UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended ~~September~~December 3031, 2014

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)

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 xþ 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 xþ 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 Smaller reporting company þ (Do not check if a smaller reporting company) ~~Smaller reporting companyx~~

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: On ~~November~~February 1213, ~~2014~~2015 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~~	Page
Part I - Financial Information
Item 1 - Financial Statements		3
Balance Sheets as of September 30, 2014 (Unaudited) and March 31, 2014	2
	Balance Sheets as of December 31, 2014 (Unaudited) and March 31, 2014	3
Unaudited Statements of Operations for the Three and Six Months Ended
	Unaudited Statements of Operations for the Three and Nine Months Ended December 31, 2014 and December 31, 2013	4
September 30, 2014 and September 30, 2013	3
	Unaudited Statements of Cash Flows for the Nine Months Ended December 31, 2014 and December 31, 2013	5
Unaudited Statements of Cash Flows for the Six Months Ended
	Notes to Unaudited Financial Statements	6
September 30, 2014 and September 30, 2013	4
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
Notes to Unaudited Financial Statements	5
Item 3 – Quantitative and Qualitative Disclosures About Market Risk		13
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
Item 4 – Controls and Procedures		13
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	12
Part II – Other Information
Item 4 – Controls and Procedures	12
Item 1 – Legal Proceedings		14
Part II – Other Information
Item 1A – Risk Factors		14
Item 1 – Legal Proceedings	13
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		14
Item 1A – Risk Factors	13
Item 3 – Defaults Upon Senior Securities		14
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 4 – Mine Safety Disclosures		14
Item 3 – Defaults Upon Senior Securities	13
Item 5 – Other Information		14
Item 4 – Mine Safety Disclosures	13
Item 6 – Exhibits		14
Item 5 – Other Information	13
Signatures		15
Item 6 – Exhibits	13
Exhibit Index		16
Signatures	14
Exhibit Index	15

ITEM 1. FINANCIAL STATEMENTS

Balance Sheets

	September 30, 2014		March 31, 2014
	December 31, 2014		March 31, 2014
	(Unaudited)
	(unaudited)
Assets
Current assets
Cash	$	~~890~~900,~~090~~959	$	674,459
Accounts receivable - trade, net		1,~~541~~401,~~077~~240		1,321,330
Inventories		~~417~~419,~~427~~366		377,907
Income tax receivable		-		57,358
Prepaid expenses and other		3862,~~617~~644		26,158
Deferred tax asset		29,648		29,648
Total current assets		2,~~916~~813,~~859~~857		2,486,860
Non-current assets
Property, plant and equipment, net		3,~~747~~821,~~634~~455		3,822,386
Investments		361,196		361,196
Water rights, net		71,675		71,675
Deposits		20,384		92,204
Other, net		~~117~~110,~~147~~145		125,482
Total non-current assets		4~~.318~~,~~036~~384,855		4.,472,943
Total assets	$	7,~~234~~198,~~895~~712	$	6,959,803

Liabilities and Stockholders' Equity

Current liabilities
Accounts payable	$	~~469~~303,~~267~~475	$	452,494
Accrued expenses		~~334~~282,~~868~~568		361,026
Income taxes payable		94152,~~412~~642		-
Customer deposits		~~105~~137,~~005~~770		107,191
Current portion of capital lease obligations		74129,~~466~~264		82,508
Current portion of long-term debt		~~185~~142,~~734~~510		189,042
Total current liabilities		1,~~263~~148,~~752~~229		1,192,261
Non-current liabilities
Deferred tax liability		59,151		59,151
Capital lease obligations, less current portion		41113,~~222~~377		73,462
Long-term debt, less current portion		3,~~834~~762,~~557~~930		3,924,839
Total non-current liabilities		3,~~934~~935,~~930~~458		4,057,452
Total liabilities		5,~~198~~083,~~682~~687		5,249,713
Commitments and contingencies
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
Retained Earnings		~~336~~415,~~439~~251		10,316
Total stockholders' equity		2,~~036~~115,~~213~~025		1,710,090
Total liabilities and stockholders' equity	$	7,~~234~~198,~~895~~712	$	6,959,803

See notes to financial statements.

Unaudited Statements of Operations

	For the Three Months Ended						For the Six Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenue
Water and related	$	3,360,845		$	3,066,821		$	6,466,325		$	5,851,096
Resort operations		119,883			113,768			170,381			170,586
Net revenue		3,480,728			3,180,589			6,636,706			6,021,682
Cost of goods sold		962,877			901,663			1,760,121			1,661,117
Gross profit		2,517,851			2,278,926			4,876,585			4,360,565
Operating expenses
Salaries and related		1,129,469			993,407			2,194,057			1,888,896
Administrative and general		554,233			489,799			1,113,409			1,082,503
Delivery		290,844			232,191			546,878			471,049
Advertising and promotions		101,768			105,301			149,706			157,363
Depreciation and amortization		143,509			125,225			285,767			258,803
		2,219,823			1,945,923			4,289,817			3,858,614
Operating income		298,028			333,003			586,768			501,951
Other income (expense)
Interest income		450			450			699			1,089
Interest expense		(55,435	)		(63,852	)		(109,574	)		(123,837	)
		(54,985	)		(63,402	)		(108,875	)		(122,748	)
Net income before provision for income taxes		243,043			269,601			477,893			379,203
Income tax (expense) benefit
Current		(73,300	)		(79,094	)		(151,770	)		(87,827	)
Deferred		-			(14,106	)		-			(44,173	)
		(73,300	)		(93,200	)		(151,770	)		(132,000	)
Net income	$	169,743		$	176,401		$	326,123		$	247,203
Basic common shares outstanding		6,036,091			6,036,091			6,036,091			6,036,091
Basic income per common share	$	0.03		$	0.03		$	0.05		$	0.04
Diluted weighted average common shares		6,048,482			6,036,091			6,048,482			6,036,091
Diluted income per common share	$	0.03		$	0.03		$	0.05		$	0.04

See notes to financial statements.

Unaudited Statements of Operations

	For the Three Months Ended						For the Nine Months Ended
	December 31,						December 31,
	2014			2013			2014			2013
Revenue
Water and related	$	2,971,685		$	2,582,034		$	9,438,010		$	8,433,130
Resort operations		-			-			170,381			170,586
Net revenue		2,971,685			2,582,034			9,608,391			8,603,716

Cost of goods sold		701,668			549,360			2,461,789			2,210,477

Gross profit		2,270,017			2,032,674			7,146,602			6,393,239

Operating expenses
Salaries and related		1,052,225			902,837			3,246,282			2,791,733
Administrative and general		555,949			443,922			1,669,358			1,527,095
Delivery		288,149			256,656			835,027			727,705
Advertising and promotions		40,779			41,220			190,485			198,583
Depreciation and amortization		144,844			125,282			430,611			383,415
		2,081,946			1,769,917			6,371,763			5,628,531

Operating income		188,071			262,757			774,839			764,708

Other income (expense)
Interest income		460			442			1,159			1,531
Interest expense		(51,489	)		(58,371	)		(161,063	)		(182,208	)
		(51,029	)		(57,929	)		(159,904	)		(180,677	)

Net income before provision for income taxes		137,042			204,828			614,935			584,031

Income tax expense
Current		(58,230	)		(80,000	)		(210,000	)		(167,827	)
Deferred		-			(10,000	)		-			(54,173	)
		(58,230	)		(90,000	)		(210,000	)		(222,000	)

Net income	$	78,812		$	114,828		$	404,935		$	362,031

Basic common shares outstanding		6,036,091			6,036,091			6,036,091			6,036,091

Basic income per common share	$	0.01		$	0.02		$	0.07		$	0.06

Diluted weighted average common shares		6,036,369			6,036,091			6,036,369			6,036,091

Diluted income per common share	$	0.01		$	0.02		$	0.07		$	0.06

Unaudited Statements of Cash Flows

	Six Months Ended
	Nine Months Ended
	September 30,
	December 31,
	2014			2013
Cash flows from operating activities
Net income	$	~~326~~404,~~123~~935		$	~~247~~362,~~203~~031
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		~~285~~430,~~767~~611			~~258~~383,~~803~~415
Deferred income tax expense		-			(44,173	)
Stock based compensation		-			-
Deferred income tax expense		-			54,173
Changes in certain assets and liabilities
Accounts receivable		(~~219~~79,~~747~~910	)		(~~232~~139,~~024~~474	)
Inventories		(3941,~~520~~459	)		(366,~~735~~695	)
Prepaid expenses and other		5836,~~461~~819			(717,~~674~~561	)
Accounts payable		16(149,~~773~~019	)		~~162~~(10,~~243~~600	)
Accrued expenses		(2678,~~158~~458	)		17(10,~~319~~624	)
Income taxes payable (receivable)		151,770			(6,673	)
Income taxes payable		210,000			23,327
Customer deposits		(230,~~186~~579	)		~~4,752~~737
Net cash provided by operating activities		~~551~~764,~~283~~098			~~451~~638,~~387~~729
Cash flows from investing activities
Purchases of property and equipment		(~~201~~316,~~780~~479	)		(~~204~~369,~~557~~208	)
Net cash flows used in investing activities		(~~201~~316,~~780~~479	)		(~~204~~369,~~557~~208	)
Cash flows from financing activities
Payments on long-term debt and capital leases		(~~133~~221,~~872~~119	)		(~~116~~175,~~085~~931	)
Borrowings on long-term obligations		-			18,919
Net cash flows used in financing activities		(~~133~~221,~~872~~119	)		(97157,~~166~~012	)
Net increase (decrease) in cash		215,631			(149,664	)
Net increase in cash		226,500			112,509
Cash — beginning of period		674,459			480,546
Cash — end of period	$	~~890~~900,~~090~~959		$	~~630~~593,~~210~~055

Supplemental disclosures of cash flow information:

Cash paid for interest for the ~~six~~nine months ended ~~September~~December 3031, 2014 and ~~September~~December 3031, 2013 was $~~109~~161,~~574~~063 and $~~123~~182,~~837~~208, respectively.

Cash paid for income taxes for the ~~six~~nine months ended ~~September~~December 3031, 2014 and ~~September~~December 3031, 2013 was $0 and $94144,500, respectively.

The Company acquired $8199,~~683~~349 and $142,975 in fixed assets through capital leases during the ~~six~~nine months ended ~~September~~December 3031, 2014 and 2013, respectively.

See notes to the financial statements.

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 ~~six~~nine months ended ~~September~~December 3031, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2015.

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, 2014. 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.

Litigation

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

~~Income Taxes~~6

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. As of March 31, 2013, net operating losses in the amount of approximately $590,000 for state taxes begin to expire in 2028.

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 ~~September~~December 3031, 2014, 1,950,000 shares were available for future grant and 50,000 options were outstanding. Additionally, the Company previously had a qualified stock plan, the 1997 Stock Option Plan, which expired in 2007, pursuant to which ~~875~~38,000 ~~shares~~options were ~~reserved~~outstanding ~~for issuance and,~~ as of ~~September~~December 3031, 2014,. ~~38,000~~No 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. ~~None of the options are held by any officers or directors of the Company.~~

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 plan (“Augmentation Plan”), we would be forced to stop using the water from our sources.

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.

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 Augmentation 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.

Note 4 – Commitments

Line of Credit

The Company has a line of credit with ANB Bank in the amount of $750,000. As of ~~September~~December 3031, 2014, the Company did not have a balance ~~outstanding~~ 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 ~~September~~December 3031, 2014. The line includes certain reporting and financial covenants, is cross-collateralized by accounts receivable and inventory and is guaranteed by two Company executives who are also directors of the Company~~: Doug Larson, President, and Jeremy Martin, Vice President of Marketing, and by Kevin Sipple, former Vice President of Operations~~. The line has a maturity date of December 27, ~~2014~~2015.

Notes Payable

The Company has a note payable with ANB Bank. The note bears interest at a fixed rate of 5.0%. The loan is payable at a rate of $17,700 per month, which includes principal and interest. A single “balloon payment” of the entire unpaid balance of principal and interest will be due on February 2, 2022. The Company has a note payable obtained from the Small Business Administration (“SBA). 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 ~~Messrs.~~two ~~Larson,~~Company ~~Martin~~executives who are also directors of the Company and ~~Sipple~~a previous director and officer of the Company. The loan agreements also include certain performance and reporting covenants.

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, inability to adequately address and strengthen our internal controls over financial reporting, 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 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. Currently, the Company’s operations consist of its home/commercial delivery business (5 and 3 gallon bottles) and its one gallon and 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. The Company’s business includes the sales and rental of filtration and coffee dispensing equipment as well as the sale of coffee. During the summer months, the Company owns and operates a public swimming pool on its property and rents out a single-family home on the property year round.

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.

Results of Operations

Performance Overview – Recent Trends

For the ~~six~~nine months ended ~~September~~December 3031, 2014, the Company reported an increase in overall revenue of 1011.27%. The increase in revenue was primarily due to overall increase in unit volumes across all categories. The number of home and office accounts increased for the interim period ended ~~September~~December 3031, 2014 and the total units for many products increased to retail establishments.

The Company continues to utilize advertising and promotional budgets to help promote various products. The Company has been pursuing ways to offer more sizes of the products off of our own delivery vehicles to increase sales to existing customers.

Overall operating expenses increased 1113.2% for the ~~six~~nine months ended ~~September~~December 3031, 2014 as compared to the same period ended ~~September~~December 3031, 2013. Operating expenses increased from 6465.14% of sales for the ~~six~~nine months ended ~~September~~December 3031, 2013 to 6466.63% of sales for the ~~six~~nine months ended ~~September~~December 3031, 2014 due to the increase in overall revenues.

The Company believes that we are in a position to continue to grow in the markets we presently service by offering additional products and utilizing advertising and promotional budgets for promoting the products. We will continue to pursue additional business in new and emerging markets. In addition, we continue to look for ways to decrease operating costs in order to maintain profitability in the future.

Three and Six Months Ended September 30, 2014 Compared to Three and Six Months Ended September 30, 2013

Revenues

Revenues for the six months ended September 30, 2014 were $6,636,706 compared to $6,021,682 for the same period ended September 30, 2013, an increase of 10.2%. Revenues for the three months ended September 30, 2014 were $3,480,728 compared to $3,180,589 for the same period ended September 30, 2013, an increase of 9.4%.

Revenues derived from products delivered to homes and offices which include 5 and 3 gallons bottles as well as the dispenser units were 53.9% of revenues and increased from $3,187,539 for the six months ended September 30, 2013 to $3,579,707 for the six months ended September 30, 2014, an increase of $392,167 or 12.3%. Revenues from the rental of equipment used for home and office accounts increased from $267,759 for the six months ended September 30, 2013 to $341,025 for the six months ended September 30, 2014, an increase of $73,266 or 27.4%. The Company has increased its customer base and continues to attract new business through a variety of sales events and outside sales staff.

The filter rental and sales revenues decreased from $134,438 for the six months ended September 30, 2013 to $126,455 for the six months ended September 30, 2014, a decrease of or 5.9%. Revenues from sales of coffee, coffee equipment and accessories increased from $144,636 for the six months ended September 30, 2013 to $158,360 for the six months ended September 30, 2014, an increase of 9.5%. 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 18.4% of revenues for the six months ended September 30, 2014 and 17.8% of revenues for the six months ended September 30, 2013 or $1,222,188 and $1,074,774, respectively. This represented a year-over-year increase of 12.1%. Sales of the Company’s gallon size products accounted for 15.9% of revenues or $1,056,630 for the six months ended September 30, 2014 compared to 15.7% of revenues or $946,008 for the six months ended September 30, 2013, an increase of 11.7%.

Revenues from sales of the Company's organic vitamin charged spring water were $75,774 for the six months ended September 30, 2014 compared to $81,582 for the six months ended September 30, 2013, a decrease of 7.1%. The decrease in sales was due to the timing of promotional deal periods for our distributors resulting in various buying patterns throughout the year. Quarterly fluctuations such as this are typical and will likely continue.

Three and Nine Months Ended December 31, 2014 Compared to Three and Nine Months Ended December 31, 2013

Revenues

Revenues for the nine months ended December 31, 2014 were $9,608,391 compared to $8,603,716 for the same period ended December 31, 2013, an increase of 11.7%. Revenues for the three months ended December 31, 2014 were $2,971,685 compared to $2,582,034 for the same period ended December 31, 2013, an increase of 15.1%.

Revenues derived from products delivered to homes and offices which include 5 and 3 gallons bottles as well as the dispenser units were 55% of revenues and increased from $4,703,553 for the nine months ended December 31, 2013 to $5,284,708 for the nine months ended December 31, 2014, an increase of $581,155 or 12.4%. Total unit sales of 5 and 3 gallon products increased by 11.3% while the average selling price increased approximately 7.4%. Revenues from the rental of equipment used for home and office accounts increased from $408,161 for the nine months ended December 31, 2013 to $502,037 for the nine months ended December 31, 2014, an increase of $93,876 or 23%. The Company has increased its customer base and continues to attract new business through a variety of sales events and outside sales staff.

The filter rental and sales revenues decreased from $205,582 for the nine months ended December 31, 2013 to $201,928 for the nine months ended December 31, 2014, a decrease of 3,654 or 1.8%. Revenues from sales of coffee, coffee equipment and accessories increased from $226,141 for the nine months ended December 31, 2013 to $239,574 for the nine months ended December 31, 2014, an increase of 5.9%. 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 17.7% of revenues for the nine months ended December 31, 2014 and 16.5% of revenues for the nine months ended December 31, 2013 or $1,701,609 and $1,417,558, respectively. This represented a year-over-year increase of 20%. Sales of the Company’s gallon size products accounted for 15.9% of revenues or $1,532,130 for the nine months ended December 31, 2014 compared to 15.6% of revenues or $1,341,263 for the nine months ended December 31, 2013, an increase of 14.2%.

Revenues from sales of the Company's organic vitamin charged spring water were $102,820 for the nine months ended December 31, 2014 compared to $112,144 for the nine months ended December 31, 2013, a decrease of 8.3%. The decrease in sales was due to the timing of promotional deal periods for our distributors resulting in various 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 ~~six~~nine months ended ~~September~~December 3031, 2014 were $12,~~760~~461,~~121~~789, or 2625.56% of revenues, compared to $12,~~661~~210,~~117,~~477 or 2725.67% of revenues for the ~~six~~nine months ended ~~September~~December 3031, 2013. Gross profit was $46,~~360~~393,~~565~~239, or 7274.43% of revenues for the ~~six~~nine months ended ~~September~~December 3031, 2013 and $47,~~876~~146,~~585~~602 or 7374.54% of revenues for the ~~six~~nine months ended ~~September~~December 3031, 2014. Overall, gross profit increased 11.8% for the ~~six~~nine months ended ~~September~~December 3031, 2014.

Cost of goods sold related to 5 and 3 gallon sales were $251,887, or 7% of revenues for the six months ended September 30, 2014, compared $221,133, or 6.9% of revenues for the six months ended September 30, 2013. Cost of goods for the Eldorado brand one gallon products were $596,039, or 56.4% of one gallon revenues for the six months ended September 30, 2014, compared to $541,435, or 57.2% of one gallon revenues for the six months ended September 30, 2013. Cost of goods sold for the PET products were $620,347, or 50.8% of revenues for the six months ended September 30, 2014, compared to 576,747, or 53.7% of revenues for the six months ended September 30, 2013.10

Cost of goods sold related to 5 and 3 gallon sales were $309,273, or 6.6% of revenues for such products for the nine months ended December 31, 2013, compared to $341,847, or 6.5% of revenues for such products for the nine months ended December 31, 2014. Cost of goods for the Eldorado brand one gallon products were $756,651, or 56.4% of one gallon revenues for the nine months ended December 31, 2013, compared to $846,841, or 55.3% of 1 gallon revenues for the nine months ended December 31, 2014. Cost of goods sold for the PET products were $757,624, or 53.4% of revenues for the nine months ended December 31, 2013, compared to $861,430, or 50.6% of PET revenues for the nine months ended December 31, 2014.

Operating Expenses

Total operating expenses increased to $46,~~289~~371,~~817~~763 for the ~~six~~nine months ended ~~September~~December 3031, 2014 compared to $35,~~858~~628,~~614~~531 for the ~~six~~nine months ended ~~September~~December 3031, 2013, an increase of $~~431~~743,~~203~~232 or 1113.2%. Of the total operating expenses, salaries and related expenses increased to $23,~~194~~246,~~057~~282 for the ~~six~~nine months ended ~~September~~December 3031, ~~2013~~2014, or 33.18% of revenues, from $12,~~888~~791,~~896~~733 for the ~~six~~nine months ended ~~September~~December 3031, 2013, or 3132.4% of revenues. Salaries and related expenses increased due to the increase headcount and commissions for the nine months ended December 31, 2014.

Administrative and general expenses increased by 2.9.3% to $1,~~113~~669,~~409~~358 for the nine months ended December 31, 2014 as compared to $1,~~082~~527,~~503~~095 for the ~~six~~nine months ended ~~September~~December 3031, 2013. The Company incurred costs related to professional fees to help facilitate the implementation of new projects. The Company expects some of these costs will continue in the future.

Delivery expenses increased from $~~471~~727,~~049~~705 for the ~~six~~nine months ended ~~September~~December 3031, 2013 to $~~546~~835,~~878~~027 for the ~~six~~nine months ended ~~September~~December 3031, 2014, an increase of 1614.17%. The Company maintains and leases additional vehicles to accommodate the increase in revenues and delivery customers.

Advertising and promotion expenses decreased from $~~157~~198,~~363~~583 for the ~~six~~nine months ended ~~September~~December 3031, 2013 to $~~149~~190,~~706~~485 for the ~~six~~nine months ended ~~September~~December 3031, 2014, a decrease of 4.91%. Advertising and promotion expenses were 2.3% and 2.63% of revenues, respectively for the ~~six~~nine months ended ~~September~~December 3031, 2014 and 2013.

Depreciation and amortization increased from $~~258~~383,~~803~~415 for the ~~six~~nine months ended ~~September~~December 3031, 2013 to $~~285~~430,~~767~~611 for the ~~six~~nine months ended ~~September~~December 3031, 2014, an increase of 1012.43%, 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 4.35% of revenues for the ~~six~~nine months ended ~~September~~December 3031, 2014 and the ~~six~~nine months ended ~~September~~December 3031, 2013.

Interest, Taxes, Other Income and Other Expenses

~~Interest~~Other income and expense for the ~~six~~nine months ended ~~September~~December 3031, 2014, decreased 11.5% to $~~109~~159,~~574~~904 as compared to $~~123~~180,~~837~~677 for the ~~six~~nine months ended ~~September~~December 3031, 2013 due to lower interest rates under the SBA Loan Agreement.

For the ~~six~~nine months ended ~~September~~December 3031, 2014, the Company recorded income tax expense of $~~151~~210,~~770~~000 against our pretax income of $~~477~~614,~~893~~935.

The Company had a net income after taxes of $~~326~~404,~~123~~935 for the ~~six~~nine months ended ~~September~~December 3031, 2014 compared to a net income after taxes of $~~247~~362,~~203~~031 for the ~~six~~nine months ended ~~September~~December 3031, 2013.

Liquidity and Capital Resources

~~Trade~~Cash ~~accounts~~flows ~~receivable~~from ~~for~~operating ~~the~~activities ~~six~~had ~~months~~a ~~ended~~net ~~September~~inflow 30of $764,098 ~~2014~~for ~~were~~the ~~16.6%~~nine ~~more~~months ~~than at year~~ ended ~~March~~December 31, 2014. ~~This~~ ~~resulted~~The ~~from~~cash ~~the~~provided by operating activities represents an increase inof ~~revenues~~$125,368 ~~for~~from the ~~six~~nine months ended ~~September~~December 3031, ~~2014~~2013. ~~Days~~ ~~outstanding~~The ~~were~~largest ~~approximately~~reconciling 42item ~~days~~between ~~for~~net ~~both~~income ~~September 30, 2014~~ and ~~March~~net ~~31,~~cash ~~2014.~~flow Infrom ~~February~~operations ~~2014~~was $430,611 ~~the~~of ~~Company~~depreciation ~~implemented~~and aamortization. The ~~new~~change ~~customer~~in ~~relations~~operating ~~management~~activities ~~(CRM)~~is ~~system.~~mainly ~~During~~attributed ~~the~~to ~~implementation~~increases ~~there~~in ~~was~~accounts areceivable ~~delay~~and inincome ~~billing~~taxes ~~the~~payable ~~customers~~and ~~which~~offset ~~resulted~~by indecreases ~~an increase~~ in ~~the~~ accounts ~~receivable~~payable. ~~balance~~The asCompany ofanticipates ~~September~~that ~~30,~~cash ~~2014.~~flow ~~The~~from ~~Company~~operations ~~expects~~will ~~billing~~be ~~schedules~~available to ~~return~~fund toexisting ~~normal~~obligations ~~resulting~~for inexpected ~~days~~cash ~~sales~~requirements ~~outstanding~~over ~~returning~~the tonext ~~previous levels~~year.

Cash flows from operating activities had a net inflow of $551,283 for the six months ended September 30, 2014. The cash provided by operating activities represents an increase of $99,896 from the six months ended September 30, 2013. The largest reconciling items between net income and net cash flow from operations were the $219,747 increase in accounts receivable and $285,767 of depreciation and amortization.11

~~Cash~~Trade ~~flows~~accounts ~~from~~receivable ~~investing~~for ~~activities~~the ~~resulted~~nine inmonths aended ~~net~~December ~~outflow~~31, of2013 ~~$201,780~~were ~~for~~6% ~~the~~more ~~six~~than ~~months~~at year ended ~~September~~March 3031, 2014. This ~~total~~resulted ~~represents~~from ~~expenditures~~the onincrease ~~equipment~~in revenues for ~~electric~~the ~~water~~nine ~~coolers~~months ended December 31, ~~filtration~~2014. Days ~~equipment~~outstanding ~~and~~were ~~coffee~~approximately ~~dispensing~~39 ~~equipment~~days ~~that~~for ~~are~~December ~~rented~~31, to2014 ~~delivery~~and ~~customers~~42 days for March 31, 2014.

Cash flows from ~~financing~~investing activities resulted in a net outflow of $~~133~~316,~~872~~479 for the ~~six~~nine months ended ~~September~~December 3031, 2014. This ~~for~~total ~~payments~~represents ~~made~~expenditures on ~~long-term~~equipment ~~obligations~~for electric water coolers, filtration equipment and coffee dispensing equipment that are rented to delivery customers.

~~The~~Cash ~~Company’s~~flows ~~cash~~from ~~balance~~financing atactivities ~~September~~resulted 30in a net outflow of $221,119 for the nine months ended December 31, 2014 ~~increased~~for payments made on long-term obligations. This decrease was attributable to ~~$890,090~~decreases byin apayments ~~net~~on ~~amount~~line of ~~$215,631~~credit ~~from~~offset ~~$674,459~~by atincreases ~~March~~on ~~31,~~payments ~~2014~~of long-term debt and capital leases.

The Company’s cash balance at December 31, 2014 increased to $900,959 by a net amount of $226,500 from $674,459 at March 31, 2014.

The Company has a line of credit with ANB Bank in the amount of $750,000. As of December 31, 2014, 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 December 31, 2014. The line includes certain reporting and financial covenants, is cross-collateralized by accounts receivable and inventory and is guaranteed by two company executives. The line has a maturity date of December 27, 2015.

The Company has a note payable with ANB Bank. The note bears interest at a fixed rate of 5.0%. The loan is payable at a rate of $17,700 per month, which includes principal and interest. A single “balloon payment: of the entire unpaid balance of principal and interest will be due on February 2, 2022. The Company has a note payable obtained from the Small Business Administration (“SBA). 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 ~~the same~~ two Company executives who are also directors of the Company and a previous director and officer of the Company. 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. Net operating losses in the amount of approximately $590,000 for state taxes begin to expire in 2028.

1112

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.

ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls 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.

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 they 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 ~~September~~December 3031, 2014.

Remediation of Material Weaknesses in Internal Control over Financial Reporting

In light of the conclusion that our internal control over financial reporting was not effective, our management is in the process of implementing a plan intended to remediate such ineffectiveness and to strengthen our internal controls over financial reporting through the implementation of certain remedial measures, including obtaining the assistance of experienced financial personnel to enhance our financial reporting capabilities and assist our principal financial officer as the need arises.

Changes in Internal Control over Financial Reporting

Other than as described above, there were no changes in our internal control over financial reporting during the quarter ended ~~September~~December 3031, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

1213

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 OF 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.

1314

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: November 13, 2014	By:	/s/ Douglas A. Larson
Date: February 17, 2015	By:	/s/ Douglas A. Larson
		Douglas A. Larson
		President
		(Principal Executive Officer)
Date: February 17, 2015	By:	/s/ Cathleen Shoenfeld
		Cathleen Shoenfeld
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Date: November 13, 2014	By:	/s/ Cathleen Shoenfeld
		Cathleen Shoenfeld
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

ELDORADO ARTESIAN SPRINGS, INC.

Quarterly Report on Form 10-Q

for the Quarter Ended ~~September~~December 3031, 2014

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.

15* 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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