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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001144204-10-020911.txt : 20100604
<SEC-HEADER>0001144204-10-020911.hdr.sgml : 20100604
<ACCEPTANCE-DATETIME>20100416171103
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001144204-10-020911
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20100416

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CONSOLIDATED WATER CO LTD
		CENTRAL INDEX KEY:			0000928340
		STANDARD INDUSTRIAL CLASSIFICATION:	WATER SUPPLY [4941]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			E6
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		TRAFALGAR PL
		STREET 2:		WEST BAY RD
		CITY:			GRAND CAYMAN BWI CAY
		STATE:			E9
		ZIP:			00000
		BUSINESS PHONE:		8099474277

	MAIL ADDRESS:	
		STREET 1:		TRAFALGAR PLACE, WEST BAY ROAD, P.O. BOX
		STREET 2:		GRAND CAYMAN, CAYMAN ISLANDS, BWI

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CAYMAN WATER CO LTD
		DATE OF NAME CHANGE:	19941212
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<html>
  <head>
    <title>Unassociated Document</title>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CONSOLIDATED
WATER CO. LTD.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Regatta Office Park</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Windward
Three, 4th Floor</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">West Bay
Road, P.O. Box 1114</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Grand
Cayman, KY1-1102</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cayman
Islands</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(345)
945-4277</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March 10,
2010</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">VIA EDGAR AND FAX
(202-772-9361)</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr. H.
Christopher Owings, Assistant Director</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">United
States Securities and Exchange Commission</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Division
of Corporation Finance</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">100 F
Street, N.E.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mail Stop
3561</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
D.C. 20549-0405</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
            </td>
            <td align="right" style="WIDTH: 27pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RE:&#160;</font></div>
            </td>
            <td align="left">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated
      Water Co. Ltd.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
      10-K for the Fiscal Year Ended December 31, 2008</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Filed
      March 17, 2009</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
      10-Q for the Fiscal Quarter Ended September 30, 2009</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Filed
      November 9, 2009</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">File
      No. 000-25248</font></div>
              </div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dear Mr.
Owings:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
responding to your March 5, 2010 comment letter.&#160;&#160;For your reference,
we included each comment in the letter followed by our response.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Form 10-K for the Fiscal
Year Ended December 31, 2008</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Consolidated Financial
Statements &#8211; Consolidated Water Co. Ltd.</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Notes to Consolidated
Financial Statements</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Note 4. Accounts Receivable,
page 59</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 62px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.&#160;&#160;</font></div>
            </td>
            <td width="818">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      note your response to comment 10 in our letter dated December 18, 2009 and
      the reduction of the past due receivables owed by the Bahamas government
      from 80% of the total receivable balance as of December 31, 2008 to 57% of
      the balance as of September 30, 2009.&#160;&#160;In light of the
      significant delinquent balance as of September 30, 2009, please update us
      regarding any subsequent cash collections through the fourth quarter along
      with a similar aging analysis as of December 31,
  2009.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Response:</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 45pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">During the fourth quarter of
      2009 we received $4.8 million in payments from the Bahamas government
      which included a $1.2 million payment on the most delinquent
      invoices.</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 45pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Comparative aging analyses of
      the accounts receivable for our Bahamas subsidiary are as follows (amounts
      in 1,000s): </font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div align="left">
        <div align="center">
          <div align="center">
            <div align="center">
              <div align="center">
                <table cellpadding="0" cellspacing="0" width="75%">
                    <tr>
                      <td valign="bottom" width="28%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="6" valign="bottom" width="34%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">At December 31, 200</font><font style="DISPLAY: inline; COLOR: #000000">9</font></font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="6" valign="bottom" width="34%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">At September 30,
      2009</font></font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="bottom" width="28%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="bottom" width="28%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">Amount</font></font></div>
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                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">%</font></font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">Amount</font></font></div>
                      </td>
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                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">%</font></font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="#ccffcc">
                      <td align="left" valign="bottom" width="28%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">Current</font></font></div>
                      </td>
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                      <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">38.5</font></font></td>
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                    <tr bgcolor="#ccffcc">
                      <td valign="bottom" width="28%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="15%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="15%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="white">
                      <td valign="bottom" width="28%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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                      <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: times new roman">&#160;</font></td>
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              </div>
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          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">On
Friday, March 5, 2010 we received e-mail correspondence from the Chief Financial
Officer of the Water and Sewerage Corporation of the Bahamas informing us that
the House of Assembly of the Bahamas government had authorized $4.3 million to
be paid to our Bahamas subsidiary (to be disbursed in three equal monthly
installments beginning in April 2010 and ending in June 2010) to satisfy current
billings and reduce the delinquent accounts receivable balances.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Consolidated Financial
Statements &#8211; Ocean Conversion (BVI) Ltd.</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Notes to Consolidated
Financial Statements</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Note
2.&#160;&#160;Accounting Policies, page 82</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 63px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.&#160;&#160;</font></div>
            </td>
            <td width="817">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      note your response to comment 13 in our letter dated December 18,
      2009.&#160;&#160;Please tell us and disclose how much the BVI government
      had paid OC-BVI during 2007, 2008 and 2009 with respect to water
      sales.&#160;&#160;In light of your disclosures on page 84 that early in
      2007 the BVI government agreed to pay a lower rate based on its estimate
      of OC-BVI&#8217;s cost of producing water, we remain unclear why OC-BVI was not
      recognizing revenues using this lower rate instead of cash basis
      accounting in recognizing revenues beginning in
      2008.&#160;&#160;&#160;Please explain to us in
  detail.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Response:</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Payments
made by the BVI government for 2007-2009, which will be disclosed in OC-BVI&#8217;s
2009 financial statements, are as follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="right" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-STYLE: italic; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">2007</font></font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="bottom" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-STYLE: italic; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;$4,619,531</font></font></div>
            </td>
            <td valign="bottom" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td align="right" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-STYLE: italic; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">2008</font></font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="bottom" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-STYLE: italic; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;$6,711,516</font></font></div>
            </td>
            <td valign="bottom" width="70%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td align="right" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-STYLE: italic; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">2009</font></font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="bottom" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-STYLE: italic; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;$6,251,661</font></font></div>
            </td>
            <td align="left" valign="bottom" width="70%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-STYLE: italic; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; COLOR: #000000">&#160;*</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">*&#160;&#160;includes
$2 million partial payment on Court award made in fourth quarter and $899,206
paid for </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">water
delivered from new Bar Bay plant.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">In
March 2007, the BVI government unilaterally notified OC-BVI that it would pay
only $6.88 per gallon for water delivered from the Baughers Bay
plant.&#160;&#160;The BVI government took the position that $6.88 was OC-BVI&#8217;s
cost per gallon of water produced.&#160;&#160;The government noted in its
correspondence to OC-BVI that the $6.88 price was not an admission of the price
owed by the government but rather an acknowledgement that some amount must be
paid to provide enough funds to keep the plant operating.&#160;&#160;&#160;As
the government stated &#8220;consistent with our respect for the position of each
other and our amicable interactions thus far, (the payments at $6.88 should be
viewed) as credits against future payments until such time as agreement on the
price of water sold to us is finalized.&#8221; OC-BVI strongly objected
to&#160;&#160;this reduced payment amount and at no time agreed to accept $6.88
as the price due per gallon for water delivered.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">When
the Baughers Bay dispute arose OC-BVI sought counsel from its BVI attorneys as
to its ability to collect for the water it continued to provide from Baughers
Bay.&#160;&#160;Counsel observed that from the time the original contract for
the plant expired in May 2006 through December 2006, the BVI government
continued to accept the water provided from the Baughers Bay plant and continued
to pay for it at the price set forth in the original contract.&#160;&#160;BVI
legal counsel therefore advised OC-BVI that it would be entitled to continued
full payment for amounts billed at the rates in effect at the time the dispute
arose, rather than the lower rate set by the BVI government.&#160;&#160;Legal
counsel advised OC-BVI that under BVI law the continued payment by government of
OC-BVI&#8217;s invoices at the same rates as those that prevailed during the life of
the written agreement (as was the case for period June 2006-December 2006)
clearly implied an agreement between both parties for those rates and that such
rates would be enforced by law thereby leaving no basis for an arbitrary
diminution by the government of such rates. Legal counsel advised that by
continuing to accept the water supplied by OC-BVI during 2007, the BVI
government would be ordered by the Court to pay OC-BVI at the rate that OC-BVI
billed the BVI government.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Under
a new operating contract for Baughers Bay the OC-BVI Board was willing to
decrease the per gallon price from that charged under the prior
contract.&#160;&#160;However OC-BVI was adamant in its position that OC-BVI must
receive full payment for all amounts billed prior to the signing of a new
contract. Based upon amicable negotiations with government throughout 2007,
OC-BVI believed full payment for prior invoices - coupled with a new long-term
contract for Baughers Bay at lower rates - to be the most likely outcome of the
negotiations with government.</font></div>
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">In
determining the correct rate for revenue recognition for 2007 we concluded that
use of the rate of $6.88 was clearly inappropriate per the guidance of SAB 101
as it had no contractual basis or no legal basis.&#160;&#160;Based upon advice
of legal counsel and the status of negotiations with government, we and OC-BVI
believed the price for the water delivered was fixed and determinable at the
rate billed by OC-BVI and that collectability was reasonably
assured.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">OC-BVI
Board members held what they considered to be a very productive meeting with the
BVI Premier and the BVI Minister of Finance on March 7, 2008 at which time these
BVI government officials expressed their desire to resolve the dispute as soon
as possible, while promising a good faith lump sum payment to OC-BVI of $3.5
million.&#160;&#160;The results of this meeting were communicated to OC-BVI the
following week in a letter from the BVI Financial Secretary, in which the
Secretary stated &#8220;it is our expectation that such an agreement (for the Baughers
Bay plant) will be reached before the end of April 2008.&#8221;&#160;&#160;As we noted
on page 21 of our Form 10-Q for the quarter ended March 31, 2008:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">&#8220;OC-BVI
informed us that it had met with<font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font>members of the Ministry
and others in the BVI Government in March 2008 and that during this meeting the
BVI Government expressed its preference to resolve the Baughers Bay ownership
issue without litigation and to enter into negotiations for new water supply
agreements with OC-BVI on mutually acceptable terms for both the Baughers Bay
and Bar Bay plants.&#8221;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">When
we prepared in May 2008 to file our Form 10-Q for the fiscal quarter ended March
31, 2008, the April 2008 target date set by the government for a new agreement
had passed and government had not remitted the promised $3.5
million.&#160;&#160;&#160;At this time we and OC-BVI concluded that it was very
possible, given government&#8217;s inaction, that the Baughers Bay dispute would
ultimately be resolved via litigation rather than
negotiation.&#160;&#160;Despite what we believed to be the strong merits of
OC-BVI&#8217;s case, we and the OC-BVI Board recognized the inherent uncertainty as to
the timing and resolution of any lawsuit.&#160;&#160;Consequently we concluded
that OC-BVI could not clearly continue to meet all of the criteria for revenue
recognition per SAB 101, and therefore we adopted the cash
method.&#160;&#160;Please note that OC-BVI has continued to apply this
method.&#160;&#160;OC-BVI recognized the first $2 million of the Court award
when it was paid by the BVI government during the fourth quarter of 2009 and
does not plan to recognize the remaining $8.1 million awarded by the Court until
the BVI government pays this amount.</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
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      </div>
      <div id="HDR">
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Consolidated Financial
Statements &#8211; Ocean Conversion (BVI) Ltd.</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Notes to Consolidated
Financial Statements</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Note
2.&#160;&#160;Accounting Policies, page 82</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 45pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, when recording the accounts receivable from the BVI government,
      it appears the recordation of deferred revenues, a current liability item,
      upfront is inappropriate under GAAP given that OC-BVI did not have any
      remaining obligations to perform.&#160;&#160;If OCI-BVI believes some or
      all of the amounts receivable were uncollectible, we believe OCI-BVI
      should record a provision and a contra account for the uncollectible
      amounts.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Response:</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">OC-BVI&#8217;s
recording of deferred revenues resulted from its inability to meet one of the
four of the revenue recognition criteria of SAB 101. With respect to such
criteria OC-BVI had evidence that an arrangement existed, had delivered the
water, and (based upon the advice of its legal counsel) believed it had a fixed
and determinable price for the water sold.&#160;&#160;However with the likely
commencement of litigation OC-BVI could not deem collectability of the revenues
reasonably assured until the Eastern Caribbean Supreme Court issued its ruling
on the Baughers Bay litigation (see response to previous comment 2.
above).&#160;&#160;Accordingly, OC-BVI reported such billings as accounts
receivable in its December 31, 2008 balance sheet. However, as OC-BVI had
adopted the equivalent of the cash method for revenue recognition, it deferred
revenue recognition - through use of a deferred revenues account on its balance
sheet - for all amounts billed that had not yet been collected as of December
31, 2008 pending final determination by the Court.&#160;&#160;The recording of
these deferred revenues had no impact on the income statement or the net working
capital amounts presented in OC-BVI&#8217;s consolidated financial
statements.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
do not believe the recording of a provision and contra account is
appropriate.&#160;&#160;All accounts receivable which related to revenue that
OC-BVI recognized on the Baughers Bay contract have been collected as of
September 30, 2009.&#160;&#160;Therefore the recording of such a provision in
the income statement would require OC-BVI to recognize revenues prior to the
time the Company believes they met the criteria for recognition.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Item 11. Executive
Compensation, page 97</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Compensation Discussion and
Analysis, page 97</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">General</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
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          <tr valign="top">
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      reviewed your responses to comments 16 and 17 in our letter dated December
      18, 2009.&#160;&#160;In both responses, you refer not only to your Peer
      Companies but also &#8220;companies of similar size and employee base.&#8221; If you
      target some elements against your peer companies and some against a
      different group of companies that &#8220;are of similar size and employee base,&#8221;
      please also name those companies and clarify why you utilize different
      peer groups for different elements of
  compensation.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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    </div>
    <div>&#160;</div>
    <div>
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          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Response:</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
references to &#8220;companies of similar size and employee base&#8221; are references to
the companies comprising our &#8220;Peer Companies.&#8221;&#160;&#160;In order to avoid
potential confusion in future filings, we will refer to the defined term &#8220;Peer
Companies&#8221; instead of referring to &#8220;companies of similar size and employee
base.&#8221;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -18pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Incentive &#8211; Based
Compensation, page 99</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      reviewed your responses comments 20 and 21 in our letter dated December
      18, 2009.&#160;&#160;Please disclose the historical net income and
      earnings per share targets for Mr. McTaggart&#8217;s incentive-based
      compensation. Please also disclose whether there were any minimum and
      maximum thresholds associated with these targets.&#160;&#160;If so, please
      disclose the percentage of base salary associated with those
      thresholds.&#160;&#160;To the extent that there are numerical targets
      associated with other goals for your named executive officers, please also
      disclose those targets.&#160;&#160;Lastly, please discuss how the
      company&#8217;s actual performance measured against targeted
    goals.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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      </font></div>
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              <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Response:</font></div>
            </td>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">In
the discussion that follows, we disclose the net income and earnings per share
targets for Mr. Frederick McTaggart&#8217;s incentive-based compensation and the
percentage of base salary associated with those thresholds. Additionally, we
disclose historical consolidated financial information associated with other
performance goals for our named executive officers and how our actual
performance measured against targeted goals.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
consider certain of the financial targets associated with performance goals
established in connection with the incentive-based compensation for two of our
named executive officers, Ramjeet Jerrybandan and Gregory McTaggart, in 2008 to
be confidential and we have not disclosed such information in any publicly
available documents. These financial targets relate to (i) the annual gross
margin of Consolidated Water (Belize) Limited, Ocean Conversion (BVI) Ltd., and
Ocean Conversion (Cayman) Limited and (ii) the Operations and Maintenance
expenses, excluding Cost of Sales, for Cayman Water Company Limited and Ocean
Conversion (Cayman) Limited. These financial targets were based on our internal
budget adopted by our Board of Directors for 2008.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
financial targets associated with performance goals established in connection
with the incentive-based compensation for Messrs. Jerrybandan and McTaggart that
we consider confidential are of a commercial nature and meet the standards for
confidentiality elaborated by the courts under the Freedom of Information
Act.&#160;&#160;Under the Freedom of Information Act, 5 U.S.C.A. &#167;552(b)(4),
federal courts have interpreted commercial or financial information to be
&#8220;confidential&#8221; when public disclosure of such information would impair the value
of the information to a company and would create the likelihood of substantial
harm to a company&#8217;s competitive position by providing detailed cost, financial,
investment, and marketing information to competitors and future collaborators,
partners, suppliers and licensees of the company.&#160;&#160;See <font style="DISPLAY: inline; TEXT-DECORATION: underline">National Parks and
Conservation Association v. Kleppe</font>, 547 F.2d 673, 677-678 (D.C. Cir.
1976); <font style="DISPLAY: inline; TEXT-DECORATION: underline">National Parks
and Conservation Association v. Morton</font>, 498 F.2d 765, 770 (D.C. Cir.
1974).&#160;&#160;The person claiming an exemption need not show any actual
adverse effect on its competitive position, but need only demonstrate that there
is actual competition and that substantial competitive injury would likely
result from disclosure.&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Gulf &amp; Western Indus.,
Inc. v. United States</font>, 615 F.2d 527, 530 (D.C. Cir. 1979); <font style="DISPLAY: inline; TEXT-DECORATION: underline">Professional Review
Organization of Florida Inc. v. United States Dept. of Health and Human
Services</font>, 607 F. Supp. 423, 425-26 (D.D.C. 1985).</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">We believe that disclosure of the
annual gross margin of Consolidated Water (Belize) Limited, Ocean Conversion
(BVI) Ltd., and Ocean Conversion (Cayman) Limited would cause us competitive
harm.&#160;&#160;Consolidated Water (Belize) Limited has only one contract with
one client (Belize Water Services Ltd.) from which it derives its
revenue.&#160;&#160;Ocean Conversion (BVI) Ltd. has two contracts with only one
client (the Government of The British Virgin Islands Water and Sewerage
Department (the &#8220;BVI Government&#8221;)) from which it derives its
revenue.&#160;&#160;Ocean Conversion (Cayman) Limited has four contracts with
only one client (the Water Authority-Cayman) from which it derives its
revenue.&#160;&#160;Disclosure of</font> <font style="DISPLAY: inline; FONT-STYLE: italic">the annual gross margin of these
companies would provide our competitors, some of which have greater financial,
managerial and other resources than we do, with important information about our
operations. As a result, our competitors would be able to use this information
to submit proposals to Belize Water Services Ltd., the BVI Government and</font>
<font style="DISPLAY: inline; FONT-STYLE: italic">the Water Authority-Cayman to
enter into contracts with more favorable pricing terms causing us to lose
business.&#160;&#160;Disclosure would also provide our other clients with the
pricing terms of these contracts which they could use to attempt to negotiate
more favorable terms with us upon renewal of their current
contracts.</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">We also believe that disclosure of
the Operations and Maintenance expenses, excluding Cost of Sales, for Cayman
Water Company Limited and Ocean Conversion (Cayman) Limited would cause us
competitive harm.&#160;&#160;As discussed above, Ocean Conversion (Cayman)
Limited has four contracts with only one client from which it derives its
revenue.&#160;&#160;Cayman Water Company Limited sells water to customers within
a prescribed service area on Grand Cayman under an exclusive license granted by
the Cayman Islands government.&#160;&#160;Except for the prices under our
agreements with three customers, the prices at which Cayman Water Company
Limited sells water are set out under the license and vary depending upon the
type and location of the customer and the monthly volume of water
purchased.&#160;&#160;Disclosure of</font> <font style="DISPLAY: inline; FONT-STYLE: italic">the Operations and Maintenance
expenses, excluding Cost of Sales, for Cayman Water Company Limited and Ocean
Conversion (Cayman) Limited would allow our customers to determine our profit
margin and may cause our customers to seek more favorable pricing terms when
their contracts come up for renewal.&#160;&#160;Additionally, disclosure would
allow our competitors to determine our operating efficiencies and enable those
competitors to submit contract proposals with pricing terms lower than our
operating and maintenance costs, thereby causing us to lose
business.</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
harm that we would suffer from disclosure of such sensitive information would
greatly outweigh any benefit that disclosure might provide to the public. Rather
than disclosing information that would be harmful to our business, we will
disclose that the compensation to be paid to Messrs. Jerrybandan and Gregory
McTaggart will be based, in part, on the profitability of the plants operated by
Consolidated Water (Belize) Limited, Ocean Conversion (BVI) Ltd., and Ocean
Conversion (Cayman) Limited. We believe that this disclosure informs a reader
that a part of two of our executives&#8217; incentive-based compensation is determined
by the profitability of operations without providing our customers and
competitors with information that would be harmful to our operations. It should
also be noted that no specific portion of the incentive-based bonus for Messrs.
McTaggart or Jerrybandan is allocated to the profitability of our operations
described below. Accordingly, as permitted by Instruction 4 to Item 402(b) of
Regulation S-K promulgated under the Securities Act of 1933, as amended, we will
discuss the difficulty for the executive to achieve, or the likelihood of us
achieving, the undisclosed target levels.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
discussion of the performance goals for which historical consolidated financial
goals were established for each of our named executive officers follows. Please
note that no numerical financial goals were established in 2008 for Gerard
Pereira.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    </div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Frederick McTaggart, Chief
Executive Officer</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
Chief Executive Officer&#8217;s bonus for 2008 was determined at the sole discretion
of our Board of Directors and was calculated by our Board of Directors based
upon their assessment of Mr. McTaggart&#8217;s performance with regard to certain
goals. The performance goals for which numerical targets were established and
the correlating value assigned to each goal are discussed below.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
Company achieving our budgeted net income and earnings per share targets. The
net income and earnings per share targets used in determining Mr. McTaggart&#8217;s
2008 incentive-based compensation were based upon the 2008 budget approved by
our Board of Directors. The net income and earnings per share targets were
$14,107,173 and $0.97, respectively. The amounts budgeted were considered to be
the minimum thresholds, but there was no maximum threshold established for these
targets. Our Board of Directors determined that if the net income and earnings
per share targets were achieved, Mr. McTaggart would be entitled to a bonus in
an amount equal to 30% of his base salary. The actual net income and earnings
per share for 2008 were $7,209,716 and $0.50, respectively. Although we did not
meet the target income and earnings targets, our Board of Directors determined
that Mr. McTaggart had met 35% of the objectives associated with this
goal.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
Company staying within the approved capital expenditure budgets for operations.
The capital expenditure budget for operations used in determining Mr.
McTaggart&#8217;s 2008 incentive-based compensation was based upon the 2008 budget
approved by our Board of Directors. The 2008 capital expenditure budget for
operations was $3,858,000. The amount budgeted was considered to be the maximum
threshold, but there was no minimum threshold established for this target. Our
Board of Directors determined that, if we stayed within the approved capital
expenditure budget for operations, Mr. McTaggart would be entitled to a bonus in
an amount equal to 25% of his base salary. The actual capital expenditures for
operations for 2008 were $1,102,753. Our Board of Directors determined that Mr.
McTaggart had met 30% of the objectives associated with this goal.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">David Sasnett, Chief
Executive Officer</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
Chief Financial Officer was entitled to an annual bonus for 2008 in an amount
not less than 25% of his then current base salary based on meeting certain
performance goals agreed to with our Chief Executive Officer. These performance
goals are considered in their entirety and we do not place values or weights on
any specific goals. The performance goals for which numerical targets were
established are discussed below.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The Company
achieving its budgeted consolidated accounting and auditing costs. The budgeted
consolidated accounting and auditing costs used in determining Mr. Sasnett&#8217;s
2008 incentive-based compensation were based upon the 2008 budget approved by
our Board of Directors. The budgeted consolidated accounting and auditing costs
for 2008 were $381,000. The amount budgeted was considered to be the maximum
threshold, but there was no minimum threshold established for this target. The
consolidated accounting and auditing costs for 2008 were $326,000. We achieved
this goal.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Ramjeet Jerrybandan, VP of
Overseas Operations</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">For
2008, our VP of Overseas Operations was entitled to an annual bonus in an amount
not less than 25% of his then current base salary based on meeting certain
performance goals that were agreed to with our Chief Executive Officer. These
performance goals are considered in their entirety and we do not place values or
weights on any specific goals.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">In order to maximize profitability,
our reverse osmosis desalination systems are designed to operate at high
equipment utilization factors and at </font><font style="DISPLAY: inline; FONT-STYLE: italic">relatively constant energy and
chemical consumption rates. We believe that careful monitoring of these systems,
a strong preventative maintenance </font><font style="DISPLAY: inline; FONT-STYLE: italic">plan, and the ability to rapidly and
effectively respond to unforeseen conditions will ensure maximum profitability
of these systems. In setting Mr. </font><font style="DISPLAY: inline; FONT-STYLE: italic">Jerrybandan&#8217;s financial targets for
2008, specifically goals #1 and #2 identified below, our Board of Directors
</font><font style="DISPLAY: inline; FONT-STYLE: italic">considered: (i) the
optimum operational performance of each plant at its current point within its
life cycle, and (ii) the expected profitability of each plant at its estimated
customer utilization.&#160;&#160;Our Board of Directors set Mr. Jerrybandan&#8217;s
financial targets at or</font> <font style="DISPLAY: inline; FONT-STYLE: italic">just below the results that would be
achieved based upon optimum operational performance.&#160;&#160;Given
</font><font style="DISPLAY: inline; FONT-STYLE: italic">the environmental and
</font><font style="DISPLAY: inline; FONT-STYLE: italic">logistical difficulties
associated with operating and maintaining seawater reverse osmosis desalination
plants in remote tropical island </font><font style="DISPLAY: inline; FONT-STYLE: italic">locations, such as an unreliable and
inconsistent power supply, difficulties obtaining necessary supplies on a timely
basis and the limited availability of skilled personnel, our Board of Directors
</font><font style="DISPLAY: inline; FONT-STYLE: italic">determined that the
financial targets established for Mr. Jerrybandan were moderate to difficult to
achieve.</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
performance goals for which numerical targets were established are discussed
below.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Maintain
or increase annual gross margin of Consolidated Water (Belize) Limited in 2008.
The budgeted annual gross margin of Consolidated Water (Belize) Limited used in
determining Mr. Jerrybandan&#8217;s 2008 incentive-based compensation was based upon
the 2008 budget approved by our Board of Directors. The amount budgeted was
considered to be the minimum threshold, but there was no maximum threshold
established for this target. Consolidated Water (Belize) Limited achieved this
goal.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Maintain
or increase annual gross margin of Ocean Conversion (BVI) Ltd. The budgeted
annual gross margin of Ocean Conversion (BVI) Ltd. used in determining Mr.
Jerrybandan&#8217;s 2008 incentive-based compensation were based upon the 2008 budget
approved by the Board of Directors. The amount budgeted was considered to be the
minimum threshold, but there was no maximum threshold established for this
target. As result of the adoption by Ocean Conversion (BVI) Ltd. of the cash
method for revenue recognition during 2008, the gross margin target for Ocean
Conversion (BVI) Ltd. was ultimately not used as a performance goal for Mr.
Jerrybandan.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Develop
and implement an effective operating plan for the Bermuda Plant and achieve
budgeted profit targets. The budgeted profit target for the Bermuda Plant used
in determining Mr. Jerrybandan&#8217;s 2008 incentive-based compensation was based
upon the 2008 budget approved by the Board of Directors. However the Bermuda
Plant did not commence operations in 2008 as anticipated and consequently the
budgeted profit target and the operating plan for the Bermuda Plant were
ultimately not used as performance goals for Mr. Jerrybandan.</font></div>
      </div>
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        </div>
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          </div>
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      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Gregory S. McTaggart, VP of
Cayman Operations</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">For
2008, our VP of Cayman Operations was entitled to an annual bonus in an amount
not less than 25% of his then current base salary based on meeting certain
performance goals that were agreed to with our Chief Executive Officer. These
performance goals are considered in their entirety and we do not place values or
weights on any specific goals.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">In
order to maximize profitability, our reverse osmosis desalination systems are
designed to operate at high equipment utilization factors and at relatively
constant energy and chemical consumption rates. We believe that careful
monitoring of these systems, a strong preventative maintenance plan, and the
ability to rapidly and effectively respond to unforeseen conditions will ensure
maximum profitability of these systems.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
also believe that minimizing non-revenue water (caused by leakage, theft and
under-metering) within our retail water distribution system is essential to the
profitable operation of our retail water utility on Grand Cayman. Over the past
two years, our Chief Executive Officer has set consistently lower non-revenue
water targets for the Company. In setting Mr. Gregory McTaggart&#8217;s financial
targets for 2008, specifically goals #1, #2 and #3 identified below, our Board
of Directors considered: (i) the optimum operational performance of each plant
at its current point within its life cycle, (ii) the expected profitability of
each plant at its estimated customer utilization. and (iii) historical
non-revenue water data for the Company over the past ten years.&#160;&#160;Our
Board of Directors set Mr. McTaggart&#8217;s financial targets at or just below the
results that would be achieved based upon optimum operational
performance.&#160;&#160;Given the environmental and logistical difficulties
associated with operating and maintaining seawater reverse osmosis desalination
plants and water distribution systems in a remote tropical island location, such
as difficulties obtaining necessary supplies on a timely basis and the limited
availability of skilled personnel, our Board of Directors determined that the
financial targets established for Mr. McTaggart were moderate to difficult to
achieve. This proved to be the case, as only three out of five numerical targets
established for performance goals were achieved in 2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
performance goals for which numerical targets were established are discussed
below.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Maintain
or increase 2007 gross margins in 2008 for Cayman Water Company Limited and
Ocean Conversion (Cayman) Limited. The gross margin for Cayman Water Company
Limited in 2007 was $12,743,000. The 2007 gross margins for Cayman Water Company
Limited and Ocean Conversion (Cayman) Limited were considered to be the minimum
thresholds, but there were no maximum thresholds established.&#160;&#160;The
gross margin for Cayman Water Company Limited in 2008 was
$12,516,000.&#160;&#160;We did not achieve this goal with respect to Cayman
Water Company Limited, and achieved this goal with respect to Ocean Conversion
(Cayman) Limited.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Lower
overall water loss percentage for Cayman Water Company Limited retail from the
2007 figure and implement a preventative/detective water loss program using
pressure and flow monitoring equipment. The 2007 overall water loss percentage
for Cayman Water Company Limited retail was 6.63%. This percentage was
considered to be the maximum threshold, but there was no minimum threshold
established. The 2008 overall water loss percentage for Cayman Water Company
Limited retail was 6.04%. We achieved the water loss target percentage, but Mr.
McTaggart did not implement a preventative/detective water loss program before
the end of 2008.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Contain
Operations and Maintenance expenses, excluding Cost of Sales, to 2008 budget or
below for Cayman Water Company Limited and Ocean Conversion (Cayman) Limited.
The 2008 budgets for Operations and Maintenance expenses, excluding Cost of
Sales, for Cayman Water Company Limited and Ocean Conversion (Cayman) Limited
were considered to be the maximum thresholds, but there were no minimum
thresholds established for these targets. We achieved this goal.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Reduce
total overtime wages paid to Cayman Water Company Limited and Ocean Conversion
(Cayman) Limited staff to below total 2007 figure. The total overtime wages paid
to the Cayman Water Company Limited and Ocean Conversion (Cayman) Limited staffs
in 2007 were $26,500 and $44,200, respectively. These amounts were considered to
be minimum thresholds, but there was no maximum threshold established. The total
overtime wages paid to the Cayman Water Company Limited and Ocean Conversion
(Cayman) Limited staffs in 2008 were $44,000 and $45,200, respectively. We did
not achieve this goal.</font></div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Form 10-Q for the Fiscal
Quarter Ended September 30, 2009</font></font></div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Notes to Condensed
Consolidated Financial Statements</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Note
6.&#160;&#160;Investment in and loan to affiliate, page 11</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      note your response to comment 27 in our letter dated December 18, 2009 and
      the related valuation report dated November 4, 2009.&#160;&#160;Please
      tell us the current status of the Court rulings and the negotiations with
      the BVI government related to the contract to continue to operate the
      Baughers Bay plant as well as the new Bar Bay plant
      contract.&#160;&#160;Please advise us if there are any significant
      developments since the last response that you reasonably expect to have a
      favorable or unfavorable impact on the impairment assessment of your
      OCI-BVI equity investment.</font></div>
            </td>
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      </table>
    </div>
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    <div>
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      </font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Response:</font></div>
            </td>
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      </table>
    </div>
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    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
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      </font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
      status of the Court rulings have not changed as a timetable has not been
      set by the Appellate Court for hearing the appeals filed by both
      parties.&#160;&#160;We have been informed by OC-BVI&#8217;s legal counsel that
      the BVI government&#8217;s appeal of the Court&#8217;s decision does not relieve them
      of their obligation to immediately pay OC-BVI the amount awarded
      (approximately $10 million) by the Court.&#160;&#160;During the fourth
      quarter of 2009 the BVI government made a partial payment of $2 million on
      the amount awarded OC-BVI by the Court.&#160;&#160;The OC-BVI Board has
      directed its&#160;legal counsel to issue a demand letter for payment of
      the remaining $8 million by no later than the end of March
      2010.</font></div>
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              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">On
      March 4, 2010 the BVI government signed the definitive contract with
      OC-BVI for the new Bar Bay plant.&#160;&#160;The terms of this contract
      were consistent with the previously executed &#8220;Heads of Terms&#8221;
      agreement.</font></div>
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      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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      </font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">On
      February 18, 2010 the BVI News announced that the BVI government had
      signed a contract with Biwater, Inc. for the construction and operation of
      a new water plant to serve Tortola.&#160;&#160;This development was not
      expected by OC-BVI and it appears, from the terms announced, that the
      price of water to be supplied from this new plant will be notably higher
      than the price offered by OC-BVI under its most recent
      proposal.&#160;&#160;The BVI government also announced it will seek to
      negotiate a new one year contract for Baughers Bay with
      OC-BVI.&#160;&#160;We and OC-BVI are now of the opinion that, as a result
      of the contract awarded to Biwater, it is now unlikely that OC-BVI will
      obtain a long-term contract for the operation of Baughers
      Bay.&#160;&#160;While we have not yet completed our impairment analysis
      calculations, we nevertheless expect to record a substantial impairment
      loss for the fourth quarter of 2009 for our investment in OC-BVI due to
      the loss of OC-BVI&#8217;s previously anticipated&#160;cash flows&#160;from a
      new contract for the operation of Baughers
Bay.</font></div>
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    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; COLOR: #000000">*&#160;&#160;&#160;&#160;&#160;&#160;*&#160;&#160;&#160;&#160;&#160;&#160;*&#160;&#160;&#160;&#160;&#160;&#160;*&#160;&#160;&#160;&#160;&#160;&#160;*</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If you
require any additional information, kindly contact our United States legal
counsel, Leslie J. Croland with Edwards Angell Palmer &amp; Dodge LLP at (561)
833-7700.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sincerely,</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">/s/ David W. Sasnett<br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David W.
Sasnett</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
Financial Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; COLOR: #000000">Cc:</font></font></div>
            </td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; COLOR: #000000">Catherine T. Brown, Staff
      Attorney</font></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; COLOR: #000000">Frederick W. McTaggart, Chief
      Executive Officer</font></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; COLOR: #000000">Leslie J. Croland,
      P.A.</font></font></div>
              </div>
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      </table>
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