SBE, Inc. Reports Second Quarter 2007 Results

  
    
  
  
    
      SBE, Inc. (Nasdaq:SBEI), a provider of high-performance IP storage 
      solutions serving remote back-up and disaster recovery applications, today 
      reported results for the three and six months ended April 30, 2007.
    
    
      “During the quarter we completed the sale of 
      our hardware business to One Stop Systems and effected a one-for-five 
      reverse stock split. The sale of our hardware business and the reverse 
      stock split allowed us to regain compliance with the requirements for 
      continued listing on Nasdaq,” said Greg 
      Yamamoto, President and Chief Executive Officer of SBE. “Although 
      we sold our hardware business, we continue to sell and license our 
      storage software solutions. We are committed to supporting existing and 
      new customers and will continue our software development efforts,” 
      continued Yamamoto.
    
    
      Net sales, including our hardware business that we sold on March 30, 
      2007, for the second quarter ended April 30, 2007 were $369,000, 
      compared with $1.8 million for the second quarter of fiscal 2006. Net 
      sales from continuing operations for the second quarter ended April 30, 
      2007 were $27,000, compared with none for the second quarter of fiscal 
      2006. We recorded a $1.3 million gain on the sale of our hardware 
      business in the quarter ended April 30, 2007. Net loss for the second 
      quarter of fiscal 2007 was $105,000, or $0.05 per share, basic and 
      diluted, compared to a net loss for the second quarter of fiscal 2006 of 
      $3.0 million, or $1.50 per share, basic and diluted.
    
    
      Net sales, including our hardware business that we sold on March 30, 
      2007, for the six months ended April 30, 2007 were $1.6 million, 
      compared with $3.2 million for the same period in 2006. Net sales from 
      continuing operations for the six months ended April 30, 2007 were 
      $49,000, compared with $10,000 for the comparable six months of fiscal 
      2006. Net loss was $1.2 million, or $0.56 per share, basic and diluted, 
      for the six months ended April 30, 2007 compared to a net loss of $5.8 
      million, or $2.88 per share, basic and diluted, for the same period in 
      2006.
    
    
      The Company’s cash balance was $1.2 million 
      and $1.1 million at April 30, 2007 and October 31, 2006, respectively, 
      and no long-term debt existed at either date.
    
    
      On January 19, 2007, the Company entered into a definitive merger 
      agreement with Neonode Inc. Founded in 2001, Neonode is a Swedish 
      developer and pioneer of touchscreen mobile phones. Neonode’s 
      patent pending zForce™ touchscreen technology 
      and Neno™ user interface combine to maximize 
      display area and provide a unique one-hand, onscreen navigation 
      experience. In February 2007, Neonode showcased its new mobile phone, 
      the N2, at the 3GSM World Congress in Barcelona, Spain and expects first 
      shipments to customers in mid-2007.
    
    
      On May 18, 2007, the Company and Neonode Inc. amended the merger 
      agreement to extend the termination date of the agreement from May 31, 
      2007 to September 30, 2007 and fixed the exchange ratio at the closing 
      of the merger such that each outstanding share of Neonode common stock 
      will be converted into the right to receive 3.5319 shares of SBE common 
      stock. The Company will also loan Neonode $1.0 million.
    
    
      It is anticipated that the Company will change its name to “Neonode 
      Inc.” upon consummation of the merger. This 
      transaction requires the approval of the SBE stockholders, and the 
      Company is in the process of preparing a proxy statement for such 
      purpose.
    
    
      About SBE
    
    
      SBE designs and provides IP-based storage networking solutions for an 
      extensive range of business critical applications, including back-up and 
      disaster recovery. SBE delivers a portfolio of scalable, standards-based 
      software products designed to enable optimal performance and rapid 
      deployment across a wide range of next-generation storage systems. Based 
      in San Ramon, California, SBE is a publicly traded company (NASDAQ:SBEI) 
      with products sold worldwide through direct sales, OEMs and system 
      integration partners. More information is available at www.sbei.com.
    
    
      Forward-Looking Statements
    
    
      This news release contains certain forward-looking statements that 
      involve risks and uncertainties, including statements about consummation 
      of the proposed merger transaction and the proposed asset sale 
      transaction. Such statements are only predictions and the company's 
      actual results may differ materially from those anticipated in these 
      forward-looking statements. Factors that may cause such differences 
      include, but are not limited to, the ability of SBE, One Stop and 
      Neonode to comply with the closing conditions necessary in order to 
      consummate the transactions. These factors and others are more fully 
      discussed in the documents the company files from time to time with the 
      Securities and Exchange Commission, particularly, the company's most 
      recent Form 10-K and Form 10-Q.
    
    
      SBE and the SBE logo are registered trademarks of SBE, Inc. All other 
      brand or product names are trademarks or registered trademarks of their 
      respective holders.
    
    
      
        
          
            SBE, INC.
          
        
      
      
        
           
        
      
      
        
          
            CONSOLIDATED STATEMENTS OF OPERATIONS
          
        
      
      
        
          for the three and six months ended April 30, 2007 and 2006
        
      
      
        
          (In thousands, except per share amounts)
        
      
      
        
          (Unaudited)
        
      
      
        
           
        
      
      
        
        
        
          Three months ended
        
        
        
        
          Six months ended
        
      
      
        
        
        
          April 30,
        
        
        
        
          April 30,
        
      
      
        
        
        
          2007 
        
        
        
        
          2006 
        
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
           
        
      
      
        
          Net sales
        
        
          $
        
        
          27 
        
        
        
        
          $
        
        
          --- 
        
        
        
        
          $
        
        
          49 
        
        
        
        
          $
        
        
          10 
        
      
      
        
           
        
      
      
        
          Operating expenses
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          
            Amortization and impairment of acquired software and intellectual 
            property
          
        
        
        
        
          188 
        
        
        
        
        
        
          1,023 
        
        
        
        
        
        
          375 
        
        
        
        
        
        
          2,046 
        
      
      
        
          Product research and development
        
        
        
        
          252 
        
        
        
        
        
        
          498 
        
        
        
        
        
        
          611 
        
        
        
        
        
        
          1,069 
        
      
      
        
          Sales and marketing
        
        
        
        
          91 
        
        
        
        
        
        
          326 
        
        
        
        
        
        
          273 
        
        
        
        
        
        
          618 
        
      
      
        
          General and administrative
        
        
           
        
        
          724 
        
        
        
        
           
        
        
          756 
        
        
        
        
           
        
        
          1,186 
        
        
        
        
           
        
        
          1,538 
        
      
      
        
           
        
      
      
        
          Total operating expenses
        
        
           
        
        
          1,255 
        
        
        
        
           
        
        
          2,603 
        
        
        
        
           
        
        
          2,445 
        
        
        
        
           
        
        
          5,271 
        
      
      
        
           
        
      
      
        
          Operating loss from continuing operations
        
        
        
        
          (1,228)
        
        
        
        
        
        
          (2,603)
        
        
        
        
        
        
          (2,396)
        
        
        
        
        
        
          (5,261)
        
      
      
        
           
        
      
      
        
          Interest income
        
        
          4 
        
        
        
        
        
        
          12 
        
        
        
        
          4 
        
        
        
        
        
        
          29 
        
      
      
        
          Provision for income taxes
        
        
           
        
        
          --- 
        
        
        
        
           
        
        
          --- 
        
        
        
        
          4 
        
        
        
        
          5 
        
      
      
        
           
        
      
      
        
          Loss from continuing operations
        
        
           
        
        
          (1,224)
        
        
        
        
           
        
        
          (2,591)
        
        
        
        
           
        
        
          (2,396)
        
        
        
        
           
        
        
          (5,237)
        
      
      
        
           
        
      
      
        
          Income (loss) from discontinued operations
        
        
           
        
        
          1,119 
        
        
        
        
           
        
        
          (438)
        
        
        
        
           
        
        
          1,162 
        
        
        
        
           
        
        
          (520)
        
      
      
        
           
        
      
      
        
          Net loss
        
        
          $
        
        
          (105)
        
        
        
        
          $
        
        
          (3,029)
        
        
        
        
          $
        
        
          (1,234)
        
        
        
        
          $
        
        
          (5,757)
        
      
      
        
           
        
      
      
        
           
        
      
      
        
          
            Basic and diluted loss per share - continuing operations
          
        
        
          $
        
        
          (0.55)
        
        
        
        
          $
        
        
          (1.28)
        
        
        
        
          $
        
        
          (1.08)
        
        
        
        
          $
        
        
          (2.62)
        
      
      
        
          
            Basic and diluted income (loss) per share - discontinued operations
          
        
        
           
        
        
          0.50 
        
        
        
        
           
        
        
          (0.22)
        
        
        
        
           
        
        
          0.52 
        
        
        
        
           
        
        
          (0.26)
        
      
      
        
           
        
      
      
        
          Basic and diluted loss per share
        
        
          $
        
        
          (0.05)
        
        
        
        
          $
        
        
          (1.50)
        
        
        
        
          $
        
        
          (0.56)
        
        
        
        
          $
        
        
          (2.88)
        
      
      
        
           
        
      
      
        
          
            Basic and diluted - weighted average shares used in per share 
            computations
          
        
        
           
        
        
          2,233 
        
        
        
        
           
        
        
          2,025 
        
        
        
        
           
        
        
          2,221 
        
        
        
        
           
        
        
          2,002 
        
      
      
        
           
        
      
      
        
           
        
      
      
        
          
            Note: The net sales and expenses included in this Consolidated 
            Statement of Operations have been adjusted to reflect the sale of 
            the Company's hardware business to One Stop Systems on March 30, 
            2007. The losses related to the operations of the hardware 
            business and the $1.3 million gain sale of the hardware business 
            are included in Income (loss) from discontinued operations.
          
        
      
    
    
      
        
          
            SBE, INC.
          
        
      
      
        
          
            CONDENSED BALANCE SHEETS
          
        
      
      
        
          (In thousands)
        
      
      
        
        
        
          April 30,
        
        
        
        
          October 31,
        
      
      
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
          $
        
        
          1,239 
        
        
        
        
          $
        
        
          1,147 
        
      
      
        
          Trade accounts receivable, net
        
        
        
        
          102 
        
        
        
        
        
        
          930 
        
      
      
        
          Other
        
        
        
        
          750 
        
        
        
        
        
        
          177 
        
      
      
        
          Current assets from discontinued operations
        
        
           
        
        
          --- 
        
        
        
        
           
        
        
          739 
        
      
      
        
          Total current assets
        
        
        
        
          2,091 
        
        
        
        
        
        
          2,993 
        
      
      
        
           
        
      
      
        
          Property, plant and equipment, net
        
        
        
        
          139 
        
        
        
        
        
        
          231 
        
      
      
        
          Capitalized software costs, net
        
        
        
        
          939 
        
        
        
        
        
        
          1,314 
        
      
      
        
          Other
        
        
          4 
        
        
        
        
          5 
        
      
      
        
          Non-current assets from discontinued operations
        
        
           
        
        
          --- 
        
        
        
        
           
        
        
          325 
        
      
      
        
           
        
      
      
        
          Total assets
        
        
          $
        
        
          3,173 
        
        
        
        
          $
        
        
          4,868 
        
      
      
        
           
        
      
      
        
           
        
      
      
        
          
            LIABILITIES AND STOCKHOLDERS' EQUITY
          
        
        
        
        
        
        
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
      
      
        
          Trade accounts payable
        
        
          $
        
        
          91 
        
        
        
        
          $
        
        
          557 
        
      
      
        
          Accrued payroll and employee benefits
        
        
        
        
          17 
        
        
        
        
        
        
          105 
        
      
      
        
          Deferred revenue
        
        
        
        
          303 
        
        
        
        
        
        
          432 
        
      
      
        
          Other accrued expenses
        
        
        
        
          162 
        
        
        
        
        
        
          177 
        
      
      
        
          Current liabilities from discontinued operations
        
        
           
        
        
          --- 
        
        
        
        
           
        
        
          21 
        
      
      
        
          Total current liabilities
        
        
           
        
        
          573 
        
        
        
        
           
        
        
          1,292 
        
      
      
        
           
        
      
      
        
          Other long-term liabilities
        
        
        
        
          61 
        
        
        
        
        
        
          65 
        
      
      
        
          Long-term liabilities from discontinued operations
        
        
           
        
        
          --- 
        
        
        
        
           
        
        
          190 
        
      
      
        
          Total liabilities
        
        
           
        
        
          634 
        
        
        
        
           
        
        
          1,547 
        
      
      
        
           
        
      
      
        
          Stockholders' equity:
        
        
        
        
        
        
        
      
      
        
          Common stock
        
        
        
        
          35,638 
        
        
        
        
        
        
          35,186 
        
      
      
        
          Accumulated deficit
        
        
           
        
        
          (33,099)
        
        
        
        
           
        
        
          (31,865)
        
      
      
        
          Total stockholders' equity
        
        
           
        
        
          2,539 
        
        
        
        
           
        
        
          3,321 
        
      
      
        
          Total liabilities and stockholders' equity
        
        
          $
        
        
          3,173 
        
        
        
        
          $
        
        
          4,868 
        
      
      
        
           
        
      
      
        
           
        
      
      
        
          
            Note: The assets and liabilities included in these Consolidated 
            Balance Sheets have been adjusted to reflect the sale of the 
            Company's hardware business to One Stop Systems on March 30, 2007.