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BDIC Revenues up 70% From Last Quarter; Releases Shareholder Letter

LOS ANGELES, CA — (Marketwired) — 05/31/16 — Blow and Drive Interlock Corporation (OTCQB: BDIC), an offender monitoring and police-grade alcohol detection device manufacturing and distribution company, releases Quarterly Shareholder Letter, Earned Revenues Increase Nearly 70% over Previous Quarter.

Dear Valued Shareholders:

As you know, BDIC just filed its first quarter disclosure for 2016. The Company is pleased to announce that practically every single machine has been leased to paying customers. These leasing customers have contracts with BDIC for an average of twelve (12) months. Our latest financial statement reflects a scaling business and our earned revenues increased quarter over quarter by 69% with an additional increase in deferred revenue of approximately 44%. These deferred revenues are customers who choose to pay for their entire lease in advance, which under GAAP accounting principles are not considered revenues but rather are accounted for as liabilities. While BDIC has technically incurred accounting liabilities relating to providing criminal monitoring services for the contract of the leases, this practically accounts as immediate revenue that we are deploying in scaling up production of our BDI 747/1 Breath Alcohol Ignition Interlock Device (BAIID).

Our sales continue to outpace our ability to manufacture devices. We estimate that our Company has lost out on approximately $330,000 in this year–s annual sales revenues simply from having a lack of inventory to meet immediate customer demand. Investment and financing dollars we have received have been used to pay for production of the additional inventory of our BDI 747/1 devices. This investment in inventory has been translating into an approximately 45% return on money in the first year. According to our economics estimates, assuming an eight (8) year lifetime of our BDI 747/1 units, this investment in inventory would translate into an internal rate of return (IRR) on investment exceeding 200% annually. This is consistent with our view that our business has already begun the process of scaling to rapidly acquire market share. These efforts resulted in BDIC increasing our equipment assets by 200% and we now have approximately 350 units under active lease. We have an additional 100 units that are being delivered to BDIC headquarters tomorrow. We have additionally begun the process of commencing production of a further additional 100 units, to be delivered to our Los Angeles facility within the next 14 days. We anticipate that we will lease each and every one of these units out by the end of the 2nd quarter, which is not inconsistent with our sales performance last quarter, and which will raise our total number of BDI 747/1 devices under active criminal monitoring leases under the auspices of the nine (9) states in which we have approval, to over 500 units. Further, it should be noted, that our sales efforts have been materially only in five (5) of the nine (9) states in which we have approvals. We didn–t pursue the additional states due to our constraints relating to manufacturing this additional inventory.

To remedy this situation we are in active discussions with a variety of parties to explore financing options to expand our manufacturing and production capabilities. We have contracted with Gnosiis International to provide us with economics and consulting services. Regardless, I want to remind you, that once we accomplish our goal of having over 1,000 paying monthly customers, the company will be in a position to self-finance the production required to meet the demand for national expansion. In the event that we choose to not accept any new financing, at our current rate of growth, by the end of this next quarter, we will be able to self-finance a national expansion by the end of 2016.

That being said, we are actively negotiating with financing and investment banking firms to assist BDIC in properly structured financings. A key barrier to us accepting financing that has been offered so far has been “toxic debt” provisions that I refuse to accept. By “toxic debt” I am referring to convertible debt of a specific nature, or unclear nature, which is commonly offered to companies trading on the OTC Markets. Not all convertible notes are toxic but toxic type of convertible debt can contain terms that can be very detrimental to shareholders. I actually feel so strongly about it that I honestly believe it should be considered predatory lending that harms the reputation of the OTC markets and the shareholders whose support is betrayed by toxic debt financing. Our company is in too strong of a position, with too much potential, to risk assuming any debt of a potentially toxic nature of any kind.

Our cash position may appear weak at first glance, however it is important for our shareholders to understand the importance of spending all our free cash manufacturing devices, which in turn enables the company to strengthen its financial position at the negotiating table with potential lenders.

As is disclosed in the subsequent events in the Company–s 10Q, we were able to secure funding from some traditional lending sources as well as the sale of restricted stock. The restricted stock was sold at a discount to market, however it is restricted for a twelve (12) month period and there are no convertible features or options in conjunction with any of these stock purchase agreements.

I am certain that, until such time that we can secure more traditional and friendlier terms of financing, these sales of restricted stock directly from the company–s treasury and/or short term loans with 100% of the proceeds received directly by the company, will continue to sustain our short term inventory financing needs. It is important to note, that all of our financing activities are being utilized to capitalize the expansion of our market share (as opposed to covering operating expenses, which is already being covered by reoccurring billing from existing leases).

I am sure that interested shareholders are aware that we were approached by the New York State Department of Criminal Justice Services (NYDCJS) to replace an industry leader in Breath Alcohol Ignition Interlock Devices that was recently suspended by the State of New York. The industry leaders each have an estimated 50,000 – 70,000 BAIID–s on the road each and every day in the United States, which equates to a gross market potential of $5 million for each company on a monthly reoccurring basis and growing. The NYDCJS reached out to us by phone inquiring if our company would be interested in applying to serve as a replacement vender for the criminal monitoring services through the NYDCJS. Subsequently, the NYDCJS mailed us the 146 page application and we have already submitted the application back to the NYDCJS. We received telephone confirmation that the state is in receipt of our application. If you remember, this was something I guaranteed we would deliver on and I am proud to announce that, in fact, we indeed have.

BDIC and its management team are as committed as ever to create a sustainable business that consistently increases shareholder value. We are expecting to realize increasingly rapid growth as we move through the phases of our plan for national expansion. We will continue to keep our shareholders well informed on our progress and challenges in all areas of the Company–s business throughout the year.

I would lastly like to make note that we are beginning internal due diligence with regard to necessary efforts to begin pursuing the possibility of up-listing from the OTC Venture Markets Exchange to another more established U.S. National Exchange. We have significant milestones that we still need to achieve but we are confident that these milestones and relevant listing criteria will inevitably be met in the due course of growth for our business. We are therefore commencing preliminary planning efforts, as well as taking some practical steps, to enable implanting this milestone when the time becomes appropriate. I am looking forward to keeping our shareholders updated in this regard in future Shareholder Letters and updates.

On behalf of the Company, I truly appreciate your continued support and patience while we embark on the next phase of the Company–s growth. Every BDI 747/1 BAIID helps keep the roads safe for sober motorists and saves lives. We hope that the Company–s positive outlook and social impact continues to be recognized by its shareholders.

Laurnce Wainer
President & CEO
Blow & Drive Interlock Corp.

This report may contain certain forward-looking statements and information. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of mentioned company to be materially different from the statements made herein.

Laurnce Wainer
President & CEO
Blow & Drive Interlock Corp.
Phone: 310-270-2888

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