UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-K/A
 Amendment
No. 1
  
  [X]     ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 for the fiscal year ended:
 DECEMBER
31, 2007
 OR
 
 [   ]    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 0-26897
 
 JAVO
BEVERAGE COMPANY, INC.
 (Name of
Registrant as Specified in Its Charter)
  DELAWARE
                48-1264292(State
      or Other Jurisdiction
                (I.R.S.
      Employerof
      Incorporation or Organization)
                Identification
      No.)
  1311
SPECIALTY DRIVE
 VISTA,
CALIFORNIA 92081
 (Address
of principal executive offices, including zip code)
  (760)
560-5286
 (Registrant’s
telephone number)
  Securities
registered under Section 12(b) of the Exchange Act:
  NONE
  Securities
registered under Section 12(g) of the Exchange Act:
 
 COMMON
STOCK, WITH PAR VALUE: $.001,
 SERIES-A
JUNIOR PARTICIPATING PREFERRED STOCK, PAR VALUE $.001 PER SHARE,
 AND
RIGHTS TO PURCHASE SHARES SERIES-A JUNIOR PARTICIPATING
 PREFERRED
STOCK, PAR VALUE $.001 PER SHARE
 (Title of
class)
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes o  No þ
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes o  No þ
 
 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 þ  No o
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this
Form 10-K.  o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the
Act).
  Large
accelerated filer o          Accelerated
filer þ          Non-accelerated
filer o
 
 Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): Yes o  No þ
 
 The
aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 30, 2007 was approximately $171,945,000, based on the last
reported sale price of the Company’s Common Stock as of that date, as reported
on the Over-the-Counter Bulletin Board quotation system.
 
 The
number of shares outstanding of the registrant's Common Stock, $0.001 par value
per share (“Common Stock”), was 156,050,430 as of February 29,
2008.
 
  2
 EXPLANATORY
NOTE
   Javo
Beverage Company, Inc. is filing this Amendment No. 1 on Form 10-K/A to its
Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as
originally filed with the Securities and Exchange Commission on March 20, 2008
(the “Original Filing”), for the purpose of providing additional information
required by Parts III and IV of Form 10-K.  At the time of
the Original Filing, Javo had intended to incorporate the information required
by Part III from its proxy statement for the 2008 annual meeting of
stockholders.
 This
Amendment No. 1 does not change the previously reported financial
statements or, except as noted above, any of the other disclosures contained in
the Original Filing.  This Amendment No. 1 continues to speak as
of the date of the Original Filing and we have not updated or amended the
disclosures contained therein to reflect events that have occurred since the
date of the Original Filing.  Accordingly, this Amendment No. 1
should be read in conjunction with our filings made with the Securities and
Exchange Commission subsequent to the date of the Original Filing.
  
 3
  PART
III
  ITEM
10.                      DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  Compliance
With Section 16(a) of the Exchange Act
  Under
Section 16(a) of the Securities Exchange Act of 1934 and SEC rules, our
directors, executive officers and beneficial owners of more than 10% of any
class of equity security are required to file periodic reports of their
ownership, and changes in that ownership, with the SEC.  Executive
officers, directors and greater-than-10% stockholders are required by SEC
regulations to furnish us with copies of all reports filed under Section
16(a).  To the Company’s knowledge, based solely on the review of
copies of the reports furnished to the Company, reports required to be filed by
our executive officers, directors and greater-than-10% stockholders were timely
filed, other than one report on Form 4 that was filed late on behalf of Richard
Specter reporting a purchase of our common stock.
  Code
of Ethics
  During
2007, the Company adopted a formal written code of ethics that applies to its
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions.  We
have posted a copy of our code of ethics on our website at www.javobeverage.com.  You
may also request a printed copy of the code of ethics, without charge, by
writing us at 1311 Specialty Drive, Vista, California  92081, Attn:
Investor Relations.
  Audit
Committee
  We
currently do not have a standing audit committee.  As a small company
that is traded on the OTC market, we believe that all members of our Board of
Directors acting together, as opposed to a subset of them acting by means of a
committee, is the most efficient and effective framework for us to perform the
functions otherwise associated with an audit committee; therefore, our entire
Board of Directors acts as the audit committee.  The Board of
Directors has determined that William C. Baker qualifies as an audit committee
financial expert as defined in Item 407 of Regulation S-K of the Securities and
Exchange Act of 1934.  We believe that Mr. Baker does not satisfy the
independence standards promulgated by the NASDAQ Stock Market (including
independence standards for audit committee members) due to his ownership of Javo
Dispenser, LLC.  Because we do not have a separate audit committee, we
do not currently have a written audit committee charter or similar
document.  We plan to form a standing audit committee during fiscal
2008.
  ITEM
11.                      EXECUTIVE
COMPENSATION
  Compensation
Discussion and Analysis
  Compensation
Philosophy and Objectives
  Our
compensation program is designed to attract, inspire, motivate and reward
executives responsible for attaining the financial and strategic objectives
essential to our long-term success and growth in stockholder value. The key
objectives of the compensation program are to:
  •
              
              attract
      and retain executives who are talented, qualified and capable of achieving
      our business objectives;
  •
              
              remain
      competitive with the compensation paid to similarly situated executive
      officers at other companies in our
industry;
  •
              
              inspire
      and motivate executives to achieve operating goals through
      performance-based compensation;
 
 •
              
              provide
      a strong, direct link between our financial and strategic goals and
      executive compensation;
  •
              
              align
      the interests of our executives and stockholders by tying elements of
      compensation to the achievement of Company goals;
  and
 
 •
              
              fairly
      reward executives for their
efforts.
  4
 Historically,
the sole compensation element had been a base salary.  Due to the
Company’s limited cash resources, cash bonuses had not been awarded and we had
historically not compensated officers with equity awards so as to minimize
stockholder dilution and to avoid the potential negative impact on the Company’s
ability to raise capital in equity financing transactions.  In fiscal
2007, the Company formed a compensation committee tasked with the goal of
reviewing the design and guiding philosophy for the Company’s executive
compensation practices.  Following a review of historical compensation
levels, overall operating performance and individual officer performance, and in
light of the Company’s success in raising a relatively significant amount of
additional operating capital in December 2006, the compensation committee in
April 2007 recommended, and the independent members of the Board approved, the
establishment of an equity incentive plan and the issuance of equity awards
thereunder, as described more fully below. The adoption of an equity
compensation plan reflects the compensation committee’s desire to align the
long-term financial interests of the management team with the interests of the
stockholders, as well as to reinforce a sense of ownership and overall
entrepreneurial spirit.  The Board in fiscal 2007 also approved a
performance-based discretionary cash bonus program to further inspire and
motivate executives, as more fully described below.
  Establishment
of Compensation Levels
  Historically,
compensation levels have been established through negotiation as each executive
has joined the Company, with the Company establishing the appropriate salary
level through an informal survey by the Board and other members of management of
what are considered to be competitive levels within the Company’s industry and
geographic areas and after giving due regard to internal pay parity
considerations.  In April 2007, the compensation committee reviewed
officer salaries and concluded that salary levels of the Company’s executive
officers were below competitive levels within the Company’s industry and
geographic areas.  The Compensation Committee recommended, and a
majority of the independent members of the Board approved, certain compensation
changes for the Company’s executive officers.  In approving these
changes, the independent directors considered historical compensation levels,
including the lack of equity awards, bonus payments and general salary increases
in prior periods, and individual and Company performance in prior
periods.
 
 Elements
of Executive Officer Compensation
 
 Base Salary. We seek to
provide our executive officers with competitive annual base salaries in order to
attract and retain key employees.  The base salary component of our
executive officer compensation program is not designed to incentivize our
near-term performance (as performance-based cash bonuses are designed to do),
but rather to provide the baseline level of compensation to executive
officers.  In most cases, the base salary component will represent the
largest annual form of compensation to executive officers, although we have no
formal policy regarding the allocation between base salary and other forms of
compensation.  In making decisions regarding base salary levels, the
compensation committee will consider and evaluate the total compensation
package, including possible performance-based cash bonuses and periodic equity
awards, received or to be received by a particular executive officer, and seek
to ensure that the executive officer’s total compensation package is fair,
reasonable and competitive, as determined by the committee, based on the
experience of its members and on comparable compensation levels in our
industry.  In determining appropriate salary levels for a given
executive officer, the compensation committee considers the following
factors:
  •
              
              individual
      performance of the executive, as well as our overall performance, during
      the prior year;
 
 •
              
              level
      of responsibility;
  •
              
              breadth,
      scope and complexity of the
position;
 
 •
              
              internal
      review of the executive’s compensation relative to other executives to
      ensure internal equity; and
  •
              
              executive
      officer compensation levels at other similar companies to ensure
      competitive compensation.
 
 5
 Prior to
December 2006, because the Company had only limited operating capital, the
Company had only increased officer salaries once since 2002.  This
increase was made in late 2006 for one officer in recognition of the expanded
duties that this officer had undertaken.  In 2007, after the
compensation committee reviewed officer salaries and concluded that salary
levels of the Company’s executive officers were below competitive levels within
the Company’s industry and geographic areas, the base salaries of the executive
officers were increased.  These base salary increases for fiscal 2007,
effective as of April 2007, are set forth in the table below for each of our
named executive officers.  We expect the compensation committee will
conduct similar reviews periodically and adjust salaries as necessary.
 
 Name
              
              2006 Base
                Salary
              
              
              2007 Base
                Salary
              
              
              IncreaseCody
      C. Ashwell
              
              $
              180,000
              
              
              $
              210,000
              
              
              16.7
              %Gary
      A. Lillian
              
              
              180,000
              
              
              
              200,000
              
              
              11.1Richard
      A. Gartrell
              
              
              180,000
              
              
              
              200,000
              
              
              11.1William
      E. Marshall
              
              
              162,750
              
              
              
              200,000
              
              
              22.9
 
 The base
salaries actually paid to each of the named executive officers in fiscal 2007
are set forth below in the Summary Compensation Table.
 
 Cash Bonus.Also starting in fiscal
2007, the compensation committee initiated the practice of providing executive
officers with discretionary performance-based cash bonuses, which are
specifically designed to reward executives for the Company’s overall performance
as well as individual performance in a given year.  In April 2007, the
compensation committee considered the Company’s performance and individual
officer performance in prior periods.  The committee then compared
historical compensation levels to the levels of compensation that was judged by
the members of the committee to be typical within the Company’s industry and in
Southern California.  Based on these considerations, the committee
recommended, and a majority of the independent members of the Board approved,
the following bonus awards for 2007.
 
 Name
              
              
              Bonus for
      Fiscal 2007Cody
      C. Ashwell
              
              
              $
              170,000Gary
      A. Lillian
              
              
              
              100,000Richard
      A. Gartrell
              
              
              
              100,000William
      E. Marshall
              
              
              
              100,000
  Equity Awards.  In
April 2007, the compensation committee recommended that the Company adopt an
equity incentive plan, pursuant to which the Company could grant various types
of equity awards to the Company’s employees, including the named executive
officers.  In prior years, the Company had not granted equity awards
to executive officers so as to avoid stockholder dilution, particularly at a
time when the Company was focused on its need to be able to raise additional
capital through equity financings.  Based on the recent stabilization
of the Company’s cash position and improved financial performance, the committee
felt that it would be appropriate to adopt an equity incentive plan and to
provide appropriate equity awards thereunder to the executive
officers.  Accordingly, in April 2007, the Board approved the
Company’s 2007 Stock Option and Incentive Plan, or the 2007 Plan, under which
the Company may grant stock options, restricted stock, performance shares and
unrestricted stock to eligible employees, officers, directors and
consultants.
  Initial
option grants were made under the 2007 Plan in April 2007 to five executive
officers, including each of the named executive officers.  These
option grants vest over five years, with 60% of the shares vesting on the third
anniversary of the grant date, 20% of the shares vesting on the fourth
anniversary of the grant date and 20% of the shares vesting on the fifth
anniversary of the grant date. The options have a ten-year term and an exercise
price of $1.16 per share, which was the fair market value of the common stock on
the date of grant.  By providing for an extended vesting period, the
compensation committee sought to create a retention tool that would incentivize
the named executive officers to remain employed with the Company during the
vesting period and build stockholder value over the option term.
  6
  The value
of the shares subject to the fiscal 2007 option grants to the named executive
officers is reflected in the Summary Compensation Table below and further
information about these grants is reflected in the Grants of Plan-Based Awards
table below.
  Other
Benefits
  Executive
officers are eligible to participate in all of our employee benefit plans, such
as medical, dental, vision, group life and accidental death and dismemberment
insurance, in each case on the same basis as other employees, subject to
applicable law.  We also provide vacation and other paid holidays to
all employees, including executive officers, all of which we believe to be
comparable to those provided at peer companies. These benefit programs are
designed to enable us to attract and retain our workforce in a competitive
marketplace.  Health, welfare and vacation benefits ensure that we
have a productive and focused workforce through reliable and competitive health
and other benefits.
  Tax
and Accounting Considerations
  Deductibility of Executive
Compensation. In making compensation decisions affecting our executive
officers, the compensation committee considers our ability to deduct under
applicable federal corporate income tax law compensation payments made to
executives. Specifically, the compensation committee considers the requirements
and impact of Section 162(m) of the Internal Revenue Code, which limits the
tax deductibility to us of compensation in excess of $1.0 million in any year
for certain executive officers, except for qualified “performance-based
compensation” under the Section 162(m) rules. The compensation committee
considers the Section 162(m) rules as a factor in determining compensation,
but will not necessarily limit compensation to amounts deductible under
Section 162(m). No covered executive’s compensation exceeded $1.0 million
for 2007.
  Accounting for Stock-Based
Compensation. Effective October 1, 2005, we adopted the fair value
recognition provisions of SFAS No. 123(R) to account for all stock grants
under all of our stock plans. Under SFAS No. 123(R), we are required to
estimate and record an expense for each award of equity compensation over the
vesting period of the award. Although we assessed the desirability of granting
shares of restricted stock to our executive officers and employees in lieu of
stock option grants in light of the accounting impact of SFAS No. 123(R),
we ultimately determined to retain our stock option program as the main
component of our long-term compensation program as that program helps to align
management performance with stockholder goals. Accounting rules also require us
to record cash compensation as an expense at the time the obligation is
incurred.
  Role
of Executives in Compensation Decisions
  Historically,
compensation decisions have been made by the entire Board of Directors, with the
Chief Executive Officer not participating in any deliberations or decisions
regarding his own compensation.  In 2007, the Board of Directors
formed a compensation committee, which has been delegated the responsibility to
review the performance and compensation of the Chief Executive Officer on an
annual basis and make recommendations to the independent members of the Board of
Directors regarding the Chief Executive Officer’s compensation
level.  For the remaining executives, the Chief Executive Officer
makes recommendations to the compensation committee, which the compensation
committee takes into account when making its recommendations to the independent
directors regarding officer compensation.
  Allocation
of Compensation
  There is
no pre-established policy or target for the allocation of compensation. The
factors described above, as well as the overall compensation philosophy, are
reviewed to determine the appropriate level and mix of compensation.
Historically, and in 2007, the largest portion of compensation to named
executive officers was granted in the form of base salary.
  7
 Timing
of Compensation
  Compensation,
including base salary adjustments, for our named executive officers is reviewed
annually, usually in the first quarter of the fiscal year and upon promotion or
other change in job responsibilities.
  Minimum
Stock Ownership Requirements
  There are
no minimum stock ownership guidelines for our executives or employees, although
senior members of our management team are encouraged and expected to have a
significant direct interest in the value of our common stock through open market
purchases and/or receipt of equity awards.
  Conclusion
  Our
compensation policies are designed and are continually being developed to retain
and motivate our executive officers and to reward them for outstanding
individual and corporate performance.
  Compensation Committee
Report
  The
compensation committee has reviewed and discussed with management the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K
and, based on such review and discussion, has recommended to the Board that such
report be included in this Annual Report on Form 10-K for the fiscal year ended
December 31, 2007.
  COMPENSATION COMMITTEE
  Ronald S.
Beard, Chairman
 William
C. Baker
 Jerry W.
Carlton
 Terry C.
Hackett
 Richard
B. Specter
  Summary
Compensation Table
  The
following table summarizes compensation paid, awarded or earned for services
rendered during each of the last two fiscal years by our Chief Executive
Officer, Chief Financial Officer and the two other most highly compensated
executive officers in fiscal 2007.  We refer to these executive
officers as our “named executive officers.”
  Name
      and Principal Position
              Fiscal
      Year
              Salary
              Bonus
              Option
                Awards
      (1)
              All
      Other Compensation (2)
              TotalCody
      C. Ashwell
                Chairman
      and Chief Executive Officer
              2007
                2006
              $  202,500
                180,000
              $  170,000
                --
              $  289,304
                --
              $  6,207
                2,616
              $  668,011
                182,616Gary
      A. Lillian
                President
              2007
                2006
              194,167
                180,000
              100,000
                --
              192,869
                --
              6,515
                2,616
              493,551
                182,616Richard
      A. Gartrell
                Chief
      Financial Officer
              2007
                2006
              194,167
                180,000
              100,000
                --
              192,869
                --
              2,428
                2,616
              489,464
                182,616William
      E. Marshall
                General
      Counsel, Sr. Executive
                Vice
      President and Secretary
              2007
                2006
              194,167
                162,750
              100,000
                --
              192,869
                --
              6,515
                2,616
              493,551
                165,366
 
 (1)
              The
      value of the option awards has been computed in accordance with SFAS No.
      123(R), which requires that we recognize as compensation expense the value
      of all stock-based awards, including stock options, granted to employees
      in exchange for their services over the requisite service period, which is
      typically the vesting period, but excluding forfeiture assumptions that
      are used in calculating equity award expense in the Company’s financial
      statements.(2)
              Amounts
      include medical, dental, vision and life insurance premiums paid by
      us.
  8
 Grants
of Plan-Based Awards
  The
following table sets forth certain information regarding grants of plan-based
awards to the named executive officers during fiscal 2007.
  Grant
      Date
              
              Option
      Awards: Number of Securities Underlying Options Granted
                (#)
      (1)
              
              Exercise
      Price of
                Option
      Awards
                ($/Sh)
              
              Grant
      Date Fair Value of Option Awards (2)Cody
      C. Ashwell
              
              4/25/2007
              
              1,500,000
              (3)
              $  1.16
              
              $  1,496,400Gary
      A. Lillian
              
              4/25/2007
              
              1,000,000
              (3)
              1.16
              
              997,600Richard
      A. Gartrell
              
              4/25/2007
              
              1,000,000
              (3)
              1.16
              
              997,600William
      E. Marshall
              
              4/25/2007
              
              1,000,000
              (3)
              1.16
              
              997,600
 
 (1)
              The
      amounts listed reflect stock options granted under our 2007 Stock Option
      and Incentive Plan and are described in the Outstanding Equity Awards at
      Fiscal Year-End Table below.(2)
              The
      grant date fair value of the option awards has been computed in accordance
      with SFAS No. 123(R), which requires that we recognize as compensation
      expense the value of all stock-based awards, including stock options,
      granted to employees in exchange for services over the requisite service
      period, which is typically the vesting period, but excluding forfeiture
      assumptions that are used in calculating equity award expense in the
      Company’s financial statements.(3)
              These
      option awards vest over five years, with 60% of the shares vesting on the
      third anniversary of the grant date, 20% of the shares vesting on the
      fourth anniversary of the grant date and 20% of the shares vesting on the
      fifth anniversary of the grant
date.
  Outstanding
Equity Awards at Fiscal Year-End
  The
following table shows information regarding outstanding equity awards at
December 31, 2007 for our named executive officers.
  Option
      AwardsNumber
      of Securities Underlying Unexercised Options
              
              Option
      Exercise Price
                ($)
              
              Option
                Expiration
      DateName
              
              Exercisable
              
              UnexercisableCody
      C. Ashwell
              
              --
              
              1,500,000
              
              $  1.16
              
              4/25/2017Gary
      A. Lillian
              
              --
              
              1,000,000
              
              1.16
              
              4/25/2017Richard
      A. Gartrell
              
              --
              
              1,000,000
              
              1.16
              
              4/25/2017William
      E. Marshall
              
              --
              
              1,000,000
              
              1.16
              
              4/25/2017
  Option
Exercises and Stock Vested
  No
options were exercised by our named executive officers during fiscal
2007.  As of December 31, 2007, no restricted stock has been granted
under the 2007 Plan.
  9
  Pension
Benefits
  We do not
have a defined benefit plan. Our named executive officers did not participate
in, or otherwise receive any special benefits under, any pension or defined
benefit retirement plan sponsored by us during fiscal 2007.
  Nonqualified
Deferred Compensation
  During
fiscal 2007, our named executive officers did not contribute to, or earn any
amount with respect to, any defined contribution or other plan sponsored by us
that provides for the deferral of compensation on a basis that is not
tax-qualified.
  Employment,
Severance and Change in Control Agreements
  We have entered into employment
agreements with each of the named executive officers.  These
agreements set forth the individual’s base salary, bonus eligibility, equity
compensation and other employee benefits, which are described above in the
Compensation Discussion and Analysis.  Pursuant to their employment
agreements, in January 2002 each named executive officer received a restricted
stock award upon commencement of employment.  At the end of 2003 and
2005, the five top officers of the Company, including the named executive
officers, forfeited their shares of restricted common stock when they
collectively contributed an aggregate of41,550,002 shares of
common stock to the Company treasury in order to facilitate the raising of $9.7
million in investment capital through private placement offerings completed in
2003 and 2005.  The employment agreements of the contributing members
of management were amended in light of these contributions.
  The employment agreements of each of
the named executive officers provide that, in the event of a termination by the
executive for good reason or by the Company without cause, the executive will be
entitled to all accrued salary, vacation time and benefits under any applicable
benefit plans of the Company through the date of termination, as well as a
prorated bonus for the year in which the termination occurs for any then
applicable bonus or bonus plan payable in accordance with the Company’s normal
bonus payment policy.  Additionally, upon the execution of a release
by the executive, the Company will pay to the executive severance pay in an
amount equal to his then base salary until one year from the date of
termination.
  Potential
Payments Upon Termination or Change In Control
  We
currently have no change in control agreements in place for any of our named
executive officers. However, our 2007 Plan contains, and certain option awards
granted thereunder contain, provisions regarding the accelerated vesting of
options in the event of a change in control or a “Sale Event,” which is defined
under the plan as (A) the sale of all or substantially all of the assets of
the Company on a consolidated basis to an unrelated person or entity; (B) a
merger, reorganization or consolidation in which the outstanding shares of
common stock are converted into or exchanged for securities of the successor
entity and the holders of the Company’s outstanding voting power immediately
prior to such transaction do not own a majority of the outstanding voting power
of the successor entity immediately upon completion of such transaction; or (C)
the sale of all or substantially all of the common stock of the Company to an
unrelated person or entity.
  Assuming
that a change in control occurred as of the end of fiscal 2007, and based on our
closing stock price on the last day of trading that year ($0.74) the named
executive officers would have received no change in control benefits because the
exercise price of then outstanding options was higher than the closing price of
our stock.
 Director
Compensation
 Directors received no compensation
for their services as directors during fiscal 2007.
  10
 Compensation
Committee Interlocks and Insider Participation
  The
Company’s compensation committee currently consists of Ronald S. Beard
(Chairman), William C. Baker, Jerry W. Carlton, Terry C. Hackett and Richard B.
Specter.  No member of the compensation committee was, at any time
during fiscal 2007, an officer or employee of the Company.  There are
no compensation committee interlocks between the Company and any other entities
involving our executive officers and Board members who serve as executive
officers or board members of such entities.
    11
 ITEM
      12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.
  The following table sets forth certain information
regarding the beneficial ownership (as defined by Rule 13d-3 under the
Securities Exchange Act of 1934) of the Company’s voting securities as of
March 31, 2008 based on information available to us and filings with the SEC
by:
  ·
              each
      person known to the Company to own more than 5% of any class of the
      Company’s voting securities;
  ·
              each
      of the Company’s directors;
  ·
              each
      of the named executive officers;
and
  ·
              all
      of the Company’s directors and executive officers as a
    group.
  Beneficial
ownership and percentage ownership are determined in accordance with the rules
of the SEC and include voting or investment power with respect to shares of
stock.  This information does not necessarily indicate beneficial
ownership for any other purpose.  Under these rules, shares of common
stock issuable under stock options that are exercisable within 60 days of March
31, 2008 are deemed outstanding for the purpose of computing the percentage
ownership of the person holding the options, but are not deemed outstanding for
the purpose of computing the percentage ownership of any other
person.
  Unless
otherwise indicated and subject to applicable community property laws, to our
knowledge, each stockholder named in the following table possesses sole voting
and investment power over their shares of common stock and/or preferred stock,
except for those jointly owned with that person’s spouse.  Percentage
of beneficial ownership is based on 156,080,826 shares of common stock and
1,952,683 shares of preferred stock outstanding as of March 31,
2008.  Unless otherwise indicated, the address of each person listed
on the table is c/o Javo Beverage Company, 1311 Specialty Drive, Vista,
CA  92081.
 
 Name
      and Address of Beneficial Owner
              
              Shares
      of
                Common
                Stock
                Beneficially
                Held
      (1)
              
              Percentage
                of Common
                Stock
      (2)
              
              
              Shares
      of
                Series
      B
                Preferred
                Stock
                Beneficially
                Held
      (3)
              
              Percentage
                of
      Series B
                Preferred
                Stock
      (4)Cody
      C. Ashwell
              
              9,187,027
              
              5.9
              %
              
              --
              
              --Curci
      Investment Co. (5)
                359
      San Miguel Drive, Suite 201
                Newport
      Beach, CA 92660
              
              8,546,500
              
              5.6
              
              
              207,227
              
              10.6
              %William
      C. Baker
              
              7,666,400
              
              5.0
              
              
              85,009
              
              4.4William
      E. Marshall
              
              1,500,300
              
              1.0
              
              
              --
              
              --Terry
      C. Hackett
              
              1,425,000
              
              *
              
              
              27,751
              
              1.4Jerry
      W. Carlton
              
              1,200,000
              
              *
              
              
              7,855
              
              *Richard
      A. Gartrell
              
              1,015,196
              
              *
              
              
              --
              
              --Richard
      B. Specter
              
              830,215
              
              *
              
              
              3,928
              
              *Stanley
      A. Solomon
              
              810,000
              
              *
              
              
              19,031
              
              1.0Gary
      A. Lillian
              
              750,000
              
              *
              
              
              --
              
              --Ronald
      S. Beard
              
              335,000
              
              *
              
              
              3,928
              
              *All
      executive officers and directors as a group
                (10
      persons)
              
              24,719,138
              
              15.9
              %
              
              147,502
              
              7.6
              %
 _____________
 
 *
              Represents
      beneficial ownership of less than 1%.(1)
              Represents
      shares of common stock held as of March 31, 2008, plus shares of common
      stock that may be acquired upon exercise of options exercisable within
      60 days from March 31, 2008.
  12
 (2)
              Based
      on 156,080,826 shares of common stock outstanding as of March 31, 2008.
      The percentage ownership and voting power for each person (or all
      directors and executive officers as a group) is calculated by assuming the
      exercise of all options exercisable within 60 days of March 31, 2008 held
      by such person and the non-exercise and non-conversion of all other
      outstanding options.(3)
              Represents
      shares of Series B preferred stock held as of March 31,
    2008.(4)
              Based
      on 1,952,683 shares of Series B preferred stock outstanding as of March
      31, 2008.(5)
              Based
      on information reported on a Schedule 13D filed with the SEC on September
      1, 2006, representing shares held by Curci Investments, LLC, and on
      information previously reported to the
Company.
 
 
 EQUITY
COMPENSATION PLAN INFORMATION
 
 The
following table sets forth certain information, as of December 31, 2007,
regarding the Company’s 2007 Stock Option and Incentive Plan.
  Plan
      category
              
              Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
              
              Weighted-average
      exercise price of outstanding options, warrants and rights
              
              Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in first
      column)Equity
      compensation plans approved by security holders
              
              --
              
              --
              
              
              --Equity
      compensation plans not approved by security holders
              
              5,000,000
              (1)
              $  1.16
              
              
              10,000,000Total
              
              5,000,000
              
              1.16
              
              
              10,000,000
  (1)
              Options
      to purchase an aggregate of 4,500,000 shares of common stock were granted
      to Messrs. Ashwell, Gartrell, Lillian and Marshall on April 25,
      2007.
 
  13
  ITEM
      13.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
  Transactions
with Related Parties
  Other
than compensation arrangements described above under the caption “Executive
Compensation” and except as disclosed in this Item 13, we are not a party to any
transactions between us and certain “related parties,” which are generally
considered to be our directors and executive officers, nominees for director,
holders of 5% or more of our outstanding common stock and members of their
immediate families.
  In 2005,
the Company entered into a seven-year rental agreement with Javo Dispenser, LLC
(“LLC”), a related party, to rent liquid concentrate dispensers for placement at
its customer locations.  The LLC is a Delaware limited liability
company owned by Company directors William C. Baker, Terry C. Hackett and
Stanley A. Solomon, two former directors and three other Company
shareholders.  The Company’s Chief Financial Officer serves, without
remuneration of any kind, as the General Manager of the LLC.  The LLC
has agreed to acquire, as needed, up to $2,000,000 worth of liquid dispensers,
which will then be rented to the Company on terms that the Company believes to
be arm’s length and no less favorable than could be obtained from an
unaffiliated supplier.  The term of the rental agreement extends to
2010 and, at the end of the term, the Company has the right to acquire the
dispensers for nominal consideration of $1.00.  The Company believes
that the terms of this agreement are fair and are consistent with the terms that
would be obtained in an arm’s length transaction.  As of December 31,
2007, the LLC had purchased 896 dispensers at a cost of
$2,153,060.  The Company has rented these machines from the LLC and
had incurred a dispenser rental expense of $716,640, $370,791 and $7,291 in
2007, 2006 and 2005, respectively.  The LLC has purchased all the
dispensers it has contracted for and will not purchase additional dispensers
beyond the 896 it has already purchased.
  Related-Party
Transaction Review and Approval
  The
Company does not have a formal policy for the review and approval of related
party transactions, although any such transactions involving an officer or
director are required to be brought before the Board of Directors for
review.  In determining whether to approve or ratify a related party
transaction, the disinterested directors may consider, among other factors they
deem appropriate, the potential benefits to the Company, the impact on a
director’s or nominee’s independence or an executive officer’s relationship with
or service to the Company, whether the related party transaction is on terms no
less favorable than terms generally available to an unaffiliated third-party
under the same or similar circumstances and the extent of the related party’s
interest in the transaction.  In deciding to approve a transaction,
the disinterested directors may, in their sole discretion, impose such
conditions as they deem appropriate on the Company or the related party in
connection with their approval of any transaction.  Any transactions
involving the compensation of executive officers, however, are to be reviewed
and approved by the compensation committee.
  Board
Independence
  The
Company believes that Ronald S. Beard, Jerry W. Carlton and Richard B. Specter
satisfy the independence standards set forth under the rules of the NASDAQ Stock
Market; William C. Baker, Terry C. Hackett and Stanley A. Solomon would not
satisfy these independence standards due to their ownership of Javo Dispenser,
LLC and Cody C. Ashwell would not satisfy these standards due to the fact that
he currently serves as our Chief Executive Officer.  The Company has
defined independence with reference to NASDAQ Marketplace Rule 4200 and has
considered known facts and circumstances, including stock ownership levels and
related-party transactions, that could reasonably be expected to potentially
impact independence.  Although the Company is not listed on the NASDAQ
Stock Market, the Company has applied the NASDAQ independence rules to make
these independence determinations.
  14
 Board
Committees
  We do not
have a standing audit or nominating committee. As a small company, we believe
that all of our directors acting together, as opposed to a subset of them acting
by means of a committee, is the most efficient and effective framework for us to
perform the functions otherwise associated with audit and nominating committees.
Our compensation committee was formed on March 20, 2007.
  Audit
Committee.Because we do not have an
audit committee, the entire Board of Directors acts as the audit committee. The
Board of Directors believes that Cody C. Ashwell, William C. Baker, Terry C.
Hackett and Stanley A. Solomon are not independent under the rules of the NASDAQ
Stock Market.
  Compensation
Committee.The
compensation committee currently consists of Ronald S. Beard (Chairman), William
C. Baker, Jerry W. Carlton, Terry C. Hackett and Richard B.
Specter.  The Board of Directors has determined that all members of
the compensation committee, with the exception of William C. Baker and Terry C.
Hackett, are independent directors under the rules of the NASDAQ Stock Market.
The compensation committee reviews and advises the Board of Directors on all
compensation arrangements for executive officers and establishes and reviews
general policies relating to the compensation and benefits of our officers and
employees. The compensation committee is governed by a written charter approved
by our Board of Directors. The compensation committee’s report is included in
this Annual Report on Form 10-K.
  Nominating
Committee.Because we do
not have a nominating committee, all of the members of the Board of Directors
participate in the consideration of director nominees. The Board of Directors
believes that Cody C. Ashwell, William C. Baker, Terry C. Hackett and Stanley A.
Solomon are not independent under the rules of the NASDAQ Stock Market. We do
not currently have a written nominating committee charter or similar
document.
 
  ITEM
14.                PRINCIPAL
ACCOUNTANT FEES AND SERVICES
  Fees for Independent Registered
Public Accounting Firm
  The
following is a summary of the fees billed to the Company by Farber Hass Hurley
& McEwen LLP for professional services rendered for the fiscal years ended
December 31, 2007 and 2006. These fees are for work performed in the fiscal
years indicated and, in some instances, we have estimated the fees for services
rendered but not yet billed.
  2007
              
              2006Audit
      Fees:
              
              $  106,636
              
              $  104,400Consists
      of fees billed for professional services rendered for the audit of the
      Company’s annual financial statements and review of financial statements
      included in the registrant's quarterly reports or services that are
      normally provided by the accountant in connection with statutory and
      regulatory filings or engagementsAudit-Related
      Fees:
              
              0
              
              0Consists
      of fees billed for assurance and related services that are reasonably
      related to the performance of the audit or review of the Company’s
      financial statementsTax
      Fees:
              
              0
              
              0Consists
      of fees billed for professional services rendered for
      tax  compliance, tax advice and tax planningAll
      Other Fees:
              
              0
              
              0Consists
      of fees billed for other products and services not described
      aboveTotal
      All Fees:
              
              $  106,636
              
              $  104,400
 
  15
 Pre-Approval
Policies and Procedures
  Before
our independent registered public accounting firm is engaged by the Company to
render audit or non-audit services, the engagement and fees are pre-approved by
the Company’s Board of Directors acting as the Company’s audit
committee.  All audit fees were so pre-approved in 2007.
    16
 PART
IV
 
 ITEM
15.               EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
 
 (b) Exhibits
  The
following exhibits are incorporated by reference or filed as part of this
report.
  Exhibit
                Number
              
              Description
              
              Incorporated
      by Reference From
              
              Filing
      Date
  2.1
              
              Agreement
      and Plan of Merger, dated August 15, 2002, by and between La Jolla Fresh
      Squeezed Coffee Co., Inc. and Javo Beverage Company, Inc.
              
              Current
      Report on Form 8-K, as Exhibit 3.1
              
              August
      19, 20023.1
              
              Amended
      and Restated Certificate of Incorporation of the
Registrant
              
              Current
      Report on Form 8-K, as Exhibit 3.5
              
              November
      6, 20063.2
              
              Bylaws
      of the Registrant, as adopted June 21, 2002
              
              Current
      Report on Form 8-K, as Exhibit 3.3
              
              August
      19, 20024.1
              
              Shareholder
      Rights Agreement, dated July 1, 2002, by and between Javo Beverage
      Company, Inc. and Corporate Stock Transfer, Inc. as Rights
      Agent
              
              Current
      Report on Form 8-K, as Exhibit 4.2
              
              August
      19, 20024.2
              
              Certificate
      of Designation of Series B Preferred Stock
              
              Current
      Report on Form 8-K, as Exhibit 3.4
              
              June
      7, 20064.3
              
              Securities
      Purchase Agreement, dated December 14, 2006, by and among Javo Beverage
      Company, Inc. and the Investors named therein
              
              Current
      Report on Form 8-K, as Exhibit 10.6
              
              December
      18, 20064.4
              
              Registration
      Rights Agreement, dated December 15, 2006, by and among Javo Beverage
      Company, Inc. and the Investors named therein
              
              Current
      Report on Form 8-K, as Exhibit 10.7
              
              December
      18, 20064.5
              
              Form
      of Senior Convertible Note
              
              Current
      Report on Form 8-K, as Exhibit 10.8
              
              December
      18, 20064.6
              
              Form
      of Series A Warrant to Purchase Common Stock
              
              Current
      Report on Form 8-K, as Exhibit 10.9
              
              December
      18, 20064.7
              
              Form
      of Series B Warrant to Purchase Common Stock
              
              Current
      Report on Form 8-K, as Exhibit 10.10
              
              December
      18, 20064.8
              
              Form
      of Series C Warrant to Purchase Common Stock
              
              Current
      Report on Form 8-K, as Exhibit 10.11
              
              December
      18, 200610.1*
              
              Employment
      Agreement by and between La Jolla Fresh Squeezed Coffee Company, Inc. and
      Cody C. Ashwell
              
              Annual
      Report on Form 10-KSB for the fiscal year ended December 31, 2001, as
      Exhibit 10.1
              
              April
      16, 200210.2*
              
              Employment
      Agreement by and between La Jolla Fresh Squeezed Coffee Company, Inc. and
      Gary A. Lillian
              
              Annual
      Report on Form 10-KSB for the fiscal year ended December 31, 2001, as
      Exhibit 10.2
              
              April
      16, 200210.3*
              
              Employment
      Agreement by and between La Jolla Fresh Squeezed Coffee Company, Inc. and
      Richard A. Gartrell
              
              Annual
      Report on Form 10-KSB for the fiscal year ended December 31, 2001, as
      Exhibit 10.3
              
              April
      16, 200210.4*
              
              Employment
      Agreement by and between La Jolla Fresh Squeezed Coffee Company, Inc. and
      William E. Marshall
              
              Annual
      Report on Form 10-KSB for the fiscal year ended December 31, 2001, as
      Exhibit 10.4
              
              April
      16, 200210.5*
              
              Employment
      Agreement by and between La Jolla Fresh Squeezed Coffee Company, Inc. and
      Stephen F. Corey
              
              Annual
      Report on Form 10-KSB for the
                Fiscal
      year ended December 31, 2001, as
                Exhibit
      10.5
              
              April
      16, 2002
   17
 Exhibit
                  Number
                
                Description
                
                Incorporated
      by Reference From
                
                Filing
      Date
  10.6
              
              Net
      Industrial Lease (Facility Lease), dated August 12, 2002, by and between
      Square One Partners and La Jolla Fresh Squeezed Coffee Company,
      Inc.
              
              Quarterly
      Report on Form 10-QSB for the
                Quarter
      ended June 30, 2002, as Exhibit 10.1
              
              August
      15, 200210.7*
              
              2007
      Stock Option and Incentive Plan
              
              Current
      Report on Form 8-K, as Exhibit 10.1
              
              May
      1, 200810.8*
              
              Form
      of Non-Qualified Stock Option Agreement for Company Employees for use with
      2007 Stock Option and Incentive Plan
              
              Current
      Report on Form 8-K, as Exhibit 10.2
              
              May
      1, 200810.9*
              
              Form
      of Non-Qualified Stock Option Agreement for Company Non-Employee Directors
      for use with 2007 Stock Option and Incentive Plan
              
              Current
      Report on Form 8-K, as Exhibit 10.3
              
              May
      1, 200810.10*
              
              Form
      of Restricted Stock Award Agreement for use with 2007 Stock Option and
      Incentive Plan
              
              Current
      Report on Form 8-K, as Exhibit 10.4
              
              May
      1, 200810.11*
              
              Form
      of Performance Share Award Agreement for use with 2007 Stock Option and
      Incentive Plan
              
              Current
      Report on Form 8-K, as Exhibit 10.5
              
              May
      1, 200823.1
              
              Consent
      of Independent Registered Public Accounting Firm
              
              Annual
      Report on Form 10-K for the year
                ended
      December 31, 2007
              
              March
      20, 200831.1
              
              Certification
      of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley
      Act of 2002
              
              Filed
      herewith31.2
              
              Certification
      of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley
      Act of 2002
              
              Filed
      herewith32.1
              
              Certification
      of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley
      Act of 2002
              
              Filed
      herewith32.2
              
              Certification
      of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley
      Act of 2002
              
              Filed
      herewith
  ______________
  *
Management contract or compensatory plan or arrangement.
  18
 SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, this April 29,
2008.
  JAVO
      BEVERAGE COMPANY, INC.,
                    a
      Delaware CorporationBy:
                  /s/ Cody
      C. AshwellCody
      C. Ashwell
                    Chairman
      and Chief Executive Officer
 
  
 
 19