UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

______________________

(Mark one)

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

For the quarterly period ended ~~June~~September 30, 2013

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 000-18235

______________________

ELDORADO ARTESIAN SPRINGS, INC.

(Exact name of registrant as specified in its charter)

______________________

Colorado		84-0907853
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

1783 Dogwood Street Louisville, Colorado		80027
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (303) 499-1316

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

(Do not check if a smaller reporting company)

Smaller reporting company þ

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: On ~~August~~November 12, 2013 there were 6,036,091 shares of the registrant’s common stock, $.001 par value, outstanding.

ELDORADO ARTESIAN SPRINGS, INC.

FORM 10-Q

INDEX

		Page
Part I – Financial Information
Part I - Financial Information
Item 1 –	Financial Statements	2
	Balance Sheets as of June 30, 2013 (Unaudited) and March 31, 2013		2
	Balance Sheets as of September 30, 2013 (Unaudited) and March 31, 2013		3
	Unaudited Statements of Operations for the Three Months Ended June 30, 2013 and June 30, 2012		3
	Unaudited Statements of Operations for the Three and Six Months Ended September 30, 2013 and September 30, 2012		4
	Unaudited Statements of Cash Flows for the Three Months Ended June 30, 2013 and June 30, 2012		4
	Unaudited Statements of Cash Flows for the Six Months Ended September 30, 2013 and September 30, 2012		5
	Notes to Unaudited Financial Statements		56
Item 2 –	Management’s Discussion and Analysis of Financial Condition and Results of Operations		89
Item 3 –	Quantitative and Qualitative Disclosures About Market Risk		1213
Item 4(T) –	Controls and Procedures		1214
Part II – Other Information
Item 1 –	Legal Proceedings		1315
Item 1A –	Risk Factors		1315
Item 2 –	Unregistered Sales of Equity Securities and Use and Proceeds		1315
Item 3 –	Defaults Upon Senior Securities		1315
Item 4 –	Mine Safety Disclosures		1315
Item 5 –	Other Information		1315
Item 6 –	Exhibits		1315
Signatures			1416
Exhibit Index			1517

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ITEM 1. FINANCIAL STATEMENTS

Balance Sheets

	June 30, 2013		March 31, 2013
	September 30, 2013		March 31, 2013
	(unaudited)
Assets
Current assets
Cash	$	~~380~~630,~~248~~210	$	480,546
Accounts receivable - trade, net		1,~~225~~239,~~513~~221		1,007,197
Inventories		~~429~~456,~~347~~783		420,048
Prepaid expenses and other		7026,~~394~~455		41,290
Deferred tax asset		2930,~~648~~000		29,648
Total current assets		2,~~135~~382,~~150~~669		1,978,729
Non-current assets
Property, plant and equipment, net		3,~~627~~709,~~708~~941		3,613.629
Investments		361,196		361,196
Water rights, net		71,675		71,675
Deposits		~~108~~107,204		108,204
Other, net		~~113~~139,~~554~~822		123,896
Total non-current assets		4,~~282~~389,~~337~~838		4,278,600
Total assets	$	6,~~417~~772,~~487~~507	$	6,257,329

Liabilities and Stockholders' Equity

Current liabilities
Accounts payable	$	~~536~~577,~~964~~685		$	415,442
Accrued expenses		~~170~~286,~~398~~335			269,016
Income taxes payable		-2,094			8,767
Customer deposits		~~105~~109,~~172~~678			104,926
Current portion of capital lease obligations		6390,~~393~~967			49,341
Current portion of long-term debt		~~147~~151,~~061~~231			146,325
Total current liabilities		1,~~022~~217,~~988~~990			993,817
Non-current liabilities
Deferred tax liability		3752,~~542~~000			7,475
Capital lease obligations, less current portion		94117,~~373~~726			45,591
Long-term debt, less current portion		3,~~986~~931,~~159~~965			4,004,823
Total non-current liabilities		4,~~118~~101,~~074~~691			4,057,889
Total liabilities		5,~~141~~319,~~062~~681			5,051,706
Commitments and contingency
Stockholders' equity
Preferred stock, par value $.001 per share; 10,000,000 shares authorized; 0 shares issued and outstanding		-			-
Common stock, par value $.001 per share; 50,000,000 shares authorized; 6,036,091 issued and outstanding		6,036			6,036
Additional paid-in capital		1,693,738			1,693,738
Accumulated deficit		(~~423~~246,~~349~~948	)		(494,151	)
Total stockholders' equity		1,~~276~~452,~~425~~826			1,205,623
Total liabilities and stockholders' equity	$	6,~~417~~772,~~487~~507		$	6,257,329

See notes to financial statements.

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Unaudited Statements of Operations

	For the Three Months Ended
	June 30,
	2013			2012
Revenues
Water and related	$	2,784,275		$	2,522,348
Resort operations		56,818			70,450
Total revenues		2,841,093			2,592,798
Cost of goods sold		759,454			674,885
Gross profit		2,081,639			1,917,913
Operating expenses
Salaries and related expenses		895,489			868,541
Administrative and general		592,704			466,268
Delivery		238,858			218,314
Advertising and promotions		52,062			65,256
Depreciation and amortization		133,578			124,160
Total operating expenses		1,912,691			1,742,539
Income from operations		168,948			175,374
Other income (expense)
Interest income		639			310
Interest expense		(59,985	)		(66,904	)
Total other expense		(59,346	)		(66,594	)
Income before income taxes		109,602			108,780
Income tax (expense) benefit
Current		(8,733	)		36,900
Deferred		(30,067	)		(36,900	)
Total income tax expense		(38,800	)		-
Net income available to common shareholders	$	70,802		$	108,780
Basic and diluted weighted average common shares outstanding		6,036,091			6,036,091
Basic and diluted income per common share	$	0.01		$	0.02

See notes to financial statements

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Unaudited Statements of Operations

	For the Three Months Ended						For the Six Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Revenue
Water and related	$	3,066,821		$	2,578,015		$	5,851,096		$	5,100,363
Resort operations		113,768			115,032			170,586			185,482
Net revenue		3,180,589			2,693,047			6,021,682			5,285,845

Cost of goods sold		901,663			637,659			1,661,117			1,312,544

Gross profit		2,278,926			2,055,388			4,360,565			3,973,301

Operating expenses
Salaries and related		993,407			910,527			1,888,896			1,779,068
Administrative and general		489,799			443,676			1,082,503			909,944
Delivery		232,191			229,390			471,049			447,704
Advertising and promotions		105,301			84,207			157,363			149,463
Depreciation and amortization		125,225			129,947			258,803			254,107
		1,945,923			1,797,747			3,858,614			3,540,286

Operating income		333,003			257,641			501,951			433,015

Other income (expense)
Interest income		450			819			1,089			1,129
Interest expense		(63,852	)		(70,430	)		(123,837	)		(137,334	)
		(63,402	)		(69,611	)		(122,748	)		(136,205	)

Net income before provision for income taxes		269,601			188,030			379,203			296,810

Income tax (expense) benefit
Current		(79,094	)		65,100			(87,827	)		102,000
Deferred		(14,106	)		(65,100	)		(44,173	)		(102,000	)
		(93,200	)		-			(132,000	)		-

Net income	$	176,401		$	188,030		$	247,203		$	296,810

Basic and dilutive income per common share	$	0.03		$	0.03		$	0.04		$	0.05

Weighted average number of common shares outstanding – basic and dilutive		6,036,091			6,036,091			6,036,091			6,036,091

See notes to financial statements.

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Unaudited Statements of Cash Flows

	Three Months Ended
	Six Months Ended
	June 30,
	September 30,
	2013			2012
Cash flows from operating activities
Net income (loss)	$	70,802		$	108,780
Net income	$	247,203		$	296,810
Adjustments to reconcile net loss to net cash provided by operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		~~133~~258,~~578~~803			~~124~~254,~~160~~107
Stock based compensation		-			510,~~031~~061
Deferred income tax expense		30(44,~~067~~173	)		-
Changes in certain assets and liabilities
Accounts receivable		(~~218~~232,~~316~~024	)		(~~182~~100,~~810~~400	)
Inventories		(936,~~299~~735	)		(1236,~~495~~653	)
Prepaid expenses and other		(227,~~553~~674	)		2225,~~600~~938
Accounts payable		~~121~~162,~~522~~243			~~205~~232,~~049~~571
Accrued expenses		~~(98~~17,~~618~~319	)		(852,~~950~~311	)
Income taxes payable		(86,~~767~~673	)		-
Customer deposits		~~246~~4,752			612,~~683~~385
Net cash (used in) provided by operating activities		(1,338	)		268,048
Net cash provided by operating activities		451,387			642,508
Cash flows from investing activities
Purchases of property and equipment		(62204,~~183~~557	)		(58152,~~798~~349	)
Net cash flows used in investing activities		(62204,~~183~~557	)		(58152,~~798~~349	)
Cash flows from financing activities
Payments on long-term debt and capital leases		(55116,~~696~~085	)		(2881,~~175~~907	)
Borrowings on long-term obligations		18,919			-
Net cash flows used in financing activities		(3697,~~777~~166	)		(2881,~~175~~907	)
Net (decrease) increase in cash		(100,298	)		181,075
Net increase in cash		149,664			408,252
Cash — beginning of period		480,546			250,083
Cash — end of period	$	~~380~~630,~~248~~210		$	~~431~~658,~~158~~335

Supplemental disclosures of cash flow information:

Cash paid for interest for the ~~three~~six months ended ~~June~~September 30, 2013 and ~~June~~September 30, 2012 was $59123,~~985~~837 and $66137,~~904~~334, respectively.

Cash paid for income taxes for the ~~three~~six months ended ~~June~~September 30, 2013 and ~~June~~September 30, 2012 was $1794,500 and $0, respectively.

The Company acquired $81142,~~683~~975 in fixed assets through capital leases during the ~~three~~six months ended ~~June~~September 30, 2013.

In May 2012, the Company obtained an SBA loan in the amount of $1,457,000 of which $1,415,216 was used to pay off a short term note with a bank and $41,784 represents loan fees which is included in other long term assets in the ~~accompanied~~accompanying balance sheet.

See notes to the financial statements.

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ELDORADO ARTESIAN SPRINGS, INC.

Notes to Unaudited Financial Statements

Note 1 - Summary of Significant Accounting Policies

The Company bottles, markets and distributes natural spring water under the Eldorado Artesian Spring Water brand. The Company also markets and distributes organic vitamin charged spring water under the Eldorado Artesian Spring Water brand. The Company distributes to businesses, homes and offices using its own trucks for distribution primarily in Colorado. The Company also distributes directly to regional warehouses for major grocery store chains and distribution companies.

Interim Unaudited Financial Statements

The accompanying unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

In the opinion of management, the consolidated financial statements include all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods presented. Operating results for the ~~three~~six months ended ~~June~~September 30, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2014.

These statements should be read in conjunction with the consolidated financial statements and related notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2013. The accounting policies used in preparing these financial statements are the same as those described in our Form 10-K.

The preparation of these financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Investments

The Company owns shares of capital stock in Farmer’s Reservoir and Irrigation Company (FRICO) – Marshall Division, which entitle the Company to a pro rata share of FRICO’s irrigation system in the Marshall reservoir. See Note 3 for additional information. As the Company’s ownership represents less than 20% ownership of FRICO, the value of this investment is stated at cost and evaluated for impairment if there are indications of such.

Revenue Recognition

Revenue is recognized on the sale of products as customer shipments are made. Returns are estimated and recorded at the time of sale. Rental revenue is recognized on a monthly basis upon commencement of the lease agreement. Water utility revenue is recognized on a monthly basis based upon the monthly contracted rate.

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Litigation

The Company is not currently involved in any legal proceedings. The Company maintains insurance to cover certain liabilities.

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Note 2 - Stockholders' Equity

Stock Option Plans

The Company has a qualified stock plan, the 2008 Incentive Stock Plan, pursuant to which 2,000,000 shares were reserved for issuance. As of ~~June~~September 30, 2013, 1,950,000 shares were available for future grant. Additionally, the Company previously had a qualified stock plan, the 1997 Stock Option Plan, which expired in 2007, pursuant to which 875,000 shares were reserved for issuance and as of ~~June~~September 30, 2013, 49,000 shares were reserved for issuance pursuant to outstanding grants and no shares were available for future grant as the plan has expired. The 2008 Incentive Stock Plan and the 1997 Stock Option Plan are referred to herein as the Plans. The shares issuable pursuant to awards granted thereunder are registered on Form S-8 with the Securities and Exchange Commission. The Plans provide for the grant of options and other equity based awards to employees, directors and consultants of the Company and are administered by the Company’s Board of Directors.

Note 3 – Contingencies

Water Rights Contingency

When we purchased the Eldorado Springs property in 1983, included in the purchase of the real estate were certain water rights that had been decreed for the water sources located on the property. We have the right to beneficially use the water derived from the sources of water that are the subject of the decreed water rights, unless there is a call being made downstream from our location by a water right that is senior to ours. A senior water right would be obtained by those that applied water to a beneficial use prior to the uses associated with our water sources. Because the Eldorado Springs area was not developed until the early 1900’s, there are many senior water rights that could place a call on the stream and, unless we have a recognized replacement source of water or a decreed ~~augmentation~~Augmentation plan, we would be forced to stop using the water from our sources.

We had previously enrolled in a replacement water subscription service known as GASP (Groundwater Appropriators of the South Platte) as a means of providing replacement water to the stream system at times when we withdrew water from our sources when we were not in priority. However, during the drought in 2002, GASP was unable to make all of the replacements for which they were obligated. Therefore, the State of Colorado determined that GASP would no longer be a recognized source of replacement water. This determination by the state meant that we would have to obtain other sources of replacement or augmentation water if we continued to withdraw water from our sources while not in priority.

Because demand for our spring water exists on a year round basis, we require a replacement water source that can be delivered to the stream at any time during the year. Since the drought of 2002, we purchased shares of stock of FRICO, entitling us to use a pro rata portion of the water belonging to FRICO as operated pursuant to state regulations that govern what are known as Mutual Ditch Companies. The Marshall reservoir is located in close proximity to our water sources in Eldorado Springs and because the water is stored, it can be released upon demand to meet our obligations.

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The water represented by our shares in the FRICO system had been historically used for irrigating croplands. This meant that, in addition to obtaining a decreed Augmentation Plan from the Colorado Water Court, we had to obtain a change of use decree in order to use the water for replacing our withdrawals as part of the Augmentation Plan. The Water Court of the State of Colorado entered a Decree on April 16, 2013 approving the change in water rights and the terms and conditions of our Augmentation Plan, subject to the retained jurisdiction clauses normally associated with such actions. The Decree allows us to use the water represented by our FRICO shares as augmentation water to replace our out-of-priority withdrawals from our springs and other sources. It also established the conditions under which we can add other sources of water to the Plan for use as additional replacement water. It is possible that our ability to withdraw water from our springs in a particular year may be limited if the water associated with our FRICO shares under drought conditions is not sufficient to meet all of our replacement requirements. Because drought is an ever present possibility in our location, we will continue to seek additional sources of replacement and augmentation water to add to our Augmentation Plan.

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Note 4 – Commitments

Line of Credit

The Company has a line of credit with ANB Bank in the amount of $750,000. As of ~~June~~September 30, 2013, the Company did not have a balance on the line of credit. The line of credit is subject to certain borrowing base requirements, requires monthly interest payments calculated at Prime plus 1% with a minimum rate of 5.5%. The borrowing base was $750,000 as of ~~June~~September 30, 2013. The line includes certain reporting and financial covenants, is cross-collateralized by accounts receivable and inventory and is guaranteed by three company executives. The line has a maturity date of December 27, 2013.

Notes Payable

On February 2, 2012, the Company refinanced debt that was due within the next 12 months and had previously been classified as current debt. The Company entered into a Commercial Loan Agreement with ANB Bank under which it received proceeds of $2,815,892, which were used to pay off a prior note secured by the Company’s property in Louisville, Colorado. The loan bears interest at a fixed rate of 5.5% for five years and is payable at a rate of approximately $19,500 per month, which includes principal and interest. At each five year anniversary of February 2, 2012, the interest rate will change to be the Prime Rate plus 2.00%. A single “balloon payment” of the entire unpaid balance of principal and interest will be due on February 2, 2022.

Also on February 2, 2012, the Company entered into a second Commercial Loan Agreement (the “Second ANB Loan Agreement”) with ANB Bank, which was intended to be in place for a short period while we obtained the loan from the Small Business Administration (“SBA”) described below. Under the Second ANB Loan Agreement, the Company received proceeds of $1,415,216, which were used to pay off a prior note on the Company’s property in Eldorado Springs, Colorado. On April 11, 2012, we received proceeds of $1,457,000 from the SBA and used such proceeds to pay off the loan made under the Second ANB Loan Agreement. The SBA loan bears interest at a fixed rate of 4.951% for its full 20 year term and is payable at a rate of $10,089 per month until maturity on April 1, 2032.

The above loans are secured by substantially all of the assets of the Company, including the real estate in Eldorado Springs and Louisville, Colorado. The loan agreements specify events of default customary to facilities of their type, including any non-payment of principal, interest or other amounts, misrepresentation of representations and warranties, violation of covenants, certain events of bankruptcy or insolvency, certain material judgments, seizure of assets, or other material adverse changes. Upon the occurrence of an event of default, the payments by the Company of all of its outstanding obligations may be accelerated, and the commitments under the loan agreements may be terminated by the respective lender. The loans are guaranteed by three Company executives. The loan agreements also include certain performance and reporting covenants.

Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the differences between the financial statement and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that are not expected to be realized based on available evidence. During the ~~quarter~~six months ended ~~June~~September 30, 2013, the Company recognized the utilization of the remainder of its Federal net operating loss carryforward, resulting in deferred expense of approximately $30,000.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

This filing contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements include, but are not limited to, statements and expectations regarding the plans and objectives of management for future operations, including plans and objectives relating to services offered by the Company, our ability to retain qualified financial personnel to enhance our financial reporting capabilities, the future economic performance of the Company and related matters.

The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties that might adversely affect the Company's operating results in the future in a material way. Such risks and uncertainties include but are not limited to the following: availability of debt and equity financing, unavailability of sufficient water to meet our customer’s demands, inability to purchase additional water rights, the exercise of senior calls of water rights, interest rate fluctuations, effects of regional economic and market conditions, labor and marketing costs, operating costs, packaging costs, intensity of competition and legal claims.

Overview

Eldorado Artesian Springs, Inc. is a Colorado based company that is primarily involved in the bottling and marketing of natural artesian spring water. The spring from which the Company obtains its water is located in the foothills of the Colorado Rocky Mountains and is surrounded by thousands of acres of state and city park land. The water rises up through many layers of sandstone under its own artesian pressure. As described in note 3 to our financial statements, we also have access to water from the Marshall reservoir based on our ownership of shares in FRICO [and from other sources based on our augmentation plan]. Currently, the Company’s operations consist of its home/commercial delivery business (5 and 3 gallon bottles), ~~one gallon container~~ and its PET (polyethylene terephthalate, a premium clear plastic container) consumer business. The Company also has an organic vitamin- charged spring water that is distributed locally off of the Company’s vehicles as well as to regional distribution facilities for distribution to Vitamin Cottage, Kroger’s (King Soopers and City Markets) and Whole Foods Markets in the Midwest area. Additionally, the product is available toat more than 2,000 other retail outlets, convenience stores and on-premise locations serviced by UNFI, US Food Service and KeHE Distributors. The Company’s business includes the sale and rental of filtration and coffee dispensing equipment as well as the sale of coffee. The Company owns and, during the summer months, operates a public swimming pool on its property and rents a single-family home on the property year round.

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The Company’s headquarters and bottling facility consists of a total of approximately 40,000 square feet in Louisville, Colorado. The water is transported to the facility in stainless steel tanker trucks. Once at the bottling plant, the water is then transferred into stainless steel holding tanks until it is used for bottling.

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Results of Operations

Performance Overview – Recent Trends

Revenues for the ~~three~~six months ended ~~June~~September 30, 2013 increased 913.69% to $26,~~841~~021,~~093~~682 from $25,~~592~~285,~~798~~845 for the same period ended ~~June~~September 30, 2012. The increase in revenues was generated by ~~increases in~~ sales ofincreases for almost all products. The areas that had the largest increase in revenues were the 1 gallon branded products and the PET products (.5 liter to 1.5 liter sizes). ~~Certain trends have continued that indicate that more customers are choosing larger, more economical packaging over the smaller size PET products.~~

The Company believes that we are in a position to grow the business as the economy recovers in the markets we presently service by offering additional products we sell including coffee and vitamin water. We are also utilizing advertising and promotional budgets for promoting the products. We will continue to pursue additional business in new areas including the sale of coffee and coffee equipment from our existing route vehicles and filtration equipment rental. In addition, we continue to look for ways to decrease operating costs in order to continue to be profitable.

Three and Six Months Ended ~~June~~September 30, 2013 Compared to Three and Six Months Ended ~~June~~September 30, 2012

Revenues

Revenues for the six months ended September 30, 2013 were $6,021,682 compared to $5,285,845 for the same period ended September 30, 2012, an increase of 13.9%. Sales for the three months ended ~~June~~September 30, 2013 were $23,~~841~~180,~~093~~589 compared to $2,~~592~~693,~~798~~047 for the same period ended ~~June~~September 30, 2012, an increase of 918.61%.

Revenues derived from products delivered to homes and offices, which include 5 and 3 gallons bottles as well as the dispenser units, were 5352.9% of revenues and increased from $12,~~438~~927,~~479~~090 for the ~~three~~six months ended ~~June~~September 30, 2012 to $13,~~531~~187,~~860~~539 for the ~~three~~six months ended ~~June~~September 30, 2013, an increase of $93260,~~381~~449 or 68.59%. Total unit sales of 5 and 3 gallon products increased by ~~approximately 6.4~~8% while the average selling price increased less than 1%. Revenues from the rental of equipment used for home and office accounts increased from $~~109~~224,~~042~~203 for the ~~three~~six months ended ~~June~~September 30, 2012 to $~~130~~267,~~049~~759 for the ~~three~~six months ended ~~June~~September 30, 2013, an increase of $2143,~~007~~556 or 19.34%. The Company has increased its customer base and continues to attract new business through a variety of sales events and outside sales staff. InAs ~~April~~of ~~2011~~September 30, ~~Company~~2013, ~~began~~the ~~offering~~Company ~~purified~~had ~~drinking~~approximately ~~water~~15,500 inhome ~~the~~and 5office ~~gallon bottles for~~ delivery ~~off~~accounts ofcompared ~~existing~~to ~~route~~approximately ~~vehicles~~14,000 as aof ~~lower~~September ~~cost~~30, ~~alternative for customers~~2012.

The Company increased filter rental and sales revenues from $57116,~~236~~877 for the ~~three~~six months ended ~~June~~September 30, 2012 to $66134,~~721~~438 for the ~~three~~six months ended ~~June~~September 30, 2013, an increase of $917,~~485~~561 or ~~16.6~~15%. Consumers are looking for ways to decrease expenses and are substituting filtration units for the 5 and 3 gallon products. The Company also sells coffee and coffee equipment from our existing route vehicles. Revenues from sales of coffee, coffee equipment and accessories increased from $61114,~~653~~706 for the ~~three~~six months ended ~~June~~September 30, 2012 to $73144,~~687~~636 for the ~~three~~six months ended ~~June~~September 30, 2013, an increase of 1926.51%. The Company continues to ~~experience competition for the coffee service from local distributors as well as on-line web sites that promote similar products. The Company continues to~~ add more varieties of coffee to compete with other distributors.

Revenues from sales of the Company’s PET products (.5 liter to 1.5 liter sizes), including private label products, represented 19.4% of revenues for the three months ended June 30, 2013 and 19.1% of revenues for the three months ended June 30, 2012, or $551,721 and $496,204, respectively. This represented a year-over-year increase of 11.2%. Sales of the Company’s gallon size products accounted for 17.6% of revenues or $498,842 for the three months ended June 30, 2013 compared to 15.4% of revenues or $398,940 for the three months ended June 30, 2012, an increase of 25%.10

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~~Back~~Revenues from sales of the Company’s PET products (.5 liter to ~~Table~~1.5 liter sizes), including private label products, represented 19.7% of ~~Contents~~revenues for the six months ended September 30, 2013 and 19.4% of revenues for the six months ended September 30, 2012 or $1,187,451 and $1,025,807, respectively. This represented a year-over-year increase of 15.8%. Sales of the Company’s gallon size products accounted for 17.7% of revenues or $1,067,115 for the six months ended September 30, 2013 compared to 15% of revenues or $794,735 for the six months ended September 30, 2012, an increase of 34.3%. In September 2013, demand for the Company’s products increased due to the flooding that severely impacted our delivery area.

Revenues from sales of the Company's organic vitamin charged spring water were $4094,~~640~~599 for the ~~three~~six months ended ~~June~~September 30, 2013 compared to $4386,~~758~~658 for the ~~three~~six months ended ~~June~~September 30, 2012, aan ~~decrease~~increase of 79.12%. The ~~decrease~~increase in sales was due to the timing of promotional deal periods for our distributors resulting in various ~~different~~ buying patterns throughout the year. Quarterly fluctuations such as this are typical and will likely continue.

Gross Profit/Cost of Goods Sold

Cost of goods sold for the ~~three~~six months ended ~~June~~September 30, 2013 were $~~759~~1,~~454~~661,117, or 2627.76% of revenues, compared to $~~674~~1,~~885~~312,544 or 2624.8% of revenues for the ~~three~~six months ended ~~June~~September 30, 2012. Gross profit ~~increased~~was ~~from~~ $13,~~917~~973,~~913~~301, or 7475.2% of revenues for the ~~three~~six months ended ~~June~~September 30, 2012 toand $24,~~081~~360,~~639~~565 or 7372.34% of revenues for the ~~three~~six months ended ~~June~~September 30, 2013. Overall, gross profit increased 89.57% for the ~~three~~six months ended ~~June~~September 30, 2013 ~~from the gross profit for the three months ended June 30, 2012~~.

Cost of goods sold related to 5 and 3 gallon sales were $~~100~~221,~~674~~133, or 6.69% of revenues for the ~~three~~six months ended ~~June~~September 30, 2013, compared to $~~100~~189,~~123~~590, or 76.5% of revenues for the ~~three~~six months ended ~~June~~September 30, 2012. Cost of goods for the Eldorado brand one gallon products were $~~251~~541,~~003~~435, or 50.37% of one gallon revenues for the ~~three~~six months ended ~~June~~September 30, 2013, compared to $~~211~~396,~~618~~347, or 5349.9% of ~~one~~1 gallon revenues for the ~~three~~six months ended ~~June~~September 30, 2012. Cost of goods sold for the PET products were $~~271~~576,~~429~~747, or 4948.26% of revenues for the ~~three~~six months ended ~~June~~September 30, 2013, compared to $~~254~~515,~~614~~397, or 5150.32% of PET revenues for the ~~three~~six months ended ~~June~~September 30, 2012.

Operating Expenses

Total operating expenses increased to $13,~~912~~858,~~691~~614 for the ~~three~~six months ended ~~June~~September 30, 2013 compared to $13,~~742~~540,~~539~~286 for the ~~three~~six months ended ~~June~~September 30, 2012, an increase of $~~170~~318,~~152~~328 or 9.8%. Of the total operating expenses, salaries and related expenses increased to $~~895~~1,~~489~~888,896 for the ~~three~~six months ended ~~June~~September 30, 2013, or 31.54% of revenues, from $~~868~~1,~~541~~779,068 for the ~~three~~six months ended ~~June~~September 30, 2012, or 33.57% of revenues.

Administrative and general expenses increased by ~~27.1~~19% to $~~592~~1,~~704~~082,503 as compared to $~~466~~909,~~268~~944 for the ~~three~~six months ended ~~June~~September 30, 2012 due in large part to additional costs associated with the ~~professional fees related to~~ changes to our ~~augmentation~~Augmentation ~~plan~~Plan described in note 3 of our financial statements.

Delivery expenses increased from $~~218~~447,~~314~~704 for the ~~three~~six months ended ~~June~~September 30, 2012 to $~~238~~471,~~858~~049 for the ~~three~~six months ended ~~June~~September 30, 2013, an increase of 95.42%.

Advertising and promotion expenses ~~decreased~~increased ~~20.2%~~from $149,463 for the ~~three~~six months ended ~~June~~September 30, ~~2013~~2012 ~~compared~~ to $157,363 for the ~~three~~six months ended ~~June~~September 30, ~~2012~~2013, an increase of 5.3%. Advertising and promotion expenses were 12.86% and 2.58% of revenues, respectively, for the ~~three~~six months ended ~~June~~September 30, 2013 and 2012. ~~The decrease in advertising and promotional expenses is primarily related to a change in the quantity and type of events. We do not expect this decline to continue next quarter.~~

Depreciation and amortization increased 7.6% for the three months ended June 30, 2013 as compared to the three months ended June 30, 2012 due to capital expenditures on equipment for electric water coolers, filtration equipment and coffee dispensing equipment that are rented to delivery customers. Depreciation and amortization was 4.7% of revenues for the three months ended June 30, 2013 compared to 4.8% of revenues for the three months ended June 30, 2012.11

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~~Back~~Depreciation and amortization increased from $254,107 for the six months ended September 30, 2012 to ~~Table~~$258,803 for the six months ended September 30, 2013, an increase of ~~Contents~~1.8%, due in large part to capital expenditures on equipment for electric water coolers, filtration equipment and coffee dispensing equipment that are rented to delivery customers. Depreciation and amortization was 4.3% of revenues for the six months ended September 30, 2013 compared to 4.8% of revenues for the six months ended September 30, 2012.

Interest, Taxes, Other Income and Other Expenses

Interest expense for the ~~three~~six months ended ~~June~~September 30, 2013, decreased 109.39% to $59123,~~985~~837 as compared to $66137,~~904~~334 for the ~~three~~six months ended ~~June~~September 30, 2012 due to ~~amortization~~lower ofinterest ~~long~~rates ~~term~~under ~~debt~~the SBA Loan Agreement.

For the ~~three~~six months ended ~~June~~September 30, 2013, the Company recorded income tax expense of $38132,~~800~~000 against our pretax income of $~~109~~379,~~602~~203.

The Company had a net income after taxes of $70247,~~802~~203 for the ~~three~~six months ended ~~June~~September 30, 2013 compared to a net income after taxes of $~~108~~296,~~780~~810 for the ~~three~~six months ended ~~June~~September 30, 2012.

Liquidity and Capital Resources

Trade accounts receivable for the ~~three~~six months ended ~~June~~September 30, 2013 were ~~21.7~~23% more than at year ended March 31, 2013. This resulted from the increase in revenues for the ~~three~~six months ended ~~June~~September 30, 2013. Days outstanding were approximately ~~39 and~~ 37 days for ~~June~~both September 30, 2013 and March 31, 2013~~, respectively~~.

Cash flows from operating activities had a net ~~outflow~~inflow of $1451,~~338~~387 for the ~~three~~six months ended ~~June~~September 30, 2013. The cash ~~used~~provided inby operating activities represents a decrease of $~~269~~191,~~386~~121 from the ~~three~~six months ended ~~June~~September 30, 2012. The largest reconciling items between net income and net cash flow from operations were the $~~218~~232,~~316~~024 of accounts receivable and $~~133~~258,~~578~~803 of depreciation and amortization.

Cash flows from investing activities resulted in a net outflow of $62204,~~183~~557 for the ~~three~~six months ended ~~June~~September 30, 2013. This total represents expenditures on equipment for electric water coolers, filtration equipment and coffee dispensing equipment that are rented to delivery customers.

Cash flows from financing activities resulted in a net outflow of $3697,~~777~~166 for the ~~three~~six months ended ~~June~~September 30, 2013 ~~from~~for ~~net~~borrowings ~~payments~~ made on long-term obligations.

The Company’s cash balance at ~~June~~September 30, 2013 ~~decreased~~increased to $~~380~~630,~~248~~210 by a net amount of $~~100~~149,~~298~~664 from $480,546 at March 31, 2013.

On December 27, 2012, the Company entered into an agreement with ANB Bank for a line of credit in the amount of $750,000. The line of credit is subject to certain borrowing base requirements, requires monthly interest payments calculated at Prime plus 1% with a minimum rate of 5.5%. The borrowing base was $750,000 as of ~~June~~September 30, 2013. The line includes certain reporting and financial covenants, is cross-collateralized by accounts receivable and inventory and is guaranteed by three company executives. The line has a maturity date of December 27, 2013.

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Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the differences between the financial statement and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that are not expected to be realized based on available evidence. During the six months ended September 30, 2013, the Company recognized the utilization of the remainder of its Federal net operating loss carryforward, resulting in deferred expense of approximately $30,000.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, the Company is not required to provide the information required by this Item.

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ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding ~~The~~the Effectiveness Ofof Disclosure Controls ~~And~~and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives.

On June 13, 2013, our principal executive officer and principal financial officer, in consultation with EKS&H LLLP, our independent registered public accounting firm, identified a control deficiency that it believed constituted a material weakness in our internal control over financial reporting. The material weakness related to our lack of technical expertise regarding complex accounting matters associated with certain income tax calculations. Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective in ensuring that material information required to be disclosed is included in the reports that we file with the Securities and Exchange Commission. Our management believes that this material weakness did not impact the reliability of our financial statements for the quarter ended ~~June~~September 30, 2013.

Remediation Ofof Material Weaknesses in Internal Control ~~Over~~over Financial Reporting

In light of the conclusion that our internal control over financial reporting was not effective, in July 2013, our management ~~engaged~~consulted with a tax expert to assist the Chief Financial Officer with respect to the income tax calculations describe above and other complex accounting matters. We will continue to monitor the effectiveness of our internal control over financial reporting in the areas affected by the material weakness described above and employ any additional tools and resources as appropriate to provide reasonable assurance that our financial statements are fairly stated in all material respects. During the quarter ended September 30, 2013, management received additional guidance from the Company’s tax accountants and the Company’s Chief Financial Officer attended a seminar on tax accounting.

Changes Inin Internal Control ~~Over~~over Financial Reporting

~~There~~Other than as described above, there were no changes in our internal control over financial reporting during the quarter ended ~~June~~September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting ~~except as described above~~. ~~As described above, we have taken steps subsequent to the period covered by this report to remedy the material weakness in our internal control over financial reporting.~~

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no pending legal proceedings.

ITEM 1A. RISK FACTORS

As a smaller reporting company, the Company is not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE AND PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Please see the exhibit index following the signature page of this Report.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ELDORADO ARTESIAN SPRINGS, INC.
Date: August 13, 2013
Date: November 14, 2013	By:	/s/ Douglas A. Larson
	By:	/s/ Douglas A. Larson
		Douglas A. Larson
		President
		(Principal Executive Officer)
Date: August 13, 2013	By:	/s/ Cathleen Shoenfeld
Date: November 14, 2013	By:	/s/ Cathleen Shoenfeld
		Cathleen Shoenfeld
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

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ELDORADO ARTESIAN SPRINGS, INC.

Quarterly Report on Form 10-Q

for the Quarter Ended ~~June~~September 30, 2013

Exhibits Filed Herewith

Exhibit No.		Description

31.1*		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase

101.LAB**		XBRL Taxonomy Extension Label Linkbase

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase

____________________

*	Filed herewith.

**	Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

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