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Delivers record results for revenue generated during a first quarter and orders converted in a quarter

Burnaby, BC, May 31, 2023--(T-Net)--Tantalus Systems (TSX: GRID), a smart grid technology company focused on helping build sustainable utilities for the future, announced its financial and operating results for the quarter ended March 31, 2023.

Financial Highlights for Q1 [1]:

• Revenue: Generated $10.4 million (CND$14.1 million), representing 12% growth over the prior year period. This revenue amount sets a record for the Company in terms of revenue generated during a first quarter. Revenue from the Utility Software Applications and Services segment represented 32% of total revenue in the quarter.
  
  
• Annual Recurring Revenue (ARR)[2] : Grew approximately 22% to $10.0 million (CND$13.6 million) as compared to $8.2 million (CND$10.4 million) from the prior year period. ARR recognized in the quarter represented 23% of total revenue generated in the quarter.

• Gross Profit Margin [2]: Remained fairly constant at 47% compared to 48% over the prior year period.

• Adjusted EBITDA[2]: Delivered negative $0.7 million (negative CND$0.9 million) as compared to negative $0.7 million (negative CND$0.9 million) for the prior year period. While the numbers are similar, Q1 of 2022 did not include a full quarter of expenses from Congruitive, which was acquired in February 2022. The negative Adjusted EBITDA in the quarter was primarily tied to the ongoing R&D effort to commercialize the TRUSense Gateway product offering.

• Total Assets: Ended the quarter with $38.9 million (CND$52.6 million) as compared to $37.4 million (CND$50.7 million) as of December 31, 2022.

• Sales Orders: The Company converted $17.7 million (CND$24.0 million) from our sales pipeline in Q1, setting a new milestone for orders converted within a quarter. The previous milestone of $16.0 million (CND$21.6 million) was set in Q1 of 2022. In addition, the Company also added 7 new utilities during the quarter to grow its User Community to 278 utilities.

Peter Londa, President and CEO, Tantalus Systems Corp.

"We continue to build momentum and are pleased with the progress made during Q1," said Peter Londa, President & CEO of Tantalus. "Delivering new financial and commercial milestones are a direct result of the dedication and hard work of our entire team. We continue to invest in the development of the TRUSense Gateway and our AI-enabled Transformer Analytics offering, both of which will enable utilities to modernize their distribution grids. In validating the differentiation of these two major R&D initiatives at our recent Users Conference, we believe Tantalus is well-positioned for the future."

About Tantalus Systems Holding Inc.

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 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.

Financial Statements and Management Discussion & Analysis

Please see the Company's consolidated financial statements ("Financial Statements") and related Management's Discussion & Analysis ("MD&A") for more details. The Financial Statements for the three months ended March 31, 2023, and related MD&A have been reviewed and approved by Tantalus' Audit Committee and Board of Directors. For a more detailed explanation and analysis, please refer to the MD&A that has been filed on SEDAR at www.sedar.com and is also available on the Company's website at www.tantalus.com.

Non-IFRS and Other Financial Measures
This press release refers to the following non-IFRS measures:

"EBITDA" is comprised as income (loss) less interest, income tax and depreciation and amortization. Management believes that EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. "Adjusted EBITDA" is comprised as income (loss) less interest, income tax, depreciation, amortization, stock-based compensation, foreign exchange gain (loss) and other income / expenses not attributable to the operations of the Company. Management believes that Adjusted EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See "Reconciliation of Net (Loss) / Income to Adjusted EBITDA" for a quantitative reconciliation of Adjusted EBITDA to the most directly comparable financial measure.

"Gross Profit" is comprised as the Company's revenues less cost of sales. Management believes that Gross Profit is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See "Gross Profit Reconciliation" for a quantitative reconciliation of Gross Profit to the most directly comparable financial measure. This press release refers to "Gross Profit Margin" which is a non-IFRS ratio. Gross Profit Margin is comprised of Gross Profit expressed as a percentage of the Company's revenues. Management believes that Gross Profit Margin is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company.

"Adjusted Working Capital" is comprised as current assets less current liabilities exclusive of the Company's bank loan. Management believes Adjusted Working Capital is a useful indicator for investors, and is used by management, for evaluating the operating liquidity to the Company. See "Adjusted Working Capital Reconciliation" for a quantitative reconciliation of Adjusted Working Capital to the most directly comparable financial measure.

"Recurring Revenue" is comprised of the Company's revenues that are recurring in nature and attributable to its analytics and other software as a service ("SaaS") offering, hosting services and software maintenance and technical support agreement services. "Annual Recurring Revenue" or "ARR" is comprised of the Company's Recurring Revenue as expressed on an annualized revenue basis attributable to its customer agreements at a point in time.

Such non-IFRS measures and non-IFRS ratio do not have a standardized meaning under IFRS and may not be comparable to a similar measure disclosed by other issuers.

Gross Profit Margin Reconciliation

Reconciliation of Net (Loss)/Income to Adjusted EBITDA

(a) Finance expense comprised of interest and related finance expense on bank loans and lease liabilities.
(b) Share-based non-cash compensation expense.
(c) Foreign exchange comprised of unrealized (gain) / loss from non-functional currency assets and liabilities.
(d) General and administrative expenses pertaining to the Company's acquisition of Congruitive.

Adjusted Working Capital Reconciliation

[1] Financial information is reported in United States dollars ("$") unless otherwise stated and in accordance with International Financial Reporting Standards ("IFRS"). Where balances are also expressed in Canadian dollars in this press release, an average foreign exchange rate of 0.7369 for the three months ended March 31, 2023 (0.7898 for three months ended March 31, 2022) for income statement items and a foreign exchange rate of 0.7389 as at March 31, 2023 (and 0.8003 as at March 31, 2022 and 0.7383 as at December 31, 2022) for balance sheet items has been applied.

[2] See "Non-IFRS and Other Financial Measures."