FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended December 31, 1997
Commission File Number: 33-6738-D
Eldorado Artesian Springs, Inc.
(Exact name of registrant as specified in its charter as amended)
Colorado 84-0907853
- -----------------------
(State or other jurisdiction of incorporation (IRS Employer
or organization Identification No.)
PO Box 445, Eldorado Springs, Colorado 80025
-----------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 499-1316
-------------
(Registrant's telephone number, including area code)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _____
-
Number shares of common stock outstanding at the latest practicable date,
December 31, 1997: 32,344,948 with 56,045 shares in the treasury.
<PAGE>
Eldorado Artesian Springs, Inc.
Form 10-QSB, December 31, 1997
TABLE OF CONTENTS
Part I - Financial Information Page
----
Balance Sheet as of March 31, 1997 and
December 31, 1997 3
Statement of Operations for the nine months and 3 months
ended December 31, 1997 and 1996 4
Statement of Cash Flow for the nine months and 3 months
ended December 31, 1997 and December 31, 1996 5
Notes to Financial Statements 6
Management's Discussion and Analysis of Financial
Condition & Results of Operations 7
Part II - Other Information 8
Signature Page 9
<PAGE>
ELDORADO ARTESIAN SPRINGS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1997 1997
------------ -------------
<S> <C> <C>
ASSETS
Current assets
Cash $ 66,453 $ 244,765
Accounts receivable
Trade net 476,094 278,421
Other 3,893 3,925
Inventories 135,019 92,548
Prepaid expenses and other 9,768 10,893
Deferred income taxes 11,845 11,845
------- -------
Total current assets 703,072 642,397
------- -------
Property, plant & equipment (net of depreciation) 1,580,851 1,212,535
Other assets
Water rights - net 115,740 119,106
Other - net 67,909 50,376
Total other assets 183,649 169,482
-------- --------
Total $ 2,467,572 $ 2,024,414
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 150,016 $ 97,803
Accrued expenses 78,318 82,230
Unearned income 30,994 33,558
Current maturities 150,466 78,680
-------- -------
Total current liabilities 409,794 292,271
Long-term debt 1,390,463 1,223,569
Deferred Income taxes 40,882 40,882
--------- --------
Total liabilities 1,841,139 1,556,722
--------- ---------
Equity
Common stock 32,345 32,345
Additional paid-in capital 265,225 265,225
Retained earnings 170,122 170,122
Net earnings 158,741 -
--------- ---------
Total equity 626,433 467,692
--------- ---------
Total $ 2,467,572 $ 2,024,414
========== ==========
</TABLE>
<PAGE>
ELDORADO ARTESIAN SPRINGS, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Nine Months
December 31, December 31,
-------------------- -------------------
1997 1996 1997 1996
--------- -------- -------- -------
<S> <C> <C> <C> <C>
Revenue
Water and related $ 766,897 $ 600,308 $ 2,357,476 $ 1,902,117
Pool (38) - 68,350 75,419
Rentals 11,708 11,865 42,598 35,595
Returns and allowances (3,642) (3,991) (6,328) (13,953)
---------- --------- ---------- ----------
Net revenue 774,925 608,182 2,462,096 1,999,178
Cost of goods sold 103,431 76,224 362,822 317,802
Gross profit 671,494 531,958 2,099,274 1,681,376
Operating expenses
Salaries and related 323,973 248,619 982,628 750,877
Administrative and general 110,774 87,015 362,996 252,797
Selling and delivery 74,779 82,708 271,408 283,279
Depreciation and amortization 85,057 57,819 199,014 161,468
---------- --------- ----------- ---------
Total other expense 594,583 476,161 1,816,046 1,448,421
---------- --------- ----------- ---------
Operating income 76,911 55,797 283,228 232,955
Other income (expense)
Interest income 744 275 3,711 819
Interest expense (37,286) (27,636) (108,066) (84,072)
Income tax expense (10,000) - (20,132) -
---------- -------- ---------- ---------
Net income (loss) 30,369 28,436 158,741 149,702
Basic net income per common share - - - -
Weighted average number of shares
outstanding 32,344,948 32,344,948 32,344,948 32,344,948
========== ========== ========== ==========
</TABLE>
<PAGE>
ELDORADO ARTESIAN SPRINGS, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Nine Months
December 31, December 31,
--------------------- -----------------
1997 1996 1997 1996
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from activities
Net income $ 30,369 $ 28,436 $ 158,741 $ 149,702
Adjustments to reconcile
Depreciation and amortization 85,057 57,819 199,013 161,468
Changes in assets and
liabilities
Accounts receivable (32,285) 36,491 (197,641) (32,655)
Inventory (11,413) (7,564) (42,471) (18,892)
Prepaid expenses and other - (39,075) 1,126 (39,075)
Accounts payable 18,140 12,868 52,213 3,200
Accrued expenses 23,435 8,184 (3,912) (16,748)
Unearned income (40) (1,691) (2,564) (7,275)
-------- --------- -------- --------
Net cash from operating
activities 113,263 95,468 164,505 199,725
-------- ------- -------- --------
Cash flows from investing
Purchase of property and
equipment (327,636) (33,538) (563,963) (135,154)
Increase in note receivable - - - -
-------- ------- ------- -------
Net cash investing (327,636) (33,538) (563,963) (135,154)
--------- -------- ------- --------
Cash flows from financing activities
Additions to long-term debt - - 1,500,000 -
Loan fees and other assets 662 671 (17,534) 2,012
Payments on long-term debt (28,490) (13,768) (1,261,320) (40,612)
-------- -------- ----------- ------
Net cash flows from
financing (27,828) (13,097) 221,146 (38,600)
-------- -------- ----------- -------
Net increase (decrease) in cash (242,201) 48,833 (178,312) 25,971
Cash - beginning 308,654 66,427 244,765 89,289
-------- ------- -------- -------
Cash - end $ 66,453 $ 115,260 $ 66,453 $115,260
======== ========= ======== ========
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OPINIONS OF MANAGEMENT
A. In the opinion of management, the accompanying financial statements
contain all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position as of December 31, 1997,
the results of operations and cash flow for the period then ended.
B. In the opinion of management, the results of operations for the nine
months ended December 31, 1997 are not necessarily indicative of the results
to be expected for the full year.
C. Summary of the Company's significant accounting policies are
incorporated by reference to the Company's March 31, 1997 Annual Report filed
under cover of Form 10-KSB.
D. The financial statements presented were prepared on a proforma
consolidated basis. This gives effect to the combination of Eldorado Artesian
Springs, Inc. and Lexington Funding, Inc. as if it had occurred April 1, 1986.
This business combination was accounted for as a reverse acquisition using the
purchase method in a manner similar to a pooling of interests. The management
of Eldorado Artesian Springs, Inc. has retained control of the combined
entity.
E. During the third quarter of fiscal 1998, the Company adopted the
provisions of Statement of Financing Accounting Standard, No. 128, "Earnings
Per Share" (FAS 128). FAS 128 established new definitions for calculating and
disclosing basic and diluted earnings per share. In accordance with FAS 128,
all prior periods have been restated to conform to the new methodology. The
restated amounts did not differ materially from amounts previously reported.
As the Company has no dilutive potential common shares, no diluted earnings
per share is presented.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDTITION AND RESULTS OF OPERATION
Revenues for the three months ended December 31, 1997 increased 27.4% to
$774,925 versus $608,182 for the same period in 1996. For the nine months
ended December 31, 1997 revenues increased 23.2% to $2,462,096 versus
$1,999,178 for the same period in 1996. Sales of five gallon products
increased by 20.2%, one gallon sales increased by 15% and sales of the smaller
packages increased by 60%.
Cost of goods sold increased by 14.2% for the first nine months. This
compares to an increase of 35% for the same period a year ago. The decrease
in costs is due in large part to improving pricing from suppliers.
Operating expenses for the nine months ended December 31, 1997 increased 25.4%
and increased 24.9% for the three months ended December 31, 1997. Wages,
salaries and related items increased 30% for the three and nine months ended
December 31, 1997. This increase is consistent with the increase in revenues
during the same period.
Accounts receivable increased to $479,987 from $267,119 a year ago. During May
1997, the Company installed a new route accounting system which has
contributed to the increase in receivables. The company has seen a reduction
in the costs of delivery and are making measures to increase collections.
Accounts receivable has also been affected by seasonal holiday trends that
traditionally occur during this time. By March 1998, the Company expects an
additional bad debt charge that has historically been 0.8% of sales.
With the restructuring of the Company debt in June 1997, the Company has used
proceeds to purchase new bottling equipment. The equipment will increase the
bottling speed which will ultimately decrease operating expenses. The new
equipment will be fully operational by January 1998.
Net income for the nine months ended December 31, 1997 was $158,741 versus
$149,702 for the same period one year ago and for the three months ended
December 31, 1997 was $30,369 versus $28,436 for the same period one year ago.
This represents an increase of 6.0% and 6.8% respectively.
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal proceedings
No legal proceedings have been filed on behalf of or against the Company, nor
have any claims been made.
Item 2 - Change in Securities
None
Item 3 - Defaults Upon Senior Obligations
There have been no defaults on any securities. The Company has no obligations
with regard to dividends and no preferred stock outstanding.
Item 4 - Submission of Matters to a Vote of the Security Holders
None
Item 5 - Other Information
None
<PAGE>
SIGNATURES
Pursuant to 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.
By: /s/ Douglas Larson
--- ---------------
Douglas A. Larson, President
By: /s/ Kevin M. Sipple
--- -------------------
Kevin M. Sipple, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 66,453
<SECURITIES> 0
<RECEIVABLES> 479,987
<ALLOWANCES> 0
<INVENTORY> 135,019
<CURRENT-ASSETS> 703,072
<PP&E> 2,012,825
<DEPRECIATION> 431,974
<TOTAL-ASSETS> 2,467,572
<CURRENT-LIABILITIES> 409,794
<BONDS> 0
0
0
<COMMON> 297,570
<OTHER-SE> 328,863
<TOTAL-LIABILITY-AND-EQUITY> 2,467,572
<SALES> 2,357,476
<TOTAL-REVENUES> 2,462,096
<CGS> 362,822
<TOTAL-COSTS> 1,816,046
<OTHER-EXPENSES> (3,711)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 108,066
<INCOME-PRETAX> 178,873
<INCOME-TAX> 20,132
<INCOME-CONTINUING> 158,741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 158,741
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
