As filed with the Securities and Exchange Commission on April 8, 2004
                                                     Registration No. 333-109633
================================================================================



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                 AMENDMENT NO. 4
                                       to
                                    FORM S-3

                                       on
                                    FORM SB-2
                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933
                            -------------------------

                            WEBFINANCIAL CORPORATION
                 (Name of Small Business Issuer in its Charter)

        DELAWARE                             6159                    56-2043000
(State or Other Jurisdiction of  (Primary Standard Industrial     (I.R.S. Employer
Incorporation or Organization)   Classification Code Number)     Identification Number)

                               590 MADISON AVENUE
                                   32ND FLOOR
                            NEW YORK, NEW YORK 10022
                                 (212) 758-3232
                        (Address and Telephone Number of
                          Principal Executive Offices)

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

                             WARREN G. LICHTENSTEIN
                      CHAIRMAN AND CHIEF EXECUTIVE OFFICER
                               590 MADISON AVENUE
                                   32ND FLOOR
                            NEW YORK, NEW YORK 10022
                                 (212) 758-3232
            (Name, Address and Telephone Number of Agent for Service)
                          ----------------------------

                                   COPIES TO:
                               ADAM FINERMAN, ESQ.
                 OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
                                PARK AVENUE TOWER
                               65 EAST 55TH STREET
                            NEW YORK, NEW YORK 10022
                                 (212) 451-2300
                         ------------------------------

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this registration statement.
                            -------------------------





          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 the earlier
effective registration statement for the 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 the same offering. |_|

          If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the 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

=================================================================================================
                                            PROPOSED MAXIMUM
                                           AGGREGATE OFFERING                    AMOUNT OF
  TITLE OF SHARES TO BE REGISTERED               PRICE(1)                    REGISTRATION FEE
-------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per share,
issuable upon exercise of nontransferable
Rights...................................    $10,000,000(2)                       $809.00(3)
=================================================================================================

(1)  Estimated solely for the purpose of calculating the registration fee in
     accordance with Rule 457(o) under the Securities Act of 1933, as amended.

(2)  Represents the gross proceeds from the assumed exercise of all
     nontransferable rights issued. (3) The registration fee was previously paid
     with the filing on October 10, 2003.

          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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.





          The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.


                   SUBJECT TO COMPLETION, DATED APRIL 8, 2004


PROSPECTUS

                            WEBFINANCIAL CORPORATION

                        4,366,866 SHARES OF COMMON STOCK

          Our Board of Directors declared a dividend of rights to purchase our
common stock to holders of record as of March  19, 2004. Through this prospectus,
we are offering the shares of common stock that rights holders may purchase upon
exercising such subscription rights.


          You received one right for each share of common stock you owned on the
record date of March 19, 2004. Each right will entitle you to purchase ___
shares of our common stock at a subscription price of $______ per share.


          The rights are currently exercisable and will expire if they are not
exercised by 5:00 p.m., New York City time, on ______, 2004. We may extend the
period for exercising the rights in our sole discretion, but in no event more
than 30 additional days. If you want to exercise your rights, you must submit
your subscription documents to us before the expiration date. Rights that are
not exercised by the expiration date will expire and will have no value.

          The proceeds from the exercise of rights will be used for working
capital and general corporate purposes.


          Shares of our common stock are listed on the Nasdaq Stock Market's
SmallCap Market under the symbol "WEFN." On April 7, 2004, the last reported
sales price for our common stock was $2.65 per share.


          AN INVESTMENT IN OUR COMMON STOCK IS VERY RISKY. YOU SHOULD CAREFULLY
CONSIDER THE RISK FACTORS BEGINNING ON PAGE 7 OF THIS PROSPECTUS BEFORE
EXERCISING YOUR SUBSCRIPTION RIGHTS.

          NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

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

                    The date of this prospectus is ___, 2004.




                                TABLE OF CONTENTS


                                                                            Page


Questions and Answers about this Offering.................................... 1


Risk Factors................................................................. 7

Forward-Looking Statements...................................................11

Business.....................................................................12

Use of Proceeds..............................................................14

Capitalization...............................................................15

Price Range of Common Stock..................................................16

Management's Discussion and Analysis or Plan of Operation....................16

The Offering.................................................................20

Material United States Federal Income Tax Consequences.......................28

Plan of Distribution.........................................................29

Management...................................................................31

Certain Relationships and Related Transactions...............................34

Security Ownership of Certain Beneficial Owners and Management...............35

Description of Capital Stock.................................................37

Legal Matters................................................................39

Experts......................................................................39

Where You Can Find More Information..........................................39

Index to Consolidated Financial Statements...................................F-1

                                       i




          You should rely only on the information in this prospectus and the
additional information described under the heading "Where You Can Find More
Information." We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should assume that the information in this prospectus and the additional
information described under the heading "Where You Can Find More Information"
were accurate on the date on the front cover of the prospectus only. Our
business, financial condition, results of operations and prospects may have
changed since that date.


                    QUESTIONS AND ANSWERS ABOUT THIS OFFERING

          This section highlights information contained elsewhere or
incorporated by reference in this prospectus. This section does not contain all
of the important information that you should consider before exercising your
subscription rights and investing in our common stock. You should read this
entire prospectus carefully.

Q:   WHAT ARE WE OFFERING IN THIS PROSPECTUS?

A:   Our Board of Directors has declared a dividend of nontransferable
     subscription rights to purchase shares of our common stock to each of our
     stockholders of record on March 19, 2004. Through this prospectus, we are
     offering the shares of common stock that holders of rights may purchase
     upon exercise of their rights.

Q:   WHO MAY PARTICIPATE IN THIS OFFERING?

A:   Only holders of record of our common stock as of March  19, 2004 are
     entitled to participate in this offering. Any attempt to participate in
     this offering by anyone that was not a holder of record of our common stock
     on such date will be null and void.


Q:    WHAT IS A SUBSCRIPTION RIGHT?

A:   Each subscription right is a right to purchase ___ shares of our common
     stock and carries with it a basic subscription privilege and an
     over-subscription privilege.

Q:   WHAT IS THE BASIC SUBSCRIPTION PRIVILEGE?

A:   The basic subscription privilege of each right entitles you to purchase ___
     shares of our common stock at a subscription price of $_____ per share. You
     may exercise any number of your subscription rights, or you may choose not
     to exercise any subscription rights. We will not distribute any fractional
     shares or pay cash in place of fractional shares, but we will round down
     the aggregate number of shares you are entitled to receive to the nearest
     whole number.


Q:   WHAT IS THE OVER-SUBSCRIPTION PRIVILEGE?

A:   We expect that not all of our stockholders will exercise all of their basic
     subscription rights. By extending over-subscription privileges to our
     stockholders, we are providing stockholders that exercise all of their
     basic subscription privileges with the opportunity to purchase those shares
     that are not purchased by other stockholders. The over-subscription
     privilege of each right entitles you, if you fully exercise your basic
     subscription privilege, to subscribe for additional shares of our common
     stock unclaimed by other holders of rights in this offering, at the same
     subscription price per share.

Q:   WILL I ALWAYS RECEIVE THE FULL NUMBER OF SHARES THAT I OVER-SUBSCRIBE FOR?

A:   If an insufficient number of shares is available to fully satisfy all
     over-subscription privilege requests, the available shares will be
     distributed proportionately among rights holders who exercised their
     over-subscription privilege based on the number of shares each rights
     holder subscribed for under the basic subscription privilege.


     Also, based on our interpretation of certain provisions of our charter, it
     is our belief that you will not be allowed to subscribe for a number of
     shares that would increase your ownership of our shares of common stock to
     4.9% or above of our then outstanding shares of common stock, unless you
     already owned at least 5.0% of our common stock on the date such


                                       1



     restriction became effective. Article Fourteenth, subparagraph (b)(i) of
     our certificate of incorporation provides that:

          No Person, other than the Corporation, shall engage in any Transfer of
          Stock with any other Person to the extent that such Transfer, if
          effective, would cause the Ownership Interest Percentage of any Person
          or Public Group to (i) increase to 4.9 percent or above, (ii) increase
          from 4.9 percent or above to a greater Ownership Interest Percentage
          or (iii) create a new Public Group under Treasury Regulation Section
          1.382-2T(j)(3)(i), except as otherwise permitted pursuant to
          subparagraph (b)(ii) or this Article.

Article Fourteenth, subparagraph (b)(ii) of our certificate of incorporation
further provides that:

          Any Transfer that would otherwise be prohibited pursuant to
          subparagraph (b)(i) shall nonetheless be permitted if (i) the Transfer
          is by an Existing Five Percent Stockholder of Stock owned by such
          stockholder on the date the Transfer restrictions contained in
          subparagraph (b)(i) become effective or (ii) information relating to a
          specific proposed transaction is presented to the Board and the Board
          determines in its discretion that (x) based upon a written opinion of
          tax counsel selected by the Board, such transaction will not
          jeopardize or create a material limitation on the Corporation's then
          current or future ability to utilize its Tax Benefits, taking into
          account both the proposed transaction and potential future
          transactions, or (y) the overall economic benefits of such transaction
          to the Corporation outweigh the detriments of such transaction.
          Nothing in this subparagraph shall be construed to limit or restrict
          the Board in the exercise of its fiduciary duties under applicable
          law.

We have interpreted these provisions to mean that no stockholder may sell or
transfer any shares of our common stock if such transaction would cause the
ownership of common stock of a stockholder (i) to increase to 4.9% or above of
our then outstanding shares of common stock or (ii) to increase from 4.9% or
above to a greater ownership percentage, unless they already owned at least 5.0%
of our common stock on the date such restriction became effective. This
restriction is included in our certificate of incorporation to preserve certain
tax benefits to which we are entitled. We believe these restrictions apply to
the transactions described herein.

The subscription agent will return any excess payments by mail without interest
or deduction promptly after the expiration of the subscription period.


Q:   HOW LONG WILL THE SUBSCRIPTION PERIOD LAST?

A:   You will be able to exercise your subscription rights only during a limited
     period. If you do not exercise your subscription rights before 5:00 p.m.,
     New York City time, on ___________, 2004, your subscription rights will
     expire. We may, in our sole discretion, decide to extend this offering
     until some later time, but in no event more than 30 additional days. If we
     extend the expiration date, we will give oral or written notice to the
     subscription agent on or before such expiration date, followed by a press
     release no later than 9:00 a.m., New York City time, on the next business
     day after the previously scheduled expiration date.

Q:   AM I REQUIRED TO SUBSCRIBE IN THIS OFFERING?

A:   No.

Q:   WHAT HAPPENS IF I CHOOSE NOT TO EXERCISE MY SUBSCRIPTION RIGHTS?

A:   You will retain your current number of shares of common stock even if you
     do not exercise your subscription rights. If you choose not to exercise
     your subscription rights, then the percentage of our common stock that you
     own may decrease. The magnitude of the reduction of your percentage
     ownership will depend upon the extent to which you and the other
     stockholders exercise your rights.

Q:   HOW DO I EXERCISE MY SUBSCRIPTION RIGHTS?

A:   You may exercise your subscription rights by properly completing and
     signing your subscription certificate, and delivering it and the rights
     certificate, with full payment of the subscription price for the shares you
     are subscribing (including any amounts in respect of the over-subscription
     privilege), to the subscription agent on or prior to the expiration date.

                                       2




     If you use the mail, we recommend that you use insured, registered mail,
     return receipt requested. If you cannot deliver your rights certificate to
     the subscription agent on time, you may follow the guaranteed delivery
     procedures described under "The Offering - Guaranteed Delivery Procedures."

Q:   WHAT SHOULD I DO IF I WANT TO EXERCISE MY SUBSCRIPTION RIGHTS BUT MY SHARES
     ARE HELD IN THE NAME OF MY BROKER, CUSTODIAN BANK OR OTHER NOMINEE?

A:   If you hold shares of our common stock through a broker, custodian bank or
     other nominee, we will ask your broker, custodian bank or other nominee to
     notify you of this offering. If you wish to exercise your subscription
     rights, you will need to have your broker, custodian bank or other nominee
     act for you. To indicate your decision, you should complete and return to
     your broker, custodian bank or other nominee the form entitled "Beneficial
     Owner Election Form." You should receive this form from your broker,
     custodian bank or other nominee with the other offering materials. You
     should contact your broker, custodian bank or other nominee if you believe
     you are entitled to participate in this offering but you have not received
     this form.

Q:   WHAT SHOULD I DO IF I WANT TO EXERCISE MY SUBSCRIPTION RIGHTS AND I AM A
     STOCKHOLDER IN A FOREIGN COUNTRY OR IN THE ARMED SERVICES?

A:   The subscription agent will mail subscription certificates to you if you
     are a rights holder whose address is outside the United States or if you
     have an Army Post Office or a Fleet Post Office address. To exercise your
     rights, you must notify the subscription agent on or prior to 5:00 p.m.,
     New York City time, on ______, 2004, and take all other steps which are
     necessary to exercise your rights, on or prior to that time. If you do not
     follow these procedures prior to the expiration date, your rights will
     expire.

Q:   WILL I BE CHARGED A SALES COMMISSION OR A FEE BY WEBFINANCIAL IF I EXERCISE
     MY SUBSCRIPTION RIGHTS?

A:   No. We will not charge a brokerage commission or a fee to rights holders
     for exercising their subscription rights. However, if you exercise your
     subscription rights through a broker or nominee, you will be responsible
     for any fees charged by your broker or nominee.

Q:   WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING MY
     SUBSCRIPTION RIGHTS AS A HOLDER OF COMMON STOCK?

A:   holder of common stock generally will not recognize income or loss for
     federal income tax purposes in connection with the receipt or exercise of
     subscription rights. We urge you to consult your own tax advisor with
     respect to the particular tax consequences of this offering to you. See
     "Material United States Federal Income Tax Consequences."

                                       3



Q:   HOW MANY SHARES MAY I PURCHASE?


A:   You will receive one nontransferable subscription right for each share of
     common stock that you owned at the close of business on March  19, 2004, the
     record date. Each right contains the basic subscription privilege and the
     over-subscription privilege. Each basic subscription privilege entitles you
     to purchase ___ shares of our common stock for $___ per share. Fractional
     shares will be eliminated by rounding down the aggregate number of shares
     you are entitled to receive to the nearest whole number. See "The Offering
     - Subscription Rights - Basic Subscription Privilege." The
     over-subscription privilege entitles you to subscribe for additional shares
     of our common stock at the same subscription price per share on a pro-rata
     basis to the number of shares you purchased under your basic subscription
     privilege, provided you fully exercise your basic subscription privilege.
     "Pro-rata" means in proportion to the number of shares of our common stock
     that you and the other rights holders electing to exercise their
     over-subscription privileges have purchased by exercising the basic
     subscription privileges on their holdings of common stock. See "The
     Offering - Subscription Rights - Over-Subscription Privilege." However,
     pursuant to the terms of our charter, we believe that you will not be
     allowed to subscribe for a number of shares that would increase your
     ownership of our shares of common stock to 4.9% or above of our then
     outstanding shares of common stock, unless you already owned at least 5.0%
     of our common stock on the date such restriction became effective. See
     "Questions and Answers About This Offering - WILL I ALWAYS RECEIVE THE FULL
     NUMBER OF SHARES THAT I OVER-SUBSCRIBE FOR?"


Q:   WHEN WILL I RECEIVE CERTIFICATES FOR THE SHARES PURCHASED IN THIS OFFERING?


A:   We will issue certificates representing shares purchased in this offering
     to you or to the Depository Trust Company on your behalf, as the case may
     be, as soon as practicable after the expiration of the subscription period
     and after all pro rata allocations and adjustments have been completed. We
     will not be able to calculate the number of shares to be issued to each
     exercising holder until 5:00 p.m., New York City time, on the third
     business day after the expiration date, which is the latest time by which
     subscription rights certificates may be delivered to the subscription agent
     under the guaranteed delivery procedures described under "The Offering -
     Guaranteed Delivery Procedures."


Q:   IF THIS OFFERING IS NOT COMPLETED, WILL MY SUBSCRIPTION PAYMENT BE REFUNDED
     TO ME?

A:   Yes. The subscription agent will hold all funds it receives in escrow until
     completion of this offering. If this offering is not completed, the
     subscription agent will return promptly, without interest, all subscription
     payments.

Q:   HOW WAS THE SUBSCRIPTION PRICE ESTABLISHED?

A:   The subscription price was established by our board of directors based on
     the recommendation of a special committee of independent directors,
     comprised of Howard Mileaf, Joseph L. Mullen and Mark E. Schwarz. The
     committee was established September 3, 2003 for the purpose of considering
     potential financing transactions for us, such as the rights offering. The
     factors considered included the historic and then current market price of
     our common stock, our business prospects, our recent and anticipated
     operating results, general conditions in the securities markets, our need
     for capital, alternatives available to us for raising capital, the amount
     of proceeds desired, the pricing of similar transactions, the liquidity of
     our common stock, and the level of risk to our investors.

Q:   ARE THERE RISKS IN EXERCISING MY SUBSCRIPTION RIGHTS?


A:   Yes. The exercise of your rights involves risks. Exercising your rights
     means buying additional shares of our common stock and should be considered
     as carefully as you would consider any other equity investment in our
     company. Among other things, you should carefully consider the risks
     described under the heading "Risk Factors," beginning on page 7.


Q:   AFTER I EXERCISE MY SUBSCRIPTION RIGHTS, CAN I CHANGE MY MIND AND CANCEL MY
     PURCHASE?

A:   No. Once you send in your subscription certificate and payment you cannot
     revoke the exercise of your subscription rights, even if you later learn
     information about us that you consider to be unfavorable and even if the
     market price of our common stock is below the subscription price. You
     should not exercise your subscription rights unless you are certain that

                                       4



     you wish to purchase additional shares of our common stock at the
     subscription price. See "The Offering - No Revocation."

Q:   MAY I TRANSFER MY SUBSCRIPTION RIGHTS IF I DO NOT WANT TO PURCHASE ANY
     SHARES?

A:   No. Should you choose not to exercise your subscription rights, you may not
     sell, give away or otherwise transfer your rights. However, subscription
     rights will be transferable by operation of law (for example, upon death of
     the recipient).

Q:   WHY IS WEBFINANCIAL ENGAGING IN THIS OFFERING?

A    We are making this offering in order to raise approximately $10.0 million
     (less offering expenses) in new capital to be used as additional working
     capital for our business and general corporate purposes.

      Our board of directors believes that this offering will ultimately
      strengthen our financial condition through generating additional cash and
      increasing our stockholders' equity. We want to give you the opportunity
      to participate in this fund raising effort and to purchase additional
      shares of our common stock.

Q:   WHAT IS THE BOARD OF DIRECTORS' RECOMMENDATION REGARDING THIS OFFERING?

A.   Our board of directors is not making any recommendation as to whether you
     should exercise your subscription rights. You are urged to make your
     decision based on your own assessment of this offering and our company.

Q:   HOW MANY SHARES OF OUR COMMON STOCK WILL BE OUTSTANDING AFTER THIS
     OFFERING?


A:   of March  31, 2004, we had 4,366,866 shares of common stock issued and
     outstanding. We expect to issue up to an additional 4,366,866 shares in
     this offering. After this offering, we anticipate that we will have
     8,733,732 shares of common stock outstanding. Depending on the number of
     subscriptions we receive from stockholders, this offering could result in
     Steel Partners II, L.P. ownership increasing to over 50%. See "Risk
     Factors" beginning on page 7.


Q:   WILL THE NEW SHARES BE INITIALLY LISTED ON THE NASDAQ STOCK MARKET'S
     SMALLCAP MARKET AND TREATED LIKE OTHER SHARES?

A:   Yes. Our common stock is listed on the Nasdaq Stock Market's SmallCap
     Market under the symbol "WEFN." We expect that the shares of common stock
     issued in this offering will also be listed on the Nasdaq Stock Market's
     SmallCap Market under the same symbol.

Q:   HOW WILL THIS OFFERING AFFECT STEEL PARTNERS' OWNERSHIP OF OUR COMMON
     STOCK?

A.   Steel Partners II, L.P. beneficially owns 1,737,345 shares of our common
     stock, representing approximately 39.8% of our outstanding common stock and
     of the voting power of our outstanding voting securities.

     If no holders of subscription rights other than Steel Partners exercise
     their rights in this offering, Steel Partners may, as a result of its
     over-subscription privilege, own 6,106,711 shares, representing
     approximately 70% of our outstanding common stock and of the voting power
     of our outstanding voting securities. If all rights holders exercise their
     basic subscription privileges in full, then Steel Partners will continue to
     beneficially own approximately 39.8% of our common stock and of the voting
     power of our outstanding voting securities.

                                       5



     Warren Lichtenstein, our Chairman and Chief Executive Officer, owns 2,500
     shares of our common stock. Mr. Lichtenstein, as the sole managing member
     of the general partner of Steel Partners II, L.P., is deemed to also
     beneficially own the shares of common stock owned by Steel Partners II,
     L.P. Mr. Lichtenstein has indicated to us his present intention to exercise
     the rights both Steel Partners II, L.P. and he receive. However, there is
     no written commitment to exercise such rights and, therefore, there can be
     no assurance that such rights will be exercised.

Q:   CAN THE BOARD OF DIRECTORS WITHDRAW THIS OFFERING?

A.   Yes. Our board of directors may decide to withdraw this offering at any
     time for any reason. If we withdraw this offering, any money received from
     subscribing stockholders will be refunded promptly, without interest. See
     "The Offering - Withdrawal and Amendment."

Q:   WHAT SHOULD I DO IF I HAVE OTHER QUESTIONS OR NEED ASSISTANCE?

A:   If you have questions or need assistance, please contact MacKenzie
     Partners, Inc., the information agent, for this offering, at the following
     address and telephone number:



                                   MACKENZIE
                                 PARTNERS, INC.

                               105 Madison Avenue
                            New York, New York 10016
                          (212) 929-5500 (Call Collect)
                                       or
                          CALL TOLL-FREE (800) 322-2885

                       Email: proxy@mackenziepartners.com


For a more complete description of this offering, see "The Offering" beginning
on page 20.

                                       6



                                  RISK FACTORS

          THE EXERCISE OF YOUR SUBSCRIPTION RIGHTS FOR SHARES OF OUR COMMON
STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING FACTORS AND OTHER INFORMATION PRESENTED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN OUR COMMON STOCK. IF WE DO NOT
SUCCESSFULLY ADDRESS ANY ONE OR MORE OF THE RISKS DESCRIBED BELOW, THERE COULD
BE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION, OPERATING RESULTS AND
BUSINESS. WE CANNOT ASSURE YOU THAT WE WILL SUCCESSFULLY ADDRESS THESE RISKS.

RISKS RELATING TO THIS OFFERING:

THE SUBSCRIPTION PRICE PER SHARE IS NOT AN INDICATION OF OUR VALUE AND YOU MAY
NOT BE ABLE TO SELL SHARES PURCHASED UPON THE EXERCISE OF YOUR SUBSCRIPTION
RIGHTS AT A PRICE EQUAL TO OR GREATER THAN THE SUBSCRIPTION PRICE.

          The subscription price per share does not necessarily bear any
relationship to the book value of our assets, operations, cash flows, earnings,
financial condition or any other established criteria for value. As a result,
you should not consider the subscription price as an indication of the current
value of our company or our common stock. We cannot assure you that you will be
able to sell shares purchased in this offering at a price equal to or greater
than the subscription price.

[IF PRICED AT A DISCOUNT] THIS OFFERING MAY CAUSE THE PRICE OF OUR COMMON STOCK
TO DECREASE IMMEDIATELY, AND THIS DECREASE MAY CONTINUE.


          The subscription price per share equals ___% of the current market
price of our common stock, determined by averaging the closing price of our
common stock on Nasdaq for the ____ preceding trading days ending on ______,
2004. This discount, along with the number of shares we propose to issue and
ultimately will issue if this offering is completed, may result in an immediate
decrease in the market value of our common stock. This decrease may continue
after the completion of this offering.


AS A HOLDER OF COMMON STOCK, YOU MAY SUFFER SIGNIFICANT DILUTION OF YOUR
PERCENTAGE OWNERSHIP OF OUR COMMON STOCK.

          If you do not exercise your subscription rights and shares are
purchased by other stockholders in this offering, your proportionate voting and
ownership interest will be reduced and the percentage that your original shares
represent of our expanded equity after exercise of the subscription rights will
be diluted. For example, if you own 200,000 shares of our common stock before
this offering, or approximately 4.58% of our outstanding common stock, and you
exercise none of your subscription rights while all other subscription rights
are exercised by other stockholders, then your percentage ownership would be
reduced to approximately 2.29%. The magnitude of the reduction of your
percentage ownership will depend upon the extent to which you exercise your
subscription rights.

ONCE YOU EXERCISE YOUR SUBSCRIPTION RIGHTS, YOU MAY NOT REVOKE SUCH EXERCISE
EVEN IF THERE IS A DECLINE IN OUR COMMON STOCK PRICE.

          The public trading market price of our common stock may decline after
you elect to exercise your subscription rights. If that occurs, you will have
committed to buy shares of common stock at a price above the prevailing market
price and you will have an immediate unrealized loss. Moreover, we cannot assure
you that following the exercise of subscription rights you will be able to sell
your shares of common stock at a price equal to or greater than the subscription
price.

YOU MAY NOT REVOKE THE EXERCISE OF YOUR RIGHTS EVEN IF WE DECIDE TO EXTEND THE
EXPIRATION DATE OF THE SUBSCRIPTION PERIOD.

          We may, in our sole discretion, extend the expiration date of the
subscription period, but in no event more than 30 additional days. During any
potential extension of time, our common stock price may decline below the
subscription price and result in a loss on your investment upon the exercise of
rights to acquire shares of our common stock. If the expiration date is extended
after you send in your subscription forms and payment, you still may not revoke
or change your exercise of rights.

                                       7



YOU WILL NOT RECEIVE INTEREST ON SUBSCRIPTION FUNDS RETURNED TO YOU.

          If we cancel this offering, neither we nor the subscription agent will
have any obligation with respect to the subscription rights except to return,
without interest, any subscription payments to you.

THE SUBSCRIPTION RIGHTS ARE NOT TRANSFERABLE AND THERE IS NO MARKET FOR THE
SUBSCRIPTION RIGHTS.

          You may not sell, give away or otherwise transfer your subscription
rights. The subscription rights are only transferable by operation of law.
Because the subscription rights are non-transferable, there is no market or
other means for you to directly realize any value associated with the
subscription rights. You must exercise the subscription rights and acquire
additional shares of our common stock to realize any value.

YOUR PARTICIPATION IN THE OFFERING IS NOT ASSURED SINCE WE MAY TERMINATE THIS
OFFERING.

          Once you exercise your subscription rights, you may not revoke the
exercise for any reason unless we amend this offering. If we decide to terminate
the offering, we will not have any obligation with respect to the subscription
rights except to return any subscription payments, without interest.

YOU NEED TO ACT PROMPTLY AND FOLLOW SUBSCRIPTION INSTRUCTIONS, OTHERWISE YOUR
SUBSCRIPTION MAY BE REJECTED.

          Stockholders who desire to purchase shares in this offering must act
promptly to ensure that all required forms and payments are actually received by
the subscription agent prior to 5:00 p.m., New York City time, on the expiration
date. If you fail to complete and sign the required subscription forms, send an
incorrect payment amount, or otherwise fail to follow the subscription
procedures that apply to your desired transaction, the subscription agent may,
depending on the circumstances, reject your subscription or accept it to the
extent of the payment received. Neither we nor our subscription agent undertakes
to contact you concerning, or attempt to correct, an incomplete or incorrect
subscription form or payment. We have the sole discretion to determine whether a
subscription exercise properly follows the subscription procedures.

YOU MAY NOT RECEIVE ALL OF THE SHARES YOU SUBSCRIBE OR OVER-SUBSCRIBE FOR.

          If an insufficient number of shares is available to fully satisfy all
over-subscription privilege requests, the available shares will be distributed
proportionately among rights holders who exercised their over-subscription
privilege based on the number of shares each rights holder subscribed for under
the basic subscription privilege. Also, pursuant to the terms of our charter, we
believe that you will not be allowed to subscribe for a number of shares that
would increase your ownership of our shares of common stock to 4.9% or above of
our then outstanding shares of common stock, unless you already owned at least
5.0% of our common stock on the date such restriction became effective. See
"Questions and Answers About This Offering - WILL I ALWAYS RECEIVE THE FULL
NUMBER OF SHARES THAT I OVER-SUBSCRIBE FOR?"


RISKS RELATING TO OUR BUSINESS:

CHANGES IN INTEREST RATES COULD HAVE A NEGATIVE EFFECT ON OUR OPERATING RESULTS.

          Our earnings depend substantially on "rate differentials," which are
the differences between the rates we earn on loans, securities and other earning
assets, and the interest rates we pay on deposits and other borrowings. These
rates are highly sensitive to many factors which are beyond our control,
including general economic conditions and the policies of various governmental
and regulatory authorities. Changes in interest rates impact the level of loans,
deposits and investments, the credit profile of existing loans, the rates
received on loans and securities and the rates paid on deposits and borrowings.
Significant fluctuations in interest rates may adversely affect our financial
condition and results of operations.

SIGNIFICANT NEW LAWS OR CHANGES IN EXISTING LAWS OR MONETARY POLICY AFFECTING
THE BANKING INDUSTRY COULD HAVE A MATERIAL ADVERSE AFFECT ON OUR RESULTS OF
OPERATIONS.

          Our banking subsidiary, WebBank, is subject to extensive government
regulation and supervision under various state and federal laws, rules and
regulations, primarily under the rules and regulations of the FDIC and the State
of Utah Department of Financial Institutions. These laws and regulations are
designed primarily to protect depositors, borrowers, and the Bank Insurance Fund

                                       8



of the FDIC. WebBank's regulators maintain significant authority to impose
requirements on WebBank's operations, such as limiting its activities or
mandating that it hold increased capital. For example, WebBank's regulators
recently required WebBank to obtain the prior non-objection of the FDIC and Utah
Department of Financial Institutions before developing new lines of activity or
expanding existing lines of activity, as well as before making changes to its
board of directors or senior executive officers. Objections to WebBank's lines
of business, enactment of significant new laws, changes in existing laws or
repeals of existing laws may cause WebBank's results to change materially. In
addition, federal monetary policy, particularly as implemented through the
Federal Reserve System, such as changes in interest rates, could affect
WebBank's financial condition. Changes in interest rates can affect the number
of loans WebBank originates, as well as the value of its loans and other
interest-earning assets and the ability to realize gains on the sale of those
assets and liabilities. Prevailing interest rates also affect the extent to
which borrowers prepay loans owned by WebBank. When interest rates increase,
borrowers are less likely to prepay their loans, and vice versa. WebBank may
then be required to invest funds generated by those prepayments at less
favorable interest rates. Increases in interest rates could hurt the ability of
borrowers who have loans with floating interest rates to meet their increased
payment obligations. If those borrowers were not able to make their payments,
then WebBank could suffer losses, and its level of performing assets would
decline.

OUR BUSINESS COULD BE HARMED IF CERTAIN ACCOUNTS RECEIVABLE FACTORING AND
SERVICE ARRANGEMENTS TERMINATE.


          At December 31, 2003, accounts receivable factoring constituted
WebBank's principal line of business. We have announced that a notice of
termination has been issued with respect to a certain accounts receivable
factoring arrangement, with the termination to be effective in May 2004, and
that another accounts receivable program was terminated in February 2004. The
accounts receivable factoring arrangement that is scheduled to be terminated
effective May 2004 generated revenue and income in fiscal 2002 and 2003 which
accounted for (a) substantially all of the revenue and income generated by our
accounts receivable factoring operating segment for those years, and (b) a
significant part of our income and revenue for those years. It is possible that
the May 2004 termination may not take effect as provided in the termination
notice and the arrangement may continue. However, in the event of termination,
there can be no assurance that we will be able to successfully enter into a
replacement arrangement or arrangements. We believe that the termination of the
two accounts receivable factoring arrangements will have a significant adverse
effect on our net income during 2004.


WE FACE SUBSTANTIAL COMPETITION IN OUR INDUSTRY SECTOR FROM BANKING AND
FINANCIAL INSTITUTIONS THAT HAVE LARGER AND GREATER FINANCIAL AND MARKETING
CAPABILITIES, WHICH MAY HINDER OUR ABILITY TO COMPETE SUCCESSFULLY.

          The banking and financial services businesses in our lines of business
are highly competitive. The increasingly competitive environment is a result of
changes in regulation, changes in technology and product delivery systems, and
the accelerating pace of consolidation among financial services providers. We
compete with many different banking and financial institutions, including:

          o    commercial and savings banks and savings and loan associations;
          o    credit unions;
          o    finance companies;
          o    brokerage and investment banking firms; and
          o    asset-based non-bank lenders.

          All of these entities are branches or subsidiaries of much larger
organizations affiliated with statewide, regional or national banking companies,
and as a result may have greater resources and lower cost of funds. There can be
no assurance that we will be able to compete effectively in the future.

WE COULD SUSTAIN LOSSES IF WE INCORRECTLY ASSESS THE CREDITWORTHINESS OF
BORROWERS, GUARANTORS OR RELATED PARTIES.

          Our earnings are significantly affected by our ability to properly
originate, underwrite and service loans. We could sustain losses if our
borrowers, guarantors or related parties fail to perform in accordance with the
terms of their loans. We have adopted underwriting and credit monitoring
procedures and credit policies, including the establishment and review of the
allowance for credit losses, that management believes are appropriate to
minimize this risk by assessing the likelihood of nonperformance, tracking loan
performance and diversifying our credit portfolio. These policies and
procedures, however, may not prevent unexpected losses that could hurt our
business and financial condition.

                                       9



WE ARE SUBJECT TO CREDIT AND INTEREST RATE RISK IN EXCESS OF AN AMOUNT
RECOGNIZED ON OUR BALANCE SHEET.


          We are a party to financial instruments with off-balance sheet risk.
In the normal course of business, these financial instruments include
commitments to extend credit in the form of loans or through letters of credit.
Those instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized on the balance sheet. Our exposure
to credit loss in the event of nonperformance by the other party to the
financial instrument for commitments to extend credit is represented by the
contractual amount of those instruments. Commitments to extend credit are
agreements to lend to a customer, provided there is no violation of any
condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee.
Since certain of the commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. We use the same credit policy in making commitments and
conditional obligations as we do for on-balance sheet instruments. We evaluate
each customer's credit worthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary upon extension of credit, is based on
management's credit evaluation of the borrower. At December 31, 2003 and 2002,
we had no undisbursed commercial loan commitments or consumer credit card loan
commitments. For the same periods, our undisbursed accounts receivable factoring
commitments totaled approximately $8,138,000 and $6,382,000, respectively.


WE MAY EXPAND INTO NEW NON-BANKING ACTIVITIES, WHICH WOULD EXPOSE US TO RISKS
ASSOCIATED WITH NEW BUSINESSES.


          We continue to consider new business opportunities, both bank-related
and otherwise. We believe that an acquisition can help create value for
stockholders through increased growth, as well as the utilization of our net
operating losses. Accordingly, we may expand our operations into new non-banking
activities in the future. Although we have experience in providing bank-related
services, this expertise may not assist us in expansion into non-banking
activities. As a result, we may be exposed to risks associated with new
businesses, such as (1) a lack of market and product knowledge or awareness of
other industry related matters and (2) an inability to attract and retain
qualified employees with experience in these non-banking activities.


OUR BUSINESS COULD BE HARMED IF THERE IS A NON-FAVORABLE RESOLUTION TO THE LEGAL
PROCEEDING COMMENCED AGAINST US BY ANDREW WINOKUR.

          In January 2000, Mr. Winokur, a former executive officer, director and
stockholder of Praxis Investment Advisors, Inc., one of our subsidiaries, filed
a lawsuit in the Superior Court of the State of California, County of Napa. The
lawsuit alleges that Praxis breached its employment agreement with Mr. Winokur.
The lawsuit also asserts claims for interference with contract and unjust
enrichment based upon his alleged wrongful termination. The lawsuit seeks
damages of an unspecified amount and compliance by Praxis with the termination
pay-out provisions in Mr. Winokur's employment agreement.

          On March  4, 2002, the lawsuit was submitted to binding arbitration.
The panel found no breach of contract and no intentional interference with Mr.
Winokur's contractual rights. However, the panel found that Mr. Winokur was
entitled to the termination pay-out provision in his employment agreement. Under
this provision, Mr. Winokur could potentially be entitled to receive certain
compensation based on (i) an investment bank valuation of WebBank, if we accept
such valuation, or (ii) the proceeds of a sale of WebBank, if we reject such
valuation. While Mr. Winokur would not be entitled to receive any compensation
in the event that the sale does not exceed a predetermined amount as provided in
the employment agreement, which amount is defined as the amount of capital
invested by the stockholders of Praxis and WebBank in such companies, plus a
cumulative annual rate of return of ten percent as of the date of sale, we may
be forced to sell WebBank if the sale price exceeds such predetermined amount,
even if we do not want to sell WebBank. In addition, if the sale price of
WebBank exceeds the predetermined amount but is less than the investment bank
valuation of WebBank, we may be required to sell WebBank at less than its value.
We do not have any alternative financing plans to make this payment in the event
such payment is required.

          At the present time, Mr. Winokur has ceased to participate in the
process of valuing WebBank. However, since there may be no time limitation on
Mr. Winokur's claim, the valuation process may proceed in the future and if we
are required to make a payment, our business could be harmed.


                                       10



WARREN G. LICHTENSTEIN, OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER, THROUGH HIS
AFFILIATION WITH STEEL PARTNERS II, L.P., HAS THE ABILITY TO EXERT SIGNIFICANT
INFLUENCE OVER OUR OPERATIONS AND MAY HAVE INTERESTS THAT DIFFER FROM THOSE OF
OUR OTHER STOCKHOLDERS.

            Prior to this offering, Warren G. Lichtenstein, our Chairman and
Chief Executive Officer, owns 2,500 shares of our common stock. Mr.
Lichtenstein, as the sole managing member of the general partner of Steel
Partners II, L.P., is deemed to also beneficially own the shares of our common
stock owned by Steel Partners II, L.P. Steel Partners II, L.P. beneficially owns
1,737,345 shares of our common stock, representing approximately 39.8% of our
outstanding common stock prior to this offering. If no stockholders other than
Steel Partners II, L.P. exercise their subscription rights, Steel Partners II,
L.P. will purchase all of the shares in this offering, thereby increasing its
ownership to approximately 70%. Mr. Lichtenstein, as sole managing member of the
general partner of Steel Partners II, L.P., has sole investment and voting
control over the shares beneficially owned by Steel Partners II, L.P. and thus
has the ability to exert significant influence over our policies and affairs,
including the election of our board of directors and the approval of any action
requiring stockholder vote, such as amendments to our Certificate of
Incorporation and approving mergers or sales of substantially all of our assets,
as well as matters where the interests of Mr. Lichtenstein and Steel Partners
II, L.P. may differ from the interests of our other stockholders in some
respects.

STEEL PARTNERS II, L.P. RECENTLY FILED CERTAIN REQUIRED NOTICES WITH THE FDIC
AND THE UTAH DEPARTMENT OF FINANCIAL INSTITUTIONS RELATING TO STEEL PARTNERS II,
L.P.'S OWNERSHIP INTEREST IN US AND OUR ACQUISITION OF WEBBANK IN 1998, AND
THERE CAN BE NO ASSURANCE AS TO WHAT ACTION THE FDIC OR THE UTAH DEPARTMENT OF
FINANCIAL INSTITUTIONS MAY TAKE.

          Steel Partners II, L.P. has advised us that it, and certain of its
affiliates, have recently filed certain required notices with the Federal
Deposit Insurance Corporation (FDIC) under the federal Change in Bank Control
Act, as well as with the Utah Department of Financial Institutions. The
obligation to file these notices arises in connection with Steel Partners II,
L.P.'s ownership interest in us and our acquisition of WebBank in 1998. These
notices are being reviewed by the FDIC and the Utah Department of Financial
Institutions. Steel Partners II, L.P. believes that the filing of these notices
is not expected to have any direct effect on us, or WebBank, but relates to bank
holding company requirements resulting from Steel Partners II, L.P.'s ownership
interest in us. There can be no assurance, however, as to what, if any, action
the FDIC or the Utah Department of Financial Institutions may take, which
actions may include requiring Steel Partners II, L.P. to sell some or all of its
holdings of our shares.

                           FORWARD-LOOKING STATEMENTS

          We believe that certain statements contained or incorporated by
reference in this prospectus are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 and are considered
prospective. The following statements are or may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995:

          o    statements before, after or including the words "may," "will,"
               "could," "should," "believe," "expect," "future," "potential,"
               "anticipate," "intend," "plan," "estimate" or "continue" or the
               negative or other variations of these words, and

          o    other statements about matters that are not historical facts.


          We may be unable to achieve the future results covered by the
forward-looking statements. The statements are subject to risks, uncertainties
and other factors that could cause actual results to differ materially from the
future results that the statements express or imply. See "Risk Factors" on page
7. Please do not put undue reliance on these forward-looking statements, which
speak only as of the date of this prospectus.


                                       11



                                    BUSINESS

OVERVIEW

          WebFinancial Corporation (formerly Rose's Holdings, Inc.) was
incorporated in 1997 to act as a holding company for Rose's Stores, Inc., an
operator of general merchandise discount stores. On December 2, 1997, we sold
all of the outstanding capital stock of Rose's Stores, Inc.

          On August 31, 1998, we acquired, through WebFinancial Holdings
Corporation, a wholly-owned subsidiary of ours, 90% of the outstanding common
stock of WebBank, a Utah industrial loan corporation, pursuant to an assignment
from Praxis Investment Advisers, LLC of a stock purchase agreement, between
Praxis and Block Financial Corporation, relating to the purchase by Praxis of
all of the issued and outstanding shares of common stock of WebBank. Pursuant to
the assignment, we paid Block Financial $5,071,000 (including $288,000 of
acquisition costs) for the shares of WebBank's common stock.

          On August 31, 1998, we formed Praxis Investment Advisers, Inc. that
together with WebFinancial Holdings and Andrew Winokur, the then holder of the
10% of Praxis that we did not own, entered into a management agreement. The
management agreement provided that Praxis may make recommendations to and
consult with the management and board of director of WebBank about the
deployment of WebBank's capital, the development of its business lines, its
acquisition of assets and its distributions to its stockholders. During 2000, we
significantly reduced the level of operations of Praxis and terminated the
management agreement.

          On May 26, 1999, we formed a wholly owned subsidiary, WebFinancial
Government Lending, Inc., to hold and service U.S. Department of Agriculture
Loans. In April 2000, WebFinancial Government Lending transferred the majority
of its loan portfolio to WebBank in exchange for 28% of WebBank's common stock.
WebFinancial Government Lending has not actively engaged in loan originations
since that time.

          Our principal executive offices are located at 590 Madison Avenue,
32nd Floor, New York, New York 10022 and our telephone number is (212) 758-3232.

DESCRIPTION OF BUSINESS

          We operate, through our subsidiaries, in niche banking markets.
WebBank, provides commercial and consumer specialty finance transactions.
WebBank is authorized by the Federal Deposit Insurance Act to charge interest
(including periodic rates, late fees and prepayment fees) allowed by Utah law on
loans made to borrowers who reside anywhere in the country. Any inconsistent
state law limits are preempted by federal law, except for loans made in states
that have opted out of the preemption (i.e., Iowa and Puerto Rico). WebBank is a
small, business oriented institution insured by the Federal Deposit Insurance
Corporation (FDIC) and examined and regulated by the FDIC and the State of Utah
Department of Financial Institutions.

          Part of the business plan of WebBank represents a non-traditional
approach to generating growth within the context of the regulatory standards of
safety and soundness. Prudent business goals and protection of WebBank's charter
are the key elements of our business strategy for WebBank. Pursuant to this
strategy, WebBank has focused on several lines of business as described below:


          o    ACCOUNTS RECEIVABLE FACTORING. At December 31, 2003, accounts
               receivable factoring constituted WebBank's principal line of
               business. Factoring is a form of collateral-based commercial
               lending in which companies sell their receivables to a lender,
               principally to secure working capital. The receivables are paid
               directly to the lender. WebBank is engaged in accounts receivable
               factoring utilizing a sourcing and servicing company. We have
               announced that a notice of termination has been issued with
               respect to a certain accounts receivable factoring arrangement,
               with the termination to be effective in May 2004, and that
               another accounts receivable program was terminated in February
               2004. The accounts receivable factoring arrangement that is
               scheduled to be terminated effective May 2004 generated revenue
               and income in fiscal 2002 and 2003 which accounted for (a)
               substantially all of the revenue and income generated by our
               accounts receivable factoring operating segment for those years,

                                       12



               and (b) a significant part of our income and revenue for those
               years. It is possible that the May 2004 termination may not take
               effect as provided in the termination notice and the arrangement
               may continue. We believe that the termination of the two accounts
               receivable factoring arrangements will have a significant adverse
               effect on our net income during 2004. In the event of the
               scheduled May 2004 termination, accounts receivable factoring
               will no longer be, at that time, WebBank's principal line of
               business and there can be no assurance that we will be able to
               successfully enter into a replacement arrangement or
               arrangements. WebBank is currently considering potential options
               to remain in the accounts receivable factoring business.


          o    PRIVATE LABEL STUDENT LENDING. This is a secondary product line
               in which WebBank is involved. It is an alternative to federally
               subsidized student loan programs. A third party sourcing company
               is engaged to source these loans. WebBank provides funding to the
               students and sells the loans to the third party shortly after
               origination of each loan. The third party sourcing company
               engaged to source private label student loans on behalf of
               WebBank has given notice to WebBank that it will not renew the
               arrangement. Consequently, this arrangement will terminate at the
               conclusion of its current term on May 31, 2004. See "Note 20 -
               Subsequent Events" to our Consolidated Financial Statements. This
               product represented 2.6% and 3.9% of our revenues in 2003 and
               2002, respectively.


          o    ELECTIVE MEDICAL AND DENTAL TREATMENT LENDING. This is another
               secondary product line. This is a form of unsecured consumer
               lending that allows customers to finance elective surgery or
               other treatments not covered under traditional health insurance
               plans. A third party company is engaged to source these loans.
               WebBank provides funding to the patients and sells the loans to
               the third party shortly after origination of each loan.


          o    USDA BUSINESS AND INDUSTRY (B&I) LENDING. This is a commercial
               loan product of which 70% to 90% is guaranteed by the full faith
               and credit of the Federal government. The loan program is
               administered by the United States Department of Agriculture to
               assist businesses located in rural areas (under 50,000
               population) to promote industrial modernization and job creation.
               Originations of new B&I loans were discontinued by WebBank in
               2001. However, WebBank continues to service loans in its existing
               portfolio and for several other investors. If the accounts
               receivable factoring arrangement is terminated in May 2004 as
               described above, the collection of the remaining B&I Loans in
               WebBank's existing portfolio would temporarily become WebBank's
               principal line of business.


          We continue to evaluate our different business lines and consider
various alternatives to maximize the aggregate value of our businesses and
increase stockholder value, including seeking acquisitions and/or merger
transactions, as well as product line extensions, additions and/or divestitures.
No firm commitments have been realized and no binding letters of intent have
been signed at this time. There can be no assurance that we will be able to
accomplish any of these alternatives and be profitable.

COMPETITION

          The banking and financial services industry is highly competitive. The
increasingly competitive environment is primarily attributable to changes in
regulation, changes in technology and product delivery systems, and the
accelerating pace of consolidation among financial services providers. We
compete for loans, deposits and customers with other commercial banks, thrift
institutions, securities and brokerage companies, mortgage companies, insurance
companies, finance companies, money market funds, credit unions, and other
nonbank financial service providers. Many of these competitors are much larger
in total assets and capitalization, have greater access to capital markets and
offer a broader range of financial services than us.

REGULATION


          WebBank is regulated by Federal and state banking agencies including
the FDIC and the State of Utah Department of Financial Institutions. As a
result, WebBank is subject to various regulatory capital requirements
administered by the Federal and state banking agencies. Failure to meet minimum
capital requirements can result in the initiation of certain actions by
regulators that, if undertaken, could have a direct material effect on WebBank's

                                       13



and our financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, WebBank must meet specific
capital guidelines that involve quantitative measures of WebBank's assets,
liabilities, and certain off balance sheet items as calculated under regulatory
accounting practices. WebBank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors. Management believes that, as of December 31,
2003, WebBank met all capital adequacy requirements to which it is subject.


EMPLOYMENT


          As of April 7, 2004, we had 5 employees, all of whom were full-time
employees. We believe that our employee relations are satisfactory. Steel
Partners, Ltd., an entity controlled by our Chairman of the Board and Chief
Executive Officer, provides certain management, consulting and advisory services
to us pursuant to a Management Agreement. James Henderson, our President and
Chief Financial Officer, provides management, accounting and financial services
to WebBank pursuant to an Employee Allocation Agreement between WebBank and
Steel Partners, Ltd. See "Certain Relationships and Related Transactions."


PROPERTIES

          We occupy office space located at 590 Madison Avenue, 32nd Floor, New
York, New York 10022 pursuant to a Management Agreement with Steel Partners,
Ltd. See "Certain Relationships and Related Transactions." We have the
non-exclusive right to use the office space along with Steel Partners, Ltd. and
several other entities.

          On March  20, 2000, WebBank entered into a lease for 4,630 square feet
of headquarters office space in Salt Lake City, Utah. The lease runs through
March  19, 2005.

          We believe that the facilities are adequate for our current needs and
that suitable additional space will be available as required.

LEGAL PROCEEDINGS

          See "Risk Factors - Our business could be harmed if there is a
non-favorable resolution to the legal proceeding commenced against us by Andrew
Winokur."


                                 USE OF PROCEEDS

          The gross proceeds from the exercise of the subscription rights in
this offering will be approximately $10.0 million, if all of the subscription
rights are exercised. If only 10% or 50% of the subscription rights are
exercised, then the gross proceeds in this offering will be $1.0 million and
$5.0 million, respectively. We will use the proceeds of this offering for
working capital and general corporate purposes.

                                       14



                                 CAPITALIZATION

          The following table sets forth our summary capitalization as of
December 31, 2003 on an historical basis and should be read in conjunction with
our financial statements and notes thereto incorporated by reference into this
prospectus. The table also includes our capitalization on a pro forma basis
assuming the completion of 10%, 50% and 100% of this offering.

                                                                                    PRO FORMA      PRO FORMA     PRO FORMA
                                                                   ACTUAL            FOR 10%        FOR 50%      FOR 100%
                                                                   ------            --------      ---------     --------
                                                               (IN THOUSANDS)     (IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS)
Liabilities
Deposits.....................................................     $11,917            $11,917       $11,917       $11,917
Other liabilities............................................         377                377           377           377
                                                               -------------------------------------------------------------

            Total liabilities................................      12,294             12,294        12,294        12,294
                                                               -------------------------------------------------------------

Stockholders' equity:
      Common stock, $.001 par value,
      authorized 50,000,000 shares, issued
      4,366,866..............................................           4
      Paid-in capital........................................      36,606
      Accumulated deficit....................................     (22,974)
      Accumulated other comprehensive income (loss)..........          55
                                                               -------------------------------------------------------------
                                                                   13,691
            Total Stockholders' equity.......................
                                                               -------------------------------------------------------------

Total capitalization.........................................     $25,985
                                                               =============================================================

                                       15



                           PRICE RANGE OF COMMON STOCK


          Our common stock has been listed on the Nasdaq Stock Market's SmallCap
Market under the symbol "WEFN" since November 15, 1996. On April 7, 2004, the
closing price of our common stock was $2.65 per share. The following table shows
the common stock's high and low sales prices on Nasdaq for the periods
indicated.


            PERIOD                                  HIGH SALE     LOW SALE

        2002:
        -----
        First Quarter                                 $2.67        $2.05
        Second Quarter                                 2.40         1.30
        Third Quarter                                  2.28         1.31
        Fourth Quarter                                 2.71         1.56

        2003:
        -----
        First Quarter                                 $2.70        $1.73
        Second Quarter                                 2.63         1.70
        Third Quarter                                  2.85         2.00
        Fourth Quarter                                 2.70         2.10


        2004:
        -----
        First Quarter                                $3.47        $2.35
        Second Quarter (through April 7, 2004)       $2.80        $2.61

          On April 7, 2004 there were approximately 463 record holders of our
common stock.


          We have not paid cash dividends on our common stock in 2004, 2003 or
2002. We intend to retain any future earnings for working capital needs and to
finance potential future acquisitions, and presently do not intend to pay cash
dividends on our common stock for the foreseeable future.


            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


          The following discussion and analysis should be read in conjunction
with our consolidated financial statements and the related notes included
elsewhere in this prospectus. Historical results are not necessarily indicative
of the operating results of any future period.


RESULTS OF OPERATIONS


YEAR ENDED DECEMBER 31, 2003 COMPARED TO THE YEAR ENDED DECEMBER 31, 2002


            At December 31, 2003, accounts receivable factoring constituted
WebBank's principal line of business. WebBank is engaged in accounts receivable
factoring utilizing a sourcing and servicing company. We have announced that a
notice of termination has been issued with respect to a certain accounts
receivable factoring arrangement, with the termination to be effective in May
2004, and that another accounts receivable program was terminated in February
2004. The accounts receivable factoring arrangement that is scheduled to be
terminated effective May 2004 generated revenue and income in fiscal 2002 and
2003 which accounted for (a) substantially all of the revenue and income
generated by our accounts receivable factoring operating segment for those
years, and (b) a significant part of our income and revenue for those years. It
is possible that the May 2004 termination may not take effect as provided in the
termination notice and the arrangement may continue. We believe that the
termination of the two accounts receivable factoring arrangements will have a
significant adverse effect on our net income during 2004. We expect that if the
May 2004 termination becomes effective during the second quarter of 2004,
WebBank will (a) not generate any gain or loss from the May 2004 termination as
the sourcing and servicing company has elected to purchase the portfolio of
accounts receivable at WebBank's net book value, and (b) generate approximately
$5.9 million of cash as a result of the sale of the portfolio. It is also

                                       16




anticipated that the cash generated by the subject termination will be used to
retire Certificates of Deposit as they mature.

          Net income was $2,109,000, or $.48 per common share, for the year
ended December 31, 2003, compared to net income of $459,000, or $.11 per common
share, for the year ended December 31, 2002. A summary of comparative changes in
the major components of net income between the two years is provided below.

          INTEREST INCOME. Interest income increased by $1,543,000, or 57%, from
2002 to 2003. This increase was primarily due to a $1,771,000, or 124%, increase
in interest and fees from purchased factoring receivables. Interest and fee
income on the loan portfolio decreased by $220,000, or 20%.

          The majority of the increase in interest income occurred at WebBank.
In January 2002, WebBank began a new accounts receivable factoring program (the
"Factoring Program"). The Factoring Program resulted in an average balance of
outstanding purchased factoring receivables of $2,976,000 with an average yield
of 45.2% and interest income of $1,345,000 during 2002. Later in 2002,
WebFinancial Corporation also began purchasing participations in factoring
accounts receivable, generating interest income of $84,000 for the year. In
2003, the average balance of outstanding purchased factoring receivables from
the Factoring Program was $6,221,000 with an average yield of 49.7% and interest
income of $2,984,000. WebFinancial Corporation continued to purchase
participations in factoring accounts receivable during 2003, generating interest
income of $216,000 for the year. As discussed above, the factoring program
included two factoring agreements that have been terminated.

          The decrease in interest and fees on the loan portfolio was due to a
decrease in average balances of loans at WebBank from $10,378,000 in 2002 to
$8,034,000 in 2003. WebBank discontinued originations of commercial loans in
2001.

          INTEREST EXPENSE. Interest expense remained approximately the same
from 2002 to 2003. All of our interest expense was incurred by WebBank during
both years. Although WebBank's average deposits increased from $12,501,000 in
2002 to $13,333,000 in 2003, the average interest rate paid on those deposits
decreased from 2.70% to 2.50%.

          PROVISION FOR CREDIT LOSSES. The credit loss provision increased from
a credit of $(60,000) in 2002 to a provision of $394,000 in 2003. The primary
reason for the increase was a higher level of charge offs in the Factoring
Program. During 2003, a total of $600,000 of factored receivables were charged
off versus $0 in 2002. The increased provision for credit losses was required to
restore the allowance for credit losses to an adequate level following the
charge offs in 2003. Additionally, amortization and pay downs of commercial
loans reduced the amount needed to replenish the allowance for credit losses in
2003 and created a $60,000 credit loss credit in 2002.

            NONINTEREST INCOME. Noninterest income increased from $1,161,000 in
2002 to $1,580,000 in 2003, a change of $419,000, or 36%. Most of the increase
was due to gains on sale of equity securities by WebFinancial Corporation. In
2003, a gain on securities of $891,000 at WebFinancial Corporation was partially
offset by a loss on sale of other assets of $80,000 at WebBank. In 2002, a gain
on sale of securities at WebFinancial Corporation of $318,000 was supplemented
by a gain on sale of other assets of $90,000 at WebBank.

            Miscellaneous income decreased from $441,000 in 2002 to $275,000 in
2003. The primary difference between years was a $112,000 recovery in 2002 of a
security written off in a prior year.

            NONINTEREST EXPENSES. Noninterest expense increased from $3,096,000
in 2002 to $3,623,000 in 2003, a change of $527,000, or 17%. The primary reasons
for the increase were a $334,000 loss on impairment of securities
available-for-sale in 2003 and a $268,000 increase between years in management
and broker fees incurred in the Factoring Program.

            INCOME TAXES. Income tax benefits of $(756,000) and $(10,000) were
recorded in 2003 and 2002, respectively. During 2003, we reduced our valuation
reserve for a deferred tax asset by $1,302,000 resulting in a deferred tax
benefit of $(757,000) offset by a current tax provision of $1,000. In 2002, we
recorded a current tax benefit of $(10,000).

LIQUIDITY AND CAPITAL RESOURCES

          At December 31, 2003 and December 31, 2002, our cash and cash
equivalents totaled $7,245,000 and $6,546,000, respectively. The cash balances
at December 31, 2003 and December 31, 2002 included liquidity to fund expected

                                       17



growth in purchased receivables. However, notices of termination have been given
with respect to two agreements included in the factoring program and, based on
the terms of the factoring agreements, the other parties to the factoring
agreements have the right to purchase our current portfolio of purchased
receivables. One party purchased approximately $500,000 of the factoring
portfolio in February 2004. We used the proceeds to reduce outstanding
certificates of deposit. If the remainder of the receivables are purchased, we
also intend to use those proceeds to reduce the outstanding certificates of
deposit as they mature. Funding for WebBank is obtained primarily from
certificates of deposit obtained through brokers and from a $500,000 unsecured
line of credit with a local correspondent bank. Management believes that our
current cash and cash equivalent balances, expected operating cash inflows, and
WebBank borrowing sources are adequate to meet our liquidity needs through at
least the next 12 months.


          The purpose of this offering is to raise up to $10 million to be used
as additional working capital for our business and general corporate purposes.


          Our officers and Steel Partners, Ltd., an entity controlled by our
Chairman, devote significant time to our administration and exploring potential
acquisition and other business opportunities. There can be no assurance that we
will be able to acquire an additional business, or that such business will be
profitable. In order to finance an acquisition, we may be required to incur or
assume indebtedness or issue securities.

OFF-BALANCE SHEET ARRANGEMENTS

          We are a party to financial instruments with off-balance sheet risk.
In the normal course of business, these financial instruments include
commitments to extend credit in the form of loans or through letters of credit.
Those instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized on the balance sheet. Our exposure
to credit loss in the event of nonperformance by the other party to the
financial instrument for commitments to extend credit is represented by the
contractual amount of those instruments. Commitments to extend credit are
agreements to lend to a customer, provided there is no violation of any
condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee.
Since certain of the commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. We use the same credit policy in making commitments and
conditional obligations as they do for on-balance sheet instruments. We evaluate
each customer's credit worthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary upon extension of credit, is based on
management's credit evaluation of the borrower. At December 31, 2003 and 2002,
we had no undisbursed commercial loan commitments or consumer credit card loan
commitments. For the same periods, our undisbursed accounts receivable factoring
commitments totaled approximately $8,138,000 and $6,382,000, respectively.
Notices of termination have been issued with respect to certain accounts
receivable factoring and service arrangements. See "Risk Factors - Our business
could be harmed if a certain accounts receivable factoring and servicing
arrangement terminates" and "Note 20 - Subsequent Events" to our Consolidated
Financial Statements.


CRITICAL ACCOUNTING ISSUES


ALLOWANCE FOR CREDIT LOSSES


          Management utilizes a comprehensive loan grading system to determine
risk potential in its loan portfolio. Determination of the allowance is
inherently subjective as it requires significant estimates, including the
amounts and timing of expected future cash flows on impaired loans, estimated
losses on pools of homogeneous loans based on historical loss experience, and
consideration of current economic trends, all of which may be susceptible to
significant change. See Notes 1, 3 and 4 of the Notes to Consolidated Financial
Statements for a description of the methodology used by us to determine the
required allowance for credit losses, a discussion of risks associated with the
process, and additional information regarding the allowance and associated
provision.


EQUITY SECURITIES AVAILABLE FOR SALE


          We, both directly and through its WebBank subsidiary, have investments
in equity securities. Available-for-sale securities are recorded at fair value.
Unrealized holding gains or losses on available-for-sale securities are excluded
from earnings and reported, until realized, in accumulated other comprehensive
income (loss) as a separate component of stockholders' equity. A decline in the


                                       18



market value of any available-for-sale or held-to-maturity security below cost
that is deemed other than temporary is charged to earnings resulting in the
establishment of a new cost basis for the security. Determination of whether a
decline in market value is other than temporary may be subjective because it
requires significant estimates of the projected financial condition of the
issuer, of the industry in which the issuer operates, and of local, regional,
and national economies. See Notes 1 and 2 of the Notes to Consolidated Financial
Statements for a description of the methodology used by us to determine the cost
and fair value of equity securities available for sale.


IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS


          In April 2003, the FASB issued SFAS No. 149, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 149 amends SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
149 improves financial reporting by requiring that contracts with comparable
characteristics be accounted for similarly. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003 and should be applied
prospectively. We adopted SFAS No. 149 with no material impact on our financial
condition or results of operations for the year ended December 31, 2003.

          In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 improves financial reporting by establishing standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. SFAS No. 150 is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. We adopted
SFAS No. 150 with no material impact on our financial condition or results of
operations for the year ended December 31, 2003.

          We adopted Emerging Issues Task Force (EITF) 03-1, "The Meaning of
Other than Temporary Impairment and Its Application to Certain Investments," as
of December 31, 2003. EITF 03-1 includes certain disclosures regarding
quantitative and qualitative disclosures for investment securities accounted for
under FAS 115, "Accounting for Certain Investments in Debt and Equity
Securities," that are impaired at the balance sheet date, but an
other-than-temporary impairment has not been recognized. The disclosure requires
a table of securities which have unrealized losses as of the reporting date,
distinguished between securities which have been in a continuous unrealized loss
position for 12 months or more and less than 12 months. The table is to include
aggregate unrealized losses and fair value of securities whose fair value are
below book value as of the reporting date. Additional information, in narrative
form, is required that provides sufficient information to allow financial
statement users to understand the quantitative disclosures and the information
that the investor considered in reaching the conclusion that the impairments are
not other than temporary. At December 31, 2003, we did not have any unrealized
losses on investment securities.


                                       19



                                  THE OFFERING

          Our Board of Directors has proposed that we attempt to raise equity
capital through this offering to all of our stockholders and to use the proceeds
from the subscription of such rights for working capital and general corporate
purposes. The Board declared a dividend of rights to purchase our common stock
to holders of record as of March  19, 2004. Through this prospectus, we are
offering the shares of common stock that rights holders may purchase upon
exercising such subscription rights.

REASONS FOR THIS OFFERING

          In approving this offering, our Board of Directors carefully
considered our need for additional capital and several alternative capital
raising methods, including a credit facility and a private placement of equity
securities. A credit facility was determined not to be feasible because members
of our Board, who are financially sophisticated, did not believe it was
available to us, and a private placement was deemed too costly. The Board also
considered that as a result of this offering, Steel Partners' ownership of our
common stock could increase from approximately 39.8% to over 50%, as well as the
potential dilution of the ownership percentage of our current common
stockholders caused by this offering. While the ownership percentage of our
current common stockholders may decrease, the Board considered that the
magnitude of this dilution would be subject to, and dependent upon, the decision
of each common stockholder whether to exercise their subscription rights for
additional shares of our common stock in this offering.

          After weighing the factors discussed above and the effect of this
offering of generating approximately $10.0 million (less expenses related to the
offering) in additional capital for us, assuming that all of the subscription
rights are exercised, the board of directors believes that this offering is the
best alternative for capital raising and is in the best interests of our company
and our stockholders. As described in "Use of Proceeds," the proceeds of this
offering are intended to be used for additional working capital for our business
and other general corporate purposes.


          Our Board of Directors believes that this offering will ultimately
strengthen our financial condition through generating additional cash and
increasing our stockholders' equity. See "Use of Proceeds" and "Capitalization."
However, our Board of Directors is not making any recommendation as to whether
you should exercise your subscription rights.


SUBSCRIPTION RIGHTS


          BASIC SUBSCRIPTION PRIVILEGE. We distributed to the holders of record
of our common stock, at the close of business on March  19, 2004, at no charge,
one nontransferable subscription right for each share of our common stock they
own. The subscription rights will be evidenced by rights certificates. Each
subscription right will entitle the holder to purchase ___ shares of our common
stock. You are not required to exercise any or all of your subscription rights.


          If, pursuant to your exercise of your subscription rights, the number
of shares of common stock you are entitled to receive would result in your
receipt of fractional shares, the aggregate number of shares issued to you will
be rounded down to the nearest whole number. You will not receive cash in lieu
of fractional shares.

          OVER-SUBSCRIPTION PRIVILEGE. Subject to the allocation described
below, each subscription right also grants each subscription rights holder an
over-subscription privilege to purchase additional shares of our common stock
that are not purchased by other rights holders pursuant to the other rights
holders' basic subscription privileges. You are entitled to exercise your
over-subscription privilege only if you exercise your basic subscription
privilege in full.

          If you wish to exercise your over-subscription privilege, you should
indicate the number of additional shares that you would like to purchase in the
space provided on your subscription certificate. When you send in your
subscription certificate, you must also send the full purchase price for the
number of additional shares that you have requested to purchase (in addition to
the payment due for shares purchased through your basic subscription privilege).
If the number of shares remaining after the exercise of all basic subscription
privileges is not sufficient to satisfy all requests for shares pursuant to
over-subscription privileges, you will be allocated additional shares pro-rata

                                       20



(subject to elimination of fractional shares), based on the number of shares you
purchased through the basic subscription privilege in proportion to the total
number of shares that you and other over-subscribing stockholders purchased
through the basic subscription privilege. However, if your pro-rata allocation
exceeds the number of shares you requested on your subscription certificate,
then you will receive only the number of shares that you requested, and the
remaining shares from your pro-rata allocation will be divided among other
rights holders exercising their over-subscription privileges. Also, pursuant to
the terms of our charter, we believe that you will not be allowed to subscribe
for a number of shares that would increase your ownership of our shares of
common stock to 4.9% or above of our then outstanding shares of common stock,
unless you already owned at least 5.0% of our common stock on the date such
restriction became effective. See "Questions and Answers About This Offering -
WILL I ALWAYS RECEIVE THE FULL NUMBER OF SHARES THAT I OVER-SUBSCRIBE FOR?"

          As soon as practicable after the expiration date, Wachovia Bank, N.A.,
acting as our subscription agent, will determine the number of shares of common
stock that you may purchase pursuant to the over-subscription privilege. You
will receive certificates representing these shares as soon as practicable after
the expiration date and after all pro-rations and adjustments have been
effected. If you request and pay for more shares than are allocated to you, we
will refund that overpayment, without interest. In connection with the exercise
of the over-subscription privilege, banks, brokers and other nominee holders of
subscription rights who act on behalf of beneficial owners will be required to
certify to us and to the subscription agent as to the aggregate number of
subscription rights that have been exercised, and the number of shares of common
stock that are being requested through the over-subscription privilege, by each
beneficial owner on whose behalf the nominee holder is acting.

SUBSCRIPTION PRICE


          The subscription price for a subscription right is $_____ per share.
The per share price equals ___% of the current market price of our common stock,
determined by averaging the closing price of our common stock on Nasdaq for the
______ preceding trading days ending on _____, 2004. The subscription price does
not necessarily bear any relationship to our past or expected future results of
operations, cash flows, current financial condition, or any other established
criteria for value. No change will be made to the cash subscription price by
reason of changes in the trading price of our common stock prior to the closing
of this offering.


DETERMINATION OF SUBSCRIPTION PRICE

          Our board of directors set all of the terms and conditions of this
offering, including the subscription price, which was based on the
recommendation of a special committee of directors, excluding those directors
affiliated with Steel Partners who did not participate (in their capacity as
directors) in the consideration or voting with respect to these matters. In
establishing the subscription price, our board of directors considered the
following factors:

          o    strategic alternatives for capital raising,

          o    the market price of our common stock,

          o    the pricing of similar transactions,

          o    the amount of proceeds desired,

          o    our business prospects,

          o    our recent and anticipated operating results, and

          o    general conditions in the securities markets.


          We determined the ___% [premium][discount] to our current market price
after taking into account the preceding factors. We did not seek or obtain any
opinion of financial advisors or investment bankers in establishing the
subscription price for the offering. You should not consider the subscription
price as an indication of the value of our company or our common stock. We
cannot assure you that you will be able to sell shares purchased during this
offering at a price equal to or greater than the subscription price. On April
7, 2004, the closing sale price of our common stock was $2.65 per share.


                                       21



EXPIRATION DATE, EXTENSIONS AND TERMINATION

          You may exercise your subscription right at any time before 5:00 p.m.,
New York City time, on _____, 2004, the expiration date for this offering.
However, we may extend the offering period for exercising your subscription
rights from time to time in our sole discretion, but in no event more than 30
additional days. If you do not exercise your subscription rights before the
expiration date, your unexercised subscription rights will be null and void. We
will not be obligated to honor your exercise of subscription rights if the
subscription agent receives the documents relating to your exercise after the
expiration date, regardless of when you transmitted the documents, unless you
have timely transmitted the documents under the guaranteed delivery procedures
described below.

          We have the sole discretion to extend the expiration date from time to
time by giving oral or written notice to the subscription agent on or before the
scheduled expiration date. If we elect to extend the expiration of this
offering, we will issue a press release announcing the extension no later than
9:00 a.m., New York City time, on the next business day after the most recently
announced expiration date.

WITHDRAWAL AND AMENDMENT

          We reserve the right to withdraw or terminate this offering at any
time for any reason. In the event that this offering is withdrawn or terminated,
all funds received from subscriptions by stockholders will be returned. Interest
will not be payable on any returned funds.

          We reserve the right to amend the terms of this offering. If we make
an amendment that we consider significant, we will:

          o    mail notice of the amendment to all stockholders of record as of
               the record date;

          o    extend the expiration date by at least 10 days; and

          o    offer all subscribers no less than 10 days to revoke any
               subscription already submitted.

          The extension of the expiration date will not, in and of itself, be
treated as a significant amendment for these purposes.

METHOD OF SUBSCRIPTION - EXERCISE OF SUBSCRIPTION RIGHTS

          You may exercise your subscription rights by delivering the following
to the subscription agent, at or prior to 5:00 p.m., New York City time, on
______, 2004, the date on which the rights expire:

          o    your properly completed and executed rights certificate with any
               required signature guarantees or other supplemental
               documentation; and

          o    your full subscription price payment for each share subscribed
               for under your basic subscription privilege and your
               over-subscription privilege.

You should read and follow the instructions accompanying the rights certificate
carefully.

SIGNATURE GUARANTEE MAY BE REQUIRED

          Your signature on each rights certificate must be guaranteed by an
eligible institution such as a member firm of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc., or
from a commercial bank or trust company having an office or correspondent in the
United States, subject to standards and procedures adopted by the subscription
agent, unless:

          o    your rights certificate provides that shares are to be delivered
               to you as record holder of those subscription rights; or

          o    you are an eligible institution.

                                       22



DELIVERY OF SUBSCRIPTION MATERIALS AND PAYMENT

          You should deliver your rights certificate and payment of the
subscription price or, if applicable, notice of guaranteed delivery, to the
subscription agent by mail or by overnight courier to:


                           By Mail:
                           --------
                           Wachovia Bank, N.A.
                           Corporate Actions - NC 1153
                           1525 West W.T. Harris Boulevard, Building 3C3
                           Charlotte, North Carolina 28288-1153
                           Telephone:  (800) 829-8432

                           By Courier:
                           -----------
                           Wachovia Bank, N.A.
                           Corporate Actions - NC 1153
                           1525 West W.T. Harris Boulevard, Building 3C3
                           Charlotte, North Carolina 28262-1153
                           Telephone:  (800) 829-8432


          You are responsible for the method of delivery of your rights
certificate(s) with your subscription price payment to the subscription agent.
If you send your rights certificate(s) and subscription price payment by mail,
we recommend that you send them by registered mail, properly insured, with
return receipt requested. You should allow a sufficient number of days to ensure
delivery to the subscription agent prior to the time this offering expires.

          Do not send your rights certificate(s) and subscription price payment
to us. Your delivery to an address other than the address set forth above will
not constitute valid delivery.

METHOD OF PAYMENT

          Your payment of the subscription price must be made in U.S. dollars
for the full number of shares of common stock you are subscribing (or
over-subscribing) for by either:

          o    bank draft (cashier's check) drawn upon a U.S. bank or money
               order payable to the subscription agent; or

          o    wire transfer of immediately available funds, to the subscription
               account maintained by the subscription agent at:


                           Wachovia Bank, N.A.
                           Charlotte, North Carolina
                           ABA # 053 000 219
                           Acct # 5000000005093
                           Acct Name:  WebFinancial
                           Ref: Stockholder name and number of shares subscribed
                                for


RECEIPT OF PAYMENT

          Your payment will be considered received by the subscription agent
only upon:

          o    receipt by the subscription agent of any certified check or bank
               draft drawn upon a United States bank, any money order or any
               funds transferred by wire transfers, or

          o    receipt of good funds in the subscription agent's account
               designated above.

   PLEASE NOTE THAT FUNDS MAY NOT BE PAID FOR BY UNCERTIFIED PERSONAL CHECK .

CALCULATION OF SUBSCRIPTION RIGHTS EXERCISED

          If you do not indicate the number of subscription rights being
exercised, or do not forward full payment of the total subscription price for
the number of subscription rights that you indicate are being exercised, then
you will be deemed to have exercised your basic subscription privilege with

                                       23



respect to the maximum number of rights that may be exercised with the aggregate
subscription price payment you delivered to the subscription agent.

YOUR FUNDS WILL BE HELD BY THE SUBSCRIPTION AGENT UNTIL SHARES OF COMMON STOCK
ARE ISSUED

          The subscription agent will hold your payment of the subscription
price payment in a segregated account with other payments received from other
rights holders until we issue your shares to you. If this offering is not
completed, or we do not apply your full subscription price payment to your
purchase of shares of our common stock, the subscription agent will return
promptly, without interest, all excess subscription payments.

NO REVOCATION

          Once you have exercised your subscription privileges, you may not
revoke your exercise. Subscription rights not exercised prior to the expiration
date of this offering will expire.

NON-TRANSFERABILITY OF THE SUBSCRIPTION RIGHTS

          Except in the limited circumstances described below, only you may
exercise the basic subscription privilege and the over-subscription privilege.
You may not sell, give away or otherwise transfer the basic subscription
privilege or the over-subscription privilege.

          Notwithstanding the foregoing, your rights may be transferred by
operation of law; for example, a transfer of rights to the estate of the
recipient upon the death of the recipient would be permitted. If the rights are
transferred as permitted, evidence satisfactory to us that the transfer was
proper must be received by us prior to the expiration date of this offering.

ISSUANCE OF STOCK CERTIFICATES

          Stock certificates for shares purchased in this offering will be
issued as soon as practicable after the expiration date. Our subscription agent
will deliver subscription payments to us only after consummation of this
offering and the issuance of stock certificates to our stockholders that
exercised rights. Unless you instruct otherwise in your subscription certificate
form, shares purchased by the exercise of subscription rights will be registered
in the name of the person exercising the rights.

GUARANTEED DELIVERY PROCEDURES

          If you wish to exercise your subscription rights, but you do not have
sufficient time to deliver the rights certificate evidencing your rights to the
subscription agent on or before the time your subscription rights expire, you
may exercise your subscription rights by the following guaranteed delivery
procedures:

          o    deliver your subscription price payment in full for each share
               you subscribed for under your subscription privileges in the
               manner set forth in "Method of Payment" to the subscription agent
               on or prior to the expiration date;

          o    deliver the form entitled "Notice of Guaranteed Delivery,"
               substantially in the form provided with the "Instructions as to
               Use of Rights Certificates" distributed with your rights
               certificates, at or prior to the expiration date; and

          o    deliver the properly completed rights certificate evidencing your
               rights being exercised and the related nominee holder
               certification, if applicable, with any required signatures
               guaranteed, to the subscription agent within three business days
               following the date of your Notice of Guaranteed Delivery.

          Your Notice of Guaranteed Delivery must be delivered in substantially
the same form provided with the Instructions as to Use of Rights Certificates,
which will be distributed to you with your rights certificate. Your Notice of
Guaranteed Delivery must come from an eligible institution, or other eligible
guarantee institutions which are members of, or participants in, a signature
guarantee program acceptable to the subscription agent.

                                       24



          In your Notice of Guaranteed Delivery, you must state:

          o    your name;

          o    the number of subscription rights represented by your rights
               certificates and the number of shares of our common stock you are
               subscribing (and over-subscribing) for; and

          o    your guarantee that you will deliver to the subscription agent
               any rights certificates evidencing the subscription rights you
               are exercising within three business days following the date the
               subscription agent receives your Notice of Guaranteed Delivery.

          You may deliver your Notice of Guaranteed Delivery to the subscription
agent in the same manner as your rights certificates at the address set forth
above under "Delivery of Subscription Materials and Payment." Alternatively, you
may transmit your Notice of Guaranteed Delivery to the subscription agent by
facsimile transmission (Facsimile No.: (704) 590-7628). To confirm facsimile
deliveries, you may call (800) 829-8432.

          Please call the information agent to request any additional copies of
the form of Notice of Guaranteed Delivery you may need.

DETERMINATIONS REGARDING THE EXERCISE OF YOUR SUBSCRIPTION RIGHTS


          We will decide all questions concerning the timeliness, validity, form
and eligibility of your exercise of your subscription rights and our
determinations will be final and binding. We, in our sole discretion, may waive
any defect or irregularity, or permit a defect or irregularity to be corrected
within such time as we may determine. In such event, we will treat any identical
defects or irregularities the same way for all stockholders. We may reject the
exercise of any of your subscription rights because of any defect or
irregularity. We will not receive or accept any subscription until all
irregularities have been waived by us or cured by you within such time as we
decide, in our sole discretion.


          Neither we nor the subscription agent will be under any duty to notify
you of any defect or irregularity in connection with your submission of rights
certificates and we will not be liable for failure to notify you of any defect
or irregularity. We reserve the right to reject your exercise of subscription
rights if your exercise is not in accordance with the terms of this offering or
in proper form. We will also not accept your exercise of rights if our issuance
of shares of our common stock to you could be deemed unlawful under applicable
law or is materially burdensome to us.

          If you are given notice of a defect in your subscription, you will
have five business days after the giving of notice to correct it. You will not,
however, be allowed to cure any defect later than 5:00 p.m., New York City time,
on ________, 2004. We will not consider an exercise to be made until all defects
have been cured or waived.

NOTICE TO BANKERS, TRUSTEES OR OTHER DEPOSITARIES

          If you are a broker, a trustee or a depositary for securities who
holds shares of our common stock for the account of others at the close of
business on the record date, you should notify the respective beneficial owners
of such shares of this offering as soon as possible to find out their intentions
with respect to exercising their subscription rights. You should obtain
instructions from the beneficial owners with respect to the subscription rights,
as set forth in the instructions we have provided to you for your distribution
to beneficial owners. If the beneficial owner so instructs, you should complete
the appropriate rights certificates and submit them to the subscription agent
with the proper payment. If you hold shares of our common stock for the accounts
of more than one beneficial owner, you may exercise the number of subscription
rights to which all such beneficial owners in the aggregate otherwise would have
been entitled had they been direct record holders of our common stock on the
record date, provided that you, as a nominee record holder, make a proper
showing to the subscription agent by submitting the form entitled "Nominee
Holder Certification" which we will provide to you with your offering materials.

NOTICE TO BENEFICIAL OWNERS

          If you are a beneficial owner of shares of our common stock or will
receive your subscription rights through a broker, custodian bank or other
nominee, we will ask your broker, custodian bank or other nominee to notify you

                                       25



of this offering. If you wish to exercise your subscription rights, you will
need to have your broker, custodian bank or other nominee act for you. If you
hold certificates of our common stock directly and would prefer to have your
broker, custodian bank or other nominee exercise your subscription rights, you
should contact your nominee and request it to effect the transaction for you. To
indicate your decision with respect to your subscription rights, you should
complete and return to your broker, custodian bank or other nominee the form
entitled "Beneficial Owner Election Form." You should receive this form from
your broker, custodian bank or other nominee with the other offering materials.
If you wish to obtain a separate rights certificate, you should contact the
nominee as soon as possible and request that a separate rights certificate be
issued to you.

SHARES OF COMMON STOCK OUTSTANDING AFTER THIS OFFERING

          Upon the issuance of the shares of common stock offered in this
offering (assuming that all of the subscription rights are exercised), 8,733,732
shares of common stock will be issued and outstanding. This would represent an
approximate 100% increase in the number of outstanding shares of common stock.
If only 10% or 50% of the subscription rights are exercised, then 4,803,552 and
6,550,299 shares of common stock will be issued and outstanding, respectively,
which represents an approximate 10% and 50% increase in the number of
outstanding shares of common stock, respectively.


EFFECTS OF OFFERING ON OUR STOCK OPTION PLANS AND OTHER PLANS

          As of April 7, 2004, there were outstanding options to purchase 72,976
shares of our common stock issued or committed to be issued pursuant to stock
options granted by us. None of the outstanding options have anti-dilution or
other provisions for adjustment to exercise price or number of shares which will
be automatically triggered by this offering. Each outstanding and unexercised
option will remain unchanged and will be exercisable for the same number of
shares of common stock and at the same exercise price as before this offering.


RELATIONSHIP WITH STEEL PARTNERS

          Pursuant to the terms of a management agreement, Steel Partners, Ltd.
provides us with office space and certain management, consulting and advisory
services. The management agreement is automatically renewable on an annual basis
unless terminated by either party, for any reason, upon at least 60 days written
notice. The agreement also provides that we will indemnify, save and hold Steel
Partners, Ltd. harmless from and against any obligation, liability, cost or
damage resulting from its actions under the terms of such agreement, except to
the extent occasioned by gross negligence or willful misconduct of its officers,
directors or employees.

          In addition, Jim Henderson, an employee of Steel Partners, Ltd. and an
executive officer of ours, performs services for us in the area of management,
accounting and finances, and identifies business opportunities, and such other
services as are reasonably requested by WebBank. This agreement will continue in
force until terminated by either of the parties upon 30 days written notice.
Glen Kassan, our Vice President and Chief Financial Officer, is also an employee
of Steel Partners, Ltd.

          In consideration of the services rendered under the management
agreement, Steel Partners, Ltd. charges us a fixed monthly fee totaling $310,000
per annum, adjustable annually upon our agreement with Steel Partners, Ltd. In
consideration of the services provided by Mr. Henderson, Steel Partners, Ltd.
charges WebBank $100,000 per annum. The fees payable by WebBank are included in
the fees payable by us under the management agreement. We believe that the cost
of obtaining the type and quality of services rendered by Steel Partners, Ltd.
under these agreements is no less favorable than the cost at which we could
obtain such services from unaffiliated entities.

          Warren Lichtenstein, our Chairman and Chief Executive Officer, is an
affiliate of Steel Partners, Ltd. based on his ownership of shares of common
stock of Steel Partners, Ltd., directly and through Steel Partners II, L.P., and
by virtue of his positions as Chairman, President and Chief Executive Officer of
Steel Partners, Ltd. Mr. Lichtenstein and Steel Partners II, L.P. own an
aggregate of approximately 49.2% of Steel Partners, Ltd. Mr. Lichtenstein is the
sole managing member of the general partner of Steel Partners II, L.P. Mr.
Lichtenstein disclaims beneficial ownership of the shares of common stock of
Steel Partners, Ltd. owned by Steel Partners II, L.P. (except to the extent of
his pecuniary interest in such shares of common stock). None of our other
executive officers or directors are 5% owners of Steel Partners, Ltd. or Steel
Partners II, L.P.

                                       26



            Steel Partners II, L.P. also currently owns 1,737,345 shares of our
common stock, which is equal to approximately 39.8% of our outstanding shares of
common stock. Warren Lichtenstein, who owns 2,500 shares of our common stock, is
deemed to also beneficially own all of the shares owned by Steel Partners II,
L.P. due to his affiliation therewith. Steel Partners II, L.P. has been offered
its pro rata portion of the subscription rights (including over-subscription
privilege). If our other stockholders purchase all of the shares offered to them
for sale, Steel Partners II, L.P. will purchase its pro rata amount and would
continue to beneficially own approximately 39.8% of our common stock
outstanding. If no stockholders other than Steel Partners II, L.P. exercise
their subscription rights, Steel Partners II, L.P. will purchase up to 4,366,866
shares in the offering. In that case, Steel Partners II, L.P.'s ownership
interest could be approximately 70%, and the aggregate ownership interest of the
other outstanding stockholders could decrease to approximately 30%. Even if some
stockholders other than Steel Partners II, L.P. exercise their rights, Steel
Partners II, L.P. could still obtain a majority ownership interest pursuant to
its subscription rights. As a result, Steel Partners II, L.P. may have the
voting power to control the election of our board of directors and the approval
of other matters presented for consideration by the stockholders, which could
include mergers, acquisitions, amendments to our charter and various corporate
governance actions.

          In addition, Steel Partners II, L.P. has advised us that it, and
certain of its affiliates, have recently filed certain required notices with the
Federal Deposit Insurance Corporation (FDIC) under the federal Change in Bank
Control Act, as well as with the Utah Department of Financial Institutions. The
obligation to file these notices arises in connection with Steel Partners II,
L.P.'s ownership interest in the Company and our acquisition of WebBank in 1998.
These notices are being reviewed by the FDIC and the Utah Department of
Financial Institutions. Steel Partners II, L.P. believes that the filing of
these notices is not expected to have any effect on the Company, or WebBank, but
relates to bank holding company requirements resulting from Steel Partners II,
L.P.'s ownership interest in the Company. There can be no assurance, however, as
to what, if any, action the FDIC or the Utah Department of Financial
Institutions may take, which actions may include requiring Steel Partners II,
L.P. to sell some or all of its holdings of our shares.

SUBSCRIPTION AGENT

          We have appointed Wachovia Bank, N.A. as subscription agent for this
offering. We will pay the fees and certain expenses of the subscription agent,
which we estimate will total approximately $10,000. Under certain circumstances,
we may indemnify the subscription agent from certain liabilities that may arise
in connection with this offering.

INFORMATION AGENT

          We have appointed MacKenzie Partners, Inc. as information agent for
this offering. We will pay the fees and certain expenses of the information
agent, which we estimate will total approximately $7,500. Under certain
circumstances, we may indemnify the information agent from certain liabilities
that may arise in connection with this offering.

FEES AND EXPENSES

          Other than for fees charged by the information agent and the
subscription agent, you are responsible for paying any other commissions, fees,
taxes or other expenses incurred in connection with the exercise of the
subscription rights. Neither us, the information agent nor the subscription
agent will pay such expenses.

OTHER MATTERS

          We are not making this offering in any state or other jurisdiction in
which it is unlawful to do so, nor are we selling or accepting any offers to
purchase any shares of our common stock from rights holders who are residents of
those states or other jurisdictions. We may delay the commencement of this
offering in those states or other jurisdictions, or change the terms of this
offering, in order to comply with the securities law requirements of those
states or other jurisdictions. We may decline to make modifications to the terms
of this offering requested by those states or other jurisdictions, in which
case, if you are a resident in those states or jurisdictions, you will not be
eligible to participate in this offering.

                                       27



          We will not be required to issue to you shares of common stock
pursuant to this offering if, in our opinion, you would be required to obtain
prior clearance or approval from any state or federal regulatory authority to
own or control such shares if, at the time the subscription rights expire, you
have not obtained such clearance or approval.

NO BOARD RECOMMENDATION

          An investment in shares of our common stock must be made according to
each investor's evaluation of its own best interests. Accordingly, our board of
directors makes no recommendation to rights holders regarding whether they
should exercise their subscription rights.

IF YOU HAVE QUESTIONS ABOUT EXERCISING RIGHTS

          If you have questions or need assistance concerning the procedure for
exercising subscription rights, or if you would like additional copies of this
prospectus, the Instructions as to Use of Rights Certificates or the Notice of
Guaranteed Delivery, you should contact the information agent at the following
address and telephone number:


                                   MACKENZIE
                                 PARTNERS, INC.

                               105 Madison Avenue
                            New York, New York 10016
                          (212) 929-5500 (Call Collect)
                                       or
                          CALL TOLL-FREE (800) 322-2885

                       Email: proxy@mackenziepartners.com


             MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

          The following discussion is a summary of the material U.S. federal
income tax consequences of (i) the dividend by us of subscription rights to
holders of common stock that hold such stock as a capital asset for federal
income tax purposes, and (ii) the exercise of such rights. This discussion is
based on laws, regulations, rulings and decisions in effect on the date of this
prospectus, all of which are subject to change (possibly with retroactive
effect) and to differing interpretations. This discussion applies only to
holders that are U.S. persons, which is defined as a citizen or resident of the
United States, a domestic partnership, a domestic corporation, any estate (other
than a foreign estate), and any trust so long as a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more U.S. persons have the authority to control all substantial
decisions of the trust. Generally, for federal income tax purposes an estate is
classified as a "foreign estate" based on the location of the estate assets, the
country of the estate's domiciliary administration, and the nationality and
residency of the domiciliary's personal representative.

          This discussion does not address all aspects of federal income
taxation that may be relevant to holders in light of their particular
circumstances or to holders who may be subject to special tax treatment under
the Internal Revenue Code of 1986, as amended, including holders of options or
warrants, holders who are dealers in securities or foreign currency, foreign
persons (defined as all persons other than U.S. persons), insurance companies,
tax-exempt organizations, banks, financial institutions, broker-dealers, holders
who hold common stock as part of a hedge, straddle, conversion or other risk
reduction transaction, or who acquired common stock pursuant to the exercise of
compensatory stock options or warrants or otherwise as compensation.

          We have not sought, and will not seek, an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the distribution of the rights or the related share issuance.
The following summary does not address the tax consequences of the distribution

                                       28



of the rights or the related share issuance under foreign, state, or local tax
laws. ACCORDINGLY, EACH HOLDER OF COMMON STOCK SHOULD CONSULT ITS OWN TAX
ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION OF
THE RIGHTS OR THE RELATED SHARE ISSUANCE TO SUCH HOLDER.

          The federal income tax consequences for a holder of common stock on
the receipt of subscription rights and the exercise of such rights are as
follows:

          o    A holder will not recognize taxable income for federal income tax
               purposes in connection with the receipt of subscription rights.

          o    Except as provided in the following sentence, the tax basis of
               the subscription rights received by a holder will be zero. If
               either (i) the fair market value of the subscription rights on
               the date such subscription rights are distributed is equal to at
               least 15% of the fair market value on such date of the common
               stock with respect to which the subscription rights are received
               or (ii) the holder irrevocably elects, by attaching a statement
               to its federal income tax return for the taxable year in which
               the subscription rights are received, to allocate part of the tax
               basis of such common stock to the subscription rights, then upon
               exercise of the subscription rights, the holder's tax basis in
               the common stock will be allocated between the common stock and
               the subscription rights in proportion to their respective fair
               market values on the date the subscription rights are
               distributed. A holder's holding period for the subscription
               rights received will include the holder's holding period for the
               common stock with respect to which the subscription rights were
               received. We believe that the fair market value of the
               subscription rights will not exceed 15% of the fair market value
               of the common stock to which the subscription rights relate.

          o    A holder that allows the subscription rights received to expire
               will not recognize any gain or loss, and the tax basis of the
               common stock owned by such holder with respect to which such
               subscription rights were distributed will be equal to the tax
               basis of such common stock immediately before the receipt of the
               subscription rights.

          o    A holder will not recognize any gain or loss upon the exercise of
               the subscription rights.

          o    The tax basis of the common stock acquired through exercise of
               the subscription rights will equal the sum of the subscription
               price for the common stock and the holder's tax basis, if any, in
               the subscription rights as described above.

          o    The holding period for the common stock acquired through exercise
               of the subscription rights will begin on the date the
               subscription rights are exercised.


                              PLAN OF DISTRIBUTION

          We are offering the shares of our common stock underlying the rights
directly to you. We have not employed any brokers, dealers or underwriters in
connection with the solicitation or exercise of subscription rights in this
offering and no commissions, fees or discounts will be paid in connection with
this offering. Wachovia Bank, N.A. is acting as our subscription agent to effect
the exercise of the rights and the issuance of the underlying shares of common
stock. Therefore, we anticipate that our officers' and employees' role will be
limited to:

               o    Responding to inquiries of potential purchasers, provided
                    the response is limited to information contained in the
                    registration statement of which this prospectus is a part;
                    and

               o    Ministerial and clerical work involved in effecting
                    transactions pertaining to the sale of the common stock
                    underlying the rights.

          We intend to distribute and deliver this prospectus by hand or by mail
only, and not by electronic delivery. Also, we intend to use printed
prospectuses only, and not any other forms of prospectus.

                                       29




          We have distributed to the holders of record of our common stock, at
the close of business on March  19, 2004, at no charge, one nontransferable
subscription right for each share of our common stock they own. Each
subscription right is a right to purchase ___ shares of our common stock and
carries with it a basic subscription privilege and an over-subscription
privilege. The basic subscription privilege of each right entitles you to
purchase ___ shares of our common stock at a subscription price of $_____ per
share. You may exercise any number of your subscription rights, or you may
choose not to exercise any subscription rights. We will not distribute any
fractional shares or pay cash in lieu of fractional shares, but will round down
the aggregate number of shares you are entitled to receive to the nearest whole
number.


          We do not expect that all of our stockholders will exercise all of
their basic subscription privileges. By extending over-subscription privileges
to our stockholders, we are providing stockholders that exercise all of their
basic subscription privileges with the opportunity to purchase those shares that
are not purchased by other stockholders.

          If you wish to exercise your over-subscription privilege, you should
indicate the number of additional shares that you would like to purchase in the
space provided on your subscription certificate. When you send in your
subscription certificate, you must also send the full purchase price for the
number of additional shares that you have requested to purchase (in addition to
the payment due for shares purchased through your basic subscription privilege).
If the number of shares remaining after the exercise of all basic subscription
privileges is not sufficient to satisfy all requests for shares pursuant to
over-subscription privileges, you will be allocated additional shares pro-rata
(subject to elimination of fractional shares), based on the number of shares you
purchased through the basic subscription privilege in proportion to the total
number of shares that you and other over-subscribing stockholders purchased
through the basic subscription privilege. However, if your pro-rata allocation
exceeds the number of shares you requested on your subscription certificate,
then you will receive only the number of shares that you requested, and the
remaining shares from your pro-rata allocation will be divided among other
rights holders exercising their over-subscription privileges. Also, pursuant to
the terms of our charter, we believe that you will not be allowed to subscribe
for a number of shares that would increase your ownership of our shares of
common stock to 4.9% or above of our then outstanding shares of common stock,
unless you already owned at least 5.0% of our common stock on the date such
restriction became effective. See "Questions and Answers About This Offering -
WILL I ALWAYS RECEIVE THE FULL NUMBER OF SHARES THAT I OVER-SUBSCRIBE FOR?"

          As soon as practicable after the expiration date, Wachovia Bank, N.A.,
acting as our subscription agent, and we will determine the number of shares of
common stock that you may purchase pursuant to the over-subscription privilege.
You will receive certificates representing these shares as soon as practicable
after the expiration date. If you request and pay for more shares than are
allocated to you, we will refund that overpayment, without interest. In
connection with the exercise of the over-subscription privilege, banks, brokers
and other nominee holders of subscription rights who act on behalf of beneficial
owners will be required to certify to us and to the subscription agent as to the
aggregate number of subscription rights that have been exercised, and the number
of shares of common stock that are being requested through the over-subscription
privilege, by each beneficial owner on whose behalf the nominee holder is
acting.

          We will pay MacKenzie Partners, Inc., the information agent, a fee of
approximately $7,500 plus expenses, and Wachovia Bank, N.A., the subscription
agent, a fee of approximately $10,000 plus expenses, for their services in
connection with this offering. We also have agreed to indemnify under certain
circumstances the information agent and the subscription agent from any
liability it may incur in connection with this offering.


          We expect that shares of our common stock issued upon the exercise of
subscription rights will be listed on the Nasdaq Stock Market's SmallCap Market
under the symbol "WEFN," the same symbol under which our currently outstanding
shares of common stock now trade.

                                       30



                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS


          The following sets forth the name, present principal occupation,
employment history and material occupations, positions, offices and employments
for the past five years and ages as of April 7, 2004, for our executive officers
and directors. Members of the Board of Directors are elected at annual meetings
of stockholders and serve until their respective successors shall have been duly
elected and qualified.


Name                        Age     Position
----                        ---     --------

Warren G. Lichtenstein      38      Chairman and Chief Executive Officer
Glen M. Kassan              60      Vice President, Chief Financial Officer
                                    and Secretary
James R. Henderson          46      President and Chief Operating Officer
Jack L. Howard              42      Vice President and Director
Joseph L. Mullen            57      Director
Mark E. Schwarz             43      Director
Howard Mileaf               67      Director

          WARREN G. LICHTENSTEIN has served as a director of ours since 1996 and
as our Chairman and Chief Executive Officer since December 1997. Mr.
Lichtenstein also served as President from December 1997 through December 2003.
Mr. Lichtenstein has served as the Chairman of the Board, Secretary and the
Managing Member of Steel Partners, L.L.C., the general partner of Steel Partners
II, L.P. ("Steel") since January 1, 1996. Prior to such time, Mr. Lichtenstein
was the Chairman and a director of Steel Partners, Ltd. ("Old Ltd."), the
general partner of Steel Partners Associates, L.P., which was the general
partner of Steel, from 1993 until prior to January 1, 1996. Mr. Lichtenstein was
the acquisition/risk arbitrage analyst at Ballantrae Partners, L.P., a private
investment partnership formed to invest in risk arbitrage, special situations
and undervalued companies, from 1988 to 1990. Mr. Lichtenstein has served as a
director and the Chief Executive Officer of Gateway Industries, Inc.
("Gateway"), a provider of database development and Web site design and
development services, since 1994 and as Chairman of the Board since 1995. He has
served as a director of SL Industries, Inc. ("SL"), a designer and producer of
proprietary advanced systems and equipment for the power and data quality
industry, from 1993 to 1997 and since January 2002. He has served as the
Chairman of the Board and Chief Executive Officer of SL since February 2002. Mr.
Lichtenstein has served as a Director and the President and Chief Executive
Officer of Steel Partners, Ltd. ("New Ltd."), a management and advisory company
that provides management services to Steel and other affiliates of Steel, since
June 1999 and as its Secretary and Treasurer from May 2001 to December 2003. Mr.
Lichtenstein served as President of an entity previously known as Steel Partners
Services, Ltd. ("SPS"), a management and advisory company, from October 1999
through March  2002. SPS provided management services to Steel and other
affiliates of Steel until March  2002, when New Ltd. acquired the rights to
provide certain management services from SPS. He has also served as Chairman of
the Board of Directors of Caribbean Fertilizer Group Ltd. ("Caribbean
Fertilizer"), a private company engaged in the production of agricultural
products in Puerto Rico and Jamaica, since June 2000. Mr. Lichtenstein is also a
director of the following other publicly held companies: Layne Christensen
Company, a provider of products and services for the water, mineral,
construction and energy markets; and United Industrial Corporation ("UIC"), a
designer and producer of defense, training, transportation and energy systems.
He also serves as Chairman of the Board of UIC.

          GLEN M. KASSAN has served as our Vice President, Chief Financial
Officer and Secretary since June 2000. He has served as Executive Vice President
of New Ltd. since March  2002. Mr. Kassan served as Executive Vice President of
SPS from June 2001 through March  2002 and Vice President from October 1999
through May 2001. He has also served as Vice Chairman of the Board of Directors
of Caribbean Fertilizer since June 2000. Mr. Kassan is a director and has served
as President of SL since January 2002 and February 2002, respectively. From 1997
to 1998, Mr. Kassan served as Chairman and Chief Executive Officer of Long Term
Care Services, Inc., a privately owned healthcare services company which Mr.
Kassan co-founded in 1994 and initially served as Vice Chairman and Chief
Financial Officer. Mr. Kassan is currently a director of UIC.

          JAMES R. HENDERSON has served as our President and Chief Operating
Officer since December 2003, and was the Vice President of Operations from
September 2000 through December 2003. He has served as a director of Del Global

                                       31



Technologies Corp., a designer and manufacturer of medical imaging and
diagnostic systems, since November 2003. He has also served as a director of the
WebBank subsidiary since March  2002 and a director and Chief Operating Officer
of Holdings since January 2000. Mr. Henderson has served as a Vice President of
New Ltd. since March  2002. Mr. Henderson served as a Vice President of SPS from
August 1999 through March  2002. He has also served as President of Gateway since
December 2001. Mr. Henderson served as a director and acting Chief Executive
Officer of ECC International Corp., a manufacturer and marketer of
computer-controlled simulators for training personnel to perform maintenance and
operator procedures on military weapons, from December 1999 and July 2002,
respectively, until September 2003. He has served as a director of SL since
January 2002. From January 2001 to August 2001, Mr. Henderson served as
President of MDM Technologies, Inc., a direct mail and marketing company that
was principally controlled by the Company's Chief Executive Officer and
Chairman. From 1996 to July 1999, Mr. Henderson was employed in various
positions with Aydin, which included a tenure as President and Chief Operating
Officer from October 1998 to June 1999. Prior to his employment with Aydin, Mr.
Henderson was employed as an executive with UNISYS Corporation, an e-business
solutions provider.

          JACK L. HOWARD has served as a director of ours since 1996 and Vice
President since December 1997. From December 1997 to May 2000, Mr. Howard served
as our Secretary, Treasurer and Chief Financial Officer. For more than the past
five years, Mr. Howard has been a principal of Mutual Securities, Inc., a
registered broker-dealer. He served as Vice President of Gateway since December
2001 and as a director since May 1994. Mr. Howard is a director of Pubco
Corporation, a manufacturer and distributor of printing supplies and
construction equipment.

          JOSEPH L. MULLEN has served as a director of ours since 1995. Since
January 1994, Mr. Mullen has served as Managing Partner of Li Moran
International, a management consulting company, and has functioned as a senior
officer overseeing the merchandise and marketing departments for such companies
as Leewards Creative Crafts Inc., Office Depot of Warsaw, Poland, and Camelot
Music.

          MARK E. SCHWARZ has served as a director of ours since July 2001. He
has served as the general partner, directly or through entities which he
controls, of Newcastle Partners, L.P., a private investment firm, since 1993.
Mr. Schwarz was Vice President and Manager of Sandera Capital, L.L.C., a private
investment firm affiliated with Hunt Financial Group, L.L.C., a Dallas-based
investment firm associated with the Lamar Hunt family ("Hunt"), from 1995 to
September 1999 and a securities analyst and portfolio Manager for SCM Advisors,
L.L.C., formerly a Hunt-affiliated registered investment advisor, from May 1993
to 1996. Mr. Schwarz currently serves as a director of the following companies:
SL; Nashua Corporation, a specialty paper, label, and printing supplies
manufacturer; Bell Industries, Inc., a provider of computer systems and
services; and Pizza Inn, Inc., a franchisor and operator of pizza restaurants.
Mr. Schwarz has served as a director and Chief Executive Officer and President
of Geoworks Corporation, an entity with no significant business operations,
since May 2003. Mr. Schwarz has also served as Chairman of the Board of
Directors of Hallmark Financial Services, Inc., a property and casualty
insurance holding company, since October 2001, and as its Chief Executive
Officer since January 2003. From October 1998 through April 1999, Mr. Schwarz
served as a director of Aydin Corporation ("Aydin"), a defense electronics
manufacturer.

          HOWARD MILEAF has served as a director of ours since December 2002. He
has been a director of Neuberger Berman Mutual Funds since 1985. Mr. Mileaf has
served as a director of WHX Corporation ("WHX"), a NYSE listed holding company,
since August 2002. From May 1993 to December 2001, Mr. Mileaf served as Vice
President and General Counsel of WHX.

EXECUTIVE COMPENSATION

          SUMMARY COMPENSATION

          The following table sets forth information concerning the compensation
paid by the Company during the fiscal years ended December 31, 2003, 2002 and
2001 to the Company's Chief Executive Officer. No other executive officer of the
Company received annual compensation in excess of $100,000 during the fiscal
year ended December 31, 2003.

                                       32



                                                                           LONG-TERM
                                                  ANNUAL COMPENSATION    COMPENSATION
                                                                           SECURITIES    ALL OTHER
                                        FISCAL                            UNDERLYING   COMPENSATION
NAME AND PRINCIPAL POSITION              YEAR     SALARY($)   BONUS($)      OPTIONS(#)   ($)(1)
---------------------------              ----     ---------   --------      ----------   ------

Warren Lichtenstein, Chairman and        2003        --        --             --        310,000
Chief Executive
Officer
                                         2002        --        --             --        310,000
                                         2001        --        --             --        310,000
--------------------

          (1) Represents aggregate management fees earned by Steel Partners,
Ltd. (for 2003 and for a portion of 2002) and Steel Partners Services, Ltd. (for
a portion of 2002 and for 2001), entities controlled by Warren Lichtenstein,
from the Company. For information relating to the management functions performed
by such entities, see "Certain Relationships and Related Transactions."

          STOCK OPTIONS

          None of our executive officers were granted any options during the
fiscal year ended December 31, 2003 nor did Mr. Lichtenstein hold any Stock
Options as of December 31, 2003.

          EMPLOYMENT AGREEMENTS

          The Company currently has no employment agreements, compensatory plans
or arrangements with any executive officer.

DIRECTOR COMPENSATION

          Our Board of Directors has authorized the payment to each of our
non-employee directors a retainer fee of $3,000 per quarter in cash for his
services as a director during 2004 and meeting fees of $1,000 per meeting of the
Board and $500 per meeting of a committee of the Board ($375 to the extent such
committee meeting is held on the same day as a Board meeting) during 2004
pursuant to the terms of the Long Term Stock Incentive Plan (the "Plan").
Pursuant to the Plan, the three non-employee directors entitled to such fees
elected to receive their fees in stock options in lieu of cash, with exercise
prices based on the market price of our common stock on the date of grant.
Officers, who are directors, do not receive annual or per meeting compensation.
Howard Mileaf, as chairman of our audit committee, receives chairmanship fees of
$2,500 per quarter.  During 2003, our non-employee directors were paid $10,000
each for their review of the registration statement of which this prospectus
is a part.


EQUITY COMPENSATION PLAN INFORMATION
                                                                                         Number of securities remaining
                                      Number of securities to be                         available for future issuance under
                                      issued upon                   Weighted-average     equity compensation plans
                                      exercise of outstanding       exercise price of    (excluding securities reflected in
                                      options                       outstanding options  column (a))

Plan Category                          (a)                           (b)                 (c)
-------------                         ----                          ----                 ----
Equity compensation plans             92,976                        $4.48                902,774
approved by security
holders(1)


Equity compensation plans             0                             0                    0
not approved by security

                                       33



holders

Total                                 92,976                        $4.48                902,774

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

            (1) Consists of the Plan.


                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Pursuant to a management agreement (the "Management Agreement"),
approved by a majority of our disinterested directors, between us and SPS (and
subsequently assigned to Steel Partners, Ltd. ("New Ltd.")), New Ltd. provides
us with office space and certain management, consulting and advisory services.
The Management Agreement is automatically renewable on an annual basis unless
terminated by either party, for any reason, upon at least 60 days written
notice. The Management Agreement also provides that we shall indemnify, save and
hold New Ltd. harmless from and against any obligation, liability, cost or
damage resulting from New Ltd.' s actions under the terms of the Management
Agreement, except to the extent occasioned by gross negligence or willful
misconduct of New Ltd.' s officers, directors or employees.

          Pursuant to an employee allocation agreement (the "Employee Allocation
Agreement") between WebBank and SPS (and subsequently assigned to New Ltd.), Mr.
Jim Henderson, an employee of New Ltd. and an executive officer of ours,
performs services in the area of management, accounting and finances, and
identifies business opportunities, and such other services as are reasonably
requested by WebBank. The Employee Allocation Agreement will continue in force
until terminated by either of the parties upon 30 days written notice.

          Prior to March  26, 2002, the original counterparty to both the
Management Agreement and the Employee Allocation Agreement was SPS. As of March
26, 2002, the Management and the Employee Allocation Agreements described above
were assigned by SPS to New Ltd. and the employees of SPS became employees of
New Ltd. Warren Lichtenstein, our Chairman and Chief Executive Officer, is an
affiliate of New Ltd. based on his ownership of New Ltd., directly and through
Steel, and by virtue of his positions as Chairman, President and Chief Executive
Officer of New Ltd. Mr. Lichtenstein is the sole managing member of the general
partner of Steel. Mr. Lichtenstein disclaims beneficial ownership of the shares
of common stock of New Ltd. owned by Steel (except to the extent of his
pecuniary interest in such shares of common stock).

          In consideration of the services rendered under the Management
Agreement, New Ltd. charges us a fixed monthly fee totaling $310,000 per annum,
adjustable annually upon agreement of us and New Ltd. In consideration of the
services provided under the Employee Allocation Agreement, New Ltd. charges
WebBank $100,000 per annum. The fees payable by WebBank are included in the fees
payable by us under the Management Agreement. We believe that the cost of
obtaining the type and quality of services rendered by New Ltd. under the
Management and Employee Allocation Agreements is no less favorable than the cost
at which we and WebBank, respectively, could obtain from unaffiliated entities.

          During the fiscal year ended December 31, 2003, New Ltd. billed us
fees with respect to fiscal 2003 of $310,000, for services rendered under the
Management Agreement. Included in these fees was $100,000 paid by WebBank for
services rendered under the Employee Allocation Agreement. During the fiscal
year ended December 31, 2002, New Ltd. and SPS billed us fees with respect to
fiscal 2002 of $232,500 and $77,500, respectively, for services rendered under
the Management Agreement. Included in these fees was $100,000 paid by WebBank
for services rendered under the Employee Allocation Agreement. The fees payable
by WebBank are included in the fees payable by us under the Management
Agreement.

          Pursuant to a sourcing and servicing agreement (the "Rockland
Agreement") between WebBank and Rockland Credit Finance LLC ("Rockland"),
Rockland performs both sourcing and servicing functions on behalf of WebBank
related to WebBank's accounts receivable factoring program. John Fox, the owner
of Rockland, is a former employee of WebBank. During 2003, Rockland was paid
$255,000 in cash management fees and earned $1,019,000 in total management fees
under the terms of the Rockland Agreement. During 2002, the first year of the

                                       34



Rockland Agreement, Rockland was paid $56,000 in cash management fees and earned
$571,000 in total management fees under the terms of the Rockland Agreement.
Management fees are paid quarterly and accrued monthly by WebBank. Notices of
termination have been issued with respect to the Rockland Agreement and other
accounts receivable factoring and service arrangements. See "Risk Factors - Our
business could be harmed if certain accounts receivable factoring and service
arrangements terminate."

               SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                                   MANAGEMENT


          The following table sets forth information as of April 7, 2004
regarding the beneficial ownership of our common stock by each person known by
us to own beneficially more than 5% of our common stock, by each of our
directors, our Chief Executive Officer, and by all directors and executive
officers as a group.


                                          Amount and
                                           Nature of
                                          Beneficial
Name and Address                         Ownership (1)    Percentage of Class
----------------                         -------------    -------------------

Warren G. Lichtenstein                  1,739,845(2)          39.8%
c/o Steel Partners II, L.P.
590 Madison Avenue, 32nd Floor
New York, New York 10022

Steel Partners II, L.P.                 1,737,345              39.8%
590 Madison Avenue, 32nd Floor
New York, New York 10022

Jack L. Howard                             42,617(3)             *
c/o Mutual Securities, Inc.
590 Madison Avenue, 32nd Floor
New York, New York 10022

Joseph L. Mullen                           15,962(4)             *
c/o Li Moran International, Inc.
611 Broadway, Suite 722
New York, New York 10012

Mark E. Schwarz                            10,344(5)             *
c/o Newcastle Capital Management, L.P.
300 Crescent Court, Suite 1110
Dallas, Texas 75201


Howard Mileaf                                 955(6)             *
64 Brookdale Court
Highland Park, New Jersey 08904


All directors and executive officers    1,859,723(7)          41.9%
as a group (seven persons)
----------------------
*Less than 1%


(1)  A person is deemed to be the beneficial owner of voting securities that can
     be acquired by such person within 60 days after April 7, 2004 upon the
     exercise of options, warrants or convertible securities. Each beneficial
     owner's percentage ownership is determined by assuming that options,
     warrants or convertible securities that are held by such person (but not
     those held by any other person) and that are currently exercisable (i.e.,

                                       35



     that are exercisable within 60 days after April 7, 2004) have been
     exercised. Unless otherwise noted, we believe that all persons named in the
     table have sole voting and investment power with respect to all shares
     beneficially owned by them.

(2)  Consists of (i) 2,500 shares of common stock owned directly by Mr.
     Lichtenstein; and (ii) 1,737,345 shares of common stock owned by Steel
     Partners II, L.P. ("Steel"), which is also separately listed in the
     security ownership table. As the sole managing member of the general
     partner of Steel, Mr. Lichtenstein has sole voting and investment power
     over the 1,737,345 shares owned by Steel. Mr. Lichtenstein disclaims
     beneficial ownership of the shares of common stock owned by Steel except to
     the extent of his pecuniary interest therein.

(3)  Consists of (i) 36,417 shares of common stock owned directly by Mr. Howard;
     (ii) 3,000 shares of common stock owned by Mr. Howard in joint tenancy with
     his spouse; and (iii) 3,200 shares of common stock owned by JL Howard,
     Inc., a California corporation controlled by Mr. Howard.


(4)  Consists of (i) 4,285 shares of common stock; and (ii) 11,677 shares of
     common stock issuable upon the exercise of options within 60 days of April
     7, 2004 granted to Mr. Mullen.

(5)  Consists of 10,344 shares of common stock issuable upon the exercise of
     options within 60 days of April 7, 2004 granted to Mr. Schwarz.

(6)  Consists of 955 shares of common stock issuable upon the exercise of
     options within 60 days of April 7, 2004 granted to Mr. Mileaf.

(7)  Consists of the shares and options held by the directors and executive
     officers named in this security ownership table and 50,000 shares of common
     stock issuable upon the exercise of options within 60 days of April 7,
     2004 held by executive officers who are not specifically named in this
     security ownership table.

                                       36



                          DESCRIPTION OF CAPITAL STOCK

GENERAL

          The following information describes our capital stock and certain
provisions of our certificate of incorporation, as amended, and our bylaws. This
description is only a summary. You should refer to the certificate of
incorporation, as amended and the bylaws as filed with the SEC.

          Our authorized capital stock consists of 50,000,000 shares of common
stock, $.001 par value, and 10,000,000 shares of preferred stock, $.001 par
value.

COMMON STOCK

          As of April 7, 2004, there are 4,366,866 shares of our common stock
outstanding. Based upon the number of shares outstanding and giving effect to
the issuance of 4,366,866 shares of common stock upon the exercise of the
subscription rights offered hereby, there will be 8,733,732 shares of our common
stock outstanding.

          The holders of our common stock are entitled to one vote for each
share held on all matters submitted to a vote of the stockholders and do not
have any cumulative voting rights. Accordingly, holders of a majority of the
shares of common stock entitled to vote in any election of directors may elect
all of the directors standing for election. Holders of our common stock are
entitled to receive proportionally any dividends declared by our board of
directors, subject to any preferential dividend rights of outstanding preferred
stock.


          In the event of our liquidation, dissolution or winding up, holders of
our common stock are entitled to share ratably in all assets remaining after
payment of all debts and other liabilities, subject to the prior rights of any
outstanding preferred stock. Holders of our common stock have no preemptive,
subscription, redemption or conversion rights. The rights, preferences and
privileges of holders of our common stock are subject to, and may be adversely
affected by, the rights of holders of shares of any series of preferred stock
that we may designate and issue in the future.

PREFERRED STOCK

          Under the terms of our certificate of incorporation, our board of
directors is authorized to issue shares of preferred stock in one or more series
without stockholder approval. The board has discretion to determine the rights,
preferences, privileges and restrictions, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences of
each series of preferred stock.


          The purpose of authorizing our board of directors to issue preferred
stock and determine its rights and preferences is to eliminate delays associated
with a stockholder vote on specific issuances. The issuance of preferred stock,
while providing desirable flexibility in connection with possible acquisitions
and other corporate purposes, could make it more difficult for a third party to
acquire, or could discourage a third party from acquiring, a majority of our
outstanding voting stock.


          As of the date hereof, there are no shares of our preferred stock
outstanding.

OPTIONS AND WARRANTS

          There are presently outstanding options to purchase 72,976 shares of
our common stock, pursuant to our stock option plan. The average exercise price
of such options is $4.30 per share.

CHANGE OF CONTROL PROTECTIONS

          TRANSFER RESTRICTIONS.

                                       37



          Our certificate of incorporation also specifically provides that in
order to preserve certain tax benefits to which we are entitled to, the
following restrictions shall apply: no stockholder may sell or transfer any
shares of our common stock if such transaction would cause their ownership of
common stock (i) to increase to 4.9% or above of our then outstanding shares of
common stock or (ii) to increase from 4.9% or above to a greater ownership
percentage, unless they already owned at least 5.0% of our common stock on the
date such restriction became effective. This provision exists to protect certain
tax benefits that we have, but we believe also has the effect of preventing
third parties, who currently do not own more than 4.9% of our common stock, from
acquiring a significant percentage of our common stock.


ANTITAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW

          We are subject to Section 203 of the General Corporate Law of the
State of Delaware, which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless:

          o    prior to such date, the board of directors of the corporation
               approved either the business combination or the transaction that
               resulted in the stockholders becoming an interested stockholder;

          o    upon consummation of the transaction that resulted in the
               stockholder becoming an interested stockholder, the interested
               stockholder owned at least 85% of the voting stock of the
               corporation outstanding at the time the transaction commenced,
               excluding for purposes of determining the numbers of shares owned
               by persons who are directors and also officers and by employee
               stock plans in which employee participants do not have the right
               to determine confidentially whether shares held subject to the
               plan will be tendered in a tender or exchange offer; or

          o    on or subsequent to such date, the business combination is
               approved by the board of directors and authorized at an annual or
               special meeting of stockholders, and not by written consent, by
               the affirmative vote of at least 66 2/3% of the outstanding
               voting stock that is not owned by the interested stockholder.

          Section 203 defines business combination to include:

          o    any merger or consolidation involving the corporation and the
               interested stockholder;

          o    any sale, transfer, pledge or other disposition of 10% or more of
               the assets of the corporation involving the interested
               stockholder;

          o    subject to certain exceptions, any transaction that results in
               the issuance or transfer by the corporation of any stock of the
               corporation to the interested stockholder;

          o    any transaction involving the corporation that has the effect of
               increasing the proportionate share of the stock of any class or
               series of the corporation beneficially owned by the interested
               stockholder; or

          o    the receipt by the interested stockholder of the benefit of any
               loans, advances, guarantees, pledges or other financial benefits
               provided by or through the corporation.

          In general, Section 203 defines an interested stockholder as any
entity or person beneficially owning 15% or more of the outstanding voting stock
of the corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.

TRANSFER AGENT AND REGISTRAR

          The transfer agent and registrar for our common stock is Wachovia
Bank, N.A.

                                       38



                                  LEGAL MATTERS

          The validity of the shares of common stock offered hereby will be
passed upon for us by Olshan Grundman Frome Rosenzweig & Wolosky LLP, New York,
New York.


                                     EXPERTS

          The consolidated financial statements of WebFinancial Corporation at
December 31, 2003 and 2002, and for each of the years then ended, included in
this prospectus and elsewhere in the registration statement, have been audited
by Grant Thornton LLP, independent certified public accountants, as set forth in
their report with respect thereto. Such consolidated financial statements are
included herein in reliance upon the authority of such firm as experts in
accounting and auditing.


                       WHERE YOU CAN FIND MORE INFORMATION

          We are subject to the informational requirements of the Securities
Exchange Act of 1934. Accordingly, we file reports, proxy statements and other
information with the SEC. You may read and copy any materials that we file with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549 upon payment of the prescribed fees. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site that contains reports,
proxy and information statements and other materials that are filed through the
SEC's Electronic Data Gathering, Analysis, and Retrieval, or EDGAR, system. You
can access this web site at HTTP://WWW.SEC.GOV. We also post our SEC filings on
our web site at HTTP://WWW.WEBFINANCIALCORPORATION.COM.

          This prospectus is part of a registration statement filed with the
SEC. This prospectus does not contain all the information contained in the
registration statement. This prospectus contains a general description of our
company and the securities being offered upon exercise of the rights. You should
read this prospectus together with the additional information found in the
registration statement. The full registration statement can be obtained from the
SEC.

          You can request a copy of any document filed with the SEC at no cost,
by writing or telephoning us at the following:

                            WebFinancial Corporation
                         590 Madison Avenue, 32nd Floor
                            New York, New York 10022
                        Attention: Warren G. Lichtenstein
                            Telephone: (212) 758-3232

                                       39



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES


Management's Report on Consolidated Financial Statements.................... F-2

Report of Independent Certified Public Accountants.......................... F-3

Consolidated Statements of Financial Condition.............................. F-4

Consolidated Statements of Earnings......................................... F-6

Consolidated Statement of Stockholders' Equity.............................. F-8

Consolidated Statements of Cash Flows....................................... F-9

Notes to Consolidated Financial Statements..................................F-11

                                      F-1



            MANAGEMENT'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002

The consolidated financial statements on the following pages have been prepared
by management in conformity with generally accepted accounting principles.
Management is responsible for the reliability and fairness of the financial
statements and other financial information included herein.

To meet its responsibilities with respect to financial information, management
maintains and enforces internal accounting policies, procedures and controls
which are designed to provide reasonable assurance that assets are safeguarded
and that transactions are properly recorded and executed in accordance with
management's authorization. Management believes that our accounting controls
provide reasonable, but not absolute, assurance that errors or irregularities
which could be material to the financial statements are prevented or would be
detected within a timely period by our personnel in the normal course of
performing their assigned functions. The concept of reasonable assurance is
based on the recognition that the cost of controls should not exceed the
expected benefits.

The responsibility of our independent auditors, Grant Thornton LLP, is to
conduct their audit in accordance with auditing standards generally accepted in
the United States of America. In carrying out this responsibility, they planned
and performed their audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether caused by error
or fraud.

The Audit Committee of the Board of Directors met three times with management
and Grant Thornton LLP to discuss auditing and financial matters and to assure
that each is carrying out its responsibilities. Grant Thornton LLP has full and
free access to the Audit Committee and met with it by telephone, with and
without management being present, to discuss the results of their audit and
their opinions on the quality of financial reporting.

By: /s/ Warren G. Lichtenstein
    --------------------------
    Warren G. Lichtenstein
    President and Chief Executive Officer
    (Principal Executive Officer)

By: /s/ Glen M. Kassan
    --------------------------
    Glen M. Kassan
    Vice President and Chief Financial Officer
    (Principal Financial and Accounting Officer)

                                      F-2



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
WebFinancial Corporation


We have audited the accompanying  consolidated statements of financial condition
of WebFinancial  Corporation  and  subsidiaries as of December 31, 2003 and 2002
and the related consolidated  statements of earnings,  stockholders' equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
WebFinancial  Corporation and subsidiaries as of December 31, 2003 and 2002, and
the consolidated  results of their operations and their  consolidated cash flows
for the years then ended in  conformity  with  accounting  principles  generally
accepted in the United States of America.


/s/ Grant Thornton LLP
Salt Lake City, Utah
March  16, 2004

                                      F-3



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                    (Amounts in thousands except share data)

                                                                  DECEMBER 31,    DECEMBER 31,
                                                                     2003            2002
                                                                  --------         --------
ASSETS
  Cash and due from banks                                         $     15         $    152
  Interest bearing deposits in other banks                           6,265            2,697
  Federal funds sold                                                   965            3,697
                                                                  --------         --------
     Total cash and cash equivalents                                 7,245            6,546

  Investment securities (note 2)
     Held-to-maturity (estimated fair value of $49 and $20
         at December 31, 2003 and 2002)                                48               19
     Available-for-sale                                                324            1,722
                                                                  --------         --------
         Total investment securities                                   472            1,741

  Loans, net (note 3)                                                8,819           11,826
   Purchased receivables (note 3)
     Accounts receivable factoring                                   7,352            4,622
     Other                                                             268              479
  Allowance for credit losses (note 4)                              (1,302)          (1,526)
                                                                  --------         --------
         Total loans, net                                           15,137           15,401

  Foreclosed assets                                                    200               36

  Premises and equipment, net (note 8)                                  15               41
  Accrued interest receivable                                          244              259
  Goodwill                                                           1,380            1,380
  Deferred tax asset (note 12)                                         757                -
  Other assets (note 16)                                             1,098              761
                                                                  --------         --------
                                                                  $ 26,448         $ 26,165
                                                                  ========         ========

                                   (continued)

                                      F-4



                                   WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)
                                   (Amounts in thousands except share data)


LIABILITIES AND STOCKHOLDERS' EQUITY
   Deposits:
      Non interest-bearing demand                                            $    206         $    668
      NOW/MMA accounts                                                            347              680
      Certificates of deposit (note 6)                                         11,364           12,272
                                                                             --------         --------
   Total deposits                                                              11,917           13,620

   Other liabilities                                                              377              919
                                                                             --------         --------
   Total liabilities before minority interests                                 12,294           14,539

   Minority interests                                                             463              356
   Commitments and contingencies (notes 7, 11 and 14)                               -                -

   Stockholders' Equity (notes 2, 10, and 15)
      Preferred stock, 10,000,000 shares authorized, none issued                    -                -
      Common stock, 50,000,000 shares authorized;
          $.001 par value, 4,366,866 shares issued and outstanding at
          December 31, 2003 and at December 31, 2002                                4                4
      Paid-in capital                                                          36,606           36,606
      Accumulated deficit                                                     (22,974)         (25,083)
      Accumulated other comprehensive income (loss)                                55             (257)
                                                                             --------         --------

   Total stockholders' equity                                                  13,691           11,270
                                                                             --------         --------
                                                                             $ 26,448         $ 26,165
                                                                             ========         ========

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

                                      F-5




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS
                    (Amounts in thousands except share data)


                                                             YEAR ENDED       YEAR ENDED
                                                             DECEMBER 31,     DECEMBER 31,
                                                                2003              2002
                                                               -------         -------
Interest income
    Loans, including fees                                      $   858         $ 1,078
    Purchased receivables
          Accounts receivable factoring                          3,200           1,429
          Other                                                     32              63
    Interest bearing deposits in other banks                        17              53
    Federal funds sold                                              42              28
    Investment securities                                           84              39
                                                               -------         -------
          Total interest income                                  4,233           2,690

Interest expense
    Deposits                                                       336             334
    Federal funds purchased                                          -               1
                                                               -------         -------
               Total interest expense                              336             335

               Net interest income before provision
               (credit) for credit losses                        3,897           2,355

Provision (credit) for credit losses (note 4)                      394             (60)
                                                               -------         -------

               Net interest income after provision
               (credit) for credit losses                        3,503           2,415

Noninterest income
    Gain on sale of assets                                         811             318
    Fee income                                                     494             402
    Miscellaneous income (note 17)                                 275             441
                                                               -------         -------
          Total noninterest income                               1,580           1,161

Noninterest expenses (note 5)
    Salaries, wages, and benefits                                  996             949
    Professional and legal fees                                    441             504
    Accounts receivable factoring management
          and broker fees                                          867             599
    Other management fees - related party                          310             310
    Loss on impairment of securities available-for-sale            334               -
    Other general and administrative                               675             734
                                                               -------         -------
          Total noninterest expenses                             3,623           3,096
                                                               -------         -------

               Operating income                                  1,460             480

Income tax benefit (note 12)                                      (756)            (10)
                                                               -------         -------

Income before minority interest                                  2,216             490

(Income) attributable to minority interests                       (107)            (31)
                                                               -------         -------
          Net income                                           $ 2,109         $   459
                                                               =======         =======

                                   (continued)

                                       F-6



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF EARNINGS (continued)
                    (Amounts in thousands except share data)


                                                  YEAR ENDED           YEAR ENDED
                                                 DECEMBER 31,         DECEMBER 31,
                                                     2003                 2002
                                                     ----                 ----



Income per common share:
    Basic                                        $         .48        $         .11
    Diluted                                      $         .48        $         .11

Weighted average number of common shares:
    Basic                                            4,366,866            4,366,866
    Diluted                                          4,368,165            4,367,142



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


                                      F-7


                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

               YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002
                    (Amounts in thousands except share data)


                                                                                                 ACCUMULATED
                                         COMMON STOCK             PAID-IN       ACCUMULATED        OTHER               TOTAL
                                     SHARES          AMOUNT       CAPITAL         DEFICIT       COMPREHENSIVE     STOCKHOLDERS'
                                     ------          ------       -------         -------        INCOME (LOSS)         EQUITY
                                                                                                 -------------    --------------

Balance at January 1, 2002                                                                                           ------
                                   4,366,866       $        4     $   36,606    $  (25,542)    $        2          $   11,070
Comprehensive income :
     Net income                            -                -              -           459              -                  459
     Unrealized holding loss
     arising during period
     net of tax                            -                -              -             -           (259)                (259)
                                   ---------       ----------     ----------    ----------     ----------          -----------
Total comprehensive income                 -                -              -           459           (259)                 200
                                   ---------       ----------     ----------    ----------     ----------          -----------


 Balance at December 31, 2002      4,366,866                4         36,606       (25,083)          (257)              11,270

Comprehensive income :
    Net income                             -                -              -         2,109              -                2,109
    Unrealized holding gain
     arising during period,
     net of tax                            -                -              -             -            312                  312
                                   ---------       ----------     ----------    ----------     ----------          -----------
Total comprehensive income                 -                -              -         2,109            312                2,421
                                   ---------       ----------     ----------    ----------     ----------          -----------
Balance at December 31,
2003                               4,366,866       $        4     $   36,606    $  (22,974)    $       55          $    13,691
                                   =========       ==========     ==========    ==========     ==========          ===========


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

                                      F-8


                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)

                                                                        YEAR ENDED     YEAR ENDED
                                                                       DECEMBER 31,    DECEMBER 31,
                                                                           2003            2002
                                                                           ----            ----
Cash flows from operating activities:
Net income from operations                                              $ 2,109         $   459
Adjustments to reconcile net loss to net cash
    provided by operating activities:
          Minority interest                                                 107              31
          Provision (credit) for credit losses                              394             (60)
          Depreciation                                                       21              37
          Abandonment of premises and equipment                               5               -
          Gain on sale of securities available-for-sale                    (891)              -
          Loss on impairment of securities available-for-sale               334               -
          Gain on sale of loans                                             (24)              -
          (Gain) loss on sale of foreclosed assets                          104             (90)
          Write down of foreclosed assets                                    20              29
          Accretion of deferred loan fees, net                             (123)           (118)
          Amortization of other assets                                        7              15
          Amortization of servicing assets                                   45              35
          Deferred tax asset                                               (757)              -
    Change in operating assets and liabilities:
          Accrued interest receivable                                        15            (205)
          Other assets                                                     (389)             88
          Other liabilities                                                (542)            750
                                                                        -------         -------

               Net cash provided by
               operating activities                                         435             971
                                                                        -------         -------

Cash flows from investing activities:
    Purchase of securities held-to-maturity                                 (40)              -
    Principal payments received on securities held-to-maturity               11               6
    Purchase of securities available-for-sale                            (2,675)         (2,571)
    Sales of securities available-for-sale                                2,641             694
    Principal payments received on securities available-for-sale          2,302             158
    Sale of SBA loans                                                       558               -
    Loans originated and principal collections, net                       2,357             463
    Purchased accounts receivable factoring originated
          and principal collections, net                                 (3,330)         (4,622)
    Purchased other receivables originated and
          principal collections, net                                        211            (479)
    Purchase of premises and equipment                                        -              (3)
    Proceeds (settlement adjustments) from sale
          of foreclosed assets                                              (68)            528
                                                                        -------         -------

               Net cash provided by (used in)
               investing activities                                       1,967          (5,826)
                                                                        -------         -------


                                   (continued)


                                      F-9


                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

                                                              YEAR ENDED    YEAR ENDED
                                                             DECEMBER 31,   DECEMBER 31,
                                                                 2003          2002
                                                              -------         -------

Cash flows from financing activities:
    Net increase (decrease) in demand deposits                   (462)            593
    Net increase (decrease) in NOW/MMA accounts                  (333)            661
    Net increase (decrease) in certificates of deposit           (908)          5,052
                                                              -------         -------

Net cash provided by (used in) financing activities            (1,703)          6,306
                                                              -------         -------
Net increase in cash and cash equivalents                         699           1,451

Cash and cash equivalents at beginning of year                  6,546           5,095
                                                              -------         -------
Cash and cash equivalents at end of year                      $ 7,245         $ 6,546
                                                              =======         =======
Supplemental disclosure of cash flow information:
    Cash paid for interest                                    $   402         $   273
    Cash paid for (refunded from) income taxes                      2             (10)

Supplemental disclosure of additional non-cash
    activities:

At December 31, 2003, the Company had a balance of net unrealized gains on
securities of $55, which is shown in accumulated other comprehensive income
(loss) on the balance sheet. As a result, accumulated other comprehensive income
(loss) was increased by $312. At December 31, 2002, the Company had a balance of
net unrealized losses on securities of $(257), which is shown in accumulated
other comprehensive income (loss) on the balance sheet. As a result, accumulated
other comprehensive income (loss) was decreased by $(259).

During 2003, the Company wrote off premises and equipment with a cost of $18 and
accumulated depreciation of $13, and during 2002, the Company wrote off $192 of
fully depreciated assets.

During 2003 and 2002, the Company acquired foreclosed assets of $220 and $54,
respectively, in lieu of loan payments.


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

                                      F-10




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002
           (All numbers except shares and per share data in thousands)

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION--The consolidated financial statements include the financial
statements of WebFinancial Corporation and its subsidiaries: WebFinancial
Holdings Corporation ("Holdings"), WebBank ("WebBank"), Praxis Investment
Advisers, Inc. ("Praxis"), WebFinancial Government Lending, Inc. ("Lending"),
and Web Film Financial, Inc. ("Film"), collectively referred to as the Company.
WebFinancial Corporation owns 93 percent of WebBank and an unconsolidated
individual owns 7 percent of WebBank. WebBank is a Utah-chartered industrial
loan corporation, and is subject to comprehensive regulation, examination, and
supervision by the Federal Deposit Insurance Corporation ("FDIC"), and the State
of Utah Department of Financial Institutions. WebBank provides commercial and
consumer specialty finance services. Lending was organized to provide U.S.
Department of Agriculture loan originations, sales and servicing. Film was
organized to finance the production and distribution of a motion picture. Both
Film and Praxis are inactive. All significant intercompany balances have been
eliminated in consolidation.

BASIS OF PRESENTATION AND USE OF ESTIMATES--The preparation of consolidated
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. A
material estimate that is particularly susceptible to significant change in the
near-term relates to the determination of the allowance for credit losses and
the valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the allowance for
credit losses and the valuation of real estate, management obtains independent
appraisals for significant properties.

CASH AND CASH EQUIVALENTS--Cash and cash equivalents include cash and
noninterest bearing deposits in depository institutions, plus interest-bearing
deposits with banks and investments in cash management funds. The Company
considers all highly liquid debt instruments with maturities of three months or
less when purchased to be cash equivalents. Cash equivalents are stated at cost,
which approximates market.

INCOME PER SHARE--Basic income per common share is calculated by dividing net
income by the weighted-average number of common shares outstanding for the
period. Diluted income per common share reflects the maximum dilutive effect of
common stock issuable upon exercise of stock options and stock warrants.

INVESTMENT SECURITIES--The Company classifies its securities as either
available-for-sale or held-to-maturity. Held-to-maturity securities are those
debt securities that the Company has the ability and intent to hold until
maturity. All other securities not included in held-to-maturity are classified
as available-for-sale.

Held-to-maturity securities are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. Available-for-sale
securities are recorded at fair value. Unrealized holding gains or losses on
available-for-sale securities are excluded from earnings and reported, until
realized, in accumulated other comprehensive income (loss) as a separate
component of stockholders' equity. A decline in the market value of any
available-for-sale or held-to-maturity security below cost that is deemed other
than temporary is charged to earnings resulting in the establishment of a new
cost basis for the security. Premiums and discounts are amortized or accreted
over the life of the related security as an adjustment to the yield using the
effective-interest method. Dividend and interest income is recognized when
earned. Realized gains and losses for securities classified as
available-for-sale or held-to-maturity are included in earnings and are derived
using the specific-identification method.

LOANS AND PURCHASED RECEIVABLES--The Company, through WebBank, grants mortgage,
commercial and consumer loans to customers. Loans that management has the intent
and ability to hold for the foreseeable future or until maturity or pay-off
generally are reported at their outstanding unpaid principal balances adjusted
for charge-offs, the allowance for loan losses, and any deferred fees or costs
on originated loans. Interest income is accrued on the unpaid principal balance.
Loan origination fees, net of certain direct origination costs, are deferred and
recognized as an adjustment of the related loan yield using the interest method.

The accrual of interest on commercial loans is discontinued at the time the loan
is 90 days delinquent unless the credit is well-secured and in process of
collection. Credit card loans and other personal loans are typically charged off
no later than 180 days past due.

                                      F-11



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In all cases, loans are placed on nonaccrual or charged-off at an earlier date
if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual
or charged-off is reversed against interest income. The interest on these loans
is accounted for on the cash-basis or cost-recovery method, until qualifying for
return to accrual. Loans are returned to accrual status when all the principal
and interest amounts contractually due are brought current and future payments
are reasonably assured.

WebBank purchases receivable balances from customers at a discounted rate. The
receivables to be purchased from any given customer are determined using
WebBank's credit granting policies. Receivable purchases have full recourse to
the customer and are accounted for as a purchase under the guidelines of
Financial Accounting Standards Board (FASB) Statement of Financial Accounting
Standards No. 140.

Purchased receivables that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at their outstanding
unpaid principal balances reduced by any charge-off or specific valuation
accounts and net of any deferred fees or costs on originated loans, or
unamortized premiums or discounts on purchased loans.

In February 2004, various agreements regarding purchased receivables were
canceled. See Note 20 for additional information.

The Company has originated loans to customers under a United States Department
of Agriculture ("USDA") program that generally provides for USDA guarantees of
70 percent to 90 percent of each loan. The Company sold the guaranteed portion
of each loan to a third party and retained the unguaranteed portion in its own
portfolio. Loans held-for-sale are carried at the lower of cost or estimated
market value in the aggregate.

The Company is required to retain a minimum of five percent of each USDA loan
sold and to service the loan for the investor. Based on the specific loan sale
agreement that the Company enters into with the investor, the difference between
the yield on the loan and the yield paid to the buyer is the servicing fee.
Loans serviced for others approximated $28,194 and $36,263 at December 31, 2003
and 2002, respectively. These loans are not included in the accompanying
statements of financial condition. Fees earned for servicing loans for others
are reported as income when the related loan payments are collected, less
amortization of the servicing asset. Loan servicing costs are charged to expense
as incurred.

CREDIT RELATED FINANCIAL INSTRUMENTS--In the ordinary course of business, the
Company has entered into commitments to extend credit, including commitments
under accounts receivable factoring and credit card arrangements. Such financial
instruments are recorded when they are funded.

LOAN IMPAIRMENT--A loan is considered impaired when, based on current
information and events, it is probable that the Bank will be unable to collect
the scheduled payments of principal and interest when due according to the
contractual terms of the loan agreement. Factors considered by management in
determining impairment include payment status, collateral value, and the
probability of collecting scheduled principal and interest payments when due.
Loans that experience insignificant payment delays and payment shortfalls
generally are not classified as impaired. Management determines the significance
of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower,
including the length of the delay, the reasons for the delay, the borrower's
prior payment record, and the amount of the shortfall in relation to the
principal and interest owed. Impairment is measured on a loan by loan basis for
commercial loans by either the present value of expected future cash flows
discounted at the loan's effective interest rate, the loan's obtainable market
price, or the fair value of the collateral if the loan is secured by collateral.

Large groups of smaller balance homogeneous loans are collectively evaluated for
impairment. Accordingly, the Company does not separately identify individual
consumer and finance receivables for impairment disclosures.

ALLOWANCE FOR CREDIT LOSSES--The allowance for credit losses is established as
losses are estimated to have occurred through a provision for credit losses
charged to earnings. Credit losses are charged against the allowance when
management believes the uncollectibility of a loan or receivable balance is
confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for credit losses is evaluated on a regular basis by management
and is based upon management's periodic review of the collectibility of the
amounts due in light of historical experience, the nature and volume of the loan
portfolio, adverse situations that may affect the borrower's ability to repay,


                                      F-12



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


estimated value of any underlying collateral and prevailing economic conditions.
This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.

The allowance for purchased receivable losses, which is included with the
allowance for credit losses, is increased by charges to income and decreased by
charge offs (net recoveries). Management's periodic evaluation of the adequacy
of the allowance is based on the Company's past purchased receivables loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the debtor's ability to repay, the estimated value of any underlying
collateral and current economic conditions. Purchased receivables are charged
off when they are 90 days contractually past due, at which time the Company may
enforce the recourse agreement to collect from the customer the remaining
outstanding balances.

NONACCRUAL LOANS--Accrual of interest is discontinued on a loan when the loan is
90 days past due or when management believes, after considering economic and
business conditions and collection efforts, that the borrower's financial
condition is such that collection of interest is doubtful. Interest income on
nonaccrual loans is credited to income only to the extent interest payments are
received. Loans are restored to accrual of interest when delinquent payments are
received in full. Additionally, the Company uses the cost recovery accounting
method to recognize interest income on impaired loans.

PREMISES AND EQUIPMENT--Premises and equipment are stated at cost, net of
accumulated depreciation and amortization. Depreciation of premises and
equipment is computed by the straight-line method over estimated useful lives
from one to five years for book purposes and accelerated methods for tax
purposes. Leasehold improvements are amortized over the terms of the related
leases or the estimated useful lives of the improvements, whichever is shorter.
Useful lives of leasehold improvements are between three and five years. Normal
recurring repair and maintenance costs are expensed as incurred.

INCOME TAXES--The Company uses the liability method of accounting for income
taxes. Under the liability method, deferred tax assets and deferred tax
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and deferred tax liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and deferred tax liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

GOODWILL--The Company evaluates their goodwill for impairment at least annually
at a reporting unit level. The Company completed its annual evaluation of
impairment of goodwill and determined that no impairment exists at December 31,
2003 or 2002.

FORECLOSED ASSETS--Assets acquired through, or in lieu of, loan foreclosures are
held for sale and initially recorded at fair value at the date of foreclosure,
establishing a new cost basis. Subsequent to foreclosure, periodic valuations
are performed and the asset is carried at the lower of the carrying amount or
fair value, less cost to sell. Revenue and expenses from operations and changes
in the valuation allowance are included in net expenses from foreclosed assets.

TRANSFERS OF FINANCIAL ASSETS--Transfers of financial assets are accounted for
as sales, when control over the assets has been surrendered. Control over
transferred assets is deemed to be surrendered when (1) the assets have been
isolated from the Company (2) the transferee obtains the right (free of
conditions that constrain it from taking advantage of that right) to pledge or
exchange the transferred assets, and (3) the Company does not maintain effective
control over the transferred assets through an agreement to repurchase them
before their maturity.

ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS--The Company reviews its
long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets held and used is measured by a comparison of the
carrying amount of the asset to future undiscounted net cash flows expected to
be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of their carrying amount or fair value less cost to
sell.

COMPREHENSIVE INCOME (LOSS)--Accounting principles generally require that
recognized revenue, expenses, gains and losses be included in net income.
Although certain changes in assets and liabilities, such as unrealized gains and
losses on securities available for sale, are reported as a separate component of


                                      F-13



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the equity section of the balance sheet, such items, along with net income, are
components of comprehensive income.

The components of other comprehensive income and related tax effects are as
follows:

                                                       Year ended December 31,
                                                       -----------------------
                                                      2003               2002
                                                      ----               -----
Unrealized holding gains (losses)  on
        available-for-sale securities               $ 869               $(259)
Gain on sale of securities in net income             (891)                  -
Reclassification adjustment-loss included
        in net income                                 334                   -
Net unrealized holding gains (losses)                 312                (259)
Tax effect                                              -                   -
                                                    -----               -----
Net-of-tax amount                                   $ 312               $(259)
                                                    =====               =====


STOCK-BASED COMPENSATION--The Company has applied the disclosure provisions of
Statement of Financial Accounting Standards (SFAS) No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB
Statement No. 123" for the years ended 2003 and 2002. Issued in December 2002,
SFAS No. 148 amends SFAS No. 123, "Accounting for Stock Based Compensation" to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock based compensation. As permitted by
SFAS No. 148, the Company is allowed to continue to measure compensation cost
for those plans using the intrinsic value based method of accounting prescribed
by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, whereby compensation cost is the excess, if any, of the quoted market
price of the stock at the grant date (or other measurement date) over the amount
an employee must pay to acquire the stock. Stock options issued under the
Company's stock option plan have no intrinsic value at the grant date, and under
Opinion No. 25 no compensation cost is recognized for them. The Company has
elected to continue with the accounting methodology in Opinion No. 25 and, as a
result, has provided pro forma disclosures of net income and earnings per share
and other disclosures, as if the fair value based method of accounting had been
applied. The pro forma disclosures include the effects of all awards granted on
or after January 1, 1995. (See Note 10.)

The following table illustrates the effect on net earnings and earnings per
share if the Company had applied the fair value recognition provisions of SFAS
No.123, as amended by SFAS No. 148 to stock based compensation (amounts in
thousands except per share amounts):

                                                                            Year ended           Year ended
                                                                           December 31,         December 31,
                                                                               2003                 2002
                                                                               ----                 ----
      Net income                                          As reported      $      2,109         $       459
      Total stock-based employee
      compensation expense
      determined under fair value based method for all
      awards net of related tax effects
                                                                                      -                (30)
                                                                           --------------------------------
                                                          Pro forma        $      2,109         $      429
                                                                           ============         ===========

      Basic and diluted
      net income per share                                As reported      $        .48         $      .11
                                                          Pro forma        $        .48         $      .10

                                      F-14



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were no options granted in 2003. For 2002, in determining the pro forma
amounts shown in the preceding table, the fair value of each option grant was
estimated on the date of the grant using the Black-Scholes option pricing model
with weighted average assumptions for the year ended December 31, 2002 which
include a risk-free interest rate of 4.0 percent, expected dividend yield of 0
percent, expected lives of 5 years, and expected volatility of 69 percent. No
options were granted to non-employees for services during the year ended
December 31, 2002.

RECLASSIFICATION--Certain immaterial amounts as of and for the year ended
December 31, 2001 and the year ended December 31, 2002 have been reclassified to
conform with the 2003 presentation.

NEW ACCOUNTING PRONOUNCEMENTS - In April 2003, the FASB issued SFAS No. 149,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149
amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 149 improves financial reporting by requiring that
contracts with comparable characteristics be accounted for similarly. SFAS No.
149 is effective for contracts entered into or modified after June 30, 2003 and
should be applied prospectively. The Company adopted SFAS No. 149 with no
material impact on its financial condition or results of operations for the year
ended December 31, 2003.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
improves financial reporting by establishing standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. SFAS No. 150 is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The Company
adopted SFAS No. 150 with no material impact on its financial condition or
results of operations for the year ended December 31, 2003.

The Bank adopted Emerging Issues Task Force (EITF) 03-1, "The Meaning of Other
than Temporary Impairment and Its Application to Certain Investments," as of
December 31, 2003. EITF 03-1 includes certain disclosures regarding quantitative
and qualitative disclosures for investment securities accounted for under FAS
115, "Accounting for Certain Investments in Debt and Equity Securities," that
are impaired at the balance sheet date, but an other-than-temporary impairment
has not been recognized. The disclosure requires a table of securities which
have unrealized losses as of the reporting date, distinguished between
securities which have been in a continuous unrealized loss position for 12
months or more and less than 12 months. The table is to include aggregate
unrealized losses and fair value of securities whose fair value are below book
value as of the reporting date. Additional information, in narrative form, is
required that provides sufficient information to allow financial statement users
to understand the quantitative disclosures and the information that the investor
considered in reaching the conclusion that the impairments are not other than
temporary. At December 31, 2003, the Company did not have any unrealized losses
on investment securities.

2.    INVESTMENT SECURITIES

The amortized cost and fair value of securities, with gross unrealized gains and
losses are summarized as follows:


                                                            DECEMBER 31, 2003

                                                            HELD-TO-MATURITY
                                               ------------------------------------------
                                                            GROSS      GROSS    ESTIMATED
                                               AMORTIZED  UNREALIZED UNREALIZED   FAIR
                                                 COST       GAINS     LOSSES     VALUE
                                               ---------  ---------- ---------- ---------

Collateralized mortgage backed securities        $ 8        $ 1      $   -        $ 9

State and municipal securities                    40          -          -         40
                                               ---------  ---------- ---------- ---------
                                                 $48        $ 1      $   -        $49
                                               =========  ========== ========== =========


                                      F-15



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                                           AVAILABLE-FOR-SALE
                                                --------------------------------------------
                                                            GROSS         GROSS    ESTIMATED
                                                AMORTIZED  UNREALIZED   UNREALIZED   FAIR
                                                COST        GAINS        LOSSES      VALUE
                                                ----        -----        ------      -----

Collateralized mortgage backed securities        $ 66        $  -       $   -        $ 66

Equity securities                                 203          55           -         258
                                                 ----        ----        ----        ----

                                                 $269        $ 55       $   -        $324
                                                 ====        ====        ====        ====


                                                                             DECEMBER 31, 2002

                                                                              HELD-TO-MATURITY
                                                 ---------------------------------------------------------------------------
                                                                           GROSS              GROSS            ESTIMATED
                                                   AMORTIZED            UNREALIZED         UNREALIZED             FAIR
                                                     COST                  GAINS             LOSSES               VALUE
                                                 ----------------    ----------------   ----------------    ----------------

Collateralized mortgage backed securities        $             19    $              1   $              -    $             20
                                                 ================    ================   ================    ================

                                                                 AVAILABLE-FOR-SALE
                                                 -------------------------------------------------------
                                                                   GROSS           GROSS        ESTIMATED
                                                  AMORTIZED     UNREALIZED      UNREALIZED        FAIR
                                                    COST           GAINS          LOSSES          VALUE
                                                 -------        -------         -------         -------
Collateralized mortgage backed securities        $   1$               -$              -         $   103

Equity securities                                  1,878              -            (259)          1,619
                                                 -------        -------         -------         -------
                                                 $ 1,981              -            (259)        $ 1,722
                                                 =======        =======         =======         =======

The amortized cost and estimated market value of investment securities at
December 31, 2003, by contractual maturity, are shown below. The contractual
maturity of collateralized mortgage backed securities and equity are
indeterminable or not applicable. Expected maturities may differ from
contractual maturities because borrowers have the right to prepay obligations
with or without penalties.

                                                  HELD-TO-MATURITY      AVAILABLE-FOR-SALE
                                                 -----------------------------------------
                                                            ESTIMATED            ESTIMATED
                                                 AMORTIZED    FAIR    AMORTIZED    FAIR
                                                   COST      VALUE      COST       VALUE
Due after one year through five years            $      40  $      40 $       -  $       -
Mortgage-backed securities not due at a
single maturity date, maturing through 2024              8          8        66         66
                                                 ---------  --------- ---------  ---------
                                                 $      48  $      48 $      66  $      66
                                                 =========  ========= =========  =========


No individual securities were in an unrealized loss position at December 31,
2003.

Proceeds from maturities, calls, and principal payments of securities classified
as available-for-sale were $2,302 in 2003 and $158 in 2002. Proceeds from sale
of securities available-for-sale were $2,641 in 2003 and $694 in 2002. Gross
realized gains on the sales were $891 in 2003 and $0 in 2002 and gross realized
losses on the sales were $0 in 2003 and $0 in 2002 based on the "specific
identification method."

                                      F-16




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.    LOANS

Loans and purchased receivables at December 31, 2003 and 2002 are summarized as
follows:

                                           2003              2002
                                         --------         --------
Commercial loans                         $  8,823         $ 11,872
Installment loans                              89              168
Deferred income                               (93)            (214)
Purchased receivables
    Accounts receivable factoring           7,352            4,622
    Other                                     268              479
                                         --------         --------
                                         $ 16,439         $ 16,927
                                         ========         ========

Loans to fifteen customers comprise approximately 55 percent of total loans at
December 31, 2003. At December 31, 2003, $268 of the loans in the portfolio had
a fixed interest rate ($479 at December 31, 2002) and $89 of the Company's loans
were unsecured ($168 at December 31, 2002). The ability of the borrowers to
repay their obligations is dependent upon economic conditions within their
respective regions as well as the financial condition of the borrowers.

The Company had $1,251 and $1,171 of loans on which the accrual of interest has
been discontinued or reduced at December 31, 2003 and 2002, respectively. If
income on those loans had been accrued, such income would have approximated $111
and $150 for 2003 and 2002, respectively.

The following is a summary of information pertaining to impaired loans:

                                                      2003          2002
                                                     ------        ------
Impaired loans without a valuation allowance$             -    $        -
Impaired loans with a valuation allowance             1,251         1,171
                                                     ------        ------
Total impaired loans                                 $1,251        $1,171
                                                     ======        ======
Valuation allowance related to impaired loans        $  622        $  483

The valuation allowance for impaired loans is included in the allowance for
credit losses in Note 4.


                                                       2003         2002
                                                       -----        ----
Average investment in impaired loans                 $1,119        $1,453
Interest income accrued on impaired loans            $             $    -
Interest income recognized on a cash basis on
impaired loans                                       $   17        $   36

4.     ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is summarized as follows:

                                                  2003            2002
                                                --------        -------
Beginning balance                               $ 1,526         $ 1,972
Additions:
    Provision (credit) for credit losses            394             (60)
    Recoveries                                        -               -
Deduction-loan charge-offs                         (618)           (386)
                                                --------        -------
Ending balance                                  $ 1,302         $ 1,526
                                                =======         =======


The Company considers the allowance for credit losses adequate to cover losses
inherent in loans, loan commitments and purchased receivables at December 31,
2003. However, no assurance can be given that the Company will not, in any
particular period, sustain credit losses that are sizable in relation to the
amount reserved, or that subsequent evaluations of the loan portfolio, in light
of the factors then prevailing, including economic conditions and the Company's
ongoing examination process and that of its regulators, will not require

                                      F-17




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

significant increases in the allowance for credit losses. It is at least
reasonably possible that a material change in the allowance for credit losses
will occur in the near term.

5.    RELATED PARTY TRANSACTIONS

Pursuant to a management agreement (the "Management Agreement"), approved by a
majority of the Company's disinterested directors, between the Company and an
entity formerly known as Steel Partners Services, Ltd. ("SPS") (and subsequently
assigned to Steel Partners, Ltd. ("New Ltd.")), New Ltd. provides the Company
with office space and certain management, consulting and advisory services. The
Management Agreement is automatically renewable on an annual basis unless
terminated by either party, for any reason, upon at least 60 days written
notice. The Management Agreement also provides that the Company shall indemnify,
save and hold SPS harmless from and against any obligation, liability, cost or
damage resulting from SPS's actions under the terms of the Management Agreement,
except to the extent occasioned by gross negligence or willful misconduct of
SPS's officers, directors or employees.

Pursuant to an employee allocation agreement (the "Employee Allocation
Agreement") between WebBank and SPS (and subsequently assigned to New Ltd.), Jim
Henderson, an employee of New Ltd. and executive officer of the Company,
performs services in the area of management, accounting and finances and such
other services as are reasonably requested by WebBank. The Employee Allocation
Agreement will continue in force until terminated by either of the parties upon
30 days written notice.

Prior to March  26, 2002, the original counterparty to both the Management
Agreement and the Employee Allocation Agreement was SPS. As of March  26, 2002,
the Management Agreement and the Employee Allocation Agreement described above
were assigned by SPS to New Ltd. and the employees of SPS became employees of
New Ltd. Warren Lichtenstein, the Company's President and Chief Executive
Officer, is an affiliate of New Ltd. based on his ownership of New Ltd.,
directly and through Steel Partners II, L.P. ("Steel"), and by virtue of his
positions as Chairman, President and Chief Executive Officer of New Ltd. Mr.
Lichtenstein is the sole managing member of the general partner of Steel. Mr.
Lichtenstein disclaims beneficial ownership of the shares of Common Stock of New
Ltd. owned by Steel (except to the extent of his pecuniary interest in such
shares of Common Stock).

In consideration of the services rendered under the Management Agreement, New
Ltd. charges the Company a fixed monthly fee totaling $310,000 per annum,
adjustable annually upon agreement of the Company and New Ltd. In consideration
of the services provided under the Employee Allocation Agreement, New Ltd.
charges WebBank $100,000 per annum. The fees payable by WebBank are included in
the fees payable by the Company under the Management Agreement. The Company
believes that the cost of obtaining the type and quality of services rendered by
New Ltd. under the Management Agreement and Employee Allocation Agreement is no
less favorable than the cost at which the Company and WebBank, respectively
could obtain from unaffiliated entities.

During the fiscal year ended December 31, 2003, New Ltd. billed fees with
respect to fiscal 2003 of $310,000 to the Company for services rendered under
the Management Agreement. Included in these fees was $100,000 paid by WebBank
for services rendered under the Employee Allocation Agreement. During the fiscal
year ended December 31, 2002, New Ltd. and SPS billed fees with respect to
fiscal 2002 of $232,000 and $77,500 respectively to the Company for services
rendered under the Management Agreement. Included in these fees were $100,000
paid by WebBank for services rendered under the Employee Allocation Agreement.

Pursuant to a sourcing and servicing agreement (the "Rockland Agreement")
between WebBank and Rockland Credit Finance LLC ("Rockland"), Rockland performs
both sourcing and servicing functions on behalf of WebBank related to WebBank's
accounts receivable factoring program. During 2003, Rockland was paid $255,000
in cash management fees and earned $1,019,000 in total management fees under the
terms of the Rockland Agreement. During 2002, Rockland was paid $56,000 in cash
management fees and earned $571,000 in total management fees under the terms of

                                      F-18



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


the Rockland Agreement. Management fees are paid quarterly and accrued monthly
by WebBank. Subsequent to year end 2003, WebBank gave Rockland notice of
termination of their Sourcing and Servicing Agreement (see "Note 20 - Subsequent
Events").

6.     CERTIFICATES OF DEPOSIT

Certificates of deposit at December 31, 2003 and 2002 are summarized as follows:

                                                                 WEIGHTED                       WEIGHTED
                                                                 AVERAGE                        AVERAGE
                                                                   RATE           2003            RATE               2002
                                                               ------------    ----------------------------       -----------
               Certificates of deposit greater than $100            1.96%      $     11,364           2.90%       $   12,272

               Other certificates of deposit                           -                  -              -                  1
                                                                               ------------                       -----------
                                                                    1.96%      $     11,364           2.90%       $   12,272
                                                                               ============                       ===========

Maturities of certificates of deposit as of December 31, 2003 are as follows:


            Year ending December 31,

                   2004                       $ 6,265

                   2005                         5,099
                                              -------

                                              $11,364

7.    SHORT-TERM BORROWINGS

      In April 2002, WebBank obtained a secured federal funds line of credit for
$500 with a commercial bank. The interest rate approximated the federal funds
rate. The security consisted of WebBank's investment portfolio of mortgage
backed securities. The secured federal funds line of credit was not used in
2002. In March  2003, the secured line of credit was replaced by an unsecured
federal funds line of credit for the same amount with the same bank. Neither the
secured or unsecured lines of credit were used in 2003.



8.    PREMISES AND EQUIPMENT

Premises and equipment at December 31, are summarized as follows:



                                                     2003              2002
                                                    ----               ----
Leasehold improvements                              $ 39               $ 39
Furniture and equipment                               69                 87
                                                    ----               ----

                                                     108                126
Less accumulated depreciation and amortization        93                 85
                                                    ----               ----

                                                    $ 15               $ 41
                                                    ====               ====

9.    INCOME PER SHARE

The following data was used in computing earnings per share:

                                      F-19




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                                    Year ended
                                                                            2003                   2002
                                                                        ----------               ----------
Income available to common shareholders                                 $    2,109               $      459
                                                                        ----------               ----------

                                               Basic
                                               -----
Shares
       Common shares outstanding entire period                           4,366,866                4,366,866
        Weighted average common shares:
               Issued during period                                              -                        -
              Canceled during period                                             -                        -
                                                                        ----------               ----------

Weighted average common shares outstanding during period
             -basic                                                      4,366,866                4,366,866
                                                                        ==========               ==========
Income per share  - basic                                               $      .48               $      .11
                                                                        ==========               ==========

                                               Diluted
                                               -------
Shares
Weighted average common shares outstanding during period
           -basic                                                        4,366,866                4,366,866
Dilutive effect on in-the-money stock options                                1,299                      276
                                                                        ----------               ----------
Weighted average common share outstanding during period
          -diluted                                                       4,368,165                4,367,142
                                                                        ===================================
Income per common share  - diluted                                      $      .48               $      .11
                                                                        ===================================


10.   STOCK OPTIONS AND WARRANTS

The Board of Directors of the Company, at its meeting on September 2, 1998,
approved the merger of all previous stock incentive plans into the new stock
option plan (the Merged Plan). At the annual meeting held November 4, 1998, the
shareholders approved the merger and certain amendments to the Merged Plan.
Approved were the grants of certain stock-based incentives and other equity
interests to employees, directors, and consultants. A maximum of 1,000,000
shares may be issued under the Merged Plan. The options are vested according to
varied schedules, exercisable when vested, and expire five years from the date
of issuance. At December 31, 2003, there were 902,774 options remaining in the
Merged Plan available for granting.


The following table summarizes stock option activity:


                                               Year ended Year ended                    Year ended Year ended


                                                December 31, 2003                        December 31, 2002
                                                              Weighted-                                 Weighted-
                                           Number              average               Number              average
                                          of shares            exercise             of shares           exercise
                                          (1,000's)             price               (1,000's)             price
                                      --------------------------------------    -------------------------------------
Options outstanding at
  beginning of year                                 468     $       3.98                  469          $   4.02

                                      F-20



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Options granted                                       -     $       -                      15          $   2.14

Options cancelled                                 (375)     $       3.86                  (16)         $   3.41

Options exercised                                     -             -                      -                -
                                      ------------------                     ------------------
Options outstanding at
  end of year                                               $      4.48                    468         $   3.98
                                                     93

                                      ==================                     ==================


Options exercisable at
  end of year                                        93     $      4.48                    464         $   3.99

Weighted-average fair
  value of options granted
  during the year (all at                                   $       -                                  $   1.27
  market)

The following table summarizes information about stock options with fixed terms
outstanding at December 31, 2003:

                                               Options outstanding                   Options exercisable
                                               -------------------                   -------------------
                              Number              Weighted                                  Number
                            outstanding           average              Weighted          exercisable         Weighted
         Range of           (000's) at           remaining              average           (000's) at          average
         Exercise          December 31,         contractual            exercise          December 31,        exercise
          Prices               2003            life in years           price ($)             2003            price ($)
          ------               ----            -------------           ---------             ----            ---------
$   1.500 to 2.549              13                  3.6                  1.97                 13               1.97
$   2.550 to 3.440              35                  1.8                  3.25                 35               3.25
$   3.441 to 5.130              20                   .1                  5.13                 20               5.13
$   6.471 to 7.000              25                   .8                  7.00                 25               7.00
                                --                                                            --
                                93                                                            93
                                ==                                                            ==


11.   EMPLOYEE BENEFIT PLAN AND INCENTIVE PROGRAM

WebBank has a 401(k) profit sharing plan, covering employees who meet age and
service requirements. Plan participants vest ratably and are fully vested after
five years of service. WebBank matches employee contributions up to five percent
of covered compensation at two hundred percent of the employee's contribution.
Contributions to the plan amounted to approximately $22 and $37 for the years
ended December 31, 2003 and 2002, respectively.

12.   INCOME TAXES

Income taxes (benefit) expense consist of the following:

                                                2003                     2002
                                               -----                      -----
Current                                        $   1                      $ (10)
Deferred                                        (757)                         -
                                               -----                      -----
                                               $(756)                     $ (10)
                                               =====                      =====

                                      F-21



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of income taxes (benefit) expense computed at the federal
statutory rate of 34% is as follows:

                                                   2003                   2002
                                                 -------                -------
Federal income taxes                             $   496                $   163
State income taxes                                    48                     16
Change in valuation allowance                     (1,302)                  (179)
Other                                                  2                    (10)
                                                 -------                -------
                                                 $  (756)               $   (10)
                                                 =======                =======


The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities were as follows:

                                            December 31,        December 31,
                                               2003                 2002
                                            -------               -------
Deferred tax assets:
     Net operating loss carry forward       $14,559             $  15,029
     Accrued vacation                            17                     8
     Allowance for loan losses                  486                   569
     Premises and equipment                      33                    34
                                            -------               -------
        Total deferred tax assets            15,095                15,640
        Less valuation allowance             14,338                15,640
                                            -------               -------
Net deferred tax asset                      $   757             $       -
                                            =======               =======


The net change in the total valuation allowance for the year ended December 31,
2003 was a decrease of $1,302.

At December 31, 2003, the Company had net operating loss carry forwards of
approximately $39,033 that are scheduled to expire from 2009 through 2021. The
Company has treated such net operating losses incurred prior to April 28, 1995,
when there was a material change in ownership of a 5% shareholder, in accordance
with Section 382(l)(5) of the Internal Revenue Code. As a result, there is
approximately $19,000 in net operating losses incurred prior to April 28, 1995
as well as $20,033 incurred subsequent to April 28, 1995 available as
carryovers. All net operating losses may be subject to certain limitations on
utilization.

13.    DISCLOSURES ABOUT THE FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying value for short-term financial instruments that mature or reprice
frequently at market rates approximates fair value. Such financial instruments
include: cash and cash equivalents, accrued interest receivable, demand
deposits, accounts payable and accrued expenses, time certificates of deposit
and short term borrowing. The difference between the fair market value and the
carrying value for loans and investment securities is not considered significant
to the financial statements.

14.    COMMITMENTS AND CONTINGENCIES

Leases
------

The Company leased office space in one building in 2003 and 2002 under operating
lease agreements. Rental expense for the years ended December 31, 2003 and 2002
were $107and $127, respectively. Future minimum lease payments by year are as
follows:

                    Year ending December 31,
                                         2004       $          107
                                         2005                   27
                                      Thereafter                 -
                                                     --------------
                                                    $          134
                                                     ==============

                                      F-22



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Credit-related financial instruments
------------------------------------

The Company is a party to financial instruments with off-balance sheet risk. In
the normal course of business, these financial instruments include commitments
to extend credit in the form of loans or through letters of credit. Those
instruments involve to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized on the balance sheet. The contract
amounts of those instruments reflect the extent of involvement the Company has
in particular classes of financial instruments.

The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual amount of those instruments. The Company the same
credit policy in making commitments and conditional obligations as it does for
on-balance sheet instruments.

 At December 31, 2003 and 2002, the Company's undisbursed commercial loan
commitments totaled $0. For the same periods, the Company's undisbursed consumer
credit card loan commitments totaled $0. For the same periods, the Company's
undisbursed accounts receivable factoring commitments totaled approximately
$8,138 and $6,382, respectively.

Commitments to extend credit are agreements to lend to a customer provided there
is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since certain of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained if deemed
necessary by the Bank upon extension of credit is based on management's credit
evaluation of the borrower.


Litigation
----------

            In January 2000, Andrew Winokur, a former executive officer,
director and stockholder of Praxis Investment Advisors, Inc. ("Praxis"), one of
the Company's subsidiaries, filed a lawsuit in the Superior Court of the State
of California, County of Napa. The lawsuit alleges that Praxis breached its
employment agreement with Mr. Winokur. The lawsuit also asserts claims for
interference with contract and unjust enrichment based upon his alleged wrongful
termination. The lawsuit seeks damages of an unspecified amount and compliance
by Praxis with the termination pay-out provisions in Mr. Winokur's employment
agreement.

            On March  4, 2002, the lawsuit was submitted to binding arbitration.
The panel found no breach of contract and no intentional interference with Mr.
Winokur's contractual rights. However, the panel found that Mr. Winokur was
entitled to the termination pay-out provision in his employment agreement. Under
this provision, Mr. Winokur could potentially be entitled to receive certain
compensation based on (i) an investment bank valuation of WebBank, if the
Company accepts such valuation, or (ii) the proceeds of a sale of WebBank, if
the Company rejects such valuation. While Mr. Winokur would not be entitled to
receive any compensation in the event that the sale does not exceed a
predetermined amount as provided in the employment agreement, which amount is
defined as the amount of capital invested by the stockholders of Praxis and
WebBank in such companies, plus a cumulative annual rate of return of ten
percent as of the date of sale, the Company may be forced to sell WebBank if the
sale price exceeds such predetermined amount, even if the Company does not want
to sell WebBank. In addition, if the sale price of WebBank exceeds the
predetermined amount but is less than the investment bank valuation of WebBank,
the Company may be required to sell WebBank at less than its value. The Company
does not have any alternative financing plans to make this payment in the event
such payment is required.

            At the present time, Mr. Winokur has ceased to participate in the
process of valuing WebBank. However, since there may be no time limitation on
Mr. Winokur's claim, the valuation process may proceed in the future and if the
Company is required to make a payment, its business could be harmed.

15.    REGULATORY REQUIREMENTS

WebBank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain actions by regulators that, if undertaken, could have a direct

                                      F-23



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of Total and Tier I
capital (as defined in the regulations) to risk-weighted assets (as defined),
and of Tier I capital (as defined) to average quarterly assets (as defined).
Management believes, as of December 31, 2003 that the Bank meets all capital
adequacy requirements to which it is subject.

As of December 31, 2003, based on the applicable capital adequacy regulations,
the Bank is categorized as "well capitalized" under the regulatory framework for
prompt corrective action. To be categorized as "well capitalized" the Bank must
maintain minimum total risk based, Tier I risk based, and Tier I leverage ratios
as set forth in the following tables. There are no conditions or events that
management believes have changed the Bank's category.


Capital amounts and ratios are summarized as follows (in thousands):

                                                                WELL CAPITALIZED      MINIMUM CAPITAL
                                                  ACTUAL           REQUIREMENT          REQUIREMENT
                                           ------------------------------------------------------------
                                           AMOUNT      RATIO   AMOUNT     RATIO      AMOUNT       RATIO
                                           ------      -----   ------     -----      ------       -----
            As of
           December 31, 2003:


Total Capital (Tier 1 + Tier 2) to risk
weighted assets                            $5,774       30.9%   $1,867     >10.0%     $1,494      >8.0%

Tier I Capital to risk weighted assets     $5,529       29.6%   $1,120      >6.0%     $  747      >4.0%

Tier I Capital to average assets
(Leverage Ratio)                           $5,529       31.9%   $  867      >5.0%     $  694      >4.0%



                                                                WELL CAPITALIZED      MINIMUM CAPITAL
                                                  ACTUAL           REQUIREMENT          REQUIREMENT
                                           ------------------------------------------------------------
                                           AMOUNT      RATIO   AMOUNT     RATIO      AMOUNT       RATIO
                                           ------      -----   ------     -----      ------       -----
            As of
           December 31, 2002:


Total Capital (Tier 1 + Tier 2) to risk
weighted assets                             $4,227       30.1%   $1,404     >10.0%     $1,123      >8.0%


Tier I Capital to risk weighted assets      $4,036       28.8%   $  843      >6.0%     $  562      >4.0%

Tier I Capital to average assets
(Leverage Ratio)                            $4,036       21.8%   $  928      >5.0%     $  742      >4.0%


                                      F-24



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


16.    SERVICING ASSETS AND LIABILITIES

In connection with certain businesses in which the Company sells originated or
purchased loans with servicing retained, servicing assets or liabilities are
recorded based on the relative fair value of the servicing rights on the date
the loans are sold. Servicing assets and liabilities are amortized in proportion
to and over the period of estimated net servicing income and expense. At
December 31, 2003 and 2002, net servicing assets, which are included in other
assets, were $31 and $99, respectively. Servicing assets are periodically
evaluated for impairment based on the fair value of those assets. During 2003
and 2002, the Company recorded no additional servicing assets, and recorded $45
and $35 of amortization, respectively.

17.    MISCELLANEOUS INCOME

Miscellaneous income for the year ended December 31, is summarized as follows:

                                                               2003     2002
                                                               ----     ----

                 Loan servicing fees                           $221     $215
                 Gain in sale of foreclosed assets                -       90
                 Recovery of prior year security write-off        -      112
                 Other                                           54       24
                                                               ----     ----
                                                               $275     $441
                                                               ====     ====


18.     OPERATING SEGMENT INFORMATION

     Operating segments represent components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance.


The Company evaluates segment performance internally based on lines of business
and the operating segments are so defined. The Company has identified two
operating segments. The first is the accounts receivable factoring program
operated by WebBank. The second operating segment, termed "other," includes
commercial lending, fee for services, and investment activities. Income
generated from investments in factoring receivables by Company entities other
than WebBank is included in the "other" operating segment. For the years ended
December 31, 2003 and 2002, factoring income earned by entities other than
WebBank was $216 and $84, respectively. Subsequent to year end 2003, several
events occurred to modify the nature of the accounts receivable factoring
program (see "Note 20 - Subsequent Events").

The following is a summary of selected operating segment information for the
years ended December 31, 2003 and 2002. Prior to 2002, the Company did not
evaluate its financial performance based on distinct operating segments. The
information represents operating results as if the segments were operated on a
stand alone basis. However, the results do not reflect a full allocation of
costs based on the current structure of the entities, and thus the results might
not be comparable to like information from other companies.

                                                                   Accounts
                                                                  Receivable                 CONSOLIDATED
                                                                   Factoring                   COMPANY
                                                                   ---------                   -------
                                 2003                                          OTHER
                                 ----                                          -----

Income Statement Information (Annual):
Net interest income after provision for credit losses             $  2,178     $  1,325      $  3,503
Noninterest income                                                      20        1,560         1,580
Noninterest expense                                                  1,110        2,513         3,623
                                                                  --------     --------      --------
Operating income                                                     1,088          372         1,460
Income taxes (benefit)                                                   -         (756)         (756)
Income attributable to minority interest                                 -         (107)         (107)
                                                                  --------     --------      --------
Net income                                                        $  1,088     $  1,021      $  2,109


                                      F-25



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Balance Sheet Information (As of December 31):
Total assets                                                      $  8,076     $ 18,372      $ 26,448
Net loans and leases                                              $  7,028     $  8,109      $ 15,137
Deposits                                                          $  6,697     $  5,220      $ 11,917

                                                                   Accounts
                                                                  Receivable                 CONSOLIDATED
                                                                   Factoring                   COMPANY
                                                                   ---------                   -------
                                 2002                                          OTHER
                                 ----                                          -----
Income Statement Information (Annual):
Net interest income after provision for credit losses             $  1,155     $  1,260      $  2,415
Noninterest income                                                       -        1,161         1,161
Noninterest expense                                                    748        2,348         3,096
                                                                  --------     --------      --------
Operating income                                                       407           73           480
Income taxes (benefit)                                                   -          (10)          (10)
Income attributable to minority interest                                 -          (31)          (31)
                                                                  --------     --------      --------
Net income                                                        $    407     $     52      $    459

Balance Sheet Information (As of December 31):
Total assets                                                      $  7,415     $ 18,750      $ 26,165
Net loans and leases                                              $  5,081     $ 10,320      $ 15,401
Deposits                                                          $  7,195     $  6,425      $ 13,620


19.     QUARTERLY FINANCIAL DATA (UNAUDITED)

                                                                Quarter Ended
                                          March  31, 2003 June 30, 2003 September 30, 2003 December 31, 2003
$(000) except per share

Net interest income after provisions for
credit losses                                $   876      $ 1,070         $ 1,133          $   424
Noninterest income                               235          399             128              818
Noninterest expenses                             879          887           1,320              537
Net income (loss)                                214          564             (79)           1,410
Net income (loss) per share - basic and
diluted                                          .05          .13            (.02)             .32
Common stock prices:
   High                                         2.70         2.63            2.75             2.70
   Low                                          1.73         1.70            2.10             2.10

                                          March  31, 2002 June 30, 2002 September 30, 2002 December 31, 2002
$(000) except per share

Net interest income after provisions for
credit losses                                $   322      $   672         $   675          $   746
Noninterest income                               199          161             166              635
Noninterest expenses                             805          846             688              757
Net income (loss)                               (276)           8             116              611
Net income (loss) per share - basic and
diluted                                         (.06)         .00             .03              .14
Common stock prices:
   High                                         2.59         2.37            2.28             2.71
   Low                                          2.05         1.34            1.43             1.56

                                      F-26



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


20.     SUBSEQUENT EVENTS


     On February 20, 2004, WebBank gave notice of termination of a Sourcing and
Servicing Agreement and an Employment Agreement to one of the two factoring
companies providing accounts receivable factoring services to WebBank. On March
1, 2004, that factoring company acknowledged receipt of the termination notice
and, under the terms of the Sourcing and Servicing Agreement, gave notice to
WebBank that the factoring company would exercise its option to purchase the
existing portfolio of accounts receivable from WebBank at book value on May 12,
2004. The accounts receivable factoring arrangement generated revenue and income
in fiscal 2002 and 2003 which accounted for (a) substantially all of the revenue
and income generated by the Company's accounts receivable factoring operating
segment for those years, and (b) a significant part of the income and revenue of
the Company for those years. It is possible that this termination may not take
effect as provided in the termination notice and the arrangement may continue.
However, in the event of termination, there can be no assurance that the Company
will be able to successfully enter into a replacement arrangement or
arrangements. WebBank expects that if the May 2004 termination becomes effective
during the second quarter of 2004, WebBank will (a) not generate any gain or
loss on such termination as the sourcing and servicing company has elected to
purchase the portfolio of accounts receivable at WebBank's net book value, and
(b) generate approximately $5.9 million of cash as a result of the sale of the
portfolio. WebBank also anticipates that the cash generated by the May 2004
termination will be used to retire Certificates of Deposit as they mature.

     Under a Termination Agreement dated February 27, 2004, WebBank and the
second of two companies providing accounts receivable factoring services to
WebBank, agreed to the termination of a Sourcing and Servicing Agreement and an
Employment Agreement between the parties. Under the terms of that Termination
Agreement, the accounts receivable factoring services company purchased a
portfolio of accounts receivable from WebBank at book value on March  2, 2004.

     Note 18 of the Notes to Consolidated Financial Statements shows the income
and expenses attributable to the Company's Accounts Receivable Factoring
operating segment, all of which were generated by the two accounts receivable
factoring arrangements described above. Neither of these arrangements was in
effect during 2001. The Company believes that the termination of the two
accounts receivable factoring arrangements will have a significant adverse
affect on its net income during 2004.

     On February 23, 2004, the third party sourcing company engaged to source
private label student loans on behalf of WebBank gave notice to WebBank that it
would not renew the Loan Sale Agreement and Loan Program Agreement between the
two parties. Consequently, those agreements will terminate at the conclusion of
their current term on May 31, 2004. The pretax income generated by the
terminated private label student loan program generated revenue of $150 for each
of the years 2003 and 2002.

                                      F-27




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

                            WEBFINANCIAL CORPORATION

                        4,366,866 SHARES OF COMMON STOCK

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



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

                                   PROSPECTUS
                               -------------------






                                     PART II


                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24.       INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     Article Tenth of the Registrant's Amended and Restated Certificate of
Incorporation and Section 5 of Article VIII of the Registrant's Amended and
Restated Bylaws state as follows:

     (a) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best interest
of the corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

     (b) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court of
Chancery or such other court shall deem proper.

     (c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) of this
Section, or in defense of any claim, issue or matter therein, including the
dismissal of an action without prejudice, he shall, without limiting the
provisions of paragraph (a) above, be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.

     (d) Any indemnification under paragraphs (a) and (b) of this Section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (a) and (b) of this
Section. Such determination shall be made (i) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceedings, or (ii) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the stockholders.

     (e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the

                                      II-1




corporation pursuant to this Section or as otherwise authorized by law. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.

     (f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other paragraphs of this Section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.

     (g) The corporation, at its expense, may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Section or under the provisions of
the General Corporation Law of the State of Delaware.

     (h) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Section shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.

     (i) All rights to indemnification and advancement of expenses under this
Section shall be deemed to be provided by contract between the corporation and
the director, officer, employee or agent who serves in such capacity at any time
while the by-laws and/or certificate of incorporation and other relevant
provisions of the General Corporation Law of the State of Delaware and other
applicable law, if any, are in effect.

     (j) Any repeal or modification of the foregoing paragraphs by the
stockholders of the corporation shall not adversely affect any right or
protection of a director, officer, employee or agent of the corporation existing
at the time of such repeal or modification.

     (k) If the General Corporation Law of the State of Delaware is amended to
authorize corporate action permitting the corporation to further indemnify or
advance expenses to directors, officers, employees or agents, then such person,
in addition to the circumstances in which he is now entitled to indemnification
and advancement of expenses, shall be entitled to be indemnified and have
expenses advanced to the fullest extent permitted by the General Corporation Law
of the State of Delaware, as so amended.

     (l) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.

     (m) For purposes of this Section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent by the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation," as referred to in this
Section.

     (n) If this Section or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each person as provided above as to expenses (including

                                      II-2



attorneys' fees), judgments, fines and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, including a grand jury proceeding and an action by the
corporation, to the fullest extent permitted by any applicable portion of this
Section that shall not have been invalidated or by any other applicable law.

ITEM 25.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

     The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by us in connection with the issuance
and distribution of the securities being offered. All items below are estimates
other than the Securities and Exchange Commission registration fee and the
Nasdaq listing fee. WebFinancial will pay all of such expenses.



      Securities and Exchange Commission registration fee     $    809.00
      Printing and engraving expenses ...................       10,000.00
      Accounting fees and expenses ......................       75,000.00
      Legal fees and expenses ...........................      110,000.00
      Subscription Agent fees and expenses ..............       10,000.00
      Information Agent fees and expenses ...............        7,500.00
      Miscellaneous .....................................       10,000.00
                                                              -----------
                  Total .................................     $223,309.00
                                                              ===========


ITEM 26.       RECENT SALES OF UNREGISTERED SECURITIES.  Not Applicable

ITEM 27.       EXHIBITS.

Exhibit #               Description
---------               -----------

3.1*                    Amended and Restated Certificate of Incorporation of the
                        Registrant, filed on March  19, 1999.

3.2*                    Certificate of Amendment of Certificate of Incorporation
                        of the Registrant, filed on July 8, 1999.

3.3                     By-Laws of the Registrant (incorporated by reference
                        from Exhibit I-5 to the Registration Statement on Form
                        8-A filed March  27, 1995).

4.1                     Specimen certificate for Common Stock, $.001 par value,
                        of the Registrant (incorporated by reference to Exhibit
                        I-1 to the Registration Statement on Form 8-A filed
                        March  27, 1995).

4.2*                    Form of Subscription Rights Certificate.

5.1*                    Opinion of Olshan Grundman Frome Rosenzweig & Wolosky
                        LLP.

23.1**                  Consent of Grant Thornton LLP.

23.2*                   Consent of Olshan Grundman Frome Rosenzweig & Wolosky
                        LLP (included in opinion filed as Exhibit 5.1).

24.1*                   Power of Attorney (included on signature page hereto).

99.1*                   Form of Instructions as to Use of Rights Certificates.

99.2*                   Form of Notice of Guaranteed Delivery for Rights
                        Certificates.

99.3*                   Form of Letter to Security Holders Who Are Record
                        Holders.


99.4*                   Form of Letter to Securities Dealers, Commercial Banks,
                        Trust Companies and Other Nominees.

                                      II-3



99.5*                   Form of Letter to Clients of Security Holders Who Are
                        Beneficial Holders.

99.6*                   Form of Nominee Holder Certification Form.

99.7*                   Beneficial Owner Election Form.

99.8*                   Substitute Form W-9 (including Guidelines for
                        Certification of Taxpayer Identification Number on
                        Substitute Form W-9).

99.9*                   Form of Subscription Agency Agreement between
                        WebFinancial Corporation and Wachovia Bank, N.A.

99.10*                  Form of Information Agent Agreement between WebFinancial
                        Corporation and MacKenzie Partners, Inc.

----------------
*        Previously filed
**       Filed herewith


ITEM 28.    UNDERTAKINGS.

            (a)  The undersigned Registrant hereby undertakes:

(2) To file, during any period in which it offers or sells securities, a
    post-effective amendment to this Registration Statement to:

          (i) Include any prospectus required by Section 10(a)(3) of the
     Securities Act;

          (ii) Reflect in the prospectus any facts or events which, individually
     or together, represent a fundamental change in the information in the
     registration statement. Notwithstanding the foregoing, any increase or
     decrease in volume of securities offered (if the total dollar value of
     securities offered would not exceed that which was registered) and any
     deviation from the low or high end of the estimated maximum offering range
     may be reflected in the form of prospectus filed with the Commission
     pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
     price represent no more than a 20 percent change in the maximum aggregate
     offering price set forth in the Calculation of Registration Fee table in
     the effective Registration Statement;

          (iii) Include any additional or changed material information on the
     plan of distribution.

     (2) For determining liability under the Securities Act, treat each
     post-effective amendment as a new registration statement of the securities
     offered, and the offering of the securities at that time to be the initial
     bona fide offering; and

     (3) To file a post-effective amendment to remove from registration any of
     the securities that remain unsold at the end of the offering.


            (b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be 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.

            (c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,

                                      II-4



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 an 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-5




                                   SIGNATURES

            In accordance with 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 SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of New
York, State of New York, on the 8th day of April, 2004.


                                                 WEBFINANCIAL CORPORATION



                                                 By:  /s/ Glen M. Kassan
                                                    ----------------------------
                                                    Glen M. Kassan
                                                    Vice President and Chief
                                                    Financial Officer

            In accordance with the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:



Signature                                           Title                                           Date


*                                                   Chairman, Chief Executive Officer and            April 8, 2004
                                                    Director (principal executive officer)
---------------------------------------------
Warren G. Lichtenstein

/s/ Glen M. Kassan                                  Vice President and Chief Financial Officer       April 8, 2004
---------------------------------------------       (principal financial and accounting officer)
Glen M. Kassan


/s/ Jack L. Howard                                  Director                                         April 8, 2004
---------------------------------------------
Jack L. Howard

*                                                   Director                                         April 8, 2004
---------------------------------------------
Howard Mileaf

*                                                   Director                                         April 8, 2004
---------------------------------------------
Joseph L. Mullen

*                                                   Director                                         April 8, 2004
---------------------------------------------
Mark E. Schwarz



   * Signed by Jack L. Howard as attorney-in-fact

                                      II-6