##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark one)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 000-18235
 
 ELDORADO ARTESIAN SPRINGS, INC.
  
 Colorado
    
    84-0907853(State or Other Jurisdiction of
    
    (IRS EmployerIncorporation or Organization)
    
    Identification No.)1783 Dogwood StreetLouisville, Colorado
    
    80027(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants Telephone Number, Including Area Code: (303) 499-1316
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




---



##### 



ELDORADO ARTESIAN SPRINGS, INC.
 FORM 10-Q
 INDEX
 PagePart I  Financial InformationItem 1   Financial StatementsBalance Sheets as of September 30, 2009 (Unaudited) and March 31, 2009
    
    
    2Unaudited Statements of Operations for the Three and Six Months Ended
September 30, 2009 and September 30, 2008
    
    
    3Unaudited Statements of Cash Flows for the Six Months Ended
September 30, 2009 and September 30, 2008
    
    
    4Notes to Unaudited Financial Statements
    
    
    5Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3  Quantitative and Qualitative Disclosures About Market Risk
    
    
    16Item 4(T)  Controls and Procedures
    
    
    16Part II  Other InformationItem 1  Legal Proceedings
    
    
    17Item 1A  Risk Factors
    
    
    17Item 2  Unregistered Sales of Equity Securities and Use and Proceeds
    
    
    17Item 3  Defaults Upon Senior Securities
    
    
    17Item 4  Submission of Matters to a Vote of Security Holders
    
    
    17Item 5  Other Information
    
    
    17Item 6  Exhibits
    
    
    17Signatures
    
    
    18Exhibit Index
    
    
    19Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




---



##### Table of Contents



ITEM 1.
    
    FINANCIAL STATEMENTS
 ELDORADO ARTESIAN SPRINGS, INC.
 
 Balance Sheets
 September 30,
    
    
    March 31,2009
    
    
    2009(Unaudited)AssetsCurrent assetsCash
    
    $
    309,257
    
    
    $
    347,148Accounts receivable  trade, net
    
    
    974,466
    
    
    
    967,508Inventories
    
    
    425,468
    
    
    
    393,320Prepaid expenses and other
    
    
    50,971
    
    
    
    105,456Deferred tax asset
    
    
    29,648
    
    
    
    29,648Income tax receivable
    
    
    
    
    
    
    66,405Total current assets
    
    
    1,789,810
    
    
    
    1,909,485Non-current assetsProperty, plant and equipment  net
    
    
    4,334,690
    
    
    
    4,433,393Notes receivable  related party
    
    
    355,843
    
    
    
    342,787Investments
    
    
    361,196
    
    
    
    361,196Water rights
    
    
    71,675
    
    
    
    71,675Deposits
    
    
    118,020
    
    
    
    112,820Deferred tax asset  long term
    
    
    121,566
    
    
    
    28,066Other  net
    
    
    41,560
    
    
    
    78,538Total non-current assets
    
    
    5,404,550
    
    
    
    5,428,475Total assets
    
    $
    7,194,360
    
    
    $
    7,337,960Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    684,695
    
    
    $
    420,849Accrued expenses
    
    
    227,618
    
    
    
    283,540Customer deposits
    
    
    82,801
    
    
    
    66,477Current portion of capital lease obligations
    
    
    117,712
    
    
    
    118,334Current portion of long-term debt
    
    
    247,931
    
    
    
    363,086Total current liabilities
    
    
    1,360,757
    
    
    
    1,252,286Non-current liabilitiesCapital lease obligations, less current portion
    
    
    79,714
    
    
    
    135,118Long-term debt, less current portion
    
    
    4,302,127
    
    
    
    4,332,360Deferred gain on the sale of real estate
    
    
    178,822
    
    
    
    178,822Total non-current liabilities
    
    
    4,560,663
    
    
    
    4,646,300Total liabilities
    
    
    5,921,420
    
    
    
    5,898,586Commitments 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; 6,536,091 (September
and March 2009) issued and outstanding
    
    
    6,536
    
    
    
    6,536Additional paid-in capital
    
    
    1,752,518
    
    
    
    1,736,438Accumulated deficit
    
    
    (486,114
    )
    
    
    (303,600
    )Total stockholders equity
    
    
    1,272,940
    
    
    
    1,439,374Total liabilities and stockholders equity
    
    $
    7,194,360
    
    
    $
    7,337,960
   2




---



##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Operations
 For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenueWater and related
    
    $
    2,291,005
    
    
    $
    2,734,821
    
    
    $
    4,517,474
    
    
    $
    4,909,871Resort operations
    
    
    66,731
    
    
    
    83,552
    
    
    
    95,852
    
    
    
    125,840Net revenue
    
    
    2,357,736
    
    
    
    2,818,373
    
    
    
    4,613,326
    
    
    
    5,035,711Cost of goods sold
    
    
    629,010
    
    
    
    817,616
    
    
    
    1,196,012
    
    
    
    1,339,312Gross profit
    
    
    1,728,726
    
    
    
    2,000,757
    
    
    
    3,417,314
    
    
    
    3,696,399Operating expensesSalaries and related
    
    
    902,475
    
    
    
    1,034,506
    
    
    
    1,781,108
    
    
    
    2,005,828Administrative and general
    
    
    460,127
    
    
    
    470,193
    
    
    
    884,977
    
    
    
    976,589Delivery
    
    
    191,616
    
    
    
    262,771
    
    
    
    384,304
    
    
    
    501,336Advertising and promotions
    
    
    114,119
    
    
    
    84,906
    
    
    
    216,202
    
    
    
    181,524Depreciation and amortization
    
    
    125,157
    
    
    
    122,353
    
    
    
    252,018
    
    
    
    238,9211,793,494
    
    
    
    1,974,729
    
    
    
    3,518,609
    
    
    
    3,904,198Operating (loss) income
    
    
    (64,768
    )
    
    
    26,028
    
    
    
    (101,295
    )
    
    
    (207,799
    )Other income (expense)Interest income
    
    
    6,651
    
    
    
    15,166
    
    
    
    13,178
    
    
    
    21,909Interest expense
    
    
    (93,403
    )
    
    
    (92,429
    )
    
    
    (187,897
    )
    
    
    (181,885
    )(86,752
    )
    
    
    (77,263
    )
    
    
    (174,719
    )
    
    
    (159,976
    )Net loss before provision
for income taxes
    
    
    (151,520
    )
    
    
    (51,235
    )
    
    
    (276,014
    )
    
    
    (367,775
    )Income tax benefit
    
    
    51,500
    
    
    
    17,700
    
    
    
    93,500
    
    
    
    127,700Net loss
    
    $
    (100,020
    )
    
    $
    (33,535
    )
    
    $
    (182,514
    )
    
    $
    (240,075
    )Basic and dilutive loss per
common share
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.03
    )
    
    $
    (0.04
    )Weighted average number of
common shares outstanding 
basic and dilutive
    
    
    6,536,091
    
    
    
    6,696,914
    
    
    
    6,536,091
    
    
    
    6,638,468
   3




---



##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Cash Flows
 Six Months EndedSeptember 30,2009
    
    
    2008Cash flows from operating activitiesNet loss
    
    $
    (182,514
    )
    
    $
    (240,075
    )Adjustments to reconcile net loss to net cash (used in) provided
by operating activitiesDepreciation and amortization
    
    
    252,018
    
    
    
    238,921Deferred income tax benefit
    
    
    (93,500
    )
    
    
    (127,700
    )Stock based compensation
    
    
    16,080
    
    
    
    16,275Accrued interest on related party note receivable
    
    
    (13,056
    )
    
    
    (12,070
    )Changes in certain assets and liabilitiesAccounts receivable
    
    
    (6,958
    )
    
    
    (309,177
    )Inventories
    
    
    (32,148
    )
    
    
    (70,739
    )Prepaid expenses and other
    
    
    81,946
    
    
    
    67,557Deposits
    
    
    (5,200
    )
    
    
    (4,662
    )Accounts payable
    
    
    263,846
    
    
    
    373,429Accrued expenses
    
    
    (55,922
    )
    
    
    (82,409
    )Income tax receivable
    
    
    66,405
    
    
    
    Customer deposits
    
    
    16,324
    
    
    
    6,780Net cash provided by (used in) operating activities
    
    
    307,321
    
    
    
    (143,870
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    (143,798
    )
    
    
    (147,114
    )Net cash flows used in investing activities
    
    
    (143,798
    )
    
    
    (147,114
    )Cash flows from financing activitiesPayments on long-term obligations
    
    
    (201,414
    )
    
    
    (74,132
    )Proceeds on line of credit
    
    
    
    
    
    
    215,000Proceeds from exercise of stock options
    
    
    
    
    
    
    2,625Net cash flows (used in) provided by financing activities
    
    
    (201,414
    )
    
    
    143,493Net decrease increase in cash
    
    
    (37,891
    )
    
    
    (147,491
    )Cash  beginning of period
    
    
    347,148
    
    
    
    389,440Cash  end of period
    
    $
    309,257
    
    
    $
    241,949
       4




---



##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 
 Notes to Unaudited Financial Statements
 Note 1  Summary of Significant Accounting Policies
 Interim Unaudited Financial Statements
  Investments
  Revenue Recognition
  Note 2  Stockholders Equity
 Stock Option Expenses
   5




---



##### Table of Contents



Valuation and Expense Information under SFAS 123(R)
   Risk Free Interest Rate
    
    
    4.65
    %Expected life (years)
    
    
    5Expected dividend yield
    
    
    0
    %Annualized volatility
    
    
    88.5
    %Estimated fair value of options granted
    
    $1.01 per share
  Risk Free Interest Rate
    
    
    3.75
    %Expected life (years)
    
    
    7.5Expected dividend yield
    
    
    0
    %Annualized volatility
    
    
    118.27
    %Estimated fair value of options granted
    
    $1.26 per share
 Warrants
   6




---



##### Table of Contents



Note 3  Related Party Transactions
   Note 4  Contingencies
 Water Rights Contingency
    7




---



##### Table of Contents



Note 5  Commitments
 Line of Credit
     8




---



##### Table of Contents



Notes Payable
     Renewable Energy Service Agreement
  Note 6  Subsequent Events
   9




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward Looking Statements
   Overview
    10




---



##### Table of Contents



Results of Operations
    Organic Vitamin Charged Spring Water
 Organic Vitamin Charged Spring Water
 Three and Six Months Ended September 30, 2009 Compared to Three and Six Months Ended September 30,
2008
 Revenues
    11




---



##### Table of Contents



Organic Vitamin Charged Spring Water Organic Vitamin Charged Spring Water Organic Vitamin Charged Spring Water
 Organic Vitamin Charged Spring Water Organic Vitamin Charged Spring Water
     12




---



##### Table of Contents



Gross Profit/Cost of Goods Sold
  Operating Expenses
      13




---



##### Table of Contents



Interest, Taxes, Other Income and Other Expenses
      14




---



##### Table of Contents



Liquidity and Capital Resources
         15




---



##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4(T).
    
    CONTROLS AND PROCEDURES
 Conclusion Regarding The Effectiveness Of Disclosure Controls And Procedures
   Remediation Of Material Weaknesses in Internal Control Over Financial Reporting
  Changes In Internal Control Over Financial Reporting
   16




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE AND PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
 Exhibit No.
    
    Description31.1
    
    
    Certification of Principal Executive Officer Pursuant to Rule
13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Principal Financial Officer Pursuant to Rule
13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Principal Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Principal Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
  17




---



##### Table of Contents



SIGNATURES
  ELDORADO ARTESIAN SPRINGS, INC.Date: November 13, 2009
    By:
    /s/ Douglas A. LarsonDouglas A. LarsonPresident
(Principal Executive Officer)Date: November 13, 2009
    By:
    /s/ Cathleen ShoenfeldCathleen ShoenfeldChief Financial Officer
(Principal Financial Officer)  18




---



##### Table of Contents



ELDORADO ARTESIAN SPRINGS, INC.
 
 
 Exhibit No.
    
    Description31.1
    
    
    Certification of Principal Executive Officer Pursuant to Rule
13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Principal Financial Officer Pursuant to Rule
13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Principal Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Principal Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
  19