Thermal Energy Reports Record $4.9 Million Revenues for FY2008

    First quarterly revenue over $2 million in Q4, First Thermal-AUD(TM)

    OTTAWA, Sept. 26 /CNW Telbec/ - Thermal Energy International Inc.
(TSX-V:TMG) ( today announced its fourth quarter and
year end financial results for Fiscal Year 2008, ended May 31, 2008.
    Thermal Energy recorded revenues of $4,926,208 and a gross profit of
$608,024 for FY08, a 500% increase over revenues of $821,024 and a gross loss
of $53,491 in FY07. The Company reduced its net loss for the year to
$2,372,508 ($0.025/share), from a net loss of $2,443,265 ($0.031/share) for
the previous year.
    Revenue for the fourth quarter was $2,750,487, a 470% increase over the
$480,179 in revenue for the same period a year earlier. This was the first
time Thermal Energy has achieved revenue in excess of $2.5 million in a single
quarter. The Company reduced its quarterly loss to $521,388 ($0.005/share) in
Q4, compared to a loss of $712,149 ($0.01/share) a year earlier. All figures
are in Canadian dollars. Full financial results including Management's
Discussion and Analysis and accompanying notes to the financial results, are
available on SEDAR and
    "Fiscal 2008 was a landmark year for Thermal Energy's evolution as a
global energy services solution provider," said President and CEO Tim Angus.
"More importantly we successfully developed an innovative energy saving
program - our Thermal-AUD(TM) Alternate Utility Delivery program - which
delivered its first major customer largely responsible for this year's record
    Thermal-AUD(TM) provides customers with a way to generate immediate
energy savings and positive cash flow from operations starting with the first
day of the agreement, all without any up-front or large capital investments.
Instead of a capital equipment purchase, the customer purchases the recovered
waste energy as green energy at a substantial discount to the fossil fuels
being displaced. It provides a further opportunity for customers to meet or
exceed emission reduction targets and achieve energy reduction targets, while
preserving capital for other projects.

    Highlights in Q4 include:

      - Recording the sale of a FLU-ACE(R) waste heat recovery system for in
        excess of $2 million under the Thermal-AUD(TM) Alternate Utility
        Delivery program with an additional $1.5 million to be earned over
        the next six years at Fraser Paper's Thurso paper mill;
      - Entering into an agreement to acquire Bristol based Gardner Energy
        Management Ltd. The transaction with a base price of approximately
        $5.4 million CAD and an amount of approximately $2.6 million CAD
        payable on an earn-out basis over a three year period based on sales
        of the GEM(R) product line to a new major customer, subsequently
        closed in the first quarter of Fiscal 2009;
      - The first revenues generated from the Company's new Thermal-AUD(TM)
        program through the Thurso installation;
      - Commencing the first phase of work (detailed design and engineering)
        for a major FLU-ACE(R) energy recovery system at a fine paper mill in
        the north eastern U.S.;
      - Joining the Asia Clean Energy Alliance led by Honeywell (China) to
        provide energy saving solutions and project financing for China's
        pulp and paper and other energy-intensive industries;

    Highlights during the balance of FY 2008 include:

      - Receiving the first order in China for GEM(R) Steam Traps from Lee
        and Man Paper Manufacturing Co. to be installed on one of its paper
        machines in one of their massive plants that produces over
        1.5 million tons of containerboard annually;
      - Receiving the first order from Alberta's oil, gas and petrochemical
        sector with a contract from an Edmonton-area petrochemical
        manufacturer, to begin retrofitting approximately one-third of its
        mid-size facility with GEM(R) steam traps;
      - Establishing ForEverGreen Energy Inc., a wholly-owned green energy
        services subsidiary to own and operate the Company's assets to be
        used under the THERMAL-AUD(TM) program. On August 27, 2007
        ForEverGreen signed an agreement for up to $3.75M over six years with
        Fraser Paper Inc. to recover waste heat at its Thurso Mill;
      - Formalizing a research and development agreement with South China
        University of Technology (SCUT) focused on the commercialization of
        the Company's THERMALONOx(TM) nitrogen oxides (NOx) removal
        technology for China's coal-fired power market;
      - Appointing Anthony J. Pugliese as Vice President, Sales. Mr. Pugliese
        came from Direct Energy Business Services where he was Manager,
        Business Development, Health Care Sector, responsible for leading the
        development and implementation of market strategies in the Canadian
        healthcare and public sector markets. Mr. Pugliese was previously
        Account Manager, Healthcare Solutions with Johnson Controls, Inc., in
        eastern Canada, and has an extension background in financial
      - Becoming majority owner through its wholly-owned subsidiary (Thermal
        Energy International (Guangzhou) Ltd.) into 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.;
      - Securing a five-year, $2.5 million line of credit with the Toronto-
        Dominion Bank to facilitate the Company's co-investment in assets
        such as FLU-ACE(R) and DRY-REX(TM) systems using its Thermal-AUD(TM)
      - Closing a non-brokered private placement with gross proceeds of
        $999,000 to support on-going sales and marketing.

                     Extraordinary and One-Time Charges

    In addition to moderate increases in selling, marketing and administrative
costs, the net loss of $2,372,508 in FY 2008 included approximately $840,000
in non-recurring costs including cost overruns and foreign exchange losses on
a U.S. project through Johnson Controls, warranty-related costs on three
projects, and increased legal costs, largely due to the initial legal work
required for the GEM(R) acquisition completed in the Q1 FY 2009.
    The Company had a working capital deficiency of $2,093,061 at the end of
FY 2008, compared to working capital of $559,350 at the end of FY 2007. This
was due mostly to the required up-front investment in the Thermal-AUD(TM)
assets required for the Fraser Papers Thurso Mill green energy contract, which
started to generate revenues in the last part of Q4. Management recognizes the
need to further improve liquidity and is aggressively working to increase
sales. This process includes expanding Thermal Energy's direct sales force
with additional hires in Q1 and beyond.
    In Q1 FY2009, Thermal Energy closed a $15 million private placement with a
number of leading investment bankers specializing in environmental and
alternative energy financings. These funds were used in part to complete the
GEM(R) acquisition, to provide funds for investment in Thermal-AUD(TM) assets,
and provide funds for increased sales and marketing, and research and
development activities.

                             Outlook for FY 2009

    While the Company anticipates a softening of revenues in the first two
quarters, a return to revenue growth and bottom line improvements is
identified beginning in Q3, resulting from Thermal Energy's corporate client
sales strategy. The strategy is focused on multi-site accounts whereby we can
demonstrate our technologies and roll them out in a streamlined approach
across a customer's entire portfolio. This includes the flow of revenues
following the expected final contracting for the previously announced
agreement in principle with a U.S. paper mill for a $20 million, eight-year,
Thermal-AUD(TM) green energy services contacts, and a number of other
significant opportunities in Canada and the U.S. Additionally we anticipate
seeing additional revenue growth on a consolidated basis from the GEM(R)
acquisition following a normal period of integration and positioning of
Thermal Energy's core products with the GEM(R) sales team throughout Europe.
We also anticipate the first GEM(R) revenues in FY 2009 from a global
preferred supplier agreement with one of the world's largest pharmaceutical
companies. Work was underway in Q1 2009 on putting the workflow and ordering
infrastructure in place with the client.
    Thermal Energy's joint venture in Guangzhou, China is commencing initial
positioning and identification of GEM(R) steam traps and FLU-ACE(R) waste heat
recovery in Asia both through the Company's Guangzhou office and the Asia
Clean Energy Alliance.


    Progress with the joint venture at South China University of Technology
(SCUT) to develop the Company's THERMALONOx(TM) technology to reduce nitrogen
oxides at coal-fired power plants has been somewhat slower than anticipated.
This has primarily been due to bureaucratic and financial delays in China.
Design work on the pilot test facility in China continued throughout Q4 2008
and subsequently equipment was manufactured in Q1 2009 and readied for
shipment to China in Q2.
    "While the year ahead is not without its challenges, Thermal Energy
continues to work very hard at converting prospects from our qualified
pipeline of sales opportunities into contracts and we have every confidence
that this will occur in FY2009 at a level that continues to produce record
year-over-year growth and significant bottom line improvements," said
Mr. Angus. "We look forward to sharing these continued successes with our
shareholders in the coming months."

                           Annual Special Meeting

    The Annual Special Meeting of shareholders will take place November 25,
2008 at the Brookstreet Hotel, 525 Legget Drive, Ottawa (Kanata), Ontario, at
9 a.m. Shareholders are asked to arrive ahead of time to complete registration
in order that the meeting can commence on time.

    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.

    There are accompanying notes which are an integral part of the following
consolidated financial statements. For complete audited financial statements
with those notes and Management's Discussion and Analysis, please go to or our website at under "investors."

    Incorporated under the Ontario Business Corporations Act

                         CONSOLIDATED BALANCE SHEETS

    As at May 31
                                                          2008          2007
                                                             $             $

    Current assets
    Cash                                                84,717       549,196
    Short-term investments (note 5)                    552,773     1,020,880
    Accounts receivable (note 6)                       627,571       428,581
    Contracts in progress                              156,000         4,000
    Net investment in lease                            227,034             -
    Prepaids and other assets                           31,934        60,894
                                                     1,680,029     2,063,551
    Property, plant and equipment (note 7)              65,066        67,612
    Net investment in lease (note 8)                 1,948,906             -
                                                     3,694,001     2,131,163

    Current liabilities
    Bank loan (note 9)                                 908,667             -
    Accounts payable                                 2,001,801       328,182
    Accrued liabilities                                459,777       158,082
    Deferred revenue                                   384,908     1,000,000
    Due to past President (note 10)                     17,937        17,937
                                                     3,773,090     1,504,201

    Capital stock, contributed surplus and deficit
    Capital stock (note 11)                         19,479,079    17,459,549
    Contributed surplus (note 11)                    1,528,414     1,881,487
    Deficit                                        -21,086,582   -18,714,074
                                                       -79,089       626,962

                                                     3,694,001     2,131,163

    Contingency (note 19)

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

    On behalf of the Board    Tim Angus              Oliver Toffoli
                              President and C.E.O.   Chief Financial Officer



    Year ended May 31
                                                          2008          2007
                                                             $             $
    Sales                                            4,926,208       821,024
    Cost of sales                                    4,318,184       874,515
    Gross profit (loss)                                608,024       -53,491

    Administration                                   1,228,984       880,331
    Selling, marketing and business development      1,314,208     1,266,359
    Legal fees                                         331,836        18,850
    Audit fees                                          72,839        77,500
    Insurance                                          127,993        78,498
    Amortization of property, plant and equipment       31,314        24,828
    Patent and trademark maintenance                    13,587        23,715
    Research and development                            87,572        99,875
    Interest and bank charges                           20,417        16,832
    Foreign exchange loss (gain)                        40,081        67,787
                                                     3,268,831     2,554,575
    Loss before the following:                      -2,660,807    -2,608,066

    Interest revenue                                    32,098           562
    Finance revenue                                     56,201             -
    Other revenue                                            -         5,240
    Other costs                                              -       -36,001
    Loss before income taxes                        -2,572,508    -2,638,265
    Future income tax recovery (note 14)               200,000       195,000
    Net loss and other comprehensive loss           -2,372,508    -2,443,265
    Deficit, beginning of year                     -18,714,074   -16,270,809
    Deficit, end of year                           -21,086,582   -18,714,074

    Net loss per share - basic and diluted              (0.025)       (0.031)
    Weighted average number of common shares        94,665,536    78,443,983

    The accompanying notes are an integral part of these consolidated
financial statements and Note 15 provides other information on earnings.



    Year ended May 31
                                                          2008          2007
                                                             $             $


    Net loss for the year                           -2,372,508    -2,443,265

    Add items not involving cash:
      Stock-based compensation charge                  495,786       377,755
      Amortization of property, plant and equipment     31,314        24,828
      Future income taxes                             -200,000      -195,000
      Write-off of past President loan to acquire
       shares                                                -       151,500
      Non-monetary compensation charge                 152,171        13,031
    Changes in non-cash operating working capital
      Accounts receivable                             -198,990       197,914
      Contracts in progress                           -152,000        85,000
      Prepaids and other assets                         28,960       -19,117
      Accounts payable                               1,673,619      -437,487
      Accrued liabilities                              301,695        -8,646
      Deferred revenue                                -615,092       901,000
    Net cash used in operating activities             -855,045    -1,352,487


    Disposal (acquisition) of short-term
     investments                                       468,107    -1,020,880
    Additions to property, plant and equipment         -28,768       -32,902
    Decrease in loan receivable                              -        55,500
    Net cash used in investing activities              439,339      -998,282

    Increase in bank loan                              908,667             -
    Net investment in lease (note 8)                -2,209,842             -
    Less: payments received                             33,902             -
    Common shares issued (note 11)                   1,218,500     2,840,846
    Net cash provided by financing activities          -48,773     2,840,846

    Increase (decrease) in cash for the year          -464,479       490,077
    Cash, beginning of year                            549,196        59,119
    Cash, end of year                                   84,717       549,196

    Interest paid                                        5,444         3,242
    Tax impact of renounced expenditures               200,000       195,000
    Shareholder loans to acquire shares                529,977         7,500

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

    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),
trademarks of Thermal Energy International.
    For more information about Thermal Energy International Inc. (TSX-V: TMG),
visit our website at
    To sign up for e-mail alerts to receive notification of press release,
financial information and media coverage, please go to

    %SEDAR: 00007994E

For further information:

For further information: Oliver Toffoli, Chief Financial Officer, (613)
723-6776 x 209; Stuart McCarthy, Investor Relations and Communications, (613)
723-6776 x 220, (613) 762-4321 - cell,

Organization Profile

Thermal Energy International Inc.

More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890