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Acquisition Will Help Utilities Prepare for the Impact of EVs and DERs

Burnaby, BC, February 3, 2022--(T-Net)--Smart grid technology leader Tantalus Systems (TSX: GRID) today announced its acquisition of DLC Systems, Inc. d/b/a Congruitive for a purchase price that includes $10 million (US$8 million) of closing consideration and up to US$5 million through a two-year earn-out.

Congruitive will become a wholly owned subsidiary of Tantalus' US operating subsidiary.

Congruitive is leveraging multi-decade relationships with utilities through its substation automation expertise to deliver its signature software solution, Congruence.IQ ("C.IQ™"), which is a software platform that enables the interoperability of a wide range of devices through an emerging Institute of Electrical and Electronics Engineers ("IEEE") standard.

By deploying C.IQ, a utility's smart grid deployment can operate as one intelligent, interoperable system, with the necessary scalability and flexibility as more electric vehicles ("EVs") and distributed energy resources ("DERs") are deployed at the edge of the grid.

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Congruitive is currently selling its C.IQ software to investor-owned utilities ("IOUs"), smart meter vendors and renewable power integrators.

Peter Londa, President and CEO, Tantalus Systems Corp.

"This acquisition serves as a further demonstration of Tantalus' purpose-driven mission to help utilities become sustainable from an enhanced financial, operational and environmental perspective," said Tantalus President and CEO, Peter Londa. "Having C.IQ as part of our solution allows us to help public power and electric cooperative utilities prepare for the impact that an increasing number of EVs and roof-top solar panels will have on the reliability of their distribution grids. We are delighted to announce the closing of this acquisition today, and we welcome Congruitive's employees, customers and partners to Tantalus."

At a recent Tantalus users conference, representatives from over 100 public power and electric cooperative utilities reiterated they are under increasing pressure to maintain operations despite disruptions from extreme weather, mandates to decarbonize, and the meteoric rise of EVs, solar panels and other DERs. Despite these disruptions, utilities are called upon daily to deliver safe, reliable and affordable services, while relying on legacy distribution grids that are challenged to respond to changing dynamics.

Tantalus' smart-grid platform, TUNet®, helps utilities address these challenges by enabling them to monitor, control and respond to events anywhere and at any time across their distribution networks. With the addition of Congruitive and C.IQ, Tantalus will be able to help utilities leverage data through a growing suite of software capabilities to improve the services delivered to their communities.

"This acquisition is an important milestone and will provide value to our customer base," said Congruitive CEO, Kenneth Munson. "As utilities digitize their distribution grids, providing interoperability of data from disparate devices is critical to maintaining reliable and expanded services. Tantalus' ability to access granular data and deliver next-generation analytics through TUNet coupled with our ability to transport and integrate data from distribution automation equipment and DERs will lead to an even greater range of solutions for the utility industry, and as part of Tantalus, C.IQ will have greater reach into the public power and electric cooperative utility segment."

Acquisition Details

Tantalus agreed to acquire 100% of the issued and outstanding common shares of Congruitive pursuant to the terms of a stock purchase agreement. The purchase price was comprised of US$8 million of closing consideration in the form of approximately US$3.5 million in cash, 869,565 common shares of Tantalus based on a share price of CDN$1.76 (US$1.38)(calculated with reference to the volume weighted average trading price of Tantalus' common shares on the TSX over the last five trading days ended January 28, 2022 and exchange rates over the same period) and the assumption of certain debt on Congruitive's balance sheet at the time of closing.

In addition, Tantalus agreed to include an earn-out provision of up to an additional US$5 million of consideration in the form of cash and common shares of Tantalus. The earn-out is tied to Congruitive increasing its annual revenue up to US$6.9 million by 2023. Congruitive delivered approximately US$2.5 million in revenue from software and services in 2021. As part of the terms of the transaction, Congruitive shareholders agreed to a one-year lock-up for the common shares being issued by Tantalus at closing.

Its current management team will remain in place and report into Tantalus' President and CEO.

"We are excited to become part of the Tantalus family," said Congruitive Founder and Chairman Douglass Campbell. "Congruitive has always been a company that cares deeply about the success of our customers. Tantalus is the right fit culturally, technologically, and operationally. Together, we look forward to helping utilities everywhere take full advantage of the data available to them, digitize the electric grid and better serve their communities in a rapidly changing world."

About Tantalus Systems Holding Inc. (TSX: GRID)

Tantalus is a smart grid technology company that transforms aging one-way grids into future-proofed multi-directional grids that improve the efficiency, reliability and sustainability of public power and electric cooperative utilities and the communities they serve. Our solutions are purpose-built to allow utilities to restore power quickly after major disruptions, adapt to rapidly shifting consumer expectations and population shifts, innovate new solutions based on the adoption of distributed energy resources and evolve their grid infrastructure at their own pace without needless cost or complexity. All this gives our user community the flexibility they need to get the most value from existing infrastructure investments while planning for future requirements. Learn more at www.tantalus.com.

About DLC Systems d/b/a Congruitive

For over 30 years, Congruitive has developed advanced technology solutions that give utilities and renewable energy producers the power to manage and control electricity at every point on the grid. Our open enterprise solutions serve as a gateway to acquire and distribute complex operational data across the grid, from substations and control centers to distributed energy resources and electric vehicles. With its powerful and flexible communications processing engine, our Congruence.IQ software provides grid operators with the information they need to keep electricity flowing effectively, efficiently, and safely. To learn more visit www.congruitive.com.