UNITED
      STATES


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, 2006








COMMISSION
      FILE NUMBER 0-21202





**FIRSTWAVE
      TECHNOLOGIES, INC.**


(Exact
      name of Registrant as specified in its charter)








**Georgia**
            **58-1588291**(State
                of incorporation)
            (IRS
                Employer ID #)







**5775
      Glenridge Drive NE**


**Bldg
      E, Suite 400**


**Atlanta,
      GA 30328**


(Address
      of principal executive offices)





**770-250-0349**


(Telephone
      number of registrant)


(Former
      address, if changed from last report)








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
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer.


Large
      accelerated filer__     Accelerated
      filer __     Non-accelerated
      filer **X**





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes__
      No **X**





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, 2006:





Common
      Stock, no par value  2,778,302
      shares





1


**FIRSTWAVE
      TECHNOLOGIES, INC.**





**FORM
      10-Q**





**For
      the quarter ended March 31, 2006**







**Index**




Page
                  No.**Part
                  I.**
              **Financial
                  Information**Item
                  1.
              Financial
                  StatementsCondensed
                  Consolidated Balance Sheets - December 31, 2005
              3And
                  (unaudited) March 31, 2006Condensed
                  Consolidated Statements of Operations (unaudited) - For
              4the
                  Three Months Ended March 31, 2005 and 2006Condensed
                  Consolidated Statement of Changes in Shareholders' Equity
              5(unaudited)
                  - For the Three Months Ended March 31, 2006Condensed
                  Consolidated Statements of Cash Flows (unaudited) - For the
              6Three
                  Months Ended March 31, 2005 and 2006Notes
                  to Condensed Consolidated Financial Statements
              7Item
                  2.
              Management's
                  Discussion and Analysis of
              13Financial
                  Condition and Results of OperationsItem
                  3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              15Item
                  4.
              Controls
                  and Procedures
              16**Part
                  II.**
              **Other
                  Information**
              16Item
                  6.
              Exhibits
              17






2


**Part
      I. FINANCIAL INFORMATION**




**Item
      1. Financial Statements**


**FIRSTWAVE
                  TECHNOLOGIES, INC.****Condensed
                  Consolidated Balance Sheets****(in
                  thousands)**
  **December
                  31,**
              
              **March
                  31,****2005**
              
              **2006****(Unaudited)****ASSETS****Current
                  assets****Cash
                  and cash equivalents**
              
              $
              360
              
              $
              409**Accounts
                  receivable: less allowance for****doubtful
                  accounts of $43 and $29, respectively**
              
              
              399
              
              
              251**Note
                  receivable, current**
              
              
              300
              
              
              300**Prepaid
                  expenses**
              
              
              475
              
              
              400**Total
                  current assets**
              
              
              1,534
              
              
              1,360**Property
                  and equipment, net**
              
              
              82
              
              
              67**Investments**
              
              
              50
              
              
              28**Software
                  development costs, net**
              
              
              363
              
              
              205**Intangible
                  assets**
              
              
              572
              
              
              514**Goodwill**
              
              
              593
              
              
              593**Note
                  receivable**
              
              
              1,065
              
              
              1,086**Total
                  assets**
              
              $
              4,259
              
              $
              3,853**LIABILITIES
                  AND SHAREHOLDERS' EQUITY****Current
                  liabilities****Accounts
                  payable**
              
              $
              302
              
              $
              288**Deferred
                  revenue**
              
              
              1,117
              
              
              965**Accrued
                  employee compensation and benefits**
              
              
              99
              
              
              27**Dividends
                  payable**
              
              
              46
              
              
              46**Other

                  accrued liabilities**
              
              
              32
              
              
              15**Total
                  current liabilities**
              
              
              1,596
              
              
              1,341**Shareholders'
                  equity**
              
              
              2,663
              
              
              2,512**Total
                  liabilities and shareholders' equity**
              
              $
              4,259
              
              $
              3,853
  **The
                  accompanying notes are an integral part of these condensed consolidated
                  financial
                  statements.**


3




**FIRSTWAVE
                  TECHNOLOGIES, INC.****Condensed
                  Consolidated Statements of Operations****(in
                  thousands, except per share amounts)****(unaudited)**
  **For
                  the Three Months Ended****March
                  31,**
              
              **March
                  31,****2005**
              
              **2006****Net
                  Revenues****Software**
              
              $
              82
              
              $
              47**Services**
              
              
              200
              
              
              94**Maintenance**
              
              
              579
              
              
              458**Other**
              
              
              20
              
              
              -881
              
              
              599**Cost
                  and Expenses****Cost
                  of revenues****Software**
              
              
              204
              
              
              172**Services**
              
              
              223
              
              
              3**Maintenance**
              
              
              79
              
              
              178**Other**
              
              
              13
              
              
              -**Sales
                  and marketing**
              
              
              164
              
              
              53**Product
                  development**
              
              
              194
              
              
              77**General
                  and administrative**
              
              
              387
              
              
              2531,264
              
              
              736**Operating
                  loss**
              
              
              (383
              )
              
              (137
              )**Interest
                  income**
              
              
              60
              
              
              21**Loss
                  from continuing operations before income taxes**
              
              
              (323
              )
              
              (116
              )**Income
                  taxes**
              
              
              -
              
              
              -**Loss
                  from continuing operations**
              
              
              (323
              )
              
              (116
              )**Loss
                  from discontinued operations**
              
              
              (427
              )
              
              -**Net
                  Loss**
              
              
              (750
              )
              
              (116
              )**Dividends
                  on preferred stock**
              
              
              (71
              )
              
              (71
              )**Net
                  loss applicable to common shareholders**
              
              $
              (821
              )
              $
              (187
              )**Income/(Loss)
                  per common share - Basic and Diluted****Income/(Loss)
                  from continuing operations**
              
              $
              (0.14
              )
              $
              (0.06
              )**Income/(Loss)
                  from discontinued operations**
              
              
              (0.16
              )
              
              -**Net
                  income/(loss) per common share**
              
              $
              (0.30
              )
              $
              (0.06
              )**Weighted
                  average shares - Basic and Diluted**
              
              
              2,694
              
              
              2,734
  **The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.**
 4
  **FIRSTWAVE
                  TECHNOLOGIES, INC.****Condensed
                  Consolidated Statement of Changes in Shareholders'
                  Equity****(In
                  thousands, except share data)****(unaudited)****For
                  the Three Months Ended March 31,
                  2006**
  **Accumulated****Other****Common
                  Stock**
              
              **Preferred
                  Stock**
              
              **Additional**
              
              **Compre-**
              
              **compre-****paid-in**
              
              **hensive**
              
              **hensive**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **capital**
              
              **loss**
              
              **loss**
              
              **Deficit**
              
              **Total****Balance
                  at December 31, 2005**
              
              
              2,729,135
              
              $
              13
              
              
              34,020
              
              $
              3,011
              
              $
              25,269
              
              
              
              
              $
              (16
              )
              $
              (25,614
              )
              $
              2,663**Exercise
                  of common stock options**
              
              
              39,167
              
              
              
              
              
              
              
              
              
              
              
              58
              
              
              
              
              
              
              
              
              
              
              
              58**Dividends**
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (71
              )
              
              
              
              
              
              
              
              
              
              
              (71
              )**Comprehensive
                  loss****Net
                  loss**
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (116
              )
              
              
              
              
              (116
              )
              
              (116
              )**Unrealized
                  loss on equity securities:**
                **available-for-sale**
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (22
              )
              
              (22
              )
              
              
              
              
              (22
              )**Comprehensive
                  loss**
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (138
              )**Balance
                  at end of period**
              
              
              2,768,302
              
              $
              13
              
              
              34,020
              
              $
              3,011
              
              $
              25,256
              
              
              
              
              $
              (38
              )
              $
              (25,730
              )
              $
              2,512
  **The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.**
 5
  **FIRSTWAVE
                  TECHNOLOGIES, INC.****Condensed
                  Consolidated Statements of Cash Flows****(in
                  thousands)****(unaudited)**
  **For
                  the Three Months Ended****March
                  31,**
              
              **March
                  31,****2005**
              
              **2006****Cash
                  flows provided by/(used in) operating activities**
              
              $
              (529
              )
              $
              62**Cash
                  flows from investing activities****Purchases
                  of property and equipment**
              
              
              (10
              )
              
              -**Acquisition
                  of Connect Care**
              
              
              16
              
              
              -**Net
                  cash provided by/(used in) investing activities**
              
              
              6
              
              
              -**Cash
                  flows from financing activities****Proceeds
                  from issuance of common stock**
              
              
              2
              
              
              58**Payment
                  of dividends on preferred stock**
              
              
              (71
              )
              
              (71
              )**Net
                  cash used in financing activities**
              
              
              (69
              )
              
              (13
              )**Foreign
                  currency translation adjustment**
              
              
              148
              
              
              -**Increase/(Decrease)
                  in cash and cash equivalents**
              
              
              (444
              )
              
              49**Cash
                  and cash equivalents, beginning of period**
              
              
              1,286
              
              
              360**Cash
                  and cash equivalents, end of period**
              
              $
              842
              
              $
              409**Supplemental
                  disclosure of cash flow information****Cash
                  paid for income taxes**
              
              $
              -
              
              $
              -**Cash
                  paid for interest**
              
              $
              26
              
              $
              -
  **The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.**
 6




**FIRSTWAVE
      TECHNOLOGIES, INC.**


**Notes
      to Condensed Consolidated Financial Statements**


**March
      31, 2006**


**(Unaudited)**





**1.**
            **Description
                of Business, Basis of Presentation and subsequent
                event**





***Description
      of the Company***


Headquartered
      in Atlanta, Georgia, Firstwave Technologies, Inc. (“Firstwave” or “the Company”)
      is a
      provider of strategic customer relationship management (“CRM”) solutions
      specifically designed for the High Technology industry. Firstwave’s solutions
      provide companies with fit-to-purpose features that are designed to optimize
      how
      companies win, maintain and grow customer and organizational relationships
      while
      improving the overall customer experience. Firstwave’s corporate and product mission
      reflects our customer-first commitment: To develop and integrate the best
      software solutions to manage customer interactions and information. Firstwave
      supports several product lines: Firstwave CRM (includes eCRM and v.10 products),
      Firstwave Technology and TakeControl.





***Basis
      of Presentation***


The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States for interim financial information and with the instructions to
      Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the condensed
      consolidated financial statements do not include all of the information and
      footnotes required by accounting principles generally accepted in the United
      States for complete financial statements and should be read in conjunction
      with
      the consolidated financial statements contained in the Company’s Form 10-K for
      the year ended December 31, 2005. In the opinion of management, all adjustments
      (consisting only of normal recurring adjustments) considered necessary for
      a
      fair presentation of the unaudited condensed consolidated financial statements
      have been included.





The
      condensed consolidated balance sheet at December 31, 2005 has been derived
      from
      the audited consolidated financial statements for the Company at that date,
      but
      does not include all of the information and footnotes required by accounting
      principles generally accepted in the United States for complete financial
      statements.





On
      June
      3, 2005, Firstwave entered into a Stock Purchase Agreement (the “Agreement”)
      with AllAboutTickets LLC (the “Buyer”) now doing business as First Sports
      International. Pursuant to the Agreement, effective May 1, 2005, the Company
      sold to Buyer all of the issued share capital of Firstwave Technologies UK,
      Ltd., a subsidiary of the Company, located at The Pavillion, 1 Atwell Place,
      Thames Ditton, Surrey, England, KT7 ONF (the “Target”). The Company has also
      entered into a License Agreement (the “License Agreement”) with Buyer and
      Target, dated June 3, 2005, pursuant to which it granted to Buyer a
      non-exclusive, non-transferable, non-assignable, limited worldwide and revocable
      license to use, modify, recompile, reproduce, distribute and maintain the object
      code version of certain portions of its software and the Source Code materials
      relating to that software for use only in the “sports industry,” as defined in
      the License Agreement. Both the Stock Purchase Agreement and the License
      Agreement were filed with the Securities and Exchange Commission as Exhibits
      to
      Form 8-K on June 9, 2005. This sale of the Company’s UK Subsidiary has been
      treated as a discontinued operation in the accompanying unaudited condensed
      consolidated financial statements.





On
      October 10, 2005, the Company entered into a three-year OEM/Outsourcing
      Agreement with M1 Global Solutions, Inc. (“M1 Global”), an Atlanta-based
      technology company. Under the terms of the agreement, both Firstwave and M1
      Global are contributing to the ongoing development, maintenance and support
      of
      Firstwave products; M1 Global has licensed the Firstwave CRM database schema
      to
      develop its future products; Firstwave is outsourcing its Professional Services
      and Support functions to M1 Global; and M1 Global will be a non-exclusive
      reseller of Firstwave products. Firstwave will retain all maintenance revenues
      and pay to M1 Global $154,315 per quarter in consideration for M1 Global
      providing support services to Firstwave customers. The
      agreement provides that M1 Global will also pay royalty commissions to
      Firstwave. Both the OEM/Outsourcing Agreement and the License Agreement were
      filed with the Securities and Exchange Commission under Form 8-K on October
      14,
      2005.





**Subsequent
      Event**


Effective
      May 2, 2006, the Company entered into an Intellectual Property Assignment
      Agreement (“Agreement”) with Galactus Software LLP (“Galactus”), a technology
      company located in Cape Coral, Florida. Under the terms of the Agreement,
      Galactus is assigned ownership of the .Net Integrated Development Environment
      (“IDE”) that the Company developed for use in writing applications for the CRM
      Market. The Agreement also grants to Firstwave the exclusive rights to continue
      using the software in the CRM Market. The purchase price for the assignment
      was
      $500,000, paid by cashier’s check on May 2, 2006. The Agreement was filed with
      the Securities and Exchange Commission under Form 8-K on May 5, 2006.





7


The
      condensed consolidated financial statements include the accounts of Firstwave
      Technologies, Inc. and its wholly owned subsidiary, Connect-Care, Inc., and,
      where appropriate, its former subsidiary, Firstwave Technologies UK, Ltd.,
      up
      until the effective date (May 1, 2005) of its sale. All intercompany
      transactions and balances have been eliminated in consolidation.




**2.**
            **Use
                of Estimates and Critical Accounting
                Policies**





***Use
      of Estimates***


The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      the disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Examples of estimates that require management’s judgment
      include revenue recognition, accounts receivable reserve, valuation of
      long-lived assets and intangible assets, and goodwill. Management bases its
      estimates on historical experience and on various other factors that are
      believed to be reasonable under the circumstances. All accounting estimates
      and
      the basis for these estimates are discussed among the Company’s senior
      management and members of the Audit Committee. Actual results could differ
      from
      those estimates.





***Critical
      Accounting Policies***


The
      Company believes that the following accounting policies are critical to
      understanding the condensed consolidated financial statements:


·
            Revenue
                Recognition


·
            Capitalization
                of Software Development Costs


·
            Intangible
                Assets





**3.**
            **Summary
                of Significant Accounting
                Policies**





***Revenue
      recognition***


The
      Company recognizes revenue in accordance with Statement of Position (SOP) 97-2,
      “Software Revenue Recognition”, as amended by SOP 98-9, and related
      interpretations.





Revenue
      from software product licenses is recognized upon shipment of the product when
      the Company has a signed contract, the fees are fixed and determinable, no
      significant obligations remain and collection of the resulting receivable is
      probable. The Company accrues for estimated warranty costs at the time it
      recognizes revenue.





The
      Company’s products are licensed on a per-user model, except for hosting
      services. License revenues under the per-user model are recognized under the
      Company’s revenue recognition polices when revenue recognition criteria are met.
      Hosting services are priced as a monthly or yearly fixed amount based upon
      number of users, and are recognized ratably by month over the period of service.
      Hosting services revenues are consolidated into services revenues.





Services
      revenue is recognized as services are performed. Our software product is able
      to
      function independently in a customer’s environment without additional services.
      Our training, implementation, and customization services are optional services
      to our customers and are not necessary for the functioning of the software
      product. Our software is offered as a stand-alone product. It can be implemented
      with minimal services. The essential functionality of the software, such as
      database support and maintenance, preparation of marketing campaigns, and
      standard workflow, is functional and can be utilized by the customer upon
      installation as intended by the customer. At a customer’s request, the software
      can also be implemented with additional services, such as data conversion and
      workflow modifications, which are not significant to the functionality of the
      software, but rather tailor features to most effectively function in the
      customer’s environment.





The
      revenue for the customization or implementation services is recognized as the
      services are provided and earned. Revenue is allocated to software and services
      based on vendor specific objective evidence of fair values. Because the software
      is a stand-alone product that can be used for the customer’s purpose upon
      installation, and because any services performed have insignificant effect
      on
      the functionality of the software, services revenues are accounted for
      separately.





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.





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 and
      when
      there are no undelivered elements essential to the functionality of the
      delivered 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.
      Standard pricing does not vary by customer or by duration, or by requirements
      of
      the arrangement.





8


Maintenance
      revenue is recognized on a **** pro-rata
      basis over the term of the maintenance agreements.





Advanced
      billings for services and maintenance contracts are recorded as deferred revenue
      on the Company's balance sheet, with revenue recognized as the services are
      performed and on a pro-rata basis over the term of the maintenance agreements.





The
      Company provides an allowance for doubtful accounts based on management’s
      estimate of receivables that will be uncollectible. The estimate is based on
      historical charge-off activity and current account status.





**Software
      development costs**


Capitalized
      software development costs consist principally of salaries, contract services,
      and certain other expenses related to development and modifications of software
      products capitalized in accordance with the provisions of Statement of Financial
      Accounting Standards 86 (“SFAS 86”), "Accounting for the Costs of Computer
      Software to be Sold, Leased, or Otherwise Marketed.” Capitalization of such
      costs begins only upon establishment of technological feasibility as defined
      in
      SFAS 86 and ends when the resulting product is available for sale. The Company
      evaluates the establishment of technological feasibility based on the existence
      of a working model of the software product. Capitalized costs may include costs
      related to product enhancements resulting in new features and increased
      functionality as well as writing the code in a new programming language. In
      this
      case, as the version enhancements are built on an already detailed design under
      an existing source code, technological feasibility is established early for
      each
      version. All costs incurred to establish the technological feasibility of
      software products are classified as research and development and are expensed
      as
      incurred.





The
      Company evaluates the realizability of unamortized capitalized software costs
      at
      each balance sheet date. Software development costs which are capitalized are
      subsequently reported at the lower of unamortized cost or net realizable value.
      If the unamortized capitalized software cost exceeds the net realizable value
      of
      the asset, the amount would be written off accordingly. The net realizable
      value
      of the capitalized software development costs is the estimated future gross
      revenues of the software product reduced by the estimated future costs of
      completing and disposing of that product. Amortization of capitalized software
      costs is provided at the greater of the ratio of current product revenue to
      the
      total of current and anticipated product revenue or on a straight-line basis
      over the estimated economic life of the software, which is not more than three
      years. It is possible that those estimates of anticipated product revenues,
      the
      remaining estimated economic life of the product, or both could be reduced
      due
      to changing technologies. The amortization of software development costs is
      presented as a cost of software revenue in the Company’s financial
      statements.





**Goodwill
      and other intangibles**


In
      accordance with SFAS 142 “Goodwill and Other Intangible Assets,” intangible
      assets with indefinite useful lives must be tested periodically for impairment.
      Examples of matters requiring management’s judgment regarding the existence of
      impairment of an intangible asset, and the resulting fair value, would include
      management’s assessment of adverse changes in legal factors, market conditions,
      loss of key personnel or the sale of a significant portion of a reporting unit.
      If the fair value of the intangible asset is determined to be less than the
      carrying value, the Company would record an impairment loss. SFAS
      142
      prescribes a two-phase approach for impairment testing. The first phase screens
      for impairment, while the second phase (if necessary) measures the impairment.
      Goodwill and Other Intangible Assets were evaluated for impairment at the end
      of
      the first quarter of 2006 in accordance with SFAS 142 “Goodwill and Other
      Intangible Assets,” and it was determined there was no instance of impairment of
      recorded Goodwill or Other Intangible Assets .





**Concentration
      of credit risk**


The
      Company is subject to credit risk primarily due to its trade receivables and
      its
      note receivable. The note receivable from AllAboutTickets LLC is more fully
      detailed in Note 4, Discontinued Operations. The Company has credit risk due
      to
      the high concentration of trade receivables through certain customers. The
      customer accounts receivable that represented more than 10% of total accounts
      receivable are shown below.


**December
                  31, 2005**
              
              **March
                  31, 2006**Argos,
                  Ltd
              16.4%
              
              
              0.0%Barclaycard
                  IT
              10.0%
              
              
              0.0%CapGemini
                  UK
              14.2%
              
              
              21.2%Delmia
              0.0%
              
              
              15.0%M1
                  Global Solutions
              10.9%
              
              
              0.0%Quovadx,
                  Inc.
              0.0%
              
              
              12.2%





9


**Significant
      Customers**


For
      the
      three months ended March 31, 2005 and 2006, none of our customers contributed
      more than 10% of total revenue.





For
      a
      more detailed description of the information above, see the discussion under
      the
      heading “Results of Operations” in Item 2 “Management’s Discussion and Analysis
      of Financial Condition and Results of Operations.”





**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 are included in the diluted earnings per share calculation
      when
      they are not antidilutive. Net loss applicable to common shareholders includes
      a
      charge for dividends related to the Company’s outstanding preferred stock.





Shown
      below is a reconciliation of the numerators and denominators of the basic and
      diluted loss per share computations. (in thousands, except per share data):


**For
                  the Three Months Ended**
              
              **For
                  the Three Months Ended****March
                  31, 2005**
              
              **March
                  31, 2006**Income
              
              Shares
              
              Per
                  Share
              
              Income
              
              Shares
              
              Per
                  Share(Numerator)
              
              (Denominator)
              
              Amount
              
              (Numerator)
              
              (Denominator)
              
              AmountNet
                  loss
              
              $
              (750
              )
              
              
              
              
              
              
              $
              (116
              )Less:
                  Preferred Stock Dividends
              
              
              (71
              )
              
              
              
              
              
              
              
              (71
              )**Basic
                  EPS**Loss
                  applicable to common shareholders
              
              $
              (821
              )
              
              2,694
              
              $
              (0.30
              )
              $
              (187
              )
              
              2,734
              
              $
              (0.06
              )**Effect
                  of Dilutive Securities**(1)Warrants
              
              
              
              
              
              19
              
              
              
              
              
              
              
              
              -Convertible
                  Preferred Stock
              
              
              71
              
              
              898
              
              
              
              
              
              71
              
              
              898Stock
                  Options
              
              
              
              
              
              4
              
              
              
              
              
              
              
              
              2871
              
              
              921
              
              
              
              
              
              71
              
              
              926**Diluted
                  EPS**Loss
                  applicable to common shareholders
              
              $
              (821
              )
              
              2,694
              
              $
              (0.30
              )
              $
              (187
              )
              
              2,734
              
              $
              (0.06
              )
  (1)
                  Not included because
                  anti-dilutive





**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 the Company has only a single segment consisting of software
      sales
      with related services and support. The information presented in the unaudited
      condensed consolidated statement of operations reflects the revenues and costs
      associated with this segment that management uses to make operating decisions
      and assess performance.





**4.**
            **Discontinued
                Operations**





On
      June
      3, 2005, Firstwave entered into the Stock Purchase Agreement with AllAboutTickets
      LLC (“Buyer”), now doing business as First Sports International, that is detailed
      under Note 1, Basis of Presentation. The Company sold its UK Subsidiary to
      re-focus on the high technology market and to direct its efforts away from
      the
      Sports business that was concentrated in the UK market. Pursuant to the
      Agreement, effective May 1, 2005, the Company sold to Buyer all of the issued
      share capital of Firstwave Technologies UK, Ltd., a subsidiary of the Company.
      This sale of the Company’s UK Subsidiary has been treated as a discontinued
      operation in the accompanying unaudited condensed consolidated financial
      statements. The total price for the stock purchase transaction was $2,214,000,
      of which $256,000 in cash was received at closing, $1,620,000 is due under
      a
      non-interest bearing Promissory Note that calls for payments to be made over
      a
      maximum of three years, and $338,000 is due as software revenues are achieved
      by
      the Buyer which will reimburse the Company for certain prepaid royalties.





10


As
      of
      March 31, 2006, the remaining balance of the promissory note is $1,550,000
      and
      is payable in installments. The short-term portion of the note, $300,000, is
      payable prior to March 31, 2007, and has been classified as a current asset
      on
      the Balance Sheet. The long-term portion of the note, $1,250,000, is payable
      in
      installments, and is classified as a non-current asset on the Balance Sheet.
      Under the License Agreement, Buyer will pay quarterly royalty amounts to the
      Company if such royalty amounts exceed the quarterly payments due under the
      Promissory Note, and such amounts will be applied to the uncollected balance
      of
      the note receivable. In accordance with APB 21,”Interest on Receivables and
      Payables,” imputed interest was calculated at 8%, resulting in an unamortized
      discount at May 31, 2005 totaling $233,000 and recorded as a direct reduction
      from the face amount of the note. Through March 2006, $69,000 was amortized,
      resulting in a balance of $164,000 in imputed interest as of March 31, 2006.





The
      sale
      of the UK subsidiary included $79,000 of total assets, consisting of accounts
      receivable, prepaid assets, furniture and equipment. The total liabilities
      sold
      were $67,000, consisting of accounts payable, taxes payable, benefits payable
      and deferred revenue. There was no activity from discontinued operations for
      the
      first three months of 2006 and a loss of $427,000 for the three months of 2005.
      There were no revenues from discontinued operations for the three months ended
      March 31, 2006, and $289,000 for three months ended March 31, 2005.





As
      a
      result of the sale of the UK Subsidiary, the Company recognized a pre-tax gain
      of $327,000 in the second quarter of 2005.





**5.**
            **Goodwill
                and Intangibles**





In
      accordance with SFAS 142 “Goodwill and Other Intangible Assets,” intangible
      assets with indefinite useful lives must be tested periodically for impairment.
      Examples of matters requiring management’s judgment regarding the existence of
      impairment of an intangible asset, and the resulting fair value, would include
      management’s assessment of adverse changes in legal factors, market conditions,
      loss of key personnel or the sale of a significant portion of a reporting unit.
      If the fair value of the intangible asset is determined to be less than the
      carrying value, the Company would record an impairment loss. SFAS 142 prescribes
      a two-phase approach for impairment testing, the first phase screens for
      impairment, while the second phase (if necessary) measures the impairment.





As
      of
      March 31, 2006, the Company had $514,000 of Intangible Assets and $593,000
      of
      Goodwill as a result of acquisitions in 1998 and 2003, after subsequent
      amortization expense and impairment charges. Goodwill and Other Intangible
      Assets were evaluated for impairment at the end of the first quarter of 2006
      in
      accordance with SFAS 142 “Goodwill and Other Intangible Assets,” and it was
      determined there was no instance of impairment of recorded Goodwill or Other
      Intangible Assets.




The
      weighted average amortization period for the intangible assets with finite
      useful lives is six years. There are no significant residual values in the
      intangible assets. The Company began amortization of the above-mentioned
      intangible assets relating to the acquisitions effective April 1, 2003.





The
      following table presents details of intangible assets with finite lives (in
      thousands):


**December
                  31, 2005**
              
              **March
                  31, 2006**Gross
                  carrying
              
              Accumulated
              
              Gross
                  carrying
              
              Accumulatedamount
              
              amortization
              
              amount
              
              amortizationAmortizable
                  intangible assetsConnect-Care
                  Technology
              
              $
              300
              
              $
              275
              
              $
              300
              
              $
              300Connect-Care
                  Customer Relationships
              
              
              900
              
              
              354
              
              
              900
              
              
              386Total
              
              $
              1,200
              
              $
              629
              
              $
              1,200
              
              $
              686Aggregrate
                  Amortization ExpenseFor
                  the Three months ended March 31, 2006
              
              $
              57Estimated
                  Amortization ExpenseFor
                  year ended December 31, 2006
              
              $
              154For
                  year ended December 31, 2007
              
              $
              129For
                  year ended December 31, 2008
              
              $
              129For
                  year ended December 31, 2009
              
              $
              129For
                  year ended December 31, 2010
              
              $
              30




11




**6.**
            **Stock-Based
                Compensation**




On
      January 1, 2006, the Company adopted Statement of Financial Accounting
      Standards No. 123  (R)
      which
      requires the measurement and recognition of compensation expense for all
      share-based payment awards made to employees, directors, and outside consultants
      including employee stock options and employee stock purchases related to the
      Employee Stock Purchase Plan based on estimated fair values. SFAS 123 (R) supersedes
      the Company’s previous accounting under Accounting Principles Board Opinion
      No. 25, “Accounting for Stock Issued to Employees” (“APB 25”)  .
      The
      Company elected
      the modified prospective transition method, which requires the application
      of
      the accounting standard as of January 1, 2006, the first day of the
      Company’s fiscal year 2006. The Company’s Condensed Consolidated Financial
      Statements for the three months ended March 31, 2006 reflect the impact of
      SFAS 123(R).
      In accordance with the modified prospective transition method, the Company’s
      Condensed Consolidated Financial Statements for prior periods have not been
      restated to reflect, and do not include, the impact of SFAS 123 (R).
      There was no stock-based compensation expense recognized under SFAS 123(R) for
      the three months ended March 31, 2006,




SFAS 123(R) requires
      companies to estimate the fair value of share-based payment awards on the date
      of grant using an option-pricing model. Compensation expense is recognized
      ratably over the period of vesting.      Compensation
      expense for all share-based payment awards granted subsequent to January 1,
      2006 will be recognized using the straight-line method.




Upon
      adoption of SFAS 123 (R),
      the
      Company retained its method of valuation for share-based awards granted
      beginning in 2006 using the Black-Scholes option-pricing model which was
      previously used for the Company’s pro forma information required under SFAS
      123 .
      The
      Company’s determination of fair value of share-based payment awards on the date
      of grant using an option-pricing model is affected by the Company’s stock price
      as well as assumptions regarding a number of highly complex and subjective
      variables. These variables include, but are not limited to, the Company’s
      expected stock price volatility over the term of the awards, and actual and
      projected employee stock option exercise behaviors.







**7.**
            **Borrowings**





On
      the
      balance sheet dates of December 31, 2005 and March 31, 2006, the Company had
      no
      borrowings.





**8.**
            **Related
                Party Transactions******





The
      former President and COO of the Company, who resigned from the Company on March
      22, 2005, was paid dividends of $675 in the first quarter of 2006 related to
      his
      $30,000 investment in Series D Convertible Preferred Stock from June of 2004.
      In
      addition, he is the General Manager of First Sports, the buyer of the Company’s
      UK Subsidiary as detailed above in Item 1, Basis of Presentation. The Chairman
      and CEO of the Company earned $50,625 in the first quarter of 2006 for dividends
      related to his $2,250,000 investment in Series A Convertible Preferred Stock,
      Series B Convertible Preferred Stock, and Series C Convertible Preferred
      Stock.





**9.**
            **Impact
                of Recently Issued Accounting
                Standards**





In
      April
      2005, the Securities and Exchange Commission’s Office of the Chief Accountant
      and its Division of Corporation Finance released Staff Accounting Bulletin
      (SAB)
      No. 107 to provide guidance regarding the application of FASB Statement No.
      123
      (revised 2004), “Share-Based Payment”, Statement No. 123(R) covers a wide range
      of share-based compensation arrangements including share options, restricted
      share plans, performance-based awards, share appreciation rights, and employee
      share purchase plans. SAB 107 provides interpretive guidance related to the
      interaction between Statement No. 123(R) and certain SEC rules and regulations,
      as well as the staff’s views regarding the valuation of share-based payment
      arrangements for public companies. SAB 107 also reminds public companies of
      the
      importance of including disclosures within filings made with the SEC relating
      to
      the accounting for share-based payment transactions, particularly during the
      transition to the Statement No. 123(R).





12


**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





*The
      following discussion should be read in conjunction with the Financial Statements
      and Notes thereto of the Company presented in the Company’s Annual Report on
      Form 10-K for the year ended December 31, 2005. This Report contains
      forward-looking statements that reflect management’s expectations, estimates,
      and projections for future periods based on information (financial and
      otherwise) available to management as of the end of the period covered by this
      Quarterly Report. These statements may be identified by the use of
      forward-looking words such as “may”, “will”, “believe”, “anticipate”,
“estimate”, “expect”, “projects”, or “intends”. Actual events and results may
      differ from the results anticipated by the forward-looking statements. Factors
      that might cause such differences include, but are not limited to, those items
      discussed under the caption "Certain Factors Affecting Forward-Looking
      Statements" presented in the Company’s Annual Report on Form 10-K for the year
      ended December 31, 2005 and other factors discussed in the Company’s press
      releases and other Reports filed with the Securities and Exchange
      Commission.*





**Overview**





Headquartered
      in Atlanta, Georgia, Firstwave Technologies, Inc. (“Firstwave” or “the Company”)
      is a
      provider of strategic customer relationship management (“CRM”) solutions
      specifically designed for the High Technology industry. Firstwave’s solutions
      provide companies with fit-to-purpose features that are designed to optimize
      how
      companies win, maintain and grow customer and organizational relationships
      while
      improving the overall customer experience. Firstwave’s corporate and product mission
      reflects our customer-first commitment: To develop and integrate the best
      software solutions to manage customer interactions and information. Firstwave
      supports several product lines: Firstwave CRM (includes eCRM and v.10 products),
      Firstwave Technology and TakeControl.





On
      October 10, 2005, the Company entered into a three-year OEM/Outsourcing
      Agreement and a licensing agreement with M1 Global Solutions, Inc. (“M1
      Global”), an Atlanta-based technology company. Under the terms of the
      agreements, both Firstwave and M1 Global are contributing to the ongoing
      development, maintenance and support of Firstwave products; M1 Global has
      licensed the Firstwave CRM database schema to develop its future products;
      Firstwave is outsourcing its Professional Services and Support functions to
      M1
      Global; and M1 Global is a non-exclusive reseller of Firstwave products.
      Firstwave retains all maintenance revenues and pays to M1 Global $154,315 per
      quarter in consideration for M1 Global providing support services to Firstwave
      customers. The agreement also provides that M1 Global pays royalty commissions
      to Firstwave.





Effective
      May 2, 2006, the Company entered into an Intellectual Property Assignment
      Agreement (“Assignment Agreement”) with Galactus Software LLP (“Galactus”), a
      technology company located in Cape Coral, Florida. Under the terms of the
      Assignment Agreement, Galactus is assigned ownership of the .Net Integrated
      Development Environment (“IDE”) that the Company developed for use in writing
      applications for the CRM Market. The Assignment Agreement also grants to
      Firstwave the exclusive rights to continue using the software in the CRM Market.
      The purchase price for the assignment was $500,000, paid by cashier’s check on
      May 2, 2006.





**Results
      of Continuing Operations**





On
      June
      3, 2005, Firstwave entered into a Stock Purchase Agreement (the “Agreement”)
      with AllAboutTickets LLC doing business as First Sports International (“First
      Sports”). Under the terms of the Agreement, the Company sold to First Sports all
      of the issued share capital of Firstwave Technologies UK, Ltd., a subsidiary
      of
      the Company. The total purchase price for the shares of stock was $2,214,000,
      of
      which $256,000 was paid at closing, $1,620,000 is being paid pursuant to a
      promissory note and $338,000 is paid as software revenues are achieved to
      reimburse the Company for certain prepaid royalties. The Company sold its UK
      Subsidiary to re-focus on the high technology market and to direct its efforts
      away from the Sports business that was concentrated in the UK market. This
      Management’s Discussion and Analysis of Financial Condition and results of
      operations compares the Company’s results from continuing operations.





Total
      revenues decreased 32.0% from $881,000 in the first quarter of 2005 to $599,000
      in the first quarter of 2006 primarily due to decreased software and services
      revenues.





Software
      revenues decreased 42.7% from $82,000 in the first quarter of 2005 to $47,000
      in
      the first quarter of 2006. Our software revenues remain significantly dependent
      upon the size and timing of closing of license agreements. As a result of our
      relationship with M1 Global, we anticipate that nearly all of our software
      revenues will come from our 33% share of the software revenues received by
      M1
      Global.





Services
      revenues decreased 53.0% from $200,000 in the first quarter of 2005 to $94,000
      in the first quarter of 2006. This decrease is primarily the result of a focus
      on existing CRM customers while the M1 Global product is in development. As
      a
      result of our relationship with M1 Global, we anticipate that nearly all of
      our
      services revenues will come from our 20% share of the service revenues received
      by M1 Global. Our services revenues are subject to fluctuations based on
      variations in the length of and number of active service engagements in a given
      quarter.





13


Maintenance
      revenues decreased 20.9% from $579,000 during the first quarter of 2005 to
      $458,000 in the first quarter of 2006. Maintenance revenues are the result
      of
      renewal agreements from previous software license sales as well as new license
      agreements. The decreases were primarily due to reduced renewals of maintenance
      agreements from existing customers and reduced new software licenses.





Cost
      of
      software revenues decreased 15.7% from $204,000 in the first quarter of 2005
      to
      $172,000 in the first quarter of 2006. Cost of software revenues includes
      amortization of capitalized software costs, costs of third party software,
      media
      costs, and documentation materials. The decrease is primarily due to a decrease
      in amortization expense related to three product lines being fully amortized
      in
      2005. Cost of software as a percentage of software revenues increased from
      249%
      in the first quarter of 2005 to 366% in the first quarter of 2006, primarily
      due
      to lower software revenues during the quarter while the amortization expense
      included in costs of revenues remained consistent.





Cost
      of
      revenues for services decreased 98.7% from $223,000 in the first quarter of
      2005
      to $3,000 in the first quarter of 2006. The decrease is primarily due to
      decreases in payroll, resulting from a reduction in the number of services
      personnel, and payroll related costs, including travel expenses, as a result
      of
      the outsourcing agreement with M1 Global whereby M1 is providing the services
      to
      customers. As a result of our relationship with M1 Global, we anticipate that
      the cost of revenues for services will remain low as a result of the elimination
      of costs related to personnel. The cost of revenues for services as a percentage
      of services revenues decreased from 111.5% in the first quarter of 2005 to
      3.2%
      in the first quarter of 2006.





Cost
      of
      revenues for maintenance increased 125.3% from $79,000 in the first quarter
      of
      2005 to $178,000 in the first quarter of 2006. The increase is primarily the
      result of quarterly fees paid to M1 Global under the outsourcing arrangement
      for
      the support of our domestic customers, and the fees paid to First Sports for
      the
      support of our U.K. CRM customers. The cost of revenues for maintenance as
      a
      percentage of maintenance revenue increased from 13.6% in the first quarter
      of
      2005 to 38.9% in the first quarter of 2006.





Sales
      and
      marketing expense decreased 67.7% from $164,000 in the first quarter of 2005
      to
      $53,000 in the first quarter of 2006. The decrease is a result of decreases
      in
      payroll expenses associated with a reduction in the number of personnel,
      personnel costs, and telemarketing costs, as a result of the outsourcing
      agreement with M1 Global.




The
      Company’s product innovation and development expenditures decreased 60.3% from
      $194,000 in the first quarter of 2005 to $77,000 in the first quarter of 2006.
      The decreases are primarily related to decreases in payroll costs associated
      with staff reductions, and reductions associated with fewer outside contractors.
      No development costs were capitalized during the first quarters of 2005 or
      2006.
      A net realizable analysis was performed at March 31, 2006 in accordance SFAS
      86.
      It was determined that the unamortized capitalized software does not exceed
      its
      net realizable value; therefore, no impairment loss was recorded.





General
      and administrative expenses decreased 34.6% from $387,000 in the first quarter
      of 2005 to $253,000 in the first quarter of 2006. These changes were primarily
      due to reduced payroll costs associated with a reduction in personnel and
      decreased rent expense. As a result of our relationship with M1 Global, we
      anticipate that general and administrative expense will continue to decrease
      as
      a result of the reduced cost related to staffing and overhead.





Loss
      from
      discontinued operations was $427,000 for the first quarter of 2005. There was
      no
      activity from discontinued operations during the first quarter of 2006.





Dividends
      on preferred stock were unchanged at $71,000 in both the first quarter of 2005
      and of 2006.





The
      above
      factors combined to result in an improvement in the net loss applicable to
      common shareholders from $821,000 in the first quarter of 2005 to $187,000
      in
      the first quarter of 2006. Net loss per basic and diluted share was $0.30 for
      the first quarter of 2005 compared to a net loss of $0.06 per basic and diluted
      share for the first quarter of 2006. At March 31, 2005, the number of basic
      weighted average shares outstanding was 2,694,000 compared to 2,734,000 at
      March
      31, 2006.





In
      the
      second quarter of 2005, the Board of Directors of the Company voted to
      immediately vest all outstanding unvested options held by employees and
      directors of the Company. Based on this decision, with no stock options granted
      in the first quarter of 2006, the non-monetary compensation expense required
      by
      SFAS 123(R) that commenced at the beginning of 2006 is zero for the three months
      ended March 31, 2006.








**Balance
      Sheet**


Net
      accounts receivable decreased 37.1% from $399,000 at December 31, 2005 to
      $251,000 at March 31, 2006, primarily due to lower software license and services
      revenues invoiced. Prepaid expenses decreased 15.8% from $475,000 at December
      31, 2005 to $400,000 at March 31, 2006, primarily due to the amortization of
      prepaid expenses during the first quarter. Property and equipment decreased
      18.3% from $82,000 at December 31, 2005 to $67,000 at March 31, 2006 as a result
      of year-to-date depreciation. Capitalized software development costs decreased
      43.5% from $363,000 at December 31, 2005 to $205,000 at March 31, 2006 due
      to
      year-to-date amortization expense of $158,000. Intangible assets decreased
      10.1%
      from $572,000 at December 31,2005 to $514,000 at March 31, 2006 due to $58,000
      in year-to-date amortization expense.




14


As
      a
      result of the sale of the UK Subsidiary, a note receivable in the amount of
      $1,620,000 was received.  At March 31, 2006 the portion of the note payable
      prior to March 31, 2007 was $300,000 and is classified as a current asset on
      the
      Balance Sheet. The long-term portion of the note is $1,250,000, payable in
      installments, and is classified as a non-current asset on the Balance Sheet.
      In
      accordance with APB 21,”Interest on Receivables and Payables,” imputed interest,
      which was calculated at 8%, resulted in an unamortized discount at May 31,
      2005
      totaling $233,000 and recorded as a direct reduction from the face amount of
      the
      note. Through March of 2006, $69,000 has been amortized, resulting in a balance
      of $164,000 in imputed interest as of March 31, 2006.





Accounts
      payable decreased 4.6% from $302,000 at December 31, 2005 to $288,000 at March
      31, 2006. Deferred revenue decreased 13.6% from $1,117,000 at December 31,
      2005
      to $965,000 at March 31, 2006 due to reductions in and the timing of billing
      for
      annual maintenance renewals. Accrued employee compensation and benefits
      decreased 72.7% from $99,000 at December 31, 2005 to $27,000 at March 31, 2006
      primarily as a result of staff reductions. Other accrued liabilities decreased
      53.1% from $32,000 at December 31, 2005 to $15,000 at March 31, 2006 primarily
      related to the reduction of sales tax is due to reduced revenues.





**Liquidity
      and Capital Resources**





As
      of
      March 31, 2006, the Company had cash and cash equivalents of $409,000, an
      increase of 13.6% from the cash and cash equivalents balance of $360,000 at
      December 31, 2005. The increase is primarily due to the elimination of certain
      expenses as a result of the outsourcing agreement with M1 Global, plus the
      exercise of outstanding stock options. The Company carries no debt.





On
      May 2,
      2006, the Company received $500,000 in cash as payment for the assignment of
      its
      .Net Integrated Development Environment to Galactus Software LLP as required
      by
      the Intellectual Property Assignment Agreement signed by both parties. Details
      of the transaction are presented above in Item 1, Notes to the unaudited
      condensed consolidated financial statements; Note 1, Description of Business;
      Subsequent Events.





Our
      future capital requirements will depend on many factors, including our ability
      to generate positive cash flows, to collect the note receivable from First
      Sports, to realize royalty revenues from the M1 Global relationship, to retain
      our maintenance revenues from existing customers, to control expenses, and
      to
      generate additional revenues from other sources. Any projections of future
      cash
      needs and cash flows are subject to substantial uncertainty. We have no material
      commitments for capital expenditures. We do not believe that inflation has
      historically had a material effect on our Company's results of
      operations.





**Discontinued
      Operations**





On
      June
      3, 2005, Firstwave entered into the Stock Purchase Agreement with
      AllAboutTickets LLC (“Buyer”), now doing business as First Sports International,
      that is detailed under Note 1, Basis of Presentation. The Company sold its
      UK
      Subsidiary to re-focus on the high technology market and to direct its efforts
      away from the Sports business that was concentrated in the UK market. Pursuant
      to the Agreement, effective May 1, 2005, the Company sold to Buyer all of the
      issued share capital of Firstwave Technologies UK, Ltd., a subsidiary of the
      Company. This sale of the Company’s UK Subsidiary has been treated as a
      discontinued operation in the accompanying unaudited condensed consolidated
      financial statements.





The
      total
      purchase price for the sale was $2,214,000, of which $256,000 in cash was paid
      at closing, $1,620,000 is payable under a non-interest bearing Promissory Note
      that calls for payments to be made over a maximum of three years, and $338,000
      is to be paid as software revenues are achieved to reimburse the Company for
      certain prepaid royalties.








**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**




The
      Company is subject to market risk exposures of varying correlations and
      volatilities, primarily relating to interest rate risk. The Company does not
      currently engage in hedging activities or otherwise use derivatives to alter
      the
      interest characteristics of its financial assets. Although a decrease in
      interest rates could reduce our interest income, at this time management does
      not believe a change in interest rates will materially affect the Company's
      financial position or results of operations.





15


**Item
      4.**  **Controls
      and Procedures**





Based
      on
      their most recent evaluation, which was completed in consultation with
      management as of the end of the period covered by the filing of this
      Form 10-Q, the Company’s Chairman and Chief Executive Officer and Principal
      Financial Officer believe the design and operation of the Company’s disclosure
      controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
      promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”)) were effective as of the date of such evaluation in timely alerting the
      Company’s management to material information required to be included in this
      Form 10-Q and other Exchange Act filings.








**PART
      II. Other Information**





Item
      1. Legal Proceedings


None.





Item
      1A.  Risk
      Factors


None.





Item
      2. Unregistered Sales of Equity Securities and Use of Proceeds


None.





Item
      3. Defaults Upon Senior Securities


None.





Item
      4. Submission of Matters to a Vote of Security Holders


None.





Item
      5. Other Information


None.





16


Item
      6. Exhibits





Exhibit
              10.1
            Licensing
                Agreement between Firstwave Technologies, Inc. and M1 Global Solutions,
                Inc.dated
                September 30, 2005 (incorporated by reference to Exhibit 10.1 of
                Form 8-K
                filed on October 14, 2005).





Exhibit
              10.2
            OEM/Outsourcing
                Agreement between Firstwave Technologies, Inc. and M1 GlobalSolutions,
                Inc. Dated October 10, 2005 (incorporated by reference to Exhibit
                10.1
                ofForm
                8-K filed on October 14, 2005).





Exhibit
              10.3
            Stock
                Purchase Agreement between Firstwave Technologies, Inc and
                AllAboutTickets, LLCdated
                June 3, 2005 (incorporated by reference to Exhibit 10.1 of Form 8-K
                filed
                on June 9, 2005).





Exhibit
              10.4
            Intellectual
                Property Assignment Agreement between Firstwave Technologies, Inc
                and
                Galactus Software LLP effective May 2, 2006 (incorporated by reference
                to
                Exhibit 10.1 of Form 8-K filed on May 5,
                2006).




Exhibit
              31.1
            Certification
                of Periodic Report by theChief
                Executive Officerpursuant to Rule 13a-14(a) of the Securities Exchange Act of
                1934.




Exhibit
              31.2
            Certification
                of Periodic Report by the Principal Financial Officer pursuant to
                Rule
                13a-14(a) ofthe
                Securities Exchange Act of 1934.





Exhibit
              32
            Certification
                of Chief Executive Officer and Principal Financial Officer pursuant
                to 18
                U.S.C.Section
                1350.












**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
      12, 2006


/s/
      David G. Kane


David
      G.
      Kane


Controller


(Principal
      Financial Officer)








17