Eldorado Artesian Springs (ELDO) 10-Q 14 Feb 14 2014 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Dec. 31, 2013	Feb. 13, 2014
Document And Entity Information	'	'
Entity Registrant Name	'ELDORADO ARTESIAN SPRINGS INC	'
Entity Central Index Key	'0000796124	'
Document Type	'10-Q	'
Document Period End Date	31-Dec-13	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--03-31	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	6,036,091
Document Fiscal Period Focus	'Q3	'
Document Fiscal Year Focus	'2014	'

Balance_Sheets_Unaudited

Balance Sheets (Unaudited) (USD $)	Dec. 31, 2013	Mar. 31, 2013
Assets	'	'
Cash	$593,055	$480,546
Accounts receivable - trade, net	1,146,671	1,007,197
Inventories	426,743	420,048
Prepaid expenses and other	42,776	41,290
Deferred tax asset	30,000	29,648
Total current assets	2,239,245	1,978,729
Non-current assets	'	'
Property, plant and equipment, net	3,753,772	3,613,629
Investments	361,196	361,196
Water rights, net	71,675	71,675
Deposits	107,204	108,204
Other, net	129,596	123,896
Total non-current assets	4,423,443	4,278,600
Total assets	6,662,688	6,257,329
Liabilities and Stockholders' Equity	'	'
Accounts payable	404,842	415,442
Accrued expenses	258,392	269,016
Income taxes payable	32,094	8,767
Customer deposits	105,663	104,926
Current portion of capital lease obligations	75,730	49,341
Current portion of long-term debt	158,996	146,325
Total current liabilities	1,035,717	993,817
Non-current liabilities	'	'
Deferred tax liability	62,000	7,475
Capital lease obligations, less current portion	98,736	45,591
Long term debt, less current portion	3,898,581	4,004,823
Total non-current liabilities	4,059,317	4,057,889
Total liabilities	5,095,034	5,051,706
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	-132,120	-494,151
Total stockholders' equity	1,567,654	1,205,623
Total liabilities and stockholders' equity	$6,662,688	$6,257,329

Balance_Sheets_Parenthetical

Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2013	Mar. 31, 2013
Statement of Financial Position [Abstract]	'	'
Preferred stock, par value	$0.00	$0.00
Preferred stock, authorized shares	10,000,000	10,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value	$0.00	$0.00
Common stock, Authorized	50,000,000	50,000,000
Common stock, Issued	6,036,091	6,036,091
Common stock, outstanding	6,036,091	6,036,091

Unaudited_Statements_of_Operat

Unaudited Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Revenue	'	'	'	'
Water and related	$2,582,034	$2,276,781	$8,433,130	$7,377,144
Resort operations	'	3,000	170,586	188,482
Total revenues	2,582,034	2,279,781	8,603,716	7,565,626
Cost of goods sold	549,360	514,482	2,210,477	1,827,026
Gross profit	2,032,674	1,765,299	6,393,239	5,738,600
Operating expenses	'	'	'	'
Salaries and related	902,837	817,723	2,791,733	2,596,791
Administrative and general	443,922	398,656	1,527,095	1,308,600
Delivery	256,656	221,347	727,705	669,051
Advertising and promotions	41,220	34,393	198,583	183,856
Depreciation and amortization	125,282	129,657	383,415	383,764
Total operating expenses	1,769,917	1,601,776	5,628,531	5,142,062
Operating income	262,757	163,523	764,708	596,538
Other income (expense)	'	'	'	'
Interest income	442	558	1,531	1,687
Interest expense	-58,371	-60,197	-182,208	-197,531
Total other expense	-57,929	-59,639	-180,677	-195,844
Net income before provision for income taxes	204,828	103,884	584,031	400,694
Income tax (expense) benefit	'	'	'	'
Current	-80,000	38,000	-167,827	140,000
Deferred	-10,000	-38,000	-54,173	-140,000
Total income tax benefit (expense)	-90,000	'	-222,000	'
Net income	$114,828	$103,884	$362,031	$400,694
Basic and dilutive income per common share	$0.02	$0.02	$0.06	$0.07
Weighted average number of common shares outstanding - basic and dilutive	6,036,091	6,036,091	6,036,091	6,036,091

Unaudited_Statements_of_Cash_F

Unaudited Statements of Cash Flows (USD $)	9 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities	'	'
Net income	$362,031	$400,694
Adjustments to reconcile net loss to net cash provided by operating activities	'	'
Depreciation and amortization	383,415	383,764
Stock based compensation	'	15,091
Deferred income taxes	54,173	'
Changes in assets and liabilities	'	'
Accounts receivable	-139,474	-70,293
Inventories	-6,695	-24,182
Prepaid expenses and other	-17,561	20,477
Accounts payable	-10,600	102,759
Accrued expenses	-10,624	-72,356
Income taxes payable	23,327	'
Customer deposits	737	11,041
Net cash provided by operating activities	638,729	766,995
Cash flows from investing activities	'	'
Purchases of property and equipment	-369,208	-223,009
Net cash flows used in investing activities	-369,208	-223,009
Cash flows from financing activities	'	'
Payments on line of credit	'	-370,051
Payments on long-term debt and capital leases	-175,931	-130,508
Borrowings on long-term obligations	18,919	17,079
Net cash flows used in financing activities	-157,012	-483,480
Net increase in cash	112,509	60,506
Cash - beginning of period	480,546	250,083
Cash - end of period	593,055	310,589
Supplemental disclosure of cash flow information	'	'
Cash paid for interest for the nine months ended December 31, 2013 and December 31, 2012	182,208	197,531
Cash paid for income taxes for the nine months ended December 31, 2013 and December 31, 2012	144,500	0
Acquisition of fixed assets through capital lease	$142,975	$0

1_Summary_of_Significant_Accou

1. Summary of Significant Accounting Policies	9 Months Ended
	Dec. 31, 2013
Accounting Policies [Abstract]	'
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 nine months ended December 31, 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.
	Litigation
	The Company is not currently involved in any legal proceedings.  The Company maintains insurance to cover certain liabilities.

2_Stockholders_Equity

2. Stockholders' Equity	9 Months Ended
	Dec. 31, 2013
Equity [Abstract]	'
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 December 31, 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 December 31, 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.

3_Contingencies

3. Contingencies	9 Months Ended
	Dec. 31, 2013
Notes to Financial Statements	'
8. 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.

4_Commitments

4. Commitments	9 Months Ended
	Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]	'
Commitments	'
	Line of Credit
	The Company has a line of credit with ANB Bank in the amount of $750,000. As of December 31, 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 December 31, 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, 2014.
	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. On December 11, 2013, the Company and ANB Bank amended the Commercial Loan Agreement to reduce the fixed interest rate from 5.5% to 5.0%. The loan is now payable at a rate of approximately $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.
	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 nine months ended December 31, 2013, the Company recognized the utilization of the remainder of its Federal net operating loss carryforward, resulting in deferred expense of approximately $54,000.

1_Summary_of_Significant_Accou1

1. Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Dec. 31, 2013
Accounting Policies [Abstract]	'
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 nine months ended December 31, 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.
Litigation	'
	The Company is not currently involved in any legal proceedings.  The Company maintains insurance to cover certain liabilities.

4_Commitments_Details_Narrativ

4. Commitments (Details Narrative) (USD $)	9 Months Ended
	Dec. 31, 2013
Commitments Details Narrative	'
Line of Credit	$750,000
Deferred Tax Expense	$54,000