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FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION FILE NO.: 333-94921
PROSPECTUS
NETGURU, INC.
430,000 SHARES COMMON STOCK
This prospectus relates to 430,000 split-adjusted shares of our common
stock, $.01 par value per share, which are being offered by the selling
stockholders, including shares of common stock underlying warrants which we
previously issued to certain selling stockholders.
The shares offered hereby were acquired by the selling stockholders in
private transactions and are "restricted securities" under the Securities Act of
1933. This prospectus has been prepared for the purpose of registering the
shares under the Securities Act of 1933 to allow for future sales by the selling
stockholders to the public without restriction. To our knowledge, the selling
stockholders have made no arrangement with any brokerage firm for the sale of
the shares. The selling stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933. Any commissions received by a broker
or dealer in connection with resales of the shares may be deemed to be
underwriting commissions or discounts under the Securities Act of 1933. We
agreed to indemnify the selling stockholders against certain liabilities,
including certain liabilities under the Securities Act of 1933. See "Plan of
Distribution."
The price of the common stock being offered by the selling stockholders
may vary, depending on market conditions. We will not receive any of the
proceeds from the sale of the shares by the selling stockholders.
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 on March 24, 2000 was a split-adjusted $35.625 per share.
Note that all numbers herein reflect a 2-for-1 split of the common stock of
netguru, inc., effective February 7, 2000.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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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 March 28, 2000
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TABLE OF CONTENTS
The Company.............................................................. 3
Risk Factors............................................................. 3
Special Note Regarding Forward-Looking Statements........................ 11
Plan of Distribution..................................................... 12
Selling Stockholders..................................................... 13
Use of Proceeds.......................................................... 13
Experts.................................................................. 14
Legal Matters............................................................ 14
Where You Can Find More Information...................................... 14
Incorporation of Certain Documents by Reference.......................... 15
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 stockholders. 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.
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THE COMPANY
Netguru, inc., formerly Research Engineers, Inc., was incorporated in
1981 and is headquartered in Yorba Linda, California. We are a leading provider
of technically advanced engineering software solutions. Our software products
provide fully integrated easy-to-use design automation and analysis solutions
for use by engineering analysis and design professionals worldwide. Our
comprehensive line of structural, mechanical, civil and process/piping
engineering software products is designed to fully integrate the functions of
model generation, analysis, design drafting and data presentation. All of our
products utilize a proprietary Windows-based graphics engine, allowing the
software to be used with or without third-party CAD software. Our products
assist engineers in performing a myriad of mission-critical engineering tasks,
including the analysis and design of industrial, commercial, transportation and
utility structures, pipelines, machinery, automotive and aerospace products, and
survey, contour and digital terrain modeling. Suggested list prices for most of
our products range from approximately $995 to $7,000.
Through the acquisitions of R-Cube Technologies in February 1999 and
NetGuru Systems in September 1999, we have expanded into the $90 billion
information technology services industry, providing expertise in data-mining and
embedded technologies to Internet/Intranet design and communications. In
addition, in April 1999, we announced that we had launched the first of several
e-commerce special interest portals targeting the 90 million expatriate
professionals of the Asia Pacific region now living throughout Europe and North
America.
We currently license our software products to more than 19,000
customers accounting for over 47,000 software installations and 140,000
concurrent users worldwide. A selected list of our customers include: Bechtel
Corporation, Boston Edison, British Telecom, California Department of Resources,
California Institute of Technology, Jet Propulsion Laboratories, Exxon
Corporation, Fluor Daniel, Inc., General Dynamics, NASA, Rocketdyne, Siemens AG
and Toyo Engineering. Our products are sold and supported domestically and
internationally through our network of branch offices, subsidiaries and
representatives in the United States, United Kingdom, Germany, Japan, France,
Scandinavia, Australia, China, Singapore, India, Indonesia, Korea, Thailand,
Malaysia, South Africa, Mexico, Russia, the Middle East and Latin America. Our
structural and civil engineering products provide eight international language
options and local design codes required by our worldwide markets.
RISK FACTORS
In addition to the other information in this prospectus, the following
risk factors should be considered carefully in evaluating us and our business
before purchasing the common stock offered by this prospectus. An investment in
the common stock offered hereby is speculative in nature and involves a high
degree of risk.
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RISKS RELATED TO OUR BUSINESS
OUR SUCCESS DEPENDS ON OUR RETENTION OF OUR CURRENT KEY MANAGEMENT AND
TECHNICAL PERSONNEL.
Our future success depends to a large extent upon the continued
services of key managerial and qualified technical and marketing employees and
on our ability to attract, assimilate or retain other highly qualified
employees. Competition for such personnel is intense, and there can be no
assurance that we will be able to attract, assimilate or retain such personnel.
The loss of the services of any of our key employees or our inability to recruit
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.
IF WE ARE UNABLE TO EFFECTIVELY MANAGE OUR EXPANDED OPERATIONS OUR
BUSINESS COULD BE ADVERSELY AFFECTED.
We expect to experience rapid growth over the next several years. This
could 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 and
financial management systems. If we are unable to manage growth effectively, the
quality of our products and services, our ability to identify, hire and retain
key personnel and our business and results of operations could be adversely
affected.
THE MARKETS IN WHICH WE 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 CAD, computer aided engineering software and information technology
industries are highly competitive. These industries 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 that
target the same markets as we target. 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 ours.
Our competitors may develop products 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 existing customers. We may
not be able to compete successfully, and competition may result in decreases in:
- the prices we receive for our products and services
- our revenues
- our profit margins
- our market share
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Any such decreases would adversely affect our business and results of
operations.
THE MAJORITY OF OUR REVENUES ARE CURRENTLY DERIVED FROM THE ENGINEERING
DESIGN INDUSTRY SO A DECLINE IN THIS INDUSTRY OR RELATED INDUSTRIES MAY
ADVERSELY AFFECT OUR BUSINESS.
Although we are in the process of diversifying our business through
acquisitions and through expansion into information technology and other lines
of business, during the fiscal year ended March 31, 1999 and the six months
ended September 30, 1999, approximately 96% and 59%, respectively, of our
revenues were derived from sales of engineering software products to the
construction and plant design industries. Companies in these industries will
continue to account for significant amounts of our revenue for the foreseeable
future, and we depend on continued demand for our products from those
industries. While those industries are cyclical, downturns in those industries
are difficult to predict and it could be difficult for us to react quickly if
and when downturns occur. Any such downturns could adversely affect our business
and results of operations.
IF WE ARE UNABLE TO SUCCESSFULLY IMPLEMENT OUR ACQUISITION STRATEGY,
OUR EXPECTATIONS OF OUR GROWTH OR OPERATING RESULTS MAY NOT BE MET.
To expand our markets, our business strategy includes growth through
acquisitions. For instance, through the acquisitions of R-Cube in February 1999
and NetGuru in September 1999, we have expanded into the $90 billion IT services
industry. Identifying and pursuing strategic acquisition opportunities and
integrating acquired products and businesses requires a significant amount of
management time and skill. There can be no assurance that we will be able to
identify suitable acquisition candidates, consummate any acquisition on
acceptable terms or successfully integrate any acquired business into our
operations. There also can be no assurance that any future acquisition will not
have an adverse effect upon our operating results, particularly in the fiscal
quarters immediately following consummation of the acquisition while the
acquired business is being integrated into our operations.
WE HAVE RECENTLY EXPANDED INTO NEW LINES OF BUSINESS, AND THOSE LINES
OF BUSINESS MAY BE DIFFICULT TO INTEGRATE WITH OUR CORE BUSINESS.
We have been in the engineering software business since 1981. We have
only recently entered the information technology, Internet special interest
portal and digital animation fields. Our expansion into these lines of business
may be particularly difficult for us to manage, 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 business. If
we are not able to attain the level of expertise and reputation in these fields
that we feel we have attained in the engineering software field, our business
and results of operations could be adversely affected.
OUR INTELLECTUAL PROPERTY PROTECTIONS MAY NOT BE ADEQUATE AND COULD
ADVERSELY AFFECT OUR BUSINESS.
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We rely primarily on a combination of contract, copyright, trademark and trade
secret laws, license and confidentiality agreements and software security
measures to protect our proprietary technology. We distribute our products under
"shrink-wrap" software license agreements, which grant end-users licenses to
(rather than ownership of) our products and which contain various provisions
intended to protect our ownership and confidentiality of the underlying
technology. In addition, our software is distributed with a third party
"hardware lock." We also require all of our employees and other parties with
access to our confidential information to execute agreements prohibiting the
unauthorized use or disclosure of our technology. In addition, we periodically
review our proprietary technology for patentability, although we do not have any
current patents. Despite these precautions, we believe that existing laws
provide limited protection for our technology and that it may be possible for a
third party to misappropriate our technology or to independently develop similar
technology. In addition, effective copyright and trade secret protection may not
be available in every jurisdiction where we distribute our products,
particularly in foreign countries where the laws generally offer no protection
or less protection than those of the United States. Due to our significant
reliance upon international sales of our products, this lack of copyright and
trade secret protection could adversely affect our business and results of
operations if a third party were successful in copying our products and
marketing products similar to ours. Moreover, "shrink-wrap" licenses, which are
not signed by the end-user, may be unenforceable in certain jurisdictions.
We believe that, due to the rapid pace of technological innovation and
change within the engineering industry, legal protections afforded our
technology are less significant in affecting our business and results of
operations than factors such as our reputation, our products, the knowledge,
ability and experience of our personnel, the frequency of product enhancements
and the timeliness and quality of our customer service and support.
IN ORDER TO COMPETE SUCCESSFULLY, WE MUST KEEP PACE WITH THE RAPID
CHANGES TO WHICH OUR INDUSTRIES ARE SUBJECT.
The engineering software and information technology industries are
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 evolving customer requirements and
achieve market acceptance. In particular, we believe we must continue to respond
quickly to users' needs for broad functionality and to advances in hardware and
operating systems. 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 or revenues. New products or product enhancements which we
develop might not achieve market acceptance.
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OUR FAILURE AND THE FAILURE OF THIRD PARTIES TO BE YEAR 2000 COMPLIANT
COULD NEGATIVELY IMPACT OUR BUSINESS.
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of our
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in major system
failure or miscalculations. We have performed a review of our internal systems
to identify and resolve the effect of Year 2000 software issues on the integrity
and reliability of our financial and operational systems. Based on this review,
our management believes that our internal systems are substantially compliant
with Year 2000 issues. In addition, we are also communicating with our principal
service providers to ensure Year 2000 issues will not have an adverse impact on
us. If we, and third parties upon which we rely, are unable to address this
issue in a timely manner, it could result in a material financial risk to us. In
order to assure that this does not occur, we plan to devote all resources
required to resolve any significant Year 2000 issues in a timely manner. To
date, we have not experienced any adverse effects of the Year 2000 issues.
RISKS RELATED TO OUR INTERNATIONAL OPERATIONS
A SUBSTANTIAL PORTION OF OUR SALES ARE MADE IN FOREIGN MARKETS AND, AS
A RESULT, WE ARE SUBJECT TO A NUMBER OF RISKS ASSOCIATED WITH INTERNATIONAL
BUSINESS ACTIVITIES.
Sales of our products and services to customers located outside the United
States accounted for approximately 55% of our net revenue for the fiscal year
ended March 31, 1999. We anticipate that international sales will continue to
account for a significant portion of our total software sales. As a result, our
financial results could be impacted by weakened general economic conditions,
such as the recent condition in the Asian markets, differing technological
advances or preferences, volatile foreign exchange rates and government trade
restrictions in any country in which we do business.
We have increasingly relied on distributors and representatives to
market our products, particularly in the Asia-Pacific market. Our revenue in any
particular quarter may be negatively impacted by a lower than anticipated
performance of any significant distributor or representative. We do not offer a
right of return to distributors or representatives. We do, however, provide
extended payment terms of up to 90 days and commissions to these distributors
and representatives. Commissions range from 20% to 70% of gross sales. These
commissions are recorded at the time of sale and are reflected in selling
expenses in our consolidated statements of operations. Sales in other regions
such as North America and Europe are generally made without commissions. We
continue to assess the costs and benefits of continuing to offer these
commissions and to evaluate means whereby the amounts can be reduced. Means by
which commissions may be reduced include, but are not limited to, opening
additional foreign sales offices, establishing new foreign subsidiaries and
renegotiating current commission amounts with foreign distributors and
representatives. We may, however, find it necessary in the future to continue to
provide commissions at current levels or possibly increase them in order to
expand international sales, which could negatively impact our operating income.
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There are a number of risks inherent in our international business
activities, including:
- unexpected changes in regulatory requirements
- tariffs, duties and other trade barriers and restrictions
- longer account receivable payment cycles
- potentially adverse tax consequences
- the burdens of compliance with foreign laws
- lack of international market data - difficulties in managing the
staffing of international operations
- establishing or maintaining international distribution channels
- increased collection risks
- uncertain political, regulatory and economic developments
Any of these risks could adversely affect our business and results of
operations.
IF WE ARE UNABLE TO MEET THE REGULATORY STANDARDS OF FOREIGN
GOVERNMENTS ON A TIMELY BASIS, OUR FOREIGN OPERATIONS AND SALES COULD BE DELAYED
AND REVENUES NEGATIVELY IMPACTED.
While we believe our current products and services are designed to meet
the regulatory standards of foreign markets, our inability to maintain or to
obtain foreign regulatory approvals on a timely basis in the future could
adversely affect our business.
BECAUSE THE 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, 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 period. Therefore, exchange rate fluctuations can have a
detrimental effect on our earnings or on our ability to compete. 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. In addition, we expect that in the
future many of our European subsidiaries will denominate their revenues in the
Euro. The Euro is an untested currency and may be subject to economic risks that
are not currently contemplated and which could have a harmful effect on our
business.
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RISKS RELATED TO THIS OFFERING
THE MARKET PRICE OF OUR STOCK HAS FLUCTUATED AND MAY CONTINUE TO
FLUCTUATE DUE TO CHANGES IN REVENUE AND OPERATING RESULTS AND GENERAL MARKET
CONDITIONS.
Our operating results have fluctuated in the past and may fluctuate
significantly in the future. Future results could be impacted by factors such as
customer order delays, a slower growth rate in the market, increased competition
or adverse changes in general economic conditions in any of the countries in
which we do business. While no single customer has accounted for more than 10%
of our revenues, the loss of a major distributor or a reduction in orders from a
major distributor could have a significant impact on our results of operations
in any particular quarter or fiscal year.
Our quarterly results of operations may also vary significantly
depending on a number of other factors, including the timing of the introduction
or enhancement of products by us or our competitors, market acceptance of new
products, customer order deferrals in anticipation of new products, changes in
our operating expenses, personnel changes, mix of products sold, changes in
product pricing, acquisitions of additional products or businesses and general
business and economic conditions. There can be no assurance that we will be able
to grow or sustain our profitability on a quarterly or annual basis.
In addition, certain of our expenses are based, in part, on our future
revenue expectations. We continue to increase our operating expense levels to
meet the growing customer demand for our products and services. If revenue is
below expectations, our operating results could be adversely and materially
affected. Net income or loss may be disproportionately affected by an unexpected
reduction in revenue because certain expenses are generally committed in
advance.
Our stock price may fluctuate significantly as a result of fluctuations
in our quarterly performance, and may also fluctuate due to other factors, many
of which are beyond our control, such as analysts' expectations and our
performance relative to those expectations, global economic conditions and
general market conditions. During the past year, our stock price has fluctuated
from a low of $0.94 per share during the week of December 31, 1998, to an
intraday high of $58.00 on March 1, 2000. Any of the following factors could
have a significant impact on the market price of our common stock:
- variations in our revenue
- variations in our earnings and cash flows
- announcements of technological innovations or price reductions by
us, our competitors, or providers of alternative products and
processes
- gain or loss of significant customers
- changes in analysts' earnings estimates
- general conditions in the engineering software and information
technology markets
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In addition, the securities markets have recently experienced
significant price and volume fluctuations that have particularly affected
technology-based companies, and resulted in changes in the market prices of the
stocks of many companies that have not been directly related to the operating
performance of those companies. Such broad market fluctuations may adversely
affect the market price of our common stock. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has sometimes been instituted against the issuing company. If
securities litigation is brought against us, it could result in substantial
costs and a diversion of management's attention and resources, which could
adversely affect our business and results of operations. Any adverse
determination in such litigation could also subject us to substantial
liabilities.
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 development of new products, possible future strategic
acquisitions, the progress of our research and development efforts, the
expansion of our sales and marketing efforts and the status of competitive
products. 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 after such time, 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 the 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 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.
OUR STOCK HAS HISTORICALLY BEEN THINLY TRADED, AND THE ABILITY OF THE
SELLING STOCKHOLDERS TO SELL THEIR SHARES IN THE OPEN MARKET COULD DEPRESS OUR
STOCK PRICE.
During 1999, our trading volume on the Nasdaq National Market has fluctuated
significantly. For example, during most of 1999 our trading volume averaged less
than 120,000 shares per week, and during the quarter ended September 30, 1999
averaged less than 70,000 shares per week. However, from November 8, 1999
through December 17, 1999, our trading volume averaged approximately 576,000
shares per week. More recently, from December 20, 1999 to March 24, 2000, our
trading volume averaged approximately 383,000 shares per week. By virtue of this
prospectus, the selling stockholders will be able to resell publicly up to
430,000 shares of our common stock. If they were to do so in large volumes
during short periods of time, our stock price on the Nasdaq National Market
could be significantly depressed.
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. The rights of the holders of our common stock
will be subject to, and may be adversely affected by, the rights of the holders
of any preferred stock that may be issued 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 the
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.
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THE CONCENTRATION OF OWNERSHIP OF OUR COMMON STOCK AND THE
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW COULD ADVERSELY AFFECT THE PERFORMANCE OF
OUR STOCK.
Our executive officers and directors and their family members together
beneficially own approximately 61.1% 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 the 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 the company without action by our
stockholders, and therefore could adversely affect the price of our common
stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements, including
among others (i) the projected growth in the engineering software market; (ii)
anticipated trends in our financial condition and results of operations; (iii)
our business strategy for expanding our presence in the engineering software
industry; and (iv) our ability to distinguish ourselves from our current and
future competitors. These forward-looking statements are based largely on our
current expectations and are subject to a number of risks and uncertainties.
Actual results could differ materially from these forward-looking statements. In
addition to the other risks described in the Risk Factors discussion, important
factors to consider in evaluating such forward-looking statements include (i)
changes in external competitive market factors or in our internal budgeting
process which might impact trends in our results of operations; (ii)
unanticipated working capital or other cash requirements; (iii) changes in our
business strategy or an inability to execute our strategy due to unanticipated
changes in the engineering software or information technology industry; and (iv)
various competitive factors that may prevent us from competing successfully in
the marketplace. In light of these risks and uncertainties, many of which are
described in greater detail elsewhere in this Risk Factors discussion, there can
be no assurance that the events predicted in forward-looking statements
contained in this prospectus will in fact transpire.
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PLAN OF DISTRIBUTION
The shares being offered hereby will be offered and sold by the selling
stockholders for their own accounts. We will not receive any of the proceeds
from the sale of the shares 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 $15,000.
The shares offered by this prospectus may be sold from time to time by
the selling stockholders and those persons' pledgees, donees, transferees or
other successors in interest. The selling stockholders may sell the shares on
the Nasdaq National Market or otherwise, at market prices or at negotiated
prices. They may sell shares by one or a combination of the following:
- 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;
- purchases by a broker or dealer as principal and resale by the
broker or dealer for its account pursuant to this prospectus; and
- brokerage transactions and transactions in which a broker solicits
purchasers.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from selling stockholders in
amounts to be negotiated prior to the sale. The selling stockholders 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 of
1933, 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 Securities Exchange Act of 1934 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 stockholder 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 of 1933, setting
forth:
- the name of each of the participating broker-dealers,
- the number of shares involved,
- the price at which the shares were sold,
- the commissions paid or discounts or concessions allowed to the
broker-dealers, where applicable,
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- 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
- any other facts material to the transaction.
We have agreed to indemnify the selling stockholders against
liabilities, including certain liabilities under the Securities Act of 1933 or
to contribute to payments which the selling stockholders may be required to make
in respect of these liabilities.
SELLING STOCKHOLDERS
GENERAL
There are seven selling stockholders. The selling stockholders are
acting individually, not as a group. None of the selling stockholders or their
affiliates has held any position, office or other material relationship, other
than as a stockholder, with us, except that Cruttenden Roth Incorporated
underwrote our initial public offering of our common stock in 1996 and Karen
Hunter and William Schmidt became non-executive officer employees of ours after
our acquisition of PacSoft Incorporated. The following table sets forth certain
ownership information as of March 24, 2000, with respect to each selling
stockholder for whom we are registering shares of common stock for resale:
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Shares of Common Stock Shares of Common Stock Shares of Common Stock
Name of Selling Beneficially Owned Being Offered Pursuant To Beneficially Owned After
Stockholer Prior To This Offering(1) This Prospectus Offering (2)
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<S> <C> <C> <C> <C> <C>
Cruttenden Roth Incorporated 260,000 1.96% 260,000 -- --
Bridgewater Capital 25,000 * 25,000 -- --
Ganesh Asset Management 15,000 * 15,000 (3) -- --
Pacific Summit Capital 30,000 * 30,000 -- --
Karen Hunter 83,332 * 83,332 -- --
William Schmidt 8,334 * 8,334 -- --
Mae Webb 8,334 * 8,334 -- --
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* Less than 1%.
</TABLE>
(1) Based on an aggregate of 13,245,833 shares of common stock issued and
outstanding as of March 24, 2000. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to
securities. 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 Securities and Exchange
Commission or information provided to our company by such beneficial
owners.
(2) Assumes that all of the shares are sold pursuant to this prospectus.
(3) Entire amount represents shares of common stock issuable upon exercise
of warrants.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of
common stock offered hereby.
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<PAGE>
EXPERTS
The consolidated financial statements of netguru, inc., formerly
Research Engineers, Inc., and subsidiaries as of March 31, 1999, and for the
years ended March 31, 1999 and 1998, 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.
The combined financial statements of NetGuru Systems, Inc. and NetGuru
Consulting, Inc. as of December 31, 1997 and 1998, and for the years then ended,
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.
The financial statements of R-Cube Technologies, Inc. as of September
30, 1998 and 1997, and for the years then ended, 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.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form S-3 under the Securities Act of 1933 covering the
shares of common stock offered pursuant to this prospectus. This prospectus
omits certain information and exhibits included in the registration statement,
copies of which may be obtained upon payment of a fee prescribed by the
Commission or may be examined free of charge at the principal office of the
Commission in Washington, D.C.
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith file reports and other
information with the Commission. Reports, proxy statements and other information
filed by us with the Commission may be inspected at the Commission's Public
Reference Section, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: 7 World Trade Center,
13th Floor, New York, New York 10048, and at Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You can request copies of
these documents upon payment of a duplicating fee, by writing to the Commission.
Please call the Commission at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. Our filings, including the registration
statement, will also be available to you on the Commission's Internet site
(http://www.sec.gov).
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We have filed the documents listed below with the Commission. These
documents are incorporated herein by reference: (a) our Annual Report on Form
10-KSB for the fiscal year ended March 31, 1999; (b) our Current Report on Form
8-K/A filed May 13, 1999; (c) our Current Report on Form 8-K filed September 29,
1999; (d) our Current Report on Form 8-K/A filed October 15, 1999; (e) our
Current Report on Form 8-K/A filed November 12, 1999; (f) our Proxy Statement
dated October 13, 1999; (g) our Quarterly Reports on Form 10-QSB for the
quarters ended June 30, 1999 and September 30, 1999; and (h) the description of
our common stock contained in the registration statement on Form 8-A filed
pursuant to Section 12 of the Securities Exchange Act of 1934 on June 11, 1996
(incorporating by reference information contained in our registration statement
on Form SB-2 filed pursuant to the Securities Act of 1933).
All reports and documents which we subsequently file pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this prospectus and prior to the termination of this offering shall
be deemed to be incorporated by reference into this prospectus and to be part
hereof from the date of filing of those reports and documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is incorporated or deemed to be
incorporated herein modifies or supersedes that statement. Any modified or
superseded statement shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus is delivered, upon the written or oral
request, a copy of any or all of the documents referred to above which have been
incorporated into this prospectus by reference (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
any such document). Requests for such copies should be directed to Wayne Blair,
netguru, inc., 22700 Savi Ranch Parkway, Yorba Linda, California 92887;
Telephone: (714) 974-2500.
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