SecProbe.io

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COOLEY GODWARD LLP                          ATTORNEYS AT LAW     BROOMFIELD, CO
                                                                 720 566-4000
                                            One Maritime Plaza   Palo Alto, CA
                                            20th Floor
                                            San Francisco, CA    Reston, VA
                                            94111-3580           703 456-8000
                                            Main 415 693-2000    San Diego, CA
                                            Fax  415 951-3699    858 550-6000

                                            www.cooley.com

                                           JODIE M. BOURDET
                                           (415) 693-2054
                                           jbourdet@cooley.com

June 15, 2005

VIA EDGAR AND FACSIMILE

Ms. Barbara Jacobs
Mr. Morgan Youngwood
Ms. Melissa Walsh
U.S. Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, DC 20549

Re:      SBE, Inc.
         Preliminary Proxy Statement on Schedule 14A filed May 5, 2005, amended
         June 6, 2005 (File No. 000-08419) Form 10-K for the Fiscal Year Ended
         October 31, 2004, filed January 14, 2005 (File No. 000-08419)

Dear Ms. Jacobs, Mr. Youngwood and Ms. Walsh:

On behalf of our client, SBE, Inc. (the "Company"), this letter responds to your
letter dated June 14, 2005, setting forth the latest comments of the Staff (the
"Staff") of the Securities and Exchange Commission regarding the
above-referenced filings (the "Comment Letter"). This letter, which has also
been filed electronically with the Securities and Exchange Commission, contains
the Company's supplemental responses to the Staff's comments. The text of the
Staff's comments has been included in this letter in italics for your
convenience, and we have numbered the paragraphs below to correspond to the
numbering of the Comment Letter. A hard copy of this letter, together with
proposed amendments to the above-referenced proxy statement responsive to the
Staff's comments, has been sent via facsimile to each of the addressees named
above.

As you know, the Company needs the funds from the proposed financing, or needs
to seek alternative funding, by July 31 in order to continue operations. The
merger agreement relating to the PyX acquisition and the unit purchase agreement
for the proposed financing may both be terminated by the other parties to such
agreements if closing does not occur by such date. Accordingly, we respectfully
request the Staff's immediate attention to the following responses. Should the
Staff have any remaining questions or comments after reviewing the following, we
propose that to have a conference call with representatives of the Company, the
Staff and possibly representatives from BDO Seidman LLP, the Company's
independent auditors, to resolve such remaining questions and comments.

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COOLEY GODWARD LLP

Ms. Barbara Jacobs
Mr. Morgan Youngwood
Ms. Melissa Walsh
June 15, 2005
Page Two

Preliminary Proxy Statement filed May 5, 2005

Pro Forma Unaudited Financial Statements

1.    Comment: We note from the revision to pro forma adjustment (b) that the
      amount allocated to intellectual property was increased to $7,913,000 from
      $7,088,000 in Amendment No. 1. Explain the basis for this increase and how
      you determined the fair value of the intellectual property. Provide us
      with an explanation of the assumptions used in your calculation.

    Response: In the PyX acquisition, the Company will issue 2,561,050 shares of
      its common stock, with an assumed value of $3.09 per share, in respect of
      all outstanding PyX capital stock. The assumed price per share is based on
      the average closing price for the Company's common stock over the period
      beginning five trading days prior to and ending five trading days after
      the date the merger agreement was signed, March 28, 2005. In the
      initially-filed version of the proxy statement, the Company incorrectly
      used a per share price that was inconsistent with EITF 99-12 to calculate
      the $7,088,000 intellectual property allocation and corrected the per
      share price to be consistent with EITF 99-12 guidelines in Amendment 1 to
      the proxy statement.

      The Company has determined, in accordance with paragraphs 36-39 and
      Appendix A of SFAS 141, that the entire purchase price for the PyX
      acquisition should be allocated to PyX's intellectual property. PyX is a
      development stage company. PyX has no significant tangible assets.
      Further, at the time our negotiation for acquisition, PyX had no
      identifiable customers or similar contractual rights, as described in
      paragraph A10 of SFAS 141, that would be developed over a business'
      history. The Company has determined that only the intellectual property is
      considered separable property as outlined in paragraph A11 of SFAS 141.
      While the founding employees may be considered key to the company, we do
      not believe that the employees meet the criteria of paragraph B168 and
      B169 of SFAS 141 as an assembled workforce. This is because each of the
      five PyX employees joining the Company bring to the table only the
      development of the intellectual property and will be provided fair value
      compensation over a defined employment agreement period.

2.    Comment: Please refer to comment No. 3 in our letter dated May 26, 2005,
      We note that you do not consider the stock options to be assumed to be
      part of the purchase price calculation. However, paragraph 85 of FIN 44

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COOLEY GODWARD LLP

Ms. Barbara Jacobs
Mr. Morgan Youngwood
Ms. Melissa Walsh
June 15, 2005
Page Three

      indicates that the fair value of unvested stock options should be
      considered part of the purchase price for an acquiree and the purchase
      price should be allocated to unearned compensation based on the intrinsic
      value of the unvested options. As explained in paragraph 148 of FIN 44,
      the unvested awards represent a form of residual equity interests that
      should be included in the purchase price for the combination. Explain how
      you considered this guidance in determining not to include the fair value
      of the stock options to be assumed in your calculation of the purchase
      price.

      Response: The Company allocated the intrinsic value of the assumed options
      to unearned compensation pursuant to authority provided by Paragraph 148
      of FIN 44. While paragraph 148 of FIN 44 does indeed state that "The Board
      was persuaded by respondents' comments that the fair value of unvested
      awards granted by an acquirer in a purchase business combination for
      awards held by employees of the acquiree should be included in the
      purchase price for the acquiree under Opinion 16," paragraph 148 goes on
      to provide "However, to the extent that service is required subsequent to
      the consummation date of the acquisition in order to vest in the
      replacement awards, a portion of the intrinsic value (if any) of the
      unvested awards at the consummation date should be allocated to unearned
      compensation and recognized as compensation cost over the remaining future
      service period."

      In this instance, the outstanding options to purchase shares of PyX common
      stock will be assumed by the Company and converted into the right to
      receive an aggregate of 2,038,950 shares of the Company's common stock
      upon exercise of the underlying options. These options are all unvested
      and will remain unvested at the time of the closing. In order for such
      options to vest, the optionees' service is required subsequent to the
      consummation date of the acquisition. Accordingly, the intrinsic value was
      allocated to unearned compensation.

Unaudited Pro Forma Condensed Combined Statements of Operations, page 44

3.    Comment: Revise to indicate the number of securities that could
      potentially dilute pro forma basic loss per share in the future that were
      not included in the computation of pro forma diluted loss per share
      because to do so would have been antidilutive for the periods presented.

      Response: In response to the Staff's comment, the Company will add
      footnote disclosure to reflect the number of securities that could
      potentially dilute pro forma basic net loss per share. This proposed
      footnote disclosure has been provided supplementally to the Staff via
      facsimile.

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COOLEY GODWARD LLP

Ms. Barbara Jacobs
Mr. Morgan Youngwood
Ms. Melissa Walsh
June 15, 2005
Page Four

Management's Discussion and Analysis of Financial Condition and Results of
Operations of PyX

Results of Operations, page 52

4.    Comment: In your discussion of the comparison of the quarters ended March
      31, 2005 and 2004, you state that operating expenses for the quarter ended
      March 31, 2005 were $293,850 and net loss for the same period was
      $294,850. Reconcile these figures to those reported on the face of the
      statements of operations of PyX on page 58.

      Response: The Company will correct the typographical errors noted by the
      Staff. The proposed corrections have been provided supplementally to the
      Staff via facsimile.

Form 10-K:  For the Fiscal Year Ended October 31, 2004

Financial Statements

Note 1.  Summary of Significant Accounting Policies

Refundable Deposit, page 55

Prior Comment No. 4

5.    Comment: We note that the negotiated termination terms include a provision
      for the execution of a Services Agreement that you entered into on April
      28, 2003. Further explain how you considered this additional deliverable
      in determining that all the criteria for revenue recognition had occurred
      at the point the renegotiated contract was executed.

      Response: The forfeiture of the $4,423,000 remaining rebate was not
      dependent upon SBE and HP executing a services agreement or requiring the
      delivery of any additional services or product. The Company believes the
      termination agreement does not give rise to any of the criteria of
      paragraph 9 or Exhibit 00-21A of EITF 00-21 as a separate unit of
      accounting. Rather, the parties only agreed "to negotiate in good faith"
      to have a Services Agreement in place by December 31, 2002 and the
      successful or unsuccessful outcome of those negotiation had no impact on
      the valuation or collectibility of the forfeited refundable deposit.

      Based on SEC Staff Account Bulletin 104 guidelines, revenues should not be
      recognized until they are realized or realizable and earned. Revenues
      generally are realized or realizable and earned when all of the following
      criteria are met:

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COOLEY GODWARD LLP

Ms. Barbara Jacobs
Mr. Morgan Youngwood
Ms. Melissa Walsh
June 15, 2005
Page Five

o     Persuasive evidence of an arrangement exists,

      The Company believes this criteria was met because a signed renegotiated
      contract between the Company and HP was in place.

o     Delivery has occurred or services have been rendered,

      As of October 31, 2002, no elements remained to be delivered under the
      renegotiated contract that would cause the forfeiture of the refundable
      deposit to be vacated. The Company has met all the criteria set-out in
      Item 3, including point 5 related to performance criteria of SAB 104.
      Further, the agreement did not require the passage of time to meet the
      terms of the termination agreement.

o     The seller's price to the buyer is fixed or determinable, The price was
      clearly set forth in the terms of the renegotiated contract. and

o     Collectibility is reasonably assured.

      The criteria was met because the Company collected the cash prior to the
      signing of the renegotiated contract.

      As a result, in this case, the Company believes it completed all the
      activities necessary to both realize and recognize the revenue associated
      with the forfeiture of the HP refundable deposit per FASB Concepts
      Statement No. 5 Recognition and Measurement in financial Statements of
      Business Enterprises and SAB 104.

Note 15.  Loan to Officer, page 69

Prior Comment No. 5

6.    Comment: You indicate that since the stock sale transaction that provided
      the proceeds for the remaining $239,000 occurred subsequent to the end of
      fiscal 2003, the reversal of the remaining loan reserve was not recorded
      until the first quarter of fiscal 2004. Based on your disclosure on page
      35, the remaining $239,000 was received in November 2003, which was prior
      to the issuance of your fiscal 2003 financial statements. Further explain
      why it was appropriate to provide for a full valuation allowance against
      the remaining loan balance of $239,000 as of October 31, 2003 in light of
      this subsequent event.

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COOLEY GODWARD LLP

Ms. Barbara Jacobs
Mr. Morgan Youngwood
Ms. Melissa Walsh
June 15, 2005
Page Six

      Response: The Company established the loan valuation allowance at the end
      of fiscal 2003 based on market conditions and the financial ability of the
      CEO to repay the outstanding loan principal balance at that time. At
      October 31, 2003, the Company was aware that the CEO had not yet sold his
      remaining Company common stock and did not yet have any proceeds available
      or the financial wherewithal to repay the remaining $239,000 unpaid
      balance of the loan. At October 31, 2003, no economic event occurred to
      provide us with the basis to reverse the previous loan write-down. The
      Company considered Paragraph 16 of SFAS 114 to determine recovery. In
      particular, the Company considered whether there were significant changes
      as discussed in paragraph 16 and believe that the CEO's ability to pay was
      still fully dependent on the underlying stock being liquidated.

      The Company also considered paragraph 17 of SFAS 5 as the potential
      recovery of this loan was considered a gain contingency. In accordance
      with SFAS 5, paragraph 17, the Company did not believe it appropriate to
      recognize the recovery of a previously reserved item prior to its economic
      realizability. Because the amount was due from a related party, the
      Company believed it appropriate to not realize the recovery of the loan
      amount until the cash was either received or, as in the case of the
      $142,000, in the hands of the transacting broker.

      However, although it would not have been appropriate under such authority
      for the Company to record a reversal of the previous loan write-down at
      October 31, 2003, the Company did disclose the receipt of payment of the
      remaining loan balance subsequent to October 31, 2003 in Footnote 15 -
      Loan to Officer and in the Liquidity section of the Management's
      Discussion and Analysis section of its Form 10-K for fiscal 2003.

      Please do not hesitate to call David Brunton, the Chief Financial Officer
      of SBE, Inc., at (925) 355-7700, me at (415) 693-2054 or Chrystal Jensen
      at (415) 693-2235 if you have any questions or would like additional
      information regarding this matter.

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COOLEY GODWARD LLP

Ms. Barbara Jacobs
Mr. Morgan Youngwood
Ms. Melissa Walsh
June 15, 2005
Page Seven

Very truly yours,

/s/ Jodie M. Bourdet

cc:      Daniel Grey, SBE, Inc.
         David Brunton, SBE, Inc.
         Lee Duran, BDO Seidman LLP
         Chrystal Jensen, Cooley Godward LLP

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