Azure Dynamics Reports Fiscal 2009 Year End Results

    
    -   Azure Dynamics reports record fourth quarter revenue of $4.4 million
        and record year end revenue of $9.4 million representing increases of
        72% and 23%, respectively versus the same periods in the prior year.

    -   Balance(TM) Hybrid Electric delivery vans and shuttle buses continue
        to gain market acceptance with new and repeat customers in 2009.

    -   Azure and Ford Motor Company announced collaboration on Transit
        Connect Electric project.

    -   Company says that with the success of its recent public offering, and
        current and anticipated product demands, it anticipates having
        sufficient liquidity to execute its business plan in 2010.
    

OAK PARK, MI, March 24 /CNW/ - Azure Dynamics Corporation (TSX: AZD) (OTC: AZDDF) ("Azure" or the "Company") a leading developer of hybrid electric and electric powertrains for commercial vehicles, today announced its financial results for the three and twelve-month periods ended December 31, 2009. The Company also provided an update on corporate and product development activities during the year.

"2009 was just the start of what we expect will be a long-term trend of positive results for Azure," said Scott T. Harrison, CEO of Azure Dynamics. "Despite the economy, it was our best sales year ever with 566 total products sold which are now powering vehicles for 80 new and repeat customers. Plus we completed major agreements with our key partners and continued to build our already strong relationships with our major fleet customers.

"As businesses start to ramp up their purchasing and implement their green initiatives, Azure is in a good place," Harrison said. "Most of our products qualify for federal and state stimulus funds which will help to lower the purchase price and reduce the payback period making them even more attractive to customers. That will help us build on the momentum we're already enjoying in the marketplace."

Financial Results

Revenue for the fourth quarter of 2009 totaled $4.4 million compared to $2.6 million in the fourth quarter of 2008. For the year ended December 31, 2009 revenue increased to $9.4 million compared to $7.7 million in 2008. Net loss for the fourth quarter of 2009 totaled $8.0 million, or $(0.02) per share compared to a loss of $14.5 million or $(0.04) per share in the fourth quarter of 2008. For the year ended December 31, 2009, the Company's net loss was $27.8 million, or $(0.07) per share, compared to a net loss of $38.9 million, or $(0.12) per share in 2008.

Before contributions, the Company's engineering, research and development ("R&D") expenses in the quarter totaled $5.2 million (including $2.9 million in product development costs), compared to $6.0 million for the same period in 2008 (including $3.1 million in product development costs). For the year ended December 31, 2009, the Company's engineering and R&D expenses totaled $15.6 million (including $6.1 million in product development costs) compared to $21.5 million in 2008 (including $11.6 million in product development costs).

As of December 31, 2009, the Company's cash and cash equivalents totaled $33.6 million and working capital totaled $31.7 million, compared to cash and cash equivalents of $13.8 million and working capital of $19.8 million as at December 31, 2008. During the year, the Company completed two equity financings, raising net proceeds of $37.2 million to fund ongoing product development, operations and working capital.

    
    Key 2009 Milestones

    -   On December 22, Azure closed its offering of common shares for total
        gross proceeds to the Company of approximately $30,000,000.

    -   On December 14, Azure announced that Purolator Courier Ltd.
        ("Purolator") placed an order for an additional 200 Balance(TM)
        Hybrid Electric delivery trucks. The 200 unit purchase is Azure's
        largest revenue order ever. Purolator had already ordered 50 units
        earlier in the year.

    -   On November 9, Azure announced that FedEx Express purchased fifty-one
        (51) additional Azure Balance(TM) Hybrid Electric vans.

    -   On October 30, Azure announced its collaborative effort to deliver
        the Ford Transit Connect Electric van. Azure will upfit the Transit
        Connect with its proprietary Force Drive(TM) pure electric
        drivetrain.

    -   On October 14, Azure and Kidron announced a record 248 unit Low
        Emission Electric Power (LEEP(TM)) sale to Idealease on behalf of its
        client, Schwan Food Company.

    -   On August 13, Azure Dynamics closed a private placement offering for
        gross proceeds of approximately $10,000,000.

    -   On April 9, Azure announced an exclusive supply agreement with
        Collins Bus of Kansas to create NEXBUS, the only hybrid electric
        Type A (short) school bus available in North America.

    -   On January 15, the Company announced a plan designed to address cost
        issues while meeting growing demand for its green technology
        solutions. The plan included a 25% workforce reduction, cuts in
        discretionary spending, actions to offset component cost increases
        and a focus on new programs that involve a sharing of development
        costs.

    -   On January 13, Azure announced a five year supply agreement with
        Johnson Controls-Saft under which Johnson Controls-Saft will supply
        the Company with its state-of-the-art lithium-ion hybrid batteries.

    Corporate

    -   Azure's Balance(TM) Hybrid Electric drivetrain integrated on the Ford
        E-450 chassis continues to enjoy little competition in the medium
        duty commercial truck segment where it resides and where Ford is the
        clear market leader. Azure customers report up to 40% fuel economy
        improvement, 30% reduction in maintenance costs, and a 30% reduction
        in greenhouse gas emissions. Current government incentives are
        encouraging adoption of this environmentally-friendly technology.

    -   During 2009 Azure deepened both its relationship with Ford and its
        offering to commercial customers with the October announcement that
        the Company will provide its Force Drive(TM) electric powertrain
        technology for the Ford Transit Connect Electric. The award winning
        Transit Connect began selling in North America in 2009 and the
        electric variant is the first electric offspring in Ford's Blueprint
        for Sustainability. Johnson Controls-Saft was chosen as the battery
        supplier for Azure's Force Drive(TM) integration on the Ford Transit
        Connect Electric.

    -   Azure established a new strategic relationship with Johnson
        Controls-Saft (JC-S) in 2009 by signing a five year supply agreement
        for lithium-ion battery packs. The relationship gives Azure a
        predictable supply of JC-S advanced lithium-ion batteries at market
        competitive prices. Led by this battery, Azure expects to
        significantly reduce the Balance(TM) Hybrid Electric product costs by
        up to 40% by year end 2010. Azure expects significant margin
        improvement on the product as a result, and where appropriate a
        portion of the savings will be passed along to customers to drive
        additional volume.

    -   Azure's sales strategy includes a combination of direct sales,
        distributor sales and Ford dealerships. Azure has partnerships with
        seven of the top shuttle bus body manufacturers that represent
        approximately 90% of this target market. The Company's relationship
        with Ford commercial truck dealerships in major metro markets in
        North America for both sales and service provides distribution
        bandwidth while keeping internal sales costs comparatively low.

    -   Azure has avoided significant investment in manufacturing facilities
        by leveraging existing capacity. The Company has announced that
        Transit Connect Electric upfitting will occur in the State of
        Michigan, however, the location and partner have not been named
        pending final agreement.
    

"Adding new customers is the name of the game but it's especially gratifying to add repeat business to the portfolio, and we did a lot of both in 2009," said Harrison. "Our biggest customers who already have experience with our products placed significant repeat orders during the year and we signed on a number of new customers who are just starting to convert to more energy efficient fleets. This bodes well for our future opportunities since we traditionally have a high re-order rate.

"We have the technology, the partners and the products to make Azure the choice for commercial fleets looking to reduce costs and green their fleets," Harrison said. "Our development work over the past twenty years is paying off and we expect that sales and revenue records will be short lived around here."

    
    Product Development

    G1 Series (7,500 to 16,000 lbs. gross vehicle weight, "GVW")
    ------------------------------------------------------------

    -   Purolator's fleet of 49 series hybrid vehicles have approximately
        1.3 million miles as of December 31, 2009
    -   During the year all 19 G1 diesel hybrids have surpassed their
        warranty period of 3 years
    -   The 30 gas series hybrids have surpassed two years in service and the
        earlier units will hit the 3 yr in-service milestone in Q1 of 2010
    -   2009 was the final model year for production of G1 Hybrid vans and
        CitiBuses. The program will now move into a service engineering mode.
        The high mileage and time in-service data will provide Azure with
        valuable durability data for future developments

    Balance(TM) Hybrid Electric (P1) Parallel (10,000 - 19,000 lbs. GVW)
    --------------------------------------------------------------------

    -   The Balance(TM) Hybrid Electric shuttle bus was released into
        production in the first quarter of 2009
    -   The 2009 model Balance(TM) Hybrid Electric was certified as a new
        qualified heavy-duty hybrid motor vehicle by the IRS, which qualifies
        it for a $3,000 US Federal tax credit to eligible buyers
    -   Azure received notification of certification from California Air
        Resources Board (CARB) for the 2009 Azure Balance Hybrid E-450
    -   The EPA and CARB certifications serve to qualify the product for the
        California Hybrid Truck and Bus Voucher Incentive Project (HVIP)
        which will provide vouchers of $10,000 to $45,000 on a first-come,
        first-served basis for purchase of each eligible new hybrid truck or
        bus in the state
    -   The Company worked with JC-S throughout the year on development and
        testing of the a new Lithium-Ion battery pack and by year-end a
        second generation of prototype battery packs were received and are
        running in the Azure development fleet

    Transit Connect Electric (Force Drive(TM))
    ------------------------------------------

    -   Development for the Transit Connect Electric was begun in the fourth
        quarter of 2009
    -   By December 1st, the Company completed a development and supply
        agreement with Johnson Controls-Saft to collaborate on the Lithium
        Ion battery pack for the Transit Connect Electric
    -   By year-end the Company had completed a concept design release for
        the vehicle and also built an initial show vehicle
    -   Testing on the completed vehicle was in progress through the end of
        the year, and the delivery to Ford occurred in January, 2010. The
        build of a second engineering vehicle began within the first quarter,
        2010

    LEEP Freeze(TM) & LEEP Lift(TM) (Low Emission Electric Power)
    -------------------------------------------------------------

    -   With support of Eaton, the company released a new variant of the LEEP
        Freeze(TM) system that is compatible with Eaton Ultrashift
        transmissions
    -   The company executed validation and durability testing on the LEEP
        Freeze(TM) system throughout the year
    -   In support of the 248 unit order for LEEP Freeze(TM) systems in
        October, the Company undertook final design upgrades and
        manufacturing ramp-up activities to support volume production. Forty
        systems were produced and delivered by year end
    -   A product field trial of LEEP Lift(TM) commenced with AT&T in the
        first quarter and continued throughout the year demonstrating up to
        30% fuel savings and idle-off performance attributes

    Other Product Developments
    --------------------------

    -   Development of a next generation of the Force Drive(TM) inverter
        commenced in the first half of 2009; the product will go into
        production mid 2010 and be used across the Company's product lines
    -   A second generation prototype advanced soft-switched inverter was
        received and preliminary testing completed with the support of the US
        DOE Freedom Car program
    

Conclusion

"We believe that our products and our internal practices, set against a backdrop of external factors including the threat of higher oil prices, access to government stimulus programs, greater recognition and appreciation for environmental issues, and better understanding of hybrid electric and electric technology in general, set the stage for Azure's accelerated growth in 2010 and beyond," said Harrison. "Our goal is very clear - to be a profitable company delivering state-of-the-art products and a solid return to our customers, investors, partners and employees. The road to profitability requires us to pass through the breakeven plateau. We believe that this plateau is within reach and hope to have a clear picture in time for our 2010 Annual General Meeting in June," Harrison said.

The Company's complete fiscal 2009 audited year-end financial statements and MD&A are available at www.sedar.com or on the Company's website at www.azuredynamics.com.

All figures are in Canadian dollars.

Azure Dynamics

Azure Dynamics Corporation (TSX: AZD) (OTC: AZDDF) is a world leader in the development and production of hybrid electric and electric components and powertrain systems for commercial vehicles. Azure is strategically targeting the commercial delivery vehicle and shuttle bus markets and is currently working internationally with various partners and customers. The Company is committed to providing customers and partners with innovative, cost-efficient, and environmentally-friendly energy management solutions.

For more information please visit www.azuredynamics.com.

The TSX Exchange does not accept responsibility for the adequacy or accuracy of this release.

Forward-looking Statements

This press release contains forward-looking statements. More particularly, this press release contains statements concerning Azure's business development strategy, projected commercial revenues and product deliveries.

The forward-looking statements are based on certain key expectations and assumptions made by Azure, including expectations and assumptions concerning achievement of current timetables for development programs, target market acceptance of Azure's products, current and new product performance, availability and cost of labor and expertise, and evolving markets for power for transportation vehicles. Although Azure believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Azure can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with Azure's early stage of development, lack of product revenues and history of losses, requirements for additional financing, uncertainty as to commercial viability, uncertainty as to product development and commercialization milestones being met, uncertainty as to the market for Azure's products and unproven acceptance of Azure's technology, competition for capital, product market and personnel, uncertainty as to target markets, dependence upon third parties, changes in environmental laws or policies, uncertainty as to patent and proprietary rights, availability of management and key personnel, and acquisition integration risk. These risks are set out in more detail in Azure's annual information form which can be accessed at www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof and Azure undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

    
    -------------------------------------------------------------------------
                                                  Azure Dynamics Corporation
                                                 Consolidated Balance Sheets
                                    (Stated in thousands of Canadian dollars)

                                                    December 31  December 31
    As at                                                  2009         2008
    -------------------------------------------------------------------------
                                                              $            $
    ASSETS

    Current
      Cash and cash equivalents                          33,588       13,803
      Accounts receivable                                 2,632        2,317
      Inventory (Note 5)                                  5,215        8,318
      Prepaid expenses                                      974          675
                                                   --------------------------
                                                         42,409       25,113

    Restricted cash (Note 4)                              1,041        1,440
    Property and equipment (Note 6)                       5,277        6,194
    Intangible assets (Note 7)                            6,755        8,012
    Goodwill                                              2,932        2,932
                                                   --------------------------

                                                         58,414       43,691

    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current
      Accounts payable and accrued liabilities            9,837        4,806
      Customer deposits & deferred revenue (Note 8)         746          360
      Current portion of notes payable (Note 3)              66           74
      Current portion of obligations under
       capital leases (Note 9)                               99          114
                                                   --------------------------
                                                         10,748        5,354
    Long-term
      Obligations under capital leases (Note 9)             117          263
      Customer deposits & deferred revenue (Note 8)         644          839
      Notes payable (Note 3)                              2,055        2,459
                                                   --------------------------
                                                          2,816        3,561
                                                   --------------------------
    Shareholders' equity
      Share capital (Note 11)                           202,250      165,007
      Contributed surplus (Note 11)                       7,139        6,500
      Deficit                                          (164,539)    (136,731)
                                                   --------------------------
                                                         44,850       34,776
                                                   --------------------------

                                                         58,414       43,691

    -------------------------------------------------------------------------

    Approved on behalf of the Board:

    "signed D. Campbell Deacon"    Director
    ---------------------------
    D. Campbell Deacon

    "signed James C. Gouin"        Director
    -----------------------
    James C. Gouin

    The accompanying notes are an integral part of these consolidated
    financial statements.



    -------------------------------------------------------------------------
                                                  Azure Dynamics Corporation
      Consolidated Statements of Operations, Comprehensive Loss, and Deficit
          (Stated in thousands of Canadian dollars, except per share amounts
                                                        and number of shares)


                                             For the years ended December 31
                                                           2009         2008
    -------------------------------------------------------------------------
                                                              $            $

    Revenues                                              9,403        7,651

    Cost of sales                                        14,520       12,866

                                                   --------------------------
    Gross Margin                                         (5,117)      (5,215)
                                                   --------------------------

    Expenses
      Engineering, research, development and
       related costs, net (Note 13)                      11,681       22,286
      Selling and marketing                               2,388        2,833
      General and administrative                          9,134        7,899
                                                   --------------------------
    Total expenses                                       23,203       33,018

                                                   --------------------------
    Loss from operations                                (28,320)     (38,233)
                                                   --------------------------

      Interest and other income, net                        546          347
      Interest expense                                     (110)         (10)
      Other expense                                        (586)        (568)
      Foreign currency gains/(losses)                       662         (403)
                                                   --------------------------

    Net loss and comprehensive loss                     (27,808)     (38,867)

    Deficit, beginning of year                         (136,731)     (97,864)
                                                   --------------------------

    Deficit, end of year                               (164,539)    (136,731)

    -------------------------------------------------------------------------

    Loss per share - basic and diluted                    (0.07)       (0.12)

    Weighted average number of shares
     - basic and diluted                            406,148,487  313,802,407

    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements.



    -------------------------------------------------------------------------
                                                  Azure Dynamics Corporation
                                       Consolidated Statements of Cash Flows
                                    (Stated in thousands of Canadian dollars)

                                             For the years ended December 31
                                                           2009         2008
    -------------------------------------------------------------------------
                                                              $            $

    Cash flows from operating activities
      Net loss for the period                           (27,808)     (38,867)
      Adjustments for:
        Amortization of property and equipment            1,048        1,005
        Amortization of intangible assets                 1,460        1,414
        Unrealized foreign currency (gains)/losses         (448)         525
        Stock option compensation expense                   400          711
        Deferred share units compensation expense           244          184
                                                   --------------------------
                                                        (25,104)     (35,028)

      Changes in non-cash working capital items
       (Note 17)                                          8,032        1,625
                                                   --------------------------
    Total cash flows from operating activities          (17,072)     (33,403)
                                                   --------------------------

    Cash flows from financing activities
      Issuance of common shares (net of costs)           37,238       24,342
      Principal repayments on notes payable                 (69)         (40)
      Repayment of obligations under capital lease         (160)         (26)
                                                   --------------------------
    Total cash flows from financing activities           37,009       24,276
                                                   --------------------------

    Cash flows from investing activities
      Acquisition of property and equipment                (141)      (1,089)
      Acquisition of intangible assets                     (203)        (143)
      Sale of property and equipment                         35            -
      Changes in restricted cash                            211            -
                                                   --------------------------
    Total cash flows from investing activities              (98)      (1,232)
                                                   --------------------------

    Increase/(Decrease) in cash and cash equivalents     19,839      (10,359)

    Exchange impact on cash held in foreign currency        (54)          29

    Cash and cash equivalents, beginning of year         13,803       24,133

                                                   --------------------------
    Cash and cash equivalents, end of year               33,588       13,803
                                                   --------------------------
                                                   --------------------------

    Supplemental cash flow information

    Cash paid for interest                                  110          159
    Cash paid for taxes                                       -            -
                                                   --------------------------
                                                   --------------------------
    Non cash investing and financing activities:
      Vehicles and equipment acquired under
       capital lease                                         24          364
                                                   --------------------------
                                                   --------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements.
    

SOURCE AZURE DYNAMICS CORPORATION

For further information: For further information: Ryan Carr, Chief Financial Officer, (248) 298-2403 ext 1206, Email: rcarr@azuredynamics.com; Pat Liebler, Liebler Group, (313) 832-4376, Email: pat@lieblergroup.com

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