<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
COMMISSION FILE NUMBER 0-21202
FIRSTWAVE TECHNOLOGIES, INC.
7372 GEORGIA 58-1588291
(Primary Std. Ind. (State of incorporation) (IRS Employer
Classification Code #) Identification #)
2859 PACES FERRY ROAD, SUITE 1000
ATLANTA, GEORGIA 30339
(Address of principal executive offices)
(770-431-1200)
(Telephone number of registrant)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding as of November 10, 2000
Common Stock, no par value 6,288,472 Shares
<PAGE> 2
FIRSTWAVE TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet - December 31, 1999 and September 30, 2000 3
Consolidated Statement of Operations - For the Three and Nine Months Ended
September 30, 1999 and September 30, 2000 4
Consolidated Statement of Changes in Shareholders' Equity -
For the Nine Months Ended September 30, 2000 5
Consolidated Statement of Cash Flows - For the Nine Months Ended
September 30, 1999 and September 30, 2000 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
Part II. Other Information 13
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRSTWAVE TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DEC 31, SEPT 30,
1999 2000
------- --------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,029 $ 985
Restricted cash 0 2,200
Investment securities, held to maturity 1,631 0
Accounts receivable, less allowance for
doubtful accounts of $345 and $270, respectively 1,937 1,888
Other assets 489 464
------- -------
Total current assets 6,086 5,537
Property and equipment, net 922 671
Deferred income tax benefit 2,621 2,708
Software development costs, net 1,918 2,503
Intangible asset 476 343
------- -------
$12,023 $11,762
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 570 $ 806
Deferred revenue 1,519 945
Accrued employee compensation and benefits 173 330
Borrowings 0 2,200
Dividends payable 123 0
Other accrued liabilities 230 218
------- -------
Total current liabilities 2,615 4,499
Shareholders' equity 9,408 7,263
------- -------
$12,023 $11,762
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
FIRSTWAVE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------- -------------------------
SEPT 30, SEPT 30, SEPT 30, SEPT 30,
1999 2000 1999 2000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues
Software $ 394 $ 551 $ 1,930 $ 2,255
Services 811 770 2,720 2,183
Maintenance 1,211 814 3,732 2,824
Other 127 42 323 194
-------- -------- -------- --------
2,543 2,177 8,705 7,456
-------- -------- -------- --------
Cost and Expenses
Cost of revenues
Software 294 240 690 759
Services 579 544 1,811 1,835
Maintenance 418 377 1,072 1,215
Other 125 31 304 154
Sales and marketing 698 907 2,898 3,103
Product development 336 181 1,352 718
General and administrative 526 619 2,262 2,042
-------- -------- -------- --------
2,976 2,899 10,389 9,826
-------- -------- -------- --------
Operating loss (433) (722) (1,684) (2,370)
Interest income, net 38 2 83 79
-------- -------- -------- --------
Loss before income taxes (395) (720) (1,601) (2,291)
Income taxes (7) 0 (37) (30)
-------- -------- -------- --------
Net loss ($ 402) ($ 720) ($ 1,638) ($ 2,321)
======== ======== ======== ========
Dividends on preferred stock (45) (23) (75) (98)
-------- -------- -------- --------
Net loss applicable to common
shareholders ($ 447) ($ 743) ($ 1,713) ($ 2,419)
======== ======== ======== ========
Basic and diluted
net loss per share ($ 0.08) ($ 0.12) ($ 0.33) ($ 0.41)
======== ======== ======== ========
Basic and diluted weighted
average shares outstanding 5,400 6,287 5,200 5,942
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
FIRSTWAVE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK PREFERRED STOCK ADD'L COMPRE- OTHER
PAID-IN HENSIVE COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT CAPITAL LOSS LOSS
--------- ------ ------- ------ ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 5,740,283 $ 11 20,000 $2,000 $21,574 $ 0 ($ 5)
Exercise of common stock options 60,374 195
Employee stock plan purchases 1,484 6
Conversion of Preferred Stock to Common Stock 485,436 1 (10,000) (1,000) 999
Comprehensive loss:
Net loss (2,321)
Foreign currency translation adjustment (25) (25)
------
Accumulated comprehensive loss (2,346)
------
--------- ------ ------- ------ ------- ----
Balance at September 30, 2000 6,287,577 $ 12 10,000 $1,000 $22,774 ($30)
========= ====== ======= ====== ======= ====
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED
DEFICIT TOTAL
----------- ------
<S> <C> <C>
Balance at December 31, 1999 ($14,172) $9,408
Exercise of common stock options 195
Employee stock plan purchases 6
Conversion of Preferred Stock to Common Stock 0
Comprehensive loss:
Net loss (2,321) (2,321)
Foreign currency translation adjustment (25)
Accumulated comprehensive loss
-------- ------
Balance at September 30, 2000 ($16,493) $7,263
======== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
FIRSTWAVE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
-----------------------------------
SEPT 30, 1999 SEPT 30, 2000
------------- -------------
<S> <C> <C>
Cash flows used in operating activities ($ 204) ($ 1,338)
Cash flows from investing activities
Software development costs (1,380) (1,235)
Purchases of property and equipment (219) (221)
Purchase of investment securities 0 (493)
Proceeds from maturity of investment securities 0 2,146
------- -------
Net cash (used in)/provided by investing activities (1,599) 197
------- -------
Cash flows from financing activities
Proceeds from borrowings 0 2,200
Purchase of investments used to secure borrowings 0 (2,200)
Proceeds from issuance of preferred stock 2,000 0
Proceeds from issuance of common stock 1,600 201
Payment of dividends on preferred stock 0 (123)
------- -------
Net cash provided by financing activities 3,600 78
------- -------
------- -------
Effect of exchange rate changes on cash (31) 19
------- -------
Increase/(decrease) in cash 1,766 (1,044)
Cash and cash equivalents, beginning of period 2,245 2,029
------- -------
Cash and cash equivalents, end of period $ 4,011 $ 985
======= =======
Supplemental disclosure of cash flow information
------- -------
Cash paid during the period for income taxes $ 37 $ 30
======= =======
------- -------
Cash paid during the period for interest $ 0 $ 25
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
FIRSTWAVE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
A. BASIS OF PRESENTATION
Firstwave Technologies, Inc. (the "Company") is a provider of Internet
relationship management solutions. The Company markets and supports
three product lines: Firstwave eRM, Takecontrol(R), and Firstwave for
Unix. All three offer a suite of applications created to fulfill and
manage the e-business relationship needs of a company in the areas of
sales, marketing and support.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, the consolidated financial
statements do not include all of the information and footnotes required
by generally accepted accounting principles and should be read in
conjunction with the consolidated financial statements contained in the
Company's Annual Report. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary
for a fair presentation of the consolidated financial statements have
been included.
The consolidated financial statements include the accounts of Firstwave
Technologies, Inc. and its wholly owned subsidiary Firstwave
Technologies UK, Ltd. All significant intercompany transactions and
balances have been eliminated in consolidation.
B. ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenue from product sales is recognized upon shipment of the product
when the Company has no significant obligations remaining and
collection of the resulting receivable is probable. The Company accrues
for estimated warranty costs at the time it recognizes revenue.
Services revenue is recognized as services are performed. Maintenance
revenue is recognized on a pro rata basis over the term of the
maintenance agreements.
International revenues are primarily generated by Firstwave UK and
independent distributors who offer licenses of the Company's products
in specific geographic areas. Under the terms of the Company's
international distributor agreements, international distributors
collect license fees and maintenance revenues on behalf of the Company,
and generally remit 50% of standard license fees and maintenance
revenues they produce. The Company recognizes international sales at
the gross license amount, with the amount paid to the distributors
reflected as a selling expense. The Company's international maintenance
fees are reflected as maintenance revenues, with the amount retained by
distributors shown as a cost of maintenance revenue.
BASIC AND DILUTED NET LOSS PER COMMON SHARE
Basic net loss per common share is based on the weighted average number
of shares of common stock outstanding during the period. Stock options
and convertible preferred stock would have been included in the diluted
earnings per share calculation had they
7
<PAGE> 8
not been antidilutive. Net loss applicable to common shareholders
includes a charge for dividends related to the Company's outstanding
preferred stock.
FOREIGN CURRENCIES
Assets and liabilities recorded in foreign currencies are translated at
the exchange rate on the balance sheet date and the effects of foreign
currency translation adjustments are included as a component of
shareholders' equity.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses. Actual results could differ from
those estimates.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates impairment of long-lived assets whenever events
or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. If the sum of the expected future
undiscounted cash flows is less than the carrying amount of the asset,
an impairment loss would be recognized. Measurement of an impairment
loss for long-lived assets would be based on the fair value of the
asset.
SEGMENT REPORTING
Management believes that it has only a single segment consisting of
software sales with related services and support. The information
presented in the consolidated statement of operations reflects the
revenues and costs associated with this segment that management uses to
make operating decisions and assess performance.
C. BORROWINGS
The Company currently has borrowings under a line of credit agreement
and a promissory note. The line of credit is a $1.5 million facility
with a commercial bank that expires June 30, 2001, bears interest at
the prime rate, and is secured by $1.5 million in commercial paper
owned by the Company. The promissory note is a $700,000 note payable
with accrued interest to a commercial bank on January 5, 2001. The
interest rate is fixed at 7.94% per annum and is secured by a $700,000
certificate of deposit owned by the Company. At September 30, 2000, the
outstanding principal balances on these borrowings were $1,500,000 and
$700,000, respectively. Based on the terms of the borrowing agreements,
the commercial paper and certificate of deposit are restricted in their
usage, and are classified as restricted cash in the consolidated
balance sheet.
D. SUBSEQUENT EVENT
On October 20, 2000 the Company obtained a loan commitment from a
commercial bank for a $1.75 million line of credit which expires
November 2001, bears interest at the prime rate plus 1.5%, and is
secured by the assets of the Company. Debt issue costs associated with
this line of credit include warrants issued to the lender. The fair
value of the warrants and other debt issue costs will be amortized over
the life of the loan agreement.
8
<PAGE> 9
ITEM 2.
FIRSTWAVE TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Firstwave Technologies, Inc. (the "Company") is a provider of Internet
relationship management solutions and recognized as having the "Best Internet
Based CRM Solution" by The Denali Group. The Company is based in Atlanta,
Georgia with an office located in London, England. Firstwave Technologies, Inc.
creates a culture of success and efficiency for its customers and partners by
continually improving communication and facilitating interactions among their
employees, customers and partners through the use of technology.
RESULTS OF OPERATIONS
Total revenues decreased 14.4% from $2,543,000 in the third quarter of 1999 to
$2,177,000 in the third quarter of 2000. Software revenues increased 39.8% from
$394,000 in the third quarter of 1999 to $551,000 in the third quarter of 2000,
and year to date increased 16.8% from $1,930,000 in 1999 to $2,255,000 in 2000.
The increase in software revenues is primarily due to sales of the Company's
internet-based product suite, Firstwave eRM, to new customers and system
expansions to existing users. The Company's quarter-to-quarter revenues are
significantly dependent upon the timing of the closing of license agreements.
Software revenues from international licenses increased 13.7% from $233,000 in
the third quarter of 1999 to $265,000 in the corresponding quarter of 2000
primarily due to increased eRM sales by Firstwave UK. Year to date, revenues
from international licenses decreased 14.9% from $1,256,000 in 1999 to
$1,069,000 in 2000 as a result of lower sales of the Company's Takecontrol
product line through international distributors. As a percentage of total
revenues, international license revenues increased from 9.2% in the third
quarter of 1999 to 12.2% in the third quarter of 2000.
Services revenues decreased 5.1% from $811,000 in the third quarter of 1999 to
$770,000 in the third quarter of 2000, and year to date decreased 19.7% from
$2,720,000 in 1999 to $2,183,000 in 2000. The Company typically provides
separate implementation and training services at the time of software sales.
Customization projects will generally follow the trend in software licenses, but
will be delayed.
Maintenance revenues decreased 32.8% from $1,211,000 in the third quarter of
1999 to $814,000 in the third quarter of 2000, and year to date, decreased 24.3%
from $3,732,000 for the first nine months of 1999 compared to $2,824,000 for the
first nine months of 2000. The decrease in maintenance revenue for 2000 compared
to 1999 is primarily attributable to cancellations during the first quarter of
2000 related to customers who were using the Takecontrol and Firstwave for Unix
product lines. Maintenance revenues are the result of renewal agreements from
previous software license sales.
Cost of software revenues decreased 18.4% from $294,000 in the third quarter of
1999 to $240,000 in the third quarter of 2000 primarily due to decreased costs
associated with licensing third party software. Year to date, cost of software
revenues increased 10.0% from $690,000 in 1999 to $759,000 in 2000. The year to
date increase is a result of an increase in amortization of capitalized software
associated with the Firstwave eRM product line. Cost of software revenues
9
<PAGE> 10
includes costs of third party software, amortization of capitalized software
costs, media costs, and documentation materials.
Cost of revenues for services decreased 6.0% from $579,000 in the third quarter
of 1999 to $544,000 in the third quarter of 2000 due to decreased payroll and
related costs. Cost of revenues for maintenance decreased 9.8% from $418,000 in
the third quarter of 1999 to $377,000 in the third quarter of 2000 primarily due
to decreased international maintenance costs associated with decreased
international maintenance revenue. Year to date, cost of revenues for
maintenance increased 13.3% from $1,072,000 in 1999 to $1,215,000 in 2000. The
year to date increase is primarily due to increased payroll and related expenses
to ramp up personnel to support the eRM suite.
Sales and marketing expense increased 29.9% from $698,000 in the third quarter
of 1999 to $907,000 in the third quarter of 2000 as the Company continues to
expand its marketing plan. The increase is related to increases in advertising,
direct mail and e-mail campaigns, payroll costs associated with new sales
representatives, and higher commissions consistent with higher software revenue.
Year to date, sales and marketing expense increased 7.1% from $2,898,000 1999 to
$3,103,000 in 2000.
The Company's product innovation and development expenditures, which includes
amounts capitalized, decreased 39.6% from $896,000 in the third quarter of 1999
to $541,000 in the third quarter of 2000. Year to date, product innovation and
development expenditures decreased 28.5% from $2,732,000 in 1999 to $1,953,000
in 2000. These decreases are related to changes implemented by management to
streamline the development process including the elimination of development
efforts by Firstwave UK, and lower expenses related to the use of outside
development contractors. The higher development expenditures during 1999 also
included costs associated with enhancements of the Takecontrol product line.
There were no corresponding costs during 2000. Software development costs
capitalized during the three months and nine months ended September 30, 1999 and
September 30, 2000 were $560,000 and $1,380,000 and $360,000 and $1,235,000
respectively.
General and administrative expenses increased 17.7% from $526,000 in the third
quarter of 1999 to $619,000 in the third quarter of 2000. The quarterly increase
is primarily related to a bad debt recovery during third quarter 1999 while
there was no corresponding activity during third quarter 2000. Year to date,
general and administrative expenses decreased 9.7% from $2,262,000 in 1999 to
$2,042,000 in 2000 primarily due to decreased costs associated with the UK
office including decreased payroll and related costs.
Interest income remained consistent at $39,000 in the third quarter of 2000
compared to $38,000 in the third quarter of 1999 and year to date increased
39.8% from $83,000 in 1999 to $116,000 in 2000. These increases are due to
fluctuations in invested cash balances. Interest expense increased to $37,000 in
the third quarter of 2000 due to borrowings during 2000. There were no
corresponding borrowings during 1999.
The above factors combined to result in a 79.1% increase in the net loss from
$402,000 in the third quarter of 1999 to $720,000 in the third quarter of 2000,
and a net loss per share of $.08 for the third quarter of 1999 compared to a net
loss per share of $.12 for the third quarter of 2000. Year to date, net loss
increased 41.7% from $1,638,000 in 1999 compared to $2,321,000 in 2000. Year to
date, net loss per share increased 24.2% from $0.33 per share in 1999 compared
to $0.41 per share in 2000. The net loss per share amounts for the quarters
ended September 30, 1999 and September 30, 2000 also include dividends accrued
on preferred stock of $45,000 and $23,000 respectively.
10
<PAGE> 11
BALANCE SHEET
Capitalized software increased 30.5% from $1,918,000 at December 31, 1999 to
$2,503,000 at September 30, 2000 due to additional capitalization of development
costs net of the related amortization. Accounts payable increased 41.4% from
$570,000 at December 31, 1999 to $806,000 at September 30, 2000 primarily due to
increased marketing expenses and the timing of their payments. Deferred revenue
decreased 37.8% from $1,519,000 at December 31, 1999 to $945,000 at September
30, 2000 primarily due to the recognition of nine months of maintenance revenues
related to annual contracts billed in advance at year end. Accrued employee
compensation and benefits increased 90.8% from $173,000 at December 31, 1999 to
$330,000 at September 30, 2000 due to additional vacation pay, incentive pay,
and commissions earned by employees. Borrowings increased to $2,200,000 at
September 30, 2000 due to an advance on a new line of credit established during
June 2000, and a promissory note of $700,000 dated September 2000. There were no
corresponding borrowings at December 31, 1999. There was no balance in dividends
payable at September 30, 2000 due to the cash payment of accrued dividends of
$123,000 in January of 2000.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, the Company had cash, cash equivalents, and restricted
cash of $3,185,000 compared to $3,660,000 in cash and investment securities at
December 31, 1999. Restricted cash comprises $2,200,000, as such funds are
security for certain of the Company's debt obligations.
During the second quarter of 2000, the Company executed a line of credit in the
amount of $1,500,000. At September 30, 2000 there was $1,500,000 outstanding on
the new line of credit. This new line of credit bears interest at the prime
rate, is effective through June 30, 2001 and is secured by $1,500,000 in
commercial paper owned by the Company. The Company's former $3,000,000 line of
credit expired September 15, 2000. At the time of expiration, there were no
borrowings against the $3,000,000 line of credit. During the third quarter of
2000 the Company executed a promissory note with a commercial bank in the amount
of $700,000. At September 30, 2000 the amount due on the promissory note was
$700,000 plus accrued interest. The note bears interest at 7.94%, is payable in
full with interest on January 5, 2001, and is secured by a $700,000 certificate
of deposit owned by the Company. Based on the terms of the borrowing agreements,
the commercial paper and certificate of deposit are restricted in their usage,
and are classified as restricted cash in the consolidated balance sheet.
The Company has implemented several measures in an effort to help the Company
preserve cash. In addition, the Company is currently pursuing equity financing
of up to $1,500,000 in Series B Convertible Preferred Stock from investors,
including Richard Brock, the Company's CEO and President, and has received
commitments as of November 13, 2000, in the amount of $500,000. The Company
expects to raise these funds in the fourth quarter of 2000.
On October 20, 2000, the Company obtained a loan commitment from a commercial
bank for a $1.75 million line of credit which would expire November 2001, bear
interest at the prime rate plus 1.5%, and be secured by the assets of the
Company. The availability of this line of credit is based on a portion of the
company's outstanding accounts receivable balance. Debt issue costs associated
with this line of credit include warrants issued to the lender. The fair value
of the warrants and other debt issue costs will be amortized over the life of
the loan agreement. The Company expects to close on this financing in November,
2000.
11
<PAGE> 12
As of September 30, 2000, the Company has available cash of $985,000. The
Company believes that its available cash, together with borrowings that will be
available upon closing of the line of credit and the raising of the additional
equity financing through the Preferred Stock Offering, will be sufficient to
finance the Company's operations for the next twelve months. Should the Company
not be able to close on the additional funding, management will need to obtain
alternative funding sources or reduce operating expenses.
The Company capitalized $1,235,000 in software development costs during the
first nine months of 2000, as compared to $1,381,000 during the first nine
months of 1999. These amounts relate to continued development and enhancement to
the Company's products.
YEAR 2000
To date there have been no material issues related to year 2000 in the Company's
products or internal systems.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements ("SAB 101"). This
bulletin summarizes certain of the Staff's views in the application of generally
accepted accounting principles to revenue recognition in financial statements.
The required implementation of SAB 101 has been deferred until the fourth
quarter of 2000. Although the Company does not currently expect the adoption of
SAB 101 to have a material impact on the consolidated financial statements, the
Company is still assessing the possible implications of SAB 101.
In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44, Accounting for Certain Transactions Involving Stock Compensation, an
interpretation of APB Opinion No. 25 (the "Interpretation"). The Interpretation
addresses questions dealing with APB 25 implementation practice issues. The
Interpretation will be applied prospectively to new awards, modifications to
outstanding awards and changes in employee status on or after July 1, 2000. In
certain circumstances, the Interpretation must be applied commencing December
15, 1998 and January 12, 2000. Financial statements for periods prior to July 1,
2000 will not be affected. The Company does not expect the adoption of the
Interpretation to have a material impact on the consolidated financial
statements.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. This
statement is effective for financial statements for all fiscal quarters of all
fiscal years beginning after June 15, 2000. The Company intends to adopt this
statement when required and does not expect the adoption of SFAS 133 to have a
material impact on the consolidated financial statements.
12
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on form 8-K
Exhibit 27 - Financial Data Schedule (for SEC use only)
13
<PAGE> 14
SIGNATURES
Pursuant to 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.
FIRSTWAVE TECHNOLOGIES, INC.
DATE: November 10, 2000 /s/ Judith A. Vitale
--------------------
Judith A. Vitale
Vice President of Finance and Administration
14
