SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Webb Interactive Services Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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PRELIMINARY COPY
WEBB INTERACTIVE SERVICES, INC.
1899 Wynkoop
Suite 600
Denver, Colorado 80202
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 5, 2002
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Webb
Interactive Services, Inc., a Colorado corporation, will be held on Tuesday,
March 5, 2002, at 9:00 a.m., Mountain Time, at our executive offices, 1899
Wynkoop, Suite 600, Denver, Colorado for the following purposes:
1. To approve issuances of our securities in connection with the
Securities Purchase Agreement dated January 17, 2002 between us and Jona, Inc.
2. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only holders of record of our common stock at the close of business on
February 1, 2002 will be entitled to notice of, and to vote at, the special
meeting or any adjournment thereof.
You are cordially invited to attend the special meeting. Whether or not
you plan to attend the special meeting, please complete, sign and date the
enclosed proxy and return it in the enclosed reply envelope as promptly as
possible.
BY ORDER OF THE BOARD OF
DIRECTORS
Lindley S. Branson
Secretary
February 14, 2002
PRELIMINARY COPY
PROXY STATEMENT
WEBB INTERACTIVE SERVICES, INC.
1899 Wynkoop
Suite 600
Denver, Colorado 80202
Special Meeting of Shareholders - March 5, 2002
GENERAL
The enclosed proxy is solicited by the board of directors of Webb
Interactive Services, Inc., a Colorado corporation, for use at the special
meeting to be held on Tuesday, March 5, 2002, at 9:00 a.m., Mountain Time, at
Webb's executive offices, 1899 Wynkoop, Suite 600, Denver, Colorado, or any
adjournment thereof. Solicitations are being made by mail and may also be made
by our directors, officers and employees. Any proxy given pursuant to such
solicitation may be revoked by the shareholder at any time prior to the voting
thereof by so notifying us in writing at the above address, attention: Lindley
S. Branson, Secretary, or by appearing and voting in person at the meeting.
Shares represented by proxies will be voted as specified in such proxies. In
the absence of specific instructions, proxies will be voted (to the extent they
are entitled to be voted on such matters): (1) FOR issuances of our securities
in connection with the Securities Purchase Agreement dated January 17, 2002
between WEBB and Jona, Inc. and (2) in the proxies' discretion upon such other
business as may properly come before the special meeting. So far as our
management is aware, no matters other than those described in this proxy
statement will be acted upon at the special meeting.
Votes cast by proxy or in person at the special meeting will be tabulated
by the election inspectors appointed for the meeting and will determine whether
or not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval of
any matter submitted to the shareholders for a vote. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will be considered as shares that are
present for the purposes of determining the presence of a quorum, but will not
be considered as present and entitled to vote with respect to that matter.
We will pay all of the expenses involved in preparing, assembling and
mailing this proxy statement and the material enclosed herewith. We may
reimburse banks, brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy material to beneficial
owners of stock. This proxy statement is being mailed to shareholders on or
about February 14, 2002.
OUTSTANDING STOCK
As of February 1, 2002, the record date for determining shares entitled to
notice of and to vote at the special meeting of shareholders, the following
shares of our capital stock were outstanding:
. 12,786,522 shares of our common stock;
. 650 shares of our series C-1 non-voting convertible preferred stock; and
. 1,500 shares of our series D non-voting convertible junior preferred
stock.
Information as to the name, address and stock holdings of each person known
by Webb to be a beneficial owner of more than five percent of our common stock
and as to the name, address and stock holdings of certain shareholders, each
director, and by all executive officers and directors, as a group, as of
February 1, 2002 is set forth below. Except as indicated below, we believe that
each such person has the sole (or joint with spouse) voting and investment
powers with respect to such shares.
Amount of
Name/Address Common Stock Percent
of Beneficially of Common
Shareholder/Director Owned Stock (1)
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William R. Cullen 567,323 (2) 4.26%
1899 Wynkoop, Suite 600
Denver, Colorado 80202
Lindley S. Branson 544,811 (3) 4.09%
1899 Wynkoop, Suite 600
Denver, Colorado 80202
Robert J. Lewis 227,836 (4) 1.76%
1899 Wynkoop, Suite 600
Denver, Colorado 80202
Richard C. Jennewine 192,286 (5) 1.48%
1899 Wynkoop, Suite 600
Denver, Colorado 80202
Jona, Inc. 2,260,000 (6) 16.20%
P.O. Box 949
Casper, Wyoming 82602
2
Directors and Executive Officers 1,754,494 (7) 12.16%
as a Group (7 persons)
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(1) In calculating percentage ownership, all shares of common stock which a
named shareholder has the right to acquire within 60 days from the date of
this report upon exercise of options or warrants are deemed to be
outstanding for the purpose of computing the percentage of common stock
owned by that shareholder, but are not deemed to be outstanding for the
purpose of computing the percentage of common stock owned by any other
shareholders.
(2) Includes options for the purchase of 533,826 shares of common stock, but
excludes options for the purchase of 200,002 shares of common stock that
are not exercisable during the next 60 days.
(3) Includes options for the purchase of 519,811 shares of common stock, but
excludes options for the purchase of 225,002 shares of common stock that
are not exercisable during the next 60 days.
(4) Includes options for the purchase of 179,466 shares of common stock, but
excludes options for the purchase of 48,370 shares of common stock that are
not exercisable during the next 60 days.
(5) Includes options for the purchase of 187,286 shares of common stock, but
excludes options for the purchase of 106,168 shares of common stock that
are not exercisable during the next 60 days.
(6) Includes warrants to purchase 1,160,000 shares of common stock. Does not
include 15,000 shares of common stock owned by Neil A. McMurray and his
spouse. Mr. McMurray, who is the sole shareholder, President, Treasurer,
Secretary and a director of Jona, Inc., is deemed to be the beneficial
owner of Webb's securities owned by Jona, Inc.
(7) Consists of options for the purchase of 1,638,577 shares of common stock,
but excludes options for the purchase of 765,758 shares of common stock
that are not exercisable during the next 60 days.
PROPOSAL 1:
SALES OF THE COMPANY'S SECURITIES
BACKGROUND
Webb and Jona, Inc. have entered into a Securities Purchase Agreement dated
as of January 17, 2002 (the "Securities Purchase Agreement") which contemplates
the sale of up to 7,500,000 units of our securities at $1.00 per unit. Each unit
consists of one share of our common stock and a 5-year warrant representing the
right to purchase an additional share of common stock at $1.00. One-third of the
warrants are callable by us if our common stock trades at $2.00 or more for five
consecutive trading days and an additional one-third of the warrants are
callable by us if our common stock trades at $3.00 or more for five consecutive
trading days. Jona, Inc. has purchased 1,100,000 of the units for $1,100,000 and
has agreed to purchase an additional 3,900,000 units for $3,900,000, provided
that our shareholders approve the sale of a total of up 7,500,000 units pursuant
to the terms of the Securities Purchase Agreement. We have granted Jona, Inc. an
option, again subject to shareholder approval of the Securities Purchase
Agreement, to purchase the remaining 2,500,000 units being offered pursuant to
the Securities Purchase Agreement on or before August 31, 2002 or, if earlier,
upon our receipt of a bona fide offer to purchase such additional units from
another party.
We believe that in addition to the $1,100,000 already raised in connection
with the sale of the units to Jona, Inc., we need to raise an additional $5.2
million to $6.4 million to fund our operations and the operations of our Jabber,
Inc. subsidiary for at least the next 12 months. In connection with the sale of
the initial 1,100,000 units, we were able to negotiate the exchange of
$1,212,192 principal amount of our 10% convertible notes into 1,984 shares of
our Series D Junior Convertible Preferred Stock, provided that we pre-pay the
balance of the $720,000
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principal amount of these notes. The 1,984 shares of Series D Junior Convertible
Preferred Stock will be convertible into 1,984,000 shares of our common stock.
It is necessary that we raise additional proceeds through the sale of the units
or otherwise to be able to pre-pay the $720,000 principal amount of these notes.
Therefore, shareholders should consider an approval of the sale of the
additional units to also constitute the approval of the exchange of $1,212,192
principal amount of the convertible notes for the 1,984 shares of the Series D
Junior Convertible Preferred Stock.
The proceeds from the sale of the additional 3,900,000 to 6,400,000 units
will be used as follows:
SALE OF 3,900,000 SALE OF 6,400,000
USE UNITS UNITS
Payment of 10% Secured Notes due 4/30/02 * $1,200,000 $1,200,000
Redemption of 10% Convertible Notes $ 720,000 $ 720,000
Jabber Working Capital $1,980,000 $4,000,000
Webb Working Capital * $ -- $ 480,000
TOTAL $3,900,000 $6,400,000
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* The $1,100,000 obtained in connection with the sale of the initial 1,100,000
units to Jona, Inc. and the $1,200,000 from the short-terms loans by Jona,
Inc. have been used to pay outstanding payables and to provide a reserve to
fund Webb's expected expenses during the next 12 months.
In accordance with an agreement entered into with France Telecom
Technologies Investissements ("FTTI") during July 2001, FTTI has the right, but
not the obligation, to invest an additional $2,000,000 in our Jabber subsidiary.
Any additional amount invested by FTTI will be used exclusively for Jabber's
operations and will not be available to fund our operations. We estimate that
in order to fund our operations and those of our Jabber, Inc. subsidiary for at
least the next 12 months, we must raise approximately $6,400,000 in addition to
the $1,100,000 already raised in connection with the sale of units to Jona, Inc.
Since FTTI is not required to make any additional investments in our Jabber,
Inc. subsidiary, we believe it is necessary to sell all of the remaining
6,400,000 units being offered pursuant to the Securities Purchase Agreement. If
all of the remaining 6,400,000 units are sold and FTTI invests an additional
$2,000,000 in our Jabber, Inc. subsidiary, we will have approximately $6 million
to fund the future operations of our Jabber, Inc. subsidiary.
Jona, Inc. has agreed to purchase at least 3,900,000 additional units,
subject to our shareholders approving the sale of the units pursuant to the
Securities Purchase Agreement. Jona, Inc. has also been granted an option,
again subject to our shareholders' approval of the Securities Purchase
Agreement, to purchase an additional 2,500,000 units of our securities.
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We have called this Special Meeting of Shareholders to consider approval of
the sale of securities in connection with the Securities Purchase Agreement
rather than deferring this proposal to our annual meeting which we expect to be
held in either April or May of this year, as we believe that shareholder
approval of the Securities Purchase Agreement prior to issuance of our auditor's
report on our financial statements for fiscal 2001 may enable us to avoid the
"going concern" qualification in the report that was included in their report
with respect to our 2000 financial statements. We believe the elimination of the
"going concern" qualification with respect to our auditor's report issued on our
2001 financial statements would be of significant benefit to our business for
fiscal 2002 and beyond.
If shareholders approve the sale of the additional units pursuant to the
Securities Purchase Agreement but Jona, Inc. does not exercise its option to
purchase the additional 2,500,000 units prior to completion of the audit of our
2001 financial statements, we will not be able to avoid the "going concern"
qualification unless FTTI has agreed to invest the additional $2 million in our
Jabber, Inc. subsidiary. While we believe that we may be able to avoid the
"going concern" qualification with respect to our auditor's report on our 2001
financial statements if shareholders approve the sale of the units pursuant to
the Securities Purchase Agreement, our auditors have not, as of the date of this
proxy statement, completed their review of our financial statements for fiscal
2001 and, therefore, there can be no assurance that we will be able to avoid the
"going concern" qualification even if shareholders approve the sale of the
remaining units pursuant to the Securities Purchase Agreement.
Our shareholders are being asked to approve the issuance of Webb's
securities pursuant to the Securities Purchase Agreement in response to the
Nasdaq Stock Market rules. Approval by a majority of the votes cast with
respect to the proposal is required to approve such proposal, provided that
there is a quorum for the conduct of business at the special meeting. If the
required affirmative vote is not obtained, our board of directors will need to
determine whether it should seek any additional funds from the sale of our
securities, notwithstanding that to do so might seriously jeopardize the
continued listing of our common stock on the Nasdaq National Market.
We currently do not meet all of the National Stock Market, Inc.'s
requirements for our common stock to continue to be listed on the Nasdaq
National Market. Further, we will not meet all of these requirements even if
all of the 7,500,000 units are sold, the $1,212,192 principal amount of our
convertible notes is converted into equity and FTTI invests an additional $2
million in our Jabber, Inc. subsidiary. While we are continuing to work to
satisfy these requirements, there can be no assurance that our efforts will be
successful and that our common stock will continue to be listed on the Nasdaq
National Market, even if shareholders approve the sale of our securities in
connection with the Securities Purchase Agreement. We believe, however, that
the failure of shareholders to approve the sale of the additional securities
would make it difficult for us to regain compliance with the National Stock
Market, Inc.'s requirements.
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ISSUANCE OF SECURITIES PURSUANT TO SECURITIES PURCHASE AGREEMENT
GENERAL. In accordance with the terms of the Securities Purchase Agreement
(i) we have sold 1,100,000 units of our securities to Jona, Inc. for $1.1
million and (ii) Jona, Inc. agreed, subject to certain conditions including
shareholder approval of the transactions contemplated by the Securities Purchase
Agreement, to purchase up to an additional $6.4 million worth of the units. Each
unit consists of one share of our common stock and one warrant to purchase one
additional share of our common stock exercisable at a price of $1.00 per share
at any time during the five years following January 17, 2002. In addition, we
agreed to file by May 1, 2002, a registration statement with the Securities and
Exchange Commission covering the resale by Jona, Inc. of up to 7,500,000 shares
of common stock issuable pursuant to the Securities Purchase Agreement and up to
7,500,000 shares of common stock issuable upon exercise of the warrants. The
description of the terms of the Securities Purchase Agreement contained in this
proxy statement is a summary and does not purport to be complete. A copy of the
Securities Purchase Agreement is available from us upon written request to:
Lindley S. Branson, Secretary, Webb Interactive Services, Inc., 1899 Wynkoop
Place, Suite 600, Denver, Colorado 80202.
Under the terms of the Securities Purchase Agreement, Jona, Inc. has agreed
to purchase a total of 5,000,000 units at a purchase price of $1.00 per unit, of
which 1,100,000 units were purchased on January 17, 2002 at the time of the
signing of the Securities Purchase Agreement. In addition, the Securities
Purchase Agreement grants Jona, Inc. an option to purchase up to an additional
2,500,000 units at a purchase price of $1.00 per share that expires on
August 31, 2002 if not previously exercised. The purchase of the remaining units
under the Securities Purchase Agreement is subject to satisfaction of certain
conditions including but not limited to approval of the transactions
contemplated by the Securities Purchase Agreement by the shareholders of Webb.
Pursuant to the terms of the Securities Purchase Agreement, we agreed to
(i) amend our bylaws to require the unanimous consent and approval of all
members of the board of directors in attendance at a duly convened meeting of
the board of directors prior to certain actions taking place; (ii) cause two
nominees of Jona, Inc. to be elected to the board of directors; and (iii) use
our best efforts to cause such nominees to be elected to the board of directors
so long as Jona, Inc. (or its affiliates) beneficially owns 25% or more of our
common stock. In the event that we sell common stock for less than $1.00 per
share in connection with a financing transaction before the earliest to occur of
(a) January 17, 2004; (b) raising an additional $7.5 million, including proceeds
received in connection with the exercise of the warrants sold to Jona, Inc.
pursuant to the Securities Purchase Agreement; or (c) the closing bid price for
our common stock exceeding $3.00 for 30 consecutive trading days, we will be
required to issue to Jona, Inc. a number of additional shares of our common
stock as is necessary to cause the value of the total number of shares of our
common stock, including any such additional shares, delivered in connection with
the purchase of the common stock to be equal to the total purchase price paid
for the common stock by Jona, less the amount, if any, received by Jona in
connection with the sale or other transfer of common stock at a price in excess
of $1.00 per share, the value of the common stock being based upon the sale
price for our common stock in the financing transaction. If the full 7,500,000
units offered pursuant to the Securities Purchase Agreement are
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sold, we should have adequate operating capital to fund our operations for at
least the next 12 months.
In connection with the purchase of units, Jona, Inc. loaned us $900,000
pursuant to the terms of a promissory note dated as of January 17, 2002 bearing
interest at the rate of 10% per annum. In addition, in connection with a letter
of intent with respect to the purchase of the units, Jona, Inc. loaned us
$300,000. All principal and accrued interest under both loans is due and
payable on demand at any time on or after April 30, 2002. The repayment of the
loans is secured by an aggregate of 4,800,000 shares of our series C convertible
preferred stock of Jabber, Inc., our subsidiary. In addition, in connection
with the $300,000 loan, Jona, Inc. was issued a warrant to purchase 60,000
shares of our common stock at $2.50 per share, which was reduced to $1.00 per
share in connection with the purchase of the units.
Assuming all of the 7,500,000 units offered pursuant to the Securities
Purchase Agreement are sold and our outstanding convertible preferred stock and
convertible notes are converted, we will have a total of approximately
23,215,000 outstanding shares of common stock, an increase of approximately 80%
over the 12,786,522 shares outstanding as of February 1, 2002. Of these shares,
Jona, Inc. will own from approximately 5,075,000 to 7,575,000 shares or from
approximately 22% to 32% of our then outstanding shares of common stock. If all
of the warrants included with the 7,500,000 units are exercised and Jona, Inc.
continued to own all of the shares of our common stock it acquired upon purchase
of the units and exercise of the warrants, Jona, Inc. would own from
approximately 10,075,000 to 15,075,000 shares of our then approximately
30,715,000 outstanding shares of common stock, representing from 35% to 49% of
our then outstanding shares of common stock. In this event, Jona, Inc. may
control Webb.
RECOMMENDATION OF BOARD OF DIRECTORS. Our Board considers Proposal 1 to be in
the best interests of Webb and its shareholders. The issuance of the 1,100,000
units and the short-term borrowing of an additional $1,200,000 from Jona, Inc.
was based on our Board's belief that the funds obtained in connection with these
transactions were necessary to pay past-due trade payables and to provide us
with the working capital required to sustain our operations and those of our
Jabber, Inc. subsidiary until we could hold a meeting of shareholders to
consider approval of the issuance of the additional securities. Our Board
believes that the ability of Jona, Inc. to invest up to an additional $6,400,000
in Webb by the purchase of additional units is necessary to (i) provide us with
flexibility to finance our operations for at least the next 12 months and
possibly until we are able to achieve positive cash flow from operations and
(ii) will facilitate our efforts to maintain the listing of our common stock on
the Nasdaq National Market.
The additional shares of common stock that could be issued pursuant to
Proposal 1 will have the same rights as our currently outstanding shares of
common stock. The adoption of Proposal 1 and the issuance of common stock
authorized thereby would not affect the rights of the holders of our currently
outstanding common stock, except for effects incidental to increasing the number
of outstanding shares of our common stock. Any future issuance of common stock
will be subject to the rights of holders of any outstanding shares of our
preferred stock.
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RESOLUTION AND VOTE REQUIRED FOR PROPOSAL 1. The following resolution will be
submitted for approval at the special meeting:
"RESOLVED, That for purpose of satisfying Rule 4350 of The Nasdaq
Stock Market, Inc., which requires that certain sales of the Company's
securities be approved by shareholders for the Company's common stock
to continue to be listed on the Nasdaq National Market, the
shareholders of the Company hereby approve the issuance of the
Company's common stock in connection with the terms of the Securities
Purchase Agreement dated as of January 17, 2002, between WEBB and
Jona, Inc."
The affirmative vote of the holders of a majority of the voting power of
the shares of common stock, present or represented at the special meeting and
entitled to vote on Proposal 1, is required to approve Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 1.
OTHER MATTERS
The board of directors does not intend to bring before the special meeting
any business other than as set forth in this proxy statement, and has not been
informed that any other business is to be presented to the meeting. However, if
any matters other than those referred to above should properly come before the
meeting, it is the intention of the persons named in the enclosed proxy to vote
such proxy in accordance with their best judgment.
Please sign and return promptly the enclosed proxy in the envelope provided
if you are a holder of common stock. The signing of a proxy will not prevent
your attending the meeting and voting in person.
BY ORDER OF THE BOARD OF DIRECTORS
Lindley S. Branson
Secretary
February 14, 2002
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WEBB INTERACTIVE SERVICES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned having duly received the Notice of Special Meeting and the
Proxy Statement dated February 14, 2002, hereby appoints the Chief Executive
Officer, William R. Cullen, and the Secretary, Lindley S. Branson, as proxies
(each with the power to act alone and with the power of substitution and
revocation) to represent the undersigned and to vote, as designated below, all
common shares of Webb Interactive Services, Inc. held of record by the
undersigned on February 1, 2002, at a Special Meeting of Shareholders to be held
on March 5, 2002 at 1899 Wynkoop, Suite 600, Denver, Colorado, at 9:00 a.m.
Mountain Time, and at any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
PROPOSALS 1 AND 2.
1. PROPOSAL TO APPROVE THE ISSUANCE OF [ ] FOR [ ] AGAINST [ ] ABSTAIN
SECURITIES PURSUANT TO THE TERMS OF
THE SECURITIES PURCHASE AGREEMENT DATED
AS OF JANUARY 17, 2002, BETWEEN WEBB
INTERACTIVE SERVICES, INC. AND JONA, INC.
2. IN THEIR DISCRETION, THE PROXIES ARE [ ] FOR [ ] AGAINST [ ] ABSTAIN
AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING.
(CONTINUED ON OTHER SIDE)
(CONTINUED FROM OTHER SIDE)
This Proxy, when properly executed, will be voted in the manner directed on
the Proxy by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please sign exactly as your name appears on this card. When shares are held
by joint tenants, both should sign. If signing as attorney, guardian, executor,
administrator or trustee, please give full title as such. If a corporation,
please sign in the corporate name by the president or other authorized officer.
If a partnership, please sign in the partnership name by an authorized person.
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(Signature)
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(Signature, if held jointly)
Dated: ______________________, 2002
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
RETURN ENVELOPE.