Shell Game

6:00 PM -- While Neonode's takeover of iSCSI software company SBE through a reverse merger today is an unusual way for a company to go public, it is not unprecedented. (See Troubled SBE Pulls a Reverse.)

Several storage companies have gone public that way, most prominently FalconStor. FalconStor pulled a reverse merger with shell company Network Peripherals in 2001. (See FalconStor Completes Merger, Joins Nasdaq.) Nearly five years later, FalconStor is still around.

There was also a reverse merger between storage service provider Managed Services Inc. (MSI) and archive management software vendor Front Porch in 2004. Front Porch technically paid $39 million in stock for MSI, but the SEC filing listed it as a reverse merger with MSI acquiring Front Porch. The merged companies became publicly traded Incentra, but Front Porch remained a separate division until Incentra sold it off to Genuity Capital Partners for $38 million last August. Incentra continues as a managed services provider.

The most recent - and ill-fated -– storage reverse merger before today came in December 2004, involving iStorage Networks and a shell company called Camryn Information Services. (See Suppliers Move From Pink to Public.) iStorage was traded on the pink sheets with an opening price of $0.02 and no products. Not surprisingly, it crashed after barely six months. (See Pink Sheets to Pink Slips.)

Whether mobile phone company Neonode makes it or not isn't of much interest to the storage world. The only concern is if it can find a home of SBE's IP SAN software where the product can have more success than it did with SBE.— Dave Raffo, News Editor, Byte and Switch