Tantalus completes $16 million private equity financing

VANCOUVER, B.C., September 1, 2004 (CCNMatthews) — Tantalus Systems Corp., a designer and manufacturer of data communications networks for utilities, is pleased to announce the completion of a CAD $16 million private equity financing. The financing syndicate includes Altira Group LLC, ARC Financial Corporation, British Columbia Discovery Fund (VCC) Inc., Sanders Morris Harris Group and Pender Growth Fund (VCC) Inc.

“We are delighted to have achieved this major milestone by bringing financial partners with strong understanding of the energy and utility industry to the Tantalus team,” said Tantalus Chairman and Chief Executive Officer Glen Brownlee. “Their support confirms the growing demand we’re hearing from our electric utility customers for innovative solutions to the capacity and reliability challenges they face today. With this new investment, Tantalus is well capitalized to expand the development and market penetration of our state-of-the-art wireless networks for the utility industry.”

The Tantalus Utility Networkà¢â€ž- (TUNetà¢â€ž-) helps utilities address their pressing need to optimize the capacity and reliability of their networks in an increasingly challenging business climate. TUNet has been recently expanded at a pilot site in Anaheim, California, and deployed at two new customer sites in the southeast United States.

“We have thoroughly reviewed the spectrum of technology companies offering solutions to the challenges facing today’s electric utility industry,” said Hull McKinnon of Altira Technology Fund IV L.P., a private equity fund managed by Denver, Colorado-based Altira Group LLC which invests exclusively in energy technologies. “TUNet caught our attention because of the elegant, cost-effective way it solves utility problems.”

“The compelling business proposition of TUNet is what attracted ARC to Tantalus,” said Allan Fowler of ARC Energy Venture Fund 4, a Calgary, Alberta-based private equity fund managed by ARC Financial Corporation. “Their wireless technology is well suited to meet the growing need, particularly in California and Ontario, for communications solutions that support smart metering and demand side management.”

“We have worked with Tantalus to build this innovative company,” said John McEwen of British Columbia Discovery Fund (VCC) Inc. (“BCDF”), a venture capital corporation managed by a subsidiary of Vancouver, Canada-based Discovery Capital. “We are pleased to have helped them create a strong management team, and to assist them in attracting premier financial partners with strong expertise in the energy sector. With this financing, Tantalus now has the right ingredients to move to the next level in this fast-growing industry.” BCDF’s investment in Tantalus is the sixth and largest investment made by BCDF to date.

The financing is also supported by Sanders Morris Harris Group, a Houston, Texas-based investment banking and financial services company managing in excess of $6 billion in client assets, and by Pender Growth Fund (VCC) Inc., of Vancouver, Canada.

About Altira

Altira is a seed and early stage venture capital firm focused on energy technology. Based in Denver, Colorado, the firm is investing from its fourth fund. Altira looks for promising technology companies in the areas of oil and gas, energy information technology, electric power generation, transmission and distribution, and renewable energy. The firm targets opportunities in first institutional equity rounds with initial investments of $500,000 to $3 million.

For more information about Altira see www.altiragroup.com

About ARC Financial Corporation

ARC Financial is a Calgary based, private, investment management firm focused exclusively on the energy sector. ARC has been an active investor in early stage energy companies since 1990 and launched its first private equity fund in 1997. ARC has made investments of over $650 million in over 100 early stage companies in various sectors of the energy industry. Investors in the ARC Energy Venture Funds are primarily Canadian and U.S. endowments and pension funds. For more information, please visit www.arcfinancial.com

About Discovery Capital Corporation

Established in 1986, Discovery Capital is a venture capital firm and venture fund manager specializing in: information technology, communications, health and life sciences, and other advanced technologies. Discovery has enhanced value for over 250 technology ventures since inception with proven expertise in strategic planning, management development, innovative financing strategies, corporate governance and positioning for liquidity. Investment successes to date include Sierra Wireless, ALI Technologies, Bennett Environmental, Inex Pharmaceuticals and TIR Systems.

About British Columbia Discovery Fund (VCC) Inc.

British Columbia Discovery Fund (VCC) Inc. was established to make venture capital investments in a portfolio of small businesses in British Columbia that qualify under the Small Business Venture Capital Act, focusing on all of B.C.’s top internationally recognized technology clusters; information technology, communications, health and life sciences, and energy and environmental technologies. Established in 2002, the Fund is the largest SBVCA registered venture capital corporation making diversified investments in British Columbia with the objectives of achieving long-term capital appreciation for its shareholders and contributing to the growth in value and employment of the technology industry in British Columbia. The Fund offers its shares on a continuous basis and has raised in excess of $20 million to date. To obtain further information about the Fund, please visit www.bcdiscoveryfund.com

About Sanders Morris Harris Group

Sanders Morris Harris Group is a diversified financial services holding company based in Houston, Texas, and is the largest investment banking firm headquartered in the Southwest. At June 30, 2004, it had assets in excess of $142 million, cash and equivalents of $20.7 million and no funded debt. Its operating entities are Sanders Morris Harris, Charlotte Capital, Kissinger Financial Services, Pinnacle Trust Co., Salient Partners and SMH Capital Advisors. Additional information is available at www.smhgroup.com

About Pender Financial Group Corporation

Pender Financial Group Corporation is a publicly traded merchant bank focused on technology and healthcare companies. Pender’s strategy is to build long-term value and liquidity by investing its capital into a relatively few undervalued companies and actively participating in their development. Pender looks for businesses that have superior management, products and market strategy. The total value of assets held or managed by Pender is $18 million. For more information, please see www.penderfund.com

About Tantalus

Founded in 1989, Tantalus designs, manufactures, and markets two-way, real-time data communications networks to monitor and control electric, gas, and water utilities. The Tantalus Utility Network is a single, multi-purpose communications backbone specifically designed to help utilities extend the capacity of their distribution infrastructure. Tantalus’ long-range wireless networks unite a utility’s applications, making outage management, advanced metering, power quality monitoring, load management, and distribution automation cost-effective and practical throughout both urban and rural service areas. For more information, please visit www.tantalus.com

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