<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 2000.
REGISTRATION NO. 333-_______
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
NETGURU, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 7370 22-2356861
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification No.) Identification Number)
organization)
22700 SAVI RANCH PARKWAY
YORBA LINDA, CALIFORNIA 92887
(714) 974-2500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------
AMRIT K. DAS,
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
NETGURU, INC.
22700 SAVI RANCH PARKWAY
YORBA LINDA, CALIFORNIA 92887
(714) 974-2500
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
COPY TO:
LARRY A. CERUTTI, ESQ.
RUTAN & TUCKER LLP
611 ANTON BOULEVARD, SUITE 1400
COSTA MESA, CALIFORNIA 92626
(714) 641-5100
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box: [ ]
--------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to Offering Price Aggregate Registration
Securities to be Registered be Registered(1) per Share Offering Price(2) Fee
------------------------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Common stock, $.01 par value......... 2,734,842(3) $19.6875 $53,842,202 $14,215
===================================== ================= ================= ================= =================
</TABLE>
(1) In the event of a stock split, stock dividend, or similar transaction
involving common stock of the registrant, in order to prevent dilution, the
number of shares registered shall be automatically increased to cover the
additional shares in accordance with Rule 416(a) under the Securities Act.
(2) The aggregate offering price of the registrant's shares is estimated solely
for the purpose of calculating the registration fee payable pursuant
hereto, as determined in accordance with Rule 457(c) under the Securities
Act as of June 27, 2000.
(3) Represents shares of common stock being offering by selling security
holders, including shares issuable following conversion of outstanding
Series B Cumulative Convertible Preferred Stock and upon exercise of
outstanding options and warrants to purchase common stock of the
registrant.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
--------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 30, 2000
PROSPECTUS
NETGURU, INC.
2,734,842 SHARES OF COMMON STOCK
The 2,734,842 shares of our common stock, $.01 par value per share,
offered hereby are being offered by certain of our security holders, who are
identified in the section of this prospectus entitled "Selling Security
Holders." The shares being offered hereby include shares of common stock
currently outstanding and shares issuable upon exercise of certain outstanding
options and warrants and upon conversion of shares of our Series B Cumulative
Convertible Preferred Stock, or Series B Stock.
The price of the common stock being offered by the selling security
holders may vary, depending on market conditions. We will not receive any of the
proceeds from the sale of the shares by the selling security holders.
There is an existing market for these shares. Our common stock is
traded on the Nasdaq National Market System under the symbol "NGRU." The last
reported sales price of our common stock on June 26, 2000, was $20.00 per share.
----------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 9.
----------------------
The information in this prospectus is not complete and may be changed.
The selling security holders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell securities, and the selling
security holders are not soliciting offers to buy these securities, in any state
where the offer or sale is not permitted.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2000.
<PAGE>
No person is authorized to give any information or to make any representations,
other than those contained or incorporated by reference in this prospectus, in
connection with the offering contemplated hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by us or the selling security holders. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in our affairs since the date hereof or that the
information contained or incorporated by reference herein is correct as of any
time subsequent to its date.
----------------------
TABLE OF CONTENTS
Page
----
WHERE YOU CAN FIND MORE INFORMATION..........................................3
-----------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................3
-----------------------------------------------
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS............................4
-------------------------------------------------
ABOUT THIS PROSPECTUS........................................................5
---------------------
PROSPECTUS SUMMARY...........................................................6
------------------
RISK FACTORS.................................................................9
------------
PRICE RANGE OF COMMON STOCK.................................................19
---------------------------
DIVIDEND POLICY.............................................................19
---------------
TRANSFER AGENT AND REGISTRAR................................................19
----------------------------
SELLING SECURITY HOLDERS....................................................20
------------------------
PLAN OF DISTRIBUTION........................................................27
--------------------
DESCRIPTION OF COMMON SHARES................................................29
----------------------------
USE OF PROCEEDS.............................................................30
---------------
EXPERTS.....................................................................30
------
LEGAL MATTERS...............................................................30
-------------
-----------------------
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission, or the SEC. You
may read and copy any document we file at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public at the SEC's Web site at
http://www.sec.gov. Our common stock is quoted on the Nasdaq National Market.
Our reports, proxy statements and other information are also available to the
public at the Nasdaq's Web site at http://www.nasdaq.com.
This prospectus is part of a registration statement on Form S-3 filed
with the SEC under the Securities Act of 1933, as amended, or the Securities
Act. This prospectus omits some of the information contained in the registration
statement. You should refer to the registration statement for further
information with respect to netGuru, Inc. and the securities offered by this
prospectus. Any statement contained in this prospectus concerning the provisions
of any document filed as an exhibit to the registration statement or otherwise
filed with the SEC is not necessarily complete, and in each case you should
refer to the copy of the document filed for complete information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it, which means we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended, or the Exchange Act, until all of the securities covered by this
prospectus are sold by the selling security holders.
1. Our Annual Report on Form 10-KSB for the fiscal year ended March 31,
2000 filed with the SEC on June 26, 2000.
2. The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on June 12, 1996 pursuant to Section 12
of the Exchange Act.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
netGuru, Inc.
22700 Savi Ranch Parkway
Yorba Linda, CA 92887
Attention: Wayne Blair
----------
Telephone: (714) 974-2500
3
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and our Annual Report on Form 10-KSB for the fiscal
year ended March 31, 2000, which is incorporated herein by reference, contain
certain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. We intend that such
forward-looking statements be subject to the safe harbors created thereby. These
forward-looking statements generally include the plans and objectives of
management for future operations, including plans and objectives relating to our
future economic performance. The forward-looking statements and associated risks
may include, relate to, or be qualified by other important factors, including,
without limitation:
o our ability to transition into new lines of business as planned;
o our ability to become a leading integrated Internet technology and
services company addressing the global Indian market, the worldwide
information technology services market and the worldwide Internet
engineering software market;
o our ability to successfully market and sell applications service
provider services through our recently launched engineering
Internet portal;
o market growth;
o new competition;
o competitive pricing;
o new technologies;
o our ability to successfully implement our future business plans;
o statements about our business strategy and our expansion strategy;
o our ability to attract strategic partners, alliances and
advertisers;
o uncertainties relating to economic conditions in the markets in
which we currently operate and in which we intend to operate in the
future;
o our ability to hire and retain qualified personnel;
o our ability to obtain capital, if required;
o our ability to successfully implement our brand building campaign;
o the risks of uncertainty of trademark protection;
o our plans for expanding our Internet portal network and the
services offered through such network;
o our plans regarding our telephony infrastructure and service
offerings;
o our beliefs regarding the growth of Internet usage within the
global Indian community;
4
<PAGE>
o our beliefs regarding the demand for our products and our
competitive advantages;
o the negative impact of economic slowdowns and recessions; and
o risks associated with existing and future governmental regulation
to which we are subject.
We do not undertake to update, revise or correct any forward-looking
statements.
Results actually achieved may differ materially from expected results
in these statements. Several of these risks are discussed in greater detail in
the "Risk Factors" section set forth below. Any of the factors described above
or in the "Risk Factors" section could cause our financial results, including
our net income (loss) or growth in net income (loss), to differ materially from
prior results.
ABOUT THIS PROSPECTUS
This prospectus provides you with a general description of our company,
certain risk factors associated with investment in the shares being offered
hereby, and a description of the contemplated offering. In addition, you should
read the additional information described under the heading "Incorporation of
Certain Documents by Reference" on page 3 of this prospectus.
5
<PAGE>
PROSPECTUS SUMMARY
This summary highlights some information from this prospectus. Because
it is a summary, it necessarily does not contain all of the information
necessary to your investment decision. To understand this offering fully, you
should read carefully the entire prospectus.
OUR COMPANY
We were incorporated in 1981 under the name Research Engineers, Inc.
and changed our name in 2000 to netGuru, Inc. We are an integrated Internet
technology and services company providing:
o Internet-based information technology, or IT, services to companies
worldwide;
o Internet and personal computer, or pc, based engineering software
products to businesses worldwide; and
o Internet content and commerce through our city- and region-oriented
portal network, netGuruIndia.com, which is focused on the "global
Indian" community, consisting of resident Indians and persons of
Indian origin, or PIOs.
We have been providing computer-aided engineering software solutions to
our customers for over 18 years. During the past 15 years, we have supported our
engineering software business with our India-based software programming and IT
resources. In 1999, we acquired two IT services companies in the U.S., further
expanding our IT resources and capabilities. With our experience in India and
our understanding of the global Indian community, we began offering our Internet
portal services in 1999. In addition, based upon our knowledge and understanding
of the engineering software market, combined with our Internet technology
resources and experience, we have recently launched web4engineers.com, an
engineering portal hosting our engineering software applications online and
providing applications services provider, or ASP, services to engineering
software providers and their licensees worldwide.
Our Internet portal, netGuruIndia.com, currently provides Internet
content and commerce services, including travel, telecommunications and gifts,
to PIOs through city- and region-oriented destinations that address the specific
Indian cultural and ethnic needs of the targeted communities. Our portal network
provides comprehensive digitally-rich media content and e-commerce services for
PIOs, including direct-to-customer fulfillment and Internet tools, such as chat
rooms and other digital communication capabilities.
We are in the process of providing our Internet access and commerce
services to the resident Indian business and consumer markets. In May 2000, we
acquired a 74% interest (49% held as a direct investment and 25% held as an
indirect investment through our subsidiary in India) in Interra Global Limited,
an Indian company with a 15-year Class A License. This Class A License enables
us to provide Internet access services throughout India from points of presence,
or POPs, which are access facilities allowing the two-way transfer of
information and data. We are currently building our network of POPs, which will
be strategically located in India's largest metropolitan areas. We intend to
expand our network by adding additional POPs in the future.
We provide a full suite of Internet-based IT consulting services to our
customers from our IT services divisions in the Silicon Valley and the Boston
area. We support our IT services operations with our offshore facility in India.
Our IT consulting customers include companies such as General Electric,
Fidelity, Netscape, Sun Microsystems, Cisco Systems and Hewlett Packard. We have
positioned our company to capitalize on our IT services methodology in order to
provide Internet-based IT consulting services to businesses worldwide and to
enable us to provide business-to-business Web solutions in India.
6
<PAGE>
We develop and market cost-effective, high-quality engineering software
solutions. Our comprehensive line of structural, mechanical, civil and
process/piping engineering software products provide our customers with
fully-integrated, easy-to-use design automation and analysis solutions. We
currently license our software products to more than 20,000 companies accounting
for over 50,000 software installations. Based on our customer surveys, we
estimate that there are approximately 150,000 users at these installations
worldwide. Our customers include: Bechtel Corporation, British Telecom, Jet
Propulsion Laboratories, Exxon Corporation, Fluor Daniel, Inc., General
Dynamics, NASA, Rocketdyne, Siemens AG and Toyo Engineering.
We recently acquired Allegria Software, Inc., a company with Internet
technology resources and online collaborative software. This recent acquisition,
combined with our Web-enabling technology, allows us to offer to our current and
prospective customers our engineering software products online with real-time,
online collaboration through our web4engineers.com portal. Our web4engineers.com
portal will also offer ASP services, including applications hosting, data
hosting and portal services for engineering companies worldwide.
Our principal offices are located at 22700 Savi Ranch Parkway, Yorba
Linda, California 92887 and our telephone number is (714) 974-2500.
A description of our business is set forth in our Annual Report on Form
10-KSB for the fiscal year ended March 31, 2000, which description is
incorporated herein by this reference.
7
<PAGE>
THE OFFERING
Common stock offered by the selling
security holders 2,734,842(1)
Common stock outstanding prior to this
offering 13,644,467(2)
Common stock outstanding following
this offering if all shares are sold 15,790,275(1)(2)
Use of Proceeds All proceeds of the offering
will be received by the
selling security holders
(other than amounts, if any,
received by us upon exercise
of the warrants or options).
Risk Factors You should read the "Risk
Factors," beginning on page 9,
as well as other cautionary
statements throughout this
prospectus, before investing
in shares of our common stock.
------------------------
(1) Assumes (a) exercise of all of the warrants and options covered by this
prospectus in exchange for 826,352 shares of common stock and immediate
resale of all of such shares, and (b) conversion of all shares of Series B
Stock in exchange for 1,319,456 shares of common stock and immediate resale
of such shares. This number includes two times the number of shares of
common stock that would have been issuable on June 26, 2000, upon conversion
of all of the Series B Stock and upon exercise of all of the options and
warrants owned by Elliott Associates, L.P. and Westgate International, L.P.
The actual number of shares offered pursuant to the prospectus and the
actual number of shares of common stock outstanding before and after the
offering will vary, and may vary materially, depending upon how many shares
are issued pursuant to the conversion of the Series B Stock and exercise of
options and warrants as described in "Selling Security Holders-The Series B
Stock and Elliott and Westgate Warrants and Options."
(2) Does not include:
o 1,918,159 shares reserved for issuance under our stock option
plans, of which options to purchase 1,891,859 shares have been
granted and not exercised; or
o 235,000 shares issuable upon the exercise of certain outstanding
warrants.
8
<PAGE>
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IN
ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD CAREFULLY
CONSIDER THE FOLLOWING RISK FACTORS BEFORE DECIDING TO INVEST IN SHARES OF OUR
COMMON STOCK. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, IT IS LIKELY THAT OUR
BUSINESS, FINANCIAL CONDITION AND OPERATING RESULTS WOULD BE HARMED. AS A
RESULT, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU COULD LOSE
PART OR ALL OF YOUR INVESTMENT.
RISKS RELATED TO OUR BUSINESS
WE HAVE RECENTLY EXPANDED INTO NEW LINES OF BUSINESS AND PLAN TO EXPAND INTO
OTHER LINES OF BUSINESS. WE HAVE A LIMITED OPERATING HISTORY AND LACK EXPERIENCE
IN THESE NEW LINES OF BUSINESS MAKING IT DIFFICULT FOR US TO PREDICT OUR FUTURE
SUCCESS.
We have only recently diversified our business and are now offering
Internet content and commerce services for the PIO community, Internet-based IT
business-to-business services, telephony services to the PIO community and ASP
services to engineering software providers and their users worldwide. We intend
to provide Internet access and content services to the resident Indian consumer
and business markets and integrated communications services to and from India to
consumers, carriers and businesses. As a result, we have limited or no operating
histories in each of these new or proposed lines of business and therefore, our
historical financial information is of limited value in projecting our future
results. Our future success in these new markets which we have recently entered
and plan to enter in the future is, therefore, difficult to evaluate.
OUR NEW LINES OF BUSINESS MAY BE DIFFICULT TO INTEGRATE WITH OUR HISTORICAL CORE
BUSINESSES.
We have been in the engineering software business for approximately 18
years and our two recently acquired IT consulting businesses have a combined 10
years of operating experience. We have only recently entered the Internet
content and commerce services, Internet-based IT business-to-business services,
telephony services and engineering ASP services markets. In the future, we plan
to expand into the Internet service provider and integrated Indian-focused
communications markets. Our expansion into these new and proposed lines of
business may be particularly difficult for us to manage and acquisitions in
these fields may be more difficult for us to integrate, at least initially,
because they involve different disciplines and require different expertise than
our core businesses. In addition, this expansion may detract management's time
and attention away from our core businesses. If we are not able to attain the
level of expertise and reputation in these fields that we believe we have
attained in the engineering software field, and, through our acquisitions within
the IT consulting field, our business, financial condition and operating results
could be adversely affected.
IF WE ARE UNABLE TO EFFECTIVELY MANAGE OUR EXPANDED OPERATIONS, OUR BUSINESS
COULD BE ADVERSELY AFFECTED.
We have experienced rapid growth in the past year in some of our new
lines of business and expect to continue to experience rapid growth in all of
our new and proposed lines of business over the next several years. This growth
has placed, and will continue to place, a significant strain on our management
and other resources. Our ability to manage our growth will require us to
continue to improve our operational, financial and management information
systems, and to motivate and effectively manage our employees. Among other
things, we will need to hire and integrate new managers and install and operate
new or enhanced accounting, financial management and information systems. If we
are unable to manage our growth effectively, the quality of our products and
services, our ability to identify, hire and retain key personnel and our
business, financial condition and operating results could be adversely affected.
9
<PAGE>
OUR SUCCESS DEPENDS ON OUR ABILITY TO RETAIN OUR CURRENT MANAGEMENT TEAM AND
RECRUIT ADDITIONAL KEY MANAGEMENT AND TECHNICAL PERSONNEL.
Our future success depends to a large extent upon the continued
services of key managerial and technical employees and our ability to recruit,
assimilate and retain other highly qualified employees. Competition for
personnel is intense. There can be no assurance that we will be able to recruit,
assimilate and retain such personnel. The loss of the services of any of our key
employees or our inability to recruit and retain quality personnel could have a
material adverse effect on our business. We do not currently maintain life
insurance on the lives of any of our key employees.
THE MARKETS IN WHICH WE CURRENTLY AND PLAN TO COMPETE ARE HIGHLY COMPETITIVE AND
WE EXPECT THEM TO BECOME MORE COMPETITIVE IN THE FUTURE, WHICH COULD RESULT IN
SIGNIFICANT PRICE COMPETITION, REDUCED REVENUES, LOWER PROFIT MARGINS OR LOSS OF
MARKET SHARE.
The Internet access and portal services, Internet-based IT
business-to-business consulting services, Internet-based engineering software
products and services and telephony services markets are each highly
competitive. These markets may experience pricing and margin pressure, which as
a result, could adversely affect our operating results and financial position. A
number of companies offer products and services within the same markets that we
target. The market for Internet-based products and services is characterized by
an increasing number of entrants due to low start-up costs. Some of our
competitors and potential competitors have larger technical staffs, more
established and larger marketing and sales organizations and significantly
greater financial resources than us. Our competitors may develop products and
services that are superior to ours or that achieve greater market acceptance.
Our future success will depend significantly upon our ability to increase our
share of our target markets and to sell additional products, product
enhancements and services to our customers. We may not be able to compete
successfully, and competition may result in decreases in:
o the prices we receive for our products and services;
o our revenues;
o our advertising rates;
o the number of visitors to our site;
o our profit margins; or
o our market share.
Any of these decreases could adversely affect our business and results of
operations.
IN ORDER TO COMPETE SUCCESSFULLY, WE MUST KEEP PACE WITH THE RAPID CHANGES
INVOLVING TECHNOLOGY AND THE INTERNET.
We currently compete in the Internet content and commerce services,
Internet-based IT business-to-business consulting services, Internet-based
engineering software products and services and telephony services markets. We
plan to compete in the Internet service provider and integrated communications
markets. Each of these markets is characterized by rapid technological advances,
changes in customer requirements and frequent new product and services
introductions and enhancements. Our future success will depend upon our ability
to enhance our current products and services and to develop and introduce new
products and services that keep pace with technological developments, respond to
the growth in the Internet, encompass evolving customer requirements and achieve
market acceptance. Any failure on our part to anticipate or respond adequately
to technological developments and customer requirements, or any significant
delays in product development or introduction, could result in a loss of
competitiveness, revenues, profit margins or market share. There is no assurance
that new products or product enhancements which we develop will achieve market
acceptance.
10
<PAGE>
IF WE ARE UNABLE TO DEVELOP STRATEGIC RELATIONSHIPS WITH CONTENT AND COMMERCE
PROVIDERS, OUR INTERNET PORTAL BUSINESS COULD BE ADVERSELY AFFECTED.
Strategic relationships with content and commerce providers are
critical to our success in our Internet portal business. We are in the process
of negotiating a number of third party relationships with content and commerce
providers. We expect that most of these relationships will not be exclusive and
will be short-term or can be terminated for convenience. We cannot assure you
that we will be successful in entering into any of these relationships or, if we
do, that any such relationship will result in attractive content and commerce
offerings. If we are unable to deliver valuable content and commerce through our
Internet portal, we will be unable to attract and retain a significant number of
users, subscribers and advertisers, and, as a result, our revenue from commerce
and advertising will not meet our expectations, and our business, financial
condition and operating results would be adversely affected.
IF WE DO NOT BUILD BRAND NAME AND REPUTATION QUICKLY, OUR ABILITY TO ATTRACT AND
RETAIN CUSTOMERS COULD BE ADVERSELY AFFECTED.
We believe it is critical to establish, maintain and strengthen our
reputation and brand in order to establish and expand our customer base. We also
believe that as the markets in which we currently compete and plan to compete
become increasingly competitive, the importance of reputation and brand will
increase. If our initial brand-building efforts are unsuccessful, we may not
experience an increase in Internet traffic needed to generate sufficient
revenues to offset the increase in marketing expenses. As a result, our
operating results and financial condition could be adversely affected. Our
Internet portal will be more attractive to advertisers if we have a large
audience of consumers with demographic characteristics that advertisers perceive
as favorable. Therefore, we intend to introduce additional and enhanced content
and commerce offerings, interactive tools and other services and features in the
future in an effort to retain our current subscribers and users and to attract
new ones. Our reputation and brand name could be adversely affected if we are
unable to enhance our Internet portal successfully.
THE UNPREDICTABILITY OF OUR QUARTERLY OPERATING RESULTS MAY CAUSE THE PRICE OF
OUR COMMON STOCK TO DECLINE.
Our quarterly operating results have varied in the past and may
continue to fluctuate significantly in the future due to a number of factors,
many of which are beyond our control. If our operating results do not meet the
expectations of securities analysts or investors, our stock price may decline.
Fluctuations in our operating results may result from a number of factors,
including the following:
o the level of advertising and e-commerce activity on our special
interest portal;
o the number of purchasers of our phone cards and the level of usage
by those purchasers;
11
<PAGE>
o the level of demand for Internet-based IT business-to-business
consulting services and Internet-based engineering software
products and services;
o the acceptance of online hosting of engineering applications;
o the prices which we are able to charge for our products and
services;
o costs related to possible acquisitions of new technologies and
businesses;
o changes affecting the telecommunication infrastructure in India,
the Internet generally or the operation of our Web sites;
o the amount and timing of capital expenditures and other costs
relating to the expansion of our Internet network; and
o general economic conditions.
We plan to increase our expenditures for our sales and marketing
operations, expand and develop content and enhance our technology and
infrastructure development. Many of our expenses are relatively fixed in the
short-term. We cannot assure you that our revenues will increase in proportion
to the increase in our expenses. We may be unable to adjust spending quickly
enough to offset any unexpected revenues shortfall. This could lead to a
shortfall in revenues in relation to our expenses.
WE RELY ON A THIRD-PARTY COMMUNICATIONS INFRASTRUCTURE OVER WHICH WE HAVE NO
CONTROL.
If the quality and maintenance of the third-party communications
infrastructure on which we rely suffers, our service could be disrupted, our
reputation could be harmed and we could lose customers. This infrastructure is
used to carry our voice traffic. We have no control over whether the
infrastructure on which we rely will be adequately maintained by these third
parties or whether these third parties are able to upgrade or improve their
equipment and prevent it from becoming obsolete. If these third parties fail to
maintain, upgrade or improve their equipment, our business may be materially
harmed.
WE COULD EXPERIENCE SYSTEM FAILURES THAT PREVENT US FROM OPERATING OUR INTERNET
BUSINESS.
Our business depends on the efficient and uninterrupted operation of
our computer hardware and software systems. In addition, we rely on the Internet
and, accordingly, depend upon the continuous, reliable and secure operation of
Internet servers, related hardware and software and network infrastructure such
as lines leased from service providers operated by the government of India. We
have a back-up data facility. Although we have designed our system for complete
redundancies of all major computer components, we cannot be sure that our system
will be fail-safe. As a result, failure of key primary or back-up systems to
operate properly could lead to a loss of customers, damage to our reputation and
violations of our Internet service provider license and contracts with corporate
customers. These failures could also lead to a decrease in the value of our
common stock, significant negative publicity and litigation.
Our Internet service provider license requires that we provide an
acceptable level of service quality and that we remedy customer complaints
within a specified time period. Our computer and communications hardware are
protected through physical and software safeguards. However, they remain
vulnerable to fire, storm, flood, power loss, power surges, telecommunications
failures, physical or software break-ins, software viruses and similar events.
We do not carry business interruption insurance to protect us in the event of a
catastrophe, even though such an event could lead to a significant negative
impact on our business. Any sustained disruption in Internet access provided by
third parties could also have a material adverse effect on our business.
12
<PAGE>
FINANCIAL STATEMENTS OF OUR FOREIGN SUBSIDIARIES ARE PREPARED USING THE RELEVANT
FOREIGN CURRENCY WHICH MUST BE CONVERTED INTO U.S. DOLLARS FOR INCLUSION IN OUR
CONSOLIDATED FINANCIAL STATEMENTS. AS A RESULT, EXCHANGE RATE FLUCTUATIONS MAY
ADVERSELY IMPACT OUR REPORTED RESULTS OF OPERATIONS.
We have established and acquired several international subsidiaries,
which prepare their balance sheets in the relevant foreign currency. In order to
be included in our consolidated financial statements, these balance sheets are
converted, at the then current exchange rate, into U.S. dollars and the
statements of operations are converted using weighted average exchange rates for
the applicable periods. Therefore, exchange rate fluctuations can have a
detrimental effect on our reported earnings. We do not engage in hedging
activities to protect against the risk of currency fluctuations. Foreign
currency denominated sales may result in gains and losses on the conversion to
U.S. dollars. We have historically denominated sales by our foreign subsidiaries
in the local currency.
RISKS RELATED TO OUR OPERATIONS IN INDIA
OUR COMMITMENT OF SIGNIFICANT RESOURCES AND EXPANSION OF OUR ACTIVITIES IN INDIA
COULD PROVE TO BE UNPROFITABLE DUE TO RISKS INHERENT IN INTERNATIONAL BUSINESS
ACTIVITIES.
Sales of our products and services to customers located outside the
U.S. accounted for approximately 28.9% and 55.3% of our net revenue for the
fiscal years ended March 31, 2000 and March 31, 1999, respectively. We
anticipate that international sales will account for a significantly increased
portion of our total revenues in the future. Consequently, we are subject to a
number of risks associated with international business activities that could
adversely affect our operations in India and slow our growth. These risks
generally include, among others:
o difficulties in managing and staffing our Indian operations;
o difficulties in obtaining or maintaining regulatory approvals or in
complying with Indian laws;
o reduced or less certain protection for intellectual property
rights;
o increased collection risks;
o differing technological advances, preferences or requirements;
o trade restrictions;
o foreign currency fluctuations; and
o general economic conditions, including instability, in the Indian
market.
Any of these risks could adversely affect our business and results of
operations.
THE INDIAN GOVERNMENT MAY CHANGE ITS REGULATION OF OUR BUSINESS OR THE TERMS OF
OUR LICENSE TO PROVIDE INTERNET ACCESS SERVICES, EITHER OF WHICH COULD
NEGATIVELY IMPACT OUR OPERATING RESULTS.
13
<PAGE>
Our business is subject to regulation under Indian law and our Internet
service provider license is also subject to regulation. These regulations
include the following:
o Our Internet service provider license has a term of 15 years; we
have no assurance that the license will be renewed. If we are
unable to renew our Internet service provider license in 2015 for
any reason, we will be unable to operate as an Internet service
provider in India and will lose one of our sources of revenue.
o The government of India and the Telecom Regulatory Authority of
India, or TRAI, maintain the right to regulate the prices we charge
our subscribers. The success of our business model depends on our
ability to price our services at levels that we believe are
appropriate. If the government or the TRAI sets a price floor, we
may not be able to attract and retain subscribers. Likewise, if the
government or the TRAI sets a price ceiling, we may not be able to
generate sufficient revenues to fund our operations.
o The government of India maintains the right to take over our entire
operations or revoke, terminate or suspend our license for national
security and similar reasons without compensation to us. If the
government of India were to take any of these actions, we would be
prevented from conducting a significant part of our business.
We had outstanding performance guarantees for various statutory
purposes totaling approximately $475,000 as of May 31, 2000. These guarantees
are generally provided to government agencies, as security for compliance with
and performance of terms and conditions contained in an Internet service
provider license towards the supply and installation of an e-commerce platform.
These guarantees may be seized by the governmental agencies if they suffer any
losses or damage by reason of our failure to perform our obligations. Any
failure on our part to comply with governmental regulations and the terms of our
Internet service provider license could result in the loss of our license and
any amount outstanding as performance guarantees, which would also prevent us
from carrying on a significant part of our business. Further, additional laws
regulating telecommunications, electronic records, the enforceability of
electronic documents and the liability of network service providers are under
consideration and if enacted, could impose additional restrictions on our
business.
IF THERE IS A CHANGE IN THE CURRENT INDIAN GOVERNMENT POLICY FAVORING
DEREGULATION, OUR BUSINESS COULD BE HARMED.
During the past decade, the government of India has pursued policies of
economic liberalization, including significant relaxation of restrictions on the
private business sector. Although the Indian government has changed three times
since 1996, the policies of economic liberalization have continued. The current
government has continued these policies of liberalization and deregulation,
which have resulted in significantly increased opportunities for publicly and
privately held businesses in the Internet access and telecommunications markets
in which we operate in India. Although there are no indications that these
trends will not continue, there can be no assurance that the current government
will remain in power or that these policies will continue. A significant change
in the Indian government's policies could materially adversely affect our
business and results of operations.
CONFLICTS INVOLVING INDIA COULD ADVERSELY AFFECT THE INDIAN ECONOMY AND HARM OUR
BUSINESS.
South Asia has from time to time experienced civil unrest and
hostilities among neighboring countries, including India and Pakistan. In April
1999, India and Pakistan conducted long-range missile tests. Since May 1999,
military confrontations between India and Pakistan have occurred in the disputed
Himalayan region of Kargill. Further, in October of 1999, the leadership of
Pakistan changed as a result of a coup led by the military. If a conflict
involving India and any of its neighboring countries should occur, it could have
an adverse affect on the Indian economy and our business would be adversely
affected.
14
<PAGE>
RISKS RELATED TO THE INTERNET MARKET IN INDIA
BANDWIDTH CAPACITY IN INDIA IS LIMITED AND MAY LIMIT THE GROWTH OF THE INTERNET
IN INDIA AND SLOW OUR GROWTH.
Bandwidth capacity, which is the measurement of the volume of data
capable of being transported in a communications system in a given amount of
time, is limited in India. The current limited bandwidth capacity in India may
severely limit the quality and desirability of using the Internet in India and,
in turn, slow our growth.
THE LIMITED INSTALLED PERSONAL COMPUTER BASE IN INDIA LIMITS THE NUMBER OF
POTENTIAL CUSTOMERS AND RESTRICTS THE AMOUNT OF REVENUES THAT WE CAN GENERATE.
The market penetration rates of pcs and online access in India are very
low. According to International Data Corporation, or IDC, at the end of 1998,
the Indian market contained 1.9 million personal computer owners, which is less
than 1% of the total population in India of 987 million. Alternate methods of
obtaining access to the Internet, such as through cable television modems or
set-top boxes for televisions, are currently unavailable in India. There can be
no assurance that the number or penetration rate of pcs in India will increase
rapidly, or at all, or that alternate means of accessing the Internet will
develop and become widely available in India. If the market penetration rates of
pcs and online access in India do not increase rapidly, or we are unable to
provide alternative means of Internet access to the Indian market, we will be
unable to generate significant revenue in India and we will not generate the
revenue which we expect to generate from this line of business.
RISKS RELATED TO THE INTERNET
WE MAY BE LIABLE TO THIRD PARTIES FOR INFORMATION RETRIEVED FROM THE INTERNET.
Because users of our Internet access services and visitors to our
portal network may distribute our content to others, third parties may sue us
for defamation, negligence, copyright or trademark infringement, personal injury
or other matters. We could also become liable if confidential information is
disclosed inappropriately. Others could also sue us for the content and services
that are accessible from our portal network through links to other Web sites or
through content and materials that may be posted by our users in chat rooms or
bulletin boards. We do not carry insurance to protect us against these types of
claims, and there is no precedent on Internet service provider liability under
Indian law.
OUR BUSINESS MAY NOT BE COMPATIBLE WITH DELIVERY METHODS OF INTERNET ACCESS
SERVICES DEVELOPED IN THE FUTURE.
We face the risk that fundamental changes may occur in the delivery of
Internet access services. Currently, Internet services are accessed primarily by
computers and are delivered by modems using telephone lines. As the Internet
becomes accessible by cellular telephones, personal data assistants, television
set-top boxes and other consumer electronic devices, and becomes deliverable
through other means involving coaxial cable or wireless transmission media, we
will have to develop new technology or modify our existing technology to
accommodate these developments. Our pursuit of these technological advances,
whether directly through internal development or by a third party license, may
require substantial time and expense. We may be unable to adapt our Internet
service business to alternate delivery means and new technologies may not be
available to us at all.
15
<PAGE>
OUR PRODUCT AND SERVICE OFFERINGS MAY NOT BE COMPATIBLE WITH INDUSTRY STANDARDS
DEVELOPED IN THE FUTURE.
Our ability to compete successfully depends upon the continued
compatibility and interoperability of our services with products and
architectures offered by various vendors. Although we intend to support emerging
standards in the market for Internet access, industry standards may not be
established and, if they become established, we may not be able to conform to
these new standards in a timely fashion or maintain a competitive position in
the market. The announcement or introduction of new products or services by us
or our competitors and any change in industry standards could cause customers to
defer or cancel purchases of existing products or services.
ONLINE SECURITY BREACHES COULD HARM OUR BUSINESS.
Security breaches of our systems and network infrastructure, or the
perception that they could occur, could harm our business and reputation.
Despite the implementation of security measures, our infrastructure may be
vulnerable to physical break-ins, computer viruses, programming errors or
similar disruptive problems. If our security measures are circumvented, the
security of confidential information stored on our systems could be jeopardized,
proprietary information could be misappropriated and interruptions in our
operations could result. We may be required to make significant additional
investments and efforts to protect against or remedy security breaches. A
material security breach could damage our reputation or result in liability to
us, and we do not carry insurance that protects us from this kind of loss.
RISKS RELATED TO THE TELEPHONY INDUSTRY
THE TELECOMMUNICATIONS INFRASTRUCTURE IN INDIA IS DEVELOPING AND MAY NOT BE
RELIABLE.
The legal framework for telecommunications businesses in India is
developing and may change in ways that would adversely affect our ability to
operate and grow our business in India. Laws and regulations may be introduced
in India governing various aspects of the industry and the use of the Internet
as a medium for conducting business. We cannot predict the effect of further
developments in the Indian legal system, particularly with regard to the
Internet, including the promulgation of new laws, changes to existing laws or
their interpretation or enforcement, or the preemption of local regulations by
national laws.
U.S. FEDERAL OR STATE GOVERNMENTS MAY INCREASE TELEPHONY REGULATION, WHICH COULD
ADVERSELY AFFECT OUR BUSINESS.
Our provision of telecommunications services is subject to government
regulation in the U.S. Federal law regulates international and interstate
telecommunications, while states have jurisdiction over telecommunications that
originate and terminate within the same state. Changes in existing policies or
regulations by Congress, by the Federal Communications Commission, or the FCC,
or any state could materially adversely affect our financial condition or
results of operations. There can be no assurance that the regulatory authorities
in one or more states or the FCC will not take action having an adverse effect
on our business, financial condition or operating results.
16
<PAGE>
RISKS RELATING TO OUR STOCK
OUR STOCK PRICE MAY BE VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES FOR
INVESTORS PURCHASING SHARES OF OUR COMMON STOCK.
The market prices of securities of other technology-based companies,
particularly Internet-related companies, are currently highly volatile. The
market price of our common stock has fluctuated significantly in the past seven
months. Our market price may continue to exhibit significant fluctuations in
response to the following factors, some of which are beyond our control:
o variations in our quarterly operating results;
o deviations in our results of operations from the estimates of
securities analysts;
o changes in securities analysts' estimates of our financial
performance;
o changes in market valuations of similar companies and stock market
price and volume fluctuations generally;
o economic conditions specific to the Internet and online commerce
products and services;
o announcements by us or our competitors of new or enhanced products,
technologies or services or significant contracts, acquisitions,
strategic relationships, joint ventures or capital commitments;
o regulatory developments;
o additions or departures of key personnel; and
o future sales of our common stock or other securities.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation. Securities
litigation could result in substantial costs and divert management's attention
and resources.
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE AND ADEQUATE FINANCING MAY NOT BE
AVAILABLE.
Our future capital requirements will depend upon many factors,
including the expansion of our sales and marketing efforts, the development of
new products and services, possible future strategic acquisitions, the progress
of our research and development efforts, and the status of competitive products
and services. We believe that current and future available capital resources
will be adequate to fund our operations for the foreseeable future. However, to
the extent we are in need of any additional financing, there can be no assurance
that any such additional financing will be available to us on acceptable terms,
or at all. If additional funds are raised by issuing equity securities, further
dilution to our existing stockholders may result. If adequate funds are not
available, we may be required to delay, scale back or eliminate our research and
development program and our marketing efforts or to obtain funds through
arrangements with partners or others that may require us to relinquish rights to
certain of our technologies or potential products or other assets. Accordingly,
the inability to obtain such financing could adversely affect our business,
financial condition and results of operations.
17
<PAGE>
OUR PREFERRED STOCK MAY DELAY OR PREVENT A TAKEOVER OF OUR COMPANY POSSIBLY
PREVENTING YOU FROM OBTAINING HIGHER STOCK PRICES FOR YOUR SHARES.
Our board of directors has the authority to issue up to 5,000,000
shares of preferred stock and to fix the rights, preferences, privileges and
restrictions, including voting rights of those shares without any further vote
or action by our stockholders. Of these shares, 12,000 have been designated
Series B Cumulative Convertible Preferred Stock, all of which are issued and
outstanding. The rights of the holders of our common stock are subject to the
rights of the holders of our Series B Cumulative Convertible Preferred Stock and
will be subject to, and may be adversely affected by, the rights of the holders
of any preferred stock that we may issue in the future. The issuance of
preferred stock, while providing desired flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of our outstanding voting
stock, thereby delaying, deferring or preventing a change in control of our
company. Furthermore, such preferred stock may have other rights, including
economic rights senior to the common stock, and, as a result, the issuance
thereof could adversely affect the market value of our common stock. We have no
present plans to issue additional shares of preferred stock.
THE CONCENTRATION OF OWNERSHIP OF OUR COMMON STOCK AND THE ANTI-TAKEOVER EFFECTS
OF DELAWARE LAW COULD ADVERSELY AFFECT THE PERFORMANCE OF OUR STOCK.
As of May 26, 2000, our executive officers and directors and their
family members together beneficially owned approximately 58.7% of the issued and
outstanding shares of our common stock. As a result, such persons will have the
ability to elect a majority of directors and exert control over our affairs,
irrespective of how our other stockholders may vote. This concentration of
ownership may have the effect of delaying or preventing a change in control of
our company. In addition, Section 203 of the General Corporation Law of Delaware
prohibits us from engaging in certain business combinations with interested
stockholders, as defined by statute. These provisions may have the effect of
delaying or preventing a change in control of our company without action by our
stockholders, and therefore could adversely affect the price of our common
stock.
18
<PAGE>
PRICE RANGE OF COMMON STOCK
Our common stock has been traded on the Nasdaq National Market since
our initial public offering in July 1996, initially under the symbol "RENG" and
since March 2000, under the symbol "NGRU." Prior to July 1996, there was no
public market for our shares. The following table sets forth for each fiscal
quarter indicated, the high and low closing sale prices as reported on the
Nasdaq National Market.
<TABLE>
<CAPTION>
FISCAL 2001 FISCAL 2000 FISCAL 1999
-------------------- -------------------- --------------------
LOW HIGH LOW HIGH LOW HIGH
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter (April 1 - June 30)............. $16.50(1) $29.00(1) $ 3.94 $ 5.50 $ 2.50 $ 3.59
Second Quarter (July 1 - September 30)........ N/A N/A 4.25 5.25 2.25 3.06
Third Quarter (October 1 - December 31)....... N/A N/A 4.47 24.50 1.50 2.47
Fourth Quarter (January 1 - March 31)......... N/A N/A 22.75 55.75 1.50 4.38
--------------------
</TABLE>
(1) The prices shown for fiscal 2001 are through June 26, 2000.
On February 7, 2000, we effected a 2-for-1 stock split of our common
stock. The above high and low closing sales prices have been adjusted to reflect
this stock split.
At June 26, 2000, there were approximately 47 registered holders of our
outstanding shares of common stock and the closing sale price of our common
stock on the Nasdaq National Market was $20.00 per share.
DIVIDEND POLICY
We have never declared or paid dividends on our common stock. Any
future decision to pay dividends on our common stock remains within the
discretion of our board of directors. We currently intend to retain any future
earnings to support operations and to finance the growth and development of our
business and do not anticipate paying dividends on our common stock in the
foreseeable future.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common shares is American
Stock Transfer & Trust Company, New York, New York.
19
<PAGE>
SELLING SECURITY HOLDERS
GENERAL
There are 15 selling security holders. The selling security holders are
acting individually, not as a group. None of the selling security holders or
their affiliates has held any position, office or other material relationship,
other than as a security holder, with us. The securities registered under the
registration statement of which this prospectus is a part include shares of
common stock issuable upon conversion of our Series B Stock and upon the
exercise of certain outstanding options and warrants, as described in the
footnotes which follow the table set forth below. In this prospectus, we
sometimes refer to Elliott Associates, L.P., as "Elliott" and to Westgate
International, L.P., as "Westgate." The following table sets forth certain
information as of June 26, 2000, with respect to each selling security holder
for whom we are registering shares of common stock for resale.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
SHARES OF COMMON COMMON STOCK
STOCK BENEFICIALLY SHARES OF BENEFICIALLY PERCENTAGE
OWNED PRIOR TO COMMON STOCK OWNED BENEFICIALLY
NAME OF SELLING THIS BEING AFTER OWNED AFTER
SECURITY HOLDER OFFERING(1) REGISTERED OFFERING(2) OFFERING(3)
----------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Elliott Associates, L.P............ 709,044 (4) 1,120,271 (5) 68,900 *
Westgate International, L.P........ 709,044 (4) 1,120,271 (5) 68,900 *
Shoreline Pacific Institutional
Finance.......................... 15,300 (6) 15,300 -- --
Roth Capital Partners.............. 460,000 (7) 260,000 200,000 1.3%
Rakesh Kapoor...................... 80,000 (8) 80,000 -- --
Dhanesh Bhindi..................... 26,656 (9) 26,656 -- --
Vinod Bhindi....................... 26,672(10) 26,672 -- --
Jayent Bhindi...................... 26,672(10) 26,672 -- --
Alok Gupta......................... 4,000 4,000 -- --
Marty Tullio....................... 22,500(11) 22,500 -- --
George Logan....................... 22,500(11) 22,500 -- --
Gordon McBean...................... 18,000(12) 5,000 13,000 *
GRAL, Inc.......................... 13,000 3,000 10,000 *
Robert Bruns....................... 6,000 1,000 5,000 *
Koushik Dutta...................... 6,000 1,000 5,000 *
All selling security holders as a
group............................ 2,145,388 2,734,842(13) 370,800 2.3%
-------------------------
</TABLE>
*Less than 1%
(1) Based on an aggregate of 13,644,467 shares of common stock issued and
outstanding as of June 26, 2000. Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes voting or
investment power with respect to securities. These numbers include shares
offered pursuant to this prospectus, where such shares are subject to
options and warrants even if not exercisable within 60 days. Except as
otherwise indicated by footnote and subject to applicable community
property laws, the persons named in the table above have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them. All information with respect to beneficial
ownership is based on filings made by the respective beneficial owners
with the SEC or information provided to us by such beneficial owners.
(2) The figures shown assume the sale of all shares of common stock being
registered hereby.
20
<PAGE>
(3) The percentages set forth in this column have been computed assuming the
number of shares of common stock outstanding equals the sum of (a)
15,790,275, which is the number of shares of common stock outstanding
after the offering assuming the sale of all of the shares being offered
hereby; and (b) shares of our common stock subject to options and
warrants which are deemed to be beneficially owned by the security holder
after this offering which are not covered by this prospectus.
(4) Consists of 198,917 shares of common stock, 75,000 shares of common stock
underlying warrants, 105,263 shares of common stock underlying options
and 329,864 shares of common stock into which Series B Stock owned by the
selling security holder is convertible calculated as of June 26, 2000. In
determining how many common shares are issuable upon conversion of the
outstanding shares of Series B Stock and upon exercise of the outstanding
options and warrants, we have assumed that all of the outstanding shares
of Series B Stock were converted and all options and warrants were
exercised on June 26, 2000, without regard to the application of the
9.99% limitation in the case of the securities owned by Elliott and
Westgate. Since the number of shares of common stock into which the
Series B Stock, options and warrants held by Elliott and Westgate are
convertible or exercisable are limited pursuant to the terms of such
instruments to the number of shares of common stock which would result in
Elliott and Westgate having aggregate beneficial ownership of 9.99% of
the total outstanding shares of common stock, Elliott and Westgate in the
aggregate beneficially own 9.99% of the total outstanding shares of
common stock as calculated pursuant to Rule 13d-3 of the Securities
Exchange Act of 1934 and expressly disclaim beneficial ownership of any
number of shares exceeding 9.99% shares of common stock for purposes of
such rule. This prospectus and the registration statement covers two
times the number of common shares that would have been issued had all of
the shares of Series B Stock been converted and all of the outstanding
options and warrants owned by Elliott and Westgate been exercised at the
then applicable exercise and conversion prices on June 26, 2000 (without
regard to the 9.99% limitation). See "Selling Security Holders--The
Series B Stock and Elliott and Westgate Warrants and Options."
(5) As required by a registration rights agreement to which this selling
security holder is a party, the number of shares that may be offered
pursuant to this prospectus is equal to two times the number of shares of
common stock issuable by us on June 26, 2000 upon full conversion of all
of the Series B Stock at the then applicable conversion price and upon
full exercise of all of such security holder's options and warrants to
purchase common stock at the then applicable exercise prices (without
regard to the 9.99% limitation), plus the number of shares of common
stock held by such security holder.
(6) Consists solely of shares of common stock underlying a warrant.
(7) Includes 200,000 shares of common stock underlying a warrant.
(8) Includes 50,000 shares of common stock underlying options.
(9) Includes 16,660 shares of common stock underlying options.
(10) Includes 16,670 shares of common stock underlying options.
(11) Consists solely of shares of common stock underlying a warrant.
(12) Includes 5,000 shares of common stock underlying a warrant.
(13) Includes 589,034 shares of common stock; 1,319,456 shares of common stock
issuable upon conversion of the Series B Stock; and 826,352 shares of
common stock issuable upon exercise of certain outstanding options and
warrants.
21
<PAGE>
SHARES OFFERED UNDER THIS PROSPECTUS
THE SERIES B STOCK AND ELLIOTT AND WESTGATE WARRANTS AND OPTIONS
On March 8, 2000, we entered into a securities purchase agreement
pursuant to which Elliott and Westgate acquired the number of Series A
Cumulative Convertible Preferred Shares (subsequently exchanged for shares of
our Series B Stock), warrants to purchase common shares and options to purchase
common shares set forth in the table below. For purposes of this prospectus, we
refer to this securities purchase agreement as the March Securities Purchase
Agreement.
<TABLE>
<CAPTION>
Number of Number of Number of
Series B Cumulative Shares Shares
Convertible Underlying Underlying
Selling Security Holder Preferred Shares Warrants Options(2)
----------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C>
Elliott Associates, L.P.............. 6,000(1) 45,000 105,263
Westgate International, L.P.......... 6,000(1) 45,000 105,263
-----------------------
</TABLE>
(1) On June 23, 2000, each of Elliott and Westgate converted 330 shares of
the 6,000 shares of Series B Stock into 20,006 shares of common stock,
and on June 26, 2000, they each converted an additional 167 shares of the
remaining 5,670 shares of Series B Stock into 10,011 shares of common
stock.
(2) Number of shares underlying options is based on an exercise price per
share of $28.50, which is the fixed price per share as provided in the
March Securities Purchase Agreement.
Under a registration rights agreement that we entered into with Elliott
and Westgate in connection with the March Securities Purchase Agreement, we are
required initially to register the number of shares set forth in the bullet
points below. This registration rights agreement requires us to initially
register two times the number of shares of common stock issuable upon conversion
of the Series B Stock at the then applicable conversion price, and upon exercise
of the options and warrants that we issued in that transaction, at the then
applicable exercise prices. As a result, the number of shares offered pursuant
to this prospectus by Elliott and Westgate include the following components,
which amounts represent twice the number of shares into which the Series B Stock
is convertible and for which the options and warrants issued in connection with
the March Securities Purchase Agreement and held by Elliott and Westgate are
exercisable:
o 90,000 shares of our common stock which Elliott and Westgate can
each acquire under warrants which are exercisable at $28.50 per
share;
o 659,728 shares of our common stock into which Series B Stock held
by each of Elliott and Westgate is convertible. This number is
determined based upon the assumption that the conversion of the
Series B Stock into common stock will occur at a conversion price
of $16.9375 per share; and
o 210,526 shares of our common stock which Elliott and Westgate each
have the right to acquire under options which are exercisable at
$28.50 per share.
On June 22, 2000, we entered into another securities purchase agreement
with Elliott and Westgate pursuant to which we issued to each of Elliott and
Westgate 100,000 shares of common stock and a warrant to purchase 30,000 shares
of common stock. For purposes of this prospectus, we refer to this securities
purchase agreement as the June Securities Purchase Agreement.
22
<PAGE>
In connection with the June Securities Purchase Agreement, we entered
into a registration rights agreement with Elliott and Westgate under which we
are obligated to register the following securities:
o 100,000 shares of common stock for each of Elliott and Westgate;
and
o 30,000 shares of common stock which Elliott and Westgate can each
acquire under warrants which are exercisable at $19.00 per share.
Elliott and Westgate are each offering an indeterminate number of
shares of our common stock. They each have 130,017 shares of our common stock
(30,017 of which they each received upon conversion of shares of Series B Stock)
and the right to acquire the shares being offered by them hereby under the terms
of 5,503 shares of Series B Stock, warrants to purchase 75,000 shares of our
common stock and options to purchase 105,263 shares of our common stock that
they acquired under the March Securities Purchase Agreement and the June
Securities Purchase Agreement. For purposes of this prospectus, it has been
assumed that Elliott and Westgate will each offer the total number of shares of
common stock into which the Series B Stock is convertible at the applicable
conversion price, and which are issuable upon exercise of the options and
warrants held by them at the applicable exercise prices on June 26, 2000.
SERIES B STOCK
The Series B Stock may be converted at the option of the holder by
giving notice to us of its election to do so. The conversion price is the lesser
of (a) $28.50, which is the fixed price provided in the certificate of
designations of the Series B Stock, or (b) the average of the lowest five
closing bid prices of our common stock on any five trading days during the 20
trading days immediately preceding the date of conversion.
On March 8, 2003, all outstanding shares of Series B Stock will
automatically be converted into common stock at the then applicable conversion
price, subject to the option of the holder of Series B Stock to defer such
conversion in limited circumstances.
In the event of a "change in control transaction" (as defined in our
certificate of designations), a "going private" transaction under Rule 13e-3 of
the Exchange Act, or a tender offer by us under Rule 13e-4 of the Exchange Act,
Elliott and Westgate each have the option of requiring us to repurchase all or a
portion of their shares of Series B Stock within three days of providing us with
written notice requiring such repurchase. The repurchase price per share is
equal to the greater of (a) 120% of the liquidation preference, or (b) the
liquidation preference for the preferred shares being sold to us divided by the
then applicable conversion price multiplied by the greater of the last closing
price of our common stock on the date the security holder exercises its option
requiring us to repurchase its preferred shares, or the date on which the event
triggering the security holder's right to require us to repurchase such shares
occurred. The liquidation preference is $1,000 plus (a) any dividends payable to
the security holder; (b) all accrued but unpaid dividends; and (c) accrued but
unpaid monthly delay payments due under the registration rights agreement
between us and Elliott and Westgate and defined as a cash payment equal to 1% of
the liquidation preference for the first 30 day period (or portion thereof) that
a specified condition in such agreement has not been fulfilled or remedied; 2%
of such liquidation preference for the next 30 day period (or portion thereof)
that such condition has not been fulfilled or remedied; and 3% of such
liquidation preference thereafter for each subsequent 30 day period (or portion
thereof) that such condition has not been fulfilled or remedied.
The overall limit on the number of shares of our common stock issuable
by us and acquirable by the holders of our Series B Stock is 2,645,093 shares,
subject to adjustments for stock splits, stock dividends, or other similar
recapitalizations affecting the common stock, unless the issuance of a greater
number of shares is first approved by our security holders in accordance with
our certificate of incorporation and bylaws.
23
<PAGE>
All shares being offered by Elliott and Westgate are being registered
pursuant to registration rights agreements with us.
ELLIOTT AND WESTGATE WARRANTS
The warrants issued to each of Elliott and Westgate pursuant to the
March Securities Purchase Agreement have an exercise price of $28.50 per share
(and a cashless exercise option at any time when the shares subject to the
warrants are not covered by an effective registration statement) and are
exercisable until March 8, 2005. The warrants issued to each of Elliott and
Westgate pursuant to the June Securities Purchase Agreement have an exercise
price of $19.00 per share and are exercisable until June 22, 2005. The terms of
the warrants provide that the holder of the warrants may not exercise its
warrants, if, after such exercise, such holder, together with any of its
affiliates, would beneficially own over 9.99% of our outstanding common shares.
These warrants include standard anti-dilution provisions pursuant to which the
exercise price and number of shares issuable thereunder is adjusted
proportionately in the event of a stock split, stock dividend, recapitalization
or similar transaction. The shares being offered hereby include the common
shares issuable upon the exercise of the warrants issued pursuant to both the
March Securities Purchase Agreement and the June Securities Purchase Agreement.
ELLIOTT AND WESTGATE OPTIONS
Pursuant to the March Securities Purchase Agreement, we granted to each
of Elliott and Westgate an option to purchase shares of our common stock with an
exercise price equal to the fixed price provided for in our certificate of
designations, or $28.50 per share, for an aggregate purchase price of up to $6
million (including both Elliott and Westgate). These options may be exercised
for a one year period beginning on July 6, 2000. During any time when the shares
subject to these options are not covered by an effective registration agreement,
the optionee may conduct a cashless exercise for the shares, in which case the
number of shares to be issued upon such exercise will be the (a) product of (i)
the number of options to be exercised; and (ii) the market value of a share of
our common stock, minus $28.50 (the fixed price per share provided in our
certificate of designations), subject to adjustment as provided for therein;
divided by (b) the market value per share of our common stock. Elliott and
Westgate have each agreed that they will not exercise their options, if, after
such exercise, such holder, together with any of its affiliates would
beneficially own over 9.99% of our outstanding common shares. In the event that
the closing bid price per share of our common stock exceeds $38.00 for a period
of 20 consecutive trading days, and provided that certain other conditions in
the securities purchase agreement are satisfied, we have the right to terminate
these options by providing notice to the optionee of our intention to do so. In
this case, the optionees will have 30 trading days to exercise their options.
If, during such 30 day period, the closing bid price of our common stock falls
below $38.00 per share, any termination notice previously given by us will
become null and void.
ELLIOTT AND WESTGATE REGISTRATION RIGHTS
In connection with the March Securities Purchase Agreement, we entered
into a registration rights agreement pursuant to which we are obligated to file
a registration statement registering for resale by the holders of the Series B
Stock, warrants and options, the common shares issuable upon conversion or
exercise thereof. In order to ensure that the registration statement covers all
of the shares issuable upon conversion of the Series B Stock and upon exercise
of the options and warrants, this registration statement registers two times the
number of common shares issuable upon full conversion on June 26, 2000, of the
preferred shares and upon full exercise of the options and warrants on June 26,
2000 owned by each of Elliott and Westgate.
24
<PAGE>
In connection with the June Securities Purchase Agreement, we entered
into a registration rights agreement with Elliott and Westgate under which we
are obligated to register for resale, the shares of common stock and the shares
of common stock issuable upon exercise of the warrants that we issued in that
transaction.
SHORELINE WARRANTS
In connection with the securities purchase transactions that we
conducted with Elliott and Westgate, we utilized the services of Shoreline
Pacific Institutional Finance, or Shoreline. As partial consideration for their
services, we issued Shoreline warrants to purchase 12,000 shares of our common
stock and 3,300 shares of our common stock in March 2000 and June 2000,
respectively. The warrant that we issued in March has an exercise price of
$28.50 per share (and a cashless exercise option) and is exercisable at any time
on or before March 8, 2003. The warrant that we issued in June is exercisable at
any time on or before June 23, 2003. This warrant has an exercise price equal to
(a) the average of the five closing bid prices of our common stock for the five
trading days immediately preceding June 22, 2000, if the warrant is exercised on
or before the twentieth trading day following June 22, 2000; or (b) 125% of the
average of the lowest five closing bid prices of our common stock for the 20
trading days immediately following June 22, 2000, if the warrant is exercised
after the twentieth trading day following June 22, 2000. These warrants contain
standard anti-dilution provisions pursuant to which the exercise price and
number of common shares issuable thereunder is adjusted proportionately in the
event of a stock split, stock dividend, recapitalization or similar transaction.
The shares being offered hereby include the shares of common stock issuable
under the Shoreline Warrants.
INVESTOR RELATION RESOURCES WARRANTS
On May 24, 2000, we issued three warrants to purchase shares of our
common stock to two members of Investor Relation Resources, LLC, and to a
consultant of the entity, in partial consideration for certain services rendered
to us. These warrants were issued to Marty Tullio, George Logan and Gordon
McBean for 22,500, 22,500 and 5,000 shares, respectively. These warrants have an
exercise price of $16.50 per share and are exercisable until May 24, 2003. Such
warrants contain standard anti-dilution provisions pursuant to which the
exercise prices and number of common shares issuable thereunder are adjusted
proportionately in the event of a stock split, stock dividend, recapitalization
or similar transaction. The shares being offered hereby include the common
shares issuable under the Investor Relation Resources Warrants.
E-DESTINATIONS SHARES AND OPTIONS
On January 31, 2000, we entered into a stock purchase agreement with
e-Destinations, Inc. and the shareholders thereof, Vinod Bindhi, Dhanesh Bindhi,
Rakesh Kapoor and Jayent Bindhi, pursuant to which we acquired all of the
outstanding shares of e-Destinations, Inc. Pursuant to this agreement, we issued
an aggregate of 60,000 shares of our common stock to the shareholders of
e-Destinations, Inc. We also granted options to the shareholders to purchase an
aggregate of 100,000 shares of our common stock at an exercise price of $10.46
per share. In connection with this transaction, we entered into registration
rights agreements with each of the individual shareholders pursuant to which we
are obligated to register for resale the shares of our common stock and the
shares underlying the options that we issued to them in the stock purchase
transaction. The shares being offered hereby include these shares.
25
<PAGE>
ADDITIONAL SHARES
On March 27, 2000, we entered into a stock purchase agreement with
Allegria Software, Inc. and its parent and sole shareholder, GRAL, Inc., a
Nevada corporation, pursuant to which we acquired all of the outstanding shares
of Allegria Software, Inc. Pursuant to this agreement, in partial consideration
for the shares, we issued 5,000 shares of our common stock to GRAL, Inc.
Additionally, we entered into a registration rights agreement with GRAL, Inc.
pursuant to which we are obligated to register for resale the shares of our
common stock that we issued to it in the stock purchase transaction. Subsequent
to this agreement, we agreed with GRAL, Inc. to register 3,000 of the shares
issued to GRAL, Inc. and 1,000 shares of our common stock for each of two
individuals, Robert Bruns and Koushik Dutta. The shares being offered hereby
include the shares owned by each of GRAL, Inc., Robert Bruns and Koushik Dutta.
On January 1, 2000, we entered an acquisition agreement under which we
acquired the assets of Goutam Communications from Alok Gupta, the sole
proprietor of the business. As partial consideration for such acquisition, we
issued to Mr. Gupta, 4,000 shares of our common stock which we agreed to
register for resale. The shares being offered hereby include these shares.
On December 7, 1999, we issued to Roth Capital Partners (formerly,
Cruttenden Roth Incorporated) a warrant to purchase 260,000 shares of our common
stock. We issued this warrant in consideration of Roth Capital's decision to
exercise certain other warrants to purchase our common stock in cash. On
February 7, 2000, Roth Capital exercised this warrant and we issued to it
260,000 shares of our common stock. The shares being offered hereby include
these shares.
26
<PAGE>
PLAN OF DISTRIBUTION
The shares being offered hereby will be offered and sold by the selling
security holders for their own accounts. We will not receive any of the proceeds
from the sale of the shares of our common stock pursuant to this prospectus. We
have agreed to bear the expenses of the registration of the shares, including
legal, accounting, printing and filing fees, and such expenses are estimated to
be $41,215.
The shares offered by this prospectus may be sold from time to time by
the selling security holders and those persons' pledgees, donees, transferees or
other successors in interest. The selling security holders may sell the shares
on the Nasdaq National Market, in privately negotiated transactions or
otherwise, at market prices or at negotiated prices. In addition, the selling
security holders may engage in short sales and other transactions in the common
stock or derivatives thereof, and may pledge, sell, deliver or otherwise
transfer the common stock offered under this prospectus in connection with such
transactions. They may sell shares by one or a combination of the following
without limitation:
o a block trade in which a broker or dealer so engaged will attempt
to sell the shares as agent, but may position and resell a portion
of the block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by the
broker or dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which a broker
solicits purchasers; and
o face-to-face transactions between sellers and buyers, without a
broker-dealer.
In effecting sales, brokers or dealers engaged by the selling security
holders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from selling security holders in
amounts to be negotiated prior to the sale. The selling security holders and any
broker-dealers that participate in the distribution may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any proceeds or commissions received by them, and any profits on the resale of
shares sold by broker-dealers, may be deemed to be underwriting discounts and
commissions.
Regulation M under the Exchange Act prohibits participants in a
distribution and their affiliates from bidding for or purchasing any of the
securities that are the subject of the distribution. It also governs bids and
purchases made to stabilize the price of a security in connection with a
distribution of the security.
If any selling security holder notifies us that a material arrangement
has been entered into with a broker-dealer for the sale of shares through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, we will file a prospectus supplement, if
required pursuant to Rule 424(c) under the Securities Act, setting forth
o the name of each of the participating broker-dealers;
o the number of shares involved;
o the price at which the shares were sold;
o the commissions paid or discounts or concessions allowed to the
broker-dealers, where applicable;
27
<PAGE>
o a statement to the effect that the broker-dealers did not conduct
any investigation to verify the information set out or incorporated
by reference in this prospectus; and
o any other facts material to the transaction.
We have agreed to indemnify certain of the selling security holders
against liabilities, including certain liabilities under the Securities Act or
to contribute to payments which the selling security holders may be required to
make in respect of these liabilities.
28
<PAGE>
DESCRIPTION OF COMMON SHARES
Our certificate of incorporation currently authorizes us to issue
20,000,000 shares of common stock, $.01 par value per share, and 5,000,000
shares of preferred stock, $.01 par value per share, 12,000 of which has been
designated as Series B Stock. Upon completion of this offering, assuming all
shares are sold, we will have 15,790,275 shares of common stock outstanding. All
outstanding shares of common stock are, and the common stock to be issued in
this offering will be, fully paid and nonassessable.
The following summarizes the rights of holders of our common stock:
o each holder of common stock is entitled to one vote per share on
all matters to be voted upon by the stockholders;
o subject to preferences that may apply to shares of preferred stock
outstanding, the holders of common stock are entitled to receive
such lawful dividends as may be declared by our board of directors;
o upon our liquidation, dissolution or winding up, the holders of
shares of common stock are entitled to receive a pro rata portion
of all our assets remaining for distribution after satisfaction of
all our liabilities and the payment of any liquidation preference
of any outstanding preferred stock;
o there are no redemption or sinking fund provisions applicable to
our common stock; and
o there are no preemptive or conversion rights applicable to our
common stock.
29
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of
common stock offered hereby. We may receive proceeds from the exercise of
options and warrants.
EXPERTS
The consolidated financial statements of netGuru, Inc. and subsidiaries
as of March 31, 2000, and for the years ended March 31, 2000 and 1999, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the legality of the securities
offered hereby will be passed upon for netGuru, Inc. by Rutan & Tucker, LLP,
Costa Mesa, California.
30
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses payable in connection with the distribution of the securities
being registered (estimated except for the registration fee), all of which will
be borne by the registrant, are as follows:
Securities and Exchange Commission registration fee ............ $ 14,215
Printing expenses............................................... $ 1,000
Legal fees and expenses......................................... $ 20,000
Accounting fees................................................. $ 5,000
Miscellaneous expenses.......................................... $ 1,000
---------
Total ................................................... $ 41,215
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The liability of the registrant's controlling persons, officers or
directors is or may be affected in such capacity by the following:
The registrant's certificate of incorporation limits, to the maximum
extent permitted by Delaware law, the personal liability of directors for
monetary damages for breach of their fiduciary duties as a director. The
registrant's bylaws provide that the registrant shall indemnify its officers and
directors and may indemnify its employees and other agents to the fullest extent
permitted by Delaware law.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses actually and reasonably incurred by him or her in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and with respect to any criminal action, had no reasonable cause
to believe his or her conduct was unlawful.
ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
2.1 Securities Purchase Agreement dated March 8, 2000 between the
registrant, Elliott Associates, L.P. and Westgate International,
L.P.**
2.2 Exchange Agreement dated March 30, 2000 between the registrant,
Elliott Associates, L.P. and Westgate International, L.P.**
2.3 Acquisition Agreement dated January 1, 2000 between the registrant
and Alok Gupta.
2.4 Stock Purchase Agreement dated March 27, 2000 between the
registrant, Allegria Software, Inc. and GRAL, Inc.**
2.5 Stock Purchase Agreement dated January 31, 2000 between the
registrant, e-Destinations, Inc., Vinod Hindi, Dhanesh Hindi,
Rakesh Kapoor and Jayent Hindi.**
II-1
<PAGE>
EXHIBIT NO. DESCRIPTION
----------- -----------
2.6 Agreement for Sale of Shares dated May 29, 2000 between Anup Das
and NetGuru India Pvt. Ltd.**
2.7 Agreement Cum Guarantee dated May 29, 2000 between the registrant
and NetGuru India Pvt. Ltd.**
2.8 Shareholders Agreement dated May 22, 2000 between Research
Engineers Pvt. Ltd. and Anup Das.**
2.9 Shareholders Agreement dated May 25, 2000 between the registrant
and Anup Das, individually and on behalf of the Indian Shareholders
(defined therein).**
2.10 Securities Purchase Agreement dated June 22, 2000 between the
registrant, Elliott Associates, L.P. and Westgate International,
L.P.
3.1 Certificate of Incorporation of the registrant.*
3.2 Bylaws of the registrant.*
4.1 Certificate of Designations of Series B Cumulative Convertible
Preferred Stock dated March 30, 2000.**
4.2 Common Stock Purchase Warrant dated March 8, 2000, issued by the
registrant to Elliott Associates, L.P.**
4.3 Common Stock Purchase Warrant dated March 8, 2000, issued by the
registrant to Westgate International, L.P.**
4.4 Registration Rights Agreement dated March 8, 2000 between the
registrant, Elliott Associates, L.P. and Westgate International,
L.P.**
4.5 Common Stock Purchase Warrant dated March 8, 2000, issued by the
registrant to Shoreline Pacific Institutional Finance.**
4.6 Warrant Agreement dated December 7, 1999 between the registrant and
Cruttenden Roth Incorporated.
4.7 Registration Rights Agreement dated April 1, 2000 between the
registrant and GRAL, Inc.
4.8 Registration Rights Agreement dated January 31, 2000 between the
registrant and Rakesh Kapoor.
4.9 Registration Rights Agreement dated January 31, 2000 between the
registrant and Vinod Bhindi.
4.10 Registration Rights Agreement dated January 31, 2000 between the
registrant and Dhanesh Bhindi.
II-2
<PAGE>
EXHIBIT NO. DESCRIPTION
----------- -----------
4.11 Registration Rights Agreement dated January 31, 2000 between the
registrant and Jayent Bhindi.
4.12 Registration Rights Agreement dated June 22, 2000 between the
registrant and Elliott Associates, L.P. and Westgate International,
L.P.
4.13 Non-Qualified Stock Option dated January 31, 2000, issued by the
registrant to Vinod Bhindi.
4.14 Non-Qualified Stock Option dated January 31, 2000, issued by the
registrant to Rakesh Kapoor.
4.15 Non-Qualified Stock Option dated January 31, 2000, issued by the
registrant to Dhanesh Bhindi.
4.16 Non-Qualified Stock Option dated January 31, 2000, issued by the
registrant to Jayent Bhindi.
4.17 Warrant to Purchase Common Stock dated May 24, 2000, issued by the
registrant to Marty Tullio.
4.18 Warrant to Purchase Common Stock dated May 24, 2000, issued by the
registrant to George Logan.
4.19 Warrant to Purchase Common Stock dated May 24, 2000, issued by the
registrant to Gordon McBean.
4.20 Common Stock Purchase Warrant dated June 22, 2000 issued by the
registrant to Elliott Associates, L.P.
4.21 Common Stock Purchase Warrant dated June 22, 2000 issued by the
registrant to Westgate International, L.P.
4.22 Common Stock Purchase Warrant dated June 23, 2000 issued by the
registrant to Shoreline Pacific Institutional Finance.
5.1 Opinion of Rutan & Tucker, LLP.
23.1 Consent of KPMG LLP.
23.2 Consent of Rutan & Tucker, LLP (included in Exhibit No. 5.1).
24.1 Power of Attorney (reference is made to page II-3 of this
registration statement).
-----------------------
* Filed as an exhibit to our registration statement on Form SB-2 dated May 21,
1996 or amendment thereto dated June 14, 1996 (registration no. 333-4844-LA)
and incorporated herein by reference.
** Filed as an exhibit to our Form 10-KSB for the fiscal year ended March 31,
2000 filed with the Securities and Exchange Commission on June 26, 2000.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided however, that paragraphs (1)(i) and (1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of post-effective amendment to
this registration statement any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
(5) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Yorba Linda, State of California, on June 29, 2000.
netGuru, Inc.
By: /S/ JYOTI CHATTERJEE
-----------------------------------
Jyoti Chatterjee, President
Each person whose signature appears below hereby constitutes and
appoints Jyoti Chatterjee and Wayne Blair, or either of them, his true and
lawful attorney-in-fact and agent, with full power and substitution, to sign on
his behalf, individually and in each capacity stated below, all amendments and
post-effective amendments to this registration statement on Form S-3 and to file
the same, with all exhibits thereto and any other documents in connection
therewith, with the Securities and Exchange Commission under the Securities Act
of 1933, granting unto said attorney-in-fact and agent full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes as each
might or could do in person, hereby ratifying and confirming each act that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
following capacities on the dates indicated.
NAME TITLE DATE
-------------------------- ------------------------------- -------------
/S/ AMRIT K. DAS Chairman of the Board, Chief June 29, 2000
-------------------------- Executive Officer (principal
Armit K. Das executive officer) and Director
/S/ JYOTI CHATTERJEE President, Chief Operating June 29, 2000
-------------------------- Officer and Director
Jyoti Chatterjee
/S/ WAYNE BLAIR Chief Financial Officer June 29, 2000
-------------------------- (principal accounting officer)
Wayne Blair
/S/ BRUCE E. CUMMINGS Director June 29, 2000
--------------------------
Bruce E. Cummings
/S/ SANTANU DAS Director June 29, 2000
--------------------------
Santanu Das
II-6
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
2.1 Securities Purchase Agreement dated March 8, 2000 between the
registrant, Elliott Associates, L.P. and Westgate International,
L.P.**
2.2 Exchange Agreement dated March 30, 2000 between the registrant,
Elliott Associates, L.P. and Westgate International, L.P.**
2.3 Acquisition Agreement dated January 1, 2000 between the registrant
and Alok Gupta.
2.4 Stock Purchase Agreement dated March 27, 2000 between the
registrant, Allegria Software, Inc. and GRAL, Inc.**
2.5 Stock Purchase Agreement dated January 31, 2000 between the
registrant, e-Destinations, Inc., Vinod Hindi, Dhanesh Hindi,
Rakesh Kapoor and Jayent Hindi.**
2.6 Agreement for Sale of Shares dated May 29, 2000 between Anup Das
and NetGuru India Pvt. Ltd.**
2.7 Agreement Cum Guarantee dated May 29, 2000 between the registrant
and NetGuru India Pvt. Ltd.**
2.8 Shareholders Agreement dated May 22, 2000 between Research
Engineers Pvt. Ltd. and Anup Das.**
2.9 Shareholders Agreement dated May 25, 2000 between the registrant
and Anup Das, individually and on behalf of the Indian Shareholders
(defined therein).**
2.10 Securities Purchase Agreement dated June 22, 2000 between the
registrant, Elliott Associates, L.P. and Westgate International,
L.P.
3.1 Certificate of Incorporation of the registrant.*
3.2 Bylaws of the registrant.*
4.1 Certificate of Designations of Series B Cumulative Convertible
Preferred Stock dated March 30, 2000.**
4.2 Common Stock Purchase Warrant dated March 8, 2000, issued by the
registrant to Elliott Associates, L.P.**
4.3 Common Stock Purchase Warrant dated March 8, 2000, issued by the
registrant to Westgate International, L.P.**
4.4 Registration Rights Agreement dated March 8, 2000 between the
registrant, Elliott Associates, L.P. and Westgate International,
L.P.**
4.5 Common Stock Purchase Warrant dated March 8, 2000, issued by the
registrant to Shoreline Pacific Institutional Finance.**
<PAGE>
EXHIBIT NO. DESCRIPTION
----------- -----------
4.6 Warrant Agreement dated December 7, 1999 between the registrant and
Cruttenden Roth Incorporated.
4.7 Registration Rights Agreement dated April 1, 2000 between the
registrant and GRAL, Inc.
4.8 Registration Rights Agreement dated January 31, 2000 between the
registrant and Rakesh Kapoor.
4.9 Registration Rights Agreement dated January 31, 2000 between the
registrant and Vinod Bhindi.
4.10 Registration Rights Agreement dated January 31, 2000 between the
registrant and Dhanesh Bhindi.
4.11 Registration Rights Agreement dated January 31, 2000 between the
registrant and Jayent Bhindi.
4.12 Registration Rights Agreement dated June 22, 2000 between the
registrant and Elliott Associates, L.P. and Westgate International,
L.P.
4.13 Non-Qualified Stock Option dated January 31, 2000, issued by the
registrant to Vinod Bhindi.
4.14 Non-Qualified Stock Option dated January 31, 2000, issued by the
registrant to Rakesh Kapoor.
4.15 Non-Qualified Stock Option dated January 31, 2000, issued by the
registrant to Dhanesh Bhindi.
4.16 Non-Qualified Stock Option dated January 31, 2000, issued by the
registrant to Jayent Bhindi.
4.17 Warrant to Purchase Common Stock dated May 24, 2000, issued by the
registrant to Marty Tullio.
4.18 Warrant to Purchase Common Stock dated May 24, 2000, issued by the
registrant to George Logan.
4.19 Warrant to Purchase Common Stock dated May 24, 2000, issued by the
registrant to Gordon McBean.
4.20 Common Stock Purchase Warrant dated June 22, 2000 issued by the
registrant to Elliott Associates, L.P.
4.21 Common Stock Purchase Warrant dated June 22, 2000 issued by the
registrant to Westgate International, L.P.
4.22 Common Stock Purchase Warrant dated June 23, 2000 issued by the
registrant to Shoreline Pacific Institutional Finance.
<PAGE>
EXHIBIT NO. DESCRIPTION
----------- -----------
5.1 Opinion of Rutan & Tucker, LLP.
23.1 Consent of KPMG LLP.
23.2 Consent of Rutan & Tucker, LLP (included in Exhibit No. 5.1).
24.1 Power of Attorney (reference is made to page II-3 of this
registration statement).
-----------------------
* Filed as an exhibit to our registration statement on Form SB-2 dated May 21,
1996 or amendment thereto dated June 14, 1996 (registration no. 333-4844-LA)
and incorporated herein by reference.
** Filed as an exhibit to our Form 10-KSB for the fiscal year ended March 31,
2000 filed with the Securities and Exchange Commission on June 26, 2000.
