##### 



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 September 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 September 30, 2007 (Unaudited) and March 31, 2007
    
    
    3Unaudited Statements of Operations for the Three and Six Months Ended
September 30, 2007 and September 30, 2006
    
    
    4Unaudited Statement of Changes in Stockholders Equity for the Six Months Ended
September 30, 2007
    
    
    5Unaudited Statements of Cash Flows for the Six Months Ended
September 30, 2007 and September 30, 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
    
    
    19Part II  Other InformationItem 1  Legal Proceedings
    
    
    20Item 2  Unregistered Sales of Equity Securities and Use and Proceeds
    
    
    20Item 3  Defaults Upon Senior Securities
    
    
    20Item 4  Submission of Matters to a Vote of Security Holders
    
    
    20Item 5  Other Information
    
    
    20Item 6  Exhibits
    
    
    21Signatures
    
    
    22Exhibit Index
    
    
    23
 2




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##### 



PART I  FINANCIAL INFORMATION
 Item 1. FINANCIAL STATEMENTS
 ELDORADO ARTESIAN SPRINGS, INC.
 Balance Sheets
 September 30,
    
    
    March 31,2007
    
    
    2007(Unaudited)AssetsCurrent assetsCash
    
    $
    328,324
    
    
    $
    607,759Accounts receivableTrade, net of allowance of $80,000
    
    
    971,362
    
    
    
    842,681Inventories
    
    
    280,026
    
    
    
    196,447Prepaid expenses and other
    
    
    88,440
    
    
    
    74,481Deferred tax asset
    
    
    29,648
    
    
    
    29,648Total current assets
    
    
    1,697,800
    
    
    
    1,751,016Non-current assetsProperty, plant and equipment  net
    
    
    4,216,414
    
    
    
    4,258,224Notes receivable  related party
    
    
    612,936
    
    
    
    590,450Water rights  net
    
    
    159,175
    
    
    
    74,600Deposits
    
    
    144,400
    
    
    
    109,004Other  net
    
    
    125,811
    
    
    
    125,811Total non-current assets
    
    
    5,258,736
    
    
    
    5,158,089Total
    
    $
    6,956,536
    
    
    $
    6,909,105Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    528,923
    
    
    $
    254,059Accrued expenses
    
    
    194,066
    
    
    
    243,218Customer deposits
    
    
    112,808
    
    
    
    93,584Income taxes payable
    
    
    616
    
    
    
    100,366Current portion of long-term debt
    
    
    73,348
    
    
    
    84,793Total current liabilities
    
    
    909,761
    
    
    
    776,020Non-current liabilitiesLong-term debt, less current portion
    
    
    3,921,000
    
    
    
    3,944,333Deferred tax liability
    
    
    71,638
    
    
    
    96,638Deferred gain on the sale of real estate
    
    
    357,544
    
    
    
    357,544Total non-current liabilities
    
    
    4,350,182
    
    
    
    4,398,515Total liabilities
    
    
    5,259,943
    
    
    
    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; 6,214,926
(2007) and 6,008,990 (2006) issued and
outstanding
    
    
    6,214
    
    
    
    6,031Additional paid-in capital
    
    
    1,555,835
    
    
    
    1,483,957Retained earnings
    
    
    134,544
    
    
    
    244,5821,696,593
    
    
    
    1,734,570Total
    
    $
    6,956,536
    
    
    $
    6,909,105
  3




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##### 



ELDORADO ARTESIAN SPRINGS, INC.
 Unaudited Statements of Operations
 For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006RevenueWater and related
    
    $
    2,311,041
    
    
    $
    2,126,638
    
    
    $
    4,429,864
    
    
    $
    4,291,552Resort operations
    
    
    92,395
    
    
    
    73,350
    
    
    
    138,598
    
    
    
    121,312Net revenue
    
    
    2,403,436
    
    
    
    2,199,988
    
    
    
    4,568,462
    
    
    
    4,412,864Cost of goods sold
    
    
    585,836
    
    
    
    473,628
    
    
    
    1,032,083
    
    
    
    966,440Gross profit
    
    
    1,817,600
    
    
    
    1,726,360
    
    
    
    3,536,379
    
    
    
    3,446,424Operating expensesSalaries and related
    
    
    946,127
    
    
    
    811,479
    
    
    
    1,845,908
    
    
    
    1,613,097Administrative and general
    
    
    466,802
    
    
    
    390,318
    
    
    
    896,743
    
    
    
    814,083Delivery
    
    
    213,765
    
    
    
    219,530
    
    
    
    413,736
    
    
    
    421,138Advertising and promotions
    
    
    90,838
    
    
    
    73,631
    
    
    
    160,927
    
    
    
    140,360Depreciation and
amortization
    
    
    107,665
    
    
    
    119,304
    
    
    
    211,986
    
    
    
    231,4641,825,197
    
    
    
    1,614,262
    
    
    
    3,529,300
    
    
    
    3,220,142Operating (loss) income
    
    
    (7,597
    )
    
    
    112,098
    
    
    
    7,079
    
    
    
    226,282Other income (expense)Other income
    
    
    
    
    
    
    92,300
    
    
    
    
    
    
    
    92,300Interest income
    
    
    15,519
    
    
    
    10,530
    
    
    
    30,746
    
    
    
    20,866Interest expense
    
    
    (87,944
    )
    
    
    (73,306
    )
    
    
    (172,863
    )
    
    
    (141,605
    )(72,425
    )
    
    
    29,524
    
    
    
    (142,117
    )
    
    
    (28,439
    )Net (loss) income before
provision for income taxes
    
    
    (80,022
    )
    
    
    141,622
    
    
    
    (135,038
    )
    
    
    197,843Income tax benefit (expense)
    
    
    19,000
    
    
    
    (50,000
    )
    
    
    25,000
    
    
    
    (87,000
    )Net (loss) income
    
    $
    (61,022
    )
    
    $
    91,622
    
    
    $
    (110,038
    )
    
    $
    110,843Basic (loss) earnings per
common share
    
    $
    (0.01
    )
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    0.02Diluted (loss) earnings per
common share
    
    $
    (0.01
    )
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    0.02Weighted average number of
common shares outstanding
    
    
    6,109,207
    
    
    
    6,008,990
    
    
    
    6,070,936
    
    
    
    6,000,356Weighted average number of
dilutive shares outstanding
    
    
    6,109,207
    
    
    
    6,092,572
    
    
    
    6,070,936
    
    
    
    6,535,578
  4




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ELDORADO ARTESIAN SPRINGS, INC.
 Unaudited Statement of Changes in Stockholders Equity
For the Six Months Ended September 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
    
    
    8,000
    
    
    
    7
    
    
    
    7,243
    
    
    
    
    
    
    
    7,250Conversion of warrants to shares
    
    
    175,860
    
    
    
    176
    
    
    
    (176
    )
    
    
    
    
    
    
    Stock options issued to
employees and director
    
    
    
    
    
    
    
    
    
    
    64,811
    
    
    
    
    
    
    
    64,811Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (110,038
    )
    
    
    (110,038
    )Balance  September 30, 2007
    
    
    6,214,926
    
    
    $
    6,214
    
    
    $
    1,555,835
    
    
    $
    134,544
    
    
    $
    1,696,593
  5




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ELDORADO ARTESIAN SPRINGS, INC.
 Unaudited Statements of Cash Flows
 Six Months EndedSeptember 30,2007
    
    
    2006Cash flows from operating activitiesNet (loss) income
    
    $
    (110,038
    )
    
    $
    110,843Adjustments to reconcile net (loss) income to net cash provided
by operating activitiesDepreciation and amortization
    
    
    211,986
    
    
    
    231,464Deferred income tax (benefit) expense
    
    
    (25,000
    )
    
    
    11,125Stock based compensation
    
    
    64,811
    
    
    
    50,149Accrued interest on related party note receivable
    
    
    (22,486
    )
    
    
    (20,868
    )Changes in certain assets and liabilitiesAccounts receivable
    
    
    (128,681
    )
    
    
    (43,752
    )Inventories
    
    
    (83,579
    )
    
    
    (1,087
    )Prepaid expenses and other
    
    
    (13,959
    )
    
    
    (32,847
    )Deposits
    
    
    (35,396
    )
    
    
    Accounts payable
    
    
    274,864
    
    
    
    321,068Accrued expenses
    
    
    (49,152
    )
    
    
    (53,683
    )Customer deposits
    
    
    19,224
    
    
    
    8,357Income tax payable
    
    
    (99,750
    )
    
    
    27,375Net cash provided by operating activities
    
    
    2,844
    
    
    
    608,144Cash flows from investing activitiesPurchase of water rights
    
    
    (87,500
    )
    
    
    Deposits
    
    
    
    
    
    
    (90,000
    )Purchases of property and equipment
    
    
    (167,251
    )
    
    
    (399,176
    )Net cash flows used in investing activities
    
    
    (254,751
    )
    
    
    (489,176
    )Cash flows from financing activitiesPayments on long-term obligations
    
    
    (34,778
    )
    
    
    (66,138
    )Proceeds on line of credit
    
    
    
    
    
    
    50,000Proceeds from exercise of stock options
    
    
    7,250
    
    
    
    20,737Net cash flows (used in) provided by financing activities
    
    
    (27,528
    )
    
    
    4,599Net (decrease) increase in cash
    
    
    (279,435
    )
    
    
    123,567Cash  beginning of period
    
    
    607,759
    
    
    
    86,558Cash  end of period
    
    $
    328,324
    
    
    $
    210,125
     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 Dividend
  Stock Option Expenses
    7




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Valuation and Expense Information under SFAS 123(R)
   Six Months EndedSeptember 30, 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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Six Months EndedSeptember 30, 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
  Line of Credit
  Note 5  Commitments
   10




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Note 6  Recently Issued Accounting Pronouncements
     11




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Note 7  Subsequent Events
   Vitamin Enhanced
Organic Spring Water
  12




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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
   Vitamin
 13




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Enhanced Organic Spring Water
    Three and Six Months Ended September 30, 2007 Compared to Three and Six Months Ended September 30,
2006
 Revenues
    14




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Cost of Goods Sold and Gross Profit
  Operating Expenses
  Salaries and Related Expenses
 15




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General and Administrative Expenses
  Advertising and Promotions
  Delivery Expenses
  16




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Depreciation and Amortization
  Other Income and Interest Expense
   Income Taxes
  Net Income and Net Loss
  Liquidity and Capital Resources
  17




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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
    
    
    2,236,423
    
    
    
    
    
    
    
    2,236,423Total
    
    $
    3,994,348
    
    
    $
    880,343
    
    
    $
    4,874,691
  Other Recent Accounting Developments
   18




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Item 3. CONTROLS AND PROCEDURES
   19




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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
   Nominee
    
    Shares Voted For
    
    Shares Voted Against
    
    Shares AbstainedDouglas A. Larson
    
    
    5,407,392
    
    
    
    0
    
    
    
    630Kevin M. Sipple
    
    
    5,408,022
    
    
    
    0
    
    
    
    0Jeremy S. Martin
    
    
    5,408,022
    
    
    
    0
    
    
    
    0George J. Schmitt
    
    
    5,408,022
    
    
    
    0
    
    
    
    0J. Ross Colbert
    
    
    5,408,022
    
    
    
    0
    
    
    
    0
  Proposal
    
    Shares Voted For
    
    Shares Voted Against
    
    Shares AbstainedEhrhardt Keefe
Steiner &
Hottman, PC
    
    
    5,407,392
    
    
    
    630
    
    
    
    0
 Item 5. OTHER INFORMATION
  20




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Item 6. EXHIBITS
 Exhibit No.
    
    Description10.19
    
    
    Commercial Loan Agreement with American National Bank dated October 11, 2007.10.20
    
    
    Purchase and Sale Agreement with Farmers Reservoir and Irrigation Company
Marshall Lake Division Shares dated February 28, 2007.10.21
    
    
    Purchase and Sale Agreement with Farmers Reservoir and Irrigation Company
Marshall Lake Division Shares dated August 2, 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: November 14, 2007
    By:
    /s/ Douglas LarsonDouglas Larson, President and Chief ExecutiveOfficerDate: November 14, 2007
    By:
    /s/ Cathleen ShoenfeldCathleen Shoenfeld, Chief Financial Officer 22




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ELDORADO ARTESIAN SPRINGS, INC.
 
 Exhibit No.
    
    Description10.19
    
    
    Commercial Loan Agreement with American National Bank dated October 11, 2007.10.20
    
    
    Purchase and Sale Agreement with Farmers Reservoir and Irrigation Company
Marshall Lake Division Shares dated February 28, 2007.10.21
    
    
    Purchase and Sale Agreement with Farmers Reservoir and Irrigation Company
Marshall Lake Division Shares dated August 2, 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.