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Table of Contents

Company Overview 3
Who We Are 3
Vision Statement 3
Mission Statement 3
Letter to Our Shareholders 4
Analysis of Financial Condition and Results of Operations 5
Financial Highlights 5
Stock Price 5
Income/Assets and Income/Sales Ratios 5
Market Share 6
Sales Growth 6
Research and Development 6
Fixed Assets 7
Liquidity and Capital Resources 7
Market Analysis 7
Marketing and Product Description 9
Our Product 10
Financial Statements 11
Consolidated Income Statement 11
Consolidated Cash Flow 12
Consolidated Balance Sheet 13
Notes to Financial Statements 13
Statement from Independent Auditor 14
Management Team 15
Board of Directors 15
Locations 15
Other Information 15
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Company Overview

Who We Are

Beach Drive Incorporated is a leading global manufacturer of multi-feature USB flash
drives. BDI provides environmentally friendly, high quality flash drives with optimal
functionality for users. We aim to remain at the forefront of the flash drive industry by
continuously developing the most cutting-edge products on the market.

Beach Drive Incorporateds headquarters is located in Long Beach, Merica 3. As an
international company, BDI has two manufacturing plants, one in its home market,
Merica 3, and a second in South America, located in Sereno. BDI currently maintains
sales offices in Merica 1, Merica 2, Merica 3, and Sereno. For the last three years BDI
has been under a new management team, which has consistently emphasized innovation
and customer satisfaction to ensure that we remain the vanguard of the flash drive
industry worldwide.

Our Vision

BDIs vision is to be the industry leader in innovative, high-quality, multi-feature USB
flash drives and offer our customers a superior product with unparalleled value at a
competitive price.

Our Mission

BDIs mission is to be the leading provider of differentiated USB flash drives for
customers who demand innovative multi-feature products. To fulfill the needs of our
customers we will invest heavily in research and development to ensure that we continue
to provide the most advanced products on the market. To provide the greatest value to our
customers and return to our shareholders we will invest in employee training to keep
costs low and productivity high.

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Letter to Our Shareholders

I am very pleased to report that Year 5 has been a great success
for Beach Drive Inc. and in turn our shareholders. Since Year 3,
when BDI introduced a new management team, directing itself
towards innovation and growth, we have released three new
product models and increased revenue by 65%. Despite an ever-
changing market and a rising demand from consumers for
environmentally friendly product packaging we have been able
to increase global market share while keeping costs low.

Although our management team faced some challenges in Year 3 and Year 4, our long
term planning and preparation for market growth has significantly paid off in Year 5. As
markets both domestically and abroad have begun to prosper we have been poised to
meet rising market demand. We project future market growth accompanied by a growing
market share, and as a result we have continued to expand our operations in order to meet
the increasing demand of our customers. As the market size has risen our financial
position has consistently improved preparing us for upcoming years. Below are a few
highlights from Year 5.

Net Income: Net income in Year 5 was $1.9 million, up from $110,000 in Year 4.
Gross Sales: Gross sales for Year 5 were over $22 million, a 23% increase from Year 4.
Market Share: Market share at year-end was over 23%, a 4% increase from Year 4.

Not only do we aim to meet the demand of our existing customers, we also strive to
continuously provide the most desirable and advanced products on the market in order to
attract new customers to our brand. By offering market specific products we have been
able to thrive in each of the four markets in which we operate. We believe that in order to
maintain current customers while attracting new customers our product needs to be not
only unique but also durable. By developing high quality products that fit the needs of the
customers in each of our respective markets we intend to maximize customer satisfaction
and in turn ensure customer retention.

At BDI we recognize our employees are our most valuable assets and therefore we invest
heavily in extensive training programs and competitive employee compensation
packages. Through the business model of providing the most advanced products on the
market that precisely meet customer demand and providing our employees a workplace in
which they can prosper we will continue to increase net income and as a result increase
our stockholders value of their stake in BDI.

We look forward to sharing our future successes with our shareholders, employees, and
management team in the years to come.

Bryce Thomson
Chief Executive Officer
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Analysis of Financial Condition and Results of Operations

Financial Highlights

Beach Drive Inc. experienced a
significant increase in stock value
during Year 5. In Quarter 1 we
issued stock in order to raise capital
for further growth. Following that
slight decrease in stock price we
have since repurchased the majority
of those shares and simultaneously
reached a record stock value of
$1.30 in the Quarter 4, up from
$1.07 one year prior, making our
market cap $8.19 million.

During Year 5 BDI greatly increased
our annual net income to a record
$1.9 million. This improved both
our income to equity ratio as well as
our income to sales ratio. Income to
equity increased from 0.89% in Year
4 to 13.43% in Year 5. Our income
to sales ratio increased from 0.65%
in Year 4 to 8.57% in Year 5. This
growth has been a result of our long
term planning and preparation for
predicted future market growth.
Despite an issuance of more shares we have also been able to increase our earning per
share from $0.018 in Year 4 to $0.286 in Year 5, highlighting the increased earnings that
BDI has achieved by cutting costs, growing customer demand, increasing sales prices and
implementing aggressive advertising campaigns.












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Year 4 Year 5
Revenue ($000s) 17,027 22,132
Gross Profit Margin 59.59% 57.35%
Net Income After Tax ($000s) 110 1,897
Earnings Per Share 0.018 0.286
Market Share (Average) 19.27% 21.29%
Production Cost Per Unit 4.73 4.94
Net Operations Cash Flow ($000s) 1,716 3,086
Shares Repurchased (000s) 0 1,000

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In Year 5 BDI has maintained
our position as a major market
competitor. We achieved
record market shares in each of
our areas of operation.
Increasing market share from
Year 4 Quarter 4 by 5% in
Merica 1, 3% in Merica 2, 2%
in Merica 3, and an
unprecedented 10% in Sereno.
Our current global market
share is up 4% from year-end
Year 4 to 23.4%.

While the market for flash drives has continued to grow, BDIs unit sales drastically
outpaced market growth in Year 5. This growth coupled with rising demand and higher
product prices to reflect new product introductions significantly increased our revenue. In
Year 5 our revenue was over
$22 million up 23% from $17
million in Year 4, and up 35%
from $14 million in Year 3.
This increase in revenue from
Year 4 to Year 5 has allowed
us to improve our financial
position, repurchase shares,
increase product innovation,
and continue to expand our
operations on a global scale, in
turn increasing shareholder

Research and Development

BDI has consistently led the market in R&D
investments. In Year 5 we invested 20%
more than the market average in R&D and
10% more than our closest competitor.
Through heavy investment in R&D we were
the first to release Model 4 in Year 4 and the
first and only company to release Model 5
in Year 5. This innovative approach has
allowed us to increase our units sold and by
raising prices to reflect our continuously
improved premium product we have
increased revenue.

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Fixed Assets

BDI currently has the highest value of fixed assets in our industry, 11% more than the
market average. Our investments have allowed us to maintain a sufficient production
capacity to meet demand and remain prepared for market growth. We have continued to
invest in our Sereno plant, including a plant expansion in Year 5 Quarter 4 in order to cut
our production costs with the aim of increasing net income.

Liquidity and Capital Resources

At year-end of Year 5, BDI had over $3 Million cash on hand, up from $1.7 Million at
the end of Year 4. With this capital we will continue to innovate, expand our operations,
and maintain a high level of employee satisfaction. This will also enable us to introduce
dividends and continue with stock buybacks in order to increase our shareholder value.

Market Analysis:

Beach Drive Inc. currently operates in four different areas. These areas include our home
market, Merica 3, as well as Merica 1, Merica 2, and Sereno. We have sales offices in
each of these markets in order to keep our sales team close to our customers. We
currently have two manufacturing facilities, one in Merica 3 and one in Sereno. We
expanded our facilities to Sereno in Year 3, which allowed us to take advantage of lower
production costs and have a greater production presence in that growing market. Each
year, we purchase a Consumer Preference Report (CPR) in order to specifically identify
which types of products our customers desire in each of the markets.

Merica 3 is our home market where we currently produce many of our innovative
products. According to the CPR, the consumers in Merica 3 desired Quality 1/ Feature 2
products. However, the difference in consumer demand between product structures in this
market is incremental and we believe it is important to maintain a differentiated and
innovative product. We are, as a result, one of only two companies selling a Quality 2/
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Feature 3 product in this market, the other company being Company 2, Macs Maple

In this market, because we incur many of our corporate costs, our costs per unit have
been higher, which has required higher sales and precise inventory management in order
to compensate for higher respective operating costs. We have begun to shift operations
out of Merica 3 in order to lower production costs and in turn increase overall profit, and
raise shareholder value. The economy has continued to grow consistently, and at a much
faster rate than in previous years, throughout Merica during Year 5 and we therefore
expect our market to continue to grow as well. Despite minimization of production in
Merica 3 we still remain at a production capacity capable of meeting current market
demand and poised to meet future increases. We have worked to keep costs low and
innovation high by maintaining aggressive training and R&D departments at our home
office. This approach has been effective and has resulted in Merica 1 becoming
increasingly profitable each quarter throughout Year 5.

Merica 2 was our largest market throughout Year 5 in terms of unit sales. In Year 5
Quarter 1, the industry sold 100,000 more units here then the next largest market, Merica
3. The consumers in Merica 2 desired a Quality 1/ Feature 1 product, according to the
CPR. Despite this preference we recognized that there remains a distinct unfulfilled
market for high quality flash drives, which we aim to expand. We have adjusted our
tactics in this Market, and made the transition from selling Model 4, a Quality 3/ Feature
3 product in Quarter 3 to Model 5, a Quality 2/ Feature 2 product in Quarter 4. This
product, meeting a slightly lower quality niche but remaining above the budget Quality 1/
Feature 1 products, proved to be successful because for the first time we took control of
the largest market share in this significantly sized market.

Merica 1 is another Merica market, which has become increasingly profitable for us
throughout Year 5. A large majority of consumers in this market desired a Quality 3/
Feature 3 product. After selling the most desired product structure in this market for
almost three years, we transitioned into selling a Quality 2/ Feature 3 product. This move
was in response to an oversaturation
of companies providing products to
fulfill the demand for Quality 3/
Feature 3 products. Two other
competitors were also selling this
product structure in this market. We
saw our sales increase after making
the move to being the only company
selling a Quality 2/ Feature 3
product in Merica 1. This shift
proved to be lucrative because it
allowed us to reach the second
largest market share in Merica 1.

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Sereno is the only foreign market that we currently produce and sell in. We have seen the
exchange rate stay extremely consistent over the past five years, remaining at 6 Pesos.
Although there have been market predictions of shifts in the exchange rate it has
remained stable from Year 3 through Year 5. It is the fastest growing market in our world
and we see a lot of potential for growth here. The consumers here prefer a Quality 1/
Feature 3 product, which is exactly what we offer. By offering an innovative product with
lower quality components we are able to meet market demand and keep both production
costs and sales prices low. Although two other companies offer the same product
structure, we have taken control of this market and have developed a loyal following of
consumers. We held a 32% market share here by the end of Year 5. We plan on
continuing to be industry leaders in this expanding market.

Although exchange rates have remained highly stable over the course of the last couple
years this is an aspect of our business model, which we are aware could become a risk in
the future. If the Sereno Peso weakens it could diminish domestic earnings, and if the
Peso strengthens it could cut the savings levels we are currently experiencing in Sereno.
We predict that in coming years the economy in Sereno will continue to grow, in turn
providing us with a stable and growing market in which to sell our product while
maintaining a steady exchange rate in relation to Merica. Based on the profitability that
has resulted from operations in Sereno we expanded our production plant there in Year 5
Quarter 4 in order to increase capacity in anticipation of growing markets in both Merica
and Sereno. We are currently one of only three companies in our world which have
invested in a Sereno plant, and therefore we see this as a great competitive advantage
which will allow use to continue to provide multi-feature products at competitive prices
for years to come.

Marketing and Product Description

At Beach Drive Inc. we believe that providing our customers with the product that they
desire most is the key to success. Our marketing team uses consumer preference studies
and experience to determine the needs and wants of our customers and to create the most
suitable products for each market. This information is then passed on to our
manufacturing department, which creates leading industry products with the designs and
features to satisfy customer demands and preferences.

We remained our worlds leader in innovation, by being the first
in the industry to release both Model 4 and Model 5. The first
model that we released was the Smart-Drive. By Year 3 we
released Model 2, the Ultra-Drive. In Year 4 we released Model
4, the Ultra-Drive-Mini. Most recently, in Year 5, we released
our most innovative product yet, the Key-Drive. Following the
release of our most recent model, BDI achieved record sales and
revenue. In recognition of our newest model, we were honored at
a global consumer technologies trade show, the Consumer
Electronics Show (CES), with the 2014 Best of Innovations
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Beach Drive Inc. pursues an aggressive advertising platform. Since our first year of
operations, we have continuously increased annual advertising expenditures. These
investments have enabled us to reach more consumers through our advertising campaigns
and increase the general recognition of our brand. In order to connect with our target
customers, in the midst of the Internet age, a large portion of our marketing is done
through online advertising. Within the past two years we have expanded our marketing
efforts into technology tradeshows and conventions. Beach Drive Inc. recently became
the main sponsor for SXSW Interactive, which is an annual multi-day trade show that
showcases the newest computer technologies from around the world.

BDI has also utilized social media as a marketing tool. Through the use of social media,
we are able to connect and interact with hundreds of thousands of Millennials and
consumers of every generation. Platforms such as Facebook, Twitter, Instagram, and
LinkedIn allow us to use active marketing to get the opinions and values of our highly
valued customers and continue to provide each market with the most desirable and
cutting-edge products.

Our Products

We have discovered that our consumers tend to prefer high quality products with multiple
features; therefore this is what we aim to deliver. Our products are industry leaders in
quality and features. We have consistently been the first to market with the release of
each of our new models. In Year 4, we jumped from Model 2 to Model 4, and since then
we have been one model ahead of even our closest competitor. Our newest model, Model
5, or the Key-Drive, set record sales and revenue upon its release in Year 5 Quarter 4.

Model 5: The Key-Drive

With the most up to date technology and a unique
design, the Key-Drive gives our consumers a
product that they can take with them everywhere
they go without even noticing it is there.
Whenever and wherever there is a need to save or
transfer data safely, they can simply pull out their
key chain and insert this extremely innovative and
mobile flash drive.

Model 4: The Ultra-Mini-Drive

The Ultra-Mini-Drive was a revitalized version of our Model
2. As we recognized that consumers were desiring a more
modern, transportable flash drive, we decided to minimize
the size and provide them with a sleek and discreet product
which can be slipped into the change pocket of a pair of jeans
or even left in your computer, acting as a convenient and
mobile storage tool.
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Financial Statements

Beach Drive Inc.s Consolidated Income Statement ($000s)
Year 3 Year 4 Year 5
Net Sales: To Customers 14,331 17,027 22,132
to Liquidators (at cost) 82 42 136
Total Sales 14,413 17,069 22,268
Cost of Goods sold 6,722 6,563 9,065
Less Value Added Tax 288 362 511
Gross Profit 7403 10146 12692

Advertising Expense 699 2,459 2,266
Sales Salaries 507 574 680
Sales Commissions 316 431 667
General Selling Expense 1,664 1,752 2,002
Transportation Expense 674 878 945
Sales Office Depreciation 48 48 48
Total Selling Expense 3907 10146 6608

Research and Development 605 1,000 810
Total Training Expense 753 572 629
Storage Expense 91 157 223
Executive Compensation 813 845 889
Other Expense 82 283 86
Total Admin & Gen Expense 2,343 2,858 2,635
Total Operating Expense 6,251 8,975 9,243
Operating Profit (Loss) 1151 1172 3451

Other Income:
CD Interest 27 - -
Capital Gain (Loss) - - -

Other Expense:
Loan Interest 12 39 -
Bond Interest 200 200 200

Net Profit (Loss) Before Tax 966 933 3,251
Less Income Tax 385 822 1,353
Net Profit (Loss) After Tax 581 110 1,897
Foreign Currency Adjustment - - -
Comprehensive Income (Loss) 581 110 1,897

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Beach Drive Inc.s Consolidated Cash Flow ($000s)
Year 3 Year 4 Year 5
Operating Receipts:
Accounts Collected 14,060 16,524 20,991
CD Interest 27 - -
Sales to Liquidators 82 42 136

Operating Expenditures:
Interest Paid 212 233 200
Production Cost 6,280 6,591 7,190
Operating Expense 6,022 8,761 9,139
Taxes Paid 782 954 1,529
Net Operating Cash Flow 873 29 3,069

Investment Receipts:
CDs Matured 1,000 - -
Fixed Assets Sold - - -
Investment Expenditures:
CDs Purchased 1,000 - -
New Equipment 2,088 - -
Sales Office Investment - - -
Plant Investment 1,935 - 539
Net Investment Cash Flow (3,023) - -539

Financing Receipts:
Loans from Bank 700 2,000 -
Bond Sale - - -
Stock Sale - - 1,027
Financing Expenditures:
Dividends Paid - - -
Bank Loans Repaid - 2,930 1,000
Bonds Repurchased - - -
Stock Repurchased - - 1,190
Net Financing Cash Flow 700 70 (1,163)

Beginning Cash Balance 2,848 1,395 1,716
Net Cash Flow for Year (1,450) 99 1,367
Cash Balance End of Year 1,395 1,716 3,086

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Beach Drive Inc.s Consolidated Balance Sheet ($000s)
Year 3 Year 4 Year 5
Cash Balance 1,395 1,716 3,086
Time Certificates of Deposit - - -
Accounts Receivable 2,204 2,708 3,848
Inventory 695 1,676 688
Total Current Assets 4,294 6,100 7,622

Net Sales Office 1,454 1,405 1,357
Net Manufacturing Plant 4,882 4,717 5,086
Net Manufacturing Equipment 3,730 3,004 2,278
Other Investments 2,000 2,000 2,000
Total Fixed Assets 12,066 11,126 10,721
Total Assets 16,360 17,226 18,343

Accounts Payable 1,178 1,404 1,448
Bank Loans 700 1,000 0
Taxes Payable 204 433 769
Total Current Liabilities 2,082 2,837 2,217

Bonds Outstanding 2,000 2,000 2,000
Total Liabilities 4,082 4,837 4,217

Capital Stock 9,500 9,500 9,085
Accumulated Earnings 2,777 2,888 5,038
Accumulated Foreign Cur. Adjust. 1 1 3
Total Equity 12,278 12,389 14,126

Total Liabilities & Equity 16,360 17,226 18,343

Notes to the Financial Statements

Principle of Consolidation: The consolidated financial statements display the financial
position and operational results of Beach Drive Inc., including our wholly owned
subsidiaries. The preparations of the financial statements are in conformity with the U.S.
generally accepted accounting principles.
Inventory: Inventories are stated at the cost of production and are based on first-in and
first-out accounting method.
Revenue Recognition: Revenue is recorded once products are delivered to affiliates,
sales office, and/or customers.
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Selling and general expenses: Expenses include general expense, transportation,
advertising, employee salaries and commission, R& D, sales office depreciation, training
expense, executive compensation expense, and storage expense.
Income Tax: Income tax is 39% of net income for our company and our subsidiaries.
Sereno implements a value-added tax of 10% on all domestic sales.
Bonds: Interest is 2.5% quarterly of the value of outstanding bonds.
Accounts Receivables: Account Receivables are collected during the current and
following quarter at a rate of 50%, respectively.
Property, plant and equipment: Depreciation is calculated on a straight-line method
based on useful lives of 31.5 years for building and plants, and 7 years for equipment.
Research and Development: R&D expense is accounted in the period it is incurred.

Statement from Independent Auditor

Report of KPMG, Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Beach Drive Inc.

We have audited the consolidated financial statements of Beach Drive Inc. and its
subsidiaries as of December 31, Year 4 and December 31, Year 5. The financial
statements examined include the income statement, balance sheet, and statement of cash
flow, all of which are the full responsibility of the companys management. Our
responsibility is to express and opinion on these financial statements based on our audits.

We conducted our audit according to the Generally Accepted Accounting Principles as
set forth by the Financial Accounting Standards Board and the Securities and Exchange
Commission in the United States. These principles require that we plan and perform the
audit in order to obtain reasonable assurance that the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in each of the financial statements. Our audit also includes
assessing the accounting principles applied by Beach Drive Inc. and examining any
significant estimates made by the company. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements of Beach Drive Inc. present all material elements
of the consolidated financial position of the company fairly and accurately as of
December 31, Year 3, December 31, Year 4, and December 31, Year 5. Each of its
financial statements conforms to the policies and standards set by the U.S. Generally
Accepted Accounting Principles.


Los Angeles, California
February 28, Year 6
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Management Team

Bryce Thomson............................................................................Chief Executive Officer
Jake Fitzgerald..........................................................................Chief Operations Officer
Jimmy Borland...........................................................................Chief Marketing Officer
Jennifer Phan................................................................................Chief Financial Officer
Damion Ma..........................................................................Vice President of Accounting

Board of Directors

Warren Buffet..............................................................................Chairman of the Board
Annette Lohman............................................................................President of the Board
Jeff Bezos.........................................................................................Member of the Board
Michael Solt.....................................................................................Member of the Board

Corporate Headquarters:
Long Beach, Merica 3
Sales Offices:
Long Beach, Merica 3
Dallas, Merica 2
New York, Merica 1
Braslia, Sereno

Long Beach, Merica 3
Braslia, Sereno

Other Information:

Corporate Headquarters: 1250 Bellflower Blvd. Long Beach, Merica 3

Stock Identification: BDI

Stock Exchange: NASDAQ Global Select Market (NASQAQ)

Independent Registered Public Accounting Firm:
355 S. Grand Ave. Los Angeles, Merica 3, 90071

General Counsel:
Greene Broillet & Wheeler, LLP
100 Wilshire Boulevard, 21st Floor
Santa Monica, Merica 3 90401

Next Annual Meeting:
April 25, Year 6
2085 S. Harbor Blvd., Anaheim, Merica 3, 92802