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

                                   FORM 10-QSB
 (Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000

[ ]      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 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

          Securities registered pursuant to Section 12 (b) of the Act:

Title of each class                         Name of exchange on which registered
        NONE                                               NONE

          Securities registered pursuant to Section 12 (g) of the Act:

                          COMMON STOCK, $0.01 PAR VALUE
                                (Title of Class)

Check whether the issuer (1) 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 16,850,603 on February 8, 2001.

<PAGE>
<TABLE>

PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                              NETGURU, INC. AND SUBSIDIARIES
                                CONSOLIDATED BALANCE SHEET
                                     DECEMBER 31, 2000
                                        (Unaudited)
                    (In thousands, except share and per share amounts)
<CAPTION>

                                          ASSETS
<S>                                                                               <C>
Current assets:
    Cash and cash equivalents                                                     $  8,486
    Accounts receivable (net of allowance for doubtful accounts of $464)             5,257
    Deferred income taxes                                                              258
    Notes and related party loans receivable                                           134
    Prepaid expenses and other current assets                                        2,867
                                                                                  ---------

           Total current assets                                                     17,002

Property, plant and equipment, net                                                   5,037
Goodwill and intangible assets (net of accumulated amortization of $2,635)          10,884
Deferred income taxes                                                                1,508
Other assets                                                                         1,346
                                                                                  ---------
                                                                                  $ 35,777
                                                                                  =========

                           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long-term bank debt                                        $    579
    Current portion of capital lease obligations                                       114
    Accounts payable                                                                 1,402
    Accrued expenses                                                                 1,373
    Income taxes payable                                                               225
    Deferred maintenance revenue                                                     1,580
    Deferred gain on sale-leaseback                                                     70
    Deferred income taxes                                                              163
                                                                                  ---------

           Total current liabilities                                                 5,506

Long-term bank debt, net of current portion                                            929
Capital lease obligations, net of current portion                                      278
Deferred gain on sale-leaseback, net of current portion                                904
Deferred income taxes                                                                   52
                                                                                  ---------

           Total liabilities                                                         7,669
                                                                                  ---------

Stockholders' equity:
    Preferred stock, par value $.01; authorized 5,000,000 shares; issued and
      outstanding none                                                                   -
    Common stock, par value $.01; authorized 100,000,000 shares; issued and
      outstanding 16,808,338 shares (net of 10,965 treasury shares)                    168
    Additional paid-in capital                                                      32,480
    Accumulated deficit                                                             (3,657)
    Accumulated other comprehensive loss:
       Cumulative foreign currency translation adjustments                            (883)
                                                                                  ---------

           Total stockholders' equity                                               28,108
                                                                                  ---------
                                                                                  $ 35,777
                                                                                  =========

See accompanying notes to consolidated financial statements.
</TABLE>

                                            2
<PAGE>
<TABLE>

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

                                                 THREE MONTHS      THREE MONTHS     NINE MONTHS       NINE MONTHS
                                                    ENDED             ENDED            ENDED             ENDED
                                                 DECEMBER 31,      DECEMBER 31,     DECEMBER 31,      DECEMBER 31,
                                                     2000              1999             2000              1999
                                             -----------------------------------------------------------------------
<S>                                          <C>                <C>               <C>              <C>
Net revenues:
    IT services                              $           4,129  $          3,359  $        14,023  $          6,410
    Software sales, maintenance and services             2,234             2,215            6,442             6,504
    Internet portals and digital media
      products and services                              1,078                19            1,798                47
                                             -----------------------------------------------------------------------

           Total net revenues                            7,441             5,593           22,263            12,961

Cost of revenues:
    IT services                                          2,997             2,372            9,469             4,489
    Software sales, maintenance and services               331               247              954               684
    Internet portals and digital media
      products and services                                973                 -            1,361                19
                                             -----------------------------------------------------------------------

           Total cost of sales                           4,301             2,619           11,784             5,192

                                             -----------------------------------------------------------------------
           Gross profit                                  3,140             2,974           10,479             7,769
                                             -----------------------------------------------------------------------

Operating expenses:
    Selling, general and administrative                  3,933             2,940           11,198             6,912
    Research and development                               746               594            2,091             1,871
                                             -----------------------------------------------------------------------

           Total operating expenses                      4,679             3,534           13,289             8,783
                                             -----------------------------------------------------------------------

           Operating loss                               (1,539)             (560)          (2,810)           (1,014)
                                             -----------------------------------------------------------------------

Other (income) expense:
    Interest, net                                         (119)              124             (334)              365
    Other                                                  (19)              (16)             (56)              (25)
                                             -----------------------------------------------------------------------

           Total other (income) expense                   (138)              108             (390)              340
                                             -----------------------------------------------------------------------

Loss before income taxes                                (1,401)             (668)          (2,420)           (1,354)

Income tax expense (benefit)                                51              (251)              11              (468)
Minority interest in earnings of
    subsidiaries                                             -                 1                -                 7
                                             -----------------------------------------------------------------------

           Net loss                          $          (1,452) $           (418) $        (2,431)$            (894)
                                             =======================================================================

Net loss per common share:
         Basic                               $           (0.10) $          (0.04) $         (0.17) $          (0.08)
                                             =======================================================================
         Diluted                             $           (0.10) $          (0.04) $         (0.17) $          (0.08)
                                             =======================================================================

Common shares used in computing net loss per
    common share:
         Basic                                      14,994,885        11,973,156       14,004,961        11,677,692
                                             =======================================================================
         Diluted                                    14,994,885        11,973,156       14,004,961        11,677,692
                                             =======================================================================
</TABLE>


See accompanying notes to consolidated financial statements.

                                                      3
<PAGE>
<TABLE>

                                   NETGURU, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (Unaudited)
                                           (In thousands)
<CAPTION>
                                                                             NINE MONTHS        NINE MONTHS
                                                                                ENDED              ENDED
                                                                             DECEMBER 31,       DECEMBER 31,
                                                                                 2000               1999
                                                                           ---------------    ---------------
<S>                                                                        <C>                <C>
Cash flows from operating activities:
    Net loss                                                               $       (2,431)    $         (894)
    Adjustments to reconcile net loss to net cash used in operating
      activities:
        Depreciation and amortization                                               1,748              1,134
        Deferred income taxes                                                        (119)                31
        Compensation expense recognized on issuance of stock options                   83                 33
        Changes in operating assets and liabilities (net of
          acquisitions):
          Accounts receivable                                                      (1,101)               245
          Notes and related party loans receivable                                     90                (76)
          Prepaid expenses and other current assets                                   284               (209)
          Other assets                                                             (1,003)              (145)
          Accounts payable                                                            534               (197)
          Accrued expenses                                                           (579)               (85)
          Income taxes payable                                                         11               (666)
          Deferred maintenance revenue                                                298                 70
          Deferred gain on sale-leaseback                                             (52)                (2)
                                                                           ---------------    ---------------

                  Net cash used in operating activities                            (2,237)              (761)
                                                                           ---------------    ---------------

Cash flows from investing activities:
    Purchase of property, plant and equipment                                      (3,030)              (518)
    Payments to acquire companies, net of cash acquired                            (1,591)            (3,194)
    Proceeds from sale-leaseback of real estate, net                                    -              2,709
                                                                           ---------------    ---------------

                  Net cash used in investing activities                            (4,621)            (1,003)
                                                                           ---------------    ---------------

Cash flows from financing activities:
    Proceeds from bank debt                                                           318                992
    Repayment of bank debt                                                         (1,003)            (2,335)
    Repayment of capital lease obligations                                            (89)               (64)
    Proceeds from issuance of preferred stock                                           -              2,600
    Proceeds from issuance of common stock                                          9,818                986
    Payments for repurchase of preferred stock                                     (6,560)                 -
    Payments for repurchase of common stock                                           (76)                 -
                                                                           ---------------    ---------------

                  Net cash provided by financing activities                         2,408              2,179
                                                                           ---------------    ---------------

    Effect of exchange rate changes on cash and cash equivalents                     (329)                37
                                                                           ---------------    ---------------

                  (Decrease) increase in cash and cash equivalents                 (4,779)               452

Cash and cash equivalents, beginning of period                                     13,265              2,011
                                                                           ---------------    ---------------

Cash and cash equivalents, end of period                                   $        8,486     $        2,463
                                                                           ===============    ===============

                                                 4
<PAGE>

                                   NETGURU, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (Unaudited)
                                           (In thousands)
                                                                             NINE MONTHS        NINE MONTHS
                                                                                ENDED              ENDED
                                                                             DECEMBER 31,       DECEMBER 31,
                                                                                 2000               1999
                                                                           ---------------    ---------------

Supplemental disclosure of cash flow information:
    Amounts paid for:
         Interest                                                          $           80     $          366
         Income taxes                                                                 112                200

Supplemental disclosure of non-cash investing and financing activities:
    Issuance of common stock and warrants in connection with
      acquisitions                                                                    750              1,194
    Issuance of note payable for NetGuru Systems acquisition                            -                600
    Note receivable obtained in sale-leaseback of real estate                           -                250
    Acquisition of equipment under capital lease obligations                            -                  4

</TABLE>


See accompanying notes to consolidated financial statements.

                                                 5
<PAGE>

                         NETGURU, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                                   (UNAUDITED)


BASIS OF PRESENTATION

         The 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 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 December 31, 2000
and the results of operations and the cash flows for the three and nine months
ended December 31, 2000 and 1999, 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. To
obtain a more detailed understanding of the Company's results, these
Consolidated Financial Statements should be read in conjunction with the
consolidated financial statements and notes in the Company's annual report on
Form 10-KSB for the fiscal year ended March 31, 2000. Results of operations for
the three and nine months ended December 31, 2000 are not necessarily indicative
of the results to be expected for the full year ending March 31, 2001.

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 amounts reported in
the consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.

RECLASSIFICATIONS

         Certain prior quarter amounts have been reclassified to conform to the
current quarter presentation.

REVENUE RECOGNITION

         The Company recognizes revenue when it is realized or realizable and
earned. The Company's revenues arise from the following segments: information
technology ("IT") services; software sales, maintenance and services; and
Internet portals and digital media products and services.

         Revenue from providing IT services is primarily recognized on a time
and material basis as services are performed. Certain IT services contracts are
fixed cost type contracts for which revenue is recognized upon achieving certain
milestones.

         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 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.

                                       6
<PAGE>

         Revenues from products and services sold via Internet portals,
including telecommunications and travel services, are predominately recognized
net of purchase costs when the products and services are delivered and
collectibility is certain. 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 October 1997, the Accounting Standards Executive Committee ("AcSEC")
of the AICPA issued Statement of Position ("SOP") 97-2, SOFTWARE REVENUE
RECOGNITION, which superseded SOP 91-1. 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. The Company adopted SOP 97-2 in the first quarter of fiscal 1999, the
implementation of which resulted in no material changes to the Company's
previous practice. 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, the implementation of which resulted in no
material changes to the Company's previous practice.

ACQUISITIONS AND INVESTMENTS

         Effective April 1, 2000, the Company acquired all of the outstanding
capital stock of Allegria Software, Inc. ("Allegria") for $1,500,000 in cash and
25,000 shares of the Company's common stock, valued at approximately $750,000 at
the date of acquisition. Allegria is a developer of Internet-based document
management and collaborative tools primarily for engineering and manufacturing
companies. The technology acquired will be used in the Company's software sales
and in the development of the Company's special interest portal targeting the
engineering community. The acquisition was accounted for as a purchase. Goodwill
of approximately $2,200,000 was recorded for this acquisition and will be
amortized over a period of ten years.

         In May 2000, the Company acquired a 49% interest in India-based Interra
Global Limited, an Internet service provider, for approximately $242,000. An
additional 25% interest in Interra Global Limited was acquired by the Company's
wholly-owned subsidiary in India for approximately $225,000. Effective May 29,
2000, as a result of these two acquisitions, the Company owns a total of 74%
interest in Interra Global Limited. These acquisitions were accounted for as a
purchase.

         In September 2000, the Company entered into an agreement to acquire all
of the outstanding capital stock of Interactive Digital India Pvt. Ltd. ("IDI"),
an Indian corporation. IDI owns and operates punecity.com, a web portal that
will be used as part of the Company's netGuruIndia.com family of city-oriented
portals. As of December 31, 2000 the Company had paid $50,000 towards the
purchase price. The Company is currently in discussions with IDI concerning the
completion of the acquisition. The Company intends that this acquisition, upon
completion, would be accounted for as a purchase.

EQUITY

         On June 22, 2000, the Company closed a private equity financing to
issue to two investors, in a private transaction not involving a public
offering, 200,000 shares of the Company's common stock for approximately
$3,075,000, net of certain commissions and offering costs. In connection with
this private equity financing, the Company issued warrants to purchase an
aggregate of 60,000 shares of the Company's common stock to the two investors.
The warrants are convertible into common stock at an exercise price of $19.00
per share and expire in June 2005. In addition, the Company issued additional
warrants to purchase 53,300 shares of the Company's common stock to third
parties related to this private equity financing transaction. These warrants are
convertible into common stock at exercise prices ranging from $16.50 to $23.46
and expire between May and June 2003.

                                       7
<PAGE>

         On November 29, 2000 the Company repurchased and retired all of its
outstanding preferred stock in exchange for 400,000 shares of common stock and a
net cash payment of $6,560,000. A significant portion of the funds for this
repurchase were obtained from the concurrent issuance of 1,670,270 shares of the
Company's common stock to one investor in a private transaction not involving a
public offering. The proceeds from this issuance were approximately $6,268,000,
net of certain commissions and offering costs. In connection with this private
equity financing, the Company issued warrants to purchase an aggregate of
200,000 shares of the Company's common stock to a third party related to this
private equity financing transaction. These warrants are convertible into common
stock at an exercise price of $3.93 and expire in November 2005.

COMPREHENSIVE INCOME (LOSS)

         Statement of Financial Accounting Standards ("SFAS") No. 130, REPORTING
COMPREHENSIVE INCOME, establishes rules for the reporting and display of
comprehensive income (loss) and its components. SFAS No. 130 requires, among
other things, foreign currency translation adjustments, which are reported
separately in stockholders' equity, to be included in other comprehensive income
(loss). Total comprehensive loss was $2,972,000 and $405,000 for the three
months ended December 31, 2000 and 1999, respectively, and was $1,558,000 and
$891,000 for the nine months ended December 31, 2000 and 1999, 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.
On February 7, 2000, the Company affected a 2-for-1 split of its common stock.
All share and per share amounts have been adjusted to reflect this split.

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

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED          NINE MONTHS ENDED
                                                             DECEMBER 31,              DECEMBER 31,

                                                  --------------------------------------------------------
                                                        2000          1999         2000           1999
                                                  --------------------------------------------------------
<S>                                                    <C>          <C>           <C>           <C>
Numerator:
Net loss                                               (1,452)        (418)       (2,431)         (894)
Cumulative preferred stock dividends                        -          (26)            -           (34)
                                                  --------------------------------------------------------
Numerator for basic and diluted loss
per share                                              (1,452)        (444)       (2,431)         (928)
                                                  ========================================================
Denominator:
Denominator for basic net loss per share -
average number of common shares outstanding
during the period                                      14,995       11,973        14,005        11,678
Incremental common shares attributable
to exercise of outstanding options, warrants
and other common stock equivalents                          -            -             -             -
                                                   --------------------------------------------------------
Denominator for diluted net loss per share             14,995       11,973        14,005        11,678
                                                   ========================================================

Basic net loss per share                              $ (0.10)     $ (0.04)      $ (0.17)      $ (0.08)
                                                   ========================================================
Diluted net loss per share                            $ (0.10)     $ (0.04)      $ (0.17)      $ (0.08)
                                                   ========================================================
</TABLE>

         Options, warrants and other common stock equivalents amounting to
1,039,000 and 1,707,000 potential common shares for the three and nine month
periods ended December 31, 2000, respectively, and 2,575,000 and 1,786,000
potential common shares for the three and nine month periods ended December 31,
1999, respectively, were excluded from the computation of diluted EPS because
the Company reported net losses and, therefore, the effect would be
antidilutive. Options to purchase 163,000 and 42,000 shares of common stock and
warrants to purchase 450,000 and 387,000 shares of common stock for the three
and nine month periods ended December 31, 2000, respectively, were not included
in the computation of diluted EPS because their exercise price was greater than
the average market price of the common shares and therefore would be
antidilutive.

                                       8
<PAGE>

SEGMENT AND GEOGRAPHIC DATA

         The Company is an integrated Internet and IT technology and services
company operating in three primary business segments; 1) IT services; 2)
engineering software products, maintenance and services; and 3) Internet portals
focused on telecommunications and travel services for Asian expatriates and
digital media products and services. The Company has provided computer-aided
engineering software solutions to customers for over 20 years. During the past
15 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. With the Company's experience in India and understanding of the global
Indian community, it began offering online Internet portal services in 1999. In
2000, the Company focused its portal offerings primarily on telecommunications
and travel services for Asian expatriates. The Company continues to provide
digital media services, including computer animation, and has used this
expertise to enhance its Internet portal offerings. The following are
significant components of worldwide operations by reportable operating segment
(in thousands):

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                     DECEMBER 31,                          DECEMBER 31,
                                          ----------------------------------   ----------------------------------
                                                2000               1999              2000              1999
                                          ---------------    ---------------   ----------------   ---------------
             NET REVENUE
<S>                                       <C>                <C>               <C>                <C>
IT services                               $        4,129     $        3,359    $        14,023    $        6,410
Software sales, maintenance and
  services                                         2,234              2,215              6,442             6,504
Internet portals and digital media
    products and services                          1,078                 19              1,798                47
                                          ---------------    ---------------   ----------------   ---------------

         Consolidated                     $        7,441     $        5,593    $        22,263    $       12,961
                                          ===============    ===============   ================   ===============

       OPERATING (LOSS)/INCOME
IT services                               $          192     $          214    $         1,837    $          593
Software sales, maintenance and
  services                                          (643)              (744)            (1,920)           (1,539)
Internet portals and digital media
    products and services                         (1,088)               (30)            (2,727)              (68)
                                          ---------------    ---------------   ----------------   ---------------

         Consolidated                     $       (1,539)    $         (560)   $        (2,810)   $       (1,014)
                                          ===============    ===============   ================   ===============
</TABLE>

         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:

                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                     DECEMBER 31,                          DECEMBER 31,
                                          ----------------------------------   ----------------------------------
                                                2000               1999              2000              1999
                                          ---------------    ---------------   ----------------   ---------------
             NET REVENUE
<S>                                       <C>                <C>               <C>                <C>
United States                             $        6,137     $        4,181    $        18,617    $        9,073
The Americas (other than U.S.)                       257                217                583               554
Europe                                               607                918              1,667             2,271
Asia-Pacific                                         440                277              1,396             1,063
                                          ---------------    ---------------   ----------------   ---------------

         Consolidated                     $        7,441     $        5,593    $        22,263    $       12,961
                                          ===============    ===============   ================   ===============

             EXPORT SALES
United States                             $          285     $          447    $           836    $        1,129
                                          ===============    ===============   ================   ===============
</TABLE>

                                           AT DECEMBER 31,      AT DECEMBER 31,
                                                 2000                1999
                                          -----------------   ------------------
                LONG-LIVED ASSETS *
                United States             $         13,376    $           8,771
                Europe                                 376                  569
                Asia-Pacific                         3,515                1,507
                                          -----------------   ------------------

                         Consolidated     $         17,267    $          10,847
                                          =================   ==================

     * Long-lived assets excludes the noncurrent portion of deferred income tax
assets.

COMMITMENTS AND CONTINGENCIES

         The Company previously disclosed that it was involved in litigation
with Video Pioneers Corporation ("VPC"). The Company settled with VPC during the
third quarter of fiscal 2001 for a nominal amount.

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

                                       10
<PAGE>

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


         This Quarterly Report on Form 10-QSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. We intend that such forward-looking statements be
subject to the safe harbors created thereby. These forward-looking statements
generally include the plans and objectives of management for future operations,
including plans and objectives relating to our future economic performance. The
forward-looking statements and associated risks may include, relate to or be
qualified by other important factors, including, without limitation,

o        our ability to transition into new lines of business as planned;
o        our ability to become a leading integrated Internet and IT technology
         and services company addressing the Asian expatriate market, the
         worldwide information technology services market and the worldwide
         Internet engineering software market;
o        our ability to successfully market and sell ASP services through our
         recently launched engineering portal;
o        market growth;
o        new competition;
o        competitive pricing;
o        new technologies;
o        our ability to successfully implement our future business plans;
o        statements about our business strategy and our expansion strategy;
o        our ability to attract strategic partners, alliances and advertisers;
o        uncertainties relating to economic conditions in the markets in which
         we currently operate and in which we intend to operate in the future;
o        our ability to hire and retain qualified personnel;
o        our ability to obtain capital, if required;
o        our ability to successfully implement our brand building campaign;
o        the risks of uncertainty of trademark protection;
o        our plans regarding our telephony infrastructure and service offerings;
o        our beliefs regarding the growth of Internet usage within the global
         Indian community;
o        our beliefs regarding the demand for our products and our competitive
         advantages;
o        the negative impact of economic slowdowns and recessions;  and
o        risks associated with existing and future government regulation to
         which we are subject.

     We do not undertake to update, revise or correct any forward-looking
statements.

         The information contained in this report is not a complete description
of our business or the risks associated with an investment in our common stock.
Before deciding to buy or maintain a position in our common stock, you should
carefully review and consider the various disclosures we made in this report,
and in our other materials filed with the Securities and Exchange Commission,
including our Annual Report on Form 10-KSB for the fiscal year ended March 31,
2000 (and, in particular, in the "Risk Factors" section therein) that discuss
our business in greater detail and that also disclose various risks,
uncertainties and other factors that may affect our business, results of
operations or financial condition.

         Any of the factors described alone or in the "Risk Factors" section
could cause our financial results, including our net income (loss) or growth in
net income (loss) to differ materially from prior results.

         As a result, we believe that period-to-period comparisons of our
results of operations are not necessarily meaningful and should not be relied
upon as any indication of future performance. Fluctuations in our operating
results could cause the price of our common stock to fluctuate substantially.

                                       11
<PAGE>

GENERAL

         We were incorporated in 1981 under the name Research Engineers, Inc.
and changed our name to netGuru, Inc. in February 2000. We are an integrated
Internet and IT technology and services company providing:

o        IT services to companies worldwide;
o        Internet and PC-based engineering and animation software products and
         services to businesses worldwide; and
o        Internet portals focused on telecommunications and travel services for
         Asian expatriates and digital media products and services.

         We have been providing computer-aided engineering software solutions to
our customers for over 20 years. For the past 15 years, we have supported our
engineering software business with our India-based software programming and IT
resources. In addition, based upon our knowledge and understanding of the
engineering software market, combined with our Internet technology resources and
experience, we recently launched WEB4ENGINEERS.COM, an engineering ASP portal
hosting our engineering software applications online and providing ASP services
to engineering software providers and their licensees worldwide. In 1999, we
acquired two IT services companies in the U.S., further expanding our IT
resources and capabilities. With our experience in India and our understanding
of the global Indian community, we began offering our Internet portal services
in fiscal 2000. In fiscal 2001, we focused our portal offerings primarily on
telecommunications and travel services for Asian expatriates. We continue to
provide digital media services, including computer animation, and use this
expertise to enhance our Internet portal offerings.

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             NINE MONTHS ENDED
                                                           DECEMBER 31,                    DECEMBER 31,
                                                    --------------------------      --------------------------
                                                       2000            1999            2000            1999
                                                       ----            ----            ----            ----
<S>                                                    <C>             <C>             <C>             <C>
Net revenues                                           100.0%          100.0%          100.0%          100.0%
Cost of revenues                                        57.8            46.8            52.9            40.1
                                                      -------         -------         -------         -------

Gross profit                                            42.2            53.2            47.1            59.9
                                                      -------         -------         -------         -------

Selling, general and administrative expenses            52.9            52.6            50.3            53.3
Research and development expenses                       10.0            10.6             9.4            14.4
                                                      -------         -------         -------         -------
Total operating expenses                                62.9            63.2            59.7            67.8
Operating loss                                         (20.7)          (10.0)          (12.6)           (7.8)

Interest (income) expense, net                          (1.6)            2.2            (1.5)            2.8
Other (income) expense, net                             (0.3)           (0.3)           (0.3)           (0.2)
                                                      -------         -------         -------         -------

Loss before income taxes                               (18.8)          (11.9)          (10.9)          (10.4)
Income tax expense (benefit)                             0.7            (4.5)            0.0            (3.6)
Minority interest in earnings of subsidiaries            -               0.0             -               0.1
                                                      -------         -------         -------         -------

Net loss                                               (19.5)%          (7.5)%         (10.9)%          (6.9)%
                                                      =======         =======         =======         =======
</TABLE>

                                       12
<PAGE>

         NET REVENUES - Net revenues for the quarter ended December 31, 2000
increased by $1,848,000 (33.0%) to $7,441,000, as compared to $5,593,000 for the
quarter ended December 31, 1999. For the nine months ended December 31, 2000,
net revenues increased by $9,302,000 (71.8%) to $22,263,000 from $12,961,000 for
the nine months ended December 31, 1999. These increases in net revenues were
primarily attributable to continued growth of the IT services business and the
expansion of our Internet portal, telecommuncations, travel and digital media
segment. Revenue recognized for the IT services business segment was $4,129,000
and $14,023,000 for the three and nine month periods ended December 31, 2000,
respectively, compared to $3,359,000 and $6,410,000, respectively, for the same
periods in fiscal 2000. The increase in IT services revenues is primarily due to
the acquisition of Net Guru Systems in September 1999 and continued growth in
this segment. Revenue recognized for the Internet portal segment was $1,078,000
and $1,798,000 for the three and nine month periods ended December 31, 2000,
respectively, compared to $19,000 and $47,000, respectively, for the same
periods in fiscal 2000. This increase is primarily the result of an increase in
the sales of travel and telecommunications services in the current year. The
increase in travel services was largely the result of the acquisition of
e-Destinations, Inc., a travel services agency, in January 2000. The sales of
prepaid phone cards has increased significantly since September 2000, when we
started routing calls through our own telecommunications switch.

         International net revenues as a percentage of total revenues for the
quarter ended December 31, 2000 decreased to 14.1%, from 21.4% for the quarter
ended December 31, 1999. For the nine months ended December 31, 2000,
international revenues decreased to 13.8%, from 25.7% for the nine months ended
December 31, 1999. The decrease in international net revenues as a percentage of
total net revenues was primarily due to the significant increase in revenues
attributable to our IT services business. Although we recently began offering
our IT services in Europe, to date a significant portion of our IT services
revenue continues to be generated within the United States. Our domestic
revenues are denominated in U.S. Dollars, while revenues and expenses for our
foreign subsidiaries and sales offices are usually recorded in the applicable
foreign currency and translated into U.S. Dollars. There were no foreign
exchange gains or losses that were material to our financial results during the
three months and nine months ended December 31, 2000 and 1999.

         GROSS PROFIT - Gross profit increased by $166,000 (5.6%) to $3,140,000
for the quarter ended December 31, 2000 as compared to $2,974,000 for the
quarter ended December 31, 1999. Gross profit increased by $2,710,000 (34.9%) to
$10,479,000 for the nine months ended December 31, 2000 as compared to
$7,769,000 for the nine months ended December 31, 1999. These increases were
primarily due to the continued growth of our IT services business segment. Gross
profit for IT services was $1,132,000 for the quarter ended December 31, 2000
and $4,554,000 for the nine month period ended December 31, 2000 compared to
$987,000 and $1,921,000, respectively, for the same periods in fiscal 2000.
Gross margin decreased to 42.2% of total net revenues in the quarter ended
December 31, 2000 as compared to 53.2% for the quarter ended December 31, 1999,
and decreased to 47.1% for the nine months ended December 31, 2000 as compared
to 59.9% of the corresponding period last year. This change is due primarily to
the continued growth of the IT services and Internet portal segments, for which
the cost of generating revenues is significantly higher than for sales of
software products. As we continue to emphasize these business segments, we
expect that our gross margin will continue at or near current levels.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSE - Selling, general and
administrative ("SG&A") expense increased by $993,000 (33.8%) to $3,933,000 for
the quarter ended December 31, 2000 as compared to $2,940,000 for the quarter
ended December 31, 1999, and increased slightly as a percentage of total net
revenues to 52.9% from 52.6% for the comparable quarter of the prior year. SG&A
expense increased by $4,286,000 (62.0%) to $11,198,000 in the nine months ended
December 31, 2000 as compared to $6,912,000 for the nine months ended December
31, 1999, and decreased as a percentage of total net revenues to 50.3% from
53.3% for the comparable period of the prior year. The majority of the increase
in expenses is due to the acquisition of NetGuru Systems in September 1999 and
the continued growth of our IT Services business segment. SG&A expenses for the
IT services segment totaled $940,000 for the current quarter and $2,716,000 for
the nine months ended December 31, 2000 compared to $772,000 and $1,328,000,
respectively, reported for the same periods in fiscal 2000. Additional increases
resulted from goodwill amortization due to recent acquisitions. The remaining
increase for both periods was largely related to the development of the Internet
portal, telecommunications, travel and digital media services businesses. SG&A
expense for our Internet portal segment was $918,000 for the current quarter and
$2,565,000 for the nine months ended December 31, 2000, as compared to $50,000
and $116,000 for the same periods in fiscal 2000.

                                       13
<PAGE>

         RESEARCH AND DEVELOPMENT EXPENSE - Research and development expense
increased by $152,000 to $746,000 in the quarter ended December 31, 2000 as
compared to $594,000 for the quarter ended December 31, 1999, but decreased as a
percentage of total net revenues to 10.0% from 10.6% for the comparable quarter
of the prior year. Research and development expense increased by $220,000 to
$2,091,000 in the nine months ended December 31, 2000 as compared to $1,871,000
for the nine months ended December 31, 1999, but decreased as a percentage of
net revenues to 9.4% from 14.4% for the comparable nine months of the prior
year. The increase in research and development expense is primarily related to
the development of our ASP technology. The decrease in research and development
expense as a percentage of total net revenues is primarily due to the continued
growth of the IT services segment. The results for both the three and nine month
periods ended December 31, 2000 include increased net revenues for IT services
with no addition to research and development expense. We anticipate that this
percentage will remain at or near current levels in the future, reflecting our
emphasis on the IT services segment.

         OTHER (INCOME) EXPENSE - Net interest changed by $243,000 to net
interest income of $119,000 in the quarter ended December 31, 2000 as compared
to net interest expense of $124,000 for the quarter ended December 31, 1999. Net
interest changed by $699,000 to net interest income of $334,000 in the nine
months ended December 31, 2000 as compared to net interest expense of $365,000
for the nine months ended December 31, 1999. The change in both periods is
primarily due to the decrease in long-term debt and increase in cash and cash
equivalent balances due largely to cash proceeds from equity financings.

         INCOME TAXES - We had income tax expense of $51,000 and $11,000 for the
three months and nine months ended December 31, 2000, respectively, as compared
to an income tax benefit of $251,000 and $468,000 for the three months and nine
months ended December 31, 1999, respectively. This decrease in income tax
benefit is primarily due to an increase in the valuation allowance provided
against deferred tax assets in the United States. In assessing the realizability
of the net deferred tax assets, management considers whether it is more likely
than not that some or all of the deferred tax assets will 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. As of December 31, 2000, we
provided a valuation allowance of $772,000 to reduce the net deferred tax assets
as a result of the potential expiration of certain tax credit and net operating
loss carryforwards prior to their utilization.

LIQUIDITY AND CAPITAL RESOURCES

         We currently finance our operations (including capital expenditures)
primarily through existing cash and cash equivalent balances. Our principal
sources of liquidity at December 31, 2000 consisted of $8,486,000 of cash and
cash equivalents. Cash and cash equivalents decreased by $4,779,000 during the
nine months ended December 31, 2000. The decrease was largely due to cash used
in operating and investing activities, somewhat offset by cash provided by
financing activities.

         Net cash used in operations was $2,237,000 during the nine months ended
December 31, 2000, compared to $761,000 used during the same period in the prior
year. The change is primaily the result of a $923,000 increase in net loss
before depreciation and amortization. Additional notable changes included
approximately $600,000 paid as a deposit in connection with the operation of our
Internet infrastructure in India and an increase in accounts receivable as a
result of the addition of our e-Destinations, Inc. and Web4, Inc. subsidiaries.

         Cash used in investing activities primarily reflects $1,500,000 paid as
a portion of the purchase price for the outstanding capital stock of Allegria
Software, Inc. ("Allegria"). The remainder of the purchase price was satisfied
through the issuance of 25,000 shares of common stock valued at $750,000.
Allegria is a developer of Internet-based document management and collaborative
tools primarily for engineering and manufacturing companies. An additional
$3,030,000 was used to fund equipment purchases, primarily for the development
of the infrastructure for our Internet businesses, including our Indian Internet
infrastructure, our telecommunications system and our Web4 ASP engine.

                                       14
<PAGE>

         Cash provided by financing activities increased mainly as a result of a
private equity financing in June 2000. On June 22, 2000, we closed a private
equity financing and issued to two investors, in a private transaction not
involving a public offering, 200,000 shares of our common stock for
approximately $3,075,000, net of certain commissions and offering costs. An
additional $476,000 was received through the exercise of stock options and
warrants. The increase in cash was partially offset by net repayment of
outstanding debt and capital lease obligations.

         We believe that our current cash and cash equivalents balances will
provide adequate working capital to fund our operations and planned expenditures
at currently anticipated levels for the next twelve months. Additionally, we
currently have $2,000,000 available under an existing line of credit. To the
extent that such amounts are insufficient to finance our working capital
requirements and planned expenditures, we may be required to raise additional
funds through public or private equity or debt financing. There can be no
assurance that such 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 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. The provisions of the statement
require the recognition of all derivatives as either assets or liabilities in
the consolidated balance sheet and the measurement of those instruments at fair
value. The accounting for the changes in fair value of a derivative depends on
the intended use of the derivative and the resulting designation. We are
required to adopt the statement, as amended by SFAS 137 and SFAS 138, in the
first quarter of fiscal year 2002. Although we are continuing to study the
impact of this pronouncement, at this time we do not believe the adoption of
SFAS 133 will have a material impact on our consolidated financial statements
and results of operations.

         In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101 ("SAB 101"), REVENUE RECOGNITION IN
FINANCIAL STATEMENTS, as amended by Staff Accounting Bulletins No. 101 A and 101
B. These bulletins summarize certain of the staff's views about applying
generally accepted accounting principles to revenue recognition in financial
statements. The provisions of these bulletins are effective for our company
commencing with quarter beginning January 1, 2001, with restatement of earlier
quarters in fiscal 2001 required, if necessary. The Securities and Exchange
Commission has recently indicated it intends to issue further guidance with
respect to the adoption of specific issues addressed by SAB 101. Until such time
as this additional guidance is issued, we are unable to assess the impact, if
any, SAB 101 may have on our consolidated financial position or results of
operations.


                                       15
<PAGE>

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         We previously disclosed that we were involved in litigation with Video
Pioneers Corporation ("VPC"). We settled with VPC during the third quarter of
fiscal 2001 for a nominal amount.

         We are a party to various other litigation arising in the normal course
of business. Management believes the disposition of these matters will not have
a material adverse effect on our results of operations or financial condition.

ITEM 2. CHANGES IN SECURITIES

         On June 22, 2000, we closed a private equity financing to issue to two
investors, in a private transaction not involving a public offering, 200,000
shares of our common stock for approximately $3,075,000, net of certain
commissions and offering costs. In connection with this private placement, we
issued warrants to purchase an aggregate of 60,000 shares of our common stock to
the two investors. The warrants are convertible into common stock at an exercise
price of $19.00 per share and expire in June 2005. In addition, we issued
additional warrants to purchase 53,300 shares of our common stock to third
parties in connection with this transaction. These warrants are convertible into
common stock at exercise prices ranging from $16.50 to $23.46 and expire between
May and June 2003.

         On November 29, 2000, we repurchased and retired all of our outstanding
preferred stock in exchange for 400,000 shares of common stock and a net cash
payment of $6,560,000. A significant portion of the funds for this repurchase
were obtained from the concurrent issuance of 1,670,270 shares of our common
stock to one investor in a private transaction not involving a public offering.
The proceeds from this issuance were approximately $6,268,000, net of certain
commissions and offering costs. In connection with this private equity
financing, we issued warrants to purchase an aggregate of 200,000 shares of our
common stock to a third party related to this private equity financing
transaction. These warrants are convertible into common stock at an exercise
price of $3.93 and expire in November 2005.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

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


         (a)      The Annual Meeting of Stockholders of the Company was held on
                  December 7, 2000.

         (b)      The Company solicited proxies for the election of Amrit K.
                  Das, Jyoti Chartterjee, Bruce E. Cummings and Santanu Das as
                  directors, all of whom were then currently serving as
                  directors. At the meeting, Garret W. Vreeland was nominated
                  and elected as a director.

         (c)(i)   PROPOSAL ONE: Election of five Directors by the holders of
                  issued and outstanding shares of Common Stock:

                                               For       Abstain      Against
                                               ---       -------      -------

                     Amrit K. Das           10,980,403       0        933,831
                     Jyoti Chatterjee       10,980,403       0        933,831
                     Bruce E. Cummings      10,980,403       0        933,831
                     Santanu Das            10,980,403       0        933,831
                     Garret W. Vreeland     10,980,403       0        933,831

                                       16
<PAGE>

         (c)(ii)  PROPOSAL TWO: Ratification of the appointment of KPMG LLP as
                  the Company's independent accountants for the fiscal year
                  beginning April 1, 2000:

                                    For:                          11,904,200
                                    Against:                           8,225
                                    Abstain:                           1,809
                                    Broker Non-Voting                      -

         (d)      Not applicable.


ITEM 5. OTHER INFORMATION

        None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  None

         (b)      Reports on Form 8-K

                  None

                                       17
<PAGE>

                                   SIGNATURES

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


Date:  February 12, 2001

                                          NETGURU, INC.


                                          By: /S/ WAYNE BLAIR
                                              ----------------------------------
                                              Wayne Blair
                                              Chief Financial Officer,  Sr. Vice
                                              President, Finance
                                              and Treasurer (principal financial
                                              and accounting officer)

                                       18