8-K/A

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 4

CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 4, 2003

FIRSTWAVE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Georgia	0-21202	58-1588291
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
2859 Paces Ferry Road, #1000, Atlanta, Georgia		30339
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (770) 431-1200

N/A
(Former Name or Former Address, if Changed Since Last Report)

        This amendment to the registrant's report on Form 8-K, as filed on March 4, 2003 and as previously amended on March 7, 2003, May 1, 2003, and June 10, 2003 is being filed to modify and replace Exhibits 23, 99.1 and 99.2 as previously filed with the exhibits filed herewith.

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 hereunto duly authorized.

	FIRSTWAVE TECHNOLOGIES, INC.
	By:	/s/  JUDITH A. VITALE Judith A. Vitale Chief Financial Officer
Date: July 14, 2003

Exhibit Index

Exhibit No.	Description
2.1	Merger Agreement dated March 3, 2003 by and between Firstwave Technologies, Inc., CC Subsidiary, Inc., Connect-Care, Inc., and certain shareholders of Connect-Care, Inc.*
23	Consent of Independent Accountants
99.1	The following financial statements of Connect-Care, LLC, together with the notes thereto and the report of Cherry, Bekaert & Holland, L.L.P. with respect to the periods stated therein:
	Balance Sheet as of December 31, 2002
	Statement of Operations for the year ended December 31, 2002
	Statement of Changes in Members' Deficit for the year ended December 31, 2002
	Statement of Cash Flows for the year ended December 31, 2002
99.2	The following unaudited pro forma condensed consolidated financial statements of Firstwave Technologies, Inc. and Connect-Care, LLC, together with the notes thereto:
	Pro forma Condensed Consolidated Statement of Operations for the year ended December 31, 2002
	Pro forma Condensed Consolidated Balance Sheet as of December 31, 2002

*

Previously filed with the registrant's Current Report on Form 8-K filed March 4, 2003.

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SIGNATURES
Exhibit Index

EX-23

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Exhibit 23

Consent of Independent Certified Public Accountants

        We consent to the inclusion of our report dated February 27, 2003, on the financial statements of Connect-Care, LLC as of and for the year ended December 31, 2002 in the current report on Form 8-K/A, Amendment Number 4, of Firstwave Technologies, Inc. (the "Company"), and to the incorporation by reference of our report into the Company's Registration Statements on Form S-3 (No. 333-46319 and No. 333-72666) and the Registration Statements on Form S-8 (No. 333-66456, No. 333-88304, No. 333-55939 No. 333-55971, No. 333-81102, and No. 333-92574).

/s/ CHERRY, BEKAERT & HOLLAND, L.L.P.

Atlanta, Georgia
July 11, 2003

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Exhibit 23

Consent of Independent Certified Public Accountants

EX-99.1

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Exhibit 99.1

CONNECT-CARE, LLC

Financial Statements
for the year ended
December 31, 2002

CONNECT-CARE, LLC

Contents

	Page
Independent Auditors' Report	2
Balance Sheet	3
Statement of Operations	4
Statement of Changes in Members' Deficit	5
Statement of Cash Flows	6
Notes to Financial Statements	7-12

Independent Auditors' Report

To the Board of Managers
Connect-Care, LLC
Alpharetta, Georgia

        We have audited the accompanying balance sheet of Connect-Care, LLC as of December 31, 2002, and the related statements of operations, changes in members' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

        We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Connect-Care, LLC as of December 31, 2002, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/S/ CHERRY, BEKAERT & HOLLAND, L.L.P.

Atlanta, Georgia
February 27, 2003

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Connect-Care, LLC

Balance Sheet

December 31, 2002

Assets
	Current assets:
		Cash and cash equivalents		$	23,972
		Accounts receivable, net of allowance for doubtful accounts of $137,144			982,435
		Prepaid expenses and other current assets			49,650
			Total current assets		1,056,057
	Property and equipment, net				44,216
			Total assets	$	1,100,273
Liabilities and Members' Deficit
	Current liabilities:
		Accounts payables and accrued expenses		$	529,434
		Deferred revenue			804,948
			Total current liabilities		1,334,382
	Note payable to member				3,583,660
	Accrued interest				567,943
			Total liabilities		5,485,985
	Commitments and contingencies (Note 7)
	Members' deficit
		Common stock, no par; 15,000,000 shares authorized; 15,000,000 shares issued			1,640,405
		Notes receivable due from employees			(25,706	)
		Accumulated deficit			(6,000,411	)
			Total members' deficit		(4,385,712	)
			Total liabilities and members' deficit	$	1,100,273

The accompanying notes are an integral part of these financial statements

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Connect-Care, LLC

Statement of Operations

December 31, 2002

Revenue
	Software licenses		$	975,744
	Professional services			771,776
	Support and maintenance			917,661
				2,665,181
Costs and expenses
	Cost of revenue:
		Software licenses		155,525
		Professional services		460,553
		Support and maintenance		354,447
	Selling and marketing			444,432
	Product development			265,998
	General and administrative			980,744
				2,661,699
		Income from operations		3,482
	Interest expense			206,001
		Net loss	$	(202,519	)

The accompanying notes are an integral part of these financial statements

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Connect-Care, LLC

Statement of Changes in Members' Deficit

December 31, 2002

	Shares	Common Stock		Notes Receivable from Employees			Accumulated Deficit			Total
Balance, December 31, 2001	14,359,100	$	1,579,687	$	(23,894	)	$	(5,797,892	)	$	(4,242,099	)
Share repurchase adjustment	640,900		58,906		—			—			58,906
Accrued interest on note receivable	—		1,812		(1,812	)		—			—
Net loss	—		—		—			(202,519	)		(202,519	)
Balance, December 31, 2002	15,000,000	$	1,640,405	$	(25,706	)	$	(6,000,411	)	$	(4,385,712	)

The accompanying notes are an integral part of these financial statements.

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Connect-Care, LLC

Statement of Cash Flows

December 31, 2002

Cash flows from operating activities:
	Net loss				$	(202,519	)
	Adjustments to reconcile net loss to net cash provided by operating activities
		Depreciation				43,984
		Bad debt expense				53,476
		Changes in assets and liabilities:
			(Increase) decrease in accounts receivable			(404,690	)
			(Increase) decrease in prepaid expenses and other current assets			10,321
			Increase (decrease) in accounts payable and other accrued expenses			250,435
			Increase in deferred revenue			210,981
			Increase in accrued interest			204,187
				Net cash provided by operating activities		166,175
Cash flows from investing activities:
	Purchases of property and equipment, net					(9,727	)
Cash flows from financing activities:
	Advances from member					65,000
	Repayment of advances from member					(396,295	)
				Net cash used in financing activities		(331,295	)
Net decrease in cash and cash equivalents						(174,847	)
Cash and cash equivalents, beginning of period						198,819
Cash and cash equivalents, end of period					$	23,972

The accompanying notes are an integral part of these financial statements

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CONNECT-CARE, LLC

Notes to Financial Statements

December 31, 2002

Note 1—Nature of the business

        Connect-Care, LLC formerly ProAmerica, LLC, (the "Company"), a Georgia limited liability company and a wholly-owned subsidiary of Dickens Holdings, LLC (the "Parent"), provides software solutions to assist customers in managing their relationships with customers. In addition, the Company offers system planning, design, and implementation services that tailor the solution to each customer's specifications and a variety of post-implementation services, such as help desk and technical support.

        On April 1, 1998, the Company's former parent was acquired. In connection therewith, the shareholders of the former parent formed the Parent for purposes of holding the outstanding shares of the Company. Concurrently, with the incorporation, notes payable to shareholders totaling $1,078,000 and outstanding advances to the former parent of $560,593 were contributed to capital in exchange for 100% of the outstanding common stock issued to the Parent. The formation of the Company was accounted for as a reorganization by related parties and historical cost basis was used as the basis in all assets and liabilities at the date of incorporation.

        The accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has a limited operating history, has substantially incurred losses from operations since its inception and has a net members' deficit. Management's plans with regard to these matters include continued development, marketing and licensing of its products, reduction of expenses, as well as seeking additional financing arrangements. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient license fees from its products or financing on terms acceptable to the Company. The Company's financial statements have been presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. See Note 9 with respect to subsequent events related to this matter.

Note 2—Summary of significant accounting policies

Use of estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ form those estimates.

Cash and cash equivalents

        The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents.

Concentration of credit risk

        Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of trade accounts receivable. At December 31, 2002, three customers accounted for 25%, 19%, and 11% of gross accounts receivable For the year ended December 31, 2002 the Company had two customers which each individually represented more than 10% of the Company's total revenues. The first customer represented $531,000 or 20% of total revenue and the second customer represented $296,000 or 11% of total revenue.

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Property and equipment

        Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred.

Research and development and software development costs

        Costs incurred in the research and development of the Company's products consists principally of compensation and benefits paid to the Company's employees and are expensed as incurred. No software development costs were capitalized during the year ended December 31, 2002.

Revenue recognition

        The Company's revenue is derived from primarily three sources: (i) software license revenue, derived primarily from software licenses to resellers and end users, (ii) service revenue, derived primarily from providing support, education and consulting services to end users, and (iii) maintenance revenues derived from a commitment on the part of the Company to provide software patches and version upgrades to existing software as they are released. Revenue from software licenses is recognized upon execution of a contract and completion of delivery obligations, provided that no uncertainties regarding customer acceptance exist and collection of the related receivable is probable. Revenue from support and maintenance services is recognized ratably over the contractual period. Payments for support and maintenance fees are generally made in advance and are nonrefundable. Revenue from education and consulting services is recognized as the related services are performed. Connect-Care's software product is able to function independently in a customer's environment without additional services. The training, implementation, and customization services are optional services to customers and are not necessary for the functioning of the software product. When applicable, the Company accrues for material estimated warranty costs at the time revenue is recognized.

        Revenues from contracts with multiple element arrangements, such as those including installation and integration services, are recognized as each element is earned based on objective evidence of the relative fair value of each element and when there are no undelivered elements essential to the functionality of the delivered elements. The Company has not recorded any unbilled receivables related to implementation and customization service revenues, and the Company has accounted for any implementation and customization service revenues that have been billed as the services were performed, in accordance with Paragraphs 65 and 66 of SOP 97-2.

        The Company has arrangements with customers that provide for the delivery of multiple elements, including software licenses, and services. The Company allocates and recognizes revenue related to each of the multiple elements based on vendor specific objective evidence of the fair value of each element. Vendor specific objective evidence is based on standard pricing for each of the elements in our multiple element arrangements. Revenue associated with the various elements of multiple element arrangements is based on such vendor-specific objective evidence as the price charged for each element is the same as when the element would be sold separately from any other element. Pricing does not vary by customer or by duration, or by requirements of the arrangement.

        Deferred revenue includes amounts received and/or invoiced that do not meet the Company's revenue recognition criteria as of the balance sheet date, such as advanced billings for support and maintenance.

        The Company presents accounts receivable at the amount of the net sale, and provides for an allowance for doubtful accounts based on an evaluation of the collectibility of specific receivable

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accounts at the reporting date. This evaluation includes such matters as past-due status and prior history with the customer.

Accounting for stock-based compensation

        Employee stock awards under the Company's compensation plans are accounted for in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related interpretations, utilizing the intrinsic value method. The Company provides the disclosure requirements of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), and the related interpretations. Stock-based awards to non-employees are accounted for under the provisions of SFAS No. 123.

        In March 2001, the Company established the ProAmerica Systems, LLC Option Plan (the "Plan") for its employees and key persons, as defined by the Plan. The Plan is administered by the compensation committee of the Board of Managers. The granting of stock options is at the sole discretion of the compensation committee of the Board of Managers. A maximum of 196,400 non-voting stock options may be granted under the Plan. The exercise price of the stock options is equal to the fair market value of the Company's common stock at the date of grant. Generally, stock options vest and become exercisable ratably over a three-year period; however, no stock options shall be exercisable prior to the occurrence of a triggering event, as defined by the Plan, which includes among other events a change in controlling ownership as defined by the Plan, or an initial public offering of the Company's common stock. Stock options contingent on the occurrence of future events are accounted for under variable accounting with compensation expense being recorded at the date of the triggering event to the extent fair value on that date exceeds the exercise price of the option. No accounting is performed on these contingent stock options until a triggering event becomes probable. As of December 31, 2002, a total of 57,500 stock options were outstanding.

        No compensation cost has been recognized for employee stock-based compensation in 2001. No stock-based awards were granted prior to 2002, and no cost has been determined to be applicable for proforma disclosures in accordance with SFAS 123.

        The following table summarizes the activity of the Company's stock option plan:

	Year ended December 31, 2002
	Number of Options		Weighted Average Exercise Price
Outstanding—beginning of period	$	57,500	$	0.09
Granted and cancelled		0
Outstanding—end of period	$	57,500

        The following table summarizes information about stock options outstanding at December 31, 2002:

Range of Exercise Price		Number Outstanding	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
$	0.09	57,500	9.8 years	$	0.09	0	$	0.09

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Comprehensive income

        SFAS No. 130, "Reporting Comprehensive Income," requires a full set of general purpose financial statements to include the reporting of comprehensive income. Comprehensive income is comprised of two components, net income and other comprehensive income. For the year ended December 31, 2002, the Company's comprehensive loss was the same as its net loss.

Income taxes

        The Company has elected limited liability corporation status, as defined by the Internal Revenue code, for federal tax reporting purposes. Accordingly, the members include the Company's net income in individual returns, and the Company has made no income tax provision. The Company's tax return and the amounts of allocable profits or losses are subject to examination by taxing authorities. If such examinations result in changes to the Company's profits or losses, the tax liabilities of the Company's members could be changed accordingly.

Long-lived assets

        The Company continually evaluates whether events and circumstances indicate that the remaining carrying amount of an asset may not be recoverable or the remaining useful life may warrant a revision. To make this evaluation, the Company uses an estimate of undiscounted future cash flows over the remaining life of the asset.

New accounting pronouncements

        In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations" and Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets." These standards require that all business combinations be accounted for using the purchase method and that goodwill and intangible assets with indefinite useful lives should not be amortized but should be tested for impairment at least annually, and they provide guidelines for new disclosure requirements. These standards outline the criteria for initial recognition and measurement of intangibles, assignment of assets and liabilities including goodwill to reporting units and goodwill impairment testing. The provisions of SFAS 141 apply to all business combinations after June 30, 2001. The provisions of SFAS 142 for existing goodwill and other intangible assets are required to be implemented effective January 1, 2002. The adoption of SFAS 141 and SFAS 142 has not had an impact on the Company's financial position or results of operations.

        In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of Long-lived Assets," which is effective for fiscal years beginning after December 15, 2001. This statement supercedes Statement of Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." However, it retains the fundamental provisions of SFAS 121 for the recognition and measurement of the impairment of long-lived assets to be disposed of by sale. The adoption of SFAS 144 has not had an impact on the Company's financial position or results of operations.

        In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which nullifies Emerging Issues Task Force Issue No. 94-3 and requires that liabilities for costs associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of SFAS No. 146 are effective for exit or disposal activities initiated after December 15, 2002. The Company adopted SFAS 146 for the year-ended December 31, 2002. The adoption of this SFAS has not had an impact on the Company's financial position or results of operations.

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Note 3—Property and equipment

	Estimated Useful Life (Years)	December 31, 2002
Computer equipment and software	2 - 3	$	24,187
Furniture and fixtures	5 - 7		352,785
Leasehold improvements	Life of lease		8,329
Less: Accumulated depreciation			(341,085	)
		$	44,216

        Depreciation expense for the year ended December 31, 2002 was $43,984.

Note 4—Common stock

        In March 2001, the Company and its member agreed to split the stock of the Company to increase the total amount of common shares outstanding from 100,000 to 15,000,000. Concurrently, the member agreed to sell shares to establish the restricted stock plan (see Note 6) and stock option plan (see note 5) for the Company's employees. The price paid for such shares was based upon an independent valuation of the Company in February 2001. The amount payable by the Company for these shares is due upon the issuance of restricted stock or exercise of an employee stock option to the member of the Company. The total amount payable at December 31, 2002 was $23,894 and is classified in accrued expenses. The shares collected by the Company were recorded as treasury stock. Of the total shares of stock authorized, the ratio of Voting Shares to Non-Voting Shares is 9 to 1. Each share of common stock with voting rights is entitled to one vote. The Company issued shares of its common stock to certain employees under stock purchase agreements, some of which contain repurchase provisions in the event of termination of employment or change of control, as defined in the Plan. Included in common stock as of December 31, 2002 are 259,100 restricted shares subject to repurchase (see Note 5).

Note 5—Restricted share purchase plan

        In March 2001, the Company adopted the Restricted Share Purchase Plan (the "Restricted Plan") and reserved 703,600 shares of non-voting common stock for issuance there under. Under the Restricted Plan, the Company's executives may receive grants of restricted stock or options to purchase common stock for a limited period of time at a purchase price per share that is equal to the fair market value of the Company's common stock at the date of grant. The Restricted Plan is administered by the compensation committee of the Board of Managers, and the granting of the restricted shares is at the sole discretion of the Compensation Committee of the Board of Managers. The Company has the right to repurchase shares under the Restricted Plan upon a participant's termination prior to a change in control, as defined by the Restricted Plan, for 12 months following the termination at amount defined by the Restricted Plan. As of December 31, 2002, 259,100 shares have been granted to the Company's executives under the Restricted Plan. The shares issued under this Restricted Plan were purchased by employees utilizing notes issued to the Company. The notes are with recourse and the interest rate on the notes is reset annually to correspond with the prime rate as published by the Wall Street Journal. The notes are payable in full upon the earlier of a change of control, termination of employment or December 31, 2010.

Share redemption agreement

        Concurrent with the establishment of the Plan and the Restricted Plan, the Company entered into a share redemption agreement with the Parent (the "Redemption Agreement.") Under the Redemption

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Agreement, the Company and Parent, the sole member of the Company, agreed that upon the purchase of shares under the Restricted Plan by a Company executive, the Company will redeem the equivalent amount of shares from the Parent to issue to the purchasing shareholder. The shares will be redeemed from the Parent at the equivalent consideration received from the purchasing shareholder, which will equal the then fair market value at the date of grant and redemption.

Note 6 - 401(k) savings plan

        During 1998, the Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Employees may contribute up to 25% of total compensation for each payroll period, subject to 401(k) limitations. Company contributions to the plan may be made at the discretion of the Board of Managers. To date, there were no contributions made to the Plan by the Company.

Note 7—Commitments and contingencies

        The Company leases its office space and certain office equipment under noncancelable operating leases. Total rent expense under these operating leases was approximately $195,000 for the year ended December 31, 2002.

        Future minimum lease payments under non-cancelable operating leases at December 31, 2002 are approximately $125,000 for 2003, and $25,000 for 2004.

Royalties

        In December 1998, the Company entered into a software reseller agreement with a third party. As of December 31, 2002, the Company is committed to make minimum future royalty payments of $13,450.

Note 8—Related party transactions

        The Company has engaged in certain transactions with its Parent. At December 31, 2002, the Company had outstanding advances from the Parent of $3,583,660, which are payable on demand. The Parent had indicated it will not seek payment on the advances before January 1, 2004. The Company did not make any cash payments to the Parent for interest during the years ended December 31, 2002 and 2001.

Note 9—Subsequent Events

        Subsequent to December 31, 2002, effective January 1, 2003, the Company elected to convert from a limited liability company to a sub-chapter S Corporation.

        Subsequent to December 31, 2002 the Company entered into an agreement to be acquired by another company. The acquisition transaction is expected to be finalized on February 28, 2003 and is a stock acquisition of the Company.

Note 10—Share redemption adjustment

        During the year ended December 31, 2002 the Company adjusted the shares presented for redemption under the share redemption plan (see Note 5) to reflect the redeemed shares to be 259,100 shares, consistent with the shares under the restricted stock plan.

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Exhibit 99.1

Financial Statements for the year ended December 31, 2002
CONNECT-CARE, LLC Contents
Independent Auditors' Report
Connect-Care, LLC Balance Sheet December 31, 2002
Connect-Care, LLC Statement of Operations December 31, 2002
Connect-Care, LLC Statement of Changes in Members' Deficit December 31, 2002
Connect-Care, LLC Statement of Cash Flows December 31, 2002
CONNECT-CARE, LLC Notes to Financial Statements December 31, 2002

EX-99.2

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Exhibit 99.2

        Connect-Care, Inc. is engaged in the business of developing, marketing and distributing customer relationship management software and providing related products and services, including installation, support and maintenance services and marketing and distributing software and other products. Connect-Care, Inc. and Firstwave Technologies, Inc. will combine through a merger, with the entities involved including Firstwave Technologies, Inc., a Georgia corporation, CC Subsidiary, Inc., a Georgia corporation, Connect-Care, Inc., a Georgia corporation, and the shareholders of Connect-Care, Inc.

        The pro forma statements of the merged companies presented include the Balance Sheet as of December 31, 2002, and the Statement of Operations for the year ended December 31, 2002. One year is shown on the pro forma statements because, in accordance with Regulation S-X, the acquisition represents 20% or more of the total assets of Firstwave, but less than 40% of the total assets of Firstwave.

        The pro forma income statement shows that both Firstwave Technologies and Connect-Care would have had net income for the year ended December 31, 2002, and therefore when combined show a net income for the year ended December 31, 2002. Basic and diluted weighted average shares outstanding would have increased by the 200,000 shares offered in the transaction. The basic and diluted earnings per share reported by Firstwave Technologies would have decreased due to the small amount of net income reported by Connect-Care, Inc. offset by the 200,000 shares added to weighted average shares. Basic earnings per share would have decreased from $1.29 per share to $1.08 per share. Fully diluted earnings per share would have decreased from $.96 per share to $.84 per share.

        The pro forma balance sheet shows an increase in total assets from $9.8 million to $13.8 million, primarily from an increase in accounts receivable from Connect-Care customers, offset by the negative shareholders' equity of the Connect-Care acquisition shown in the indefinite life intangible assets. Total liabilities and shareholders' equity show an increase consistent with the increase in total assets from $9.8 million to $13.8 million, primarily from deferred revenue carried on the financial statements of Connect-Care and other liabilities offset by negative shareholders' equity. Any nonrecurring charges or credits and related tax effects were not considered in the pro forma condensed financial statements.

        The $300,000 earn-out provision of the merger agreement with Connect-Care makes this payment contingent upon the attainment of certain total revenues, including license revenues and associated maintenance revenues that would be recognized according to SOP 97-2, during 2003 from March through December. Such earn-out is contingent consideration based upon future financial performance. Such revenue attainment is offset by any net accounts receivable shown as of February 28, 2003, not collected by December 31, 2003. If the revenue targets are realized, the $300,000 will be paid in full. If the revenue targets are partially realized, then the payout is payable ratably. If the revenue target is met the payout will be accounted for on Firstwave's financial statements as an increase to the purchase price of the acquisition and an increase to intangible assets.

        The Company is accounting for the $300,000 as contingent consideration in accordance with paragraphs 25 through 28 of SFAS 141. As the amount, if any, of contingent consideration was not determinable at the acquisition date, no amount for the contingency will be recorded in the Company's financial statements until the contingency is resolved, or the consideration is issued or becomes issuable. The Company expects that, should any amount of contingent consideration be issuable, that such amount would result in an additional element of the cost of acquiring Connect-Care.

        In determining the acquisition price, Firstwave evaluated the recorded assets and liabilities of Connect-Care and determined that such assets and liabilities, given their short-term operating nature, would typically be stated at their fair value, or the amount that Firstwave would realize from the asset or to settle the obligation. The recorded liabilities of Connect Care (exclusive of the related party note payable and interest accrual) exceeded the assets of Connect Care. Firstwave then evaluated the estimated realizability and useful life of the software product of Connect Care and assigned an estimated net realizable amount to the software product. Firstwave then evaluated the existing customer base of Connect Care and estimated the potential future revenues that may be derived by

Firstwave from the customer relationships. Based on this evaluation, Firstwave estimated a value for the customer relationships. Utilizing this methodology Firstwave determined an estimated acquisition price.

        The following table summarizes the comprehensive purchase price including net liabilities assumed and estimated costs to complete the acquisition:

Purchase price	$	2,630,000	200,000 shares at $13.15
Net liabilities assumed	$	621,922
Estimated cost of acquisition	$	124,139
Comprehensive purchase price	$	3,376,061

        The primary objective of the Connect-Care acquisition was to acquire the customer relationships of the customer base of Connect-Care and, to a lesser degree, to acquire utilization of Connect-Care technology.. The Connect-Care technology asset consists of the source code for the ConnectCare 7 version of the product. We believe we will continue to derive revenue from licensing this product to new customers. The customer relationship asset represents the existing customer base of Connect-Care which we believe will continue to contribute revenue from the purchase of additional licenses of the Connect-Care product, purchase of additional service engagements, and renewals of annual maintenance agreements. We also expect that some of the existing active customers or former customers may transition to the Firstwave eCRM product. Accordingly, a significant portion of the purchase price has been allocated to these intangible assets. Of the $3,376,061 purchase price, $300,000 was assigned as an estimated net realizable amount to the intangible asset Connect-Care technology with an estimated useful life of three years, $900,000 was assigned as an estimated value to the intangible asset Connect-Care customer relationships with an estimated useful life of seven years, and $2,176,061 was assigned to Goodwill. Goodwill will be evaluated for impairment in accordance with FAS No. 142 "Goodwill and Other Intangible Assets".

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR YEAR ENDED DECEMBER 31, 2002

(in thousands except per share data)

		FIRSTWAVE			CONNECT CARE			PRO-FORMA ADJUSTMENTS			PRO FORMA COMBINED STATEMENT OF OPERATIONS
REVENUES
	SOFTWARE	$	2,934		$	976					$	3,910
	SERVICES		9,785			772						10,557
	MAINTENANCE		1,654			918						2,572
	OTHER		31			0						31
TOTAL REVENUE			14,404			2,665			0			17,069
COSTS AND EXPENSES
COST OF REVENUE
	SOFTWARE		1,197			156						1,353
	SERVICES		3,252			461						3,713
	MAINTENANCE		515			354						869
	OTHER		31			0						31 0
	SALES AND MARKETING		3,481			444						3,925
	PRODUCT DEVELOPMENT		699			266						965
	GENERAL & ADMINISTRATION		2,257			980			229	(3)		3,466
TOTAL COSTS AND EXPENSES			11,432			2,661			229			14,322
	OPERATING INCOME/ (LOSS)		2,972			4			(229	)		2,747
	INTEREST INCOME, NET		53			0	(2)					53
	DIVIDENDS		(252	)		0						(252	)
NET INCOME/(LOSS) APPLICABLE TO COMMON SHAREHOLDERS		$	2,773		$	4		$	(229	)	$	2,548
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING			2,150									2,350	(1)
BASIC EARNINGS/(LOSS) PER SHARE		$	1.29								$	1.08
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING			3,153									3,353	(1)
DILUTED EARNINGS/(LOSS) PER SHARE		$	0.96								$	0.84

(1)

Includes 200,000 shares issued as consideration in the acquisition

(2)

Interest expense of $206,001 has been eliminated because the interest was associated to the $3,583,660 note payable that was not carried forward subsequent to the acquisition, and, therefore, was not a part of the acquisition.

(3)

Includes annual amortization expense of $229,000 related to intangible assets associated with the acquisition.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2002

(in thousands)

		FIRSTWAVE		CONNECT CARE			PRO FORMA ADJUSTMENTS			PROFORMA COMBINED BALANCE
CURRENT ASSETS
	CASH AND CASH EQUIVALENTS	$	3,779	$	24					$	3,803
	ACCOUNTS RECEIVABLES, LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS		2,406		982						3,388
	PREPAID EXPENSES AND OTHER ASSETS		664		50						714
TOTAL CURRENT ASSETS			6,849		1,056						7,905
PROPERTY AND EQUIPMENT, NET			738		44						782
SOFTWARE DEVELOPMENT COSTS, NET			2,041		0						2,041
INTANGIBLE ASSETS			0		0			1,200			1,200
GOODWILL			175		0			1,664			1,839
TOTAL ASSETS		$	9,803	$	1,100		$	2,864		$	13,767
LIABILITIES AND SHAREHOLDERS' EQUITY
	ACCOUNTS PAYABLE		909		147						1,056
	DEFERRED REVENUE		812		805						1,617
	ACCRUED EMPLOYEE COMPENSATION AND		417		301						718
	DIVIDENDS PAYABLE		42		0						42
	OTHER ACCRUED LIABILITIES		802		81						883
TOTAL CURRENT LIABILITIES			2,982		1,334						4,316
NOTE PAYABLE TO MEMBER			—		3,584	(1)		(3,584	)		—
ACCRUED INTEREST			—		568	(1)		(568	)		—
TOTAL LIABILITIES			2,982		5,486			(4,152	)		4,316
SHAREHOLDERS EQUITY			6,821		(4,386	)		7,016			9,451
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	9,803	$	1,100		$	2,864		$	13,767

(1)

The agreement for the acquisition of Connect Care provided that this note payable would not be carried forward subsequent to the acquisition. Accordingly, the note and associated interest have been accounted for as having been contributed to equity at the time of acquisition.

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Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 2002 (in thousands except per share data)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2002 (in thousands)