Press Release

ThermoEnergy Corporation Closes Private Equity Financing

July 15, 2005 - ThermoEnergy Corporation (OTCBB: TMEN), headquartered in Little Rock, Arkansas, announced today the completion of a private equity placement raising of approximately $7,000,000. The company announced that it has issued 5,590,337 units at a price of $1.20 per unit, with each unit consisting of one share of Convertible Preferred Stock, convertible into Common Stock on a one-for-one basis, and a Warrant entitling the holder to purchase 0.45 share of Common Stock at an exercise price of $1.50 per share.

“ThermoEnergy’s corporate dynamic will be significantly affected as a result of this equity investment, enabling management to expedite its immediate and long-term growth strategy,” said Dennis C. Cossey, President and CEO of ThermoEnergy Corporation. “In addition, we were exceptionally pleased with the level of interest and participation by institutional investors who were responsible for over 80% of the total amount invested.”

The company recently signed its first commercial contract, for a 500,000 gallon per day Ammonia Recovery Process (ARP) facility for New York City, designed to assist in the clean up of Long Island Sound by limiting the amount of nitrogen (in the form of ammonia) that gets discharged into the Upper East River every day. The company has since quoted a second ARP system for a new privatized wastewater treatment facility currently in the design and construction phase in Orange County, California.

Fieldstone Private Capital Group, Inc., led by Manfred Ernst and Anastasia Pozdniakova in New York, acted as a placement agent to ThermoEnergy in connection with the equity financing.

About ThermoEnergy Corporation

ThermoEnergy’s core business is the design, fabrication and operation of renewable energy and power generation facilities based on the company’s patented and/or proprietary technologies.

The ThermoFuel Process converts municipal and industrial wastewaters into a high-energy biofuel. The ARP technology converts ammonia nitrogen into a commercial grade fertilizer. The TIPS process is a totally new thermodynamic method of converting fossil fuels, including oil, natural gas or coal, and most biomass into energy with zero air emissions. In addition, TIPS removes and recovers carbon dioxide (CO2) in liquid form which can be reused in a number of commercial applications, including a low-cost alternative for desalinating water, secondary and tertiary oil recovery, and methane production.

Included in the company’s long-term strategy are plans to market the by-products as well as emission credits generated by its technologies. The company looks to expedite the commercial success through acquisitions, mergers, and the formation of partnerships with larger, well capitalized firms who have a proven track-record in the company’s targeted markets.