[NETGURU LETTERHEAD]
OCTOBER 7, 2005
VIA E-MAIL AND EDGAR CORRESPONDENCE
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Mark P. Shuman
Branch Chief-Legal
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: NETGURU, INC.
SCHEDULE 14A FILED SEPTEMBER 15, 2005
FILE NO. 0-28560
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Dear Mr. Shuman:
This letter responds to your letter of comments dated September 28,
2005. The comments contained in your letter are set forth below in their
entirety for your convenience.
Enclosed are clean and marked to show changes copies of our revised
preliminary proxy statement. We have indicated below where disclosure in
response to your comments has been included in the proxy statement or the
reasons why we believe such disclosure is inapplicable or inappropriate. The
page numbers referenced below correspond to the clean version of the enclosed
document.
Proposal 2: Approval of Sale of REI Business and STAAD Product Lines, page 30
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1. PLEASE REVISE YOUR PROXY STATEMENT TO INCLUDE UNAUDITED FINANCIAL
STATEMENTS OF THE BUSINESS THAT YOU ARE SELLING TO BENTLEY FOR THE
PERIODS REQUIRED BY ITEM 14 OF SCHEDULE 14A. SEE QUESTION I.H.6 OF THE
THIRD SUPPLEMENT DATED JULY 2001 TO OUR MANUAL OF PUBLICLY AVAILABLE
TELEPHONE INTERPRETATIONS.
Unaudited financial statements for the years ended March 31, 2005 and
2004 and the three month periods ended June 30, 2005 and 2004 for the
business to be sold are included in APPENDIX E to the proxy statement.
These financial statements are also referenced in proposal 2 at page
56 of the proxy statement.
Mark P. Shuman
October 7, 2005
Page 2
2. IN ADDITION, YOU WILL NEED TO PROVIDE YOUR FINANCIAL STATEMENTS FOR THE
PERIODS REQUIRED BY ITEM 14(c)(1) OF SCHEDULE 14A. IF YOU INTEND TO
SATISFY THIS DISCLOSURE REQUIREMENT BY INCORPORATION BY REFERENCE,
PLEASE COMPLY WITH THE REQUIREMENTS OF PART B OF FORM S-4 AND INCLUDE A
STATEMENT ON THE LAST PAGE OF YOUR PROXY STATEMENT AS TO WHICH
DOCUMENTS, OR PART OF DOCUMENTS, ARE INCORPORATED BY REFERENCE. PLEASE
ALSO SEE ITEM 14(e) OF SCHEDULE 14A AND NOTE D.1 TO SCHEDULE 14A FOR
ADDITIONAL GUIDANCE.
Pursuant to Item 14(c) of Schedule 14A, netGuru's financial statements
for the years ended March 31, 2005 and 2004 and the three month periods
ended June 30, 2005 and 2004 are incorporated by reference to netGuru's
annual report on Form 10-KSB for March 31, 2005 and quarterly report on
Form 10-QSB for June 30, 2005. Both of those reports will be
distributed to stockholders with the proxy statement. A list of
documents, or parts of documents, that are incorporated by reference is
included under the heading "Annual, Quarterly and Current Reports" at
page 64 of the proxy statement, as permitted by Items 12 and 13 of
Form S-4 for S-2 registrants.
3. WE NOTE YOUR DISCLOSURE ON PAGE 46 REGARDING YOUR USE OF PROCEEDS AND
OPERATIONS FOLLOWING THE CLOSING. PLEASE REVISE YOUR DISCLOSURE TO
PROVIDE A SUBSTANTIAL DISCUSSION REGARDING THE EFFECT OF THE SALE ON
YOUR OPERATIONS AND LIQUIDITY AND CAPITAL RESOURCES. PLEASE DISCUSS THE
BUSINESS THAT WILL BE CONDUCTED AFTER THE TRANSACTION AND HOW IT
COMPARES TO YOUR HISTORICAL ACTIVITIES.
Additional disclosure regarding the effect of the sale on netGuru's
operations and liquidity and capital resources, and disclosure
regarding the business that will be conducted after the transaction and
how it compares to netGuru's historical activities, is included under
the heading "Use of Proceeds and Operations Following the Closing" at
page 46 of the proxy statement.
Proposal 3: Ratification of Certain Issuances of Equity Securities . . . page 56
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4. WE NOTE YOUR DISCLOSURE REGARDING YOUR FEBRUARY 2005 GRANT OF
"IMMEDIATELY VESTED FIVE-YEAR NON-QUALIFIED STOCK OPTIONS" TO CERTAIN
CONSULTANTS. PLEASE RECONCILE THE IMMEDIATELY VESTED NATURE OF THE
OPTIONS WITH THE FIVE-YEAR TERM USED TO DESCRIBE THE OPTIONS. WE
FURTHER NOTE THAT YOU ARE SEEKING STOCKHOLDER APPROVAL OR RATIFICATION
OF AMENDMENTS THAT WOULD EFFECTUATE THE IMMEDIATE VESTING OF SUCH
OPTIONS.
The options originally were intended to vest and become exercisable
immediately upon grant and to remain exercisable for five years.
However, based on our communications with Nasdaq, the options were
revised to provide that they do not vest and become exercisable until
after stockholder ratification of the issuance of the options is
obtained pursuant to proposal 3. The "Description of Issuances"
Mark P. Shuman
October 7, 2005
Page 3
contained in proposal 3 has been revised to clarify the vesting and
expiration date and to provide additional information required by Item
10(b)(2) of Schedule 14A. The forms of option agreement and option
agreement amendment executed by netGuru and each optionholder are
included in APPENDIX G to the proxy statement for your information.
5. PLEASE PROVIDE ALL INFORMATION REQUIRED PURSUANT TO ITEM 10 OF SCHEDULE
14A WITH RESPECT TO THE RATIFICATION OF THE COMPENSATORY ARRANGEMENTS
YOU OUTLINE IN YOUR PROPOSAL 3. WE NOTE, FOR EXAMPLE, THAT CERTAIN
INFORMATION REQUIRED BY ITEM 10(b)(2)(i) APPEARS TO NOT HAVE BEEN
PROVIDED. FURTHER, PLEASE COMPLY WITH THE INSTRUCTIONS TO ITEM 10. WE
NOTE THAT THE DISCLOSED AGREEMENTS HAVE NOT BEEN FILED WITH THE PROXY
STATEMENT NOR HAVE WE BEEN INFORMED OF THE PLANS FOR REGISTRATION OF OR
EXEMPTION THEREFROM RELIED UPON FOR THE ISSUANCE OF THE EQUITY
SECURITIES.
All information required pursuant to Item 10 of Schedule 14A is now
included in proposal 3. The forms of option agreement and option
agreement amendment for the software consultants and the agreement
regarding equity compensation paid to the former director are included
in APPENDIX G to the proxy statement for your information. Exemption
from the registration provisions of the Securities Act of 1933 for the
issuances described in proposal 3 is claimed under Section 4(2) of the
Securities Act of 1933, among others, on the basis that such
transactions did not involve any public offering, the recipients had
access to the kind of information registration would provide, and we
believed the recipients were accredited or sophisticated. The
recipients of the shares and the options understand that those
securities are restricted. The shares of common stock were issued with
a restrictive legend. The options contain a prohibition on transfer and
a provision requiring investment representations to be made by the
option holders at the time of issuance of shares of common stock upon
exercise.
Mark P. Shuman
October 7, 2005
Page 4
netGuru, Inc. acknowledges that:
o netGuru is responsible for the adequacy and accuracy of the
disclosure in the filing;
o staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with respect to the filing; and
o netGuru may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
We trust the foregoing is responsive to your comments. If you have
further questions or comments, please call our legal counsel,
Cristy Parker, at (714) 641-3446.
Sincerely yours,
NETGURU, INC.
/s/ BRUCE NELSON (BY SHARMI DAS)
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Bruce Nelson,
Chief Financial Officer
Enclosures
cc: Mr. Daniel Lee (w/enclosures)
Mr. Perry Hindin (w/enclosures)
Gregg Amber, Esq. (w/enclosures)
Cristy Parker, Esq. (w/enclosures)