10QSB/A 1 netguru_10qa3-063002.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 3 TO FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ Commission file number: 0-28560 NETGURU, INC. (Exact name of small business issuer as specified in its charter) DELAWARE 22-2356861 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 22700 SAVI RANCH PARKWAY, YORBA LINDA, CA 92887 (Address of principal executive offices) (Zip Code) Issuer's telephone number: (714) 974-2500 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of the registrant's only class of Common Stock, $.01 par value, was 17,325,150 on May 2, 2003. PART I FINANCIAL INFORMATION
PAGE Item 1. Financial Statements Condensed Consolidated Statements of Operations for the three month periods ended June 30, 2002 and 2001(unaudited)................. 3 Condensed Consolidated Balance Sheets as of June 30, 2002 (unaudited) and March 31, 2002.......................... 4 Condensed Consolidated Statements of Cash Flows for the three month periods ended June 30, 2002 and 2001 (unaudited).......... 5 Notes to Condensed Consolidated Financial Statements (unaudited)...... 6 Signatures....................................................................... 15 Certifications of Principal Executive Officer and Principal Financial Officer.... 16 Exhibits Filed with this Report on Form 10-QSB................................... 17
2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NETGURU, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands except share and per share amounts)
THREE MONTHS ENDED JUNE 30, ----------------------------- 2002 2001 ------------- ------------- Net revenues: Engineering and collaborative software products and services $ 1,871 $ 2,395 IT services 1,414 3,348 Web-based telecommunication and travel services 1,132 1,038 ------------- ------------- Total net revenues 4,417 6,781 Cost of revenues: Engineering and collaborative software products and services 292 352 IT services 1,076 2,345 Web-based telecommunication and travel services 987 914 ------------- ------------- Total cost of sales 2,355 3,611 ------------- ------------- Gross profit 2,062 3,170 ------------- ------------- Operating expenses: Selling, general and administrative 2,616 3,114 Research and development 464 487 Amortization of goodwill -- 334 Depreciation and other amortization 268 273 Restructuring 93 -- ------------- ------------- Total operating expenses 3,441 4,208 ------------- ------------- Operating loss (1,379) (1,038) ------------- ------------- Other expense (income): Interest, net 62 32 Other (2) (8) ------------- ------------- Total other expense 60 24 ------------- ------------- Loss before income taxes (1,439) (1,062) Income tax (benefit) expense (369) 89 ------------- ------------- Net loss $ (1,070) $ (1,151) ============= ============= Net loss per common share: Basic $ (0.06) $ (0.07) ============= ============= Diluted $ (0.06) $ (0.07) ============= ============= Common shares used in computing net loss per common share: Basic 17,285,977 16,877,539 ============= ============= Diluted 17,285,977 16,877,539 ============= =============
See accompanying notes to condensed consolidated financial statements. 3 NETGURU, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) JUNE 30, MARCH 31, 2002 2002 --------- --------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 2,485 $ 3,466 Accounts receivable (net of allowance for doubtful accounts of $973 and $981, as of June 30, 2002 and March 31, 2002, respectively) 3,013 3,325 Income tax receivable 309 305 Notes and related party loans receivable 198 269 Prepaid expenses and other current assets 1,011 1,543 --------- --------- Total current assets 7,016 8,908 Property, plant and equipment, net 4,014 4,169 Goodwill (net of accumulated amortization of $4,438 as of June 30, 2002 and March 31, 2002) 9,105 9,105 Other assets 948 884 --------- --------- $ 21,083 $ 23,066 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term bank debt $ 257 $ 259 Current portion of capital lease obligations 428 417 Accounts payable 1,091 1,012 Accrued expenses 630 1,082 Income taxes payable -- 196 Deferred revenues 1,652 1,760 Deferred income taxes -- 60 Other liabilities 152 199 Accrued restructuring costs 237 157 --------- --------- Total current liabilities 4,447 5,142 Long-term bank debt, net of current portion 456 567 Capital lease obligations, net of current portion 926 1,027 Deferred income taxes, non-current -- 112 Deferred gain on sale-leaseback 870 887 --------- --------- Total liabilities 6,699 7,735 --------- --------- 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 17,296,650 and 17,265,850 shares (net of 10,965 treasury shares) as of June 30, 2002 and March 31, 2002, respectively 173 173 Additional paid-in capital 33,086 33,057 Accumulated deficit (17,875) (16,805) Accumulated other comprehensive loss: Cumulative foreign currency translation adjustments (1,000) (1,094) --------- --------- Total stockholders' equity 14,384 15,331 --------- --------- $ 21,083 $ 23,066 ========= ========= See accompanying notes to condensed consolidated financial statements. 4 NETGURU, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
THREE MONTHS THREE MONTHS ENDED ENDED JUNE 30, 2002 JUNE 30, 2001 ------------ ------------ Cash flows from operating activities: Net loss $ (1,070) $ (1,151) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 311 661 Bad debt expense 25 -- Deferred income taxes (172) (7) Compensation expense recognized on issuance of stock options (23) 34 Restructuring 93 -- Changes in operating assets and liabilities (net of acquisitions): Accounts receivable 361 1,094 Notes and related party loans receivable 71 (1) Income tax receivable (4) -- Prepaid expenses and other current assets 535 (294) Other assets (88) 153 Accounts payable 69 (57) Accrued expenses (456) (437) Income taxes payable (199) 68 Accrued restructuring costs (13) -- Other current liabilities (73) 38 Deferred revenues (140) (525) Deferred gain on sale-leaseback (17) (29) ------------ ------------ Net cash used in operating activities (790) (453) ------------ ------------ Cash flows from investing activities: Purchase of property, plant and equipment (88) (167) Payments to acquire companies, net of cash acquired -- (67) ------------ ------------ Net cash used in investing activities (88) (234) ------------ ------------ Cash flows from financing activities: Proceeds from issuance of bank debt 1 19 Repayment of bank debt (115) (109) Repayment of capital lease obligations (84) (36) Issuance of common stock 52 27 Repurchase common stock -- (140) ------------ ------------ Net cash used in financing activities (146) (239) ------------ ------------ Effect of exchange rate changes on cash and cash equivalents 43 (68) ------------ ------------ Decrease in cash and cash equivalents (981) (994) Cash and cash equivalents, beginning of period 3,466 7,958 ------------ ------------ Cash and cash equivalents, end of period $ 2,485 $ 6,964 ============ ============ Supplemental disclosure of cash flow information: Amounts paid for: Interest $ 63 $ 21 Income taxes $ 1 $ 14
See accompanying notes to condensed consolidated financial statements. 5 NETGURU, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2002 (UNAUDITED) BASIS OF PRESENTATION These condensed consolidated financial statements include the accounts of netGuru, Inc. and its wholly owned subsidiaries (the "Company"). All significant transactions among the consolidated entities have been eliminated upon consolidation. These condensed consolidated financial statements have been prepared by the Company and include all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position at June 30, 2002 and the results of operations and the cash flows for the three months ended June 30, 2002 and 2001, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual consolidated financial statements. Results of operations for the three months ended June 30, 2002 are not necessarily indicative of the results to be expected for the full year ending March 31, 2003. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards ("SFAS") No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires management to disclose the estimated fair value of certain assets and liabilities defined by SFAS No. 107 as financial instruments. Financial instruments are generally defined by SFAS No. 107 as cash or contractual obligations that convey to one entity a right to receive cash or other financial instruments from another entity, as well as impose on the other entity the obligation to deliver cash or other financial instruments to the first entity. At June 30, 2002, management believes the carrying amounts of cash and cash equivalents, receivable and payable amounts, and accrued expenses approximate fair value because of the short maturity of these financial instruments. The Company also believes that the carrying amounts of its long-term debt and capital lease obligations approximate their fair value as the interest rates approximate a rate that the Company could obtain under similar terms at the balance sheet date. SOFTWARE DEVELOPMENT COSTS AND PURCHASED TECHNOLOGY The Company capitalizes costs related to the development of certain software products. Capitalization of costs begins when technological feasibility has been established and ends when the product is available for general release to customers. As of June 30, 2002, capitalized costs of approximately $657,000, net of accumulated amortization, were included in other assets. Approximately $303,000 of this amount represents software developed in-house and $261,000 represents the cost of software developed on the Company's behalf by third parties. The remaining $93,000 represents purchased technology. Additions to capitalized software were $28,000 and $2,500 during the quarters ended June 30, 2002 and 2001, respectively. The Company amortizes capitalized software development costs and purchased technology using the straight-line method over three to five years, or 6 the ratio of actual sales to anticipated sales, whichever is greater. Amortization of software development costs and purchased technology charged to cost of revenues was approximately $43,000 and $54,000 for the quarter ended June 30, 2002 and 2001, respectively. Accumulated amortization on capitalized software was $533,000 and $432,000 as of June 30, 2002 and 2001, respectively. REVENUE RECOGNITION The Company recognizes revenue when the following criteria are met: 1. persuasive evidence of an arrangement such as agreements, purchase orders or written or online requests exists; 2. delivery has been completed and no significant obligations remain; 3. the Company's price to the buyer is fixed and determinable; and 4. collectibility is probable. The Company's revenues arise from the following segments: engineering and collaborative software products and services; IT services; and Web-based telecommunication and travel services. Revenues from our pre-packaged engineering software products are recognized upon shipment, provided that no significant post-contract support obligations remain outstanding and collection of the resulting receivable is deemed probable. Through June 30, 2002, at the time of sale, the Company provided 120-day initial maintenance and support to the customer. Costs relating to this initial 120-day support period, which included primarily telephone support, were not considered material. After the initial support period, customers were offered ongoing maintenance contracts that included telephone, e-mail and other methods of support, and the right to receive upgrades. Effective July 1, 2002, the Company provides a 15-day right of return on the purchase of a product during which time the customer may return the product to the Company subject to a $50 restocking fee on each returned item. Revenue from the maintenance contracts was deferred and recognized ratably over the life of the contract, usually twelve months. The Company recognizes revenues from software that it customizes to fit a customer's requirements based on satisfactory completion of pre-determined milestones (evidenced by written acceptance from the customer) and delivery of the product to the customer provided no significant obligations remain and collectibility of the resulting receivable is probable. Revenues from digital media and animation services were recognized upon achievement of certain pre-determined milestones. In October 1997, the Accounting Standards Executive Committee ("AcSEC") of the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position ("SOP") 97-2, SOFTWARE REVENUE RECOGNITION. The Company adopted SOP 97-2 in the first quarter of fiscal 1999. SOP 97-2 distinguishes between significant and insignificant vendor obligations as a basis for recording revenue, with a requirement that each element of a software licensing arrangement be separately identified and accounted for based on relative fair values of each element. We determine the fair value of each element in multi-element transactions based on vendor-specific objective evidence ("VSOE"). VSOE for each element is based on the price charged when the same element is sold separately. 7 In 1998, the AICPA issued SOP 98-9, MODIFICATION OF SOP 97-2, SOFTWARE REVENUE RECOGNITION, WITH RESPECT TO CERTAIN TRANSACTIONS, which modifies SOP 97-2 to allow for use of the residual method of revenue recognition provided that certain criteria have been met. The Company adopted SOP 98-9 in the first quarter of fiscal 2000. If evidence of fair value of all undelivered elements exists but evidence does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the transaction fee is recognized as revenue. Revenues from providing IT services are recognized primarily on a time and materials basis, with time at a marked-up rate and materials and other reasonable expenses at cost, once the services are completed and no significant obligations remain. Certain IT services contracts are fixed price contracts where progress toward completion is measured by mutually agreed upon pre-determined milestones for which the Company recognizes revenue upon achieving such milestones. The Company's fixed price IT contracts are typically for a short duration of one to three months. With regard to the Company's Web-based telecommunication services, the Company recognizes revenues for call termination services at gross value, with the applicable cost separately stated in cost of revenues. Revenues from the Company's own phone card transactions are deferred and recognized on the basis of usage. Revenues from the resale of third-party phone cards are recognized net of returns because no significant obligations remain once the phone cards are delivered. Revenues from certain travel services, where we are a ticket consolidator, are recognized at the gross sales value with purchase costs stated as a separate cost of revenues in accordance with Emerging Issues Task Force Issue No. 99-19, RECORDING REVENUE GROSS AS A PRINCIPAL VERSUS NET AS AN AGENT. Revenues from other products and services sold via Internet portals, including travel services, where the Company is a travel discounter or an agent, are recognized net of purchase costs when the products and services are delivered and collectibility is probable. RECLASSIFICATIONS Certain reclassifications have been made to the fiscal 2002 consolidated financial statements to conform to the fiscal 2003 presentation. PROVISION FOR RESTRUCTURING OPERATIONS In March 2001, the Company announced plans to restructure its operations. As a result of this restructuring plan, the Company recorded a restructuring charge of $2,400,000 in fiscal 2001. The restructuring plan consisted of four major points: 1) refocused strategic direction of Internet service provider ("ISP") initiatives; 2) refocused strategic direction of Internet portal initiatives; 3) consolidation of the Company's technical support activities; and 4) elimination of the Company's in-house legal department. 8 With regard to the Company's ISP initiatives in India, the Company redirected its primary focus toward communication and connectivity services targeted at the corporate market. The Company's original focus related to ISP services was that the Company planned to offer ISP services to both consumers and businesses in India. With the proposed acquisition of a 30% ownership interest in Vital Communications, Ltd., an IT communications technology company, the Company had planned to start providing ISP services for the 10,000 customers of Vital Communications as a first step toward becoming an ISP in India. The total amount charged for the refocus of ISP operations in fiscal 2001 was $1,998,000. This total charge consisted of $171,000 in contractual obligations and $1,827,000 in asset write-offs related to ISP operations in India. These charges did not include any employee costs. However, they included the write-off of $537,000 paid toward the Company's proposed acquisition of a 30% ownership interest in Vital Communications, the write-off of $346,000 related to capitalized connectivity charges for the ISP business, and the write-off of $944,000 of ISP infrastructure equipment. The ISP infrastructure equipment related to the Voice Over Internet Protocol (VOIP) technology. The equipment was determined to have no resale value because VOIP technology was not permitted in India and because it was not cost-effective to sell the equipment in countries where VOIP was permitted since the technology had changed. The restructuring related to the ISP operations resulted in elimination of depreciation and amortization expenses that would have resulted from the ISP related assets. In March 2001, the Company closed its Boston technical support office. Technical support activities previously offered from the Boston office were consolidated into the California facility. The closing of this office resulted in the termination of two employees. The restructure charge related to the consolidation of technical support facilities was $166,000, of which $49,000 related to accrued severance payments for the two terminated employees and $117,000 related to contractual lease obligations for the vacated space. The Company made cash payments totaling $58,000 and $13,000 in fiscal 2002 and during the three months ended June 30, 2002, respectively, toward settlement of obligations related to this activity. The employee costs related to technical support operations decreased beginning in April 2001 and the Company expects facility costs to decrease beginning in October 2003, after the termination of the lease in September 2003. The elimination of the in-house legal department primarily consisted of the termination of one employee whose position was not refilled. Legal services are being obtained from the Company's continuing external legal counsel. In fiscal 2001, the Company estimated the restructure charge related to the elimination of the in-house legal department to be $42,000. In fiscal 2002, the Company paid $52,000 toward this restructure charge. Additional charges of $41,000 and $109,000 were recorded in fiscal 2002 and during the first quarter of fiscal 2003, respectively, since the original estimate of severance expenses was insufficient. 9 Activity relating to the restructuring charge is as follows (in thousands):
REFOCUS OF REFOCUS OF CONSOLIDATION ELIMINATION ISP PORTAL OF TECHNICAL OF LEGAL TOTAL OPERATIONS OPERATIONS SUPPORT DEPARTMENT -------------- -------------- ----------------- --------------- ------------ March 31, 2000 -- -- -- -- -- Restructuring charge $ 1,998 $ 194 $ 166 $ 42 $ 2,400 Cash payments (1,897) (194) -- -- (2,091) -------------- -------------- ----------------- --------------- ------------ March 31, 2001 $ 101 $ -- $ 166 $ 42 $ 309 -------------- -------------- ----------------- --------------- ------------ Cash payments -- (67) (58) (52) (177) Adjustments (67) a 67 a (16) b 41 b 25 -------------- -------------- ----------------- --------------- ------------ March 31, 2002 $ 34 $ -- $ 92 $ 31 $ 157 -------------- -------------- ----------------- --------------- ------------ Cash payments -- -- (13) (13) Adjustments (16) c -- 109 c 93 -------------- -------------- ----------------- --------------- ------------ June 30, 2002 $ 18 $ -- $ 79 $ 140 $ 237 ============== ============== ================= =============== ============
a. Represents reversal of over-accrual for contractual obligations for ISP operations and additional amounts accrued for contractual obligations related to the portal operations. b. Represents reversal of over-accrual for technical support severance costs and additional amounts accrued for anticipated severance costs for the elimination of the legal department. c. Represents reversal of over-accrual for contractual obligation for ISP operations and additional amounts accrued for anticipated severance costs for the elimination of the legal department. The balance at June 30, 2002 includes $54,000 of lease payments for vacated office space scheduled for payment through September 2003. As of the date of filing of this report, the remaining personnel costs have been satisfied. STOCKHOLDERS' EQUITY In April 2000, the Company issued 25,000 shares of common stock as a portion of the purchase price for the acquisition of Allegria Software, Inc ("Allegria"). The recipients of these shares were given the right to demand the Company to repurchase these shares at a price of $28.60 per share at the end of one year. In April 2001, each of the three former owners exercised this right. The total repurchase price was $715,000. Agreements were reached with the former owners to extend the cash payment for this repurchase over a period of twelve months. 10 As of June 30, 2002, the Company had paid $146,000 to one of the former owners for the repurchase of 6,000 shares. The remaining $26,000 was to be paid by November 30, 2002, and has been accrued under "accrued expenses." The repurchase of 6,000 shares from another former owner was settled for a total of $100,000, and the entire amount was paid as of June 30, 2002. The owner of the remaining 13,000 shares is holding the stock certificates until full payment is received for these shares. The total cash to be paid for this repurchase was $372,000, of which $128,000 had been paid as of June 30, 2002. Due to a dispute as a result of an apparent breach of the purchase agreement by the former owner, the Company believes that it is probable that the balance of $244,000 will not be paid and therefore has not accrued this amount as a liability. FOREIGN CURRENCY TRANSLATION The financial position and results of operations of the Company's foreign subsidiaries are accounted for using the local currency as the functional currency. Assets and liabilities of the subsidiaries are translated into U.S. dollars (the reporting currency) at the exchange rate in effect at the period-end. Statements of operations accounts are translated at the average rate of exchange prevailing during the respective periods. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss in the consolidated balance sheets. Gains and losses resulting from foreign currency transactions are included in operations and are not material to the first quarter of fiscal 2003 and the first quarter of fiscal 2002. COMPREHENSIVE INCOME (LOSS) The Company applies the provisions of SFAS No. 130, REPORTING COMPREHENSIVE INCOME, which prescribes rules for the reporting and display of comprehensive income (loss) and its components. SFAS No. 130 requires foreign currency translation adjustments, which are reported separately in stockholders' equity, to be included in other comprehensive income (loss). Total comprehensive loss was $976,000 and $1,242,000 for the quarter ended June 30, 2002 and 2001, respectively. NET LOSS PER SHARE Basic earnings (loss) per share ("EPS") is calculated by dividing net income (loss) by the weighted-average common shares outstanding during the period. Diluted EPS reflects the potential dilution to basic EPS that could occur upon conversion or exercise of securities, options, or other such items, to common shares using the treasury stock method based upon the weighted-average fair value of the Company's common shares during the period. 11 The following table illustrates the computation of basic and diluted net loss per share (in thousands except per share amounts):
THREE MONTHS ENDED JUNE 30, ----------------------- 2002 2001 ----------- --------- Numerator: Net loss & numerator for basic and diluted loss per share $ (1,070) $ (1,151) =========== ========= Denominator: Denominator for basic net loss per share - average number of common shares outstanding during the period 17,286 16,877 Incremental common shares attributable to exercise of outstanding options, warrants and other common stock equivalents -- -- ----------- --------- Denominator for diluted net loss per share 17,286 16,877 =========== ========= Basic net loss per share $ (0.06) $ (0.07) =========== ========= Diluted net loss per share $ (0.06) $ (0.07) =========== =========
Options, warrants and other common stock equivalents amounting to 737,000 and 608,000 potential common shares were excluded from the computation of diluted EPS for the quarters ended June 30, 2002 and 2001, respectively, because the Company reported net losses and, therefore, the effect would be antidilutive. SEGMENT AND GEOGRAPHIC DATA The Company is an integrated information technology and services company operating in three primary business segments: 1) engineering and collaborative software products and services; 2) IT services; and 3) Web-based telecommunication and travel services. The Company has provided computer-aided engineering software solutions to customers for over 21 years. During the past 19 years, the Company has supported the engineering software business with India-based software programming and IT resources. With the acquisitions of R-Cube Technologies in February 1999 and NetGuru Systems completed in December 1999, the Company further expanded its IT resources and capabilities and its presence in the IT services industry, providing expertise in data-mining and embedded technologies, Internet/Intranet design and development and systems and software integration and implementation to companies in North America. The Company has expanded its IT services business into Europe and intends to further expand its services in India and Southeast Asia. In April 2000, with the acquisition of Allegria Software, Inc., the Company added eReview and ForReview collaborative software products to its offerings. 12 The Company applies the provisions of SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE and RELATED INFORMATION. SFAS No. 131 requires segments to be determined and reported based on how management measures performance and makes decisions about allocating resources. Prior to April 1, 2002, the Company's operating segments were: o Software sales, maintenance and services; o IT services; and o Internet, e-commerce and collaborative software solutions. Effective April 1, 2002, the Company realigned its operating segments to more appropriately reflect how these divisions were managed and its resources were allocated. The operating segments were realigned as follows: o Engineering and collaborative software products and services; o IT services; and o Web-based telecommunication and travel services. The significant components of worldwide operations by reportable operating segments are (prior period presentation has been revised to be consistent with the current period presentation): THREE MONTHS ENDED JUNE 30, -------------------------- 2002 2001 ----------- ----------- (IN THOUSANDS) NET REVENUE Engineering and collaborative software $ 1,871 $ 2,395 products and services IT services 1,414 3,348 Web-based telecommunication and travel 1,132 1,038 services =========== =========== Consolidated $ 4,417 $ 6,781 =========== =========== OPERATING (LOSS)/INCOME Engineering and collaborative software $ (1,135) $ (763) products and services IT services (67) 183 Web-based telecommunication and travel (177) (458) services =========== =========== Consolidated $ (1,379) $ (1,038) =========== =========== AT JUNE 30, AT MARCH 31, 2002 2002 ----------- ----------- (IN THOUSANDS) TOTAL ASSETS Engineering and collaborative products $ 11,527 $ 12,630 and services IT services 7,858 8,667 Web-based telecommunication and travel 1,698 1,769 services =========== =========== Consolidated $ 21,083 $ 23,066 =========== =========== 13 The Company's operations are based worldwide through foreign and domestic subsidiaries and branch offices in the United States, India, the United Kingdom, France, Germany and Asia-Pacific. The following are significant components of worldwide operations by geographic location: THREE MONTHS ENDED JUNE 30, ------------------------- 2002 2001 ----------- ----------- (IN THOUSANDS) NET REVENUE United States $ 3,200 $ 5,718 The Americas (other than U.S.) 107 120 Europe 495 497 Asia-Pacific 615 446 ----------- ----------- Consolidated $ 4,417 $ 6,781 =========== =========== EXPORT SALES United States $ 232 $ 124 =========== =========== JUNE 30, JUNE 30, 2002 2001 ----------- ----------- (IN THOUSANDS) LONG-LIVED ASSETS United States $ 12,342 $ 14,105 Europe 365 386 Asia-Pacific 1,360 2,570 ----------- ----------- Consolidated $ 14,067 $ 17,061 =========== =========== CONTINGENCIES The Company is party to various litigation matters arising in the normal course of business. Management believes the resolution of these matters will not have a material adverse effect on the Company's results of operations or financial condition. 14 SIGNATURES ---------- In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 5, 2003 NETGURU, INC. By: /s/ Bruce K. Nelson ------------------- Bruce K. Nelson Chief Financial Officer (principal financial and accounting officer) 15 CERTIFICATIONS I, Amrit K. Das, certify that: 1. I have reviewed this amendment no. 3 to quarterly report on Form 10-QSB of netGuru, Inc. ("quarterly report"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. Date: May 5, 2003 /s/ Amrit K. Das ------------------------------------ Amrit K. Das, Chief Executive Officer (Principal executive officer) I, Bruce Nelson, certify that: 1. I have reviewed this amendment no. 3 to quarterly report on Form 10-QSB of netGuru, Inc. ("quarterly report"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. Date: May 5, 2003 /s/ Bruce K. Nelson ---------------------------------------- Bruce K. Nelson, Chief Financial Officer (Principal financial officer) 16 EXHIBITS FILED WITH THIS AMENDMENT NO. 3 TO REPORT ON FORM 10-QSB Exhibit 99.1 Certifications of chief executive officer and chief financial officer pursuant to 18 U.S.C section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 17