-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WD+zY3H/jgYFUr3xxVPlcDaXRcTOuPrtBbeV/FeVJWvmsYwNwQW/0BdRp2QkDdp3 Zz7IWUKvBKdDxIt1yBj2qQ== 0001045969-99-000723.txt : 19990928 0001045969-99-000723.hdr.sgml : 19990928 ACCESSION NUMBER: 0001045969-99-000723 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEBB INTERACTIVE SERVICES INC CENTRAL INDEX KEY: 0001011901 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 841293864 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-87887 FILM NUMBER: 99717958 BUSINESS ADDRESS: STREET 1: 1800 GLENARM PLACE STREET 2: STE 800 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032969200 MAIL ADDRESS: STREET 1: 1800 GLENARM PL STREET 2: SUITE 800 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: ONLINE SYSTEM SERVICES INC DATE OF NAME CHANGE: 19960410 S-3 1 FORM S-3 As filed with the Securities & Exchange Commission on September 27, 1999 Registration No. 333-______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 _________________________ WEBB INTERACTIVE SERVICES, INC. (Exact name of issuer as specified in its charter) Colorado 84-1293864 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 1800 Glenarm Place, Suite 700 Denver, Colorado 80202 (303) 296-9200 (Address and telephone number of principal executive offices) _________________________ R. Steven Adams Webb Interactive Services, Inc. 1800 Glenarm Place, Suite 700 Denver, Colorado 80202 (303) 296-9200 (Name, address and telephone number of agent for service) Copy to: Lindley S. Branson Steven J. Price Gray, Plant, Mooty, Mooty & Bennett, P.A. 33 South Sixth Street 3400 City Center Minneapolis, Minnesota 55402 (612) 343-2800 _________________________ Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of earlier effective registration statement for same offering. [_] _______________________________________________ If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for same offering. [_] _________________________________________________________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] CALCULATION OF REGISTRATION FEE
Title of securities Amount to be Proposed maximum Proposed maximum aggregate Amount of to be registered registered offering price (1) offering price (1) registration fee - ---------------------------------------------------------------------------------------------------------------------------- Common Stock, no par 1,129,568 $11.625 $13,131,228 $3,650.48 value (1)(2) ---------------------- ------------------------------ ---------------------- Total 1,129,568 $11.625 $13,131,228 $3,650.48
_______________________________ (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of Regulation C as of the close of the market on September 21, 1999. (2 Common stock issuable by Webb upon exercise of a stock purchase warrant (136,519 shares) and which may be issuable upon conversion of an outstanding promissory note in the principal amount of $5,000,000, provided that the note is not redeemed. The note does not become convertible until December 23, 1999. The shares include any additional shares issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. _______________________________ The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. SUBJECT TO COMPLETION, DATED SEPTEMBER 27, 1999 PROSPECTUS WEBB INTERACTIVE SERVICES, INC. This is a public offering of a maximum of 1,129,568 shares of common stock of Webb Interactive Services, Inc. The shares include up to 993,049 shares which are reserved for issuance upon conversion of a 10% promissory note in the principal amount of $5,000,000 and 136,519 shares issuable upon exercise of a transferable warrant. The note becomes convertible on December 23, 1999, if not redeemed earlier. The selling shareholder is offering all of the shares to be sold. We will not receive any of the proceeds from the offer and sale of the shares, however, 136,519 of the shares offered by the selling shareholder are issuable upon the exercise of an outstanding warrant of Webb at an exercise price of $11.44 per share ($1,561,777 in the aggregate). The Nasdaq SmallCap Market lists our common stock under the symbol WEBB. Investing in our common stock involves risks. You should not purchase our common stock unless you can afford to lose your entire investment. See "Risk Factors" beginning on page 4 of this prospectus. Because the selling shareholder will offer and sell the shares at various times, we have not included in this prospectus information about the price to the public of the shares or the proceeds to the selling shareholder. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities or passed on the adequacy of the disclosures in this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is September __, 1999 WEBB INTERACTIVE SERVICES, INC. Webb Interactive Services, Inc. (Nasdaq: WEBB) ("Webb") is developing a new generation of XML-based Internet applications that simplify and support e-commerce transactions in local markets. Our products provide an interactive framework of local commerce and community-based services comprised of publishing content management, community-building and communications. Branded CommunityWare/XML, our products generally are offered on a private-labeled, application service basis through high-volume distribution partners such as yellow page publishers, newspapers, city guides and search engines. To date, we have generated revenues through the sale of design and consulting services for Web site development and network engineering services, resale of software licenses, mark-ups on computer hardware and software sold to customers, maintenance fees charged to customers to maintain computer hardware and Web sites, license fees based on a percentage of revenues from our products and services, training course fees, and monthly fees paid by customers for Internet access which we have provided. We were founded in March 1994 and commenced sales in February 1995 and have incurred losses from operations since inception. At June 30, 1999, we had an accumulated deficit of $30,620,542. The reports of our independent public accountants for the years ended December 31, 1998 and 1997 contained a paragraph noting substantial doubt regarding our ability to continue as a going concern. Based on our current projections, we have cash on hand which will allow us to operate through February 2000. Accordingly, we will need to raise additional capital, which could involve the issuance of dilutive equity securities and/or reduce our operating activity to conserve cash. Prior to the third quarter of 1997, our focus generally was on three markets: general Web site development, maintenance and hosting; rural or small market Internet service providers ("ISPs"); and healthcare information services and continuing medical education. Each of these activities involved, to varying degrees, the building of online communities and the development of tools and services to allow for the building of strategic and customized Web sites. As an outgrowth of these activities, since mid 1997, our business has evolved to the development of online communities and more recently, the development of Internet applications that simplify and support e-commerce transactions in local markets. Our application services are being developed to solve two of the largest problems in the local online market; the failure of merchants to have their web sites found by their target customers, and the inability of customers to find merchants, compare products and services, and ask questions, or conduct transactions such as making an appointment or requesting a bid. The opportunity to connect buyers and sellers in the rapidly emerging local online market is significant. The Kelsey Group estimates that the number of U.S. based local businesses that are active advertisers and that have a web presence will increase from 1.9 million in 1999 to 5.2 million in 2004. According to Forrester Research, local online sales are projected to grow from $680 million in 1998 to $6.1 billion in 2003. The local only advertising dollars spent in support of these web site activities are projected to grow from $135 million in 1998 to $1.7 billion in 2003. Our application solutions are intended to provide: . Local market merchants with advanced yet easy-to-use web site publishing tools, new ways to have their site found by their target customers, and services that turn web site visitors into leads, buyers, and repeat customers. . Consumers with unique abilities to easily comparison shop and interact online with merchants in support of e-commerce or in-store transactions. . Directory services and yellow page publishers who host local market merchant sites with enhanced services to attract a larger share of merchant web sites and command premium fees for site development and hosting. 2 In addition to targeting the local directory and e-commerce markets, we also offer online banking transaction processing and management services to local-market focused credit unions and community banks. Over the next year, we intend to offer a suite of XML-enabled services to these financial institutions to enhance customer service and support and connect their loans and other financial services into the local e-commerce marketplace. We have over five years of experience in web site development and in developing and marketing community building tools supported by a full suite of content rich services. Customers have included Citicorp Diners Club, Invesco Funds Group, TCI International, Intermedia Partners and Bresnan Communications, Inc. During the first six months of 1999, we acquired privately held Durand Communications, Inc. and NetIgnite, Inc. We have contracted with Switchboard, Inc. as a key distribution partner in the online local directories market and with CU Cooperative Systems, Inc. in the community banking arena. We believe these partners may provide a critical mass of end users that will generate sustainable and recurring revenue for Webb and a strong foundation on which to build enhanced distribution relationships with other market leaders. As a result of these agreements, we expect our revenues to increase during the remainder of fiscal 1999 and beyond: Our strategy is to develop a competitive advantage and build a leadership position in a local e-commerce by: in local e-commerce by: . Delivering leading-edge technical solutions that provide first mover advantage and capitalize on our expertise in online community, communication and XML-based technologies; . Securing additional distribution partnerships that drive the deployment of our technologies to a critical mass of end-users; and . Providing innovative, value-added services to enhance buyer-seller interaction. On August 25, 1999, we issued to the selling shareholder a three-year convertible promissory note in the amount of $5,000,000 and a five-year warrant representing the right to acquire 136,519 shares of our common stock at an exercise price of $11.44 per share in consideration for which the selling shareholder loaned us $5,000,000. The note becomes convertible 120 days after issuance at a conversion price equal to the lesser of $11.14 or the average of the five lowest closing bid prices for our common stock during the 15 trading days prior to the date of conversion, if we have yet redeemed the note. Webb was incorporated under the laws of the State of Colorado on March 22, 1994. Our executive offices are located at 1800 Glenarm Place, Suite 700, Denver, Colorado 80202, telephone number (303) 296-9200. 3 RISK FACTORS Our limited operating history could affect our business. We were founded in March 1994 and commenced sales in February 1995. Accordingly, we have a limited operating history upon which you may evaluate us. Our business is subject to the risks, expenses and difficulties frequently encountered by companies with a limited operating history including: . Limited ability to respond to competitive developments, . Exaggerated effect of unfavorable changes in general economic and market conditions, . Ability to attract qualified personnel, and . Ability to develop and introduce new product and service offerings. There is no assurance we will be successful in addressing these risks. If we are unable to successfully address these risks our business could be significantly affected. We have accumulated losses since inception and we anticipate that we will continue to accumulate losses for the foreseeable future. We have incurred net losses since inception totaling $30,620,542 through June 30, 1999. In addition, we expect to incur additional substantial operating and net losses in 1999 and for one or more years thereafter. We expect to incur these additional losses because: . We currently intend to increase our capital expenditures and operating expenses to expand the functionality and performance of our products and services, . We recorded goodwill and other intangible assets in connection with the DCI and NetIgnite acquisitions which will be amortized over their estimated useful lives of approximately three years. We have allocated approximately $15 million to goodwill and other intangible assets in connection with these acquisitions. Net losses since inception include approximately $10.2 million of non-cash expenses related to the issuance of preferred stock and warrants in financing transactions and warrants issued to three customers. The current competitive business environment may result in our issuance of similar securities in future financing transactions or to other companies as an inducement for them to enter into a business relationship with us. While these transactions represent non- cash charges, to the extent that we enter into similar transaction in the future, they will increase our expenses and may increase our net loss. If we are unable to raise additional working capital funds, we may not be able to sustain our operations. We believe that our present cash and cash equivalents, working capital and commitments for additional equity investments will be adequate to sustain our current level of operations only through February 2000. If we cannot raise additional funds when needed, we may be required to curtail or scale back our operations. These actions could have a material adverse effect on our business, financial condition, or results of operations. We estimate that we will need to raise through equity, debt or other external financing at least $10 million to sustain operations for the next 12 months. There is no assurance that we will be able to raise additional funds in amounts required or upon acceptable terms. In addition, we may discover that we have underestimated our working capital needs, and we may need to obtain additional funds to sustain our operations. In its report accompanying the audited financial statements for the years ended December 31, 1998 and 1997, our auditor, Arthur Andersen LLP, expressed substantial doubt about our ability to continue as a going concern. We may never become or remain profitable. Our ability to become profitable depends on the ability of our products and services to generate revenues. The success of our revenue model will depend upon many factors including: . The success of our distribution partners in marketing their products and services, and . The extent to which consumers and businesses use our products and conduct e-commerce transactions and advertising utilizing our products. Because of the new and evolving nature of the Internet, we cannot predict whether our revenue model will prove to be viable, whether demand for our products and services will materialize at the prices we expect to be charged, or whether current or future pricing levels will be sustainable. Additionally, our customer contracts may 4 result in significant development revenue in one quarter, which will not recur in the next quarter for that customer. As a result, it is likely that certain components of our revenue will be volatile, which may cause our stock price to be volatile as well. Our business depends on the growth of the Internet. Our business plan assumes that the Internet will develop into a significant source of communication and communication interactivity. However, the Internet market is new and rapidly evolving and there is no assurance that the Internet will develop in this manner. If the Internet does not develop in this manner, our business, operating results and financial condition would be materially adversely effected. Numerous factors could prevent or inhibit the development of the Internet in this manner, including: . The failure of the Internet's infrastructure to support Internet usage or electronic commerce, . The failure of businesses developing and promoting Internet commerce to adequately secure the confidential information, such as credit card numbers, needed to carry out Internet commerce, and . Regulation of Internet activity Use of many of our products and services will be dependent on distribution partners. Because we have elected to partner with other companies for the distribution of many of our products and services, many users of our products and services are expected to utilize our products through our distribution partners. As a result, our distribution partners, and not us, will substantially control the customer relationship with these users. If the business of the companies with whom we partner is adversely affected in any manner our business, operating results and financial condition could be materially adversely effected. We may be unable to develop desirable products. Our products are subject to rapid obsolescence and our future success will depend upon our ability to develop new products and services that meet changing customer and marketplace requirements. There is no assurance that we will be able to successfully: . Identify new product and service opportunities, or . Develop and introduce new products and services to market in a timely manner. If we are unable to accomplish these items, our business, operating results and financial condition could be materially adversely affected. Our products and services may not be successful. Even if we are able to successfully identify, develop, and introduce new products and services there is no assurance that a market for these products and services will materialize to the size and extent that we anticipate. If a market does not materialize as we anticipate, our business, operating results, and financial condition could be materially adversely affected. The following factors could affect the success of our products and services: . The failure of our business plan to accurately predict the rate at which the market for Internet products and services will grow, . The failure of our business plan to accurately predict the types of products and services the future Internet marketplace will demand, . Our limited experience in marketing our products and services, . The failure of our business plan to accurately predict our future participation in the Internet marketplace, . The failure of our business plan to accurately predict the estimated sales cycle, price, and acceptance of our products and services, . The development by others of products and services that renders our products and services noncompetitive or obsolete, or . Our failure to keep pace with the rapidly changing technology, evolving industry standards, and frequent new product and service introductions that characterize the Internet marketplace. The intense competition that is prevalent in the Internet market could have a material adverse effect on our business. Our current and prospective competitors include many companies whose financial, technical, marketing and other resources are substantially greater than ours. There is no assurance that we will have the financial resources, technical expertise, or marketing, sales and support capabilities to compete successfully. The 5 presence of these competitors in the Internet marketplace could have a material adverse effect on our business, operating results, or financial condition by causing us to: . Reduce the average selling price of our products and services, or . Increase our spending on marketing, sales and product development. There is no assurance that we would be able to offset the effects of any such price reductions or increases in spending through an increase in the number of our customers, higher sales from premium services, cost reductions or otherwise. Further, our financial condition may put us at a competitive disadvantage relative to our competitors. If we fail to, or cannot, meet competitive challenges, our business, operating results and financial condition could be materially adversely affected. A limited number of our customers generate a significant portion of our revenues. We had four customers representing 77% of revenues for the June 30, 1999 three-month period and four customers representing 82% of net revenues for the similar 1998 period. We had four customers representing 83% of revenues for the June 30, 1999 six-month period and three customers representing 74% of revenues for the similar 1998 period. There is no assurance that we will be able to attract or retain major customers. The loss of, or reduction in demand for products or related services from major customers could have a material adverse effect on our business, operating results, cashflows, and financial condition. The sales cycle for our products and services is lengthy and unpredictable. While our sales cycle varies from customer to customer, it typically has ranged from one to six months for projects. Our pursuit of sales leads typically involves an analysis of our prospective customer's needs, preparation of a written proposal, one or more presentations and contract negotiations. We often provide significant education to prospective customers regarding the use and benefits of our Internet technologies and products. Our sales cycle may also be affected by a prospective customer's budgetary constraints and internal acceptance reviews, over which we have little or no control. In order to quickly respond to, or anticipate, customer requirements, we may begin development work prior to having a signed contract, which exposes us to the risk that the development work will not be recovered from revenue from that customer. We may be unable to adjust our spending to account for potential fluctuations in our quarterly results. As a result of our limited operating history, we do not have historical financial data for a sufficient number of periods on which to base planned operating expenses. Therefore, our expense levels are based in part on our expectations as to future sales and to a large extent are fixed. We typically operate with little backlog and the sales cycles for our products and services may vary significantly. As a result, our quarterly sales and operating results generally depend on the volume and timing of and the ability to close customer contracts within the quarter, which are difficult to forecast. We may be unable to adjust spending in a timely manner to compensate for any unexpected sales shortfalls. If we were unable to so adjust, any significant shortfall of demand for our products and services in relation to our expectations would have an immediate adverse effect on our business, operating results and financial condition. Further, we currently intend to increase our capital expenditures and operating expenses to fund product development and increase sales and marketing efforts. To the extent that such expenses precede or are not subsequently followed by increased sales, our business, operating results and financial condition will be materially adversely affected. We may be unable to retain our key executives and research and development personnel. Our future success also depends in part on our ability to identify, hire and retain additional personnel, including key product development, sales, marketing, financial and executive personnel. Competition for such personnel is intense and there is no assurance that we can identify or hire additional qualified personnel. Executives and research and development personnel who leave us may compete against us in the future. We generally enter into written nondisclosure and nonsolicitation agreements with our officers and employees which restrict the use and disclosure of proprietary information and the solicitation of customers for the purpose of selling competing products or services. However, we generally do not require our employees to enter into non-competition agreements. Thus, if any of these officers or key employees left, they could compete with us, so long as they did not solicit our customers. Any such competition could have a material adverse effect on our business. 6 We may be unable to manage our expected growth. If we are able to implement our growth strategy, we will experience significant growth in the number of our employees, the scope of our operating and financial systems, and the geographic area of our operations. There is no assurance that we will be able to implement in whole or in part our growth strategy or that our management or other resources will be able to successfully manage any future growth in our business. Any failure to do so could have a material adverse effect on our operating results and financial condition. We may be unable to protect our intellectual property rights. Intellectual property rights are important to our success and our competitive position. There is no assurance that the steps we take to protect our intellectual property rights will be adequate to prevent the imitation or unauthorized use of our intellectual property rights. Policing unauthorized use of proprietary systems and products is difficult and, while we are unable to determine the extent to which piracy of our software exists, we expect software piracy to be a persistent problem. In addition, the laws of some foreign countries do not protect software to the same extent as do the laws of the United States. Even if the steps we take to protect our proprietary rights prove to be adequate, our competitors may develop products or technologies that are both non-infringing and substantially equivalent or superior to our products or technologies. Computer viruses and similar disruptive problems could have a material adverse effect on our business. Our software and equipment may be vulnerable to computer viruses or similar disruptive problems caused by our customers or other Internet users. Our business, financial condition or operating results could be materially adversely effected by: . Losses caused by the presence of a computer virus that causes us or third parties with whom we do business to interrupt, delay or cease service to our customers, . Losses caused by the misappropriation of secured or confidential information by a third party who, in spite of our security measures, obtains illegal access to this information, . Costs associated with efforts to protect against and remedy security breaches, or . Lost potential revenue caused by the refusal of consumers to use our products and services due to concerns about the security of transactions and commerce that they conduct on the Internet. Future government regulation could materially adversely effect our business. There are currently few laws or regulations directly applicable to access to, communications on, or commerce on the Internet. Therefore, we are not currently subject to direct regulation of our business operations by any government agency, other than regulations applicable to businesses generally. Due to the increasing popularity and use of the Internet, however, federal, state, local, and foreign governmental organizations are currently considering a number of legislative and regulatory proposals related to the Internet. The adoption of any of these laws or regulations may decrease the growth in the use of the Internet, which could, in turn: . Decrease the demand for our products and services, . Increase our cost of doing business, or . Otherwise have a material adverse effect on our business, results of operations and financial condition. Moreover, the applicability to the Internet of existing laws governing issues such as property ownership, copyright, trademark, trade secret, obscenity, libel and personal privacy is uncertain and developing. Our business, results of operations and financial condition could be materially adversely effected by the application or interpretation of these existing laws to the Internet. Our systems may not be year 2000 compliant. We have reviewed our internal software and hardware systems. Based on this review, we believe that our internal software and hardware systems will function properly with respect to dates in the year 2000 and thereafter. We expect to incur no significant costs in the future for Year 2000 problems. Nonetheless, there is no assurance in this regard until our internal software and hardware systems are operational in the year 2000. The failure to correct material Year 2000 problems by our suppliers and vendors could result in an interruption in, or a failure of, certain of our normal business activities or operations. Due to the general uncertainty inherent in the Year 2000 problem, resulting from the uncertainty of the Year 2000 readiness of third-party suppliers and vendors and of our customers, we are unable to determine at this time that the consequences of Year 2000 failures will not have a material impact on our results of operations, liquidity or financial condition. 7 Our articles of incorporation and bylaws may discourage lawsuits and other claims against our directors. Our articles of incorporation provide, as permitted by Colorado law, that our directors shall have no personal liability for certain breaches of their fiduciary duties to us. In addition, our bylaws provide for mandatory indemnification of directors and officers to the fullest extent permitted by Colorado law. These provisions may reduce the likelihood of derivative litigation against directors and may discourage shareholders from bringing a lawsuit against directors for a breach of their duty. The price of our common stock has been highly volatile due to factors that will continue to effect the price of our stock. Our common stock traded as high as $19.38 per share and as low as $8.00 between January 1, 1999 and September 15, 1999. Historically, the over-the-counter markets for securities such as our common stock have experienced extreme price and volume fluctuations. Some of the factors leading to this volatility include: . Price and volume fluctuations in the stock market at large that do not relate to our operating performance, . Fluctuations in our quarterly revenue and operating results, . Announcements of product releases by us or our competitors, . Announcements of acquisitions and/or partnerships by us or our competitors, and . Increases in outstanding shares of common stock upon exercise or conversion of derivative securities. These factors may continue to affect the price of our common stock in the future. The trading volume of our common stock may diminish significantly if our common stock is prohibited from being traded on the Nasdaq SmallCap Market. Although our shares are currently traded on The Nasdaq SmallCap Market, there is no assurance that we will remain eligible to be included on Nasdaq. If our common stock was no longer eligible for quotation on Nasdaq, it could become subject to rules adopted by the Securities and Exchange Commission regulating broker-dealer practices in connection with transactions in "penny stocks." If our common stock became subject to the penny stock rules, many brokers may be unwilling to engage in transactions in our common stock because of the added regulation, thereby making it more difficult for purchasers of our common stock to dispose of their shares. We have issued numerous options, warrants, and convertible securities to acquire our common stock that could have a dilutive effect on our shareholders. We have issued numerous options, warrants, and convertible securities to acquire our common stock. During the terms of these outstanding options, warrants, and convertible securities, the holders of these securities will have the opportunity to profit from an increase in the market price of our common stock with resulting dilution to the holders of shares who purchased shares for a price higher than the respective exercise or conversion price. The existence of such stock options, warrants and convertible securities may adversely affect the terms on which we can obtain additional financing, and you should expect the holders of such options or warrants to exercise or convert those securities at a time when we, in all likelihood, would be able to obtain additional capital by offering securities on terms more favorable to us than those provided by the exercise or conversion of such options or warrants. As of September 15, 1999, we have issued the following warrants and options and convertible notes convertible into shares of our common stock: . Options and warrants to purchase 2,052,119 shares of common stock upon exercise of such options and warrants, exercisable at prices ranging from $0.50 to $18.25 per share, with a weighted average exercise price of approximately $9.75 per share. . Options issued to EBI Securities Corporation, the representative of the underwriters involved in our initial public offering (the "Representative's Option"), to purchase 106,700 shares of common stock upon exercise of the Representative's Option at a purchase price of $8.10 per share. . Warrants issued in connection with the issuance of the 10% Preferred Stock to purchase 53,500 shares of common stock upon exercise of such warrants, exercisable at $15.00 per share. . Warrants issued in connection with the issuance of the 5% Preferred Stock to purchase 100,000 shares of common stock upon exercise of such warrants, exercisable at $16.33 per share. . Warrants issued to customers to purchase 231,829 shares of common stock upon exercise of such warrants, exercisable at $8.77 to $9.94 8 . Warrants issued to purchase 242,293 shares of common stock at prices ranging from $4.30 to $20.33 assumed in connection with the acquisition of Durand Communications, Inc. . Notes convertible into 70,000 shares of common stock at conversion prices ranging from $9.61 to $9.75. . Warrants issued to purchase 136,519 shares of common stock at an exercise price of $11.44. In addition to these derivative securities, we have reserved an indeterminate number of shares of common stock for issuance upon conversion of outstanding shares of our 10% Preferred Stock and which may become issuable upon the conversion of our 10% promissory note which will become convertible on December 23, 1999, if not redeemed earlier. Based on the market value for the common stock as of September 15, 1999, the then outstanding 10% Preferred Stock were convertible into approximately 99,508 shares of common stock. The number of shares of common stock issuable upon conversion of the 10% Preferred Stock could increase significantly if the market value for our common stock decreases in the future. Further, there could be issuances of additional similar securities in connection with our need to raise additional working capital. Future sales of our common stock in the public market could adversely affect the price of our common stock. Sales of substantial amounts of common stock in the public market that is not currently freely tradable, or even the potential for such sales, could have an adverse affect on the market price for shares of our common stock and could impair the ability of purchasers of our common stock to recoup their investment or make a profit. As of September 15, 1999, these shares consist of: . Approximately 650,000 shares owned by our officers and directors ("Affiliate Shares"), . Approximately 1,650,000 shares issued to former shareholders and warrant and option holders of Durand Communications, Inc. and for services rendered offered pursuant to a registration statement to be declared effective by the SEC on September 27, 1999, and . The shares being offered pursuant to this Prospectus. Unless the Affiliate Shares are further registered under the securities laws, they may not be resold except in compliance with Rule 144 promulgated by the SEC, or some other exemption from registration. Rule 144 does not prohibit the sale of these shares but does place conditions on their resale which must be complied with before they can be resold. The common stock issuable upon conversion of our convertible notes may significantly increase the supply of our common stock in the public market, which may cause our stock price to decline. On August 25, 1999, we issued $5,000,000 aggregate principal amount of convertible notes and a warrant to purchase 136,519 shares of Common Stock. The convertible notes will become convertible on December 23, 1999, if not redeemed earlier, into a number of shares of common stock as is determined by dividing the principal amount of the convertible notes by the lesser of: . a fixed conversion price which is initially $11.44 per share, but will be increased under the terms of the convertible notes; and . the floating market price of our common stock at the time of conversion. The number of shares of common stock that may ultimately be issued upon conversion is presently indeterminable and could fluctuate significantly. Purchasers of common stock could therefore experience substantial dilution upon conversion of the convertible notes. To illustrate the potential dilution that may occur upon conversion of the convertible notes, the following table sets forth the number of shares of common stock that would be issued upon conversion of the convertible notes if the conversion price is $11.44, which is the initial conversion price, and also if the conversion price is $9.00 and $7.00 per share.
Conversion Price Shares issuable upon conversion(1) Percentage(2) - ---------------- ---------------------------------- -------------- $11.44 (the initial conversion price) 441,134 5.8% $9.00 560,731 7.6% $7.00 720,939 9.4%
- ----------------------- (1) Assumes interest through September 27, 1999, and full principal amount is converted. (2) Based on the number of shares outstanding on September 15, 1999. 9 The variable conversion price formula could affect the common stock as follows: . If our common stock trades at a price less than the fixed conversion price, which is initially $11.44 per share, then the convertible notes will be convertible into shares of our common stock at variable rates based on future trading prices of the common stock and events that may occur in the future. The number of shares of common stock issuable upon conversion of the convertible notes will be inversely proportional to the market price of the common stock at the time of conversion. . To the extent that the holders of the convertible notes convert and then sell their common stock, the common stock price may decrease due to the additional shares in the market, allowing holders to convert the convertible notes into greater amounts of common stock, further depressing the stock price. . The interest payable on the convertible notes may be paid in cash, additional convertible notes or common stock at our option. In this regard, the lower the common stock price, the more shares of common stock the holders of the convertible notes will receive in payment of interest. . significant The downward pressure on the price of the common stock as the selling stockholders convert and sell material amounts of common stock could encourage short sales by the holders or others, placing further downward pressure on the price of the common stock. The warrants are also subject to anti-dilution protection, which may result in the issuance of more shares than originally anticipated if we issue securities at less than market value or the applicable exercise price. These factors may result in substantial future dilution to the holders of our common stock. Future sales of our common stock in the public market could limit our ability to raise capital. Sales of substantial amounts of common stock in the public market pursuant to Rule 144, upon exercise or conversion of derivative securities or otherwise, or even the potential for such sales, could affect our ability to raise capital through the sale of equity securities. Provisions in our articles of incorporation allow us to issue shares of stock that could make a third party acquisition of us difficult. Our Articles of Incorporation authorize our Board of Directors to issue up to 20,000,000 shares of common stock and 5,000,000 shares of preferred stock in one or more series, the terms of which may be determined at the time of issuance by the Board of Directors, without further action by our shareholders. Preferred stock authorized by the Board of Directors may include voting rights, preferences as to dividends and liquidation, conversion and redemptive rights and sinking fund provisions. If the Board of Directors authorizes the issuance of preferred stock in the future, this authorization could affect the rights of the holders of common stock, thereby reducing the value of the common stock, and could make it more difficult for a third party to acquire us, even if a majority of the holders of our common stock approved of an acquisition. Our issuances of derivative securities will require us to record non-cash expenses which will, in turn, increase our net loss available to shareholders. We will record a non-cash expense in the amount of approximately $900,000 during the quarter ending September 30, 1999 as a result of our issuance of a three-year warrant to acquire 150,000 shares to a customer. The agreement with the customer contemplates the issuance of a second warrant, subject to certain conditions, to purchase 150,000 shares of common stock which, if issued, could result in similar charges in the future. In addition, on August 25, 1999, we completed a bridge financing in the amount of $5,000,000. The financing was in the form of a redeemable promissory note which becomes convertible into our common stock if not redeemed prior to December 23, 1999, and a five-year warrant representing the right to acquire 136,519 shares of our common stock. During the 120-day period following the issuance of the note, we will record a non-cash charge for accretion relating to the conversion feature of the note of from approximately $1.3 million to $1.9 million and during the term of the note we expect to incur additional non-cash charges for interest expense of from approximately $500,000 to $1.1 million based upon the fair value of the warrant. We do not anticipate paying dividends on our common stock for the foreseeable future. We have never paid dividends on our common stock and do not intend to pay any dividends on our common stock in the foreseeable future. Any decision by us to pay dividends on our common stock will depend upon our profitability at 10 the time, cash available therefor, and other factors. We anticipate that we will devote profits, if any, to our future operations. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements made in this prospectus and the documents incorporated by reference in this prospectus under the captions "Webb Interactive Services, Inc." and "Risk Factors" and elsewhere in this prospectus constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to the safe harbor provisions of the reform act. Forward-looking statements may be identified by the use of the terminology such as may, will, expect, anticipate, intend, believe, estimate, should, or continue or the negatives of these terms or other variations on these words or comparable terminology. To the extent that this prospectus contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of Webb, you should be aware that our actual financial condition, operating results and business performance may differ materially from that projected or estimated by Webb in the forward-looking statements. We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from their current expectations. These differences may be caused by a variety of factors, including but not limited to adverse economic conditions, intense competition, including entry of new competitors, ability to obtain sufficient financing to support our operations, progress in research and development activities, variations in costs that are beyond our control, changes in capital expenditure budgets for cable companies, adverse federal, state and local government regulation, inadequate capital, unexpected costs, lower sales and net income, or higher net losses than forecasted, price increases for equipment, inability to raise prices, failure to obtain new customers, the possible fluctuation and volatility of our operating results and financial condition, inability to carry out marketing and sales plans, loss of key executives, and other specific risks that may be alluded to in this prospectus. USE OF PROCEEDS We will not receive any of the proceeds from the offer and sale of the shares, however, 136,519 of the shares offered by the selling shareholder are issuable upon the exercise of an outstanding warrant of Webb at an exercise price of $11.44 per share. If the warrant is exercised in full, we will receive proceeds of $1,561,777. SELLING SHAREHOLDER The common stock covered by this prospectus consists of shares issued or issuable upon conversion of our $5,000,000 aggregate principal amount of 10% Promissory Notes due August 25, 2002 and warrants to purchase 136,519 shares of our common stock. The number of shares that may be actually sold by the selling shareholder will be determined by such selling shareholder. Because the selling shareholder may sell all, some or none of the shares of common stock which it holds, and because the offering contemplated by this prospectus is not currently being underwritten, no estimate can be given as to the number of shares of common stock that will be held by the selling shareholder upon termination of the offering. The following table sets forth certain information regarding the selling shareholder, including: . The name of the selling shareholder, . The beneficial ownership of common stock of the selling shareholder as of September 24, 1999, and . The maximum number of shares of common stock offered by the selling shareholder. The information presented is based on data furnished to the Company by the selling shareholder and assumes a conversion price of $11.44 per share. The actual number of shares of common stock issuable upon conversion of the convertible notes is indeterminate, and is subject to adjustment and could be materially less or more than the amounts set forth in the table below, depending on factors which we cannot predict at this time, including, among other factors, our right to redeem the note before it becomes convertible and the future market price of the common stock. 11 The shares of common stock included in the table below represent a good faith estimate of the number of shares of common stock that will become issuable upon conversion of the convertible notes. Under the registration rights agreement, we are required to register for resale by the selling shareholder 1,129,568 shares of our common stock. This amount is based upon: . The number of shares convertible from the convertible notes and exercisable with respect to the warrants, and . The increased number of shares issuable with respect to the convertible notes if the conversion price declines. If the warrants were exercised in full, including accrued interest through September 27, 1999, and all of the convertible notes were converted at the conversion price of $11.44 per share, only 577,463 shares of common stock would be issued and available for resale under this prospectus. However, we cannot determine the exact number of shares of common stock that we will ultimately issue upon exercise of the warrants and conversion of the convertible notes if anti-dilution adjustments occur with respect to the warrants or the conversion price for the convertible notes changes from the initial conversion price. Pursuant to their terms, the convertible notes and warrants are convertible by any holder only to the extent that the number of shares thereby issuable, together with the number of shares of common stock owned by such holder, but not including unconverted shares of convertible notes or warrants, would not exceed 4.99% of the then outstanding common stock as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, unless such conversion is approved by the majority of the holders of common stock. Accordingly, the number of shares of common stock set forth in the third and fourth columns in the table below for the selling shareholder exceeds the number of shares of common stock that the selling shareholder beneficially owns as of September 24, 1999. This 4.99% limit may not prevent any holder from converting all of its convertible notes or exercising its warrants, because the holder can convert or exercise convertible notes and warrants into 4.99% of the outstanding common stock, then sell all of that stock to permit it to engage in further conversions or exercises. As a result, the 4.99% limit does not prevent the selling shareholder from selling more than 4.99% of our common stock. At our election, but subject to specific conditions, the notes are not convertible if shares to be received upon such conversion of all of the notes would equal or exceed 19.99% of our outstanding common stock.
Shares of Common Stock Owned if All Acquisition Rights Shares of Common are Exercised Shares of Common Stock Owned (Assuming No 4.99% Stock Included Under Beneficiallly Prior Limitation and Notes This Registration Selling Sharholder to Offering (%) Not Redeemed) (%) Statement (%) - ----------------------------------------------------------------------------------------------- Castle Creek Technology 136,51 (1.8%) 577,653 (7.0%) 1,129,568 (12.9%) Partners LLC, 77 West Wacker Drive, Suite 4040 Chicago, Illinois 60601 (1)
(1) Castle Creek Technology Partners, LLC beneficially owns approximately 401,000 shares, determined in accordance with Rule 13d-3, and disclaims beneficial ownership of any shares other than these shares. As investment manager, pursuant to a management agreement with Castle Creek Technology Partners LLC, Castle Creek Partners, LLC may be deemed to beneficially own the securities held by Castle Creek Technology Partners LLC. Castle Creek Partners, LLC disclaims such beneficial ownership. John Ziegelman and Daniel Asher, as managing members of Castle Creek Partners, LLC, may be deemed to be beneficial owners of such securities. Messrs. Asher and Ziegelman disclaim such beneficial ownership. 12 PLAN OF DISTRIBUTION The sale of the shares offered by this prospectus may be made in the Nasdaq SmallCap Market or other over-the-counter markets at prices and at terms then prevailing or at prices related to the then current market price or in negotiated transactions. These shares may be sold by one or more of the following: . A block trade in which the broker or dealer will attempt to sell shares as agent but may position and resell a portion of the block as principal to facilitate the transaction. . Purchases by a broker or dealer as principal and resale by a broker or dealer for its account using this prospectus. . Ordinary brokerage transactions and transactions in which the broker solicits purchasers. . In privately negotiated transactions not involving a broker or dealer. In effecting sales, brokers or dealers engaged to sell the shares may arrange for other brokers or dealers to participate. Brokers or dealers engaged to sell the shares will receive compensation in the form of commissions or discounts in amounts to be negotiated immediately prior to each sale. These brokers or dealers and any other participating brokers or dealers may be deemed to be underwriters within the meaning of the Securities Act of 1933 in connection with these sales. Webb will receive no proceeds from any resales of the shares offered by this prospectus, and we anticipate that the brokers or dealers, if any, participating in the sales of the shares will receive the usual and customary selling commissions. If the warrants are exercised in full, Webb will receive $1,561,177. To comply with the securities laws of some states, if applicable, the shares will be sold in these states only through brokers or dealers. In addition, in some states, the shares may not be sold in those states unless they have been registered or qualified for sale in these states or an exemption from registration or qualification is available and is complied with. Each sale may be made either at market prices prevailing at the time of such sale, at negotiated prices, at fixed prices which may be changed, or at prices related to prevailing market prices. If necessary, the specific shares of our common stock to be sold, the names of the selling shareholders, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post- effective amendment to the registration statement of which this prospectus is a part. We entered into a registration rights agreement in connection with the private placement of the convertible notes and the warrants which required us to register the underlying shares of our common stock under applicable federal and state securities laws under certain circumstances and at certain times. The registration rights agreement provides for cross-indemnification of the selling shareholder and us and each party's respective directors, officers and controlling persons against certain liabilities in connection with the offer and sale of the common stock, including liabilities under the Securities Act of 1933 and to contribute to payments the parties may be required to make in respect thereof. We have agreed to indemnify and hold harmless the selling shareholder from certain liabilities under the Securities Act of 1933. Under applicable rules and regulations under Regulation M under the Securities Exchange Act of 1934, any person engaged in the distribution of the common stock may not simultaneously engage in market making activities, subject to certain exceptions, with respect to the common stock for a specified period set forth in Regulation M prior to the commencement of such distribution and until its completion. In addition and without limiting the foregoing, the selling shareholder will be subject to the applicable provisions of the Securities Act of 1933 and Securities Exchange Act of 1934 and the rules and regulations thereunder, including, without limitation, Regulation M, which provisions may limit the timing of purchases and sales of shares of the common stock by the selling shareholder. The foregoing may affect the marketability of the common stock. We will bear all expenses of the offering of the common stock, except that the selling shareholders will pay any applicable underwriting commissions and expenses, brokerage fees and transfer taxes, as well as the fees and disbursements of counsel to and experts for the selling shareholders. 13 WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file with the SEC at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's public reference rooms located at it's regional offices in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0300 for further information on the operation of public reference rooms. You can also obtain copies of this material from the SEC's Internet web site located at http://www.sec.gov. The SEC allows us to incorporate by reference the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, file no. 0-28462: . Our annual report on Form 10-KSB for the year ended December 31, 1998. . Our quarterly report on Form 10-QSB for the quarter ended March 31, 1999. . Our quarterly report on Form 10-QSB for the quarter ended June 30, 1999. . The description of our common stock contained in our registration statement on Form 8-A filed with the SEC on May 22, 1996. . Our current report on Form 8-K dated January 11, 1999. . Our current report on Form 8-K dated July 14, 1999. . Our current report on Form 8-K filed September 2, 1999. You may request a copy of these filings, at no cost, by writing or telephoning us at the following address and telephone number: Shareholder Servic Attn:Kim Castillo Webb Interactive Services, Inc 1800 Glenarm Place Suite 700 Denver, Colorado 802202 (303) 296-9200 This prospect us is part of a registration statement we filed with the SEC. You should rely only on the information or representations provided in this prospectus. We have authorized no one to provide you with different information. The selling shareholder will not make an offer of these shares in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front page of this prospectus. LEGAL MATTERS Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, Minnesota, has issued an opinion about the legality of the shares registered by this prospectus. EXPERTS The financial statements of Webb incorporated by reference in this prospectus and elsewhere in the registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. Reference is made to said report, which includes an explanatory paragraph with respect to the uncertainty regarding our ability to continue as a going concern as discussed in Note 1 to the financial statements incorporated by reference. 14 INDEMNIFICATION Our articles of incorporation provide that we shall indemnify, to the full extent permitted by Colorado law, any of our directors, officers, employees or agents who are made, or threatened to be made, a party to a proceeding by reason of the fact that he or she is or was one of our directors, officers, employees or agents against judgments, penalties, fines, settlements and reasonable expenses incurred by the person in connection with the proceeding if specified standards are met. Although indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons under these provisions, we have been advised that, in the opinion of the SEC, indemnification for liabilities arising under the Securities Act of 1933 is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Our articles of incorporation also limit the liability of our directors to the fullest extent permitted by the Colorado law. Specifically, our articles of incorporation provide that our directors will not be personally liable for monetary damages for breach of fiduciary duty as directors, except for: . Any breach of the duty of loyalty to Webb or its shareholders, . Acts or omissions not in good faith or that involved intentional misconduct or a knowing violation of law, . Dividends or other distributions of corporate assets that are in contravention of specified statutory or contractual restrictions, . Violations of specified laws, or . Any transaction from which the director derives an improper personal benefit. ================================================================================ No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with the offer made by this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by Webb. This prospectus does not constitute an offer to sell or the solicitation of any offer to buy any security other than the securities offered by this prospectus, nor does it constitute an offer to sell or a solicitation of any offer to buy the securities offered by this prospectus by anyone in any jurisdiction in which the offer or solicitation is not authorized, or in which the person making the offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make an offer or solicitation. Neither the delivery of this prospectus nor any sale made under this prospectus shall, under any circumstances, create any implication that information contained in this prospectus is correct as of any time subsequent to the date of this prospectus. _____________________ TABLE OF CONTENTS
Page ---- Webb Interactive Services, Inc............................................. 2 Risk Factors............................................................... 3 Special Note Regarding Forward-Looking Statements.......................... 7 Use of Proceeds............................................................ 8 Selling Shareholder........................................................ 10 Plan of Distribution....................................................... 11 Where You Can Find More Information........................................ 14 Legal Matters.............................................................. 15 Experts.................................................................... 15 Indemnification............................................................ 15
WEBB INTERACTIVE SERVICES, INC. -------------- PROSPECTUS -------------- September __, 1999 PART II INFORMATION NOT REQUIRED TO BE IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The following table sets forth the various expenses of Webb in connection with the sale and distribution of the Shares being registered pursuant to this Form S-3 Registration Statement. All of the amounts shown are estimates, except for the Securities and Exchange Commission registration fee and the Nasdaq listing fee. All of such expenses will be paid by Webb. Securities and Exchange Commission fee $ 3,650.48 Accounting fees and expenses 2,000.00 Legal fees and expenses 10,000.00 Printing, Mailing 1,000.00 Transfer Agent fees 200.00 Miscellaneous $ 3,149.52 ---------- TOTAL $20,000.00
Item 15. Indemnification of Officers and Directors Webb's articles of incorporation provide that Webb shall indemnify, to the full extent permitted by Colorado law, any director, officer, employee or agent of Webb made or threatened to be made a party to a proceeding, by reason of the fact that such person is or was a director, officer, employee or agent of Webb against judgments, penalties, fines, settlements and reasonable expenses incurred by the person in connection with the proceeding if certain standards are met. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of Webb pursuant to the foregoing provisions, or otherwise, Webb has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. Webb's articles of incorporation limit the liability of its directors to the fullest extent permitted by Colorado law. Specifically, the articles of incorporation provide that directors of Webb will not be personally liable for monetary damages for breach of fiduciary duty as directors, except for (i) any breach of the duty of loyalty to Webb or its shareholders, (ii) acts or omissions not in good faith or that involved intentional misconduct or a knowing violation of law, (iii) dividends or other distributions of corporate assets that are in contravention of certain statutory or contractual restrictions, (iv) violations of certain laws, or (v) any transaction from which the director derives an improper personal benefit. Liability under federal securities law is not limited by the Articles. Item 16. Exhibits 3.1 Articles of Incorporation, as amended, of Webb Interactive Services, Inc. (1) 3.2 Bylaws of Webb Interactive Services, Inc. (2) 4.1 Specimen form of Webb Interactive Services, Inc. common stock certificate (3) 5.1 Opinion of Counsel* 10.1 Securities Purchase Agreement dated August 25, 1999 between Webb and the Selling Shareholder, including the Form of Warrant and Registration Rights Agreement (4) 10.2 Promissory note dated August 25, 1999 issued by Webb to the Selling Shareholder (4) 23.1 Consent of Arthur Andersen LLP* __________________ * Filed herewith (1) Filed with the Registration Statement on Form S-3, filed January 29, 1999, Commission File No. 333-71503. II-1 (2) Filed with the initial Registration Statement on Form SB-2, filed April 5, 1996, Commission File No. 333-3282-D. (3) Filed with the Registration Statement on Form S-3, filed September 24, 1999, Commission File No. 333-86465. (4) Filed with the current report on Form 8-K, filed September 2, 1999, Commission File No. 000-28462. Item 17. Undertakings A. The undersigned registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: (a) include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, (b) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or together, represent a fundamental change in the information in the registration statement, and (c) to include any additional or changed material information on the plan of distribution; (2) to treat, for determining liability under the Securities Act of 1933, each such post-effective amendment as a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering. B. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant as discussed above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-2 Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on September 24, 1999. WEBB INTERACTIVE SERVICES, INC. By /s/ R. Steven Adams ------------------------------------------ R. Steven Adams, Chairman and Chief Executive Officer KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints R. Steven Adams and Lindley S. Branson, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him/her and in his/her name, place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full powers and authority to do and perform each and every act and things requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below on September 24, 1999, by the following persons in the capacities indicated: /s/ R. Steven Adams - ------------------------------------------------------------------- R. Steven Adams, (Chairman, Chief Executive Officer and a Director) /s/ William R. Cullen - ------------------------------------------------------------------- William R. Cullen (Executive Vice President, Chief Financial Officer and a Director) /s/ Stuart J. Lucko - ------------------------------------------------------------------- Stuart J. Lucko (Controller) /s/ Perry Evans - ------------------------------------------------------------------- Perry Evans (President and a Director) /s/ * - ------------------------------------------------------------------- Robert J. Lewis (Director) ___________________________________________________________________ Richard C. Jennewine (Director) * by R. Steven Adams, attorney-in-fact II-3 Webb Interactive Services, Inc. Form S-3 Index to Exhibits 3.1 Articles of Incorporation, as amended, of Webb Interactive Services, Inc. (1) 3.2 Bylaws of Webb Interactive Services, Inc. (2) 4.1 Specimen form of Webb Interactive Services, Inc. common stock certificate (3) 5.1 Opinion of Counsel* 10.1 Securities Purchase Agreement dated August 25, 1999 between Webb and the Selling Shareholder, including the Form of Warrant and Registration Rights Agreement (4) 10.2 Promissory note dated August 25, 1999 issued by Webb to the Selling Shareholder (4) 23.1 Consent of Arthur Andersen LLP* ____________________ * Filed herewith (1) Filed with the Registration Statement on Form S-3, filed January 29, 1999, Commission File No. 333-71503. (2) Filed with the initial Registration Statement on Form SB-2, filed April 5, 1996, Commission File No. 333-3282-D. (3) Filed with the Registration Statement on Form S-3, filed September 24, 1999, Commission File No. 333-86465. (4) Filed with the current report on Form 8-K, filed September 2, 1999, Commission File No. 000-28462. II-4 EX-5.1 2 OPINION OF COUNSEL [Letterhead of Gray Plant Mooty Mooty & Bennett] Exhibit 5.1 Lindley S. Branson 612 343-2827 September 23, 1999 Webb Interactive Services, Inc. 1800 Glenarm Place Suite 800 Denver, CO 80202 RE: Form S-3 Registration Statement Ladies/Gentlemen: This opinion is furnished in connection with the registration, pursuant to the Securities Act of 1933, as amended, of a maximum of 1,129,568 shares of common stock, no par value (the "Shares"), of Webb Interactive Services, Inc. (the "Company" or "Webb") issuable upon the conversion of a promissory note and the exercise of a warrant issued by the Company pursuant to the Securities Purchase Agreement dated August 25, 1999, between the Company and Castle Creek Technology Partners LLC (the "Purchase Agreement"). We have acted as counsel to the Company in connection with the preparation of the Form S-3 Registration Statement (the "Registration Statement"). We have examined the Articles of Incorporation, as amended, the Bylaws of the Company, such records of proceedings of the Company as we deemed material and such other certificates, records and documents as we considered necessary for the purposes of this opinion. Based on the foregoing, we are of the opinion that the Shares, when issued in accordance with terms of the Purchase Agreement, including the exhibits thereto, will be legally issued, fully paid and non-assessable securities of the Company. We understand that this opinion is to be issued in connection with the Registration Statement. We consent to a filing of a copy of this opinion with the Registration Statement. Very truly yours, GRAY, PLANT, MOOTY, MOOTY & BENNETT, P.A. By /s/ Lindley S. Branson ------------------------------------------- Lindley S. Branson EX-23.1 3 CONSENT OF ARTHUR ANDERSEN LLP Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated March 10, 1999, included in Webb Interactive Services, Inc.'s Form 10-KSB for the year ended December 31, 1998 and to all references to our Firm included in this Registration Statement on Form S-3. /s/ Arthur Andersen LLP Denver, Colorado September 23, 1999 -----END PRIVACY-ENHANCED MESSAGE-----