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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, 2010
 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
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    84-0907853
(IRS Employer
Identification No.)1783 Dogwood StreetLouisville, Colorado
    
    80027(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants Telephone Number, Including Area Code: (303) 499-1316
 Yes þ No 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




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##### 



ELDORADO ARTESIAN SPRINGS, INC.
FORM 10-Q
 INDEX
 PagePart I  Financial InformationItem 1  Financial StatementsBalance Sheets as of September 30, 2010 (Unaudited) and March 31, 2010
    
    
    2Unaudited Statements of Operations for the Three and Six Months Ended
September 30, 2010 and September 30, 2009
    
    
    3Unaudited Statements of Cash Flows for the Six Months Ended
September 30, 2010 and September 30, 2009
    
    
    4Notes to Unaudited Financial Statements
    
    
    5Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    8Item 3   Quantitative and Qualitative Disclosures About Market Risk
    
    
    13Item 4(T)  Controls and Procedures
    
    
    13Part II  Other InformationItem 1   Legal Proceedings
    
    
    15Item 1A   Risk Factors
    
    
    15Item 2   Unregistered Sales of Equity Securities and Use and Proceeds
    
    
    15Item 3   Defaults Upon Senior Securities
    
    
    15Item 4   Submission of Matters to a Vote of Security Holders
    
    
    15Item 5   Other Information
    
    
    15Item 6  Exhibits
    
    
    15Signatures
    
    
    16Exhibit Index
    
    
    17Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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ITEM 1. FINANCIAL STATEMENTS
 ELDORADO ARTESIAN SPRINGS, INC.
 
 Balance Sheets
 September 30,
    
    
    March 31,2010
    
    
    2010(Unaudited)AssetsCurrent assetsCash
    
    $
    38,045
    
    
    $
    65,304Accounts receivable  trade, net of $80,000 allowance
    
    
    1,041,090
    
    
    
    853,914Inventories
    
    
    547,959
    
    
    
    391,410Prepaid expenses and other
    
    
    87,421
    
    
    
    136,396Deferred tax asset
    
    
    29,648
    
    
    
    29,648Total current assets
    
    
    1,744,163
    
    
    
    1,476,672Non-current assetsProperty, plant and equipment  net
    
    
    4,045,258
    
    
    
    4,149,154Notes receivable  related party
    
    
    383,468
    
    
    
    369,397Investments
    
    
    361,196
    
    
    
    361,196Water rights
    
    
    71,675
    
    
    
    71,675Deposits
    
    
    118,020
    
    
    
    118,020Deferred tax asset  long term
    
    
    109,966
    
    
    
    101,466Other  net
    
    
    31,601
    
    
    
    34,346Total non-current assets
    
    
    5,121,184
    
    
    
    5,205,254Total assets
    
    $
    6,865,347
    
    
    $
    6,681,926Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    765,191
    
    
    $
    570,584Accrued expenses
    
    
    354,643
    
    
    
    283,145Customer deposits
    
    
    86,872
    
    
    
    73,423Current portion of capital lease obligations
    
    
    79,715
    
    
    
    121,634Current portion of long-term debt
    
    
    68,842
    
    
    
    68,842Total current liabilities
    
    
    1,355,263
    
    
    
    1,117,628Non-current liabilitiesCapital lease obligations, less current portion
    
    
    
    
    
    
    17,910Long-term debt, less current portion
    
    
    4,221,651
    
    
    
    4,256,953Deferred gain on the sale of real estate
    
    
    178,822
    
    
    
    178,822Total non-current liabilities
    
    
    4,400,473
    
    
    
    4,453,685Total liabilities
    
    
    5,755,736
    
    
    
    5,571,313Commitments 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
2010) issued and outstanding
    
    
    6,536
    
    
    
    6,536Additional paid-in capital
    
    
    1,784,678
    
    
    
    1,768,598Accumulated deficit
    
    
    (681,603
    )
    
    
    (664,521
    )Total stockholders equity
    
    
    1,109,611
    
    
    
    1,110,613Total liabilities and stockholders equity
    
    $
    6,865,347
    
    
    $
    6,681,926
   2




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ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Operations
 For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenueWater and related
    
    $
    2,378,276
    
    
    $
    2,291,005
    
    
    $
    4,627,968
    
    
    $
    4,517,474Resort operations
    
    
    97,075
    
    
    
    66,731
    
    
    
    132,558
    
    
    
    95,852Net revenue
    
    
    2,475,351
    
    
    
    2,357,736
    
    
    
    4,760,526
    
    
    
    4,613,326Cost of goods sold
    
    
    602,957
    
    
    
    629,010
    
    
    
    1,247,263
    
    
    
    1,196,012Gross profit
    
    
    1,872,394
    
    
    
    1,728,726
    
    
    
    3,513,263
    
    
    
    3,417,314Operating expensesSalaries and related
    
    
    912,000
    
    
    
    902,475
    
    
    
    1,729,502
    
    
    
    1,781,108Administrative and general
    
    
    416,741
    
    
    
    460,127
    
    
    
    859,616
    
    
    
    884,977Delivery
    
    
    212,798
    
    
    
    191,616
    
    
    
    395,827
    
    
    
    384,304Advertising and promotions
    
    
    95,605
    
    
    
    114,119
    
    
    
    160,809
    
    
    
    216,202Depreciation and amortization
    
    
    115,028
    
    
    
    125,157
    
    
    
    234,676
    
    
    
    252,0181,752,172
    
    
    
    1,793,494
    
    
    
    3,380,430
    
    
    
    3,518,609Operating income (loss)
    
    
    120,222
    
    
    
    (64,768
    )
    
    
    132,833
    
    
    
    (101,295
    )Other income (expense)Interest income
    
    
    7,101
    
    
    
    6,651
    
    
    
    14,071
    
    
    
    13,178Interest expense
    
    
    (90,563
    )
    
    
    (93,403
    )
    
    
    (172,486
    )
    
    
    (187,897
    )(83,462
    )
    
    
    (86,752
    )
    
    
    (158,415
    )
    
    
    (174,719
    )Net income (loss) before provision for income taxes
    
    
    36,760
    
    
    
    (151,520
    )
    
    
    (25,582
    )
    
    
    (276,014
    )Income tax (expense) benefit
    
    
    (12,800
    )
    
    
    51,500
    
    
    
    8,500
    
    
    
    93,500Net income (loss)
    
    $
    23,960
    
    
    $
    (100,020
    )
    
    $
    (17,082
    )
    
    $
    (182,514
    )Basic and dilutive income (loss) per common share
    
    $
    0.00
    
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    (0.03
    )Weighted average number of common shares outstanding 
 basic and dilutive
    
    
    6,536,091
    
    
    
    6,536,091
    
    
    
    6,536,091
    
    
    
    6,536,091
   3




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ELDORADO ARTESIAN SPRINGS, INC.
 
 Unaudited Statements of Cash Flows
 Six Months EndedSeptember 30,2010
    
    
    2009Cash flows from operating activitiesNet loss
    
    $
    (17,082
    )
    
    $
    (182,514
    )Adjustments to reconcile net loss to net cash provided by operating activitiesDepreciation and amortization
    
    
    234,676
    
    
    
    252,018Deferred income tax benefit
    
    
    (8,500
    )
    
    
    (93,500
    )Stock based compensation
    
    
    16,080
    
    
    
    16,080Accrued interest on related party note receivable
    
    
    (14,071
    )
    
    
    (13,056
    )Changes in certain assets and liabilitiesAccounts receivable
    
    
    (187,176
    )
    
    
    (6,958
    )Inventories
    
    
    (156,549
    )
    
    
    (32,148
    )Prepaid expenses and other
    
    
    48,975
    
    
    
    81,946Deposits
    
    
    
    
    
    
    (5,200
    )Accounts payable
    
    
    194,607
    
    
    
    263,846Accrued expenses
    
    
    71,498
    
    
    
    (55,922
    )Income tax receivable
    
    
    
    
    
    
    66,405Customer deposits
    
    
    13,449
    
    
    
    16,324Net cash provided by operating activities
    
    
    195,907
    
    
    
    307,321Cash flows from investing activitiesPurchases of property and equipment
    
    
    (128,035
    )
    
    
    (143,798
    )Net cash flows used in investing activities
    
    
    (128,035
    )
    
    
    (143,798
    )Cash flows from financing activitiesPayments on long-term obligations
    
    
    (95,131
    )
    
    
    (201,414
    )Net cash flows used in financing activities
    
    
    (95,131
    )
    
    
    (201,414
    )Net decrease in cash
    
    
    (27,259
    )
    
    
    (37,891
    )Cash  beginning of period
    
    
    65,304
    
    
    
    347,148Cash  end of period
    
    $
    38,045
    
    
    $
    309,257
      4




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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 Plans
   5




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Warrants
  Note 3  Related Party Transactions
  Note 4  Contingencies
 Water Rights Contingency
    6




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Note 5  Commitments
 Notes Payable
    7




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Renewable Energy Service Agreement
  
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward Looking Statements
   Overview
    8




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Results of Operations
  Organic Vitamin Charged Spring Water
  Organic Vitamin Charged Spring Water
  Three and Six Months Ended September 30, 2010 Compared to Three and Six Months Ended September 30,
2009
 Revenues
      9




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Organic Vitamin Charged Spring Water Organic Vitamin
Charged Spring Water Organic Vitamin Charged Spring Water
   Gross Profit/Cost of Goods Sold
   10




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Operating Expenses
        11




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Interest, Taxes, Other Income and Other Expenses
     Liquidity and Capital Resources
       12




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4(T). CONTROLS AND PROCEDURES
 Conclusion Regarding The Effectiveness Of Disclosure Controls And Procedures
    13




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Remediation Of Material Weaknesses in Internal Control Over Financial Reporting
  Changes In Internal Control Over Financial Reporting
   14




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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.
  15




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SIGNATURES
  ELDORADO ARTESIAN SPRINGS, INC.Date: November 15, 2010
    By:
    /s/ Douglas A. LarsonDouglas A. LarsonPresident
(Principal Executive Officer)Date: November 15, 2010
    By:
    /s/ Cathleen ShoenfeldCathleen ShoenfeldChief Financial Officer
(Principal Financial Officer)  16




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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.
  17