Thermal Energy Reports Record Revenues for Q1 FY2008 - First time Q1 revenues top $1 million mark



    OTTAWA, Oct. 30 /CNW Telbec/ - Thermal Energy International Inc. (TSX-V:
TMG) (www.thermalenergy.com) is pleased to announce it achieved record
revenues with its financial results for the first quarter of Fiscal Year 2008,
ended August 31, 2007.
    Thermal Energy recorded revenues of $1,048,347 for Q1 with a net loss of
$417,895 ($0.00) share compared to revenues of $102,659 and a net loss of
$512,011 ($0.01/share) for the same period a year earlier. Full financial
results are posted to SEDAR and are available on the Company's web site. All
amounts are in Canadian dollars.
    At the end of Q1, working capital stood at $462,517 compared to $559,350
at May 31, 2007. Current assets at $1,933,621 declined by $129,930 over the
same period.
    This was the first time that first quarter revenues exceeded $1 million
in the Company's history and only the second time ever that quarterly revenues
have reached this level. The Company anticipates continued quarter-to-quarter
growth through the balance of the current fiscal year on the way to a record
year.

    Highlights during the quarter include:

    
    - The appointment of Anthony J. Pugliese as Vice President, Sales, who
      came to Thermal Energy from Direct Energy, where he was in charge of
      business development for the health care sector;
    - The signing of a Memorandum of Understanding to lead to a joint venture
      with Jiangnan Boilers and Pressure Vessels Company, Ltd. (JBPV),
      a $90 million-a-year company, to deploy Thermal Energy's energy
      recovery solutions in key Chinese markets;
    - Formalizing the research and development agreement for Thermal Energy's
      THERMALONOx(TM) nitrogen oxides (NOx) reduction technology with
      South China University of Technology (SCUT) which paved the way for an
      initial Chinese investment of $1 million RMB ($140,000) in the program;
    - Reaching a marketing agreement with Gardner Energy Management, U.K., to
      let Thermal Energy sell the GEM(R) Condensate Return System in China.
      This led to the first sale of GEM(R) steam traps to Lee and Man Paper
      Manufacturing Co. for one of its large paper machines. Additional sales
      are expected;
    - The first sale of GEM(R) steam traps into Alberta's oil and gas sector
      with a petrochemical company;
    - The establishment of the Company's energy services subsidiary
      ForEverGreen Energy Inc. (FEI), to facilitate contracts under the
      THERMAL-AUD(TM) Alternate Utility Delivery Program;
    - The signing of an energy services agreement between FEI and Fraser
      Papers Inc. for up to $3.75 million to recover waste heat at the
      Thurso paper mill in Thurso, Quebec. In excess of $2 million from this
      agreement is expected to be recognized in Thermal Energy's revenues in
      the current fiscal year.

    At the end of the quarter, the pipeline of qualified sales prospects at
various stages of development stood in excess of $100 million.
    "We are extremely pleased with this quarter's results which we believe
demonstrate Thermal Energy is on track with good revenue growth and the
execution of our business strategy," said President and CEO Tim Angus. "With
this fiscal year already set to generate record revenues, we are working hard
to convert prospects in our pipeline into sales and at the same time increase
the rate of conversion to achieve even stronger revenues and ultimately
achieve profitability."

                       Annual Meeting of Shareholders

    The Annual Meeting for shareholders of Thermal Energy International Inc.
will be held on Thursday, November 29, 2007 in the Mulligan Room of the
Brookstreet Hotel, 525 Legget Drive, Kanata, Ontario. The meeting will
commence at 9 a.m. The meeting will include an on update on current business
activities and the Company's research and development efforts in China.

    NOTE: This press release may contain forward-looking statements relating
to, and among 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 Thermal Energy

    Thermal Energy International Inc. is an innovative technology company
providing custom energy and emission reduction solutions. Headquartered in
Ottawa, Canada, TEI is a designer, design build developer, fabricator, 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. FLU-ACE(R), THERMALONOx(TM), THERMALOZOMAx(TM) and
Dry-Rex(TM) are trademarks of Thermal Energy International. GEM(R) is a
trademark used under exclusive license from Gardner Energy Management Ltd.
    For more about Thermal Energy International Inc. (TSX-V: TMG), visit our
website at www.thermalenergy.com.


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


                         CONSOLIDATED BALANCE SHEETS


                                                     (Unaudited)
    As at                                                Aug 31       May 31
                                                           2007         2007
                                                              $            $
    -------------------------------------------------------------------------

    ASSETS
    Current assets
    Cash                                                246,382      549,196
    Short term investments (note 4)                   1,286,293    1,020,880
    Accounts receivable (note 5)                        333,505      428,581
    Contracts in progress                                33,000        4,000
    Prepaids and other assets                            59,441       60,894
    -------------------------------------------------------------------------
                                                      1,958,621    2,063,551
    Property, plant and equipment (note 6)               84,600       67,612
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      2,043,221    2,131,163
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    LIABILITIES, CAPITAL STOCK, CONTRIBUTED SURPLUS
     AND DEFICIT
    Current liabilities
    Accounts payable                                    778,173      328,182
    Accrued liabilities                                 144,547      158,082
    Deferred revenue                                    530,447    1,000,000
    Due to past President (note 7)                       17,937       17,937
    -------------------------------------------------------------------------
                                                      1,471,104    1,504,201
    -------------------------------------------------------------------------

    Capital stock, contributed surplus and deficit
    Capital stock (note 8)                           17,775,816   17,459,549
    Contributed surplus (note 8)                      1,928,270    1,881,487
    Deficit                                         -19,131,969  -18,714,074
    -------------------------------------------------------------------------
                                                        572,117      626,962
    -------------------------------------------------------------------------
                                                      2,043,221    2,131,163
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Contingency (note 15)



                     CONSOLIDATED OPERATIONS AND DEFICIT

    Three months ended August 31

                                                           2007         2006
                                                              $            $
    -------------------------------------------------------------------------
    REVENUE
    Sales                                             1,048,357      102,659
    Cost of sales                                       785,405      150,122
    -------------------------------------------------------------------------
    Gross profit (loss)                                 262,952      -47,463
    -------------------------------------------------------------------------

    Expenses
    Administration                                      284,273      122,260
    Selling, marketing and business development         301,109      242,433
    Legal fees                                            5,097       12,670
    Audit fees                                           15,000       15,000
    Insurance                                            30,176       18,828
    Amortization of property, plant and equipment         7,693        6,413
    Patent and trademark maintenance                          -        4,932
    Research and development                             30,680       24,659
    Interest and bank charges                             2,987        1,201
    Foreign exchange loss                                18,507        1,591
    -------------------------------------------------------------------------
                                                        695,522      449,987
    -------------------------------------------------------------------------
                                                       -432,570     -497,450

    Interest revenue                                     14,675          123
    Other costs (note 11)                                     -      -14,684
    -------------------------------------------------------------------------
    Net loss                                           -417,895     -512,011
    Deficit, beginning of period                    -18,714,074  -16,270,809
    -------------------------------------------------------------------------
    Deficit, end of period                          -19,131,969  -16,782,820
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share - basic and diluted               (0.005)      (0.007)
    Weighted average number of common shares         91,505,729   74,669,876
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                    CONSOLIDATED STATEMENTS OF CASH FLOWS

    Three months ended August 31

                                                           2007         2006
                                                              $            $
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net loss for the period                            -417,895     -512,011
    Add items not involving cash:
      Stock-based compensation charge                   153,800        8,550
      Amortization of property, plant and equipment       7,693        6,413
    Changes in non-cash operating working capital
      Accounts receivable                               120,076      418,088
      Contracts in progress                             -29,000       89,000
      Prepaids and other assets                           1,453      -24,531
      Accounts payable                                  468,741      -62,573
      Accrued liabilities                               -13,535       77,220
      Deferred revenue                                 -469,553       17,000
    -------------------------------------------------------------------------
    Net cash used in operating activities              -178,220       17,156
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Acquisition of short-term investments              -265,413            -
    Additions to property, plant and equipment          -24,681      -32,901
    -------------------------------------------------------------------------
    Net cash used in investing activities              -290,094      -32,901
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
                                                      ----------
    Common shares issued (note 8)                       140,500            -
                                                      ----------
    Decrease in loan receivable                          25,000       18,500
    -------------------------------------------------------------------------
    Net cash provided by financing activities           165,500       18,500
    -------------------------------------------------------------------------

    Increase (decrease) in cash for the period         -302,814        2,755
    Cash beginning of period                            549,196       59,119
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash end of period                                  246,382       61,874
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Interest paid                                         2,390          644
    -------------------------------------------------------------------------
    Fair value of options exercised for cash            107,017            -
    -------------------------------------------------------------------------

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

    For complete audited financial statements with notes and management
discussion and analysis, please go to www.sedar.com or our website at
www.thermalenergy.com under "investors."

    THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
    RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
    %SEDAR: 00007994E




For further information:

For further information: Stuart McCarthy, Thermal Energy International
Inc., Investor Relations and Communications, (613) 723-6776 x 220, (613)
762-4321 (cell phone), stuart.mccarthy@thermalenergy.com

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