netGuru Reports Fiscal 2006 Fourth Quarter and Year-End Financial Results from Continuing Operations; Excludes REI and French Subsidiary Due to Sale

YORBA LINDA, Calif.—(BUSINESS WIRE)—June 30, 2006— netGuru, Inc. (Nasdaq: NGRU) reported financial results for fiscal 2006 fourth quarter and fiscal year ended March 31, 2006. On November 18, 2005, the Company completed the sale of its Research Engineers International ("REI") business to Bentley Systems, Incorporated, and in January 2006 the Company sold its French subsidiary. All amounts pertaining to the Company's REI business and French subsidiary are accounted for as discontinued operations. Final fiscal 2006 year-end results included a net gain on sale of the REI business of $21.5 million.

Net revenues for the quarter were $1.10 million, compared to $1.13 million in fourth-quarter fiscal 2005. Revenues from collaborative software sales and services were $274,000, compared to $203,000 in fourth-quarter last year; revenues from IT services were $822,000, compared to $926,000. Gross profit for the quarter was $517,000 versus $554,000 in fourth-quarter a year ago.

Total operating expenses for the quarter increased $360,000 to $1.56 million from $1.20 million in fourth-quarter fiscal 2005 due primarily to an increase in lawsuit settlements and professional fees. Operating loss for the quarter was $1.04 million, compared to an operating loss of $647,000 in fourth-quarter last year.

Net loss for the quarter was $1.85 million, or $0.10 per share, and included a loss from continuing operations of $927,000, or $0.05 per share, and a loss from discontinued operations of $925,000, or $0.05 per share. For fiscal 2005 fourth quarter, net income was $138,000, or $0.01 per diluted share, and included a loss from continuing operations of $769,000, or $0.04 per diluted share, and income from discontinued operations of $907,000, or $0.05 per diluted share.

Net revenues for fiscal 2006 were $3.87 million, compared to $4.55 million in fiscal 2005. Net revenues from collaborative software products and services were $969,000 versus $748,000 in fiscal 2005, and net revenues from IT services were $2.90 million versus $3.80 million in the prior fiscal year. Gross profit for fiscal 2006 was $1.63 million, compared to $1.99 million in fiscal 2005.

Operating expenses for fiscal 2006 totaled $7.76 million, which included an impairment charge of $2.92 million to account for a third-quarter write off of goodwill related to the IT services and collaborative software divisions. Operating expenses in fiscal 2005 were $4.38 million. Operating loss for fiscal 2006 was $6.13 million versus an operating loss of $2.39 million in fiscal 2005.

Net income for fiscal 2006 was $14.7 million, or $0.77 per diluted share, and included a loss from continuing operations of $6.57 million, or $0.34 per diluted share, and income from discontinued operations of $21.2 million, or $1.11 per diluted share. Net loss for fiscal 2005 was $788,000, or $0.04 per basic share, and included a loss from continuing operations of $2.79 million, or $0.15 per basic share, and income from discontinued operations of $2.00 million, or $0.11 per basic share.

The Company commented that a special committee of its 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 public and private entities have been, or are being, held involving potential asset purchases, common stock purchases, and reverse mergers. The Company anticipates entering into merger and/or sale agreement(s) with one or more parties; however, neither the timing nor completion of a deal can be assured.

The Company further commented that its future capital requirements will depend upon many factors, including 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, and the status of competitive products and services. The Company believes that the proceeds that remain 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 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 BALANCE SHEETS
          (In thousands, except share and per share amounts)


                                              March 31,     March 31,
                                                2006          2005
                                             -----------   -----------
Current assets:
  Cash and cash equivalents                 $     2,749   $     3,619
  Restricted cash                                 1,217            62
  Accounts receivable (net of allowance
   for doubtful accounts of $275 and $199,
   as of March 31, 2006 and March 31,
   2005, respectively)                              882         1,568
  Income tax receivable                               -            11
  Notes and related party loans receivable          103            12
  Deposits                                           69            96
  Prepaid expenses and other current
   assets                                                                754                      923
    Assets  held  for  sale                                                                -                  4,062
                                                                                          -----------      -----------
                Total  current  assets                                            5,774                10,353

Property,  plant  and  equipment,  net                                1,053                  1,065
Goodwill                                                                                            -                  2,931
Other  assets                                                                                109                      144
                                                                                          -----------      -----------
                                                                                        $          6,936      $        14,493
                                                                                          ===========      ===========

Current  liabilities:
    Current  portion  of  long-term  debt,  net
      of  discount  of  $18  and  $222,  as  of  
      March  31,  2006  and  March  31,  2005
      respectively                                                          $                57      $          1,397
    Current  portion  of  capital  lease
      obligations                                                                            135                      133
    Accounts  payable                                                                    314                      173
    Income  taxes  payable                                                              60                        29
    Accrued  expenses                                                                    910                      542
    Deferred  revenues                                                                  207                      409
    Accrued  settlement  for  REI  sale                                      760                          -
    Other  liabilities                                                                    53                        63
    Liabilities  held  for  sale                                                      -                  3,334
                                                                                          -----------      -----------
                Total  current  liabilities                                  2,496                  6,080

Long-term  bank  debt,  net  of  current
  portion  and  net  of  discount  of  $0  and
  $200,  as  of  March  31,  2006  and  March  31,
  2005,  respectively                                                                    17                  2,108
Capital  lease  obligations,  net  of  current
  portion                                                                                        177                      342
Deferred  gain  on  sale-leaseback                                          608                      678
                                                                                          -----------      -----------

                Total  liabilities                                                  3,298                  9,208
                                                                                          -----------      -----------

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;  issued  and
      outstanding    19,235,041  and  19,117,154
      shares  as  of  March    31,  2006  and  March
      31,  2005,  respectively                                                      192                      191
    Additional  paid-in  capital                                          20,685                36,869
    Accumulated  deficit                                                      (16,563)            (31,232)
    Accumulated  other  comprehensive  loss:
          Cumulative  foreign  currency
            translation  adjustments                                            (676)                  (543)
                                                                                          -----------      -----------

                Total  stockholders'  equity                                3,638                  5,285
                                                                                          -----------      -----------
                                                                                        $          6,936      $        14,493
                                                                                          ===========      ===========



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


                                                                  Three          Three          Twelve        Twelve
                                                                  Months        Months        Months        Months
                                                                  Ended          Ended          Ended          Ended
                                                                  March          March          March          March
                                                                    31,              31,              31,              31,
                                                                  2006            2005            2006            2005
Net  revenues:
    Collaborative  software
      products  and  services              $        274    $        203    $        969    $        748
    IT  services                                              822              926          2,902          3,801
                                                                --------    --------    --------    --------
                Total  net  revenues          $    1,096    $    1,129    $    3,871    $    4,549

Cost  of  revenues:
    Collaborative  software
      products  and  services                          64                  1              104                73
    IT  services                                              515              574          2,138          2,486
                                                                --------    --------    --------    --------
                Total  cost  of  revenues            579              575          2,242          2,559

                                                                --------    --------    --------    --------
                Gross  profit                                517              554          1,629          1,990
                                                                --------    --------    --------    --------

Operating  expenses:
    Selling,  general  and
      administrative                                  1,266              877          3,639          3,257
    Research  and  development                    100              135              496              543
    Bad  debt  expense                                    100                80              369              236
    Depreciation                                              95              109              328              343
    Impairment  charge                                      -                  -          2,924                  -
                                                                --------    --------    --------    --------

                Total  operating
                  expenses                                  1,561          1,201          7,756          4,379

                                                                --------    --------    --------    --------
                Operating  loss                      (1,044)          (647)      (6,127)      (2,389)

Other  expense  (income):
    Interest,  net                                          (50)            165              543              504
    Other                                                        (102)            (42)          (147)          (109)
                                                                --------    --------    --------    --------
                Total  other  (income)
                  expense                                      (152)            123              396              395

Loss  from  continuing  operations
  before  income  taxes                              (892)          (770)      (6,523)      (2,784)
Income  tax  expense  (benefit)                  35                (1)              45                  7
                                                                --------    --------    --------    --------
Loss  from  continuing  operations        (927)          (769)      (6,568)      (2,791)
                                                                --------    --------    --------    --------

Discontinued  operations:
  (Loss)  income  from
    discontinued  operations                    (252)            907            (258)        1,886
  (Loss)  gain  on  sale  of
    business,  net  taxes                            (673)                -        21,495              117
                                                                --------    --------    --------    --------
  (Loss)  income  from
    discontinued  operations                    (925)            907        21,237          2,003

Net  (loss)  income                            $  (1,852)  $        138    $  14,669    $      (788)
                                                                ========    ========    ========    ========



                                        NETGURU,  INC.  AND  SUBSIDIARIES
            CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS  -  continued
                    (In  thousands,  except  share  and  per  share  amounts)


                                            Three                Three                Twelve              Twelve
                                            Months              Months              Months              Months
                                            Ended                Ended                Ended                Ended
                                          March  31,        March  31,        March  31,        March  31,
                                              2006                  2005                  2006                  2005
Basic  (loss)  income
  per  common  share:
    (Loss)  income  
      per  share  from
      continuing
      operations            $          (0.05)  $          (0.04)  $          (0.34)  $          (0.15)
    (Loss)  income
      from
      discontinued
      operations                        (0.05)                0.05                  1.11                  0.11
                                        -----------    -----------    -----------    -----------
      Basic  net  
        (loss)  income  
        per  common  
        share                    $          (0.10)  $            0.01    $            0.77    $          (0.04)
                                        ===========    ===========    ===========    ===========
Diluted  (loss)
  income  per  
  common  share:
    (Loss)  income
      per  share  from
      continuing
      operations            $          (0.05)  $          (0.04)  $          (0.34)  $          (0.15)
    (Loss)  income
      from
      discontinued
      operations                        (0.05)                0.05                  1.11                  0.11
                                        -----------    -----------    -----------    -----------
      Diluted  net
        (loss)  income
        per  common
        share                    $          (0.10)  $            0.01    $            0.77    $          (0.04)
                                        ===========    ===========    ===========    ===========

Weighted  average
  shares  used  in
  computing:
    Basic  loss  per
      common  share          19,131,376      19,117,154      19,120,661      18,857,866
                                        ===========    ===========    ===========    ===========
    Diluted  loss  per
      common  share          19,131,376      21,187,269      19,184,160      18,857,866
                                        ===========    ===========    ===========    ===========
 


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