Mr. Ted Konyi reports

SMARTCOOL ANNOUNCES PRIVATE PLACEMENT OF PREFERRED SHARES TO FUND US RESIDENTIAL INITIATIVE

Smartcool Systems Inc.'s U.S. residential initiative is progressing to an anticipated launch and the company plans to finance that initiative with a private placement offering of up to 750,000 newly designated non-voting Series A preferred shares.

About the initiative

Historically, Smartcool Canada has focused its products and technologies on the commercial market. Now, through its wholly owned Nevada subsidiary, Smartcool Systems (USA) Inc., Smartcool proposes to market those products and technologies for retrofit in residential applications in the United States.

About the offering

The company proposes to finance its residential initiative in the United States through a non-brokered private placement offering of up to 750,000 Series A preferred shares at a price of $1 per Series A share.

The Series A shares are non-voting and may not be transferred without prior written consent of the company's board of directors. In addition, holders of Series A shares will:

• Accrue interest at 8 per cent per year;
• Be entitled to exchange their Series A shares for common shares of Smartcool (USA) if a liquidity event occurs prior to the second anniversary of the date the Series A shares were issued; for purposes of this right to exchange, a liquidity event will occur if: (i) all of the shares of Smartcool USA are sold to a single purchaser; or (ii) Smartcool USA becomes a reporting issuer in any province of Canada or in the United States; if a liquidity event occurs and the holder elects its right to exchange, such exchange would be on the basis of one Series A share being equal to 0.00333 per cent of the share capital of Smartcool USA on the date of the liquidity event;
• If a liquidity event does not occur prior to the second anniversary, each Series A share will be convertible, at the option of the holder, into common shares of Smartcool Canada on the basis of the original purchase price of the Series A share plus accrued interest divided by the price per Smartcool Canada share; the price of each Smartcool Canada share shall be the closing price per share of the Smartcool Canada shares on the date of conversion less the maximum discount allowable by the TSX Venture Exchange, subject to a minimum price per Smartcool Canada share of 10 cents;
• If the holder has not elected to convert its Series A shares into Smartcool Canada shares between the second anniversary and the third anniversary of the date the Series A shares were issued, all of the Series A shares outstanding on the third anniversary shall be automatically converted into Smartcool Canada shares at the conversion price in effect on the third anniversary.

The placement is expected to close by March 31, 2018.

Don Iannucci, vice-president of the ECOHome division, said: "Significant progress has been made to establish relationships with all facets of a successful launch of the ECOHome products this spring. Digital and social marketing of the products is being co-ordinated by Strawhouse, with other avenues to market being pursued as well. An execution group has been chosen in the initial target market and work is being done on the ECOHome module to incorporate IoT [Internet of things] communication protocols."

Finders' fees or brokers' commissions may be paid in accordance with the TSX-V policies.

The private placement offering of Series A shares is subject to approval from the TSX-V. All of the Series A shares issued and any securities into which they may be exchanged or converted will be subject to resale restrictions imposed by applicable law or regulation, including a four-month hold period that will begin on the closing date.

About Smartcool Systems Inc.

Smartcool provides cutting-edge energy-efficient and energy-cost-reduction solutions for businesses around the world. The ECO3, ESM and ECOHome are Smartcool's unique retrofit technologies that reduce the energy consumption of compressors in air conditioning, refrigeration and heat pump systems by up to 40 per cent, giving customers a return on investment in as little as 12 months.

We seek Safe Harbor.