UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 ———————
 FORM
10-Q
 ———————
 (March
One)
  þ
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGEACT
      OF 1934For
      the quarterly period ended: March 31,
      2010ORo
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGEACT
      OF 1934For
      the transition period from: _____________ to
  _____________
 
 Commission
file number: 333-47924
 ———————
  BLASTGARD
      INTERNATIONAL, INC.(Exact
      name of small business issuer as specified in it
      charter)
  Colorado
              
              84-1506325(State
      or other jurisdiction of incorporation or organization)
              
              (IRS
      Employer Identification No.)
  2451
McMullen Booth Road, Suite 242, Clearwater, Florida 33759-1362
 (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)
 
 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 þ  No  ̈
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate website, if any, every Interactive Date File required to be
submitted pursuant to Rule 405 of Regulation S-T during the 12
preceding months (or such shorter period that the registrant was required to
submit and post such file). Yes  ̈   No
 ̈
  Indicate
by checkmark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of "large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
  Large
      Accelerated Filer
              o
              Accelerated
      Filer
              oAccelerated
      Filer
              o
              Smaller
      Reporting Company
              þ
  APPLICABLE
ONLY TO CORPORATE ISSUERS
  Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes  ̈No þ
  State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date: As of May 10, 2010 the issuer had
50,586,142 shares of $.001 par value common stock outstanding.
  Transitional
Small Business Disclosure Format (Check one):  Yes  ̈   No
þ
  
 
 
 BLASTGARD
INTERNATIONAL, INC.
  INDEX
   PAGEPART
      1 – FINANCIAL INFORMATIONItem
    1.
              Financial
      Statements
              
              
              1Condensed balance
      sheets, March 31, 2010 (unaudited) and December 31,
      2009
              
              
              1Condensed statements
      of operations, for the three months ended March 31, 2010  (unaudited) and 2009
              
              
              2Condensed statement
      of changes in stockholders’ equity for the year ended  December 31, 2009 and three months ended
      March 31, 2010 (unaudited)
              
              
              3Condensed statements
      of cash flows for the three months ended March 31, 2010  (unaudited) and 2009
              
              
              4Notes to condensed
      financial statements (unaudited)
              
              
              5Item
    2.
              Management’s Plan of
      Operation
              
              
              12Item
    3.
              Quantitative and
      Qualitative Disclosures About Market Risk
              
              
              19Item
    4.
              Controls and
      Procedures
              
              
              19PART
      I1 – OTHER INFORMATION
              
              
              2020Item
    1.
              Legal
      Proceedings.
              
              
              20Item
      1A.
              Risk
      Factors
              
              
              21Item
    2.
              Unregistered Sales
      of Equity Securities and Use of Proceeds.
              
              
              21Item
      3.
              Defaults upon Senior
      Securities.
              
              
              21Item
      4.
              Submission of
      Matters to a Vote of Security Holders.
              
              
              21Item
      5.
              Other
      Information.
              
              
              21Item 6.
              Exhibits
              
              
              21Signatures
              
              
              
              22
  
 
 PART
I – FINANCIAL INFORMATION
   ITEM
      1.
                FINANCIAL
      STATEMENTS
 BLASTGARD
INTERNATIONAL, INC.
 CONDENSED
BALANCE SHEET
  March
      31,
                2010
              
              
              December
      31,
                2009Assets
              
              (unaudited)Current
      assets:Cash
              
              $
              2,511
              
              
              $
              1,739Receivables:Trade,
      net
              
              
              9,558
              
              
              
              —Inventory
              
              
              66,984
              
              
              
              67,126Prepaid
      expenses
              
              
              915
              
              
              
              —Total
      current assets
              
              
              79,968
              
              
              
              68,865Property
      and equipment, net
              
              
              232
              
              
              
              320Other
      assets:Intangible
      assets, net
              
              
              25,794
              
              
              
              26,277Deferred
      costs
              
              
              198,386
              
              
              
              179,112Deposits
              
              
              300
              
              
              
              817$
              304,680
              
              
              $
              275,391Liabilities
      and Shareholders’ EquityCurrent
      liabilities:Current
      maturities on convertible notes payable, net ofunamortized
      discount of $0 and $0 respectively
              
              $
              634,292
              
              
              $
              634,292Line
      of credit
              
              
              94,492
              
              
              
              91,380Accounts
      payable
              
              
              190,341
              
              
              
              139,603Accrued
      payroll
              
              
              191,310
              
              
              
              111,956Short
      term portion of settlement payable
              
              
              56,250
              
              
              
              75,000Related
      party loans
              
              
              18,245
              
              
              
              26,544Total
      current liabilities
              
              
              1,184,930
              
              
              
              1,078,775Long
      term portion of settlement payable
              
              
              —
              
              
              
              —Total
      liabilities
              
              
              1,184,930
              
              
              
              1,078,775Shareholders’
      equityPreferred
      stock, $.001 par value; 1,000 shares authorized,
                -0-
      shares issued and outstanding
              
              
              —
              
              
              
              —Common
      stock, $.001 par value; 100,000,000 shares authorized,
                50,586,142
      and 50,086,142 shares issued and outstanding respectively
              
              
              50,586
              
              
              
              50,086Additional
      paid-in capital
              
              
              12,400,749
              
              
              
              12,351,249Retained
      deficit
              
              
              (13,331,585
              )
              
              
              (13,204,719
              )Total
      shareholder’s equity
              
              
              (880,250
              )
              
              
              (803,384
              )$
              304,680
              
              
              $
              275,391
  
 1
  BLASTGARD
INTERNATIONAL, INC.
 CONDENSED STATEMENTS OF
OPERATIONS
 (UNAUDITED)
  Three
      Months Ended
                March
      31,2010
              
              
              2009Revenues:Sales
              
              $
              25,555
              
              
              $
              12,091Cost
      of goods sold
              
              
              23,797
              
              
              
              6,703Gross
      profit
              
              
              1,758
              
              
              
              5,388Operating
      expenses:General
      and administrative
              
              
              121,732
              
              
              
              258,346Research
      and development
              
              
              —
              
              
              
              10,818Depreciation
      and amortization
              
              
              571
              
              
              
              518Total
      operating expenses
              
              
              122,303
              
              
              
              269,682Operating
      loss
              
              
              (120,545
              )
      )
              
              
              (264,294
              )Non-operating
      income/(expense):Royalty
      Expense
              
              
              (99
              )
              
              
              —Interest
      income
              
              
              —
              
              
              
              1Other
      income
              
              
              6,446
              
              
              
              1,200Rental
      income
              
              
              —
              
              
              
              —Bad
      debt expense
              
              
              —
              
              
              
              —Interest
      expense
              
              
              —
              
              
              
              —Amortized
      debt issue costs.
              
              
              —
              
              
              
              —Amortized
      debt discount
              
              
              —
              
              
              
              —
              )Other
              
              
              (12,668
              )
              
              
              (8,049
              )Loss
      before income taxes
              
              
              (126,866
              )
              
              
              (271,142
              )Income
      tax provision
              
              
              —
              
              
              
              —Net
      loss
              
              $
              (126,866
              )
              
              $
              (271,142
              )Basic
      and diluted loss per share
              
              $
              —
              
              
              $
              (0.01
              )Basic
      weighted average common shares
      outstanding
              
              
              50,363,920
              
              
              
              42,557,478Diluted
      weighted average common shares outstanding
              
              
              50,363,920
              
              
              
              42,557,478
 
 This
is OK, no dilution.
  See
accompanying notes to condensed financial statements
  2
  BLASTGARD
INTERNATIONAL, INC.
 STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY
 FOR
THE YEAR ENDED DECEMBER 31, 2009 AND THE THREE MONTHS ENDED MARCH 31,
2010
  AdditionalCommon
      Stock
              
              
              Common
      Stock
              
              
              Paid
      in
              
              
              RetainedDescription
              
              No.
      of Shares
              
              
              Par
      Value
              
              
              Capital
              
              
              Deficit
              
              
              TotalBalance
      12/31/08
              
              
              42,369,978
              
              
              
              42,370
              
              
              
              11,957,148
              
              
              
              (12,506,498
              )
              
              
              (506,980Sale
      of stock
              
              
              3,000,000
              
              
              
              3,000
              
              
              
              87,000
              
              
              
              —
              
              
              
              90,000Stock
      in lieu of salary
              
              
              1,500,000
              
              
              
              1,500
              
              
              
              148,500
              
              
              
              —
              
              
              
              150,000Conversion
      of debt
              
              
              3,116,134
              
              
              
              3,116
              
              
              
              90,369
              
              
              
              —
              
              
              
              93,485Stock
      for services
              
              
              100,000
              
              
              
              100
              
              
              
              3,900
              
              
              
              —
              
              
              
              4,000Discount
      on convertible
                debt
      assumed
              
              
              —
              
              
              
              —
              
              
              
              64,332
              
              
              
              —
              
              
              
              64,3322009
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (698,221
              )
              
              
              (698,221
              )Balance,
      12/31/09
              
              
              50,086,112
              
              
              
              50,086
              
              
              
              12,351,249
              
              
              
              (13,204,719
              )
              
              
              (803,384
              )Stock
      for services
              
              
              500,000
              
              
              
              500
              
              
              
              49,500
              
              
              
              —
              
              
              
              50,0001st
      Qtr loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (126,866
              )
              
              
              (126,866
              )Balance,
      3/31/10
              
              
              50,586,112
              
              
              $
              50,586
              
              
              $
              12,400,749
              
              
              $
              (13,331,585
              )
              
              $
              (880,250
              )
 
 See
accompanying notes to condensed financial statements
  3
  BLASTGARD
INTERNATIONAL, INC.
 CONDENSED STATEMENTS OF CASH
FLOWS
 (UNAUDITED)
  Three
      Months Ended
                March
      31,2010
              
              
              2009Cash
      flows from operating activities:Net
      loss
              
              $
              (126,866
              )
              
              $
              (271,142
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
              
              
              571
              
              
              
              518Stock-based
      compensation
              
              
              50,000
              
              
              
              56,250Changes
      in operating assets and liabilities:Accounts
      receivable
              
              
              (9,558
              )
              
              
              261,700Inventory
              
              
              142
              
              
              
              (2,365
              )Other
      operating assets
              
              
              (398
              )
              
              
              2,068Accounts
      payable and accruals
              
              
              111,342
              
              
              
              38,714
              )Indebtedness
      to a related party
              
              
              (8,299
              )
              
              
              6,766Net
      cash provided by (used) in operating activities
              
              
              16,934
              
              
              
              92,509
              )Cash
      flows from investing activities:Payments
      for deferred costs
              
              
              (19,274
              )
              
              
              (8,484
              )Net
      cash used in investing activities
              
              
              (19,274
              )
              
              
              (8,484
              )Cash
      flow from financing activities:Net
      payments on line of credit
              
              
              3,112
              
              
              
              (82,881Net
      cash used in financing activities
              
              
              3,112
              
              
              
              (82,881
              )Net
      change in cash
              
              
              772
              
              
              
              1,144
              )Cash,
      beginning of period
              
              
              1,739
              
              
              
              1,477Cash,
      end of period.
              
              $
              2,511
              
              
              $
              2,621Supplemental
      disclosure of cash flow information:Cash
      paid during the period for:Interest
              
              $
              2,171
              
              
              $
              8,049Income
      taxes
              
              $
              —
              
              
              $
              —
  
 4
  BLASTGARD
INTERNATIONAL, INC.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
  (1)           Basis
of Presentation
  The
Condensed Balance Sheet as of March 31, 2010, the Condensed Statement of
Changes in Stockholders’ Equity for the three months ended March 31, 2010
and the Condensed Statements of Operations for the three months ended
March 31, 2010 and 2009, and Cash Flows for the three months ended
March 31, 2010 and 2009 have been prepared by us without audit. In the
opinion of Management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly in all material respects our financial
position as of March 31, 2010 and results of operations for the three
months ended March 31, 2010 and 2009, and cash flows for the three months
ended March 31, 2010 and 2009. The results of operations and cash flows for
the three months ended March 31, 2010 are not necessarily indicative of the
results to be expected for the full year.
  This
report should be read in conjunction with our Form 10-K for our fiscal year
ended December 31, 2009.
  BlastGard
International, Inc. (the “Company”) was incorporated on September 26, 2003 as
BlastGard Technologies, Inc. (“BTI”) in the State of Florida, to design and
market proprietary blast mitigation materials. The Company created, designs,
develops and markets proprietary blast mitigation materials.  The
Company’s patent-pending BlastWrap® technology effectively mitigates blast
effects and suppresses post-blast fires.  The Company sub-contracts
the manufacturing of products to licensed and qualified production
facilities.
  The
Company went public through a shell merger on January 31, 2004.  On
March 31, 2004, the Company changed its name to BlastGard International,
Inc.
  Going
Concern
  The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and satisfaction of liabilities in
the normal course of business.  As shown in the accompanying financial
statements, the Company has incurred recurring losses and has used significant
cash in support of its operating activities.  These factors, among
others, may indicate that the Company will be unable to continue as a going
concern.
  The
financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be
necessary should the Company be unable to continue as a going
concern.  The Company’s continuation as a going concern was dependent
upon its ability to generate sufficient cash flow to meet its obligations on a
timely basis and ultimately to attain profitability.  The Company
plans to generate the necessary cash flows with increased sales revenue over the
next 12 months.  However, should the Company’s sales not provide
sufficient cash flow; the Company has plans to raise additional working capital
through debt and/or equity financings.    There was no
assurance the Company will be successful in producing increased sales revenues
or obtaining additional funding through debt and equity financings.
  Accounting
Pronouncements
  We have
reviewed accounting pronouncements and interpretations thereof that have
effectiveness dates during the periods reported and in future periods. We
believe that there are no new or impending standards that may have an impact on
our future filings.  The applicability of any standard is subject to
the formal review of our financial management and certain standards are under
consideration.
  5
  Convertible
debt
  On
June 22, 2006, we borrowed the principal amount of $1,200,000 (the
“June 2006 Debt”) from two non-affiliated persons (the “Lenders”) due
June 22, 2008. The holders of this June 2006 Debt were issued subordinated
convertible promissory notes and common stock purchase warrants in various
classes. Pursuant to an agreement dated as of August 7, 2007 (the
“August 2007 Agreement”), Robert F. Rose Investments and two other
non-affiliated parties (collectively hereinafter referred to as the
“Purchasers”) entered into an agreement with the Lenders to purchase the
June 2006 Debt, which transaction was personally guaranteed by
Mr. Rose. Upon the completion of said transaction, the Purchasers had
agreed to automatically convert their June 2006 Debt into shares of our
Common Stock at $.30 per share. To date, $795,000 of the $1,200,000 has been
completed and converted into our Common Stock at $.30 per share and $50,000 in
principal was paid back. Pursuant to an agreement dated as of September 21,
2007, the Purchasers agreed to assign the remaining $355,000 to be purchased
pursuant to the August 2007 Agreement to five non-affiliated persons
(collectively hereinafter referred to as the “Assignees”) and the Assignees
deposited $355,000 in escrow with Lenders’ attorney, as Escrow Agent.
Subsequently, the Assignees notified the Escrow Agent that it should not release
the escrowed funds from escrow and demanded the return of their funds. Said
$355,000 was the subject of a legal dispute and to our knowledge such funds were
being held in escrow by the Lenders’ attorneys. Although there was a dispute as
to the rights and obligations of the parties pursuant to the aforementioned
agreements and the possible conversion of the June 2006 Debt into shares of
our Common Stock, we had continued to make the quarterly interest payments on
the June 2006 Debt so as to avoid any claim of default. However, on
June 22, 2008, the June 22, 2006 debt became due and payable and no
payment of principal or accrued interest thereon was made by us. It was
management’s position, although no assurance can be given in this regard, that
we do not owe the lenders the $355,000 and that we were obligated to deliver
1,183,333 shares of common stock to the assignees upon conversion thereof.
Recently, we have learned that the lenders and the assignees agreed to settle
their dispute and to release the funds from escrow with the net result that the
lenders continue to own the June 2006 Debt and they have made demand for payment
of all principal and accrued interest thereon from BlastGard. While we dispute
that we owe the lenders the $355,000 plus interest since the case was settled
without our consent as a third party beneficiary, the June 2006 Debt is shown
(without accrued interest which could range from 8% per annum to a default
interest rate of 15% per annum) on our consolidated balance sheet convertible at
a price that could be as low as $.03 per share in order to reflect the worst
case scenario.
   (2) Notes
Payable
  Convertible
Promissory Notes
  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 secured
convertible notes and common stock purchase warrants. The Company’s convertible
promissory notes payable consist of the following at March 31,
2010:
  $500,000
      convertible promissory note issuedDecember 2,
      2004, due on November 30, 2009,8%
      annual interest rate, net of unamortizedDiscount
      of $0
              
              $
              150,166$93,096
      convertible promissory note (1/4 ofprevious
      outstanding notes) issued December2,
      2004, due November 30, 2009, 8% interestNet
      of unamortized discount of $0
              
              
              93,096$50,000
      convertible promissory note issuedDecember 2,
      2004, due on November 30, 2009,8%
      annual interest rate, net of unamortizedDiscount
      of $0
              
              
              17,325$50,000
      convertible promissory note issuedDecember 2,
      2004, due on November 30, 2009,8%
      annual interest rate, net of unamortizedDiscount
      of $0
              
              
              15,241$10,000
      convertible promissory note issuedDecember 2,
      2004, due on November 30, 2009,8%
      annual interest rate, net of unamortizedDiscount
      of $0
              
              
              3,464279,292Less:
      current maturities
              
              
              (279,292
              )$
              -
  6
 
 Each note
carries a default interest rate of 15% per annum. Aggregate monthly payments of
1.2% of the principal amount were paid from November 1, 2005 through
April 30, 2006, then aggregate monthly payments of 3% of the principal
amount were originally payable from May 1, 2006 through October 31,
2006, and then aggregate monthly payments of 6% of the principal amount were
originally payable 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 were paid from June 1, 2006 through May 31, 2007, and
then aggregate monthly payments of 6% of the principal amount were paid from
June 1, 2007 through March 31, 2008. A Modification Agreement was
entered into in March 2007 so that each Note became due and payable on
March 20, 2008. Pursuant to a further Modification Agreement and a $150,000
payment towards principal, the balance of the unpaid principal of the Notes and
any unpaid interest thereon was due and payable on August 29, 2008.
However, pursuant to a Revised and Amended Sixth Waiver and Modification
Agreement dated as of September 16, 2008, the Senior Lenders received the
payment of default interest calculated at the rate of 21% per annum (versus 8%)
for the period April 1, 2008 through September 30, 2008 as
consideration to extend the Maturity Date of the Notes to November 1, 2008.
Accordingly, all accrued interest had been paid in full as of September 30,
2008. Commencing October 1, 2008 and thereafter, the interest rate shall
revert to an amount equal to 8% per annum. In addition, the holders of the
December 2004 Debt agreed to convert an aggregate of $124,093 in principal
and accrued interest therein at a conversion price of $.10 per
share.
  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 per share set forth below, subject
to adjustment in certain circumstances if the notes were 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. From
March 20, 2008 through October 20, 2008, the Note holder could have
elected at any time to convert through the Maturity Date of the Notes and
thereafter until the Notes were paid in full, the unpaid principal of the Notes
and the accrued interest thereon at a 10% discount (15% discount if the average
trading volume per day over the ten preceding trading days prior to a conversion
date was 60,000 shares per day or less) to the fair market value of the
Company’s Common Stock. The fair market value of the Company’s Common Stock was
defined as the average of the closing sales price of the Company’s Common Stock
on the OTC Electronic Bulletin Board for the ten trading days preceding each
respective conversion date of the Note(s). Notwithstanding anything contained
herein to the contrary, the Notes shall not at any time be convertible at a
conversion price below $.10 per share (the “Floor Price”) or above a ceiling
price of $.25 per share (the “Ceiling Price”). In October 2008, the conversion
price was fixed at $.10 per share pursuant to anti-dilution provisions of the
Note. During March 2009, the holders of certain senior convertible
securities originally issued on December 2, 2004, extended the due date of
the debt to November 30, 2009 in exchange for the issuance of Class G
warrants to purchase 1,800,000 shares of common stock in the
Company.  The 2004 Debt is currently in arrears as payment of the
unpaid principal and accrued interest  was not made on November 30,
2009 or any subsequent date thereof. In March 2009, the conversion price of the
Notes was also lowered to $.03 per share. Concurrently, the Class A, C, D,
E and F warrants held by these investors were cancelled and an equal number of
Class G warrants were issued as replacements.
  7
  
 In May,
2009, $93,097 of the Notes and $388 in interest was converted at $.03 per share
into 3,116,164 shares of the Company’s Common Stock, reducing the principal
balance of the debt underlying the 2004 Notes to $279,292 as of December 31,
2009.
 
 The notes
are secured by all of the Company’s assets until the notes have been fully paid
or fully converted into common stock.
 
 In March
2009 the Company issued 1,800,000 warrants to new investors who assumed one half
of the 2004 debt from the existing holders. The Company used the Black-Scholes
model to estimate the value of these warrants at $58,612. The assumptions used
to value the warrants are as follows:
  Risk-free
      interest rate
              
              1.0
              %Dividend
      yield
              
              0.00
              %Volatility
      factor
              
              194.26
              %Weighted
      average expected life
              
              1.61
      years
 
 The
relative fair value of these warrants was calculated at $44,579. This relative
fair value was recorded as a discount to the assumed debt and will be amortized
to interest over the remaining life of the loans. The relative fair value of
previously issued detachable warrants associated with the convertible notes was
charged to additional paid-in capital with a corresponding discount on the
convertible notes payable. The discount was amortized over the original life of
the debt.
  At
March 31, 2010, there were 9,292,158 warrants outstanding and exercisable
associated with the 2004 debt. These warrants were valued at
$302,569.
  (3) Subordinated
Convertible Notes Payable
 
 On
June 22, 2006, we borrowed the principal amount of $1,200,000 (the
“June 2006 Debt”) from two non-affiliated persons (the “Lenders”) due
June 22, 2008. The holders of this June 2006 Debt were issued subordinated
convertible promissory notes and common stock purchase warrants in various
classes. Pursuant to an agreement dated as of August 7, 2007 (the
“August 2007 Agreement”), Robert F. Rose Investments and two other
non-affiliated parties (collectively hereinafter referred to as the
“Purchasers”) entered into an agreement with the Lenders to purchase the
June 2006 Debt, which transaction was personally guaranteed by
Mr. Rose. Upon the completion of said transaction, the Purchasers had
agreed to automatically convert their June 2006 Debt into shares of our
Common Stock at $.30 per share. To date, $795,000 of the $1,200,000 has been
completed and converted into our Common Stock at $.30 per share and $50,000 in
principal was paid back. Pursuant to an agreement dated as of September 21,
2007, the Purchasers agreed to assign the remaining $355,000 to be purchased
pursuant to the August 2007 Agreement to five non-affiliated persons
(collectively hereinafter referred to as the “Assignees”) and the Assignees
deposited $355,000 in escrow with Lenders’ attorney, as Escrow Agent.
Subsequently, the Assignees notified the Escrow Agent that it should not release
the escrowed funds from escrow and demanded the return of their funds. Said
$355,000 was the subject of a legal dispute and to our knowledge such funds were
being held in escrow by the Lenders’ attorneys. Although there was a dispute as
to the rights and obligations of the parties pursuant to the aforementioned
agreements and the possible conversion of the June 2006 Debt into shares of
our Common Stock, we had continued to make the quarterly interest payments on
the June 2006 Debt so as to avoid any claim of default. However, on
June 22, 2008, the June 22, 2006 debt became due and payable and no
payment of principal or accrued interest thereon was made by us. It was
management’s position, although no assurance can be given in this regard, that
we do not owe the lenders the $355,000 and that we were obligated to deliver
1,183,333 shares of common stock to the assignees upon conversion thereof.
Recently, we have learned that the lenders and the assignees agreed to settle
their dispute and to release the funds from escrow with the net result that the
lenders continue to own the June 2006 Debt and they have made demand for payment
of all principal and accrued interest thereon from BlastGard. While we dispute
that we owe the lenders the $355,000 plus interest since the case was settled
without our consent as a third party beneficiary, the June 2006 Debt is shown
(without accrued interest which could range from 8% per annum to a default
interest rate of 15% per annum) on our consolidated balance sheet convertible at
a price that could be as low as $.03 per share in order to reflect the worst
case scenario.
  8
  The
Company’s subordinated, convertible promissory notes payable consist of the
following at March 31, 2010:
  $600,000
      subordinated, convertible promissory noteissued
      June 22, 2006, due on June 22, 2008,8%
      annual interest rate, net of unamortizeddiscount
      of $0
              
              $
              355,000Less:
      current maturities
              
              
              (355,000
              )$
              —
 
 These
notes are subordinated to the convertible promissory notes listed above, 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 per share that may be as low as
$.03 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
  Pursuant
to SFAS 133, options embedded in contracts containing the price of a specific
equity 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. At March 31, 2010, $355,000 in principal of the subordinated
convertible notes was still outstanding as were a portion of the warrants. See
“Note 1.”  As a result, the Company bifurcated the option resulting
from the conversion feature and classified it as a derivative liability pursuant
to SFAS 133.  The derivative expires with the original
debt.
  The
following table presents the allocation of proceeds from the financing and the
subsequent revaluation of the warrants and derivative liability.
 
 Principal
      balance of the notes
              
              $
              1,200,000Less
      debt discounts:Fair
      value of warrants
              
              
              (768,000
              )Fair
      value of conversion option
              
              
              (432,000
              )Plus
      amortization of discounts to December 31, 2007
              
              
              552,490Less
      the conversion of debt
              
              
              (795,000
              )Plus
      the revaluation of discount and conversion option
              
              
              494,676Plus
      amortization of discounts in 2008
              
              
              152,834Principal
      payment in 2008
              
              
              (50,000
              )Carrying
      value at March 31, 2010
              
              $
              355,000
 
 Detachable
common stock warrants issued with subordinated convertible promissory
notes
  The
warrants are detachable and are valued separately from the convertible notes
payable. Therefore, the total fair value of the warrants, $1,200,000, was
charged to additional paid-in capital with a corresponding discount on the
convertible notes payable. Changes to the value of the warrants are also charged
to additional paid-in-capital and discount on convertible notes payable. The
remaining discount was amortized over the life of the debt. At March 31,
2010 there were 7,457,126 warrants outstanding and exercisable associated with
the 2006 debt. These warrants were valued at $182,012.
  9
 
  Debt
issue costs
  The
subordinated, convertible debt discounts and related debt issue costs have been
fully amortized.
  (4) Shareholders’
Equity
  Preferred
stock
  The
Company is authorized to issue 1,000 shares of $.001 par value preferred stock.
The Company may divide and issue the Preferred Shares in series. Each Series,
when issued, shall be designated to distinguish them from the shares of all
other series. The relative rights and preferences of these series include
preference of dividends, redemption terms and conditions, amount payable upon
shares of voluntary or involuntary liquidation, terms and condition of
conversion as well as voting powers.
  Share-based
payment
  During
the three months ended March 31, 2010, the Company issued 500,000 shares of
common stock in lieu of cash compensation to its 2 outside board members. The
company recognized $50,000 in share based compensation from this
transaction.
  All
options were issued and vested before 2010. No additional compensation expense
was recognized during 2010. The following table represents stock option activity
as of and for the three months ended March 31, 2010:
 
 Number
                of
      Shares
              
              Weighted
                Average
                Exercise
                Price
              
              Weighted
                Average
                Remaining
                Contractual Life
              
              Aggregate
                Intrinsic
                ValueOptions
      Outstanding – December 31, 2009
              
              4,186,667
              
              $
              .10
              
              2.9
      years
              
              1,505,033Granted
              
              —Exercised
              
              —Forfeited/expired/cancelled
              
              (766,667)
              
              
              .10Options
      Outstanding – March 31, 2010
              
              3,420,000
              
              $
              0.10
              
              1.9 years
              
              1,374,700Outstanding
      Exercisable – December 31, 2009
              
              3,420,000
              
              $
              0.10
              
              2.9
      years
              
              1,405,500Outstanding
      Exercisable – March 31, 2010
              
              3,420,000
              
              $
              0.10
              
              1.9
      years
              
              1,374,700
 
 (5)           Line
of Credit
  The
Company borrowed approximately $98,000 against its $100,000 credit line, which
was secured by a personal guarantee of its Chief Financial Officer. Currently,
$94,492 was owed pursuant to the line of credit (inclusive of interest) at March
31, 2010.
  (6) 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, no income tax
benefit or expanse has been presented.
  (7) Commitments
and Contingencies
  Office
Lease
  The
Company entered into a new lease agreement in January 1, 2009 for office space
in Clearwater Florida.  Rental payments under the new lease were $300
per month on a month to month basis.  Rent expense for the three
months ended March 31, 2010 and 2009 was approximately $900 and $900,
respectively.
 
  Litigation
  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 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 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 were 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 was moot. The Court entered judgment on
July 17, 2007 in favor of all Defendants and against the Plaintiff. The
Plaintiff had 30 days from the date of the judgment (July 17) to file a notice
of appeal. No notice was filed.
 
 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 were 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 was 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. Sam Gettle, Guy Gettle, and
Verde counter claimed in the lawsuit alleging the same bad acts complained of in
the Nevada action. The counterclaim seeks an award of unspecified damages and
injunctive relief.
 
 On
April 2, 2009, the Company entered into a Settlement Agreement to settle
our outstanding civil litigation. The Company will pay the sum of $125,000 over
18 months. The first monthly payment was paid within 30 days after the
Defendants deliver to the Company’s counsel an original executed version of the
Agreement and a promissory note in the amount of the remaining principal balance
to bear interest in the amount of 6% per annum. Upon Verde’s receipt of the
payment and promissory note, the parties shall jointly dismiss with prejudice
all litigation between them, including the Pinellas County action and the
Federal action. The company and Verde also entered into a license agreement
whereby BlastGard obtains a fully paid up non-exclusive license for the 2 Verde
patents for the remaining life of those patents in exchange for the Company
paying Verde a 2% royalty for the life of the patents, on the sales price
received by BlastGard for BlastGard’s portion of all blast mitigation products
sold by the company (the royalty was not
on any third-party’s portion of any product containing blast mitigation products
sold by BlastGard). The parties also agreed not to file any complaints with any
state, federal or international agency or disciplinary body regarding any of the
other parties or any person affiliated with any of the other parties or
otherwise make negative statements about them (in other words, a broad
non-disparagement clause). The company and Verde also signed mutual general
releases (excepting the obligations above) and a covenant not to
sue.  At March 31, 2010, the Company was in arrears on six monthly
payments on the settlement.
 10
 (8) Inventory
 
 The
Company’s manufacturing is
sub-contracted to a BlastGard-licensed and qualified production facility. This
method facilitates customer interaction in design, quality and distribution to
affect the greatest level of satisfaction and usefulness of the
BlastWrap®product. Our inventory is made up of
raw materials, work in progress and finished goods. Out inventory is maintained
at our manufacturing facilities.
 
 March31,
              
              
              December
      31,2010
              
              
              2009(unaudited)Raw
      materials
              
              $
              17,185
              
              
              $
              17,185Work
      in process
              
              $
              -
              
              
              $
              -Finished
      Goods
              
              $
              49,799
              
              
              $
              49,941TOTAL
              
              $
              66,984
              
              
              $
              67,126
 
 (9)           Subsequent
events
  Subsequent
to March 31, 2010, the lenders and the assignees of the 2006 debt have agreed to
settle their dispute and to release the funds from escrow with the net result
that the lenders continue to own the June 2006 Debt and they have made demand
for payment of all principal and accrued interest thereon from BlastGard. While
we dispute that we owe the lenders the $355,000 plus interest since the case was
settled without our consent as a third party beneficiary, the June 2006 Debt is
shown (without accrual interest which could range from 8% per annum to a default
interest rate of 15% per annum) on our consolidated balance sheet convertible at
a price that could be as low as $.03 per share in order to reflect the worst
case scenario.
 11





PART
I – FINANCIAL INFORMATION










ITEM
      2.
              MANAGEMENT’S
      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
those 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-Q. Except
for the historical information contained herein, the discussion in this
Form 10-Q 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-Q 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 March 31, 2010, 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.




BlastGard
Technologies was formed on September 26, 2003, and was 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 former Chief
Operating Officer and President, and James F. Gordon, our Chairman and
President, 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.




Results
of Operations




Since
emerging from our development stage operations in 2005, our BlastGard MTR blast
mitigated trash receptacles have been sold to government service advantage
(“GSA”) clients located in the United States. We received orders for MTRs from
AmTrak, the U.S. Holocaust Memorial Museum, GSA for Federal Buildings, NYC
Transit, major airport and for BlastWrap® from
the Naval Weapons Station Earle, Sandia National Labs, and several domestic and
international entities. A major U.S. airport ordered 156 BlastGard MTR Blast
Mitigated Receptacles, which order resulted in gross revenues to the Company of
over $700,000. For the quarter ended March 31, 2010, we recognized sales of
$25,555 and a gross profit of $1,900. For the three months ended March 31,
2009, we recognized sales of $12,091 and a gross profit of $5,388.




12





[Mike - read this paragraph and fix
it.] For the quarter ended March 31, 2010, sales consisted of one
consulting contract with relatively high contract labor costs, which reduced our
gross profit margin for the period..  Our overall operating expenses
dropped from the prior first quarter.  Our general and administrative
costs were $121,732 and our research and development costs were $0 for the three
months ended March 31, 2010 compared to $258,356 and
$10,818  respectively for the three months ended March 31, 2009.
See “Recent Developments.”




Our net
loss for the quarter ended March 31, 2010 was $(126,866) as compared to
$(271,142) for the comparable period of the prior year. The decreases in net
loss are due to a decrease in operating expenses.




Business Prospects/Recent
Developments





On
February 13, 2008, we introduced a new product for perimeter and structure
protection. The BlastGard Barrier System (“BBS”) is an innovative combination of
three patented technologies, an HDPE cellular core, BlastWrap®
and an aesthetically pleasing novel fascia system. BBS has extraordinary blast,
ballistic, fragment, shaped charge jet and breaching resistance capabilities and
it is beautiful, low cost, configurable and “stealthy”. The cellular core
material, patented by the U.S. Army, has been used extensively by the U.S.
military and commercial clients worldwide for building roads, for shoring up
unstable roads, for extensive soil stabilization projects and for revetments and
barriers.  After the core is placed and filled, BlastWrap®
is attached to the “threat side(s)” of the BBS structure, and finally,
the fascia system encloses the entire structure, thereby creating an effective
“stealth” characteristic for the entire BBS structure...that is, the extreme
capabilities of this system are not at all visually apparent. BlastGard’s new
high-capacity Clients with concerns about heavy blast, breaching, ballistic,
fragment and shaped charge jet threats to their facilities can now effectively
address all of those threats with our economical solution.” Optional electronic
security capabilities can also be integrated into the system.





On
February 25, 2008, we introduced a new product for Airport Security, transit
stations, convention centers, and other transportation centers’ with security
requirements, the BlastGard® Gard Cart. The BlastGard® MBR
Gard Cart (Mobile Suspect Package Removal Unit), which houses BlastGard’s MBR
300, provides security personnel with an effective tool for safe removal of an
explosive device after it is
discovered. The MBR Gard Cart contains and protects against all lethal
threats posed by the detonation of an improvised explosive device (IED) and also
provides rapid removal of the threat using a Mobile Removal Unit
Cart.  When a suspect package or device is discovered, the airports
now have a safe means of securing that package and removing it from public
exposure until the bomb squad arrives.  In this way, the MBR Gard Cart
can help prevent long airport facility shut-down times presently experienced
when a suspect package is discovered.





On
September 22, 2008 BlastGard announced an agreement with U. S. Explosive Storage
to provide them with BlastWrap for insensitive munitions packaging of ammunition
storage, ordnance storage, pyrotechnics storage, and other explosive materials
storage, utilized, among other things, for military, governmental, and
commercial use. BlastGard and U.S. Explosive are joining forces to create
storage and transportation boxes that will prevent sympathetic detonation
through BlastWrap’s unique proprietary technology. Initial testing was completed
the week of March 23, 2009. The US ARMY Department of Defense Explosive Safety
Board (“DDESB”) sponsored 2 of our tests for the purpose of getting DDESB
certification. DDESB wants ISO certified blast mitigated containers for major
storage and special ISO containers to store grenades, etc. We will be installing
BlastWrap inside storage boxes and inside the magazines. U.S. Explosives is
forecasting sales of $5-6 million in year one and approximately $8 million in
year two. The BlastWrap component in the new product line represents
approximately $1.8 million in year one and $2.4 million in year
two.





13





In
February 2009, Precision Operations Systems India Pvt. Ltd., which has been
supplying security, surveillance, counter surveillance and special ops equipment
to various Government entities in India, purchased BGI’s MBR (mitigated bomb
receptacle) for testing. Precision is our commercial representative for India
and represented BlastGard at the 12th
India International Security Expo, which was held from February 22-25,
2010.  We anticipate additional sales in 2010.





In March
2009, BlastGard entered into a commercial representative agreement with Lindner
& Co. as our exclusive sales and marketing representative for Iraq.
Lindner’s alliance with an Iraqi company, which has a credentialed history with
US Corps of Engineers, KBR, and other Iraqi national companies as well as
business relationships with companies in Saudi Arabia, the Emirates, Jordan and
other Middle Eastern countries, will operate in Iraq as the authorized installer
for BlastGard in Iraq.





On July
17, 2008 BlastGard announced receipt of a formal purchase agreement for 156
BlastGard MTR blast mitigated receptacles valued at approximately $700,000 for a
major United States airport. BlastGard’s blast mitigating receptacles were
installed throughout the facility and this very important transaction has opened
the door to the Airport Security market for our Blast Mitigating Receptacles.
Receptacles, which are a necessity for waste management, pose a serious threat
to public safety considering how easily they can conceal an explosive device.
The installation of these blast mitigating receptacles is another step toward
USA airport's emphasis on safety, reliability, enhanced cleanliness and improved
customer service. In addition to a $2,000,000 order from Miami Airport, which is
pending the securing of grant funds, we are attempting to secure
funding for pending MTR orders from Houston Airport, San Francisco Airport,
and Chicago Airport.




Various Product Lines
Identified For BlastWrap®- We have Several Completed
and Finished Products




We are
currently manufacturing our core product, BlastWrap®, for
sale in various forms to non-affiliated third-parties. The primary application
for BlastWrap® is as
an intermediate good for numerous civilian and military applications and
uses.




Our
technology is being customized for specific industries and applications. We have
examined the various markets where explosions occur, selected targeted
applications and focused on development of products for those businesses and
agencies at risk. While designing finished products engineered with
BlastWrap®, we
have taken into account that some products must be portable, while others will
remain at a fixed location. Some products have been designed to contain
identified explosive agents, while others are designed to mitigate unidentified
explosive threats. With these standards in mind, we have developed or are
developing the following product lines to address the needs of customers and
targeted markets:




·
            Mitigated
      Bomb Receptacles and MBR Gard Cart;




·
            Blast
      Mitigated Unit Load Device (“BMULD”) – LD3
  Container;




·
            Lining
      – Aircraft;




·
            Insensitive
      Munitions (IM) Weapons Container;




·
            Mitigated
      Trash Receptacle; and




·
            BlastGard
      Barrier System (“BBS”).




MBR 300 and MBR Gard
Cart




The
BlastGard Mitigated-Bomb Receptacle (MBR 300) is intended to provide 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 IED; namely, primary fragments, secondary
fragments, mechanical effects (shock/blast pressure) and thermal effects
(contact and radiation burn) from the fireball, after burn and resultant
post-blast fires. If a suspect package or bomb is discovered, the airports will
use the MBR 300 as a safe means of securing that package until the bomb squad
arrives, or remove the suspicious device from the area, allowing airport
operations to continue.




14


The
BlastGard® MBR
Gard Cart (Mobile Suspect Package Removal Unit), which houses BlastGard’s MBR
300, provides security personnel with an effective tool for safe removal of an
explosive device after it is
discovered. The MBR Gard Cart contains and protects against all lethal
threats posed by the detonation of an improvised explosive device (IED) and also
provides rapid removal of the threat using a Mobile Removal Unit Cart. When a
suspect package or device is discovered, the airports now have a safe means of
securing that package and removing it from public exposure until the bomb squad
arrives. In this way, the MBR Gard Cart can help prevent long airport facility
shut-down times presently experienced when a suspect package is discovered. The
United States Transportation Security Administration has worked hard to secure
U.S. airports against a range of threats that includes attacks against both
aircraft and ground facilities. The largest and most visible investment made by
the agency 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 also 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. We believe that the MBR 300 is an
ideal incident / security management technology for airports when dealing with
bomb threats and suspicious objects or packages, especially in passenger carryon
baggage.




Twin-Aisle (containerized)
Aircraft – Blast Mitigated Unit Load Devices (BMULDs)




LD3 Cargo
Containers are used primarily on twin aisle/wide body aircraft such as the B747.
These luggage or cargo containers are manufactured by a few well-established
companies throughout the world. The market is extremely competitive with low
margins. In accordance with an agreement with Nordisk Aviation Products, we have
combined our 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
called BlastGard BMULD. 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 alliance has developed a new line of ULDs that include
BlastWrap®. The
introduction of this product line enables us to provide the airline industry an
important new line of defense to increase airline safety of passengers and
crewmembers. This revolutionary new container design incorporating
BlastWrap® will
prevent shock holing of the fuselage, effectively retaining the structural
integrity of the aircraft; prevent post-blast fires and conflagration in the
hold; and add little or only negligible weight to the ULD.




Lining – Single-Aisle
(non-containerized) Aircraft




Working
in conjunction with aircraft and shipping manufacturers, we are designing
products and component assemblies to be used in the cargo holds of single-aisle
aircraft. Due to the heightened security surrounding aircraft safety, we are
diligently working to demonstrate the effectiveness of our product on this large
sector which is estimated at about 70% of the commercial fleet.




Insensitive Munitions (IM)
Weapons Containers




Weapons
containers require specialty design. We have developed several of these
containers for evaluation and testing by the United States, United Kingdom and
other military clients. Although we do not have a development or supply contract
with any military agencies at this time, we anticipate important prototype
testing of these designs will ensue in 2009 with our strategic partner Lancer
Systems and with the National Warheads and Energetics Consortium (NWEC) /
Defense Ordnance Technology Consortium (DOTC). This product line will have
numerous versions for military weapons including bombs, rockets, medium and
large caliber ammunition and missiles. In addition, in September 2008, we
announced an agreement with U. S. Explosive Storage to provide them with
BlastWrap for insensitive munitions packaging of ammunition storage, ordnance
storage, pyrotechnics storage, and other explosive materials storage, utilized,
among other things, for military, governmental, and commercial use. Prototype
testing is planned to begin in the 4th
quarter of 2008. We will be installing BlastWrap inside storage boxes and inside
the magazines. U.S. Explosives is forecasting sales of $5-6 million in year
one and approximately $8 million in year two. The BlastWrap component in
the new product line represents approximately $1.8 million in year one and
2.4 million in year two with ever increasing sales on a year over year
basis.




Trash
Receptacles




We have
four models of mitigated trash receptacles, the BlastGard® MTR
81, MTR 91, MTR 96 and MTR 101. These containers have been designed and proof
tested to drastically mitigate blast pressures and thermal output and to capture
bomb fragments.




Vehicle Improvised Explosive
Devices and Mine Protection




Military
vehicles (such as MRAPs, HMMWVs, HEMMT, M915 and FMTV) are or can be
“up-armored” for improvised explosive devices and land mine protection.
BlastGard® and
Colt Rapid Mat LLC have developed and are now offering a new product called
BATS. These specialty Colt Rapid Mat fiberglass-cased BlastWrap®
products are easy to retro-fit to armored vehicles to provide protection for
occupants from blast thermal output and head, neck and spine injuries from blast
pressures. Initial durability testing of BATS by the Nevada Automotive Test
Center (NATC) for the Office of Naval Research has been concluded successfully.
Further testing awaits selection and funding by NATC/ONR for blast testing.
 An important additional partner in these vehicle applications is Cellular
Materials International, Inc. which has a periodic cellular material shown to be
effective in managing the heavy G-loads typical of under-vehicle blast
threats.




15




BlastGard Barrier System
(“BBS”) High-Capacity Wall System for Perimeter and Structure
Protection




The BBS
product is an innovative combination of three patented technologies, an HDPE
cellular core, BlastWrap®
and an aesthetically pleasing novel fascia system. BBS has extraordinary blast,
ballistic, fragment, shaped charge jet and breaching resistance capabilities and
it is beautiful, low cost, configurable and “stealthy”. The cellular core
material, patented by the U.S. Army, has been used extensively by the U.S.
military and commercial clients worldwide for building roads, for shoring up
unstable roads, for extensive soil stabilization projects and for revetments and
barriers. After the core is placed and filled, BlastWrap®
is attached to the “threat side(s)” of the BBS structure, and finally,
the fascia system encloses the entire structure, thereby creating an effective
“stealth” characteristic for the entire BBS structure that is, the extreme
capabilities of this system are not at all visually apparent. Clients with
concerns about heavy blast, breaching, ballistic, fragment and shaped charge jet
threats to their facilities can now effectively address all of those threats
with our economical solution. Optional electronic security capabilities can also
be integrated into the system.




In
summary, we have developed either finished products or working prototypes of
BlastWrap®
products for each of the product lines described above. All of these products
have been successfully tested and evaluated in-house, by third-parties and by
interested clients and strategic partners. Prototypes may require further
modifications based on the test results and client and partner feed-back.
However, we have the following products that are completed and finished
products, available for sale that we are currently manufacturing and
marketing:




·
            The
      core product, BlastWrap®;




·
            BlastGard®
      MTR (mitigated trash receptacle);




·
            BlastGard
      MBR 300 (mitigated bomb receptacle) and MBR Gard
  Cart;




·
            BMULD
      (Blast Mitigated Unit Load Device - LD3 Container);
  and




·
            BlastGard
      Barrier System (“BBS”) high-capacity wall system for perimeter and
      structure protection.




Liquidity and Capital
Resources.




At March
31, 2010, we had cash of $2,511, working capital of $(1,104,962), an accumulated
deficit of $(13,331,585) and shareholder equity of $(880,250).




For the
three months ended March 31, 2010, net cash provided by operating activities was
$16,934 primarily due to our net loss of $(126,866), offset by stock based
compensation and an increase in our accounts payables and accruals. During the
three months ended March 31, 2010, we used cash in investing activities for
payment of deferred costs of $(19,274). During the three months ended March 31,
2010, we used cash in financing activities of $3,112 for net payments on our
credit line. For the quarter ending March 31, 2009, net cash used in operating
activities was $92,509 primarily due to our net loss of $(271,142), partially
offset by collections of $261,700 in accounts receivable. During the quarter
ended March 31, 2009, we used cash in investing activities for payment of
deferred costs of $(8,484).




At
March 31, 2010, we had cash of $2,511. As of May 15, 2010, we had cash
of approximately $1,197 and we owed approximately $279,292 in principal and
approximately $7,407 in accrued interest to the holders of our
December 2004 Debt. Further, the original lenders of our 2006 Debt are of
the belief that we owe them $355,000 plus accrued interest thereon, which debt
we dispute as being outstanding due to certain agreements entered into which
would have resulted in the conversion of the 2006 Debt at $.30 per share into
common stock from the Company being a third party beneficiary of said
agreements, which agreements were later terminated without our written consent.
As described below, we issued Class G Warrants to purchase 1,800,000 shares
of the Company to a third party to purchase one-half of the principal amount of
the Notes from the December 2004 Note Holders and extended the due date of the
Notes through November 30, 2009.  These notes are in arrears. We
have accrued interest past the due date but have not made any payments on
principal or accrued interest thereon.




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 are expected to be cash
generated from operations and raising additional capital from the sale of equity
and/or debt securities. However, 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. Our
continuation as a going concern is dependent upon our ability to generate
sufficient cash flow to meet our obligations on a timely basis and ultimately to
attain profitability. The Company is attempting to obtain cash to finance its
operations through the sale of equity, debt borrowing and/or through the receipt
of product licensing fees. We can provide no assurances that financing will be
available to us on terms satisfactory to us, if at all, or that we will be able
to continue as a going concern. Further, we can provide no assurances that a
mutually acceptable licensing agreement will be entered into on terms
satisfactory to us, if at all. In this respect, see “Note 1 – Going Concern” in
our financial statements for additional information as to the possibility that
we may not be able to continue as a “going concern.”




16





To date,
we have relied on management’s ability to raise capital through equity private
placement financings to fund our operations. We estimate that we will require
between $1.0 million and $1.5 million in additional financing and cash
flow from operations to support our operations and to meet our debt obligations
as they become due and payable over the next 15 months of operations. We can
provide no assurances that cash generated from operations will occur or
additional financing will be obtained on terms satisfactory to us, if at all, or
that additional debt conversions will occur.




Recent
Developments







On
October 17, 2008, in order to reduce the Company’s monthly expenses, the Board
and its Chief Executive Officer, Andrew McKinnon, agreed to pay Mr. McKinnon his
monthly salary, effective December 1, 2008, pursuant to his employment contract
in BlastGard common stock based on a 15% discount to the fair market value of
the Company’s Common Stock based on the ten preceding trading days prior to the
conversion date. The fair market value of the Company’s Common Stock is defined
as the average of the closing sales price of the Company’s Common Stock on the
OTC Electronic Bulletin Board for the ten trading days proceeding the last day
of each month (conversion date of the monthly salary).  The salary
conversion shall not at any time be convertible at a conversion price below $.10
per share (the “Floor Price”). Between December 2008 and August 31, 2009, the
Company issued Mr. McKinnon 187,500 shares of restricted Common Stock per month
based upon the Floor Price of $.10 per share for a total of 1,500,000
shares.





On August
10, 2009, the Board of Directors accepted the resignation of Andrew McKinnon
from the position of Chief Executive Officer of the Corporation and elected
Michael J. Gordon to replace Mr. McKinnon as Chief Executive
Officer.





As of
March 31, 2010, BlastGard’s salary accruals and benefits to its executive
officers totaled $153,940 and its other account payable totaled
$399,896.  Excluding our cash needs to meet these and other debt
obligations, we have a monthly cash budget broken down as follows:





salaries
      and benefits:
            
            $
            17,000legal
      fees (patents & Verde)
            
            
            11,000professional
      fees
            
            
            8,000office
      overhead
            
            
            3,000Travel
            
            
            5,000research
      and development
            
            
            3,000Miscellaneous
            
            
            3,000Total
            
            $
            50,000





On
March 10, 2009, the Company lowered the exercise price of its issued and
outstanding Class A, C, D, E and F Warrants to an exercise price of $.03
per share on a temporary basis until the close of business on March 20,
2009, which was later extended to March 30, 2009 (the “Warrant Reduction
Period”). Subsequent to that date, the exercise price of the aforementioned
classes of Warrants reverted to $.10 per share. During the Warrant Reduction
Period, none of these Warrants were exercised. During the Warrant Reduction
Period, the holders of certain outstanding Senior convertible securities
originally issued on December 2, 2004 (the "2004 Debt") granted BlastGard
an extension of the due date of their 2004 Debt until the close of business on
November 30, 2009, in exchange for the issuance of Class G Warrants to
purchase 1,800,000 restricted shares of Common Stock of the Company.
Contemporaneously, certain other person(s) were assigned these Warrants and sold
one-half of their $372,000 of outstanding principal of the notes and related
security agreements and guarantees at a purchase price of about $186,000. Each
Class G Warrant entitles the holder to purchase one share of the Company’s
Common Stock at an exercise price of $.03 per share through the close of
business on June 22, 2011. Since March 2009, the 2004 Debt is convertible
at $.03 per share. On May 22, 2009, $93,097.25 of the outstanding principal and
$387.69 in interest was converted into 3,116,164 shares of the Company’s Common
Stock.




During
the Warrant Reduction Period, the Company cancelled Class A, C, D, E and F
Warrants totaling the rights to purchase 11,000,334 shares of the Company’s
Common stock and issued an equal number of Class G Warrants in exchange
thereof. Currently, the Company has outstanding the following
Warrants:







17




Class of
      Warrant
            
            Number
      of Warrants OutstandingUndefined
            
            
            —Class A
            
            
            —Class C
            
            
            1,921,500Class D
            
            
            324,000Class E
            
            
            162,000Class F
            
            
            2,097,620Class G
            
            
            12,244,164





All
shares of Common Stock issuable upon exercise of the aforementioned Warrants
contain an appropriate restrictive legend. Exemption from registration for the
issuance of the Class G Warrants as replacement Warrants and 3,116,164
shares of Common Stock issued upon conversion of the Notes were exempt under
Section 3a(9) of the Securities Act of 1933, as amended (the “1933 Act”).
The issuance of 1,800,000 Warrants to the Senior convertible debt holders was
exempt under Section 4(2) of the Securities Act.




During
2009, the Board of Directors approved the issuance of 3,000,000 restricted
shares of Common Stock of the Company at a purchase price of $.03 per share
($90,000 in the aggregate). Mr. McKinnon, the Company’s then CEO, purchased
the shares via a Subscription Agreement.  Approximately $1,200 of the
subscription price was paid in exchange for services rendered and the balance of
the subscription price was paid in cash. The issuance of 3,000,000 shares to Mr.
Mckinnon was exempt under Section 4(2) of the Securities Act.




2007
Private Placement Transactions




Between
April 20, 2007 and May 4, 2007, the Company completed two concurrent
Offerings and raised a total of $3,968,810 as described below.




The
Company sold 11,529,368 units, each unit consisting of one share of its
unregistered Common Stock at $.30 per share and one-half warrant, with a full
warrant exercisable at $.45 per share in an offshore offering to non-US Persons
through D &D Securities Company, its placement agent. The offering raised
$3,458,810 in gross proceeds through the issuance of 11,529,368 shares and
5,764,684 warrants. In addition, the Company issued broker warrants to purchase
1,322,937 units. Exemption from registration is claimed under Regulation S
of the Securities Act of 1933, as amended.




The
Company also sold 1,700,000 shares of its unregistered Common Stock at $.30 per
share and issued 850,000 warrants exercisable at $.45 per share, pursuant to a
Regulation D offering. The offering raised $510,000 in gross proceeds.
Exemption from registration is claimed under Rule 506 of Regulation D
promulgated under Section 4(2) of the Securities Act of 1933, as amended.
All of the aforementioned securities have not been registered under the
Securities Act and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements. The
securities sold pursuant to its concurrent plans of financing contain certain
registration rights and penalty warrants for failure to meet certain
registration or trading conditions by October 15, 2007. Since the Company
did not register these securities or have them listed on one of two Canadian
Exchanges by October 15, 2007, the Company issued to each investor an
additional 10% in shares of Common Stock and an additional 10% Warrants on what
they purchased in the 2007 Private Placement.




Other
Recent Financings




Reference is made to our Form 10-K for
our fiscal year ended December 31, 2009 for a description of other financings
that accrued in December 2004 and June 2006.




Registration
Statements




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. We have also 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 (the obligation to the
holders of the June 2006 Debt are collectively referred to as the
“Registrable Securities”), as well as to register for resale by Source Capital
(and its transferees) and the holders of the December 2004 debt, the shares
of common stock issuable upon exercise of their warrants. In
September 2006, we obtained an effective registration statement pertaining
to (i) a portion of the Registrable Securities, including the (x) shares of
common stock issuable upon conversion of the June 2006 Debt based upon a
then conversion price of $.75 per share and (y) warrant shares underlying the
(x) Class C and Class F Warrants held by the holders of the
June 2006 Debt and (ii) all shares of common stock issuable upon exercise
of the warrants held by Source Capital (and its transferees). In
September 2006, an amended agreement was entered into by and among the
Company and the holders of the June 2006 Debt.





18





This
amendment requires us to register with the SEC the resale of the shares of
common stock issuable upon exercise of the Class D and Class E
Warrants and an additional 30% of the original Registrable Securities (as
defined) upon receipt, in writing, of a written demand from such persons holding
at least 51% of the outstanding Registrable Securities. To date, no such written
demand has been received by us. Our original Registration Rights Agreement with
the holders of the 2006 Debt (except as otherwise amended) requires us to
maintain an effective Registration Statement pertaining to all Registrable
Securities until all Registrable Securities covered by such Registration
Statement have been sold, or may be sold, without volume restriction pursuant to
Rule 144(k) (the “Effectiveness Period”). If during the Effectiveness
Period, the number of Registrable Securities at any time exceeds 90% of the
number of shares of Common Stock then registered in a Registration Statement,
then we are required to file as soon as reasonably practicable, but in any case
prior to the 30th day
following the date on which we first know, or should reasonably have known, that
such additional Registration Statement is required, an additional Registration
Statement covering the resale by the holders of not less than 130% of the number
of such Registrable Securities. The agreement further provides that we may
require each selling holder of Registrable Securities to furnish us a certified
statement as to the number of shares of common stock beneficially owned by each
holder and that during any period that we are unable to meet our obligations
under the Registration Statement for the registration of the Registrable
Securities solely because any holder fails to furnish us information within
three trading days of our request, any liquidated damages that are accruing at
such time to such selling holder only shall be tolled and that any event that
may otherwise occur solely because of such delay shall be suspended as to such
holder only, until such information is delivered to us.




Recently Issued Accounting
Pronouncements




During
the past two years, the Financial Accounting Standards Board (“FASB”) issued a
number of new pronouncements, which are described in Note 1, “Recent Accounting
Pronouncements” of the Notes to Financial Statements contained in our latest
annual report on Form 10-K filed with the Security and Exchange commission
on April 14, 2009. Reference is made to these recent accounting
pronouncements as if they are set forth therein in their entirety.






ITEM
      3.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK


Market
risk is the risk of loss arising from adverse changes in market rates and
prices, such as interest rates, foreign currency exchange rates and commodity
prices. Our primary exposure to market risk is interest rate risk associated
with our short term money market investments. The Company does not have any
financial instruments held for trading or other speculative purposes and does
not invest in derivative financial instruments, interest rate swaps or other
investments that alter interest rate exposure. The Company does not have any
credit facilities with variable interest rates.






ITEM
      4.
              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.




19




PART
II – OTHER INFORMATION






ITEM
      1.
              LEGAL
      PROCEEDINGS.


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 “Nevada Action”). The plaintiff in the lawsuit was Verde
Partners Family Limited Partnership. The lawsuit makes a variety of claims and
contends that BlastGard and certain officers of BlastGard 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
the Nevada Action. 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 had 30 days from the date of the judgment to file a
notice of appeal and no filing was made.




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. Sam Gettle, Guy Gettle, and Verde
counter claimed in the lawsuit alleging the same bad acts complained of in the
Nevada action. The counterclaim seeks an award of unspecified damages and
injunctive relief. On April 2, 2009, the company entered into a Settlement
Agreement to settle our outstanding civil litigation. The company will pay the
sum of $125,000 over 18 months. The first monthly payment was paid within 30
days after the Defendants deliver to the Company’s counsel an original executed
version of the Agreement and a promissory note in the amount of the remaining
principal balance to bear interest in the amount of 6% per annum. Upon Verde’s
receipt of the payment and promissory note, the parties shall jointly dismiss
with prejudice all litigation between them, including the Pinellas County action
and the Federal action. The company and Verde also entered into a license
agreement whereby BlastGard obtains a fully paid up non-exclusive license for
the 2 Verde patents for the remaining life of those patents in exchange for the
Company paying Verde a 2% royalty for the life of the patents, on the sales
price received by BlastGard for BlastGard’s portion of all blast mitigation
products sold by the company (the royalty is not
on any third-party’s portion of any product containing blast mitigation products
sold by BlastGard). The parties also agreed not to file any complaints with any
state, federal or international agency or disciplinary body regarding any of the
other parties or any person affiliated with any of the other parties or
otherwise make negative statements about them (in other words, a broad
non-disparagement clause). The company and Verde also signed mutual general
releases (excepting the obligations above) and a covenant not to sue. Since
entering into the Settlement Agreement in April 2009, the Company has paid Verde
a total of $31,250 and is in arrears for $44,212.04 as of March 31,
2010.


ITEM
      1A.
              RISK
      FACTORS
  As a
Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act and in
item 10(f)(1) of Regulation S-K, we are electing scaled disclosure
reporting obligations and therefore are not required to provide the information
requested by this Item 1A.
  ITEM
      2.
              UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.


20




(a)
            From
      January 2010 to March 31, 2010, we had no sales or issuances of
      unregistered securities, except we made sales or issuances of unregistered
      securities listed in the table
below:




Date
      of Sale
            
            Title
      of
              Security
            
            Number
      Sold
            
            ConsiderationReceived
      and
              Description
      ofUnderwriting
      or
              Other
      Discounts toMarket
      Price or
              Convertible
      Security,
              Afforded
      toPurchasers
            
            Exemption
      from
              Registration
              Claimed
            
            If
      Option, Warrant
              or
      Convertible
              Security,
      terms of
              exercise
      or
              conversionMarch
      2010
            
            Common
      stock for services
            
            
            500,000
            
            Outside
      board compensation
            
            Section
      4(2
            
            Not
      applicable.





(b)        Rule 463
of the Securities Act is not applicable to the Company.




(c)        In
the three months ended March 31, 2010, there were no repurchases by the
Company of its Common Stock.




ITEM
      3.
              DEFAULTS
      UPON SENIOR SECURITIES.
  None
  ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
  NONE.
  ITEM
      5.
              OTHER
      INFORMATION.
  None.
  ITEM
      6.
              EXHIBITS




Except
for the exhibits listed below, other required exhibits have been previously
filed with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended.




Exhibit
      Number
            
            Description11.1
            
            Statement
      re: computation of earnings per share. See condensed consolidated
      statement of operations and notes thereto.31.1
            
            Rule 13a-14(a)
      Certification – Chief Executive Officer and Chief Financial Officer
      *32.1
            
            Section 1350
      Certification – Chief Executive Officer and Chief Financial Officer
      *


———————


*
              Filed
      herewith.





21





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:
      May 15, 2010
            By:
            /s/
      Michael J. GordonMichael
      J. Gordon, Chief Executive and Chief Financial
              Officer


22