In the Boardroom With...
Mr. Michael J. Gordon
Chief Financial Officer
BlastGard International Inc.
Michael, thanks for joining us today. Prior to joining BlastGard®, you
seem to have had a very interesting background in the environmental field
as well. Please tell us about your background.
J. Gordon: Prior to my involvement with BlastGard, I was Vice
President and a Board member of BBJ Environmental Solutions, which conducts
research on the causes of, and develops solutions to, biologically related
indoor air quality problems, including research in bio-defense and emerging
infectious diseases, such as Anthrax. From August 1987 through December
1997, I was employed by
Information Systems Corp., where I
was responsible for overseeing administrative operations, the filing of
all SEC reports and documents, company news releases and public relations.
Before joining Phoenix, I served as Director of Legacies and Planned Giving
for the American Cancer Society.
SecurityStockWatch.com: We understand that BlastGard® was created
to design, develop, manufacture and market proprietary blast mitigation
materials and that the Company's patent-pending BlastWrap® technology
effectively mitigates blast effects and suppresses post-blast fires. Please
give us an overview of the Company’s core technology.
Michael J. Gordon: First, it is important to understand that Blast
management solutions generally fall into one of two categories: hardening
or mitigation. Hardening is a method of blast mitigation by which an object
is placed around an explosive material to contain the blast, and is generally
accomplished through the use of armor, mass or both. Mitigation (or attenuation)
of blast effects is the dissipation of blast energy so that acoustic and
shock waves, peak overpressure, reflected peak overpressure, impulse and
after-burn are reduced. Because BlastWrap® is so easily customized, it
can be used to work with existing products or designed to create finished
products for numerous applications across all industries. The Company’s
core technology centers around BlastWrap®. BlastWrap® is scientifically
engineered and designed to remove much or most of the energy from an explosion.
There are two primary components of any explosion – mechanical effects
(which are shock impulse and acoustic waves) and chemical effects (fireball).
In fact, shock impulse is the real killer in a high explosive blast. BlastWrap®
dissipates blast shock wave energy through irreversible processes, such
as drag, turbulence, friction, viscosity, reflection, etc.); and at the
same time, BlastWrap® dramatically quenches the flame fronts or fireballs
created as a result of the explosion, which means we also kill the after-burn
and post-blast fires. This is important because a fireball (which represents
the rapid gas expansion by the burning of materials) creates enormous
pressures, commonly called “the blast wind.”
SecurityStockWatch.com: Without giving away any competitive secrets,
what are the main features and advantages?
Michael J. Gordon: The real beauty about BlastWrap® is that it
is a purely passive mitigation, so it uses no power, alarms, sensors,
or activation system. It works 24/7/365; does not dispense chemical extinguishants;
never fails; is light weight and is low cost. The main advantage of BlastWrap®
is for blast protection products to save lives and valuable assets from
explosions, which also means it: reduces liability from loss of life and
property; eases QD (Quantity / Distance) requirements; may lower insurance
costs; lowers explosion mitigation costs; may Increase inventory level
capabilities for explosive materials; prevents sympathetic detonation;
and eliminates need for trained personnel to manage detection capability.
BlastWrap® not only reduces blast impulse and pressure (including reflected
and quasi-static pressure), but rapidly quenches fireballs and suppresses
post-blast fires. Lethal fragments and/or ballistic threats may be managed
by adding armor. Therefore, BlastWrap® can be used to make a wide variety
of products perform better, such as: building materials; magazines; ordnance
containers; aircraft (single & twin-aisle) protection systems; explosives
storage units; decorative facings; linings; IED and EOD threat management
(permanent or portable); wall components; barriers (permanent or portable);
vehicle protection systems, etc.
SecurityStockWatch.com: BlastGard® recently received a Naval Supply
Systems Command Contract. The Military is obviously a big target market.
Please give our audience an overview of this particular deal with the
Navy and, what can you tell us about the Company’s key market opportunities
today and tomorrow.
Michael J. Gordon: The Naval Supply Systems Command, Fleet &
Industrial Supply Center (“FISC”), in Sigonella, Italy for the Naval Regional
Contracting Detachment (NRCD) in Bahrain purchased 50 blast-mitigated
trash receptacles. FISC provides fleet and base support for US Navy, Military
Sealift and Coast Guard ships; US bases and facilities located in Europe,
Africa and Southwest Asia; contingency operations; and continental US
activities requiring supplies and services from Europe, Africa and Southwest
Asia. Trash receptacles, which are a necessity for waste management, pose
a serious threat to Public Safety considering how easily they can conceal
an explosive device planted by a terrorist. Our BlastGard MTR series of
mitigated trash receptacles deals with all aspects of the detonation of
an improvised explosive device (IED) explosion - primary and secondary
fragments, mechanical (shock/blast pressure), thermal (fireball), after-burn
threats and reflected pressure. The existing explosion resistant trash
receptacles that are on the market today, only deal with the first two
points: primary and secondary fragmentation but does nothing to reduce
the remaining three: blast pressures, reflected pressures and the fireball.
The military is one of four markets that the Company is focused on, the
others being the commercial sector, law enforcement and government agencies.
In regards to the military, BlastGard® is GSA approved and our key market
opportunities in this market are: Ordnance Containers, which is the storage
and transportation of insensitive munition to prevent sympathetic detonation
and slow/fast cook-off; and Vehicle Protection, which relates to protecting
up-armored HMMWV’s. BlastGard® is also working with several defense companies
on behalf of the U.S. Marines marrying BlastWrap® with their product to
provide blast protection for additional military applications such as
wall protection from IED’s and barrack and bunker protection from mortar
rounds. In addition, BlastGard® recently conducted a series of demonstrations
(at a firing range in Nigeria near the Benin border) for the Nigerian
Army Ordnance Corps (NAOC). These simple demonstrations proved the basic
effectiveness of BlastWrap®, for the reduction of blast pressure and impulse
and for the prevention of sympathetic detonation. BlastGard® has also
submitted proposals for BlastWrap®, for IM packaging, for training programs
and oil pipeline protection.
SecurityStockWatch.com: Overall, what’s the total size of the market
BlastGard® is addressing.
Michael J. Gordon: The demand outlook for blast and fire mitigation
is extremely strong. The market for blast mitigation products (including
fire suppression systems) is expected to exceed $7 billion in 2005. Nearly
all niche areas, from armor plating to access control technology, are
seeing a pickup in sales in the wake of the war on terrorism as well as
increased government focus on Homeland Security as it relates to terrorism
and national security.
SecurityStockWatch.com: BlastGard® recently signed a Five Year
Alliance Agreement with Nordisk Aviation Products. What are the key aspects
of this strategic relationship? Any other key strategic relationships
you care to mention?
Michael J. Gordon: On October 24, 2005, we entered into a five-year
alliance agreement with Nordisk Aviation Products, Inc. (“Nordisk”), headquartered
in Cape Canaveral, Florida. Nordisk is a manufacturer, repair and leasing
company of Unit Loading Devices (“ULD”, the standard luggage containers
on twin-aisle aircraft) engaged in developing, supplying and supporting
ULD equipment for the commercial passenger and air freight/cargo airline
industry as well as the military, including its engineering support, and
Worldwide Service Network. The purpose of the Alliance is to combine Nordisk
Services products with the BlastGard Technology to offer enhanced blast
mitigated products to the ULD marketplace with respect to both existing
ULD’s and newly manufactured ULD’s. There are an estimated 600,000 containers
in service in the fleet today with approximately 40,000 new units sold
each year. Each unit has an average useful life of about 5 years, and
we estimate that the total number of units in service will continue to
rise over the next 10 years. We are working with the largest ULD container
manufacturer in the world to develop a low-cost solution for ‘semi-hardened’
blast mitigation ULD containers that may vastly improve the chances of
aircraft survival in the event of a reoccurrence of an airplane explosion
in midair as occurred in Lockerbie, Scotland. Nordisk expects to begin
marketing its new ULD design with BlastWrap® in the first half of 2006.
The Company is also developing a blast-mitigated armor for the RE:NEW
project for Media Metrica Ltd. of London. Media Metrica has created an
innovative on-street product that combines recycling, blast mitigation
and outdoor advertising. This product will spearhead recycling in urban
centers and, simultaneously, act as a premium outdoor advertising platform.
With security becoming an ever-growing concern in urban centers across
the globe, BlastGard® and Media Metrica are working jointly on these new
proprietary modular units that will mitigate the effects of an explosion
within the units, and suppress the principal hazards of blast, fragmentation,
heat, flash and fireball. In addition to developing and manufacturing
the RE:NEW units, BlastGard® will be involved with marketing these products
in the USA upon completion of all three development phases which are expected
to be completed by May 2006.
We have several other strategic partnerships underway but are not at liberty
at this time in disclosing them.
SecurityStockWatch.com: What about Patent protection for BlastGard®
technology? And, competition for the Company?
Michael J. Gordon: Explosive devices are increasingly being used
in asymmetric warfare to cause destruction to property and loss of life.
These explosive devices can sometimes be disrupted; however, most often
there is not sufficient warning of an impending attack. BlastWrap® products
were created around this core concept, and a patent was filed on July
31, 2003, which is still pending. In the spring of 2004, the Company filed
additional patent applications for other blast mitigation technologies,
but those innovations cannot be disclosed in detail at this time. We also
filed an application for this technology under the Patent Cooperation
Treaty (PCT). Under the PCT, we will have patent protection in most industrialized
countries during the review process. A substantial number of countries
have been added to the list of PCT members, including almost all of the
former Soviet republics and China; thus the new claims will be protected
in more than 40 countries while the application is pending.
The market for blast containment and mitigation is not well defined. Competitors
range from niche architectural and engineering firms that provide specialized
design and construction techniques for buildings to fire systems manufacturers.
We have identified the top nine established companies that offer blast
mitigation solutions, but none of them have all of the benefits and features
SecurityStockWatch.com: BlastGard® has an impressive Board which
includes Howard Safir, who served from 1996 to 2000, as the 39th Police
Commissioner of New York City. Please tell us about BlastGard® management
team and Board.
Michael J. Gordon: Howard Safir joined our Board of Directors in
July 2005. Mr. Safir was the 39th Police Commissioner of New York City
and served during the same period that Rudolph W. Giuliani was mayor of
New York City. Mr. Safir has been a distinguished member of law enforcement
for over forty years and has held various posts at the Federal Bureau
of Narcotics, the Drug Enforcement Agency, the U.S. Marshals Service and
he also served as the New York City’s 29th Fire Commissioner. Mr. Safir
has also been engaged by BlastGard through his company - The November
Group - to assist BlastGard in bringing BlastGard technology to the attention
of key decision-makers in the Department of Defense, the Department of
Homeland Security, New York City Police, Fire and Emergency Services,
FBI and other Police/Fire Organizations in the USA; as well as providing
assistance in identifying and developing teaming or partnering opportunities
for the Company. On November 14, 2005, Joel L. Gold joined our Board of
Directors. Joel L. Gold is Director of Investment Banking at Andrew Garrett,
Inc., an investment-banking firm located in New York City. Mr Gold is
currently a director on the boards of several companies of which he serves
on the Audit and Compensation Committees. He holds a B.S. in accounting
from Brooklyn College, an M.B.A from Columbia Graduate School of Business,
and a Juris Doctorate from The NYU School of Law.
The rest of the management team is made up of myself, James Gordon, Jack
Waddell and Kevin Sharpe. BlastGard®’s management team has a strong background
in marketing, sales, corporate finance, accounting, manufacturing, research
and development, and industrial engineering. Our bios are available on
our web site at www.blastgardintl.com.
SecurityStockWatch.com: BlastGard® had nice revenue improvement
for the third quarter ended September 30, 2005 due to the initial sales
of BlastWrap®. How are things looking for 2006?
Michael J. Gordon: The Company is continuing to move toward profitability.
We were a development stage company and reported our first revenue at
September 30, 2005 of $444,000. Our revenue for our year-end of December
31, 2005 will exceed that figure. We are very confident that 2006 will
be our break-out year and we currently have orders on hand of over $800,000.
SecurityStockWatch.com: Thank you for your time today, Michael.
Michael J. Gordon: It was my pleasure. I really appreciate the
opportunity of introducing our Company to your audience.