As filed with the Securities and Exchange Commission on July 10, 2001
Registration No. 333-57442
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SECURITIES AND EXCHANGE COMMISSION
AMENDMENT NO. 3
TO
FORM S-3/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WEBB INTERACTIVE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Colorado
(State or other jurisdiction of incorporation or organization)
84-1293864
(I.R.S. Employer Identification No.)
1899 Wynkoop, Suite 600
Denver, Colorado 80202
(303) 296-9200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Perry Evans
Webb Interactive Services, Inc.
1899 Wynkoop, Suite 600
Denver, Colorado 80202
(303) 296-9200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for same offering. [_] __________________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for same offering. [_] ________________________________________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
Proposed
Title of each class Proposed maximum
of securities to be Amount to be Maximum offering aggregate offering Amount of
registered registered price per unit (1) price (1) registration fee
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Common Stock, no 3,091,911(2)(3) $1.75 $5,410,844.20 $2,260.55*
par value
* Previously paid by Webb Interactive Services, Inc., based on 5,166,979
shares originally sought to be registered by the registrant.
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of Regulation C as of the close of the market on
March 20, 2001.
(2) Common stock issuable by Webb: (i) upon the conversion of series B-2
convertible preferred stock (180,082 shares); (ii) upon the conversion of
series C-1 convertible preferred stock (1,000,000 shares); (iii) upon the
conversion of outstanding promissory notes in the principal amount of
$2,038,356 (815,342 shares), and upon the conversion of interest accruing
under such notes from April 1, 2001 through their maturity date, August 25,
2002, in the aggregate amount of $246,125 (98,450 shares) assuming all such
interest is paid in additional notes; and (iv) upon the exercise of stock
purchase warrants (821,991 shares). The amount of shares being registered
also includes 377,708 shares of common stock currently held by the selling
shareholder. The shares include any additional shares issued to prevent
dilution resulting from stock splits, stock dividends or similar
transactions.
(3) Does not include 201,662 shares of common stock previously registered by
the registrant on registration statement on Form S-3, Registration No. 333-
87887. The registration fee for these 201,662 shares was previously paid
by Webb Interactive Services, Inc. These 201,662 shares are being offered
pursuant to the prospectus which is part of this registration statement
pursuant to Rule 429 of Regulation C.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
ii
The information in this prospectus is not complete and may be changed.
The selling shareholder 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 of sale is not
permitted.
SUBJECT TO COMPLETION, DATED JULY 10, 2001 PROSPECTUS
WEBB INTERACTIVE SERVICES, INC.
This is a public offering of a maximum of 3,293,573 shares of common
stock of Webb Interactive Services, Inc., including 2,915,865 shares which are
reserved for issuance under convertible preferred stock, convertible promissory
notes and upon the exercise of stock purchase warrants. All of the shares are
being offered for sale by Castle Creek Technology Partners LLC. We will not
receive any of the proceeds from the offer and sale of the common stock.
The Nasdaq National Market lists our common stock under the symbol
WEBB.
Investing in our common stock involves risks. You should not purchase
our common stock unless you can afford to lose your entire investment. See
"Risk Factors" beginning on page 2 of this prospectus.
Because Castle Creek Technology Partners LLC will offer and sell the
shares at various times, we have not included in this prospectus information
about the price to the public of the shares or the proceeds to Castle Creek
Technology Partners LLC.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the securities or passed on
the adequacy of the disclosures in this prospectus. Any representation to the
contrary is a criminal offense.
The date of this prospectus is ________ __, 2001
WEBB INTERACTIVE SERVICES, INC.
Webb provides online commerce and communication solutions for businesses.
Our AccelX business consists of Internet-based software products and services
designed to assist small businesses in developing, maintaining and strengthening
local buyer-seller relationships. Our Jabber, Inc. subsidiary is in the early
stages of building a business around commercializing open-source instant
messaging products and services for large enterprises and internet service
providers.
Before January 2000, we were organized around our primary market focus on
local commerce services, with an additional business unit dedicated to e-banking
services. During the third quarter of fiscal 2000, we discontinued our e-banking
business. In February 2000, we formed a new subsidiary to commercialize
separately the Jabber.org instant messaging system from our AccelX business. We
intend to seek participation from external partners to help us expand our
instant messaging business. On May 2, 2001, we entered into a non-binding
agreement with France Telecom Technologies. Under this non-binding agreement,
France Telecom Technologies is expected to invest up to $7 million to acquire
approximately 28% of the ownership of our Jabber subsidiary. As part of this
transaction, France Telecom Technologies loaned Jabber, Inc. $2,500,000.
We were incorporated under the laws of Colorado on March 22, 1994. Our
executive offices are located at 1899 Wynkoop, Suite 600, Denver, Colorado
80202, telephone number (303) 296-9200.
RISK FACTORS
Our independent public accountants have indicated that we may not have
sufficient cash to fund future losses from operations. In the report issued by
our independent public accountants accompanying our financial statements for the
year ended December 31, 2000, they indicated there was substantial doubt about
our ability to continue as a going concern. Their report notes that, among other
factors regarding our ability to continue as a going concern, we have incurred
significant and recurring losses from operations and our operations have used
substantial amounts of cash. These losses are expected to continue in the near
future. We will require additional capital to fund these operating losses. The
availability of additional capital is uncertain. Our financial statements have
been prepared assuming that we will continue as a going concern and may be of
limited utility to an investor because they do not include any adjustments
relating to the recoverability and classification asset carrying amounts or the
amount and classification of liabilities that might result should we be unable
to continue as a going concern.
Our limited operating history makes it difficult to evaluate our business.
We were founded in March 1994 and began sales in February 1995. Subsequently,
our business model has changed periodically to reflect changes in technology and
markets. We have a limited operating history for our current business model
upon which you may evaluate us. Our business is subject to the risks, exposures
and difficulties frequently encountered by companies with a limited operating
history including:
. Limited ability to respond to competitive developments;
. Exaggerated effect of unfavorable changes in general economic and
market conditions;
. Limited ability to adjust our business plan to address marketplace and
technological changes; and
. Difficulty in obtaining operating capital.
We expect to incur net losses at least through 2002. We have incurred net
losses since we began our business totaling approximately $102 million through
March 31, 2001, including approximately $57.5 million of non-cash expenses. We
expect to incur additional substantial operating and net losses in 2001 and for
the next one or more years. We expect to incur these additional losses because:
. We intend to increase our capital expenditures and operating expenses
by more than $2 million in 2001 to cover the increasing activities of
our Jabber, Inc. subsidiary;
. We acquired goodwill and other intangible assets totaling
approximately $24 million as a part of the acquisitions of three
businesses which will be amortized over their estimated useful lives
of approximately three years; and
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. We may continue to incur significant non-cash expenses due to
financing and other equity-based transactions. The current competitive
business and capital environments likely will result in our issuance
of similar securities in future financing transactions.
If we are unable to raise additional working capital, we may not be able to
sustain our operations. Because our present cash and cash equivalents, working
capital and commitments for additional equity investments will be adequate to
sustain our current level of operations only until July 2001 for our AccelX
business and to October 2002 for our Jabber business, based upon current
estimates, we will need to obtain additional capital to fund our businesses.
Operating expenses for our AccelX business exceed revenues by more than $400,000
per month, and operating expenses for our Jabber business exceed revenues by
more than $600,000 per month. There is no assurance that we will be able to
raise additional funds in amounts required or upon acceptable terms. If we
cannot raise additional funds when needed, we may be required to curtail or
scale back our operations or sell some of our assets.
We could lose our ownership in our subsidiary, Jabber, Inc., if it fails to
repay a loan. We have pledged all of our shares of Jabber, Inc. stock to secure
a $2.5 million loan to Jabber by France Telecom Technologies. If we do not
enter into a binding agreement with France Telecom Technologies to convert the
loan into preferred stock or we or Jabber are not able to repay the loan as
required by the loan agreement, France Telecom Technologies could sell all or a
portion of this stock, or take other actions to satisfy the interest and
principal due on the loan. Additionally, we do not have the funds to repay this
note if it were to become payable, and our ability to repay the note would be
dependent upon our ability to raise additional capital.
We may not earn revenues sufficient to remain in business. Our ability to
become profitable depends on whether we can sell our products and services for
more than it cost to produce and support them. Our future sales also need to
provide sufficient margin to support our ongoing operating activities. The
success of our revenue model will depend upon many factors including:
. The success of our distribution partners in marketing their products
and services; and
. The extent to which consumers and businesses use our products and
services.
Because of the new and evolving nature of the Internet and our limited
operating history, we cannot predict whether our revenue model will prove to be
viable, whether demand for our products and services will materialize at the
prices we expect to charge, or whether current or future pricing levels will be
sustainable.
If the Internet does not develop into a significant source of business-
related communication, then our business will not be successful. Our business
plan assumes that the Internet will develop into a significant source of
business-related communication and communication interactivity. However, the
Internet market is new and rapidly evolving and there is no assurance that the
Internet will develop in this manner. If the Internet does not develop in this
manner, our business, may not be successful. Numerous factors could prevent or
inhibit the development of the Internet in this manner, including:
. The failure of the Internet's infrastructure to support Internet usage
or electronic commerce;
. The failure of businesses developing and promoting Internet commerce
to adequately secure the confidential information, such as credit card
numbers, needed to carry out Internet commerce; and
. Regulation of Internet activity.
We are dependent upon our suppliers to maintain good relationships with the
users of our products and services. Because we have elected to partner with
other companies for the distribution of many of our products and services, many
users of our products and services are expected to obtain or use them through
our distribution partners. Our distribution partners, and not us, will
substantially control the customer relationship with these users. If the
relationship between our distribution partners and the users of our products and
services suffers, we may experience a loss of the users of our products and
services as they seek relationships with other distributors.
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We must continually develop new products which appeal to our customers.
Our products are subject to rapid obsolescence and our future success will
depend upon our ability to develop new products and services that meet changing
customer and marketplace requirements. There is no assurance that we will be
able to successfully:
. Identify new product and service opportunities; or
. Develop and introduce new products and services to market in a timely
manner.
Even if we are able to identify new opportunities, our working capital
constraints limit our ability to pursue them. If we are unable to identify and
develop and introduce new products and services on a timely basis, demand for
our products and services will decline.
We must identify and develop markets for our products and services. A
suitable market for our products and services may not develop or, if it does
develop, it may take years for the market to become large enough to support
significant business opportunities. Even if we are able to successfully
identify, develop, and introduce new products and services there is no assurance
that a suitable market for these products and services will materialize. The
following factors could affect the success of our products and services and our
ability to address sustainable markets:
. The failure of our business plan to accurately predict the types of
products and services the future Internet marketplace will demand;
. Our limited working capital may not allow us to commit the resources
required to adequately support the introduction of new products and
services.
. The failure of our business plan to accurately predict the estimated
sales cycle, price and acceptance of our products and services; or
. The development by others of products and services that makes our
products and services noncompetitive or obsolete.
There is a lot of competition in the Internet market which could hurt our
revenues or cause our expenses to increase. Our current and prospective
competitors include many companies whose financial, technical, marketing and
other resources are substantially greater than ours. We may not have the
financial resources, technical expertise or marketing, sales and support
capabilities to compete successfully. The presence of these competitors in the
Internet marketplace could hurt our business by causing us to:
. Reduce the average selling price of our products and services; or
. Increase our spending on marketing, sales and product development.
We may not be able to offset the effects of price reductions or increases
in spending. Further, our financial condition may put us at a competitive
disadvantage relative to our competitors.
We have a limited number of customers, so the loss of one or more of them
will substantially hurt our revenues. We had three customers representing 66%
of revenues for the year ended December 31, 2000, and four customers
representing 97% of revenues for the three months ended March 31, 2001. We may
not be able to attract or retain major customers.
It usually takes a long time and significant expense before we are able to
make a sale of our products and services to a customer. While our sales cycle
varies from customer to customer, it is long, typically ranging from two to nine
months or more, and unpredictable. Our pursuit of sales leads typically
involves an analysis of our prospective customer's needs, preparation of a
written proposal, one or more presentations and contract negotiations. We often
provide significant education to prospective customers about the use and
benefits of our Internet technologies and services. Our sales cycle may also be
affected by a prospective customer's budgetary constraints and internal
acceptance reviews, over which we have little or no control. To respond to, or
anticipate, customer requirements, we may begin development work before having a
signed contract, which exposes us to the risk that the development work will not
be recovered from revenue from that customer.
4
It will take at least one or more years before we earn significant revenues
from our products and services. Many of our products and services, particularly
our AccelX products and services, are offered on a revenue-share basis. Once we
have sold our products and services, it may take three or more months for them
to be integrated into our customers' businesses and product offerings. Further,
even after our customers have begun to market our products and services to their
customers, our limited operating history does not enable us to predict how long
it will take before their customers will begin to use our products and services
in sufficient quantity to provide us with significant recurring revenues. Even
if significant business for our products and services does develop, we may not
recognize meaningful revenues from this business for many months or possibly
even for one or more years. This could require that we raise significant
additional investment capital to sustain our operations and could effect on our
ability to become profitable within the next one or more years.
Offering proprietary products based on the Jabber.org open-source movement
may jeopardize our relationship with open-source communities. An important
element of the business model for our Jabber, Inc. subsidiary is based upon
Jabber's ability to offer proprietary products compatible with Jabber.org open-
source instant messaging systems. A key element of open-source software
development movements is that the software and its code be offered to other
developers and users free, provided that anyone who makes an improvement or
modification to the software and who intends to commercialize the improvement or
modification, makes them available for free to the community and other users.
If the Jabber.org open-source community or other open-source communities
withdraw their support for either Jabber, Inc. or Jabber instant messaging
products, demand for Jabber instant messaging products will likely decline.
We may be unable to reduce our expenses if sales do not occur as expected.
Because of our limited operating history, we do not have historical financial
data for a sufficient number of periods on which to base planned operating
expenses. Our expense levels are based in part on our expectations of future
sales and to a large extent are fixed. We typically operate with little backlog
and the sales cycles for our products and services may vary significantly. We
may be unable to adjust spending in a timely manner to compensate for any
unexpected sales shortfalls. If we were unable to so adjust, any significant
shortfall of demand for our products and services in relation to our
expectations would result in operating losses or reduced profitability.
Further, we intend to increase our capital expenditures and operating expenses
to fund the operations of our Jabber, Inc. subsidiary. If these expenditures
are not subsequently followed by increased sales with substantial margin, then
we will need to raise additional capital to stay in business.
An investment in our common stock is risky because the price of our stock
is highly volatile. Our common stock closed as high as $6.25 per share and as
low as $1.00 per share between January 1, 2001 and July 3, 2001. Historically,
the over-the-counter markets for securities such as our common stock have
experienced extreme price and volume fluctuations. Some of the factors leading
to this volatility include:
. Price and volume fluctuations in the stock market at large that do not
relate to our operating performance;
. Fluctuations in our quarterly revenue and operating results;
. Increases in outstanding shares of common stock upon exercise or
conversion of derivative securities.
These factors may continue to affect the price of our common stock in the
future.
We have issued numerous options, warrants, and convertible securities to
acquire our common stock that could have a dilutive effect on our shareholders.
As of July 3, 2001, we had issued warrants and options to acquire approximately
5,469,000 shares of our common stock, exercisable at prices ranging from $1.875
to $58.25 per share, with a weighted average exercise price of approximately
$9.19 per share. We had also reserved 2,093,874 shares of common stock for
issuance upon conversion of our 10% convertible notes and series B-2 and C-1
convertible preferred stock. During the terms of these derivative securities,
the holders will have the opportunity to profit from an increase in the market
price of our common stock with resulting dilution to the holders of shares who
purchased shares for a price higher than the applicable exercise or conversion
price. The increase in the outstanding shares of our common stock because of
the exercise or conversion of these derivative securities could result in a
5
significant decrease in the percentage ownership of our common stock by current
and future holders of our common stock.
The significant number of shares issuable upon conversion of our
convertible securities could make it difficult to obtain additional financing.
2,093,874 shares of our common stock may be issued if our 10% notes and series
B-2 and C-1 convertible preferred stock are converted. This number could
increase due to future financings. Due to this significant potential increase
in the number of our outstanding shares of common stock, new investors may
either decline to make an investment in Webb due to the potential negative
effect this additional dilution could have on their investment or require that
their investment be on terms at least as favorable as the terms of the notes or
convertible preferred stock. If we are required to provide similar terms to
obtain required financing in the future, the onerous terms and significant
dilution of these financings could be perpetuated and significantly increased.
Future sales of our common stock in the public market could depress the
price of our common stock. Actual or potential future sales of substantial
amounts of common stock in the public market could depress the market price for
shares of our common stock and could impair the ability of purchasers of our
common stock to recoup their investment or make a profit. As of July 3, 2001,
these shares consist of:
. Up to 2,093,874 shares issuable upon conversion of the 10% convertible
notes and series B-2 and C-1 preferred stock; and
. Approximately 5,469,000 shares issuable to warrant and option
holders.
Future sales of our common stock in the public market could limit our
ability to raise capital. Actual or potential future sales of substantial
amounts of our common stock in the public by our officers and directors, upon
exercise or conversion of derivative securities could affect our ability to
raise capital through the sale of equity securities.
The trading volume of our common stock may diminish significantly if our
common stock is delisted from the Nasdaq National Market. Although our shares
are traded on the Nasdaq National Market, there is no assurance that they will
remain eligible to be included on Nasdaq. If our common stock was no longer
eligible for quotation on Nasdaq, it could become subject to rules adopted by
the Securities and Exchange Commission, regulating broker/dealer practices in
transactions in low-priced stocks. If our common stock became subject to the
penny stock rules, many brokers may be unwilling to engage in transactions in
our common stock because of the added regulation, making it more difficult for
purchasers of our common stock to dispose of their shares.
The issuance of our 10% convertible notes payable and convertible preferred
stock has required us to record non-cash expenses which, in turn, increased our
net loss applicable to common shareholders. Based on generally accepted
accounting principles, we recorded a non-cash expense of approximately $2.5
million as additional interest expense for the three months ended March 31, 2001
due to the issuance of our 10% convertible notes in 1999 and a $2.9 million
expense related to preferred dividends deemed to have been paid for the three
months ended March 31, 2001 due to the terms of our series C-1 issued during the
first quarter of 2001 and B-2 preferred stock issued during the first quarter of
2000. We may incur significant additional non-cash expenses due to future
financings.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
Some of the statements made in this prospectus and the documents
incorporated by reference in this prospectus under "Webb Interactive Services,
Inc." and "Risk Factors" and elsewhere constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are subject to the safe harbor provisions of the act. Forward-
looking statements may be identified by the use of terminology such as may,
will, expect, anticipate, intend, believe, estimate, should, or continue or
other variations on these words or comparable terminology. Where this
prospectus contains forward-looking statements about Webb, you should be aware
that our actual financial condition, operating results and business performance
may differ materially from that projected or estimated by us in the forward-
looking statements. We have attempted to identify, in context, some of the
factors that we believe may cause actual future experience and results to differ
from their current expectations.
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USE OF PROCEEDS
Castle Creek Technology Partners LLC is offering all of the shares to be
sold. We will not receive any of the proceeds from the offer and sale of the
shares of common stock. However, 821,991 of the shares offered by Castle Creek
Technology Partners LLC are issuable upon the exercise of outstanding stock
purchase warrants at exercise prices ranging from $3.75 to $9.3343 per share.
If these warrants were exercised in full, we would receive gross proceeds of
$3,921,402.
SELLING SHAREHOLDER
The common stock covered by this prospectus consists of:
. 180,082 shares issued upon the conversion of our series B-2
convertible preferred stock;
. 1,000,000 shares issuable upon the conversion of our series C-1
convertible preferred stock;
. 815,342 shares issuable upon the conversion of our 10% convertible
promissory notes due August 25, 2002, in the principal amount of
$2,038,356, plus 98,450 shares issuable upon the conversion of
interest of $246,125 accruing from January 1, 2001 through August 25,
2002;
. 821,991 shares issuable upon the exercise of various stock purchase
warrants; and
. 377,708 shares of common stock held by Castle Creek Technology
Partners LLC.
Castle Creek Technology Partners LLC acquired its series B-2 convertible
preferred stock on September 14, 2000 in exchange for all of its series B
convertible preferred stock. Castle Creek Technology Partners LLC purchased the
series B convertible preferred stock from us, and a warrant to purchase 171,875
shares of common stock, for $6,250,000 on February 18, 2000. Castle Creek
Technology Partners LLC acquired the series C-1 convertible preferred stock on
February 28, 2001, and a warrant to purchase up to 500,000 shares of common
stock, in exchange for a cash investment of $2,500,000. Castle Creek Technology
Partners LLC acquired the 10% convertible promissory notes during 1999 and 2000.
Castle Creek Technology Partners LLC received a warrant to purchase 136,519
shares of our common stock on December 18, 1999 as part of an amendment of the
terms of the promissory notes, and this warrant was adjusted by its own terms in
February 2001 resulting in an additional 13,597 shares being covered by the
warrant. Castle Creek Technology Partners LLC acquired the 377,708 shares of
common stock when it converted a portion of the series B-2 convertible preferred
stock that it acquired in 2000.
The number of shares that actually may be sold will be determined by Castle
Creek Technology Partners LLC. Because Castle Creek Technology Partners LLC may
sell all, some or none of the shares of common stock which it holds, and because
this offering is not being underwritten, no estimate can be given of the number
of shares of common stock that will be held by Castle Creek Technology Partners
LLC upon termination of the offering.
The following table provides information as of July 3, 2001, about Castle
Creek Technology Partners LLC, including:
. Its beneficial ownership of common stock; and
. The maximum number of shares of common stock offered.
The information presented is based on data furnished to us by Castle Creek
Technology Partners LLC.
Under the registration rights agreement, we are required to register for
resale by Castle Creek Technology Partners LLC 3,293,573 shares of our common
stock. This amount is based upon the number of shares:
. Issuable upon the conversion of our series B-2 and C-1 convertible
preferred stock;
. Issuable upon the conversion of our 10% convertible promissory notes,
plus interest accruing from January 1, 2001 through August 25, 2002;
. Issuable upon the exercise of various stock purchase warrants; and
. Held by Castle Creek Technology Partners LLC.
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Approximately 201,662 of these shares are subject to effective registration
statements filed with the Securities and Exchange Commission.
Under the terms of the convertible preferred stock, the convertible
promissory notes and the warrants, each is convertible or exercisable by Castle
Creek Technology Partners LLC up to that number of shares, including the number
of shares of common stock owned by Castle Creek Technology Partners LLC, that
would not exceed 4.99% of the then outstanding shares of our common stock as
determined under section 13(d) of the Securities Exchange Act of 1934. This
limit does not include unconverted or unexercised shares under the convertible
preferred stock, convertible promissory notes or the warrants. Because of this
limitation, the number of shares of common stock contained in the third and
fourth columns in the table below for Castle Creek Technology Partners LLC
exceeds the number of shares of common stock that Castle Creek Technology
Partners LLC beneficially owns under section 13(d) as of May 24, 2001. This
4.99% limit may not prevent Castle Creek Technology Partners LLC from converting
all of its convertible preferred stock or the convertible promissory notes, or
exercising its warrants, because Castle Creek Technology Partners LLC can
convert the convertible preferred stock or the convertible promissory notes, or
exercise the warrants into 4.99% of our outstanding common stock, then sell all
of that stock to permit it to engage in further conversions or exercises. The
4.99% limit does not prevent Castle Creek Technology Partners LLC from selling
more than 4.99% of our common stock.
Shares of Common Stock
Owned Before Offering Plus
Shares Of Common Maximum Number of Shares Maximum Number of Shares of Common
Stock Owned Which Can Be Acquired Shares Offered Under Stock Owned
Selling Beneficially Before Over the Life of Securities This Registration Beneficially After
Shareholder Offering (%) Owned (%) Statement (%) Offering (%)
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Castle Creek 537,896 (4.99%) 3,293,573 (24.33%)(2) 3,293,573 (24.33%) 0 (0%)(3)
Technology
Partners LLC (1)
(1) Shares beneficially owned include 377,708 common shares held and 160,188
shares issuable upon conversion or exercise of outstanding securities. Castle
Creek Technology Partners LLC's address is 77 West Wacker Drive, Suite 4040,
Chicago, Illinois 60601. Castle Creek Technology Partners LLC beneficially owns
529,903 shares of common stock, determined under Rule 13d-3, and disclaims
beneficial ownership of any shares other than these shares. Castle Creek
Technology Partners LLC acquired its securities in the ordinary course of its
business and at the time of its purchase of these securities, it had no
understandings, directly or indirectly with any person to distribute the
securities. As an investment manager under a management agreement, Castle Creek
Partners, LLC may be considered to beneficially own the securities held by
Castle Creek Technology Partners LLC. Castle Creek Partners, LLC disclaims this
beneficial ownership. Daniel Asher, as a managing member of Castle Creek
Partners, LLC, holds the voting and dispositive powers over these securities and
may be considered to be the beneficial owner. Mr. Asher disclaims this
beneficial ownership.
(2) Includes:
. 180,082 shares issuable upon conversion of the series B-2 convertible
preferred stock and assumes a conversion price of $2.50;
. 1,000,000 shares issuable upon conversion of the series C-1
convertible preferred stock and assumes a conversion price of $2.50;
. 815,342 shares issuable upon conversion of the 10% convertible
promissory notes and assumes a conversion rate of $2.50 per share;
. 98,450 shares issuable upon conversion of interest accruing under the
10% convertible promissory notes from January 1, 2001 through August
25, 2002, and assumes a conversion rate of $2.50 per share and that
all interest is paid in additional notes;
8
. 821,991 shares issuable upon the exercise of stock purchase warrants.
No effect has been given to the antidilution provisions in the
warrants since any events which could cause the antidilution
provisions to take effect are not known; and
. 377,708 shares of common stock held by Castle Creek Technology
Partners LLC.
(3) Assumes the sale of all shares offered for sale by this prospectus.
PLAN OF DISTRIBUTION
The sale of the shares offered by this prospectus may be made in the Nasdaq
National Market or other over-the-counter markets at prices and at terms then
prevailing or at prices related to the then current market price or in
negotiated transactions. These shares may be sold by one or more of the
following:
. A block trade in which the broker or dealer will attempt to sell
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction.
. Purchases by a broker or dealer as principal and resale by a broker or
dealer for its account using this prospectus.
. Ordinary brokerage transactions in which the broker does not solicit
purchasers and transactions in which the broker does solicit
purchasers.
. Transactions directly with a market maker.
. In privately negotiated transactions not involving a broker or dealer.
Each sale may be made either at market prices prevailing at the time of the
sale, at negotiated prices, at fixed prices which may be changed, or at prices
related to prevailing market prices.
Castle Creek Technology Partners LLC has a short position in shares of our
common stock. Castle Creek Technology Partners LLC has confirmed to us that none
of the shares covered by this registration statement will be used to cover any
portion of this short position. Castle Creek Technology Partners LLC has also
confirmed to us that it will not take any action to cover any portion of this
short position during any period when it is engaged in a distribution of the
shares under this prospectus within the meaning of Regulation M under the
Securities Act of 1934.
Brokers or dealers engaged by Castle Creek Technology Partners LLC to sell
the shares may arrange for other brokers or dealers to participate. Brokers or
dealers engaged to sell the shares will receive compensation in the form of
commissions or discounts in amounts to be negotiated immediately before each
sale. These brokers or dealers and any other participating brokers or dealers
may be determined to be underwriters within the meaning of the Securities Act of
1933. We will receive no proceeds from any resales of the shares offered by
this prospectus, and we anticipate that the brokers or dealers, if any,
participating in the sales of the shares will receive the usual and customary
selling commissions.
Castle Creek Technology Partners LLC may enter into hedging transactions.
Persons with whom they enter into hedging transactions may engage in short sales
of our common stock. Castle Creek Technology Partners LLC may engage in short
sales of our common stock and transactions involving options, swaps, derivatives
and other transactions involving our securities or its investments in those
securities, and may sell and deliver the shares covered by this prospectus under
agreements to effect these transactions or in settlement of securities loans.
These transactions may be entered into with broker-dealers or other financial
institutions that may resell those shares. Castle Creek Technology Partners LLC
may pledge its shares to secure borrowings. Upon delivery of the shares or a
default by Castle Creek Technology Partners LLC, the broker-dealer or financial
institution may offer and sell the pledged shares.
To comply with the securities laws of some states, if applicable, the
shares will be sold in those states only through brokers or dealers. The shares
may not be sold in some states unless they have been registered or qualified for
sale in those states or an exemption from registration or qualification is
available and is complied with.
9
If necessary, the specific shares of our common stock to be sold, the name
of the selling shareholder, the purchase and public offering prices, the names
of any agent, dealer or underwriter, and any applicable commissions or discounts
will be disclosed in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this prospectus
is a part.
We entered into a registration agreement as a requirement of the private
placement of the series C-1 convertible preferred stock. The registration
agreement requires us to register the underlying shares of our common stock
under applicable federal and state securities laws, and the other shares of
common stock being offered in this prospectus. The registration agreement
provides for cross-indemnification of Castle Creek Technology Partners LLC and
us and each party's directors, officers and controlling persons against
liability for the offer and sale of the common stock, including liabilities
under the Securities Act of 1933, and to contribute to payments the parties may
be required to make. We have agreed to indemnify and hold harmless Castle Creek
Technology Partners LLC from liability under the Securities Act of 1933.
The rules and regulations in Regulation M under the Securities Exchange Act
of 1934, provide that during the period that any person is engaged in the
distribution within the meaning of Regulation M of our common stock, that person
usually may not purchase shares of our common stock. Castle Creek Technology
Partners LLC is subject to the rules and regulations of the Securities Act of
1933 and Securities Exchange Act of 1934 including Regulation M, which may limit
the timing of purchases and sales of shares of the common stock by Castle Creek
Technology Partners LLC. The prohibition on purchases under Regulation M may
include purchases to cover short positions by Castle Creek Technology Partners
LLC, and the failure by Castle Creek Technology Partners LLC to cover a short
position at a lender's request and purchases by the lender in the market of
shares to cover such a short position may constitute an inducement to buy those
shares prohibited by Regulation M. This may affect the marketability of the
common stock.
We will bear all expenses of the offering of the common stock, except that
Castle Creek Technology Partners LLC will pay any applicable underwriting
commissions and expenses, brokerage fees and transfer taxes, and the fees and
disbursements of its counsel and experts.
DESCRIPTION OF SECURITIES
General
Our articles of incorporation authorize our board of directors to issue
65,000,000 shares of capital stock, including 60,000,000 shares of common stock
and 5,000,000 shares of preferred stock, with rights, preferences and privileges
as are determined by our board of directors.
Common Stock
As of July 3, 2001, we had 10,619,303 shares of common stock outstanding.
All outstanding shares of our common stock are fully paid and nonassessable and
the shares of our common stock offered by this prospectus will be, upon
issuance, fully paid and nonassessable. The following is a summary of the
material rights and privileges of our common stock.
Voting. Holders of our common stock are entitled to cast one vote for each
share held at all shareholder meetings for all purposes, including the election
of directors. The holders of more than 50% of the voting power of our common
stock issued and outstanding and entitled to vote and present in person or by
proxy, and any preferred stock issued and outstanding and entitled to vote and
present in person or by proxy, constitute a quorum at all meetings of our
shareholders. The vote of the holders of a majority of our common stock present
and entitled to vote at a meeting, and any preferred stock present and entitled
to vote at a meeting, will decide any question brought before the meeting,
except when Colorado law, our articles of incorporation, or our bylaws require a
greater vote and except when Colorado law requires a vote of any preferred stock
issued and outstanding, voting as a separate class, to approve a matter brought
before the meeting. Holders of our common stock do not have cumulative voting
for the election of directors.
10
Dividends. Holders of our common stock are entitled to dividends when, as
and if declared by the board of directors out of funds available for
distribution. The payment of any dividends may be limited or prohibited by loan
agreement provisions or priority dividends for preferred stock that may be
outstanding.
Preemptive Rights. The holders of our common stock have no preemptive
rights to subscribe for any additional shares of any class of our capital stock
or for any issue of bonds, notes or other securities convertible into any class
of our capital stock.
Liquidation. If we liquidate or dissolve, the holders of each outstanding
share of our common stock will be entitled to share equally in our assets
legally available for distribution to our shareholders after payment of all
liabilities and after distributions to holders of preferred stock legally
entitled to be paid distributions before the payment of distributions to holders
of our common stock.
Series B-2 Convertible Preferred Stock
As of July 3, 2001, we had 450.205 shares of series B-2 convertible
preferred stock outstanding. On February 18, 2000, we issued 6,250 shares of
our series B convertible preferred stock and a warrant to acquire 171,875 shares
of our common stock to Castle Creek Technology Partners LLC for a cash
investment of $6,250,000. A similar number of series B-2 preferred stock and
warrant was issued to another investor, resulting in the issuance of an
aggregate of 12,500 shares of this preferred stock. On September 14, 2000, we
agreed to exchange all of the series B convertible preferred stock for 12,500
shares of series B-2 convertible preferred stock. During December 2000, all but
978 shares of the series B-2 convertible preferred stock were converted at a
conversion price of $10.20408 per share. In 2001, an additional 527.795 shares
of the series B convertible preferred stock were converted at a conversion price
of $2.50 per share. The series B-2 convertible preferred stock does not bear
dividends and does not entitle the holders to any voting rights except as
required by Colorado law. The following is a summary of the material terms of
the series B-2 convertible preferred stock.
Conversion. The preferred stock is convertible into common stock if the
conversion would not result in the holder being a beneficial owner of more than
4.99% of our common stock. The current conversion price is $2.50 per share.
The conversion price is also subject to anti-dilution protection if we
issue our common stock at prices less than the conversion price for the
preferred stock or the then current price for our common stock and for stock
splits, stock dividends and other similar transactions. If the conversion price
is reduced, we may be required to record a charge to income.
Redemption. The holder of the preferred stock has the right to require us
to redeem its shares of preferred stock if we:
. do not have a sufficient number of shares of our common stock
available for the conversion of the preferred stock for any reason;
. fail in any material respect to comply with the terms of the preferred
stock or the purchase agreement under which the preferred stock was
sold; or
. our common stock ceases to be quoted on the Nasdaq Stock Market
because of any willful action or failure on our part.
The redemption price would be equal to the greater of $1,250 per share of
preferred stock or the market value of the preferred stock based on the then
market value for our common stock.
Liquidation Preference. If we liquidate, dissolve or wind-up our business,
whether voluntarily or involuntarily, after we pay our debts and other
liabilities, the holder of the preferred stock will be entitled to receive from
our remaining net assets, before any distribution to the holders of our common
stock, the amount of $1,000 per share.
11
Series C-1 Convertible Preferred Stock
On February 28, 2001, we issued 2,500 shares of our series C-1 convertible
preferred stock and warrants to acquire 500,000 shares of our common stock to
Castle Creek Technology Partners LLC for a cash investment of $2,500,000. The
conversion price for the series C-1 convertible preferred stock is $2.50 The
series C-1 convertible preferred stock does not bear dividends and does not
entitle the holder to any voting rights except as required by Colorado law.
The following is a summary of the material terms of the series C-1
convertible preferred stock.
Conversion. The preferred stock is convertible into common stock if the
conversion would not result in the holder being a beneficial owner of more than
4.99% of our common stock. The current conversion price is $2.50 per share.
The conversion price is also subject to anti-dilution protection if we
issue our common stock at prices less than the conversion price for the
preferred stock or the then current price for our common stock and for stock
splits, stock dividends and other similar transactions. If the conversion price
is reduced, we may be required to record a charge to income.
Redemption. The holder of the preferred stock has the right to require us
to redeem its shares of preferred stock if we:
. do not have a sufficient number of shares of our common stock
available for the conversion of the preferred stock for any reason;
. fail in any material respect to comply with the terms of the preferred
stock or the purchase agreement under which the preferred stock was
sold; or
. our common stock ceases to be quoted on the Nasdaq Stock Market
because of any willful action or failure on our part.
The redemption price would be equal to the greater of $1,250 per share of
preferred stock or the market value of the preferred stock based on the then
market value for our common stock.
Liquidation Preference. If we liquidate, dissolve or wind-up our business,
whether voluntarily or involuntarily, after we pay our debts and other
liabilities, the holder of the preferred stock will be entitled to receive from
our remaining net assets, before any distribution to the holders of our common
stock, the amount of $1,000 per share.
Registration Rights. The agreement under which the series C-1 preferred
stock was issued requires us to file with the Securities and Exchange Commission
a registration statement for the resale of the shares issuable upon conversion
of this preferred stock and the other shares of common stock being offered for
sale by Castle Creek Technology Partners LLC under this prospectus. The
agreement under which the series C-1 preferred stock was issued also requires us
to use our best efforts to keep the registration statement effective until all
of the registered shares have been resold or can be sold immediately without
compliance with the registration requirements of the Securities Act of 1933
under Rule 144.
Series C-2 Preferred Convertible Stock. The February 28, 2001 agreement
under which we issued the series C-1 convertible preferred stock and the
accompanying warrant to Castle Creek Technology Partners LLC requires Castle
Creek Technology Partners LLC to purchase, and us to sell, up to 2,500 shares of
series C-2 convertible preferred stock and an accompanying series C-2 warrant
representing the right to purchase additional shares of common stock equal to
20% of the shares issuable upon the conversion of the series C-2 preferred stock
if the following conditions are met:
. The registration statement which includes this prospectus has been
declared effective by the Securities and Exchange Commission and has been
effective for 15 days;
12
. Our common stock continues to be listed on the Nasdaq National Market;
. Our average market capitalization for the three trading days
immediately preceding the closing of the sale of these securities is
at least $32,300,000, adjusted to the extent of any increase or
decrease in the number of our outstanding shares of common stock;
. Our representations and warranties in the February 28, 2001 agreement
with Castle Creek Technology Partners LLC are true and correct in all
material respects at the time of the closing; and
. There has been no material adverse change in our business, financial
condition, properties, prospects or results of operations.
The purchase price of the series C-2 convertible preferred stock and
accompanying warrant is $2,500,000. The series C-2 shares are convertible into
common stock at a price equal to the least of:
. 80% of the average market price for our common stock for the three
trading days immediately preceding the issuance of the stock;
. 80% of the closing bid price for the common stock on the day
immediately preceding the issuance of the preferred stock; and
. $7.50.
At the time the series C-2 convertible preferred stock is issued, the
maximum number of shares of common stock issuable upon conversion of this
preferred stock will be 1,000,000 shares, and a maximum of 200,000 shares will
be issuable upon exercise of the accompanying warrant.
The series C-2 convertible preferred stock will not bear dividends and will
not entitle the holder to any voting rights except as required by Colorado law.
The following is a summary of the material terms of the series C-1 convertible
preferred stock.
. Conversion. The preferred stock is convertible into common stock so
long as the conversion would not result in the selling shareholder
being a beneficial owner of more than 4.99% of our common stock. The
conversion price is subject to the formula described in the preceding
paragraph.
The conversion price is also subject to anti-dilution protection in
the event of the issuance of our common stock at prices less than the
conversion price for the preferred stock or the then current price for
our common stock and for stock splits, stock dividends and other
similar transactions. If the conversion price is reduced, we may be
required to record a charge to income.
. Redemption. In the event that we do not have a sufficient number of
shares of our common stock available for the conversion of the
preferred stock for any reason, including our failure to obtain the
approval of our shareholders of the issuance of the preferred stock,
fail in any material respect to comply with the terms of the preferred
stock or the purchase agreement pursuant to which the preferred stock
was sold or our common stock ceases to be quoted on the Nasdaq Stock
Market and such suspension or failure to be so quoted or listed occurs
as a result of any willful action or failure on our part, the holder
of the preferred stock has the right to require us to redeem its
shares of preferred stock. The redemption price would be equal to the
greater of $1,250 per share of preferred stock or the market value of
the preferred stock based on the then market value for our common
stock.
. Liquidation Preference. If we liquidate, dissolve or wind-up our
business, whether voluntary or otherwise, after we pay our debts and
other liabilities, the holder of the preferred stock will be entitled
to receive from our remaining net assets, before any distribution to
the holders of our common stock, the amount of $1,000 per share.
We were required under the February 28, 2001 agreement with Castle Creek
Technology Partners LLC to register the maximum number of shares of common stock
issuable upon the conversion of the series C-2 convertible preferred stock and
the exercise of the accompanying warrant. Based on the position of the
Securities and Exchange Commission that the shares of common stock issuable upon
conversion of the series C-2 preferred stock and exercise
13
of the series C-2 warrant could not be registered until the series C-2
securities had been issued, these shares of common stock are not part of this
prospectus. Castle Creek Technology Partners LLC has waived this condition to
its obligation to purchase these series C-2 securities. We have agreed to
register with the Securities and Exchange Commission the shares of common stock
issuable upon the conversion and exercise of the series C-2 securities after the
series C-2 securities have been issued.
10% Convertible Promissory Notes
On August 25, 1999, we issued to Castle Creek Technology Partners LLC a
three-year 10% convertible promissory note in the amount of $5,000,000. On
December 18, 1999, the terms of the promissory note were amended and we issued
to Castle Creek Technology Partners LLC a warrant to purchase 136,519 shares of
common stock, and this warrant was adjusted by its own terms in February 2001
resulting in an additional 13,597 shares being covered by the warrant. On
February 18, 2000, one-half of the principal amount of the note was converted
into 248,262 shares of common stock at a conversion price of $10.07 per share.
During 2000, an aggregate of $164,110 principal amount of similar 10%
convertible notes were issued to pay interest on the note. As of July 3, 2001,
we had a total of $2,038,356 principal amount of the 10% convertible notes
outstanding. For the period from April 1, 2001 through the maturity date of the
notes, August 25, 2002, additional interest will accrue in the amount of
$246,125 assuming the interest is paid in additional notes. If paid in cash,
the interest will be lower due to the absence of compounding. Upon the issuance
of additional convertible promissory notes to pay this interest, an additional
98,450 shares of common stock would be issuable upon conversion of the notes.
The following is a summary of the material terms of the promissory notes.
Conversion Price. The convertible promissory notes are convertible into
shares of common stock at a conversion price of $2.50 per share.
Redemption. We can prepay the promissory notes at any time, if the closing
bid price for our common stock for 20 consecutive trading days is at least 200%
of the conversion price then in effect. The redemption price would equal 115%
of the face amount of the convertible notes, plus accrued and unpaid interest.
Interest. The promissory notes bear interest at an annual rate of 10%.
The holder has the option to elect to receive interest payments in the form of
cash, common stock or a promissory note. If the market value of our common
stock is above $2.50, the issuance of notes to pay interest would result in an
effective interest rate of more than 10%.
Warrant Issued with Series B Convertible Preferred Stock
Castle Creek Technology Partners LLC owns a five-year warrant to purchase
171,875 shares of our common stock, which was issued on February 18, 2000. A
similar warrant was issued to a second investor as part of its purchase of
series B convertible preferred stock. The exercise price for the warrants is
currently $3.75374 per share. During the first three years of the warrant, the
exercise price is subject to adjustment at the end of each ninety-day period
following the issuance of the warrants. During this period, the exercise price
at the end of each ninety-day period will be adjusted if the market price for
our common stock is less than the exercise price for the warrants, so that the
exercise price will equal the market price for our common stock. The exercise
price for the warrant is also subject to anti-dilution protection if we issue
our common stock at prices less than the exercise price for the warrants and for
stock splits, stock dividends and other similar transactions. If the warrant
price is reset, we may record additional charges to income. The warrants may be
subject to early expiration after an underwritten public offering or one year if
the market price for our common stock exceeds $40.81.
Warrant Issued with Series C-1 Convertible Preferred Stock
Castle Creek Technology Partners LLC received a three-year warrant to
purchase up to 500,000 shares of our common stock, which was issued on February
28, 2001. The exercise price for the warrant is $3.75 per share. The warrant
may be subject to early expiration after 180 days if the market price for our
common stock exceeds
14
$7.50 for 10 consecutive trading days. The exercise price for the warrant is
subject to anti-dilution protection for stock splits, stock dividends and other
similar transactions
Warrant Issued with Convertible Notes
In December 1999 we issued Castle Creek Technology Partners LLC a five-
year warrant to purchase 136,519 shares of our common stock as part of an
amendment of the terms of the 10% convertible promissory notes, and this warrant
was adjusted by its own terms in February 2001 resulting in an additional 13,597
shares being covered by the warrant. The exercise price for the warrant is
$9.33431 per share. The warrant is subject to anti-dilution protection if we
issue our common stock at prices less than the exercise prices for the warrant
or the then current price for our common stock and for stock splits, stock
dividends and other similar transactions.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file with the SEC at the SEC's public reference room located at
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-
SEC-0330 for further information on the operation of the public reference room.
You can also obtain copies of this material from the SEC's Internet site located
at http://www.sec.gov.
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, file no. 0-28462:
. Our annual report on Form 10-KSB/A for the year ended December 31,
2000.
. Our quarterly report on Form 10-QSB for the quarter ended March 31,
2001.
. Our definitive proxy statement for the 2001 annual meeting of
shareholders filed on April 18, 2000.
. The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on May 22, 1996.
. Our current report on Form 8-K filed March 1, 2001.
. Our current report on Form 8-K filed May 10, 2001.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address and telephone number:
Shareholder Services
Attn: Kim Boswood
Webb Interactive Services, Inc.
1899 Wynkoop
Suite 600
Denver, Colorado 80202
(303) 308-3227
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different
information. Castle Creek Technology Partners LLC will not make an offer of
these shares in any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front page of this prospectus.
15
LEGAL MATTERS
Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, Minnesota, has
issued an opinion about the legality of the shares registered by this
prospectus. Lindley S. Branson, a principal of Gray, Plant, Mooty, Mooty &
Bennett, P.A., serves as our executive vice president, general counsel and as a
director. Mr. Branson holds 25,000 shares of our common stock, and options to
purchase an additional 344,813 shares.
EXPERTS
We have incorporated by reference in this prospectus our audited financial
statements as of December 31, 1999 and 2000 and for each of the two years in the
period ended December 31, 2000 along with Arthur Andersen LLP's audit report on
these financial statements. Arthur Andersen LLP issued the report as independent
accountants and as experts in auditing and accounting. Reference is made to the
report, which includes an explanatory paragraph regarding the uncertainty about
our ability to continue as a going concern as discussed in note 1 to the
financial statements.
INDEMNIFICATION
Our articles of incorporation provide that we shall indemnify, to the full
extent permitted by Colorado law, our directors, officers, employees or agents
who are made, or threatened to be made, a party to a proceeding against
judgments, penalties, fines, settlements and reasonable expenses if specified
standards are met. Although indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers and
controlling persons under these provisions, we have been advised that, in the
opinion of the SEC, indemnification for liabilities arising under the Securities
Act of 1933 is against public policy as expressed in the Securities Act and is
unenforceable.
Our articles of incorporation also limit the liability of our directors to
the fullest extent permitted by the Colorado law. Specifically, our articles of
incorporation provide that our directors will not be personally liable for
monetary damages for breach of fiduciary duty as directors, except for:
. Any breach of the duty of loyalty to us or our shareholders;
. Acts or omissions not in good faith or that involved intentional
misconduct or a knowing violation of law;
. Dividends or other distributions of corporate assets that are in
contravention of specified statutory or contractual restrictions;
. Violations of specified laws; or
. Any transaction from which the director derives an improper personal
benefit.
16
No dealer, salesperson or any other person has been authorized to give
any information or to make any representations other than those contained in
this prospectus and, if given or made, the information or representations must
not be relied upon as having been authorized by us. This prospectus does not
constitute an offer to sell or the solicitation of any offer to buy any security
other than the securities offered by this prospectus, nor does it constitute an
offer to sell or a solicitation of any offer to buy the securities offered by
this prospectus by anyone in any jurisdiction in which the offer or solicitation
is not authorized, or in which the person making the offer or solicitation is
not qualified to do so, or to any person to whom it is unlawful to make an offer
or solicitation. Neither the delivery of this prospectus nor any sale made under
this prospectus shall, under any circumstances, create any implication that
information contained in this prospectus is correct as of any time after the
date of this prospectus.
_______________
TABLE OF CONTENTS
Page
----
Webb Interactive Services, Inc............................................ 2
Risk Factors.............................................................. 2
Special Note About Forward-Looking Statements............................. 6
Use of Proceeds........................................................... 7
Selling Shareholder....................................................... 7
Plan of Distribution...................................................... 9
Description of Securities................................................. 10
Where You Can Find More Information....................................... 15
Legal Matters............................................................. 16
Experts................................................................... 16
Indemnification........................................................... 16
WEBB INTERACTIVE
SERVICES, INC.
_________________
PROSPECTUS
_________________
_________ __, 2001
======================================= ==================================
======================================= ==================================
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PART II
INFORMATION NOT REQUIRED TO BE IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth our various expenses in connection with the
sale and distribution of the shares being registered pursuant to this Form S-3
registration statement. All of the amounts shown are estimates, except for the
Securities and Exchange Commission registration fee and the Nasdaq listing fee.
We will pay all of such expenses.
Securities and Exchange Commission fee $ 2,260.55
Accounting fees and expenses 6,000.00
Legal fees and expenses 10,000.00
Printing, Mailing 4,000.00
Transfer Agent fees 500.00
Miscellaneous 2,239.45
----------
TOTAL $25,000.00
==========
Item 15. Indemnification of Directors and Officers
Our articles of incorporation provide that we shall indemnify, to the full
extent permitted by Colorado law, any of our directors, officers, employees or
agents made or threatened to be made a party to a proceeding, by reason of the
fact that such person is or was a director, officer, employee or agent of Webb
against judgments, penalties, fines, settlements and reasonable expenses
incurred by the person in connection with the proceeding if the person conducted
himself or herself in good faith and in a manner he or she reasonably believed
to be in or not opposed to our best interests, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, we 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.
Our articles of incorporation limit the liability of our directors to the
fullest extent permitted by Colorado law. Specifically, the articles of
incorporation provide that our directors will not be personally liable for
monetary damages for breach of fiduciary duty as directors, except for:
. any breach of the duty of loyalty to us or our shareholders;
. acts or omissions not in good faith or that involved intentional
misconduct or a knowing violation of law;
. dividends or other distributions of corporate assets that are in
contravention of statutory or contractual restrictions; or
. any transaction from which the director derives an improper personal
benefit.
Liability under federal securities law is not limited by the articles of
incorporation.
Item 16. Exhibits
3.1 Articles of Incorporation, as amended, of Webb Interactive Services,
Inc. (1)
3.2 Bylaws of Webb Interactive Services, Inc. (2)
4.1 Specimen form of Webb Interactive Services, Inc. common stock
certificate (3)
5.1 Opinion of Counsel*
10.1 Securities Purchase Agreement dated August 25, 1999 between Webb and
the Castle Creek Technology Partners LLC, including the Form of
Warrant and Registration Rights Agreement (5)
10.2 Promissory note dated August 25, 1999 issued by Webb to the Castle
Creek Technology Partners LLC (4)
10.3 Amendment dated December 18, 1999 to Securities Purchase Agreement
dated August 25, 1999 between Webb and the Castle Creek Technology
Partners LLC (5)
II-1
10.4 First Amendment dated December 18, 1999 to Promissory Note dated
August 25, 1999 issued by Webb to Castle Creek Technology Partners
LLC (5)
10.5 Stock Purchase Warrant dated August 25, 1999, as amended, December
18, 1999, issued by Webb to Castle Creek Technology Partners LLC (5)
10.6 Stock Purchase Warrant dated December 18, 1999, issued by Webb to
Castle Creek Technology Partners LLC (5)
10.7 Securities Purchase Agreement dated as of December 31, 1999, between
Webb, Marshall Capital Management, Inc. and Castle Creek Technology
Partners LLC. Included as exhibits thereto are the form of Warrant
and the Registration Rights Agreement (6)
10.8 Letter Agreement dated as of September 14, 2000 between Webb and
Castle Creek. (7)
10.9 Articles of Amendment setting forth the terms of the series B-2
convertible preferred stock (8)
10.10 Exchange Agreement dated as of September 14, 2000, between Webb and
Castle Creek (8)
10.11 Securities Purchase Agreement dated as of February 28, 2001, between
Webb and Castle Creek Technology Partners LLC. Included as exhibits
thereto are the Articles of Amendment setting forth the terms of the
Series C-1 Convertible Preferred Stock, the form of Series C-1
Warrant and the Registration Rights Agreement (9)
10.12 Articles of Amendment setting forth the terms of the Series C-1
Convertible Preferred Stock (10)
10.13 Amendment Agreement dated as of July 10, 2001 between Webb and Castle
Creek Technology Partners LLC*
23.1 Consent of Arthur Andersen LLP*
___________________
* Filed herewith
(1) Filed with the Registration Statement on Form S-3, filed January 29, 1999,
Commission File No. 333-71503.
(2) Filed with the initial Registration Statement on Form SB-2, filed April 5,
1996, Commission File No. 333-3282-D.
(3) Filed with the Registration Statement on Form S-3, filed September 24,
1999, Commission File No. 333-86465.
(4) Filed with the current report on Form 8-K, filed September 2, 1999,
Commission File No. 000-28462.
(5) Filed with Amendment 2 to the Registration Statement on Form S-3, filed
January 3, 2000, Commission File No. 333-87887.
(6) Filed with the current report on Form 8-K, filed January 5, 2000,
Commission File No. 000-28462.
(7) Filed with the current report on Form 8-K, filed September 19, 2000,
Commission File No. 000-28462.
(8) Filed with the current report on Form 8-K/A, filed September 27, 2000,
Commission File No. 000-28462.
(9) Filed with the current report on Form 8-K, filed March 1, 2001, Commission
File No. 000-28462.
Item 17. Undertakings
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, 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
II-2
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) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain
unsold at the termination of the offering.
B. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the registrant as discussed above, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Denver, State of Colorado, on July 10,
2001.
WEBB INTERACTIVE SERVICES, INC.
By: /s/ Perry Evans
---------------------------------------
Perry Evans, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below on the 10th day of July,
2001, by the following persons in the capacities indicated:
/s/ Perry Evans
- ----------------------------------------------------
Perry Evans
(President, Chief Executive Officer and a Director)
/s/ William R. Cullen
- ----------------------------------------------------
William R. Cullen
(Chief Financial Officer and a Director)
/s/ Stuart J. Lucko
- ----------------------------------------------------
Stuart J. Lucko
(Chief Accounting Officer)
/s/ Lindley S. Branson
- ----------------------------------------------------
Lindley S. Branson
(Director)
/s/ Robert J. Lewis
by Lindley S. Branson attorney-in-fact
- ----------------------------------------------------
Robert J. Lewis
(Director)
/s/ Richard C. Jennewine
by Lindley S. Branson attorney-in-fact
- ----------------------------------------------------
Richard C. Jennewine
(Director)
/s/ Timothy O'Reilly
by Lindley S. Branson attorney-in-fact
- ----------------------------------------------------
Timothy O'Reilly
(Director)
Webb Interactive Services, Inc.
Form S-3
Index to Exhibits
3.1 Articles of Incorporation, as amended, of Webb Interactive Services,
Inc. (1)
3.2 Bylaws of Webb Interactive Services, Inc. (2)
4.1 Specimen form of Webb Interactive Services, Inc. common stock
certificate (3)
5.1 Opinion of Counsel*
10.1 Securities Purchase Agreement dated August 25, 1999 between Webb and
the Castle Creek Technology Partners LLC, including the Form of
Warrant and Registration Rights Agreement (4)
10.2 Promissory note dated August 25, 1999 issued by Webb to the Castle
Creek Technology Partners LLC (4)
10.3 Amendment dated December 18, 1999 to Securities Purchase Agreement
dated August 25, 1999 between Webb and the Castle Creek Technology
Partners LLC (5)
10.4 First Amendment dated December 18, 1999 to Promissory Note dated
August 25, 1999 issued by Webb to Castle Creek Technology Partners LLC
(5)
10.5 Stock Purchase Warrant dated August 25, 1999, as amended, December 18,
1999, issued by Webb to Castle Creek Technology Partners LLC (5)
10.6 Stock Purchase Warrant dated December 18, 1999, issued by Webb to
Castle Creek Technology Partners LLC (5)
10.7 Securities Purchase Agreement dated as of December 31, 1999, between
Webb, Marshall Capital Management, Inc. and Castle Creek Technology
Partners LLC. Included as exhibits thereto are the form of Warrant and
the Registration Rights Agreement (6)
10.8 Letter Agreement dated as of September 14, 2000 between Webb and
Castle Creek. (7)
10.9 Articles of Amendment setting forth the terms of the series B-2
convertible preferred stock (8)
10.10 Exchange Agreement dated as of September 14, 2000, between Webb and
Castle Creek (8)
10.11 Securities Purchase Agreement dated as of February 28, 2001, between
Webb and Castle Creek Technology Partners LLC. Included as exhibits
thereto are the Articles of Amendment setting forth the terms of the
Series C-1 Convertible Preferred Stock, the form of Series C-1 Warrant
and the Registration Rights Agreement (9)
10.12 Articles of Amendment setting forth the terms of the Series C-1
Convertible Preferred Stock (9)
10.13 Amendment Agreement dated as of July 10, 2001 between Webb and Castle
Creek Technology Partners LLC*
23.1 Consent of Arthur Andersen LLP*
___________________
* Filed herewith
(1) Filed with the Registration Statement on Form S-3, filed January 29,
1999, Commission File No. 333-71503.
(2) Filed with the initial Registration Statement on Form SB-2, filed April
5, 1996, Commission File No. 333-3282-D.
(3) Filed with the Registration Statement on Form S-3, filed September 24,
1999, Commission File No. 333-86465.
(4) Filed with the current report on Form 8-K, filed September 2, 1999,
Commission File No. 000-28462.
(5) Filed with Amendment 2 to the Registration Statement on Form S-3, filed
January 3, 2000, Commission File No. 333-87887.
(6) Filed with the current report on Form 8-K, filed January 5, 2000,
Commission File No. 000-28462.
(7) Filed with the current report on Form 8-K, filed September 19, 2000,
Commission File No. 000-28462.
(8) Filed with the current report on Form 8-K/A, filed September 27, 2000,
Commission File No. 000-28462.
(9) Filed with the current report on Form 8-K, filed March 1, 2001,
Commission File No. 000-28462.