Azure Dynamics Reports Fiscal 2007 Year End Results

    OAK PARK, MI, March 26 /CNW/ - Azure Dynamics Corporation (TSX: AZD &
LSE: ADC) ("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,
2007. The Company also provided an update on corporate and product development
activities in the year.
    "2007 was a pivotal year with many key accomplishments for Azure," said
Scott T. Harrison, Chief Executive Officer. "We have delivered product to end
users in our three areas of strategic focus; general delivery, shuttle buses
and electric drive solutions. Our executive ranks and Board have been
bolstered by industry veterans and we completed additional equity financing to
allow us to commercialize our product technology in 2008."

    Key 2007 Milestones

    -   Purolator Courier Ltd. increased order to 105 P1 parallel hybrid
        delivery vehicles;
    -   Agreement completed with FedEx Express to develop hybrid-electric
        powertrains for their commercial delivery fleet;
    -   Signed a commercial development and cooperation agreement with a
        major fleet, which became Azure's third lead customer for the
        P1 parallel hybrid delivery vehicle;
    -   Met target of four lead customers by year end when Florida Power and
        Light becomes Azure's fourth lead customer by signing a commercial
        development and cooperation agreement for Azure's P1 parallel hybrid
        delivery vehicle;
    -   Executed supply agreement with Electro Autos Eficaces ("EAE") of
        Mexico to convert 1,000 electric vehicle systems for Mexico City's
        municipal automobile fleet;
    -   Finalized agreement with Kidron Inc. ("Kidron") for supply and
        marketing of Low Emission Electric Power ("LEEP") systems in
        refrigerated trucks;
    -   Canadian facility in Vancouver, B.C. became certified to the
        ISO 9001:2000 Quality Management System standard;
    -   Established new head office and development center in Oak Park,
    -   Awarded the 2007 Deloitte Technology Green 15 as a top performer in
        environmental technology;
    -   Completed equity financing in October for $30.0 million in gross

    Financial Results

    Revenue for the fourth quarter of 2007 totaled $0.5 million compared to
$3.0 million in the fourth quarter of 2006. For the year ended December 31,
2007 revenue decreased to $2.8 million compared to $5.8 million in 2006. Net
loss for the fourth quarter of 2007 totaled $8.4 million, or $(0.03) per share
compared to a loss of $5.0 million or $(0.03) per share in the fourth quarter
of 2006. For the year ended December 31, 2007, the Company's net loss was
$30.2 million, or $(0.14) per share, compared to a net loss of $23.4 million,
or $(0.14) per share in 2006.
    Before contributions, the Company's engineering, research and development
("R&D") expenses in the quarter totaled $5.0 million (including $2.7 million
in product development costs), compared to $5.1 million for the same period in
2006 (including $2.7 million in product development costs). For the year ended
December 31, 2007, the Company's engineering and R&D expenses totaled
$17.8 million (including $10.0 million in product development costs) compared
to $17.6 million in 2006 (including $10.8 million in product development
    As of December 31, 2007, the Company's cash and cash equivalents totaled
$24.1 million and working capital totaled $32.3 million, compared to cash and
cash equivalents of $27.2 million and working capital of $32.4 million as at
December 31, 2006. During the year, the Company completed an equity financing,
raising net proceeds of $27.8 million to fund ongoing product development,
operations and working capital.


    On April 17, 2007, Azure announced the appointment of Mr. Scott T.
Harrison, as Chief Executive Officer. Mr. James J. Padilla, former President
and Chief Operating Officer of the Ford Motor Company, was appointed to the
Board of Directors in May 2007. Subsequently, Mr. Harrison appointed Mr. Curt
Anthony Huston as Chief Operating Officer and Mr. Ryan Carr as Chief Financial
    On September 19, 2007, Azure established its new corporate headquarters
in Oak Park, Michigan, in order to position the business closer to key
partners and automotive industry leaders.
    "The key executive appointments added considerable experience to an
already talented management team," Mr. Harrison said. "Add to that our changes
to the Board of Directors and our headquarters relocation into the heart of
the auto industry and Azure is positioned to move to the next level of product
development and commercialization."

    Product Development

    Azure has formed significant relationships with industry leaders to
increase penetration into its target markets and advance its product
development programs. For example, the Company has established arrangements
with Ford Motor Company, StarTrans (a business division of Supreme
Corporation) and Utilimaster Corporation, which has facilitated a
concentration of the Company's efforts around its core programs for
series-hybrid (G1) and parallel-hybrid (P1) delivery vans and shuttle buses.

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

    -   Purolator completed the introduction of 30 new hybrid delivery vans
        into their fleet operations in the first part of 2007; their combined
        fleet of Azure hybrid vehicles now totals 49 and have accumulated
        more than a half million miles in service.

    -   Azure delivered nine G1 hybrid shuttle buses (CitiBus Hybrid Senator
        HD or "CitiBus") to customers in New York. The Company has since
        completed the assembly of 35 additional cab-chassis with 24 more to
        be completed in the first half of 2008.

    -   On November 29, 2007, the Company successfully completed the Federal
        Transit Administration's new model bus durability testing of the G1
        Citibus at the certification test facility in Altoona, Pennsylvania.
        The successful completion of this test qualifies Azure's gasoline
        hybrid drive system for federally-supported hybrid bus purchases by
        public transit agencies across the United States.

    P1 Parallel (10,000 - 19,000 lbs. GVW)

    -   During 2007, Azure advanced the P1 parallel hybrid vehicle through
        the initial concept phase; including the build and testing of
        alternative design prototypes. Initial demonstration prototypes were
        completed and delivered to customers for in-service trials in the
        second half of 2007 and early 2008. It is intended, subject to formal
        agreement, to distribute the hybridized chassis through Ford's
        distribution channels.

    LEEP Product

    -   Azure is in the process of designing and building the initial
        prototype of the LEEP system with a refrigerated truck body supplied
        by Kidron. The LEEP system has the potential to replace the ancillary
        motor/generators used in the other method of cooling refrigerator
        trucks, thereby reducing fuel consumption, noise and emissions. The
        Company anticipates initial deliveries under this supply agreement
        will commence in 2008.

    Other Product Developments

    -   On April 9, 2007, the Company entered into a supply agreement with
        Electro Autos Eficaces of Mexico ("EAE") to deliver 1,000 electric
        drive systems for integration into the Nissan Tsuru sedan for use in
        Mexico City's municipal fleet. The first converted vehicle was
        completed in April 2007 and was unveiled at the International
        Electric Vehicle Forum on May 8, 2007 in Mexico City.


    Mr. Harrison added, "2007 was a tremendous year for Azure Dynamics. We
have launched best-in-class products, with market leading partners, to allow
us to deliver product to world-class customers. The development of our key
markets and our organization has us looking forward to 2008 and beyond."

    The Company's complete fiscal 2007 audited year-end financial statements
and MD&A are available at or on the Company's website at

    Azure Dynamics

    Azure Dynamics Corporation (TSX: AZD) (LSE: ADC) 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. Azure Dynamics'
operations are based in North America and Europe.
    For more information please visit

    The TSX and LSE Exchanges do 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
    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
    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
                                             (A Development Stage Enterprise)
                                                 Consolidated Balance Sheets
                                                        (Stated in Thousands)

                                                         December   December
    As at                                                 31 2007    31 2006
                                                                $          $

      Cash and cash equivalents (Note 6)                   24,133     27,192
      Accounts receivable                                     590      3,394
      Contributions receivable (Note 14)                    1,128      1,274
      Inventory and related prepayments (Note 7)           10,201      3,821
      Prepaid expenses                                        702        831
                                                           36,754     36,512

    Restricted cash (Note 6)                                1,172        699
    Property and equipment (Note 8)                         5,746      5,614
    Intangible assets, net of amortization (Note 9)         9,283     10,542
    Goodwill (Note 3)                                       2,932      2,932

                                                           55,887     56,299



      Accounts payable and accrued liabilities              4,275      2,814
      Customer deposits & deferred revenue                    166      1,046
      Current portion of notes payable (Note 4)                35        212
                                                            4,476      4,072

      Deferred revenue                                        941        943
      Notes payable (Note 4)                                2,064      2,294
                                                            3,005      3,237

    Shareholders' equity
      Share capital (Note 12)                             140,665    112,803
      Contributed surplus (Note 12)                         5,605      3,816
      Deficit                                             (97,864)   (67,629)
                                                           48,406     48,990

                                                           55,887     56,299


    Approved on behalf of the Board:

     "signed Scott T. Harrison"      Director
    Scott T. Harrison

    "signed Dennis A. Sharp"         Director
    Dennis A. Sharp

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

                                                  Azure Dynamics Corporation
                                             (A Development Stage Enterprise)
       Consolidated Statements of Operations, Comprehensive Loss and Deficit
                                                        (Stated in Thousands)

                                                      For the
                                                    years ended   Cumulative
                                                    December 31      Since
                                                  2007       2006  Inception
                                                     $          $

    Revenues                                     2,801      5,771     13,180

    Cost of sales                                3,098      4,590     11,523

    Gross Margin                                  (297)     1,181      1,657

      Engineering, research, development
       and related costs, net                   16,690     13,466     50,723
      Selling and marketing                      3,683      3,171     13,945
      General and administrative                 7,813      8,376     34,328
    Total expenses                              28,186     25,013     98,996

    Loss from operations                       (28,483)   (23,832)   (97,339)

      Interest and other income, net               934        487      2,262
      Other Expense                             (2,604)         -     (2,604)
      Foreign currency losses                      (82)       (89)      (183)

    Net loss and comprehensive loss for
     the period                                (30,235)   (23,434)   (97,864)


    Deficit, beginning of period               (67,629)   (44,195)         -

    Net loss for the period                    (30,235)   (23,434)

    Deficit, end of period                     (97,864)   (67,629)   (97,864)


    Loss per share - basic                       (0.14)     (0.14)

    Weighted average number of shares -
     basic (*)                                 214,274    164,130


    (*) No fully diluted earnings per share have been disclosed, as these
        would be anti dilutive.

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

                                                  Azure Dynamics Corporation
                                             (A Development Stage Enterprise)
                                       Consolidated Statements of Cash Flows
                                                        (Stated in Thousands)

                                                      For the
                                                    years ended   Cumulative
                                                    December 31      Since
                                                  2007       2006  Inception
                                                     $          $          $

    Cash flows from operating activities
      Net loss for the period                  (30,235)   (23,434)   (97,864)
      Adjustments for:
      Amortization of property and equipment       931        780      3,206
      Amortization of intangible assets          1,431      1,749      4,770
      Unrealized foreign currency losses          (450)      (245)      (525)
      Accretion expense on convertible
       debentures                                    -          -         74
      Amortizaton of deferred financing costs        -          -         88
      Lease termination                              -          -        458
      Common shares issued in exchange for
       services                                      -          -         78
      Loss on disposal of assets                   214          -        214
      Stock option compensation expense            967      1,696      4,910
      Deferred share units compensation
       expense                                     826          -        826
                                               (26,316)   (19,454)   (83,765)

      Changes in non-cash working capital
       items (Note 16)                          (2,809)    (5,232)    (9,570)
      Movement due to exchange impact     	     88        (24)       (11)

    Total Cash flows from operating
     activities                                (29,037)   (24,710)   (93,346)

    Cash flows from financing activities
      Issuance of common shares (net of costs)  27,858     31,905    120,206
      Alternative Investment Market listing
       costs                                         -          -     (1,000)
      Capital Assurance Agreement costs              -          -       (965)
      Convertible debentures funds received
       (net of costs)                                -          -      2,009
      Issuance of special warrants                   -          -      3,500
      Repayment of obligations under capital
       lease                                         -          -        (27)
      Repayment of long term debt                    -          -        (50)
      Principle payments on notes payable          (36)       (54)      (132)
      Movement due to exchange impact                -          4       (369)
    Total Cash flows from financing
     activities                                 27,822     31,855    123,172

    Cash flows from investing activities
      Acquisition of property and equipment     (1,278)      (820)    (4,366)
      Acquisition of intangible assets            (172)       (97)    (1,034)
      Changes in Restricted Cash                  (473)         -     (1,171)
      Cash acquired from acquisition of
       subsidiary, net of costs                      -          -        365
      Changes in loans to employees                  -          -         92
      Movement due to exchange impact             (154)       238         84
    Total Cash flows from investing
     activities                                 (2,077)      (679)    (6,030)

    Increase (decrease) in cash and cash
     equivalents                                (3,292)     6,466     23,796

    Exchange impact on cash held in foreign
     currency                                      233          5        337

    Cash and cash equivalents, beginning of
     period                                     27,192     20,721          -

    Cash and cash equivalents, end of period    24,133     27,192     24,133

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

For further information:

For further information: Ryan Carr, Chief Financial Officer, (248)
298-2403 ext 1206, Email:; Bruce G. MacDonald,
Liebler!MacDonald, (248) 233-8062, Email:

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