##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-KSB
 þ
    
    Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 for the fiscal year ended March 31, 2007
or
 o
    
    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 0-18235
 ELDORADO ARTESIAN SPRINGS, INC.
  Colorado
    
    84-0907853(State or other jurisdiction of 
incorporation or organization)
    
    I.R.S. Employer Identification
Number
 1783 Dogwood Street, Louisville, Colorado 80027
   
 o
 þ o
 o
 o þ
    DOCUMENTS INCORPORATED BY REFERENCE
 o þ




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##### 



TABLE OF CONTENTS
 PART IItem 1.
    
    Description of BusinessItem 2.
    
    Description of PropertyItem 3.
    
    Legal ProceedingsItem 4.
    
    Submission of Matters to a Vote of Security HoldersPART IIItem 5.
    
    Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of
Equity SecuritiesItem 6.
    
    Managements Discussion and Analysis of Financial Condition or Plan of OperationItem 7.
    
    Financial StatementsItem 8.
    
    Change In and Disagreements with Accountants on Accounting and Financial DisclosureItem 8A.
    
    Controls and ProceduresItem 8B.
    
    Other InformationPART IIIItem 9.
    
    Directors, Executive Officers, Promoters, Control Persons and Corporate Governance;
Compliance with Section 16(a) of the Exchange ActItem 10.
    
    Executive CompensationItem 11.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 12.
    
    Certain Relationships and Related Transactions, and Director IndependenceItem 13.
    
    ExhibitsItem 14.
    
    Principal Accountant Fees and ServicesExhibit 10.18Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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FORWARD-LOOKING STATEMENTS
 Certain statements made in this Annual Report on Form 10-KSB are forward-looking statements
(within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans
and objectives of management for future operations. Such statements involve known and unknown
risks, uncertainties and other factors that may cause actual results, performance or achievements
of Eldorado to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking statements included
herein are based on current expectations that involve numerous risks and uncertainties. Eldorados
plans and objectives are based, in part, on assumptions involving the continued expansion of
business. Assumptions relating to the foregoing involve judgments with respect to, among other
things, future economic, competitive and market conditions, availability of debt ad equity
financing, ability to purchase additional water rights, interest rate fluctuations, labor and
marketing costs, operating costs, packaging costs, competition, legal claims and future business
decisions, all of which are difficult or impossible to predict accurately and many of which are
beyond the control of Eldorado. Although Eldorado believes that its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove inaccurate. In light
of the significant uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by Eldorado or any other
person that the objectives and plans of Eldorado will be achieved. We undertake no obligation to
revise or update publicly any forward-looking statements for any reason.
 All references in this report to Company, we, us, our, or Eldorado refer to Eldorado
Artesian Springs, Inc.
 
 ITEM 1. DESCRIPTION OF BUSINESS.
  Industry Background
      3




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Company Background
        Water Source and Bottling
    4




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1 2
    Products
   5




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Sales and Distribution
  Home/Commercial Delivery Business
 PET Packaging/Retail Distribution Business
 Marketing
     Supplies
  Seasonality
  Competition
   6




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Government Regulation
     Research and Development Costs
  Employees
  
 ITEM 2. DESCRIPTION OF PROPERTY.
  Eldorado Springs, Colorado
  Louisville, Colorado
   7




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ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES
OF EQUITY SECURITIES.
 Market Information
  Fiscal Year 2007
    
    High
    
    
    LowFourth Quarter through March 31, 2007
    
    $
    4.18
    
    
    $
    2.00Third Quarter through December 31, 2006
    
    $
    4.18
    
    
    $
    2.65Second Quarter through September 30, 2006
    
    $
    3.42
    
    
    $
    2.25First Quarter through June 30, 2006
    
    $
    7.01
    
    
    $
    2.55Fiscal Year 2006Fourth Quarter through March 31, 2006
    
    $
    3.00
    
    
    $
    2.00Third Quarter through December 31, 2005
    
    $
    2.95
    
    
    $
    1.45Second Quarter through September 30, 2005
    
    $
    2.20
    
    
    $
    1.86First Quarter through June 30, 2005
    
    $
    3.25
    
    
    $
    1.55
 Holders
  Dividends
  Securities Authorized for Issuance Under Equity Compensation Plans
  Recent Sales of Unregistered Securities
   8




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ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Forward Looking Statements
   Overview
   Results of Operations
      9




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Year Ended March 31, 2007 Compared to Year Ended March 31, 2006
 Sales
     Gross Profit/Cost of Goods Sold
   Operating Expenses
    10




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Interest, Taxes, Other Income and Other Expenses
    Liquidity and Capital Resources
        11




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Contractual Obligations and Commitments
  Fiscal Year End
    
    Long-Term Debt
    
    
    Operating Lease
    
    
    Total2008
    
    $
    84,793
    
    
    $
    317,353
    
    
    $
    402,1462009
    
    
    78,078
    
    
    
    245,349
    
    
    
    323,4272010
    
    
    88,158
    
    
    
    191,097
    
    
    
    279,2552011
    
    
    99,160
    
    
    
    103,113
    
    
    
    202,2732012
    
    
    1,419,181
    
    
    
    23,431
    
    
    
    1,442,612Thereafter
    
    
    2,259,756
    
    
    
    
    
    
    
    2,259,756Total
    
    $
    4,029,126
    
    
    $
    880,343
    
    
    $
    4,909,469
  Other Recent Accounting Developments
     12




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Impact of Inflation
  
 ITEM 7. FINANCIAL STATEMENTS
   13




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Table of Contents
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-1Financial StatementsBalance Sheet
    
    
    F-2Statements of Operations
    
    
    F-3Statement of Changes in Stockholders Equity
    
    
    F-4Statements of Cash Flows
    
    
    F-5Notes to Financial Statements
    
    
    F-6




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
  F-1




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Balance Sheet
March 31, 2007
 AssetsCurrent assetsCash
    
    $
    607,759Accounts receivable  trade, net
    
    
    842,681Inventories
    
    
    196,447Prepaid expenses and other
    
    
    74,481Deferred tax asset
    
    
    29,648Total current assets
    
    
    1,751,016Non-current assetsProperty, plant and equipment  net
    
    
    4,258,225Notes receivable  related party
    
    
    590,450Water rights  net
    
    
    74,600Deposits
    
    
    109,004Other  net
    
    
    125,811Total non-current assets
    
    
    5,158,090Total assets
    
    $
    6,909,105Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    254,059Accrued expenses
    
    
    243,218Customer deposits
    
    
    93,584Income taxes payable
    
    
    100,366Current portion of long-term debt
    
    
    84,793Total current liabilities
    
    
    776,020Non-current liabilitiesLong-term debt, less current portion
    
    
    3,944,333Deferred tax liability
    
    
    96,638Deferred gain on the sale of real estate
    
    
    357,544Total non-current liabilities
    
    
    4,398,515Total liabilities
    
    
    5,174,535Commitments and contingencyStockholders equityPreferred stock, par value $.001 per share;
10,000,000 shares authorized; 0 shares
issued and outstanding
    
    
    Common stock, par value $.001 per share;
50,000,000 shares authorized; 3,015,533
issued and outstanding
    
    
    3,015Additional paid-in capital
    
    
    1,486,973Retained earnings
    
    
    244,582Total stockholders equity
    
    
    1,734,570Total liabilities and stockholders equity
    
    $
    6,909,105
  F-2




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Statements of Operations
 For the Years EndedMarch 31,2007
    
    
    2006RevenuesWater and related
    
    $
    8,104,710
    
    
    $
    7,786,454Rentals
    
    
    12,000
    
    
    
    12,000Pool and other
    
    
    131,597
    
    
    
    111,540Total revenues
    
    
    8,248,307
    
    
    
    7,909,994Cost of goods sold
    
    
    1,732,078
    
    
    
    1,589,024Gross profit
    
    
    6,516,229
    
    
    
    6,320,970Operating expensesSalaries and related expenses
    
    
    3,152,611
    
    
    
    3,047,546Administrative and general
    
    
    1,579,282
    
    
    
    1,564,295Delivery
    
    
    799,130
    
    
    
    808,280Advertising and promotions
    
    
    202,392
    
    
    
    246,707Depreciation and amortization
    
    
    446,537
    
    
    
    473,665Total operating expenses
    
    
    6,179,952
    
    
    
    6,140,493Income (loss) from operations
    
    
    336,277
    
    
    
    180,477Other income (expense)Other income
    
    
    92,300
    
    
    
    Interest income
    
    
    42,626
    
    
    
    42,850Interest expense
    
    
    (297,599
    )
    
    
    (246,517
    )Total other expense
    
    
    (162,673
    )
    
    
    (203,667
    )Income (loss) before income taxes
    
    
    173,604
    
    
    
    (23,190
    )Income tax (expense) benefitCurrent
    
    
    (138,990
    )
    
    
    (31,035
    )Deferred
    
    
    52,970
    
    
    
    43,990Total income tax (expense) benefit
    
    
    (86,020
    )
    
    
    12,955Net income (loss) available to common shareholders
    
    $
    87,584
    
    
    $
    (10,235
    )Basic weighted average common shares outstanding
    
    
    3,006,088
    
    
    
    2,995,495Basic income per common share
    
    $
    0.03
    
    
    $
    (0.00
    )Weighted average diluted number of shares outstanding
    
    
    3,180,967
    
    
    
    2,995,495Weighted average diluted earnings per share
    
    $
    0.03
    
    
    $
    (0.00
    )
  F-3




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Statement of Changes in Stockholders Equity
For the Years Ended March 31, 2007 and 2006
 Additional
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    EquityBalance  March 31, 2005
    
    
    2,995,495
    
    
    $
    2,995
    
    
    $
    1,416,107
    
    
    $
    167,233
    
    
    $
    1,586,335Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,235
    )
    
    
    (10,235
    )Balance  March 31, 2006
    
    
    2,995,495
    
    
    
    2,995
    
    
    
    1,416,107
    
    
    
    156,998
    
    
    
    1,576,100Stock options exercised
    
    
    9,000
    
    
    
    9
    
    
    
    20,728
    
    
    
    
    
    
    
    20,737Conversion of warrants to shares
    
    
    11,038
    
    
    
    11
    
    
    
    (11
    )
    
    
    
    
    
    
    Stock options issued to
employees
    
    
    
    
    
    
    
    
    
    
    50,149
    
    
    
    
    
    
    
    50,149Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87,584
    
    
    
    87,584Balance  March 31, 2007
    
    
    3,015,533
    
    
    $
    3,015
    
    
    $
    1,486,973
    
    
    $
    244,582
    
    
    $
    1,734,570
  F-4




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Statements of Cash Flows
 For the Years EndedMarch 31,2007
    
    
    2006Cash flows from operating activitiesNet income (loss)
    
    $
    87,584
    
    
    $
    (10,235
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activitiesDepreciation and amortization
    
    
    446,537
    
    
    
    473,665Deferred income taxes
    
    
    (52,969
    )
    
    
    (43,990
    )Stock based compensation
    
    
    50,149
    
    
    
    Accrued interest on related party note receivable
    
    
    (42,628
    )
    
    
    (39,466
    )Income taxes payable
    
    
    
    
    
    
    31,035Changes in assets and liabilitiesAccounts receivable
    
    
    (12,801
    )
    
    
    (77,884
    )Inventories
    
    
    100,330
    
    
    
    (56,044
    )Prepaid expenses and other
    
    
    (8,558
    )
    
    
    27,159Other assets
    
    
    18,511
    
    
    
    Deposits
    
    
    (95,000
    )
    
    
    2,085Accounts payable
    
    
    (34,431
    )
    
    
    42,734Accrued expenses
    
    
    10,902
    
    
    
    (4,059
    )Income taxes
    
    
    69,331
    
    
    
    34,132Customer deposits
    
    
    (720
    )
    
    
    10,356Net cash provided by operating activities
    
    
    536,237
    
    
    
    389,488Cash flows from investing activitiesPurchases of property and equipment
    
    
    (543,942
    )
    
    
    (177,269
    )Net cash used in investing activities
    
    
    (543,942
    )
    
    
    (177,269
    )Cash flows from financing activitiesProceeds from exercise of stock options
    
    
    20,737
    
    
    
    Net proceeds from line of credit
    
    
    50,000
    
    
    
    6,150Payments on line of credit
    
    
    (356,150
    )
    
    
    Proceeds from long-term debt
    
    
    1,500,000
    
    
    
    Payments on long-term debt
    
    
    (685,681
    )
    
    
    (170,513
    )Net cash provided by (used in) financing activities
    
    
    528,906
    
    
    
    (164,363
    )Net increase in cash
    
    
    521,201
    
    
    
    47,856Cash  beginning of year
    
    
    86,558
    
    
    
    38,702Cash  end of year
    
    $
    607,759
    
    
    $
    86,558
     F-5




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ELDORADO ARTESIAN SPRINGS, INC.
 
 NOTES TO FINANCIAL STATEMENTS
 Note 1  Description of Business and Summary of Significant Accounting
Policies
  Concentrations of Credit Risk
  Inventories
  Deposits
  Property, Plant, and Equipment
  Water Rights
  Other Assets
  Accounts Receivable
  Long-Lived Assets
  Customer Deposits
   F-6




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ELDORADO ARTESIAN SPRINGS, INC.
 Stock Based Compensation
     For the Year EndedMarch 31,2006Net loss  as reported
    
    $
    (10,235
    )Deduct: Total equity-based compensation expense
determined under the fair value method, net of tax
    
    $
    (127,518
    )Net loss  pro forma
    
    $
    (137,753
    )Basic and diluted loss per common share  as reported
    
    $
    (.00
    )Basic and diluted loss per common share  pro forma
    
    $
    (.05
    )
  F-7




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ELDORADO ARTESIAN SPRINGS, INC.
  For the Year EndedMarch 31,2006Approximate risk free rate
    
    4.2% - 4.4%Average expected life
    
    2.5 - 10 yearsDividend yield
    
    0%Volatility
    
    80% - 84%Estimated fair value of total options granted
    
    $127,518
 Basic and Diluted Earnings Per Common Share
 Earnings Per Share
  2007
    
    
    2006Net income (loss)
    
    $
    87,584
    
    
    $
    (10,235
    )Common shares outstanding:Weighted average common shares outstanding  basic
    
    
    3,006,088
    
    
    
    2,995,495Effect of dilution from stock options and warrants
    
    
    174,879
    
    
    
    Weighted average common shares outstanding  diluted
    
    
    3,180,967
    
    
    
    2,995,495Net income (loss) per share, basic
    
    $
    0.03
    
    
    $
    (0.00
    )Net income (loss) per share, diluted
    
    
    0.03
    
    
    
    (0.00
    )
 Fair Value of Financial Instruments
   Revenue Recognition
  Promotional Expense  Consideration to Vendors
   F-8




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ELDORADO ARTESIAN SPRINGS, INC.
 Advertising Costs
  Comprehensive Income
  Use of Estimates
  Recently Issued Accounting Pronouncements
       F-9




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ELDORADO ARTESIAN SPRINGS, INC.
  Note 2  Balance Sheet Disclosures
  Accounts receivableAccounts receivable
    
    $
    922,681Allowance for doubtful accounts
    
    
    (80,000
    )$
    842,681
  Property, plant and equipmentLand
    
    $
    1,000,263Buildings and improvements
    
    
    3,924,858Machinery and equipment
    
    
    4,241,390Office furniture and fixtures
    
    
    325,5119,492,022Less accumulated depreciation and amortization
    
    
    (5,233,797
    )$
    4,258,225
  Water rights
    
    $
    179,500Less accumulated amortization
    
    
    (104,900
    )$
    74,600
  Other assetsCustomer lists, loan fees, and other
    
    $
    223,612Accumulated amortization
    
    
    (97,801
    )$
    125,811
  Accrued expensesAccrued payroll and taxes
    
    $
    56,147Accrued property taxes
    
    
    161,355Accrued sales taxes
    
    
    25,716$
    243,218
  F-10




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ELDORADO ARTESIAN SPRINGS, INC.
 Note 3  Sale of Real Estate
   Note 4  Line of Credit
  Note 5  Long-Term Debt
  Note payable to a bank with interest at .75% over
Prime (9% at March 31, 2007). The note calls for
monthly principal and interest payments of $11,604
and matures August 2026. Collateralized by a second
deed of trust on the building and land purchased with
the proceeds and guaranteed by the Small Business
Administration and three stockholders and officers of
the Company. The note is subject to certain
restrictive covenants.
    
    $
    1,265,374Note payable to a bank with interest at .75% over
Prime (9% at March 31, 2007). The note calls for
monthly principal and interest payments of $11,293
and matures August 2026. Collateralized by the
building and land purchased with the proceeds and
guaranteed by three stockholders and officers of the
Company. The note is subject to certain restrictive
covenants.
    
    
    1,266,149Note payable to a bank with interest fixed at 7.75%
until February 2012, at which time the balance of
the note is due. The note calls for monthly
principal and interest payments of $11,439 with all
unpaid principal and interest due February 2012.
Cross-collateralized by substantially all assets of
the Company and guaranteed by three stockholders
and officers of the Company.
    
    
    1,497,6034,029,126Less current portion
    
    
    (84,793
    )$
    3,944,333
  F-11




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ELDORADO ARTESIAN SPRINGS, INC.
  Year Ending March 31,2008
    
    $
    84,7932009
    
    
    78,0782010
    
    
    88,1582011
    
    
    99,1602012
    
    
    1,419,181Thereafter
    
    
    2,259,756$
    4,029,126
 Note 6  Income Taxes
  Current deferred tax asset
    
    $
    29,648Current deferred tax liability
    
    
    Net current deferred tax asset
    
    $
    29,648Long-term deferred tax asset
    
    $
    4,584Long-term deferred tax liability
    
    
    (101,222
    )Net long-term deferred tax liability
    
    $
    (96,638
    )
  Allowance for doubtful accounts
    
    $
    29,648Property and equipment
    
    
    (85,488
    )Other assets
    
    
    4,584Deferred gain
    
    
    (15,734
    )$
    (66,990
    )
  For the Years EndedMarch 31,2007
    
    
    2006Federal income taxes computed at statutory rate
    
    $
    (59,025
    )
    
    $
    7,884State income taxes and other
    
    
    (5,305
    )
    
    
    5,071Stock based compensation associated with issuance of warrants
    
    
    (18,585
    )
    
    
    Other
    
    
    (3,105
    )
    
    
    $
    (86,020
    )
    
    $
    12,955
  F-12




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ELDORADO ARTESIAN SPRINGS, INC.
 Note 7  Commitments
 Operating Leases
   Year Ending March 31,2008
    
    $
    317,3532009
    
    
    245,3492010
    
    
    191,0972011
    
    
    103,1132012
    
    
    23,431$
    880,343
 Management Consulting and Finders Agreement
  Note 8  Contingency
     F-13




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ELDORADO ARTESIAN SPRINGS, INC.
  Note 9  Stockholders Equity
 Stock Options
   WeightedAverageStock
    
    
    ExerciseOptions
    
    
    PriceOutstanding  March 31, 2005
    
    
    391,500
    
    
    
    2.69Granted
    
    
    122,000
    
    
    
    2.57Forfeited/canceled
    
    
    (16,000
    )
    
    
    2.23Exercised
    
    
    
    
    
    
    Outstanding  March 31, 2006
    
    
    497,500
    
    
    
    2.67Granted
    
    
    72,500
    
    
    
    2.99Forfeited/canceled
    
    
    (12,000
    )
    
    
    2.39Exercised
    
    
    (9,000
    )
    
    
    2.30Outstanding  March 31, 2007
    
    
    549,000
    
    
    $
    2.73
  Options Outstanding
    
    
    Options ExercisableExercise Prices
    
    Number
    
    
    Price*
    
    
    Life*
    
    
    Number
    
    
    Price*1.75
    
    
    24,000
    
    
    
    1.75
    
    
    
    6.7
    
    
    
    24,000
    
    
    
    1.752.00
    
    
    17,000
    
    
    
    2.00
    
    
    
    6.4
    
    
    
    17,000
    
    
    
    2.002.75
    
    
    432,500
    
    
    
    2.75
    
    
    
    1.1
    
    
    
    432,500
    
    
    
    2.752.85
    
    
    50,000
    
    
    
    2.85
    
    
    
    4.8
    
    
    
    
    
    
    
    2.853.30
    
    
    18,500
    
    
    
    3.30
    
    
    
    9.1
    
    
    
    18,500
    
    
    
    3.303.88
    
    
    3,500
    
    
    
    3.88
    
    
    
    3.1
    
    
    
    3,500
    
    
    
    3.884.25
    
    
    3,500
    
    
    
    4.25
    
    
    
    2.1
    
    
    
    3,500
    
    
    
    4.25Total  March 31, 2007
    
    
    549,000
    
    
    $
    2.73
    
    
    
    1.8
    
    
    
    499,000
    
    
    $
    2.72
   F-14




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 Valuation and Expense Information under SFAS 123(R)
  For the Year EndedMarch 31,2007Approximate risk free rate
    
    4.65% - 5.15%Average expected life
    
    5 - 10 yearsDividend yield
    
    0%Volatility
    
    88.85%Estimated fair value of total options granted
    
    $128,446
 Warrants
   Note 10  Employee Benefit Plan
  Note 11  Subsequent Events
  1 2
  F-15




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 
 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 8A. CONTROLS AND PROCEDURES
   
 ITEM 8B. OTHER INFORMATION
 
 
 PART III
 
 ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
  Tenure asOfficerName
    
    Age
    
    Position(s)
    
    or DirectorDouglas A. Larson
    
    
    52
    
    
    President and Director
    
    1986 to presentKevin M. Sipple
    
    
    51
    
    
    Vice President of
Operations, Corporate
Secretary and Director
    
    1986 to presentJeremy S. Martin
    
    
    52
    
    
    Vice President of Marketing
and Director
    
    1986 to presentRobert E. Weidler
    
    
    62
    
    
    Vice President of Production
    
    1998 to presentCathleen M.
Shoenfeld
    
    
    38
    
    
    Chief Financial Officer
    
    1998 to presentKate Janssen
    
    
    35
    
    
    Vice President of Sales and
Customer Service
    
    2002 to presentGeorge J. Schmitt
    
    
    75
    
    
    Director
    
    1998 to presentJ. Ross Colbert
    
    
    52
    
    
    Director
    
    2007 to present
  14




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 Douglas A. Larson
 Kevin M. Sipple
 Jeremy S. Martin
 Robert E. Weidler
 Cathleen M. Shoenfeld
 Kate Janssen
 George J. Schmitt
 J. Ross Colbert
 Family Relationships
   15




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 Board of Directors
  Board Committees
  Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics
  
 ITEM 10. EXECUTIVE COMPENSATION
 Summary Compensation
  Summary Compensation TableNon-Equity
    
    
    Nonqualified
    
    
    All OtherName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Options
    
    
    Incentive Plan
    
    
    Deferred
    
    
    CompensationPrincipal
    
    Fiscal
    
    
    
    
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Compensation
    
    
    CompensationPosition
    
    Year
    
    
    Salary ($)
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)(1)
    
    
    ($)
    
    
    Earnings ($)
    
    
    ($) (2)
    
    
    Total ($)Douglas A. Larson,
President
    
    
    2007
    
    
    $
    120,235
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    11,073
    (3)
    
    $
    131,308Kevin Sipple,
Vice President of
Operations
    
    
    2007
    
    
    $
    120,235
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,244
    (4)
    
    $
    130,479Jeremy Martin,
Vice President of
Marketing
    
    
    2007
    
    
    $
    120,451
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    11,549
    (5)
    
    $
    132,000
 
 (1)
    
    Amounts reported reflect the dollar amount required to be recognized for financial
statement reporting purposes in fiscal 2007 for awards granted in and prior to fiscal 2007,
calculated in accordance with SFAS No. 123R. As indicated in the table, no amounts were
required to be recognized in accordance with SFAS No. 123R.
  16




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 (2)
    
    Includes all other compensation not reported in the preceding columns, including
perquisites and other personal benefits, or property, unless the aggregate amount of such
compensation is less than $10,000. Does not include certain fringe benefits made available
on a nondiscriminatory basis to all our employees, such as group health insurance, vacation
and sick leave, 3% matching contributions to the Companys 401(k) plan, no-cost Eldorado
water and related products, and Eldorado resort/swimming pool admission.(3)
    
    Includes amounts paid by the Company for vehicle lease, insurance and gas.(4)
    
    Includes amounts paid by the Company for vehicle lease, insurance and gas.(5)
    
    Includes amounts paid by the Company for vehicle lease, insurance and gas.
 Outstanding Equity Awards at Fiscal Year-End
  Compensation of Directors
  Director Compensation Table
  Fee Earned or
    
    
    
    
    
    
    
    
    
    
    OtherPaid in Cash
    
    
    Stock Awards
    
    
    Option Awards
    
    
    Compensation
    
    
    TotalName(1)
    
    ($)(2)
    
    
    ($)(3)
    
    
    ($)(3)
    
    
    ($)(4)
    
    
    ($)George J. Schmitt
(5)
    
    $
    15,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    15,500Ross Colbert (6)
    
    $
    2,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,500
 
 (1)
    
    Douglas A. Larson, our Chief Executive Officer and President, Kevin M. Sipple, our Vice
President of Operations and Corporate Secretary, and Jeremy S. Martin, our Vice President
of Marketing, are not included in this table as they are employees and thus receive no
compensation for their services as directors. The compensation received by Messrs. Larson,
Sipple and Martin as employees is shown in the summary compensation table above.(2)
    
    Includes fees paid to the listed director for consulting services provided to the
Company. During fiscal 2007, Mr. Schmitt received $13,500 for consulting services and Mr.
Colbert received $2,500 for consulting services. The services provided by the directors
included consulting and project support.(3)
    
    Amounts reported reflect the dollar amount required to be recognized for financial
statement reporting purposes in fiscal 2007 for awards granted in and prior to fiscal 2007,
calculated in accordance with SFAS No. 123R. As indicated in the table, no amounts were
required to be recognized in accordance with SFAS No. 123R. On February 8, 2007, the
Company issued 50,000 options to Mr. Colbert, at an exercise price of $2.85. The options
vest 12,500 shares per year beginning on February 8, 2008 and fully vesting on February 8,
2011. The options will expire on February 8, 2012.(4)
    
    Includes all other compensation not reported in the preceding columns. Does not
include certain fringe benefits made available on a nondiscriminatory basis to all our
employees and directors, such as no-cost Eldorado water and related products, and Eldorado
resort/swimming pool admission.(5)
    
    As of March 31, 2007, Mr. Schmitt had 100,000 options and no stock awards outstanding.(6)
    
    As of March 31, 2007, Mr. Colbert had 50,000 options of which none are vested and no
stock awards outstanding.
  17




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ELDORADO ARTESIAN SPRINGS, INC.
 
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
   SharesBeneficially
    
    
    PercentageName and Address
    
    Owned(1)
    
    
    of ClassBeneficial Owners of More than 5%:NoneDirectors and Named Executive Officers:Douglas A. Larson
    
    
    757,005
    (2)
    
    
    20.3
    %Kevin M. Sipple
    
    
    763,674
    (3)
    
    
    20.4
    %Jeremy S. Martin
    
    
    771,060
    
    
    
    20.6
    %George J. Schmitt
    
    
    100,000
    (4)
    
    
    2.7
    %J. Ross Colbert
    
    
    
    
    
    
    All Officers and Directors as a Group (8 persons)
    
    
    2,691,739
    (5)
    
    
    72.0
    %
 
 *
    
    Less than 1%(1)
    
    A person is deemed to be a beneficial owner of securities that can be acquired by such
person within 60 days from June 26, 2007 upon the exercise of options and warrants or
conversion of convertible securities. Each beneficial owners percentage ownership is
determined by assuming that options, warrants and convertible securities that are held by
such person (but not held by any other person) and that are exercisable or convertible
within 60 days from the filing of this report have been exercised or converted. Except as
otherwise indicated, and subject to applicable community property and similar laws, each of
the persons named has sole voting and investment power with respect to the shares shown as
beneficially owned. All percentages are determined based on the number of all shares,
including those underlying options exercisable within 60 days from the filing of this
report held by the named individual, divided by 3,016,553 outstanding shares on June 26,
2007 plus those shares underlying options exercisable within 60 days from the filing of
this report held by the named individual or the group.(2)
    
    Includes 20,000 shares that Mr. Larsons wife has the right to acquire within 60 days
of June 26, 2007 pursuant to the exercise of options. As of June 26, 2007, Mr. Larson has
pledged as security 250,000 shares of common stock.(3)
    
    As of June 26, 2007, Mr. Sipple has pledged as security 250,000 shares of common stock.(4)
    
    Includes 100,000 shares that Mr. Schmitt has the right to acquire within 60 days of
June 26, 2007 pursuant to the exercise of options.(5)
    
    Includes an aggregate of 420,000 shares which directors and executive officers as a
group have the right to acquire within 60 days of June 26, 2007 pursuant to the exercise of
options, including 100,000 options held by Cathleen Shoenfeld, Chief Financial Officer,
100,000 options held by Robert Weidler, Vice President of Production, 100,000 options held
by George Schmitt, director, 100,000 options held by Kate Janssen, Vice President of Sales
and Customer Service, and 20,000 options held by Mr. Larsons spouse as set forth in
footnote (2) above.
  18




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ELDORADO ARTESIAN SPRINGS, INC.
 Securities Authorized for Issuance under Equity Compensation Plans
  Number of securitiesremaining available for futureNumber of securities to
    
    
    Weighted-average
    
    
    issuance under equitybe issued upon exercise
    
    
    exercise price of
    
    
    compensation plansof outstanding options,
    
    
    outstanding option,
    
    
    (excluding securities reflectedPlan category
    
    warrants and rights (a)
    
    
    warrants and rights (b)
    
    
    in column (a)) (c)Equity compensation
plans approved by
shareholders1
    
    
    549,00
    
    
    $
    2.73
    
    
    
    326,000Equity compensation
plans not approved
by shareholders
2
    
    
    300,000
    
    
    $
    3.00
    
    
    
    Total
    
    
    849,000
    
    
    $
    2.82
    
    
    
    326,000
 (1)
    
    Represents shares authorized for issuance under the Eldorado 1997 Stock Option Plan.(2)
    
    Equity compensation plans not approved by shareholders includes warrants granted
in connection with a consulting agreement related to business development.
 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 Related Party Transactions
 Real Estate Transaction
   Consulting Agreement
    19




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 Director Independence
  
 ITEM 13. EXHIBITS
  ExhibitNo.
    
    Description
    
    Location3.1
    
    Articles of Incorporation and Bylaws
    
    Incorporated by
reference to
Exhibit 3 to the
Registration
Statement (No.
33-6738-D)3.2.
    
    Amended Articles of Incorporation
    
    Incorporated by
reference to
Exhibit 3.1 to
Eldorados Form
10-KSB for the
fiscal year ended
March 31, 19983.3
    
    Amended and Restated Articles of
Incorporation
    
    Incorporated by
reference to
Exhibit 3.1 to
Eldorados Form
SB-2/A
(Registration
Statement No.
333-68553) filed
with the Securities
and Exchange
Commission on
November 21, 20003.4
    
    Amended and Restated Bylaws
    
    Incorporated by
reference to
Exhibit 3.2 to
Eldorados Form
SB-2/A
(Registration
Statement No.
333-68553) filed
with the Securities
and Exchange
Commission on July
2, 199910.1*
    
    1997 Stock Option Plan
    
    Incorporated by
reference to
Exhibit 10.1 to
Registration
Statement No.
333-6855310.2
    
    Promissory Note with First National Bank of
Boulder County dated June 27, 1997
    
    Incorporated by
reference to
Exhibit 10.2 to
Registration
Statement No.
333-6855310.3
    
    Deed of Trust dated June 27, 1997
    
    Incorporated by
reference to
Exhibit 10.3 to
Registration
Statement No.
333-6855310.4
    
    Small Business Administration Note  U.S. Bank,
August 21, 2001
    
    Incorporated by
reference to
Exhibit 10.4 to
Eldorados Form
10-KSB for the
fiscal year ended
March 31, 200310.5
    
    U.S. Bank, August 21, 2001
Deed of Trust
    
    Incorporated by
reference to
Exhibit 10.5 to
Eldorados Form
10-KSB for the
fiscal year ended
March 31, 200310.6
    
    U.S. Small Business Administration
Note  Bank of West August 21, 2001
    
    Incorporated by
reference to
Exhibit 10.6 to
Eldorados Form
10-KSB for the
fiscal year ended
March 31, 200310.7
    
    Bank of West, August 21, 2001, Deed of Trust
    
    Incorporated by
reference to
Exhibit 10.7 to
Eldorados Form
10-KSB for the
fiscal year ended
March 31, 200310.8
    
    Contract to Buy and Sell Real Estate (Commercial)
    
    Incorporated by
reference to
Exhibit 10.1 to
Eldorados Form
10-QSB for the
quarter ended
September 30, 2001
  20




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 10.9
    
    Contract to Buy and Sell Real Estate (Residential)
    
    Incorporated by
reference to
Exhibit 10.2 to
Eldorados Form
10-QSB for the
quarter ended
September 30, 200110.10
    
    Contract to Buy and Sell Real Estate (Residential)
    
    Incorporated by
reference to
Exhibit 10.3 to
Eldorados Form
10-QSB for the
quarter ended
September 30, 200110.11
    
    Note receivable  Doug Larson
    
    Incorporated by
reference to
Exhibit 10.8 to
Eldorados Form
10-KSB for the
fiscal year ended
March 31, 200310.12
    
    Doug Larson  Pledge agreement
    
    Incorporated by
reference to
Exhibit 10.9 to
Eldorados Form
10-KSB for the
fiscal year ended
March 31, 200310.13
    
    Note receivable  Kevin Sipple
    
    Incorporated by
reference to
Exhibit 10.10 to
Eldorados Form
10-KSB for the
fiscal year ended
March 31, 200310.14
    
    Kevin Sipple  Pledge agreement
    
    Incorporated by
reference to
Exhibit 10.11 to
Eldorados Form
10-KSB for the
fiscal year ended
March 31, 200310.15
    
    Management Consulting and Finders Agreement,
dated as of January 4, 2005, by and between the
Company and Capital Merchant Bank, LLC
    
    Incorporated by
reference to
Exhibit 10.1 to
Eldorados Form 8-K
filed with the
Securities and
Exchange Commission
on January 11, 200510.16
    
    Warrant to Purchase Shares of Common Stock, dated
January 4, 2005
    
    Incorporated by
reference to
Exhibit 10.2 to
Eldorados Form 8-K
filed with the
Securities and
Exchange Commission
on January 11, 200510.17
    
    Water Lease Agreement with Denver Wells, LLC
dated August 31, 2006
    
    Incorporate by
reference to
Exhibit 10.14 to
Eldorados Form 8-K
filed with the
Securities and
Exchange Commission
on October 4, 200610.18
    
    Commercial Loan Agreement with American National
Bank dated February 20, 2007
    
    Filed herewith23.1
    
    Consent of Ehrhardt Keefe Steiner & Hottman PC
    
    Filed herewith31.1
    
    Certification of Principal Executive Officer
Pursuant to Rule 13a-14(a) or 15d-14(a) of the
Exchange Act, as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    Certification of Principal Financial Officer
Pursuant to Rule 13a-14(a) or 15d-14(a) of the
Exchange Act, as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32.1
    
    Certification of Principal Executive Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
    
    Filed herewith32.2
    
    Certification of Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
    
    Filed herewith
 
 *
    
    Management contract or compensatory plan
  21




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ELDORADO ARTESIAN SPRINGS, INC.
 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Fiscal 2007
    
    
    Fiscal 2006Audit Fees(1)
    
    $
    60,000
    
    
    $
    45,000Audit-Related fees
    
    
    
    
    
    
    Tax Fees(2)
    
    
    3,600
    
    
    
    3,600All Other Fees
    
    
    
    
    
    
    Total Fees
    
    $
    63,600
    
    
    $
    48,600
 
 (1)
    
    Includes fees for the Companys annual audits and reviews of the Companys quarterly
financial statements or services that are normally provided by the accountant in connection
with statutory or regulatory filings or engagements.(2)
    
    Includes fees for tax preparation services.
  22




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 SIGNATURES
  ELDORADO ARTESIAN SPRINGS, INC.By:
    /s/ Douglas A. LarsonDouglas A. Larson,President (Principal
Executive Officer)   Name and Capacity
    
    Date/s/ Douglas A. Larson

Douglas A. Larson,
President and Director
    
    June 26, 2007/s/ Kevin M. Sipple

Kevin M. Sipple,
Vice-President, Secretary and Director
    
    June 26, 2007/s/ Cathleen Shoenfeld

Cathleen Shoenfeld,
Chief Financial Officer, Chief Accounting Officer
(Principal Financial and Accounting Officer)
    
    June 26, 2007/s/ Jeremy S. Martin

Jeremy S. Martin,
Vice-President  and Director
    
    June 26, 2007/s/ George J. Schmitt

George J. Schmitt,
Director
    
    June 26, 2007/s/ J. Ross Colbert

J. Ross Colbert,
Director
    
    June 26, 2007
  23




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 EXHIBIT INDEX
 Exhibit No.
    
    Description10.18
    
    Commercial Loan Agreement with American National
Bank dated February 20, 200723.1
    
    Consent of Ehrhardt Keefe Steiner & Hottman PC31.1
    
    Certification of Principal Executive Officer
Pursuant to Rule 13a-14(a) or 15d-14(a) of the
Exchange Act, as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Principal Financial Officer
Pursuant to Rule 13a-14(a) or 15d-14(a) of the
Exchange Act, as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Principal Executive Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.2
    
    Certification of Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
  24