SBEI Sbe (MM)

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 months ended January 31, 2007. �A shareholders� meeting has been scheduled for the end of March and expect to close the sale of our hardware business to One Stop shortly thereafter. We will 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,� said Greg Yamamoto, President and Chief Executive Officer of SBE. Net sales for the first quarter ended January 31, 2007 were $1.2 million, compared to net sales of $1.4 million in the same quarter of fiscal 2006. Net loss for the first quarter of fiscal 2007 was $1.1 million, or $0.10 per share basic and diluted, compared to a net loss for the same period of fiscal 2006 of $2.7 million, or $0.28 per share basic and diluted. The Company�s cash balance was $443,000 and $1.1 million at January 31, 2007 and October 31, 2006, respectively, and no long-term debt existed at either date. On January 11, 2007, the Company signed an asset purchase agreement with One Stop Systems, Inc., pursuant to which the Company agreed to sell all of the assets associated with its embedded hardware business (excluding cash, accounts receivable and other excluded assets specified in the asset purchase agreement) to One Stop Systems for $2.2 million in cash and One Stop Systems� assumption of the Company�s real estate and certain equipment leases. A special meeting of the SBE stockholders has been scheduled for March 29, 2007 to approve this transaction and to approve a proposed 1 for 5 reverse stock split to enable the Company to comply with the Nasdaq Capital Market�s continued listing criteria. A proxy statement detailing the transaction and reverse stock split has been mailed to all SBE shareholders of record as of March 6, 2007. On January 19, 2007, the Company entered into a definitive merger agreement with Neonode Inc., a Delaware corporation. Founded in 2001, Neonode is a Swedish developer and pioneer of touchscreen mobile phones. Neonode�s patented 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 to critical acclaim. 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 hardware and 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. - Tables Follow - SBE, INC. � CONDENSED STATEMENTS OF OPERATIONS for the three months ended January 31, 2007 and 2006 (In thousands, except per share amounts) (Unaudited) � Three months ended January 31, 2007� 2006� � Net sales $ 1,207� $ 1,400� � Operating Expenses Amortization and impairment of acquired software and intellectual property 188� 1,022� Cost of hardware and other revenue 734� 803� Product research and development 585� 946� Sales and marketing 364� 598� General and administrative � 462� � 771� � Total operating expenses � 2,333� � 4,140� � Operating loss (1,126) (2,740) � Interest and other income 1� � 18� Loss before income taxes (1,125) (2,722) � Provision for income taxes 4� � 5� � Net loss $ (1,129) $ (2,727) � Basic and diluted loss per share $ (0.10) $ (0.28) � � Basic and diluted- shares used in per share computations � 11,051� � 9,895� SBE, INC. CONDENSED BALANCE SHEETS (In thousands) � January 31, October 31, 2007� 2006� Current assets: Cash and cash equivalents $ 443� $ 1,147� Trade accounts receivable, net 963� 930� Inventories 714� 739� Other � 221� � 177� Total current assets 2,341� 2,993� � Property, plant and equipment, net 458� 508� Capitalized software costs, net 1,126� 1,314� Other � 52� � 53� Total assets $ 3,977� $ 4,868� � � LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 622� $ 557� Accrued payroll and employee benefits 54� 105� Deferred revenue 299� 432� Other accrued expenses � 288� � 198� Total current liabilities � 1,263� � 1,292� � Other long-term liabilities � 232� � 255� Total liabilities � 1,495� � 1,547� � Stockholders' equity: Common stock 33,476� 35,186� Accumulated deficit � (32,994) � (31,865) Total stockholders' equity � 2,482� � 3,321� Total liabilities and stockholders' equity $ 3,977� $ 4,868�