Cost of sales 3,594 2,132 7,126 6,214

------------------------- -------------------------
Gross Margin (426) (807) (2,157) (1,136)
------------------------- -------------------------

Expenses
Engineering,
research,
development and
related costs, net 3,330 4,832 10,422 15,074
Selling and
marketing 519 679 1,504 1,945
General and
administrative 1,859 1,937 6,005 5,834
------------------------- -------------------------
Total expenses 5,708 7,448 17,931 22,853

------------------------- -------------------------
Loss from operations (6,134) (8,255) (20,088) (23,989)

Interest and other
income, net 136 40 423 285
Interest expense (26) (3) (85) (6)
Other expense 24 - (594) (561)
Foreign currency
gains/(losses) 308 (91) 569 (64)
------------------------- -------------------------

Net loss and
comprehensive loss
for the period (5,692) (8,309) (19,775) (24,335)

Deficit, beginning
of period (150,814) (113,890) (136,731) (97,864)
------------------------- -------------------------

Deficit, end of period (156,506) (122,199) (156,506) (122,199)

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

Loss per share -
basic and diluted (0.01) (0.03) (0.05) (0.08)

Weighted average
number of shares -
basic and
diluted* 410,241,505 316,332,699 389,787,339 291,784,936
-------------------------------------------------------------------------

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



Azure Dynamics Corporation
Consolidated Statements of Cash Flows
(Stated in Thousands)

For the three months ended For the nine months ended
September 30 September 30
(unaudited) (unaudited)
2009 2008 2009 2008
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