NGRU Netguru

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. -0- *T 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 =========== =========== =========== =========== *T