Azure Dynamics Corporation
TSX : AZD
PINK SHEETS : AZDDF

Azure Dynamics Corporation

October 25, 2011 15:14 ET

Azure Dynamics Announces US$5.0 Million Investment by Strategic Investor and Files a Preliminary Short Form Prospectus in Canada for an Offering of Common Shares and Warrants

OAK PARK, MICHIGAN--(Marketwire - Oct. 25, 2011) -

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Azure Dynamics Corporation (TSX:AZD)(PINK SHEETS:AZDDF), a world leader in the development and production of hybrid electric and electric components and powertrain systems for commercial vehicles, announced today that it has entered into a definitive subscription agreement with a strategic investor which has subscribed for and agreed to purchase, on a private placement basis, 30,796,969 common shares of Azure at a price of CDN$0.165 per common share for gross proceeds of CDN$5,081,500 (the "Equity Investment").

"We are pleased that Azure continues to be recognized as a global leader in electrifying light-to-medium duty commercial vehicles," said Scott Harrison, CEO of Azure Dynamics. "This Equity Investment is at a premium to the recent trading price of our shares, and is a notable endorsement of our technology."

Azure is also announcing today that it has filed a preliminary short form prospectus with the securities regulatory authorities in each of the provinces of Canada in connection with a proposed public offering (the "Public Offering") of units ("Units"). The Public Offering will be conducted on a best efforts basis through a syndicate of agents co-led by Raymond James Ltd. and Cormark Securities Inc. and including National Bank Financial Inc.

Each Unit is to be comprised of one common share of the Company and one-half of one common share purchase warrant (each whole warrant a "Warrant"). Each Warrant shall be exercisable to acquire one common share of the Company for a period of two years from the closing of the Public Offering, subject to adjustment in certain events. The number of Units, the price per Unit and the exercise price per Warrant will be determined in the context of the marketing of the Public Offering.

The Equity Investment and Public Offering are expected to close on or about November 4, 2011 and November 8, 2011, respectively, subject to customary conditions, including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange. There can be no assurance as to whether or when the Equity Investment or the Public Offering may be completed or as to the actual size or terms of the Public Offering.

The Company plans to use the net proceeds of the Equity Investment and the Public Offering to fund its ongoing product development as well as general corporate and working capital requirements.

The Units will be offered in Canada by way of a short form prospectus to be filed in all provinces of Canada, pursuant to National Instrument 44-101 Short Form Prospectus Distributions, and in the United States on a private placement basis to "accredited investors" under U.S. securities laws.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities of Azure in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or unless an exemption from such registration is available.

About Azure Dynamics

Azure Dynamics Corporation (TSX:AZD)(PINK SHEETS: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 a variety of 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.

Forward-looking Statements

This press release contains forward-looking statements. More particularly, this press release contains statements concerning an investment by a strategic investor, a proposed offering of Azure's securities and the use of proceeds from such offering, if completed. 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 and the preliminary short form prospectus dated October 25, 2011, each of 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.

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

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