Servidyne Outlines Rationale for Increasing Authorized Shares

ATLANTA, Aug. 28 /PRNewswire-FirstCall/ — SERVIDYNE, INC. (Nasdaq:
SERV), today announced that the company has filed with the Securities and
Exchange Commission an open letter to its shareholders from Alan R. Abrams,
Chairman, President and CEO. The letter outlines the rationale for the
company’s current proposal to increase the number of Servidyne’s authorized
shares of common stock from 5 million to 10 million shares. The full text
of that letter follows below.

Established in 1925, Servidyne, Inc. is headquartered in Atlanta,
Georgia, and operates globally through its wholly-owned subsidiaries. The
Company provides comprehensive energy efficiency solutions, sustainability
programs, and other products and services that significantly enhance the
operating and financial performance of existing buildings. Servidyne
enables customers to cut energy consumption and realize immediate cost
savings across their portfolios, while reducing greenhouse gas emissions
and improving the comfort and satisfaction of their buildings’ occupants.
The Company serves a broad range of markets in the United States and
internationally, including corporate, commercial office, hospitality,
gaming, retail, industrial, distribution, healthcare, government,
multi-family and education. Servidyne also engages in commercial real
estate investment and development. The Company currently owns or controls
shopping centers in the Southeast and Midwest and office properties in
metropolitan Atlanta. For more information about Servidyne, please visit
http://www.servidyne.com or call 770-953-0304.

SERVIDYNE, INC.

1945 The Exchange
Suite 300
Atlanta, GA 30339-2029

August 27, 2008

Dear Fellow Shareholders:
At this year’s annual meeting of shareholders, which will be held on
September 16, 2008, at our corporate headquarters in Atlanta, Georgia, you
will be asked to approve a proposal to increase the number of authorized
shares of common stock of Servidyne from 5 million to 10 million shares. I
believe this proposal is important for both Servidyne and its shareholders,
and I want to give you some additional background as to why.

We face a severe shortage of available equity.

Currently, approximately 97% of our authorized common shares are either
issued or reserved for issuance. As a result, our ability to use shares for
strategic, compensatory or other purposes is severely limited.

Your Board has proposed the increase in authorized shares as an
essential step to protect the financial soundness of our company and to
further the financial interests of all shareholders. As described in
greater detail in our proxy statement, the increase in authorized shares
will, among other things:

— give the company the flexibility to use common stock to raise
capital or to use as consideration to acquire other businesses;

— allow the company to declare additional stock splits or stock
dividends; and

— permit the company to continue to provide equity incentive
compensation to its employees, including those of newly acquired
businesses.

Your Board has recommended a vote in favor of this proposal. In
addition, Glass Lewis, an independent proxy advisory service, has completed
its analysis of Servidyne’s proposed increase in authorized shares and is
recommending that shareholders vote “FOR” this proposal.

Your management’s interests are aligned with shareholders.

My grandfather founded Servidyne in 1925, and the company has been
public since 1960. I joined the company in 1984, became a director in 1992,
and was appointed CEO in fiscal 2000. My brother and I and our immediate
family today own or control over 30% of the company’s outstanding shares.
As a large shareholder, my interests are, and have been, strategically
aligned with my fellow shareholders, especially as it relates to matters of
dilution.

I strongly believe that increasing the number of authorized shares does
not have to result in significant shareholder dilution when those shares
are managed responsibly. As a company, we have taken a conservative
approach to the use of equity and have a long track record of responsible
management of the company and its pool of available shares.

Acquisition Strategy

Soon after I became CEO, the Board completed a thorough analysis of our
then-existing businesses, and implemented a deliberate plan to reinvent the
company to enhance its prospects for the next decade and beyond. Drawing on
our experience of constructing, owning and operating commercial real
estate, we knew first hand that commercial buildings faced rapidly
increasing utility expenses and other facility operating costs, which put
increasing pressure on operating results. So we adopted a new long range
strategic plan to refocus the business to be a provider of products and
services that could enable our customers to gain control of and reduce the
operating costs of their facilities. During the next several years, we
exited our mature, low-margin legacy businesses and established the current
business platform through the acquisition of five small operating
companies.

Overall, we were very judicious in utilizing our stock as currency to
effect these transactions. We purchased these operating companies, which
now comprise our core Building Performance Efficiency Segment (representing
73.8% of our 2008 revenues, excluding revenues from the fifth company which
was acquired less than three months ago) almost entirely with available
cash and the assumption of certain operating liabilities. Of the
approximately 3.73 million Servidyne shares currently outstanding, only
approximately 340,000 shares, or 9.1%, were issued in these five
acquisitions.

Strong Results

In the eight full fiscal years that the current Board and management
team have been in place, the company instituted a stock buy-back program;
paid out a total of $4,432,475 in cash dividends; declared two stock
dividends; eliminated unsecured long-term debt to strengthen the balance
sheet; and achieved the following summarized results:

4/30/2000 4/30/2008 Dilutive Accretive

Shares Outstanding (1) 3,391,491 3,716,759 9.6%
Stock Price (1) $3.27 $5.68 74%
Market Value $11.1 million $21.1 million 90%
Book Value $22.3 million $22.5 million <1%
Book Value as %
of Total Assets 21.7% 42.9% 98%
Adjusted Book Value (2) $22.3 million $26.9 million 20%
Adj. Bk. Val. Per Share (2) $6.59 $7.24 10%

(1) All share amounts in this letter have been adjusted to reflect the
10% stock dividend in October 2005 and the 5% stock dividend in July 2008.
The closing stock price on August 26, 2008, was $3.85, and the 30 trading
day average closing price on that date was $ 4.64.

(2) Book Value on 4/30/08 adjusted to include the total cash dividends
of $4.4 million paid 4/30/00 - 4/30/08.

Employee Ownership

Eight years ago, no director or company executive, other than Abrams
family members, owned company stock. At that time, the Board determined
that it was important for our directors, officers and employees to be
better aligned financially with the interests of our shareholders.
Accordingly, in August 2000 our Board proposed, and our shareholders
approved, an equity incentive program.

Today, I am proud to report that virtually all of our employees and
every director are Servidyne shareholders. Our Board’s compensation
committee has granted targeted equity incentives to directors, officers,
and key employees with dilution-sensitive features and restrictions,
including long and/or back-end weighted vesting periods and without
exception strike prices granted out of the money. As a result of this
program, directors and officers now have material equity incentives, with
very little dilution as a result (currently a total of approximately 82,000
shares of common stock are outstanding as a result of the plan, including
approximately 70,000 shares from grants of restricted stock and
approximately 12,000 shares from exercised stock options), representing
2.2% of currently outstanding shares). As of the date of this letter, all
outstanding equity incentives granted under the plan are out of the money.

We have faced this issue before.

My father and my uncle, who served the company as President and
Chairman & CEO, respectively, from the early 1970s to the mid 1990s, faced
capitalization issues similar to our present situation. In 1976, and again
in 1984, they requested and received shareholder approval to increase the
number of authorized shares by 50% and 233%, respectively. The company
utilized these newly-authorized shares to effect a total of ten separate
stock dividends and stock splits between 1973 and 1989 to increase
liquidity in Servidyne shares traded in the public market.

* * * * *

I am proud of our company’s long record of conservative family
ownership and our current Board’s demonstrated track record of growing
shareholder value. I am confident we have the discipline to continue our
sound financial governance practices in the future, and I would appreciate
your support. Please vote the proxy delivered to you with the company’s
proxy statement in favor of this proposal.

Respectfully,

Alan R. Abrams
Chairman of the Board,
President & Chief Executive Officer

IMPORTANT INFORMATION
On August 13, 2008, Servidyne, Inc. filed with the Securities and
Exchange Commission a definitive proxy statement and accompanying proxy
card in connection with its annual meeting of shareholders, and on August
14, 2008, it began mailing these proxy materials to its shareholders.
Servidyne shareholders are strongly advised to read Servidyne’s proxy
statement as it contains important information. Shareholders may obtain the
proxy statement, any amendments or supplements to the proxy statement, and
the annual, quarterly and current reports and other information filed by
Servidyne with the Securities and Exchange Commission for free at the
internet Website maintained by the Securities and Exchange Commission at
http://www.sec.gov. Copies of the definitive proxy statement and any amendments
and supplements to the definitive proxy statement will also be available
for free at Servidyne’s internet Website at http://www.servidyne.com or by writing
to Servidyne, Inc., 1945 The Exchange, Suite 300, Atlanta, Georgia,
30339-2029, Attn: Corporate Secretary. In addition, copies of Servidyne’s
proxy materials may be requested by contacting our proxy solicitor, Morrow
& Co., LLC at (203) 658-9400.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this letter are forward-looking
statements within the meaning of federal securities laws. Such
forward-looking statements involve known and unknown risks, uncertainties
and other matters, including the risks and uncertainties set forth under
the heading “Risk Factors” in the Company’s Annual Report on Form 10-K,
which may cause the actual results, performance or achievements of
Servidyne, Inc. to be materially different from any past or future results,
performance, or uncertainties expressed or implied by such forward-looking
statements. Servidyne does not undertake to update these forward-looking
statements.

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Servidyne Outlines Rationale for Increasing Authorized Shares

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