Thermal Energy Reports FY2006 Q3 Results: Company Closes $735,000 Non-Brokered Private Placement Financing

Attention Business and Financial Editors

Thermal Energy International Inc. (TSX VENTURE:TMG), (the "Company,") (www.thermalenergy.com) today announced third quarter results for fiscal year 2006.

For the three months ended February 28, 2006, the Company posted revenue of $655,010, up sharply from $35,604 for the same period a year earlier. The Company posted a gross profit of $11,417 for the third quarter with a net loss of $402,164 (0.6 cents per share), an improvement over the net loss of $508,593 (1.2 cents per share) for the same period in fiscal 2005. Figures in the financial statements are rounded off to the nearest whole cent. All figures are in Canadian dollars.

Nine month revenue totals $1,844,554, a 443% increase over $415,993 reported in fiscal year 2005. Net loss for the period stands at $1,548,350 (2.7 cents per share) compared to $1,030,757 (2 cents a share) a year earlier. The increase is largely attributed to cost overruns to remedy deficiencies on certain projects as identified and captured in the previous quarter's results.

"As we told shareholders at our recent annual meeting, Thermal Energy has suffered some set backs in executing our revenue plan, mostly attributable to our need to address legacy issues, including cost overruns and cleaning up projects initiated in 2004," said Thermal Energy President and CEO Tim Angus. "As of this quarter I am pleased to say that the financial impact of these issues is all but behind us and we look forward to continued revenue growth and improvements in gross profits in the coming quarters."

Highlights and other recent developments:

- The FLU-ACE® waste heat recovery project at CAMCO's e-coat
  facility in Montreal, Quebec, was essentially completed in the
  quarter and became operational shortly after;

- Thermal Energy and Johnson Controls continued to jointly market
  Thermal Energy's energy and emission reduction solutions in Canada
  and the U.S. This resulted in the recent award of a detailed waste
  heat engineering and design study for a client in the U.S. at a
  manufacturing facility which is the largest of its kind in the
  world. This is the company's first project development work in
  the U.S.;

"We are confident that Thermal Energy is in a better position now than ever before to compete in the energy and emission reduction market," said Mr. Angus. "We have developed a strong suite of complimentary products and technology to position Thermal Energy as a powerful competitor able to offer a complete range of solutions to meet customer needs."

Thermal Energy has recently acquired exclusive distribution rights to the GEM® line of next-generation industrial and commercial steam traps. The Company also recently received its first purchase order for a trial of the GEM® technology at a "Big Three" automaker's central steam plant in Detroit, Michigan.

Thermal Energy also recently announced the launch of its THERMALOZOMAx(TM) line of ozone generating technology and is working through proposals to implement THERMALOZOMAx(TM) in certain sectors.

The Company was also pleased to recently announce it had filed for a provisional patent on new technology at the heart of its THERMALONOx(TM) technology for reducing nitrogen oxide (NOx) emissions at fossil-fuel fired power plants and other industrial boiler settings. Thermal Energy's Chief Scientist Dr. Raymond Belanger has conducted extensive bench tests on the new process he has developed and generated significant quantities of ozone to make it possible for the Company to move forward and bring THERMALONOx(TM) to market.

To assist the company in accelerating the sales and marketing of the new offerings and Thermal's complete solution, the Company today has announced it has closed a non-brokered private placement with gross proceeds of $734,900.05. The placement consisted of 3,867,895 units at $0.19 with each unit comprising one Common Share and one non-transferable Share Purchase Warrant entitling the holder to acquire one additional Common Share at any time within one year of issuance at a price of $0.30 per share. In all, 23 individuals took part in the private placement financing, including one insider, Thermal Energy's Corporate Secretary, Dr. Gustav Pliva, who participated with an investment of $19,000. This transaction is subject to approval by the TSX Venture Exchange.

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

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 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®, THERMALONOx(TM) and THERMALOZOMAx(TM) are trademarks of Thermal Energy International. GEM® is a trademark used under exclusive license from Gardner Energy Management Ltd. (www.gemtrap.com)

To find out more about Thermal Energy International Inc. (TSX-V: TMG), visit our website at www.thermalenergy.com.

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

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