Serveron Reports Record Revenue for 2006; Sales Increase 42% as Utilities Adopt Transformer Monitors to Reduce Blackouts

February 8, 2007 - HILLSBORO, Ore. - Serveron Corporation today reported revenues for the 2006 year increased 42% to record levels, primarily from sales of its advanced transformer monitoring systems.

The venture-capital-financed company, which does not disclose specific operating results, said it attributed the year's record performance to enhanced market penetration in North America, as more utilities accept and apply new standards for monitoring their large power transformer "fleets." In addition, Serveron said it is beginning to see heightened interest and a ramping up of sales from utilities and other power generating companies in Europe and Asia, following the appointments of senior executives based in those regions.

Power transformers, which either step-up or step-down the voltage of electricity to enable its transmission and distribution, represent the single largest asset class for power generating and power distribution companies other than the power plants themselves. Replacement cost for a failed transformer can range from $2 million to $12 million or more, and there are hundreds of thousands of such units now deployed worldwide.

"We are finding a growing awareness in our marketplace that suppliers of electricity cannot afford to have failures occur in the power grid that are clearly preventable," said Bart Tichelman, Serveron's chief executive officer. "To help prevent such failures, and the blackouts and potential damage to lives and property that come with transformer problems, utilities in the United States adopted new standards this past year for monitoring transformers for the dissolved gases that can predict failures."

Mr. Tichelman referred to Arizona Public Service and more than a dozen other major U.S. utilities committed to putting Serveron's remotely readable transformer monitors on all new power transformers they purchase, as well as retrofitting them on critical existing power transformers.

According to Hartford Steam Boiler, a major insurer of utility assets, approximately 1,500 such transformers will fail during the coming year, 300 of which will fail catastrophically - that is, explode and catch fire. Transformer fires are among the most dangerous fires to fight. They are electro-chemical in nature, and they often result in collateral damage, environmental clean ups, legal action and other impacts. This growing failure rate is attributed to two factors:

1. The stress over time of increasingly heavier loads on an already aged transformer fleet. The average power transformer in the U.S. is now about 42 years old and, therefore, is being operated at or beyond the design life for such devices.

2. The other factor is the purchase of new transformers to replace older or failed transformers, since these new units, those less than a few years old, are the second most likely to fail.

"Regulated industries, such as utilities, are faced with difficult choices as a result of these two factors," Mr. Tichelman continued. "Either they can run transformers until they fail, or they can take preventive action to monitor and predict if a unit is running properly, or is likely to fail."

About Serveron

Reliability of the worldwide electrical grid is paramount, and Serveron asset condition assessment and management tools are critical to utilities in improving grid reliability while optimizing the management and economics of their asset base. Serveron develops, delivers and supports on-line transformer monitoring products, as well as diagnostic services, that are helping restructure the way utility assets are managed. Serveron's venture investors include Siemens Venture Capital, Perseus 2000 LLC, Ventures West Management LLC, El Dorado Investment Company, Nth Power LLC, Cascadia Pacific Management and Oregon Life Sciences LLC. Headquartered in Hillsboro, OR, Serveron serves electric power providers in the United States and around the world. For more information, please visit: www.serveron.com.