##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-QSB



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(Mark One)

|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------

For the quarterly period ended June 30, 2006



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------

For the transition period from  to

Commission file number: 333-47924



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BLASTGARD INTERNATIONAL, INC.

(Exact name of small business issuer as specified in it charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Colorado                                                       |  | 84-1506325                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

12900 Automobile Blvd., Suite D, Clearwater, Florida 33762

(Address of principal executive offices)

(727) 592-9400

(issuers telephone number)

(Former name, former address and former fiscal year, if changed since last report)





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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 such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes  x    No ̈

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the issuer filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.    Yes ̈No ̈

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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the
number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: As of July 31, 2006, the issuer had 22,035,913 shares of $.001 par value common stock outstanding.

Transitional Small Business Disclosure Format (Check one):     Yes ̈No  x



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##### Table of Contents

INDEX



|                                                                                                  |  |                                                     |  |     
|------------------------------------------------------------------------------------------------- |  | --------------------------------------------------- |  | ----
|                                                                                                  |  |                                                     |  | Page
|PART 1  FINANCIAL INFORMATION                                                                    |  |                                                    
|                                                                                                  |  |                                                    
|Item 1.                                                                                           |  | Financial Statements                                |  |     
|                                                                                                  | 
|Condensed balance sheet, June 30, 2006 (unaudited)                                                |  | 3                                                  
|                                                                                                  | 
|Condensed statements of operations, three and six months ended June 30, 2006 and 2005 (unaudited) |  | 4                                                  
|                                                                                                  | 
|Condensed statements of cash flows, six months ended June 30, 2006 and 2005 (unaudited)           |  | 5                                                  
|                                                                                                  | 
|Notes to condensed financial statements (unaudited)                                               |  | 6                                                  
|                                                                                                  |  |                                                    
|Item 2.                                                                                           |  | Managements Plan of Operation.                     |  | 13  
|                                                                                                  |  |                                                    
|Item 3.                                                                                           |  | Controls and Procedures                             |  | 20  
|                                                                                                  | 
|PART 2  OTHER INFORMATION                                                                        |  | 21                                                 
|                                                                                                  |  |                                                    
|Item 1.                                                                                           |  | Legal Proceedings                                   |  | 21  
|                                                                                                  |  |                                                    
|Item 2.                                                                                           |  | Changes in Securities and Use of Proceeds           |  | 21  
|                                                                                                  |  |                                                    
|Item 3.                                                                                           |  | Defaults upon Senior Securities                     |  | 22  
|                                                                                                  |  |                                                    
|Item 4.                                                                                           |  | Submission of Matters to a Vote of Security Holders |  | 22  
|                                                                                                  |  |                                                    
|Item 5.                                                                                           |  | Other Information                                   |  | 22  
|                                                                                                  |  |                                                    
|Item 6.                                                                                           |  | Exhibits                                            |  | 23  
|                                                                                                  |  |                                                    
|Signatures                                                                                        |  |                                                     |  | 27  



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##### Table of Contents

BLASTGARD INTERNATIONAL, INC.

Condensed Balance Sheet

(Unaudited)

June 30, 2006



|                                                                                                       |  |   |            |  
|------------------------------------------------------------------------------------------------------ |  | - | ---------- | -
|Assets                                                                                                 |  |   |            |  
|Current assets:                                                                                        |  |   |            |  
|Cash                                                                                                   |  | $ | 980,342    |  
|Receivables:                                                                                           |  |   |            |  
|Trade                                                                                                  |  |   | 37,964     |  
|Other                                                                                                  |  |   | 12,500     |  
|Inventory                                                                                              |  |   | 13,780     |  
|Prepaid expenses                                                                                       |  |   | 26,487     |  
|                                                                                                       |  |   |            |  
|Total current assets                                                                                   |  |   | 1,071,073  |  
|                                                                                                       | 
|Property and equipment, net                                                                            |  |   | 50,457     |  
|Other assets:                                                                                          |  |   |            |  
|Debt issue costs (Notes 4 and 5)                                                                       |  |   | 306,393    |  
|Deferred costs                                                                                         |  |   | 39,064     |  
|Deposits                                                                                               |  |   | 30,178     |  
|                                                                                                       |  |   |            |  
|                                                                                                       |  | $ | 1,497,165  |  
|                                                                                                       |  |   |            |  
|                                                                                                      
|Liabilities and Shareholders Deficit                                                                  | 
|Current liabilities:                                                                                   |  |   |            |  
|Current maturities on convertible notes payable (Note 4)                                               |  | $ | 7,100      |  
|Indebtedness to related parties (Note 2)                                                               |  |   | 719        |  
|Accounts payable                                                                                       |  |   | 6,601      |  
|Derivative liability (Note 6)                                                                          |  |   | 600,000    |  
|                                                                                                       |  |   |            |  
|Total current liabilities                                                                              |  |   | 614,420    |  
|                                                                                                       |  |   |            |  
|Long-term debt:                                                                                        |  |   |            |  
|Convertible notes payable, less current maturities, net of unamortized discount of $472,391 (Note 4)   |  |   | 841,006    |  
|Subordinated, convertible notes payable, net of unamortized discount of $1,107,240 (Note 5)            |  |   | 92,760     |  
|                                                                                                       |  |   |            |  
|Total liabilities                                                                                      |  |   | 1,548,186  |  
|                                                                                                       |  |   |            |  
|                                                                                                       |  |   |            |  
|Commitments and contingencies (Note 8)                                                                 |  |   |           |  
|                                                                                                       | 
|Shareholders deficit (Note 7):                                                                        |  |   |            |  
|Preferred stock, $.001 par value; 1,000 shares authorized, -0- shares issued and outstanding           |  |   |           |  
|Common stock, $.001 par value; 100,000,000 shares authorized, 22,035,913 shares issued and outstanding |  |   | 22,036     |  
|Additional paid-in capital                                                                             |  |   | 5,555,234  |  
|Retained deficit                                                                                       |  |   | (5,628,291 | )
|                                                                                                       |  |   |            |  
|Total shareholders deficit                                                                            |  |   | (51,021    | )
|                                                                                                       |  |   |            |  
|                                                                                                       |  | $ | 1,497,165  |  
|                                                                                                       |  |   |            |  

See accompanying notes to condensed financial statements



1



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##### Table of Contents

BLASTGARD INTERNATIONAL, INC.

Condensed Statements of Operations

(Unaudited)



|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------------------ |  | --------------------------- | ---------- | - | ------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                             |  | Three Months Ended June 30, |            |   | Six Months Ended June 30, |  
|                                                             |  | 2006                        |            |   | 2005                      |   |            | 2006 |  |   | 2005       |  
|Revenues:                                                    |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Sales                                                        |  | $                           | 486,305    |   |                           | $ | 1,384      |      |  | $ | 863,335    |   |  | $ | 1,643      |  
|Cost of goods sold                                           |  |                             | 367,654    |   |                           |   | 209        |      |  |   | 663,253    |   |  |   | 209        |  
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Gross profit                                                 |  |                             | 118,651    |   |                           |   | 1,175      |      |  |   | 200,082    |   |  |   | 1,434      |  
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Operating expenses:                                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Stock-based compensation (Note 7):                           |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Consulting                                                   |  |                             |           |   |                           |   | 125,000    |      |  |   | 6,750      |   |  |   | 125,000    |  
|Legal                                                        |  |                             | 27,360     |   |                           |   |           |      |  |   | 27,360     |   |  |   |           |  
|Granted stock options                                        |  |                             | 43,659     |   |                           |   |           |      |  |   | 98,296     |   |  |   | 53,785     |  
|General and administrative                                   |  |                             | 280,016    |   |                           |   | 285,181    |      |  |   | 615,306    |   |  |   | 611,035    |  
|Research and development                                     |  |                             | 5,185      |   |                           |   | 76,847     |      |  |   | 28,451     |   |  |   | 109,706    |  
|Depreciation and amortization                                |  |                             | 6,985      |   |                           |   | 6,549      |      |  |   | 13,971     |   |  |   | 11,793     |  
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Total operating expenses                                     |  |                             | 363,205    |   |                           |   | 493,577    |      |  |   | 790,134    |   |  |   | 911,319    |  
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Operating loss                                               |  |                             | (244,554   | ) |                           |   | (492,402   | )    |  |   | (590,052   | ) |  |   | (909,885   | )
|Non-operating income/(expense):                              |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Loss on disposal of assets                                   |  |                             | (635       | ) |                           |   |           |      |  |   | (863       | ) |  |   |           |  
|Loss on derivative liability (Note 6)                        |  |                             | (168,000   | ) |                           |   |           |      |  |   | (168,000   | ) |  |   |           |  
|Interest income                                              |  |                             | 906        |   |                           |   | 7,709      |      |  |   | 2,583      |   |  |   | 17,573     |  
|Rental income                                                |  |                             | 750        |   |                           |   | 2,400      |      |  |   | 3,000      |   |  |   | 2,400      |  
|Interest expense (Notes 4 and 5):                            |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Amortized debt issue costs                                   |  |                             | (13,807    | ) |                           |   | (13,807    | )    |  |   | (27,614    | ) |  |   | (27,614    | )
|Amortized debt discount                                      |  |                             | (28,518    | ) |                           |   | (28,517    | )    |  |   | (57,036    | ) |  |   | (57,035    | )
|Default penalty and interest                                 |  |                             |           |   |                           |   | (35,714    | )    |  |   |           |   |  |   | (35,714    | )
|Other                                                        |  |                             | (29,239    | ) |                           |   | (28,400    | )    |  |   | (56,420    | ) |  |   | (56,800    | )
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Loss before income taxes                                     |  |                             | (483,097   | ) |                           |   | (588,731   | )    |  |   | (894,402   | ) |  |   | (1,067,075 | )
|                                                             |  |                             |           |   |                           |   |            |      |  |   |           |   |  |   |            |  
|Income tax provision (Note 3)                                |  |                             |           |   |                           |   |           |      |  |   |           |   |  |   |           |  
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Net loss                                                     |  | $                           | (483,097   | ) |                           | $ | (588,731   | )    |  | $ | (894,402   | ) |  | $ | (1,067,075 | )
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted loss per share                             |  | $                           | (0 02      | ) |                           | $ | (0 03      | )    |  | $ | (0 04      | ) |  | $ | (0 05      | )
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted weighted average common shares outstanding |  |                             | 22,335,913 |   |                           |   | 21,873,292 |      |  |   | 22,314,484 |   |  |   | 21,861,387 |  
|                                                             |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  

See accompanying notes to condensed financial statements



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##### Table of Contents

BLASTGARD INTERNATIONAL, INC.

Condensed Statements of Cash Flows

(Unaudited)



|                                                  |  |                           |           |   |      |   |            |  
|------------------------------------------------- |  | ------------------------- | --------- | - | ---- | - | ---------- | -
|                                                  |  | Six Months Ended June 30, |          
|                                                  |  | 2006                      |           |   | 2005 |  
|Cash flows from operating activities:             |  |                           |           |   |      |   |            |  
|Net loss                                          |  | $                         | (894,402  | ) |      | $ | (1,067,075 | )
|Adjustments to reconcile net loss to net cash     |  |                           |           |   |      |   |            |  
|used in operating activities:                     |  |                           |           |   |      |   |            |  
|Depreciation and amortization                     |  |                           | 41,585    |   |      |   | 39,407     |  
|Stock-based compensation (Note 5)                 |  |                           | 132,406   |   |      |   | 178,785    |  
|Stock options granted for legal services          |  |                           | 6,800     |   |      |   |            |  
|Discount on convertible notes payable (Note 4)    |  |                           | 57,036    |   |      |   | 57,035     |  
|Loss on derivative liability                      |  |                           | 168,000   |   |      |   |           |  
|Loss on disposal of assets                        |  |                           | 635       |   |      |   |           |  
|Changes in operating assets and liabilities:      |  |                           |           |   |      |   |            |  
|Accounts receivable                               |  |                           | 155,079   |   |      |   |           |  
|Inventory                                         |  |                           | 719       |   |      |   | (372,610   | )
|Other operating assets                            |  |                           | (28,524   | ) |      |   | (29,992    | )
|Accounts payable and accruals                     |  |                           | (15,909   | ) |      |   | 394,208    |  
|Indebtedness to related party                     |  |                           | 719       |   |      |   | 1,435      |  
|                                                  |  |                           |           |   |      |   |            |  
|Net cash used in operating activities             |  |                           | (375,856  | ) |      |   | (798,807   | )
|                                                  |  |                           |           |   |      |   |            |  
|Cash flows from investing activities:             |  |                           |           |   |      |   |            |  
|Payments for deferred costs                       |  |                           | (18,556   | ) |      |   | (10,974    | )
|Purchases of property and equipment               |  |                           | (4,048    | ) |      |   | (38,889    | )
|                                                  |  |                           |           |   |      |   |            |  
|Net cash used in investing activities             |  |                           | (22,604   | ) |      |   | (49,863    | )
|                                                  |  |                           |           |   |      |   |            |  
|Cash flows from financing activities:             |  |                           |           |   |      |   |            |  
|Proceeds from issuance of debt (Note 5)           |  |                           | 1,200,000 |   |      |   |           |  
|Proceeds from related party advances (Note 2)     |  |                           | 105,000   |   |      |   |           |  
|Payments for related party advances (Note 2)      |  |                           | (105,000  | ) |      |   |           |  
|Payments for debt principal                       |  |                           | (65,423   | ) |      |   |           |  
|Payments for debt issue costs                     |  |                           | (117,000  | ) |      |   |           |  
|                                                  |  |                           |           |   |      |   |            |  
|Net cash provided by financing activities         |  |                           | 1,017,577 |   |      |   |           |  
|                                                  |  |                           |           |   |      |   |            |  
|Net change in cash                                |  |                           | 619,117   |   |      |   | (848,670   | )
|                                                  |  |                           |           |   |      |   |            |  
|Cash, beginning of period                         |  |                           | 361,225   |   |      |   | 1,821,288  |  
|                                                  |  |                           |           |   |      |   |            |  
|Cash, end of period                               |  | $                         | 980,342   |   |      | $ | 972,618    |  
|                                                  |  |                           |           |   |      |   |            |  
|Supplemental disclosure of cash flow information: |  |                           |           |   |      |   |            |  
|Cash paid during the period for:                  |  |                           |           |   |      |   |            |  
|Interest                                          |  | $                         | 56,420    |   |      | $ |           |  
|                                                  |  |                           |           |   |      |   |            |  
|Income taxes                                      |  | $                         |          |   |      | $ |           |  
|                                                  |  |                           |           |   |      |   |            |  

See accompanying notes to condensed financial statements



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##### Table of Contents

BLASTGARD INTERNATIONAL, INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 1: Basis of Presentation

The financial statements presented herein have been prepared by the Company in accordance with the accounting policies in its Form 10-KSB dated
December 31, 2005, and should be read in conjunction with the notes thereto.

In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim periods presented have been made. The results of operations for the periods presented are not necessarily indicative of the results to be
expected for the year.

Financial data presented herein are unaudited.

Note 2: Related Party Transactions

During the six months
ended June 30, 2006, an officer advanced the Company $105,000 for working capital, which was repaid prior to June 30, 2006. The advances carried no interest rate.

Note 3: Income Taxes

The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, Accounting for Income Taxes. The Company incurred net operating losses during all periods presented resulting in a deferred tax asset, which was fully allowed for; therefore, the net benefit and expense
resulted in no income taxes.

Note 4: Convertible Notes Payable

On December 2, 2004, the Company entered into agreements to borrow an aggregate principal amount of $1,420,000 and to issue to the investors collateralized convertible promissory notes and common stock purchase
warrants. The Companys convertible promissory notes payable consist of the following at June 30, 2006:



|                                                                                                                                                          |  |   |           |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | --------- | -
|$1,000,000 convertible promissory note issued December 2, 2004, due on October 31, 2007, 8% annual interest rate, net of unamortized
discount of $331,509 |  | $ | 598,418   |  
|$200,000 convertible promissory note issued December 2, 2004, due on October 31, 2007, 8% annual interest rate, net of unamortized
discount of $66,302    |  |   | 119,683   |  
|$100,000 convertible promissory note issued December 2, 2004, due on October 31, 2007, 8% annual interest rate, net of unamortized
discount of $33,151    |  |   | 59,842    |  
|$100,000 convertible promissory note issued December 2, 2004, due on October 31, 2007, 8% annual interest rate, net of unamortized
discount of $33,151    |  |   | 59,842    |  
|$20,000 convertible promissory note issued December 2, 2004, due on October 31, 2007, 8% annual interest rate, net of unamortized
discount of $8,278      |  |   | 10,321    |  
|                                                                                                                                                          |  |   |           |  
|                                                                                                                                                          |  |   | 848,106   |  
|Less: current maturities                                                                                                                                  |  |   | (7,100    | )
|                                                                                                                                                          |  |   |           |  
|                                                                                                                                                          |  |   | $ 841,006 |  
|                                                                                                                                                          |  |   |           |  



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##### Table of Contents

Each note carries a default interest rate of 15% per annum. Aggregate monthly payments of 1.2% of the principal
amount were due commencing November 1, 2005 through April 30, 2006, then aggregate monthly payments of 3% of the principal amount were due commencing May 1, 2006 through October 31, 2006, and then aggregate monthly payments of 6%
of the principal amount were due commencing November 1, 2006 through October 31, 2007. However, as a result of the June 22, 2006 debt financing, the payment arrangements were modified. Monthly payments of interest only (8%) based
on the principal amount is due commencing June 1, 2006 through May 31, 2007, and then aggregate monthly payments of 6% of the principal amount is due commencing June 1, 2007 through October 31, 2007. Payments will be applied
first to accrued interest and then to principal. The balance of the unpaid principal and any unpaid interest is due on October 31, 2007. All accrued interest had been paid in full as of June 30, 2006.

The individual note holders have the right, at their option, to convert the principal amount of the note, together with all accrued interest thereon in accordance with
the provisions of and upon satisfaction of the conditions contained in the note, into fully paid and non-assessable shares of the Companys common stock at a conversion price of $.75 per share, subject to adjustment in certain circumstances if
the notes are then outstanding, such as a stock split, combination or dividend; or in the event the Company issues shares of common stock for consideration of less than the exercise price.

The Company can require the holders to convert the notes into shares of common stock if a registration statement for the resale of the underlying shares is effective and
the common stock has traded above $2.50 per shares for ten consecutive days. The amount that the holders can be required to convert is limited to the aggregate dollar volume traded over the past seven trading days (pro-rated among all holders), but
no holder is required to convert an amount that results in the holder becoming the beneficial owner of more than 4.99% of the outstanding common stock on the date of conversion.

The notes are secured by all of the Companys assets until the notes have been fully paid or fully converted into common stock.



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##### Table of Contents

Warrants

The
fair value of detachable Class A and Class B warrants issued with the convertible notes was charged to additional paid-in capital with a corresponding discount on the convertible notes payable. The discount is amortized over
the life of the debt. As the discount is amortized, the reported outstanding principal balance of the notes will approach the remaining unpaid value ($1,320,497 at June 30, 2006).

As part of a debt financing conducted in June 2006 (see Note 5), the Company revised the exercise prices on the above warrants and issued 666,667 additional warrants. The exercise price on the 473,336 Class
A warrants was reduced from $2.09 to $1.00 per share. The exercise price on the 141,999 Class B warrants was reduced from $3.00 to $1.50 per share. These warrants were revalued as follows:



|                                                            |  |   |          |   |  |   |          |   |  |   |        
|----------------------------------------------------------- |  | - | -------- | - |  | - | -------- | - |  | - | -------
|Original fair value of Class A warrants, December 2, 2004 |  |   |          |   |  | $ | 291,102  |   |  |   |        
|Original fair value of Class B warrants, December 2, 2004 |  |   |          |   |  |   | 41,605   |   |  |   |        
|                                                            |  |   |          |   |  |   |          |   |  |   |        
|Total original value of warrants, December 2, 2004          |  |   |          |   |  |   |          |   |  | $ | 332,707
|Fair value of original Class A warrants, June 22, 2006    |  | $ | (117,861 | ) |  |   |          |   |  |   |        
|Fair value of original Class B warrants, June 22, 2006    |  |   | (8,520   | ) |  |   |          |   |  |   |        
|                                                            |  |   |          |   |  |   |          |   |  |   |        
|Total fair value of original warrants, June 22, 2006        |  |   |          |   |  |   | (126,381 | ) |  |   |        
|Fair value of revised Class A warrants                    |  | $ | 153,834  |   |  |   |          |   |  |   |        
|Fair value of revised Class B warrants                    |  |   | 18,177   |   |  |   |          |   |  |   |        
|                                                            |  |   |          |   |  |   |          |   |  |   |        
|Total fair value of revised warrants, June 22, 2006         |  |   |          |   |  |   | 172,011  |   |  |   |        
|                                                            |  |   |          |   |  |   |          |   |  |   |        
|Net increase in revised Class A and B warrants          |  |   |          |   |  |   |          |   |  |   | 45,630 
|                                                            |  |   |          |   |  |   |          |   |  |   |        
|Total revised value of Class A and B warrants           |  |   |          |   |  |   |          |   |  | $ | 378,337
|                                                            |  |   |          |   |  |   |          |   |  |   |        

On June 22, 2006, the Company issued the note holders Class F common stock purchase warrants
entitling the holders to purchase an aggregate of 666,667 shares of the Companys common stock at an exercise price of $0.75 per share. The Class F warrants are exercisable for a period of five years. The fair value for the Class
F warrants was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:



|                               |  |         |  
|------------------------------ |  | ------- | -
|Risk-free interest rate        |  | 5.18    | %
|Dividend yield                 |  | 0.00    | %
|Volatility factor              |  | 104.21  | %
|Weighted average expected life |  | 5 years |  

The weighted average exercise price and weighted average fair value of the Class F warrants were $0.75
and $.412, respectively. The fair value of the Class F warrants totaled $274,667.

The initial discount recorded on the convertible promissory
notes totaled $332,707. Following the revaluation of the Class A and B warrants and the issuance of the Class F warrants, the total discount related to the convertible promissory notes increased to $653,004. As of
June 30, 2006, $180,613 of the discount was amortized to interest expense, reducing the balance of the unamortized discount to $472,391. Amortization expense on the debt discount totaled $57,036 for the six months ended June 30, 2006.



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Debt issue costs

The Company paid its debt placement agent and its attorney a total of $112,370 and issued detachable Class A and B warrants in connection with the issuance of the convertible promissory notes. The original fair value
of the warrants totaled $48,709, but increased to $55,342 following the revaluation discussed above. The sum of the payments and the fair value of the warrants, resulted in total debt issue costs of $167,712. Amortization resulting from the debt
issue costs is charged to interest expense. Accumulated amortization and amortization expense of the debt issue costs totaled $87,443 and $27,614 as of and for the six months ended June 30, 2006, respectively.

The convertible debt discount and related debt issue costs are expected to amortize over the next two years as follows:



|             |  |          |         |            |   |        |  |   |        
|------------ |  | -------- | ------- | ---------- | - | ------ |  | - | -------
|             |  | Debt     |         | Debt Issue |   |       
|December 31, |  | Discount |         | Costs      |   | Totals
|2006         |  | $        | 177,147 |            | $ | 30,101 |  | $ | 207,248
|2007         |  |          | 295,244 |            |   | 50,168 |  |   | 345,412
|             |  |          |         |            |   |        |  |   |        
|             |  | $        | 472,391 |            | $ | 80,269 |  | $ | 552,660
|             |  |          |         |            |   |        |  |   |        

Note 5: Subordinated Convertible Notes Payable

On June 22, 2006, the Company entered into agreements to borrow an aggregate principal amount of $1,200,000 and to issue to the investors subordinated, convertible
promissory notes and common stock purchase warrants. The Companys subordinated, convertible promissory notes payable consist of the following at June 30, 2006:



|                                                                                                                                                                |  |   |       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------
|$600,000 subordinated, convertible promissory note issued June 22, 2006, due on June 22, 2008, 8% annual interest rate, net of
unamortized discount of $553,620 |  | $ | 46,380
|$600,000 subordinated, convertible promissory note issued June 22, 2006, due on June 22, 2008, 8% annual interest rate, net of unamortized
discount of $553,620 |  |   | 46,380
|                                                                                                                                                                |  |   |       
|                                                                                                                                                                |  |   | 92,760
|Less: current maturities                                                                                                                                        |  |   |      
|                                                                                                                                                                |  |   |       
|                                                                                                                                                                |  | $ | 92,760
|                                                                                                                                                                |  |   |       

These notes are subordinated to the convertible promissory notes listed in Note 4, which are collateralized by all
of the Companys assets until the notes have been fully paid or fully converted into common stock.

The individual note holders have the right, at
their option, to convert the principal amount of the note into fully paid and non-assessable shares of the Companys common stock at a conversion price of $0.75 per share, subject to adjustment in certain circumstances if the notes are then
outstanding, such as a stock split, combination or dividend; or in the event the Company issues shares of common stock for consideration of less than the exercise price.

Carrying value of subordinated, convertible notes payable

The conversion of the subordinated, convertible
notes payable is fixed at $0.75 per share of the Companys common stock. Pursuant to SFAS 133, options embedded in contracts containing the price of a specific equity



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instrument are not clearly and closely related to an investment in an interest-bearing note and the embedded derivative
must be separated from the host contract. As a result, the Company has bifurcated the option resulting from the conversion feature and has classified it as a derivative liability pursuant to SFAS 133. The following table presents the allocation of
proceeds from the financing:



|                                         |  |   |           |  
|---------------------------------------- |  | - | --------- | -
|Principal balance of the notes           |  | $ | 1,200,000 |  
|Less debt discounts:                     |  |   |           |  
|Fair value of warrants (below)           |  |   | (675,240  | )
|Fair value of conversion option (Note 6) |  |   | (432,000  | )
|                                         |  |   |           |  
|Carrying value at June 30, 2006          |  | $ | 92,760    |  
|                                         |  |   |           |  

Warrants

In connection with the subordinated, convertible promissory notes, the Company issued note holders the following warrants to purchase shares of its common stock:



|                   |  |               |  |                |      |            |   |                     |  |   |      
|------------------ |  | ------------- |  | -------------- | ---- | ---------- | - | ------------------- |  | - | -----
|Description        |  | Number Issued |  | Exercise Price |      | Fair Value |   | Relative Fair Value
|                   |  |               | 
|                   |  |               | 
|Class C warrants |  | 1,200,000     |  | $              | 1.00 |            | $ | 0.392               |  | $ | 0.171
|Class D warrants |  | 1,200,000     |  | $              | 1.50 |            | $ | 0.360               |  | $ | 0.157
|Class E warrants |  | 600,000       |  | $              | 2.00 |            | $ | 0.337               |  | $ | 0.147
|Class F warrants |  | 1,066,666     |  | $              | 0.75 |            | $ | 0.412               |  | $ | 0.180
|                   |  |               |  |                |      |            |   |                     |  |   |      
|                   |  | 4,066,666     |  |                |      |            |   |                     |  |   |      

The warrants are exercisable for a period of five years.

The fair value for the warrants granted in association with the subordinated, convertible debt was estimated at the date of grant using the Black-Scholes option-pricing
model with the following assumptions:



|                               |  |         |  
|------------------------------ |  | ------- | -
|Risk-free interest rate        |  | 5.18    | %
|Dividend yield                 |  | 0.00    | %
|Volatility factor              |  | 104.21  | %
|Weighted average expected life |  | 5 years |  

The weighted average exercise price and weighted average relative fair value of these warrants were $1.23 and
$.166, respectively. The fair value of all 4,066,666 warrants granted in association with the issuance of the convertible debt totaled $675,240.

The
warrants are detachable and are valued separately from the convertible notes payable. Therefore, the fair value of the warrants, $675,240, was charged to additional paid-in capital with a corresponding discount on the convertible notes payable. The
discount will be amortized over the life of the debt. As the discount is amortized, the outstanding principal balance of the notes will approach their face value of $1,200,000.

Debt issue costs

The Company paid its debt placement agent and attorney a total of $117,000 in connection
with the issuance of the subordinated, convertible promissory notes. In addition, the Company issued the placement agent common stock purchase warrants as follows:



|                   |  |               |  |                |      |            |   |      
|------------------ |  | ------------- |  | -------------- | ---- | ---------- | - | -----
|Description        |  | Number Issued |  | Exercise Price |      | Fair Value
|                   |  |              
|Class C warrants |  | 72,000        |  | $              | 1.00 |            | $ | 0.392
|Class D warrants |  | 72,000        |  | $              | 1.50 |            | $ | 0.360
|Class E warrants |  | 36,000        |  | $              | 2.00 |            | $ | 0.337
|Class F warrants |  | 104,000       |  | $              | 0.75 |            | $ | 0.412
|                   |  |               |  |                |      |            |   |      
|                   |  | 284,000       |  |                |      |            |   |      



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The placement agents warrants are exercisable for a period of five years.

The weighted average exercise price and weighted average fair value of these warrants were $1.16 and $.384, respectively. The fair value of the 284,000
warrants granted to the debt placement agent totaled $109,124, which, when added to the $117,000 paid to the placement agent, resulted in total debt issue costs of $226,124. Amortization resulting from the debt issue costs is charged to interest
expense.

The subordinated, convertible debt discounts and related debt issue costs are expected to amortize over the next two years as follows:



|             |  |              |           |                 |   |         |  |   |          
|------------ |  | ------------ | --------- | --------------- | - | ------- |  | - | ---------
|December 31, |  | DebtDiscount |           | Debt IssueCosts |   | Totals 
|2006         |  | $            | 276,810   |                 | $ | 56,531  |  | $ | 333,341  
|2007         |  |              | 553,620   |                 |   | 113,062 |  |   | 666,682  
|2008         |  |              | 276,810   |                 |   | 56,531  |  |   | 333,341  
|             |  |              |           |                 |   |         |  |   |          
|             |  | $            | 1,107,240 |                 | $ | 226,124 |  | $ | 1,333,364
|             |  |              |           |                 |   |         |  |   |          

Note 6: Derivative Financial Instrument

The Company generally does not use derivative instruments to hedge exposures to cash-flow risks or market-risks that may affect the fair values of its financial
instruments. However, certain other financial instruments, such as embedded conversion features, where an embedded option in a debt security contains the price of a specific equity instrument, are bifurcated and are classified as derivative
liabilities. Such financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period.



|                                           |  |                     |         |                                                                   |          
|------------------------------------------ |  | ------------------- | ------- | ----------------------------------------------------------------- | ---------
|                                           |  | DerivativeLiability |         | Number of Shares In Which The Derivative Liability Can Be Settled
|Embedded conversion feature, June 22, 2006 |  | $                   | 432,000 |                                                                   | 1,600,000
|Embedded conversion feature, June 30, 2006 |  | $                   | 600,000 |                                                                   | 1,600,000

The loss on the derivative liability totaled $168,000 for the six months ended June 30, 2006.



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Note 7: Shareholders Deficit

Common stock issuances

On February 23, 2006, the Company
issued 25,000 shares of its common stock in exchange for business advisory services. On that date, the traded market value of the common stock was $0.32 per share. The Companys Board of Directors valued the issuance at $0.27 (a 15.5% discount
from the traded market value) due to the restricted nature of the common stock issued in the transaction. Stock-based compensation expense of $6,750 was recognized in the accompanying financial statements for the six months ended June 30, 2006.

Options granted to non-employees, accounted for under the fair value method

An additional 5,833 stock options granted to non-employees in prior years, vested during the six months ended June 30, 2006. Compensation related to the vested options totaled $4,213 and has been recorded as
stock-based compensation in the accompanying condensed financial statements.

On June 6, 2006, the Company granted its attorneys options to purchase
an aggregate of 80,000 shares of the Companys common stock at an exercise price of $1.00 per share. The options vested on the date of grant and expire on June 5, 2011. The quoted market price of the stock was $0.71 per share on the grant
date. The Company valued the options at $.342 per share, or $27,360, which has been recorded as stock-based compensation in the accompanying financial statements for the six months ended June 30, 2006.

The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:



|                               |  |         |  
|------------------------------ |  | ------- | -
|Risk-free interest rate        |  | 4.99    | %
|Dividend yield                 |  | 0.00    | %
|Volatility factor              |  | 104.21  | %
|Weighted average expected life |  | 5 years |  

Options granted to employees, accounted for under the intrinsic value method

An additional 145,833 stock options granted to employees in prior years, vested during the six months ended June 30, 2006. Compensation related to the vested options
totaled $66,723 and has been recorded as stock-based compensation in the accompanying condensed financial statements.

Effective January 1, 2006, the
Company adopted SFAS No. 123R, Share Based Payment. SFAS 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award
(with limited exceptions). In prior years, employee stock-based compensation awards were measured based on the intrinsic value method. Had compensation expense in prior years been recorded based on the fair value at the grant date, and charged to
expense over vesting periods, the Companys net loss and net loss per share would have increased to the pro forma amounts indicated below:



|                                       |  |                           |          |   |      |   |            |  
|-------------------------------------- |  | ------------------------- | -------- | - | ---- | - | ---------- | -
|                                       |  | Six Months Ended June 30, |         
|                                       |  | 2006                      |          |   | 2005 |  
|Net loss, as reported                  |  | $                         | (894,402 | ) |      | $ | (1,067,075 | )
|Decrease due to:                       |  |                           |          |   |      |   |            |  
|Employee stock options                 |  |                           |         |   |      |   | (213,060   | )
|Pro forma net loss                     |  | $                         | (894,402 | ) |      | $ | (1,280,135 | )
|As reported:                           |  |                           |          |   |      |   |            |  
|Net loss per share - basic and diluted |  | $                         | (0.04    | ) |      | $ | (0.05      | )
|Pro Forma:                             |  |                           |          |   |      |   |            |  
|Net loss per share - basic and diluted |  | $                         | (0.04    | ) |      | $ | (0.06      | )



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Following is a schedule of changes in common stock options and warrants for the six
months ended June 30, 2006:



|                               |       |                    |   |                        |           |                                        |   |                                         |  |   |      |  |           
|------------------------------ | ----- | ------------------ | - | ---------------------- | --------- | -------------------------------------- | - | --------------------------------------- |  | - | ---- |  | ----------
|                               |       | Awards Outstanding |   | ExercisePricePer Share |           | WeightedAverageExercisePrice Per Share |   | WeightedAverageRemainingContractualLife
|                               | Total |                    |   | Exercisable            |           |                                        |  
|Outstanding at January 1, 2006 |       | 3,838,889          |   |                        | 2,893,889 |                                        | $ | .98 -$5.00                              |  | $ | 2.03 |  | 2.86 years
|Granted                        |       | 5,097,333          |   |                        | 5,097,333 |                                        | $ | .75 -$2.00                              |  | $ | 1.16 |  | 5.00 years
|Vested                         |       |                   |   |                        | 151,666   |                                        | $ | 0.98                                    |  | $ | 0.98 |  | 4.42 years
|Exercised                      |       |                   |   |                        |          |                                        |   |                                        |  | $ |     |  | N/A       
|Cancelled/Expired              |       | (50,000            | ) |                        |          |                                        | $ | 0.98                                    |  | $ | 0.98 |  | N/A       
|Outstanding at June 30, 2006   |       | 8,886,222          |   |                        | 8,142,888 |                                        | $ | .75 -$5.00                              |  | $ | 1.43 |  | 3.89 years
|                               |       |                    |   |                        |           |                                        |   |                                         |  |   |      |  |           

Common stock awards consisted of the following options and warrants for the six months ended June 30, 2006:



|                               |  |           |   |  |           |  |             |  
|------------------------------ |  | --------- | - |  | --------- |  | ----------- | -
|Description                    |  | Options   |   |  | Warrants  |  | TotalAwards |  
|Outstanding at January 1, 2006 |  | 2,885,750 |   |  | 953,139   |  | 3,838,889   |  
|Granted                        |  | 80,000    |   |  | 5,017,333 |  | 5,097,333   |  
|Exercised                      |  |          |   |  |          |  |            |  
|Cancelled/Expired              |  | (50,000   | ) |  |          |  | (50,000     | )
|                               |  |           |   |  |           |  |             |  
|Outstanding at June 30, 2006   |  | 2,915,750 |   |  | 5,970,472 |  | 8,886,222   |  
|                               |  |           |   |  |           |  |             |  

Note 8: Commitments and Contingencies

Office Lease

The Company entered into a noncancellable office
lease agreement on January 10, 2006. The lease runs from January 1, 2006 through December 31, 2006. Rental payments under the lease are $2,500 per month.



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Litigation

Prisma Capital Markets, LLC

On May 25, 2004, the Company entered into an agreement with Prisma Capital Markets,
LLC, appointing Prisma as an exclusive distributor of our products in Kuwait. Prisma also agreed to arrange for, and pay the costs and expenses related to, the testing and demonstration of the Companys products in Kuwait, in exchange for
300,000 shares of the Companys restricted common stock. The Company also granted Prisma warrants entitling Prisma to purchase up to 4,401,720 shares of the Companys common stock at an exercise price of $2.062 per share, which would be
exercisable only upon Prismas meeting various sales goals totaling $30,000,000 in sales. In July 2004, the Company notified Prisma that the agreement was cancelled due to Prismas failure to arrange for the testing of products in Kuwait,
and demanded the return of the certificates representing the common stock and the warrants. In February 2005, the Company filed a lawsuit against Prisma in the Supreme Court of the State of New York, County of New York, for breach of contract, and
demanded the return of the securities issued to Prisma and $100,000 in actual damages. In February 2006, the Company was granted a motion for summary judgment in its favor. On July 6, 2006, the Company received a court order declaring the
cancellation of the 300,000 shares.

Verde Partners Family Limited Partnership

The Company was served with a lawsuit that was filed on September 12, 2005 in the Second Judicial District Court in Washoe County, Nevada as case number CV-05-02072.
The plaintiff in the lawsuit is Verde Partners Family Limited Partnership (Verde). The lawsuit makes a variety of claims and contends that the Company and certain officers of the Company misappropriated certain technology, including two
patents, and seeks damages in excess of $10,000. The action was removed to federal court in Nevada. A motion was pending to have the case dismissed as to Blastgard International, Inc., and all other defendants, for lack of personal
jurisdiction. There was also a motion pending for a more definite statement in that three of the claims by Verde are conclusory, vague and ambiguous.

On
July 14, 2006, the United States District Court rendered its decision in this case. It was ordered and adjudged that the motion to dismiss the individual defendants and the motion to dismiss the BlastGard defendants was granted.
Defendants motion for a more definite statement is moot. The Court entered judgment on July 17, 2006 in favor of all Defendants and against the Plaintiff. The Plaintiff has 30 days from the date of the judgment (July 17) to file a notice
of appeal.

On July 19, 2006, the Company filed a lawsuit in the Circuit Court of the Sixth Judicial Circuit in Pinellas County, Florida. The
Defendants in the lawsuit are Sam Gettle, Guy Gettle and Verde Partners Family Limited Partnership (Verde). The lawsuit contends that the Defendants have committed defamatory acts against the Company and its products. The lawsuit also
asks for a declaration that the Company is not liable for the acts complained of in the Nevada action. On the Companys affirmative claims for defamation, the Florida action seeks injunctive relief and damages in excess of $15,000, exclusive of
attorneys fees and costs.

Note 9: Concentration of Credit Risk for Cash

The Company has concentrated its credit risk for cash by maintaining deposits in a financial institution, which may at times exceed the amounts covered by insurance
provided by the United States Federal Deposit Insurance Corporation (FDIC). The loss that would have resulted from that risk totaled $925,527 at June 30, 2006, for the excess of the deposit liabilities reported by the financial
institution over the amount that would have been covered by FDIC. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk to cash.



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Item 2. Plan of Operation

Statements contained herein that are not historical facts are forward-looking
statements as that term is defined by the Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, the forward-looking statements are subject
to risks and uncertainties that could cause actual results to differ from those projected. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that actual results may
differ materially from those in the forward-looking statements. Such risks and uncertainties include, without limitation: well-established competitors who have substantially greater financial resources and longer operating histories, regulatory
delays or denials, ability to compete as a start-up company in a highly competitive market, and access to sources of capital.

The
following discussion should be read in conjunction with the Companys financial statements and notes thereto included elsewhere in this Form 10-QSB. Except for the historical information contained herein, the discussion in this Form 10-QSB
contains certain forward looking statements that involve risks and uncertainties, such as statements of the Companys plans, objectives, expectations and intentions. The cautionary statements made in this Form 10-QSB should be read as being
applicable to all related forward-looking statements wherever they appear herein. The Companys actual results could differ materially from those discussed here.

The financial information furnished herein has not been audited by an independent accountant; however, in the opinion of management, all adjustments (only consisting of normal recurring accruals) necessary for a fair
presentation of the results of operations for the period ended June 30, 2006, have been included.

Reorganization with BlastGard Technologies, Inc.

On January 31, 2004, pursuant to an Agreement and Plan of Reorganization, we acquired 100% of the issued and outstanding common
stock of BlastGard Technologies, Inc., a Florida corporation, from BlastGard Technologies shareholders, in exchange for an aggregate of 18,200,000 (adjusted to reflect subsequent stock split) shares of our common stock. BTI is a development
stage company that was created to develop, design, manufacture, and market proprietary blast mitigation materials. BlastGard Technologies patent-pending BlastWrap®technology is designed to effectively mitigate blasts and suppress fires resulting from explosions. As a result of the Reorganization
Agreement, a change in control and change in management of the Company occurred and BTI became a wholly-owned subsidiary of the Company. The Reorganization Agreement also provided that the Company hold a shareholders meeting to (i) change the
name of the corporation to BlastGard®International, Inc., and (ii) approve a reverse
split of the outstanding common stock on a 5:1 basis. A Special Shareholder meeting was held on March 12, 2004, and both proposals were approved. The name change and the reverse split of the outstanding common stock became effective on
March 31, 2004.

We intend to focus exclusively on the business plan of BlastGard Technologies. BlastGard Technologies was formed on
September 26, 2003, and is a development stage company. BTI acquired its only significant asset, a patent application for BlastWrap®, in January 2004, from co-inventors John L. Waddell, Jr., our Chief Operating Officer, and President, and James F. Gordon, our Chief Executive Officer, who assigned the patent to BlastGard
Technologies in consideration of the consummation of the Reorganization Agreement. For accounting purposes, we assigned no monetary value to the patent application that was assigned to BlastGard Technologies. Our current management team, which was
the management team of BlastGard Technologies prior to the reorganization, had operated a corporation called BlastGard, Inc., which was dissolved in 2004. BlastGard, Inc. had a license from a third-party to certain technology which is different from
the technology owned by BlastGard Technologies.

Pursuant to the Reorganization Agreement, BlastGard Technologies became a wholly-owned
subsidiary of our company. However, for accounting purposes, the acquisition was treated as a recapitalization of BlastGard Technologies, with our company the legal surviving entity.

Financial Results

Management changed the manner in which it presents our operating results and cash
flows during the year ended December 31, 2005. Management no longer considers us in the development stage as defined by the FASB Statement of



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Standards No. 7, Accounting and Reporting by Development State Enterprises. As a result, cumulative operating results and cash flow
information are no longer presented in the accompanying financial statements contained in Item 7. This change does not affect our operating results or financial position.

Results of Operations

Since emerging from our development stage operations in 2005, our BlastGard
MTR blast mitigated trash receptacles have been sold to six government service advantage (GSA) clients located in the United States. In this respect, in February 2006, we received an order for 190 BlastGard®MTR blast mitigated trash receptacles from the National Railroad Passenger Corporation also known as
Amtrak. The blast mitigated trash receptacles were installed at twelve different Amtrak stations throughout the United States. Amtrak took delivery and installation of the trash receptacles during the first half of 2006. We recognized approximately
$828,000 in gross revenue from this initial order. In addition, we received other orders of MTRs from U.S. Holocaust Memorial Museum and GSA for Federal Buildings and for BlastWrap from the Naval Warfare Center, Sandia National Labs, and
several domestic and international entities. In the three months ended June 30, 2006, we recognized sales of $486,305 and a gross profit of $118,651, and for the six months ended June 30, 2006, we recognized sales of $863,335 and a gross
profit of $200,082.

For the quarter ended and six months ended June 30, 2006, our operating and non operating expenses, including
interest expense, were relatively constant over the comparable period of the prior year.

Our net loss for the quarter ended June 30,
2006 was $483,097 as compared to $588,731 for the comparable period of the prior year. Our net loss for the six months ended June 30, 2006 was $894,402 as compared $1,067,075 for the comparable period of the prior year.

BlastGards products are currently being tested (or have recently been tested) and evaluated by many military and defense contractors and commercial
companies in the United States and abroad as described under Business Prospects. As we experience anticipated growth and expansion of our operations, we will experience an increase in operating expenses and costs of doing business.

Business Prospects

On September 8, 2005, we
entered into a Term of Collaboration agreement with Media Metrica Ltd. to develop required blast-mitigated internal systems 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 combination with BlastGards MTR units in the United States upon completion of all three development phases. Tests on Phase II Module were completed in March 2006. Additional design modifications and
the completion of Phase III testing should be completed by the end of August 2006.

In March, 2006, the UK Defence Ordnance Safety
Group agreed to proceed with testing of BlastWrap® as the key ingredient in a new class of insensitive munitions packaging solutions. This novel packaging system will be designed to prevent mass detonations in ammunition
storage and transport by the elimination of sympathetic detonation, which results when one detonating unit or energetic material initiates the next, and so on, in a chain reaction. It is also anticipated these Insensitive Munitions solutions will
dramatically improve fast cook off (the initiation of a unit of ammunition or other energetic store in the event of a fuel fire) and slow cook off (the initiation of a unit of ammunition or other energetic material in the event of a slower but more
sustained thermal event) performance as well as meet all of the other insensitive munitions packaging specifications of NATO and the United States military. With UK MoD funding in place to support the testing and the manufacturing of the products,
management believes that successful test results in the coming months would be a prestigious achievement for our Company, allowing us to get our technology into the United Kingdom military and establish important precedent for other militaries.
There are at least two specific weapons containers under development.



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Armor Systems International, Inc. has developed an armor that is lighter than traditional hardened
steel solutions, and, importantly, that uses widely available commercial off the shelf materials. These weight savings quickly translate into higher vehicle performance often without the need to upgrade suspension, drive-train and cooling systems.
Work is also underway on a light weight pipeline protection system.

We have also been working on further development of a series of
products for vehicle protection and for improved blast mitigation protection of barriers, walls, revetments and bunkers (including overhead protection from inbound mortars) for the United States military. The two other companies involved with
BlastGard are Geocell Systems, Inc. of San Francisco and Colt Rapid Mat LLC of Hartford, CT. We anticipate that highly-instrumented vehicle blast testing should be concluded at the King Abdullah Design and Development Bureau (KADDB) in Amman, Jordan
in the 4thQuarter of 2006.

In early 2006, BlastGard submitted proposals to the Nigerian Army, which has requested from BlastGard new Insensitive Munitions packaging solutions as well as training support to protect against such future
disastrous events in their weapons depots, due to problems they have had with the handling, storage and transport of munitions and ammunition, particularly at Ikeja and Kaduna, In early August last year, BlastGard conducted a series of
demonstrations (at a firing range in Nigeria near the Benin border) for the Nigerian Army Ordnance Corps. 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 submitted proposals
for BlastWrap®, for Insensitive Munitions packaging, for training programs, for rapid
deployment wall and bunker systems, for fire resistance products, and we anticipate oil pipeline protection systems quotations soon for initial funding by the Nigerian government in the fourth quarter of 2006. Nigerian government
funding for the initial BlastWrap® contract is in place, and contract negotiations are expected to be concluded in the 3rdQuarter of 2006.

In late 2005, to assess the vulnerability of oil and gas pipelines to explosive attack, the Company
conducted a series of explosive tests at Bakersfield, CA. The tests graphically illustrate the phenomenon of high explosive breaching of oil pipelines. We tested 24 OD X .375 wall API-5L X42 grade steel line pipe with welded .375
thick end plates (to seal the pipe). The assembly was then filled with water to represent the appropriate hydraulic shock transmission characteristics of a filled oil transmission line. A 2 pound charge of C4 was placed directly on the surface of
the pipe and detonated. The charge punched a 6 diameter hole in the side of the pipe and produced a high pressure wave in the fluid in the tube which split the end plate welds and distorted the plates. This is a classic example of shock
holing. We then placed a 10-1/8 square section of 3 thick BlastWrap®onto an identical section of (filled) line pipe, and placed a second 2 pound charge of C4 directly onto the BlastWrap®, and fired the charge. The pipe was only slightly dented. We are developing this protection system with an impenetrable tough surface material, which will make it very difficult for terrorists to
destroy these exposed oil pipelines using current methods. The oil pipe line test shows the remarkable ability of BlastWrap®to prevent shock holing and this capability can be applied to many applications: aircraft fuselages, bridge pillars, suspension cables for bridges, electricity substations and hardened
buildings. We have successfully proposed a pipeline protection system with a technology partner and expect to receive a contract to proceed with Phase 1 of this funded development by the end of the 3rdQuarter 2006.

Recent Developments

In February 2006, we received an order for 190 BlastGard®MTR blast mitigated trash receptacles from the National Railroad Passenger Corporation also known as Amtrak. The blast mitigated
trash receptacles were installed at twelve different Amtrak stations throughout the United States. Amtrak took delivery and installation of the trash receptacles during the first half of 2006. We recognized approximately $828,000 in gross revenue
from this order during the first half of 2006.

In June 2006, we introduced a new line of aviation products. In accordance with a five-year
alliance agreement with Nordisk Aviation Products, Inc. (Nordisk) signed in October 2005, BlastGard has combined its BlastWrap® blast-mitigating technology with Nordisks LD3 containers to create superior blast mitigating products for the air cargo and unit loading device
(ULD) market. ULDs are pallets and containers used to load luggage, freight, and mail onto wide-body aircraft that facilitate the bundling of cargo into large units. The introduction of this product line enables the Company to provide the airline
industry an important new line of defense to increase airline safety of passengers and crewmembers. Nordisk is headquartered in Cape Canaveral, Florida. Nordisk is a manufacturer, repair and leasing company of Unit Loading Devices (ULD)
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



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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. Initial technical meetings with the primary US flag carriers will commence in August 2006 and should be concluded by late September. Assessment of those meetings
will dictate the next steps. In addition, contacts with appropriate levels of the TSA will also guide our immediate commercial efforts in the USA. Contacts with international carriers will follow these initial efforts.

In June 2006, we introduced a new product for Homeland Security. The Pipe-Bomb Mitigator (PBM) is made up of a ring and blanket system that can be
rapidly placed, by one person, over any small IED, such as a pipe bomb, grenade, cluster bomblet or 1lb TNT bare charge. The device is designed to defeat a 1/2 pound smokeless powder pipe bomb, the classic North American IED threat. The
product has been designed to be used by one person and will easily fit in the trunk of a police car, EMT, SWAT, etc, for immediate access by the First Responder to any suspect device scene. The 3 thick BlastWrap lining (the inner wall of the
cylinder) has been designed to dramatically reduce the blast pressure and the thermal output of steel pipe bombs. This product will contain all primary, horizontally-moving, lethal fragments from a 1/2smokeless powder pipe bomb, dramatically reduce blast overpressures and thus reduce damage to people and property, and rapidly extinguish the fireball and
eliminate burns or post-blast fires.

In July 2006, we introduced a new product for Airport Security. The BlastGard® Mitigated-Bomb Receptacle (MBR 300) provides airport
security personnel with an effective tool, if and when an explosive is discovered. The MBR 300 will dramatically contain and protect against all lethal threats posed by the detonation of an improvised explosive device (IED); namely, primary
fragments, secondary fragments, mechanical effects (shock/blast pressure) and thermal effects (contact and radiation burn) from the fireball, afterburn and resultant post-blast fires. If a suspect package or bomb is discovered, the airports need a
safe means of securing that package until the bomb squad arrives. The largest and most visible investment made by the Transportation Security Administration (TSA) has been in enhancing the passenger screener force and in massively expanding the
number of explosive detection systems (EDS) required to examine checked luggage for bombs. Effective security, therefore, includes not only deterrent and preventive measures but all efforts to mitigate casualties, damage, and disruption. Since
deterrence and prevention are sometimes difficult to achieve given the nature of terrorism and the inherent vulnerabilities of public transportation, great emphasis is also placed upon the mitigation of casualties through design of facilities and
upon effective, rapid response that ensures safety while minimizing disruption. The MBR 300 is an ideal pre-incident security technology for airport security when dealing with bomb threats and suspicious objects or packages.

The American Public Transportation Association (http://www.apta.com/) (APTA) has established a Transit Security Infrastructure Work
Group. The focus of the Transit Security Infrastructure Work Group is to develop industry standards for transit related infrastructure. Transit infrastructure is defined as passenger, maintenance and operations facilities, and their
related assets; rights-of-way, including tunnels, elevated structures, and bridges; fixed assets, such as track, signals, traction power substations, and interlockings. The Working Group has initially focused on the types, placement, and
testing of security conscious trash receptacles. We expect these specifications will be published very soon, which should substantially set apart and enhance our MTR product line. The APTA group also plans to develop industry standards for
airport bomb units, which should substantially enhance our MBR product line. These industry standard specifications are important in defining and distinguishing what products are blast-mitigated. BlastGard management was involved in
thewriting of these specifications as technical members on the committee along with some physicists from Lawrence Livermore National Laboratory, DHS, DOT, various large airports and others.

The November Group, Ltd., per an agreement with Howard Safir, a former board member, serves as an advisor to render strategic and consulting services to
us, primarily in connection with the commercialization of our proprietary BlastGard technology, has been working with the Australian Department of Defences Defence Science and Technology Organisation (DSTO). DSTO is moving toward testing of
the PBMas well as the MBRand the MTR®in the near future and substantial efforts are underway to attain Australian DoD approval and usage of these unique BlastGard products. In addition, the DSTO is testing BlastWrap® in several classified applications. Additional research and testing, mostly classified,
is under way at companies such as SRI International, US Army at Huntsville, AL, Sandia National Laboratory, VSE Corporation, Bell Labs, The Protection Group, the Army Transportation Command, the Redstone Arsenal and others.



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In addition, the company is actively involved in pursuit of numerous initiatives as a member of the
Department of Defenses (DoDs) Defence Ordnance Technology Consortium (DOTC) and the National Warheads and Energetics Consortium (NWEC). Funded projects focusing on IM compliant packaging will be our targeted area for the 2007 year, one
in which these organizations are now intensely interested.

Liquidity and Capital Resources.

At June 30, 2006, we had cash of $980,342, working capital of $456,653, an accumulated deficit of $5,628,291 and shareholder deficit of $51,021.

We anticipate that our future liquidity requirements will arise from the need to finance our accounts receivable and inventories, and from
the need to fund our growth from operations, current debt obligations and capital expenditures. The primary sources of funding for such requirements is expected to be cash generated from operations, raising additional capital from the sale of equity
and/or debt securities and/or borrowings under debt facilities. While we recently secured $1,200,000 through a convertible note, we can provide no assurances that we will be able to generate sufficient cash flow from operations and/or obtain
additional financing on terms satisfactory to us, if at all, to remain a going concern. In this respect, see Note 1  Going Concern in our financial statements contained in our 2005 Form 10-KSB for additional information as to the
possibility that we may not be able to continue as a going concern.

For the six months ended June 30, 2006, net cash used
in operating activities was $375,856 primarily due to our net loss of $894,402. During the six months ended June 30, 2006, we used cash in investing activities to purchase property and equipment of $4,048 and for payment of deferred costs of
$18,556. During the six months ended June 30, 2006, net cash was provided by financing activities due to debt proceeds totaling $1,200,000, offset by debt issue costs of $117,000 and principal payments on convertible debt of $65,423. For the
six months ended June 30, 2005, net cash used in operating activities was $798,807 primarily due to our net loss of $1,067,075 and an increase in inventory of $372,610 and partially offset by an increase in accounts payable and accruals of
$394,208 and stock based compensation of $178,785. During the six months ended June 30, 2005, we used cash in investing activities to purchase property and equipment of $38,889 and for payment of deferred costs of $10,974.

We estimate that we will require $1.8 million to carry out our business plan over the next 12 months. We are not in the process of securing additional
financing to continue our operations but expect cash generated from operations. There can be no assurances that such cash generated from operations will occur.

Our monthly cash needs are budgeted to average approximately $150,000 per month, with the following approximate breakdown:



|                              |  |   |        
|----------------------------- |  | - | -------
|salaries and benefits:        |  | $ | 60,000 
|consulting, professional fees |  | $ | 58,000 
|office overhead               |  | $ | 3,000  
|travel                        |  | $ | 9,000  
|research and development      |  | $ | 20,000 
|total                         |  | $ | 150,000

To date, we have relied on managements ability to raise capital through equity private
placement financings to fund our operations. While no capital was raised by us in 2005, we raised capital in 2004 and in June 2006 through the following private placement transactions:

A. In February 2004, we raised $200,000 by selling 200,000 (as adjusted to reflect the 1:5 reverse split of the outstanding common stock that occurred on March 31, 2004) shares of common stock to five investors.

B. During the quarter ending June 30, 2004, we raised $944,050 by selling 629,367 shares of restricted common stock (at $1.50 per share) to 34
accredited investors.

C. During the quarter ending September 30, 2004, we raised $193,250 by selling 128,834 shares of restricted common stock (at
$1.50 per share) to twelve accredited investors.



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D. In December 2004, we raised $1,420,000 from five investors in a convertible debt financing, and issued to the
investors secured convertible notes due October 31, 2007 and common stock purchase warrants.

The notes each bear an interest rate of
8% per annum. Aggregate monthly payments of 1.2% of the principal amount were due commencing November 1, 2005 through April 30, 2006, then aggregate monthly payments of 3% of the principal amount were scheduled for payment commencing
May 1, 2006 through October 31, 2006, and then aggregate monthly payments of 6% of the principal amount were scheduled for payment commencing November 1, 2006 through October 31, 2007. Payments are applied first to accrued
interest and then to principal. The balance of the unpaid principal and any unpaid interest is due on October 31, 2007. In June 2006, the holders of the December 2004 debt agreed to modify their rights to receive interest only from June 1,
2006 through May 31, 2007 and thereafter to resume the original payment schedule from June 1, 2007 through the due date of their notes on October 31, 2007. The note holders have the right, at their option, to convert the principal
amount of the note, together with all accrued interest thereon in accordance with the provisions of and upon satisfaction of the conditions contained in the note, into fully paid and non-assessable shares of our common stock at as adjusted
conversion price of $.75 per share, subject to further adjustment in certain circumstances if the notes are then outstanding, such as a stock split, combination or dividend; or in the event we issue shares of common stock for consideration of less
than the exercise price. On March 16, 2006, the exercise price of the notes was originally reduced from $1.50 per share to $1.00 per share as we failed to achieve gross revenues of at least $15 million or net profits of at least $1 million for
the year ended December 31, 2005 and on June 22, 2006, the conversion price was reduced to $.75 per share.

We can require the
holders of the December 2004 debt to convert their notes into shares of common stock if a registration statement for the resale of the underlying shares is effective and the common stock has traded above $2.50 per shares for ten consecutive days.
The amount that the holders can be required to convert is limited to the aggregate dollar volume traded over the past seven trading days (pro-rated among all holders), but no holder is required to convert an amount that result in the holder becoming
the beneficial owner of more than 4.99% of the outstanding common stock on the date of conversion. The notes are secured by all of the assets of BlastGard®International, Inc, and its wholly-owed subsidiary, BlastGard Technologies, Inc., until the notes have been fully paid or fully
converted into common stock.

Also in connection with the December 2004 debt, we issued the note holders two types of warrants to acquire
shares of our common stock. We issued to the investors Class A Common Stock Purchase Warrants which entitle the investors to acquire an aggregate of 473,336 shares of our common stock currently exercisable at a price of $1.00 per share
through December 2009 and contain a cashless exercise provision that applies only in the event that a registration statement for the resale of the shares is not effective.

We also issued to the investors Class B Common Stock Purchase Warrants entitling them to acquire an aggregate of 141,999 shares of our common
stock currently exercisable at a price of $1.50 per share through December 2007 and contain a cashless exercise provision that applies only in the event that a registration statement for the resale of the shares is not effective.

Andrew Garrett, Inc., acted as placement agent in this transaction. The placement agent was paid a cash fee of $99,400, which represented
7% of the gross proceeds. Andrew Garrett is also entitled to a 5% fee upon exercise of warrants by the investors, if any. We also issued the placement agent a warrant to acquire an aggregate of 82,834 shares of our common stock currently exercisable
at a price of $1.00 per share, and a warrant to acquire 4,970 shares of our common stock currently exercisable at a price of $1.50 per share. The placement agents warrants are exercisable for a period of five years and contain a cashless
exercise provision that applies only in the event that a registration statement for the resale of the shares is not effective.

E. In December 2004,
we raised $1,020,000 from one investor by selling 680,000 shares of restricted common stock (at $1.50 per share) to one investor, and we also issued to the investor a Class B common stock purchase warrant to acquire 100,000 shares of
common stock currently exercisable at a price of $1.50 per share. Basic Investors, Inc., acted as placement agent in this transaction. The placement agent was paid a cash fee of $132,600, which represents 13% of the gross proceeds.

For all of the transactions described above in D and E above, we agreed to file a registration statement to register all of the shares of common stock
issued, and the shares of common stock underlying the convertible notes and the warrants for resale by the holders, which registration statement became effective on August 10, 2005, with a post-effective amendment to the registration statement
which became effective on May 17, 2006.

F. On June 22, 2006, we entered into a series of simultaneous transactions with two investors, whereby
we borrowed an aggregate principal amount of $1,200,000 due June 22, 2008 and issued to the investors subordinated convertible 8% notes (secured by the assets of our company and subsidiary) and we issued the following series of warrants:



| | (i) | Five-year Class C warrants to purchase an aggregate of 1,200,000 shares exercisable at $1.00 per share;
| | --- | -------------------------------------------------------------------------------------------------------



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| | (ii) | Five-year Class D warrants to purchase an aggregate of 1,200,000 shares exercisable at $1.50 per share;
| | ---- | -------------------------------------------------------------------------------------------------------



| | (iii) | Five-year Class E warrants to purchase an aggregate of 600,000 shares exercisable at $2.00 per share; and
| | ----- | ---------------------------------------------------------------------------------------------------------

(iv) Five-year Class F warrants to purchase an aggregate of 1,066,666 shares exercisable at $.75 per share. The class F warrants are redeemable at a
nominal price under certain circumstances if the volume weighted average price for our common stock is at least $1.10 for ten consecutive trading days. The Class C warrants, Class D warrants, Class E warrants and Class F warrants contain
anti-dilution protection in the case of stock splits, dividends, combinations, reclassifications and the like and in the event that we sell common stock below the applicable exercise price. The warrants also contain immediate registration rights and
cashless exercise provisions in the event that there is no current registration statement commencing one year after issuance. An additional 666,667 Class F warrants were issued in connection with this transaction to the holders of our December 2004
debt to consent to this financing transaction and to agree to modify certain of their existing rights.

The notes issued on June 22,
2006 bear an interest rate of 8% per annum, payable quarterly in arrears, in stock or cash at our discretion, in registered Common Stock, at 90% of the average of the 10 days volume weighted average price immediately prior to the interest
payment date as long as the stock price is not below the conversion price of $.75 per share.

Each holder of the June 2006 debt has the
right, at its option, to convert the principal amount of the note, together with all accrued interest thereon in accordance with the provisions of and upon satisfaction of the conditions contained in the note, into fully paid and non-assessable
shares of our common stock at a conversion price of $.75 per share, subject to adjustment for dividends, stock splits, combinations, reclassifications and the like or in the event we issue shares of common stock for consideration of less than the
conversion price. In the event of default, the June 2006 debt can be called by the note holders at 115% of the outstanding principal amount (200% in the case of a change in control) plus accrued and unpaid interest.

Source Capital Group, Inc. acted as a finder in connection with this transaction. Source Capital was paid 25,000 shares of restricted common stock, a
cash fee of $72,000, which represents 6% of the gross proceeds and a 6% fee of each class of warrants issued in connection with the June 2006 debt financing, which warrants were issued by us and not deducted from those issued to any other party.

Our recent debt and equity financings are described above. We have in the past and currently relied principally on external financing to
maintain our company as a going concern. All of our assets have been used as collateral to secure our indebtedness. Among the many risks of our business and an investment in our company, is the possibility that we will not be able to meet our
obligations as they come due and remain as a going concern. While management believes that the net proceeds from our recently completed June 2006 debt financing, plus cash flow from operations will be sufficient to meet our obligations over the next
12 to 15 months and to remain a going concern, we can provide no assurances in this regard.

We have agreed to file a registration
statement to register for resale by the holders of the June 2006 debt, the number of shares of common stock issuable to them upon conversion of their notes and exercise of their warrants, as well as to register for resale by Source Capital and the
holders of the December 2004 debt, the shares of common stock issuable upon exercise of their newly granted warrants.

Event of Default

An event of default occurred on March 20, 2005 with respect to the holders of the December 2004 debt
and class A and class B warrants because a registered statement for the resale of the shares underlying the notes and warrants was not declared effective by the SEC by that date, as required by our agreement with the note holders. The SEC declared
our Registration Statement on Form SB-2 effective on August 10, 2005. As a result, our convertible promissory notes are no longer in default. However, as a result of the default, we recorded $38,943 of additional default interest and $11,127 in
default penalties.

Modification and Waiver Agreement

Pursuant to a Modification and Waiver Agreement dated as of December 6, 2005, the December 2004 note holders and us agreed that they would waive
exercising their remedies and rights available to them for events of default only as they relate to the late filing and effectiveness of the Registration Statement, including the right to receive liquidated damages and the



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non-payment of principal amounts of the notes and interest due through December 31, 2005, including the right to receive the default interest rate of
15% in lieu of 8% per annum. These waivers by the December 2004 note holders of their rights and remedies saved us approximately $50,069 in liquidated damages and default interest. In consideration of these waivers, we agreed to issue 314,280
restricted shares of our common stock in exchange for the conversion of principal amounting to $34,080 and accrued interest totaling $123,064 through December 31, 2005 at a conversion rate of $.50 per share. By virtue of the Modification and
Waiver Agreement, the December 2004 note holders have also agreed that an event of default has not occurred and the effect of this is to reinstate the non-current portion of the notes payable to long-term debt due October 31, 2007. The
aforementioned 314,288 shares were granted piggy-back registration rights and are available for sale as restricted securities in accordance with the requirements of Rule 144 of the Securities Act of 1933, as amended. See Notes to Financial
Statements.

Recently Issued Accounting Pronouncements

During the past two years, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, SFAS No. 153, SFAS No. 154 and
SFAS No. 123R as described in Recent Accounting Pronouncements contained in Note 1 of the Notes to Financial Statements contained in our financial statements. Reference is made to these recent accounting pronouncements as if they
are set forth herein in their entirety. These pronouncements and any anticipated effect on us are described in Note 1 contained therein.

Item 3. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Companys Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is
accumulated and communicated to the Companys management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of
disclosure controls and procedures in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company carried out an evaluation,
under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and the Companys Chief Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures. Based on the foregoing, the Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures were effective at the reasonable
assurance level at the end of our most recent quarter. There have been no changes in the Companys disclosure controls and procedures or in other factors that could affect the disclosure controls subsequent to the date the Company completed its
evaluation. Therefore, no corrective actions were taken.



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PART II  OTHER INFORMATION

Item 1. Legal Proceedings.

On May 25, 2004, we entered into an agreement with Prisma Capital Markets,
LLC, appointing Prisma as an exclusive distributor of our products in Kuwait. Prisma also agreed to arrange for, and pay the costs and expenses related to, the testing and demonstration of our products in Kuwait, in exchange for 300,000 shares of
restricted common stock of our company. We also granted Prisma warrants entitling Prisma to purchase up to 4,401,720 shares of Common Stock of our company at an exercise price of $2.062 per share, which would be exercisable only upon Prismas
meeting various sales goals totaling $30,000,000 in sales. In July 2004, we notified Prisma that the agreement was cancelled due to Prismas failure to arrange for the testing of our products in Kuwait, and demanded the return of the
certificates representing the common stock and the warrants. In February 2005, we filed a lawsuit against Prisma in the Supreme Court of the State of New York, County of New York, for breach of contract, and demanded the return of the securities
issued to Prisma and $100,000 in actual damages. In February 2006, we were granted a motion for summary judgment in our favor and are waiting for a court order in order to cancel the 300,000 shares from our books and records and in July 2006, the
court order was issued and the 300,000 shares were canceled from our books and records.

Verde Litigation

On September 12, 2005, we were served with a lawsuit that was filed in the Second Judicial District Court in Washoe County, Nevada as case number
CV-05-02072. The plaintiff in the lawsuit was Verde Partners Family Limited Partnership (Verde). The lawsuit makes a variety of claims and contends that the Company and certain officers of the Company misappropriated certain technology,
including two patents, and seeks damage in excess of $10,000. The action was removed to federal court in Nevada. We filed a motion to have the case dismissed as to BlastGard International, Inc., and all other defendants, for lack of
personal jurisdiction. There was also a motion for a more definite statement in that three of the claims by Verde are conclusory, vague and ambiguous.

On July 14, 2006, the United States District Court rendered its decision in this case. It was ordered and adjudged that the motion to dismiss the individual defendants and the motion to dismiss the BlastGard
defendants was granted. Defendants motion for a more definite statement is moot. The Court entered judgment on July 17, 2006 in favor of all Defendants and against the Plaintiff. The Plaintiff has 30 days from the date of the judgment
(July 17) to file a notice of appeal.

On July 19, 2006, we filed a lawsuit in the Circuit Court of the Sixth Judicial Circuit in
Pinellas County, Florida. The Defendants in the lawsuit are Sam Gettle, Guy Gettle and Verde Partners Family Limited Partnership (Verde). The lawsuit contends that the Defendants have committed defamatory acts against BlastGard
International and its products. The lawsuit also asks for a declaration that BlastGard International is not liable for the acts complained of in the Nevada action. On BlastGards affirmative claims for defamation, the Florida action seeks
injunctive relief and damages in excess of $15,000, exclusive of attorneys fees and costs.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On June 22, 2006, we entered
into a series of simultaneous transactions with two investors, whereby we borrowed an aggregate principal amount of $1,200,000 due June 22, 2008 and issued to the investors subordinated convertible 8% notes (secured by the assets of our company
and subsidiary) and we issued the following series of warrants:



| | (i) | Five-year Class C warrants to purchase an aggregate of 1,200,000 shares exercisable at $1.00 per share;
| | --- | -------------------------------------------------------------------------------------------------------



| | (ii) | Five-year Class D warrants to purchase an aggregate of 1,200,000 shares exercisable at $1.50 per share;
| | ---- | -------------------------------------------------------------------------------------------------------



| | (iii) | Five-year Class E warrants to purchase an aggregate of 600,000 shares exercisable at $2.00 per share; and
| | ----- | ---------------------------------------------------------------------------------------------------------



| | (iv) | Five-year Class F warrants to purchase an aggregate of 1,066,666 shares exercisable at $.75 per share. The class F warrants are redeemable at a nominal price under
certain circumstances if the volume weighted average price for our common stock is at least $1.10 for ten consecutive trading days. The Class C warrants, Class D warrants, Class E warrants and Class F warrants contain anti-dilution protection in the
case of stock splits, dividends, combinations, reclassifications and the like and in the event that we sell common stock below the
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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applicable exercise price. The warrants also contain immediate registration rights and cashless exercise provisions in the event that there is no current
registration statement commencing one year after issuance. An additional 666,667 Class F warrants were issued in connection with this transaction to the holders of our December 2004 debt to consent to this financing transaction and to agree to
modify certain of their existing rights.

The notes issued on June 22, 2006 bear an interest rate of 8% per annum, payable
quarterly in arrears, in stock or cash at our discretion, in registered Common Stock, at 90% of the average of the 10 days volume weighted average price immediately prior to the interest payment date as long as the stock price is not below the
conversion price of $.75 per share.

Each holder of the June 2006 debt has the right, at its option, to convert the principal amount of the
note, together with all accrued interest thereon in accordance with the provisions of and upon satisfaction of the conditions contained in the note, into fully paid and non-assessable shares of our common stock at a conversion price of $.75 per
share, subject to adjustment for dividends, stock splits, combinations, reclassifications and the like or in the event we issue shares of common stock for consideration of less than the conversion price. In the event of default, the June 2006 debt
can be called by the note holders at 115% of the outstanding principal amount (200% in the case of a change in control) plus accrued and unpaid interest.

Source Capital Group, Inc. acted as a finder in connection with this transaction. Source Capital was paid 25,000 shares of restricted common stock, a cash fee of $72,000, which represents 6% of the gross proceeds and
a 6% fee of each class of warrants issued in connection with the June 2006 debt financing, which warrants were issued by us and not deducted from those issued to any other party.

In connection with the completion of the June 2006 financing, we issued to members of the law firm of Morse & Morse, PLLC, five-year warrants to
purchase an aggregate of 80,000 shares exercisable at $1.00 per share, subject to adjustment for stock splits, stock dividends, combinations, reclassifications and the like.

Exemption from registration is claimed from the sale of the foregoing securities pursuant to Rule 506 and/or section 4(2) of the Securities Act of 1933,
as amended.

Item 3. Defaults Upon Senior Securities.None

Item 4. Submission of Matters to a Vote of Security Holders.None.

Item 5. Other Information.

On July 1, 2006, Howard Safir resigned as a member on the board of
directors due to demands of his numerous business and personal commitments and is no longer able to serve on our Board.

On July 17,
2006, our blast-mitigating technology BlastWrap and our BlastGard Mitigating Trash Receptacles (MTR) were designated as Qualified Anti-Terrorism Technologies (QATT) and placed on the Approved Products List for Homeland Security. The
Company was issued the Designation and Certification for its technology by the Department of Homeland Security (DHS) under the Support Anti-Terrorism by Fostering Effective Technologies Act of 2002 (the SAFETY ACT). The
SAFETY ACT Designation and Certification are intended to support effective technologies aimed at preventing, detecting, identifying, or deterring acts of terrorism, or limiting the harm that such acts might otherwise cause.
The criteria technologies must meet to be awarded Designation and Certification status include: the availability of the technology for immediate deployment in public and private settings; the magnitude of risk exposure to the
public if the technology is not deployed; the evaluation of scientific studies being feasibly conducted to assess the technologys capability to substantially reduce risks of harm; and the technologys effectiveness in facilitating the
defense against acts of terrorism. A press release was issued on July 24, 2006.

On August 2, 2006, Arnold Burns was appointed to
fill a vacancy on the board of directors. Since January 2004, Mr. Arnold Burns has been Chairman of the QuanStar Group, LLC. A graduate with distinction from Union College and Cornell Law School, Mr. Burns volunteered for service as an
enlisted man in the United States Army. After less than a year he became



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a commissioned officer in the Judge Advocate Generals Corps. Mr. Burns was separated from the Service as a Captain. After serving his country,
Mr. Burns began the practice of law with the New York firm Dewey Ballantine. Mr. Burns left to found and to build his own law firm, which bore his name and which grew to become a diversified full service firm of over 100 lawyers. The firm
specialized in finding growing companies and assisting them in their growth by providing a wide variety of legal and corporate counseling services.

In 1985 Arnold Burns was appointed by President Ronald Reagan Associate and shortly thereafter Deputy Attorney General of the United States. As Chief Operating Officer of the Department of Justice he was responsible for managing thousands
of professional and administrative employees and a multimillion dollar budget. Upon leaving the government he joined the firm of Proskauer Rose, which he, as a senior Partner, helped build to one of the most prominent law firms of today. After being
a practicing lawyer for over 45 years, Arnie left the law firm January 1999 to begin a new career as a Managing Director of Arnhold and S. Bleichroeder, Inc., a 200-year-old international investment banking firm offering corporate finance
activities, capital market services and institutional asset management. In January, 2004, Mr. Burns and Mark Sirangelo co-founded The QuanStar Group.

Mr. Burns has been deeply committed to philanthropic activities and, among many other posts, has served as Chairman of Union College, Chairman of Freedoms Foundation at Valley Forge, Chairman of Boys &
Girls Clubs of America, Chairman of the International Centre for Missing & Exploited Children, and Chairman of the Council for Unity.

Mr. Burns was granted a five-year Non-Statutory Stock Option to purchase 100,000 shares of the Corporations Common Stock at an exercise price of $1.00 per share. The Option granted contains cashless exercise provisions and shall
vest 50% on the date of grant and the remaining 50% shall vest on August 3, 2007, it being understood that the Options that shall vest on August 3, 2007 shall terminate in the event that the holder is no longer serving as a director of our
Company at anytime between the date of grant and August 3, 2007, subject to our Boards right to accelerate the vesting date of the Option.

Item 6. Exhibits



|              |  |                                                                                                                                                                                                                                                                            
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                
|2.4           |  | Agreement and Plan of Reorganization dated January 31, 2004, by and among the Registrant, BlastGard Technologies, Inc., (BTI) and the shareholders of BTI. (Incorporated by
reference to Exhibit 2.4 to the Companys current report on Form 8-K dated January 31, 2004.)
|              | 
|3.7           |  | The Companys Articles of Incorporation, as amended and currently in effect. (Incorporated by reference to Exhibit 3.7 to the Companys quarterly report on Form 10-QSB dated March
31, 2004).                                                                             
|              | 
|3.8           |  | The Companys Bylaws, as amended and currently in effect. (Incorporated by reference to Exhibit 3.8 to the Companys quarterly report on Form 10-QSB dated March 31,
2004).                                                                                                
|              | 
|4.01          |  | Subscription Agreement between the Company and the named investors dated December 2, 2004. (Incorporated by reference to exhibit 4.01 of the current report on Form 8-K filed December 3,
2004.)                                                                           
|              | 
|4.02          |  | Form of Secured Convertible Note issued to the named investors. (Incorporated by reference to exhibit 4.02 of the current report on Form 8-K filed December 3, 2004.)                                                                                                      
|              | 
|4.03          |  | Form of Class A Common Stock Purchase Warrant. (Incorporated by reference to exhibit 4.03 of the current report on Form 8-K filed December 3, 2004.)                                                                                                                       
|              | 
|4.04          |  | Form of Class B Common Stock Purchase Warrant. (Incorporated by reference to exhibit 4.04 of the current report on Form 8-K filed December 3, 2004.)                                                                                                                       
|              | 
|4.05          |  | Form of Common Stock Purchase Warrant issued to Andrew Garrett, Inc. (Placement Agent). (Incorporated by reference to exhibit 4.05 of the current report on Form 8-K filed December 3,
2004.)                                                                              



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|      |  |                                                                                                                                                                                                                                                                                              
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.06  |  | Security and Pledge Agreement between the Company and Barbara Mittman as collateral agent for the named investors dated December 2, 2004. (Incorporated by reference to exhibit 4.06 of
the current report on Form 8-K filed December 3, 2004.)                                              
|      | 
|4.07  |  | Security and Pledge Agreement between BlastGard Technologies, Inc. and Barbara Mittman as collateral agent for named investors dated December 2, 2004. (Incorporated by reference to exhibit
4.07 of the current report on Form 8-K filed December 3, 2004.)                                 
|      | 
|4.08  |  | Collateral Agent Agreement among the Company, Barbara Mittman (the collateral agent) and the named investors dated December 2, 2004. (Incorporated by reference to exhibit 4.08 of the current
report on Form 8-K filed December 3, 2004.)                                                   
|      | 
|4.09  |  | Guaranty Agreement between BlastGard Technologies, Inc. and Barbara Mittman as collateral agent for named investors dated December 2, 2004. (Incorporated by reference to exhibit 4.09 of the
current report on Form 8-K filed December 3, 2004.)                                            
|      | 
|99.1  |  | 2005 Employee Benefit and Consulting Services Compensation Plan (Incorporated by reference to Exhibit 99.1 to the Companys annual report on Form 10-KSB dated December 31,
2005).                                                                                                           
|      | 
|99.2  |  | Form of Securities Purchase Agreement, dated June 22, 2006. (Incorporated by reference to exhibit 99.2 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                               
|      | 
|99.3  |  | Form of Registration Rights Agreement, dated June 22, 2006. (Incorporated by reference to exhibit 99.3 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                               
|      | 
|99.4  |  | Form of Security Agreement, dated June 22, 2006. (Incorporated by reference to exhibit 99.4 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                          
|      | 
|99.5  |  | Form of Subsidiary Guarantee, dated June 22, 2006. (Incorporated by reference to exhibit 99.5 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                        
|      | 
|99.7  |  | Form of Amended and Restated Second Modification and Waiver Agreement between BlastGard International, Inc. and the December 2004 Convertible Debenture Note holders, dated June 22, 2006.
(Incorporated by reference to exhibit 99.7 of the current report on Form 8-K filed June 23, 2006.)
|      | 
|99.8  |  | Form of Debenture, dated June 22, 2006. (Incorporated by reference to exhibit 99.8 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                                   
|      | 
|99.9  |  | Form of Warrant (C, D, E & F), dated June 22, 2006. (Incorporated by reference to exhibit 99.9 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                       
|      | 
|99.10 |  | Form of SPA Disclosure Schedule, dated June 22, 2006. (Incorporated by reference to exhibit 99.10 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                    
|      | 
|99.11 |  | Form of Security Agreement Disclosure Schedule, dated June 22, 2006. (Incorporated by reference to exhibit 99.11 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                     
|      | 
|99.12 |  | Form of Subsidiary Guarantee Disclosure Schedule, dated June 22, 2006. (Incorporated by reference to exhibit 99.12 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                   
|      | 
|99.13 |  | Form of Registration Rights Agreement Disclosure Schedule, dated June 22, 2006. (Incorporated by reference to exhibit 99.13 of the current report on Form 8-K filed June 23,
2006.)                                                                                                          



24



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|      |  |                                                                                                                                                                                                                                              
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|99.14 |  | Form of Modification and Warrant Agreement between BlastGard International, Inc. and Andrew Garrett warrant holders, dated June 22, 2006. (Incorporated by reference to exhibit 99.14 of
the current report on Form 8-K filed June 23, 2006.)
|      | 
|99.15 |  | Form of Modification and Warrant Agreement between BlastGard International, Inc. and Argyll Equities, LLC, dated June 22, 2006. (Incorporated by reference to exhibit 99.15 of the current
report on Form 8-K filed June 23, 2006.)          
|      | 
|99.16 |  | Form of First Modification and Waiver Agreement between BlastGard International, Inc. and the June 2006 Convertible Debenture Note holders, dated as of July 20, 2006. (Filed
Herewith)                                                      
|      | 
|99.17 |  | Form of Second Modification and Waiver Agreement between BlastGard International, Inc. and Argyll Equities, dated as of July 20, 2006. (Filed Herewith)                                                                                      
|      | 
|99.18 |  | Form of Second Modification and Waiver Agreement between BlastGard International, Inc. and Andrew Garrett warrant holders, dated as of July 20, 2006. (Filed Herewith)                                                                       
|      | 
|99.19 |  | Form of Third Modification and Waiver Agreement between BlastGard International, Inc. and the December 2004 Convertible Debenture Note holders, dated as of July 20, 2006. (Filed
Herewith)                                                  
|      | 
|99.20 |  | Press release dated August 10, 2006. (Filed herewith.)                                                                                                                                                                                       
|      | 
|10.9  |  | IDMedical.com, Inc. 2002 Stock Plan (Incorporated by reference to Exhibit 10.9 of the Companys Registration Statement on Form S-8, SEC File No. 333-84002, filed March 8,
2002).                                                            
|      | 
|10.12 |  | Amendment dated March 24, 2004, to the IDMedical.com, Inc. 2002 Stock Plan. (Incorporated by reference to Exhibit 10.12 of the Companys Registration Statement on Form S-8, SEC File No.
333-113994 filed March 29, 2004.)                  
|      | 
|10.13 |  | Employment Agreement with James F. Gordon dated January 31, 2004. (Incorporated by reference to Exhibit 10.13 to the Companys quarterly report on Form 10-QSB dated March 31,
2004).                                                        
|      | 
|10.14 |  | Employment Agreement with Michael J. Gordon dated January 31, 2004. (Incorporated by reference to Exhibit 10.14 to the Companys quarterly report on Form 10-QSB dated March 31,
2004).                                                      
|      | 
|10.15 |  | Employment Agreement with John L. Waddell, Jr. dated January 31, 2004. (Incorporated by reference to Exhibit 10.15 to the Companys quarterly report on Form 10-QSB dated March 31,
2004).                                                   
|      | 
|10.16 |  | Employment Agreement with Kevin J. Sharpe dated January 31, 2004. (Incorporated by reference to Exhibit 10.16 to the Companys registration statement on Form SB-2, pre-effective
amendment no. 3 (File No. 333-121455).)                    
|      | 
|10.17 |  | Alliance Agreement with Centerpoint Manufacturing, Inc. dated October 25, 2004. (Incorporated by reference to Exhibit 10.17 to the Companys quarterly report on Form 10-QSB dated March
31, 2006).                                          
|      | 
|10.18 |  | Advisory Agreement with The November Group, Ltd., dated June 29, 2005. (Incorporated by reference to Exhibit 10.18 of the current report on Form 8-K filed July 6, 2005.)                                                                    
|      | 
|10.19 |  | Modification and Waiver Agreement (Incorporated by reference to Exhibit 10.1 in our Form 8-K filed December 8, 2006.)                                                                                                                        
|      | 
|21.1  |  | List of subsidiaries (Incorporated by reference to Exhibit 21.1 to the Companys annual report on Form 10-KSB dated December 31, 2005).                                                                                                      



25



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##### Table of Contents

|     |  |                                                                                          
|---- |  | -----------------------------------------------------------------------------------------
|31.1 |  | Section 302 Certification by the Corporations Chief Executive Officer. (Filed herewith).
|     | 
|31.2 |  | Section 302 Certification by the Corporations Chief Financial Officer. (Filed herewith).
|     | 
|32.1 |  | Section 906 Certification by the Corporations Chief Executive Officer. (Filed herewith).
|     | 
|32.2 |  | Section 906 Certification by the Corporations Chief Financial Officer. (Filed herewith).



26



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.



|                       |  |                               |  |                                               
|---------------------- |  | ----------------------------- |  | ----------------------------------------------
|                       |  | BLASTGARD INTERNATIONAL, INC.
|                       |  |                              
|Dated: August 10, 2006 |  | By:                           |  | /s/ James F. Gordon                           
|                       |  |                               |  | James F. Gordon, Chief Executive Officer      
|                       |  |                              
|Dated: August 10, 2006 |  | By:                           |  | /s/ Michael J. Gordon                         
|                       |  |                               |  | Michael J. Gordon, Chief Financial Officer and
|                       |  |                               |  | Principal Accounting Officer                  



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##### Table of Contents

EXHIBIT INDEX



|              |  |                                                                                                                                                                                                                                                                            
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                
|2.4           |  | Agreement and Plan of Reorganization dated January 31, 2004, by and among the Registrant, BlastGard Technologies, Inc., (BTI) and the shareholders of BTI. (Incorporated by
reference to Exhibit 2.4 to the Companys current report on Form 8-K dated January 31, 2004.)
|              | 
|3.7           |  | The Companys Articles of Incorporation, as amended and currently in effect. (Incorporated by reference to Exhibit 3.7 to the Companys quarterly report on Form 10-QSB dated March
31, 2004).                                                                             
|              | 
|3.8           |  | The Companys Bylaws, as amended and currently in effect. (Incorporated by reference to Exhibit 3.8 to the Companys quarterly report on Form 10-QSB dated March 31,
2004).                                                                                                
|              | 
|4.01          |  | Subscription Agreement between the Company and the named investors dated December 2, 2004. (Incorporated by reference to exhibit 4.01 of the current report on Form 8-K filed December 3,
2004.)                                                                           
|              | 
|4.02          |  | Form of Secured Convertible Note issued to the named investors. (Incorporated by reference to exhibit 4.02 of the current report on Form 8-K filed December 3, 2004.)                                                                                                      
|              | 
|4.03          |  | Form of Class A Common Stock Purchase Warrant. (Incorporated by reference to exhibit 4.03 of the current report on Form 8-K filed December 3, 2004.)                                                                                                                       
|              | 
|4.04          |  | Form of Class B Common Stock Purchase Warrant. (Incorporated by reference to exhibit 4.04 of the current report on Form 8-K filed December 3, 2004.)                                                                                                                       
|              | 
|4.05          |  | Form of Common Stock Purchase Warrant issued to Andrew Garrett, Inc. (Placement Agent). (Incorporated by reference to exhibit 4.05 of the current report on Form 8-K filed December 3,
2004.)                                                                              
|              | 
|4.06          |  | Security and Pledge Agreement between the Company and Barbara Mittman as collateral agent for the named investors dated December 2, 2004. (Incorporated by reference to exhibit 4.06 of the
current report on Form 8-K filed December 3, 2004.)                            
|              | 
|4.07          |  | Security and Pledge Agreement between BlastGard Technologies, Inc. and Barbara Mittman as collateral agent for named investors dated December 2, 2004. (Incorporated by reference to exhibit
4.07 of the current report on Form 8-K filed December 3, 2004.)               
|              | 
|4.08          |  | Collateral Agent Agreement among the Company, Barbara Mittman (the collateral agent) and the named investors dated December 2, 2004. (Incorporated by reference to exhibit 4.08 of the current
report on Form 8-K filed December 3, 2004.)                                 
|              | 
|4.09          |  | Guaranty Agreement between BlastGard Technologies, Inc. and Barbara Mittman as collateral agent for named investors dated December 2, 2004. (Incorporated by reference to exhibit 4.09 of the
current report on Form 8-K filed December 3, 2004.)                          
|              | 
|99.1          |  | 2005 Employee Benefit and Consulting Services Compensation Plan (Incorporated by reference to Exhibit 99.1 to the Companys annual report on Form 10-KSB dated December 31,
2005).                                                                                         
|              | 
|99.2          |  | Form of Securities Purchase Agreement, dated June 22, 2006. (Incorporated by reference to exhibit 99.2 of the current report on Form 8-K filed June 23, 2006.)                                                                                                             
|              | 
|99.3          |  | Form of Registration Rights Agreement, dated June 22, 2006. (Incorporated by reference to exhibit 99.3 of the current report on Form 8-K filed June 23, 2006.)                                                                                                             



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                                              
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|99.4  |  | Form of Security Agreement, dated June 22, 2006. (Incorporated by reference to exhibit 99.4 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                          
|      | 
|99.5  |  | Form of Subsidiary Guarantee, dated June 22, 2006. (Incorporated by reference to exhibit 99.5 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                        
|      | 
|99.7  |  | Form of Amended and Restated Second Modification and Waiver Agreement between BlastGard International, Inc. and the December 2004 Convertible Debenture Note holders, dated June 22, 2006.
(Incorporated by reference to exhibit 99.7 of the current report on Form 8-K filed June 23, 2006.)
|      | 
|99.8  |  | Form of Debenture, dated June 22, 2006. (Incorporated by reference to exhibit 99.8 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                                   
|      | 
|99.9  |  | Form of Warrant (C, D, E & F), dated June 22, 2006. (Incorporated by reference to exhibit 99.9 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                       
|      | 
|99.10 |  | Form of SPA Disclosure Schedule, dated June 22, 2006. (Incorporated by reference to exhibit 99.10 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                                    
|      | 
|99.11 |  | Form of Security Agreement Disclosure Schedule, dated June 22, 2006. (Incorporated by reference to exhibit 99.11 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                     
|      | 
|99.12 |  | Form of Subsidiary Guarantee Disclosure Schedule, dated June 22, 2006. (Incorporated by reference to exhibit 99.12 of the current report on Form 8-K filed June 23, 2006.)                                                                                                                   
|      | 
|99.13 |  | Form of Registration Rights Agreement Disclosure Schedule, dated June 22, 2006. (Incorporated by reference to exhibit 99.13 of the current report on Form 8-K filed June 23,
2006.)                                                                                                          
|      | 
|99.14 |  | Form of Modification and Warrant Agreement between BlastGard International, Inc. and Andrew Garrett warrant holders, dated June 22, 2006. (Incorporated by reference to exhibit 99.14 of the
current report on Form 8-K filed June 23, 2006.)                                                
|      | 
|99.15 |  | Form of Modification and Warrant Agreement between BlastGard International, Inc. and Argyll Equities, LLC, dated June 22, 2006. (Incorporated by reference to exhibit 99.15 of the current
report on Form 8-K filed June 23, 2006.)                                                          
|      | 
|99.16 |  | Form of First Modification and Waiver Agreement between BlastGard International, Inc. and the June 2006 Convertible Debenture Note holders, dated as of July 20, 2006. (Filed
Herewith)                                                                                                      
|      | 
|99.17 |  | Form of Second Modification and Waiver Agreement between BlastGard International, Inc. and Argyll Equities, dated as of July 20, 2006. (Filed Herewith)                                                                                                                                      
|      | 
|99.18 |  | Form of Second Modification and Waiver Agreement between BlastGard International, Inc. and Andrew Garrett warrant holders, dated as of July 20, 2006. (Filed Herewith)                                                                                                                       
|      | 
|99.19 |  | Form of Third Modification and Waiver Agreement between BlastGard International, Inc. and the December 2004 Convertible Debenture Note holders, dated as of July 20, 2006. (Filed
Herewith)                                                                                                  
|      | 
|99.20 |  | Press release dated August 10, 2006. (Filed herewith.)                                                                                                                                                                                                                                       
|      | 
|10.9  |  | IDMedical.com, Inc. 2002 Stock Plan (Incorporated by reference to Exhibit 10.9 of the Companys Registration Statement on Form S-8, SEC File No. 333-84002, filed March 8,
2002).                                                                                                            



29



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##### Table of Contents

|      |  |                                                                                                                                                                                                                            
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.12 |  | Amendment dated March 24, 2004, to the IDMedical.com, Inc. 2002 Stock Plan. (Incorporated by reference to Exhibit 10.12 of the Companys Registration Statement on Form S-8, SEC File
No. 333-113994 filed March 29, 2004.)
|      | 
|10.13 |  | Employment Agreement with James F. Gordon dated January 31, 2004. (Incorporated by reference to Exhibit 10.13 to the Companys quarterly report on Form 10-QSB dated March 31,
2004).                                      
|      | 
|10.14 |  | Employment Agreement with Michael J. Gordon dated January 31, 2004. (Incorporated by reference to Exhibit 10.14 to the Companys quarterly report on Form 10-QSB dated March 31,
2004).                                    
|      | 
|10.15 |  | Employment Agreement with John L. Waddell, Jr. dated January 31, 2004. (Incorporated by reference to Exhibit 10.15 to the Companys quarterly report on Form 10-QSB dated March 31,
2004).                                 
|      | 
|10.16 |  | Employment Agreement with Kevin J. Sharpe dated January 31, 2004. (Incorporated by reference to Exhibit 10.16 to the Companys registration statement on Form SB-2, pre-effective
amendment no. 3 (File No. 333-121455).)  
|      | 
|10.17 |  | Alliance Agreement with Centerpoint Manufacturing, Inc. dated October 25, 2004. (Incorporated by reference to Exhibit 10.17 to the Companys quarterly report on Form 10-QSB dated March
31, 2006).                        
|      | 
|10.18 |  | Advisory Agreement with The November Group, Ltd., dated June 29, 2005. (Incorporated by reference to Exhibit 10.18 of the current report on Form 8-K filed July 6, 2005.)                                                  
|      | 
|10.19 |  | Modification and Waiver Agreement (Incorporated by reference to Exhibit 10.1 in our Form 8-K filed December 8, 2006.)                                                                                                      
|      | 
|21.1  |  | List of subsidiaries (Incorporated by reference to Exhibit 21.1 to the Companys annual report on Form 10-KSB dated December 31, 2005).                                                                                    
|      | 
|31.1  |  | Section 302 Certification by the Corporations Chief Executive Officer. (Filed herewith).                                                                                                                                  
|      | 
|31.2  |  | Section 302 Certification by the Corporations Chief Financial Officer. (Filed herewith).                                                                                                                                  
|      | 
|32.1  |  | Section 906 Certification by the Corporations Chief Executive Officer. (Filed herewith).                                                                                                                                  
|      | 
|32.2  |  | Section 906 Certification by the Corporations Chief Financial Officer. (Filed herewith).                                                                                                                                  



30