<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               AMENDMENT NO. 1 TO
                                   FORM 10-QSB
 (Mark One)
[X] QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

             FOR THE TRANSITION PERIOD FROM __________ TO __________

                         Commission file number: 0-28560

                                  NETGURU, INC.
        (Exact name of small business issuer as specified in its charter)

            DELAWARE                                    22-2356861
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

22700 SAVI RANCH PARKWAY, YORBA LINDA, CA                   92887
(Address of principal executive offices)                 (Zip Code)

                  Issuer's telephone number: (714) 974-2500

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]

The number of shares outstanding of the registrant's only class of Common Stock,
$.01 par value, was 17,405,150 on November 27, 2002.




<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

                                                                            PAGE
Item 1.  Financial Statements

         Condensed Consolidated Statements of Operations for the three
         month periods ended June 30, 2002 and 2001(unaudited )..............  3

         Condensed Consolidated Balance Sheets as of
         June 30, 2002 (unaudited) and March 31, 2002........................  4

         Condensed Consolidated Statements of Cash Flows for the
         three month periods ended June 30, 2002 and 2001 (unaudited)........  5

         Notes to Condensed Consolidated Financial Statements (unaudited)....  6

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations............................................... 13

                                     PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings...................................................  23

Item 2. Changes in Securities and Use of Proceeds...........................  23

Item 3. Defaults Upon Senior Securities.....................................  23

Item 4. Submission of Matters to a Vote of Security Holders.................. 23

Item 5. Other Information.................................................... 23

Item 6. Exhibits and Reports on Form 8-K....................................  23

Signatures..................................................................  24

Certifications of Principal Executive Officer and Principal Financial Officer 25

Exhibits Filed with this Report on Form 10-QSB............................... 26

                                       2




<PAGE>
<TABLE>

PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                   NETGURU, INC. AND SUBSIDIARIES
                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                             (Unaudited)
                         ($ in thousands except share and per share amounts)
<CAPTION>

                                                                       THREE MONTHS ENDED
                                                                            JUNE 30,
                                                                --------------------------------
                                                                    2002               2001
                                                                -------------      -------------
<S>                                                             <C>                <C>
Net revenues:
    Engineering and collaborative software solutions            $      1,871       $      2,395
    IT services                                                        1,414              3,348
    Web-based telecommunication and travel services                    1,132              1,038
                                                                -------------      -------------
           Total net revenues                                          4,417              6,781

Cost of revenues:
    Engineering and collaborative software solutions                     249                298
    IT services                                                        1,076              2,345
    Web-based telecommunication and travel services                      987                914
                                                                -------------      -------------
           Total cost of sales                                         2,312              3,557
                                                                -------------      -------------
           Gross profit                                                2,105              3,224
                                                                -------------      -------------

Operating expenses:
    Selling, general and administrative                                2,616              3,114
    Research and development                                             464                487
    Amortization of goodwill                                              --                334
    Depreciation and other amortization                                  311                327
    Restructuring                                                         93                 --
                                                                -------------      -------------
           Total operating expenses                                    3,484              4,262
                                                                -------------      -------------

           Operating loss                                             (1,379)            (1,038)
                                                                -------------      -------------

Other expense (income):
    Interest, net                                                         62                 32
    Other                                                                 (2)                (8)
                                                                -------------      -------------
           Total other expense                                            60                 24
                                                                -------------      -------------

Loss before income taxes                                              (1,439)            (1,062)
Income tax (benefit) expense                                            (369)                89
                                                                -------------      -------------

           Net loss                                              $    (1,070)       $    (1,151)
                                                                 ============       ============

Net loss per common share:
         Basic                                                   $     (0.06)       $     (0.07)
                                                                 ============       ============
         Diluted                                                 $     (0.06)       $     (0.07)
                                                                 ============       ============
Common shares used in computing net loss per common share:
         Basic                                                    17,285,977         16,877,539
                                                                 ============       ============
         Diluted                                                  17,285,977         16,877,539
                                                                 ============       ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                                 3




<PAGE>
<TABLE>

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

                                                                                  JUNE 30,       MARCH 31,
                                                                                    2002           2002
                                                                                  ---------      ---------
                                                                                 (Unaudited)
                                               ASSETS
<S>                                                                               <C>            <C>
Current assets:
    Cash and cash equivalents                                                     $  2,485       $  3,466
    Accounts receivable (net of allowance for doubtful accounts of $973 and
      $981, as of June 30, 2002 and March 31, 2002, respectively)                    3,013          3,325
    Income tax receivable                                                              309            305
    Notes and related party loans receivable                                           198            269
    Prepaid expenses and other current assets                                        1,011          1,543
                                                                                  ---------      ---------

           Total current assets                                                      7,016          8,908

Property, plant and equipment, net                                                   4,014          4,169
Goodwill  (net of accumulated amortization of $4,438 as of June 30, 2002 and
    March 31, 2002)                                                                  9,105          9,105
Other assets                                                                           948            884
                                                                                  ---------      ---------
                                                                                  $ 21,083       $ 23,066
                                                                                  =========      =========

                                LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long-term bank debt                                        $    257       $    259
    Current portion of capital lease obligations                                       428            417
    Accounts payable                                                                 1,091          1,012
    Accrued expenses                                                                   630          1,082
    Income taxes payable                                                                --            196
    Deferred maintenance revenue                                                     1,652          1,760
    Deferred income taxes                                                               --             60
    Other liabilities                                                                  152            199
    Accrued restructuring costs                                                        237            157
                                                                                  ---------      ---------

           Total current liabilities                                                 4,447          5,142

Long-term bank debt, net of current portion                                            456            567
Capital lease obligations, net of current portion                                      926          1,027
Deferred income taxes, non-current                                                      --            112
Deferred gain on sale-leaseback                                                        870            887
                                                                                  ---------      ---------

           Total liabilities                                                         6,699          7,735
                                                                                  ---------      ---------

Stockholders' equity:
    Preferred stock, par value $.01 (Authorized 5,000,000 shares; no shares
      issued and outstanding)                                                           --             --
    Common stock, par value $.01; authorized 150,000,000 shares; issued and
      outstanding 17,296,650 and 17,265,850 shares (net of 10,965 treasury
      shares) as of June 30, 2002 and March 31, 2002, respectively                     173            173
    Additional paid-in capital                                                      33,086         33,057
    Accumulated deficit                                                            (17,875)       (16,805)
    Accumulated other comprehensive loss:
       Cumulative foreign currency translation adjustments                          (1,000)        (1,094)
                                                                                  ---------      ---------

           Total stockholders' equity                                               14,384         15,331
                                                                                  ---------      ---------
                                                                                  $ 21,083       $ 23,066
                                                                                  =========      =========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                                 4




<PAGE>
<TABLE>

                                        NETGURU, INC. AND SUBSIDIARIES
                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (Unaudited)
                                                (In thousands)
<CAPTION>
                                                                       THREE MONTHS         THREE MONTHS
                                                                          ENDED                ENDED
                                                                      JUNE 30, 2002        JUNE 30, 2001
                                                                      -------------        -------------
<S>                                                                       <C>                 <C>
Cash flows from operating activities:
    Net loss                                                              $(1,070)            $(1,151)
    Adjustments to reconcile net loss to net cash used in operating
      activities:
        Depreciation and amortization                                         311                 661
        Bad debt expense                                                       25                  --
        Deferred income taxes                                                (172)                 (7)
        Compensation expense recognized on issuance of stock options          (23)                 34
        Restructuring                                                          93                  --
        Changes in operating assets and liabilities (net of
          acquisitions):
          Accounts receivable                                                 361               1,094
          Notes and related party loans receivable                             71                  (1)
          Income tax receivable                                                (4)                 --
          Prepaid expenses and other current assets                           535                (294)
          Other assets                                                        (88)                153
          Accounts payable                                                     69                 (57)
          Accrued expenses                                                   (456)               (437)
          Income taxes payable                                               (199)                 68
          Accrued restructuring costs                                         (13)                 --
          Other current liabilities                                           (73)                 38
          Deferred maintenance revenue                                       (140)               (525)
          Deferred gain on sale-leaseback                                     (17)                (29)
                                                                          --------            --------

                  Net cash used in operating activities                      (790)               (453)
                                                                          --------            --------

Cash flows from investing activities:
    Purchase of property, plant and equipment                                 (88)               (167)
    Payments to acquire companies, net of cash acquired                        --                 (67)
                                                                          --------            --------

                  Net cash used in investing activities                       (88)               (234)
                                                                          --------            --------

Cash flows from financing activities:
    Proceeds from issuance of bank debt                                         1                  19
    Repayment of bank debt                                                   (115)               (109)
    Repayment of capital lease obligations                                    (84)                (36)
    Issuance of common stock                                                   52                  27
    Repurchase common stock                                                    --                (140)
                                                                          --------            --------

                  Net cash used in financing activities                      (146)               (239)
                                                                          --------            --------

    Effect of exchange rate changes on cash and cash equivalents               43                 (68)
                                                                          --------            --------

                  Decrease in cash and cash equivalents                      (981)               (994)

Cash and cash equivalents, beginning of period                              3,466               7,958
                                                                          --------            --------

Cash and cash equivalents, end of period                                  $ 2,485             $ 6,964
                                                                          ========            ========

Supplemental disclosure of cash flow information:
   Amounts paid for:
         Interest                                                         $    63             $    21
         Income taxes                                                     $     1             $    14

</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                                      5




<PAGE>

                         NETGURU, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)

     BASIS OF PRESENTATION

         The condensed consolidated financial statements include the accounts of
netGuru, Inc. and its wholly owned subsidiaries (the "Company"). All significant
transactions among the consolidated entities have been eliminated upon
consolidation.

         These condensed consolidated financial statements have been prepared by
the Company and include all adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial position at June 30, 2002 and
the results of operations and the cash flows for the three months ended June 30,
2002 and 2001, pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for annual consolidated financial statements. Results of
operations for the three months ended June 30, 2002 are not necessarily
indicative of the results to be expected for the full year ending March 31,
2003.

     USE OF ESTIMATES

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America, requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates.

     FAIR VALUE OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards ("SFAS") No. 107,
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires management to
disclose the estimated fair value of certain assets and liabilities defined by
SFAS No. 107 as financial instruments. Financial instruments are generally
defined by SFAS No. 107 as cash or a contractual obligation that conveys to one
entity a right to receive cash or other financial instruments from another
entity, as well as impose on the other entity the obligation to deliver cash or
other financial instruments to the first entity. At June 30, 2002, management
believes the carrying amounts of cash and cash equivalents, receivable and
payable amounts, and accrued expenses approximate fair value because of the
short maturity of these financial instruments. The Company also believes that
the carrying amounts of its long-term debt and capital lease obligations
approximate their fair value as the interest rates approximate a rate that the
Company could obtain under similar terms at the balance sheet date.

     SOFTWARE DEVELOPMENT COSTS AND PURCHASED TECHNOLOGY

         The Company capitalizes costs related to the development of certain
software products. Capitalization of costs begins when technological feasibility
has been established and ends when the product is available for general release
to customers. As of June 30, 2002, capitalized costs of approximately $657,000,
net of accumulated amortization, were included in other assets. Approximately
$303,000 of this amount represents software developed in-house and $261,000
represents the cost of software developed on the Company's behalf by third
parties. The remaining $93,000 represents purchased technology. Additions to
capitalized software were $28,000 and $2,500 during the quarters ended June 30,
2002 and 2001, respectively.

                                       6




<PAGE>

         The Company amortizes capitalized software development costs and
purchased technology using the straight-line method over three to five years, or
the ratio of actual sales to anticipated sales, whichever is greater.
Amortization of software development costs and purchased technology charged to
operations was approximately $43,000 and $54,000 for the quarter ended June 30,
2002 and 2001 respectively. Accumulated amortization on capitalized software was
$533,000 and $432,000 as of June 30, 2002 and 2001, respectively.

     REVENUE RECOGNITION

         The Company recognizes revenue when the following criteria are met: 1.
persuasive evidence of an arrangement exists, such as agreements, purchase
orders or written or online requests; 2. delivery has been completed and no
significant obligations remain; 3. the Company's price to the buyer is fixed and
determinable; and 4. collectibility is reasonably assured. The Company's
revenues arise from the following segments: enterprise engineering and
collaborative software solutions (including digital media products and animation
services); IT services; and Web-based telecommunication and travel services.

         Revenue from software sales is recognized upon shipment, provided that
no significant post-contract support obligations remain outstanding and
collection of the resulting receivable is deemed probable. The Company's
software sales do not provide a specific right of return. At the time of sale,
the Company typically provides 120-day initial maintenance and support to the
customer. Costs relating to this initial 120-day support period, which include
primarily telephone support, are not considered material. After the initial
support period, customers may choose to purchase ongoing maintenance contracts
that include telephone, e-mail and other methods of support, and the right to
receive upgrades. Revenue from these maintenance contracts is deferred and
recognized ratably over the life of the contract, usually twelve months.
Revenues from digital media and animation services are recognized upon
achievement of certain pre-determined milestones.

         In October 1997, the Accounting Standards Executive Committee ("AcSEC")
of the AICPA issued Statement of Position ("SOP") 97-2, SOFTWARE REVENUE
RECOGNITION. The Company adopted SOP 97-2 in the first quarter of fiscal 1999.
SOP 97-2 distinguishes between significant and insignificant vendor obligations
as a basis for recording revenue with a requirement that each element of a
software licensing arrangement be separately identified and accounted for based
on relative fair values of each element. We determine the fair value of each
element in multi-element transactions based on vendor-specific objective
evidence ("VSOE"). VSOE for each element is based on the price charged when the
same element is sold separately. In 1998 the AICPA issued SOP 98-9, MODIFICATION
OF SOP 97-2, SOFTWARE REVENUE RECOGNITION, WITH RESPECT TO CERTAIN TRANSACTIONS,
which modifies SOP 97-2 to allow for use of the residual method of revenue
recognition provided that certain criteria have been met. The Company adopted
SOP 98-9 in the first quarter of fiscal 2000. If evidence of fair value of all
undelivered elements exists but evidence does not exist for one or more
delivered elements, then revenue is recognized using the residual method. Under
the residual method, the fair value of the undelivered elements is deferred and
the remaining portion of the transaction fee is recognized as revenue.

         Revenue from providing IT services are recognized primarily on a time
and materials basis, with time at a marked-up rate and materials and other
reasonable expenses at cost, once the services are completed and no significant
obligations remain. Certain IT services contracts are fixed price contracts
where progress toward completion is measured by mutually agreed upon
pre-determined milestones for which we recognize revenue upon achieving such
milestones. Our fixed price IT contracts are typically for a short duration of
one to three months.

         Revenues from Web-based telecommunication and travel services are
predominantly recognized net of purchase costs when the products and services
are delivered and collectibility is probable. Revenues from certain phone card
transactions are deferred and recognized on the basis of usage. Revenues from
call termination services are recognized when the services are completed and the
costs of these services are recognized when incurred. Certain travel services,
based on their nature, are recognized at the gross sales value with purchase
costs stated as a separate cost of revenues in accordance with Emerging Issues
Task Force Issue No. 99-19, RECORDING REVENUE GROSS AS A PRINCIPAL VERSUS NET AS
AN AGENT.

                                       7




<PAGE>

     RECLASSIFICATIONS

         Certain reclassifications have been made to the fiscal 2002
consolidated financial statements to conform to the fiscal 2003 presentation.

     PROVISION FOR RESTRUCTURING OPERATIONS

         In March 2001, the Company announced plans to restructure its
operations. As a result of this restructuring plan, the Company recorded a
restructuring charge of $2,400,000 in fiscal 2001. The restructuring plan
consisted of four major points: 1) refocused strategic direction of Internet
service provider ("ISP") initiatives; 2) refocused strategic direction of
Internet portal initiatives; 3) consolidation of the Company's technical support
activities; and 4) elimination of the Company's in-house legal department.

         With regard to the Company's ISP initiatives in India, the Company
redirected its primary focus towards the communication and connectivity services
targeted at the corporate market. The total amount charged for the refocus of
ISP operations in fiscal 2001 was $1,998,000. This total charge consisted of
$117,000 in contractual obligations and $1,827,000 in asset write-offs related
to ISP operations in India. These charges did not include any employee costs.
The restructuring related to the ISP operations resulted in elimination of
depreciation and amortization expenses that would have resulted from the ISP
related assets.

         With regard to the Internet portal business, the Company redirected its
primary focus towards the telephony and travel services offered through the
portal. The initial restructuring charge related to the refocus of the portal
business was $194,000, of which $168,000 was related to asset write-offs, and
$26,000 was related to contractual obligations. The entire $194,000 was paid in
fiscal 2001. During fiscal 2002, an additional $67,000 relating to contractual
obligations for the portal operations was paid.

         In March 2001, the Company closed its Boston technical support office
as part of consolidating the Company's technical support activities. Technical
support activities previously offered from the Boston office were consolidated
into the California facility. The closing of this office resulted in the
termination of two employees. The restructure charge related to the
consolidation of technical support facilities was $166,000, of which $49,000
related to accrued severance payments for the two terminated employees and
$117,000 related to contractual lease obligations for the vacated space. The
Company made cash payments totaling $58,000 and $13,000 in fiscal 2002 and
during the three months ended June 30, 2002, respectively, towards settlement of
obligations related to this activity. The Company expects that employee costs,
and the facility costs (once the lease obligations are satisfied) would decrease
as a result of this restructure charge.

         The elimination of the in-house legal department primarily consisted of
the termination of one employee whose position was not filled. Legal services
are being obtained from the Company's continuing external legal counsel. In
fiscal 2001, the Company estimated that the restructure charge related to the
elimination of the in-house legal department to be $42,000. In fiscal 2002, the
Company paid $52,000 toward this restructure charge. An additional charge of
$41,000 and $109,000 was recorded in fiscal 2002 and during the first quarter of
fiscal 2003, respectively, since the original estimate of severance expenses was
insufficient.

                                       8




<PAGE>
<TABLE>

     Activity relating to the restructuring charge is as follows (in thousands):
<CAPTION>

                         REFOCUS OF   REFOCUS OF   CONSOLIDATION  ELIMINATION
                             ISP        PORTAL      OF TECHNICAL    OF LEGAL
                         OPERATIONS   OPERATIONS      SUPPORT      DEPARTMENT      TOTAL
                          --------      --------      --------      --------      --------
<S>                       <C>           <C>           <C>           <C>           <C>
March 31, 2000                 --            --            --            --            --

Restructuring charge      $ 1,998       $   194       $   166       $    42       $ 2,400

Cash payments              (1,897)         (194)           --            --        (2,091)
                          --------      --------      --------      --------      --------

March 31, 2001            $   101       $    --       $   166       $    42       $   309
                          --------      --------      --------      --------      --------

Cash payments                  --           (67)          (58)          (52)         (177)

Adjustments                   (67) a         67  a        (16) b         41  b         25
                          --------      --------      --------      --------      --------

March 31, 2002            $    34       $    --       $    92       $    31       $   157
                          --------      --------      --------      --------      --------

Cash payments                  --            --           (13)           --           (13)

Adjustments                   (16) c         --            --           109  c         93
                          --------      --------      --------      --------      --------

June 30, 2002             $    18       $    --       $    79       $   140       $   237
                          ========      ========      ========      ========      ========
</TABLE>

a.         Represents reversal of over-accrual for contractual obligations for
           ISP operations and additional amounts accrued for contractual
           obligations related to the portal operations.

b.         Represents reversal of over-accrual for technical support severance
           costs and additional amounts accrued for anticipated severance costs
           for the elimination of the legal department.

c.         Represents reversal of over-accrual for contractual obligation for
           ISP operations and additional amounts accrued for anticipated
           severance costs for the elimination of the legal department.

         The balance at June 30, 2002 includes $54,000 of lease payments for
vacated office space scheduled for payment through September 2003. The remaining
personnel costs and contractual obligations are expected to be completed by the
end of the third quarter of fiscal 2003.

     STOCKHOLDERS' EQUITY

         In April 2000, the Company issued 25,000 shares of common stock as a
portion of the purchase price for the acquisition of Allegria Software, Inc
("Allegria"). The recipients of these shares were given the right to demand the
Company to repurchase these shares at a price of $28.60 per share at the end of
one year. In April 2001, each of the three former owners exercised this right.
The total repurchase price was $715,000. Agreements were reached with the former
owners to extend the cash payment for this repurchase over a period of twelve
months.

         As of June 30, 2002, the Company had paid $146,000 to one of the former
owners for the repurchase of 6,000 shares. The remaining $26,000 is to be paid
by November 30, 2002, and has been accrued under "accrued expenses." The
repurchase of 6,000 shares from another former owner was settled for a total of
$100,000, and the entire amount was paid as of June 30, 2002.

                                       9




<PAGE>

         The owner of the remaining 13,000 shares is holding the stock
certificates until full payment is received for these shares. The total cash to
be paid for this repurchase was $372,000, of which $128,000 has been paid as of
June 30, 2002.

     FOREIGN CURRENCY TRANSLATION

         The financial position and results of operations of the Company's
foreign subsidiaries are accounted for using the local currency as the
functional currency. Assets and liabilities of the subsidiaries are translated
into U.S. dollars (the reporting currency) at the exchange rate in effect at the
period-end. Statements of operations accounts are translated at the average rate
of exchange prevailing during the respective periods. Translation adjustments
arising from the use of differing exchange rates from period to period are
included in accumulated other comprehensive loss in the consolidated balance
sheets. Gains and losses resulting from foreign currency transactions are
included in operations and are not material to the first quarter of fiscal 2003
and the first quarter of fiscal 2002.

     COMPREHENSIVE INCOME (LOSS)

         The Company applies the provisions of SFAS No. 130, REPORTING
COMPREHENSIVE INCOME, which prescribes rules for the reporting and display of
comprehensive income (loss) and its components. SFAS No. 130 requires foreign
currency translation adjustments, which are reported separately in stockholders'
equity, to be included in other comprehensive income (loss). Total comprehensive
loss was $976,000 and $1,242,000 for the quarter ended June 30, 2002 and 2001,
respectively.

     NET LOSS PER SHARE

         Basic Earnings (Loss) Per Share ("EPS") is calculated by dividing net
income (loss) by the weighted-average common shares outstanding during the
period. Diluted EPS reflects the potential dilution to basic EPS that could
occur upon conversion or exercise of securities, options, or other such items,
to common shares using the treasury stock method based upon the weighted-average
fair value of the Company's common shares during the period.

         The following table illustrates the computation of basic and diluted
net loss per share (in thousands except per share amounts):

<TABLE>
<CAPTION>

                                                              THREE MONTHS ENDED
                                                                   JUNE 30,
                                                           ------------------------
                                                              2002           2001
                                                           ---------      ---------
<S>                                                        <C>            <C>
Numerator:
Net loss & numerator for basic and diluted loss per
share                                                      $ (1,070)      $ (1,151)
                                                           =========      =========

Denominator:
Denominator for basic net loss per share - average
number of common shares outstanding during the period        17,286         16,877
Incremental common shares attributable to exercise of
outstanding options, warrants and other common stock
equivalents                                                      --             --
                                                           ---------      ---------
Denominator for diluted net loss per share                   17,286         16,877
                                                           =========      =========

Basic net loss per share                                   $  (0.06)      $  (0.07)
                                                           =========      =========
Diluted net loss per share                                 $  (0.06)      $  (0.07)
                                                           =========      =========
</TABLE>

         Options, warrants and other common stock equivalents amounting to
737,000 and 608,000 potential common shares were excluded from the computation
of diluted EPS for the quarters ended June 30, 2002 and 2001, respectively,
because the Company reported net losses and, therefore, the effect would be
antidilutive.

                                       10




<PAGE>

     SEGMENT AND GEOGRAPHIC DATA

         The Company is an integrated information technology and services
company operating in three primary business segments: 1) enterprise engineering
and collaborative software solutions; 2) IT services; and 3) Web-based
telecommunication and travel services.

         The Company has provided computer-aided engineering software solutions
to customers for over 20 years. During the past 18 years, the Company has
supported the engineering software business with India-based software
programming and IT resources. In addition, based upon the Company's knowledge
and understanding of the engineering software market, combined with the
Company's Internet technology resources and experience, the Company launched
Web4engineers.com, an engineering applications service provider ("ASP") portal
hosting the Company's engineering software applications online and providing ASP
services to engineering software providers and their licensees worldwide. With
the acquisitions of R-Cube Technologies in February 1999 and NetGuru Systems
completed in December 1999, the Company further expanded its IT resources and
capabilities and its presence in the IT services industry, providing expertise
in data-mining and embedded technologies, Internet/Intranet design and
development and systems and software integration and implementation to companies
in North America. The Company has expanded its IT services business into Europe
and intends to further expand its services in India and Southeast Asia.

         The Company applies the provisions of SFAS No. 131, DISCLOSURES ABOUT
SEGMENTS OF AN ENTERPRISE and RELATED INFORMATION. SFAS 131 requires segments to
be determined and reported based on how management measures performance and
makes decisions about allocating resources.

         The significant components of worldwide operations by reportable
operating segment (in thousands) are:

                                                           THREE MONTHS ENDED
                                                               JUNE 30,
                                                         ----------------------
                                                           2002          2001
                                                         --------      --------
                                                             (IN THOUSANDS)
         NET REVENUE
             Engineering and collaborative software
               solutions                                 $ 1,871       $ 2,395
             IT services                                   1,414         3,348
             Web-based telecommunication and travel
               services                                    1,132         1,038
                                                         ========      ========
                  Consolidated                           $ 4,417       $ 6,781
                                                         ========      ========

         OPERATING (LOSS)/INCOME
             Engineering and collaborative software
               solutions                                 $(1,135)      $  (763)
             IT services                                     (67)          183
             Web-based telecommunication and travel
               services                                     (177)         (458)
                                                         ========      ========
                  Consolidated                           $(1,379)      $(1,038)
                                                         ========      ========

                                       11




<PAGE>

         The Company's operations are based worldwide through foreign and
domestic subsidiaries and branch offices in the United States, India, the United
Kingdom, France, Germany and Asia-Pacific. The following are significant
components of worldwide operations by geographic location:

                                                 THREE MONTHS ENDED
                                                      JUNE 30,
                                               ---------------------
                                                 2002         2001
                                               --------     --------
                                                  (IN THOUSANDS)
NET REVENUE
United States                                  $ 3,200      $ 5,718
The Americas (other than U.S.)                     107          120
Europe                                             495          497
Asia-Pacific                                       615          446
                                               --------     --------

         Consolidated                          $ 4,417      $ 6,781
                                               ========     ========

EXPORT SALES
United States                                  $   232      $   124
                                               ========     ========

                                                JUNE 30,    JUNE 30,
                                                  2002         2001
                                               --------     --------
                                                  (IN THOUSANDS)
LONG-LIVED ASSETS
United States                                  $12,342      $14,105
Europe                                             365          386
Asia-Pacific                                     1,360        2,570
                                               --------     --------

         Consolidated                          $14,067      $17,061
                                               ========     ========

     CONTINGENCIES

         The Company is party to various litigation matters arising in the
normal course of business. Management believes the resolution of these matters
will not have a material adverse effect on the Company's results of operations
or financial condition.

                                       12




<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

FORWARD-LOOKING STATEMENTS

         This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, or the Securities Act,
and Section 21E of the Securities Exchange Act of 1934, as amended, or the
Exchange Act. We intend that those forward-looking statements be subject to the
safe harbors created by those sections. 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, and
can generally be identified by the use of the words "believe," "intend," "plan,"
"expect," "forecast," "project," "may," "should," "could," "seek," "pro forma,"
"estimates," "continues," "anticipate" and similar words. 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 return to profitability and obtain additional
                  working capital, if required;
         o        our ability to successfully implement our future business
                  plans;
         o        our ability to attract strategic partners, alliances and
                  advertisers;
         o        our ability to hire and retain qualified personnel;
         o        the risks of uncertainty of trademark protection;
         o        risks associated with existing and future governmental
                  regulation to which we are subject; and
         o        uncertainties relating to economic conditions in the markets
                  in which we currently operate and in which we intend to
                  operate in the future.

         These forward-looking statements necessarily depend upon assumptions
and estimates that may prove to be incorrect. Although we believe that the
assumptions and estimates reflected in the forward-looking statements are
reasonable, we cannot guarantee that we will achieve our plans, intentions or
expectations. The forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ in
significant ways from any future results expressed or implied by the
forward-looking statements. We do not undertake to update, revise or correct any
forward-looking statements.

         Any of the factors described above or in the "Risk Factors" section of
our most recent annual report on Form 10-KSB could cause our financial results,
including our net income (loss) or growth in net income (loss) to differ
materially from prior results, which in turn could, among other things, cause
the price of our common stock to fluctuate substantially.

OVERVIEW

         We were incorporated in 1981 under the name Research Engineers, Inc.
and changed our name to netGuru, Inc. in 2000. We are a Delaware corporation.
Our primary business offerings are:

         o        Engineering and collaborative software solutions (including
                  related services) for businesses worldwide;
         o        Information technology, or IT, services (including value-added
                  IT services); and
         o        Web-based telecommunications and travel services (including
                  long-distance communication services that include call
                  termination services and prepaid phone cards, and travel
                  services).

         We have provided computer-aided engineering software solutions to our
customers for over 20 years. For the past 18 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., which
further expanded our IT resources and capabilities. Our Internet portal services
were started in 1999 and were refocused in fiscal 2001 toward telecommunications
and travel services. A more expansive discussion of our business and services is
contained in the "Business" section of our most recent annual report on Form
10-KSB.

                                       13




<PAGE>

CRITICAL ACCOUNTING POLICIES

         We have identified the following as accounting policies critical to our
company: revenue recognition, capitalization of software development, allowances
for accounts receivable, impairment of long-lived assets including goodwill, and
deferred income taxes.

     REVENUE RECOGNITION
     -------------------

         We recognize revenue when the following criteria are met: 1. persuasive
evidence of an arrangement exists, such as agreements, purchase orders or
written or online requests; 2. delivery has been completed and no significant
obligations remain; 3. our price to the buyer is fixed and determinable; and 4.
collectibility is reasonably assured. Our revenues arise from the following
segments: enterprise engineering and collaborative software solutions (including
digital media products and animation services); IT services; and Web-based
telecommunication and travel services.

         Revenue from software sales is recognized upon shipment, provided that
no significant post-contract support obligations remain outstanding and
collection of the resulting receivable is deemed probable. Our software sales do
not provide a specific right of return. At the time of sale, we typically
provide 120-day initial maintenance and support to the customer. Costs relating
to this initial 120-day support period, which consist primarily of telephone
support, are not considered material. After the initial support period,
customers may choose to purchase ongoing maintenance contracts that include
telephone, e-mail and other methods of support, and the right to receive
upgrades. Revenue from these maintenance contracts is deferred and recognized
ratably over the life of the contract, usually twelve months. Revenues from
digital media and animation services are recognized upon achievement of certain
pre-determined milestones.

         In October 1997, the Accounting Standards Executive Committee ("AcSEC")
of the AICPA issued Statement of Position ("SOP") 97-2, Software Revenue
Recognition. We adopted SOP 97-2 in the first quarter of fiscal 1999. SOP 97-2
distinguishes between significant and insignificant vendor obligations as a
basis for recording revenue with a requirement that each element of a software
licensing arrangement be separately identified and accounted for based on
relative fair values of each element. We determine the fair value of each
element in multi-element transactions based on vendor-specific objective
evidence ("VSOE"). VSOE for each element is based on the price charged when the
same element is sold separately. In 1998 the AICPA issued SOP 98-9, Modification
of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions,
which modifies SOP 97-2 to allow for use of the residual method of revenue
recognition provided that certain criteria have been met. We adopted SOP 98-9 in
the first quarter of fiscal 2000. If evidence of fair value of all undelivered
elements exists but evidence does not exist for one or more delivered elements,
then revenue is recognized using the residual method. Under the residual method,
the fair value of the undelivered elements is deferred and the remaining portion
of the transaction fee is recognized as revenue.

         Revenues from providing IT services are recognized primarily on a time
and materials basis, with time at a marked-up rate and materials and other
reasonable expenses at cost, as services are performed. Certain IT services
contracts are fixed price contracts where progress toward completion is measured
by mutually agreed upon pre-determined milestones for which we recognize revenue
upon achieving such milestones. Our fixed price IT contracts are typically for a
short duration of one to three months.

         With regard to the Web-based telecommunication services, revenues from
call termination services are recognized at gross sales value with the
applicable cost separately stated in the cost of revenues. Revenues from our
own phone cards are deferred and recognized on the basis of usage, whereas
revenues from re-sale of third-party phone cards are recognized net of returns
since no significant obligations remain once product is delivered. Certain
travel services, based on their nature, are recognized at the gross sales value

                                       14




<PAGE>

with purchase costs stated as a separate cost of revenues in accordance with
Emerging Issues Task Force Issue No. 99-19, Recording Revenue Gross as a
Principal Versus Net as an Agent. Other products and services sold via Internet
portals, including certain travel services, where we are a travel discounter or
an agent, are recognized net of purchase costs when the products and services
are delivered and collectibility is probable.

     ACCOUNTING FOR SOFTWARE DEVELOPMENT COST AND PURCHASED TECHNOLOGY
     -----------------------------------------------------------------

         We develop software in-house, employ third parties to develop software
for us as well as purchase software technology. Costs related to the development
of certain software products are capitalized. Capitalization of costs begins
when technological feasibility has been established and ends when the product is
available for general release to customers. Additional costs to enhance products
after release are expensed as they are incurred.

         Capitalized software development costs and purchased technology are
amortized using the straight-line method over three to five years, or the ratio
of actual sales to anticipated sales, whichever is greater. The resulting net
book value of the capitalized software asset is reviewed periodically for
recoverability based on estimated future revenues from products based on that
particular technology. When significant uncertainties exist with respect to the
recoverability of the capitalized cost of the asset, we write the cost of the
asset down to its potential recoverable value.

     ALLOWANCE FOR ACCOUNTS RECEIVABLE
     ---------------------------------

         We sell to our customers on credit and grant credit to those who are
deemed credit worthy based on our analysis of their credit history. We review
our accounts receivable balances and the collectibility of these balances on a
periodic basis. Based on our analysis of the length of time that the balances
have been outstanding, the pattern of customer payments, our understanding of
the general business conditions of our customers and our communications with the
customers, we estimate the recoverability of these balances. When recoverability
is uncertain and the unrecoverable amounts can be reasonably estimated, we
record bad debt expense and increase the allowance for accounts receivable by an
amount equal to the amount estimated to be unrecoverable.

     IMPAIRMENT OF LONG-LIVED ASSETS
     -------------------------------

         Through March 31, 2002, we applied the provisions of SFAS No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO
BE DISPOSED OF. This statement required that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net undiscounted cash
flows expected to be generated by the asset. If the asset is considered to be
impaired, the impairment to be recognized was measured as the amount by which
the carrying amount of the asset exceeded the fair value of the asset. Assets to
be disposed of are reported at the lower of the carrying amount or fair value
less costs to sell. In August 2001, the FASB issued SFAS No. 144 ("SFAS 144"),
ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS. This statement
addresses financial accounting and reporting for the impairment of long-lived
assets and supersedes SFAS 121, and the accounting and reporting provisions of
APB No. 30, REPORTING THE RESULTS OF OPERATIONS FOR A DISPOSAL OF A SEGMENT OF A
BUSINESS. SFAS 144 is effective for fiscal years beginning after December 15,
2001. We have adopted SFAS 144 beginning April 1, 2002. The adoption of SFAS 144
does not have a material impact on our consolidated financial position or
results of operations. We apply the provisions of SFAS No. 86 (SFAS 86),
"ACCOUNTING FOR THE COST OF COMPUTER SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE
MARKETED" for evaluating unamortized capitalized software development costs. At
each balance sheet date, we compare the unamortized software development cost of
each product to the net realizable value of the product. The amount by which the
unamortized software development cost exceeds the net realizable value of the
product is written off.

                                       15




<PAGE>

     DEFERRED INCOME TAXES
     ---------------------

         We account for income taxes using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.

         In assessing the realizability of the net deferred tax assets, we
consider whether it is more likely than not that some or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon either the generation of future taxable income during the periods
in which those temporary differences become deductible or the carryback of
losses to recover income taxes previously paid during the carryback period.

     RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, certain
statement of operations data expressed as a percentage of our net revenues.

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                                    JUNE 30,
                                                         --------------------------------
                                                              2002              2001
                                                              ----              ----

         <S>                                                  <C>               <C>
         Net revenues                                         100.0%            100.0%
         Cost of revenues                                      52.3              52.5
                                                         --------------    --------------

         Gross profit                                          47.7              47.5
                                                         --------------    --------------

         Selling, general and administrative expenses          59.2              45.9
         Research and development expenses                     10.6               7.2
         Amortization of goodwill                                -                4.9
         Depreciation and software amortization                 7.0               4.8
         Restructuring                                          2.1                -
                                                         --------------  --------------
                Total operating expenses                       78.9              62.8

         Operating loss                                       (31.2)            (15.3)

         Interest expense, net                                  1.4               0.5
         Other income, net                                       -               (0.1)
                                                         --------------    --------------

         Loss before income taxes                             (32.6)            (15.7)
         Income tax benefit (expense)                           8.4              (1.3)
                                                         --------------    --------------

         Net loss                                             (24.2)%           (17.0)%
                                                         ==============    ==============
</TABLE>

         NET REVENUES. Net revenues for the quarter ended June 30, 2002
decreased by $2,364,000 (34.9%) to $4,417,000, as compared to $6,781,000 for the
quarter ended June 30, 2001. Our total revenues for the current period primarily
consisted of revenues from (1) enterprise engineering and collaborative software
solutions (including digital media products and animation services), (2) IT
services, and (3) Web-based telecommunication and travel services.

         Net revenues from engineering and collaborative software solutions,
increased as a percentage of total revenues to 42.4% in the first quarter of
fiscal 2003 from 35.3% in the first quarter in fiscal 2002 primarily due to
greater declines in other segments. In dollar terms, net revenues from
engineering and collaborative software solutions were $1,871,000 in the first
quarter of fiscal 2003 compared to $2,395,000 in the first quarter of fiscal
2002, a decrease of $524,000 and 21.9%. The decrease was primarily due to a
decline in revenues in collaborative software. Collaborative software revenues

                                       16




<PAGE>

for the quarter ended June 30, 2002 decreased by $384,000 to $79,000 as compared
to $463,000 for the same period in the prior year due to a decrease in number of
large contracts completed in the first quarter of fiscal 2003. We expect our
software sales from the Far East and Asia to improve during the remainder of the
fiscal year as a result of our efforts to refocus our sales initiatives and to
re-engage our international distributors as well as due to improvements in the
Asian economy.

         IT services net revenues represented 32.0% of total net revenues for
the quarter ended June 30, 2002 compared to 49.4% for the quarter ended June 30,
2001. In dollar terms, IT services net revenues were $1,414,000 during the
quarter ended June 30, 2002 compared to $3,348,000 in the same period in the
prior year, a decrease of $1,934,000 or 57.8%. During the past year, the IT
services industry has been adversely affected by a slow economy and many of our
customers reduced spending on technology consulting and systems integration
services. As a result, we have seen a decline in revenues during the quarter
ended June 30, 2002, as compared to the same period in the prior fiscal year. We
do not anticipate significant recovery to occur in the IT services segment as we
expect that this period of economic uncertainty may continue to impact our IT
services revenue throughout fiscal 2003.

         Net revenues for our telecommunication and travel services segment
increased as a percentage of total revenues to 25.6% in the first quarter of
fiscal 2003 from 15.3% in the first quarter of fiscal 2002 due primarily to
declines in other segments. In dollar terms, revenues from this segment were
$1,132,000 during the first quarter of fiscal 2003 compared to $1,038,000 during
the first quarter of fiscal 2002, an increase of $94,000 or 9.1%. This increase
was due to a $363,000 increase in net revenues from call terminations, offset by
a $95,000 decrease in travel services revenue and a $136,000 decrease in phone
card revenues during the three months ended June 30, 2002, as compared to the
same period in the prior year. The ramp-up of the call termination services did
not start until the beginning of the current fiscal year. The increase in net
revenues from call termination services during the three months ended June 30,
2002 is the result of comparison to the same periods in the prior year when the
call-termination services were being started and no ramp-up had taken place.
Although telecommunications services revenues increased during the three months
ended June 30, 2002, compared to the same period in the prior year, the recent
turmoil in the telecommunications industry has increased the uncertainty of the
viability of smaller service providers, some of whom are our customers. As a
result, we anticipate that, during the remainder of the current fiscal year, net
revenues from telecommunications services will not improve from current levels.
Travel services net revenues decreased due to competition from other online
travel services and reductions in travel agency commissions. We do not
anticipate that net revenues from travel services will improve from current
levels during the remainder of the current fiscal year.

         GROSS PROFIT. Gross profit as a percentage of net revenues increased
slightly to 47.7% for the quarter ended June 30, 2002 compared to 47.5% for the
quarter ended June 30, 2001. In dollar terms, total gross profit decreased by
$1,119,000 (34.7%) to $2,105,000 in the first quarter of fiscal 2003 from
$3,224,000 in the same period of the prior year. The decrease is mainly due to
the decline in gross profit from the IT services business. To a lesser extent,
the decrease in gross profit from the travel services also contributed to the
decline in total gross profit.

         Gross profit percentage in the engineering and collaborative software
solutions segment decreased to 86.7% in the first quarter of fiscal 2003 from
87.6% in the first quarter of fiscal 2002 due to slightly lower revenues from
higher margin products within this segment. Our software sales and support
segment generally produces a higher gross margin than our other segments due to
the low costs associated with each sale. The cost of revenues for the software
sales and support segment includes printing services, direct supplies such as
hardware locks, which are security devices that are attached to the central
processing unit to prevent unauthorized access to licensed software, salaries
for the technical support employees, freight out, and software amortization
expense.

         IT services gross profit as a percentage of sales for the quarter ended
June 30, 2002 decreased to 23.9% from 30.0% for the same period in the prior
year. As a result of the market slowdown for the IT industry, revenues from this
segment decreased significantly without proportionate decreases in our IT
services costs, which resulted in lower gross profit. Historically, the gross
profit percentage from the IT services segment has been lower than the gross
profit percentage from the engineering and collaborative software solutions
segment due to the fact that service revenue has a higher cost of labor

                                       17




<PAGE>

associated with it. The cost of revenues for IT services includes the salaries,
bonuses, and benefits for all of the consulting employees. Our IT service
consultants generally receive higher salaries than our technical support
employees and we have employed more consultants than technical support staff,
both of which contributed to the lower gross margin as compared to the software
sales and support segment.

         Gross profit as a percentage of sales from the telecommunication and
travel services segment increased to 12.8% in the first quarter of fiscal 2003
from 11.9% in the first quarter of fiscal 2002. The cost of revenues for
Web-based telecommunications and travel services includes the cost of buying
minutes from another carrier and the cost of purchasing airline tickets.
Continuing threats in the worldwide political climate, competition from other
online travel services and reductions in travel agency commissions due to
pricing pressures, may impact the gross profit from our travel business in the
near future.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses decreased by $498,000 (16.0%) to $2,616,000 for
the quarter ended June 30, 2002 as compared to $3,114,000 for the quarter ended
June 30, 2001 primarily due to a decrease in sales commissions as well as due to
our continuing emphasis on cost control. The decrease in SG&A expenses for the
three months ended June 30, 2002 is due primarily to a $197,000 reduction in
salaries and benefits due to employee terminations, a $190,000 reduction in
advertising expenses due to continuing cost control measures, a $48,000
reduction in IT sales commissions due to decreased IT revenues, and a $37,000
reduction in marketing consulting expenses due to continuing cost control
measures.

         RESEARCH AND DEVELOPMENT EXPENSES. Research and development ("R&D")
expenses consist primarily of software developers' wages. For the quarter ended
June 30, 2002, R&D expenses decreased by $23,000 (4.7%) to $464,000 from
$487,000 for the quarter ended June 30, 2001. The decrease in R & D expenses in
fiscal 2003 is the result of our continuing efforts to control costs.

         DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and other
amortization expenses (excluding goodwill amortization) decreased by $16,000
(4.9%) to $311,000 in the first quarter of fiscal 2003 from $327,000 in the
first quarter of fiscal 2002 primarily due to the disposal of fixed assets in
our European offices in the fourth quarter of fiscal 2002.

         RESTRUCTURING. In March 2001, we announced plans to restructure our
operations. As a result of this restructuring plan, we recorded a restructuring
charge of $2,400,000 in the fourth quarter of fiscal 2001. The restructuring
plan consisted of four major points: 1) refocused strategic direction of ISP
initiatives; 2) refocused strategic direction of Internet portal initiatives; 3)
consolidation of technical support activities; and 4) elimination of our
in-house legal department. In the Internet portal business, we redirected our
primary focus towards the Web-based telecommunication and travel services. In
March 2001, we closed our Boston technical support office as part of
consolidating our technical support activities. Technical support activities
previously offered from that office have been consolidated into the California
facility. The elimination of the in-house legal department primarily consisted
of the termination of one employee whose position was not filled. Legal services
are being obtained, as needed, through our continuing external legal counsel.
During the quarter ended June 30, 2002, we provided an additional $93,000 toward
additional expenses from the restructuring plans announced in March 2001 due to
additional amounts needed for severance costs for the elimination of the legal
department.

         INTEREST EXPENSE. Net interest for the quarter ended June 30, 2002
increased by $30,000 to $62,000 from $32,000 for the quarter ended June 30,
2001. The increase was primarily due to an increase in capital leases
obligations, offset by a decrease in bank debt as compared to the same period in
the prior year. The increase was primarily due to a decrease in investment
interest income of $28,000 and an increase of $7,000 in interest expense related
to capital leases obligations.

         INCOME TAXES. We recorded an income tax benefit of $369,000 in the
first quarter of fiscal 2003 compared to net income tax expense of $89,000 in
the first quarter of fiscal 2002. Due to our net operating loss position, we
reversed tax liabilities recorded in prior periods that are no longer required,
which resulted in a tax benefit in the first quarter of fiscal 2003. Tax expense
in the first quarter of the prior year resulted from provisions for local and
state taxes.

                                       18




<PAGE>

     LIQUIDITY AND CAPITAL RESOURCES

         Currently we finance our operations (including capital expenditures)
primarily through existing cash and cash equivalent balances. We have used debt
and equity financing when appropriate and practicable. Our principal sources of
liquidity at June 30, 2002 consisted of $2,485,000 of cash and cash equivalents.
Cash and cash equivalents decreased by $981,000 or 28.3% during the quarter
ended June 30, 2002. The primary reasons for this decline were cash used in
operations, capital expenditures, repayment of bank debt and payments toward
capital lease obligations.

         Net cash used in operations was $790,000 in first quarter of fiscal
2003 compared to $453,000 in the first quarter of fiscal 2002. Net loss was the
primary contributor to net cash used in both periods. Decrease in accrued
expenses of $456,000, decrease in income tax payable of $199,000, decrease in
deferred income taxes of $172,000 and decrease in deferred maintenance revenues
of $140,000 contributed to the usage of cash in the first quarter of fiscal
2003. This was offset by cash provided by a decrease of $535,000 in prepaid
expenses and other current assets, and a decrease of $361,000 in accounts
receivable, net of bad debt expense. In the comparable quarter of the prior
fiscal year, the primary reason for net cash used in operations was the net
loss, offset largely by a decrease in accounts receivable balance of $1,094,000.
Increases in prepaid expenses and other assets of $294,000, decrease in deferred
maintenance revenue of $525,000, and decrease in accrued expenses of $437,000
were primary contributors to cash used in operations during the first quarter of
the prior fiscal year.

         Net cash used in investing activities in the first quarter of fiscal
2003 consisted of capital expenditures of $88,000 compared to $167,000 and
$67,000 of cash used to acquire companies during the same period in the prior
fiscal year.

         In the first quarter of fiscal 2003, we used $146,000 primarily to
repay bank debt and to pay capital lease obligations. In the first quarter of
the prior fiscal year, we used $239,000 primarily to repay bank debt, capital
lease obligations and to repurchase common stock.

         We incurred net losses of $1,070,000 and $1,151,000 and have used cash
in operations of $790,000 and $453,000 in first quarter of fiscal years 2003 and
2002, respectively. Our future capital requirements will depend upon many
factors, including sales and marketing efforts, the development of new products
and services, possible future strategic acquisitions, the progress of research
and development efforts, and the status of competitive products and services. We
believe we will be able to generate cash from operations or through additional
sources of debt and equity financing. We have continued our program to reduce
costs and expenses. If adequate funds are not available, we may be required to
delay, scale back, or eliminate our research and development programs and our
marketing efforts or to obtain funds through arrangements with partners or
others who may require us to relinquish rights to certain of our technologies or
potential products or assets.

                                       19




<PAGE>

The following table summarizes our contractual obligations and commercial
commitments at June 30, 2002 (in thousand dollars):

<TABLE>
<CAPTION>
                                   -----------------------------------------------------------------------
                                                         PAYMENTS DUE BY PERIOD
                                   -----------------------------------------------------------------------
                                                    LESS
                                                    THAN 1
CONTRACTUAL OBLIGATIONS              TOTAL           YEAR       1-3 YEARS     4-5 YEARS     AFTER 5 YEARS
-----------------------              -----           ----       ---------     ---------     -------------
<S>                                  <C>            <C>           <C>              <C>         <C>
Long-Term Debt                         713            257           430             16            10
Capital Lease Obligations            1,354            428           670            256            -
Operating Leases                     4,428            579           811            672         2,366
                                   -----------------------------------------------------------------------
Total Contractual Cash Obligations   6,495          1,264         1,911            944         2,376
                                   =======================================================================

                                    TOTAL AMOUNTS    LESS THAN 1
OTHER COMMERCIAL COMMITMENTS         COMMITTED           YEAR       1-3 YEARS     4-5 YEARS   OVER 5 YEARS
----------------------------         ---------           ----       ---------     ---------   ------------

Letter of Credit                         55               55             -            -           -
                                   ----------------------------------------------------------------------
Total Commercial Commitments             55               55             -            -           -
                                   ======================================================================
</TABLE>

         Subsequent to the quarter ended June 30, 2002, one of our major
stockholders executed a letter of commitment to provide us with a revolving line
of credit expiring March 31, 2003, in the amount of $500,000 at annual interest
rates varying from 2.0% over prime rate to 10.0% over prime rate depending on
the outstanding balance. The revolving line of credit has no loan covenant or
ratio requirements.

         Although we expect our existing cash and cash equivalent balances to
decline further during the next twelve months, as described in the first
paragraph of this section, we believe that our current cash and cash equivalents
balances along with the line of credit mentioned above will be sufficient to
meet our working capital needs at currently anticipated levels through March 31,
2003. We have made, and will continue to make budget cuts to maintain adequate
capital reserves. However, if we are unable to execute our operational plan for
the next twelve months, we may be required to raise additional funds through
public or private equity or debt financing. We cannot be certain that additional
financing will be available, if needed, or, if available, will be on terms
satisfactory to us.

     IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard (SFAS) No. 141, BUSINESS COMBINATIONS, (SFAS
No. 141) and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS (SFAS No. 142).
SFAS No. 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. SFAS No. 141 specifies criteria that intangible
assets acquired in a business combination must meet to be recognized and
reported separately from goodwill. SFAS No. 142 also requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead tested for impairment at least annually in accordance with the
provisions of SFAS No. 142. SFAS No. 142 also requires that intangible assets
with estimable useful lives be amortized over their respective estimated useful
lives to their estimated residual values. In addition, SFAS No. 142 includes
provisions upon adoption for the reclassification of certain existing recognized
intangibles as goodwill, reclassification of certain intangibles out of
previously reported goodwill, reassessment of the useful lives of recognized
intangibles and testing for impairment of those intangibles.

                                       20




<PAGE>

         We adopted the provisions of SFAS No. 141 as of July 1, 2001 and SFAS
No. 142 became effective for us on April 1, 2002. Intangible assets identified
as having an indefinite useful life were required to be tested for impairment in
accordance with the provisions of SFAS No. 142. Impairment is measured as the
excess of carrying value over the fair value of an intangible asset with an
indefinite life. We did not record an impairment loss as of the date of adoption
because we determined that we did not have any identifiable intangible assets
other than goodwill.

         In connection with the SFAS No. 142 transitional goodwill impairment
evaluation, the Statement requires us to perform an assessment of whether there
is an indication that goodwill is impaired as of the date of adoption. To
accomplish this, we identified our reporting units and determined the carrying
value of each reporting unit by assigning the assets and liabilities, including
the existing goodwill, to those reporting units as of April 1, 2002. Pursuant to
paragraphs 30-31 of SFAS 142, we identified three "reporting units" as defined
in paragraph 17 of FAS 131:

         1)       Engineering and collaborative software solutions;
         2)       IT Services; and
         3)       Web-based telecommunications and travel services.

         Each of these reporting units was identical to its related operating
segment and met the specified criteria as distinct operating units: the
component constitutes a business; discrete financial data is available for the
component; and segment management routinely reviews the component's operating
results. The aggregation criteria for each of the components met the test of:

         (a)      similar economic characteristics over the long term;
         (b)      similar products or services;
         (c)      similar production processes; and
         (d)      similar types or classes of customers.

         We have until October 1, 2002 to determine the fair value of each
reporting unit and compare it to the carrying amount of the reporting unit. To
the extent the carrying amount of a reporting unit exceeds the fair value of the
reporting unit, and an indication exists that the reporting unit goodwill may be
impaired, we must perform the second step of the transitional impairment test.
The second step is required to be completed as soon as possible, but no later
than March 31, 2003, the end of the year of adoption. In the second step, we
must compare the implied fair value of the reporting unit goodwill with the
carrying amount of the reporting unit goodwill, both of which would be measured
as of the date of adoption. The implied fair value of goodwill is determined by
allocating the fair value of the reporting unit to all of the assets (recognized
and unrecognized) and liabilities of the reporting unit in a manner similar to a
purchase price allocation, in accordance with SFAS No. 141. The residual fair
value after this allocation is the implied fair value of the reporting unit
goodwill. Any transitional impairment loss will be recognized as the cumulative
effect of a change in accounting principle in our statement of operations.

         As of June 30, 2002, we had unamortized goodwill in the amount of
$9,105,000, all of which will be subject to the transition provisions of SFAS
No. 142. No amortization expense was recorded during the three month period
ended June 30, 2002. We will continue to assess for impairment at each reporting
date or at any time we become aware of factors or circumstances that would
warrant the assessment for impairment, including whether we will be required to
recognize any transitional impairment losses as the cumulative effect of a
change in accounting principles.

                                       21




<PAGE>

The following table reconciles previously reported net income (loss) as if the
provisions of SFAS No. 142 were in effect in fiscal year 2002 and at fiscal year
end 2002 and 2001 (in thousands except per share amounts):

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED                YEAR ENDED
                                                   JUNE 30,                      MARCH 31,
                                                   --------                      ---------
                                             2002           2001            2002            2001
                                             ----           ----            ----            ----
<S>                                     <C>             <C>             <C>             <C>
Reported net loss                       $    (1,070)    $    (1,151)    $    (8,944)    $    (6,637)
Add back:  Goodwill amortization,
net of taxes                                     --             198           1,052           1,282
                                        ------------    ------------    ------------    ------------

Adjusted net loss                       $    (1,070)    $      (953)    $    (7,892)    $    (5,355)

Reported basic and diluted loss per
common share                            $     (0.06)    $     (0.07)    $     (0.53)    $     (0.45)
Add back: Goodwill amortization, net
of taxes                                         --            0.01            0.06            0.09
                                        ------------    ------------    ------------    ------------
Adjusted basic and diluted loss per
common share                            $     (0.06)    $     (0.06)    $     (0.47)    $     (0.36)
                                        ------------    ------------    ------------    ------------
</TABLE>

         In June 2001, the FASB issued SFAS No. 143 ("SFAS 143"), ACCOUNTING FOR
ASSET RETIREMENT OBLIGATIONS. This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This statement applies to
legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development, or normal use of the
asset. SFAS 143 is effective for fiscal years beginning after June 15, 2002. We
do not expect the adoption of SFAS 143 to have a material impact on our
consolidated financial position or results of operations.

         In August 2001, the FASB issued SFAS No. 144 ("SFAS 144"), ACCOUNTING
FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS. This statement addresses
financial accounting and reporting for the impairment of long-lived assets and
supersedes SFAS 121, and the accounting and reporting provisions of APB No. 30,
REPORTING THE RESULTS OF OPERATIONS FOR A DISPOSAL OF A SEGMENT OF A BUSINESS.
SFAS 144 is effective for fiscal years beginning after December 15, 2001. We
have adopted SFAS 144 beginning April 1, 2002. The adoption of SFAS 144 does not
have a material impact on our consolidated financial position or results of
operations.

         In April 2002, the FASB issued SFAS No. 145, RESCISSION OF THE FASB
STATEMENTS NO. 4, 44 AND 64, AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL
CORRECTIONS. SFAS No. 145 eliminates the requirement to classify gains and
losses from the extinguishment of indebtedness as extraordinary, requires
certain lease modifications to be treated the same as a sale-leaseback
transaction, and makes other non-substantive technical corrections to existing
pronouncements. SFAS No. 145 is effective for fiscal years beginning after May
15, 2002, with earlier adoption encouraged. We do not expect the adoption of
SFAS No. 145 to have a material impact on our consolidated financial position or
results of operations.

         In July 2002, the FASB issued SFAS No. 146, ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL Activities. SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Examples of costs covered by the standard include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operations, plant closing, or other exit or disposal activities.
SFAS No. 146 is effective prospectively for exit or disposal activities
initiated after December 31, 2002, with earlier adoption encouraged. As the
provisions of SFAS No. 146 are required to be applied prospectively after the
adoption date, we cannot determined the potential effects that adoption of SFAS
No. 146 will have on our consolidated financial statements.

                                       22




<PAGE>

PART II -- OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

             None

ITEM 2.      CHANGES IN SECURITIES AND USE OF PROCEEDS

             None

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

             None

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               During the quarter ended June 30, 2002, no matters were submitted
for vote to our common stockholders.

ITEM 5.      OTHER INFORMATION

             None

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibit 99-1: Certifications of chief executive officer and
                  chief financial officer pursuant to 18 U.S.C section 1350, as
                  adopted pursuant to section 906 of the Sarbanes-Oxley Act of
                  2002.

         (b)      Reports on Form 8-K

                  On April 16,2002, the Company filed a current report on Form
                  8-K announcing the appointment of Bruce K. Nelson to the
                  office of Chief Financial Officer.

                  On August 13, 2002, the Company filed a current report on Form
                  8-K announcing a scheduled conference call and clarifying the
                  Company's acquisition, merger, public offering or similar
                  activities in India.

                                       23




<PAGE>

                                   SIGNATURES
                                   ----------

         In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

Date:  December 2, 2002

                                                 NETGURU, INC.

                                                 By: /S/ BRUCE K. NELSON
                                                     -------------------
                                                     Bruce K. Nelson
                                                     Chief Financial Officer
                                                     (principal financial and
                                                     accounting officer)

                                       24




<PAGE>

                                 CERTIFICATIONS

         I, Amrit K. Das, certify that:

         1. I have reviewed this amendment no. 1 to quarterly report on Form
10-QSB of netGuru, Inc. ("quarterly report");

         2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report; and

         3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

Date: December 2, 2002                    /s/ AMRIT K. DAS
                                          -----------------
                                          Amrit K. Das, Chief Executive Officer
                                          (principal executive officer)

         I, Bruce Nelson, certify that:

         1. I have reviewed this amendment no. 1 to quarterly report on Form
10-QSB of netGuru, Inc. ("quarterly report");

         2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report; and

         3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

Date: December 2, 2002                     /s/ BRUCE K. NELSON
                                           ----------------------
                                           Bruce Nelson, Chief Financial Officer
                                           (principal financial officer)

                                       25




<PAGE>

        EXHIBITS FILED WITH THIS AMENDMENT NO. 1 TO REPORT ON FORM 10-QSB

Exhibit 99.1      Certifications of chief executive officer and chief
                  financial officer pursuant to 18 U.S.C section 1350, as
                  adopted pursuant to section 906 of the Sarbanes-Oxley Act of
                  2002.

                                       26