Thermal Energy to substantially benefit from Canadian government’s new enhanced renewable energy tax incentives

, Sept. 27, 2002 — The new Income Tax Regulations enable Thermal Energy (TSX VENTURE:TMG) to raise working capital much easier through the issuance of Flow Through Shares to fund Canadian Renewable and Conservation Expenses (or CRCE), by allowing the investor to deduct 100% of ($) value invested immediately from taxable income for the same calendar year.

Thermal Energy International Inc. (TSX Venture Exchange, stock symbol TMG, www.tse-cdnx.com) is very pleased to announce that the Company will strongly benefit from the new Enhanced Renewable Energy Tax Incentives recently introduced by Finance Canada.

On July 26, 2002, John Manley, Deputy Prime Minister and Minister of Finance, announced proposed changes to the income tax rules to enhance the tax incentives for investments in renewable energy and energy conservation projects. The most important change, allows Thermal Energy International Inc. to renounce Canadian Renewable and Conservation Expenses (or CRCE) to Flow-Through Share investors in a year where the CRCE will be incurred in the subsequent year.

While for over the past decade, the non-renewable energy sector (e.g. oil and gas exploration companies) have enjoyed this same tax incentive known as the “look-back rule” in subsection 66(12.66) of the Income Tax Act, until now, the renewable energy industry has not had access to any such look-back provision related to their attempted Flow-Through Share (or FTS) financings.

“During the fall of 2001, the inapplicability of this “look-back” provision disqualified Thermal Energy from completing a potential $1,600,000 FTS financing through a prominent Calgary, Alberta based investment banking firm”, says Oliver Toffoli, Vice President of Finance and Administration, CFO.

“This is great news, as the vast majority of our Canadian operational costs qualify as CRCE, and may be utilized immediately this fall 2002 to raise Flow-Through Share capital from Canadian investors in excess of $1,000,000”, says Tom Hinke, President & CEO.

Thermal Energy International Inc. is an environmental and energy technology company since 1986. Headquartered in Ottawa, Canada, the Company is an established designer, developer, fabricator, and supplier of Superior proprietary and patented environmental compliance (air) and energy conservation products and technology solutions.

The Company is also a fully accredited professional engineering firm, and offers advanced process and applications engineering services. More on Thermal Energy can be found at www.thermalenergy.com. FLU-ACEà‚® is a registered trademark of Thermal Energy. Common shares of Thermal Energy are traded on the TSX Venture Exchange (formerly CDNX) under the symbol TMG.

SOURCE: Thermal Energy International I

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