netGuru Reports Fiscal 2007 First Quarter Financial Results From Continuing Operations; Excludes...

YORBA LINDA, Calif. -- netGuru, Inc. (Nasdaq: NGRU) reported financial results for fiscal 2007 first quarter ended June 30, 2006.

In November 2005, the Company completed the sale of its Research Engineers International ("REI") business to Bentley Systems, Incorporated, and in

Since November 2005, the special committee appointed by the Company's board of directors has been evaluating the possible divestiture of some of or all of the Company's remaining assets and operations, as well as possible mergers and/or strategic acquisitions for the Company and its information technology, collaborative software, and engineering business process outsourcing businesses. Discussions with a number of public and private entities have been, or are being, held. The Company anticipates entering into a merger and/or a sale agreement with one or more parties, but neither the timing nor completion of a transaction can be assured. However, due to the probability of the sale of the India operations of the Company, those operations are reported as assets and liabilities held for sale.

Net revenues for the quarter were $870,000, compared to $796,000 in first-quarter fiscal 2006. Revenues from collaborative software sales and services were $450,000, compared to $242,000 in first-quarter last year; revenues from IT services were $420,000, compared to $554,000 in first-quarter fiscal 2006. Gross profit for the quarter was $509,000 versus $407,000 in first quarter a year ago.

Total operating expenses for the quarter were $880,000 versus $688,000 in first-quarter fiscal 2006 due primarily to higher sales, general, and administrative expenses reflecting, in part, costs related to the Company's ongoing evaluations of strategic alternatives for its remaining operations. Operating loss for the quarter was $371,000, compared to an operating loss of $281,000 in first-quarter last year.

Net loss for the quarter was $452,000, or $0.02 per share on 19,235,041 shares outstanding, and included a loss from discontinued operations of $82,000. For fiscal 2006 first quarter, net loss was $334,000, or $0.02 per share on 19,117,154 shares outstanding, and included income from discontinued operations of $80,000.

The Company also stated that future capital requirements depend upon sales and marketing efforts, the development of new products and services, possible future corporate mergers or strategic acquisitions or divestitures, the progress of research and development efforts, competitive products and services, and other factors. The Company believes that the proceeds remaining from its sale of its REI business, together with its operating revenues and the proceeds from the sale of its French subsidiary, will be adequate to extinguish all of its remaining liabilities and fund its current operations through at least October 2006. However, to the extent the Company is in need of any additional financing, there can be no assurance that any such additional financing will be available on acceptable terms, or at all. In addition, any future financing may cause significant dilution to existing stockholders.

About netGuru

netGuru is an engineering services company offering engineering business process outsourcing (EBPO) services for the architecture, engineering, and construction (A/E/C) industry; document/project collaboration software/solutions for A/E/C companies, enterprise software providers, software integrators, and other businesses engaged in document/project-centric operations; and technical services and support. netGuru offices are located in the United States, Europe, and India. For more information, please visit www.netguru.com.

Safe Harbor Statement under the Private Securities Litigation

Reform Act of 1995:

With the exception of historical or factual information, other matters discussed in this press release, including opportunities for the Company's remaining operations, discussions with interested parties, progress being made, timing and completion of any agreement, sufficiency of the Company's assets and revenues, and the need for and availability and terms of additional financing, are forward looking statements that involve risks and uncertainties. Actual future results may differ. Factors that could cause or contribute to such differences in results include, but are not limited to, the special committee's and Company's ability to identify, negotiate and consummate any divestiture or other strategic transaction, netGuru's ability to conserve resources and implement further reductions in ongoing expenses and/or increase revenues, market conditions regionally and worldwide, demand for collaborative and IT products and services, technological change, economic conditions, changes in governmental regulations and policies, competitive products and services, unforeseen issues, and other factors discussed in the "Risk Factors" Section and other sections of the Company's Form 10-KSB for the fiscal year ended March 31, 2006, and other filings made with the U.S. Securities and Exchange Commission.

NETGURU, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)
          ($ in thousands except share and per share amounts)

                                                 Three Months Ended
                                                      June 30,
                                              ------------------------
                                                 2006         2005
                                              -----------  -----------
Net revenues:
  Collaborative software products and
   services                                  $       450  $       242
  IT services                                        420          554

                                              -----------  -----------
        Total net revenues                           870          796
                                              -----------  -----------
Cost of revenues:
  Collaborative software products and
   services                                           54            1
  IT services                                        307          388

                                              -----------  -----------
        Total cost of revenues                       361          389

                                              -----------  -----------
        Gross profit                                 509          407
                                              -----------  -----------

Operating expenses:
  Selling, general and administrative                738          482
  Research and development                           108          150
  Depreciation                                        34           56

                                              -----------  -----------
        Total operating expenses                     880          688
                                              -----------  -----------

        Operating loss                              (371)        (281)
                                              -----------  -----------

Other (income) expense                                (1)         123
                                              -----------  -----------

Loss from continuing operations before income
 taxes                                              (370)        (404)
Income tax expense                                     -           10
                                              -----------  -----------
   Loss from continuing operations                  (370)        (414)
                                              -----------  -----------

(Loss) income from discontinued operations           (82)          80
                                              -----------  -----------

                    Net loss                 $      (452) $      (334)
                                              ===========  ===========

Basic and diluted net loss per common share:
    Net loss per common share from continuing
     operations                              $     (0.02) $     (0.02)
    Net income per common share from
     discontinued operations                 $         -  $         -
                                              -----------  -----------
  Basic and diluted loss per common share          (0.02)       (0.02)
                                              ===========  ===========

Common equivalent shares used in computing
 basic and diluted net loss per common share  19,235,041   19,117,154
                                              ===========  ===========


                    NETGURU, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
          (In thousands, except share and per share amounts)

                                                  June 30,
                                                    2006     March 31,
                                                 (Unaudited)   2006
                                                 ----------- ---------
                     Assets
Current assets:
  Cash and cash equivalents                     $     2,197  $  2,497
  Restricted cash                                         -     1,070
  Accounts receivable (net of allowance for
   doubtful accounts of $20 of June 30, 2006 and
   March 31, 2006)                                      368       606
  Note receivable                                        38       103
  Prepaid expenses and other current assets             134       239
     Assets held for sale                             1,995     2,133
                                                 -----------  --------
        Total current assets                          4,732     6,648

Property and equipment, net                             151       179
Other assets                                            105       109
                                                 -----------  --------
                                                $     4,988     6,936
                                                 ===========  ========

      Liabilities and Stockholders' Equity
Current liabilities:
  Current portion of capital lease obligations          118       117
  Accounts payable                                      158       205
  Accrued expenses                                      244       451
  Income taxes payable                                   32        52
  Deferred revenues                                      87       199
  Accrued settlement for REI sale                         -       760
  Other liabilities                                      34        53
  Liabilities held for sale                             451       717
                                                 -----------  --------
        Total current liabilities                     1,124     2,554

Capital lease obligations, net of current
 portion                                                106       136
Deferred gain on sale-leaseback                         591       608
                                                 -----------  --------
        Total liabilities                             1,821     3,298
                                                 -----------  --------
Stockholders' equity:
  Preferred stock, par value $.01 (Authorized
   5,000,000 shares; no shares issued and
   outstanding)                                           -         -
  Common stock, par value $.01; authorized
   150,000,000 shares; 19,235,041 shares
   outstanding as of June 30, 2006 and March 31,
   2006                                                 192       192
  Additional paid-in capital                         20,685    20,685
  Accumulated deficit                               (17,014)  (16,563)
  Accumulated other comprehensive loss:
     Cumulative foreign currency translation
      adjustments                                      (696)     (676)
                                                 -----------  --------

        Total stockholders' equity                    3,167     3,638
                                                 -----------  --------
                                                $     4,988     6,936
                                                 ===========  ========