CRM Software Industry News

Company reports both financial and cash improvement

ATLANTA (May 8, 2006) - FirstWave Technologies, Inc. (NASDAQ: FSTW), a web-based, CRM solutions provider, today announced preliminary financial results for the quarter ended March 31, 2006.

Continuing Operations
The loss from continuing operations applicable to common shareholders for the first quarter of 2006 decreased 77.2% to $187,000, or ($0.06) per fully diluted share, as compared to a loss from continuing operations applicable to common shareholders of $821,000 in the first quarter of 2005, or ($0.30) per fully diluted share.

As more fully explained below, the decreases in license and services revenues are in part the result of a shift in the product marketing approach from a direct model to a channel model as reflected in our previously announced relationship with M1 Global which commenced in October 2005. Software license revenues decreased 42.7% to $47,000 in the first quarter of 2006 from $82,000 in the first quarter of 2005. Services revenues decreased 53.0% to $94,000 in the first quarter of 2006 as compared to $200,000 in the same quarter a year ago. Maintenance revenues decreased 20.9% to $458,000 in first quarter of 2006 from $579,000 in the first quarter of 2005. Total revenues for the first quarter of 2006 were $599,000, a 32.0% decrease from the first quarter of 2005 revenues of $881,000. Of the total revenue decrease in the first quarter of 2006, $138,000 relates to the fact that FirstWave now receives a percentage of revenues from M1 Global’s sales (33% of license revenues and 20% of services revenues); however, the costs relating to making such sales are borne by M1 Global so the amounts received by FirstWave from these revenues benefit the bottom line.

Although revenues decreased during the first quarter 2006 as compared to the same period last year, the bottom line improved primarily due to the M1 Global relationship and the significant reductions in our operating expenses associated therewith.

Discontinued Operations
As previously announced on June 3, 2005, FirstWave entered into the Stock Purchase Agreement with AllAboutTickets LLC, now known as First Sports International, to sell its UK Subsidiary. As a result of this sale, there were no discontinued operations results during the first quarter of 2006 compared to a loss of $427,000 in the first quarter of 2005. The impact of this transaction on reported financials is explained in the Company’s annual report and Form 10K which have previously been filed.

Other
FirstWave reported a cash balance of $409,000 at March 31, 2006, and continues to carry no debt. This was the second consecutive increase in quarter-over-quarter cash balances. With the $500,000 received from the Galactus transaction on May 2, 2006 for the assignment of the Company’s .Net Integrated Development Environment (“IDE”), as described in our May 5, 2006 Form 8-K filing with the Securities and Exchange Commission and the related press release, and the anticipated collection of the $300,000 note payment due on June 3, 2006 from First Sports International, we believe our cash balance will show a significant increase at June 30, 2006.

The May 2 transaction increased our cash balance by $500,000, less nominal transaction costs. After deducting the capitalized software development costs associated with the IDE, the benefit to our bottom line will be approximately $340,000 for the quarter ending June 30, 2006. Given our current expense structure, we believe we will report net income for the quarter ending June 30, 2006 compared to a net loss from continuing operations applicable to common shareholders of $439,000 for the quarter ended June 30, 2005.

Financial results for quarters subsequent to June 30, 2006 will also benefit from the absence of the recent $153,000 per quarter in amortization of software development costs which will no longer be incurred since these capitalized costs have now been reduced to zero.

“We have been extremely pleased with the transactions the Company has made and believe that continued improvement in both cash and financial performance will help the Company to grow,” said Richard T. Brock, President and CEO of FirstWave.“We believe that with our reduced expense levels and with a strategy to build applications in markets where we can gain competitive advantage, we will continue to see progress.”

Filed under: Firstwave CRM