Thermal Energy International Inc.

Thermal Energy International Inc.

October 31, 2005 17:25 ET

Thermal Energy Reports Improved Results for First Quarter Fiscal 2006, Revenue Up 144%-Higher Gross Profits-Largest FLU-ACE'R' Contract Signed

OTTAWA, ONTARIO--(CCNMatthews - Oct. 31, 2005) - Thermal Energy International Inc. (TSX VENTURE:TMG) ( is pleased to announce its financial results for the first quarter of fiscal year 2006 ended August 31, 2005.

Revenue for the quarter was $382,180, a 144% increase over revenue of $156,565 for the same quarter a year earlier. The Company recorded a gross profit of $52,825 for the quarter compared to $5,337 for the same period last year, with a net loss of $380,611 ($0.00 cents per share) compared to a net loss of $218,063 ($0.00 cents per share) last year.

During the quarter, the Company recorded a non-cash expense of $288,189 to account for incentive stock options granted during the quarter. Stock option expenses are expected to be substantially reduced to a minimal amount in the second quarter. A further one-time, non-cash amount of $134,066 was recorded for expensing a previous loan to Thermal Energy's past president. If not for these items, Thermal Energy would have posted a net profit of $41,644 for the quarter.

"These results clearly show that Thermal Energy is making significant headway under new management with a capable, experienced sales team," said Thermal Energy President and CEO Tim Angus. "This was a quarter of tremendous breakthroughs including the signing of our first major contract in the pulp and paper sector which is also Thermal Energy's largest FLU-ACE® contract to date."

Significant events and highlights in the quarter include:

- The awarding of a multi-million dollar FLU-ACE® contract from
Johnson Controls for an installation at a Nova Scotia-based pulp
and paper mill. Revenue from this project will be recognized over
the balance of this fiscal year;

- The completion of a FLU-ACE installation with Johnson Controls at
the Stratford General Hospital, attended by Ontario Health
Minister George Smitherman;

- Achieved positive liquidity with working capital of $29,348
compared to a working capital deficit of $226,371 at the end of
the last fiscal year; and

- Engaging two new sales representation partners to expand
geographic coverage including the Pacific Northwest region of
Canada and the U.S.

"Management recognizes this is just a start and we are still a long way off from having a Company which is delivering the value shareholders want and deserve," said Mr. Angus. "We are extremely busy in meeting with prospective clients and have been engaged by our cooperative partner JCI for several new and exciting potential opportunities. Thermal Energy's offerings are being well-received with regular requests for follow-up meetings, presentations and advanced discussions. We look forward to sharing some very positive results from our business activities with shareholders in the months ahead."

For complete financial statements with notes and management discussion and analysis please go to or our website at

NOTE: This release may contain forward looking statements based on management's expectations, estimates and projections. Such statements including those about the Company's strategy for growth, product development, market position, expected expenditures and financial results are forward looking statements. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents which may be filed with the British Columbia Securities Commission, the Alberta Securities Commission, the Ontario Securities Commission, the TSX Venture Exchange, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which the Company does business; competitive pressures; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw material, research and development of new products, including regulatory approval and market acceptance; and seasonality of sales in some products.

About Thermal Energy

Thermal Energy (TSX-V: TMG) ( is an environmental and energy technology company established in 1986. Headquartered in Ottawa, Canada, TMG is a designer, developer, fabricator, and supplier of proprietary and patented environmental compliance (air) and energy conservation, renewable energy products and technology solutions. Thermal Energy is a fully accredited professional engineering firm, and offers advanced process and applications engineering services. FLU-ACE® and THERMALONOx™ are trademarks of Thermal Energy.


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