netGuru Reports Fiscal 2006 First-Quarter Results; Continuing Revenue Growth, Improving Margins

netGuru, Inc. (Nasdaq:NGRU) reported financial results
for fiscal 2006 first quarter ended June 30, 2005.
   Net revenues for the quarter were $3.85 million compared to $3.52
million in fiscal 2005 first quarter. Engineering and collaborative
software sales rose 23.3% to $3.01 million from $2.44 million due to
growing use of the Company's engineering software by major corporate
clients under three-year software licensing contracts, and higher
engineering-related maintenance sales and services. IT services
revenues fell to $834,000 from $1.08 million.
   Gross profit rose to $3.09 million, or 80.3% of net revenues, from
$2.52 million, or 71.5% of net revenues, in first-quarter fiscal 2005,
due to higher gross margin from our engineering and collaborative
software segment. Operating expenses were $3.26 million, compared to
$3.06 million. Operating expenses as a percent of net revenues
improved from fiscal 2005 first quarter. Operating losses narrowed to
$171,000 from $535,000 for first-quarter last fiscal year.
   Net loss also narrowed to $334,000, or two cents per share on
19,117,154 shares outstanding, compared to a net loss of $617,000, or
three cents per share on 18,626,165 shares outstanding, in the first
quarter of fiscal 2005.
   netGuru Chairman and Chief Executive Amrit Das remarked: "We are
pleased with the Company's continuing year-over-year growth in
revenues and improving margins. As a result, we have generated
positive cash flows from operations for three consecutive quarters and
substantial improvement in net results.
   "A first-quarter ramp up in personnel to expand engineering
business process outsourcing (EBPO) in India resulted in an increase
in sales, general, and administrative (SG&A) expenses," Das continued.
"This expanded capability now enables us to launch our new estimation
services, which are expected to result in additional billings, as well
as handle up to 2000 tons per month in steel detailing. Billings
during the first quarter were at approximately one-half that rate due
to start-up and training. Generally, by continuing to scale up sales
and by keeping costs and expenses under control, we remain confident
in our outlook for revenue growth and profitability for fiscal 2006."

   Teleconference information:

   The Company will hold a teleconference today at 1:30 p.m. PDT
(4:30 p.m. EDT) to review financial results, including a Q&A session.
To participate in the teleconference, call toll-free 800-608-3625 (or
706-634-0478 for international callers) approximately 10 minutes prior
to the above start time. The Company will also archive the call on its
website, www.netguru.com (requires RealPlayer streaming audio
software, available at www.real.com). Additionally, a telephone
playback will be available for 48 hours beginning at 5 p.m. PDT today.
The playback can be accessed by dialing 800-642-1687 (or 706-645-9291
for international callers) and providing Conference ID 8501003.

   About netGuru, Inc.

   netGuru is an engineering information technology and services
company offering engineering analysis and design software,
collaborative software solutions, and professional and technical IT
services and support to businesses worldwide. netGuru serves its
global markets and clients through offices located in the United
States, Europe, Asia, and the Middle East, and through distributors in
40 countries. The Company licenses its engineering software and
solutions to more than 19,000 businesses in 100 countries. For more
information, please visit www.netguru.com.

   Safe Harbor Statement:

   With the exception of historical or factual information, the
matters discussed in this press release, including sales/revenue
growth, cost and expense controls, expected profitability, and timing
of profitability 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, market acceptance and use of the Company's products,
market conditions in Asia and worldwide, engineering needs, our
ability to increase revenue and control costs and expenses, and
technological change, economic conditions, changes in governmental
regulations and policies, competitive products and services,
unforeseen technical issues, and other factors discussed in the "Risk
Factors" Section of the company's Form 10-KSB for the fiscal year
ended March 31, 2005, as filed with the U.S. Securities and Exchange
Commission.
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                    NETGURU, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)
          ($ in thousands except share and per share amounts)

                                                Three Months Ended
                                                     June 30,
                                             -------------------------
                                                2005          2004
                                             -----------   -----------
Net revenues:
  Engineering and collaborative software
   solutions                                $     3,014   $     2,444
  IT services                                       834         1,080
                                             -----------   -----------
        Total net revenues                        3,848         3,524

Cost of revenues:
  Engineering and collaborative software
   solutions                                        125           245
  IT services                                       633           758
                                             -----------   -----------
        Total cost of sales                         758         1,003

                                             -----------   -----------
        Gross profit                              3,090         2,521
                                             -----------   -----------

Operating expenses:
  Selling, general and administrative             2,454         2,235
  Research and development                          382           415
  Bad debt expense                                  208           165
  Depreciation                                      217           241

                                             -----------   -----------
        Total operating expenses                  3,261         3,056
                                             -----------   -----------

        Operating loss                             (171)         (535)
                                             -----------   -----------

Other (income) expense:
  Interest, net                                     138           138
  Other                                              10           (33)

                                             -----------   -----------
        Total other expense                         148           105
                                             -----------   -----------

Loss from continuing operations before
 income taxes                                      (319)         (640)
Income tax expense                                   15             6
                                             -----------   -----------
Net loss from continuing operations                (334)         (646)
Gain from discontinued operations                     -            29
                                             -----------   -----------

        Net loss                            $      (334)  $      (617)
                                             ===========   ===========

Net loss per common share:
         Basic                              $     (0.02)  $     (0.03)
                                             ===========   ===========
         Diluted                            $     (0.02)  $     (0.03)
                                             ===========   ===========
Common shares used in computing net loss
 per common share:
         Basic                               19,117,154    18,626,165
                                             ===========   ===========
         Diluted                             19,117,154    18,626,165
                                             ===========   ===========


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

                                                 June 30,    March 31,
                                                   2005        2005
                                                ----------  ----------

                                Assets
Current assets:
  Cash and cash equivalents                    $    3,791  $    3,619
  Restricted cash                                      60          62
                                                ----------  ----------
        Total cash and cash equivalents             3,851       3,681

  Accounts receivable (net of allowance for
   doubtful accounts of $777 and $705, as of
   June 30, 2005 and March 31, 2005,
   respectively)                                    3,302       4,334
  Income tax receivable                                12          15
  Notes and related party loans receivable             11          12
  Deposits                                            100          96
  Prepaid expenses and other current assets         1,150       1,343
                                                ----------  ----------
        Total current assets                        8,426       9,481

Property, plant and equipment, net                  1,593       1,682
Goodwill and intangible assets                      3,088       3,088
Other assets                                          306         242
                                                ----------  ----------
                                               $   13,413  $   14,493
                                                ==========  ==========

                 Liabilities and Stockholders' Equity

Current liabilities:
  Current portion of long-term debt, net of
   discount of $221 and $222, as of June 30,
   2005 and March 31, 2005, respectively         $  1,509  $    1,297
  Related party loans payable                         100         100
  Current portion of capital lease obligations        155         144
  Accounts payable                                    505         464
  Income taxes payable                                 28          29
  Accrued expenses                                    857       1,136
  Deferred revenues                                 2,297       2,697
  Other liabilities                                   158         212
                                                  --------  ----------

        Total current liabilities                   5,609       6,079

Long-term debt, net of current portion, net of
 discount of $144 and $200 as of June 30, 2005
 and March 31, 2005, respectively                   1,884       2,108
Capital lease obligations, net of current
 portion                                              325         343
Deferred gain on sale-leaseback and other 
 long-term liabilities                                683         678
                                                  --------  ----------

        Total liabilities                           8,501       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; 19,117,154 shares issued
   and outstanding                                    191         191
  Additional paid-in capital                       36,869      36,869
  Accumulated deficit                             (31,566)    (31,232)
  Accumulated other comprehensive loss:
     Cumulative foreign currency translation
      adjustments                                    (582)       (543)
                                                  --------  ----------

        Total stockholders' equity                  4,912       5,285
                                                  --------  ----------
                                                 $ 13,413  $   14,493
                                                  ========  ==========
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