##### 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, 2006
 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
    
    I.R.S. Employer Identification Numberincorporation or organization)
 1783 Dogwood Street, Louisville, Colorado 80027
  Securities registered pursuant to Section 12(g) of the Act: None
 Securities registered pursuant to Section 12(b) of the Act:
 
 o
 þ o
 o
 o þ
 $7,909,994




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TABLE OF CONTENTS  ITEM 1. 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 AND RESULTS OF OPERATIONSITEM 7. FINANCIAL STATEMENTSITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 8A. CONTROLS AND PROCEDURESITEM 8B. OTHER INFORMATIONPART IIIITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACTITEM 10. EXECUTIVE COMPENSATIONITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSItem 14. Principal Accountant Fees and ServicesSIGNATURESCertification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive OfficerCertification of Chief Financial Officer    Table of Contents  Documents Incorporated by Reference
  
 ITEM 1. BUSINESS.
  Industry Background
     Company Background
  2




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Water Source and Bottling
   3




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##### Table of Contents



Products
  Sales and Distribution
  Home/Commercial Delivery Business
  PET Packaging/Retail Distribution Business
  4




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Marketing
     Supplies
  Seasonality
  Competition
  Government Regulation
   5




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##### Table of Contents



Research and Development Costs
  Employees
  
 ITEM 2. DESCRIPTION OF PROPERTY.
      
 ITEM 3. LEGAL PROCEEDINGS.
   6




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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.
  High
    
    LowCalendar 2006First Quarter through March 31, 2006
    
    $
    3.25
    
    
    $
    2.00Calendar 2005First Quarter through March 31, 2005
    
    $
    3.00
    
    
    $
    1.47Second Quarter through June 30, 2005
    
    $
    3.25
    
    
    $
    1.55Third Quarter through September 30, 2005
    
    $
    2.20
    
    
    $
    1.86Fourth Quarter through December 31, 2005
    
    $
    2.95
    
    
    $
    1.45Calendar 2004First Quarter through March 31, 2004
    
    $
    1.10
    
    
    $
    0.80Second Quarter through June 30, 2004
    
    $
    2.00
    
    
    $
    1.01Third Quarter through September 30, 2004
    
    $
    2.00
    
    
    $
    1.10Fourth Quarter through December 31, 2004
    
    $
    2.00
    
    
    $
    1.35
   Number of securitiesremaining available forNumber of securities to be
    
    
    
    
    
    future issuance underissued upon exercise of
    
    Weighted-average exercise
    
    equity compensation plansoutstanding options,
    
    price of outstanding option,
    
    (excluding securitiesPlan category
    
    warrants and rights (a)
    
    warrants and rights (b)
    
    reflected in column (a)) (c)Equity compensation
plans approved by
security holders1
    
    
    468,500
    
    
    
    2.67
    
    
    
    406,500Equity compensation
plans not approved
by security holders2
    
    
    350,000
    
    
    
    3.00
    
    
    
    650,000Total
    
    
    818,500
    
    
    
    2.89
    
    
    
    1,056,500
 
 1
    
    Represents Shares authorized for issuance under our 1997 Stock Option Plan.2
    
    Represents Warrant to purchase common stock to Capital Merchant Bank, LLC. See disclosure below. 7




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##### Table of Contents



RECENT SALES OF UNREGISTERED SECURITIES
   
 ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Forward Looking Statements
   Overview
   8




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Results of Operations
      Year Ended March 31, 2006 Compared to Year Ended March 31, 2005
 Sales
     9




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Gross Profit/Cost of Goods Sold
   Operating Expenses
      Interest, Taxes and Other Expenses
  10




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Liquidity and Capital Resources
         11




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Contractual Obligations and Commitments
  Fiscal Year End
    
    Long-Term Debt
    
    
    Operating Lease
    
    
    Total2007
    
    
    136,855
    
    
    
    384,739
    
    
    
    521,5942008
    
    
    145,419
    
    
    
    261,264
    
    
    
    406,6832009
    
    
    154,872
    
    
    
    253,132
    
    
    
    408,0042010
    
    
    164,964
    
    
    
    136,575
    
    
    
    301,5392011
    
    
    175,744
    
    
    
    95,481
    
    
    
    271,225Thereafter
    
    
    2,436,983
    
    
    
    34,259
    
    
    
    2,471,242Total
    
    $
    3,214,837
    
    
    $
    1,165,450
    
    
    $
    4,380,287
  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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ELDORADO ARTESIAN SPRINGS, INC.
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 F - 1




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ELDORADO ARTESIAN SPRINGS, INC.
 Balance Sheet
March 31, 2006
 AssetsCurrent assetsCash
    
    $
    86,558Accounts receivable  trade, net
    
    
    829,880Inventories
    
    
    296,777Prepaid expenses and other
    
    
    65,923Deferred tax asset
    
    
    29,064Total current assets
    
    
    1,308,202Non-current assetsProperty, plant and equipment  net
    
    
    4,160,850Notes receivable  related party
    
    
    547,822Water rights  net
    
    
    79,088Deposits
    
    
    14,004Other  net
    
    
    139,834Total non-current assets
    
    
    4,941,598Total assets
    
    $
    6,249,800Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    288,490Accrued expenses
    
    
    232,316Customer deposits
    
    
    94,304Line of credit
    
    
    306,150Income taxes payable
    
    
    31,035Current portion of long-term debt
    
    
    136,855Total current liabilities
    
    
    1,089,150Non-current liabilitiesLong-term debt, less current portion
    
    
    3,077,982Deferred tax liability
    
    
    149,024Deferred gain on the sale of real estate
    
    
    357,544Total non-current liabilities
    
    
    3,584,550Total liabilities
    
    
    4,673,700Commitments 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; 2,995,495
issued and outstanding
    
    
    2,995Additional paid-in capital
    
    
    1,416,107Retained earnings
    
    
    156,998Total stockholders equity
    
    
    1,576,100Total liabilities and stockholders equity
    
    $
    6,249,800
  F - 2




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ELDORADO ARTESIAN SPRINGS, INC.
 Statements of Operations
 For the Years EndedMarch 31,2006
    
    
    2005RevenuesWater and related
    
    $
    7,786,454
    
    
    $
    7,542,419Rentals
    
    
    12,000
    
    
    
    12,000Pool and other
    
    
    111,540
    
    
    
    79,944Total revenues
    
    
    7,909,994
    
    
    
    7,634,363Cost of goods sold
    
    
    1,589,024
    
    
    
    1,175,873Gross profit
    
    
    6,320,970
    
    
    
    6,458,490Operating expensesSalaries and related expenses
    
    
    3,047,546
    
    
    
    3,064,308Administrative and general
    
    
    1,564,295
    
    
    
    1,489,466Delivery
    
    
    808,280
    
    
    
    725,435Advertising and promotions
    
    
    246,707
    
    
    
    650,327Depreciation and amortization
    
    
    473,665
    
    
    
    529,320Total operating expenses
    
    
    6,140,493
    
    
    
    6,458,856Income (loss) from operations
    
    
    180,477
    
    
    
    (366
    )Other income (expense)Stock based compensation associated with issuance of warrants
    
    
    
    
    
    
    (431,451
    )Interest income
    
    
    42,850
    
    
    
    43,423Interest expense
    
    
    (246,517
    )
    
    
    (222,974
    )Total other expense
    
    
    (203,667
    )
    
    
    (611,002
    )Loss before income taxes
    
    
    (23,190
    )
    
    
    (611,368
    )Income tax (expense) benefitCurrent
    
    
    (31,035
    )
    
    
    30,687Deferred
    
    
    43,990
    
    
    
    33,177Total income tax benefit
    
    
    12,955
    
    
    
    63,864Net loss available to common shareholders
    
    $
    (10,235
    )
    
    $
    (547,504
    )Basic and diluted weighted average common shares outstanding
    
    
    2,995,495
    
    
    
    2,995,495Basic loss per common share
    
    $
    (0.00
    )
    
    $
    (0.18
    )
  F - 3




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ELDORADO ARTESIAN SPRINGS, INC.
 Statement of Changes in Stockholders Equity
For the Years Ended March 31, 2006 and 2005
 Additional
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    EquityBalance  March 31, 2004
    
    
    2,995,495
    
    
    
    2,995
    
    
    
    984,656
    
    
    
    714,737
    
    
    
    1,702,388Issuance of warrants
    
    
    
    
    
    
    
    
    
    
    431,451
    
    
    
    
    
    
    
    431,451Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (547,504
    )
    
    
    (547,504
    )Balance  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
    
    
    $
    1,576,100
 F - 4




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##### Table of Contents



Statements of Cash Flows
 For the Years EndedMarch 31,2006
    
    
    2005Cash flows from operating activitiesNet loss
    
    $
    (10,235
    )
    
    $
    (547,504
    )Adjustments to reconcile net loss to net cash
provided by operating activitiesDepreciation and amortization
    
    
    473,665
    
    
    
    529,320Issuance of warrants
    
    
    
    
    
    
    431,451Accrued interest on related party note receivable
    
    
    (39,466
    )
    
    
    (43,066
    )Deferred income taxes
    
    
    (43,990
    )
    
    
    (33,177
    )Income taxes payable
    
    
    31,035
    
    
    
    Changes in assets and liabilitiesAccounts receivable
    
    
    (77,884
    )
    
    
    2,802Inventories
    
    
    (56,044
    )
    
    
    (20,966
    )Prepaid expenses and other
    
    
    27,159
    
    
    
    (41,204
    )Other assets
    
    
    
    
    
    
    (72,645
    )Deposits
    
    
    2,085
    
    
    
    25,116Accounts payable
    
    
    42,734
    
    
    
    (59,685
    )Accrued expenses
    
    
    (4,059
    )
    
    
    (121,081
    )Income taxes receivable
    
    
    34,132
    
    
    
    Customer deposits
    
    
    10,356
    
    
    
    11,978Net cash provided by operating activities
    
    
    389,488
    
    
    
    61,339Cash flows from investing activitiesPurchases of property and equipment
    
    
    (177,269
    )
    
    
    (124,215
    )Net cash used in investing activities
    
    
    (177,269
    )
    
    
    (124,215
    )Cash flows from financing activitiesNet proceeds from line of credit
    
    
    6,150
    
    
    
    200,000Payments on long-term obligations
    
    
    (170,513
    )
    
    
    (252,061
    )Net cash used in financing activities
    
    
    (164,363
    )
    
    
    (52,061
    )Net increase (decrease) in cash
    
    
    47,856
    
    
    
    (114,937
    )Cash  beginning of year
    
    
    38,702
    
    
    
    153,639Cash  end of year
    
    $
    86,558
    
    
    $
    38,702
   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 Years EndedMarch 31,2006
    
    
    2005Net loss  as reported
    
    $
    (10,235
    )
    
    $
    (547,504
    )Net loss  pro forma
    
    $
    (137,753
    )
    
    $
    (591,002
    )Basic and diluted loss per common share  as reported
    
    $
    (.00
    )
    
    $
    (.18
    )Basic and diluted loss per common share  pro forma
    
    $
    (.05
    )
    
    $
    (.20
    )
  For the Years EndedMarch 31,2006
    
    2005Approximate risk free rate
    
    4.2% - 4.4%
    
    4.5%Average expected life
    
    2.5 - 10 years
    
    10 yearsDividend yield
    
    0%
    
    0%Volatility
    
    80% - 84%
    
    128%Estimated fair value of total options granted
    
    $127,518
    
    $43,498
 Basic and Diluted Earnings Per Common Share
  Fair Value of Financial Instruments
   F - 7




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ELDORADO ARTESIAN SPRINGS, INC.
 Revenue Recognition
  Promotional Expense  Consideration to Vendors
  Advertising Costs
  Comprehensive Income
  Use of Estimates
  Recently Issued Accounting Pronouncements
   F - 8




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
   Note 2  Balance Sheet Disclosures
  Accounts receivableAccounts receivable
    
    $
    909,880Allowance for doubtful accounts
    
    
    (80,000
    )$
    829,880
  Property, plant and equipmentLand
    
    $
    1,000,263Buildings and improvements
    
    
    3,886,887Machinery and equipment
    
    
    3,758,048Office furniture and fixtures
    
    
    325,5118,970,709Less accumulated depreciation and amortization
    
    
    (4,809,859
    )$
    4,160,850
  Water rights
    
    $
    179,500Less accumulated amortization
    
    
    (100,412
    )$
    79,088
 F - 9




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ELDORADO ARTESIAN SPRINGS, INC.
  Other assetsCustomer lists, loan fees, and other
    
    $
    219,524Accumulated amortization
    
    
    (79,690
    )$
    139,834
  Accrued expensesAccrued payroll and taxes
    
    $
    56,105Accrued property taxes
    
    
    151,936Accrued sales taxes
    
    
    24,275$
    232,316
 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
(8.25% at March 31, 2006). The note calls for monthly
principal and interest payments of $10,968 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.
    
    $
    1,288,635
 F - 10




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 Note payable to a bank with interest at .75%
over Prime (8.25% at March 31, 2006). The note
calls for monthly principal and interest
payments of $10,675 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.
    
    
    1,288,453Note payable to a bank with interest fixed at
4.75% until November 2007, at which time the
interest rate may adjust to Prime and may
adjust annually. The note calls for monthly
principal and interest payments of $9,858 with
all unpaid principal and interest due June
2012. Cross-collateralized by substantially all
assets of the Company and guaranteed by three
stockholders and officers of the Company.
    
    
    637,7493,214,837Less current portion
    
    
    (136,855
    )$
    3,077,982
  Year Ending March 31,2007
    
    
    136,8552008
    
    
    145,4192009
    
    
    154,8722010
    
    
    164,9642011
    
    
    175,744Thereafter
    
    
    2,436,983$
    3,214,837
 Note 6  Income Taxes
   Current deferred tax asset
    
    $
    29,064Current deferred tax liability
    
    
    Net current deferred tax asset
    
    $
    29,064Long-term deferred tax asset
    
    $
    Long-term deferred tax liability
    
    
    (149,024
    )Net long-term deferred tax liability
    
    $
    (149,024
    )
 F - 11




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ELDORADO ARTESIAN SPRINGS, INC.
  Allowance for doubtful accounts
    
    $
    29,064Property and equipment
    
    
    (128,906
    )Other assets
    
    
    (4,694
    )Deferred gain
    
    
    (15,424
    )$
    (119,960
    )
  For the Years EndedMarch 31,2006
    
    
    2005Federal income taxes computed at statutory rate
    
    $
    7,884
    
    
    $
    207,864State income taxes and other
    
    
    5,071
    
    
    
    2,693Stock based compensation associated with issuance of warrants
    
    
    
    
    
    
    (146,693
    )$
    12,955
    
    
    $
    63,864
 Note 7  Commitments
 Operating Leases
   Year Ending March 31,2007
    
    $
    384,7392008
    
    
    261,2642009
    
    
    253,1322010
    
    
    136,5752011
    
    
    95,481Thereafter
    
    
    34,259$
    1,165,450
 Management Consulting and Finders Agreement
  F - 12




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ELDORADO ARTESIAN SPRINGS, INC.
 Note 8  Contingency
   Note 9  Stockholders Equity
 Stock Options
   WeightedAverageStock
    
    
    ExerciseOptions
    
    
    PriceOutstanding  March 31, 2004
    
    
    589,500
    
    
    
    2.85Granted
    
    
    22,500
    
    
    
    2.00Forfeited/canceled
    
    
    (220,500
    )
    
    
    2.98Exercised
    
    
    
    
    
    
    Outstanding  March 31, 2005
    
    
    391,500
    
    
    
    2.69Granted
    
    
    122,000
    
    
    
    2.57Forfeited/canceled
    
    
    (16,000
    )
    
    
    2.23Exercised
    
    
    
    
    
    
    Outstanding  March 31, 2006
    
    
    497,500
    
    
    $
    2.67
 F - 13




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##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
  Options Outstanding
    
    
    Options ExercisableExercise Prices
    
    Number
    
    
    Price*
    
    
    Life*
    
    
    Number
    
    
    Price*1.75
    
    
    33,000
    
    
    
    1.75
    
    
    
    7.7
    
    
    
    33,000
    
    
    
    1.752.00
    
    
    22,500
    
    
    
    2.00
    
    
    
    7.4
    
    
    
    22,500
    
    
    
    2.002.75
    
    
    433,000
    
    
    
    2.75
    
    
    
    2.1
    
    
    
    404,000
    
    
    
    2.753.88
    
    
    4,500
    
    
    
    3.88
    
    
    
    4.1
    
    
    
    4,500
    
    
    
    3.884.25
    
    
    4,500
    
    
    
    4.25
    
    
    
    3.1
    
    
    
    4,500
    
    
    
    4.25Total  March 31, 2006
    
    
    497,500
    
    
    $
    2.67
    
    
    
    2.7
    
    
    
    468,500
    
    
    $
    2.67
 
 *
    
    Price and Life reflect the weighted average exercise price and weighted average remaining
contractual life, in years, respectively. Warrants
  Note 10  Employee Benefit Plan
  Note 11  Subsequent Events
  F - 14




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##### Table of Contents



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
    
 ITEM 8B. OTHER INFORMATION
  
 PART III
 
 ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT.
 The following table sets forth information with respect to directors, executive officers, and
significant employees of the Company. Directors serve for one year terms. Each director is also a
nominee for election to the Board of Directors. Tenure asOfficerName
    
    Age
    
    Position(s)
    
    or DirectorDouglas A. Larson
    
    
    51
    
    
    President and Director
    
    1986 to presentKevin M. Sipple
    
    
    50
    
    
    Vice President, Secretary and Director
    
    1986 to presentJeremy S. Martin
    
    
    51
    
    
    Vice President and Director
    
    1986 to presentRobert E. Weidler
    
    
    61
    
    
    Vice President
    
    1998 to presentCathleen M. Shoenfeld
    
    
    37
    
    
    Chief Financial Officer
    
    1998 to presentKate Janssen
    
    
    34
    
    
    Vice President
    
    2002 to presentGeorge J. Schmitt
    
    
    74
    
    
    Director
    
    1998 to present
 Douglas A. Larson
 Kevin M. Sipple
 Jeremy S. Martin
 14




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##### Table of Contents



Robert E. Weidler
 Cathleen M. Shoenfeld
 Kate Janssen
 George J. Schmitt
   Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics
  15




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##### Table of Contents



ITEM 10. EXECUTIVE COMPENSATION
 Summary Compensation Table
 Name and
    
    
    
    
    
    Salary
    
    Bonus
    
    All Other Compensation (1)Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)Douglas A. Larson, CEO
    
    
    2006
    
    
    $
    114,475
    
    
    
    
    
    
    $
    19,0532005
    
    
    $
    117,254
    
    
    
    
    
    
    $
    19,0532004
    
    
    $
    112,688
    
    
    
    
    
    
    $
    19,643Kevin Sipple, VP
    
    
    2006
    
    
    $
    115,215
    
    
    
    
    
    
    $
    12,7332005
    
    
    $
    118,033
    
    
    
    
    
    
    $
    12,8182004
    
    
    $
    113,353
    
    
    
    
    
    
    $
    12,330Jeremy Martin, VP
    
    
    2006
    
    
    $
    115,537
    
    
    
    
    
    
    $
    13,3382005
    
    
    $
    118,475
    
    
    
    
    
    
    $
    13,4272004
    
    
    $
    113,652
    
    
    
    
    
    
    $
    13,323
 
 (1)
    
    Other annual compensation includes annual health care premiums, a 3% match for all
contributions to the 401(k) plan and a car allowance. Compensation of Outside Directors
  
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  Number of
    
    PercentName and Address of Beneficial Owners
    
    Shares
    
    OwnedKevin M. Sipple
    
    
    763,674
    
    
    
    25.5
    %43 Fowler Lane
Eldorado Springs, CO 80025Douglas A. Larson
    
    
    757,005
    (1)
    
    
    25.3
    %12 Baldwin Circle
Eldorado Springs, CO 80025Jeremy S. Martin
    
    
    771,060
    
    
    
    25.7
    %2707 - 4th Street
Boulder, CO 80302
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Number of
    
    PercentName and Address of Beneficial Owners
    
    Shares
    
    OwnedCapital Merchant Bank, LLC
    
    
    350,000
    (3)
    
    
    10.5
    %204 E. Witchwood Lane
Lake Bluff, IL 60044All Officers and Directors as a Group, 6 persons(2)
    
    
    3,026,739
    
    
    
    83.4
    %
 
 (1)
    
    Mr. Larsons shares include options to buy 20,000 shares held by Mr. Larsons spouse.(2)
    
    The shares owned by all officers and directors as a group include options to buy 391,000
shares, of which 100,000 options are held by Ms. Shoenfeld, 100,000 options are held by Mr.
Weidler, 100,000 options are held by Mr. George Schmitt, 85,000 options are held by Ms.
Janssen and 20,000 options are held by Mr. Larsons spouse.(3)
    
    Shares owned by Capital Merchant Bank, LLC are shares underlying warrants, exercisable for
$3.00 per share. The warrants expire on January 4, 2008. 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
     Item 13 Exhibits
 Documents filed as a part of this Report
  ExhibitNo.
    
    Description
    
    Location3
    
    Articles of Incorporation and Bylaws
    
    Incorporated by
reference to
Exhibit No. 3 to
the Registration
Statement (No.
33-6738-D)3.1
    
    Amended Articles of Incorporation
    
    Incorporated by
reference to
Exhibit 3.1
 17




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##### Table of Contents



ExhibitNo.
    
    Description
    
    Locationfiled with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 199810.1
    
    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 No. 10.2 to
Registration
Statement No.
333-6855310.3
    
    Deed of Trust dated June 27, 1997
    
    Incorporated by
reference to
Exhibit No. 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 filed
with 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 filed
with 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 filed
with 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 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.8
    
    Note receivable  Doug Larson
    
    Incorporated by
reference to
Exhibit 10.8 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.9
    
    Doug Larson  Pledge agreement
    
    Incorporated by
reference to
Exhibit 10.9 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.10
    
    Note receivable  Kevin Sipple
    
    Incorporated by
reference to
Exhibit 10.10 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.11
    
    Kevin Sipple  Pledge agreement
    
    Incorporated by
reference to
Exhibit 10.11 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.12
    
    Management Consulting and Finders
    
    Incorporated by
reference to
Exhibit
 18




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##### Table of Contents



ExhibitNo.
    
    Description
    
    LocationAgreement, dated as of January 4, 2005, by
and between the Company and Capital
Merchant Bank, LLC
    
    10.1 filed
with Eldorados
Form 8-K files with the Securities and
Exchange Commission
on January 11,
2005.10.13
    
    Warrant to Purchase Shares of Common Stock,
dated January 4, 2005
    
    Incorporated by
reference to
Exhibit 10.2 filed
with Eldorados
Form 8-K files with
the Securities and
Exchange Commission
on January 11,
2005.31.1
    
    Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a).31.2
    
    Certification of Chief Financial Officer
Pursuant to Rule 13a-14(a).32.1
    
    Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a) and 18 U.S.C.
Section 1350.32.2
    
    Certification of Chief Financial Officer
Pursuant to Rule 13a-14(a) and 18 U.S.C.
Section 1350.
 Reports on Form 8-K
  
 Item 14. Principal Accountant Fees and Services
         19




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##### Table of Contents



SIGNATURES
  ELDORADO ARTESIAN SPRINGS, INC.By:
    
    /s/ Douglas A. LarsonDouglas A. Larson,
President and Principal
Executive Officer
   Name and Capacity
    
    Date/s/ Douglas A. Larson
    
    June 22, 2006Douglas A. Larson, President and Director/s/ Kevin M. Sipple
    
    June 22, 2006Kevin M. Sipple, Vice-President, Secretary and Director/s/ Cathleen Shoenfeld
    
    June 22, 2006Cathleen Shoenfeld, Chief Financial Officer, Chief Accounting Officer/s/ Jeremy S. Martin
    
    June 22, 2006Jeremy S. Martin, Vice-President and Director/s/ George J. Schmitt
    
    June 22, 2006George J. Schmitt, Director
 20




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##### Table of Contents



Exhibit Index
 ExhibitNo.
    
    Description
    
    Location3
    
    Articles of Incorporation and Bylaws
    
    Incorporated by
reference to
Exhibit No. 3 to
the Registration
Statement (No.
33-6738-D)3.1
    
    Amended Articles of Incorporation
    
    Incorporated by
reference to
Exhibit 3.1 filed with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 199810.1
    
    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 No. 10.2 to
Registration
Statement No.
333-6855310.3
    
    Deed of Trust dated June 27, 1997
    
    Incorporated by
reference to
Exhibit No. 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 filed
with 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 filed
with 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 filed
with 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 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.8
    
    Note receivable  Doug Larson
    
    Incorporated by
reference to
Exhibit 10.8 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.9
    
    Doug Larson  Pledge agreement
    
    Incorporated by
reference to
Exhibit 10.9 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.10
    
    Note receivable  Kevin Sipple
    
    Incorporated by
reference to
Exhibit 10.10 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.11
    
    Kevin Sipple  Pledge agreement
    
    Incorporated by
reference to
Exhibit 10.11 filed
with Eldorados
Form 10-KSB for the
fiscal year ended
March 31, 200310.12
    
    Management Consulting and Finders
    
    Incorporated by
reference to
Exhibit




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##### Table of Contents



ExhibitNo.
    
    Description
    
    LocationAgreement, dated as of January 4, 2005, by
and between the Company and Capital
Merchant Bank, LLC
    
    10.1 filed
with Eldorados
Form 8-K files with the Securities and
Exchange Commission
on January 11,
2005.10.13
    
    Warrant to Purchase Shares of Common Stock,
dated January 4, 2005
    
    Incorporated by
reference to
Exhibit 10.2 filed
with Eldorados
Form 8-K files with
the Securities and
Exchange Commission
on January 11,
2005.31.1
    
    Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a).31.2
    
    Certification of Chief Financial Officer
Pursuant to Rule 13a-14(a).32.1
    
    Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a) and 18 U.S.C.
Section 1350.32.2
    
    Certification of Chief Financial Officer
Pursuant to Rule 13a-14(a) and 18 U.S.C.
Section 1350.