We manufacture, market, lease, install and monitor a Breath Alcohol Ignition
Interlock Device (BAIID) we developed known as the BDI-747 Ignition Interlock
Device (the “BDI-747/1”), which is a mechanism that is installed
on the steering column of an automobile and into which a driver exhales prior
to starting their vehicle. The device in turn provides a blood-alcohol concentration
analysis. If the driver’s blood-alcohol content is higher than a certain
pre-programmed limit, the device prevents the ignition from engaging and the
automobile from starting. These devices are often required for use by DUI or
DWI (“driving under the influence” or “driving while intoxicated”)
offenders as part of a mandatory court or motor vehicle department program.
The BDI-747/1 has met the 2013 National Highway Traffic Safety Administration
(NHTSA) guidelines for Breath Alcohol Ignition Interlock Devices [Federal Register
Volume 78, Number 89] as an authorized BAIID [Element Materials Technology/Report
# ESP018444P June 17, 2015]. The BDI-747/1 is manufactured by BDI Manufacturing
Inc., a subsidiary of Blow & Drive Interlock Inc.
The primary market for the BDI-747/1 Ignition Interlock Device is as a breathalyzer
device to be used by persons convicted of a driving under the influence of alcohol.
In order for the BDI-747/1 to be used in states for persons convicted of driving
under the influence the device must be approved by each individual state. The
process to get the device approved varies greatly state-to-state. As of December
31, 2015, the BDI-747/1 was approved for use in eight states, namely California,
Colorado, Oregon, Texas, Arizona, Kentucky, Oklahoma and Tennessee. Our plan
for 2016 is gain approval in an additional 8-12 states.
In states where the BDI-747/1 is approved as a BAIID, we lease the BDI-747/1
devices to offenders, typically for twelve months, but the time could differ
on a case-by-case basis depending on the sentence received by the offender.
In some states we market, lease, install and support the devices directly and
in other states we sell distributorships to authorized distributors allowing
them to lease, install, service, remove and support the BDI-747/1 devices. Currently,
we lease the devices directly in four states state – California, Kentucky,
Oregon and Tennessee - and license the device to distributors in three different
areas – two counties in Texas and in the state of Arizona.
In states where we lease the devices directly to consumers, we currently charge
$198 in upfront fees for the user (which covers two months of the lease payment),
and then $99/month for the other ten months of the lease for the typical one
year lease. The lease payment covers the installation of the device in the consumer’s
vehicle, the rental of the device, recalibration of the device as required by
each state (typically every 30 to 60 days) and the monitoring services for the
device, which are then reported to the state in accordance with each state’s
requirements. In states and areas where we do not have a direct presence, which
we only have in Los Angeles, California, we contract with independent service
centers, such as car alarm installation companies or other auto services companies,
to perform the installations of our BDI-747/1 device, which centers must be
approved by the states in which the perform the installations. Because our devices
are installed in consumers’ vehicles are part of a judicially-mandated
program, and since the use of the device controls the individual’s driving
privileges, collection rates of the monthly leasing fees is close to 100%. The
failure to make the payment could be a violation of the consumer’s sentence
or probation and could cause them to lose the device and their driving privileges.
In areas where we have a distributor, in our typical distributorship arrangement,
we charge the distributor a flat fee distributorship territory fee up front
(which fee varies based on the size and location of the distributorship), a
$150 per unit registration fee, and then a $35 monthly fee for each device the
distributor has in its inventory. These fees may vary on a case-by-case basis.
The relationship with our distributors may either be on an exclusive or non-exclusive
basis depending upon the location of the distributorship and the fees charged.
Currently, between the devices we lease directly and those devices leased through
our distributors, we have approximately 225 units on the road. We plan to increase
our marketing of the device, and more aggressively pursue sales and distributors
once we have funds to manufacture additional units.
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