Thermal Energy Reports Q2 Revenues for FY 2009



    $1M+ revenues, gross profit increases, $5.5M+ cash position

    OTTAWA, Jan. 29 /CNW Telbec/ - Thermal Energy International Inc. (TSX-V:
TMG) (www.thermalenergy.com) is pleased to announce it achieved record second
quarter revenues for Fiscal Year 2009 for the period, ended November 30, 2008.
    Thermal Energy recorded revenues of $1,140,563 for Q2 and gross profit of
$822,863, compared to revenues of $618,290 and a gross loss of $19,624 for the
same period in the previous year.
    The company recorded a net loss of $874,477 ($0.005/share) compared to a
net loss of $863,431 ($0.0009/share) for the same period in the previous year,
largely due to increased selling, general and administration (SG&A) expenses
which recognizes costs associated with expanding the sales team in North
America as well as the inclusion of total SG&A expense from GEM Ltd. Full
financial results are posted to SEDAR and are available on the Company's web
site. All amounts are in Canadian dollars.
    "Thermal Energy remains in an excellent financial position to ride out
the current global financial conditions and we are aggressively managing our
healthy cash position", said President and CEO Tim Angus. "Customers continue
to show an interest in moving forward with our Flu-Ace(R) and Dry-Rex(TM)
projects and confirm that energy costs are still a major concern long term
despite the short term reduction in energy prices. We also continue to achieve
profitable sales growth globally within our GEM(R) condensate return system
business line".

    
    Highlights during the second quarter include:

    - The addition of Peter Bennett as Sales and Marketing Director, GEM
      Ltd., responsible for overall management of UK and European sales,
      marketing and business development activities.
    - The addition of five sales personnel; Al Fenner as Business Development
      Manager for GEM sales in North America overseeing Geo Hebrada, James
      Pond and Gary Brooks as Account Managers for GEM sales in Alberta,
      Quebec, and South East US, respectively. In addition, Colleen Snee was
      added as Business Development Manager, Solution Sales, covering the
      mid-Atlantic, US.
    - Sales growth of our GEM condensate return product line including
      several new customers in North America and substantial sales growth
      globally to one Fortune 500 pharmaceutical manufacturing company which
      GEM Ltd is under a global preferred supply agreement with.

    NOTE: This press release may contain forward-looking statements relating
to, and amongst other things, 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 could cause results to differ materially from
those stated. The Company disclaims any obligation to publicly update or
revise any such statements.

    About ForEverGreen

    ForEverGreen Energy Inc. ("ForEverGreen") is a wholly-owned subsidiary of
Thermal Energy International Inc. (TSX-V: TMG). ForEverGreen owns and operates
Thermal Energy assets to be used under the Thermal AUD(TM) (Alternate Utility
Delivery) green power program, which will let Thermal Energy's customers
benefit from energy savings without capital investments. ForEverGreen
administers the Thermal AUD(TM) program.

    About Thermal Energy

    Thermal Energy International Inc. is an innovative technology company
providing custom energy and emission reduction, and bioenergy solutions.
Headquartered in Ottawa, Canada, TEI is a designer, design build developer,
fabricator, owner, operator and supplier of proprietary and patented energy
conservation, renewable energy and environmental technology solutions. Thermal
Energy is a fully accredited professional engineering firm, and offers
advanced process and applications engineering services. The Company is a proud
member of the Chicago Climate Exchange (CCX). FLU-ACE(TM), Dry-Rex(TM),
THERMALONOx(TM) and THERMALOZOMAx(TM), THERMAL AUD(TM) are trademarks of
Thermal Energy International. GEM(R) is a trademark used under exclusive
license from Gardner Energy Management Ltd.
    To find out more about Thermal Energy International Inc. (TSX-V: TMG),
visit our website at http://www.thermalenergy.com.


    THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
    RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.


    THERMAL ENERGY INTERNATIONAL INC.
    Incorporated under the Ontario Business Corporations Act

                         CONSOLIDATED BALANCE SHEETS

                                                    (Unaudited)
    As at                                               Nov 30        May 31
                                                          2008          2008
                                                             $             $
    -------------------------------------------------------------------------

    ASSETS
    Current assets
    Cash                                               166,042        84,717
    Short-term investments (note 5)                  5,378,234       552,773
    Accounts receivable (note 6)                     1,456,865       627,571
    Contracts in progress                                    -       156,000
    Inventories                                        534,905             -
    Net investment in lease (note 8)                   249,159       227,034
    Prepaids and other assets                           91,172        31,934
    -------------------------------------------------------------------------
                                                     7,876,377     1,680,029
    Property, plant and equipment (note 7)             121,637        65,066
    Net investment in lease (note 8)                 1,818,536     1,948,906
    Goodwill (note 4)                                4,804,213             -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                    14,620,763     3,694,001
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    LIABILITIES, CAPITAL STOCK, CONTRIBUTED SURPLUS AND DEFICIT
    Current liabilities
    Bank loans (note 9)                                924,966       908,667
    Accounts payable                                   862,798     2,001,801
    Accrued liabilities                                480,833       459,777
    Deferred revenue                                    70,000       384,908
    Due to past President (note 10)                     17,937        17,937
    -------------------------------------------------------------------------
                                                     2,356,534     3,773,090
    -------------------------------------------------------------------------

    Non-controlling interest (note 4)                   10,143             -

    Capital stock, contributed surplus and deficit
    Capital stock (note 11)                         32,606,553    19,479,079
    Contributed surplus (note 11)                    2,273,122     1,528,414
    Deficit                                        (22,536,999)  (21,086,582)
    Accumulated other comprehensive loss               (68,304)            -
    -------------------------------------------------------------------------
                                                    12,274,372       (79,089)
    -------------------------------------------------------------------------

                                                    14,620,763     3,694,001
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Contingency (note 18)

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


    On behalf of the Board

                  (signed)                    (signed)
                  Tim Angus                   Oliver Toffoli
                  President and C.E.O.        Chief Operating Officer & CFO



    THERMAL ENERGY INTERNATIONAL INC.

           CONSOLIDATED OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
                                 (Unaudited)

                            Three months ended           Six months ended
                                November 30                 November 30
                              2008          2007          2008          2007
                                 $             $             $             $

    REVENUE
    Sales                1,140,563       618,290     2,198,881     1,666,647
    Cost of sales          317,700       637,914       847,915     1,423,319
    Gross profit (loss)    822,863       (19,624)    1,350,966       243,328

    Expenses
    Administration         644,552       250,894     1,172,131       535,167
    Selling, marketing
     and business
     development           830,837       480,208     1,351,919       781,317
    Legal fees              59,797         5,312        69,382        10,409
    Audit fees              46,468        15,744        64,468        30,744
    Insurance               34,155        41,563        68,403        71,739
    Amortization of
     property, plant
     and equipment          15,199         7,918        26,890        15,611
    Patent and
     trademark
     maintenance            14,730         6,295        17,540         6,295
    Research and
     development            83,407        22,474       155,050        53,154
    Interest and
     bank charges           34,868         1,163        65,762         4,150
    Foreign exchange
     loss (gain)           (12,048)       21,436        21,264        39,943
                         1,751,965       853,007     3,012,809     1,548,529
    Loss before
     the following:       (929,102)     (872,631)   (1,661,843)   (1,305,201)

    Interest revenue        31,306         9,200        65,327        23,875
    Finance revenue         64,465             -       149,517             -
    Loss before
     non-controlling
     interest             (833,331)     (863,431)   (1,446,999)   (1,281,326)
    Non-controlling
     interest               (1,000)            -        (3,418)            -
    Net loss              (834,331)     (863,431)   (1,450,417)   (1,281,326)
    Exchange
     translation
     adjustment of
     net investment in
     self-sustaining
     foreign operation      40,146             -        68,304             -
    Net loss and Other
     comprehensive
     loss                 (874,477)     (863,431)   (1,518,721)   (1,281,326)
    Deficit, beginning
     of period         (21,730,826)  (19,131,969)  (21,086,582)  (18,714,074)
    Deficit, end
     of period         (22,605,303)  (19,995,400)  (22,605,303)  (19,995,400)

    Net loss per
     share - basic
     and diluted            (0.005)       (0.009)       (0.009)       (0.014)
    Weighted average
     number of common
     shares            167,709,197    91,876,821   159,005,606    91,702,425

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


    THERMAL ENERGY INTERNATIONAL

                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (Unaudited)

                            Three months ended           Six months ended
                                November 30                 November 30
                              2008          2007          2008          2007
                                 $             $             $             $
    ---------------------------------------------  --------------------------

    OPERATING ACTIVITIES
    Net loss for the
     period               (834,331)     (863,431)   (1,450,417)   (1,281,326)
    Add items not
     involving cash:
      Stock-based
       compensation
       charge               56,104       132,034       177,508       285,834
      Amortization of
       property, plant
       and equipment        15,199         7,918        26,890        15,611
      Non-monetary
       compensation
       charge               10,808        47,171        17,500        90,921
    Changes in non-cash
     operating working
     capital
      Accounts
       receivable         (462,616)     (296,813)       89,427      (201,737)
      Contracts in
       progress            194,000      (192,300)      156,000      (221,300)
      Prepaids and
       other assets          5,013        22,023        (5,785)       23,476
      Accounts payable      64,412         1,119    (1,506,401)      451,110
      Accrued
       liabilities          26,328       602,333      (218,342)      588,798
      Deferred revenue      70,000        77,553      (314,908)     (392,000)
    ---------------------------------------------  --------------------------
    Net cash used
     in operating
     activities           (854,934)     (462,393)   (3,028,528)     (640,613)
    ---------------------------------------------  --------------------------

    INVESTING ACTIVITIES
    (Acquisition)
     reduction in short
     term investments      763,638       817,052    (4,823,119)      551,639
    Acquisition of
     subsidiary                  -      (333,976)   (5,411,394)     (333,976)
    Additions to
     property, plant
     and equipment         (21,367)       (1,567)      (37,811)      (26,248)
    ---------------------------------------------  --------------------------
    Net cash used in
     investing
     activities            742,122       481,509   (10,272,324)      191,415
    ---------------------------------------------  --------------------------

    FINANCING ACTIVITIES
    Increase (decrease)
     in bank loan         (113,969)            -      (405,506)            -
    Net investment in
     lease (note 8)         44,574             -       108,245             -
    Common shares issued
     (note 11)                   -        11,000    14,900,400       176,500
    Financing fees               -             -    (1,223,226)            -
    Decrease in loan
     receivable                  -        25,000             -        25,000
    ---------------------------------------------  --------------------------
    Net cash provided
     by financing
     activities            (69,395)       36,000    13,379,913       201,500
    ---------------------------------------------  --------------------------

    Effect of exchange
     rate fluctuations
     on cash and cash
     equivalents               367             -         2,264             -

    Increase (decrease)
     in cash for the
     period               (181,840)       55,116        81,325      (247,698)
    Cash beginning
     of period             347,882       246,382        84,717       549,196
    ---------------------------------------------  --------------------------
    ---------------------------------------------  --------------------------
    Cash end of
     period                166,042       301,498       166,042       301,498
    ---------------------------------------------  --------------------------
    ---------------------------------------------  --------------------------

    ---------------------------------------------  --------------------------
    Interest paid           39,058           697        58,753         3,087
    ---------------------------------------------  --------------------------
    Shareholder loans
     to acquire shares      65,000             -       212,600             -
    ---------------------------------------------  --------------------------
    Fair value of
     options exercised
     transferred to
     capital stock          35,000        26,041        69,000       133,058
    ---------------------------------------------  --------------------------
    Fair value of
     warrants issued
     for financing fees          -             -       636,200             -
    ---------------------------------------------  --------------------------
    

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




For further information:

For further information: Tim Angus, President & CEO, (613) 723-6776 x
207, tim.angus@thermalenergy.com

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Thermal Energy International Inc.

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