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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from __________ to _____________
 Commission file number 00-18235
 Eldorado Artesian Springs, Inc.
 
  Colorado
    
    84-0907853(State or other jurisdiction of incorporation)
    
    (IRS Employer Identification No.)
Or organization)1783 Dogwood Street, Louisville, Colorado
    
    80027(Address of principal executive offices)
    
    (Zip Code)
  
   þ o
  o þ
   o þ




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ELDORADO ARTESIAN SPRINGS, INC.
 INDEX
 PagePart I  Financial InformationItem 1  Financial StatementsBalance Sheets as of June 30, 2007 (Unaudited) and March 31, 2007
    
    
    3Unaudited Statements of Operations for the Three Months Ended June 30, 2007 and June 30, 2006
    
    
    4Unaudited Statement of Changes in Stockholders Equity for the Three Months Ended June 30, 2007
    
    
    5Unaudited Statements of Cash Flows for the Three Months Ended June 30, 2007 and June 30, 2006
    
    
    6Notes to Unaudited Financial Statements
    
    
    7Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3  Controls and Procedures
    
    
    18Part II  Other Information
    
    
    19Signatures and Exhibit Index
    
    
    20Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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ELDORADO ARTESIAN SPRINGS, INC.
 Balance Sheets
 June 30,
    
    
    March 31,2007
    
    
    2007(Unaudited)AssetsCurrent assetsCash
    
    $
    474,731
    
    
    $
    607,759Accounts receivableTrade, net of allowance of $80,000
    
    
    942,940
    
    
    
    842,681Inventories
    
    
    236,201
    
    
    
    196,447Prepaid expenses and other
    
    
    74,653
    
    
    
    74,481Deferred tax asset
    
    
    29,648
    
    
    
    29,648Total current assets
    
    
    1,758,173
    
    
    
    1,751,016Non-current assetsProperty, plant and equipment  net
    
    
    4,211,828
    
    
    
    4,258,224Notes receivable  related party
    
    
    601,588
    
    
    
    590,450Water rights  net
    
    
    160,843
    
    
    
    74,600Deposits
    
    
    104,004
    
    
    
    109,004Other  net
    
    
    121,282
    
    
    
    125,811Total non-current assets
    
    
    5,199,545
    
    
    
    5,158,089Total
    
    $
    6,957,718
    
    
    $
    6,909,105Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    414,154
    
    
    $
    254,059Accrued expenses
    
    
    232,696
    
    
    
    243,218Customer deposits
    
    
    104,458
    
    
    
    93,584Income taxes payable
    
    
    616
    
    
    
    100,366Current portion of long-term debt
    
    
    73,350
    
    
    
    84,793Total current liabilities
    
    
    825,274
    
    
    
    776,020Non-current liabilitiesLong-term debt, less current portion
    
    
    3,937,040
    
    
    
    3,944,333Deferred tax liability
    
    
    90,638
    
    
    
    96,638Deferred gain on the sale of real estate
    
    
    357,544
    
    
    
    357,544Total non-current liabilities
    
    
    4,385,222
    
    
    
    4,398,515Total liabilities
    
    
    5,210,496
    
    
    
    5,174,535Commitments and contingenciesStockholders equityPreferred stock, par value $.001 per share;
10,000,000 shares authorized; 0 issued and
outstanding
    
    
    
    
    
    
    Common stock, par value $.001 per share;
50,000,000 shares authorized; 6,033,066
(2007) and 6,031,066 (2006) issued and
outstanding
    
    
    6,033
    
    
    
    6,031Additional paid-in capital
    
    
    1,545,623
    
    
    
    1,483,957Retained earnings
    
    
    195,566
    
    
    
    244,5821,747,222
    
    
    
    1,734,570Total
    
    $
    6,957,718
    
    
    $
    6,909,105
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ELDORADO ARTESIAN SPRINGS, INC.
 Unaudited Statements of Operations
 For the Three Months EndedJune 30,2007
    
    
    2006RevenuesWater and related
    
    $
    2,118,823
    
    
    $
    2,164,914Rentals
    
    
    3,000
    
    
    
    3,000Pool and other
    
    
    43,203
    
    
    
    44,962Total revenues
    
    
    2,165,026
    
    
    
    2,212,876Cost of goods sold
    
    
    446,247
    
    
    
    492,812Gross profit
    
    
    1,718,779
    
    
    
    1,720,064Operating expensesSalaries and related expenses
    
    
    899,781
    
    
    
    801,618Administrative and general
    
    
    429,941
    
    
    
    423,765Delivery
    
    
    199,971
    
    
    
    201,608Advertising and promotions
    
    
    70,089
    
    
    
    66,729Depreciation and amortization
    
    
    104,321
    
    
    
    112,160Total operating expenses
    
    
    1,704,103
    
    
    
    1,605,880Income from operations
    
    
    14,676
    
    
    
    114,184Other income (expense)Interest income
    
    
    15,227
    
    
    
    10,336Interest expense
    
    
    (84,919
    )
    
    
    (68,299
    )Total other expense
    
    
    (69,692
    )
    
    
    (57,963
    )(Loss) income before income taxes
    
    
    (55,016
    )
    
    
    56,221Income tax benefit (expense)
    
    
    6,000
    
    
    
    (37,000
    )Net (loss) income available to common shareholders
    
    $
    (49,016
    )
    
    $
    19,221Basic weighted average common shares outstanding
    
    
    6,032,670
    
    
    
    5,990,990Basic loss per common share
    
    $
    (0.01
    )
    
    $
    0.00Weighted average diluted number of shares outstanding
    
    
    6,032,670
    
    
    
    6,057,580Weighted average diluted loss per share
    
    $
    (0.01
    )
    
    $
    0.00
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ELDORADO ARTESIAN SPRINGS, INC.
 Unaudited Statement of Changes in Stockholders Equity
For the Three Months Ended June 30, 2007
 Additional
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    EquityBalance  March 31, 2007
    
    
    6,031,066
    
    
    $
    6,031
    
    
    $
    1,483,957
    
    
    $
    244,582
    
    
    $
    1,734,570Stock options exercised
    
    
    2,000
    
    
    
    2
    
    
    
    1,748
    
    
    
    
    
    
    
    1,750Stock options issued to
employees and director
    
    
    
    
    
    
    
    
    
    
    59,918
    
    
    
    
    
    
    
    59,918Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,016
    )
    
    
    (49,016
    )Balance  June 30, 2007
    
    
    6,033,066
    
    
    $
    6,033
    
    
    $
    1,545,623
    
    
    $
    195,566
    
    
    $
    1,747,222
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ELDORADO ARTESIAN SPRINGS, INC.
 Unaudited Statements of Cash Flows
 Three Months EndedJune 30,2007
    
    
    2006Cash flows from operating activitiesNet (loss) income
    
    $
    (49,016
    )
    
    $
    19,221Adjustments to reconcile net (loss) income to net
cash provided by operating activitiesDepreciation and amortization
    
    
    104,321
    
    
    
    112,160Deferred income tax (benefit) expense
    
    
    (6,000
    )
    
    
    37,000Stock based compensation
    
    
    59,918
    
    
    
    50,149Accrued interest on related party note receivable
    
    
    (11,138
    )
    
    
    (10,338
    )Income tax payable
    
    
    (99,750
    )
    
    
    (31,035
    )Changes in certain assets and liabilitiesAccounts receivable
    
    
    (100,259
    )
    
    
    (100,033
    )Inventories
    
    
    (39,754
    )
    
    
    73,406Prepaid expenses and other
    
    
    (169
    )
    
    
    9,217Deposits
    
    
    5,000
    
    
    
    Accounts payable
    
    
    160,095
    
    
    
    108,086Accrued expenses
    
    
    (10,522
    )
    
    
    (21,747
    )Customer deposits
    
    
    10,874
    
    
    
    105Net cash provided by operating activities
    
    
    23,600
    
    
    
    246,191Cash flows from investing activitiesPurchase of water rights
    
    
    (87,500
    )
    
    
    Purchases of property and equipment
    
    
    (52,141
    )
    
    
    (57,555
    )Net cash flows used in investing activities
    
    
    (139,641
    )
    
    
    (57,555
    )Cash flows from financing activitiesPayments on long-term obligations
    
    
    (18,737
    )
    
    
    (34,031
    )Proceeds from exercise of stock options
    
    
    1,750
    
    
    
    20,737Net cash flows used in financing activities
    
    
    (16,987
    )
    
    
    (13,294
    )Net (decrease) increase in cash
    
    
    (133,028
    )
    
    
    175,342Cash  beginning of period
    
    
    607,759
    
    
    
    86,558Cash  end of period
    
    $
    474,731
    
    
    $
    261,900
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ELDORADO ARTESIAN SPRINGS, INC.
 Notes to Unaudited Financial Statements
 Note 1  Summary of Significant Accounting Policies
 Interim Unaudited Financial Statements
  Note 2  Stockholders Equity
 Stock Dividend
  Stock Option Expenses
    7




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Valuation and Expense Information under SFAS 123(R)
   Three Months EndedJune 30, 2007Risk Free Interest Rate
    
    4.65%Expected life (years)
    
    5Expected dividend yield
    
    0%Annualized volatility
    
    88.5%Estimated fair value of options granted
    
    $2.03 per share
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Three Months EndedJune 30, 2007Risk Free Interest Rate
    
    4.65%Expected life (years)
    
    10Expected dividend yield
    
    0%Annualized volatility
    
    87.5%Estimated fair value of options granted
    
    $3.06 per share
 Note 3  Related Party Transactions
   Note 4  Contingencies
 Water Rights Contingency
    9




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1 2
  Line of Credit
  Note 5  Commitments
    10




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Note 6  Recently Issued Accounting Pronouncements
      11




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Item 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward Looking Statements
   Overview
  Results of Operations
     12




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Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
 Revenues
       13




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Cost of Goods Sold and Gross Profit
  Operating Expenses
  Salaries and Related Expenses
  General and Administrative Expenses
   14




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Advertising and Promotions
  Delivery Expenses
  Depreciation and Amortization
  Other Income and Interest Expense
   Income Taxes
   15




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Net Income and Net Loss
  Liquidity and Capital Resources
        Fiscal Year End
    
    Long-Term Debt
    
    
    Operating Lease
    
    
    Total2008
    
    $
    73,350
    
    
    $
    317,353
    
    
    $
    390,7032009
    
    
    78,078
    
    
    
    245,349
    
    
    
    323,4272010
    
    
    88,158
    
    
    
    191,097
    
    
    
    279,2552011
    
    
    99,160
    
    
    
    103,113
    
    
    
    202,2732012
    
    
    1,419,181
    
    
    
    23,431
    
    
    
    1,442,612Thereafter
    
    
    2,252,463
    
    
    
    
    
    
    
    2,252,463Total
    
    $
    4,010,390
    
    
    $
    880,343
    
    
    $
    4,890,733
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Other Recent Accounting Developments
      17




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Item 3: CONTROLS AND PROCEDURES
    18




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PART II  OTHER INFORMATION
  Item 6. Exhibits
  31.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002 by Chief Executive Officer31.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002 by Chief Financial Officer32.1
    
    Certification Of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, 18 U.S.C. Section 1350 by Chief Executive Officer32.2
    
    Certification Of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, 18 U.S.C. Section 1350 by Chief Financial Officer
 
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SIGNATURES
  ELDORADO ARTESIAN SPRINGS, INC.Date: August 14, 2007
    By:
    /s/ Douglas LarsonDouglas Larson,President and Chief Executive OfficerDate: August 14, 2007
    By:
    /s/ Cathleen ShoenfeldCathleen Shoenfeld,Chief Financial Officer 
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ELDORADO ARTESIAN SPRINGS, INC.
 
 ExhibitNumber
    
    Description31.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002 by Chief Executive Officer31.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002 by Chief Financial Officer32.1
    
    Certification Of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350 by Chief Executive Officer32.2
    
    Certification Of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350 by Chief Financial Officer
 
  21