SECURITIES AND EXCHANGE COMMISSION
                       ----------------------------------
                             Washington, D.C.  20549

                                    FORM 10-K
                                    ---------
 Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
                                      1934


          DATE OF REPORT: FOR THE FISCAL YEAR ENDED OCTOBER 31, 1999


                                    SBE, INC.
                                    ---------
             (Exact name of Registrant as specified in its charter)
                Delaware                          94-1517641
                --------                          ----------
     (State or other jurisdiction of     (IRS Employer Identification
      incorporation or organization)                Number)

                           Commission File No. 0-8419

              4550 Norris Canyon Road, San Ramon, California 94583
              ----------------------------------------------------
              (Address of principal executive offices and Zip Code)
                                 (925) 355-2000
                                 --------------
              (Registrant's Telephone Number, including Area Code)
           Securities registered pursuant to Section 12(b) of the Act:
                                      None
           Securities registered pursuant to Section 12(g) of the Act:
                                  Common Stock
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.  Yes  X      No
                        -

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of the Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ X ]

The approximate aggregate market value of the Common Stock of the Registrant
held by non-affiliates of the Registrant, based on the closing price for the
Registrant's Common Stock on December 31, 1999 as reported on the Nasdaq
National Market, was $12,504,231.  Shares of Common Stock held by each executive
officer, director and stockholder whose ownership exceeds five percent of Common
Stock outstanding have been excluded in that such persons may be deemed to be
affiliates of the Registrant.  This determination of affiliate status for
purposes of the foregoing calculation is not necessarily a conclusive
determination of affiliate status for other purposes.

The number of shares of the Registrant's Common Stock outstanding as of December
31, 1999 was 2,905,861.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------
(1) Proxy statement for Annual Meeting of Stockholders scheduled for March 21,
2000 - Part III

Exhibit Index on Page 22
Total Pages 44

<PAGE>

                                    SBE, INC.

                                    FORM 10-K
                                    ---------

                                TABLE OF CONTENTS



PART I


  Item 1    Business                                                     3
  Item 2    Properties                                                  13
  Item 3    Legal Proceedings                                           13
  Item 4    Submission of Matters to a Vote of Security Holders         13

PART II

  Item 5    Market for The Registrant's Common Equity
            and Related Stockholder Matters                             14
  Item 6    Selected Financial Data                                     14
  Item 7    Management's Discussion and Analysis of
            Financial Condition and Results of Operations               15
  Item 7A   Quantitative and Qualitative Disclosures about Market Risk  19
  Item 8    Financial Statements and Supplementary Data                 19
  Item 9    Changes in and Disagreements with Accountants
            on Accounting and Financial Disclosure                      19

PART III

  Item 10   Directors and Executive Officers of the Registrant          20
  Item 11   Executive Compensation                                      21
  Item 12   Security Ownership of Certain Beneficial Owners
            and Management                                              21
  Item 13   Certain Relationships and Related Transactions              21

PART IV

  Item 14   Exhibits, Financial Statement Schedules
            and Reports on Form 8-K                                     22

SIGNATURES                                                              25

SCHEDULE                                                                42

EXHIBITS                                                                43


                                      2

<PAGE>

                                    PART I


Except for the historical information contained herein, the following discussion
contains  forward-looking  statements that involve risks and uncertainties.  The
Company's  actual  results  could  differ  materially from those discussed here.
Factors  that could cause or contribute to such differences include, but are not
limited  to,  those  discussed  in  this  report,  particularly  in the sections
entitled  "Item 1-Business-Risk Factors" and "Item 7-Management's Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations."

ITEM 1.     BUSINESS


OVERVIEW

SBE,  Inc.  (the  "Company")  designs,  markets,  sells  and supports innovative
communication  controller  solutions  for the global communications marketplace.
The  Company's  solutions  enable  both  traditional  carriers  and new emerging
carriers  to  rapidly  deliver  advanced communications products and services in
order  to  compete  effectively  in  today's fast-evolving public communications
network environment.  The Company's products are distributed worldwide through a
direct sales force, distributors, independent manufacturers' representatives and
value-added  resellers.

Founded  in 1961 as Linear Systems, Inc., the Company evolved from a supplier of
radio  communications  equipment  to  a  provider  of  comprehensive  network
communications  solutions  for  original  equipment manufacturers and end users.
Over  the  last  year  the  Company  expanded  its  product lines to include its
Highwire  (tm)  family  of high performance telecommunications controllers.  The
Highwire  family  provides  high  bandwidth  intelligent connectivity to servers
designed  to  act  as  gateways  and  signaling  points within telecommunication
networks.  The  Highwire  coprocessing  controllers enable operators of wireline
and  wireless  networks  to  deliver  Intelligent  Network  (IN)  and  Advanced
Intelligent  Network (AIN) services such as Caller ID, voice messaging, personal
number calling, Service Provider Local Number Portability and customized routing
and  billing,  as  well  as  digital  wireless  services  such  as  Personal
Communications  Systems  (PCS)  and  Global System for Mobile Telecommunications
(GSM).  The  Highwire products are designed for integration with standard server
platforms  that  will  enable  traditional  carriers and new telecom entrants to
pursue  cost-reduced  and  performance-enhanced  network  architectures based on
Internet  Protocol  (IP),  Asynchronous  Transfer  Mode  (ATM) or other "packet"
technologies.  The  Company  is  focusing substantial resources on the continued
development,  marketing  and  sales  activities  for  the  Highwire  products.

The  Company  markets,  sells and supports three lines of high-speed intelligent
communications  controller  products:  Highwire, WanXL and VMEbus.  All of these
products are sold primarily to original equipment manufacturers ("OEMs").  These
products  are  often  customized for a specific customer's application, and they
support  applications  in a broad spectrum of industrial and commercial markets.
Markets  and application areas include cellular network data communication, data
networking,  process  control,  medical  imaging,  CAE/automated test equipment,
military  defense  systems  and  telecommunications  networks.

The  Company's  Highwire  communications controllers leverage the Company's core
technology  strength  into  the  telecommunications  applications  market.  The

                                      3
<PAGE>
Company's  WanXL  products  are  designed  for  applications  that  require
high-performance and high-speed communications capability such as financial data
feed  video  feeds.  The  Company's  VMEbus  products  are  designed  for  high
reliability industrial applications and are used in many wireline, wireless, and
satellite  based  communications  networks.  All  of  these  products  are
"intelligent,"  containing  their  own  microprocessors  and  memory.  This
architecture  allows  these  communications  controllers  to offload many of the
lower-level  communications  tasks that would typically be performed by the host
platform,  improving  overall  system  performance.  All three product lines are
supported by communications software developed by both the Company and a variety
of  third  party  partners.

RISK  FACTORS

DEPENDENCE  ON  A  LIMITED NUMBER OF OEM CUSTOMERS.  In fiscal 1999, most of the
Company's  sales were derived from a limited number of OEM customers.  In fiscal
1999,  sales  to  Compaq  Computer accounted for 70 percent of the Company's net
sales.  The Company expects that sales from Compaq Computer will also constitute
a  substantial portion of the Company's net sales in fiscal 2000.  Orders by the
Company's  OEM  customers  are  affected  by  factors  such  as  new  product
introductions,  product  life  cycles, inventory levels, manufacturing strategy,
contract  awards,  competitive  conditions and general economic conditions.  The
Company's  sales  to  any  single  OEM  customer are also subject to significant
variability  from  quarter  to  quarter.  Such  fluctuations may have a material
adverse  effect  on the Company's operating results.  A significant reduction in
orders from any of the Company's OEM customers, particularly Compaq Computer and
Lockheed Martin, would have a material effect on the Company's operating results
and  financial  condition.  In  addition,  there  can  be  no assurance that the
Company  will  become  a  qualified  supplier with new OEM customers or that the
Company  will  remain  a  qualified  supplier  with  existing  OEM  customers.

FUTURE SUCCESS DEPENDENT ON NEW PRODUCT LINES.  Since late 1998, the Company has
focused  a  significant  portion  of its research and development, marketing and
sales  efforts on Highwire products.  The success of these products is dependent
on  several  factors,  including  timely  completion  of  new  product  designs,
achievement  of  acceptable  manufacturing  quality  and yields, introduction of
competitive  products  by other companies and market acceptance of the Company's
products.  If  the  Highwire  products  or  other  new products developed by the
Company do not gain market acceptance, the Company's business, operating results
and  financial  condition  would  be  materially  adversely  affected.

HIGHLY  COMPETITIVE  ENVIRONMENT.  The  market  for  communications  products is
highly  competitive.  The  Company competes directly with traditional vendors of
terminal  servers,  modems, remote control software, terminal emulation software
and  application-specific  communications  solutions.  The Company also competes
with  suppliers  of  routers,  hubs,  network  interface  cards  and  other data
communications  products.  In  the  future, the Company expects competition from
companies offering client/server access solutions based on emerging technologies
such  as  switched  digital  telephone  services.  In  addition, the Company may
encounter  increased  competition  from  operating  system and network operating
system  vendors  to  the  extent  such  vendors  include  full  communications
capabilities  in  their  products.  The  Company  may  also  encounter  future
competition  from telephony service providers (such as AT&T or the regional Bell
operating  companies)  that  may  offer  communications  services  through their
telephone  networks.

Increased competition with respect to any of the Company's products could result
in  price  reductions and loss of market share, which would adversely affect the

                                      4
<PAGE>
Company's  business,  operating  results  and  financial condition.  Many of the
Company's  current  and potential competitors have greater financial, marketing,
technical  and other resources than the Company.  There can be no assurance that
the  Company  will be able to compete successfully with its existing competitors
or  will  be  able  to  compete  successfully  with  new  competitors.

FLUCTUATIONS  IN  QUARTERLY  RESULTS.  The Company's quarterly operating results
have  fluctuated  significantly  in  the  past  and  are  likely  to  fluctuate
significantly  in  the  future due to several factors, some of which are outside
the  control  of  the  Company,  including timing of significant orders from OEM
customers,  fluctuating  market demand for, and declines in, the average selling
prices  of  the  Company's products, delays in the introduction of the Company's
new  products,  competitive  product  introductions,  the  mix of products sold,
changes  in  the  Company's  distribution  network,  the  failure  to anticipate
changing  customer product requirements, the cost and availability of components
and  general economic conditions.  The Company generally does not operate with a
significant  order  backlog, and a substantial portion of the Company's revenues
in  any quarter is derived from orders booked in that quarter.  Accordingly, the
Company's sales expectations are based almost entirely on its internal estimates
of  future  demand and not on firm customer orders.  Based on the foregoing, the
Company  believes  that  quarterly  operating  results  are  likely  to  vary
significantly in the future and that period-to-period comparisons of its results
of  operations  are  not necessarily meaningful and should not be relied upon as
indications  of  future  performance.  Further, it is likely that in some future
quarter  the  Company's  revenues  or  operating  results  will  be  below  the
expectations  of public market analysts and investors.  In such event, the price
of  the  Company's  Common  Stock is likely to be materially adversely affected.

RAPID  TECHNOLOGICAL  CHANGE; ONGOING NEW PRODUCT DEVELOPMENT REQUIREMENTS.  The
markets  for  the  Company's  products  are  characterized  by  rapidly changing
technologies,  evolving  industry  standards  and  frequent  new  product
introductions.  The  Company's  future  success  will  depend  on its ability to
enhance its existing products and to introduce new products and features to meet
and  adapt  to  changing customer requirements and emerging technologies such as
ISDN  (Integrated  Services  Digital  Network),  Frame  Relay,  ADSL (Asymmetric
Digital  Subscriber Line) and ATM (Asynchronous Transfer Mode).  There can be no
assurance  that  the  Company  will  be  successful  in identifying, developing,
manufacturing and marketing new products or enhancing its existing products.  In
addition,  there  can  be  no  assurance that services, products or technologies
developed  by  others  will  not render the Company's products noncompetitive or
obsolete.

DEPENDENCE  ON KEY EMPLOYEES.  The Company is highly dependent on the technical,
management,  marketing  and  sales  skills of a limited number of key employees.
The  Company  does not have employment agreements with, or life insurance on the
lives  of,  any  of  its  key  employees.  The  loss  of the services of any key
employees  could  adversely affect the Company's business and operating results.

NEED  TO  RECRUIT  AND  RETAIN  QUALIFIED PERSONNEL.  The Company's success also
depends on its ability to continue  to  attract  and  retain  additional  highly
talented  personnel.  Competition  for  qualified personnel  in  the  networking
industry,  and in the San Francisco Bay  Area,  is  intense.  There  can  be  no
assurance  that  the Company will be successful in retaining  its key employees
or that it can attract or retain additional skilled personnel  as  required.

DEPENDENCE  ON  KEY  SUPPLIERS.  The chipsets used in the Company's products are
currently  available  only from Motorola.  In addition, certain other components
are  currently  available  only  from single suppliers.  The inability to obtain

                                      5
<PAGE>
sufficient  key components as required, or to develop alternative sources if and
as  required  in  the  future,  could  result in delays or reductions in product
shipments  which, in turn, would have a material adverse effect on the Company's
business,  operating  results  and  financial  condition.

DEPENDENCE  ON CONTRACT MANUFACTURER.  In December 1996, the Company sold all of
its  manufacturing  operations  to  XeTel  Corporation  ("XeTel"),  a  contract
manufacturing  company  headquartered  in  Austin,  Texas.  At the same time the
Company  and  XeTel  entered  into  an exclusive manufacturing service agreement
under which XeTel is to manufacture all of the Company's products until at least
December  2000.  The  Company is dependent on XeTel's ability to manufacture the
Company's  products  according  to  specifications  and in required volumes on a
timely  basis.  The  failure  of  XeTel  to  perform  its  obligations under the
manufacturing  service  agreement  could  have  a material adverse effect on the
Company's  business,  operating  results  and  financial  condition.

DEPENDENCE  ON  PROPRIETARY  TECHNOLOGY.  Although the Company believes that its
future  success will depend primarily on continuing innovation, sales, marketing
and  technical expertise, the quality of product support and customer relations,
the  Company  must  also  protect  the  proprietary  technology contained in its
products.  The  Company  does  not  currently  hold  any patents and relies on a
combination  of  copyright,  trademark,  trade  secret  laws  and  contractual
provisions  to  establish and protect proprietary rights in its products.  There
can  be  no  assurance  that  steps  taken by the Company in this regard will be
adequate to deter misappropriation or independent third-party development of its
technology.  Although  the  Company believes that its products and technology do
not  infringe proprietary rights of others, there can be no assurance that third
parties  will  not  assert  infringement  claims  against  the  Company.

STOCK  PRICE  VOLATILITY.  The  trading  price  of the Company's Common Stock is
subject  to  wide fluctuations in response to quarter-to-quarter fluctuations in
operating  results,  the  failure  to  meet  analyst estimates, announcements of
technological  innovations  or  new  products by the Company or its competitors,
general  conditions  in  the  computer  and  communications industries and other
events  or  factors.  In  addition, stock markets have experienced extreme price
and  trading  volume  volatility  in  recent  years.  This  volatility has had a
substantial  effect  on  the market prices of securities of many high technology
companies  for reasons frequently unrelated to the operating perform-ance of the
specific  companies.  These  broad  market fluctuations may adversely affect the
market  price  of  the  Company's  Common  Stock.

ANTI-TAKEOVER PROVISIONS AND DELAWARE LAW.  The Company's Board of Directors has
the  authority  to  issue  up  to  2,000,000  shares  of  Preferred Stock and to
determine  the price, rights, preferences and privileges of those shares without
any  further  vote  or action by the stockholders.  The rights of the holders of
Common  Stock  will  be subject to, and may be materially adversely affected by,
the  rights  of  the  holders  of  any Preferred Stock that may be issued in the
future.  The issuance of Preferred Stock could have the effect of making it more
difficult  for  a  third  party  to acquire a majority of the outstanding voting
stock  of  the  Company.  Furthermore,  certain  provisions  of  the  company's
Certificate  of  Incorporation  may  have  the  effect of delaying or preventing
changes  in  control  or management of the Company, which could adversely affect
the  market  price  of  the Company's Common Stock.  In addition, the Company is
subject  to  the  provisions  of Section 203 of the Delaware General Corporation
Law,  an  anti-takeover  law.

                                      6
<PAGE>
YEAR  2000  COMPLIANCE.
----------------------

Many older computer software programs refer to years in terms of their final two
digits  only.  Such  programs  may interpret the year 2000 to mean the year 1900
instead.  If  not corrected, those programs could cause date-related transaction
failures.

The  Company's  current  products,  to  the  extent  they have the capability to
process  date-related  information,  were designed to be Year 2000 compliant; in
other  words, the products were designed to manage and manipulate data involving
the transition of dates from 1999 to 2000 without functional or data abnormality
and  without  inaccurate  results  relating  to  such  dates.  There  can  be no
assurance  that systems operated by third parties that interface with or contain
the Company's products will timely achieve Year 2000 compliance.  Any failure of
these third parties' systems to timely achieve Year 2000 compliance could have a
material  adverse  effect  on  the  Company's  business, financial condition and
results  of  operations.

The  Company  believes  it  has  identified  substantially  all  of  the  major
information systems used in connection with its internal operations that must be
modified,  upgraded  or  replaced  to  minimize  the  possibility  of a material
disruption  of  its  business.  The  Company  had already modified, upgraded and
replaced  systems  that  had  been  identified  as  potentially  being adversely
affected  at  the  end  of  year  1999.

The  Company  depends  on  third  party  suppliers  for the manufacturing of its
products.  The Company has been gathering information from, and is communicating
with, these suppliers and, to the extent possible, has resolved issues involving
the  Year 2000 problem.  However, the Company has limited or no control over the
actions  of  its  suppliers.  Therefore,  the  Company cannot guarantee that its
manufacturing services suppliers will resolve any or all Year 2000 problems with
their  systems  before  the  occurrence  of  a  material  disruption  to  their
businesses.  Any  failure  of these suppliers to resolve Year 2000 problems with
their  systems  in  a  timely manner could have a material adverse effect on the
Company's  business,  financial  condition  or  operating  results.

The  Company  has  developed  contingency plans to be implemented as part of its
efforts  to  identify  and  correct  Year  2000  problems affecting its internal
systems.  Depending on the systems affected, these plans include (a) accelerated
replacement of affected equipment or software; (b) increased work hours; and (c)
other  similar approaches.  If the Company is required to implement any of these
contingency  plans,  such  plans  could  have  a  material adverse effect on its
business,  financial  condition  or  operating  results.

PRODUCTS

The  Company  designs,  markets,  sells  and  supports innovative communications
controller  solutions  for  the  global communications marketplace.  The Company
offers three principal lines of products: Highwire, WanXL and VMEbus.  All three
families  offer  a variety of intelligent communications controllers that enable
computers  to  exchange  data  across  networks.

Highwire  Products.  The  Highwire  products  are  focused  on  providing
communications  solutions  to  the  telecommunications applications market.  The
telecommunications  applications  market  is  characterized  as  an  Intelligent
Network.  The  Intelligent  Network  (IN)  utilizes  out  of  band  signaling to
provide  the  basis  for  virtually all new telecommunications services.  The IN

                                      7
<PAGE>
architecture  uses  two  separate but parallel paths; one to handle the voice or
data traffic and a second to carry the signaling information for call set up and
routing.  The signaling channel utilizes a protocol called SS7 (signaling system
7).  Network operators utilize the IN architecture to increase the efficiency of
their  networks  by  offloading  signaling  traffic  onto  the SS7 network, thus
freeing  up  trunk  line  capacity  needed  for  revenue  generating  traffic.

A  second generation Intelligent Network called the Advanced Intelligent Network
(AIN)  is  used  by  carriers  and  service  providers  seeking to differentiate
themselves by offering advanced voice and data communications services.  The AIN
is  a  network  architecture  and  a  set of standards designed to allow network
operators  to create, deploy and modify these services quickly and economically.
AIN  services  represent  the  merging  of  telephony  with database information
through  SS7  signaling.  Such  services  include  Caller  ID,  voice messaging,
personal  number  calling,  Service  Provider  Local  Number  Portability  and
customized  routing and billing as well as digital wireless services such as PCS
and  GSM.

Network operators are increasingly using SS7 networks as a source of competitive
advantage  to  introduce  new  services  through software changes in IN elements
rather  than  in  central  office switches.  The Company's Highwire products are
designed to provide from 1 to 128 SS7 signaling channels per controller card and
to  integrate  easily  with  the  industry's  leading  applications  providers.

WanXL  Client/Server  WAN  products.  The  need  to  collect, store, analyze and
distribute  information  in  a secure, timely and efficient manner has become an
integral  part of operating a successful organization.  Developments in computer
technology  have resulted in less reliance on centralized mainframes and greater
reliance  on  distributed  computing,  which  has  led  to the computer software
architecture  concept  of  "client/server"  computing  systems.  Client/server
computing  systems typically provide for a large number of desktop computers, or
clients,  interconnected  with  one,  or  often more than one, file server.  The
server  provides  central  resources  to  all remote computer users and provides
common services such as printing, communications and data backup and information
gateways  to  other  local  or  distant  client/server systems.  The fundamental
premise  of this architecture relies heavily on computer networking for both LAN
interconnections  for  desktop-to-server communications and WAN interconnections
for  server-to-server  communications.

As  a  result  of the growing installed base of client/server computing systems,
the  Company  believes  the  market  opportunity  for  client/server  networking
products is rapidly expanding.  According to a recent industry study, the market
for  WAN  access  equipment  was  $2.8 billion in 1999, with increased demand in
2000.

The  Company's  WanXL  products  are  specifically  targeted  to  meet  the
interconnectivity  needs  of client/server systems.  The Company offers a family
of  products  with  one  to  four  ports  per  controller  with various physical
connection  options  and  software  features.

VMEbus  Intelligent  Communications  Controller  Products.  Intelligent
communications  controller  products  are used to provide connectivity between a
system  such  as  a  mini-computer  or  bridge/router  and  a local or wide area
network.  Communication controller products enable computers to exchange data in
much  the  same  way  as the telephone system allows people to converse with one
another.  As  computers  become more pervasive in all areas of society, computer
users  are  demanding  greater productivity, efficiency and lower costs in their

                                      8
<PAGE>
computer  systems,  which  has  led  to  the  sharing  of  databases,  software
applications and computer peripheral equipment.  Communications controllers have
become  a  central  component  to  connecting  networks and computers to deliver
information  more  efficiently.

The  Company's  VMEbus  communications  products  target all four major protocol
communications technologies for each of the bus architectures: Fiber Distributed
Data  Interface  (FDDI),  Token  Ring,  Ethernet  and  high-speed  serial
communications.  The  latter  is  a growing wide-area networking technology that
enables  computers  to  talk  to one another using telephone lines.  FDDI, Token
Ring and Ethernet are local area networking technologies that offer a wide range
of  speed  and  reliability  options.

The  Company's strategy for its intelligent controller products is to expand its
offerings to more segments of the market by adding software interfaces, improved
performance  and  new  technologies  that  will provide lower-cost solutions for
high-speed,  high-volume  communication  applications.

Other  Products
---------------

Single-Board  Computer  Products.  The  Company  supplies  high-performance
single-board computers (SBC) for Multibus*foot1 Multibus is a Trademark of Intel
Corporation.  and  VMEbus  architectures.  An SBC manages and processes the data
that  passes  between  the  boards  within a computer system.  The Company's SBC
products  provide  a  high-speed  interface  for  linking  to  peripherals  and
intelligent I/O controllers that accommodate plug-on modules for many industrial
applications.

Integrated  Circuits.  The  Company  has  designed  a  number  of  proprietary
integrated circuits that are used on many SBE products.  The Company has a small
group  of  customers  that  purchase  some  of these proprietary chips for their
applications.  The  Company  is  not  actively  pursuing  this line of business.

Custom  Products.  The  Company  has developed several products specifically for
single  customer  applications.  These  products  typically  have  proprietary
functions  that  meet  specific  application needs of the customer.  The Company
does  not  seek  new  custom  relationships unless the products have significant
sales  potential.

Software  Products.  The Company supplies software products that operate various
communications  protocols  for  certain  communications  controller  products
including  X.25 for serial communications, SMT (Station Management) for FDDI and
TCP/IP  for  Ethernet  applications.  Real-time operating systems for Motorola's
68000  family  are  also  supported.  The  Company's  software  products  are
principally  bundled  with  the  hardware  platform  based  upon  the customer's
application  requirement.

The  following  table  shows  sales by major product type as a percentage of net
sales  for  fiscal  1999,  1998  and  1997.



---------------
*Multibus is a Tradmark of Intel Corporation

                                      9
<PAGE>
                                            Year Ended October 31,
                                        1999         1998         1997
                                        ------------------------------
                                           (percentage of net sales)

  VME Communication Controllers          92%          80%          72%
  WanXL products                          3            4           14
  Single Board Computer                   4            5            3
  Integrated Circuits                    --            6            1
  Other                                   1            5           10
                                        ----         ----         ----
                                        100%         100%         100%
                                        ====         ====         ====

DISTRIBUTION, SALES AND MARKETING

The Company primarily markets its Highwire and VMEbus intelligent communications
controller  products  to  OEMs  and  systems integrators.  The Company sells its
products  both  domestically  and  internationally using a direct sales force as
well  as  through  independent manufacturers' representatives.  The Company also
sells  certain  products  directly  to end users.  The Company believes that its
direct  sales  force is well suited to differentiate the Company's products from
those  of  its  competitors.

The  Company's  product sales are concentrated among a small number of customers
and,  consequently,  the  timing  of significant orders from major customers has
caused  and  is  likely  to continue to cause the Company's operating results to
fluctuate.  See  "Risk Factors-Dependence on a Limited Number of OEM Customers."

The  Company  markets its WanXL client/server products through multiple indirect
distribution  channels  worldwide,  including  distributors,  manufacturers'
representatives,  value-added  resellers  and certain OEM partners.  The Company
actively supports its indirect channel marketing partners with its own sales and
marketing  organization.  SBE's  sales  staff  solicits  prospective  customers,
provides  technical  advice  with respect to SBE products and works closely with
marketing partners to train and educate their staffs on how to sell, install and
support  the  WanXL  product  line.

The  Company  has  focused  its  sales  and marketing efforts principally in the
United  States,  Asia  and Europe.  All of the Company's international sales are
negotiated  in  U.S.  dollars.

The  Company provides most of its distributors and resellers with product return
rights  for  stock  balancing  or  product  evaluation.  Stock balancing permits
distributors  to return products for credit, within specified limits and subject
to  purchasing  additional  products.  The Company believes that it has adequate
reserves  to  cover  product returns although there can be no assurance that the
Company  will  not  experience  significant  returns  in  the  future.

The  Company  conducts  its  sales  and  marketing activities from its principal
offices  in San Ramon, California.  The Company's direct sales force is based in
four  locations  in  the  United  States and one location in the United Kingdom.

                                     10
<PAGE>
RESEARCH  AND  DEVELOPMENT

The  Company's  product  development  efforts  are  focused  principally  on its
strategic  businesses,  telecommunications  applications,  client/server
internetworking  and  VMEbus  intelligent  communications  controllers.  The
Company's  experience  in high-speed data communication creates opportunities to
leverage  its engineering investments and develop additional integrated products
for  simpler,  more  innovative  communications  solutions  for  customers.  The
development  of  new  internetworking  products, high-performance communications
controllers  and  communications-related  software is critical to attracting new
and  retaining  existing  customers.

During  the  past three years, the Company has developed communications products
based  on  CPCIbus,  PCIbus, VMEbus and EISA architecture.  The Company has also
redesigned and upgraded certain communications products to improve the products'
performance  and  lower  the  products'  manufacturing  costs.  In addition, the
Company  has  acquired  or  licensed  certain  hardware  products that have been
integrated  principally  through  the  addition  of  software into the Company's
product  line.

During  fiscal 1999, the Company focused the majority of its development efforts
on  the  Highwire product line, and it expects to continue Highwire development,
while  also  developing  other  new  product  platforms,  in  fiscal  2000.

Information  relating  to  accounting  for  research  and  development  costs is
included  in Note 1 of Notes to Consolidated Financial Statements.  Also see the
section labeled "Management's Discussion and Analysis of Financial Condition and
Results  of  Operations."

MANUFACTURING

The  Company  does  not  use  raw materials in any of its products or production
activity.  Products are constructed from components that are generally available
as  needed  from a variety of suppliers.  The Company believes that it currently
possesses  adequate  supply  channels.  An interruption in its existing supplier
relationships  or delays by some suppliers could result in production delays and
may  have  a  material  adverse  effect  on  the  Company's  operations.

Certain  parts  used in the Company's products are purchased from Motorola.  See
"Risk  Factors-Dependence  on  Key  Suppliers."  The  Company  believes  these
components will become available from alternative suppliers over time.  Although
the  Company  has  rarely  experienced  any  significant  problems  in obtaining
sole-source components, the Company has sought to establish a close relationship
with  sole-source  suppliers  and,  if  necessary, build up an inventory of such
components.

In  December  1996, the Company sold all of its manufacturing assets and entered
into  a  contract  manufacturing  agreement  with  XeTel to supply manufacturing
services.  The Company believes that XeTel has been able to provide lower prices
and  a more efficient and timely product delivery than the Company could produce
with  its  previous  manufacturing  resources.

                                     11
<PAGE>
COMPETITION

The  market  for  telecommunications and client/server access products is highly
competitive.  Many of the Company's competitors have greater financial resources
and  are  more  established  than  the  Company.  Competition  within  the
telecommunications market is fragmented principally by application segment.  The
Company's  Highwire  products  compete  with offerings from Radisys, Performance
Technology,  Artesyn,  SBS Technology and Adax along with various other platform
and  controller  products  providers.  The  Company's  VMEbus  and  WanXL
communications  controller  products  compete  primarily with products from Digi
International,  Motorola,  Interphase  Corp.,  CMC,  a  Rockwell Company, Themis
Computers,  Performance  Technologies  and  various  other  companies  on  a
product-by-product  basis.  To compete in this market the Company emphasizes the
functionality,  support,  quality  and  price  of its product in relation to its
competitors  as  well  as  the  Company's  ability  to  customize the product or
software  to  exactly  meet  the  customer's  needs.

Additionally,  the  Company  competes with the internal engineering resources of
its  customers.  As  its  customers  become successful with their products, they
examine  methods  to  reduce costs and integrate functions.  To compete with the
internal  engineering resources of its customers, the Company works jointly with
their engineering staffs to understand its customers' system requirements and to
anticipate  product  needs.

INTELLECTUAL  PROPERTY

The  Company  believes  that  its  future success will depend principally on its
continuing product innovation, sales, marketing and technical expertise, product
support  and  customer  relations.  The  Company  also believes that it needs to
protect  the proprietary technology contained in its products.  The Company does
not  currently  hold  any  patents  and  relies  on  a combination of copyright,
trademark, trade secret laws and contractual provisions to establish and protect
proprietary  rights  in  its  products.  The  Company  typically  enters  into
confidentiality  agreements  with  its  employees,  strategic  partners, Channel
Partners  and suppliers and limits access to the distribution of its proprietary
information.

BACKLOG

On  December  31, 1999 the Company had a backlog of orders of approximately $6.9
million  for  shipment  within  the  next  12  months.  On December 31, 1998 the
Company  had  a  backlog  of  orders  of approximately $4.4 million for shipment
within the next 12 months.  Because recorded sales orders are subject to changes
in  customer  delivery  schedules, cancellation, or price changes, the Company's
backlog  as of any particular date may not be representative of actual sales for
any  succeeding  fiscal  period  and  is  not  considered  firm.

EMPLOYEES

On  January  3,  2000  the  Company  had  71  employees.  None  of the Company's
employees  is represented by a labor union.  The Company has experienced no work
stoppages.  The  Company  believes  its  employee  relations  are  good.

The  Company believes that the Company's future success will depend, in part, on
its  ability  to  attract  and  retain  qualified  technical  (particularly

                                     12
<PAGE>
engineering),  marketing  and  management personnel.  Such experienced personnel
are  in great demand, and the Company must compete for their services with other
firms,  many  of  which  have  greater  financial  resources  than  the Company.

ITEM  2.          PROPERTIES

The  Company's engineering and administrative headquarters are located in 63,000
square feet of leased space in a building located in San Ramon, California.  The
lease  expires  in 2006.  The Company expects that the facility will satisfy its
anticipated  needs  through  the  foreseeable  future.  In  December  1996,  in
conjunction  with  the  sale  of  all of the Company's manufacturing assets, the
Company  subleased approximately 24,000 square feet of this space to XeTel for a
four-year  term  with  an  option  to  renew  for  an  additional  five  years.

ITEM  3.          LEGAL  PROCEEDINGS

The  Company  is  not  a  party  to  any  material  pending  legal  proceedings.

ITEM  4.          SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

None

                                     13
<PAGE>


                                     PART II


ITEM 5.     MARKET FOR THE REGISTRANT'S COMMON EQUITY &
            RELATED STOCKHOLDER MATTERS


                                         Fiscal quarter ended
                           ----------------------------------------------
    1999                   January 31    April 30     July 31  October 31
-------------------------------------------------------------------------

     High                     $  9.00     $  8.50     $  6.50     $  5.06
     Low                         6.63        4.19        4.63        3.50

    1998
     High                     $ 15.88     $  8.50     $  6.50     $  6.63
     Low                         7.00        6.25        3.13        2.88

The  Company's  common  stock  is quoted on the Nasdaq National Market under the
symbol  SBEI.  The  above  table sets forth the high and low bid prices for 1999
and 1998 for the quarters indicated.  The Company has not paid cash dividends on
its common stock and anticipates that for the foreseeable future it would retain
earnings  for use in its business.  As of December 31, 1999, the Company had 676
named  stockholders  of  record.

ITEM 6.     SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

(in thousands, except for per share
amounts and number of employees)

For years ended October 31,
  and at October 31                  1999     1998     1997      1996       1995
---------------------------------  -------  -------  -------  ---------  ---------
<S>                                <C>      <C>      <C>      <C>        <C>
Net sales                          $18,022  $18,985  $24,970  $ 13,350   $ 19,368

Net income (loss)                  $    52  $   380  $ 3,333   ($9,625)   ($4,568)

Net income (loss) per share        $  0.05  $  0.13  $  1.23    ($4.51)    ($2.22)

Product research and development   $ 4,634  $ 3,592  $ 2,808  $  5,084   $  6,900

Working capital                    $ 7,102  $ 7,609  $ 7,492  $  2,049   $  7,644

Total assets                       $10,480  $11,183  $11,269  $  7,894   $ 14,978

Long-term obligations              $   503  $   631  $   925  $    757   $  1,218

Stockholders' equity               $ 8,490  $ 8,534  $ 7,966  $  3,981   $ 12,108

Shares outstanding                   2,895    2,680    2,641     2,233      2,074

Number of employees                     68       64       80        92        173
</TABLE>

                                     14
<PAGE>


ITEM  7.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except for the historical information contained herein, the following discussion
contains  forward-looking  statements that involve risks and uncertainties.  The
Company's  actual  results  could  differ  materially from those discussed here.
Factors  that could cause or contribute to such differences include, but are not
limited  to,  those  discussed  in  this  section and the section entitled "Item
1-Business"  (particularly  "Item  1-Business-Risk  Factors").

The  Company's  business is characterized by a concentration of sales to a small
number of customers and consequently the timing of significant orders from major
customers  and  their  product  cycles  causes  fluctuations  in  the  Company's
operating  results.  See  "Item  1-Business-Risk  Factors-Dependence  on Limited
Number of OEM Customers."  The Company is attempting to diversify its sales with
the introduction of new products that are targeted at large growing markets such
as  telecommunications  and  client/server.  The Company's Highwire products are
focused  on  the  telecommunications  applications  market  and  the significant
increases  in  communications  activity  that  are  driven by the convergence of
traditional  telephony  applications  with  the  Internet.  While  the  Company
believes  the  market  for the Highwire product family is large, there can be no
assurance  that  the  Company will be able to succeed in penetrating this market
and  diversifying  its  sales.  See "Item 1-Business-Risk Factors-Future Success
Dependent  on  New  Product  Lines."

RESULTS  OF  OPERATIONS

The  following  table  sets  forth,  as  a  percentage  of  net  sales,  certain
consolidated  statements  of  operations data for the fiscal years ended October
31, 1999, 1998 and 1997.  These operating results are not necessarily indicative
of  Company's  operating  results  for  any  future  period.


                                     YEAR ENDED OCTOBER 31,
                                     ----------------------

                                      1999   1998   1997

Net sales                              100%   100%   100%
Cost of sales                           37     40     49
                                      -----  -----  -----
    Gross profit                        63     60     51
Operating expenses:
    Product research and development    26     19     11
    Sales and marketing                 22     23     15
    General and administrative          16     17     15
                                      -----  -----  -----
     Total operating expenses           63     59     41
                                      -----  -----  -----
Operating income                         0      1     10
Gain on sale of assets                 ---    ---      3
Interest and other expense, net          1      1    ---
                                      -----  -----  -----
Income before taxes                      1      2     13
Income tax provision                   ---    ---    ---
                                      -----  -----  -----
Net income                              1 %     2%    13%
                                      =====  =====  =====


                                     15

<PAGE>
NET SALES

Net  sales  for  fiscal  1999  were  $18.0 million, a five percent decrease from
fiscal  1998.  Net  sales  for  fiscal  1998  were  $19.0  million, a 24 percent
decrease  from  fiscal  1997.  The  decrease from fiscal 1998 to fiscal 1999 was
primarily attributable to lower sales of VMEbus and Integrated Circuit products.
The decrease from fiscal 1997 to fiscal 1998 was primarily attributable to lower
sales  of  WanXL  and  VMEbus  products  and  lower  sales  to  integrators that
distribute  product  primarily in Asia.  Sales to individual customers in excess
of  10 percent of net sales of the Company included net sales to Compaq of $12.6
million  in  fiscal  1999;  net sales to Compaq and Motorola of $9.4 million and
$2.8  million,  respectively, in fiscal 1998; and net sales to Compaq, Motorola,
and  Silicon  Graphics  of  $8.8  million,  $3.8  million  and  $3.0  million,
respectively,  in  fiscal  1997.  Net  sales to Motorola were $500,000 in fiscal
1999.  Net  sales  to Silicon Graphics were $200,000 and $100,000 in fiscal 1998
and  1999,  respectively.  The  Company  expects  to  continue  to  experience
fluctuation  in  product  sales  as  large  customers'  needs change.  See "Item
1-Business-Risk  Factors-Dependence  on  a  Limited  Number  of  OEM Customers."

International sales constituted 4 percent, 5 percent and 12 percent of net sales
in  fiscal  1999,  fiscal  1998  and fiscal 1997, respectively.  The decrease in
international  sales  from fiscal 1997 is primarily attributable to lower demand
in  Asia.

GROSS  PROFIT

Gross  profit as a percentage of sales was 63 percent, 60 percent and 51 percent
in  fiscal  1999,  fiscal 1998 and fiscal 1997, respectively.  The increase from
fiscal  1998  to  fiscal 1999 was primarily attributable to lower material costs
and  improved operational efficiencies.  The increase from fiscal 1997 to fiscal
1998  was  primarily  attributable  to  discontinuance  of  low-margin  netXpand
products  and  improved  operational  efficiencies.

PRODUCT  RESEARCH  AND  DEVELOPMENT

Product research and development expenses were $4.6 million in fiscal 1999, $3.6
million in fiscal 1998 and $2.8 million in fiscal 1997, representing 26 percent,
19  percent and 11 percent of sales, respectively.  The increase in research and
development  spending  from  fiscal  1998  to fiscal 1999 was a result of higher
spending  on  new  telecommunications  product  development.  The  increase  in
research  and  development  spending  from fiscal 1997 to fiscal 1998 was due to
expanded  software development programs for the WanXL product line.  The Company
expects that product research and development expenses will increase from fiscal
1999  levels  as  the  Company  focuses  its  resources  on  developing  new
telecommunications  product  offerings and enhancing its traditional board-level
products.  See  "Item  1-Business-Risk  Factors-Future  Success Dependent on New
Product  Lines;  -Rapid  Technological  Change;  -Ongoing  Product  Development
Requirements."

The  Company  capitalized no internal software development costs in fiscal 1999,
fiscal  1998  or  fiscal  1997.  All previously capitalized software development
costs  have  been  fully  amortized.

SALES  AND  MARKETING

Sales  and  marketing expenses for fiscal 1999 were $3.9 million, down 8 percent
from  $4.3  million  in  fiscal  1998.  This decrease was due to lower marketing

                                     16
<PAGE>
program  costs for advertising and tradeshows.  Sales and marketing expenses for
fiscal 1997 were $3.8 million.  The increase from fiscal 1997 to fiscal 1998 was
due to expanded marketing programs and the establishment of an UK branch office.
The Company expects sales and marketing expenses, as new products are announced,
will  increase  slightly  as a percentage of total sales from fiscal 1999 levels
for  the  foreseeable  future.

GENERAL  AND  ADMINISTRATIVE

General  and  administrative  expenses for fiscal 1999 decreased 14 percent from
$3.3  million  in  fiscal  1998  to  $2.8  million.  General  and administrative
expenses  for fiscal 1998 decreased 11 percent from $3.7 million in fiscal 1997.
The decrease from fiscal 1998 to fiscal 1999 was a result of lower outside costs
and  continued expense control efforts.  The decrease from fiscal 1997 to fiscal
1998  represents  lower  variable  expenses  for  profit  sharing  and  bonuses.

INTEREST  AND  OTHER  INCOME,  NET

Interest  income  increased  in  fiscal 1999 from fiscal 1998 due to higher cash
balances  in  fiscal 1999.  Interest income decreased in fiscal 1998 from fiscal
1997  due  to  lower  cash  balances  in fiscal 1998.  Interest expense remained
constant  from  fiscal  1998  to  fiscal 1999.  Interest expense for fiscal 1998
decreased  from  fiscal  1997 due to the repayment of borrowings in fiscal 1997.

INCOME  TAXES

The  Company  recorded  tax  provisions of $1,600 and $31,600 in fiscal 1999 and
fiscal  1998,  respectively.  The  Company  recorded a tax benefit of $82,000 in
fiscal  1997  due  to  the application of certain credits to prior year returns.
The  Company's effective tax rate was 1 percent and 7 percent in fiscal 1999 and
1998,  respectively.  The  Company  has recorded a valuation allowance in fiscal
1999,  1998  and  1997 for certain deferred tax assets due to the uncertainty of
realization.  This valuation allowance increased from approximately $3.9 million
in  fiscal  1998 to $4.1 million in fiscal 1999.  In the event of future taxable
income, the Company's effective income tax rate in future periods could be lower
than  the  statutory  rate  as  such  tax  assets  are  realized.

NET  INCOME

As  a  result of the factors discussed above, the Company recorded net income of
$151,000, $380,000 and $3.3 million in fiscal 1999, fiscal 1998 and fiscal 1997,
respectively.

LIQUIDITY  AND  CAPITAL  RESOURCES

The  Company  had  cash and cash equivalents of $3.3 million and $3.4 million on
October  31,  1999  and  October  31,  1998, respectively.  In fiscal 1999, $1.3
million of cash was provided by operating activities, principally as a result of
a  $547,000  decrease in accounts receivable, a $237,000 decrease in inventories
and  a  $119,000  decrease in other assets, along with a $151,000 net income and
$780,000  of non cash depreciation and amortization charges.  These increases in
cash  were  offset  by  a $440,000 decrease in trade accounts payable, a $93,000
decrease  in  other  current  liabilities, and a $46,000 decrease in non current
liabilities.  Working  capital at October 31, 1999 was $7.1 million, as compared
to  $7.6  million  at  October  31,  1998.

In  fiscal  1999  the  Company  purchased  $847,000  of fixed assets, consisting

                                     17
<PAGE>
primarily  of an enterprise resource planning system, computers, and engineering
equipment,  and purchased $268,000 of capitalized software.  The Company expects
capital  expenditures during fiscal 2000 to approximate the same level as fiscal
1999.

The  Company  received  $164,000  in  fiscal  1999  from  employee  stock option
exercises  and  stock  purchase  plan  purchases,  a decrease of 13 percent from
fiscal  1998  amounts.

In  fiscal  1999,  the  Company made a loan to an officer and stockholder in the
amount of $743,800 under a two-year recourse promissory note bearing an interest
rate of 4.47 percent and collateralized by 145,313 shares of Common Stock of the
Company.  The loan was used to pay for the exercise of 139,400 shares of Company
stock  options  and  related  taxes.

In  May  1999, the Board of Directors authorized the Company to repurchase up to
100,000  shares  of  the  Company's  issued  and  outstanding common stock.  The
Company  repurchased 74,500 shares of its common stock in the open market for an
aggregate  purchase  price  of $358,000 in fiscal 1999.  Repurchases may be made
from  time  to  time, subject to prevailing conditions, in the open market or in
privately  negotiated  transactions.

Based  on  the  current operating plan, the Company anticipates that its current
cash  balances,  cash  flow  from  operations  and  credit  facilities  will  be
sufficient  to  meet  its  working  capital  needs  in  the  foreseeable future.

YEAR  2000  COMPLIANCE

Many older computer software programs refer to years in terms of their final two
digits  only.  Such  programs  may interpret the year 2000 to mean the year 1900
instead.  If  not corrected, those programs could cause date-related transaction
failures.

The  Company's  current  products,  to  the  extent  they have the capability to
process  date-related  information,  were designed to be Year 2000 compliant; in
other  words, the products were designed to manage and manipulate data involving
the transition of dates from 1999 to 2000 without functional or data abnormality
and  without  inaccurate  results  relating  to  such  dates.  There  can  be no
assurance  that systems operated by third parties that interface with or contain
the Company's products will timely achieve Year 2000 compliance.  Any failure of
these third parties' systems to timely achieve Year 2000 compliance could have a
material  adverse  effect  on  the  Company's  business, financial condition and
results  of  operations.

The  Company  believes  it  has  identified  substantially  all  of  the  major
information systems used in connection with its internal operations that must be
modified,  upgraded  or  replaced  to  minimize  the  possibility  of a material
disruption  of  its  business.  The  Company  had already modified, upgraded and
replaced  systems  that  had  been  identified  as  potentially  being adversely
affected  at  the  end  of  year  1999.

The  Company  depends  on  third  party  suppliers  for the manufacturing of its
products.  The Company has been gathering information from, and is communicating
with, these suppliers and, to the extent possible, has resolved issues involving
the  Year 2000 problem.  However, the Company has limited or no control over the
actions  of  its  suppliers.  Therefore,  the  Company cannot guarantee that its
manufacturing services suppliers will resolve any or all Year 2000 problems with
their  systems  before  the  occurrence  of  a  material  disruption  to  their

                                     18
<PAGE>
businesses.  Any  failure  of these suppliers to resolve Year 2000 problems with
their  systems  in  a  timely manner could have a material adverse effect on the
Company's  business,  financial  condition  or  operating  results.

The  Company  has  developed  contingency plans to be implemented as part of its
efforts  to  identify  and  correct  Year  2000  problems affecting its internal
systems.  Depending on the systems affected, these plans include (a) accelerated
replacement of affected equipment or software; (b) increased work hours; and (c)
other  similar approaches.  If the Company is required to implement any of these
contingency  plans,  such  plans  could  have  a  material adverse effect on its
business,  financial  condition  or  operating  results.

ITEM  7A.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  Company's cash and cash equivalents are subject to interest rate risk.  The
Company  invests  primarily  on  a  short-term basis.  The  Company's  financial
Instrument  holdings  at  October  31,  1999  were  analyzed  to determine their
sensitivity  to interest rate changes.  The  fair  values  of these  instruments
were  determined  by net present values.  In our sensitivity analysis,  the same
change  in  interest rate was used for all maturities and all other factors were
held  constant.  If  interest  rates  increased  by  10%, the expected effect on
net income related to the  Company's financial  instruments would be immaterial.

ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

The  financial  statements  and  supplementary  data  required  under Item 8 are
provided  under  Item  14.


ITEM  9.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE

None.

                                     19
<PAGE>
                                  PART III


ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Identification of Directors; Section 16(a) Beneficial Ownership Reporting
Compliance
-------------------------------------------------------------------------

The  information  called  for  by  Item 10 concerning the Company's directors is
incorporated by reference from the information in the section entitled "Election
of  Directors"  appearing  in  the  Company's definitive Proxy Statement for the
Annual  Meeting  of  Stockholders  to be held on March 21, 2000 (the "2000 Proxy
Statement").  The information called for by Item 10 concerning the compliance of
certain  persons with the beneficial ownership reporting requirements of Section
16(a)  of  the  Act  is  incorporated  by  reference from the information in the
section  entitled  "Section  16(a)  Beneficial  Ownership  Reporting Compliance"
appearing  in  the  2000  Proxy  Statement.

Identification  of  Executive  Officers
---------------------------------------

The  executive  officers  of the Company and their respective ages and positions
with the Company are set forth in the following table.  Executive officers serve
at  the discretion of the Board of Directors.  There are no family relationships
between  a  director  or  executive  officer and any other director or executive
officer  of  the  Company.


Name                  Age                 Position
--------------------  ---  ----------------------------------------

William B. Heye, Jr.   61  President and Chief Executive Officer

Timothy J. Repp        39  Vice President, Finance, Chief Financial
                           Officer, Treasurer and Secretary

Michael R. Coker       46  Vice President, Sales

David Schaetzel        43  Vice President, Engineering


Mr. Heye has served as President, Chief Executive Officer, and a director of the
Company since November 1991.  From 1989 to November 1991, he served as Executive
Vice President of Ampex Corporation, a manufacturer of high-performance scanning
recording  systems,  and  President  of  Ampex  Video  Systems  Corporation,  a
wholly-owned  subsidiary of Ampex Corporation and a manufacturer of professional
video  recorders  and editing systems for the television industry.  From 1986 to
1989,  Mr.  Heye  served  as  Executive  Vice  President  of  Airborn,  Inc.,  a
manufacturer  of  components  for  the aerospace and military markets.  Prior to
1986,  Mr.  Heye  served  in  various  senior  management  positions  at  Texas
Instruments,  Inc.  in  the United States and overseas, including Vice President
and  General  Manager  of  Consumer  Products and President of Texas Instruments
Asia,  Ltd.,  with  headquarters  in  Tokyo,  Japan.

Mr.  Repp has served as Secretary of the Company since December 1996 and as Vice
President,  Finance,  Chief  Financial Officer and Treasurer since January 1992.

                                     20
<PAGE>
He  joined  the Company in January 1991 as Controller.  From 1987 until 1990, he
was  assistant  controller  at Grubb and Ellis, a national real estate firm, and
prior  to  1987  he  was  an  audit  manager  at  Coopers  &  Lybrand  (now
PricewaterhouseCoopers  LLP),  an  international  professional  services  firm.

Mr.  Coker  has  been  Vice President, Sales since December 1998.  He joined the
Company  as  Vice President, Sales in March 1996.  From October 1996 to December
1998, he was Vice President, Sales and Marketing.  From January 1993 to February
1996,  he was President and Chief Executive Officer of Syskonnect, a provider of
networking  communication equipment.  From October 1983 to December of 1993, Mr.
Coker served in various senior management positions, including Vice President of
International  Sales,  Vice  President,  Marketing  and Director of Marketing at
Vitalink,  a  provider  of  routers,  bridges  and  networking  products.

Mr.  Schaetzel  has been Vice President, Engineering since June 1999.  He joined
the  Company  as  a  Hardware  Engineer in August 1997 and has served in various
engineering  management  positions  since  then.  From  1994  to  June 1997, Mr.
Schaetzel  was  an  executive of Woodward Governor Co., a manufacturer of engine
control  systems.  From  1992  to  1994, he was a consultant in microelectronics
design,  development and manufacturing.  Prior to 1992, he was a manager at TRW,
a  manufacturer  of  electronic  products.


ITEM 11.     EXECUTIVE  COMPENSATION

The  information  called  for  by  Item 11 is incorporated by reference from the
information  in  the  section entitled "Executive Compensation" appearing in the
2000  Proxy  Statement.


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  called  for  by  Item 12 is incorporated by reference from the
information  in  the  section entitled "Security Ownership of Certain Beneficial
Owners  and  Management"  appearing  in  the  2000  Proxy  Statement.


ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information called for by Item 13 is incorporated by reference from the
information in the section entitled "Certain Transactions" appearing in the 2000
Proxy Statement.

                                     21
<PAGE>

                                   PART IV

ITEM 14.     EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES
             AND REPORTS ON FORM 8-K

The following documents are filed as part of this Report:

(a)     Financial Statements
        --------------------

                                                                            Page
                                                                            ----

     Report of Independent Accountants                                        26

     Consolidated Balance Sheets at October 31, 1999 and 1998                 27

     Consolidated Statements of Operations for fiscal years 1999, 1998
          and 1997                                                            28

     Consolidated Statements of Stockholders' Equity for fiscal years 1999,
          1998 and 1997                                                       29

     Consolidated Statements of Cash Flows for fiscal years 1999, 1998
          and 1997                                                            30

     Notes to Consolidated Financial Statements                               31


(b)     Financial Statement Schedule
        ----------------------------

     Schedule II - Valuation and Qualifying Accounts                          42

All other schedules are omitted as the required information is not applicable or
has been included in the consolidated financial statements or the notes thereto.

                                     22
<PAGE>
(c)     Exhibits

     Exhibit                                                          Sequential
     Number     Description                                             Page No.
     ------     -----------                                           ----------

(e)     3.1     Certificate of Incorporation, as amended through
                December 15, 1997                                            ---

(i)     3.2     Bylaws, as amended through December 8, 1998                  ---

(f)    10.1     1996 Stock Option Plan, as amended                           ---

(a)    10.2     1991 Non-Employee Directors' Stock Option Plan, as amended   ---

(h)    10.3     1992 Employee Stock Purchase Plan, as amended                ---

(g)    10.4     1998 Non-Officer Stock Option Plan                           ---

(b)    10.5     Lease for 4550 Norris Canyon Road, San Ramon, California
                dated November 2, 1992 between the Company and
                PacTel Properties                                            ---

(c)    10.6     Amendment dated June 6, 1995 to lease for 4550 Norris
                Canyon Road, San Ramon, California, between the Company
                and CalProp L.P. (assignee of PacTel Properties)             ---

(d)    10.7     Asset Purchase Agreement between XeTel Corporation and
                the Company dated as of December 6, 1996                     ---

(e)    10.8     Letter of agreement to provide credit facilities between
                the Company and Comerica Bank - California, dated August 26,
                1997                                                         ---

(i)    10.9     Full Recourse Promissory Note executed by William B.
                Heye, Jr. in favor of the Company dated November 6, 1998     ---

       11.1     Statement re computation of per share earnings                43

       23.1     Consent of PricewaterhouseCoopers LLP, Independent Public
                Accountants                                                   44

       27.1     Financial Data Schedule                                       45


(d)          REPORTS ON FORM 8-K

               No report on Form 8-K was filed by the Company during the quarter
               Ended October 31, 1999.

                                     23
<PAGE>
Explanations for letter footnotes:
----------------------------------

     (a)     Filed as an exhibit to Annual Report on Form 10-K for the year
             ended October 31, 1991 and incorporated herein by reference.

     (b)     Filed as an exhibit to Annual Report on Form 10-K for the year
             ended October 31, 1993 and incorporated herein by reference.

     (c)     Filed as an exhibit to Annual Report on Form 10-K for the year
             ended October 31, 1995 and incorporated herein by reference.

     (d)     Filed as an exhibit to the report on Form 8-K dated December 6,
             1996 and incorporated herein by reference.

     (e)     Filed as an exhibit to Annual Report on Form 10-K for the year
             ended October 31, 1997 and incorporated herein by reference.

     (f)     Filed as an exhibit to Form S-8 dated September 15, 1998 and
             incorporated herein by reference.

     (g)     Filed as an exhibit to Form S-8 dated October 16, 1998 and
             incorporated herein by reference.

     (h)     Filed as an exhibit to Form S-8 dated November 24, 1998 and
             incorporated herein by reference.

     (i)     Filed as an exhibit to Annual Report on Form 10-K for the year
             ended October 31, 1998 and incorporated herein by reference.

                                     24
<PAGE>
                                 SIGNATURES


Pursuant  to  the requirements of section 13 or 15(d) of the Securities Exchange
Act  of 1934, the Company has duly caused this report to be signed on its behalf
by  the  undersigned,  thereunto  duly  authorized.


                                       SBE, Inc.
                                       (Registrant)


Dated:     January 31, 2000            By:     /s/ Timothy J. Repp
                                               -------------------
                                               Timothy J. Repp
                                               Chief Financial Officer
                                               and Vice President, Finance


Pursuant  to  the  requirements  for  the  Securities Exchange Act of 1934, this
report  has  been signed below by the following persons on behalf of the Company
in  the  capacities  indicated,  as  of  January  31,  2000.


  Signature                            Title
  ---------                            -----

/s/ William B. Heye, Jr.
------------------------
William B. Heye Jr.                    Chief Executive Officer and President
                                       (Principal Executive Officer)

/s/ Timothy J. Repp
-------------------
Timothy J. Repp                        Chief Financial Officer, Vice President,
                                       Finance, Secretary (Principal Financial
                                       And Accounting Officer)

/s/ Raimon L. Conlisk
---------------------
Raimon L. Conlisk                      Director, Chairman of the Board

/s/ Randall L-W. Caudill
------------------------
Randall L-W. Caudill                   Director

/s/ Ronald J. Ritchie
---------------------
Ronald J. Ritchie                      Director



                                     25
<PAGE>
                        REPORT OF INDEPENDENT ACCOUNTANTS




To  the  Board  of  Directors  and  Stockholders  of
SBE,  Inc.  and  Subsidiary:

In  our  opinion,  the  consolidated  financial  statements  listed in the index
appearing  under  Item  14(a)  present  fairly,  in  all  material respects, the
financial  position  of SBE, Inc. and subsidiary as of October 31, 1999 and 1998
and  the  results of their operations and their cash flows for each of the three
years  in  the  period  ended  October  31,  1999,  in conformity with generally
accepted  accounting  principles.  In  addition,  in  our opinion, the financial
statement  schedule  listed  in  the  index  appearing under Item 14(b) presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.  These financial
statements  and  financial  statement  schedule  are  the  responsibility of the
Company's  management;  our  responsibility  is  to  express an opinion on these
financial  statements  and financial schedule based on our audits.  We conducted
our  audits  of  these statements in accordance with generally accepted auditing
standards  which require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  financial  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  state-ments,  assessing  the
accounting  principles  used  and  significant estimates made by management, and
evaluating  the  overall  financial statement presentation.  We believe that our
audits  provide  a  reason-able  basis  for  the  opinion  expressed  above.




/s/ PricewaterhouseCoopers LLP

November 23, 1999
San Francisco, California

                                     26
<PAGE>


<TABLE>
<CAPTION>

SBE, INC.
CONSOLIDATED BALANCE SHEETS


October 31                                                                1999          1998
--------------------------------------------------------------------  ------------  ------------
<S>                                                                   <C>           <C>

ASSETS

Current assets:
     Cash and cash equivalents                                        $ 3,325,741   $ 3,381,021
     Trade accounts receivable, net                                     3,290,216     3,836,916
     Inventories                                                        1,517,290     1,753,771
     Deferred income taxes                                                158,000       239,986
     Other                                                                298,032       416,576
                                                                      ------------  ------------
             Total current assets                                       8,589,279     9,628,270

Property, plant and equipment, net                                      1,512,518     1,330,476
Capitalized software costs, net                                           338,300       185,084
Other                                                                      39,450        39,450
                                                                      ------------  ------------

                          Total assets                                $10,479,547   $11,183,280
                                                                      ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Trade accounts payable                                           $   935,393   $ 1,374,569
     Accrued payroll and employee benefits                                320,353       321,049
     Accrued product warranties                                           101,049       207,444
     Other                                                                129,775       115,935
                                                                      ------------  ------------
             Total current liabilities                                  1,486,550     2,018,997

Deferred tax liabilities                                                  158,000       239,986
Deferred rent                                                             344,808       390,747
                                                                      ------------  ------------

     Total liabilities                                                  1,989,358     2,649,730
                                                                      ------------  ------------

Commitments and Contingencies (Note 7 and 11).

Stockholders' equity:
     Common stock and additional paid-in capital
            ($0.001 par value); authorized
             10,000,000 shares; issued and outstanding
             2,894,805 and 2,680,414 shares at
             October 31, 1999 and 1998, respectively                   10,923,509    10,016,181
     Note receivable from stockholder                                    (743,800)          ---
     Treasury stock                                                      (358,312)          ---
     Accumulated deficit                                               (1,331,208)   (1,482,631)
                                                                      ------------  ------------

                          Total stockholders' equity                    8,490,189     8,533,550
                                                                      ------------  ------------

                          Total liabilities and stockholders' equity  $10,479,547   $11,183,280
                                                                      ============  ============




The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                     27
<PAGE>
<TABLE>
<CAPTION>

SBE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS


For the years ended October 31            1999          1998          1997
------------------------------------  ------------  ------------  ------------
<S>                                   <C>           <C>           <C>
Net sales                             $18,021,512   $18,985,054   $24,970,427
Cost of sales                           6,687,975     7,518,068    12,151,883
                                      ------------  ------------  ------------

      Gross profit                     11,333,537    11,466,986    12,818,544

Product research and development        4,633,502     3,591,962     2,807,872
Sales and marketing                     3,949,527     4,295,030     3,833,801
General and administrative              2,820,495     3,268,098     3,686,890
                                      ------------  ------------  ------------

      Total expenses                   11,403,524    11,155,090    10,328,563

      Operating (loss) income             (69,987)      311,896     2,489,981

Gain on sale of assets                        ---           ---       684,502
Interest income                           223,363       100,405       101,546
Interest expense                             (352)         (352)      (24,858)
                                      ------------  ------------  ------------

      Income before income taxes          153,023       411,949     3,251,171

Provision (benefit) for income taxes        1,600        31,600       (82,010)
                                      ------------  ------------  ------------

Net income                            $   151,423   $   380,349   $ 3,333,181


Basic earnings per common share       $      0.05   $      0.14   $      1.33
                                      ============  ============  ============

Diluted earnings per common share     $      0.05   $      0.13   $      1.23
                                      ============  ============  ============

Basic - Shares used in per share
      computations                      2,849,349     2,666,707     2,501,786
                                      ============  ============  ============

Diluted - Shares used in per share
      computations                      2,908,613     2,890,740     2,703,423
                                      ============  ============  ============










The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>

                                     28
<PAGE>
<TABLE>
<CAPTION>

SBE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                                                                 Common Stock and
                                         Preferred Stock     Additional Paid-in Capital  Notes Receivable
                                        Shares     Amount      Shares        Amount      from Stockholder
                                      ---------  ----------  -----------  ------------  -----------------
<S>                                   <C>        <C>         <C>          <C>           <C>
Balance, October 31, 1996                  113   $ 750,460    2,232,881   $ 8,426,315                ---

Stock retired/issued in connection
     with conversion to
     common stock                         (113)   (750,460)     240,083       750,460                ---

Stock issued in connection
     with exercise of stock warrants       ---         ---       42,539           ---                ---

Stock issued in connection
     with dividend on converted
     preferred shares                      ---         ---        8,836        31,558                ---

Stock issued in connection
     with stock option plans               ---         ---      102,588       570,988                ---

Stock issued in connection
     with stock purchase plan              ---         ---       13,612        49,516                ---

Net income                                 ---         ---          ---           ---                ---
                                      ---------  ----------  -----------  ------------  -----------------

Balance, October 31, 1997                  ---         ---    2,640,539     9,828,837                ---

Stock issued in connection
     with stock option plans               ---         ---       20,325       100,908                ---

Stock issued in connection
     with stock purchase plan              ---         ---       19,550        86,436                ---

Net income                                 ---         ---          ---           ---                   ---
                                      ---------  ----------  -----------  ------------  -----------------

Balance, October 31, 1998                  ---         ---    2,680,414    10,016,181                ---

Stock issued in connection
     with stock option plans               ---         ---      194,750       833,446                ---

Stock issued in connection
     with stock purchase plan              ---         ---       19,641        73,882                ---

Stock repurchase                           ---         ---          ---           ---                ---

Note receivable from stockholder           ---         ---          ---           ---   $       (743,800)

Net income                                 ---         ---          ---           ---                ---
                                      ---------  ----------  -----------  ------------  -----------------

Balance, October 31, 1999                  ---   $     ---    2,894,805   $10,923,509   $       (743,800)
                                      =========  ==========  ===========  ============  =================




                                         Treasury Stock      Accumulated
                                       Shares     Amount       Deficit       Total
                                      --------  ----------  ------------  ------------
<S>                                   <C>       <C>         <C>           <C>
Balance, October 31, 1996                 ---         ---   $(5,196,161)  $ 3,980,614

Stock retired/issued in connection
     with conversion to
     common stock                         ---         ---           ---           ---

Stock issued in connection
     with exercise of stock warrants      ---         ---           ---           ---

Stock issued in connection
     with dividend on converted
     preferred shares                     ---         ---           ---        31,558

Stock issued in connection
     with stock option plans              ---         ---           ---       570,988

Stock issued in connection
     with stock purchase plan             ---         ---           ---        49,516

Net income                                ---         ---     3,333,181     3,333,181
                                      --------  ----------  ------------  ------------

Balance, October 31, 1997                 ---         ---    (1,862,980)    7,965,857

Stock issued in connection
     with stock option plans              ---         ---           ---       100,908

Stock issued in connection
     with stock purchase plan             ---         ---           ---        86,436

Net income                                ---         ---       380,349       380,349
                                      --------  ----------  ------------  ------------

Balance, October 31, 1998                 ---         ---    (1,482,631)    8,533,550

Stock issued in connection
     with stock option plans              ---         ---           ---       833,446

Stock issued in connection
     With stock purchase plan             ---         ---           ---        73,882

Stock repurchase                       74,500   $(358,312)          ---      (358,312)

Note receivable from stockholder          ---         ---           ---      (743,800)

Net income                                ---         ---       151,423       151,423
                                      --------  ----------  ------------  ------------

Balance, October 31, 1999              74,500   $(358,312)  $(1,331,208)  $ 8,490,189
                                      ========  ==========  ============  ============










The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                     29
<PAGE>


<TABLE>
<CAPTION>

SBE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS


For the years ended October 31                                            1999          1998         1997
--------------------------------------------------------------------  ------------  ------------  -----------
<S>                                                                   <C>           <C>           <C>
Cash flows from operating activities:
  Net income                                                          $   151,423   $   380,349   $3,333,181
  Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
    Depreciation and amortization                                         779,821     1,020,708    1,083,274
    Gain from sales of property and equipment                                 ---           ---     (684,502)
    Costs and reserves related to sale of property and equipment              ---           ---     (442,585)
    Changes in operating assets and liabilities:
      Decrease (increase) in trade accounts receivable                    546,700    (1,056,643)    (736,314)
      Decrease (increase) in inventories                                  236,481      (902,630)   1,890,215
      Decrease (increase) in other assets                                 118,544      (258,956)     (69,262)
      (Decrease) increase in trade accounts payable                      (439,176)      345,459      (55,703)
      (Decrease) increase in other current liabilities                    (93,271)     (704,706)     258,099
      Decrease in noncurrent liabilities                                  (45,939)      (21,134)         ---
                                                                      ------------  ------------  -----------
        Net cash provided by (used in) operating activities             1,254,583    (1,197,553)   4,576,403
                                                                      ------------  ------------  -----------

Cash flows from investing activities:
  Capital expenditures:
    Purchases of property and equipment                                  (846,829)     (970,843)    (290,464)
    Disposals of property and equipment                                       ---           ---    1,600,000
    Proceeds from sale of fixed assets                                        ---           ---        1,709
    Capitalized software costs                                           (268,250)     (206,800)         ---
                                                                      ------------  ------------  -----------
        Net cash (used in) provided by investing activities            (1,115,079)   (1,177,643)   1,311,245
                                                                      ------------  ------------  -----------

Cash flows from financing activities:
  Repayments of borrowing on line of credit                                   ---           ---     (980,340)
  Proceeds from stock plans                                               163,528       187,344      620,504
  Purchase of treasury stock                                             (358,312)          ---          ---
                                                                      ------------  ------------  -----------
        Net cash (used in) provided by financing activities              (194,784)      187,344     (359,836)
                                                                      ------------  ------------  -----------

      Net (decrease) increase in cash and cash equivalents                (55,280)   (2,187,852)   5,527,812

Cash and cash equivalents at beginning of year                          3,381,021     5,568,873       41,061
                                                                      ------------  ------------  -----------
Cash and cash equivalents at end of year                              $ 3,325,741   $ 3,381,021   $5,568,873
                                                                      ============  ============  ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
  Interest                                                            $       352   $       352   $   24,858
                                                                      ============  ============  ===========
  Income taxes                                                        $    36,524   $   121,197   $    2,540
                                                                      ============  ============  ===========

SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES
Conversion of preferred stock into common stock                       $       ---   $       ---   $  750,460
                                                                      ============  ============  ===========

Issuance of common stock in lieu of dividend on
  converted preferred stock                                           $       ---   $       ---   $   31,558
                                                                      ============  ============  ===========

Exercise of stock options in exchange for note receivable             $   743,800   $       ---   $      ---
                                                                      ============  ============  ===========




The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>

                                     30
<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS



1.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Business  Segment  and  Basis  of  Presentation:

SBE, Inc. and subsidiary (the Company) designs and manufactures high-performance
network  systems  and  products  for  world-wide  distribution.  The  Company's
business  falls  exclusively  within  one  industry  segment.

On  December  6,  1996,  the  Company  sold  all the assets of its manufacturing
operation  to  XeTel  Corporation (XeTel), a contract manufacturing company with
headquarters  in  Austin,  Texas,  for  $1.6 million.  Additionally, the Company
entered  into a four-year exclusive agreement to purchase manufacturing services
from  XeTel  and  subleased  a  portion of its San Ramon facility to XeTel.  The
Company  reported a gain of $685,000 net of expenses on the sale of these assets
in  fiscal  1997.

Principles  of  Consolidation:

The  consolidated  financial  statements include the accounts of the Company and
its  wholly-owned  subsidiary.

Use  of  Estimates:

The  preparation  of  consolidated  financial  statements  in  conformity  with
generally  accepted  accounting principles requires management to make estimates
and  assumptions  that affect the reported amounts of assets and liabilities and
disclosure  of  contingent  assets  and liabilities at the date of the financial
statements  and  the  reported  amounts  of  revenues  and  expenses  during the
reporting  period.  Such  estimates  include  levels  of  reserves  for doubtful
accounts,  obsolete  inventory,  warranty costs and deferred tax assets.  Actual
results  could  differ  from  those  estimates.

Cash  Equivalents:

The  Company  considers  all  highly liquid investments readily convertible into
cash  with  an original maturity of three months or less upon acquisition by the
Company  to  be  cash  equivalents.  Substantially  all  of  its  cash  and cash
equivalents  are  held  in  one  large  financial  institution.

Inventories:

Inventories  are  stated  at  the  lower  of cost, using the first-in, first-out
method,  or  market  value.

Property,  Plant  and  Equipment:

Property,  plant  and  equipment  are carried at cost.  The Company provides for
depreciation  and  amortization  by  charges to expense, which are sufficient to

                                     31
<PAGE>
write  off the costs of the assets over their estimated useful lives of three to
eight  years,  on  a  straight-line basis.  Leasehold improvements are amortized
over  the  lesser  of  their  useful  lives or the remaining term of the related
leases.

When  assets  are  sold  or  otherwise  disposed  of,  the  cost and accumulated
depreciation are removed from the recognized in operations accounts and any gain
or  loss  on  such  sale  or  disposal  is  recognized  in  operations accounts.

Maintenance,  repairs  and  minor  renewals  are charged to expense as incurred.
Expenditures  which  substantially  increase  an  asset's  useful  life  are
capitalized.

The  Company  reviews  property  and equipment for impairment whenever events or
changes  in  circumstances  indicate  the  carrying value of an asset may not be
recoverable.  No  such  events  have occurred to date.  In performing the review
for recoverability, the Company would estimate the future cash flows expected to
result  from  the  use of the asset and its eventual disposition.  The amount of
the  impairment  loss, if an impairment exists, would be calculated based on the
excess  of  the  carrying  amount  of  the  asset  over  its  fair  value.

Capitalized  Software  Costs:

Capitalized  software  costs  consist  of  costs  to  purchase  software  and to
internally  develop  software.  Capitalization of software costs begins upon the
establishment  of technological feasibility.  All capitalized software costs are
amortized  as  related  sales  are  recorded  on a per-unit basis with a minimum
amortization  based on a straight-line method over a three-year estimated useful
life.  The Company evaluates the estimated net realizable value of each software
product  and records provisions to the asset value of each product for which the
net  book  value  is  in  excess  of  the  net  realizable  value.

Revenue  Recognition  and  Warranty  Costs:

The  Company  records  product  sales at the time of product shipment.  Warranty
costs are not significant; however, the Company provides a reserve for estimated
warranty  costs  at  the  time  of sale and periodically adjusts such amounts to
reflect  actual  expenses.  The  Company's  sales  transactions  are  negotiated
principally  in  US  dollars.

Product  Research  and  Development  Expenditures:

Product  research  and  development  (R&D) expenditures, except certain software
development  costs,  are  charged  to  expense  as  incurred.  Contractual
reimbursements for R&D expenditures under joint R&D contracts with customers are
accounted  for  as  a  reduction of related expenses as incurred.  For the years
ended October 31, 1999, 1998 and 1997, direct costs incurred under R&D contracts
were  $6,000,  $1,032 and $172,895, respectively, and reimbursements earned were
$43,750,  $7,250  and  $338,470  ,  respectively.

Income  Taxes:

The  Company accounts for income taxes in accordance with Statement of Financial
Accounting  Standards  (SFAS)  No. 109, "Accounting for Income Taxes."  SFAS No.
109 requires recognition of deferred tax liabilities and assets for the expected

                                     32
<PAGE>
future  tax  consequences  of  items that have been included in the consolidated
financial statements or tax returns.  Deferred income taxes represent future net
tax effects resulting from temporary differences between the financial statement
and  tax  bases of assets and liabilities, using enacted tax rates in effect for
the year in which the differences are expected to reverse.  Valuation allowances
are  recorded  against  net  deferred  tax  assets  where,  in  the  opinion  of
management, realization is uncertain.  The provision for income taxes represents
the  net  change  in  deferred  tax  amounts,  plus income taxes payable for the
current  period.

Net  Earnings  Per  Common  Share:

In  fiscal 1999, the Company adopted Statement of Financial Accounting Standards
No.  128,  "Earnings Per Share."  All historical earnings per share amounts have
been  restated  to  conform to the provisions of this Statement.  Basic earnings
per  common  share  for  the  years  ended  October  31, 1999, 1998 and 1997 was
computed  by  dividing  net  income  by the weighted average number of shares of
common stock outstanding.  Diluted earnings per common share for the years ended
October  31,  1999,  1998  and  1997  was computed by dividing net income by the
weighted  average  number of shares of common stock and common stock equivalents
outstanding.  Common  stock  equivalents  relate  to  stock  options and include
59,264,  224,033,  and 201,637 shares for the years ended October 31, 1999, 1998
and  1997  respectively.

Recent  Accounting  Pronouncements:

In  June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for Derivative
Instruments  and Hedging Activities," which establishes accounting and reporting
standards  for  derivative instruments and hedging activities.  It requires that
an  entity  recognize  all  derivatives  as  either assets or liabilities in the
balance  sheet and measure those instruments at fair value.  Management does not
believe  this  will  have  a  material  effect  on  the  Company's  operations.
Implementation  of  this  standard  has  recently been delayed by the FASB for a
12-month  period.  The Company will adopt SFAS No. 133 as required for its first
quarterly  filing  of  fiscal  year  2001.

Reclassifications:

Certain  reclassifications  have  been  made  to  the  1998  and  1997 financial
statements  to  conform to the 1999 presentation with no effect on net income as
previously  reported.

2.     INVENTORIES

Inventories  at  October  31,  1999  and  1998  are  comprised of the following:


                             1999        1998
------------------------  ----------  ----------

    Finished goods        $  773,616  $1,656,650
    Parts and materials      743,674      97,121
                          ----------  ----------
                          $1,517,290  $1,753,771
                          ==========  ==========

                                     33
<PAGE>
3.     PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at October 31, 1999 and 1998 are comprised of the
following:


                                      1999        1998
---------------------------------  ----------  ----------

    Machinery and equipment        $6,536,207  $5,753,540
    Furniture and fixtures          1,062,264   1,015,905
    Leasehold improvements            320,276     320,276
                                   ----------  ----------
                                    7,918,748   7,089,721
    Less accumulated depreciation
      and amortization              6,406,230   5,759,245
                                   ----------  ----------

                                   $1,512,518  $1,330,476
                                   ==========  ==========

Depreciation  and  amortization  expense totaled $664,787, $723,404 and $807,694
for  the  years  ended  October  31,  1999,  1998  and  1997,  respectively.

4.     CAPITALIZED  SOFTWARE  COSTS

Capitalized software costs at October 31, 1999 and 1998 are comprised of the
following:

                                  1999        1998
-----------------------------  ----------  ----------

Purchased software             $  584,166  $  315,916
Internally developed software     805,333     805,333
                               ----------  ----------
                                1,389,499   1,121,249
Less accumulated amortization   1,051,199     936,165
                               ----------  ----------
                               $  338,300  $  185,084
                               ==========  ==========

The  Company  capitalized  $268,250  and $206,800 of purchased software costs in
1999  and  1998,  respectively.  No  software  costs  were  capitalized in 1997.
Amortization  of  capitalized  software  costs  totaled  $115,034,  $297,304 and
$275,580  for  the  years  ended  October 31, 1999, 1998 and 1997, respectively.

5.     STOCKHOLDERS'  EQUITY

On  July  10,  1996 the Company issued and sold 167 shares of Series A Preferred
Stock  ("Series  A  Preferred")  for net proceeds of approximately $1.1 million.
The  issuance  of  Series  A  Preferred  was  exempt,  pursuant  to Regulation S
promulgated  under  the  Securities  Act  of  1933, as amended (the "Act"), from
registration requirements under the Act.  As of December 4, 1996 all outstanding
shares  of  Series  A Preferred had been converted into 240,083 shares of Common
Stock.

In  connection  with  the  sale  of  the  Series A Preferred, the Company issued
warrants  to  purchase  an  aggregate  of  93,703 shares of Common Stock with an
exercise price of $8.25 per share.  As of October 31, 1997, all the warrants had
been  exercised  on a net basis, which resulted in the issuance of 42,539 shares
of  Common  Stock.  All  the  warrants  had  expired  in  July  1999.

                                     34
<PAGE>
Additionally,  during  fiscal  1997,  the  Company issued 8,836 shares of Common
Stock  in  lieu  of $31,588 of dividends due on the convertible preferred stock.

On  December  15, 1997, the Company reincorporated in the state of Delaware.  In
connection  with  this  event,  the  Company  increased the number of authorized
shares  of  preferred  stock  to 2,000,000 shares and established a par value of
$0.001  for  both  its  common  and  preferred  stock.

On November 6, 1998 the Company made a loan to an officer and stockholder in the
amount of $622,800 under a two-year recourse promissory note bearing an interest
rate of 4.47 percent and collateralized by 145,313 shares of Common Stock of the
Company.  The loan was used to pay for the exercise of 139,400 shares of Company
stock  options  and  related taxes.  On April 16, 1999 the loan was increased to
$743,800.

In  May  1999, the Board of Directors authorized the Company to repurchase up to
100,000  shares of the Company's issued and outstanding common stock.  In fiscal
1999,  the  Company  repurchased  74,500  shares of its common stock in the open
market  for  an  aggregate  purchase  price  of  approximately  $358,312.

6.     INCOME  TAXES

The  components  of  the provision for (benefit from) income taxes for the years
Ended October  31,  1999,  1998  and  1997,  are  as  follows:


                                                    1999    1998      1997
                                                   ------  -------  ---------
Federal:
    Current                                       $  ---  $18,000  $(83,610)
    Deferred                                         ---      ---       ---
  State:
    Current                                        1,600   13,600     1,600
    Deferred                                         ---      ---       ---
                                                  ------  -------  ---------
      Total provision (benefit) for income taxes  $1,600  $31,600  $(82,010)
                                                  ======  =======  =========

The effective income tax rate differs from the statutory federal income tax rate
for  the  following  reasons:

                                                     1999    1998    1997
                                                    ------  ------  ------
    Statutory federal income tax rate                34.0%   34.0%   34.0%
    State taxes, net of federal income tax benefit    ---     ---     ---
    Change in valuation allowance                   (32.9)  (26.3)  (30.0)
    Refund of prior year taxes                        ---     ---    (5.5)
    Tax credits                                       ---     ---     ---
    Nontaxable interest income                        ---     ---     ---
    Other, net                                        ---     ---    (1.0)
                                                    ------  ------  ------
                                                      1.1%    7.7%  (2.5)%
                                                    ======  ======  ======



                                     35
<PAGE>
Significant components of the Company's deferred tax balances as of October 31,
1999 and 1998 are as follows:

                                                1999          1998
                                            ------------  ------------
Deferred tax assets:
    Current
      Accrued employee benefits             $    59,000   $    62,000
      Inventory allowances                      550,000       558,000
      Allowance for doubtful accounts            60,000        80,000
      Warranty accruals                          40,000        83,000

    Noncurrent
      Deferred rent                             156,000       164,000
      R&D credit carryforward                 1,358,000     1,115,000
      Alternative minimum tax carryforward      143,000       143,000
      Operating loss carryforward             1,413,000     1,252,000
      Investments                               130,000       130,000
      Capital loss carryforward                  74,000        74,000
                                            ------------  ------------
        Total deferred tax assets             3,274,000     3,661,000
                                            ------------  ------------
  Deferred tax liabilities:
    Noncurrent
      Depreciation                                9,000        48,000
      Capitalized software costs                149,000       192,000
                                            ------------  ------------
        Total deferred tax liabilities          158,000       240,000
                                            ------------  ------------

  Deferred tax asset valuation allowance     (4,141,000)   (3,901,000)
                                            ------------  ------------
    Net deferred tax assets                 $       ---   $       ---
                                            ============  ============

A  valuation allowance was established to offset certain deferred tax assets due
to  management's  uncertainty  of  realizing  the  benefit  of these items.  The
valuation  allowance  increased  by  $240,000  and  $524,000 for the years ended
October  31,  1999  and  1998,  respectively.  The  Company  has  research  and
experimentation tax credit carryforwards of $1,358,000 for federal and state tax
purposes.  These  carryforwards  expire in the periods ending 2007 through 2014.
The  Company  has  net operating loss carryforwards for federal and state income
tax purposes of approximately $3.6 million and $3.3 million, respectively, which
expire  in  periods  ending  2000  through  2019.

7.     COMMITMENTS

The  Company leases all its buildings under noncancelable operating leases which
expire  at  various  dates through the year 2006.  Future minimum lease payments
under  all operating leases, net of sublease proceeds, with initial or remaining
noncancelable  lease  terms  in  excess  of  one year at October 31, 1999 are as
follows:

Year ending October 31:
  2000                            $  424,333
  2001                               658,596
  2002                               677,717
  2003                               638,796
  2004                               638,796
  Thereafter                         904,961
                                  ----------

    Total minimum lease payments  $3,943,199
                                  ==========

                                     36
<PAGE>
Under  the  terms of the San Ramon, California building lease, rent includes the
lessor's operating costs and is offset by sublease proceeds.  The building lease
also  includes  two  five-year renewal options at market rates as defined by the
lease.  Rent  expense under all operating leases for the years ended October 31,
1999,  1998  and  1997  was  $588,734  (net  of  sublease proceeds of $360,000),
$657,142  (net  of  sublease proceeds of $363,750) and $664,409 (net of sublease
proceeds  of  $328,911),  respectively.

The Company is committed to purchase $2.7 million of electronics components from
a  vendor  before  February,  2000.  As  of  October  31,  1999, the Company had
purchased  $469,000  of  components  from  the  vendor.

8.     STOCK  OPTION  AND  STOCK  PURCHASE  PLANS

The Company has two employee stock option plans, the 1996 Stock Option Plan (the
1996  Plan)  and  the  1998  Non-Officer  Stock  Option  Plan  (the  1998 Plan).
Originally adopted as the 1987 Supplemental Stock Option Plan, the 1996 Plan was
amended  and  restated  on  January  18, 1996 and retitled the 1996 Stock Option
Plan.  A  total  of 1,330,000 shares of common stock are reserved under the 1996
Plan.  The  Company's Board of Directors adopted the 1998 Plan on June 15, 1998.
A  total  of  300,000  shares  of common stock are reserved under the 1998 Plan.
Stock  options  granted  under  the  1996  and 1998 Plans are exercisable over a
maximum  term  of ten years from the date of grant, vest in various installments
over this period and have exercise prices reflecting market value at the date of
grant.

In July 1998, due to the reduced market price of the Company's common stock, the
Company offered employees the opportunity to cancel their existing options under
the  1996  Plan  and have the options reissued under the 1998 Plan at a price of
$5.125.  The  new  options  retain  their  original  vesting  periods  but carry
restrictions  of  certain  rights  that  had  existed  under the original option
grants.

Additionally,  in  1991,  stockholders  approved  a "Non-Employee Director Stock
Option  Plan."  A  total  of  140,000  shares  of  common stock are reserved for
issuance under this plan.  Options granted under this plan vest over a four-year
period,  expire  five  years  after  the  date of grant and have exercise prices
reflecting  market  value  at  the  date  of  grant.

At  October  31,  1999  and 1998, 286,245 and 326,470 shares, respectively, were
available  for  stock  option grants under the 1996 Plan.  A total of 64,200 and
100,300  shares were available for grant under the 1998 Plan at October 31, 1999
and  1998, respectively.  A total of 65,750 and 52,000 shares were available for
grant  under  the  Non-Employee  Director  Plan  at  October  31, 1999 and 1998,
respectively.

                                     37
<PAGE>
A  summary  of  the  activity  under  the stock option plans is set forth below:

                                                                     Weighted
                                                                      Average
                         Number of       Price Per      Aggregate    Exercise
                          Shares           Share          Price        Price
                      ---------------  --------------  ------------  ---------
[S]                   [C]              [C]             [C]           [C]
Outstanding at
    October 31, 1996         842,200    $4.13 -$13.00    5,545,900   $    6.59

  Granted                    222,100     3.69 - 17.25    1,296,903        5.84
  Terminated                (245,937)    3.75 - 13.50   (1,952,804)       7.94
  Exercised                 (102,588)     4.38 - 9.75     (571,011)       5.57
                      ---------------  --------------  ------------  ---------

  Outstanding at
    October 31, 1997         715,775     3.69 - 17.25    4,318,988        6.03

  Granted                    453,650     3.44 - 15.50    3,436,502        7.58
  Terminated                (324,100)    3.69 - 17.25   (2,838,040)       8.76
  Exercised                  (20,325)     3.69 - 8.93     (100,908)       4.96
                      ---------------  --------------  ------------  ---------

  Outstanding at
    October 31, 1998         825,000     3.44 - 13.00    4,816,541        5.84

  Granted                    418,500      3.50 - 8.63    2,808,974        6.71
  Terminated                (255,925)     3.44 - 9.50   (1,386,797)       5.42
  Exercised                 (194,750)     3.69 - 5.13     (833,446)       4.28
                      ---------------  --------------  ------------  ---------

  Outstanding at
    October 31, 1999         792,825     3.50 - 13.00    5,405,272        6.82
                      ===============                  ============

  Exercisable at
    October 31, 1999         266,233   $3.63 - $13.00  $ 1,669,993   $    6.27
                      ===============                  ============



                                     38
<PAGE>
The  following  table  summarizes  information  with  respect  to  stock options
outstanding  at  October  31,  1999:

                            Options Outstanding            Options Exercisable
                            -------------------            -------------------

                                            Weighted
                                  Average       Weighted                Weighted
                   Number        Remaining       Average     Number     Average
   Range of     Outstanding   Contractual Life  Exercise  Exercisable   Exercise
Exercise Price  at 10/31/99       (years)         Price   at 10/31/999   Price
--------------  -----------  -----------------  --------  ------------  --------
[S]             [C]          [C]                [C]       [C]           [C]
$3.45 - $5.18       369,475         4.6           $4.72      171,433     $ 4.67
 5.18 -  6.90        77,750         5.5            5.60       21,675       5.37
 6.90 -  8.63       238,100         5.5            7.99       27,500       7.97
 8.63 - 10.35         5,000         0.4            9.50        5,000       9.50
10.35 - 12.08        22,500         3.1           10.50       16,875      10.50
12.08 - 13.00        80,000         5.1           13.00       23,750      13.00
                 -----------                                 --------

                    792,825                                  266,233
                 ===========                                 ========

The  Company has an Employee Stock Purchase Plan (the Purchase Plan) under which
200,000  shares  of  common stock have been reserved for issuance.  The Purchase
Plan  allows  participating  employees  to purchase, through payroll deductions,
shares  of  the  Company's common stock at 85 percent of the stock's fair market
value  at  specified  dates.  At October 31, 1999, 68 employees were eligible to
participate  in the Purchase Plan and 80,446 shares were available for issuance.
In fiscal year 1999, 1998 and 1997, 19,641, 19,550 and 13,612 shares were issued
under  the  Purchase  Plan,  respectively.

In  fiscal  1997,  the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation."  The  Company  accounts  for  stock options under its three plans
under  APB Opinion No. 25, under which no compensation cost has been recognized.
Had compensation cost for these plans been determined pursuant to the provisions
of  SFAS  No.  123, the Company's pro forma net income (loss) would have been as
follows:

Years ended October 31                     1999         1998        1997
                                       ------------  ----------  ----------

Pro forma net (loss) income            $(1,241,358)  $(983,566)  $2,516,518
Pro forma net (loss) income per share  $     (0.43)  $   (0.37)  $     0.93

The  fair value of each option grant is estimated on the date of grant using the
Black-Scholes  option  pricing  model  with  the  following  weighted-average
assumptions:

Options granted in years ended October 31    1999    1998    1997
                                            ------  ------  ------

Expected life (in years)                     5.00    5.00    6.45
Risk-free interest rate                      6.00%   4.50%   7.00%
Volatility                                  92.00%  91.00%  93.41%
Dividend yield                               0.00%   0.00%   0.00%

The  weighted  average estimated fair value of each option granted during fiscal
1999,  1998  and  1997  was  $4.99,  $7.53  and  $5.32,  respectively.

                                     39

Because  the  SFAS  No. 123 method of accounting has not been applied to options
granted prior to November 1, 1995, the resulting pro forma compensation cost may
not  be  representative  of  that  to  be  expected  in  future  years.

9.     EMPLOYEE  SAVINGS  AND  INVESTMENT  PLAN

The  Company  contributes  a  percentage  of  income before income taxes into an
employee  savings and investment plan.  The percentage is determined annually by
the  Board  of  Directors.  These  contributions are payable annually, vest over
five  years and cover substantially all employees who have been with the Company
at  least  one  year.  Additionally,  the Company makes matching payments to the
employee  savings  and  investment  plan  of  50  percent  of  each  employee's
contribution  up  to  three  percent  of  employees'  earnings.

For  the  years  ended  October 31, 1999, 1998 and 1997, total expense under the
above  plan  was  $121,530,  $173,847  and  $279,899,  respectively.

10.     CONCENTRATION  OF  CREDIT  RISK  AND  SIGNIFICANT  CUSTOMERS

The Company's trade accounts receivable are concentrated among a small number of
customers,  principally  located  in the United States.  Two customers accounted
for 52 and 16 percent, respectively, of total accounts receivable at October 31,
1999,  and one customer accounted for 80 percent of total accounts receivable at
October  31, 1998.  Ongoing credit evaluations of customers' financial condition
are  performed and, generally, no collateral is required.  The Company maintains
an  allowance  for doubtful accounts for potential credit losses, and actual bad
debt  losses  have  not  been  material  and  have  not  exceeded  management's
expectations.  Trade  accounts  receivable  are  recorded  net  of allowance for
doubtful  accounts  of  $150,000  and  $200,000  at  October  31, 1999 and 1998,
respectively.

Sales  to  individual  customers  in  excess  of  10 percent of net sales of the
Company  included  sales  to  Compaq Computer of $12.6 million in 1999; sales to
Compaq  Computer and Motorola of $9.4 million and $2.8 million, respectively, in
1998  and  sales  to  Tandem  Computers,  Motorola, and Silicon Graphics of $8.8
million,  $3.8  million  and $3.0 million, respectively, in 1997.  International
sales  accounted  for  4 percent and 5 percent of total sales during fiscal 1999
and  fiscal  1998,  respectively.

                                     40
<PAGE>
11.     QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>

(in thousands except                            First      Second      Third     Fourth
  per share amounts)                           Quarter     Quarter    Quarter    Quarter
-------------------------------------------  -----------  ---------  ---------  ---------
<S>                                          <C>          <C>        <C>        <C>

  1999:  Net sales                           $    6,518   $  3,760   $  3,533   $  4,211
         Gross profit                             4,267      2,483      2,067      2,517
         Net income (loss)                        1,230       (172)      (436)      (471)
         Basic earnings (loss) per share     $     0.44   $  (0.06)  $  (0.15)  $  (0.17)
         Diluted earnings (loss) per share   $     0.41   $  (0.06)  $  (0.15)  $  (0.17)

  1998:  Net sales                           $    4,444   $  4,412   $  4,041   $  6,088
         Gross profit                             2,722      2,768      2,438      3,539
         Net (loss) income                         (469)      (241)       154        936
         Basic (loss) earnings per share     $    (0.18)  $  (0.09)  $   0.06   $   0.35
         Diluted (loss) earnings per share   $    (0.18)  $  (0.09)  $   0.06   $   0.35
</TABLE>




                                     41
<PAGE>
<TABLE>
<CAPTION>

                                  SBE, INC.
                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                 FOR THE YEARS ENDED OCTOBER 31, 1999 AND 1998


             Column A                   Column B         Column C         Column D         Column E
           ------------              --------------  ---------------   ---------------  -------------
                                        Balance at       Additions                        Balance at
                                        Beginning    charged to costs                       End of
            Description                 of Period      and expenses     Deductions (a)      Period
-----------------------------------  --------------  ----------------  ---------------  -------------
<S>                                   <C>            <C>               <C>              <C>
YEAR ENDED OCTOBER 31, 1999

Allowance for Doubtful Accounts       $    200,000               ---          (50,000)   $    150,000
Allowance for Obsolete Inventory         1,400,000           100,802         (119,432)      1,381,370
Allowance for Warranty Claims              207,445           (33,233)         (73,164)        101,049
Allowance for the Deferred Tax asset     3,901,000           240,000              ---       4,141,000

YEAR ENDED OCTOBER 31, 1998

Allowance for Doubtful Accounts       $    169,205            32,373           (1,578)   $    200,000
Allowance for Obsolete Inventory         1,022,463           353,461           24,076       1,400,000
Allowance for Warranty Claims              251,957            47,410          (91,922)        207,445
Allowance for the Deferred Tax asset     3,377,000           524,000              ---       3,901,000
</TABLE>







                                     42