The Company

Smartcool Systems Inc. is an advanced energy savings solutions company that specializes in energy and cost reduction technologies for commercial and retail businesses. The company's wholly owned subsidiary, Smartcool International Inc., is the owner, developer, manufacturer and worldwide distributor of the Energy Saving Module (ESM)™. This green technology reduces the electricity consumption (Kwh) and maximum demand (KW) of air conditioning and refrigeration compressors through enhanced system performance. The Energy Saving Module (ESM)™ enables the compressor to maximize the rate of heat removal by optimizing the natural physical properties of the compressor operation cycle. This process, known as "Compressor Optimization" can reduce compressor runtime by more than 30% and electricity consumption by up to 20%, while maintaining preset temperature levels and without causing over-cycling.

Recent News Highlights

• July 9, 2008 - University of Miami Reports on Smartcool's Energy Reduction Technology for Florida Power & Light Company
• June 25, 2008 - Smartcool Acquires UK Based Distributor
• June 2, 2008 - First Quarter Results Report Significant Revenue Increase
• May 13, 200 - Smartcool Signs Distribution Agreement for Germany, Receives Initial Order for Multiple Installations
• April 17, 2008 - Smartcool Completes First Ever Installation on a Centrifugal Compressor
• April 10, 2008 - Smartcool Receives Further Order from Distributor, Phase One of Australian Multi-Site Rollout Completed
• April 3, 2008 - Smartcool Receives Large Order from Distributor for Projects in the U.A.E and U.K.

Acquisition Overview

Smartcool's association with the ESM™ started in October 2003 when the Company acquired the exclusive distribution rights of the ESM™ in Canada and certain states of the United States from Abbotly Technologies, Inc. ("Abbotly USA"). Throughout 2004, the Company acquired additional states and territories from Abbotly USA. In November 2004, the Company first announced preliminary discussions to acquire the business and assets of Abbotly Australia. While a memorandum of understanding was reached with Abbotly Australia in February 2005, the transaction did not close. The Company instead pursued discussions with Abbotly USA to acquire the exclusive distribution rights for all of North America and this resulted in the Company acquiring the exclusive distribution rights for the ESM™ for Canada, the United States, Mexico and the Caribbean in March 2006.

Effective June 30, 2006, the Company's wholly owned subsidiary, Smartcool International Inc., has acquired the business and assets of Abbotly Australia for an agreed upon purchase price to be paid in cash in scheduled payments over two years. Previous deposits totalling CAD $100,000 were applied towards the final payment. As security for the purchase price, Smartcool International Inc. has granted Abbotly Australia a charge over the intellectual property which Smartcool International Inc. acquired from Abbotly Australia. In addition, the Company has guaranteed the obligations of Smartcool International Inc. to Abbotly Australia.

As a result of the acquisition, Smartcool International Inc. acquires four existing distribution agreements for the ESM™ encompassing the following countries; Australia, Thailand, the United Kingdom, Spain, Portugal, Hungary, Czech Republic, Slovakia, Poland, Saudi Arabia and the Persian Gulf, as well as the distribution agreement with the company's wholly owned subsidiary Smartcool USA for Canada, the United States, Mexico and the Caribbean. The cash flow currently being generated by the existing distributors will allow Smartcool to complete the terms of the acquisition without returning to the market place for further financing.

Technology Overview

Abbotly Technologies was established in 1980 to specialize in energy and cost reduction strategies for air conditioning and refrigeration systems used in commercial, retail and industrial businesses.

The ESM™ is a system of micro-computer digital optimization modules specifically designed to reduce the electricity consumption of refrigeration and air conditioning compressors by 10% to 20% while maintaining temperature performance. The ESM™ is designed to interface with all types of controls and complements rather than replaces the existing controller for air conditioning and refrigeration compressors. The ESM™ utilizes world wide exclusively copyrighted software that has been developed over 20 years to augment existing building and refrigeration control systems.

Over 25,000 ESM's™ have been installed throughout the world since 1986 and in 2003 they reduced electricity consumption by 213,000 Mwh and Greenhouse Gas emissions by 250,000 tons resulting in cost savings of $20,000,000. The major function of the ESM™ is to optimize the performance of air conditioning and refrigeration compressors while operating within the control parameters of the existing primary controller. The modules are compatible with all types of control systems including the latest building automation systems and computer controlled refrigeration plants. They are suitable for most types of refrigeration and air conditioning equipment.

Market Opportunity

With ever increasing energy demands and the rising cost of power, both Government and Industry are searching for systems and devices in order to preserve our current natural resources. Governments are implementing rebate programs for those companies that institute energy saving measures. Companies are realizing the economic and social benefits of implementing aggressive environmentally conscious programs that reduce their energy costs. An example can be taken from a quote by H. Lee Scott, CEO of Wal-Mart, "As one of the world's largest companies in the world, with an expanding global presence, environmental problems are our problems."

With over 25,000 ESMs™ installed throughout the world, Smartcool has the knowledge and experience to implement an aggressive sales and marketing program to introduce the ESM™ to the North American marketplace. Management feels that the Company is positioned to take advantage of a sector which is primed for growth as illustrated by a quote from Kleiner Perkins' John Doerr, "Greentech could be the largest economic opportunity of the 21st century."

The ESM™ is the energy conservation product of choice for some of the world's leading corporations including:

Telstra Corp. (AUS)	Tesco Supermarkets (UK)	Gate Gourmet (UK)
Tapia Bros Foods (USA)	Marks and Spencer (UK)	Coles Myer: K Mart & Target (AUS)
Nestle Limited (UK)	Woolworths Big W (AUS)	Safeway Supermarkets (UK)

Summary

With the completion of the acquisition of Abbotly, Smartcool not only owns the worldwide distribution rights for this intellectual property but now controls product development and manufacture thereby controlling its costs. By reverting from distributor status to owner of the technology Smartcool's cost of doing business has been reduced dramatically improving margins significantly.

The Company has established an experienced technical team and a network of independent sales representatives throughout the U.S. This distribution network, in addition to the existing distributors throughout the world, is positioned to continue to take advantage of both government and industry's environmental and fiscal initiatives. This, in turn, will enable companies to reduce the cost of doing business, increase profits and reduce green house gas emissions.