Azure Dynamics Corporation

Azure Dynamics Corporation

March 24, 2005 18:40 ET

Azure Dynamics Reports Year End 2004 Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: AZURE DYNAMICS CORPORATION

TSX SYMBOL: AZD
LSE SYMBOL: ADC

MARCH 24, 2005 - 18:40 ET

Azure Dynamics Reports Year End 2004 Results

TORONTO, ONTARIO--(CCNMatthews - March 24, 2005) - Azure Dynamics
Corporation (TSX:AZD)(LSE:ADC)("Azure Dynamics" or the "Company") a
leading developer of hybrid electric and electric powertrains for
commercial and military vehicles announces its results for the year
ended December 31, 2004.



Selected Annual Information:

---------------------------------------------------------------------
Years ended December 31, December 31, December 31,
2004 2003 2002
---------------------------------------------------------------------
Revenue $ 207,852 $ 47,383 $ 51,818
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Net loss $ 8,198,393 $ 3,832,824 $ 5,284,536
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Net loss per share $ 0.10 $ 0.08 $ 0.13
---------------------------------------------------------------------
Total assets $ 17,813,280 $ 10,626,181 $ 1,967,864
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For the year ended December 31, 2004, the Company incurred a net loss of
$8,198,393 ($0.10 per share) compared to a net loss of $3,832,824 ($0.08
per share) in 2003 representing the cost of developing its technology.
Since inception, the Company has incurred a total loss of $22.3 million.

As the Company currently has no commercial revenues it mainly incurs
costs to progress its product development and commercialization plans -
the investment is charged to the profit and loss account as incurred in
accordance with Canadian accounting standards.

The net loss is higher in 2004, when compared to 2003, as the capital
raised through financings has enabled the Company to increase its
activity levels in 2004. Research and development expenditure has
increased from 2003 due to the larger number of ongoing customer and
development programs as well as the increase in staff levels required to
support the program deliverables and related pre-commercialization
activity.

Contributions from customers, sponsors and government funding of $2.5
million in 2004 (2003 - $2.3 million) have partially offset the higher
research and development investment. Selling and marketing costs as well
as general and administrative costs have also increased, generally due
to the expanded infrastructure, increased headcount and increased sales,
marketing and financing activity.

"2004 marked the transition of Azure Dynamics from a research and
development Company to a commercial enterprise with the launch of the
Company's initial product which will see vehicles powered by Azure
Dynamics hybrid electric powertrains on the road in 2005," said D.
Campbell Deacon, Deputy Chairman and Chief Executive Officer.

"This past year included a number of significant challenges both
operationally and financially. Our team of focused executives and
dedicated technical staff handled these challenges competently and
successfully, resulting in the Company emerging as a world leader in
hybrid electric and electric powertrain technology for commercial and
military vehicles".

"Azure Dynamics is now well positioned to generate significant revenues
through the delivery of a variety of hybrid electric and electric
products to numerous customers in North America, the UK and Europe".

"In addition," he stated, "we have recently begun exploring
opportunities in south east Asia and in China with our new shareholder,
Singapore Technologies Kinetics."



Selected Quarterly information:

---------------------------------------------------------------------
Q4, 2004 Q3, 2004 Q2, 2004 Q1, 2004
(Oct - Dec) (Jul - Sept) (Apr - Jun) (Jan - Mar)
---------------------------------------------------------------------
Revenue $ 59,893 $ 60,869 $ 47,417 $ 39,673
---------------------------------------------------------------------
Expenses $ (2,788,837) $ (2,613,769) $(1,757,113) $(1,246,526)
---------------------------------------------------------------------
Net loss for
the period $ (2,728,944) $ (2,552,900) $(1,709,696) $(1,206,853)
---------------------------------------------------------------------
Loss per
share $ (0.03) $ (0.03) $ (0.02) $ (0.02)
---------------------------------------------------------------------
Weighted
average
number of
Shares 94,229,512 87,322,084 84,032,618 79,525,744
---------------------------------------------------------------------


---------------------------------------------------------------------
Q4, 2003 Q3, 2003 Q2, 2003 Q1, 2003
(Oct - Dec) (Jul - Sept) (Apr - Jun) (Jan - Mar)
---------------------------------------------------------------------
Revenue $ 23,993 $ 9,540 $ 7,674 $ 6,176
---------------------------------------------------------------------
Expenses $ (1,182,302) $ (1,264,791) $ (603,531) $ (829,583)
---------------------------------------------------------------------
Net loss for
the period $ (1,158,309) $ (1,255,251) $ (595,857) $ (823,407)
---------------------------------------------------------------------
Loss per
share $ (0.02) $ (0.03) $ (0.01) $ (0.02)
---------------------------------------------------------------------
Weighted
average
number of
Shares 54,547,058 45,044,375 45,031,042 45,008,264
---------------------------------------------------------------------


In December 2003 the Company secured its first significant funding which
enabled it to progress its commercialization plans at a more rapid but
still cautious pace. The expenditure levels increased progressively in
2004 indicative of the resultant availability of resources and higher
investment levels. This trend is expected to continue in 2005 as
investment requirements increase due to the incremental impact of
resources added throughout 2004 and further planned increases required
to achieve the successful commercial launch of the Company's products.
The impact of the Solectria acquisition will result in revenues and
expenses with effect from February 1, 2005.

Expenses are $1,606,535 higher in the fourth quarter of 2004 compared to
the fourth quarter in 2003. As explained above, the ramp-up in our
investment in engineering and other commercialization activities only
commenced with effect from December 2003 and therefore the cost of
advancing the technology is higher in 2004. Also, the 2003 comparative
number was reduced by approximately $1 million in customer and
government contributions whereas the offsetting contributions were
approximately $0.5 million in 2004 - the higher 2003 contribution number
was due to claims under an active customer project at that time as well
as the recognition of a backlog of Technology Partnerships Canada claims
that became realisable in the quarter as a result of the December 2003
financing.

Azure Dynamics Corporation and its group of companies is a world leader
in the development and production of hybrid electric and electric
commercial and military vehicles and systems. The group estimates it has
over 25 million miles of vehicle experience. Azure Dynamics' operations
are based in North America and Europe.

Azure Dynamics is currently working internationally with various
partners and customers including Purolator Courier Ltd., Canada Post,
DHL, London Taxis International, US Department of Defence, Leyland
Product Development, Renault Trucks UK and the United States Postal
Service. Azure Dynamics Corporation is a public company trading on the
TSX (AZD) in Canada and on AIM (ADC) in the UK. For more company
information please visit our website at www.azuredynamics.com.

NOTE: The foregoing information may contain forward-looking statements
which involve known and unknown risks, uncertainties and other factors
which may cause the actual results to be materially different from any
future results, performance or achievements expressed or implied by such
statements. Such factors include, but are not limited to: the ability to
raise the capital required for product development and operations,
product development delays, changing environmental regulations, the
ability to attract and retain business partners, competition from other
developers of hybrid electric vehicle control systems, competition from
other advanced or existing power technologies, evolving markets for
power for transportation vehicles. These factors should be considered
carefully and readers should not place undue reliance on Azure's
forward-looking statements. Investors are encouraged to review the risks
detailed from time to time in the company's filings with regulatory
authorities.



---------------------------------------------------------------------
---------------------------------------------------------------------
Azure Dynamics Corporation
(A Development Stage Enterprise)
Consolidated Balance Sheets

December 31 December 31
2004 2003
As at
---------------------------------------------------------------------
$ $
ASSETS

Current
Cash and cash equivalents (Note 4) 14,312,708 9,075,219
Accounts receivable 211,459 337,794
Contributions receivable (Note 12) 996,328 780,459
Inventory and related prepayments
(Note 5) 1,199,078 -
Prepaid expenses 284,155 61,655
--------------------------
17,003,728 10,255,127

Employee loans - 91,727
Property and equipment (Note 6) 538,972 162,048
Other assets (Note 7) 270,580 117,279
--------------------------

17,813,280 10,626,181

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LIABILITIES AND SHAREHOLDERS' EQUITY

Current
Accounts payable and accrued
liabilities 1,697,306 567,692

Shareholders' equity
Share capital (Note 10) 37,693,509 23,991,665
Contributed surplus (Note 10(f)) 721,832 167,798
Deficit (22,299,367) (14,100,974)
----------------------------
16,115,974 10,058,489
----------------------------

17,813,280 10,626,181

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Azure Dynamics Corporation
(A Development Stage Enterprise)
Consolidated Statements of Operations and Deficit

For the years ended Cumulative
December 31 Since
2004 2003 Inception
---------------------------------------------------------------------
$ $
Revenue
Contract sales - - 258,066
Other 207,852 47,383 394,403
------------------------------------------
207,852 47,383 652,469
------------------------------------------
Cost of contract sales - - 101,073
------------------------------------------
207,852 47,383 551,396

Expenses
Research and
development, net 3,460,730 1,173,994 9,123,835
Selling and marketing 1,720,148 751,282 3,730,860
General and
administrative 2,395,411 1,374,568 7,038,752
Rent and ancillary 559,483 219,392 1,503,017
Amortization of property
and equipment and other
assets 270,473 198,684 834,347
Accretion expense on
convertible debentures - 74,144 74,144
Amortization of deferred
financing costs - 88,143 88,143
------------------------------------------
8,406,245 3,880,207 22,393,098
------------------------------------------

Net loss for the period (8,198,393) (3,832,824) (21,841,702)

Exceptional items
Lease termination - - 457,665
------------------------------------------

Net loss for the period
after exceptional items (8,198,393) (3,832,824) (22,299,367)

Deficit, beginning of
period (14,100,974) (10,268,150) -
------------------------------------------

Deficit, end of period (22,299,367) (14,100,974) (22,299,367)

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

Loss per share - basic (a) (0.10) (0.08)

Weighted average number
of shares - basic 86,253,914 47,425,079

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

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



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

For the years ended Cumulative
December 31 Since
2004 2003 Inception
---------------------------------------------------------------------
$ $
Cash flows from operating
activities
Net loss for the period (8,198,393) (3,832,824) (22,299,367)
Adjustments for:
Amortization
of property
and equipment
and other assets 270,473 198,684 834,347
Lease termination - - 457,665
Common shares
issued in
exchange for services 27,500 25,000 77,500
Stock option
Compensation expense 497,476 131,426 628,902
Accretion
expense on
convertible debentures - 74,144 74,144
Amortizaton
of deferred
financing costs - 88,143 88,143
Changes in
non-cash working
capital items (Note 14) (381,498) (653,050) (1,166,819)
------------------------------------------

(7,784,442) (3,968,477) (21,305,485)
------------------------------------------

Cash flows from financing
activities
Issuance of common shares
(net of costs) 15,695,658 9,952,940 34,157,072
Alternative
Investment Market
listing costs (999,756) - (999,756)
Capital
Assurance Agreement costs (965,000) - (965,000)
Convertible
Debentures funds
received (net of costs) - 2,008,905 2,008,905
Issuance of special
warrants - - 3,500,000
Repayment of
obligations
under capital lease - (9,797) (27,316)
Repayment of
long term debt - - (50,000)
------------------------------------------

13,730,902 11,952,048 37,623,905
------------------------------------------

Cash flows
from
investing
activities
Acquisition of property
and equipment (597,698) (45,516) (1,403,145)
Acquisition of subsidiary - - (249,610)
Acquisition
of other assets (203,000) (60,467) (352,959)
Repayment of
loans from employees 91,727 167,037 -
------------------------------------------

(708,971) 61,054 (2,005,714)
------------------------------------------

------------------------------------------
Increase in
cash and cash equivalents 5,237,489 8,044,625 14,312,706

Cash and cash
equivalents,
beginning of period 9,075,219 1,030,594 2
------------------------------------------

Cash and cash
equivalents,
end of period 14,312,708 9,075,219 14,312,708
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-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Azure Dynamics Corporation
    Greg Francis
    Senior Vice-President, Finance and CFO
    (416) 367-0220 ext 110
    gfrancis@azuredynamics.com
    or
    Azure Dynamics Corporation
    Steven Glaser
    Vice-President, Corporate Affairs
    (416) 367-0220 ext 105
    sglaser@azuredynamics.com
    or
    Azure Dynamics Corporation
    Nick Fox
    M: Communications
    (+ 44) 207 153 1540
    Fox@mcomgroup.com
    The TSX Exchange does not accept responsibility for the adequacy or
    accuracy of this release.