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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-QSB

(Mark One)

x
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934For the quarterly period ended September 30, 2003


o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor the transition period from  to


Commission file number: 333-105521

Sardy House, LLC

(Exact name of small business issuer as specified in its charter)


Colorado
    
    75-3099118(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)


128 East Main Street
Aspen, Colorado 81611
(Address of principal executive offices)

(970) 925-6246
(Issuers telephone number)

Not applicable
(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes o
No x

The issuer had 25 units of its assessable limited liability company
membership interests issued and outstanding as of December 23, 2003, the latest
practicable date before the filing of this report.

Transitional Small Business Disclosure Format (Check one): Yes o No x





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TABLE OF CONTENTS



|                                                   |                                           |                               |  |  |  |  |  | 
|-------------------------------------------------- | ----------------------------------------- | ----------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                    
|                                                   | Item 1. Financial Statements.            
|                                                   |                                           | BALANCE SHEET                
|                                                   |                                           | STATEMENTS OF OPERATIONS     
|                                                   |                                           | STATEMENTS OF CASH FLOWS     
|                                                   |                                           | NOTES TO FINANCIAL STATEMENTS
|                                                   | Item 2. Plan of Operation.               
|                                                   | Item 3. Controls and Procedures.         
|PART II  OTHER INFORMATION                       
|                                                   | Item 2. Changes in Securities.           
|                                                   | Item 6. Exhibits and Reports on Form 8-K.
|SIGNATURES                                        
|EX-10.1 Escrow Agreement                          
|EX-31.1 Certification of Presdient                
|EX-31.2 Certification of Treasurer                
|EX-32.1 Certification Pursuant to USC Section 1350



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##### Table of Contents



SARDY HOUSE, LLC
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

TABLE OF CONTENTS

PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsBalance Sheet as of September 30, 2003 (unaudited) and March 31, 2003
    
    
    1Statements of Operations for the Three Months and Six Months Ended
September 30, 2003 (unaudited) and September 30, 2002 (unaudited)
    
    
    2Statements of Cash Flows for the Six Months Ended September 30,
2003 (unaudited) and September 30, 2002 (unaudited)
    
    
    3Notes to Financial Statements
    
    
    4Item 2. Plan of Operation
    
    
    8Item 3. Controls and Procedures
    
    
    12PART II  OTHER INFORMATIONItem 2. Changes in Securities
    
    
    12Item 6. Exhibits and Reports on Form 8-K
    
    
    13SIGNATURES
    
    
    14






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PART I  FINANCIAL INFORMATION







Item 1. Financial Statements.







SARDY HOUSE, LLC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET

September 30, 2003(Unaudited)
    
    March 31, 2003ASSETSCURRENT ASSETSCash
    
    $
    6,513
    
    
    $
    Prepaid Expenses
    
    
    3,357
    
    
    
    Due From Related Party
    
    
    349,351
    
    
    
    4,000TOTAL CURRENT ASSETS
    
    
    359,221
    
    
    
    4,000PROPERTY & EQUIPMENTLand
    
    
    405,309
    
    
    
    405,309Buildings and Improvements
    
    
    2,416,531
    
    
    
    2,416,531Furniture and Fixtures
    
    
    288,405
    
    
    
    288,405Construction-in-Progress
    
    
    1,498,170
    
    
    
    51,7674,608,415
    
    
    
    3,162,012Less Accumulated Depreciation
    
    
    (1,359,744
    )
    
    
    (1,358,628
    )NET PROPERTY & EQUIPMENT
    
    
    3,248,671
    
    
    
    1,803,384OTHER ASSETSLoan Fees net of accumulated amortization of $9,602 and $158
    
    
    51,861
    
    
    
    55,549TOTAL ASSETS
    
    $
    3,659,753
    
    
    $
    1,862,933LIABILITIES AND MEMBERS DEFICIT
CURRENT LIABILITIESAccounts Payable
    
    $
    150,671
    
    
    $
    19,617Advance deposit
    
    
    9,489
    
    
    
    Due to Related Party
    
    
    91,270
    
    
    
    60,422Accrued Expenses
    
    
    18,450
    
    
    
    402Accrued Interest
    
    
    21,200
    
    
    
    1,220TOTAL CURRENT LIABILITIES
    
    
    291,080
    
    
    
    81,661LONG TERM LIABILITIESLong Term Debt
    
    
    3,747,969
    
    
    
    2,091,795TOTAL LIABILITIES
    
    
    4,039,049
    
    
    
    2,173,456MEMBERS (DEFICIT)
    
    
    (379,296
    )
    
    
    (310,523
    )TOTAL LIABILITIES AND MEMBERS (DEFICIT)
    
    $
    3,659,753
    
    
    $
    1,862,933


The accompanying notes are an integral part of the financial statements.

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SARDY HOUSE, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)

Quarter
    
    QuarterEnded
    
    Ended
    
    Year-to-Date
    
    Year-to-DateSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2003
    
    2002
    
    2003
    
    2002OPERATING REVENUESRoom and Other Guest Charges
    
    $
    
    
    
    $
    85,250
    
    
    $
    4,254
    
    
    $
    123,703OPERATING EXPENSESSalaries, Payroll Taxes and Benefits
    
    
    
    
    
    
    64,546
    
    
    
    7,636
    
    
    
    126,780Room ExpensesCommissions
    
    
    
    
    
    
    2,806
    
    
    
    127
    
    
    
    4,838Laundry and Linen
    
    
    
    
    
    
    1,530
    
    
    
    170
    
    
    
    2,539Guest Services
    
    
    
    
    
    
    6,201
    
    
    
    480
    
    
    
    12,334Total Room Expenses
    
    
    
    
    
    
    10,537
    
    
    
    777
    
    
    
    19,711Property Operating CostsRepairs and Maintenance
    
    
    
    
    
    
    4,085
    
    
    
    371
    
    
    
    19,295Utilities
    
    
    
    
    
    
    8,700
    
    
    
    3,691
    
    
    
    17,265Total Property Operating Costs
    
    
    
    
    
    
    12,785
    
    
    
    4,062
    
    
    
    36,560General and Administrative ExpensesAdvertising and Marketing
    
    
    
    
    
    
    3,885
    
    
    
    2,257
    
    
    
    8,776Credit Card Fees
    
    
    112
    
    
    
    2,106
    
    
    
    179
    
    
    
    3,618Depreciation Expense
    
    
    
    
    
    
    21,434
    
    
    
    1,116
    
    
    
    42,969Insurance Expense
    
    
    
    
    
    
    2,799
    
    
    
    197
    
    
    
    5,598Professional Fees
    
    
    
    
    
    
    5,350
    
    
    
    254
    
    
    
    7,770Property Taxes
    
    
    
    
    
    
    9,225
    
    
    
    608
    
    
    
    18,450Telephone
    
    
    
    
    
    
    3,121
    
    
    
    441
    
    
    
    5,413Other
    
    
    3,000
    
    
    
    729
    
    
    
    7,901
    
    
    
    4,362Total General and Administrative Expenses
    
    
    3,112
    
    
    
    48,649
    
    
    
    12,953
    
    
    
    96,956NET (LOSS) FROM OPERATIONS
    
    
    (3,112
    )
    
    
    (51,267
    )
    
    
    (21,174
    )
    
    
    (156,304
    )Other Income (Expense)Other Income (Expense)
    
    
    
    
    
    
    (28
    )
    
    
    (364
    )
    
    
    (71
    )Amortization (Expense)
    
    
    
    
    
    
    (639
    )
    
    
    (309
    )
    
    
    (1,278
    )Interest (Expense)
    
    
    
    
    
    
    (34,692
    )
    
    
    (2,462
    )
    
    
    (80,264
    )Total Other Income (Expense)
    
    
    
    
    
    
    (35,359
    )
    
    
    (3,135
    )
    
    
    (81,613
    )NET (LOSS) FROM CONTINUING OPERATIONS
    
    
    (3,112
    )
    
    
    (86,626
    )
    
    
    (24,309
    )
    
    
    (237,917
    )NET INCOME (LOSS) FROMDISCONTINUED OPERATIONS
    
    
    
    
    
    
    124,395
    
    
    
    (44,464
    )
    
    
    143,924NET INCOME (LOSS)
    
    $
    (3,112
    )
    
    $
    37,769
    
    
    $
    (68,773
    )
    
    $
    (93,993
    )MEMBERSHIP UNITS OUTSTANDING
    
    
    25
    
    
    
    25
    
    
    
    25
    
    
    
    25NET INCOME (LOSS) PER UNIT
    
    $
    (124
    )
    
    $
    1,511
    
    
    $
    (2,751
    )
    
    $
    (3,760
    )NET INCOME (LOSS) PER UNIT
FROM DISCONTINUED OPERATIONS
    
    $
    
    
    
    $
    4,976
    
    
    $
    (1,779
    )
    
    $
    5,757NET (LOSS) PER UNIT FROM CONTINUING OPERATIONS
    
    $
    (124
    )
    
    $
    (3,465
    )
    
    $
    (972
    )
    
    $
    (9,517
    )


The accompanying notes are an integral part of the financial statements.

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SARDY HOUSE, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)

Year-to-Date
    
    Year-to-DateSeptember 30,
    
    September 30,2003
    
    2002Net Income (Loss)
    
    $
    (68,773
    )
    
    $
    (93,993
    )Adjustments to Reconcile Net (Loss) to Net Cash
Used in Operating Activities:Amortization
    
    
    309
    
    
    
    1,278Depreciation
    
    
    1,116
    
    
    
    42,969Decrease (Increase) in:A/R
    
    
    
    
    
    
    (28,087
    )Due From Related Party
    
    
    (345,351
    )
    
    
    Prepaid Expenses
    
    
    (3,357
    )
    
    
    3,494Inventory F&B
    
    
    
    
    
    
    1,500Loan Fees
    
    
    (5,756
    )
    
    
    Increase (Decrease) in:Due To Related Party
    
    
    30,848
    
    
    
    Accounts Payable
    
    
    131,054
    
    
    
    (6,169
    )Sales Tax Payable
    
    
    
    
    
    
    (10,223
    )Advance Deposits
    
    
    9,489
    
    
    
    1,167Accrued Expenses
    
    
    18,048
    
    
    
    554Accrued Interest
    
    
    19,980
    
    
    
    11,840Net Cash Provided By Operating Activities
    
    
    (212,393
    )
    
    
    (75,670
    )Cash Flows From Investing ActivitiesPurchase of Property
    
    
    (1,437,268
    )
    
    
    Net Cash (Used By) Investing Activities
    
    
    (1,437,268
    )
    
    
    Cash Flows From Financing ActivitiesProceeds of Long-Term Debt
    
    
    1,656,174
    
    
    
    Principal Payments
    
    
    
    
    
    
    (7,944
    )Member Distributions
    
    
    
    
    
    
    (1,720
    )Net Cash Provided By Financing Activities
    
    
    1,656,174
    
    
    
    (9,664
    )Cash and Cash Equivalents:Beginning of Period
    
    
    
    
    
    
    126,097End of Period
    
    $
    6,513
    
    
    $
    40,763


The accompanying notes are an integral part of the financial statements.

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SARDY HOUSE, LLC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

1. SUMMARY OF ACCOUNTING POLICIES

This summary of significant accounting policies of Sardy House, LLC (Company)
is presented to assist in understanding the Companys financial statements.
The financial statements and notes are representations of the Companys
management who is responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting principles in the
United States of America and have been consistently applied in the preparation
of the financial statements. The company has selected March 31 as its year
end.

UNAUDITED FINANCIAL STATEMENTS

The balance sheet as of September 30, 2003, the statements of operations and
the statements of cash flows for the three month and six month periods ended
September 30, 2003 and 2002, have been prepared by Sardy House, LLC (Company)
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures, normally
included in the financial statements prepared in accordance with accounting
principles generally accepted in the United States of America, have been
condensed or omitted as allowed by such rules and regulations, and the Company
believes that the disclosures are adequate to make the information presented
not misleading. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in financial position at September
30, 2003 and for all periods presented, have been made.

It is suggested that these statements be read in conjunction with the March 31,
2003 audited financial statements and the accompanying notes included in the
Companys Amendment No. 3 to Registration Statement on Form SB-2 (Registration
No. 333-105521), filed with the Securities and Exchange Commission on October
29, 2003.

DESCRIPTION OF BUSINESS

Sardy House, LLC is a Colorado limited liability company organized March 21,
2003 under the Colorado Limited Liability Company Act. The Limited Liability
Company was formed to acquire and operate the Sardy Main House Residence, the
Carriage House Residence and the Carriage House Inn formerly operated as the
Sardy House Hotel. The Carriage House Inn will continue to operate as a hotel.
Therefore the operating results from the Carriage House Inn have been reported
as a continuing operation. The Sardy Main House Residence and the Carriage
House Residence will be available for personal use by the Limited Liability
Company members. Therefore the operating results from the Sardy Main House
Residence and the Carriage House Residence have been reported as discontinued
operations (See Note 8).

The Company owns and will operate the Sardy Main House Residence, the Carriage
House Residence and the Carriage House Inn located in downtown Aspen, Colorado
upon completion of the property renovation. The Company owns the 9,000 square
foot Sardy Main House Residence and the 1,050 square foot Carriage House
Residence as properties available for personal use by the Limited Liability
Company members. The Company owns and will operate the 4,600 square foot eight
room Carriage House Inn as a hotel. The company is a development stage company
since the planned principal operations of the company have not yet commenced.

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The entire Sardy House Property was closed for renovations for the quarter
ended September 30, 2003.

USE OF ESTIMATES IN PREPARATION OF THE FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

PROPERTY AND EQUIPMENT

Property and equipment is stated at predecessor cost. Depreciation is computed
using the straight-line method over the following useful lives:

Buildings, Improvements
    And Acquisition Fees
Furniture, Fixtures,
    And Equipment
    
    15 to 40 years
5 to 7 years


Maintenance and repairs of property and equipment are charged to operations,
and major improvements are capitalized. Upon retirement, sale, or other
disposition of property and equipment, the costs and accumulated depreciation
are eliminated from the accounts, and any resulting gain or loss is included in
operations.

INCOME TAXES

No provision for federal and state income taxes has been made in the financial
statement since the Companys profit and losses are reported on the individual
members tax return. The Company is a one-member Limited Liability Company.
The revenues and expenses of the Company are taxed on the members tax return.
Upon entrance of the second member, the Company will be taxed as a partnership
for federal and state income tax purposes. For income tax purposes the income
tax basis of the property and equipment is $883,382 less than the carrying
value in the financial statements.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company identifies and accounts for the impairment of long-lived assets in
accordance with SFAS 144.

CONSTRUCTION-IN-PROGRESS

Construction period interest, real estate taxes, insurance costs and renovation
costs are capitalized in construction-in-progress.

LOAN FEES

Loan fees represent a loan origination fee and certain other loan costs
incurred when the Company refinanced its loan on the Companys property and
equipment for the renovation construction of its building. The loan fees are
being amortized over the life of the loan.

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INTERIM FINANCIAL STATEMENTS

The balance sheet as of September 30, 2003 and the statements of operations for
the three month and six
month periods ended September 30, 2003 and 2002 and statements of cash flows
for the six month periods ended September 30, 2003 and 2002 have been prepared
by the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly present
the financial position, results of operations, and cash flows for all periods
presented have been made.

2. MEMBER UNITS ISSUED

On March 28, 2003 Sardy House, LLC issued 25 membership units to the initial
member, North and South Aspen, LLC, in exchange for the Sardy Main House
Residence, the Carriage House Residence and the Carriage House Inn formerly
operated as the Sardy House Hotel (Sardy House Property). Sardy House, LLC is
a wholly owned subsidiary of North and South Aspen, LLC. The contributed
property is recorded at the contributing members original cost, net of
accumulated depreciation and has been accounted for as a
transfer/reorganization since there was no change in control of the real estate
property.

3. RELATED PARTY TRANSACTIONS

The Company is a wholly owned subsidiary of North and South Aspen, LLC.

North and South Aspen, LLC rented the Companys property and equipment from
March 28, 2003 through March 31, 2003 for $1,000 per day. The Company accrued
$4,000 in rent in the period ending March 31, 2003. The Company has
receivables of $4,000 as of March 31, 2003 for rents receivable from North and
South Aspen, LLC.

North and South Aspen, LLC has agreed to pay certain marketing and professional
expenses related to the registration and sale of the Sardy House, LLC units.
As of September 30, 2003 Sardy House, LLC had advanced North and South Aspen,
LLC $349,351 related to these expenses. North and South Aspen, LLC intends to
repay the advances from the proceeds of the sales of the Sardy House, LLC
units.

North and South Aspen, LLC paid certain organizational and construction fees
for Sardy House, LLC. Sardy House, LLC owed North and South Aspen, LLC $36,422
and $70,573, as of March 31, 2003 and September 30, 2003, respectively, for
reimbursable expenses paid by North and South Aspen, LLC for the benefit of
Sardy House, LLC. North and South Aspen, LLC requires expense reimbursements
for construction and organizational expenses directly connected to the
renovation of the Sardy House property and organizational costs directly
connected with the organization of Sardy House, LLC. Certain reimbursable
costs are based on managements estimates of costs allocable to Sardy House,
LLC.

Block 66, LLC, a company wholly owned by the controlling members of North and
South Aspen, LLC, is the manager of Sardy House, LLC under the original Sardy
House, LLC operating agreement. Block 66, LLC shall manage the Sardy House
Property for an indefinite term until the Manager resigns or is removed and
until a successor has been elected or qualified under the rules set forth in
the Companys operating agreement. The management agreement shall
automatically terminate upon resignation or removal of the manager.

Block 66, LLC receives a basic business management fee of $1,000 monthly by
agreement with Sardy House, LLC. For the period ended September 30, 2003 the
Company incurred $6,000 of business management fees.

After completion of construction, Block 66, LLC will receive additional basic
property management fees of $1,667 monthly for management of the Residences and
$2,083 monthly for management of the Carriage House Inn. Block 66, LLC will
also receive a fee of 10% of the Room and Other Guest Charges of the Carriage
House Inn and incentive fee of an additional 10% of any Room and Other Guest
Charges above those projected in the annual budget. Block 66, LLC will be the
exclusive rental agent for rental of the Residences when owner-

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members of the Company choose to have their Exclusive Weeks in the Residences
marketed for rental. 60% of any gross rental revenue of the Residences shall be
paid to the owner-members and the remaining 40%, less taxes and incidentals,
shall be paid to Block 66, LLC. Block 66 will pay all housekeeping fees and
commissions associated with the rental, including a 10% commission payable to
the owner/member when the owner/member refers the rental.

During current interior renovations construction of the Sardy House property,
Block 66, LLC will act as the construction manager and charge the Company $75
per hour their services. The Company paid $142,200 and $24,000 in fees for
construction planning to Block 66, LLC for the six months ended September 30,
2003 and the year ended March 31, 2003, respectively. The Company also paid
Block 66 $3,082 for reimbursable expenses for the six months ended September
30, 2003. These amounts have been included in the financial statements as part
of construction-in-progress.

4. ADVERTISING

The Company expenses advertising production costs as they are incurred and
advertising communication costs the first time the advertising takes place.

5. LONG-TERM DEBT

Note Payable WestStar Bank, collateralized by the Companys property and
equipment, 14 monthly consecutive interest payments, beginning August 30, 2003
with interest calculated on the unpaid principal balances at a floating
interest rate based on the WestStar Bank Base (currently 5.00%). Commencing
October 30, 2004, 18 monthly fixed principle payments of $8,702 plus accrued
interest. One interest and principal payment based on the current interest
rates of $4,218,641 due on April 30, 2006. The minimum and maximum interest
rate allowed under this loan is 7% and 21%, respectively. The loan is a
construction loan, the proceeds of which will be used to finance the
construction of the property as well as furnishings for the renovated property.
The maximum principal loan amount under this agreement is $4,350,000. The
Note Payable balance is $3,747,969 and $2,091,795 as of September 30, 2003 and
March 31, 2003 respectively and it matures on April 30, 2006. The initial
member, North and South Aspen, LLC will be required to list the Sardy House
property and equipment for sale as a single-family residence or repay the loan
in full if the initial member is unable to sell a sufficient amount of the
membership units by March 2005.

6. OPERATING AGREEMENT

Membership units are subject to specific provisions of an operating agreement
which provides the rules and regulations regarding ownership of the units and
use of the property, including required provisions for payment of operating
costs of the entity and the property. Failure to follow the provisions of the
operating agreement could result in significant penalties, including potential
required forfeiture of rights of use of the property and potential required
disposition of the membership unit.

7. COMMITMENTS

The Company intends to lease two Land Rovers with a fair market value of
$35,000 each and anticipated annual lease obligations of $16,800 beginning
January 1, 2004.

8. DISCONTINUED OPERATIONS

On April 7, 2003 the Company discontinued hotel operations in the Sardy Main
House Residence and in the Carriage House Residence. Accordingly, the
operations of the Sardy Main House Residence and the Carriage

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House Residence have been reported separately as discontinued operations in the
accompanying financial statements. The Carriage House Inn will continue to
operate as a hotel and has been accounted for as a continuing operation in the
accompanying financial statements.

9. SUBSEQUENT EVENTS

On November 20, 2003 the Company received their Certificate of Occupancy.







Item 2. Plan of Operation.

Cautionary Note About Forward
Looking Statements

This report contains forward-looking statements within the meaning of
securities laws. These forward-looking statements are subject to a number of
risks and uncertainties, many of which are beyond our control. All statements
other than statements of historical facts included in this report, including
the statements about our future operations, financial position, plans and
objectives of management are forward-looking statements. When used in this
report, the words will, believe, anticipate, intend, estimate,
expect, project and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
such identifying words. Although we believe that our plans, intentions,
expectations and projections reflected in or suggested by the forward-looking
statements we make in this report are reasonable, such plans, intentions,
expectations or projections may not be achieved since they are subject to risks
which may cause our actual results to differ materially from results expressed
or implied by the forward-looking statements. These risks include two matters
discussed in the Risk Factors section of our prospectus dated November 10,
2003 filed with the SEC. All forward-looking statements speak only as of the
date on which they were made. Although we may from time to time voluntarily
update or revise publicly our forward-looking statements, whether as a result
of new information, future events or otherwise, we disclaim any commitment to
do so except as required by securities laws.

Overview

We are a development stage company that was formed in February 2003. In
March 2003 we acquired the Sardy House hotel property in Aspen, Colorado from
our affiliate North and South Aspen, L.L.C. in exchange for the issuance to
North and South Aspen, L.L.C. of 25 of our limited liability company membership
interests. The Sardy House is a Victorian mansion that was built in 1892, and
there is also a separate Carriage House building on the property that was built
in 1985.

Since 1985 the Sardy House has been operated as a 20-room hotel with a
restaurant, but those operations were discontinued in April 2003 when the Sardy
House was closed for interior renovations to the buildings to convert them for
our planned operation of the Sardy House property as two private residences for
exclusive use by up to 25 members and a semi-private Carriage House Inn, which
will continue to operate as an 8-room hotel. The renovations were completed in
November 2003 and a Certificate of Occupancy was issued on November 20, 2003.
The Carriage House Inn resumed operations as a hotel on December 7, 2003.

We accounted for the contribution of the Sardy House property from North
and South Aspen, L.L.C. as a transfer/reorganization among entities under
common control, and therefore our financial statements in this report include
the historical operations of our predecessor, the Sardy House hotel. The
historical operations of the Sardy House hotel, including the operations of the
portion of the Carriage

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House which will not continue to operate as a hotel, are shown separately
in the financial statements as discontinued operations as a result of the
discontinuation of those hotel operations in April 2003.

Plan of Operation

The 25 membership interests issued to North and South Aspen, L.L.C. are
being offered for sale under a registration statement that was declared
effective by the SEC on November 10, 2003, and a purchaser of a membership
interest will have exclusive rights to occupy and use:



| |  |  | the 9,000 square foot main Sardy House residence for two weeks each year, and
| | - |  | -----------------------------------------------------------------------------



| |  |  | the 1,000 square foot Carriage House residence for two weeks each
year.
| | - |  | -----------------------------------------------------------------------

In addition, members will be entitled to booking of rooms at the Carriage House
Inn on a discounted basis. There will be no restaurant operations.

The offering of membership interests is being conducted on a best
efforts, all or none basis as to the minimum offering necessary to allow for
complete repayment of the construction loan debt discussed below, and on a
best efforts basis as to additional membership interests up to the maximum
offering of 25 membership interests. The current offering price is $750,000
per membership interest, for an aggregate offering price for all 25 membership
interests of $18,750,000.

The costs and expenses of the planned operation are expected to include
staff and housekeeping payroll, laundry and linen, repairs and maintenance,
utilities, management fees, insurance and property taxes. These expenses will
be partially offset by revenues from the rental of rooms at the Carriage House
Inn, and members will be required under the provisions of our operating
agreement to contribute to us operating contributions to make up any projected
or actual operating deficit and to provide reserves for repairs or
replacements. The operating contributions will be based on the operations
budget annually prepared by the manager and delivered to the members.
Operating contributions may also be requested in a month where our revenues or
receipts are insufficient to cover operating expenses, and members may also be
required to contribute to us additional capital contributions to pay for
expenses of any construction, reconstruction, structural repair or replacement
of our property, as approved by the members by a two-thirds vote of the
membership interests.

We have appointed our affiliate Block 66, LLC as our exclusive manager and
agent to supervise, lease and operate the residences and the Carriage House Inn
for a management agreement term ending June 30, 2006. Our manager has prepared
an operating budget for 2004, which contemplates a required annual contribution
from each member of $19,500 per membership interest. We expect to assess these
contributions on a quarterly basis. The draft operating budget for 2005 and
future years will, as provided in our operating agreement, be reviewed and
approved by an advisory committee appointed by the members and then revised by
the manager after consideration of the advisory committees recommendations.

Before the Sardy House was closed for the renovations, North and South
Aspen, L.L.C. had approximately 24 employees for the hotel and restaurant
operations. When the new operation begins, we plan on having a staff for the
two residences and Carriage House Inn of 10 employees provided under a
management agreement with our manager.

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Liquidity and Capital Resources

To finance the renovations and refurnishings, on March 28, 2003 we entered
into a construction loan agreement with WestStar Bank in Aspen, along with
North and South Aspen, L.L.C. as a co-borrower. The construction loan
agreement was amended on August 22, 2003. Under the construction loan
agreement, the maximum loan principal amount is $4.35 million and there was
$3,747,969 outstanding as of September 30, 2003, approximately $2,045,000 of
which represented prior indebtedness associated with the Sardy House property
that was outstanding with WestStar Bank before the renovations began and was
included in the construction loan agreement. As of December 23, 2003, the
outstanding balance was $4.35 million. The agreement has a maturity date of
April 30, 2006.

The construction loan agreement requires 14 consecutive monthly interest
payments beginning August 31, 2003, with interest calculated on the unpaid
principal balances at a floating interest rate based on the WestStar Bank base
rate (which was 5.00% as of August 22, 2003), 18 monthly consecutive principal
payments of $8,702 each, beginning October 30, 2004, 18 monthly consecutive
interest payments beginning October 30, 2004, and one principal and interest
payment of $4,218,640.97, subject to change resulting from changes in the
floating interest rate, due on April 30, 2006. The minimum and maximum
interest rates allowed under this loan are 7% and 21%.

We must comply with the following material covenants under the construction loan agreement:



| |  |  | We must maintain adequate insurance with respect to our properties and operations.
| | - |  | ----------------------------------------------------------------------------------



| |  |  | We must use the loan funds solely for payment of expenses
directly related to the renovation and refurnishing project, and the
SEC registration and marketing of the membership interests.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We must complete the renovation project for purposes of final
payment to Block 66, LLC as the general contractor by December 31,
2003.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Without the prior written consent of WestStar Bank, we
cannot:
| | - |  | --------------------------------------------------------------



| |  |  | incur or assume any indebtedness,
except for trade debt incurred in the normal course of
business and indebtedness to WestStar Bank under the
construction loan agreement,
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | sell, transfer, mortgage, assign,
pledge, lease, grant a security interest in, or encumber
any of our assets, except as allowed as permitted liens
under the construction loan agreement,
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | engage in any business activities
substantially different than those in which we are
presently engaged, cease operations, liquidate, merge,
transfer, acquire or consolidate with any other entity,
dissolve or transfer or sell property out of the
ordinary course of business, or make any distribution
with respect to any capital account,
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | loan, invest in or advance money or
assets, or acquire any interest in any other enterprise
or entity, or
| | - |  | ---------------------------------------------------------------------------------------------------------

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| |  |  | create or allow to be created any
lien or charge upon the properties serving as collateral
for the loan or the improvements to those properties.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We must have pre-sold membership interests with a total value
of at least $4.5 million by March 1, 2005, or we must list for sale
the Sardy House property as a single-family residence or repay the
loan in full.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We are currently in compliance with such covenants.

Repayment of the borrowings under the construction loan agreement is
secured by a mortgage on the Sardy House property, and personally guaranteed by
Frank S. Peters and Daniel D. Delano, who are officers of us and who control
North and South Aspen, L.L.C.

Although North and South Aspen, L.L.C. will receive the proceeds from the
sale of the membership interests being offered, North and South Aspen, L.L.C.
has agreed to apply the first proceeds from the closing of the required minimum
offering amount to complete repayment of all outstanding indebtedness under the
construction loan agreement when the renovations and refurnishings are
complete. Therefore, we will not have any outstanding long-term debt when new
members are admitted and the planned operation of the residences begins.

Through December 23, 2003, we incurred a total cash outlay of
approximately $2.07 million in capital expenditures to complete the renovations
of the Sardy House. This amount includes a total of approximately $190,000 in
management and construction fees payable to Block 66, LLC. Through September
30, 2003, we had incurred $1,498,170 in construction-in-progress costs for the
renovations, including $166,200 in fees for construction planning payable to
Block 66, LLC through September 30, 2003.

We do not expect to need any additional financing within the next 12
months other than through operating contributions from members. Through the
required operating contributions from members we expect to have funds to cover
our costs and expenses and begin and continue the planned operation. We have
incurred approximately $250,000 in registration and offering expenses that will
be paid for through a capital contribution by North and South Aspen, L.L.C. to
us, which will be partially funded under the construction loan agreement.
North and South Aspen, L.L.C. has agreed to pay certain additional marketing
expenses related to the sale of the membership interests. As of September 30,
2003, we had advanced North and South Aspen, L.L.C. $349,351 related to
registration and marketing expenses. North and South Aspen, L.L.C. intends to
repay the advances and other expenses of the sale of the membership interests
from the proceeds of the sales of the membership interests. We began
operations, with North and South Aspen, L.L.C. as the sole holder of our
membership interests, when the interior renovations were completed in November
2003. We expect to require a pro rata interim operating contribution from
members, including new members, upon the closing of the minimum offering
expected to occur in the first quarter of 2004 in order to cover operating
expenses until the normal contribution budget cycle begins for the fiscal year
beginning April 1, 2004. Operating contributions from the members will be
requested by our manager on a quarterly basis upon 15 days written notice. We
plan to give such notice so that operating contributions will be due at the
beginning of each quarter. In any month where Sardy House revenues or receipts
are insufficient to cover operating expenses, our manager may request
additional operating contributions from the members upon 15 days written
notice. If the minimum offering is completed but not all 25 membership
interests are sold, North and South Aspen, L.L.C. as a continuing owner of
membership interests will be responsible for its pro rata share of the required
operating contributions for the membership interests that it continues to own.
North and South Aspen, L.L.C. may endeavor to rent out its exclusive weeks in
order to satisfy this obligation, but its obligation to pay the required
operating contributions will not be subject to receiving any
rental revenues for its exclusive weeks.

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Item 3. Controls and Procedures.

We maintain a system of disclosure controls and procedures that are
designed for the purposes of ensuring that information required to be disclosed
in our SEC reports is recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms, and that such information
is accumulated and communicated to our principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding
required disclosure.

Our principal executive officer and our principal financial officer
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by
this report. Based upon that evaluation, the principal executive officer and
the principal financial officer concluded that our disclosure controls and
procedures are effective for the purposes discussed above as of the end of the
period covered by this report. There was no significant change in our internal
control over financial reporting that occurred during our most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.







PART II  OTHER INFORMATION







Item 2. Changes in Securities.

On November 10, 2003, our Registration Statement on Form SB-2
(Registration No. 333-105521) for the best efforts offering of up to 25 of our
assessable limited liability company membership interests was declared
effective by the Securities and Exchange Commission under the Securities Act of
1933. The offering commenced on November 11, 2003. The offering price is
$750,000 per membership interest, for an aggregate offering price for all of
the membership interests of $18,750,000. The offering price may be changed at
any time.

All 25 of the membership interests are held by our affiliate North and
South Aspen, L.L.C. North and South Aspen, L.L.C. will receive any proceeds
from the sale of the membership interests in the offering, subject to an
agreement to first apply the proceeds to complete repayment of the indebtedness
on the Sardy House property of up to $4,350,000 on which both we and North and
South Aspen, L.L.C. are obligated and the Sardy House property serves as
collateral.

The offering is being conducted through W.G. Nielsen & Co. on a best
efforts, all or none basis as to the minimum offering necessary to allow for
complete repayment of the bank debt of up to $4,350,000 on the Sardy House, and
on a best efforts basis as to additional membership interests up to the
maximum offering. If a minimum of $4,665,000, before commissions and realtor
referral fees and excluding accrued interest on the bank debt to be repaid, is
not raised by May 31, 2004, subject to extension in our sole discretion of up
to an additional 30 days, the offering will be terminated and all money
received will be returned to investors with interest within 5 business days.
Until the minimum offering is achieved, all funds received from investors will
be deposited into an interest-bearing escrow account, with interest to be
credited toward the final purchase price.

As of the date of this report, no securities have been sold in the offering.

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Item 6. Exhibits and Reports on Form 8-K.

(a) The following exhibits are furnished as part of this report:

ExhibitNumber
    
    Description10.1*
    
    Escrow Agreement dated as of December 11, 2003 among Sardy
House, LLC, North and South Aspen, L.L.C., W.G. Nielsen & Company
and Computershare Trust Company, Inc.31.1*
    
    Certification of President pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2*
    
    Certification of Treasurer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1*
    
    Certification pursuant to U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




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|* |  | Filed herewith.
|- |  | ---------------

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the quarter for which this report
is filed.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

SARDY HOUSE, LLCDate: December 23, 2003
    
    By:
    BLOCK 66, LLC, its ManagerBy:
    /s/ Daniel D. DelanoDaniel D. Delano, Manager


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ExhibitNumber
    
    Description10.1*
    
    Escrow Agreement dated as of December 11, 2003 among Sardy
House, LLC, North and South Aspen, L.L.C., W.G. Nielsen & Company
and Computershare Trust Company, Inc.31.1*
    
    Certification of President pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2*
    
    Certification of Treasurer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1*
    
    Certification pursuant to U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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