**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**








(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.





**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 ended February
      28, 2007 ,
      the
      Company's directors and shareholders devoted time to the development of the
      Company. Compensation expense totaling $ 30,000 and
      $ 60,000 has been
      recorded for the three and six months ended February
      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* . S ince
      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.





9
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            of Contents*




**I****TEM****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 of 355ml,
      500ml, 1liter, 1.5liters, 1gallon) directly to the smaller end user -
      convenience stores, fast food establishments, gas stations, major clubs and
      popular restaurants, among others.





10
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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). We have contacts in some of the major
      hotel-casinos in Las Vegas who have already expressed an interest in purchasing
      water from our company when it becomes available. 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 which is pressurized and
                air
                conditioned (filtered air) 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 bundling
                machine groups the various forms into packs of 6, 12, 24 and 32 bottles,
                wrapping them in printed film. The packs are then transferred to
                the
                robotic pallet- forming area where they are palletized for
                shipment.





5.
            Our
                in house laboratorystaff
                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 various sizes - 12oz, 16.9oz 1L and 1.5L. Our current
                system
                can also manufacture flavored water and carbonated water. Our capping
                machines can handle both a regular flat cap as well as a
                sports****cap.
                We have a Krup stretch blow molder which we will use 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”)




11
 *Table
            of Contents*




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





During
      the three months ended February 28, 2007 we began shipping inventory to our
      customers and incurred sales of $65,392.





The
      plant
      is now operational and during the three months ended February 28, 2007 we have
      begun to incur costs which have been capitalized to our inventory. These costs
      include purchases of raw materials, direct labor, freight in, water testing,
      amortization of equipment and building, etc. 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
      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 .





**Licensing
      and Water Rights**





Although
      we have a contract which will allow us to extract water from
      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 a fully automated ,
      state
      of the art water treatment and bottling system that is currently in place and
      has the capacity to bottle up to 144 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 bottle sizes from 8 ounce bottles to 1.5 liter bottles. This
      state of the art machinery is fully automated and runs with minimal human
      intervention. As part of our bottling system we also purchased a bottle stretch
      blow molder which enables 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.




12
 *Table
            of Contents*





**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.




13
 *Table
            of Contents*





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.





14
 *Table
            of Contents*




**I****TEM****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.





15
 *Table
            of Contents*




**PART
      II - OTHER INFORMATION**





**I****TE****M
                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.





**ITE****M
                2**
            **UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





This
      item
      is not applicable.





**I****TE****M
                3**
            **DEFAULTS
                UPON SENIOR SECURITIES**





This
      item
      is not applicable.





**I****TE****M
                4**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS**





This
      item
      is not applicable.





**ITE****M
                5**
            **OTHER
                INFORMATION**





This
      item
      is not applicable.




**I****TEM****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.




16
 *Table
            of Contents*





**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:
                April 20, 2007By:
            /s/
                Harel GoldsteinName:
                Harel GoldsteinTitle:
                Chief Financial OfficerDate:
                April 20, 2007






17