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FORM
10-QSB
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
 For
Quarter Ended June 30, 2005
 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




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ELDORADO ARTESIAN SPRINGS, INC.
 INDEX
 PagePart I  Financial InformationItem 1 - Financial StatementsBalance Sheets as of June 30, 2005 (Unaudited) and March 31, 2005
    
    
    2Unaudited Statements of Operations For the Three Months Ended
June 30, 2005 and June 30, 2004
    
    
    3Unaudited Statements of Cash Flows For the Three Months Ended
June 30, 2005 and June 30, 2004
    
    
    4Notes to Unaudited Financial Statements
    
    
    5Item 2 - Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    7Item 3  Controls and Procedures
    
    
    13Part II  Other Information
    
    
    14Signatures
    
    
    16Exhibit Index
    
    
    17Certification Pursuant to Section 302 by CEOCertification Pursuant to Section 302 by CFOCertification Pursuant to Section 906 by CEOCertification Pursuant to Section 906 by CFO
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LDORADO ARTESIAN SPRINGS, INC.
 
 Balance Sheets
 June 30,
    
    March 31,2005
    
    2005(Unaudited)AssetsCurrent assetsCash
    
    $
    167,788
    
    
    $
    38,702Accounts receivableTrade, net of allowance of 80,000
    
    
    809,971
    
    
    
    755,837Other
    
    
    
    
    
    
    14,830Inventories
    
    
    211,550
    
    
    
    240,733Prepaid expenses and other
    
    
    95,334
    
    
    
    78,252Income tax receivable
    
    
    30,687
    
    
    
    30,687Deferred tax asset
    
    
    29,064
    
    
    
    29,064Total current assets
    
    
    1,344,394
    
    
    
    1,188,105Non-current assetsProperty, plant and equipment  net
    
    
    4,353,068
    
    
    
    4,434,651Notes receivable  related party
    
    
    517,950
    
    
    
    508,356Water rights  net
    
    
    82,454
    
    
    
    83,576Deposits
    
    
    16,089
    
    
    
    16,089Other  net
    
    
    149,571
    
    
    

    154,100Total non-current assets
    
    
    5,119,132
    
    
    
    5,196,772Total
    
    $
    6,463,526
    
    
    $
    6,384,877Liabilities and Stockholders EquityCurrent liabilitiesLine of credit
    
    $
    306,150
    
    
    $
    300,000Accounts payable
    
    
    383,670
    
    
    
    245,756Accrued expenses
    
    
    192,167
    
    
    
    236,375Customer deposits
    
    
    95,769
    
    
    
    83,948Current portion of capital lease obligations
    
    
    17,214
    
    
    
    31,635Current portion of long-term debt
    
    
    141,249
    
    
    
    141,249Total current liabilities
    
    
    1,136,219
    
    
    
    1,038,963Non-current liabilitiesLong-term debt, less current portion
    
    
    3,176,737
    
    
    
    3,212,466Deferred tax liability
    
    
    195,569
    
    
    
    189,569Deferred gain on the sale of real estate
    
    
    357,544
    
    
    
    357,544Total non-current liabilities
    
    
    3,729,850
    
    
    
    3,759,579Total liabilities
    
    
    4,866,069
    
    
    
    4,798,542Commitments 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; 2,995,495
issued and outstanding
    
    
    2,995
    
    
    
    2,995Additional paid-in capital
    
    
    1,416,107
    
    
    
    1,416,107Retained earnings
    
    
    178,355
    
    
    
    167,2331,597,457
    
    
    
    1,586,335Total
    
    $
    6,463,526
    
    
    $
    6,384,877
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ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Operations
 For the Three Months EndedJune 30,2005
    
    2004RevenueWater and related
    
    $
    1,966,014
    
    
    $
    1,968,166Resort operations
    
    
    26,175
    
    
    
    21,053Net revenue
    
    
    1,992,189
    
    
    
    1,989,219Cost of goods sold
    
    
    401,165
    
    
    
    282,754Gross profit
    
    
    1,591,024
    
    
    
    1,706,465Operating expensesSalaries and related
    
    
    775,579
    
    
    
    811,868Administrative and general
    
    
    370,631
    
    
    
    425,146Delivery
    
    
    180,626
    
    
    
    186,429Advertising and promotions
    
    
    76,381
    
    
    
    233,420Depreciation and amortization
    
    
    122,607
    
    
    
    136,3831,525,824
    
    
    
    1,793,246Operating income (loss)
    
    
    65,200
    
    
    
    (86,781
    )Other income (expense)Interest income
    
    
    9,594
    
    
    
    7,527Interest expense
    
    
    (57,672
    )
    
    
    (53,911
    )(48,078
    )
    
    
    (46,384
    )Net income (loss) before provision for income
taxes
    
    
    17,122
    
    
    
    (133,165
    )Income tax (expense) benefit
    
    
    (6,000
    )
    
    
    46,000Net income (loss)
    
    
    11,122
    
    
    
    (87,165
    )Basic earnings (loss) per common share
    
    $
    0.00
    
    
    $
    (0.03
    )Diluted earnings (loss) per common share
    
    $
    0.00
    
    
    $
    (0.03
    )Weighted average number of shares outstanding
    
    
    2,995,495
    
    
    
    2,995,495Weighted average number of shares outstanding
(diluted)
    
    
    3,062,995
    
    
    
    2,995,495
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ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Cash Flows
 Three Months EndedJune 30,2005
    
    2004Cash flows from operating activitiesNet loss
    
    $
    11,122
    
    
    $
    (87,165
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activitiesDepreciation and amortization
    
    
    122,607
    
    
    
    136,383Deferred income tax benefit
    
    
    6,000
    
    
    
    (45,696
    )Accrued interest on related party note receivable
    
    
    (9,594
    )
    
    
    (7,500
    )Changes in certain assets and liabilitiesAccounts receivable
    
    
    (39,304
    )
    
    
    (22,661
    )Inventories
    
    
    29,183
    
    
    
    24,616Prepaid expenses and other
    
    
    (17,082
    )
    
    
    (1,661
    )Accounts payable
    
    
    137,914
    
    
    
    (4,105
    )Accrued expenses
    
    
    (44,208
    )
    
    
    (135,639
    )Customer deposits
    
    
    11,821
    
    
    
    7,763Net cash provided by (used in) operating activities
    
    
    197,337
    
    
    
    (135,665
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    (35,373
    )
    
    
    (39,219
    )Net cash flows used in investing activities
    
    
    (35,373
    )
    
    
    (39,219
    )Cash flows from financing activitiesPayments on long-term obligations
    
    
    (50,150
    )
    
    
    (235,047
    )Proceeds on line of credit
    
    
    6,150
    
    
    
    200,000Net cash flows used in financing activities
    
    
    (44,000
    )
    
    
    (35,047
    )Net increase (decrease) in cash
    
    
    129,086
    
    
    
    (97,219
    )Cash  beginning of period
    
    
    38,702
    
    
    
    149,154Cash  end of period
    
    $
    167,788
    
    
    $
    51,935
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ELDORADO ARTESIAN SPRINGS, INC.
 
 Notes to Unaudited Financial Statements
 Note 1  Summary of Significant Accounting Policies
 Interim Unaudited Financial Statements
  Reclassifications
  Note 2  Stockholders Equity
 Stock Option Plan
  For the Three Months EndedJune 30,2005
    
    2004Net income (loss)  as reported
    
    $
    11,122
    
    
    $
    (87,165
    )Net loss  pro forma
    
    $
    (21,689
    )
    
    $
    (131,845
    )Basic and diluted income (loss) per common share  as reported
    
    $
    
    
    
    $
    (.03
    )Basic and diluted loss per common share  pro forma
    
    $
    (.01
    )
    
    $
    (.05
    )
  5




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For the Three Months EndedJune 30,2005
    
    2004Approximate risk free rate
    
    
    4.21
    %
    
    
    4.53
    %Average expected life
    
    10 years
    
    10 yearsDividend yield
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    84.14
    %
    
    
    165.37
    %Estimated fair value of total options granted
    
    $
    32,811
    
    
    $
    44,680
 Note 3  Related Party Transactions
   Note 4  Contingencies
 Water Rights Contingency
    6




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Line of Credit
  Note 5  Commitments
    
 Item 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward Looking Statements
   7




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Overview
        Revenues
  8




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Cost of Goods Sold and Gross Profit
  Operating Expenses
  Salaries and Related Expenses
  General and Administrative Expenses
  9




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Advertising and Promotions
  Delivery Expenses
  Depreciation and Amortization
  Interest Expense
  Net Income and Net Loss
  Liquidity and Capital Resources
    10




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Fiscal Year End
    
    Long-Term Debt
    
    
    Capital Lease
    
    
    Operating Lease
    
    
    Total2006
    
    
    141,249
    
    
    
    17,214
    
    
    
    276,472
    
    
    
    434,9352007
    
    
    154,202
    
    
    
    
    
    
    
    249,277
    
    
    
    403,4792008
    
    
    162,705
    
    
    
    
    
    
    
    181,208
    
    
    
    343,9132009
    
    
    171,685
    
    
    
    
    
    
    
    173,255
    
    
    
    344,9402010
    
    
    181,172
    
    
    
    
    
    
    
    59,573
    
    
    
    240,745Thereafter
    
    
    2,506,973
    
    
    
    
    
    
    
    7,834
    
    
    
    2,514,807Total
    
    
    3,317,986
    
    
    
    17,214
    
    
    
    947,619
    
    
    
    4,282,819
      11




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Other Recent Accounting Developments
    12




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Item 3: CONTROLS AND PROCEDURES
   13




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PART II  OTHER INFORMATION
 Item 1. Legal Proceedings
   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Item 3. Defaults Upon Senior Securities
  Item 4. Submission of Matters to a Vote of the Security Holders
  Item 5. Other Information
  Item 6. Exhibits
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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 15, 2005
    
    By:
    
    /s/ Douglas LarsonDouglas Larson, PresidentDate: Auguest 15, 2005
    
    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
 17