**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**


**(AMENDMENT
        NO. 1)**


(Mark
      One)


x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      quarter ended: **February 28, 2007**





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: **000-31329**





**ROYAL
      SPRING WATER INC.**


(Name
      of small business issuer in its charter)







**Nevada**
            **N/A**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)




**14553
      Delano Street Suite 217, Van-Nuys CA, 91411**


(Address
      of principal executive offices)





Issuer’s
      telephone number: (818) 902-3690








Securities
      registered under Section 12(b) of the Exchange Act:  
**None**





Securities
      registered under Section 12(g) of the Exchange Act:   **Common
      Shares, $0.001 par value**





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No
o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No
x





State
      issuer’s revenues for its most recent fiscal year: $0





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of a
      specified date within the past 60 days: $60,168,713, assuming a price per share
      of $2.35 as of April 20, 2007. For the purpose of this disclosure, shares of
      common stock held by directors, officers and stockholders whose ownership
      exceeds five percent of the common stock outstanding were excluded. Exclusion
      of
      shares held by any person should not be construed to indicate that such person
      possesses the power, direct or indirect, to direct or cause the direction of
      management or policies of the issuer, or that such person is controlled by
      or
      under common control of the issuer.





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date. 30,072,000 as of April 20, 2007.
















**ROYAL
      SPRING WATER INC.**





**Form
      10-QSB**




**For
      the Quarter Ended February 28, 2007**








**TABLE
      OF CONTENTS**






Page**PART
                I - FINANCIAL INFORMATION**Item
                1.
            Financial
                StatementsBalance Sheets
            3Statements of Operations
            4Statements
                of Cash Flows
            6Notes to Financial Statements
            7Item
                2.
            Management’s
                Discussion & Analysis or Plan
                of  Operation
            10Item
                3.
            Controls
                and Procedures
            15**PART
                II - OTHER INFORMATION**Item
                1.
            Legal
                Proceedings
            16Item
                2.
            Unregistered
                Sales of Equity securities and Use of
                Proceeds
            16Item
                3.
            Defaults
                Upon Senior Securities
            16Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            16Item
                5
            Other
                Information
            16Item
                6.
            Exhibits
            16




2











Table
      of
      Contents




**ROYAL
      SPRING WATER INC.**


**BALANCE
      SHEETS**




**February
                28, 2007**
            
            
            **August
                31, 2006****(Unaudited)****ASSETS**CURRENT
                ASSETSCash
                and cash equivalents
            
            $
            31,659
            
            
            $
            252,197Accounts
                receivable
            
            
            26,936
            
            
            
            -Inventory
            
            
            289,613
            
            
            
            65,912Prepaid
                expenses and deposits
            
            
            181,197
            
            
            
            32,722Total
                Current Assets
            
            
            529,405
            
            
            
            350,831Property,
                plant and equipment, net
            
            
            3,776,350
            
            
            
            3,768,892Debt
                issue costs
            
            
            93,958
            
            
            
            -TOTAL
                ASSETS
            
            $
            4,399,713
            
            
            $
            4,119,723**LIABILITIES
                AND STOCKHOLDERS’ DEFICIT**CURRENT
                LIABILITIESAccounts
                payable and accrued liabilities
            
            $
            160,181
            
            
            $
            64,398Advances
                from shareholders
            
            
            1,535,727
            
            
            
            1,649,609Accrued
                warrant liability
            
            
            389,448
            
            
            
            -Obligation
                under capital lease - current portion
            
            
            181,608
            
            
            
            171,083Total
                Current Liabilities
            
            
            2,266,964
            
            
            
            1,885,090Convertible
                debt, net of discount
            
            
            831,141
            
            
            
            -Obligation
                under capital lease
            
            
            3,830,087
            
            
            
            3,690,442Total
                Long Term Liabilities
            
            
            4,661,228
            
            
            
            3,690,442TOTAL
                LIABILITIES
            
            
            6,928,192
            
            
            
            5,575,532STOCKHOLDERS’
                DEFICITPreferred
                stock - $.001 par value; 5,000,000 shares authorized, none issued
                or
                outstanding
            
            
            -
            
            
            
            -Common
                stock - $.001 par value; 50,000,000 shares authorized, 30,072,000
                shares
                outstanding
            
            
            30,072
            
            
            
            30,072Additional
                paid-in capital
            
            
            339,863
            
            
            
            135,633Accumulated
                deficit
            
            
            (2,898,414
            )
            
            
            (1,621,514
            )TOTAL
                STOCKHOLDERS’ DEFICIT
            
            
            (2,528,479
            )
            
            
            (1,455,809
            )TOTAL
                LIABILITIES AND STOCKHOLDERS’ DEFICIT
            
            $
            4,399,713
            
            
            $
            4,119,723





_______________________


See
      accompanying notes to these financial statements.




3









Table
      of
      Contents





**ROYAL
      SPRING WATER INC.**


**STATEMENTS
      OF OPERATIONS**


**FOR
      THE THREE MONTHS ENDED FEBRUARY 28, 2007 AND 2006**




**Three
                Months Ended February 28, 2007**
              **(Unaudited)**
            
            
            **Three
                Months Ended February 28, 2006**
              **(Unaudited)**Sales
            
            $
            65,392
            
            
            $
            -Cost
                of goods sold
            
            
            27,591
            
            
            
            -Gross
                profit
            
            
            37,801
            
            
            
            -EXPENSESGeneral
                and administrative
            
            
            165,396
            
            
            
            68,433Professional
                fees
            
            
            73,783
            
            
            
            42,635Travel
                and entertainment
            
            
            20,376
            
            
            
            6,696Salaries
                and wages
            
            
            16,952Vehicle
            
            
            18,864
            
            
            
            10,163Advertising
                and promotion
            
            
            14,882
            
            
            
            -Telecommunications
            
            
            10,096
            
            
            
            5,086Insurance
            
            
            7,858
            
            
            
            -Occupancy
                costs
            
            
            5,285
            
            
            
            -Depreciation
            
            
            62,961
            
            
            
            43,412TOTAL
                EXPENSES
            
            
            396,453
            
            
            
            176,425LOSS
                FROM OPERATIONS
            
            
            (358,652
            )
            
            
            (176,425
            )OTHER
                EXPENSESInterest
                and bank charges
            
            
            51,925
            
            
            
            335Interest
                on capital lease obligation and convertible debenture
            
            
            326,421
            
            
            
            156,624NET
                LOSS
            
            $
            (736,998
            )
            
            $
            (333,384
            )Loss
                per common share, basic and diluted
            
            $
            (0.03
            )
            
            $
            (0.01
            )Weighted
                average shares outstanding, basic and diluted
            
            
            30,072,000
            
            
            
            30,072,000




_______________________


See
      accompanying notes to these financial statements.





4









Table
      of
      Contents





**ROYAL
      SPRING WATER INC.**


**STATEMENTS
      OF OPERATIONS**


**FOR
      THE SIX MONTHS ENDED FEBRUARY 28, 2007 AND 2006**




**Six
                Months Ended February 28, 2007**
              **(Unaudited)**
            
            
            **Six
                Months Ended February 28, 2006**
              **(Unaudited)**Sales
            
            $
            65,392
            
            
            $
            -Cost
                of goods sold
            
            
            27,591
            
            
            
            -Gross
                Profit
            
            
            37,801
            
            
            
            -EXPENSESGeneral
                and administrative
            
            
            259,748
            
            
            
            104,690Professional
                fees
            
            
            89,695
            
            
            
            65,835Advertising
                and promotion
            
            
            52,958
            
            
            
            758Salaries
                and wages
            
            
            62,910
            
            
            
            -Vehicle
            
            
            34,297
            
            
            
            14,600Travel
                and entertainment
            
            
            32,633
            
            
            
            11,567Consulting
                fees
            
            
            17,049
            
            
            
            -Telecommunications
            
            
            16,716
            
            
            
            7,425Insurance
            
            
            14,818
            
            
            
            -Occupancy
                costs
            
            
            14,729
            
            
            
            -Depreciation
            
            
            143,656
            
            
            
            86,509TOTAL
                EXPENSES
            
            
            739,209
            
            
            
            291,384LOSS
                FROM OPERATIONS
            
            
            (701,408
            )
            
            
            (291,384
            )OTHER
                EXPENSESInterest
                and bank charges
            
            
            98,005
            
            
            
            891Interest
                on capital lease obligation and convertible debenture
            
            
            477,489
            
            
            
            314,992NET
                LOSS
            
            $
            (1,276,902
            )
            
            $
            (607,267
            )Loss
                per common share, basic and diluted
            
            $
            (0.04
            )
            
            $
            (0.02
            )Weighted
                average shares outstanding, basic and diluted
            
            
            30,072,000
            
            
            
            30,072,000




_______________________


See
      accompanying notes to these financial statements.





5









Table
      of
      Contents





**ROYAL
      SPRING WATER INC.**


**STATEMENTS
      OF CASH FLOWS**


**FOR
      THE SIX MONTHS ENDED FEBRUARY 28, 2007 AND 2006**





**Six
                Months Ended February 28, 2007**
              **(Unaudited)**
            
            
            **Six
                Months Ended February 28, 2006**
              **(Unaudited)**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                Loss
            
            $
            (1,276,902
            )
            
            $
            (607,267
            )Adjustments
                to reconcile net loss to net cash used by operating
                activities:Depreciation
            
            
            161,390
            
            
            
            86,509Interest
                accrued on obligation under capital lease and convertible
                debt
            
            
            477,489
            
            
            
            314,992Services
                contributed by shareholders
            
            
            60,000
            
            
            
            60,000Amortization
                of debt issuance costs
            
            
            8,542Changes
                in Assets and Liabilities:Accounts
                receivable
            
            
            (26,936
            )
            
            
            -Prepaid
                expenses and deposits
            
            
            (148,475
            )
            
            
            (19,722
            )Inventory
            
            
            (223,701
            )
            
            
            -Accounts
                payable and accrued liabilities
            
            
            95,783
            
            
            
            -NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (872,810
            )
            
            
            (165,488
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Acquisition
                of property and equipment
            
            
            (168,846
            )
            
            
            (336,426
            )NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (168,846
            )
            
            
            (336,426
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from convertible debt
            
            
            1,085,000
            
            
            
            -Repayment
                of advances from shareholders
            
            
            (113,882
            )
            
            
            617,148Repayment
                of obligation under capital lease
            
            
            (150,000
            )
            
            
            (90,000
            )NET
                CASH PROVIDED BY FINANCING ACTIVITES
            
            
            821,118
            
            
            
            527,148NET
                CHANGE IN CASH & CASH EQUIVALENTS
            
            
            (220,538
            )
            
            
            25,234CASH
                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
            
            
            252,197
            
            
            
            12CASH
                AND CASH EQUIVALENTS AT END OF PERIOD
            
            $
            31,659
            
            
            $
            25,246





_______________________


See
      accompanying notes to these financial statements.





6







Table
      of
      Contents


**ROYAL
      SPRING WATER INC.**





**NOTE
                1.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF
                OPERATIONS**





**ORGANIZATION**





Easy.com,
      Inc. (“Easy”) was incorporated under the laws of the State of Nevada on May 9,
      2000.  Easy was a non-operating shell corporation with nominal net
      assets prior to June 2005, when Easy acquired one hundred percent (100%) of
      the
      assets of Royal Spring Water Inc., a Nevada company (“RSW” or the
“Company”).





In
      April
      2006, the Company filed Articles of Merger in Nevada and legally combined the
      entities of Easy.com and Royal Spring Water Inc. They concurrently changed
      the
      name of the surviving entity to Royal Spring Water Inc.





The
      Company was established with a clear mission, namely to extract, process, and
      bottle artesian well water of supreme quality.





**BASIS
      OF PRESENTATION**





The
      accompanying unaudited interim financial statements have been prepared in
      accordance with accounting principles generally accepted in the U.S. for interim
      financial information and with the instructions to Form 10-QSB and item 310
      under subpart A of Regulation S-B.  Accordingly, they do not include
      all of the information and footnotes required by generally accepted accounting
      principles for complete financial statements. In the opinion of management,
      all
      adjustments (consisting of normal recurring accruals) considered necessary
      for a
      fair presentation have been included.  Operating results for the three
      and six month periods ended February 28, 2007 are not necessarily indicative
      of
      the results that may be expected for the year ending August 31, 2007. For
      further information, refer to the financial statements and footnotes thereto
      included in the Company’s annual report on Form 10-KSB for the year ended August
      31, 2006.





The
      Company's financial statements are presented on a going concern basis, which
      contemplates the realization of assets and satisfaction of liabilities in the
      normal course of business. The Company has experienced losses from operations
      since inception, and as of February 28, 2007 has a working capital and total
      capital deficiency, which raise substantial doubt as to its ability to continue
      as a going concern.





**REVENUE
        RECOGNITION**





The
        Company recognizes revenue from product sales when title transfers, the customer
        takes ownership and assumes risk of loss, collection of the relevant receivable
        is probable, persuasive evidence of an arrangement exists and the sales price
        is
        fixed or determinable, which is generally at the time of shipment.  In
        the event a situation occurs to create a post-shipment obligation, we would
        defer revenue recognition until the specific obligation was
        satisfied.  We defer recognition of sales to distributors when we are
        unable to make a reasonable estimate of product returns due to insufficient
        historical product return information.  The revenue recorded is
        dependent upon estimates of expected customer returns and sales
        discounts.





**INCOME
      TAXES**





The
      Company accounts for income taxes pursuant to SFAS No. 109, Accounting for
      Income Taxes. Deferred tax assets and liabilities are recorded for differences
      between the financial statements and tax basis of the assets and liabilities
      that will result in taxable or deductible amounts in the future based on enacted
      tax laws and rates. Valuation allowances are established when necessary to
      reduce deferred tax assets to the amount expected to be realized. Income tax
      expense is recorded for the amount of income tax payable or refundable for
      the
      period increased or decreased by the change in deferred tax assets and
      liabilities during the period. As of February 28, 2007, a deferred tax asset
      of
      approximately $1 million (which arises solely as a result of net operating
      losses), has been entirely offset by a valuation reserve due the uncertainty
      that this asset will be realized in the future.





**RECENT
      ACCOUNTING PRONOUNCEMENTS**





In
      September 2006, the FASB issued SFAS No. 157, *Fair Value
      Measurements*. SFAS 157 defines fair value, establishes a framework for
      measuring fair value and expands disclosure of fair value measurements.
      SFAS 157 applies under other accounting pronouncements that require or
      permit fair value measurements and accordingly, does not require any new fair
      value measurements. SFAS 157 is effective for financial statements issued
      for fiscal years beginning after November 15, 2007. The Company is
      currently in the process of assessing the impact the adoption of SFAS 157
      will have on its financial statements.





In
      September 2006, the SEC issued SAB No. 108, *Considering the Effects of Prior
      Year Misstatements when Quantifying Misstatements in Current Year Financial
      Statements*. SAB 108 requires that public companies utilize a
      "dual-approach" to assessing the quantitative effects of financial
      misstatements. This dual approach includes both an income statement focused
      assessment and a balance sheet focused assessment. The guidance in SAB 108
      must
      be applied to annual financial statements for fiscal years ending after November
      15, 2006. Management believes the adoption of this pronouncement will not have
      a
      material impact on the Company's consolidated financial statements.





In
      December 2006, the FASB issued FSP EITF 00-19-2, *Accounting for Registration
      Payment Arrangements* which addresses accounting for registration payment
      arrangements. FSP 00-19-2 specifies that the contingent obligation to make
      future payments or otherwise transfer consideration under a registration payment
      arrangement, whether issued as a separate agreement or included as a provision
      of a financial instrument or other agreement, should be separately recognized
      and measured in accordance with FASB Statement No. 5, *Accounting for
      Contingencies*. FSP 00-19-2 further clarifies that a financial instrument
      subject to a registration payment arrangement should be accounted for in
      accordance with other applicable generally accepted accounting principles
      without regard to the contingent obligation to transfer consideration pursuant
      to the registration payment arrangement. For registration payment arrangements
      and financial instruments subject to those arrangements that were entered into
      prior to the issuance of EITF 00-19-2, this guidance is effective for financial
      statements issued for fiscal years beginning after December 15, 2006 and interim
      periods within those fiscal years. The Company has adopted FSP 00-19-2 and
      the
      effect on the financial statement is disclosed in note 5.





In
      February 2007, the FASB issued SFAS No. 159, *The Fair Value Option for
      Financial Assets and Financial Liabilities*. SFAS 159 permits
      entities to choose to measure many financial instruments, and certain other
      items, at fair value.SFAS 159 applies to reporting periods
      beginning after November 15, 2007. The adoption of SFAS 159 is not expected
      to
      have a material impact on the Company’s financial condition or results of
      operations.




7







Table
      of
      Contents




**ROYAL
      SPRING WATER INC.**





**NOTE
                2.**
            **PROPERTY,
                PLANT & EQUIPMENT**





At
      February 28, 2007 property, plant and equipment consists of the
      following:


**February
                28, 2007**
            
            
            **August
                31, 2006****(Unaudited)**Land
                and water rights under capital lease
            
            $
            1,287,853
            
            
            $
            1,287,853Equipment
                under capital lease
            
            
            506,555
            
            
            
            506,555Locomotive
                under capital lease
            
            
            53,661
            
            
            
            53,661Computer
            
            
            73,282
            
            
            
            67,524Software
            
            
            3,275
            
            
            
            3,275Water
                treatment system
            
            
            559,238
            
            
            
            469,218Building
                under capital lease
            
            
            1,502,495
            
            
            
            1,502,495Furniture
                and equipment
            
            
            95,939
            
            
            
            75,850Leasehold
                improvements
            
            
            52,981
            
            
            
            -4,135,279
            
            
            
            3,966,431Less:
                accumulated depreciation
            
            
            (358,929
            )
            
            
            (197,539
            )Net
                property, plant and equipment
            
            $
            3,776,350
            
            
            $
            3,768,892





Depreciation
      expense was $77,475 and $161,390 for the three and six months ended February
      28,
      2007, respectively ($43,412 and $86,509 - 2006).





**NOTE
                3.**
            **RELATED
                PARTY TRANSACTIONS**





The
      advances from shareholders of the Company to facilitate the payment of debts
      bear interest at 10% per annum, are unsecured and have no specific terms of
      repayment. The carrying value of the advances approximates the market value
      due
      to the short-term maturity of the financial instruments.





For
      the three and six months endedFebruary 28,
      2007, the Company's
      directors and shareholders devoted time to the development of the Company.
      Compensation expense totaling $30,000and $60,000has been recorded for the three and
      six months endedFebruary
      28, 2007, respectively.
      These directors and shareholders have waived reimbursement and have considered
      these services as a contribution to capital. Accordingly, the contributions
      have
      been recorded as additional paid-in capital.





**NOTE
                4.**
            **OBLIGATION
                UNDER CAPITAL LEASE**





The
      Company leases land, building and equipment under a capital lease which contains
      a bargain purchase option which the Company intends to exercise on or before
      its
      expiration on August 1, 2009. The asset and liability under the capital lease
      are recorded at the present value of the minimum lease payments and purchase
      option price.





Future
      minimum lease payments under capital lease as of February 28, 2007
      are:





2007
                (6 months)
            
            $
            150,0002008
            
            
            307,0002009
                (11 months), including bargain purchase option
            
            
            4,881,929Total
                minimum lease payments
            
            
            5,338,929Less:
                amount representing interest at 19%
            
            
            (1,327,234
            )Total
                obligations under capital lease
            
            
            4,011,695Less:
                current installments of obligations under capital lease
            
            
            (181,608
            )Long-term
                obligation under capital lease
            
            $
            3,830,087





8









Table
      of
      Contents




**ROYAL
      SPRING WATER INC.**







**NOTE
                5.**
            **CONVERTIBLE
                DEBT**





In
      December 2006, the Company signed a
      two year non-interest bearing convertible note for $1,250,000.  The note is
      collateralized by a general security agreement of the assets of the
      Company.  The note matures in December 2008 and the Company may at its
      option repay, in whole or in part, the note for a pre-payment price of
      110%.  Any remaining unpaid balance of the note will be paid on the
      maturity date.  The holder of the note shall have the right, at its option,
      at any time, to convert the outstanding principal to common stock at a price
      equal to 85% of the weighted market value for the twenty days immediately prior
      to the conversion date.  The Company has also issued to the purchaser of
      the convertible note 500,000 warrants with strike prices ranging from $2.00
      to
      $5.00.  These warrants are exercisable for a period of five years (the
“exercise period”) and can be exercised at any time within the exercise period;
      payment will be made by a net cash settlement by the holder and the holder
      will
      receive unregistered common shares of the Company.





In
      accounting for the debentures and the warrants described above the Company
      considered the guidance contained in EITF 00-19, *Accounting for Derivative
      Financial Instruments Indexed To, and Potentially Settled In, a Company's Own
      Common Stock*, and SFAS 133 *Accounting for Derivative Instruments and
      Hedging Activities*.  Since the convertible
      debenture
      is convertible into an indeterminate number of shares of common stock, it is
      assumed that the Company could never have enough authorized and unissued shares
      to settle the conversion of the outstanding warrants into common stock that
      are
      held by non-employees.  In addition, as the warrants are detachable
      from the convertible debt, they are freestanding derivative financial
      instruments.  Therefore, in accordance with EITF 00-19, the fair value
      of the warrants outstanding when the debentures were issued was determined
      and
      removed from equity and shown as a liability.  The fair value of the
      warrants at the inception of the debentures of $389,448 was calculated using
      the
      Black-Scholes model using the following assumptions: Discount rate of 4.8%,
      volatility of 70%; dividend rate of 0% and expected term of 5
      years.





In
      connection with the convertible debt, the Company paid $102,500 in fees and
      commissions. These debt issue costs are being amortized over the term of the
      debentures in accordance with SAB 5. For the three and six months ended February
      28, 2007, the Company amortized $8,542 of the debt issue costs as a charge
      to
      financing costs.





The
      Company is required to measure the fair value of the warrants calculated using
      the Black-Scholes valuation model on the date of each reporting period until
      the
      debt is extinguished.  The Company allocated the proceeds from the
      sale of the Debentures between the relative fair values at the date of
      origination of the sale for the warrants and the debenture. The fair value
      of
      the warrants was calculated by using the Black-Scholes valuation model and
      the
      relative fair value of the warrants was recorded as a reduction to the Debenture
      liability and will be valued periodically with any increase or decrease charged
      to earnings. Upon full payment of the debenture (through repayment or conversion
      to equity) the fair value of the warrants on that date will be reclassified
      to
      equity.





In
      accordance with EITF 98-5, the Company evaluated the conversion feature embedded
      in the debt instrument and concluded that a beneficial conversion feature exists
      since the effective conversion price of the shares was less than the stock
      price
      at the date of issuance.  The beneficial conversion feature of
      $144,230 has been recorded as additional paid in capital and has
      been charged as interest expense in the statement of
      operations.





The
      convertible debenture agreement requires the Company to prepare and file a
      registration statement on or before the 30th day following the closing date
      on
      December 27, 2006.  If the Company fails to file the registration
      statement by the filing date, the Company must pay to the Purchaser an amount
      equal to 1% of the outstanding principal amount of the Convertible Note,
      prorated, for each 30 day period until the Registration Statement is filed
      with
      the Commission.  The Company has not as this date filed a registration
      statement and accordingly has accrued payments of $13,750 in the statement
      of
      operations for the three and six months ended February 28, 2007.  The
      agreement also requires the Company to pay to purchaser, as liquidated damages,
      an amount equal to 2% of the outstanding principal amount of the Convertible
      Note, prorated, for each 30 day period the Registration Statement is not
      declared effective by the Commission, based on certain definitions of the “best
      efforts” of the Company to do so.  The agreement goes on to require
      the Company to pay liquidated damages if, following the declaration of
      effectiveness of the Registration Statement, such registration statement ceases
      to be effective.  The Company must pay to the purchaser an amount
      equal to 1% of the outstanding principal amount of the convertible note,
      prorated, for each 30 day period the registration default remains
      uncured.  .







**NOTE
                6.**
            **COMMITMENT
                AND CONTINGENCY**





The
      Company has made payments toward equipment in the amount of
      $134,975.  The Company has a commitment to pay an additional $94,975
      towards this equipment subsequent to the period end.





In
      February of 2006, our former Chief Operating Officer filed a complaint against
      the Company, for, among other things, breach of employment agreement. The
      complaint was filed in the Los Angeles Superior Court, Santa Monica Division
      and
      seeks unspecified damages. The Company filed a cross complaint against this
      individual for fraud, misrepresentation and breach of fiduciary duty. We
      recently made an offer of settlement to plaintiff, to which a response has
      not
      been received. The Company is in the process of conducting discovery. We do
      not
      believe that this litigation will be material to our financial position,
      operations, or cash flows. There are no proceedings in which any of our
      directors, officers or affiliates is an adverse party or has a material interest
      adverse to the interest of the Company.




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**ITEM
                2.**
            **MANAGEMENT'S
                DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION**




**PLAN
      OF OPERATION**





**Overview**





The
      following discussion and analysis should be read in conjunction with our
      Financial Statements and notes appearing elsewhere in this
      report.  The following discussion contains forward-looking statements
      that reflect our plans, estimates and beliefs. Our actual results could differ
      materially from those discussed in the forward looking
      statements.  Factors that could cause or contribute to such
      differences include, but are not limited to those discussed below and elsewhere
      in this report.





Our
      financial statements are stated in United States Dollars and are prepared in
      accordance with United States Generally Accepted Accounting
      Principles.





On
      August
      1, 2005 the Company entered into a lease for operating a production facility
      at
      3500 Holly Sugar Rd. in Hereford, Texas with the intention of producing and
      selling artesian water.  This property includes 1,000 square feet of
      office space, a 70,000 square foot warehouse and production facility, six 25,000
      gallon liquid holding tanks and related equipment and the water rights from
      two
      artesian wells.  The lease calls for an initial rent of $15,000 per
      month for six months commencing November 1, 2005 to April 2006 payable in
      advance for six months on November 1, 2005.  Thereafter for the next
      24 years, the annual rent is $25,000 per month, adjusted annually based on
      the
      consumer price index.  In the first four years, the Company has an
      option to purchase the facility at an amount calculated as set forth in the
      terms of the lease which is estimated to be $4,590,964.





Of
      the
      70,000 square foot space, 40,000 square feet will be allocated to water
      processing and packaging space made accessible by loading bays and a 5.5 mile
      railroad spur leading directly from the main railroad station in Hereford to
      our
      loading dock.  The railroad extension is made available to the Company
      as a term of the lease and, as a term of the option to purchase the property,
      will continue to be made available for use as an easement when the Company
      purchases the property.  Also included in the property lease and
      option to purchase is the train engine needed to pull and push the train cars
      for our shipping needs which will enable us to keep our shipping cost very
      low.  Approximately 30,000 square feet has been allocated for storage
      of raw materials and finished goods.





Under
      our
      lease agreement, we are allowed to pump 400,000 gallons of water per day, which
      equates to approximately 2,909,000****bottles of water (16.9
      oz) per day.  We believe this will be sufficient to meet the demands
      of any large orders in the foreseeable future.





During
      the next twelve months, we intend to concentrate on one product; plain,
      non-carbonated bottled water.





Our
          primary business strategy is focused in two main areas.  The first is
          to offer existing bottled water distribution companies, major retail stores
          and
          service oriented businesses the ability to change their current bottled
          water to
          a private label in their business name.  Additionally, for companies
          already selling under a private label, we intend to sell our water for
          a more
          competitive price and to help increase their bottle water capacity by providing
          them with an additional source for their water supply.  Our research
          has shown that some manufacturing and distribution companies are at their
          production capacity and cannot meet their customers’ demands and that it may be
          more cost effective for them to have us provide them with water rather
          than to
          develop or expand existing water bottling facilities.  In these
          circumstances, we intend to have the customers provide us with their labels
          or
          logo, and we will fill the bottles, apply the label and ship the products
          to the
          customer.   The second part of our marketing and sales strategy
          is to develop the “Royal Spring Water” brand of bottled water and commence sales
          of that product in the US and around the world.  We will be targeting
          our product (single serve plastic bottles) directly to the smaller end
          user -
          convenience stores, fast food establishments, gas stations, major clubs
          and
          popular restaurants, among others.





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A
          sales
          team comprised of Company representatives will be put in charge to first
          work on
          securing contracts with stores, restaurants and clubs using various promotional
          tools such as pamphlets, price lists, and samples of our bottled
          water.  Sponsorship is another marketing tool that we will utilize in
          order to acquire exposure and gain recognition.  We expect to be
          sponsoring concerts, golf tournaments, and dance clubs, etc.  We
          believe that by providing free samples of our bottled water to various
          groups
          and venues, we will be able to effectively spread our name and popularity
          and
          obtain market penetration.  We will also be targeting all major hotel
          and casino gaming companies in order to provide them with their private
          labeled
          bottled water and customized labels (specific hotel-casino names, logos
          and
          images).   The hotels and major casinos out-source 100% of their
          consumable bottled water.





Our
      production and bottling facility at the wells is a highly automated plant with
      an operationally flexible system with high production capacity.  The
      processing and bottling of the water to be captured at the artesian well water
      facility is divided into various main steps:





Initial
      capture at the artesian well water where the water is pumped from a depth of
      approximately 300 to 400 feet then transferred to the storage location by a
      system of pipes.





1.
            From
                the point of capture, a network of underground pipes transfers the
                water
                to our treatment plant where the water is first filtered through
                sand
                traps and stored in indoor holding tanks (one of six 25,000 gallon
                tanks)
                subsequent to the filtration and treatment process to prepare water
                for
                the bottling process.





2.
            After
                the primary storage, water is pumped to a Multi-Media Filter to an
                Activated  Carbon Pre-Filter, to a 5-Micron Sediment Filter to
                Reverse Osmosis to Ozone Disinfection treated water pumped in two
                6,000
                gallon Stainless Steel Production Water Storage Tanks.  The
                water is then transferred to the bottling zone via stainless steel
                pipes
                and Post Activated Carbon Filter and a Ultra-Violet Sterilization
                system.





3.
              The
                    water is then moved to the bottling room via sealed pipes to
                    avoid all
                    possible contamination during the bottle filling process.  These
                    operations consist of rinsing of the bottle prior to filling,
                    filling of
                    the bottle with  the purified water, capping
                    it,  labeling it, assigning it with a batch
                    number,  year and  time of bottling and expiration
                    date.





4.
              The
                    bottles are then moved to the packing and shipping area where
                    a  machine  packs the bottles, wrapping them
                    in   film.  The packs are then transferred to the
                    pallet- forming area where they are palletized for
                    shipment.





5.
              Our
                    in
                    housestaff maintains a constant control on the quality
                    of the water.  Weekly water samples are sent out to a certified
                    lab in order to maintain our certification by the EPA, TCEQ and
                    Texas
                    Department of Health authorities.  To further
                    guarantee  a
                    superior  quality  product,  the
                    laboratory  has  to  process  daily
                    chemical  and bacteriological analyses on the entire production
                    chain. We are using polyethylene Terephthalate (known as PET)
                    bottles in
                    16.9oz size.    Our capping machines can handle  a
                    regular flat cap  We  will use a blow molder to blow
                    our PET bottles.  The PET bottles are blown from what is called
                    a preform.  This is supplied to us by the Ball Corporation, one
                    of the leading PET manufacturers.   We have made a decision
                    to buy all of our raw materials from US based companies instead
                    of China
                    made products.  (see details of our current existing production
                    capacity and potential capacity in the paragraph below entitled
                    “Acquisition or Disposition of Plant and
                    Equipment”)





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**Results
      of Operations for the Three and Six Months Ended February 28,
      2007**





The
        plant
        is now operational and during the three and six months ended February 28,
        2007
        we began shipping bottled water to our customers and realized sales of $65,392
        and $65,392 for the three and six months ended February 28, 2007
        respectively.  These sales were made to distributors and national
        chain stores.  The sales were of both our RSW bottled water and
        private labeled bottled water.  The revenues from the contracts we
        have negotiated are on a net 30 basis after the products are received by
        the
        customer. We now have an account receivable line of credit for $1,000,000
        with
        American Business Finance LLC out of Oklahoma which will help to speed up
        cash
        flow into our account against the payments that are pending on outstanding
        vendor invoices.





Cost
        of
        sales represents the allocation of raw materials, direct labor, freight in
        and
        water testing related to our sales of our finished goods
        inventory.  For the three months and six months ended February 28,
        2007, we incurred a gross profit of $37,801.  Advertising and
        promotion during the three months and six months ended February 28, 2007
        increased $14,882 and $52,200 since the three months and six months ended
        February 28, 2006.  This is because we incurred expenses related to
        creating and airing a television commercial for our product.  Other
        general expense categories have increased as well over these periods, which
        include professional fees, vehicle, travel and entertainment, occupancy costs,
        insurance and telecommunications.  These expenses either did not exist
        or were minimal in the three months and six months ended February 28, 2006
        mainly because we had only recently begun operations.  Our interest
        and bank charges during the three months and six months ended February 28,
        2007
        have increased $51,590 and $97,114 since the three months and six months
        ended
        February 28, 2006 because of the interest recorded on our shareholder
        loans.





Our
        operations since inception have not generated any significant
        revenue.  We We generated a net loss of $736,998 for the three months
        ended February 28, 2007 and a net loss of $1,276,902 for the six months ended
        February 28, 2007.We
        have relied on and will continue to rely on significant external financing
        to
        fund our operations.





**Licensing
      and Water Rights**





Although
      we have a contract
      which will allow us to extract waterfrom the land, it doesn’t
      automatically give us the right to distribute it.  In order to
      distribute water worldwide and do business, certain licenses
      must first
      be acquired.  Besides necessary licenses, one must pass certain
      specifications and requirements of the Food and Drug Administration
      (FDA).  This includes a clean and immaculate warehouse, and the use of
      hygienic filtration, refrigeration, bottling and packing operation systems.
      We
      will assure that all our operations meet and surpass these government
      requirements.  In June 2006 the Company passed the water test required
      by the state of Texas Commission on Environmental Quality, in order to commence
      production at the Royal Spring Water plant in Hereford, Texas.  The
      test was conducted by the City of Amarillo, Environmental Laboratory No. 48103
      over a period of three days.  This completed all of the testing and
      licensing requirements of the various government bodies needed to commence
      production and sales of our products.





**Product
      Research and Development**





In
      order
      to obtain high quality products and assure customer satisfaction, we will be
      using fully automated state of the art machinery. Since our inception, we have
      spent much of our time, money and efforts into researching the water industry
      in
      the U.S. and overseas. As a result, we have acquired broad knowledge about
      procedures, licenses, machinery, and land.  During this time, we have
      also built strong relationships with key individuals within the government
      and
      private sectors related to the water industry.  We do not anticipate
      performing further research and development for any products during the next
      twelve months.





**Acquisition
      or Disposition of Plant and Equipment**





We
          have purchased and
          assembled an automated, state of the art water treatment and bottling
          system that is currently in place and has the capacity to bottle up to
          approximately 113 million bottles per year, based on a bottle size of 16.9
          ounces. The plant facility has the water capacity to grow and supply in
          excess
          of one billion bottles per year.  Our bottling line can currently
          handle a bottle size of 16.9oz.  This state of the art machinery is
          automated and runs with minimal human intervention.  As part of our
          bottling system we also purchased a bottle stretch blow molder which will
          enable
          us to blow our own bottles from preforms





To
      date,
      we have spent approximately $860,000 on the purchase of machinery and equipment
      and have acquired land, water rights, facilities, and other operating equipment
      under a capital lease.





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**Liquidity
      and Capital Resources and Future Funding Requirements**





The
      Company has received letters of intent from potential customers, which
      management believes will produce the necessary income to attain positive cash
      flows in the future. Since inception, the Company’s principal
      shareholders/officers have provided approximately $1.5 million in short-term
      working capital advances and these individuals will continue to provide certain
      funding as and when required on a short-term basis. In addition, the Company
      has
      secured a line of credit of up to $1,000,000 with American Business Finance
      LLC,
      located in Oklahoma, to be collateralized by accounts receivable. American
      Business Finance LLP will purchase 80% of the face value of invoices until
      Royal
      Spring Water Inc. is paid. Borrowings will bear a base fee of 2% over base
      index. This will help to improve cash flows needed for working capital until
      profitable operations are attained.





In
      December 2006, the Company signed a two year non-interest bearing convertible
      note for $1,250,000, with an original issue discount of and debt issue costs
      of
      $102,500  The note is collateralized by a general security agreement
      over the assets of the Company.  The note matures in December 2008 and
      the Company may at its option repay, in whole or in part, the note for a
      pre-payment price of 110%.  Any remaining unpaid balance of the note
      will be paid on the maturity date.  The holder of the note shall have
      the right, at its option, at any time, to convert the outstanding principal
      to
      common stock at a price equal to 85% of the weighted market value for the twenty
      days immediately prior to the conversion date.  The Company has also
      issued, to the purchaser of the convertible note, 500,000 warrants with strike
      prices ranging from $2.00 to $5.00 expiring in five years.





Although
      the Company has no other firm commitments from other investors or lenders at
      this time, the Company believes it has raised sufficient capital and has
      adequate available credit facilities in place to continue production and
      distribution of its products until profitability is reached. Additionally,
      the
      Company believes it will not be required to raise any additional funds in the
      next twelve months.





Operating
      Cash Flows:





Our
      cash
      used in operating activities increased mainly because of the purchase of new
      inventory and payments for deposits on new equipment not yet delivered as of
      the
      quarter end, as well as payments made for rent deposits on our plant
      facility.  In addition, production costs are now capitalized to the
      inventory account and expensed to cost of sales as inventory is
      sold.





Investing
      Cash Flows:





To
      date
      we have spent $134,975 towards new equipment which is included with prepaid
      expenses and deposits.  We have also paid for new machinery in the
      current quarter in the amount of $194,663.  These payments are mainly
      related to the purchase of new equipment, as discussed above in Acquisition
      or
      Disposition of Plant and Equipment.





Financing
      Cash Flows:





From
      commencement in 2005 to the second quarter of fiscal year 2007, our financing
      came from loans from shareholders in the amount of $1,535,727 and a convertible
      note in the amount of $1,085,000.  These funds have been used to meet
      working capital requirements, acquire bottling equipment and further develop
      the
      plant.  Commencing October 1, 2006, the Company and the shareholders
      have agreed to an annual interest rate of 10% on the shareholder loans which
      the
      Company believes approximates a fair market rate of interest for similar debt
      financing.





The
      majority of the infrastructure necessary for the operation of the plant was
      already in place upon commencement of the lease.  This is the key
      capital resource that will enable the Company to quickly commence production
      and
      obtain revenues to assist in meeting its working capital
      requirements.





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The
      following assets are currently in use at our plant:





**·**
            Building
                – 20,000 square feet three story building attached to the
                warehouse


·
            Warehouse
                – 15,000 square feet adjacent to the three story
                building


·
            Warehouse
                - additional 36,000 square feet space, added April
                2006


·
            Equipment
                - six 25,000 gallon liquid holding tanks (4 tanks are inside the
                building
                and 2 outside) related water pumps and pipes connecting wells and
                tanks,
                motors and agitators


·
            Land
                and Water Rights - Well #11 and Well #12 located on the real
                Property


·
            Waste
                water ponds


·
            Paved
                parking


·
            Access
                to existing rail





The
      Company’s scheduled lease payments from inception of the lease and leading up
      the purchase date are as follows:





March
                1, 2007 – December 31, 2007
            
            $
            250,000January
                1, 2008 – December 31, 2008*
            
            
            310,500January
                1, 2009 – July 31, 2009*
            
            
            187,464$
            747,964





*CPI
      is
      estimated at 3.5% as per most recent full year information available as posted
      in The Wall Street Journal.





At
      the
      end of this period, the Company intends to purchase the assets at an estimated
      price of $4,590,964.****The actual purchase price will depend
      upon the prevailing lease rate in effect at the time we exercise our purchase
      option.





**Critical
      Accounting Policies and Estimates**




Our
      most
      critical accounting policies, which are those that require significant judgment,
      include: capitalization and recognition of leases; income taxes and revenue
      recognition. In-depth descriptions of these can be found in our Annual Report
      on
      Form 10-KSB for the fiscal year ended August 31, 2006 (the “2006 Form 10-KSB”).
      There have been no material changes in our existing accounting policies from
      the
      disclosures included in our 2006 Form 10-KSB.








**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet guarantees, interest rate swap transactions or
      foreign currency contracts. We do not engage in trading activities involving
      non-exchange traded contracts.





**Going
      Concern**





Due
      to
      the uncertainty of our ability to meet our current operating and capital
      expenses, in their report on our audited financial statements for the period
      ended August 31, 2006, our independent registered accountants included an
      explanatory paragraph expressing substantial doubt about our ability to continue
      as a going concern. Our financial statements contain additional note disclosures
      describing the circumstances that lead to this disclosure by our independent
      auditors.




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**ITEM
                3.**
            **CONTROLS
                AND PROCEDURES**





We
      maintain disclosure controls and procedures that are designed to be effective
      in
      providing reasonable assurance that information required to be disclosed in
      our
      reports under the Securities Exchange Act of 1934 is recorded, processed,
      summarized and reported within the time periods specified in the rules and
      forms
      of the SEC, and that such information is accumulated and communicated to our
      management to allow timely decisions regarding required disclosure.





In
      designing and evaluating disclosure controls and procedures, management
      recognizes that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable, not absolute assurance of achieving
      the
      desired objectives.  Also, the design of a control system must reflect
      the fact that there are resource constraints and the benefits of controls must
      be considered relative to their costs.  Because of the inherent
      limitations in all control systems, no evaluation of controls can provide
      absolute assurance that all control issues and instances of fraud, if any,
      have
      been detected.  These inherent limitations include the realities that
      judgments in decision-making can be faulty and that breakdowns can occur because
      of simple error or mistake.  The design of any system of controls is
      based, in part, upon certain assumptions about the likelihood of future events
      and there can be no assurance that any design will succeed in achieving its
      stated goals under all potential future conditions.





As
      of the
      end of the period covered by this report, we carried out an evaluation, under
      the supervision and with the participation of management, including our chief
      executive officer and principal financial officer, of the effectiveness of
      the
      design and operation of our disclosure controls and procedures as defined in
      Rules 13a-15(e) and 15d-15(e) of the Exchange Act.  Based upon that
      evaluation, management concluded that our disclosure controls and procedures
      are
      effective to cause the information required to be disclosed by us in reports
      that we file or submit under the Exchange Act is recorded, processed, summarized
      and reported within the time periods prescribed by SEC, and that such
      information is accumulated and communicated to management, including our chief
      executive officer and principal financial officer, as appropriate, to allow
      timely decisions regarding required disclosure.





There
      was
      no change in our internal controls over financial reporting identified in
      connection with the requisite evaluation that occurred during our last fiscal
      quarter that has materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting.




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**PART
      II - OTHER INFORMATION**




**ITEM 1
                  -**
              ****LEGAL
                  PROCEEDINGS****


In
      February of 2006, our former Chief Operating Officer filed a complaint against
      the Company, relating to his employment with Company. The complaint was filed
      in
      the Los Angeles Superior Court, Santa Monica Division and seeks unspecified
      damages alleging breach of contract, wrongful discharge, fraud and violation
      of
      labor law. The Company filed a cross complaint against this individual for
      fraud, misrepresentation and breach of fiduciary duty. We recently made an
      offer
      of settlement to plaintiff, which provided the plaintiff would retain the
      $50,000 in salary paid to him, and in return, plaintiff would return 300,720
      shares of common stock that were issued to him at the time he entered into
      the
      alleged employment contract with the Company.  The plaintiff has
      retained new legal counsel who has reiterated the previous settlement proposal
      to which the Company is waiting for a response.  We do not believe
      that this litigation will be material to our financial position, operations,
      or
      cash flow. There are no proceedings in which any of our directors, officers
      or
      affiliates is an adverse party or has a material interest adverse to the
      interest of the Company.





**ITEM
                2 -**
            **UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS**





This
      item
      is not applicable.





**ITEM
                3 -**
            **DEFAULTS
                UPON SENIOR SECURITIES**





This
      item
      is not applicable.





**ITEM
                4 -**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**





This
      item
      is not applicable.





**ITEM
                5 -**
            **OTHER
                INFORMATION**





This
      item
      is not applicable.




**ITEM
                6 -**
            **EXHIBITS**





The
      following exhibits are being filed as part of this quarterly
      report:




Exhibit
                No.
            
            Description31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002 and Rule 13a-14(a)/15d-14(a) of the Securities Exchange
                Act of
                1934.31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002 and Rule 13a-14(a)/15d-14(a) of the Securities Exchange
                Act of
                1934.32.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.





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**SIGNATURES**




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





**ROYAL
                  SPRING WATER INC.**By:
              /s/
                  Alex HazanName:
                  Alex HazanTitle:
                  Chief Executive OfficerDate:
                  August 16, 2007By:
              /s/
                  Harel GoldsteinName:
                  Harel GoldsteinTitle:
                  Chief Financial OfficerDate:
                  August 16, 2007






17