FirstWave Announces New Demand Generation Product and Reports First Quarter Results for 2007

FirstWave Announces New Demand Generation Product and Reports First Quarter Results for 2007

ATLANTA, May 15 /PRNewswire-FirstCall/ -- FirstWave Technologies, Inc. (NASDAQ:FSTW) today announced new product offerings and the financial results for the first quarter of 2007. Details are contained in a related press release and the Company's Form 10-Q filed today and are summarized below.

FirstWave - Sole Solution Provider to offer New Lead Generation Products with Traditional CRM Offerings

FirstWave today announced a new next generation lead optimization solution that provides the Company with a unique competitive advantage in demand generation offerings which include personalized URL's ("PURLs") for the creation of microsites tailored for each prospect in a marketing campaign, behavior tracking which assigns lead quality scores based upon the prospect's interests as expressed by their web site navigation and time spent on site, and tight integration with variable data printing which provides integrated multi-channel on-line/off-line marketing. See press release being issued May 16, 2007 on the new offerings for more details. These product offerings are made available as a result of the Company's financial investment during the first quarter of 2007 to accelerate development efforts and commitment to deliver the best of next generation lead optimization solutions.

Revenue Sources Increase with New Product Offerings

FirstWave launched its new web site and new positioning and began limited marketing of the new offerings in the fourth quarter of 2006. Offered as pilot programs, initial deal sizes have been small but do not reflect the expected growth of monthly revenues. Management anticipates the recent marketing and sales investments will result in new and greater sources of revenues, generating a positive return over time on the Company's investment in developing and marketing these products. Through May 15, the Company has already recognized more software license revenue in the second quarter of 2007 than the $60,000 recognized in the first quarter of 2007. Growth in software licenses should also have a positive impact on maintenance revenues. One turnaround has already been achieved this quarter - a large customer returned to paying maintenance after evaluating the new offerings and also licensed additional software relating to our new products. Rejuvenating existing and past customer relationships is a key corporate focus in connection with introducing and selling our new products.

Additionally, the new product solution set allows us to reach several other sales channels, and preliminary discussions with potential partners is encouraging. We believe that FirstWave's longtime market presence, together with its unique solution in a new market-space, places the Company in a promising position.

Financial Summary for the Quarter Ended March 31, 2007

First quarter expenses are not indicative of expenses for the second quarter of 2007. For example, during the first quarter of 2007, the Company increased development expenditures in order to complete the new product offering. Having achieved the goals of product diversification and competitive differentiation, we have reduced development expenditures going forward, and will redeploy our development resources to billable professional services engagements as needed. To promote the new product offerings, the Company increased sales and marketing expenses during the first quarter of 2007 by $23,000 over the fourth quarter of 2006 with positive results in the growth of the Company's prospect pipeline. As the Company focuses on generating new revenue from the new product offerings, we expect to increase marketing expenses in future quarters when we see a clear return on these incremental marketing and sales expenses as measured in near term incremental revenues that produces a positive return on these expenses.

Total revenues decreased 22% from $599,000 in the first quarter of 2006 to $465,000 in the first quarter of 2007. Net loss applicable to common shareholders increased from $187,000 in the first quarter of 2006 to a net loss of $380,000 in the first quarter of 2007. Net loss per basic and diluted share was $0.06 in the first quarter of 2006 compared to a net loss per basic and diluted share of $0.13 per basic and diluted share for the first quarter of 2007. The Company reported a cash balance of $792,000 at March 31, 2007, and continues to carry no debt.

FirstWave reported five consecutive quarters of increasing cash balances through December 31, 2006. While the investments made in product development and some other higher than normal expenses incurred in the first quarter of 2007 caused the Company to report a reduced ending cash balance, the balance sheet remains very strong. The Company has already received $121,250 from First Sports International (FSI) this current quarter and expects to receive the $500,000 note payment due from FSI in June from the sale of the Company's sports division completed in June 2005. While future cash balances will be augmented by future payments from FSI, management is also focused on generating positive cash flows provided by operating activities.

"Comparisons with comparable quarters are difficult because of the changing business model over the last several quarters," said Richard Brock, CEO of FirstWave. "FirstWave's transition from a traditional enterprise CRM vendor selling licenses to a hosted provider of solutions that optimize demand generation, minimize lead leakage, and optimize revenue retention built on the CRM platform has not been, nor is expected to be, a straight line. However, when viewed over the last several calendar years, the Company's financial progress has been significant: loss of $1.82 per share in 2004, loss of $.74 per share in 2005, and loss of $.04 in 2006. We expect the quarter ending June 30, 2007 will show a significant increase in our cash balance. Based upon reasonable revenue expectations, the Company is focusing its efforts on achieving revenue growth and profitability in the future without any additional capital. However, the new revenue streams from the lead generation functions and the transition from a license only model to a license/subscription/hosted model may make near term revenue improvement appear "lumpy" with potential significant variations from period to period which makes the traditional simple financial comparisons difficult," continued Brock.

The Company is also issuing a press release tomorrow which describes the enhanced solutions for our customers and our new offerings. Full details of the Company's new offerings and product enhancements can be found at our enhanced website, http://www.firstwave.net/.

ABOUT FIRSTWAVE

FirstWave(R) Technologies, Inc. is a provider of lead generation, lead nurturing and customer management and tracking solutions built upon a suite of Customer Relationship Management (CRM) products. FirstWave's solutions help customers find new prospects, continuously engage these prospects throughout the sales cycle and maintain contact with customers throughout their lifecycle. With 20 years of sales management software, FirstWave's modular internet marketing, sales lead and customer management solutions, customers achieve results at every opportunity. FirstWave is headquartered in Atlanta, Georgia. For more information, visit the Company's web site at http://www.firstwave.net/ or call 1-800-540-6061.

NOTE: Except for historical information contained herein, the matters set forth in this communication are "forward-looking statements" within the meaning of various provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements can generally be identified by words such as will, expect, intends, believe, anticipates, should and words of similar meaning. FirstWave Technologies, Inc. (the "Company") notes that the forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, such as potential fluctuations in quarterly results due to delays in purchase decisions and other adverse market conditions, whether the parties will be able to successfully launch a combined product offering and develop any significant customer following from the transactions described in this release, the Company's dependence on other parties to continue to perform under the agreements described in this release, whether the Company will be able to continue diversification of its revenues, competition and technological developments, the Company's capital requirements and other liquidity concerns, the Company's ability to continue to comply with NASDAQ listing requirements, and the size, timing, and contractual terms of orders, and also the risks and uncertainties discussed under the caption "Certain Factors Affecting Forward-Looking Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the Securities and Exchange Commission ("SEC"), which discussions are incorporated herein by this reference. The information set forth herein is provided as of the date hereof. The Company does not assume, and expressly disclaims, any duty or obligation to update any of the information presented herein with respect to its consolidated operations or anticipated performance in 2007 or beyond.

Firstwave Technologies, Inc.

Selected Financial Information (in thousands; except per share data)

Consolidated Statement of Operations For the Three Months Ended March 31, (unaudited) 2006 2007

Net Revenues $599 $465

Loss before income taxes (116) (310)

Loss after income taxes (116) (310)

Net Loss (116) (310)

Dividends on preferred stock (71) (70)

Net Loss applicable to common shareholders $(187) $(380)

Net Loss per common share - basic and diluted $0.06 $0.13

Weighted average shares - basic and diluted 2,734 2,868

Condensed Consolidated Balance Sheet Dec 31, Mar 31, 2006 2007 (unaudited)