EX-99.1 2 v061699_ex99-1.htm
EXHIBIT 99.1
 
Contact: 
 David W. Brunton, Chief Financial Officer 
    SBE, Inc.   
    (925) 355-7700   
    davidb@sbei.com   


SBE, Inc. Reports Fourth Quarter and Fiscal 2006 Results


SAN RAMON, CA, January 4, 2007 - SBE, Inc. (Nasdaq: SBEI), a leading provider of high-performance IP storage solutions serving remote back-up and disaster recovery applications, today reported results for the three months and fiscal year ended October 31, 2006.

“We are looking at all strategic alternatives that may enhance shareholder value as we continue to reduce our cash burn rate.” said Greg Yamamoto, President and Chief Executive Officer of SBE. “During the quarter just ended we used $215,000 of cash compared to using $1.4 million of cash in the same quarter last year. We have also been successful in reducing our inventory from $1.3 million at the beginning of the year to $740,000 at year-end. The current inventory level better matches our current sales levels without negatively impacting our customers”, continued Yamamoto.

Net sales for the fiscal year ended October 31, 2006 were $6.1 million compared to net sales of $8.1 million in fiscal 2005. Net sales for the fourth quarter of fiscal 2006 were $1.4 million. Net sales for the corresponding quarter in fiscal 2005 were $1.8 million.

Net loss for fiscal 2006 amounted to $16.2 million, or $1.57 per share basic and diluted, compared to a net loss for fiscal 2005 of $4.2 million, or $0.66 per share basic and diluted.

The loss for the year ended October 31, 2006 includes $12.6 million of non-cash expenses detailed below:
 
·  
$6.5 million of non-cash expense attributable to an asset impairment write-down of software acquired from PyX Technologies;
   
·  
$3.4 million of non-cash expense primarily related to the quarterly recurring amortization of software acquired from PyX Technologies;
   
·  
$0.3 million of inventory valuation charges for obsolete and slow-moving products and the discontinuance of our VoIP products;
   
·  
$0.2 million of depreciation and amortization expense;
   
·  
$0.8 million of stock-based compensation expense resulting from stock issued to employees; and
   
·  
$1.4 million of stock-based compensation expense resulting from the company’s required adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments,” (“SFAS 123R”) at the beginning of the year.
 
 
 
 
 
The loss for the year ended October 31, 2005 includes $1.4 million of non-cash expenses detailed below:
 
·  
$1.0 million of non-cash expense attributable to the quarterly recurring amortization of software acquired from PyX Technologies;
   
·  
$0.2 million of stock-based compensation expense related to the acquisition of PyX Technologies; and
   
·  
$0.2 million of depreciation and amortization expense.

Net loss for the fourth quarter of 2006 amounted to $2.6 million, or $0.24 per share basic and diluted, compared to a net loss for the fourth quarter of 2005 of $2.5 million, or $0.26 per share basic and diluted.

The loss for the quarter ended October 31, 2006 includes $1.7 million of non-cash expenses detailed below:
 
·  
$1.0 million of non-cash expense attributable to an asset impairment write-down of software acquired from PyX Technologies;
   
·  
$0.3 million of non-cash expense attributable to the quarterly recurring amortization of software acquired from PyX Technologies;
   
·  
$0.1 million of stock-based compensation expense resulting from stock issued to employees; and
   
·  
$0.3 million of stock-based compensation expense resulting from the company’s required adoption of SFAS 123R at the beginning of the year.

The loss for the quarter ended October 31, 2005 includes $1.2 million of non-cash expenses detailed below:
 
·  
$1.0 million of non-cash expense attributable to the quarterly recurring amortization of software acquired from PyX Technologies; and
   
·  
$0.2 million of stock-based compensation expense related to the acquisition of PyX Technologies.

The company’s cash balance was $1.2 million and $3.6 million at October 31, 2006 and 2005, respectively, and no long-term debt existed at either date.

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 market opportunity for new products and the demand for services that may be offered by SBE’s customers. 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, risks related to the company’s reliance on a small number of OEM customers, rapidly changing product requirements, the introduction of new products, market acceptance of the company’s products, and reliance on strategic partners. 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 CONSOLIDATED STATEMENTS OF OPERATIONS
 
 For the three months and years ended October 31, 2006 and 2005
 (In thousands, except per share amounts)
                        
       
Three months ended
  
 Fiscal years ended
 
       
October 31,
 
 October 31,
 
       
2006
  
2005
  
 2006
  
2005
  
       
(unaudited)
           
                   
Net sales
$
1,359
  
$
1,815
  
$
6,127
  
$
8,056
  
                         
Operating expenses:
                        
Amortization of acquired software
  
1,331
   
1,023
    
9,894
    
1,047
  
Cost of hardware and other revenue
  
923
    
1,004
    
4,046
    
4,357
  
Product research and development
 
815
    
1,022
    
3,979
    
2,694
  
Sales and marketing
 
433
    
647
    
2,180
    
2,293
  
General and administrative
 
445
    
665
    
2,246
    
1,906
  
                         
Total operating expenses
 
3,947
    
4,361
    
22,345
    
12,297
  
                         
Operating loss
 
(2,588
)
  
(2,546
)
  
(16,218
)
  
(4,241
)
                         
Interest income
 
4
    
27
    
42
    
22
  
                         
Other expense
  
---
    
(6
)
  
---
    
(6
)
                         
Loss before income taxes
 
(2,584
)
  
(2,525
)
  
(16,176
)
  
(4,225
)
                         
Provision for income taxes
 
---
    
---
    
(7
)
  
(5
)
                         
Net loss
$
(2,584
)
$
(2,525
)
$
(16,183
)
$
(4,230
)
                                 
Net loss per common share:
                       
Basic
       
$
(0.24
)
$
(0.26
)
$
(1.57
)
$
(0.66
)
Diluted
       
$
(0.24
)
$
(0.26
)
$
(1.57
)
$
(0.66
)
                                 
Shares used in per share calculation:
                       
Basic
          
10,807
    
9,879
    
10,304
    
6,439
  
Diluted
         
10,807
    
9,879
    
10,304
    
6,439
  
 
- more -
 
 
 
 

SBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

     
 October 31,
    
 October 31,
  
     
 2006
    
 2005
  
               
Current assets:
              
Cash and cash equivalents
  
$
1,147
  
$
3,632
  
Trade accounts receivable, net
    
930
    
1,555
  
Inventories
    
739
    
1,283
  
Other
    
177
    
293
  
Total current assets
    
2,993
    
6,763
  
               
Property, plant and equipment, net
    
508
    
563
  
Capitalized software costs, net
    
1,314
      11,424  
Other
    
53
    
82
  
Total assets
  
$
4,868
  
$
18,832
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
              
Trade accounts payable
  
$
557
  
$
743
  
Accrued payroll and employee benefits
    
105
    
155
  
Deferred revenue
    
432
    
176
  
Other accrued expenses
    
198
    
169
  
Total current liabilities
    
1,292
    
1,243
  
               
Other long-term liabilities
    
255
    
241
  
Total liabilities
    
1,547
    
1,484
  
               
Stockholders' equity:
              
Common stock
    
35,186
    
35,431
  
Deferred compensation
    
---
    
(2,402
)
Accumulated deficit
    
(31,865
)
  
(15,681
)
Total stockholders' equity
    
3,321
    
17,348
  
Total liabilities and stockholders' equity
  
$
4,868
  
$
18,832
  
 
 
###