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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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



For the period ended March 31, 2004



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



For the transition period from  to



Commission File Number : 0-28462



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WEBB INTERACTIVE SERVICES, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Colorado                                                       |  | 84-1293864                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



1899 Wynkoop, Suite
600

Denver, CO 80202

(Address of principal executive offices, including zip code)



(303) 308-3180

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act)    Yes ̈No  x



The number of shares of registrants common stock outstanding as of as
of May 12, 2004, was: 25,433,552



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##### Table of Contents

WEBB INTERACTIVE SERVICES, INC.



FORM
10-QSB



QUARTERLY REPORT



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TABLE OF CONTENTS



|           |  |                                                                                                   |  |      
|---------- |  | ------------------------------------------------------------------------------------------------- |  | -----
|           |  |                                                                                                   |  | Page 
|Part I.    |  | Financial Information                                                                             |  |      
|           |  |                                                                                                  
|           |  | Item 1.    
Unaudited Financial Statements                                                        |  |      
|           |  |                                                                                                  
|           |  | Condensed Balance Sheets as of March 31, 2004 and December 31, 2003                               |  | 3    
|           |  | Condensed Statements of Operations for the Three Months Ended March 31, 2004 and 2003             |  | 4    
|           |  | Condensed Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2003             |  | 5    
|           |  | Notes to Condensed Financial Statements                                                           |  | 6-11 
|           |  |                                                                                                  
|           |  | Item 2.    
Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 12-19
|           |  | Item 3.    
Disclosure Controls and Procedures                                                    |  | 19   
|           |  |                                                                                                  
|Part II.   |  | Other Information                                                                                 |  |      
|           |  |                                                                                                  
|           |  | Items 1 - 5.    
Not Applicable                                                                   |  | 20   
|           |  | Item 6.    
Exhibits and Reports on Form 8-K                                                      |  | 20-21
|           | 
|Signatures |  | 22                                                                                               



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This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended, and is subject to the safe harbors created by those sections. These forward-looking statements are subject to significant risks and uncertainties, including those identified in the section of
this Form 10-QSB entitled Managements Discussion and Analysis of Financial Condition and Results of Operations  Factors That May Affect Future Operating Results, which may cause actual results to differ materially from those discussed in
such forward-looking statements. The forward-looking statements within this Form 10-QSB are identified by words such as believes, anticipates, expects, intends, may, will and
other similar expressions. However, these words are not the exclusive means of identifying such statements. In addition, any statements which refer to expectations, projections or other characterizations of future events or circumstances are
forward-looking statements. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances occurring subsequent to the filing of this
Form 10-QSB with the Securities and Exchange Commission (SEC). Readers are urged to carefully review and consider the various disclosures made by the Company in this report and in the Companys other reports filed with the SEC that attempt to
advise interested parties of the risks and factors that may affect the Companys business.



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PART I FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



WEBB INTERACTIVE SERVICES, INC.

CONDENSED BALANCE SHEETS

(UNAUDITED)



|                                                                                                                                                 |  |                |              |   |                  |   |              |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ------------ | - | ---------------- | - | ------------ | -
|                                                                                                                                                 |  | March 31, 2004 |              |   | December 31,2003 |  
|                                                                                                                                                 |  |                |              |   | (Consolidated)   |  
|ASSETS                                                                                                                                           |  |                |              |   |                  |   |              |  
|Current assets:                                                                                                                                  |  |                |              |   |                  |   |              |  
|Cash and cash equivalents                                                                                                                        |  | $              | 327,793      |   |                  | $ | 559,590      |  
|Prepaid expenses                                                                                                                                 |  |                | 109,447      |   |                  |   | 12,957       |  
|Notes receivable from Company officer                                                                                                            |  |                | 130,793      |   |                  |   | 134,130      |  
|Note receivable from Jabber                                                                                                                      |  |                | 103,880      |   |                  |   | 136,479      |  
|                                                                                                                                                 |  |                |              |   |                  |   |              |  
|Total current assets                                                                                                                             |  |                | 671,913      |   |                  |   | 843,156      |  
|                                                                                                                                                 |  |               
|Investment in Jabber                                                                                                                             |  |                | 1,413,985    |   |                  |   | 1,591,985    |  
|Property and equipment, net                                                                                                                      |  |                | 239,473      |   |                  |   | 258,834      |  
|                                                                                                                                                 |  |                |              |   |                  |   |              |  
|Total assets                                                                                                                                     |  | $              | 2,325,371    |   |                  | $ | 2,693,975    |  
|                                                                                                                                                 |  |                |              |   |                  |   |              |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                             |  |                |              |   |                  |   |              |  
|Current liabilities:                                                                                                                             |  |                |              |   |                  |   |              |  
|Accounts payable and accrued liabilities                                                                                                         |  | $              | 55,198       |   |                  | $ | 23,246       |  
|Accrued compensation, benefits and payroll taxes                                                                                                 |  |                | 50,470       |   |                  |   | 71,928       |  
|                                                                                                                                                 |  |                |              |   |                  |   |              |  
|Total current liabilities                                                                                                                        |  |                | 105,668      |   |                  |   | 95,174       |  
|                                                                                                                                                 |  |               
|Commitments and contingencies                                                                                                                    |  |                |              |   |                  |   |              |  
|                                                                                                                                                 |  |               
|Stockholders equity:                                                                                                                            |  |                |              |   |                  |   |              |  
|Preferred stock, no par value, 5,000,000 shares authorized:                                                                                      |  |                |              |   |                  |   |              |  
|Series D junior convertible preferred stock, 734 and 784 shares issued and outstanding, respectively, liquidation preference of $1,000 per
share |  |                | 561,781      |   |                  |   | 600,049      |  
|                                                                                                                                                 |  |               
|Common stock, no par value, 60,000,000 shares authorized, 25,433,552 and 25,268,167 shares issued and outstanding,
respectively                  |  |                | 106,952,339  |   |                  |   | 105,654,866  |  
|Warrants and options                                                                                                                             |  |                | 13,384,077   |   |                  |   | 14,643,282   |  
|Accumulated other comprehensive loss                                                                                                             |  |                | (3,668       | ) |                  |   | (3,668       | )
|Accumulated deficit                                                                                                                              |  |                | (118,674,826 | ) |                  |   | (118,295,728 | )
|                                                                                                                                                 |  |                |              |   |                  |   |              |  
|Total stockholders equity                                                                                                                       |  |                | 2,219,703    |   |                  |   | 2,598,801    |  
|                                                                                                                                                 |  |                |              |   |                  |   |              |  
|Total liabilities and stockholders equity                                                                                                       |  | $              | 2,325,371    |   |                  | $ | 2,693,975    |  
|                                                                                                                                                 |  |                |              |   |                  |   |              |  



The accompanying
notes to condensed financial statements are an integral part of these condensed balance sheets.



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WEBB INTERACTIVE SERVICES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                       |  |                              |            |   |                |   |            |  
|------------------------------------------------------ |  | ---------------------------- | ---------- | - | -------------- | - | ---------- | -
|                                                       |  | Three Months Ended March 31, |           
|                                                       |  | 2004                         |            |   | 2003           |  
|                                                       |  |                              |            |   | (Consolidated) |  
|Net revenues                                           |  | $                            |           |   |                | $ | 646,613    |  
|                                                       |  |                              |            |   |                |   |            |  
|Operating expenses:                                    |  |                              |            |   |                |   |            |  
|Cost of revenues                                       |  |                              |           |   |                |   | 161,899    |  
|Sales and marketing                                    |  |                              |           |   |                |   | 356,983    |  
|Product development                                    |  |                              |           |   |                |   | 590,569    |  
|General and administrative                             |  |                              | 185,362    |   |                |   | 635,705    |  
|Depreciation and amortization                          |  |                              | 19,361     |   |                |   | 114,996    |  
|                                                       |  |                              |            |   |                |   |            |  
|                                                       |  |                              | 204,723    |   |                |   | 1,860,152  |  
|                                                       |  |                              |            |   |                |   |            |  
|Loss from operations                                   |  |                              | (204,723   | ) |                |   | (1,213,539 | )
|                                                       |  |                             
|Interest income                                        |  |                              | 3,625      |   |                |   | 1,616      |  
|(Loss) income from investment in Jabber                |  |                              | (178,000   | ) |                |   | 108,819    |  
|Other loss, net                                        |  |                              |           |   |                |   | (693       | )
|                                                       |  |                              |            |   |                |   |            |  
|Net loss before minority interest in losses of Jabber  |  |                              | (379,098   | ) |                |   | (1,103,797 | )
|Minority interest in losses of Jabber                  |  |                              |           |   |                |   | 2,709      |  
|                                                       |  |                              |            |   |                |   |            |  
|Net loss                                               |  | $                            | (379,098   | ) |                | $ | (1,101,088 | )
|                                                       |  |                              |            |   |                |   |            |  
|Net loss per share, basic and diluted                  |  | $                            | (0.01      | ) |                | $ | (0.05      | )
|                                                       |  |                              |            |   |                |   |            |  
|Weighted average shares outstanding, basic and diluted |  |                              | 25,371,591 |   |                |   | 22,108,167 |  
|                                                       |  |                              |            |   |                |   |            |  



The accompanying
notes to condensed financial statements are an integral part of these condensed statements.





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WEBB INTERACTIVE SERVICES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                            |  |                              |          |   |                |   |            |  
|--------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | -------------- | - | ---------- | -
|                                                                            |  | Three Months Ended March 31, |         
|                                                                            |  | 2004                         |          |   | 2003           |  
|                                                                            |  |                              |          |   | (Consolidated) |  
|Cash flows from operating activities:                                       |  |                              |          |   |                |   |            |  
|Net loss                                                                    |  | $                            | (379,098 | ) |                | $ | (1,101,088 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                              |          |   |                |   |            |  
|Depreciation expense                                                        |  |                              | 19,361   |   |                |   | 114,996    |  
|Loss (income) from investment in Jabber                                     |  |                              | 178,000  |   |                |   | (108,819   | )
|Minority interest in losses of subsidiary                                   |  |                              |         |   |                |   | (2,709     | )
|                                                                            |  |                             
|Changes in operating assets and liabilities:                                |  |                              |          |   |                |   |            |  
|Increase in accounts receivable                                             |  |                              |         |   |                |   | (404,246   | )
|Increase in prepaid expenses                                                |  |                              | (96,490  | ) |                |   | (55,558    | )
|Increase in other current assets                                            |  |                              | (1,048   | ) |                |   | (1,194     | )
|Increase in accounts payable and accrued liabilities                        |  |                              | 31,952   |   |                |   | 149,424    |  
|(Decrease) increase in accrued compensation, benefits and payroll taxes     |  |                              | (21,458  | ) |                |   | 10,997     |  
|Increase in deferred revenue                                                |  |                              |         |   |                |   | 653,287    |  
|                                                                            |  |                              |          |   |                |   |            |  
|Net cash used in operating activities                                       |  |                              | (268,781 | ) |                |   | (744,910   | )
|                                                                            |  |                              |          |   |                |   |            |  
|Cash flows from investing activities:                                       |  |                              |          |   |                |   |            |  
|Purchase of property and equipment                                          |  |                              |         |   |                |   | (4,500     | )
|Cash retained by Jabber at March 19, 2003                                   |  |                              |         |   |                |   | (68,991    | )
|Collections of note receivable from Jabber                                  |  |                              | 33,647   |   |                |   | 20,477     |  
|Collection of notes receivable from Company officer                         |  |                              | 3,337    |   |                |   | 3,337      |  
|                                                                            |  |                              |          |   |                |   |            |  
|Net cash provided by (used in) investing activities                         |  |                              | 36,984   |   |                |   | (49,677    | )
|                                                                            |  |                              |          |   |                |   |            |  
|Net decrease in cash and cash equivalents                                   |  |                              | (231,797 | ) |                |   | (794,587   | )
|Effect of foreign currency exchange rate changes on cash                    |  |                              |         |   |                |   | (232       | )
|Cash and cash equivalents, beginning of period                              |  |                              | 559,590  |   |                |   | 1,714,077  |  
|                                                                            |  |                              |          |   |                |   |            |  
|Cash and cash equivalents, end of period                                    |  | $                            | 327,793  |   |                | $ | 919,258    |  
|                                                                            |  |                              |          |   |                |   |            |  
|Supplemental disclosure of cash flow information:                           |  |                              |          |   |                |   |            |  
|                                                                            |  |                             
|Supplemental schedule of non-cash investing and financing activities:       |  |                              |          |   |                |   |            |  
|Equity adjustment related to sale of Jabber stock                           |  | $                            |         |   |                | $ | 3,472,282  |  
|Series D junior convertible preferred stock converted to common stock       |  | $                            | 38,268   |   |                | $ | 612,295    |  



The accompanying
notes to condensed financial statements are an integral part of these condensed statements.



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WEBB INTERACTIVE SERVICES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2004

(UNAUDITED)



NOTE 1  BASIS OF PRESENTATION



The sole business of Webb Interactive Services, Inc. (the Company, Webb, we
or our) is the ownership of securities of Jabber, Inc. (Jabber). At March 31, 2004, on an as-if converted basis, we owned 43.4% of Jabbers common stock. On March 19, 2003, Jabber issued 25,218,914 shares of its series D convertible preferred
stock for $5 million in gross cash proceeds and the cancellation of $2.2 million convertible notes payable to Webb. As a result of this transaction, Webbs ownership in Jabber was reduced from 77.8% on an as-if converted basis prior to the
transaction to 43.3% immediately after the transaction. With this change in ownership interest, Webb evaluated whether to continue the consolidation method of accounting for Jabber in its financial statements. Webb considered whether it continued to
exercise control over the operations of Jabber based on its ownership percentage, voting rights, board of director seats and management influence. Based on this evaluation, Webb has determined that it no longer exercises control over the operations
of Jabber, but does exert significant influence. As a result, after March 19, 2003, Webb no longer consolidated the financial results of Jabber with that of its own and began to report its investment in Jabber under the equity method of accounting.



These condensed financial statements have been prepared
without audit pursuant to rules and regulations of the SEC and reflect, in the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the financial position and results of operations
for the periods presented. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions. Such estimates and assumptions affect the
reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the accompanying financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. The interim financial statements should be read in connection with the financial statements
included in our Annual Report on Form 10-KSB/A for the year ended December 31, 2003, filed with the SEC.



NOTE 2  STOCK BASED COMPENSATION PLANS



We issue stock options to our employees and outside directors to purchase our stock pursuant to stockholder approved stock option programs. We account for our stock-based compensation plans under the intrinsic value
method of accounting as defined by Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees and related interpretations. No stock-based employee compensation cost is reflected in net loss for the three months
ended March 31, 2004 and 2003, as all options granted under these plans had an exercise price equal to the fair market value of the underlying common stock on the date of grant. For pro forma disclosures, the estimated fair value of the options is
amortized over the vesting period, typically three years. The following table illustrates the effect on net income and earnings per share if we had accounted for our stock option and stock purchase plans under the fair value method of accounting
under Statement of Financial Accounting Standards (SFAS) No. 123, Accounting and Disclosure of Stock Based Compensation (SFAS 123).



|                                               |  |                              |          |   |      |   |            |  
|---------------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | ---------- | -
|                                               |  | Three Months Ended March 31, |         
|                                               |  | 2004                         |          |   | 2003 |  
|Net loss as reported                           |  | $                            | (379,098 | ) |      | $ | (1,101,088 | )
|Expense calculated under APB 25                |  |                              |         |   |      |   |           |  
|Expense calculated under SFAS 123              |  |                              | (78,924  | ) |      |   | (365,247   | )
|                                               |  |                              |          |   |      |   |            |  
|Pro-forma net loss                             |  | $                            | (458,022 | ) |      | $ | (1,466,335 | )
|                                               |  |                              |          |   |      |   |            |  
|Pro-forma net loss per share-basic and diluted |  | $                            | (0.02    | ) |      | $ | (0.07      | )
|                                               |  |                              |          |   |      |   |            |  



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We estimate the fair value of our options using the Black-Scholes option value model, which is one of
several methods that can be used to estimate option values. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation
models require the input of highly subjective assumptions, including the expected stock price volatility. Our options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can
materially affect the fair value estimates. Webb did not grant any options during the three months ended March 31, 2004. The fair value of options granted in the three months ended March 31, 2003, were estimated at the date of grant using a
Black-Scholes pricing model with the weighted average assumptions in the table which follows.



|                            |  |                                   |         |  
|--------------------------- |  | --------------------------------- | ------- | -
|                            |  | Three Months Ended March 31, 2003 |        
|Risk-free interest rate     |  |                                   | 5.0     | %
|Expected dividend yield     |  |                                   | 0       | %
|Expected lives              |  |                                   | 3 years |  
|Expected volatility         |  |                                   | 128     | %
|Dividend yield              |  |                                   | 0       | %
|Weighted average fair value |  | $                                 | 0.54    |  



Included in the
expense calculated under SFAS 123 for the three months ended March 31, 2003, are options granted under the Jabber stock option plan, which totaled 1,900,394 for the period ended March 19, 2003.



NOTE 3  NET LOSS PER SHARE



Net loss per share is calculated in accordance with SFAS No. 128, Earnings
Per Share (SFAS 128). Under the provisions of SFAS 128, basic net loss per share is computed by dividing net loss applicable to common shareholders for the period, subject to certain adjustments, by the weighted average number of common shares
outstanding for the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of common and potential common shares outstanding during the period if the effect of the potential common
shares is dilutive. As a result of our net losses, all potentially dilutive securities, as indicated in the table below, would be anti-dilutive and are excluded from the computation of diluted loss per share, and there are no differences between
basic and diluted per share amounts for all periods presented.



|                                            |  |           |  |           
|------------------------------------------- |  | --------- |  | ----------
|                                            |  | March 31,
|                                            |  | 2004      |  | 2003      
|Stock options                               |  | 2,749,919 |  | 3,425,419 
|Warrants                                    |  | 2,174,700 |  | 12,640,842
|Series D junior convertible preferred stock |  | 734,000   |  | 1,784,000 
|                                            |  |           |  |           
|Total                                       |  | 5,658,619 |  | 17,850,261
|                                            |  |           |  |           



The number of shares
excluded from the earnings per share calculation because they are anti-dilutive, using the treasury stock method were 867,035 and 189,801 for the three months ended March 31, 2004 and 2003, respectively.



NOTE 4  INVESTMENT IN JABBER, INC



Jabber is a Delaware corporation founded by Webb in February 2000. Jabber is
a commercial developer of extensible instant messaging software for enterprises, carriers and service providers that require real-time communication and collaboration solutions. Jabbers products are based on the standardized extensible message
and presence protocol, XMPP, developed by the Jabber.org open-source movement. Jabber instant messaging solutions differ from packaged and consumer instant messaging solutions in the ability of Jabber instant messaging to support and to be
integrated with other applications and services.



As a result
of the Jabber investment transaction on March 19, 2003, Webbs ownership in Jabber was reduced from 77.8% on an as-if converted basis prior to the transaction to 43.3% immediately after the transaction. Due to this change in ownership interest,
on March 20, 2003, Webb ceased consolidating the financial results of Jabber with its financial statements and began to report its investment in Jabber under the equity method of accounting.



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On March 19, 2003, Webb, France Telecom Technologies Investissements, a wholly-owned subsidiary of France
Telecom (FTTI) and Intel Capital Corporation, a wholly-owned subsidiary of Intel Corporation (Intel), purchased an aggregate of 25,218,914 shares of Jabbers series D convertible preferred stock for an aggregate consideration of $7,200,000
($0.2855 per share). Webbs investment was in the form of the cancellation of a $2.2 million convertible note receivable from Jabber for 7,705,779 shares of Jabbers series D preferred stock.



The Jabber series D convertible preferred stock purchase agreement provides
that, without the prior approval of holders of 662/3% of the outstanding shares of Jabber series D convertible
preferred stock, Jabber will not engage in any transaction or arrangement for the distribution of Jabbers securities to the public, except in connection with a qualified public offering; permit any transaction which would result in any of the
holders of the Jabber series D convertible preferred stock owning more than 49% of Jabbers authorized shares of capital stock calculated either by ownership percentage or voting power; or take any other action, other than in connection with a
qualified public offering, that would result in Jabber becoming a reporting company under the Securities Exchange Act of 1934. If an event has not occurred by January 1, 2005 that would permit Webb to distribute its Jabber securities to the Webb
shareholders, Webb may require FTTI, on an annual basis until such an event shall have occurred, to sell Webb 1,000,000 shares of the Jabber common stock held by FTTI, at a purchase price equal to the conversion price for the Jabber series D
convertible preferred stock plus interest compounded at 15% per annum. If the 49% ownership limit described above limits Webbs ability to exercise this right, then the right will be suspended until Webb is able to exercise the right in full
within the 49% limitation or upon an event which provides liquidity for all of Jabbers shareholders, at which time the 49% limitation would be waived.



In connection with the series D preferred stock purchase agreement, Jabber purchased business software owned by Webb and is
scheduled to make payments at a rate of $12,000 per month for a period of 21 months commencing April 1, 2003. At March 31, 2004, the balance of the note was $103,880, which is expected to be paid in 2004. In addition, Jabber has also agreed that no
later than August 31, 2004, Jabber shall purchase Webbs computer equipment, office furnishings and fixtures and other office equipment at a purchase price of $200,000. Webbs estimated net book value of these assets at August 31, 2004, is
expected to approximate the purchase price.



The unaudited condensed financial
information for Jabber is presented below:



Results of Operations



|                                               |  |                              |           |   |      |   |            |  
|---------------------------------------------- |  | ---------------------------- | --------- | - | ---- | - | ---------- | -
|                                               |  | Three Months Ended March 31, |          
|                                               |  | 2004                         |           |   | 2003 |  
|Net revenues                                   |  | $                            | 1,612,951 |   |      | $ | 1,167,017  |  
|Costs and expenses                             |  |                              | 2,022,046 |   |      |   | 1,850,680  |  
|                                               |  |                              |           |   |      |   |            |  
|Loss from operations                           |  |                              | (409,095  | ) |      |   | (683,663   | )
|Other loss, net                                |  |                              | (1,042    | ) |      |   | (1,610,639 | )
|                                               |  |                              |           |   |      |   |            |  
|Net loss                                       |  | $                            | (410,137  | ) |      | $ | (2,294,302 | )
|                                               |  |                              |           |   |      |   |            |  
|Webbs income (loss) from investment in Jabber |  | $                            | (178,000  | ) |      | $ | 108,819    |  
|                                               |  |                              |           |   |      |   |            |  



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Financial Position



|                                         |  |               |           |                  |   |          
|---------------------------------------- |  | ------------- | --------- | ---------------- | - | ---------
|                                         |  | March 31,2004 |           | December 31,2003
|Cash and cash equivalents                |  | $             | 4,135,881 |                  | $ | 5,375,388
|Accounts receivable, net                 |  | $             | 878,467   |                  | $ | 1,052,228
|Other current assets                     |  | $             | 200,732   |                  | $ | 174,969  
|Property and equipment, net              |  | $             | 380,396   |                  | $ | 452,320  
|Accounts payable and accrued liabilities |  | $             | 1,175,050 |                  | $ | 1,406,938
|Deferred revenue                         |  | $             | 1,147,763 |                  | $ | 1,928,868
|Note payable to Webb                     |  | $             | 103,880   |                  | $ | 136,479  
|Stockholders equity                     |  | $             | 3,168,783 |                  | $ | 3,582,620



Webbs income
from investment in Jabber for the three months ended March 31, 2003, includes net losses from March 20, 2003 to March 31, 2003. Prior to March 20, 2003, the results of operations from Jabber were consolidated with Webbs results of operations.



Included in other loss, net for the three months ended March
31, 2003, is a $1.57 million non-cash loss on debt extinguishment resulting from the exchange of the convertible note payable to Webb for shares of Jabbers series D preferred stock in the first quarter of 2003. This amount was eliminated in
consolidation in the period ended March 19, 2003.



For the
three months ended March 31, 2004 and 2003, France Telecom accounted for 76% and 49%, respectively, of Jabbers total revenues.



NOTE 5  CONVERSION OF PREFERRED STOCK AND EXERCISE OF COMMON STOCK PURCHASE WARRANT



On February 2, 2004, the holder of our series D junior convertible preferred stock converted 50 shares into 50,000 shares of
our common stock at conversion prices per share of $1.00.



On
February 5, 2004, the holder of a warrant to purchase 500,000 shares of our common stock exercised the entire warrant under its cash-less exercise provision whereby we issued 115,385 shares of our common stock. The number of shares issued were
calculated by multiplying the number of shares exercised by the quotient of the difference between the average closing price five days immediately prior to the exercise date ($1.30) and the exercise price ($1.00) divided by the average closing price
five days immediately prior to the exercise date.



NOTE 6  SEGMENT
REPORTING



FASB Statement No. 131, Disclosures about
Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that
is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Webb has only one reportable business segment.



9



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##### Table of Contents

WEBB INTERACTIVE SERVICES, INC.



UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION



RECONCILIATION OF WEBB PARENT ONLY FINANCIAL STATEMENTS TO AS REPORTED FINANCIAL STATEMENTS



With the purchase of Jabbers series D convertible preferred stock on
March 19, 2003, by Webb, FTTI and Intel, Webbs ownership in Jabber was reduced from 77.8% on an as-if converted basis prior to the transaction to 43.3% immediately after the transaction. Due to this change in ownership, on March 20, 2003, Webb
ceased consolidating the financial results of Jabber with Webbs financial statements and began to report its investment in Jabber under the equity method of accounting. Presented below are the unaudited consolidating financial statements for
the period in which Webb consolidated Jabbers results of operations with its own to aid the reader in better understanding the financial statements of Webb for all periods presented. The amounts in the column labeled Consolidated
represent the presentation in accordance with accounting principles generally accepted in the United States (GAAP) and the amounts reported in our financial statements.



UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2003



|                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|----------------------------------------------------------- |  | ---- | ---------- | - | ---------- | - | ---------- | ------------ |  | - | ----------------- | - |  | - | ---------- | -
|                                                            |  | WEBB |            |   | JABBER (1) |   |            | ELIMINATIONS |  |   | GAAP CONSOLIDATED |  
|Net revenues                                                |  | $    |           |   |            | $ | 646,613    |              |  | $ |                  |   |  | $ | 646,613    |  
|                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Operating expenses:                                         |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Cost of revenues                                            |  |      |           |   |            |   | 161,899    |              |  |   |                  |   |  |   | 161,899    |  
|Sales and marketing expenses                                |  |      |           |   |            |   | 356,983    |              |  |   |                  |   |  |   | 356,983    |  
|Product development expenses                                |  |      |           |   |            |   | 590,569    |              |  |   |                  |   |  |   | 590,569    |  
|General and administrative expenses                         |  |      | 208,543    |   |            |   | 427,162    |              |  |   |                  |   |  |   | 635,705    |  
|Depreciation and amortization                               |  |      | 68,168     |   |            |   | 46,828     |              |  |   |                   |   |  |   | 114,996    |  
|                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|                                                            |  |      | 276,711    |   |            |   | 1,583,441  |              |  |   |                  |   |  |   | 1,860,152  |  
|                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Loss from operations                                        |  |      | (276,711   | ) |            |   | (936,828   | )            |  |   |                  |   |  |   | (1,213,539 | )
|                                                            |  |      |            |  
|Interest income                                             |  |      | 1,611,750  |   |            |   | 413        |              |  |   | (1,610,547        | ) |  |   | 1,616      |  
|Income (loss) from investment in Jabber                     |  |      | (2,436,127 | ) |            |   |           |              |  |   | 2,544,946         |   |  |   | 108,819    |  
|Loss on extinguishment of convertible notes payable to Webb |  |      |           |   |            |   | (1,571,900 | )            |  |   | 1,571,900         |   |  |   |           |  
|Other loss, net                                             |  |      |           |   |            |   | (693       | )            |  |   |                  |   |  |   | (693       | )
|Interest expense                                            |  |      |           |   |            |   | (38,647    | )            |  |   | 38,647            |   |  |   |           |  
|                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Net loss before minority interest in losses of Jabber       |  |      | (1,101,088 | ) |            |   | (2,547,655 | )            |  |   | 2,544,946         |   |  |   | (1,103,797 | )
|                                                            |  |      |            |  
|Minority interest in losses of subsidiary                   |  |      |           |   |            |   |           |              |  |   | 2,709             |   |  |   | 2,709      |  
|                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Net loss                                                    |  | $    | (1,101,088 | ) |            | $ | (2,547,655 | )            |  | $ | 2,547,655         |   |  | $ | (1,101,088 | )
|                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  

---

|(1) | The operating results of Jabber are for the period ended March 19, 2003.
|--- | ------------------------------------------------------------------------



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##### Table of Contents

UNAUDITED CONSOLIDATING STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2003



|                                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|--------------------------------------------------------------------------- |  | ---- | ---------- | - | ---------- | - | ---------- | ------------ |  | - | ----------------- | - |  | - | ---------- | -
|                                                                            |  | WEBB |            |   | JABBER (1) |   |            | ELIMINATIONS |  |   | GAAP CONSOLIDATED |  
|Cash flows from operating activities:                                       |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Net loss                                                                    |  | $    | (1,101,088 | ) |            | $ | (2,547,655 | )            |  | $ | 2,547,655         |   |  | $ | (1,101,088 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Depreciation expense                                                        |  |      | 68,168     |   |            |   | 46,828     |              |  |   |                  |   |  |   | 114,996    |  
|Interest income on exchange of convertible note receivable from Jabber      |  |      | (1,571,900 | ) |            |   |           |              |  |   | 1,571,900         |   |  |   |           |  
|Loss on extinguishment of convertible notes payable to Webb                 |  |      |           |   |            |   | 1,571,900  |              |  |   | (1,571,900        | ) |  |   |           |  
|(Income) loss from investment in Jabber                                     |  |      | 2,436,127  |   |            |   |           |              |  |   | (2,544,946        | ) |  |   | (108,819   | )
|Minority interest in losses of subsidiary                                   |  |      |           |   |            |   |           |              |  |   | (2,709            | ) |  |   | (2,709     | )
|Accrued interest payable on convertible note payable                        |  |      |           |   |            |   | 38,647     |              |  |   | (38,647           | ) |  |   |           |  
|Changes in operating assets and liabilities:                                |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Increase in accounts receivable                                             |  |      |           |   |            |   | (404,246   | )            |  |   |                  |   |  |   | (404,246   | )
|(Increase) decrease in prepaid expenses                                     |  |      | (90,582    | ) |            |   | 35,024     |              |  |   |                  |   |  |   | (55,558    | )
|Increase in other current assets                                            |  |      | (1,194     | ) |            |   |           |              |  |   |                  |   |  |   | (1,194     | )
|Increase (decrease) in accounts payable and accrued liabilities             |  |      | (49,438    | ) |            |   | 160,215    |              |  |   | 38,647            |   |  |   | 149,424    |  
|Increase (decrease) in accrued compensation, benefits and payroll taxes     |  |      | 19,603     |   |            |   | (8,606     | )            |  |   |                  |   |  |   | 10,997     |  
|Increase in deferred revenue                                                |  |      |           |   |            |   | 653,287    |              |  |   |                  |   |  |   | 653,287    |  
|                                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Net cash used in operating activities                                       |  |      | (290,304   | ) |            |   | (454,606   | )            |  |   |                  |   |  |   | (744,910   | )
|                                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Cash flows from investing activities:                                       |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Purchase of property and equipment                                          |  |      |           |   |            |   | (4,500     | )            |  |   |                  |   |  |   | (4,500     | )
|Cash invested in Jabber                                                     |  |      | (195,000   | ) |            |   |           |              |  |   | 195,000           |   |  |   |           |  
|Cash retained by Jabber at March 19, 2003                                   |  |      |           |   |            |   |           |              |  |   | (68,991           | ) |  |   | (68,991    | )
|Collection of note receivable from Jabber                                   |  |      | 20,477     |   |            |   |           |              |  |   |                  |   |  |   | 20,477     |  
|Collection of notes receivable from Company officer                         |  |      | 3,337      |   |            |   |           |              |  |   |                  |   |  |   | 3,337      |  
|                                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Net provided by (cash used) in investing activities                         |  |      | (171,186   | ) |            |   | (4,500     | )            |  |   | 126,009           |   |  |   | (49,677    | )
|                                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Cash flows from financing activities:                                       |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Cash investment from Webb                                                   |  |      |           |   |            |   | 195,000    |              |  |   | (195,000          | ) |  |   |           |  
|                                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Net cash provided by financing activities                                   |  |      |           |   |            |   | 195,000    |              |  |   | (195,000          | ) |  |   |           |  
|                                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Net decrease in cash and cash equivalents                                   |  |      | (461,490   | ) |            |   | (264,106   | )            |  |   | (68,991           | ) |  |   | (794,587   | )
|Effect of foreign currency exchange rate changes on cash                    |  |      | (2,450     | ) |            |   | 2,218      |              |  |   |                  |   |  |   | (232       | )
|Cash and cash equivalents, beginning of year                                |  |      | 1,383,198  |   |            |   | 330,879    |              |  |   |                  |   |  |   | 1,714,077  |  
|                                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  
|Cash and cash equivalents, end of year                                      |  | $    | 919,258    |   |            | $ | 68,991     |              |  | $ | (68,991           | ) |  | $ | 919,258    |  
|                                                                            |  |      |            |   |            |   |            |              |  |   |                   |   |  |   |            |  

---

|(1) | The cash flows for Jabber are for the period ended March 19, 2003.
|--- | ------------------------------------------------------------------



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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS



GENERAL



Our sole
business is the ownership of securities of Jabber, a company we formed in February 2000. Jabber is a commercial developer of extensible instant messaging software for enterprises, carriers and service providers that require real-time communication
and collaboration solutions. Jabbers products are based on the standardized extensible message and presence protocol, XMPP, developed by the Jabber.org open-source movement. Jabber instant messaging solutions differ from packaged and consumer
instant messaging solutions in the ability of Jabber instant messaging to support and to be integrated with other applications and services.



With the purchase of Jabbers series D convertible preferred stock on March 19, 2003, by Webb, FTTI and Intel, Webbs ownership in Jabber was
reduced from 77.8% on an as-if converted basis prior to the transaction to 43.3% immediately after the transaction. Due to this change in ownership interest, on March 20, 2003, we ceased consolidating the financial results of Jabber with those of
Webb and began to account for our investment in Jabber under the equity method.



Webb, as a holding company, has no independent source of revenue and will, therefore, continue to incur losses from its operations. Webbs value is dependent upon the success of Jabber. Jabbers ability to
become profitable depends on its ability to market its products and services and generate revenues sufficient to exceed its expenses. Because of the new and evolving nature of instant messaging technologies and Jabbers early stage of
development, we cannot be sure that Jabbers revenue model will prove to be viable, whether demand for its products and services will materialize at the prices it expects to charge, or whether its current or future pricing levels will be
sustainable.



LIQUIDITY AND CAPITAL RESOURCES



Amounts included in Webbs liquidity and capital resources discussion
for the three months ended March 31, 2003, include the accounts of Webb only and do not reflect the consolidation of Jabber as previously reported in the financial statements included herein. Included in the reported financial statements and not
reflected below are the consolidated results of Jabber through March 19, 2003, for the period ended March 31, 2003. See Item 1  Financial Statements  Unaudited Supplemental Financial Information for a reconciliation of Webbs
stand-alone financial statements presented below to its consolidated financial statements as reported for the three months ended March 31, 2003.



|                          |  |                |         |                   |   |        
|------------------------- |  | -------------- | ------- | ----------------- | - | -------
|                          |  | March 31, 2004 |         | December 31, 2003
|                          |  |               
|Working capital1          |  | $              | 566,245 |                   | $ | 747,982
|Cash and cash equivalents |  | $              | 327,793 |                   | $ | 559,590



|                                                |  |                              |          |   |      |   |          |  
|----------------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | -------- | -
|                                                |  | Three Months Ended March 31, |         
|                                                |  | 2004                         |          |   | 2003 |  
|Cash used in operating activities               |  | $                            | (268,781 | ) |      | $ | (290,304 | )
|Cash provided by (used in) investing activities |  | $                            | 36,984   |   |      | $ | (171,186 | )

---

|1 | Includes note receivable from Jabber of $103,793 and $136,479 at March 31, 2004 and December 31, 2003, respectively.
|- | --------------------------------------------------------------------------------------------------------------------



Working capital:Working capital is calculated by deducting current liabilities from
current assets. Working capital decreased for the first quarter of 2004, as compared with the first quarter of 2003, primarily due to funding our operating activities with cash on-hand at December 31, 2003.



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##### Table of Contents

Cash flows used in operating activities:Cash used in operating activities decreased during the first quarter of
2004, as compared with the first quarter of 2003, primarily due to a decrease in operating expenses in the first quarter of 2004 as compared to the first quarter of 2003.



Cash flows provided by investing activities:Cash provided by investing activities in the first quarter of 2004 was a result of
collections on notes receivable. The increase over the first quarter of 2003 primarily resulted from Webb investing $195,000 in Jabber during the 2003 period.



In connection with the Jabber financing in March 2003, Webb and Jabber formalized a two-year cost sharing arrangement, as amended, commencing April 1,
2003, whereby Jabber agreed to pay (i) 80% of the cost of two shared employees who provide accounting services for both companies; (ii) 60% of the cost of the Secretary and General Counsel for Webb who performs similar services for Jabber; and (iii)
$100,000 annually for salary and 44% of the expenses of the CEO of Webb for serving on Jabbers executive committee. We estimate that we will reduce our monthly expenses by approximately $23,000 per month through March 31, 2005, as a result of
this cost sharing arrangement with Jabber. In addition, commencing April 1, 2003, we began receiving from Jabber $12,000 per month for 21 months for the purchase of third-party business software we owned and we are to receive an additional $200,000
by August 31, 2004, from Jabber for the purchase of computer equipment, office furnishings and fixtures and other office equipment. We believe our cash on-hand of approximately $264,000 at April 22, 2004, and the expected cash collections from
Jabber will be sufficient to fund Webbs operating expenses to at least April 2005. Webbs operating expenses are generally fixed in nature and include compensation costs, investor relations and the cost associated with being a public
company. Our monthly cash requirements, after the cost sharing arrangement and the sale of property and equipment to Jabber, are forecasted to average approximately $28,000 for 2004 and $72,000 for 2005.



RESULTS OF OPERATIONS



Amounts included in Webbs results of operations discussion for the three months ended March 31, 2003, include the
accounts of Webb only and do not reflect the consolidation of Jabber as previously reported in the financial statements included herein and in our Form 10-QSB for 2003 so as to present the 2003 numbers on a comparative basis with 2004. Included in
the reported financial statements and not reflected below are the consolidated results of Jabber through March 19, 2003, for the period ended March 31, 2003. See Item 1  Financial Statements  Unaudited Supplemental Financial Information
for a reconciliation of Webbs stand-alone financial statements presented below to its consolidated financial statements as reported for the three months ended March 31, 2003.



Critical Accounting Policies



Webbs financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). These accounting
principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments
and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods
presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, Webbs financial statements will be affected. The significant accounting policies that we believe are the most
critical to aid in fully understanding and evaluating Webbs reported financial results include accounting for our investment in Jabber and impairment of long-lived assets.



In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require
managements judgment in its application. There are also areas in which managements judgment in selecting among available alternatives would not produce a materially different result. Management has reviewed these critical accounting
policies and related disclosures with our Audit Committee. See Form 10-KSB/A for the year ended December 31, 2003, See Item 7  Financial Statements  Note 2 to Notes to Consolidated Financial Statements, which contains additional
information regarding Webbs accounting policies and other disclosures required by GAAP.



13



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Accounting for Investment in Jabber



We report our investment in Jabber using the equity method of accounting whereby we record our percentage of Jabbers
net income or losses as an increase or a reduction to the carrying value of our investment account on our balance sheet and as income or losses in our results of operations. To the extent that we record losses from Jabber, our investment account
will not be reduced below zero, unless at some future date we become obligated to fund future Jabber losses, if any. The balance of our investment in Jabber as of March 31, 2004, was $1.4 million. The use of the equity method of accounting
represents a change in how we reported our investment in Jabber prior to March 19, 2003, the date on which Jabber sold shares of its series D convertible preferred stock to FTTI, Intel and Webb. Prior to this date, we consolidated the operations of
Jabber with our own.



As a result of the March 19, 2003, Jabber
financing, our ownership in Jabber was reduced from 77.8% on an as-if converted basis prior to the transaction to 43.3% immediately after the transaction. With this change in ownership and the additional terms of the Jabber series D convertible
preferred stock (See Item 1  Financial Statements  Note 4 to Notes to Condensed Financial Statements), we evaluated whether to continue the consolidation method of accounting for Jabber in our financial statements. We considered whether
we continued to exercise control over the operations of Jabber based on our ownership percentage, voting rights, board of director seats and management influence. Based on this evaluation, we have determined that while we do exert significant
influence, we no longer exercise control over the operations of Jabber, and therefore changed from consolidating Jabbers operations with our own to reporting our investment in Jabber using the equity method of accounting.



We will continue to evaluate the facts and circumstances of our relationship
with Jabber on an as needed basis in our continuing evaluation of our reporting method related to Jabber. A change in our relationship with Jabber or the issuance of future guidance, if any, on consolidating subsidiaries may change the method we use
to report Jabber in our results of operations. We review our investment in Jabber for impairment on a regular basis. In the event the fair value of our investment in Jabber declines to an amount that is less than our carrying value and that decline
is other than temporary, we will record an impairment charge to reduce our carrying amount to fair value.



Operating Expenses:



Our sole business is the ownership of securities of Jabber, a company we formed in February 2000. We also conduct corporate activities such as accounting, administration, public reporting and financing activities for both Webb and Jabber.
We reduce our expenses by amounts reimbursed to us by Jabber for its share of these costs. Webbs parent-only unaudited statements of operations for the three months ended March 31, 2003, are presented below. See Item 1  Financial
Statements  Unaudited Supplemental Financial Information for a reconciliation of Webbs stand-alone financial statements presented below to its consolidated financial statements as reported for the three months ended March 31, 2003.



|                               |  |                              |          |   |      |   |            |  
|------------------------------ |  | ---------------------------- | -------- | - | ---- | - | ---------- | -
|                               |  | Three Months Ended March 31, |         
|                               |  | 2004                         |          |   | 2003 |  
|Operating expenses:            |  |                              |          |   |      |   |            |  
|General and administrative     |  | $                            | 185,362  |   |      | $ | 208,543    |  
|Depreciation and amortization  |  |                              | 19,361   |   |      |   | 68,168     |  
|                               |  |                              |          |   |      |   |            |  
|Loss from operations           |  |                              | (204,723 | ) |      |   | (276,711   | )
|                               |  |                             
|Interest income                |  |                              | 3,625    |   |      |   | 1,611,750  |  
|Loss from investment in Jabber |  |                              | (178,000 | ) |      |   | (2,436,127 | )
|                               |  |                              |          |   |      |   |            |  
|Net loss                       |  | $                            | (379,098 | ) |      | $ | (1,101,088 | )
|                               |  |                              |          |   |      |   |            |  



14



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General and administrative expenses consist primarily of employee compensation, and other costs
associated with being a public company, including investor relations, shareholder communications and legal and accounting fees. General and administrative expenses were $185,362 for the first quarter of 2004, compared with $208,543 for the first
quarter of 2003. The decrease was primarily from (i) a decrease in employee compensation and related expenses of $47,000; (ii) a decrease in travel costs of $11,000; and (iii) an increase in shared costs paid by Jabber of $10,000. These reductions
were partially offset by an increase in accounting fees of $43,000. We are estimating Webbs general and administrative expenses for the remainder of 2004 to be approximately $485,000.



Depreciation was $19,361 for the first quarter of 2004, compared to $68,168
for the first quarter of 2003. The decrease is primarily from no depreciation being recorded in the first quarter of 2004 for the business software assets we sold to Jabber in April 2003, which had a net book value of $220,059.



Interest Income:



Interest income was $3,625 for the first quarter of 2004, compared to $1,611,750 for the first quarter of 2003. We recorded
interest income from Jabber of $3,401 and $1,610,547 in the first quarters of 2004 and 2003, respectively. Included in the interest income from Jabber for 2003 is $1,571,900 of non-cash interest income we recorded from additional shares of
Jabbers series D convertible preferred stock issued to us pursuant to anti-dilution provisions under the terms of our convertible notes receivable. The non-cash interest income was eliminated in our consolidated financial statements for the
three months ended March 19, 2003.



Loss on investment in Jabber:



At March 31, 2004, we owned 43.4% of Jabber stock, on an
as-if converted basis. Prior to March 19, 2003, we owned 74.8% of Jabber stock. As of March 19, 2003, in conjunction with the Jabber financing transaction, we ceased consolidating Jabbers results of operations and financial position with our
own and began reporting our investment in Jabber under the equity method of accounting. During the first quarter of 2004, we recorded $178,000 in losses from Jabber, compared with $2,436,127 for the first quarter of 2003. The decreases in losses in
2004 was primarily from the reduction in our percentage of Jabbers losses between periods from 99.9% to 43.4%, as well as a $1.9 million decrease in net losses for Jabber in the 2004 period. The difference between the losses recorded by Webb
in the 2003 three-month period of $2.4 million and Jabbers net losses of $2.3 million is a result of Webb recording a smaller percentage of Jabbers net income for the period from March 20, 2003 to March 31, 2003, due to the reduction in
Webbs ownership percentage after the sale of Jabbers series D convertible preferred stock on March 19, 2003.



Jabbers net loss was $410,000 for the first quarter of 2004, which represented a $1.9 million decrease when compared to a net loss of $2.3 million
for the first quarter of 2003. Jabbers net revenues were $1.6 million for the first quarter of 2004, compared with $1.2 million for the similar 2003 period. The revenue mix between license fees and services was 54% and 46%, respectively, for
the first quarter of 2004, compared with 53% and 47%, respectively, for the similar 2003 period. France Telecom, a related party, represented 76% of Jabbers net revenues for the first quarter of 2004, compared with 49% for the first quarter of
2003. This percentage increase was primarily due to France Telecom not exercising rights under a distribution agreement which resulted in Jabber recognizing approximately $644,500 of revenue in the first quarter of 2004 of which $507,000 would
otherwise have been recognized during the second quarter of 2004 and $137,500 that would have been recognized during the balance of 2004 and the first nine months of 2005. Jabbers operating expenses were $2 million for the first quarter of
2004, compared with $1.9 million for the first quarter of 2003. The increase in operating expenses was primarily due to increases in product development expenses of $231,000. The decrease in net loss applicable to common stockholders in the 2004
period was primarily from a $1.6 million non-cash expense on loss on debt extinguishment resulting from the series D preferred stock transaction in March 2003 and a decrease in loss from operations of $275,000.



As of April 30, 2004, Jabber had not recognized revenue with respect to
signed contracts for approximately $1.4 million, including approximately $413,000 for France Telecom, a related party, for product licenses (16% of total) for which the majority of the revenue is being recognized on a monthly user count basis and
maintenance and



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support and professional services (84% of total) for services provided over the term of the contract with respect to
maintenance and support agreements and for services Jabber expects to provide in 2004 with respect to professional services, but which have not been provided as of April 30, 2004. We expect approximately $1.2 million in deferred revenue at April 30,
2004, to be recognized in the remainder of 2004. Approximately $507,000 of deferred revenues scheduled to be recognized during the second quarter of 2004 and $137,5000 of revenues scheduled to be recognized during the last nine months of 2004 and
the first nine months of 2005 were recognized in the first quarter of 2004 due to France Telecoms failure to exercise rights it had under a distribution agreement.



At March 31, 2004, Jabbers cash and cash equivalents were $4.1 million, which represented a decrease of $1.3 million
compared with $5.4 million in cash and cash equivalents at December 31, 2003. The decrease was primarily due to cash used to fund its operating activities in the first quarter of 2004.



We believe Jabber is adequately funded through cashflow break-even, which we expect to occur in the fourth quarter of 2004.
Jabbers projected use of cash is predicated on Jabber meeting its revenue projections and managing its expense levels to budgeted amounts. While Jabber continues to project a modest increase in revenues in 2004 compared to 2003 and its
revenues for the first quarter were slightly ahead of plan, Jabber booked approximately $273,000 less in new business in the first quarter than planned. Jabber has a limited operating history upon which to base its projections, particularly its
revenue projections, and there can be no assurance that Jabber will be able to meet its projections for revenues and expenses. In addition, since many of Jabbers expenses are fixed or must be incurred in advance of revenues, Jabbers
working capital requirements could increase significantly over projected levels if Jabber does not meet its revenue projections. Therefore, Jabber may require more cash for its operations than our current projections indicate. In this circumstance,
Jabber may have to seek additional funding or reduce its operating activities.



Net Loss:



Net loss was $379,098 for first
quarter of 2004, compared to $1,101,088 for the first quarter of 2003. The decrease in losses for 2004 was primarily from (i) a reduction of $2.3 million in losses we recorded in connection with our investment in Jabber; (ii) a reduction in
operating expenses of $72,000; and (iii) recording $1.6 million of non-cash interest income in the first quarter of 2003 related to the conversion of notes and issuance of Jabber securities to us. Before recording losses from Jabber, we expect
Webbs losses to be approximately $518,000 for the remainder of 2004.



FACTORS THAT MAY AFFECT FUTURE RESULTS



Webb,
as a holding company, has no independent source of revenue or business other than the ownership of securities of Jabber, Inc., a company formed by Webb in February 2000. Webb currently owns approximately 43% of Jabbers outstanding common stock
on a fully converted basis. Factors that may affect our and Jabbers future results include, but are not limited to, the following items as well as the information in Item 2  Managements Discussion and Analysis of Financial
Condition and Results of Operations.



Factors Relating to Webb



Additional funding for Jabber could reduce further
our ownership interest in Jabber.Jabber raised $7.2 million in March 2003 through the sale of shares of its preferred stock to France Telecom Technologies Investissements, Intel Capital Corporation and Webb. The offering contemplated that
Jabber would raise an additional $3 million from unidentified venture capital investors on the same terms as the purchases by FTTI, Intel and Webb. In the event that the additional $3 million had been committed by November 30, 2003, Webb would have
been granted an option to invest an additional $2.5 million in Jabber on the same terms. While the additional funding contemplated at the time of the March 2003 funding has not been completed, the Jabber board has indicated that it believes Jabber
should raise an additional $5 million during fiscal 2004. In the event that Jabber obtains additional equity investments, Webbs percentage ownership of Jabber would be further reduced.



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We expect to incur net losses into 2004. We have incurred net losses since we began our
business totaling approximately $118.7 million through March 31, 2004, including approximately $67 million of non-cash expenses. We expect to incur additional substantial operating and net losses in during the remainder of 2004.



We may need to raise additional working capital to sustain our
operations.Jabbers present cash and cash equivalents and working capital will, based on current estimates, be adequate to sustain operations for Jabber until it is able to sustain positive cash flow from operations. In the event that
Jabbers revenues are less than projected or Jabber desires to increase marketing and business development expenses over projected levels, Jabber may need to obtain additional capital to fund its business. Webb estimates that it has adequate
cash and commitments to sustain its operations until at least April 2005. There is no assurance that either Webb or Jabber will be able to raise additional funds, if needed.



An investment in our common stock is risky because the price of our stock is highly volatile. Our common stock
closed as high as $1.42 per share and as low as $0.68 per share between January 1, 2004 and May 12, 2004. 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 or Jabbers operating performance;
| | - | -----------------------------------------------------------------------------------------------------------------------



| |  | Fluctuations in Jabbers quarterly revenue and operating results; and
| | - | ---------------------------------------------------------------------



| |  | Increases in outstanding shares of common stock upon exercise or conversion of derivative securities.
| | - | -----------------------------------------------------------------------------------------------------



These factors may continue to affect the price of our common stock in the future.



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 May 12, 2004, we had issued warrants and options to acquire approximately 5 million shares of our common stock, exercisable at prices ranging from $0.24
to $58.25 per share, with a weighted average exercise price of approximately $1.55 per share. We had also reserved 734,000 shares of common stock for issuance upon conversion of our series D junior convertible preferred stock. During the terms of
these derivative securities, the holders may have the opportunity to profit from an increase in the market price of our common stock with resulting potential 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 significant decrease in the percentage ownership of our common
stock by current and future holders of our common stock.



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. At May 12, 2004 these shares consist of:



| |  | Up to 734,000 shares issuable upon conversion of our series D junior convertible preferred stock; and
| | - | -----------------------------------------------------------------------------------------------------



| |  | Approximately 5 million shares issuable to warrant and option holders.
| | - | ----------------------------------------------------------------------



Factors Relating to Jabber



Jabbers limited operating history makes it difficult to evaluate its business. Jabber was founded in February 2000 and began shipping
software in 2001. Jabber has a limited operating history for its current business model upon which you may evaluate Jabber. Jabbers business is subject to the risks, exposures and difficulties frequently encountered by early-stage 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; and
| | - | ----------------------------------------------------------------------------------------



| |  | Limited ability to adjust Jabbers business plan to address marketplace and technological changes.
| | - | --------------------------------------------------------------------------------------------------



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Jabber may not earn revenues sufficient to remain in business. Jabbers ability to
become profitable depends on whether it can sell its products and services for more than it costs to produce and support them. Jabbers future sales also need to provide sufficient margin to support its ongoing operating activities. The success
of Jabbers revenue model will depend upon many factors including:



| |  | The extent to which consumers and businesses use Jabbers products and services; and
| | - | ------------------------------------------------------------------------------------



| |  | The success of Jabbers distribution partners in marketing its products and services.
| | - | -------------------------------------------------------------------------------------



Because of the new and evolving nature of instant messaging and web services, the early stage of Jabbers products and
its limited operating history, we cannot predict whether Jabbers revenue model will prove to be viable, whether demand for Jabbers products and services will materialize at the prices Jabber expects to charge, or whether Jabbers
current or future pricing levels will be sustainable.



Jabbers operations may be adversely affected by changes in its senior management.Tony Bamonti was named acting President of Jabber on December 1, 2003, to serve until a permanent President and CEO has been retained.
Jabber has retained an executive search firm to assist it in hiring a new President/CEO and has begun interviewing candidates for this position as well as for the Vice President  Sales position. However, there can be no assurance as to when a
new President/CEO or Vice President  Sales will be hired. Jabbers operations and business could be adversely affected until the new President/CEO and Vice President  Sales are retained by disruptions in Jabbers normal
management activities that are likely to occur during the search process and the transition period following the hiring of a new President/CEO and Vice President  Sales.



A limited number of Jabbers customers generate a significant portion of its revenues. A few customers
have accounted for a significant portion of Jabbers revenues. We expect that Jabbers current customers will account for a significant percentage of its revenues during 2004. There is no assurance that Jabber will be able to retain major
customers or attract additional major customers. The loss of or reduction in demand for Jabbers products or services from major customers could have a material adverse effect on Jabbers operating results and cash flow from operations.



Jabber must continually develop new products that appeal
to its customers. Jabbers products are subject to rapid obsolescence and Jabbers future success will depend upon Jabbers ability to develop new products and services that meet changing customer and marketplace requirements.
There is no assurance that Jabber 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 Jabber is able to identify new opportunities, its working capital constraints may limit its ability to pursue them. If Jabber is unable to
identify and develop and introduce new products and services on a timely basis, demand for Jabbers products and services may decline.



Jabber must identify and develop markets for its products and services. A suitable market for Jabbers 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 Jabber is 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 Jabbers products and services and its ability to address sustainable markets:



| |  | The failure of Jabbers business plan to accurately predict the types of products and services the marketplace will demand;
| | - | ---------------------------------------------------------------------------------------------------------------------------



| |  | Jabbers limited working capital may not allow it to commit the resources required to adequately support the introduction of new products and services;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The failure of Jabbers business plan to accurately predict the estimated sales cycle, price and acceptance of its products and services; or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



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| |  | The development by others of products and services that makes Jabbers products and services noncompetitive or obsolete.
| | - | ------------------------------------------------------------------------------------------------------------------------



There is a lot of competition that could hurt Jabbers revenues or
cause its expenses to increase.Jabbers current and prospective competitors include many companies, including Microsoft Corporation, IBM, and Time Warner, Inc., whose financial, technical, marketing and other resources are
substantially greater than Jabbers. Jabber may not have the financial resources, technical expertise or marketing, sales and support capabilities to compete successfully. The presence of these competitors could hurt Jabbers business by
causing Jabber to:



| |  | Reduce the selling prices for its products and services; or
| | - | -----------------------------------------------------------



| |  | Increase its spending on marketing, sales and product development.
| | - | ------------------------------------------------------------------



Jabber may not be able to offset the effects of price reductions or increases in spending. Further, Jabbers financial condition may put it at a
competitive disadvantage relative to its competitors.



It
usually takes a long time for Jabber to make a sale of its products and services to a customer. While Jabbers sales cycle varies from customer to customer, it is long, typically ranging from two to nine months or more. Jabbers
sales cycle may also be affected by a prospective customers budgetary constraints and internal acceptance reviews, over which Jabber has little or no control.



Offering proprietary products derived from the Jabber.org open-source movement may jeopardize Jabbers
relationship with open-source communities. An important element of the business model for Jabber 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 or its instant messaging products, demand
for Jabber instant messaging products will likely decline.



Jabber may be unable to reduce expenses if sales do not occur as expected. Because of Jabbers limited operating history, it does not have significant historical financial data upon which to base its planned operating
expenses or to forecast revenues and there can be no assurance that Jabber will be able to meet its revenue or expense projections. Jabbers expense levels are based in part on its expectations of future sales and to a large extent are fixed.
Jabber typically operates with little backlog and the sales cycles for its products and services may vary significantly. Jabber may be unable to adjust spending in a timely manner to compensate for any unexpected sales shortfalls. If Jabber were
unable to so adjust, any significant shortfall of demand for its products and services in relation to its expectations would result in operating losses or reduced profitability.



Item 3. CONTROLS AND PROCEDURES.



Our Chief Executive Officer and Chief Financial Officer, William R. Cullen, has reviewed our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this
report. Based upon this review, Mr. Cullen believes that our disclosure controls and procedures are effective in ensuring that material information related to Webb is made known to him by others within Webb.



There have been no significant changes in internal control over financial
reporting that occurred during the fiscal period covered by this report that have materially affected, or are reasonably likely to materially affect, Webbs internal control over financial reporting.



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PART II



OTHER
INFORMATION



Items 1-5. Not Applicable



Item 6. Exhibits and Reports on Form 8-K



|(a) | Listing of Exhibits:
|--- | --------------------



|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(a) |  | Articles of Incorporation, as amended, of Webb Interactive Services, Inc. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | 
|3.1(b) |  | Articles of Amendment setting forth the terms of Series D Junior Convertible Preferred Stock (2)                                                                                                                                                                                                                                                                                                                                                                                                                         
|       | 
|3.2    |  | Bylaws of Webb Interactive Services, Inc. (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | 
|4.1    |  | Specimen form of Webb Interactive Services, Inc. common stock certificate (4)                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | 
|4.2    |  | Webb Interactive Services, Inc. Stock Option Plan of 1995 (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | 
|4.3    |  | Form of Incentive Stock Option Agreement for Webb Interactive Services, Inc. Stock Option Plan of 1995 (3)                                                                                                                                                                                                                                                                                                                                                                                                               
|       | 
|4.4    |  | Form of Nonstatutory Stock Option Agreement for Webb Interactive Services, Inc. Stock Option Plan of 1995 (3)                                                                                                                                                                                                                                                                                                                                                                                                            
|       | 
|4.5    |  | Webb Interactive Services, Inc. Stock Option Plan of 2000, including forms of Incentive and Nonstatutory Stock Option Agreements (5)                                                                                                                                                                                                                                                                                                                                                                                     
|       | 
|4.6    |  | Stock Purchase Warrant dated August 25, 1999, as amended December 18, 1999, issued by Webb Interactive Services, Inc. to Castle Creek Technology Partners, Inc. (6)                                                                                                                                                                                                                                                                                                                                                      
|       | 
|4.7    |  | Stock Purchase Warrant dated December 18, 1999 issued by Webb Interactive Services, Inc. to Castle Creek Technology Partners, Inc. (6)                                                                                                                                                                                                                                                                                                                                                                                   
|       | 
|4.8    |  | Stock Purchase Warrant dated December 31, 1999 issued to by Webb Interactive Services, Inc. Marshall Capital Management, Inc. and Castle Creek Technology Partners, LLC (7)                                                                                                                                                                                                                                                                                                                                              
|       | 
|4.9    |  | Form of Stock Purchase Warrant, form of Series D Stock Purchase Warrant and form of amended Stock Purchase Warrants dated January 17, 2002 issued by Webb Interactive Services, Inc. to Castle
Creek Technology Partners, LLC (2)                                                                                                                                                                                                                                                                                        
|       | 
|10.1   |  | Form of Nondisclosure and Nonsolicitation Agreement between Webb Interactive Services, Inc. and its employees (1)                                                                                                                                                                                                                                                                                                                                                                                                        
|       | 
|10.2   |  | Employment Agreement between Webb Interactive Services, Inc. and William R. Cullen, dated March 1, 2002 (8)                                                                                                                                                                                                                                                                                                                                                                                                              
|       | 
|10.3   |  | Employment Agreement between Webb Interactive Services, Inc. and Lindley S. Branson, dated March 1, 2002 (8)                                                                                                                                                                                                                                                                                                                                                                                                             
|       | 
|10.4   |  | Securities Purchase Agreement dated as of January 17, 2002, between Webb Interactive Services, Inc. and Jona, Inc. Included as an exhibit is a Registration Rights Agreement
(2)                                                                                                                                                                                                                                                                                                                                         
|       | 
|10.5   |  | Letter Agreement between Webb Interactive Services, Inc. and Jona, Inc. (8)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | 
|10.6   |  | Exchange Agreement dated January 17, 2002 between Webb Interactive Services, Inc. and Castle Creek Technology Partners LLC. Included as an exhibit is a Registration Rights Agreement
(2)                                                                                                                                                                                                                                                                                                                                
|       | 
|10.7   |  | Series D Preferred Stock Purchase Agreement dated March 17, 2003, by and among Jabber, Inc. France Telecom Technologies Investissements, Intel Capital Corporation, and Webb Interactive
Services, Inc. Included as exhibits to the Stock Purchase Agreement are the Restated Certificate of Incorporation of Jabber, Inc. and the following additional agreements among the parties to the Stock Purchase Agreement: Investors Rights Agreement;
Right of First Refusal and Co-Sale Agreement; and Voting Agreement. (9)
|       | 
|10.8   |  | Jabber, Inc. Certificate of Designation for Series D Convertible Preferred Stock (9)                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | 
|10.9   |  | Exchange Agreement, dated as of October 21, 2003, by and between Webb Interactive Services, Inc. and Jona, Inc. (10)                                                                                                                                                                                                                                                                                                                                                                                                     
|       | 
|31.1   |  | Certification of Chief Executive Officer and Chief Financial Officer*                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | 
|32.1   |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for William R. Cullen*                                                                                                                                                                                                                                                                                                                                                                            



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---

|* | 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 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 Form 10-KSB Annual Report for the year ended December 31, 2000, Commission File No. 0-28462.
|--- | -----------------------------------------------------------------------------------------------------------

|(5) | Filed with the Current Report on Form 8-K, filed January 22, 2002 and amended on January 29, 2002, Commission File No. 0-28462.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(6) | Filed with Amendment No. 2 to Webbs Registration Statement on Form S-3, filed January 3, 2000, Commission File No. 333-87887.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(7) | Filed with the Current Report on Form 8-K, filed January 5, 2000, Commission File No. 0-28462.
|--- | ----------------------------------------------------------------------------------------------

|(8) | Filed with the Form 10-KSB Annual Report for the year ended December 31, 2001, Commission File No. 0-28462.
|--- | -----------------------------------------------------------------------------------------------------------

|(9) | Filed with the Current Report on Form 8-K, filed on March 20, 2003, Commission File No. 0-28462.
|--- | ------------------------------------------------------------------------------------------------

|(10) | Filed with the Quarterly Report on Form 10-QSB for the quarter ended September 30, 2003, Commission File No. 0-28462.
|---- | ---------------------------------------------------------------------------------------------------------------------



| | (b) | Reports on Form 8-K. The Company filed reports on Form 8-K during the quarter ended March 31, 2004, as follows: (i) under Item 12 of Form 8-K on March 16, 2004.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



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Signatures



In accordance with the requirements of the
Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                   |  |                                 |  |                                                   |  | 
|------------------ |  | ------------------------------- |  | ------------------------------------------------- |  | 
|                   |  | WEBB INTERACTIVE SERVICES, INC.
|                   |  |                                
|Date: May 14, 2004 |  | By                              |  | /s/ William R. Cullen                            
|                   |  |                                 |  | Chief Executive Officer - Chief Financial Officer
|                   |  |                                
|                   |  | By                              |  | /s/ Stuart Lucko                                 
|                   |  |                                 |  | Controller                                       





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