-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VkdQEDgCnGfy8EI3ml38v4wyvdZ8koEYcx1wSfiM8sg1lFCXFocN4VmNO/92bUJC rUGgbwy3ivLSN+6Y5BZYhQ== 0000950144-00-006498.txt : 20000515 0000950144-00-006498.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950144-00-006498 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTWAVE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000897078 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 581588291 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21202 FILM NUMBER: 628841 BUSINESS ADDRESS: STREET 1: 2859 PACES FERRY RD STREET 2: STE 1000 CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 7704311200 MAIL ADDRESS: STREET 1: 2859 PACES FERRY RD STREET 2: STE 1000 CITY: ATLANTA STATE: GA ZIP: 30339 FORMER COMPANY: FORMER CONFORMED NAME: BROCK INTERNATIONAL INC DATE OF NAME CHANGE: 19960227 FORMER COMPANY: FORMER CONFORMED NAME: BROCK CONTROL SYSTEMS INC DATE OF NAME CHANGE: 19930208 10-Q 1 FIRSTWAVE TECHNOLOGIES, INC. 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 MARCH 31, 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 May 10, 2000 Common Stock, no par value 6,285,406 Shares 2 FIRSTWAVE TECHNOLOGIES, INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 INDEX
Page No. -------- Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheet - December 31, 1999 and March 31, 2000 3 Consolidated Statement of Operations - For the Three Months Ended March 31, 1999 and March 31, 2000 4 Consolidated Statement of Changes in Shareholders' Equity - For the Three Months Ended March 31, 2000 5 Consolidated Statement of Cash Flows - For the Three Months Ended March 31, 1999 and March 31, 2000 6 Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis of 8 Financial Condition and Results of Operations Part II. Other Information 11
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FIRSTWAVE TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEET (IN THOUSANDS)
DEC 31, MAR 31, 1999 2000 ------- ------- (UNAUDITED) ASSETS CURRENT ASSETS: CASH AND CASH EQUIVALENTS $ 2,029 $ 2,629 INVESTMENT SECURITIES, HELD TO MATURITY 1,631 493 ACCOUNTS RECEIVABLE, LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS OF $345 AND $321, RESPECTIVELY 1,937 1,681 OTHER ASSETS 489 378 ------- ------- TOTAL CURRENT ASSETS 6,086 5,181 PROPERTY AND EQUIPMENT, NET 922 819 DEFERRED INCOME TAX BENEFIT 2,621 2,708 SOFTWARE DEVELOPMENT COSTS, NET 1,918 2,168 INTANGIBLE ASSET 476 436 ------- ------- $12,023 $11,312 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: ACCOUNTS PAYABLE $ 570 $ 646 DEFERRED REVENUE 1,519 1,289 ACCRUED EMPLOYEE COMPENSATION AND BENEFITS 173 296 DIVIDENDS PAYABLE 123 0 OTHER ACCRUED LIABILITIES 230 254 ------- ------- TOTAL CURRENT LIABILITIES 2,615 2,485 SHAREHOLDERS' EQUITY 9,408 8,827 ------- ------- $12,023 $11,312 ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 3 4 FIRSTWAVE TECHNOLOGIES, INC. CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
FOR THE THREE MONTHS ENDED -------------------------- MAR 31, MAR 31, 1999 2000 ------- ------- NET REVENUES SOFTWARE $ 1,171 $ 737 SERVICES 959 672 MAINTENANCE 1,233 1,094 OTHER 99 66 ------- ------- 3,462 2,569 ------- ------- COST AND EXPENSES COST OF REVENUES SOFTWARE 205 295 SERVICES 633 637 MAINTENANCE 301 430 OTHER 95 64 SALES AND MARKETING 1,379 963 PRODUCT DEVELOPMENT 624 242 GENERAL AND ADMINISTRATIVE 1,079 731 ------- ------- 4,316 3,362 ------- ------- OPERATING LOSS (854) (793) INTEREST INCOME 18 43 ------- ------- LOSS BEFORE INCOME TAXES (836) (750) INCOME TAX (4) (20) ------- ------- NET LOSS $ (840) $ (770) ======= ======= DIVIDENDS ON PREFERRED STOCK 0 (45) ------- ------- NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (840) $ (815) ======= ======= BASIC AND DILUTED NET LOSS PER SHARE $ (0.16) $ (0.14) ======= ======= BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 5,160 5,752 ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 4 5 FIRSTWAVE TECHNOLOGIES, INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2000
COMMON STOCK PREFERRED STOCK ACCUMULATED ------------------ --------------- ADD'L COMPRE- OTHER PAID-IN HENSIVE COMPREHENSIVE ACCUMULATED SHARES AMOUNT SHARES AMOUNT CAPITAL LOSS LOSS DEFICIT TOTAL ---------- ------ ------ ------ ------- ------- ------------- ----------- ------ BALANCE AT DECEMBER 31, 1999 5,740,283 $ 11 20,000 $2,000 $21,574 $ 0 $ (5) $(14,172) $9,408 EXERCISE OF COMMON STOCK OPTIONS 59,124 192 192 EMPLOYEE STOCK PLAN PURCHASES 404 1 1 COMPREHENSIVE LOSS: NET LOSS (770) (770) (770) FOREIGN CURRENCY TRANSLATION ADJUSTMENT (4) (4) (4) ----- ACCUMULATED COMPREHENSIVE LOSS (774) ----- --------- ------ ------ ------ ------- ------------- ----------- ------ BALANCE AT MARCH 31, 2000 5,799,811 $ 11 20,000 $2,000 $21,767 $ (9) $(14,942) $8,827 ========= ====== ====== ====== ======= ============= =========== ======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 5 6 FIRSTWAVE TECHNOLOGIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
FOR THE THREE MONTHS ENDED ---------------------------- MAR 31, 1999 MAR 31, 2000 ------------ ------------ CASH FLOWS PROVIDED BY/(USED IN) OPERATING ACTIVITIES $ 94 $ (47) CASH FLOWS FROM INVESTING ACTIVITIES SOFTWARE DEVELOPMENT COSTS (344) (500) PURCHASES OF PROPERTY AND EQUIPMENT (20) (77) PURCHASE OF INVESTMENT SECURITIES (493) PROCEEDS FROM SALE OF INVESTMENT SECURITIES 1,646 ------------ ------------ NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES (364) 576 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES PROCEEDS FROM EMPLOYEE STOCK PURCHASE PLAN 3 1 PROCEEDS FROM ISSUANCE OF PREFERRED STOCK 1,000 0 PAYMENT OF DIVIDENDS ON PREFERRED STOCK 0 (123) EXERCISE OF COMMON STOCK OPTIONS 0 192 ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 1,003 70 ------------ ------------ ------------ ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH (52) 1 ------------ ------------ INCREASE IN CASH 681 600 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,245 2,029 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,926 $ 2,629 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION ------------ ------------ CASH PAID DURING THE PERIOD FOR INCOME TAXES $ 4 $ 20 ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 6 7 FIRSTWAVE TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 A. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary for a fair presentation have been included. B. ACCOUNTING POLICIES 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 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. 7 8 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-based customer relationship management (eCRM) applications. The Company markets and supports three product lines: Firstwave eRM, Takecontrol(R), and Firstwave for Unix. All three offer a suite of products designed to automate marketing, sales, and customer service operations for companies in multiple industries. Firstwave eRM is the Company's Internet-based product suite, Takecontrol is a Microsoft(R) Windows-based product suite, and Firstwave for Unix is a traditional UNIX character-based product suite. RESULTS OF OPERATIONS Total revenues decreased 25.8% from $3,462,000 in the first quarter of 1999 to $2,569,000 in the first quarter of 2000. Software revenues decreased 37.1% from $1,171,000 in the first quarter of 1999 to $737,000 in the first quarter of 2000. The lower license revenues on a year-over-year basis are attributed primarily to decreased international sales through the Company's global network of distributors. These distributors have historically offered only the Takecontrol and Firstwave for UNIX product lines. With the release of Firstwave eRM version 4.0 in the second quarter of 2000, the Company gives its distributors an internet-based product with multi-lingual and multi-currency capabilities to add to their offerings of Firstwave products. Decreased sales by international distributors and Firstwave UK resulted in lower international license revenues of $452,000 in the first quarter of 2000, down 41.9% from $778,000 in the first quarter of 1999. As a percentage of total revenues, international license revenues decreased from 22.5% in the first quarter of 1999 to 17.6% in the first quarter of 2000. Total revenues increased 3.3% on a sequential-quarter basis, from $2,488,000 in the fourth quarter of 1999 to $2,569,000 in the first quarter of 2000. Similarly, software revenues increased 47.4% from $500,000 in the fourth quarter of 1999 to $737,000 in the first quarter of 2000. The Company's quarterly revenues are also significantly dependent upon the timing of the closing of license agreements. Services revenues decreased 29.9% from $959,000 in the first quarter of 1999 to $672,000 in the first quarter of 2000. The decrease in services revenues is consistent with the decrease in software license revenue as the Company typically provides separate implementation and training services at the time of software sales. Maintenance revenues decreased 11.3% from $1,233,000 in the first quarter of 1999 to $1,094,000 in the first quarter of 2000. Maintenance revenues are the result of renewal agreements from previous software license sales and implementation of new agreements from software license sales. The decrease is primarily due to a decrease in the Company's Takecontrol installed base of systems covered under maintenance agreements. 8 9 Cost of software revenues increased 43.9% from $205,000 in the first quarter of 1999 to $295,000 in the first quarter of 2000. The increase is the result of increased amortization of capitalized software associated with the Firstwave eRM product line. Cost of software revenues include costs of third party software, amortization of capitalized software costs, media costs, and documentation materials. Cost of revenues for services remained consistent at $637,000 in the first quarter of 2000 compared to $633,000 in the first quarter of 1999. Cost of revenues for maintenance increased 42.9% from $301,000 in the first quarter of 1999 to $430,000 in the first quarter of 2000. The increase in cost of maintenance is primarily due to increased payroll and related expenses to ramp up support personnel to support the eRM suite. Sales and marketing expense decreased 30.2% from $1,379,000 in the first quarter of 1999 to $963,000 in the first quarter of 2000. The decreases were due to decreases in international commissions consistent with the decrease in software license revenues sold by international distributors. The Company has also made changes to its marketing plan, decreasing costs in trade shows and using a more automated and consistent approach targeting specific prospects, including the use of the Company's website to obtain additional sales leads. The Company's product innovation and development expenditures, which includes amounts capitalized, decreased 23.3% from $968,000 in the first quarter of 1999 to $742,000 in the first quarter of 2000. The higher development expenditures during the first quarter of 1999 relate to costs associated with enhancements of the Takecontrol product line. There were no corresponding costs during the first quarter of 2000. Software development costs capitalized during the three months ended March 31, 1999 and 2000 were $344,000 and $500,000 respectively. The Company expects that the additional versions of Firstwave eRM will further enhance the product's viability in the market. General and administrative expenses decreased 32.3% from $1,079,000 in the first quarter of 1999 to $731,000 in the first quarter of 2000. First quarter 1999 included a $212,000 bad debt expense related to the reserve for outstanding receivables that were partially recovered in the third quarter of 1999. There was no corresponding activity during the first quarter of 2000. Interest income increased 138.9% from $18,000 in the first quarter of 1999 to $43,000 in the first quarter of 2000 due to the increase in invested cash balances. The net loss applicable to common shareholders for the first quarter of 2000 includes a $45,000 charge for dividends related to the Company's outstanding convertible preferred stock that was issued during the second quarter of 1999. The above factors combined to result in a 3.0% decrease in net loss from $840,000 in the first quarter of 1999 to a net loss applicable to common shareholders of $815,000 in the first quarter of 2000, and a net loss per share of $0.16 for the first quarter of 1999 compared to a net loss per share of $0.14 for the first quarter of 2000. BALANCE SHEET Net accounts receivable decreased 13.2% from $1,937,000 at December 31, 1999 to $1,681,000 at March 31, 2000 due to collection of outstanding receivables. Property and equipment decreased 11.2% from $922,000 at December 31, 1999 to $819,000 at March 31, 2000, due to year to date depreciation offset by additional fixed asset purchases. Capitalized software increased 13.0% from $1,918,000 at December 31, 1999 to $2,168,000 at March 31, 9 10 2000 due to additional capitalization of development costs net of the related amortization. Deferred revenue decreased 15.1% from $1,519,000 at December 31, 1999 to $1,289,000 at March 31, 2000 primarily due to the recognition of three months of maintenance revenues related to annual contracts billed in advance at year end. Accrued employee compensation and benefits increased 71.1% from $173,000 at December 31, 1999 to $296,000 at March 31, 2000 due to additional vacation pay, incentive pay, and commissions earned by employees. There was no balance in dividends payable at March 31, 2000 due to the $123,000 payment of accrued dividends in January of 2000. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2000, the Company had cash and investment securities of $3,122,000 compared to $3,660,000 at December 31, 1999. Management believes that its present liquidity position, expected cash flow from operations, and available line of credit are sufficient to finance the Company's operations during 2000 and beyond. The Company's $3,000,000 line of credit, which is in effect through September 15, 2000, bears interest at the prime rate, but increases to prime plus .50% if the Company fails to attain certain quarterly financial targets. The line of credit is secured by the assets of the Company. As of March 31, 2000 there were no borrowings against the line of credit. YEAR 2000 As of May 10, 2000 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. There will be no material impact on the Company's financial statements as a result of the issuance of this bulletin. 10 11 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) 11 12 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: May 10, 2000 /s/ Judith A. Vitale -------------------- Judith A. Vitale Vice President of Finance and Administration 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q OF FIRSTWAVE TECHNOLOGIES, INC. FOR QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1 2,629 493 1,681 0 0 5,181 819 0 11,312 2,485 0 0 2,000 11 6,816 11,312 737 2,569 295 1,426 1,936 13 0 (750) (20) (770) 0 0 0 (770) (.14) (.14)
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