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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 December 31, 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)
 (Issuers telephone number, including area 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 December 31, 2007 (Unaudited) and March 31, 2007
    
    
    3Unaudited Statements of Operations for the Three and Nine Months Ended
December 31, 2007 and December 31, 2006
    
    
    4Unaudited Statement of Changes in Stockholders Equity for the Nine Months Ended
December 31, 2007
    
    
    5Unaudited Statements of Cash Flows for the Nine Months Ended
December 31, 2007 and December 31, 2006
    
    
    6Notes to Unaudited Financial Statements
    
    
    7Item 2 - Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3 - Controls and Procedures
    
    
    20Part II  Other InformationItem 1 - Legal Proceedings
    
    
    21Item 2 - Unregistered Sales of Equity Securities and Use and Proceeds
    
    
    21Item 3 - Defaults Upon Senior Securities
    
    
    21Item 4 - Submission of Matters to a Vote of Security Holders
    
    
    21Item 5 - Other Information
    
    
    21Item 6 - Exhibits
    
    
    21Signatures
    
    
    22Exhibit Index
    
    
    23Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 ELDORADO ARTESIAN SPRINGS, INC.
 
 Balance Sheets
 December 31,
    
    
    March 31,2007
    
    
    2007(Unaudited)AssetsCurrent assetsCash
    
    $
    838,489
    
    
    $
    607,759Accounts receivableTrade, net of allowance of $80,000
    
    
    855,384
    
    
    
    842,681Inventories
    
    
    306,203
    
    
    
    196,447Prepaid expenses and other
    
    
    107,310
    
    
    
    74,481Deferred tax asset
    
    
    29,648
    
    
    
    29,648Total current assets
    
    
    2,137,034
    
    
    
    1,751,016Non-current assetsProperty, plant and equipment  net
    
    
    4,235,881
    
    
    
    4,258,224Notes receivable  related party
    
    
    312,248
    
    
    
    590,450Water rights  net
    
    
    309,175
    
    
    
    74,600Deposits
    
    
    104,004
    
    
    
    109,004Other  net
    
    
    116,243
    
    
    
    125,811Total non-current assets
    
    
    5,077,551
    
    
    
    5,158,089Total
    
    $
    7,214,585
    
    
    $
    6,909,105Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    359,208
    
    
    $
    254,059Accrued expenses
    
    
    286,366
    
    
    
    243,218Customer deposits
    
    
    120,646
    
    
    
    93,584Income taxes payable
    
    
    616
    
    
    
    100,366Current portion of long-term debt
    
    
    84,793
    
    
    
    84,793Total current liabilities
    
    
    851,629
    
    
    
    776,020Non-current liabilitiesLong-term debt, less current portion
    
    
    4,393,347
    
    
    
    3,944,333Deferred tax liability
    
    
    56,027
    
    
    
    96,638Deferred gain on the sale of real estate
    
    
    178,772
    
    
    
    357,544Total non-current liabilities
    
    
    4,628,146
    
    
    
    4,398,515Total liabilities
    
    
    5,479,775
    
    
    
    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; 6,426,464
(2007) and 6,031,066 (2006) issued and
outstanding
    
    
    6,426
    
    
    
    6,031Additional paid-in capital
    
    
    1,629,266
    
    
    
    1,483,957Retained earnings
    
    
    99,118
    
    
    
    244,5821,734,810
    
    
    
    1,734,570Total
    
    $
    7,214,585
    
    
    $
    6,909,105
   3




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ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Operations
 For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006RevenueWater and related
    
    $
    1,894,455
    
    
    $
    1,864,559
    
    
    $
    6,324,319
    
    
    $
    6,156,111Resort operations
    
    
    5,310
    
    
    
    5,293
    
    
    
    143,908
    
    
    
    126,605Net revenue
    
    
    1,899,765
    
    
    
    1,869,852
    
    
    
    6,468,227
    
    
    
    6,282,716Cost of goods sold
    
    
    375,975
    
    
    
    394,371
    
    
    
    1,408,058
    
    
    
    1,360,811Gross profit
    
    
    1,523,790
    
    
    
    1,475,481
    
    
    
    5,060,169
    
    
    
    4,921,905Operating expensesSalaries and related
    
    
    873,405
    
    
    
    769,156
    
    
    
    2,719,313
    
    
    
    2,382,253Administrative and general
    
    
    440,956
    
    
    
    348,793
    
    
    
    1,337,699
    
    
    
    1,162,876Delivery
    
    
    220,851
    
    
    
    196,461
    
    
    
    634,587
    
    
    
    617,599Advertising and promotions
    
    
    54,738
    
    
    
    32,109
    
    
    
    215,665
    
    
    
    172,469Depreciation and
amortization
    
    
    93,250
    
    
    
    111,387
    
    
    
    305,236
    
    
    
    342,8511,683,200
    
    
    
    1,457,906
    
    
    
    5,212,500
    
    
    
    4,678,048Operating (loss) income
    
    
    (159,410
    )
    
    
    17,575
    
    
    
    (152,331
    )
    
    
    243,857Other income (expense)Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,300Gain on the sale of property
    
    
    178,772
    
    
    
    
    
    
    
    178,772
    
    
    
    Interest income
    
    
    14,784
    
    
    
    10,728
    
    
    
    45,530
    
    
    
    31,594Interest expense
    
    
    (85,183
    )
    
    
    (77,694
    )
    
    
    (258,046
    )
    
    
    (219,299
    )108,373
    
    
    
    (66,966
    )
    
    
    (33,744
    )
    
    
    (95,405
    )Net (loss) income before
provision for income taxes
    
    
    (51,037
    )
    
    
    (49,391
    )
    
    
    (186,075
    )
    
    
    148,452Income tax benefit (expense)
    
    
    15,611
    
    
    
    17,000
    
    
    
    40,611
    
    
    
    (70,000
    )Net (loss) income
    
    $
    (35,426
    )
    
    $
    (32,391
    )
    
    $
    (145,464
    )
    
    $
    78,452Basic (loss) earnings per
common share
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    0.01Diluted (loss) earnings per
common share
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    0.01Weighted average number of
common shares outstanding
    
    
    6,290,412
    
    
    
    6,008,990
    
    
    
    6,144,635
    
    
    
    6,004,656Weighted average number of
dilutive shares outstanding
    
    
    6,290,412
    
    
    
    6,008,990
    
    
    
    6,144,635
    
    
    
    6,495,894
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ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statement of Changes in Stockholders Equity
For the Nine Months Ended December 31, 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
    
    
    58,000
    
    
    
    57
    
    
    
    75,943
    
    
    
    
    
    
    
    76,000Conversion of warrants to shares
    
    
    337,398
    
    
    
    338
    
    
    
    (338
    )
    
    
    
    
    
    
    Stock options issued to
employees and director
    
    
    
    
    
    
    
    
    
    
    69,704
    
    
    
    
    
    
    
    69,704Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (145,464
    )
    
    
    (145,464
    )Balance  December 31, 2007
    
    
    6,426,464
    
    
    $
    6,426
    
    
    $
    1,629,266
    
    
    $
    99,118
    
    
    $
    1,734,810
   5




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ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Cash Flows
 Nine Months EndedDecember 31,2007
    
    
    2006Cash flows from operating activitiesNet (loss) income
    
    $
    (145,464
    )
    
    $
    78,452Adjustments to reconcile net (loss) income to net cash provided
by operating activitiesDepreciation and amortization
    
    
    305,236
    
    
    
    342,851Deferred income tax (benefit) expense
    
    
    (40,611
    )
    
    
    11,125Stock based compensation
    
    
    69,704
    
    
    
    50,149Accrued interest on related party note receivable
    
    
    (32,109
    )
    
    
    (31,596
    )Change in deferred gain on the sale of real estate
    
    
    (178,772
    )
    
    
    Changes in certain assets and liabilitiesAccounts receivable
    
    
    (12,703
    )
    
    
    25,163Inventories
    
    
    (109,756
    )
    
    
    (249
    )Prepaid expenses and other
    
    
    (20,336
    )
    
    
    (31,592
    )Deposits
    
    
    5,000
    
    
    
    (90,725
    )Accounts payable
    
    
    105,149
    
    
    
    66,240Accrued expenses
    
    
    43,148
    
    
    
    15,365Customer deposits
    
    
    27,062
    
    
    
    18,349Income tax payable
    
    
    (99,750
    )
    
    
    (2,408
    )Net cash provided by operating activities
    
    
    (84,202
    )
    
    
    451,124Cash flows from investing activitiesPurchase of water rights
    
    
    (237,500
    )
    
    
    Payments received on related party not receivable
    
    
    310,311
    
    
    
    Purchases of property and equipment
    
    
    (282,892
    )
    
    
    (470,315
    )Net cash flows used in investing activities
    
    
    (210,081
    )
    
    
    (470,315
    )Cash flows from financing activitiesPayments on long-term obligations
    
    
    (3,957,380
    )
    
    
    (98,611
    )Proceeds from refinance of long-term obligations
    
    
    4,406,393
    
    
    
    Proceeds on line of credit
    
    
    
    
    
    
    50,000Proceeds from exercise of stock options
    
    
    76,000
    
    
    
    20,737Net cash flows provided by(used in) financing activities
    
    
    525,013
    
    
    
    (27,874
    )Net increase (decrease) in cash
    
    
    230,730
    
    
    
    (47,065
    )Cash  beginning of period
    
    
    607,759
    
    
    
    86,558Cash  end of period
    
    $
    838,489
    
    
    $
    39,493
      6




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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 Split
  Stock Option Expenses
    7




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Valuation and Expense Information under SFAS 123(R)
   Nine Months EndedDecember 31, 2007Risk 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
   8




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Nine Months EndedDecember 31, 2007Risk Free Interest Rate
    
    4.65%Expected life (years)
    
    10Expected dividend yield
    
    0%Annualized volatility
    
    87.5%Estimated fair value of options granted
    
    $1.53 per share
 Note 3  Related Party Transactions
   Note 4  Contingencies
 Water Rights Contingency
    9




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1 2
 Eldorado Natural Spring Water
  Line of Credit
   10




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Note Payable
  Vitamin Enhanced
Organic Spring Water
 Note 5  Commitments
   Note 6  Recently Issued Accounting Pronouncements
   11




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Note 7  Subsequent Events
   12




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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward Looking Statements
   Overview
 Organic Vitamin Charged Spring Water
 Results of Operations
   Vitamin Enhanced Organic
Spring Water
  13




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Three and Nine Months Ended December 31, 2007 Compared to Three and Nine Months Ended December 31,
2006
 Revenues
     14




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Cost of Goods Sold and Gross Profit
  Operating Expenses
   15




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Salaries and Related Expenses
   General and Administrative Expenses
  Advertising and Promotions
   16




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Delivery Expenses
  Depreciation and Amortization
  Other Income and Interest Expense
    Income Taxes
   17




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Net Income and Net Loss
  Liquidity and Capital Resources
        Fiscal Year End
    
    Long-Term Debt
    
    
    Operating Lease
    
    
    Total2008
    
    $
    73,348
    
    
    $
    317,353
    
    
    $
    390,7012009
    
    
    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
    
    
    2,720,215
    
    
    
    
    
    
    
    2,720,215Total
    
    $
    4,478,140
    
    
    $
    880,343
    
    
    $
    5,358,483
   18




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Other Recent Accounting Developments
      19




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Item 3. CONTROLS AND PROCEDURES
    20




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PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 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.
    
    Description10.1
    
    
    Commercial Loan Agreement with American National Bank dated
October 11, 2007(incorporated by reference to Exhibit 10.19 to
the Companys Form 10-QSB filed November 14, 2007).10.2
    
    
    Water Use Agreement with City of Louisville, Colorado dated
October 16, 2007(incorporated by reference to Exhibit 10.22 to
the Companys Form 8-K filed November 21, 2007).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 Officer.31.2
    
    
    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 Officer.32.1
    
    
    Certification Of Periodic Report Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 by
Chief Executive Officer.32.2
    
    
    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




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SIGNATURES
  ELDORADO ARTESIAN SPRINGS, INC.Date: February 14, 2008
    By:
    /s/   Douglas LarsonDouglas Larson, President and Chief Executive OfficerDate: February 14, 2008
    By:
    /s/   Cathleen ShoenfeldCathleen Shoenfeld, Chief Financial Officer  22




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ELDORADO ARTESIAN SPRINGS, INC.
 
 
  Exhibit No.
    
    Description10.1
    
    
    Commercial Loan Agreement with American National Bank dated
October 11, 2007(incorporated by reference to Exhibit 10.19 to
the Companys Form 10-QSB filed November 14, 2007).10.2
    
    
    Water Use Agreement with City of Louisville, Colorado dated
October 16, 2007(incorporated by reference to Exhibit 10.22 to
the Companys Form 8-K filed November 21, 2007).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 Officer.31.2
    
    
    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 Officer.32.1
    
    
    Certification Of Periodic Report Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 by
Chief Executive Officer.32.2
    
    
    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.
  23