Attached files
| file | filename |
|---|---|
| EX-32.1 - EXHIBIT 32.1 - ELDORADO ARTESIAN SPRINGS INC | c19384exv32w1.htm |
| EX-23.1 - EXHIBIT 23.1 - ELDORADO ARTESIAN SPRINGS INC | c19384exv23w1.htm |
| EX-31.1 - EXHIBIT 31.1 - ELDORADO ARTESIAN SPRINGS INC | c19384exv31w1.htm |
| EX-31.2 - EXHIBIT 31.2 - ELDORADO ARTESIAN SPRINGS INC | c19384exv31w2.htm |
| EX-32.2 - EXHIBIT 32.2 - ELDORADO ARTESIAN SPRINGS INC | c19384exv32w2.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
| þ | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended March 31, 2011
| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 000-18235
ELDORADO ARTESIAN SPRINGS, INC.
(Exact name of registrant as specified in its charter)
| Colorado | 84-0907853 | |
| (State or Other Jurisdiction of | (IRS Employer | |
| Incorporation or Organization) | Identification No.) | |
| 1783 Dogwood Street | ||
| Louisville, Colorado | 80027 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (303) 499-1316
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of Class)
Common 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
15(d) of the Exchange 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, and (2)
has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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, a
non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
| (Do not check if a smaller reporting company) |
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
State the aggregate market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of the last business day of the registrant’s most recently
completed second fiscal quarter: $3,268,046
As of June 29, 2011, the Issuer had a total of 6,036,091 shares of common stock, $.001 par value,
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s definitive proxy statement for the 2011 Annual Meeting of Stockholders,
expected to be held in September 2011, are incorporated by reference into Part III of this Form
10-K.
ELDORADO ARTESIAN SPRINGS, INC.
TABLE OF CONTENTS
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Table of Contents
PART I
Introductory Note. Cautionary Statement Regarding Forward-Looking Information and Risk
Factors. Certain statements made in this Annual Report on Form 10-K 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 and 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. | BUSINESS. |
The Company bottles, markets and distributes natural spring water under the Eldorado Artesian
Spring Water brand. The Company also markets and distributes organic vitamin charged spring water
under the Eldorado Artesian Spring Water brand. The Company distributes to businesses, homes and
offices using our own trucks for distribution primarily in Colorado. The Company also distributes
directly to regional warehouses for major grocery store chains and distributions companies.
Industry Background
Bottled water is perceived by many consumers as being a healthy, natural beverage, and this
perception has driven demand for this product among many consumers. Recently, reports have been
released that show that many water systems in America are contaminated with the residual waste of
pharmaceutical drugs, caffeine, steroids and countless other chemicals that are nearly impossible
for the municipal treatment systems today to eliminate from the water supply. Further fuel to the
water market was provided by the rising health consciousness of people in general, as they have
turned away from high caloric and alcoholic beverages in favor of products that are perceived as
natural and beneficial.
Bottles used for the smaller packaging, typically in sizes 1.5 liters and smaller, are made of
polyethylene terephtalate (PET), a premium clear plastic. These bottles are commonly referred to in
the beverage industry as PET bottles. The PET market has been driven by manufacturers who sell
their water in smaller, more portable sizes, which are sold at retail and intended to fit the
active lifestyles of bottled water consumers. The PET category has been the driving force behind
the explosive growth in bottled water consumption. It is the most competitive market, dominated by
four of the largest food and beverage companies in the world.
While much of the bottled water market is still highly fragmented and controlled by local brands,
consolidation is rapidly occurring, as four companies have come to dominate much of the market.
Larger multi-national companies have been active in acquisitions of smaller more regional bottled
water companies. Coca-Cola (Dasani) and PepsiCo (Aquafina) have both been successful in producing
and marketing their own brands, creating much competition for the smaller regional producers that
typically have higher costs of production and distribution.
In 2006 and 2007, the “Enhanced and Flavored” segment of the beverage market was one of the fastest
growing segments in the industry. Flavored waters included in this segment saw the most significant
growth but the real growth had been in the enhanced or functional waters. Enhanced waters are those
which include specific additives for perceived health or attitude benefits. In September 2007, the
Company introduced a line of enhanced waters that are
differentiated from the others in the market. The product is made with organic ingredients and
vitamins and high quality spring water. The objective is to make a product with superior taste and
quality.
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Table of Contents
Company Background
Eldorado Artesian Springs, Inc. was formed under the laws of the State of Colorado on April 15,
1986, under the name Lexington Funding, Inc. (“Lexington”). Effective April 10, 1987, Lexington
acquired all of the shares of Eldorado Artesian Springs, Inc. (“Eldorado”) of Eldorado Springs,
Colorado. Eldorado, a Colorado corporation, was formed in 1983. In June 1988, Eldorado was merged
into Lexington and Lexington changed its name to Eldorado Artesian Springs, Inc. The primary
business of the Company is the bottling and sale of spring water from springs located in Eldorado
Springs, Colorado on property owned by the Company. In addition to real property, the wells and
springs thereon, and water rights, the Company owns a bottling plant in Louisville, Colorado
(including a building and bottling equipment), associated containers and equipment, resort
buildings, a residential home, and an outdoor swimming pool which are located on the property in
Eldorado Springs, Colorado.
The Company began operations by delivering 5 gallon bottles and renting equipment to homes and
offices as well as delivering 1 gallon bottles to retailers. In 1994, the Company introduced the
1.5 liter bottle, which was followed, in 1995, with the 1.0 liter, 0.5 liter and 24 ounce bottles.
Eldorado introduced its PET bottles to grocery retailers, and these products have gained market
share among the larger retail grocery chains.
The Company bottles the same natural spring water that emanates from the source in Eldorado
Springs, Colorado. The Company also uses additional high speed bottling equipment that at the
Louisville warehouse. By utilizing high speed equipment, and the additional warehouse, bottling and
office space, the Company has been able to realize benefits in increased bottling speeds as well as
efficiencies in transporting and storing raw materials and finished goods.
The Company has reacted to consumer demands by adding additional products to its service and
delivery operations. In order to handle competition from other companies, the Company added
filtration products in July 2003. Currently, the Company services approximately 450 filter
accounts.
In October 2005, the Company added coffee products and coffee equipment as products to be delivered
off of existing route vehicles. The coffee is provided by Green Mountain Coffee Roasters which
offers their various coffee brands to be delivered by our employees. Coffee has been integrated
into the Company’s current distribution channel and is a product that is counter-seasonal to water.
The Company obtained the initial customers utilizing leads from the existing account base as well
as new customers from sales personnel.
In September 2007, the Company introduced a line of Organic Vitamin Charged spring water. The
beverage industry has been influenced by the enhanced water segment of the beverage market. The
Company believes the Organic Vitamin Charged spring water will compete based on the organic
ingredients, superior taste and brand recognition in the Colorado area where we currently
distribute our water products. The Company expects to grow the distribution of this product off of
existing delivery vehicles as well as through other independent distribution companies.
Water Source and Bottling
When the Company purchased mountain property in 1983, included in the purchase price were certain
water rights for Eldorado Springs. These water rights are relatively junior to other water rights
in the South Boulder Creek and South Platte Basins. The Company has the right to beneficially use
all of the water that emanates from the springs in accordance with its water rights unless a more
senior rights holder makes a call on the water. A senior call might occur in the winter or when
runoff is low and insufficient to meet the water needs of more senior water users below Eldorado
Springs. Because of Colorado’s drought conditions, the possibility of a senior call has increased.
For many years, the Company had enrolled its water rights in a substitute supply plan approved by
the Colorado State Engineer, which serves to protect the Company’s water supply in the event of a
senior call.
On September 30, 2010, the Company entered into a Water Lease Agreement with Denver Wells, LLC, for
the right to 50 acre feet of non-tributary ground water. The term of the lease is for 13 months,
commencing October 1, 2010 and continuing through October 31, 2011. The lease may be extended upon
mutual written agreement of the parties executed prior to the expiration of the lease. The cost of
the lease is $39,000 for 50 acre feet, to be paid at the rate of $3,000 per month on the first of
each month of the lease term. The first payment was made on October 5, 2010. The
Company is current on all required payments.
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The Company is also pursuing other possible supply sources for use in augmenting the stream flows
as a result of the Company’s withdrawals of water. There is no assurance that any of the renewal
applications, Colorado Water Court applications for permanent augmentation, or any other
alternative arrangements being sought by the Company will be approved. Denial of the Company’s
applications for substitute or for a permanent augmentation plan coupled with a senior call on the
Company’s water will likely result in a significant financial impact on the Company. The Company
will also incur significant expenses in connection with its efforts to obtain approval of these
plans. In the event of the approval of a permanent augmentation plan, the Company will also incur
additional expenses associated with its required purchase of additional water rights.
Water is produced at two springs and eleven wells on the Company’s property. The well heads are in
close proximity to the fill station and nothing is added to or removed from the water during the
bottling process.
In Eldorado Springs, the water is loaded into stainless steel tanker trucks and transported to
the bottling facility in Louisville, Colorado. Once at the facility, the water is transferred into
stainless steel tanks until bottled. The Company installed all stainless steel piping in the
bottling facility and monitors quality on a regular basis to assure the highest quality products.
As a safeguard to any contamination, the water passes through a protective filter and ultra-violet
light. The product is packaged in high quality plastic bottles, and each bottle is sealed
with a tamper evident cap.
Products
The Company is principally in the business of selling bottled artesian spring water. Sales of the
Company’s water have historically been made by selling five gallon and three gallon bottles of
water directly to homes and businesses, retail grocery stores and distributors located in Colorado.
The Company also sells its water at wholesale to retail food stores (grocery chains), by packaging
the water into smaller, more convenient sizes which are suitable for retail distribution. The
Company rents coolers to customers to dispense the bottled water. The Company also rents and sells
filtration equipment to customers for home and office accounts. The Company added coffee and coffee
equipment to its product mix delivered to customers from route delivery vehicles. The coffee is
packaged by Green Mountain Coffee Roasters and is delivered by the Company’s employees. The
Company’s water bottling operation accounted for approximately 98% of the Company’s revenues for
the fiscal year ended March 31, 2011. The Company added a line of organic vitamin charged spring
water to the product line and those products were available for distribution in September 2007.
Additionally, in Eldorado Springs, the Company owns and operates a public swimming pool on its
property during the summer months and rents outs a single-family home.
Sales and Distribution
The Company sells its bottled artesian spring water into two distinct segments of the market for
bottled water.
Home/Commercial Delivery Business
Direct delivery of bottled water to homes and businesses has historically been the focus of the
Company’s business. The Company’s bottled water delivery business primarily consists of the sale of
five gallon and three gallon containers of water to customers who lease water dispensers from the
Company. The Company delivers these bottles directly to customers using trucks owned or leased by
the Company. The Company’s delivery sales are made primarily in the Denver/Boulder, Colorado
metropolitan area (but also in selected other cities along the front range). As of March 31, 2011,
the Company had approximately 12,500 active delivery accounts, and the delivery business currently
accounts for roughly 62% of the Company’s revenues. Of the five and three gallon accounts,
approximately 55% were home accounts and 45% were commercial accounts.
PET Packaging/Retail Distribution Business
The PET business consists principally of the wholesale distribution of the Company’s PET products
to grocery store chains with operations primarily in Colorado. The Company uses its own trucks to
deliver its PET water products to grocery customers’ warehouses in the Denver metropolitan area.
From there, the water is shipped to customers’ grocery stores throughout Colorado. In addition,
because some of the grocery customers’ warehouse distribution extends beyond the State of Colorado,
the Company receives some distribution at these customers’ grocery stores located in New Mexico,
Wyoming, Kansas, Utah, Oklahoma and Texas.
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Table of Contents
Marketing
The Company focuses on three major areas in marketing its products: five gallon and three gallon
sales, small package products, and brand name recognition.
The five gallon and three gallon products are primarily sold through the acquisition of new
accounts attracted by personal sales representatives at local events strategically located
throughout the area. The efforts of the staff are augmented by yellow pages, the Company’s web
site, radio, and occasional television advertisements and by product donation to local events.
The smaller packages and the organic vitamin charged spring water, which are sold principally
through retail chain stores, are effectively marketed by using point of purchase inducements to
gain new trial customers, usually in the form of discounts in price in conjunction with signage.
The Company attempts to build brand name awareness by sponsoring or participating in many local
events. The Company has been a sponsor of many races and events including the Bolder Boulder 10K
race, the Eldorado Springs Cancer Research Run, the Taste of Colorado and many other local events.
Supplies
Water bottled by the Company comes from springs located on the Company’s property in Eldorado
Springs, Colorado which have been flowing for many years. While the Company could lose rights to
the spring water, the Company does not foresee any disruption in the flow of the spring water. The
Company currently sources all of its raw materials from outside vendors. Suppliers of the bottles
have experienced seasonal shortages resulting from resin shortages. Changes in the supply of the
bottles can affect the prices. The Company tries to mitigate possible shortages by maintaining
sufficient inventory safety stocks so as not to interrupt production.
Seasonality
Sales tend to be mildly seasonal in the bottled water business. A ten to fifteen percent
differential in sales is normally experienced between the peak summer months from May to September
and the low winter months from November to March. As a result, revenues tend to be highest in the
Company’s first and second fiscal quarters, and somewhat lower in the third and fourth fiscal
quarters.
Competition
The bottled water industry has numerous competitors. Generally, the industry is made up of a few
large companies (who own multiple brands), smaller companies whose products are distributed only on
a regional or local basis and some private label brands. The Company’s competitors include more
diversified corporations having substantially greater assets and larger sales organizations than
the Company, as well as other small firms. The Company’s competitors in the local Denver/Boulder
area for home and office delivery include Deep Rock and Sierra Springs. The Company also competes
in the retail area for the smaller PET packages and the organic vitamin charged spring water with
products including Aquafina, Arrowhead, Evian, Deep Rock, Dasani, Vitamin Water, Propel, Snapple
and various private label brands. The Company is a smaller regional company compared to the
competitors as most of the Company’s products are sold in Colorado. The Company competes on the
basis of product quality, customer service, and price. The Company believes that the products’
superior taste, competitive pricing and attractive packaging are significant factors in maintaining
the Company’s competitive position.
Government Regulation
The Company’s bottling operations are subject to regulation by the U.S. Food and Drug
Administration and the Colorado Department of Public Health and Environment Consumer Protection
Division. Weekly product and source bacteriological tests are required, and annual inspections are
performed.
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The Company is also subject to regulation under the Colorado Primary Drinking Water Regulations and
the United States Safe Drinking Water Act. These regulations pertain to the operation of the water
utility system owned by the
Company that services the town of Eldorado Springs. These regulations are administered by the
State of Colorado Health Department Drinking Water Division and regular periodic testing is
required for this operation.
The Company operates a swimming pool that is also subject to regulation by the State of Colorado.
These regulations are administered by the Boulder County Health Department and require periodic
daily testing and agency inspections.
It is the Company’s understanding that it is in compliance with these regulations as communicated
by representatives of the responsible local agencies. Compliance with the standards and regulations
above do not require material expenditures.
Employees
As of March 31, 2011, the Company had 62 full-time employees. During the summer months, the Company
employs approximately 14 seasonal employees for the operation of the pool.
| ITEM 1A. | RISK FACTORS. |
As a smaller reporting company, this item is not required.
| ITEM 1B. | UNRESOLVED STAFF COMMENTS. |
None.
| ITEM 2. | PROPERTIES. |
The Company owns property in two locations.
Eldorado Springs, Colorado
The Company owns approximately 24 acres of land in Eldorado Springs, Colorado. The buildings owned
by the Company at this location total approximately 12,000 square feet. The Company uses this
warehouse space for the fill station for the spring water as well as for storage of products from
time to time. The Company also continues to use office space next to the warehouse. As part of the
property in Eldorado Springs, the Company owns the wells and springs thereon and certain water
rights. The Company owns an outdoor swimming pool that is operated during the summer months. The
Company rents out a residential house that is owned by the Company. Virtually all of the Company’s
property in Eldorado Springs is pledged as collateral on Company loan balances.
Louisville, Colorado
In August 2001, the Company purchased a new facility in Louisville, Colorado located approximately
10 miles from Eldorado Springs. This facility is approximately 40,000 square feet. The Company
utilizes approximately 9,000 square feet for office space for its corporate headquarters. The
facility also serves as the bottling facility and warehouse space for raw and finished materials.
The building sits on 6.6 acres owned by the Company. The facility is financed through traditional
bank financing.
| ITEM 3. | LEGAL PROCEEDINGS. |
There are no material, pending legal proceedings to which the Company is a party or to which any of
it properties are subject.
| ITEM 4. | [REMOVED AND RESERVED] |
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Table of Contents
PART II
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES. |
Market Price of Common Stock
The Company’s common stock is traded in the over-the-counter market on the Nasdaq’s OTC Bulletin
Board (“OTCBB”) under the symbol “ELDO.” Corporate Stock Transfer is the Company’s transfer agent
and registrar, and is able to respond to inquiries from stockholders on its website:
www.corporatestock.com or at its mailing address: 3200 Cherry Creek Drive South, Suite #430,
Denver, CO 80209. The quotations presented below reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not necessarily represent actual transactions. The
following table sets forth, for the periods shown, high and low sales prices of our common stock,
as quoted by the OTCBB:
| Fiscal Year 2011 | High | Low | ||||||
Fourth Quarter through March 31, 2011 |
$ | 0.73 | $ | 0.35 | ||||
Third Quarter through December 31, 2010 |
$ | 0.45 | $ | 0.35 | ||||
Second Quarter through September 30, 2010 |
$ | 0.45 | $ | 0.35 | ||||
First Quarter through June 30, 2010 |
$ | 0.40 | $ | 0.39 | ||||
| Fiscal Year 2010 | High | Low | ||||||
Fourth Quarter through March 31, 2010 |
$ | 1.50 | $ | 0.35 | ||||
Third Quarter through December 31, 2009 |
$ | 0.59 | $ | 0.32 | ||||
Second Quarter through September 30, 2009 |
$ | 1.10 | $ | 0.30 | ||||
First Quarter through June 30, 2009 |
$ | 1.40 | $ | 0.25 | ||||
The last price at which the Company’s common stock was sold was $0.50 on May 5, 2011.
Holders
The Company had 142 record owners of its common stock as of June 29, 2011.
Dividends
No dividends have been declared or paid to date on the Company’s common stock, and the Company does
not anticipate paying dividends in the foreseeable future. The Company follows a policy of cash
preservation for future use in the business.
Securities Authorized for Issuance Under Equity Compensation Plans
Information regarding securities authorized for issuance under equity compensation plans is
incorporated by reference to our Proxy Statement for the 2011 Annual Meeting of Stockholders.
Recent Sales of Unregistered Securities
During the year ended March 31, 2011, we did not have any sales of securities in transactions that
were not registered under the Securities Act of 1933, as amended, that have not been reported in a
Form 8-K or Form 10-Q.
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Issuer Purchases of Equity Securities
The following table presents information with respect to repurchases of common stock made by us
during the quarter ended March 31, 2011. The shares presented in the table below are shares of
common stock that were forfeited by our President, Mr. Douglas Larson, and transferred to the
Company pursuant to a pledge agreement dated August 30, 2001 in exchange for the cancellation of an
outstanding note that was in default as of March 31, 2011.
ISSUER PURCHASES OF EQUITY SECURITIES
| Maximum Number (or | ||||||||||||||||
| Total Number of Shares | Approximate Dollar Value) | |||||||||||||||
| Purchased as Part of | of Shares That May Yet Be | |||||||||||||||
| Total Number of Shares | Average Price Paid per | Publicly Announced Plans | Purchased Under the Plans | |||||||||||||
| Period | Purchased | Share | or Programs | or Programs | ||||||||||||
January 1-31, 2011 |
— | — | — | — | ||||||||||||
February 1-28, 2011 |
— | — | — | — | ||||||||||||
March 1-31, 2011 |
500,000 | (1) | $ | 0.35 | (2) | — | — | |||||||||
Total |
500,000 | (1) | $ | 0.35 | (2) | — | — | |||||||||
| (1) | On March 31, 2011, Mr. Larson, our President, forfeited and transferred 500,000 shares
of common stock to the Company pursuant to a pledge agreement in exchange for the cancellation
of a note that was in default. As of March 31, 2011, the total amount owed on the note was
$398,076 and the shares of common stock forfeited and transferred to us had an aggregate value
of $175,000 based on a price of $0.35 per share. As a result, the difference between the
outstanding amount owed at default and the value of the shares received in exchange for the
cancellation of the note is $223,076, which is a personal benefit to Mr. Larson and will be
reported as compensation to Mr. Larson in the summary compensation table to be included in our
proxy statement for our 2011 annual meeting of shareholders and which is incorporated by
reference into this Form 10-K. |
|
| (2) | The average price per share is based upon the closing price of the common stock on
March 31, 2011. |
| ITEM 6. | SELECTED FINANCIAL DATA |
As a smaller reporting company, this item is not required.
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
The following Management’s Discussion and Analysis (MD&A) is intended to help the reader understand
our Company. The MD&A should be read in conjunction with our consolidated financial statements and
accompanying notes. The MD&A includes the following sections:
| • | Forward Looking Statements |
| • | Business Overview |
| • | Results of Operations — Year Ended March 31, 2011 Compared to Year Ended March 31, 2010 |
| • | Liquidity and Capital Resources |
| • | Critical Accounting Issues |
Forward Looking Statements
This filing contains certain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and the Company
intends that such forward-looking statements be subject to the safe harbors created thereby. These
forward-looking statements include the plans and objectives of management for future operations,
including plans and objectives relating to services offered by and future economic performance of
the Company.
The forward-looking statements included herein are based on current expectations that involve a
number of risks and uncertainties that might adversely affect the Company’s operating results in
the future in a material way. Such risks and uncertainties include but are not limited to the
following: availability of debt and equity financing, ability to purchase additional water rights,
interest rate fluctuations, effects of regional economic and market conditions, labor and marketing
costs, operating costs, packaging costs, intensity of competition and legal claims.
9
Table of Contents
Business Overview
Eldorado Artesian Springs, Inc. is a Colorado based company that is primarily involved in the
bottling and marketing of natural artesian spring water. The spring is located in the foothills of
the Colorado Rocky Mountains and is surrounded by thousands of acres of state and city park land.
The water rises up through many layers of sandstone under its own artesian pressure. Currently, the
Company’s operations consist of its home/commercial delivery business (5 and 3 gallon bottles) and
its PET (polyethylene terephtalate, a premium clear plastic container) consumer business. The
Company also recently introduced an organic vitamin charged spring water that is distributed
locally off of the Company’s vehicles as well as to regional distribution facilities. A small
segment of the Company’s business includes the sales and rental of filtration and coffee dispensing
equipment as well as the sale of coffee. The Company also owns and operates a public swimming pool
on its property during the summer months and rents out a single-family home on the property.
The Company’s headquarters and bottling facility consists of a total of approximately 40,000 square
feet in Louisville, Colorado. The water is transported to the facility in stainless steel tanker
trucks. Once at the bottling plant, the water is then transferred into stainless steel holding
tanks until it is used for bottling.
Results of Operations
Performance Overview — Recent Trends
For the fiscal year ended March 31, 2011, the Company reported an increase in overall revenue of
4.4%. The increase in revenue was due to overall increase in unit volumes across all categories.
The number of home and office accounts increased for the fiscal year ended March 31, 2011 and the
total units for many products increased to the retail establishments.
The Company continues to utilize advertising and promotional budgets to help promote various
products. The Company has been pursuing ways to offer more sizes of the products off of our own
delivery vehicles to increase sales to existing customers.
The Company continues to look for ways to decrease costs and improve overall efficiencies. Overall
operating expenses increased 2.5% for the year ended March 31, 2011 as compared to the same period
ended March 31, 2011. The Company incurred a one-time non cash expense of $223,076 related to the
default in a note due from Douglas A. Larson, the Company’s President, Chief Executive Officer and
a director. Without the one-time non cash expense, total operating expenses would have decreased by
6%. Operating expenses decreased from 76.1% of sales for the fiscal year ended March 31, 2010 to
74.7% of sales for the fiscal year ended March 31, 2011.
The Company believes that we are in a position to continue to grow in the markets we
presently service by offering additional products and utilizing advertising and promotional budgets
for promoting the products. We will continue to pursue additional business in new and emerging
markets. In addition, we continue to look for ways to decrease operating costs in order to achieve
profitability in the future.
Year Ended March 31, 2011 Compared to Year Ended March 31, 2010
Sales
Sales for the year ended March 31, 2011 were $8,853,631 compared to $8,476,775 for the same period
ended March 31, 2010, an increase of 4.4%.
Sales of the products used in the delivery to homes and offices which include 5 and 3 gallons
bottles as well as the dispenser units were 55.1% of sales and increased from $4,790,588 for fiscal
year 2010 to $4,877,794 for fiscal year 2011, an increase of $87,206 or 1.8%. Total units of 5 and
3 gallon products decreased less than 1% from the fiscal year ended March 31, 2010 to the fiscal
year ended March 31, 2011 while the average selling price increased approximately 1%. General
economic conditions have affected the total units delivered off of our existing vehicles as
customers look for ways to decrease expenses. The Company continues to look for additional products
to distribute to existing and new customers to increase sales off of existing route vehicles.
10
Table of Contents
The Company increased filter rental and sales from $140,247 in fiscal year 2010 to $167,559 in
fiscal year 2011, an increase of $27,312 or 19.5%. Consumers are looking for ways to decrease
expenses and are substituting filtration units for the 5 and 3 gallon products. The Company also
sells coffee and coffee equipment from our existing route vehicles. For the year ended March 31,
2011, sales for coffee, coffee equipment and accessories increased from $153,531 for the fiscal
year ended March 31, 2010 compared to $165,069 for the fiscal year ended March 31, 2011. The
Company continues to experience competition for the coffee service from local distributors as well
as on-line web sites that promote similar products.
Sales of the Company’s PET products (.5 liter to 1.5 liter sizes), including private label
products, represented 16.4% of sales for fiscal year 2011 and 17.4% of sales for fiscal year 2010
or $1,452,159 and $1,474,439, respectively. This represented a decrease of 1.5%. The Company’s
gallon size products were 10.9% of sales or $965,334 in fiscal year 2011 compared to $811,442 in
fiscal year 2010, an increase of 18.9%. Sales for the private label one gallon purified water
products were $752,177 in fiscal year 2011 compared to $760,819 in fiscal year 2010, a decrease of
approximately 1%. The Company expects to continue shipments of this product in the future and will
look to expand distribution where available.
In the second quarter of the fiscal year ended March 31, 2008, the Company began introducing an
organic vitamin charged spring water for distribution off of existing route vehicles as well as
through major distributors. The product is now available throughout Colorado and in portions of
surrounding states. The line of organic vitamin charged spring water is available in Vitamin
Cottage, King Soopers (Kroger stores), Costco and Whole Foods which is one of the nation’s premier
health food supermarkets. Additionally, the product is available to more than 2,000 other retail
outlets, convenience stores and on-premise locations by UNFI and US Food Service distributors. The
Company is utilizing purchasing incentives for the retail buyers as well as supporting in store
sampling which shows increased market acceptance where customers have had the opportunity to
sample. The Company has been able to add additional distributors. Total gross sales for the organic
vitamin charged spring water were $302,582 for the fiscal year 2011 compared to $233,011 in fiscal
year 2010.
Gross Profit/Cost of Goods Sold
Cost of goods sold for fiscal year 2011 were $2,363,365, or 26.7% of sales, compared to $2,129,757
or 25.1% of sales for fiscal year 2010. Gross profit increased from $6,347,018, or 74.9% of sales
in fiscal year 2010 to $6,490,266 or 73.3% of sales for fiscal year 2011. Overall, gross profit
increased 2.3% from the fiscal year ended March 31, 2010.
Cost of goods for the home and office products were $279,964, or 5.7% of 5 and 3 gallon sales for
fiscal year 2011, compared to $324,047, or 6.8% of 3 and 5 gallon sales for fiscal year 2010. Cost
of goods for the Eldorado brand 1 gallon products were $402,275, or 41.7% of 1 gallon sales for
fiscal year 2010, compared to $323,551, or 39.9% of 1 gallon sales for fiscal year 2010. Cost of
goods for the private label purified water was $504,186 and $426,329, or 67% and 56% of sales for
fiscal 2011 and 2010. The purified water has a lower average selling price which results in higher
cost of goods as a percent of sales. Cost of goods for the PET products were $694,718, or 47.8% of
sales for fiscal year 2011, compared to $723,376, or 49.1% of PET sales for fiscal year 2010.
Recently, the cost of goods for the bottles and packaging of the gallon and PET products has
decreased resulting in increased profit for these categories.
Operating Expenses
Total operating expenses increased to $6,681,061 in fiscal year 2011 from $6,446,617 in fiscal year
2010, an increase of $234,444 or 3.6%. Of the total operating expenses, salaries and related
expenses increased to $3,439,184 in fiscal year 2011, or 38.8% of sales, from $3,226,075 in fiscal
year 2010, or 38.1% of sales. The increase in salaries and related expenses is due a one-time non
cash expense of $223,076. On March 31, 2011, the Company declared an outstanding promissory note
between Douglas A. Larson, the Company’s President, Chief Executive Officer and a director, in
default. In accordance with the terms of the pledge agreement, Mr. Larson consented to the transfer
of the 500,000 shares of common stock to the Company. The difference between the outstanding amount
of the note at the time of notice and the value of the pledged shares transferred to the Company
was $223,076 which has been reported as other compensation to Mr. Larson.
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Administrative and general expenses increased 2.3% to $1,755,868 for 2011 as compared to $1,647,194
for fiscal year 2010. Increased insurance expenses combined with additional fees for outside sales
consultants contributed to the majority of the increase in administrative and general expenses.
Delivery expenses increased from $746,670 for fiscal year 2010 to $778,781 for fiscal year 2011, an
increase of 4.3%. The increase in fuel costs from 2010 to 2011 contributed to the largest increase
in delivery expenses, increasing 18%. Additionally, truck maintenance on vehicles was higher as the
Company retired older leased vehicles from the fleet of vehicles.
Advertising and promotion expenses decreased 27.9% for fiscal year 2011 compared to the fiscal year
2010. Advertising and promotion expenses were 2.7% and 3.9% of sales, respectively for both fiscal
year 2011 and 2010. The Company did not participate in many of the larger and more expensive
events. Additionally, the Company did not conduct as many on-site demos and promotions for the
organic vitamin charged spring water.
Depreciation and amortization decreased 5.5% for fiscal year 2011 as compared to fiscal year 2010.
Depreciation and amortization for fiscal year 2011 was 5.3% of sales compared to 5.9% of sales for
fiscal year 2010. Depreciation and amortization continues to decrease as more fixed assets become
fully depreciated.
Interest, Taxes, Other Income and Other Expenses
For the year ended March 31, 2011, interest income increased 23.6% to $33,054 as compared to
$26,745 for the same period ended March 31, 2010.
Interest expense for the year ended March 31, 2011 decreased 3.9% to $347,493 as compared to
$361,467 for the year ended March 31, 2010.
In August 2001, the Company entered into an agreement to sell certain parcels of real estate to
Messrs. Larson and Sipple for a total of $900,000. The Company received cash from the sale of
$500,000. The Company also provided 60-month carry back financing of $400,000 with interest at 7.5%
due annually that was recorded as notes receivable related party. On March 31, 2011, the Company
declared an outstanding promissory note between Mr. Larson in default. In accordance with the terms
of the pledge agreement, Mr. Larson consented to the transfer of the 500,000 shares of common stock
to the Company. The difference between the outstanding amount of the note at the time of default
and the value of the pledged shares transferred to the Company at the time of default was $223,076
which has been reported at other compensation to Mr. Larson. At that time, $178,722 of the deferred
gain from the sale of real estate was recognized.
For the fiscal year ended March 31, 2011, the Company recorded an income tax expense of $131,114
against our pretax book loss of $326,412 as a valuation allowance was recorded on our outstanding
deferred tax assets due to uncertainty of realization, a 28% effective tax rate. For the fiscal
year ended March 31, 2010, the Company recorded a tax benefit of $73,400 against our pretax book
loss of $434,321 for the fiscal year ended March 31, 2010.
The Company had a net loss after taxes of $457,526 in fiscal year 2011 compared to a net loss of
$360,921 for fiscal year 2010.
Liquidity and Capital Resources
Trade accounts receivable for the year ended March 31, 2011 were 27.5% more than at year ended
March 31, 2010. This resulted from the increase in revenues for the year ended March 31, 2011.
Days sales outstanding was approximately 43 days for March 31, 2011 and 37 days for March 31, 2010.
Cash flows from operating activities had a net inflow of $90,400 for fiscal year 2011. The cash
provided by operating activities represents a decrease of $308,293 from fiscal year 2010. The
largest reconciling item between net income and net cash flow from operations was the $470,367 of
depreciation and amortization. The change in operating activities also resulted from the change in
accounts receivable and change in the related party transaction.
Cash flows from investing activities resulted in a net outflow of $240,917 for fiscal year 2011.
This total represents expenditures on equipment for electric water coolers, filtration equipment
and coffee dispensing equipment that are rented to delivery customers.
12
Table of Contents
Cash flows from financing activities resulted in a net inflow of $164,415 for fiscal year 2011.
The Company received proceeds from a line of credit of approximately $370,000. The Company also
made payment on long-term obligations in the amount of$205,636.
The Company’s cash balance at March 31, 2011 increased to $79,202 by a net amount of $13,898 from
$65,304 at March 31, 2010.
On November 18, 2010, the Company entered into an agreement with Great Western Bank for a line of
credit in the amount of $475,000. As of March 31, 2011, the Company had a balance on the line of
credit of $370,051. The line of credit is subject to certain borrowing base requirements, requires
monthly interest payments calculated at U.S. Prime plus 1% with a minimum rate of 5.5% (5.5% at
March 31, 2011). The line includes certain reporting and financial covenants and is
cross-collateralized by accounts receivable and inventory.
In February 2007 and October 2007, the Company entered into two new notes payable with American
National Bank to refinance notes that were outstanding at that time. The notes include certain
reporting and financial covenants and have a cross default provision. As of March 31, 2011, the
balance of one of the notes is due within the next 12 months and therefore has been reclassified as
current debt in the March 31, 2011 balance sheet. Because of the change in classification, the
Company does not meet the current ratio covenant required by the bank under the terms of the note
payable. The bank has granted a waiver of non-compliance as of March 31, 2011 for this covenant
violation. Expected future violations have not been waived at this time. The Company is working on
refinancing both notes as the Company projects that they will not be able to pay the balance due on
the note that is due in February 2012 in the amount of $1,406,502. As the Company projects that
they will not be able to pay the outstanding balance of the note due in February 2012 and there is
a cross default provision on the notes, the outstanding balance of both notes, including the note
due in October 2012 in the amount of $2,842,814, are classified as current as of March 31, 2011 in
the balance sheet. In order for us to continue as a going concern, we hope to refinance the
existing debt but there is no assurance that we will be able to do so. If we are unable to
refinance existing debt, sell certain assets or raise additional equity, we may be required to
significantly reduce or cease operations.
During the year ended March 31, 2002, the Company entered into an agreement to sell certain parcels
of real estate to two senior executives of the Company, Messrs. Larson and Sipple, for a total of
$900,000. The Company received cash from the sale of $500,000. The Company also provided 60 month
carry back financing of $400,000 with interest at 7.5% that has been recorded as notes receivable
related party. The Company recognized a gain on the real estate sales of $519,937 and deferred an
additional $357,544 of gain as required by the terms of the carry back note. The accumulated
interest and outstanding principal were due upon maturity in August 2007. The collateral on the
notes receivable included a junior deed of trust on the properties and shares of the Company’s
common stock. During the year ended March 31, 2003, the Board of Directors determined that 500,000
shares of common stock of the Company was sufficient collateral and released the junior deed of
trust on the properties. On December 7, 2007, Mr. Sipple paid the entire balance due to the
Company in the amount of $310,311. In the third quarter of fiscal year 2008, $178,722 of the
deferred gain was recognized as the $200,000 note receivable plus interest from Mr. Sipple was
paid.
On March 31, 2011, the Company declared an outstanding promissory note between the Company and Mr.
Larson in default. The promissory note matured on August 30, 2001 and as of March 31, 2011, the
outstanding principal and interest due was $398,076. In accordance with the terms of the pledge
agreement, Mr. Larson consented to the transfer of the 500,000 shares of common stock to the
Company. The 500,000 shares of common stock were determined to have a value of $175,000 based on a
price of $0.35 per share, which was the closing price on March 31, 2011, the date the shares were
transferred and the note cancelled. The difference between the outstanding amount of the note at
the notice of default and the value of the pledged shares transferred to the Company at the notice
of default was $223,076 which has been reported as other compensation to Mr. Larson. The Company
also recognized the remaining $178,822 in deferred gain on the sale of real estate.
Contractual Obligations and Commitments
The following table sets forth our contractual commitments as of March 31, 2011:
| Long-Term Debt | ||||||||||||
| Fiscal Year End | and Capital Leases | Operating Lease | Total | |||||||||
2012 |
$ | 4,291,971 | $ | 384,237 | $ | 4,676,208 | ||||||
2013 |
26,321 | 271,304 | 297,625 | |||||||||
2014 |
16,530 | 162,385 | 178,915 | |||||||||
2015 |
— | 80,835 | 80,835 | |||||||||
Thereafter |
— | 18,252 | 18,252 | |||||||||
Total |
$ | 4,334,822 | $ | 917,013 | $ | 5,251,835 | ||||||
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Please refer to notes 4, 5, 6, 7 and 8 in our Consolidated Financial Statements for more
information regarding our future cash commitments.
Impact of Inflation
We believe that our results are not dependent upon moderate changes in inflation rates, however,
our notes are subject to fluctuations in the U.S. Prime interest rate.
Recently Issued Accounting Pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability
to the Company. Where it is determined that a new accounting pronouncement affects the Company’s
financial reporting, the Company undertakes a study to determine the consequence of the change to
its financial statements and assures that there are proper controls in place to ascertain that the
Company’s financials properly reflect the change. New pronouncements assessed by the Company
recently are discussed below:
In January 2010, the FASB issued guidance that requires reporting entities to make new disclosures
about fair value measurements including significant transfers into and out of Level 1 and Level 2
fair value measurements and information on purchases, sales, issuances and settlements on a gross
basis in the reconciliation of Level 3 fair value measurements. In addition, the guidance
clarifies certain existing disclosure requirements. This guidance is effective for interim and
annual reporting periods beginning after December 15, 2009, except for the additional Level 3
reconciliation disclosures, which are effective for interim and annual reporting periods beginning
after December 15, 2010. The Company adopted the new requirements in 2010. The adoption of this
guidance did not have a material impact on the financial statements.
On February 24, 2010, the FASB issued guidance to eliminate contradictions between the requirements
of U.S. GAAP and the Securities and Exchange Commission’s (SEC) filing rules. The amendments also
discharge the requirement that public companies disclose the date of their financial statements in
both issued and revised financial statements. The guidance was effective upon issuance and did not
have a material impact on the financial statements.
In February 2010 the FASB issued Accounting Standards Update (ASU) 2010-09 “Subsequent Events
(Topic 855)” (“2010-09”). ASU 2010-09 clarifies the interaction of Accounting Standards
Codification 855, Subsequent Events (“Topic 855”) with guidance issued by the SEC as well as the
intended breadth of the reissuance disclosure provision related to subsequent events found in
paragraph 855-10-50-4 in Topic 855. This update is effective for annual or interim periods ending
after June 15, 2010. The adoption of this guidance did not have a material impact on the financial
statements.
In July 2010, the FASB issued guidance to require increased disclosures about the credit quality of
financing receivables and allowances for credit losses, including disclosure about credit quality
indicators, past due information and modifications of financing receivables. Trade accounts
receivable with maturities of one year or less are excluded from the disclosure requirements. The
Company adopted the guidance in 2010, which did not have a material impact on the financial
statements.
In December 2010, the FASB issued ASU 2010-28, Intangibles — Goodwill and Other (Topic 350): When
to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative
Carrying Amounts (ASU 2010-28). ASU 2010-28 modifies Step 1 of the goodwill impairment test for
reporting units with zero or negative carrying amounts and requires the Company to perform Step 2
if it is more likely than not that a goodwill impairment may exist. ASU 2010-28 is effective for
fiscal years and interim periods within those years, beginning after December 15, 2010. Early
adoption is not permitted. Under the guidance, any impairment recorded upon adoption is recorded as
a cumulative-effect adjustment to beginning retained earnings in the period of adoption. The
Company will adopt these standards on April 1, 2011 and does not expect it will have a material
impact on its financial statements.
14
Table of Contents
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As a smaller reporting company, this item is not required.
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
The financial statements of the Company, including the notes thereto, and the report of the
independent registered public accounting firm, are included in this Annual Report and begin on page
F-1.
15
Table of Contents
Table of Contents
| Page | ||||
| F-1 | ||||
Financial Statements |
||||
| F-2 | ||||
| F-3 | ||||
| F-4 | ||||
| F-5 | ||||
| F-6 | ||||
16
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Eldorado Artesian Springs, Inc.
Eldorado Artesian Springs, Inc.
Louisville, Colorado
We have audited the accompanying balance sheets of Eldorado Artesian Springs, Inc. (“the Company”)
as of March 31, 2011 and 2010 and the related statements of operations, changes in stockholders’
equity and cash flows for the years then ended. These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Eldorado Artesian Springs, Inc. as of March 31, 2011 and 2010,
and the results of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a
going concern. As discussed in Note 2 to the financial statements, the Company has experienced
circumstances which raise substantial doubt about its ability to continue as a going concern.
Management’s plans regarding those matters also are described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
Ehrhardt Keefe Steiner & Hottman PC
June 29, 2011
Denver, Colorado
Denver, Colorado
F-1
Table of Contents
Balance Sheets
| March 31, 2011 | March 31, 2010 | |||||||
Assets |
||||||||
Current assets |
||||||||
Cash |
$ | 79,202 | $ | 65,304 | ||||
Accounts receivable — trade, net |
1,048,546 | 853,914 | ||||||
Inventories |
368,197 | 391,410 | ||||||
Prepaid expenses and other |
57,018 | 136,396 | ||||||
Deferred tax asset |
— | 29,648 | ||||||
Total current assets |
1,552,963 | 1,476,672 | ||||||
Non-current assets |
||||||||
Property, plant and equipment, net |
3,994,823 | 4,149,154 | ||||||
Notes receivable — related party |
— | 369,397 | ||||||
Investments |
361,196 | 361,196 | ||||||
Water rights, net |
71,675 | 71,675 | ||||||
Deposits |
148,200 | 118,020 | ||||||
Deferred tax asset — long term |
— | 101,466 | ||||||
Other, net |
51,354 | 34,346 | ||||||
Total non-current assets |
4,627,248 | 5,205,254 | ||||||
Total assets |
$ | 6,180,211 | $ | 6,681,926 | ||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 503,166 | $ | 570,584 | ||||
Accrued expenses |
335,580 | 283,145 | ||||||
Customer deposits |
99,107 | 73,423 | ||||||
Line of credit |
370,051 | — | ||||||
Current portion of capital lease obligations |
42,655 | 121,634 | ||||||
Current portion of long-term debt |
4,249,316 | 68,842 | ||||||
Total current liabilities |
5,599,875 | 1,117,628 | ||||||
Non-current liabilities |
||||||||
Capital lease obligations, less current portion |
42,851 | 17,910 | ||||||
Long-term debt, less current portion |
— | 4,256,953 | ||||||
Deferred gain on the sale of real estate |
— | 178,822 | ||||||
Total non-current liabilities |
42,851 | 4,453,685 | ||||||
Total liabilities |
5,642,726 | 5,571,313 | ||||||
Commitments and contingency |
||||||||
Stockholders’ equity |
||||||||
Preferred 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; 6,036,091 and
6,536,091 (2011 and 2010) issued and
outstanding |
6,036 | 6,536 | ||||||
Additional paid-in capital |
1,653,496 | 1,768,598 | ||||||
Accumulated deficit |
(1,122,047 | ) | (664,521 | ) | ||||
Total stockholders’ equity |
537,485 | 1,110,613 | ||||||
Total liabilities and stockholders’ equity |
$ | 6,180,211 | $ | 6,681,926 | ||||
See notes to financial statements
F-2
Table of Contents
Statements of Operations
| For the Years Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Revenues |
||||||||
Water and related |
$ | 8,715,073 | $ | 8,380,923 | ||||
Resort operations |
138,558 | 95,852 | ||||||
Total revenues |
8,853,631 | 8,476,775 | ||||||
Cost of goods sold |
2,363,365 | 2,129,757 | ||||||
Gross profit |
6,490,266 | 6,347,018 | ||||||
Operating expenses |
||||||||
Salaries and related expenses |
3,439,184 | 3,226,075 | ||||||
Administrative and general |
1,755,868 | 1,647,194 | ||||||
Delivery |
778,782 | 746,670 | ||||||
Advertising and promotions |
236,860 | 328,731 | ||||||
Depreciation and amortization |
470,367 | 497,947 | ||||||
Total operating expenses |
6,681,061 | 6,446,617 | ||||||
Loss from operations |
(190,795 | ) | (99,599 | ) | ||||
Other income (expense) |
||||||||
Gain on the sale of property |
178,822 | — | ||||||
Interest income |
33,054 | 26,745 | ||||||
Interest expense |
(347,493 | ) | (361,467 | ) | ||||
Total other income (expense) |
(135,617 | ) | (334,722 | ) | ||||
Loss before income taxes |
(326,412 | ) | (434,321 | ) | ||||
Income tax (expense) benefit |
||||||||
Deferred |
(131,114 | ) | 73,400 | |||||
Total income tax (expense) benefit |
(131,114 | ) | 73,400 | |||||
Net loss available to common shareholders |
$ | (457,526 | ) | $ | (360,921 | ) | ||
Basic and diluted weighted average common shares outstanding |
6,036,091 | 6,536,091 | ||||||
Basic and diluted loss per common share |
$ | (0.08 | ) | $ | (0.06 | ) | ||
See notes to financial statements
F-3
Table of Contents
Statement of Changes in Stockholders’ Equity
For the Years Ended March 31, 2011 and 2010
| Total | ||||||||||||||||||||
| Common Stock | Additional Paid- | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | in Capital | Deficit | Equity | ||||||||||||||||
Balance — March 31, 2009 |
6,536,091 | $ | 6,536 | $ | 1,736,438 | $ | (303,600 | ) | $ | 1,439,374 | ||||||||||
Stock options issued to employees |
— | — | 32,160 | — | 32,160 | |||||||||||||||
Net loss |
— | — | — | (360,921 | ) | (360,921 | ) | |||||||||||||
Balance — March 31, 2010 |
6,536,091 | $ | 6,536 | $ | 1,768,598 | $ | (664,521 | ) | $ | 1,110,613 | ||||||||||
Stock options issued to employees |
— | — | 59,398 | — | 59,398 | |||||||||||||||
Stock transferred for note payment |
(500,000 | ) | (500 | ) | (174,500 | ) | — | (175,000 | ) | |||||||||||
Net loss |
— | — | — | (457,526 | ) | (457,526 | ) | |||||||||||||
Balance — March 31, 2011 |
6,036,091 | $ | 6,036 | $ | 1,653,496 | $ | (1,122,047 | ) | $ | 537,485 | ||||||||||
See notes to financial statements
F-4
Table of Contents
Statements of Cash Flows
| For the Years Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Cash flows from operating activities |
||||||||
Net loss |
$ | (457,526 | ) | $ | (360,921 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities |
||||||||
Depreciation and amortization |
470,367 | 497,947 | ||||||
Deferred income taxes |
131,114 | (73,400 | ) | |||||
Stock based compensation |
59,398 | 32,160 | ||||||
Accrued interest on related party note receivable |
(28,679 | ) | (26,610 | ) | ||||
Change in deferred gain on the sale of real estate |
(178,822 | ) | — | |||||
Compensation on related party note receivable write-off |
223,076 | — | ||||||
Changes in assets and liabilities |
||||||||
Accounts receivable |
(194,632 | ) | 113,594 | |||||
Inventories |
23,213 | 1,910 | ||||||
Prepaid expenses and other |
62,370 | (3,478 | ) | |||||
Deposits |
(30,180 | ) | (5,200 | ) | ||||
Accounts payable |
(67,418 | ) | 149,735 | |||||
Accrued expenses |
52,435 | (395 | ) | |||||
Income taxes |
— | 66,405 | ||||||
Customer deposits |
25,684 | 6,946 | ||||||
Net cash provided by operating activities |
90,400 | 398,693 | ||||||
Cash flows from investing activities |
||||||||
Purchases of property and equipment |
(240,917 | ) | (196,978 | ) | ||||
Net cash used in investing activities |
(240,917 | ) | (196,978 | ) | ||||
Cash flows from financing activities |
||||||||
Net proceeds from line of credit |
370,051 | — | ||||||
Payments on long-term debt and capital leases |
(205,636 | ) | (483,559 | ) | ||||
Net cash provided by (used in) financing activities |
164,415 | (483,559 | ) | |||||
Net increase (decrease) in cash |
13,898 | (281,844 | ) | |||||
Cash — beginning of year |
65,304 | 347,148 | ||||||
Cash — end of year |
$ | 79,202 | $ | 65,304 | ||||
Supplemental disclosure of cash flow information
Cash paid during the year for interest was $347,493 (2011) and $361,468 (2010).
Cash paid during the year for income taxes was $0 (2011 and 2010).
The Company acquired $75,120 (2011) and $0 (2010) in fixed assets through capital leases.
During fiscal 2011, the Company reduced the related party note receivable by $175,000 upon
receipt of stock pledged as collateral.
See notes to financial statements
F-5
Table of Contents
Note 1 — Description of Business and Summary of Significant Accounting Policies
Eldorado Artesian Springs, Inc., (the “Company”), is a Colorado corporation which primarily sells
bottled Artesian spring water from springs located in Eldorado Springs, Colorado and rents water
dispensers. The Company also sells a line of Organic Vitamin Charged Spring Water to retail
stores. The Company also rents out a single family house, and during the summer months, it
operates a natural Artesian spring pool. The Company’s bottling and distribution facility is
located in Louisville, Colorado.
Concentrations of Credit Risk
The Company maintains cash in bank accounts that may, at times, exceed FDIC insurance limits.
Financial instruments potentially subjecting the Company to concentrations of credit risk consist
primarily of accounts receivable. The Company grants credit to customers located primarily in
Colorado. The Company periodically performs credit analysis and monitors the financial condition
of its clients in order to minimize credit risk.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or
less to be cash equivalents. At March 31, 2011 and 2010, the Company did not have any cash
equivalents.
Inventories
Inventories consist primarily of water bottles and packaging and are stated at the lower of cost or
market, determined using the first-in, first-out method (FIFO).
Deposits
Deposits consist primarily of deposits related to the purchase of equipment.
Property, Plant, and Equipment
Property, plant and equipment are stated at cost. Machinery, equipment, furniture and fixtures are
depreciated using various methods over their estimated useful lives, ranging from 3 to 7 years.
Buildings and improvements are depreciated using the straight—line method over the estimated
useful lives for owned assets, ranging from 15 to 39 years. Depreciable lives on leasehold
improvements are the shorter of the lease term or the useful life. Capital leased assets amortize
over the shorter of their useful life or related lease term.
Investments
The Company owns investments of capital stock in an investee. [Please explain this arrangement]
This investment entitles the Company to an equal pro rata share of this investee’s irrigation
system. As the ownership represents less than 20% ownership of the Company the value of this
investment is stated at cost and evaluated for impairment if there are indications of such.
Water Rights
Water rights are recorded at cost. As water rights have an indefinite life, no amortization is
recognized.
Other Assets
Other assets consist of loan fees and other costs which have been recorded at cost and are being
amortized on the straight-line basis over 5 years. The Company expects to amortize approximately
$4,000 each year for the next three years.
F-6
Table of Contents
Accounts Receivable
The Company extends unsecured credit to its customers in the ordinary course of business. The
Company considers a reserve for doubtful accounts based on the creditworthiness of the customer.
The provision for uncollectible amounts is continually reviewed and adjusted to maintain the
allowance at a level considered adequate to cover future losses. The allowance is management’s best
estimate of uncollectible amounts and is determined based on historical performance that is tracked
by the Company on an ongoing basis.
Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be recovered. The Company
looks primarily to the undiscounted future cash flows in its assessment of whether or not
long-lived assets have been impaired.
Customer Deposits
Customer deposits consist primarily of deposits on bottles and equipment.
Stock Based Compensation
The Company accounts for employee stock-based compensation under “ASC 718 — Compensation — Stock
Compensation” which requires companies to measure all employee stock-based compensation awards
using a fair value method and record such expense in their financial statements. ASC 718 focuses
primarily on accounting for transactions in which an entity obtains employee services in
share-based payment transactions. ASC 718 does not change the accounting guidance for share-based
payment transactions with parties other than employees provided in. The Company estimates the fair
value of stock option awards on the date of grant using the Black-Scholes options pricing model.
Stock-based compensation expense recognized under ASC 718 for the twelve months ended March 31,
2010 was $59,398 and $32,160 for the twelve months ended March 31, 2011, which consisted of
compensation expense related to employee stock options based on the value of the portion of
share-based payment awards that is ultimately expected to vest during the period.
Basic and Diluted Loss Per Common Share
The Company calculates net loss per share under the provisions of “ASC 260 — Earnings Per Share”.
Under ASC 260, basic earnings per share is computed by dividing net income (loss) by the weighted
average number of common shares outstanding. Shares issued during the period and shares reacquired
during the period are weighted for the portion of the period that they were outstanding. Diluted
earnings per share is computed in a manner consistent with that of basic earnings per share while
giving effect to all potentially dilutive common shares that were outstanding during the period.
Potentially dilutive common shares and outstanding options and warrants which have been excluded
from the computation of diluted income per share as of March 31, 2011 and 2010 were 226,000 and
254,000, respectively, because their effect would have been antidilutive.
Fair Value of Financial Instruments
The carrying amounts of financial instruments including cash, receivables, accounts payable and
accrued expenses approximate fair value as of March 31, 2011, because of the relatively short
maturity of these instruments.
The carrying amounts of notes receivable and long-term debt approximate fair value as of March 31,
2011 because interest rates on these instruments approximate market interest rates.
Revenue Recognition
Revenue is recognized on the sale of products as customer shipments are made. Returns are
estimated and recorded at the time of sale. Rental revenue is recognized on a monthly basis upon
commencement of the lease agreement. Water tap revenue is recognized upon the transfer of the right
to use the water. Water utility revenue is recognized on a monthly basis based upon the monthly
contracted rate.
F-7
Table of Contents
Shipping Costs
Shipping costs for materials used in the final products are included in the cost of goods. Shipping
costs for products delivered to customers are included in total operating expenses.
Promotional Expense — Consideration to Vendors
The Company recognizes certain promotional expenses as a reduction in revenues. These costs
included off invoice discounts to resellers and promotions for customers.
Advertising Costs
The Company expenses advertising costs as incurred. Advertising expenses for the years ended March
31, 2011 and 2010 were $236,860 and $328,731, respectively.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability
to the Company. Where it is determined that a new accounting pronouncement affects the Company’s
financial reporting, the Company undertakes a study to determine the consequence of the change to
its financial statements and assures that there are proper controls in place to ascertain that the
Company’s financials properly reflect the change. New pronouncements assessed by the Company
recently are discussed below:
In January 2010, the FASB issued guidance that requires reporting entities to make new disclosures
about fair value measurements including significant transfers into and out of Level 1 and Level 2
fair value measurements and information on purchases, sales, issuances and settlements on a gross
basis in the reconciliation of Level 3 fair value measurements. In addition, the guidance
clarifies certain existing disclosure requirements. This guidance is effective for interim and
annual reporting periods beginning after December 15, 2009, except for the additional Level 3
reconciliation disclosures, which are effective for interim and annual reporting periods beginning
after December 15, 2010. The Company adopted the new requirements in 2010. The adoption of this
guidance did not have a material impact on the financial statements.
On February 24, 2010, the FASB issued guidance to eliminate contradictions between the requirements
of U.S. GAAP and the Securities and Exchange Commission’s (SEC) filing rules. The amendments also
discharge the requirement that public companies disclose the date of their financial statements in
both issued and revised financial statements. The guidance was effective upon issuance and did not
have a material impact on the financial statements.
In February 2010 the FASB issued Accounting Standards Update (ASU) 2010-09 “Subsequent Events
(Topic 855)” (“2010-09”). ASU 2010-09 clarifies the interaction of Accounting Standards
Codification 855, Subsequent Events (“Topic 855”) with guidance issued by the SEC as well as the
intended breadth of the reissuance disclosure provision related to subsequent events found in
paragraph 855-10-50-4 in Topic 855. This update is effective for annual or interim periods ending
after June 15, 2010. The adoption of this guidance did not have a material impact on the financial
statements.
In July 2010, the FASB issued guidance to require increased disclosures about the credit quality of
financing receivables and allowances for credit losses, including disclosure about credit quality
indicators, past due information and modifications of financing receivables. Trade accounts
receivable with maturities of one year or less are excluded from the disclosure requirements. The
Company adopted the guidance in 2010, which did not have a material impact on the financial
statements.
F-8
Table of Contents
In December 2010, the FASB issued ASU 2010-28, Intangibles — Goodwill and Other (Topic 350): When
to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative
Carrying Amounts (ASU 2010-28). ASU 2010-28 modifies Step 1 of the goodwill impairment test for
reporting units with zero or negative carrying
amounts and requires the Company to perform Step 2 if it is more likely than not that a goodwill
impairment may exist. ASU 2010-28 is effective for fiscal years and interim periods within those
years, beginning after December 15, 2010. Early adoption is not permitted. Under the guidance, any
impairment recorded upon adoption is recorded as a cumulative-effect adjustment to beginning
retained earnings in the period of adoption. The Company will adopt these standards on April 1,
2011 and does not expect it will have a material impact on its financial statements.
Note 2 — Going Concern
Cash flows generated from operations and proceeds from a line of credit were sufficient to meet our
working capital requirements for the year ended March 31, 2011, but will not likely be sufficient
to meet our working capital requirements for the foreseeable future. In February 2007 and October
2007, the Company entered into two new notes payable with American National Bank to refinance notes
that were outstanding at that time. The notes include certain reporting and financial covenants and
have a cross default provision. As of March 31, 2011, the balance of one of the notes is due within
the next 12 months and therefore has been reclassified as current debt in the March 31, 2011
balance sheet. Because of the change in classification, the Company does not meet the current ratio
covenant required by the bank under the terms of the note payable. The bank has granted a waiver of
non-compliance as of March 31, 2011 for this covenant violation. Expected future violations have
not been waived at this time. The Company is working on refinancing both notes as the Company
projects that they will not be able to pay the balance due on the note that is due in February 2012
in the amount of $1,406,502. As the Company projects that they will not be able to pay the
outstanding balance of the note due in February 2012 and there is a cross default provision on the
notes, the outstanding balance of both notes, including the note due in October 2012 in the amount
of $2,842,814, are classified as current as of March 31, 2011 in the balance sheet. In order for
the Company to continue as a going concern, we hope to refinance the existing debt but there is no
assurance that we will be able to do so. If we are unable to refinance existing debt, sell certain
assets or raise additional equity, we may be required to significantly reduce or cease operations.
Note 3 — Balance Sheet Disclosures
Accounts receivable consist of the following at:
| March 31, 2011 | March 31, 2010 | |||||||
Accounts receivable |
||||||||
Accounts receivable |
$ | 1,128,546 | $ | 933,914 | ||||
Allowance for doubtful accounts |
(80,000 | ) | (80,000 | ) | ||||
| $ | 1,048,546 | $ | 853,914 | |||||
Property, plant and equipment consist of the following at:
| March 31, 2011 | March 31, 2010 | |||||||
Property, plant and equipment |
||||||||
Land |
$ | 1,000,263 | $ | 1,000,263 | ||||
Buildings and improvements |
4,401,998 | 4,294,275 | ||||||
Machinery and equipment |
5,294,411 | 5,088,521 | ||||||
Office furniture and fixtures |
329,391 | 329,391 | ||||||
| 11,026,063 | 10,712,450 | |||||||
Less accumulated depreciation and amortization |
(7,031,240 | ) | (6,563,296 | ) | ||||
| $ | 3,994,823 | $ | 4,149,154 | |||||
F-9
Table of Contents
Accrued expenses consist of the following at:
| March 31, 2011 | March 31, 2010 | |||||||
Accrued expenses |
||||||||
Accrued payroll and taxes |
$ | 102,943 | $ | 90,313 | ||||
Accrued property taxes |
206,331 | 168,754 | ||||||
Accrued sales taxes |
26,306 | 24,078 | ||||||
| $ | 335,580 | $ | 283,145 | |||||
Note 4 — Deferred Gain on the Sale of Real Estate
During the year ended March 31, 2002, the Company entered into an agreement to sell certain parcels
of real estate to two senior executives of the Company, Messrs. Larson and Sipple, for a total of
$900,000. The Company received cash from the sale of $500,000. The Company also provided 60 month
carry back financing of $400,000 with interest at 7.5%. The Company recognized a gain on the real
estate sales of $519,937 and deferred an additional $357,544 of gain as required by the terms of
the carry back note. The collateral on the notes receivable included a junior deed of trust on the
properties and shares of the Company’s common stock. The accumulated interest and outstanding
principal were due upon maturity in August 2007. During the year ended March 31, 2003, the Board of
Directors determined that 500,000 shares of common stock of the Company was sufficient collateral
and released the junior deed of trust on the properties.
On March 31, 2011, the Board of Directors declared the outstanding promissory note between the
Company and Mr. Larson in default. The promissory note matured on August 30, 2001 and as of March
31, 2011, the outstanding principal and interest due was $398,076. The promissory note was secured
by 500,000 shares of the Company’s common stock owned by Mr. Larson pursuant to a pledge agreement
dated August 20, 2001. Pursuant to the pledge agreement, Mr. Larson forfeited and transferred
500,000 shares of common stock to the Company in exchange for cancellation of the note. The shares
had a value of $175,000 based on a price of $0.35 per share, which was the closing price on March
31, 2011, the date the shares were transferred and the note cancelled. The difference between the
outstanding amount of the note at the time of declared default on March 31, 2011 and the value of
the pledged shares transferred to the Company at the time of declared default was $223,076, which
is reported as compensation to Mr. Larson.
On December 7, 2007, Mr. Sipple paid the entire balance due to the Company in the amount of
$310,311. In the third quarter of fiscal year 2008, $178,722 of the deferred gain was recognized as
the $200,000 note receivable plus interest from Mr. Sipple was paid. In July 2001, when the
Company’s Board of Directors authorized the aforementioned real estate transactions, the Company
also authorized the sale of certain real estate at the then fair value to Mr. Martin, another
officer of the Company. Because of county land approval processes and associated delays, the
officer’s option to purchase the real estate expired on September 26, 2007 and, as of the date of
this annual report, has not been further extended.
Note 5 — Long-Term Debt
Long-term debt is as follows:
| March 31, 2011 | March 31, 2010 | |||||||
Note payable to a bank with
interest fixed at 7.5% until
October 2012, at which time the
balance of the note is due. The
note calls for monthly
principal and interest payments
of $22,385 with unpaid
principal and interest due
October 2012. The note is
cross-collateralized by
substantially all assets of the
Company and guaranteed by three
stockholders and officers of
the Company. The note is
subject to certain restrictive
covenants, which have a cross
default provision with the note
due in October 2012. The bank
has waived the covenants as of
March 31, 2011. As projected
future covenant violations have
not been waived and the Company
projects that they will not be
able to pay the remaining
balance of the note due in
February 2012, the balance of
the existing note has been
classified as current debt. |
$ | 2,842,814 | $ | 2,893,080 | ||||
F-10
Table of Contents
| March 31, 2011 | March 31, 2010 | |||||||
Note 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. The note is
cross-collateralized by all
rents and property as outlined
in the Deed of Trust and
guaranteed by three
stockholders and officers of
the Company. The note is
subject to certain restrictive
covenants, which have a cross
default provision with the note
due in October 2012. The bank
has waived the covenant
violations as of March 31,
2011. |
1,406,502 | 1,432,715 | ||||||
| 4,249,316 | 4,325,795 | |||||||
Less current portion |
(4,249,316 | ) | (68,842 | ) | ||||
| $ | — | $ | 4,256,953 | |||||
Note 6 — Line of Credit
On November 18, 2010, the Company entered into an agreement with Great Western Bank for a line of
credit in the amount of $475,000. As of March 31, 2011, the Company had a balance on the line of
credit of $370,051. The line of credit is subject to certain borrowing base requirements, requires
monthly interest payments calculated at U.S. Prime plus 1% with a minimum rate of 5.5% (5.5% as of
March 31, 2011). The line includes certain reporting and financial covenants and is collateralized
by accounts receivable and inventory and is subordinate to the long-term debt in Note 5.
Note 7 — Capital Leases
The Company acquired assets under the provisions of long-term leases. For financial reporting
purposes, minimum lease payments relating to the assets have been capitalized. The leases expire
between April 2011 and June 2011. Amortization of the leased property is included in depreciation
expense.
The assets under capital lease have cost and accumulated amortization as follows:
| March 31, | ||||
| 2011 | ||||
Cost |
$ | 351,877 | ||
Less accumulated amortization |
(227,691 | ) | ||
| $ | 124,186 | |||
Maturities of capital lease obligations are as follows:
| Year Ending March 31, | ||||
2012 |
$ | 53,267 | ||
2013 |
29,232 | |||
2014 |
17,052 | |||
Total minimum lease payments |
99,551 | |||
Amount representing interest |
(14,045 | ) | ||
Present value of net minimum lease payments |
85,506 | |||
Less current portion |
(42,655 | ) | ||
Long-term capital lease obligation |
$ | 42,851 | ||
F-11
Table of Contents
Note 8 — Income Taxes
The Company recognizes deferred tax liabilities and assets for the expected future tax consequences
of events that have been included in the financial statements or tax returns. Deferred tax
liabilities and assets are determined based on the differences between the financial statement and
tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the
differences are expected to reverse. The measurement of deferred tax assets is reduced, if
necessary, by the amount of any tax benefits that are not expected to be realized based on
available evidence. As of March 31, 2010, the deferred tax asset was reduced by a valuation
allowance of $252,270 for amounts the Company had determined that there is uncertainty of
realization. Net operating losses in the amount of $212,078 begin to expire in 2028.
The Company is subject to income taxes in the U.S. federal jurisdiction, and various state and
local jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of
the related tax laws and regulations and require significant judgment to apply. In the United
States, the tax years 2007-2010 remain open to examination by the federal Internal Revenue Service
and the tax years 2006-2010 remain open for various state taxing authorities. The Company has not
taken any uncertain tax positions. The net current and long-term deferred tax assets and
liabilities in the accompanying balance sheet include the following:
| March 31, 2011 | March 31, 2010 | |||||||
Current deferred tax asset |
$ | — | $ | 29,648 | ||||
Current deferred tax liability |
— | — | ||||||
Net current deferred tax asset |
$ | — | $ | 29,648 | ||||
Long-term deferred tax asset, net of valuation allowance |
$ | — | $ | 101,466 | ||||
Long-term deferred tax liability |
— | — | ||||||
Net long-term deferred tax asset, net of valuation allowance |
$ | — | $ | 101,466 | ||||
Temporary differences giving rise to the net deferred tax asset are as follows:
Allowance for doubtful accounts |
$ | 29,648 | $ | 29,648 | ||||
Property and equipment |
630 | (58,651 | ) | |||||
Deductible stock compensation |
9,914 | 9,914 | ||||||
Net operating loss and credits |
212,078 | 216,319 | ||||||
Deferred gain and other |
— | 3,884 | ||||||
Valuation allowance |
(252,270 | ) | (70,000 | ) | ||||
| $ | — | $ | 131,114 | |||||
The following is a reconciliation of the statutory federal income tax rate applied to
pre-tax accounting net income compared to the income tax (expense) benefit in the statements of
income:
| For the Years Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Federal income taxes computed at statutory rate |
$ | (79,633 | ) | $ | (147,669 | ) | ||
State income taxes |
(4,335 | ) | (11,568 | ) | ||||
Stock based compensation |
20,195 | 10,934 | ||||||
Other |
11,280 | 4,903 | ||||||
Valuation allowance |
183,607 | 70,000 | ||||||
| $ | 131,114 | $ | (73,400 | ) | ||||
F-12
Table of Contents
Note 9 — Commitments
Operating Leases
The Company leases delivery trucks, vehicles, equipment and property under non-cancelable operating
leases. Rent expense for these leases was $410,871 and $414,599 for the years ended March 31, 2011
and 2010, respectively.
Future minimum lease payments under these leases are approximately as follows:
| Year Ending March 31, | ||||
2012 |
$ | 363,237 | ||
2013 |
271,304 | |||
2014 |
162,385 | |||
2015 |
80,835 | |||
Thereafter |
18,252 | |||
| $ | 896,013 | |||
Renewable Energy Service Agreement
On June 11, 2009, the Company entered into a twenty year renewable energy service agreement with
Eldorado Springs Solar, LLC, an unrelated third party, to design, install, own, operate and
maintain a solar electricity generating system at our property in Louisville, Colorado. The Company
will purchase all of the solar electricity generated by the system which will provide approximately
50% of the electricity needs at the facility in Louisville, Colorado. The agreement provides a
guaranteed energy rate schedule for 10 years with a reset rate in year eleven for the electric
cost. If the Company was to terminate the agreement the Company would be required to pay a
termination penalty. As of March 31, 2011, this penalty would be approximately $388,000. The
Company also has the option to purchase and take title to the system starting in year eleven.
During the fiscal year ended March 31, 2011, the Company expensed approximately $10,000 in utility
costs under this agreement.
Note 10 — Contingency
When the Company purchased mountain property in 1983, included in the purchase price were certain
water rights for Eldorado Springs. These water rights are relatively junior to other water rights
in the South Boulder Creek and South Platte Basins. The Company has the right to beneficially use
all of the water that emanates from the springs in accordance with its water rights unless a more
senior rights holder makes a call on the water. A senior call might occur in the winter or when
runoff is low and insufficient to meet the water needs of more senior water users below Eldorado
Springs. Because of Colorado’s drought conditions, the possibility of a senior call has increased.
For many years, the Company had enrolled its water rights in a substitute supply plan approved by
the Colorado State Engineer, which serves to protect the Company’s water supply in the event of a
senior call.
On September 30, 2010, the Company entered into a Water Lease Agreement with Denver Wells, LLC, for
the right to 50 acre feet of non-tributary ground water. The term of the lease is for 13 months,
commencing October 1, 2010 and continuing through October 31, 2011. The lease may be extended upon
mutual written agreement of the parties executed prior to the expiration of the lease. The cost of
the lease is $39,000 for 50 acre feet, to be paid at the rate of $3,000 per month on the first of
each month of the lease term. The first payment was made on October 5, 2010.
The Company is also pursuing other possible supply sources for use in augmenting the stream flows
as a result of the Company’s withdrawals of water. There is no assurance that any of the renewal
applications, Colorado Water Court applications for permanent augmentation, or any other
alternative arrangements being sought by the Company will be approved. Denial of the Company’s
applications for substitute or for a permanent augmentation plan coupled with a senior call on the
Company’s water will likely result in a significant financial impact on the Company. The Company
will also incur significant expenses in connection with its efforts to obtain approval of these
plans. In the event of the approval of a permanent augmentation plan, the Company will also incur
additional expenses associated with its required purchase of additional water rights.
F-13
Table of Contents
Note 11 — Stockholders’ Equity
Stock Options
The Company has a qualified stock plan, the 2008 Incentive Stock Plan, pursuant to which
2,000,000 shares were reserved for issuance. As of March 31, 2011, 25,000 shares were reserved for
issuance pursuant to outstanding grants and 1,950,000 shares were available for future grant.
Additionally, the Company previously had a qualified stock plan, the 1997 Stock Option Plan, which
expired in 2007, pursuant to which 875,000 shares were reserved for issuance. As of March 31,
2011, 176,000 shares were reserved for issuance pursuant to outstanding grants and no shares were
available for future grant as the plan has expired. The 2008 Incentive Stock Plan and the 1997
Stock Option Plan, referred to herein as the Plans, and the shares issuable there under, are both
registered on Form S-8 with the Securities and Exchange Commission. The Plans provide for the
grant of options and other equity based awards to employees, directors and consultants of the
Company and are administered by the Company’s Board of Directors.
The following table presents the activity for options outstanding:
| Weighted | ||||||||
| Average | ||||||||
| Stock | Exercise | |||||||
| Options | Price ($) | |||||||
Outstanding — March 31, 2009 |
270,000 | 1.48 | ||||||
Granted |
— | — | ||||||
Forfeited/canceled |
(30,000 | ) | 1.50 | |||||
Exercised |
— | — | ||||||
Outstanding — March 31, 2010 |
240,000 | 1.47 | ||||||
Granted |
— | — | ||||||
Forfeited/canceled |
(14,000 | ) | 1.48 | |||||
Exercised |
— | — | ||||||
Outstanding — March 31, 2011 |
226,000 | $ | 1.47 | |||||
The following table presents the composition of options outstanding and exercisable:
| Options Outstanding | Options Exercisable | |||||||||||||||||||
| Exercise Prices ($) | Number | Price* | Life* | Number | Price* | |||||||||||||||
0.875 |
21,000 | 0.875 | 3.44 | 21,000 | 0.875 | |||||||||||||||
1.00 |
17,000 | 1.00 | 2.88 | 17,000 | 1.00 | |||||||||||||||
1.43 |
100,000 | 1.43 | 1.34 | 100,000 | 1.43 | |||||||||||||||
1.65 |
18,000 | 1.65 | 5.59 | 18,000 | 1.65 | |||||||||||||||
1.75 |
20,000 | 1.75 | 6.59 | 20,000 | 1.75 | |||||||||||||||
1.80 |
50,000 | 1.80 | 7.55 | 25,000 | 1.80 | |||||||||||||||
Total — March 31, 2011 |
226,000 | $ | 1.47 | 3.31 | 201,000 | $ | 1.43 | |||||||||||||
| * | Price and Life reflect the weighted average exercise price and weighted average remaining
contractual life, in years, respectively. |
The fair value of each share option award is estimated on the date of grant using the
Black-Scholes pricing model based on assumptions noted in the following table. The Company’s
employee stock options have various restrictions including vesting provisions and restrictions on
transfers and hedging, among others, and are often exercised prior to their contractual maturity.
Expected volatilities used in the fair value estimate are based on historical volatility of the
Company’s stock. The Company uses historical data to estimate share option exercises, expected term
and employee departure behavior used in the Black-Scholes pricing model. The risk-free rate for
periods within the contractual term of the share option is based on the U.S. Treasury yield curve
in effect at the time of grant. The value of stock options, net of an estimated forfeiture rate of
0%, is recognized over the requisite service period. As of March 31, 2011, $40,242 of value
remained to be expensed in future periods.
F-14
Table of Contents
Warrants
On January 24, 2008, the Company retained Pfeiffer High Investor Relations, Inc. (“PHIR”) to
develop and implement a comprehensive investor relations program. For providing services, PHIR was
paid a monthly retainer fee of $5,000. In addition, the Company granted to PHIR principals, John
Pfeiffer and Geoff High, a total of 20,000 warrants to purchase 20,000 shares of the Company’s
common stock at an exercise price of $1.80. The warrants vest one-third on the date of the
agreement, one-third at the six-month anniversary and one-third at 12-month anniversary. In the
event of termination of the agreement, warrants will vest on a pro-rata basis for the period in
which the agreement was in effect. All warrants have a four-year term, have cashless exercise
provisions and piggyback registration rights. The warrants were determined to have a value of
$26,750 based upon the Black-Scholes option-pricing model. As of March 31, 2011, all of the
warrants were fully vested. The warrants have a remaining life of 10 months. The Company terminated
the agreement with PHIR in February 2009.
Note 12 — Employee Benefit Plan
The Company has adopted a 401(k) profit sharing plan for its employees. Employees become eligible
to participate in the plan once they have completed one year of service and have reached 21 years
of age. Contributions by the Company and employees vest immediately. The Company matches 100% of
employee’s contributions up to 3% of the employee’s gross pay. The Company matched approximately
$44,500 for the year ended March 31, 2011 and $46,000 for the year ended March 31, 2010. No
discretionary profit sharing contributions were approved by the Board of Directors for the years
ended March 31, 2011 and 2010.
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
| ITEM 9A. | CONTROLS AND PROCEDURES |
Conclusion Regarding the Effectiveness of Disclosure Controls And Procedures
We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange Commission’s rules and
forms, and that such information is accumulated and communicated to management, including the
principal executive officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure. Management necessarily applied its judgment in assessing
the costs and benefits of such controls and procedures, which, by their nature, can provide only
reasonable assurance regarding management’s control objectives.
With the participation of management, our principal executive officer and principal financial
officer evaluated the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report. In consultation with Ehrhardt Keefe
Steiner & Hottman, PC, our independent registered public accounting firm, management has identified
a control deficiency that it believes constitutes a material weakness in our internal control over
financial reporting. The material weakness relates to our lack of technical expertise regarding
complex accounting matters associated with certain equity transactions and the impact on deferred
income taxes. Based upon this evaluation, our principal executive officer and principal financial
officer concluded that our disclosure controls and procedures were not effective in ensuring that
material information required to be disclosed is included in the reports that we file with the
Securities and Exchange Commission.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management, under the supervision of our principal executive officer and principal financial
officer, is responsible for establishing and maintaining adequate internal control over financial
reporting for the Company. Internal control over financial reporting is a process to provide
reasonable assurance regarding the reliability of our financial reporting for external purposes in
accordance with accounting principles generally accepted in the United States of America. Internal
control over financial reporting includes maintaining records that in reasonable detail accurately
and fairly reflect our transactions; providing reasonable assurance that transactions are recorded
as necessary for preparation of our financial statements; providing reasonable assurance that
receipts and
F-15
Table of Contents
expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized
acquisition, use or disposition of Company assets that could have a material effect on our
financial statements would be prevented or detected on a timely basis. Because of the inherent
limitations of internal control over financial reporting, misstatements may not be prevented or
detected on a timely basis. Also, projections of any evaluation of the effectiveness of the
internal control over financial reporting to future periods are subject to the risk that the
controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management, with the participation of our principal executive officer and principal financial
officer, assessed the effectiveness of our internal control over financial reporting as of March
31, 2011. In making this assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO), referred to as the Internal
Control—Integrated Framework. Based on this assessment, management, with the participation of our
principal executive officer and principal financial officer, has determined that we did not
maintain effective internal controls over financial reporting as of March 31, 2011. Management has
identified a material weakness in the operation of our internal controls over financial reporting
as it relates to the lack of technical expertise regarding complex accounting matters associated
with certain equity transactions and the impact on deferred income taxes. A material weakness is a
significant deficiency, or combination of significant deficiencies, that results in more than a
remote likelihood that a material misstatement of the annual or interim financial statements will
not be prevented or detected on a timely basis.
This annual report does not include an attestation report of our independent registered public
accounting firm regarding internal control over financial reporting. Management’s report was not
subject to attestation by our independent registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit us to provide only management’s report
in this Annual Report on Form 10-K.
Remediation of Material Weaknesses in Internal Control Over Financial Reporting
In light of the conclusion that our internal control over financial reporting was not effective,
our management is in the process of implementing a plan intended to remediate such ineffectiveness
and to strengthen our internal controls over financial reporting through the implementation of
certain remedial measures, including obtaining the assistance of experienced financial personnel to
enhance our financial reporting capabilities and assist our principal financial officer as the need
arises.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended
March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. As described above, in the future we intend to obtain
the assistance of experienced financial personnel to enhance our financial reporting capabilities
as the need arises.
| ITEM 9B. | OTHER INFORMATION |
None.
17
Table of Contents
PART III
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE |
The required information for this item is incorporated by reference to the Company’s Proxy
Statement for the 2011 Annual Meeting of Shareholders, since such Proxy Statement will be filed
with the Securities and Exchange Commission no later than 120 days after the end of the Company’s
fiscal year pursuant to Regulation 14A.
The Company’s Board of Directors has adopted a code of ethics to provide guidance on maintaining
the Company’s commitment to being honest and ethical in its business endeavors. The code of ethics
applies to the Company’s directors, executive officers and employees and covers a wide range of
business practices, procedures and basic principles regarding corporate and personal conduct. The
Company undertakes to provide without charge, upon request, a copy of the code of ethics. A request
for the code of ethics can be made in writing to the Company’s Chief Financial Officer, Eldorado
Artesian Springs, Inc., 1783 Dogwood Street, Louisville, CO 80027.
| ITEM 11. | EXECUTIVE COMPENSATION |
The required information for this item is incorporated by reference to the Company’s Proxy
Statement for the 2011 Annual Meeting of Shareholders, since such Proxy Statement will be filed
with the Securities and Exchange Commission no later than 120 days after the end of the Company’s
fiscal year pursuant to Regulation 14A.
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS |
The required information for this item is incorporated by reference to the Company’s Proxy
Statement for the 2011 Annual Meeting of Shareholders, since such Proxy Statement will be filed
with the Securities and Exchange Commission no later than 120 days after the end of the Company’s
fiscal year pursuant to Regulation 14A.
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
The required information for this item is incorporated by reference to the Company’s Proxy
Statement for the 2011 Annual Meeting of Shareholders, since such Proxy Statement will be filed
with the Securities and Exchange Commission no later than 120 days after the end of the Company’s
fiscal year pursuant to Regulation 14A.
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
The required information for this item is incorporated by reference to the Company’s
Proxy Statement for the 2011 Annual Meeting of Shareholders, since such Proxy Statement will be
filed with the Securities and Exchange Commission no later than 120 days after the end of the
Company’s fiscal year pursuant to Regulation 14A.
18
Table of Contents
PART IV
| ITEM 15. | EXHIBITS |
(a) Documents Filed as Part of this Report
| (1) | Financial Statements. The financial statements of Eldorado Artesian
Springs, Inc., which are listed on the Table of Contents to Financial Statements
appearing on page 16 of this Annual Report. |
| (2) | Financial Statement Schedules. All schedules for which provision is made
in the applicable accounting regulations of the SEC are omitted because of the
absence of conditions under which they are required or because the required
information is included in the financial statements and related notes thereto. |
| (3) | Exhibits. The following is a list of exhibits filed as part of this
Annual Report on Form 10-K. |
| Exhibit | ||||||
| No. | Description | Location | ||||
| 3.1 | 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, 1998 | ||||
| 3.3 | 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, 2000 | ||||
| 3.4 | 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, 1999 | ||||
| 10.1 | * | 1997 Stock Option Plan
|
Incorporated by reference to Exhibit 10.1 to Registration Statement No. 333-68553 | |||
| 10.2 | Promissory Note with First National Bank of
Boulder County dated June 27, 1997
|
Incorporated by reference to Exhibit 10.2 to Registration Statement No. 333-68553 | ||||
| 10.3 | Deed of Trust dated June 27, 1997
|
Incorporated by reference to Exhibit 10.3 to Registration Statement No. 333-68553 | ||||
| 10.4 | 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, 2003 | ||||
| 10.5 | 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, 2003 | ||||
| 10.6 | 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, 2003 | ||||
19
Table of Contents
| Exhibit | ||||||
| No. | Description | Location | ||||
| 10.7 | 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, 2003 | ||||
| 10.8 | 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 | ||||
| 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, 2001 | ||||
| 10.10 | 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, 2001 | ||||
| 10.11 | Note receivable — Doug Larson
|
Incorporated by reference to Exhibit 10.8 to Eldorado’s Form 10-KSB for the fiscal year ended March 31, 2003 | ||||
| 10.12 | Doug Larson — Pledge agreement
|
Incorporated by reference to Exhibit 10.9 to Eldorado’s Form 10-KSB for the fiscal year ended March 31, 2003 | ||||
| 10.13 | Note receivable — Kevin Sipple
|
Incorporated by reference to Exhibit 10.10 to Eldorado’s Form 10-KSB for the fiscal year ended March 31, 2003 | ||||
| 10.14 | Kevin Sipple — Pledge agreement
|
Incorporated by reference to Exhibit 10.11 to Eldorado’s Form 10-KSB for the fiscal year ended March 31, 2003 | ||||
| 10.15 | 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, 2005 | ||||
| 10.16 | 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, 2005 | ||||
| 10.17 | 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, 2006 | ||||
| 10.18 | Commercial Loan Agreement with American National
Bank dated February 20, 2007
|
Incorporated by reference to Exhibit 10.18 to Eldorado’s Form 10-KSB filed with the Securities and Exchange Commission on June 26, 2007 | ||||
| 10.19 | Commercial Loan Agreement with American National
Bank dated October 11, 2007
|
Incorporated by reference to Exhibit 10.1 to Eldorado’s Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2007 | ||||
| 10.20 | Purchase and Sale Agreement with Farmers
Reservoir and Irrigation Company Marshall Lake
Division Shares dated February 28, 2007
|
Incorporated by reference to Exhibit 10.20 to Eldorado’s Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2007 | ||||
20
Table of Contents
| Exhibit | ||||||
| No. | Description | Location | ||||
| 10.21 | Purchase and Sale Agreement with Farmers
Reservoir and Irrigation Company Marshall Lake
Division Shares dated August 2, 2007
|
Incorporated by reference to Exhibit 10.21 to Eldorado’s Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2007 | ||||
| 10.22 | Water Use Agreement with the City of Louisville,
Colorado dated October 16, 2007
|
Incorporated by reference to Exhibit 10.22 to Eldorado’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2007 | ||||
| 10.23 | Purchase and Sale Agreement with Farmers
Reservoir and Irrigation Company Marshall Lake
Division Shares dated March 21, 2008
|
Incorporated by reference to Exhibit 10.23 to Eldorado’s Form 10-KSB filed with the Securities and Exchange Commission on June 27, 2008 | ||||
| 10.24 | * | 2008 Incentive Stock Plan
|
Incorporated by reference to Annex A to Eldorado’s Definitive Proxy Statement on Schedule 14A for the Annual meeting of Shareholders held on August 26, 2008 | |||
| 10.25 | First Amendment to Water Lease Agreement dated
July 15, 2008
|
Incorporated by reference to Exhibit 10.24 to Eldorado’s Form 8-k filed with the Securities and Exchange Commission on August 1, 2008 | ||||
| 10.26 | Commercial Loan Agreement with American National
Bank dated March 17, 2009 (including Debt
Modification Agreement dated March 17, 2009)
|
Incorporated by reference to Exhibit 10.26 to Eldorado’s Form 10-K filed with the Securities and Exchange Commission on June 29, 2009. | ||||
| 23.1 | Consent of Ehrhardt Keefe Steiner & Hottman PC
|
Filed herewith | ||||
| 31.1 | 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 herewith | ||||
| 31.2 | 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 herewith | ||||
| 32.1 | 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 herewith | ||||
| 32.2 | 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
Table of Contents
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.
| ELDORADO ARTESIAN SPRINGS, INC. | ||||||
| By: | /s/ Douglas A. Larson
|
|||||
| President | ||||||
| (Principal Executive Officer) | ||||||
Dated: June 29, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
| Name and Capacity | Date | |
/s/ Douglas A. Larson
|
June 29, 2011 | |
President and Director |
||
/s/ Kevin M. Sipple
|
June 29, 2011 | |
Vice-President and Director |
||
/s/ Cathleen Shoenfeld
|
June 29, 2011 | |
Chief Financial Officer, Chief Accounting Officer |
||
(Principal Financial and Accounting Officer), Secretary |
||
/s/ Jeremy S. Martin
|
June 29, 2011 | |
Vice-President and Director |
||
/s/ George J. Schmitt
|
June 29, 2011 | |
Director |
||
/s/ J. Ross Colbert
|
June 29, 2011 | |
Director |
22