Press Room

Press Release

June 2006

Mountain Island Energy Holdings, LLC is Formed

Salt Lake City, Utah - Terra Systems, Inc. (Pink Sheets: TSYI - News) -, Mountain Island Energy, LLC (MIE) of Soda Springs, Idaho, a subsidiary of Terra Systems Inc. and United Fund Advisors, LLC (UFA) of Portland, Oregon have formed Mountain Island Energy Holdings, LLC (MIEH), a Delaware limited liability company. The holding company was formed to unite the strengths of both companies in the pursuit of an Idaho-based advanced coal powered generating facility. The formation of MIEH combines the financial and project development resources of UFA and the physical assets, project site and project management strengths of MIE.

MIEH was formed to make application to the US Treasury and US Department of Energy for federal tax credits for Advanced Coal Project Tax Credits under Section 48A of the Internal Revenue Code. These tax credits will be utilized in the construction of a qualified advanced coal-based electrical generation power plant located on MIE's project site in Southeast Idaho.

Under the new management agreement, Reynold Roeder, Chief Operating Officer of UFA will serve as a Managing Director of MIEH with Mitchell J. Hart, P.E., Vice President of TSYI and General Manager of MIE serving as a Managing Director representing TSYI and MIE. There will be a third independent managing director selected by the two parties in the very near term.

Mr. Roeder stated, "Funding of advanced combustion clean coal generation processes is an extremely difficult proposition. United Fund Advisors brings a new level of sophistication to the financing of a project of this scope."

Mr. Hart commented, "It has been our goal to bring state of the art clean coal power generation technology to Southeast Idaho to provide for the growing energy needs of its people and industry."

United Fund Advisors (UFA) is owned 53% by its management and 47% by Portland Family of Funds Holdings, Inc. ("PFF" -- www.portlandfunds.com ). PFF is currently providing advisory and compliance services for over $400 million in New Market Tax Credit transactions, primarily on the west coast. PFF contracts for its management from UFA. Norris Lozano is the Chief Executive Officer of UFA and Reynold Roeder is the Chief Operating Officer. Mr. Lozano and Mr. Roeder own the majority of the management position in UFA. UFA and its management are experienced at raising capital in for tax-advantaged transactions having closed over $200 million in New Market Tax Credit transactions.

Mountain Island Energy, LLC is a wholly owned subsidiary of Terra Systems, Inc. and focused on energy, carbon and mineral related projects and based in Soda Springs, Idaho.

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About Terra Systems, Inc.
Terra Systems, Inc. is a clean energy technology company incorporated in 1996 focused on advanced clean coal power generation, enhancement and utilization of waste coal and upgrading of specialty carbon products.

Contact
George Ford
Terra Systems, Inc.
gford3648@msn.com

Note: Certain statements contained herein may be forward-looking statements within the meaning of federal securities laws and Terra Systems, Inc. intends that such forward-looking statements be subject to the safe-harbor created thereby. Forward-looking statements include Terra Systems, Inc. expectations as to the managing and marketing of its businesses within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and our future results that are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Actual results may vary materially from such expectations. Words such as "expects," "anticipates," "targets," "goals," "projects," believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward-looking statements. Any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking. Although Terra Systems, Inc. believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that our results of operations will not be adversely affected by such factors. Unless legally required, we undertake no obligation to revise or update any forward-looking statements for any reason. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this statement.

Company Profile

Terra Systems, Inc. is a development stage company focused on advanced, clean and renewable energy technology applications and projects. TSYI is engaged in the development and commercialization of it's patented pneumatic accelerator system technology and the upgrading of specialty and waste carbon products. Terra Systems was founded in 1996 and is headquartered in Salt Lake City, Utah with a satellite office in Price, Utah.