SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ELDORADO ARTESIAN SPRINGS INC.
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(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ELDORADO ARTESIAN SPRINGS, INC.
1783 Dogwood Street, Louisville, CO 80027
P.O. Box 445, Eldorado Springs, CO 80025
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held September 19, 2005
To Our Shareholders:
The Annual Meeting of Shareholders of Eldorado Artesian Springs, Inc., a
Colorado corporation, will be held at 10:00 a.m., Mountain Daylight Time, on
Monday, September 19, 2005 at 1783 Dogwood Street, Louisville, Colorado, and at
any and all adjournments thereof, for the following purposes, all of which are
more completely set forth in the accompanying Proxy Statement.
1. To elect four (4) Directors to serve until the next Annual Meeting
of Shareholders and until their successors are duly elected and qualified;
2. To ratify the appointment of Ehrhardt Keefe Steiner & Hottman, P.C.,
independent certified public accountants for the Company for the fiscal year
ended March 31, 2006.
3. To consider and act upon such other matters as may properly come
before the meeting or any adjournment thereof.
Only shareholders of record on July 11, 2005 as fixed by action of the
Board of Directors, will be entitled to notice of, and to vote at, the meeting
or at any and all adjournments thereof. In order for the proposals listed above
to be approved, each must be approved by the affirmative vote of holders of the
majority of the shares of common stock of the Company.
All shareholders are cordially invited to attend the Annual Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, TO INSURE YOUR
REPRESENTATION AND A QUORUM AT THE ANNUAL MEETING, PLEASE COMPLETE, DATE AND
SIGN AND PROMPTLY MAIL YOUR PROXY IN THE RETURN ENVELOPE PROVIDED. This will not
prevent you from voting in person, should you so desire, but will help assure a
quorum and avoid added solicitation costs. Your Proxy may be revoked at any time
before it is voted.
BY ORDER OF THE BOARD OF DIRECTORS
Kevin M. Sipple, Secretary
Eldorado Springs, Colorado
July 29, 2005
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ELDORADO ARTESIAN SPRINGS, INC.
1783 Dogwood Street, Louisville, CO 80027
P.O. Box 445, Eldorado Springs, CO 80025
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 19, 2005
SOLICITATION OF PROXIES
This Proxy Statement, together with the accompanying Proxy, is furnished in
connection with the Board of Directors' solicitation of Proxies for use at the
Annual Meeting of Shareholders of Eldorado Artesian Springs, Inc. (the
"Company"), to be held at 10:00 a.m., Mountain Daylight Time, on Monday,
September 19, 2005, at 1783 Dogwood Street, Louisville, Colorado, 80027, and at
any and all adjournments thereof. It is anticipated that this Proxy Statement
and the accompanying Proxy Card will be mailed to the Company's shareholders on
or about July 29, 2005. Any shareholder who executes and returns a Proxy may
revoke it by delivering a written revocation to the offices of the Company at
any time before such Proxy is voted at the meeting; by submitting a later dated
Proxy; or by casting a ballot in person at the meeting.
The cost of solicitation of Proxies, including the cost of preparing,
assembling and mailing this proxy material to shareholders, will be borne by the
Company. The Company may also reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for expenses incurred by them in sending
proxy material to the beneficial owners of stock. Brokerage houses, custodians,
nominees and fiduciaries are requested to vote directly Proxies held for their
beneficial owners. In addition to solicitation by mail, certain directors,
officers and regular employees of the Company may solicit Proxies by telephone.
No additional remuneration will be paid for such solicitation.
SHARES OUTSTANDING AND VOTING RIGHTS
------------------------------------
The Company has fixed the close of business on July 11, 2005, as the record
date for determining the holders of its $0.001 par value Common Stock who will
be entitled to notice of and to vote at the meeting. On July 11, 2005, the
Company had issued and outstanding 2,995,495 shares of the Company's $0.001 par
value Common Stock. Holders of the Company's Common Stock are entitled to one
vote for each share owned of record. The presence in person or by proxy of the
holders of a majority of the shares outstanding and entitled to vote at the
meeting shall constitute a quorum. Directors are elected by plurality vote.
Meaning the four candidates that receive the greatest number of votes will be
elected. Affirmative votes of the holders of the majority of the votes cast is
required for the ratification of auditors and to approve any other matters to
come before the meeting. Abstentions and broker non-votes, if any, will not be
included in vote totals, and as such, will have no effect on any proposal.
The accompanying proxy, unless the shareholder otherwise specifies in the
proxy, will be voted (i) for the election of each of the four nominees named
herein for the office of director, (ii) for the selection of Ehrhardt Keefe
Steiner & Hottman, P.C., independent public accountants, as the auditors of the
Company for the fiscal year ending March 31, 2006; and (iii) at the discretion
of the proxy holders, on any other matter that may property come before the
meeting or any adjournment thereof.
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Where shareholders have appropriately specified how their proxies are to be
voted, they will be voted in accordance with such instructions. If any other
matter of business is properly brought before the meeting, the proxy holders may
vote the proxies on such matters at their discretion. The directors do not know
of any such other matter or business.
ELECTION OF DIRECTORS
---------------------
(Proxy Item #1)
The Board of Directors recommends the election as Directors of the four
nominees listed below, to hold office until the next Annual Meeting of
Shareholders or until their successors are elected and qualified or until their
earlier death, resignation or removal.
The enclosed Proxy provides that each shareholder may specify that his or
her shares be voted "FOR" the election of the four nominees named herein as
Directors with provision to "withhold authority" as to any individual Director.
At the Annual Meeting, the shares represented by the Proxies will be voted in
accordance with shareholder instructions, and, if no instructions are given, for
the election of the four nominees. In the event any nominee is unable or
declines to serve, which the Board does not anticipate, it is intended that such
Proxies will be voted for the election of the remaining nominees and for
substitute nominees, if any, recommended by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
EACH OF ITS NOMINEES FOR THE BOARD OF DIRECTORS
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently held
by him, and the period during which he has served as such:
<Table>
<Caption>
All Positions and Period Served
Offices Held With as Director
Name Age The Company of the Company
---- --- ----------- --------------
Douglas A. Larson * 50 President and Director 1986 to Present
Kevin M. Sipple 49 Vice President, Secretary 1986 to Present
and Director
Jeremy S. Martin 50 Vice President and Director 1986 to present
George J. Schmitt * 73 Director 1998 to present
</Table>
- -------------------------------------------------
* Audit Committee member
The principal occupation and business experience of each nominee for
Director are set forth below.
Douglas A. Larson was a co-founder of Eldorado Artesian Springs, Inc. in
1983 and has been President of Eldorado since 1991. Mr. Larson's
responsibilities include corporate strategy and administration of all operating
activities at Eldorado. Before his association with Eldorado, Mr. Larson
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worked as a stock broker with Richey-Frankel and Co. from 1981 to 1983 and with
B.J. Leonard, Inc. from 1980 to 1981. Mr. Larson holds a Bachelor of Science
Degree in Business Finance from the University of Colorado.
Kevin M. Sipple was a co-founder of Eldorado Artesian Springs, Inc. in 1983
and has served as Vice President and Secretary of Eldorado since 1991. Mr.
Sipple's responsibilities quality control, testing, source protection. Mr.
Sipple is a licensed Water Plant operator and manages the utility productions.
Before his association with Eldorado, Mr. Sipple worked for King Soopers, Inc.
from 1972 to 1983, serving in a variety of positions including inventory
ordering and control. Mr. Sipple attended the University of Colorado from 1973
to 1977.
Jeremy S. Martin was a co-founder of Eldorado Artesian Springs, Inc. in
1983 and has served as Vice President since 1985. Mr. Martin's responsibilities
include management of the 5 gallon sales and service business. In addition, he
is also responsible for special event promotions and public relations. Before
his association with Eldorado, Mr. Martin was an independent distributor for
Sunasu International, a nutritional products manufacturer. Mr. Martin holds a
Bachelor of Science Degree in Business from the University of Colorado.
George J. Schmitt has been a director of the Company since 1998. Mr.
Schmitt has over forty years of experience in the bottled water business. From
1968 to 1996, Mr. Schmitt was CEO and President of Hinckley & Schmitt Bottled
Water Group. He built an old family business from a small local company in
Chicago, Illinois with revenues of less than one million dollar to a two hundred
million dollar profitable industry leader. Mr. Schmitt was a founding member of
the American Bottled Water Association, now called the International Bottled
Water Association, in 1959 and was inducted into the Industry Hall of Fame in
1991. Mr. Schmitt is a director of Eureka Bottled Water Co. and National Fuel
Corporation. Mr. Schmitt holds a Bachelor of Arts degree from Dartmouth.
Directors are elected at each annual meeting of stockholders and serve
until the next annual meeting. Executive officers are elected at each annual
meeting of the Board of Directors.
During the fiscal year ended March 31, 2005, the Company's Board of
Directors held four formal, in-person meetings. All directors were in
attendance. There is no family relationship between any Director or nominee for
Director of the Company and any other Director, nominee or Executive Officer of
the Company.
Directors of the Company are required to attend annual meetings either in
person or via conference call. All four directors were in attendance at the
annual meeting held July 19, 2004.
Committee of the Board of Directors
The Board of Directors has an Audit Committee comprised of Messrs. Larson
and Schmitt. Among other functions, the Audit Committee makes recommendations to
the Board of Directors regarding the selection of independent auditors, reviews
the results and scope of the annual audit and other services provided by the
Company's independent auditors, reviews the Company's financial statements,
reviews and evaluates the Company's internal control functions, and is available
to the independent auditors for consultation purposes. The Board of Directors
has determined that Mr. Schmitt is an "audit committee financial expert" as
defined in SEC rules. Mr. Schmitt is an "independent director" as defined in
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NASD Marketplace Rule 4200 (a)(15). Mr. Larson is not an "independent director"
under that definition. The Audit Committee met one time in the fiscal year ended
March 31, 2005.
The Board of Directors does not have any other committees. The Board
believes that, considering the size of the Company and the Board of Directors,
decisions relating to nominations for election to the Board can be made on a
case-by-case basis and without the formality of a nominating committee by all
members of the board.
The Board of Directors does not have an express policy with regard to the
consideration of any director candidates recommended by shareholders since the
Board believes that it can adequately evaluate any such nominees on a
case-by-case basis. The Board will consider director candidates proposed in
accordance with the procedures set forth below under "Shareholder Proposals for
2006 Annual Meeting," and will evaluate shareholder-recommended candidates under
the same criteria as internally generated candidates. Although the Board does
not currently have formal minimum criteria for nominees, substantial relevant
business and industry experience would generally be considered important
qualifying criteria, as would the ability to attend and prepare for board,
committee and shareholder meetings. Any candidate must state in advance his or
her willingness and interest in serving on the Board.
Audit Committee Report
The audit committee oversees the Company's financial process on behalf of
the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the committee reviewed
the audited financial statements in the Annual Report with management including
a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgements, and the clarity of
disclosures in the financial statements. The Board has adopted a written Charter
of the Audit Committee (See Appendix A).
The committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgements as to
the quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the committee under
generally accepted auditing standards, including Statements on Auditing
Standards Nos. 61, 89 and 90. In addition, the committee has discussed with the
independent auditors the auditors' independence from management and the Company
including the matters in the written disclosures and the letter from the
independent auditors required by the Independence Standards Board, Standard No.
1.
The committee discussed with the Company's independent auditors the overall
scope and plans for their audit. The committee meets with the independent
auditors to discuss the results of their examination, their evaluation of the
Company's internal controls, and the overall quality of the Company's financial
reporting.
In reliance on the reviews and discussions referred to above, the audit
committee recommended to the board, and the board has approved, that the audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-KSB for the year ended March 31, 2005, for filing with the Securities
and Exchange Commission.
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Compliance with Section 16(a)
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and beneficial owners of more than 10% of the Company's
outstanding common stock (collectively, "Insiders") to file reports with the SEC
disclosing direct and indirect ownership of the Company's common stock and
changes in such ownership. The rules of the SEC require Insiders to provide the
Company with copies of all Section 16(a) reports filed with the SEC. Based
solely upon a review of copies of Section 16(a) reports received, the Company
believes Insiders have complied with all Section 16(a) filing requirements
applicable since April 1, 2004, except that Capital Merchant Bank, LLC, a
beneficial owner of more than 10% of the Company's outstanding common stock, has
not filed a Form 3 reporting its acquisition of such beneficial ownership or a
From 4 reporting the grant of warrants to Capital Merchant Bank to purchase
shares of the Company's common stock.
Compensation of Outside Directors
Each outside director receives compensation totaling $1,000 for each annual
or special meeting of the board he attends in person or by qualified electronic
means. In addition, each outside director will receive compensation totaling
$500 for each committee meeting he attends in person or by electronic means. In
addition, if the Company engages an outside director as an independent
consultant, for such duties and responsibilities as the president determines,
the outside director will be compensated at the rate of $150 per hour, plus
nominal travel expenses as agreed upon if needed. During the fiscal year ended
March 31, 2005, Mr. Schmitt received $18,275 for consulting.
EXECUTIVE OFFICERS
The following table sets forth information about the executive officers of
the Company.
Name Age Position(s) Tenure as Officer
---- --- ----------- -----------------
Douglas A. Larson 50 President 1986 to present
Kevin M. Sipple 49 Vice President, Secretary 1986 to present
Jeremy S. Martin 50 Vice President 1986 to present
Robert E. Weidler 59 Vice President 1998 to present
Cathleen M. Shoenfeld 36 Chief Financial Officer 1998 to present
Kate Janssen 33 Vice President 2002 to present
Biographical information about Messrs. Larson, Sipple and Martin can be
found in the section entitled Election of Directors above.
Robert E. Weidler joined Eldorado in 1990 and has served as Production
Manager from 1991 to 1998. Currently, Mr. Weidler is Vice President and his
responsibilities include inventory management, daily operations for finished
goods and conforming to safety and health department standards and other
governmental requirements. Mr. Weidler holds a Bachelor of Science Degree in
Sociology from Michigan State University.
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Cathleen M. Shoenfeld joined Eldorado in 1990 and has served as Assistant
Treasurer from 1991 to 1998. Currently, Ms. Shoenfeld is Chief Financial Officer
and her responsibilities include the procurement of financing for growth of
operations of Eldorado as well as overseeing the accounting functions for
Eldorado, including the annual audit and corporate reporting. Ms. Shoenfeld
holds a Bachelor of Science Degree in Economics and a Masters of Business
Administration from the University of Colorado.
Kate Janssen joined Eldorado in 1995 and has served as Director of Sales
and Service. Currently, Ms. Janssen is Vice President in charge of Sales and her
responsibilities include management of the sales and service sector of the
business. Ms. Janssen holds a Bachelor of Fine Arts Degree from the University
of Colorado.
EXECUTIVE COMPENSATION
The following table sets forth the compensation of Eldorado's President,
Douglas A. Larson, and Vice Presidents Kevin Sipple and Jeremy Martin, for the
fiscal year ended March 31, 2005. No other executive officer receives annual
compensation in excess of $100,000 per year.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
Annual Compensation Long-Term
Compensation
Awards
Restricted
Stock Options All Other
Name and Salary Bonus Awards /SARs Compensation(1)
Principal Position Year ($) ($) ($) (#) ($)
- -------------------- ---- ------ ----- ---------- ------- ------------
Douglas A. Larson 2005 $117,254 - - - $19,053
2004 $112,688 - $19,643
2003 $112,087 $7,820 $14,490
Kevin Sipple 2005 $118,033 - - - $12,818
2004 $113,353 - $12,330
2003 $112,007 $7,818 $ 9,144
Jeremy Martin 2005 $118,475 - - - $13,427
2004 $113,652 - $13,323
2003 $112,072 $7,879 $12,591
</Table>
(1) Other annual compensation includes annual health care premiums, a 3% match
for all contributions to the 401(k) plan and a car allowance.
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Stock Option Plan
On September 10, 1997 Eldorado adopted a Stock Option Plan which reserves
875,000 shares for the grant of non-qualified stock options ("Non-Qualified
Options"), and incentive stock options ("Incentive Options"). The Plan is
administered by the Board of Directors. All salaried officers and key employees
of Eldorado and any subsidiaries are eligible to receive options under the Plan.
The Plan will terminate by its terms on September 10, 2007, and may be
terminated at any time by the exercise of all outstanding options.
Options granted may be exercisable for up to ten years. If any options
granted under the Plan expire, terminate or are canceled for any reason without
having been exercised in full, the corresponding number of unpurchased shares
reserved for issuance upon exercise thereof will again be available for the
purposes of the Plan. The purchase price of the Common Stock under each option
shall not be less than the fair market value of the Common Stock on the date on
which the option is granted. The option price is payable either in cash, by the
delivery of shares of Eldorado's common stock, or a combination of cash and
shares.
Options will be exercisable immediately, after a period of time or in
installments. Options will terminate not later than the expiration of ten years
from the date of grant, subject to earlier termination due to termination of
service. Except under certain circumstances where termination of service is due
to retirement or death, in which event options may be exercised for an
additional period of time following such termination of service, the option may
be exercised only while the optionee remains in the employ of Eldorado or one of
its subsidiaries.
As of March 31, 2005, 391,500 options were outstanding, of which 362,500
are fully vested. All of the options were granted at an option price
representing 100% of the fair market value on the date of the grant as
determined by the Board of Directors.
401(k) Plan
Eldorado has adopted a 401(k) plan for employees. Employees become eligible
to participate in the plan once they have completed one year of service and have
reached 21 years of age. Approximately 35 employees were eligible to participate
in the 401(k) plan as of March 31, 2005. Contributions by the Company and the
employees vest immediately. Eldorado matches 100% of employee contributions, up
to 3% of employee gross pay. The Company matched approximately $48,000 during
the year ended March 31, (2005.)
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2005, the number and
percentage of the Company's shares of $0.001 par value Common Stock owned of
record and beneficially by each person owning more than five percent (5%) of
such Common Stock and by all individual Officers and Directors and by all
Officers and Directors as a group.
Shares Percent
Beneficially Of
Name and Address of Beneficial Owners Owned Class
- -------------------------------------- ------------ -------
Kevin M. Sipple 763,674 25.5%
43 Fowler Lane
Eldorado Springs, CO 80025
Douglas A. Larson 782,005 (1) 25.5%
12 Baldwin Circle
Eldorado Springs, CO 80025
Jeremy S. Martin 771,060 25.8%
2707 Fourth Street
Boulder, CO 80302
Capital Merchant Bank, LLC 350,000 (3) 10.5%
204 E. Witchwood Lane
Lake Bluff, IL 60044
All Officers and Directors as a Group 2,937,739 80.8%
(six persons) (2)
(1) Mr. Larson's shares include options to purchase 20,000 shares held by his
spouse.
(2) The shares owned by all officers and directors as a group include options to
purchase a total of 291,000 shares, of which 100,000 are held by Ms.
Shoenfeld, 100,000 by Mr. Weidler, 71,000 by Ms. Janssen and 20,000 by Mr.
Larson's spouse.
(3) Shares owned by Capital Merchant Bank, LLC are shares underlying warrants,
exercisable for $3.00 per share. The warrants expire on January 4, 2008.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In August 2001, the Company entered into an agreement to sell certain
parcels of real estate to two Company officers 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
has been recorded as notes receivable related party. The collateral on the notes
receivable included a junior deed of trust on the properties and shares of
common stock. During the year ended March 31, 2003, the Board of Directors
determined that 250,000 shares of common stock of the Company was sufficient
collateral and released the junior deed of trust on the properties. The note
receivables include $108,356 of accrued interest at March 31, 2005.
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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. In July 2001, when the 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 has been extended through September
26, (2007.)
On January 4, 2005, the Company entered into a Management Consulting and
Finders Agreement with Capital Merchant Bank, LLC. Under the terms of the
Agreement, Capital Merchant Bank agreed to provide certain consulting services
to assist the Company in its business development efforts.
Pursuant to the terms of the Agreement, the Company has made an initial
payment of $25,000 to Capital Merchant Bank, and will be obligated to pay an
additional $175,000 upon completion of a qualified financing. Thereafter, the
Company will be obligated to pay to Capital Merchant Bank a fee of $600,000
payable in installments every six months, unless the Agreement is terminated by
either party. Termination of the Agreement requires 60 days' written notice to
the party not terminating the Agreement. The Company also issued to Capital
Merchant Bank a Warrant to purchase up to 1,000,000 shares of the Company's
common stock, subject to completion of a qualified financing and continuation of
the Agreement, for an exercise price of $3.00 per share.
APPROVAL OF AUDITORS
(Proxy Item #2)
The Board of Directors, through its audit committee, has appointed Ehrhardt
Keefe Steiner & Hottman, P.C. to serve as the Company's independent auditors for
the current fiscal year, subject to the approval of the shareholders. The firm
has audited the financial records of the Company for the fiscal years ending
March 31, 2005 and 2004 and is considered well qualified.
The Company's independent public accountants for the fiscal year ended
March 31, 2005 are Ehrhardt Keefe Steiner & Hottman, P.C. and are expected to be
present at the Annual Meeting, to have the opportunity to make a statement if
they desire and are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE APPOINTMENT OF
EHRHARDT KEEFE STEINER & HOTTMAN, P.C. TO SERVE AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE CURRENT FISCAL YEAR.
Audit Fees
Ehrhardt, Keefe, Steiner and Hottman, PC fees for the Company's 2005 and
2004 annual audits and reviews of the Company's quarterly financial statements
or services that are normally provided by the accountant in connection with
statutory or regulatory filings or engagements were approximately $43,000 and
$37,000 respectively.
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Audit Related Fees
Ehrhardt, Keefe, Steiner & Hottman, P.C. did not render any audit related
services related to the Company in 2005 and 2004.
Tax Fees
Ehrhardt, Keefe, Steiner and Hottman, PC fees for tax preparation services
to the Company for 2005 and 2004 were approximately $3,500 for both fiscal
years.
All Other Fees
Ehrhardt, Keefe, Steiner and Hottman, PC did not provide additional
services to the Company in 2005 and (2004.)
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Annual Report to Shareholders, which includes the financial statements
for the fiscal year ended March 31, 2005, is not incorporated in the Proxy
Statement and is not to be considered part of the proxy soliciting material. THE
COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF THE 10-KSB FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 TO ANY SECURITY HOLDER REQUESTING SUCH COPY IN
WRITING TO THE CHIEF FINANCIAL OFFICER, ELDORADO ARTESIAN SPRINGS, INC., P.O.
BOX 445, ELDORADO SPRINGS, COLORADO 80025.
MISCELLANEOUS
All information contained in this Proxy Statement relating to the
occupations, affiliations and securities holdings of directors and officers of
the Company and their relationship and transactions with the Company is based on
information received from the individual directors and officers. All information
relating to any beneficial owner of more than 5% of the Company's common stock
is based on information contained in reports filed by such owner with the
Securities and Exchange Commission.
Matters to be Presented:
As of the date of this Proxy Statement, Management does not know of any
other matters to be presented at the Annual Meeting other than those set forth
herein. However, if any other matters properly come before the Meeting, the
accompanying Proxy will be voted in accordance with the best judgment of the
Proxy holders.
Shareholder Communications with Directors:
Shareholders and other interested parties wishing to contact any member (or
all members) of the Board of Directors or the audit committee of the Board may
do so by mail, addressed, either by name or title, to the Board of Directors or
to any such individual director or the audit committee, and all such
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correspondence should be sent to the Company's principal office. Administrative
staff of the Company may review any such communications to ensure that
inappropriate material is not forwarded to the Board of Directors or to any
individual director. The Board of Directors intends to continuously evaluate its
communication process with the Company's shareholders, and may adopt additional
procedures to facilitate shareholder communications with the Company's Board,
consistent with standards of professionalism and the Company's administrative
resources.
Shareholder Proposals for 2006 Annual Meeting:
The Board of Directors will make provision for presentation of shareholder
proposals at the 2006 Annual Meeting of Shareholders if such proposals are
submitted by eligible shareholders who have complied as to the substance of the
proposal with the relevant regulations of the Securities Exchange Act. Proposals
for inclusion in the Company's Proxy Statement must be delivered to the
Company's offices not later than March 29, 2006 so that proxy materials may be
prepared on a timely basis.
Shareholder proposals that will not be included in the Company's Proxy
Statement for the 2006 Annual Meeting in accordance with Rule 14a-8 of the
Securities Exchange Act will be considered untimely if notice of the proposal is
received by the Company after June 12, 2006. The proxy card solicited by the
Board of Directors may grant discretionary voting authority with respect to
proposals not included in the Proxy Statement unless the Company receives notice
of such proposals by June 12, 2006 and the conditions set forth in Rule
14a-4(c)(2)(i)-(iii) under the Securities Exchange Act are met.
BY ORDER OF THE BOARD OF DIRECTORS
Douglas A. Larson, President
July 29, 2005
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Exhibit A
ELDORADO ARTESIAN SPRINGS, INC.
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial reports and other financial information provided by the Corporation to
any governmental body, including but not limited to the Securities and Exchange
Commission or the public; the Corporations systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Corporations auditing, accounting and
financial reporting processes. Consistent with this function, the Audit
Committee should encourage continuous improvement of, and should foster
adherence to, the Corporations policies, procedures and practices at all levels.
The Audit Committees primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporations financial reporting process and internal control system.
o Review and appraise the audit efforts of the Corporations independent
accountants and internal auditing department.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of directors as determined by the
Board, with an independent director(s), free from any relationship that, in the
opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee.
Independent Directors - A director will not be considered independent if,
among other things, he or she:
o has been employed by the Corporation or its affiliates in the current
or past three years;
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o has accepted any compensation from the Corporation or its affiliates
in excess of $60,000 during the previous fiscal year (except for board
service, retirement plan benefits or non-discretionary compensation);
o is an immediate family member who is, or has been in the past three
years, employed by the Corporation or its affiliates as an executive
officer;
o has been a partner, controlling shareholder or an executive officer
for any for-profit business to which the Corporation made, or from
which it received, payments (other than those which arise solely from
investments in the corporations securities) that exceed five percent
of the Corporations consolidated gross revenues for that year, or
$200,000, whichever is more, in any of the past three years; or
o has been employed as an executive officer of another entity where any
of the Corporations executives serve on that entity's compensation
committee.
All Independent Directors must be able to read and understand fundamental
financial statements, including the Corporations balance sheet, income statement
and cash flow statement. At least one Independent Director must have past
employment experience in finance or accounting, requisite professional
certification in accounting or comparable experience or background, including a
current or past position as chief executive or financial officer or other senior
officer with financial oversight responsibilities.
The Chair of the Audit Committee must have the requisite financial or
accounting experience set forth above. Committee members may enhance their
familiarity with finance and accounting by participating in educational programs
conducted by the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
To fulfill its responsibilities, the Committee must:
1. Periodically self-assess the financial literacy and other skills of
Committee members against those skills that are needed to fulfill the
Committees rules and responsibility.
2. Periodically solicit feedback on the skill requirements and skill gaps
of the Audit Committee from the Board of Directors, management and
auditors.
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III. MEETINGS
The Committee shall meet at least one time annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the Chief Financial
Officer and the independent public accountant in separate executive sessions to
discuss any matters that the Committee or each of these groups believe should be
discussed privately. In addition, the Committee or at least its Chair should
meet with the independent public accountants and management quarterly to review
the Corporations financials consistent with IV.5 below.
IV. RESPONSIBILITIES AND DUTIES
To fulfil its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organizations annual and quarterly financial statements and
any reports or other financial information submitted to any
governmental body, or the public, including any certification, report,
opinion, or review rendered by the independent accountants.
3. Review the regular internal reports to management prepared by the
internal auditing response.
4. Review the Audit Committee report to be included in the proxy
statement.
5. Review with financial management and the independent accountants the
10-QSB reports and 10-KSB report prior to its filing and prior to the
release of earnings. The Chair of the Committee may represent the
entire Committee for purposes of this review.
6. Set guidelines for development of an Annual Audit Committee Plan which
is responsive to the primary Audit Committee responsibilities, and for
the review and approval of the Plan by the full Board.
Independent Accountants
- -----------------------
1. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve
the fees and other compensation to be paid to the independent
accounts.
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2. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
3. Periodically consult with the independent accountants in the presence
of management about internal controls and fullness and accuracy of the
organizations financial statements.
4. Require the independent public accountant to submit a formal written
statement regarding relationships and services which may affect
objectivity and independence, for discussing any relevant matters with
the independent public accountants, and for recommending that the full
Board take appropriate action to address the independence of the
auditor.
Financial Reporting Processes
- -----------------------------
1. In consideration with the independent accountants and the
internal auditors, review the integrity of the organizations
financial reporting processes, both internal and external.
2. Consider the independent accountants judgments about the quality
and appropriateness of the Corporations accounting principles as
applied in its financial reporting.
3. Consider and approve, if appropriate, major changes to the
Corporations auditing and accounting principles and practices as
suggested by the independent accountants, management or the
internal auditing department.
4. The independent public accountant is ultimately accountable to
the Board of Directors and the Audit Committee.
Process Improvement
- -------------------
1. Establish regular and separate system of reporting to the Audit
Committee by each of management and the independent accountants
regarding any significant judgments made in management's
preparation of the financial statements and the view of each as
to appropriateness of such judgments.
2. Following completion of the annual audit, review separately with
each of management, the independent accountants and the internal
auditing department any significant difficulties encountered
during the course of the audit, including any restrictions on the
scope of work or access to required information.
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3. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection what the preparation of the financial statements.
4. Review with the independent accountants and the internal auditing
department and management the extent to which changes or
improvements in financial or accounting practices as approved by
the Audit Committee, have been implemented. (This review should
be conducted at an appropriate time subsequent to implementation
of changes or improvements, as decided by the Committee.)
Ethical and Legal Compliance
- ----------------------------
1. Establish, review and update periodically a Code of Ethical
Conduct and ensure that management has established a system to
enforce this Code.
2. Review management's monitoring of the Corporations compliance
with the organizations Ethical Code, and ensure that management
has the proper review system in place to ensure that Corporations
financial statements, reports and other financial information
disseminated to governmental organization, and the public satisfy
legal requirements.
3. Review activities, organizational structure, and qualification of
the internal audit department.
4. Review, with the Corporations counsel, legal compliance matters
including corporate securities trading policies and general
regulatory oversight.
5. Review, with the Corporations counsel, any legal matter that
could have significant impact on the organizations financial
statements.
6. Perform any activities consistent with this Charter, the
Corporations Bylaws and governing law, as the Committee or the
Board deems necessary or appropriate.
7. Review and assess conflicts of interest and related party
transactions.
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PROXY CARD
ELDORADO ARTESIAN SPRINGS, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD SEPTEMBER 19, 2005
The undersigned hereby constitutes, appoints and authorizes Douglas A.
Larson or Kevin M. Sipple, and each of them, the true and lawful attorneys and
Proxies of the undersigned with full power of substitution and appointment, for
and in the name, place and stead of the undersigned to act for and vote as
designated below, all of the undersigned's shares of the $0.001 par value common
stock of Eldorado Artesian Springs, Inc., a Colorado corporation, at the Annual
Meeting of Shareholders to be held at 1783 Dogwood Street, Louisville, Colorado
at 10:00 a.m., Mountain Daylight Time, on September 19, 2005 and at any and all
adjournments thereof, for the following purposes:
1. To elect four (4) Directors to serve until the next Annual Meeting of
Shareholder or until their successors are duly elected and qualified:
For all nominees listed below (except as marked to the contrary):
Douglas A. Larson Jeremy S. Martin
Kevin M. Sipple George J. Schmitt
(INSTRUCTION: To withhold authority to vote for any individual nominee,
draw a line through or otherwise strike out his or her name. If authority to
vote for the election of any nominee is not withheld, the execution of this
Proxy shall be deemed to grant such authority.)
2. To ratify the appointment of Ehrhardt Keefe Steiner & Hottman, P.C. as
independent certified public accountants for the Company for the
fiscal year ended March 31, 2006.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby revokes any Proxies as to said shares heretofore
given by the undersigned, and ratifies and confirms all that said attorneys and
Proxies may lawfully do by virtue hereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3. THIS PROXY CONFERS DISCRETIONARY AUTHORITY IN RESPECT
TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF
THE ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement furnished herewith.
Dated: July 29, 2005
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Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) shown hereof. Executors,
administrators, trustees, guardians and attorneys should indicate when signing.
Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ELDORADO
ARTESIAN SPRINGS, INC. PLEASE SIGN AND RETURN THIS PROXY TO THE COMPANY. THE
GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING.