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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 September 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
  o þ




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ELDORADO ARTESIAN SPRINGS, INC.
 INDEX
 PagePart I  Financial InformationItem 1 Financial StatementsBalance Sheets as of September 30, 2005 (Unaudited) and March 31, 2005
    
    
    2Unaudited Statements of Operations For the Three and Six Months Ended September 30, 2005 and September 30, 2004
    
    
    3Unaudited Statements of Cash Flows For the Six Months Ended September 30, 2005 and September 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
    
    
    14Item 4
 Submission of Matters to a Vote of Security Holders
    
    
    15Part II  Other Information
    
    
    15Signatures and Exhibit Index
    
    
    17Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
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LDORADO ARTESIAN SPRINGS, INC.
 
 Balance Sheets
 September 30,
    
    
    March 31,2005
    
    
    2005(Unaudited)AssetsCurrent assetsCash
    
    $
    104,728
    
    
    $
    38,702Accounts receivableTrade, net of allowance of 80,000
    
    
    834,692
    
    
    
    755,837Other
    
    
    
    
    
    
    14,830Inventories
    
    
    317,611
    
    
    
    240,733Prepaid expenses and other
    
    
    72,727
    
    
    
    78,252Income tax receivable
    
    
    30,687
    
    
    
    30,687Deferred tax asset
    
    
    29,064
    
    
    
    29,064Total current assets
    
    
    1,389,509
    
    
    
    1,188,105Non-current assetsProperty, plant and equipment  net
    
    
    4,271,483
    
    
    
    4,434,651Notes receivable  related party
    
    
    527,724
    
    
    
    508,356Water rights
 net
    
    
    81,332
    
    
    
    83,576Deposits
    
    
    16,089
    
    
    
    16,089Other  net
    
    
    145,045
    
    
    
    154,100Total non-current assets
    
    
    5,041,673
    
    
    
    5,196,772Total
    
    $
    6,431,182
    
    
    $
    6,384,877Liabilities and Stockholders EquityCurrent liabilitiesLine of credit
    
    $
    306,150
    
    
    $
    300,000Accounts payable
    
    
    363,845
    
    
    
    245,756Accrued expenses
    
    
    172,962
    
    
    
    236,375Customer deposits
    
    
    100,742
    
    
    
    83,948Current portion of capital lease obligations
    
    
    8,573
    
    
    
    31,635Current portion of long-term debt
    
    
    141,249
    
    
    
    141,249Total current liabilities
    
    
    1,093,521
    
    
    
    1,038,963Non-current liabilitiesLong-term debt, less current portion
    
    
    3,143,483
    
    
    
    3,212,466Deferred tax liability
    
    
    210,569
    
    
    
    189,569Deferred gain on the sale of real estate
    
    
    357,544
    
    
    
    357,544Total non-current liabilities
    
    
    3,711,596
    
    
    
    3,759,579Total liabilities
    
    
    4,805,117
    
    
    
    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
    
    
    206,963
    
    
    
    167,2331,626,065
    
    
    
    1,586,335Total
    
    $
    6,431,182
    
    
    $
    6,384,877
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ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Operations
 For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004RevenueWater and related
    
    $
    2,101,246
    
    
    $
    1,985,812
    
    
    $
    4,067,260
    
    
    $
    3,953,978Resort operations
    
    
    76,436
    
    
    
    56,250
    
    
    
    102,611
    
    
    
    77,303Net revenue
    
    
    2,177,682
    
    
    
    2,042,062
    
    
    
    4,169,871
    
    
    
    4,031,281Cost of goods sold
    
    
    436,383
    
    
    
    352,190
    
    
    
    837,548
    
    
    
    634,944Gross profit
    
    
    1,741,299
    
    
    
    1,689,872
    
    
    
    3,332,323
    
    
    
    3,396,337Operating expensesSalaries and related
    
    
    834,041
    
    
    
    796,145
    
    
    
    1,609,620
    
    
    
    1,608,013Administrative and general
    
    
    399,717
    
    
    
    389,861
    
    
    
    770,348
    
    
    
    815,007Delivery
    
    
    225,231
    
    
    
    177,387
    
    
    
    405,857
    
    
    
    363,816Advertising and promotions
    
    
    68,141
    
    
    
    206,379
    
    
    
    144,522
    
    
    
    439,799Depreciation and amortization
    
    
    118,693
    
    
    
    134,814
    
    
    
    241,300
    
    
    
    271,1971,645,823
    
    
    
    1,704,586
    
    
    
    3,171,647
    
    
    
    3,497,832Operating income (loss)
    
    
    95,476
    
    
    
    (14,714
    )
    
    
    160,676
    
    
    
    (101,495
    )Other income (expense)Interest income
    
    
    9,774
    
    
    
    7,850
    
    
    
    19,368
    
    
    
    15,377Interest expense
    
    
    (61,642
    )
    
    
    (53,418
    )
    
    
    (119,314
    )
    
    
    (107,329
    )(51,868
    )
    
    
    (45,568
    )
    
    
    (99,946
    )
    
    
    (91,952
    )Net income (loss) before provision for income taxes
    
    
    43,608
    
    
    
    (60,282
    )
    
    
    60,730
    
    
    
    (193,447
    )Income tax (expense) benefit
    
    
    (15,000
    )
    
    
    21,000
    
    
    
    (21,000
    )
    
    
    67,000Net income (loss)
    
    $
    28,608
    
    
    $
    (39,282
    )
    
    $
    39,730
    
    
    $
    (126,447
    )Basic earnings (loss) per common share
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.04
    )Diluted earnings (loss) per common share
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.04
    )Weighted average number of common shares outstanding
    
    
    2,995,495
    
    
    
    2,995,495
    
    
    
    2,995,495
    
    
    
    2,995,495Weighted average number of dilutive shares
outstanding
    
    
    3,001,207
    
    
    
    2,995,495
    
    
    
    2,999,515
    
    
    
    2,995,495
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ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Cash Flows
 Six Months EndedSeptember 30,2005
    
    
    2004Cash flows from operating activitiesNet income (loss)
    
    $
    39,730
    
    
    $
    (126,447
    )Adjustments to reconcile net income (loss) to net cash provided
by operating activitiesDepreciation and amortization
    
    
    241,300
    
    
    
    271,197Income tax benefit (expense)
    
    
    21,000
    
    
    
    (66,696
    )Accrued interest on related party note receivable
    
    
    (19,368
    )
    
    
    (15,000
    )Changes in certain assets and liabilitiesAccounts receivable
    
    
    (64,025
    )
    
    
    (35,769
    )Inventories
    
    
    (76,878
    )
    
    
    119Prepaid expenses and other
    
    
    5,525
    
    
    
    (14,635
    )Accounts payable
    
    
    118,089
    
    
    
    107,348Accrued expenses
    
    
    (63,413
    )
    
    
    (166,661
    )Customer deposits
    
    
    16,794
    
    
    
    14,872Net cash provided by (used in) operating activities
    
    
    218,754
    
    
    
    (31,672
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    (66,833
    )
    
    
    (74,198
    )Net cash flows used in investing activities
    
    
    (66,833
    )
    
    
    (74,198
    )Cash flows from financing activitiesPayments on long-term obligations
    
    
    (92,045
    )
    
    
    (135,499
    )Proceeds on line of credit
    
    
    6,150
    
    
    
    200,000Net cash flows (used in) provided by financing activities
    
    
    (85,895
    )
    
    
    64,501Net increase (decrease) in cash
    
    
    66,026
    
    
    
    (41,369
    )Cash  beginning of period
    
    
    38,702
    
    
    
    153,639Cash  end of period
    
    $
    104,728
    
    
    $
    112,270
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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 Six Months EndedSeptember 30,2005
    
    2004Net income (loss)  as reported
    
    $
    39,730
    
    
    $
    (126,447
    )Net income (loss)  pro forma
    
    $
    6,919
    
    
    $
    (171,127
    )Basic and diluted income (loss) per common share  as reported
    
    $
    .01
    
    
    $
    (.04
    )Basic and diluted loss per common share  pro forma
    
    $
    .00
    
    
    $
    (.06
    )
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For the Six Months EndedSeptember 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
       8




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Revenues
     Cost of Goods Sold and Gross Profit
  Operating Expenses
  9




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Salaries and Related Expenses
  General and Administrative Expenses
  Advertising and Promotions
  Delivery Expenses
  10




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Depreciation and Amortization
  Interest Expense
  Net Income and Net Loss
  Liquidity and Capital Resources
       11




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Fiscal Year End
    
    Long-Term Debt
    
    
    Capital Lease
    
    
    Operating Lease
    
    
    Total2006
    
    $
    141,249
    
    
    $
    8,573
    
    
    $
    276,472
    
    
    $
    426,2942007
    
    
    154,202
    
    
    
    
    
    
    
    249,277
    
    
    
    403,4792008
    
    
    162,705
    
    
    
    
    
    
    
    181,208
    
    
    
    343,9132009
    
    
    171,685
    
    
    
    
    
    
    
    173,255
    
    
    
    344,9402010
    
    
    181,172
    
    
    
    
    
    
    
    59,573
    
    
    
    240,745Thereafter
    
    
    2,473,719
    
    
    
    
    
    
    
    7,834
    
    
    
    2,481,553Total
    
    $
    3,284,732
    
    
    $
    8,573
    
    
    $
    947,619
    
    
    $
    4,240,924
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Other Recent Accounting Developments
    13




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Item 3: CONTROLS AND PROCEDURES
   14




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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
   2,371,773 For Mr. Larson
    
    65,315 Withheld2,372,088 For Mr. Sipple
    
    65,000 Withheld2,372,088 For Mr. Martin
    
    65,000 Withheld2,390,088 For Mr. Schmitt
    
    47,000 Withheld
  Item 5. Other Information
  15




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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 Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer32.2
    
    Certification Pursuant to 18 U.S.C. Sections 1320, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer
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SIGNATURES
  ELDORADO ARTESIAN SPRINGS, INC.Date: November 14, 2005
    
    By:
    
    /s/ Douglas LarsonDouglas Larson, PresidentDate: November 14, 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
 18