Thermal Energy Reports Results for Q2 FY2008



    Quarterly revenue improves year-to-year, backlog grows to $3.2 million

    OTTAWA, Jan. 29 /CNW Telbec/ - Thermal Energy International Inc.
(TSX-V: TMG) (www.thermalenergy.com) today reported its financial results for
the second quarter of fiscal year 2008, ended November 30, 2007.
    Thermal Energy recorded revenues of $618,290 for Q2 with a net loss of
$863,431 ($0.01/share) share compared to revenues of $127,987 and a net loss
of $689,150 ($0.01/share) for the same period a year earlier. For the six
months ended November 30, 2007, revenues stood at $1,666,647 with net loss of
$1,281,326 ($0.014/share) compared to revenues of $230,646 and a net loss of
$1,201,161 ($0.016/share) for the same period in the previous fiscal year.
    Full financial results and Management's Discussion and Analysis are
posted to SEDAR and are available on the Company's web site. All amounts are
in Canadian dollars.
    Revenues do not include $585,000 of equipment and work provided to
Thermal Energy's subsidiary ForEverGreen Energy Inc., for the construction in
progress of a FLU-ACE(R) waste heat recovery system at the FPS Canada Inc.
Thurso mill in Thurso, Quebec. These assets will be used for the six-year,
$3.75 million THERMAL-AUD(TM) green power purchase agreement signed with FPS
Canada in the previous quarter. Under Canadian generally accepted accounting
principles (GAAP), revenues from this project will be recognized going forward
on a consolidated basis. Thermal Energy's revenue backlog at the end of the
second quarter stood at $3,246,390.
    "The continued growth of Thermal Energy's backlog at the same time as the
Company delivers on existing contracts, speaks to the continued improvement
and growth shareholders can expect from Thermal Energy in the coming
quarters," said Thermal Energy President and CEO Tim Angus.
    Second quarter highlights include:
    
    - The signing of a Letter of Intent with an Eastern Canada pulp and paper
      mill for a DRY-REX(R) biomass drying system to dry the mill's biomass
      waste stream including paper sludge for use as biofuel. Upon completion
      of a feasibility study and acceptance by the mill, it is expected to
      lead to a THERMAL-AUD(TM) green power agreement through Thermal
      Energy's subsidiary ForEverGreen Energy Inc.;
    - Three new initial orders for the "no fail" GEM(R) steam traps and an
      engineering contract from an existing customer involving the
      optimization of an older FLU-ACE(R) waste heat recovery system and
      steam system. The total value of the contracts is in excess
      of $125,000;
    - Completion of Thermal Energy's first waste heat recovery project in the
      U.S., worth $1.4 million, for a Fortune 500 food and beverage customer;
    - A second order was received for 39 GEM(R) steam traps from Jiangsu
      Huachang Chemical Co. in China.
    - Thermal Energy was honoured by the Ottawa Section of the Institute of
      Electrical Engineers (IEEE) with an award for its innovative technology
      and success in providing custom energy and emission reduction
      solutions;
    - Thermal Energy announced it would be the majority owner through its
      wholly owned subsidiary (Thermal Energy International (Guangzhou) Ltd.)
      of a joint venture with Oriental-Unicorn Sales and Marketing Co., of
      Guangzhou, China and E5 Enterprises LLC, of Markham, Ontario. Oriental-
      Unicorn was instrumental in the Company's first sale of GEM(R) steam
      traps to Lee & Man Paper Co.
    
    "This was a busy and productive quarter for Thermal Energy with a strong
focus on our large scale bioenergy and heat recover solutions domestically and
our GEM(R) Condensate Return System offering internationally" said Mr. Angus.
"We made excellent progress in establishing the Company's new energy services
business and this further demonstrates that our dedicated efforts to project
development, growing our sales pipeline and shortening the sales cycle are
providing the results shareholders expect and deserve."

    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                                       Nov 30               May 31
                                                  2007                 2007
                                                     $                    $
    ASSETS
    Current assets
    Cash                                       301,498              549,196
    Short term investments (note 4)            469,241            1,020,880
    Accounts receivable (note 5)               605,318              428,581
    Contracts in progress                      225,300                4,000
    Loan receivable (note 6)                    25,000                    -
    Prepaids and other assets                   37,418               60,894
                                             1,663,775            2,063,551
    Construction in progress                   333,976
    Property, plant and equipment (note 7)      78,249               67,612
                                             2,076,000            2,131,163


    LIABILITIES, CAPITAL STOCK,
     CONTRIBUTED SURPLUS AND DEFICIT
    Current liabilities
    Accounts payable                           779,292              328,182
    Accrued liabilities                        746,880              158,082
    Deferred revenue                           608,000            1,000,000
    Due to past President (note 8)              17,937               17,937
                                             2,152,109            1,504,201

    Capital stock, contributed
     surplus and deficit
    Capital stock (note 9)                  17,885,028           17,459,549
    Contributed surplus (note 9)             2,034,263            1,881,487
    Deficit                                -19,995,400          -18,714,074
                                               -76,109              626,962

                                             2,076,000            2,131,163

    Contingency (note 18)


    On behalf of the Board

                          Tim Angus           Oliver Toffoli
                          President & CEO     Chief Financial
                                              Officer


    THERMAL ENERGY INTERNATIONAL INC.

                     CONSOLIDATED OPERATIONS AND DEFICIT
    (Unaudited)

                                  Three months ended       Six months ended
                                      November 30              November 30
                                  2007         2006          2007        2006
                                     $            $             $           $
    REVENUE
    Sales                      618,290      127,987     1,666,647     230,646
    Cost of sales              637,914      166,341     1,423,319     316,463
    Gross profit (loss)        -19,624      -38,354       243,328     -85,817

    Expenses
    Administration             250,894      316,177       535,167     438,437
    Selling, marketing and
     business development      480,208      259,696       781,317     502,129
    Legal fees                   5,312      -10,603        10,409       2,067
    Audit fees                  15,744       15,000        30,744      30,000
    Insurance                   41,563       19,827        71,739      38,655
    Amortization of property,
     plant and equipment         7,918        6,335        15,611      12,748
    Patent and trademark
     maintenance                 6,295        3,203         6,295       8,135
    Research and development    22,474       22,705        53,154      47,364
    Interest and bank charges    1,163        1,728         4,150       2,929
    Foreign exchange loss       21,436          792        39,943       2,383
                               853,007      634,860     1,548,529   1,084,847
                              -872,631     -673,214    -1,305,201  -1,170,664

    Other Revenue (note 12)          -        5,240             -       5,240
    Interest revenue             9,200          141        23,875         264
    Other Costs (note 13)            -      -21,317             -     -36,001
    Net loss and
     comprehensive income     -863,431     -689,150    -1,281,326  -1,201,161
    Deficit, beginning
     of period             -19,131,969  -16,782,820   -18,714,074 -16,270,809
    Deficit, end of
     period                -19,995,400  -17,471,970   -19,995,400 -17,471,970

    Net loss per share
     - basic and diluted        (0.009)      (0.009)       (0.014)    (0.016)
    Weighted average number
     of common shares       91,876,821   76,515,443    91,702,425  75,589,120



    THERMAL ENERGY INTERNATIONAL INC.

    CONSOLIDATED STATEMENT OF CASH FLOWS
    (Unaudited)
                                  Three months ended     Six months ended
                                     November 30           November 30
                                  2007         2006         2007         2006
                                     $            $            $            $
    OPERATING ACTIVITIES
    Net loss for the period   -863,431     -689,150   -1,281,326   -1,201,161
    Add items not
     involving cash:
      Stock-based
       compensation charge     132,034       43,700      285,834       52,250
      Amortization of
       property, plant
       and equipment             7,918        6,335       15,611       12,748
      Non-monetary
       compensation charge      47,171      123,991       90,921      123,991
      Past President loan to
       acquire shares expensed       -      151,500            -      151,500
    Changes in non-cash
     operating working capital
      Accounts receivable     -271,813      167,040     -176,737      585,128
      Contracts in progress   -192,300            -     -221,300       89,000
      Loan receivable,
       current                 -25,000            -      -25,000            -
      Prepaids and other
       assets                   22,023       36,244       23,476       11,713
      Accounts payable           1,119     -116,707      451,110     -179,280
      Accrued liabilities      602,333      -71,772      588,798        5,448
      Deferred revenue          77,553      -72,000     -392,000      -55,000
    Net cash used in
     operating activities     -462,393     -420,819     -640,613     -403,663

    INVESTING ACTIVITIES
    Reduction in short
     term investments          817,052            -      551,639            -
    Additions to construction
     on progress              -333,976            -     -333,976            -
    Additions to property,
     plant and equipment        -1,567            -      -26,248      -32,901
    Net cash used in
     investing activities      481,509            -      191,415      -32,901

    FINANCING ACTIVITIES
    Common shares
     issued (note 9)            11,000      383,000      176,500      383,000
    Decrease in loans for
     common shares              25,000            -       25,000       18,500
    Net cash provided by
     financing activities       36,000      383,000      201,500      401,500


    Increase (decrease) in
     cash for the period        55,116      -37,819     -247,698      -35,064
    Cash beginning of period   246,382       61,874      549,196       59,119
    Cash end of period         301,498       24,055      301,498       24,055

    Interest paid                  697          922        3,087        1,566
    Fair value of options
     exercised for cash         26,041            -      133,058            -
    
    The accompanying notes are an integral part of these consolidated
financial statements. For complete audited financial statements with notes and
Management's 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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