<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                       FOR THE QUARTER ENDED JUNE 30, 2001

                         COMMISSION FILE NUMBER 0-21202

                          FIRSTWAVE TECHNOLOGIES, INC.


          7372                         GEORGIA                     58-1588291
   (Primary Std. Ind.          (State of incorporation)          (IRS Employer
  Classification Code #)                                       Identification #)


                        2859 PACES FERRY ROAD, SUITE 1000
                             ATLANTA, GEORGIA 30339
                    (Address of principal executive offices)


                                 (770-431-1200)
                        (Telephone number of registrant)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.


     YES [X]                 NO [ ]


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

     Outstanding as of August 10, 2001
     ---------------------------------

     Common Stock, no par value                     6,300,841 Shares

<PAGE>   2

                          FIRSTWAVE TECHNOLOGIES, INC.

                                    FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 2001

                                      INDEX

<TABLE>
<CAPTION>
                                                                                     Page No.
                                                                                     --------
<S>                                                                                  <C>
Part  I.  Financial Information

Item 1.   Financial Statements

    Consolidated Balance Sheet - December 31, 2000 and June 30, 2001                     3

    Consolidated Statement of Operations - For the Three and Six Months Ended
        June 30, 2000 and June 30, 2001                                                  4

    Consolidated Statement of Changes in Shareholders' Equity -
        For the Six Months Ended June 30, 2001                                           5

    Consolidated Statement of Cash Flows - For the Six Months Ended
       June 30, 2000 and June 30, 2001                                                   6

    Notes to Consolidated Financial Statements                                           7



Item 2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations                               11


Part II.  Other Information                                                             15
</TABLE>


                                       2
<PAGE>   3

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                          FIRSTWAVE TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEET
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 DEC 31,         JUNE 30,
                                                                   2000            2001
                                                                 -------         --------
                                                                                (UNAUDITED)

<S>                                                              <C>            <C>
                                   ASSETS

CURRENT ASSETS:
  CASH AND CASH EQUIVALENTS                                       $1,281          $  738
  RESTRICTED CASH                                                  2,200               0
  ACCOUNTS RECEIVABLE, LESS ALLOWANCE FOR
    DOUBTFUL ACCOUNTS OF $287 AND $275, RESPECTIVELY               1,774             742
  PREPAID EXPENSES AND OTHER ASSETS                                  444             413
                                                                  ------          ------
                    TOTAL CURRENT ASSETS                           5,699           1,893

  PROPERTY AND EQUIPMENT, NET                                        717             502
  SOFTWARE DEVELOPMENT COSTS, NET                                  2,580           2,291
  GOODWILL                                                           311             232
                                                                  ------          ------
                                                                  $9,307          $4,918
                                                                  ======          ======



                    LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  ACCOUNTS PAYABLE                                                $  679          $  496
  DEFERRED REVENUE                                                 1,047             682
  ACCRUED EMPLOYEE COMPENSATION AND BENEFITS                         216             108
  BORROWINGS                                                       2,836             750
  DIVIDENDS PAYABLE                                                  113              82
  OTHER ACCRUED LIABILITIES                                          188             170
                                                                  ------          ------
                    TOTAL CURRENT LIABILITIES                      5,079           2,288

REDEEMABLE PREFERRED STOCK                                         1,702           1,702

SHAREHOLDERS' EQUITY                                               2,526             928
                                                                  ------          ------
                                                                  $9,307          $4,918
                                                                  ======          ======
</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                       3
<PAGE>   4

                          FIRSTWAVE TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                        FOR THE THREE MONTHS ENDED            FOR THE SIX MONTHS ENDED
                                       ---------------------------           ---------------------------
                                       JUNE 30,           JUNE 30,           JUNE 30,           JUNE 30,
                                         2000               2001               2000               2001
                                       --------           --------           --------           --------
<S>                                    <C>                <C>                <C>                <C>
NET REVENUES
  SOFTWARE                             $    967           $    333           $  1,704           $    465
  SERVICES                                  741                796              1,413              1,546
  MAINTENANCE                               916                581              2,010              1,284
  OTHER                                      86                 35                152                 63
                                       --------           --------           --------           --------
                                          2,710              1,745              5,279              3,358
                                       --------           --------           --------           --------
COST AND EXPENSES
  COST OF REVENUES
    SOFTWARE                                224                329                519                613
    SERVICES                                654                492              1,291                961
    MAINTENANCE                             408                172                838                444
    OTHER                                    59                 24                123                 42
  SALES AND MARKETING                     1,233                539              2,196              1,330
  PRODUCT DEVELOPMENT                       295                147                537                342
  GENERAL AND ADMINISTRATIVE                692                601              1,423              1,264
                                       --------           --------           --------           --------
                                          3,565              2,304              6,927              4,996
                                       --------           --------           --------           --------

    OPERATING LOSS                         (855)              (559)            (1,648)            (1,638)

INTEREST INCOME/(EXPENSE)                    34                (14)                77                (44)
OTHER INCOME, NET                             0                 92                  0                 80
                                       --------           --------           --------           --------
LOSS BEFORE INCOME TAXES                   (821)              (481)            (1,571)            (1,602)
 INCOME TAXES                               (10)                (1)               (30)                (1)
                                       --------           --------           --------           --------
NET LOSS                               $   (831)          $   (482)          $ (1,601)          $ (1,603)
                                       ========           ========           ========           ========

DIVIDENDS ON PREFERRED STOCK                (30)               (38)               (75)               (76)
                                       --------           --------           --------           --------

NET LOSS APPLICABLE TO COMMON
 SHAREHOLDERS                          $   (861)          $   (520)          $ (1,676)          $ (1,679)
                                       ========           ========           ========           ========

BASIC AND DILUTED
 NET LOSS PER SHARE                    $  (0.14)          $  (0.08)          $  (0.29)          $  (0.27)
                                       ========           ========           ========           ========

BASIC AND DILUTED WEIGHTED
  AVERAGE SHARES OUTSTANDING              6,057              6,300              5,836              6,295
                                       ========           ========           ========           ========
</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                       4
<PAGE>   5

                          FIRSTWAVE TECHNOLOGIES, INC.
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                   (UNAUDITED)

                     FOR THE SIX MONTHS ENDED JUNE 30, 2001

<TABLE>
<CAPTION>

                                              COMMON STOCK                              ACCUMULATED
                                           -------------------     ADD'L     COMPRE-       OTHER
                                                                  PAID-IN    HENSIVE    COMPREHENSIVE    ACCUMULATED
                                             SHARES     AMOUNT    CAPITAL      LOSS         LOSS           DEFICIT       TOTAL
                                           ---------    ------   --------    -------    -------------    -----------    -------
<S>                                        <C>          <C>      <C>         <C>        <C>              <C>            <C>
BALANCE AT DECEMBER 31, 2000               6,288,472     $ 12    $ 22,587    $     0       $ (28)         $(20,045)     $ 2,526


EXERCISE OF COMMON STOCK OPTIONS               1,700                    3                                                     3

EMPLOYEE STOCK PLAN PURCHASES                 10,669                    9                                                     9



COMPREHENSIVE LOSS:
NET LOSS                                                                      (1,603)                       (1,603)      (1,603)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT                                           (7)         (7)                            (7)
                                                                             -------
ACCUMULATED COMPREHENSIVE LOSS                                                (1,610)
                                                                             -------

                                           ---------     ----    --------                  -----          --------      -------

BALANCE AT JUNE 30, 2001                   6,300,841     $ 12    $ 22,599                  $ (35)         $(21,648)     $   928
                                           =========     ====    ========                  =====          ========      =======
</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                       5
<PAGE>   6

                          FIRSTWAVE TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     FOR THE SIX MONTHS ENDED
                                                                 --------------------------------
                                                                 JUNE 30, 2000      JUNE 30, 2001
                                                                 -------------      -------------
<S>                                                              <C>                <C>
CASH FLOWS USED IN OPERATING ACTIVITIES                             $   (533)          $   (315)

CASH FLOWS FROM INVESTING ACTIVITIES
  SOFTWARE DEVELOPMENT COSTS                                            (875)              (307)
  PURCHASES OF PROPERTY AND EQUIPMENT                                   (181)               (28)
  PURCHASE OF INVESTMENT SECURITIES                                     (493)              (711)
  PROCEEDS FROM SALE/MATURITY OF INVESTMENT SECURITIES                 2,146                691
  LOSS ON INVESTMENT SECURITIES                                            0                 20
                                                                    --------           --------
       NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES               597               (335)
                                                                    --------           --------

CASH FLOWS FROM FINANCING ACTIVITIES
  PROCEEDS FROM EMPLOYEE STOCK PURCHASE PLAN                               3                  9
  PAYMENT OF DIVIDENDS ON PREFERRED STOCK                               (123)               (31)
  PROCEEDS FROM BORROWINGS                                             1,500                750
  REPAYMENT OF BORROWINGS                                                  0             (2,836)
  PROCEEDS FROM RESTRICTED CASH USED TO SECURE BORROWINGS                  0              2,200
  EXERCISE OF COMMON STOCK OPTIONS                                       195                  3
                                                                    --------           --------
       NET CASH PROVIDED BY FINANCING ACTIVITIES                       1,575                 95
                                                                    --------           --------


                                                                    --------           --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                    8                 12
                                                                    --------           --------

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                       1,647               (543)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                         2,029              1,281
                                                                    --------           --------
CASH AND CASH EQUIVALENTS, END OF PERIOD                            $  3,676           $    738
                                                                    ========           ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
                                                                    --------           --------
  CASH PAID FOR INCOME TAXES                                        $     30           $      1
                                                                    ========           ========

  CASH PAID FOR INTEREST                                            $      0           $     79
                                                                    ========           ========
</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                       6
<PAGE>   7

                          FIRSTWAVE TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

A.       BASIS OF PRESENTATION

         Firstwave Technologies, Inc. (the "Company") is a provider of Internet
         customer relationship management solutions. The Firstwave eCRM
         (Internet-based Customer Relationship Management) Suite is an
         integrated, Internet-based suite of applications created to fulfill and
         manage the e-business relationship needs of a company in the areas of
         sales, marketing, and support.

         The accompanying unaudited consolidated financial statements have been
         prepared in accordance with the instructions to Form 10-Q and Rule
         10-01 of Regulation S-X. Accordingly, the consolidated financial
         statements do not include all of the information and footnotes required
         by generally accepted accounting principles and should be read in
         conjunction with the consolidated financial statements contained in the
         Company's Form 10-K for the period ended December 31, 2000. In the
         opinion of management, all adjustments (consisting only of normal
         recurring adjustments) considered necessary for a fair presentation of
         the consolidated financial statements have been included.

         The consolidated financial statements include the accounts of Firstwave
         Technologies, Inc. and its wholly owned subsidiary Firstwave
         Technologies UK, Ltd. All significant intercompany transactions and
         balances have been eliminated in consolidation.

B.       ACCOUNTING POLICIES

         REVENUE RECOGNITION

         Revenue from software product sales 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. Services revenue is
         recognized as services are performed. Maintenance revenue is recognized
         on a pro rata basis over the term of the maintenance agreements.

         International revenues are primarily generated by Firstwave UK and
         independent distributors who offer licenses of the Company's products
         in specific geographic areas. Under the terms of the Company's
         international distributor agreements, international distributors
         collect license fees and maintenance revenues on behalf of the Company,
         and generally remit 50% to 60% of standard license fees and maintenance
         revenues they produce. The Company recognizes international sales at
         the gross license amount, with the amount paid to the distributors
         reflected as a selling expense. The Company's international maintenance
         fees are reflected as maintenance revenues, with the amount retained by
         distributors shown as a cost of maintenance revenue.

         Revenues from nonmonetary exchanges are recorded at the fair value of
         the products and services provided or received, whichever is more
         clearly evident.


                                       7
<PAGE>   8

         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 for
         maintenance.

         BASIC AND DILUTED NET LOSS PER COMMON SHARE

         Basic net loss per common share is based on the weighted average number
         of shares of common stock outstanding during the period. Stock options
         and convertible preferred stock would have been included in the diluted
         earnings per share calculation had they not been antidilutive. Net loss
         applicable to common shareholders includes a charge for dividends
         related to the Company's outstanding preferred stock.

         FOREIGN CURRENCY TRANSLATION

         The financial statements of the Company's international subsidiary are
         translated into U.S. dollars at current exchange rates, except for
         revenues and expenses, which are translated at average exchange rates
         during each reporting period. Currency transaction gains or losses,
         which are included in the results of operations, are insignificant for
         all periods presented. Net exchange gains or losses resulting from the
         translation of assets and liabilities are included as a component of
         accumulated other comprehensive income in shareholders' equity.

         USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
         accepted accounting principles 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. Actual results could
         differ from those estimates.

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

         RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
         Statement of Financial Accounting Standards No. 133, Accounting for
         Derivative Instruments and Hedging Activities ("SFAS 133"). SFAS 133
         establishes accounting and reporting standards for derivative
         instruments, including certain derivative instruments embedded in other
         contracts and for hedging activities. The Company adopted SFAS 133
         effective January 1, 2001 and it did not have a material impact on the
         consolidated financial statements.


                                       8
<PAGE>   9

         In September 2000, the FASB issued SFAS No. 140, "Accounting for
         Transfers and Servicing of Financial Assets and Extinguishments of
         Liabilities." This statement replaces SFAS No. 125 and is effective for
         transfers and servicing occurring after June 30, 2001 and, for certain
         provisions, fiscal years ending after December 15, 2000. Upon its
         adoption, the Company will account for activity under its Accounts
         Receivable Purchase Agreement (discussed in Note C) pursuant to SFAS
         No. 140.

         In July 2001, the FASB issued SFAS No. 141, "Business Combinations,"
         and SFAS No. 142, "Goodwill and Other Intangible Assets." Under these
         new standards, the FASB eliminated accounting for certain mergers and
         acquisitions as pooling of interests, eliminated amortization of
         goodwill and indefinite life intangible assets and established new
         impairment measurement procedures for goodwill. For calendar year
         reporting companies, the standards become effective for all
         acquisitions completed on or after June 30, 2001, except with regard to
         business combinations initiated prior to July 1, 2001. Changes in
         financial statement treatment for goodwill and intangible assets
         arising from mergers and acquisitions completed prior to June 30, 2001
         become effective January 1, 2002.

         The Company is currently assessing the impact of implementing these
         standards, and believes they will not have a material impact on the
         consolidated financial statements.

C.       BORROWINGS

         On April 5, 2001, the Company liquidated its $1,500,000 US Treasury
         bill and paid off the related $1,500,000 line of credit.

         On April 16, 2001, the Company liquidated its $700,000 certificate of
         deposit and paid off the related $700,000 promissory note.

         On May 8, 2001, the Company paid off the remaining balance on its
         revolving line of credit and the agreement was terminated.

         On June 5, 2001 the Company signed an Accounts Receivable Purchase
         Agreement with a commercial bank whereby the Company may sell up to
         $500,000 of its eligible accounts receivable, as defined in the
         agreement. Said agreement will expire one year from execution, bear
         interest at 1.85% per month, and be secured by the assets of the
         Company. As of June 30, 2001 there were no outstanding borrowings under
         this agreement.

D.       SUBSEQUENT EVENTS

         On July 19, 2001 the Company executed a Convertible Note Purchase
         Agreement with Mercury Fund II, Ltd. in the amount of $500,025. The
         note bears interest at 9% per annum and is due and payable on the
         earlier of conversion to shares of Series C Preferred Stock (upon
         shareholder approval) or October 31, 2001.

         In response to a notification from the Nasdaq Stock Market Inc.
         ("Nasdaq") of a deficiency in the continued listing requirements of net
         tangible assets and market value of public float, the Company presented
         a plan to regain and sustain compliance at a


                                       9
<PAGE>   10

         hearing before the Nasdaq Listing Qualifications Panel on July 19,
         2001. The plan includes the following:

                  1.       The sale and issuance of (i) 6,667 shares of Series C
                           Preferred Stock upon the conversion of the promissory
                           note in the original principal amount of $500,025
                           previously issued to Mercury Fund II, Ltd. and (ii)
                           warrants to acquire up to 125,025 shares of common
                           stock.

                  2.       The sale and issuance of 10,000 shares of Series C
                           Preferred Stock to Richard T. Brock, President and
                           CEO of the Company, in exchange for the promissory
                           note of the Company in the aggregate principal amount
                           of $750,000 held by Mr. Brock.

                  3.       An amendment to the Company's Articles of
                           Incorporation to eliminate certain provisions that
                           require the Company to treat $1,702,000 of the
                           Company's Series A Convertible Preferred Stock and
                           Series B Convertible Preferred Stock as "redeemable
                           securities" rather than permanent equity in the
                           Company's consolidated balance sheet.

                  4.       An amendment to the Company's Articles of
                           Incorporation to effect a reverse stock split of all
                           issued and outstanding shares of the Company's common
                           stock at a ratio not to exceed one-for-three.

         The Company filed a Preliminary Proxy statement with the Securities and
         Exchange Commission on July 25, 2001, and a special meeting of
         shareholders is currently scheduled for August 29, 2001. At the meeting
         on August 29, 2001, shareholders will vote on the above transactions,
         each of which has been approved by the Board of Directors of the
         Company subject to shareholder approval.

         On August 3, 2001, Nasdaq notified the Company that its securities will
         continue to be listed on the Nasdaq SmallCap Market with a temporary
         exception from the Net Tangible Asset and Minimum Bid Price
         requirements. The exception requires the Company to report net tangible
         assets in excess of $3.5 million by September 4, 2001, and for the
         Company's common stock to demonstrate a closing bid price at or above
         $1.00 per share on or before September 4, 2001 and immediately
         thereafter a closing bid price at or above $1.00 for at least 10
         consecutive trading days. Satisfaction of these conditions will require
         that the Company's shareholders approve the various transactions
         outlined above at the special meeting of shareholders. In the event the
         Company is deemed to have met the terms of the exception, its common
         stock shall continue to be listed on The Nasdaq SmallCap Market. If the
         above transactions are not approved by shareholders and the Company is
         delisted from Nasdaq, these events could adversely impact the Company's
         ability to raise additional capital.


                                       10
<PAGE>   11

ITEM 2.

                          FIRSTWAVE TECHNOLOGIES, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Firstwave Technologies, Inc. provides Internet-based customer relationship
management (eCRM) solutions. The Company is based in Atlanta, Georgia with an
office located in London, England. Firstwave offers powerful applications that
optimize the sales, marketing and customer service functions through a series of
solutions. The Company supports three product lines: Firstwave eCRM,
Takecontrol(R), and Firstwave for Unix.

RESULTS OF OPERATIONS

Total revenues decreased 35.6% from $2,710,000 in the second quarter of 2000 to
$1,745,000 in the second quarter of 2001. Year to date total revenues decreased
36.4% from $5,279,00 in 2000 to $3,358,000 in 2001. These decreases are
primarily due to decreases in software sales and decreases in maintenance
revenues due to cancellation of maintenance agreements by Takecontrol software
customers. Software revenues decreased 65.6% from $967,000 in the second quarter
of 2000 to $333,000 in the second quarter of 2001. Year to date software
revenues decreased 72.7% from $1,704,000 in 2000 to $465,000 in 2001. The
Company's software revenues are significantly dependent upon the timing of
closing of license agreements.

Services revenues increased 7.4% from $741,000 in the second quarter of 2000 to
$796,000 in the second quarter of 2001, and year to date increased 9.4% from
$1,413,000 in 2000 to $1,546,000 in 2001. The increases are primarily due to
increases in services engagements with existing customers.

Maintenance revenues decreased 36.6% from $916,000 in the second quarter of 2000
to $581,000 in the second quarter of 2001, and year to date, decreased 36.1%
from $2,010,000 for the first six months of 2000 compared to $1,284,000 for the
first six months of 2001. Maintenance revenues are the result of renewal
agreements from previous software license sales. The decreases are primarily due
to a decrease in the Company's Takecontrol installed base of systems covered
under maintenance agreements.

Cost of software revenues increased 46.9% from $224,000 in the second quarter of
2000 to $329,000 in the second quarter of 2001. Year to date, cost of software
revenues increased 18.1% from $519,000 in 2000 to $613,000 in 2001. The
increases are a result of the amortization of capitalized software additions of
the Firstwave eCRM product line. Cost of software revenues include costs of
third party software, amortization of capitalized software costs, media costs,
and documentation materials.

Cost of revenues for services decreased 24.8% from $654,000 in the second
quarter of 2000 to $492,000 in the second quarter of 2001 due to decreased
payroll and related costs. Cost of revenues for maintenance decreased 57.8% from
$408,000 in the second quarter of 2000 to $172,000 in the second quarter of 2001
primarily due to decreased international maintenance


                                       11
<PAGE>   12

costs associated with decreased international maintenance revenue and decreased
payroll and related costs.

Sales and marketing expense decreased 56.3% from $1,233,000 in the second
quarter of 2000 to $539,000 in the second quarter of 2001 and year to date
decreased 39.4% from $2,196,000 in 2000 to $1,330,000 in 2001. The decreases are
related to changes in the Company's marketing strategy which resulted in expense
reductions for advertising, direct mail and e-mail campaigns, as well as, lower
payroll costs and lower commission expense consistent with lower software
revenue.

The Company's product innovation and development expenditures, which includes
amounts capitalized, decreased 65.6% from $670,000 in the second quarter of 2000
to $230,000 in the second quarter of 2001. Year to date, product innovation and
development expenditures decreased 54.0% from $1,412,000 in 2000 to $649,000 in
2001. The decreases are primarily related to decreased use of outside
development contractors and the temporary reallocation of some development
resources to the services organization during second quarter 2000. Software
development costs capitalized during the three months and six months ended June
30, 2000 and June 30, 2001 were $375,000 and $875,000 and $83,000 and $307,000
respectively.

General and administrative expenses decreased 13.2% from $692,000 in the second
quarter of 2000 to $601,000 in the second quarter of 2001, and year to date
decreased 11.2% from $1,423,000 in 2000 to $1,264,000 in 2001, in each case
primarily due to decreases in personnel and personnel related costs.

Net interest income decreased 141.2% from $34,000 net interest income in the
second quarter of 2000 to $14,000 net interest expense in the second quarter of
2001 due to the decrease in invested cash balances and changes in the level of
borrowings during the period.

Other income results from a settlement agreement related to the cancellation by
a third party of a sublease of office space from the Company, offset by losses
related to the Company's securities investments.

The above factors combined to result in a 39.6% decrease in net loss from
$861,000 in the second quarter of 2000 to $520,000 in the second quarter of
2001, and a net loss per share of $0.14 for the second quarter of 2000 compared
to a net loss per share of $0.08 for the second quarter of 2001. Year to date,
net loss remained consistent at $1,679,000 in 2001 compared to $1,676,000 in
2000. Year to date, net loss per share decreased 6.9% from $0.29 per share in
2000 compared to $0.27 per share in 2001. The net loss per share amounts for the
quarters ended June 30, 2000 and June 30, 2001 also include dividends accrued on
preferred stock of $75,000 and $76,000 respectively.

BALANCE SHEET

Net accounts receivable decreased 58.2% from $1,774,000 at December 31, 2000 to
$742,000 at June 30, 2001 due to collection of outstanding receivables and
decreased billings consistent with lower revenues. Property and equipment
decreased 30.0% from $717,000 at December 31, 2000 to $502,000 at June 30, 2001,
due to year to date depreciation offset by additional fixed asset purchases.
Capitalized software decreased 11.2% from $2,580,000 at December 31, 2000 to
$2,291,000 at June 30, 2001 due to year to date amortization offset by
additional capitalization of development costs. Accounts payable decreased 27.0%
from $679,000 to


                                       12
<PAGE>   13

$496,000 due to vendor payments and decreased expenses. Deferred revenue
decreased 34.9% from $1,047,000 at December 31, 2000 to $682,000 at June 30,
2001 primarily due to the recognition of six months of maintenance revenues
related to annual contracts billed in advance at year end. Accrued employee
compensation and benefits decreased 50.0% from $216,000 at December 31, 2000 to
$108,000 at June 30, 2001 due to decreased accruals related to lower personnel
counts and decreased commission accruals consistent with lower software
revenues. Borrowings decreased 73.5% from $2,836,000 at December 31, 2000 to
$750,000 at June 30, 2001 due to repayment of borrowings net of new borrowings.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2001, the balance of cash and cash equivalents was $738,000
compared to $1,281,000 at December 31, 2000. Since December 31, 2000, the
Company has repaid its bank debt of $636,000. The Company has implemented
several measures in an effort to reduce the Company's expenses and to help the
Company preserve cash.

The Company's future capital requirements will depend on many factors, including
its ability to increase revenue levels and reduce costs of operations to
generate positive cash flows, as well as the timing and extent of spending to
support product development efforts and expansion of sales and marketing, and
market acceptance of the Company's products. Although the Company has
historically been able to satisfy its cash requirements, there can be no
assurance that efforts to obtain sufficient financing for operations will be
successful in the future. The Company's future capital needs will be highly
dependent upon the Company's ability to control expenses and generate additional
software license revenues, and any projections of future cash needs and cash
flows are subject to substantial uncertainty. If the Company is not able to
generate the revenues it is projecting, it may need to raise additional capital.
If the Company is unable to obtain the necessary additional capital, it may be
required to reduce the scope of planned product development and sales and
marketing efforts, as well as reduce the size of current staff, all of which
could have a material adverse effect on its business, financial condition, and
the Company's ability to reduce losses or generate profits.

On July 19, 2001 the Company entered into a Convertible Note Purchase Agreement
with an investor providing funds to the Company in the amount of $500,025 in
exchange for a 9% secured promissory note. The note is automatically convertible
into 6,667 shares of Series C Convertible Preferred Stock upon approval of the
conversion by the Company's shareholders at a special meeting of shareholders
currently scheduled for August 29, 2001. The note bears interest at 9% per annum
through the date of conversion or repayment, and is secured by a lien on
substantially all of the assets of the Company. If the conversion of the note is
not approved by the shareholders of the Company, it will be due and payable on
October 31, 2001.

In response to a notification from Nasdaq of a deficiency in the continued
listing requirements of net tangible assets and market value of public float,
and the Company's presentation of a plan to regain and sustain compliance at a
hearing before the Nasdaq Listing Qualifications Panel on July 19, 2001, Nasdaq
notified the Company that its securities will continue to be listed on the
Nasdaq SmallCap Market with a temporary exception from the Net Tangible Asset
and Minimum Bid Price requirements. The exception requires the Company to report
net tangible assets in excess of $3.5 million by September 4, 2001, and for the
Company's common stock to demonstrate a closing bid price at or above $1.00 per
share on or before September 4, 2001 and immediately thereafter a closing bid
price at or above $1.00 for at least 10 consecutive trading days. Satisfaction
of these conditions will require that the Company's shareholders


                                       13
<PAGE>   14

approve the various transactions at the special meeting of shareholders.
Approval of the transactions would increase the Company's net tangible assets by
$2,952,000, to $3,591,000 as of July 31, 2001, a level that would allow the
Company to regain compliance with Nasdaq's SmallCap Market minimum net tangible
assets listing requirements. In the event the Company is deemed to have met the
terms of the exception, its common stock shall continue to be listed on The
Nasdaq SmallCap Market.

The Company believes it can meet these conditions and maintain its listing on
the Nasdaq SmallCap Market, but there can be no assurance that such will be the
case. If the above transactions are not approved by the Company's shareholders,
the Company's common stock would likely be delisted from Nasdaq, the Company
would be required to repay the 9% convertible secured promissory note on or
before October 31, 2001, and Mr. Brock's note would not convert into Series C
Preferred Stock. If the Company's shares are delisted from Nasdaq, the Company
believes it would be more difficult for the Company to raise additional capital.


                                       14
<PAGE>   15

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

                  Not Applicable

Item 2.  Changes in Securities

                  None

Item 3.  Defaults Upon Senior Securities

                  Not applicable

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

         The Annual Meeting of Shareholders was held on May 15, 2001, in
         Atlanta, Georgia, at which the following matters were submitted to a
         vote of the shareholders:

                  1.       Votes cast for or withheld regarding the election of
                           five (5) Directors for a term of one (1) year were as
                           follows:

<TABLE>
<CAPTION>
                           Name of Nominee          Votes For           Votes Withheld
                           ---------------          ---------          ---------------
                           <S>                      <C>                <C>
                           Roger A. Babb            5,081,130              322,551
                           Richard T. Brock         5,081,130              322,551
                           John F. Keane            5,081,130              322,551
                           Michael T. McNeight      5,081,130              322,551
                           James R. Porter          5,081,130              322,551
</TABLE>

                  2.       Votes cast for, against or abstained regarding an
                           amendment of the Company's 1993 Stock Option Plan to
                           increase the number of shares reserved for future
                           grants under the plan from 1,200,000 to 1,400,000.

<TABLE>
<CAPTION>
                           Votes For         Votes Against       Abstain
                           ---------         -------------       -------
                           <S>               <C>                 <C>
                           4,900,622            499,604           3,455
</TABLE>

                  3.       Votes cast for, against, or abstained regarding an
                           amendment of the Company's Employee Stock Purchase
                           Plan to increase the number of shares of Common Stock
                           reserved for possible purchase by Company employees
                           from 70,000 to 90,000.

<TABLE>
<CAPTION>
                           Votes For         Votes Against       Abstain
                           ---------         -------------       -------
                           <S>               <C>                 <C>
                           5,378,320             21,981           3,380
</TABLE>

Item 5.  Other Information

                  Not applicable


Item 6.  Exhibits and Reports on form 8-K


                                       15
<PAGE>   16

                                   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: August 10, 2001               /s/ Judith A. Vitale
                                    --------------------------------------------

                                    Judith A. Vitale
                                    Vice President of Finance and Administration


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