SmartCool Systems Inc. (TSXV: SSC) is pleased to announce that it has entered into a Letter of Intent ("LOI") with Abbotly Technologies, Inc. ("Abbotly USA"), a Missouri USA corporation, to acquire the exclusive rights to distribute the Energy Savings Module ("ESM") throughout North America.

 

Pursuant to the LOI, Abbotly USA has agreed to assign all of its rights and obligations, and the Company has agreed to assume all of Abbotly USA's obligations, under a license agreement between Abbotly USA and Abbotly Australia Pty Limited ("Abbotly Australia").

Abbotly Australia is the owner and manufacturer of the ESM, which is specifically designed to reduce electric usage on air conditioning and refrigeration compressors. Abbotly Australia has successfully marketed the ESM through a network of distributors worldwide for over 20 years. Pursuant to the license agreement between Abbotly USA and Abbotly Australia which is being assigned to SmartCool, Abbotly USA was granted the exclusive rights to distribute the ESM throughout North America.

SmartCool, through its US subsidiary, SmartCool Systems USA Inc. ("SmartCool USA") is currently a sub-distributor of Abbotly USA and holds the exclusive distribution rights for the ESM in Canada and the states of New York, Arizona, Nevada, New Hampshire, Rhode Island, Massachusetts, Connecticut, Colorado, New Mexico, Vermont, Maine, and New Jersey. SmartCool USA also has non-exclusive distribution rights in the states of California, Oregon, Washington, and Hawaii.

With the signing of this LOI, SmartCool USA will become the master distributor of the ESM in North America and will be required to meet certain minimum purchase obligations under the license agreement with Abbotly Australia but will no longer be bound by its previous minimum purchase obligations that it had as a sub-distributor of Abbotly USA.

George Burnes, President of Smartcool, stated that "acquiring these rights will not only strengthen the Company's position in the North American market and allow it to expand its marketing and sales efforts, but also provide important financial benefits. Abbotly USA has already developed a sub-distributor network (of which SmartCool USA is one sub-distributor) throughout North America that has actively been promoting the ESM to numerous corporate clients. We look forward to working with these sub-distributors, providing additional marketing and technical support which should allow them to increase their success rate for installing the ESM's."

It is the intention of the parties to enter into a definitive agreement by February 15, 2006. The consideration payable by SmartCool will be in the form of cash and a royalty paid to Abbotly USA on all products purchased from Abbotly Australia. In addition, SmartCool will enter into a consulting agreement with Abbotly USA and will grant incentive stock options to Abbotly USA.

This transaction is subject to the approval of the TSX Venture Exchange and consent from Abbotly Australia.

Smartcool would also like to provide an update on the previously announced proposed acquisition of the assets of Abbotly Australia. The Company is still in discussions with Abbotly Australia with respect to this acquisition. The exclusive rights granted Smartcool by Abbotly Australia expired on December 31, 2005, and the ongoing discussions will continue on a non-exclusive basis.

About Smartcool

Smartcool Systems Inc. (TSX-V: SSC) delivers cutting edge energy efficiency and cost reduction solutions for businesses around the world. The ESM™ and ECO3™ are Smartcool’s unique retrofit technologies that reduce the energy consumption of compressors in air conditioning, refrigeration and heat pump systems. Energy savings achieved by the ESM™ and ECO3™are quantifiable and the products can qualify for government and utility rebates. The technology has been validatedby rigorous third party testing, government organizations and private business installations.

Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

 

Investor Inquiries

Mike Kordysz
Tel: +1 604 904 8632
mike.kordysz@smartcool.net

TSX-V: SSC
OTC: SSCFF
Frankfurt: R3W

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