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<SEC-DOCUMENT>0001015402-04-001555.txt : 20040419
<SEC-HEADER>0001015402-04-001555.hdr.sgml : 20040419
<ACCEPTANCE-DATETIME>20040419115633
ACCESSION NUMBER:		0001015402-04-001555
CONFORMED SUBMISSION TYPE:	SB-2
PUBLIC DOCUMENT COUNT:		6
FILED AS OF DATE:		20040419

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PURE CYCLE CORP
		CENTRAL INDEX KEY:			0000276720
		STANDARD INDUSTRIAL CLASSIFICATION:	REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580]
		IRS NUMBER:				840705083
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		SB-2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-114568
		FILM NUMBER:		04739801

	BUSINESS ADDRESS:	
		STREET 1:		8451 DELAWARE STREET
		CITY:			THORNTON
		STATE:			CO
		ZIP:			80260
		BUSINESS PHONE:		3032923456

	MAIL ADDRESS:	
		STREET 1:		8451 DELAWARE STREET
		CITY:			THORNTON
		STATE:			CO
		ZIP:			80260
</SEC-HEADER>
<DOCUMENT>
<TYPE>SB-2
<SEQUENCE>1
<FILENAME>doc1.txt
<TEXT>
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 19, 2004.

                                                          REGISTRATION NO.  333-
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
                       ___________________________________

                                    FORM SB-2

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                       ___________________________________

                             PURE CYCLE CORPORATION
             (Exact name of registrant as specified in its charter)
                       ___________________________________

               DELAWARE                               84-0705083
    (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)               Identification No.)

                                         4941
                (Primary Standard Industrial Classification Code)
                       ___________________________________

                                8451 DELAWARE ST.
                            THORNTON, COLORADO 80260
                                 (303) 292-3456
    (Address, including zip code, and telephone number, including area code, of
                    registrant's principal executive offices)

                                 MARK W. HARDING
                                8451 DELAWARE ST.
                            THORNTON, COLORADO 80260
                            TELEPHONE: (303) 292-3456
  (Name, address, including zip code, and telephone number, including area code,
                              of agent for service)


                                 With copies to:

                               WANDA J. ABEL, ESQ.
                            DAVIS GRAHAM & STUBBS LLP
                       1550 SEVENTEENTH STREET, SUITE 500
                             DENVER, COLORADO 80202
                            TELEPHONE: (303) 892-9400
                       ___________________________________


APPROXIMATE  DATE  OF  PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this  registration  statement  becomes  effective.

     If  this  Form  is  filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and  list  the  Securities  Act  registration  statement  number  of the earlier
effective  registration  statement  for  the  same  offering.  [ ]

     If  this  Form  is a post-effective amendment filed pursuant to Rule 462(c)
under  the  Securities  Act, check the following box and list the Securities Act
registration  statement  number  of the earlier effective registration statement
for  the  same  offering.  [ ]

     If  this  Form  is a post-effective amendment filed pursuant to Rule 462(d)
under  the  Securities  Act, check the following box and list the Securities Act
registration  statement  number  of the earlier effective registration statement
for  the  same  offering.  [ ]

     If  delivery of the prospectus is expected to be made pursuant to Rule 434,
please  check  the  following  box.  [ ]


<PAGE>
<TABLE>
<CAPTION>
                                   _______________________________________

                                       CALCULATION OF REGISTRATION FEE

- -----------------------------------------  ------------  ----------------  ---------------  -----------------
                                                             Proposed         Proposed
                                              Amount         maximum           maximum
Title of each class of                        to be       offering price      aggregate         Amount of
securities to be registered                 registered    per share (1)    offering price   registration fee
- -----------------------------------------  ------------  ----------------  ---------------  -----------------
<S>                                        <C>           <C>               <C>              <C>
Common Stock, $.00333 par value per share  3,586,210(2)  $           9.05  $ 32,455,200.50  $        4,112.08
- -----------------------------------------  ------------  ----------------  ---------------  -----------------
</TABLE>

(1)  Estimated solely for the purpose of computing the registration fee. The
     proposed maximum offering price per share and maximum aggregate offering
     price for the shares being registered hereby are calculated in accordance
     with Rule 457(c) under the Securities Act using the average of the high and
     low sales price per share of our common stock on April 14, 2004, as
     reported on the OTC Bulletin Board.

(2)  Consists of 700,000 shares of common stock being offered by Pure Cycle
     Corporation, 2,418,443 shares of common stock being offered by certain
     selling stockholders of Pure Cycle Corporation, and an additional 467,767
     shares issuable by Pure Cycle upon the exercise of the underwriter's
     overallotment option.

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.


                                        2
<PAGE>
The information in this prospectus is not complete and may be changed.  The
selling stockholders may not sell these securities pursuant to this prospectus
until the registration statement filed with the Securities and Exchange
Commission becomes effective.  This prospectus is not an offer to sell these
securities and neither Pure Cycle nor the Selling Stockholders are soliciting
offers to buy these securities in any state where the offer or sale is not
permitted.

                  Subject to completion, dated April 19, 2004


PROSPECTUS

                                3,118,443 SHARES
                             PURE CYCLE CORPORATION
                         COMMON STOCK, $.00333 PAR VALUE


                                ________________

     The 3,118,443 shares of common stock, $.00333 par value, offered hereby are
being offered by Pure Cycle Corporation and by certain Pure Cycle stockholders.
Of the total number of shares offered, 700,000 shares are being offered by Pure
Cycle and 2,418,443 shares are being offered by the selling stockholders.  See
"Selling Stockholders."

     Pure Cycle's common stock is quoted on the OTC Bulletin Board under the
symbol "PCYL."  On April 15, 2004, the last reported sales prices of our common
stock on the OTC Bulletin Board was $9.30 per share.  We have applied for
listing of our common stock on the NASDAQ Small Cap Market under the symbol
"__________."

     FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE.  ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                                                             PER SHARE     TOTAL
                                                             ---------     -----
Offering price                                                   *           *
Underwriting discount                                            *           *
Proceeds, before expenses, to Pure Cycle                         *           *
Proceeds, before expenses, to selling stockholders               *           *

     We have granted an over-allotment option to the underwriters. Under this
option, the underwriters may elect to purchase a maximum of 467,767 additional
shares from us within 30 days following the date of this prospectus to cover
over-allotments. See "Plan of Distribution."


                              FLAGSTONE SECURITIES


                The date of this prospectus is __________, 2004.



<PAGE>
                                TABLE OF CONTENTS


                                                                            Page
                                                                            ----

PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .16
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
MARKET PRICE OF AND DIVIDENDS FOR OUR COMMON EQUITY AND
    RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . 20
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . 22
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . .44
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSHIP AND
    MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . .48
DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . . . . . . . . . . 57


                                  ____________

     As used in this prospectus, the terms "Pure Cycle," the "Company," "we,"
"our," or "us" refer to Pure Cycle Corporation, unless the context otherwise
indicates.

     Unless otherwise stated, all information in this prospectus gives effect
to the 1-for-10 reverse stock split of our common stock that will be effective
April 26, 2004.  The financial statements beginning on Page F-1 do not give
effect to the reverse stock split.

     Unless otherwise stated in this prospectus, all information contained in
this prospectus assumes no exercise of the over-allotment option granted to the
underwriters.

     The underwriters are offering the shares subject to various conditions and
may reject all or part of any order.  The common stock should be ready for
delivery on or about _____________ ___, 2004 against payment in immediately
available funds.


                                        2
<PAGE>
                               PROSPECTUS SUMMARY

     This summary  highlights information contained elsewhere in this
prospectus.  Because it is a summary, it does not contain all of the information
that you should consider before investing in our common stock.  You should read
the entire prospectus carefully.

                                   THE COMPANY

     We own or have rights to use significant water assets which we have begun
to utilize to provide water and wastewater services to customers located in the
Denver, Colorado metropolitan area near our principal water assets.  We will
operate water and wastewater systems to deliver and treat the water we provide.
Our services will include designing, constructing, operating and maintaining
systems to service our customers.

Rangeview Water Assets.
- ----------------------

     We have exclusive access to approximately 29,000 acre feet per year of
water from, and the exclusive right to provide water and wastewater services to,
24,000 acres of primarily undeveloped land in eastern Colorado known as the
Lowry Range (the "Lowry Range service area").  The Lowry Range is located in
Arapahoe County approximately 15 miles southeast of Denver and 12 miles south of
the Denver International Airport.  Of the approximately 29,000 acre feet of
water to which we have access, 17,500 acre feet are available to us for use on
the Lowry Range.  We own the remaining 11,650 acre feet and we can "export" it
from the Lowry Range to supply water to nearby communities and developers in
need of additional water supplies ("Export Water").  We acquired these rights
and the Export Water in 1996 when we entered into an 85-year agreement with the
State of Colorado Board of Land Commissioners ("State Land Board"), which owns
the Lowry Range, and the Rangeview Metropolitan District (the "District"), a
quasi-municipal political subdivision formed for the sole purpose of providing
water and wastewater services to the Lowry Range.  We refer to all of these
assets as our Rangeview water supply.

     We are in the early stages of utilizing our Rangeview water assets.  Since
June 2001, we have been supplying water and wastewater services in the Lowry
Range service area to approximately 200 single family equivalent, or SFE, units
through service to the Ridge View Youth Services Center, a 500 bed juvenile
facility.  In October 2003, we entered into a contract  to provide water service
to Sky Ranch, a proposed mixed-use development of single and multi-family
residences and commercial space.  Sky Ranch will be located approximately four
miles north of the Lowry Range along Interstate-70 in Arapahoe County.  When the
development is complete, we expect to supply Sky Ranch with water services for
4,000 SFE units.  Our agreement does not call for us to provide wastewater
services to Sky Ranch.  We expect the initial development of Sky Ranch to begin
in the fall of 2004.  While we are currently actively marketing our water
services to other developers and property owners in areas near the Sky Ranch
development, the Ridge View Youth Services Center represents our only current
operation.

     Operations.  We will have two sources of revenue from providing water and
     ----------
water services.  We will receive a one time "tap" fee, generally paid by the
developer, and annual service and use charges based on the monthly metered water
deliveries to the water user.  The water tap fee has two components:  a system
development fee, which gives the customer access to the water system and is used
for construction of the water delivery system, and a water resource fee, which
defrays the costs of acquiring the water rights.  Under the terms of our
agreement with the State Land Board, our tap fees and use charges may not exceed
the average of the tap fees and use charges of three nearby communities.  This
average, which is adjusted annually, has risen by approximately 52% since 2000
and is presently $12,420 per SFE.  Generally, we receive 95% of these tap fees


                                        3
<PAGE>
after deducting a 12% royalty payable to the State Land Board.  In exchange for
developing, operating and maintaining the wastewater system, we receive 100% of
wastewater tap fees, presently $4,883 per SFE, and 90% of monthly wastewater
usage fees.  We also receive wastewater service fees.  Annual water service fees
per SFE are approximately $578 and annual wastewater service fees per SFE are
approximately $404.

     We expect to utilize the portion of the tap fees designated by the District
as the system development portion to construct the infrastructure necessary to
deliver water.  We expect ongoing water and wastewater usage fees to cover costs
of operating the water and wastewater systems.  We will design the water and
wastewater delivery systems and contract with third parties for construction of
the systems.  We plan to utilize a dual distribution system that contains two
water pipes, one for potable water that will go directly to a residence and a
second for non-potable water that will be used to deliver water for outdoor
irrigation use.  A third pipe will return the wastewater to our treatment
facility where it will be processed to Colorado Department of Public Health and
Environment ("CDPHE") standards for irrigation water and then, subject to
approval by the CDPHE,  returned through the second delivery pipe for outdoor
non-potable use.

     Under the terms of financing agreements we entered into in connection with
the acquisition of our Rangeview water assets, we are obligated to pay the first
$36,240,000 of proceeds (after royalty payments) from the sale of Export Water
to parties to these agreements.  Generally, we will make these payments from the
water resource portion of the tap fees we receive.  These financing agreements
will not restrict our use of the system development portion of the tap fees to
finance construction of the water and wastewater delivery systems.

     Opportunity.  The Denver Regional Council of Governments has estimated that
     -----------
between 2000 and 2025 the population in the Denver metropolitan area will
increase from 2.4 million to 3.4 million.  An independent consultant to the
State Land Board and the District has forecast that approximately 50% of new
land development in metropolitan Denver will occur in the area south of
Interstate-70 and east of Interstate-25, an area of Arapahoe County that
includes the Lowry Range, Sky Ranch and surrounding areas.  Because of ongoing
water shortages, any developer submitting a land use plan to Arapahoe County is
required to provide assurance that water will be available to service the
development prior to any consideration of a change in land use.

     The State Land Board is in the initial stages of developing a plan to
solicit requests for proposals (RFPs) to engage a development partner to assist
the State Land Board in planning for future development of the Lowry Range.  If
RFPs are sent as planned later this summer, we expect that the first stage of
the long-term development of the Lowry Range could start within three years.  We
estimate that full development of the Lowry Range will take in excess of 30
years.

     We have received confirmation from independent engineering firms that our
Rangeview water assets are capable of providing water service to approximately
80,000 SFE units.  Our Rangeview water assets have been adjudicated in the
Colorado water courts in decrees specifying the amount of water we own or have a
right to use and that the water is available for municipal use.  We believe,
based on these Water Court decrees and the location of our water on or near
areas of projected future development, that we have significant opportunities to
utilize our water resources.

Paradise Water Supply.
- ---------------------

     We own conditional water rights in western Colorado that entitle us to
build a 70,000 acre foot reservoir to store tributary water on the Colorado
River.  We will seek to develop and market this water either to the greater
Denver metropolitan area or in markets in the downstream states of Nevada,


                                        4
<PAGE>
Arizona and California.  Our ability to use this asset may be limited, however,
because of constraints imposed by the difficulties and costs involved in
transporting the water out of  the Colorado River watershed to the Denver
metropolitan area and because of legal complications in transferring such water
to downstream states under the interstate Colorado River Compact.

General.
- -------

     We were incorporated in Delaware in 1976.  Our corporate offices are
located at 8451 Delaware Street, Thornton, Colorado 80260.  Our telephone number
is (303) 292-3456.




                                        5
<PAGE>
<TABLE>
<CAPTION>
                                     THE OFFERING

<S>                                 <C>
Common stock offered by Pure Cycle  700,000 shares

Common stock offered by selling     2,418,443 shares
  stockholders . . . . . . . . . .

Common stock outstanding before. .  11,288,030 shares
  the offering . . . . . . . . . .

Common stock to be outstanding      11,988,030 shares
  after the offering . . . . . . .

Use of proceeds of common stock     To pay outstanding indebtedness, for water
  sold by Pure Cycle . . . . . . .  system expenditures, and for working capital and
                                    other general corporate purposes, including
                                    acquisitions and to buy out third party rights to
                                    receive proceeds from the sale of Export Water,
                                    to the extent such rights are available on
                                    acceptable terms.

OTC Bulletin Board and symbol. . .  PCYL

Proposed NASDAQ SmallCap
  symbol . . . . . . . . . . . . .
</TABLE>

     The shares of common stock outstanding before the offering is based on the
number of shares of common stock outstanding at February 29, 2004, increased
by:

     -    645,500 shares of common stock issued upon conversion on April __,
          2004 of 6,455,000 shares of Series D preferred stock,

     -    200,000 shares of common stock issued upon conversion on April __,
          2004 of 2,000,000 shares of Series D-1 preferred stock, and

     -    326,667 shares of common stock purchasable on exercise of outstanding
          stock options at an exercise price of $1.80 per share and 1,970,775
          shares of common stock purchasable on exercise of outstanding warrants
          at an exercise price of $1.80 per share, which shares are being sold
          in this offering (the "Selling Stockholder Option and Warrant
          Shares").

     and excludes:

     -    2,273,333 shares of common stock issuable on the exercise of
          outstanding options at an exercise price of $1.80 per share,

     -    an additional 1,600,000 shares of common stock reserved for future
          issuance under our stock option plan,

     -    469,525 shares of common stock issuable on the exercise of outstanding
          warrants at an exercise price of $1.80 per share, and


                                        6
<PAGE>
     -    587,778 shares of common stock issuable upon the conversion of
          outstanding Series A-1 convertible preferred stock at a conversion
          ratio of 5.556 shares of common stock for each share of Series A-1
          preferred stock.

     The common stock offered by selling stockholders in this offering consists
of the Selling Stockholder Option and Warrant Shares and 121,000 shares being
offered by two of our officers (collectively, the "Selling Stockholder Shares").

     At February 29, 2004, the Selling Stockholder Option and Warrant Shares
were not outstanding, but these options and warrants will be exercised
immediately prior to the sale of the shares in this offering.  If all of these
options and warrants are exercised, we will receive $4,135,395 of gross
proceeds.  The $588,000 exercise price for the options will be paid in cash and
the exercise price for the warrants will be paid $6,569 in cash and $3,540,826
in the form of 4% promissory notes payable to Pure Cycle, secured by the stock
issued upon exercise.  We anticipate that the notes will be paid with the
proceeds of the sale of the stock in this offering.  If the warrant holders'
shares are not sold, we expect that we will foreclose on the promissory notes
and cancel the shares.

     The information in this prospectus, other than the financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, assumes that these options and warrants have been exercised, the
Series D and Series D-1 preferred stock have been converted, the common stock
issued or issuable on exercise and conversion are outstanding, and the
promissory notes payable to Pure Cycle in partial consideration of the exercise
price for the warrants have been repaid.


                                        7
<PAGE>
                             SUMMARY FINANCIAL DATA

     The following table shows selected summary financial data for Pure Cycle as
of the dates and for the periods indicated.  You should read this data in
conjunction with the financial statements and notes included in this prospectus
beginning on page F-1.

<TABLE>
<CAPTION>
                                                 SIX MONTHS ENDED              YEAR ENDED
                                             -------------------------  --------------------------
                                               FEB. 29,     FEB. 28,     AUGUST 31,    AUGUST 31,
                                                 2004         2003          2003          2002
                                             ------------  -----------  ------------  ------------
<S>                                          <C>           <C>          <C>           <C>
                                                    (UNAUDITED)
STATEMENT OF OPERATIONS
Revenues. . . . . . . . . . . . . . . . . .  $    85,731   $  103,812   $   225,432   $   204,858
Expenses:
  Operating . . . . . . . . . . . . . . . .       11,338       10,732        37,496        27,792
  General and administrative. . . . . . . .      219,302      124,556       318,182       221,872
Operating loss. . . . . . . . . . . . . . .     (147,691)     (34,784)     (135,841)      (49,764)
Other expense, net. . . . . . . . . . . . .       91,259       92,572       185,212       195,383

Net loss. . . . . . . . . . . . . . . . . .     (238,950)    (127,356)     (321,043)     (245,147)

Basic and diluted net loss per common share  $      --(1)  $     --(1)  $      --(1)  $      --(1)
Weighted average number of shares of common
  stock outstanding - basic and diluted . .    8,056,418    7,843,976     7,843,976     7,843,976
                                             ============  ===========  ============  ============
</TABLE>


<TABLE>
<CAPTION>
                                                                 FEBRUARY 29, 2004
                                                            ----------------------------
                                                               ACTUAL     AS ADJUSTED(2)
                                                            ------------  --------------
<S>                                                         <C>           <C>
                                                                   (UNAUDITED)
BALANCE SHEET DATA:
Cash and cash equivalents. . . . . . . . . . . . . . . . .  $    338,559
Investment in water and systems. . . . . . . . . . . . . .    19,410,635
Total assets . . . . . . . . . . . . . . . . . . . . . . .    20,254,298
Working capital. . . . . . . . . . . . . . . . . . . . . .       327,790
Long-term debt-related parties, including accrued interest     4,976,511
Participating interests in Rangeview water supply. . . . .    11,090,630
Stockholders' equity . . . . . . . . . . . . . . . . . . .     4,142,507
</TABLE>

     (1)  Less than $.01 per share

     (2)  The "as adjusted" column reflects (a) the exercise of options to
          purchase 326,667 shares of common stock at an exercise price of $1.80
          per share and the exercise of warrants to purchase 1,970,775 shares of
          common stock at an exercise price of $1.80 per share, and (b) the sale
          by Pure Cycle of 700,000 shares of common stock in this offering at an
          assumed offering price of $____________ per share, after deducting the
          estimated underwriting discount and offering expenses, and the
          application of the net proceeds from the sale of these shares as
          described under "Use of Proceeds."


                                        8
<PAGE>
                                  RISK FACTORS

     INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.  YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER
INFORMATION IN THIS PROSPECTUS, BEFORE INVESTING IN OUR COMMON STOCK.

WE ARE DEPENDENT FOR FUTURE REVENUES ON DEVELOPMENT OF THE LOWRY RANGE AND OF
THE OTHER AREAS NEAR OUR RANGEVIEW WATER ASSETS THAT ARE POTENTIAL MARKETS FOR
OUR EXPORT WATER.

     We expect that our principal source of future revenue will be from two
contracts that entitle us to provide water and wastewater service in the Lowry
Range service area.  The timing and amount of these revenues will depend
significantly on the development of this area.  The land in the Lowry Range is
owned by the State Land Board, which is in the early stages of considering
various development alternatives, but no timetable exists for development.  We
are not able to determine the timing of water sales or the timing of
development.  There can be no assurance that development will occur, or that
water sales will occur on acceptable terms or in the amounts or time required
for us to support our costs of operation.  Because of the prior use of the Lowry
Range as a military reservation, environmental clean-up may be required prior to
development, including to remove unexploded ordnance.  There is often
significant delay in adoption of development plans, as the political process
involves many constituencies with differing interests.  In the event water sales
are not forthcoming or development of the Lowry Range is delayed, we may incur
additional short or long-term debt obligations or seek to sell additional equity
to generate operating capital.  These sales of equity may be at prices that are
dilutive to existing investors.

     Our operations are significantly affected by the general economic
conditions for real estate development and the pace and location of real estate
development activities in the greater Denver metropolitan area, most
particularly areas such as Sky Ranch which are near to our Rangeview water
assets and thus are potential markets for our Export Water.  Increases in the
number of our water and wastewater connections, our connection fees and our
billings and collections will depend on real estate development in this area.
We have no ability to control the pace and location of real estate development
activities which affect our business.

WE ARE A START-UP BUSINESS AND DO NOT HAVE SIGNIFICANT EXPERIENCE IN THE
LARGE-SCALE SALE OF WATER AND OPERATION OF WATER AND WASTEWATER SYSTEMS.

     Although we have been in operation since 1976, our expected future
operations are significantly different from the businesses in which we have been
engaged over most of our past.  While we have constructed and are operating one
water and wastewater treatment facility on the Lowry Range, that facility serves
only one customer and provides revenues of only about $15,000 per month,
representing 81% of our total revenues.  We do not yet have significant
experience in the large-scale sale of water and operation of water and
wastewater systems and our revenue growth will depend on our ability to enter
into new operating contracts with municipal water districts and developers.
Because we have not built a large number of water and wastewater systems, we
cannot assure you that the portion of the tap fee revenue that we will utilize
for construction of our water delivery system will cover the costs of
construction, particularly since a disproportionately greater cost must be paid
in the initial stage of construction, and the tap fees are assessed equally at
all stages of a development.  A significant portion of our marketing and sales
effort is spent demonstrating to municipal water districts and developers the
benefits of our water assets and our operating capabilities, but our inability
to point to a history of successful operations may be a competitive disadvantage
in obtaining new contracts.  Our business is subject to the risks often
associated with start-up businesses, and you will be unable to evaluate our
operations based on our past operating results.


                                        9
<PAGE>
OUR NET LOSSES MAY CONTINUE AND WE MAY NOT HAVE SUFFICIENT LIQUIDITY TO PURSUE
OUR BUSINESS OBJECTIVES.

     We have experienced significant net losses and could continue to incur net
losses.  For the year ended August 31, 2003 and the six months ended February
29, 2004, we had net losses of $321,000 and $238,950, respectively, on revenues
of $225,000 and $85,731 in the respective periods.  Our cash flow from
operations has been insufficient to fund our operations in the past, and we have
been required to raise debt and equity capital from related parties to remain in
operation.  Since 1998, we have raised $1,310,000 through the issuance of
776,133 shares of common stock to support our operations.  Our ability to fund
our operational needs and meet our business objectives will depend on our
ability to generate cash from future operations.  If our future cash flow from
operations and other capital resources are insufficient to fund our operations
and the significant capital expenditure requirements to build our water delivery
systems, we may be forced to reduce or delay our business activities, grant
additional priority rights to revenues from the sale of Export Water, or seek to
obtain additional debt or equity capital, which may not be available on
acceptable terms, or at all.

OBLIGATIONS UNDER THE COMMERCIALIZATION AGREEMENT AND OTHER AGREEMENTS WILL
DELAY OUR ABILITY TO BENEFIT FROM INCREASED REVENUES.

     We have entered into financing agreements with investors and in settlement
of controversies over our Rangeview water assets that obligate us to pay to
others the first $36,240,000 of certain revenues we receive from our sale of
Export Water.  Under the provisions of one of these financing agreements, called
the Commercialization Agreement, we are required to pay to investors in the
Rangeview project signatory to such agreement the first $31,807,000 from the
water resource component of the tap fees we receive from the sale or other
disposition of Export Water.  We are obligated to pay the next $4,000,000 of
such revenues to another investor, and the next $433,000 in such revenues to the
holders of our Series B Preferred Stock.  These obligations, along with other
indebtedness, pose risks to the holders of our common stock, including the risks
that:

     -    A substantial portion of our cash flow from the sale of Export Water
          for a significant period of time will be dedicated to the payment of
          obligations to investors;

     -    These obligations may impair our ability to obtain external financing
          in the future, including for capital expenditures required for growth;

     -    The obligation to pay out these amounts may make us more vulnerable to
          economic downturns and may limit our ability to withstand competitive
          pressures; and

     -    Payment of these amounts will limit the amount of cash we will have
          available to invest in acquisitions and other growth opportunities.

THE RATES WE ARE ALLOWED TO CHARGE CUSTOMERS ARE LIMITED BY THE DISTRICT'S
CONTRACT WITH THE STATE LAND BOARD AND OUR CONTRACT WITH THE DISTRICT AND MAY BE
INSUFFICIENT TO COVER OUR COSTS OF CONSTRUCTION AND OPERATION.

     The price we can charge for our water and wastewater services are subject
to pricing regulations set in the District's contract with the State Land Board
and our contract with the District.  Both the tap fees and our usage rates and
charges are based on the average of the rates of three surrounding
quasi-governmental water providers.  We survey annually the tap fees and rates
and charges from the water providers that comprise our rate base group and set
our tap fees and rates and charges based on the average of those charged by this
group.  Our costs associated with the construction of water delivery systems and
the production, treatment and delivery of our water are subject to market


                                       10
<PAGE>
conditions and other factors, which may increase at a significantly greater rate
than the prices charged by our rate base water providers.  Factors beyond our
control and which cannot be predicted, such as drought, water contamination and
severe weather conditions, like tornadoes and floods, may result in additional
labor and material costs that may not necessarily be recoverable under our
operations and maintenance contracts, creating additional differences from the
costs of our rate base water providers.  Increased customer demand can also
increase the overall cost of our operations.  If the costs for construction and
operation of our water services, including the cost of extracting our
groundwater, exceed our revenues, we may petition the State Land Board for rate
increases.  We cannot assure that the State Land Board would grant us approval
to increase rates beyond the average of the rate base water providers.  Our
profitability could be negatively impacted if we experience an imbalance of
costs and revenues and are not successful in receiving approval for rate
increases.

OUR CAPITAL RESOURCES MAY RESTRICT OUR ABILITY TO OPERATE AND EXPAND OUR
BUSINESS.

     As of February 29, 2004, we had cash and cash equivalents of $338,599.  We
have not been able to secure lines of credit to enable us to expand our
operations.  We may be unable to establish credit facilities or execute
financing alternatives on terms that we find acceptable.

     In order to obtain contracts, we must be able to demonstrate the ability to
fund the significant investments required to build water delivery and treatment
facilities.  We may obtain funds for these obligations from the proceeds of this
offering or the sale of stock and other equity related securities, our cash flow
from operations, contributions by developers and the use of both short and
long-term debt.  If we are unable to establish lines of credit, or if we are
unable to secure additional financing sources, our capital spending would be
reduced or delayed, which would limit our growth.

WE ONLY HAVE THREE EMPLOYEES AND MAY NOT BE ABLE TO MANAGE THE INCREASING
DEMANDS OF OUR EXPANDING OPERATIONS.

     We expect that our activities relating to the Sky Ranch agreement will
significantly expand our business, and we are actively pursuing additional
development opportunities in areas near Sky Ranch, as well as acquisition
opportunities to continue to grow our operations.  We currently have only three
employees to administer our existing assets, interface with applicable
governmental bodies, market our services, and plan for the construction and
development of our future assets.  We may not be able to maximize the value of
our water assets because of our limited manpower.  We depend significantly on
the services of Mark Harding, our President, and Thomas P. Clark, our Chief
Executive Officer.  Loss of either of these employees would cause a significant
interruption of our operations.  The success of our future business development
and ability to capitalize on growth opportunities depends on our ability to
attract and retain additional experienced and qualified persons to operate and
manage our business.  State regulations set the training, experience and
qualification standards required for our employees to operate specific water and
wastewater facilities.  Failure to find state-certified and qualified employees
to support the operation of our facilities could put us at risk, among other
things, for operational errors at the facilities, for improper billing and
collection processes, and for loss of contracts and revenues.  We cannot assure
you that we can successfully manage our assets and our growth.

OUR BUSINESS IS SUBJECT TO GOVERNMENTAL REGULATION AND PERMITTING REQUIREMENTS.
WE MAY BE ADVERSELY AFFECTED BY ANY FUTURE DECISION BY THE COLORADO PUBLIC
UTILITIES COMMISSION TO REGULATE US AS A PUBLIC UTILITY AND TO IMPOSE
REGULATION.

     The Colorado Public Utilities Commission (CPUC) regulates investor-owned
water companies that hold themselves out to the public as serving, or ready to
serve, all of the public in a service area.  The CPUC regulates many aspects of
public utilities' operations, including the siting and construction of
facilities, establishing water rates and fees, initiating inspections,
enforcement and compliance activities and assisting consumers with complaints.


                                       11
<PAGE>
Although we act as a service provider under contracts with quasi-municipal
metropolitan districts that are exempt by statute from regulation by the CPUC,
the CPUC could decide to regulate us as a public utility.  If this were to
occur, we might incur significant expense challenging the CPUC's assertion of
authority, and we may be unsuccessful.  In the future, existing regulations may
be revised or reinterpreted, and new laws and regulations may be adopted or
become applicable to us or our facilities.  If we become regulated as a public
utility, our ability to generate profits could be limited and we might incur
significant costs associated with regulatory compliance.

WATER IS A DEPLETING RESOURCE AND WE MAY NOT BE ABLE TO PROVIDE AN ADEQUATE
SUPPLY OF WATER TO OUR CUSTOMERS.

     We obtain our water from various sources.  The preferred source is pumping
tributary groundwater from the alluvial aquifer beneath or connected with the
surface streams located under the Lowry Range.  Although a relatively small
portion of our water supply comes from these renewable surface water supplies,
the volume of water available through surface water rights are subject to a
priority system which, particularly in times of drought, may diminish the supply
of available water.  A significant portion of our water supply comes from
nontributary groundwater that can only be withdrawn at an average rate of 1% per
year so that the resource, which is thought to be non-renewable, will last for
100 years.  We will seek to recycle and reuse our existing water assets and to
replenish and increase our water rights through acquisition of additional
tributary and nontributary water rights, but we cannot assure you that we will
continue to have sufficient supplies of water in the future to meet our
customers' needs and to support continued growth.

THERE ARE MANY OBSTACLES TO OUR ABILITY TO REALIZE ON OUR PARADISE WATER ASSETS.

     We currently earn no revenues from our Paradise water assets, which as of
February 29, 2004 are recorded at $5,498,124.  Our ability to convert our
Paradise water supply into an income generating asset is limited.  While there
is demand for water in the downstream states of California, Nevada and Arizona,
Colorado law prohibits the export of water out of state without obtaining a
Water Court decree.  To issue a decree the Water Court must find that the export
is not in violation of the provisions of interstate compacts and does not
prevent Colorado from complying with its interstate compact obligations.  In
addition, there are significant difficulties and costs involved in transporting
the water out of the Colorado River watershed to the Denver metropolitan area.
As part of our Water Court decree for the Paradise water, we are permitted to
construct a storage facility on the Colorado River.  However, due to the strict
regulatory requirements for constructing an on-channel reservoir, completing the
conditional storage right at its decreed location would also be difficult.  As a
result, we cannot assure you that we will ever be able to make use of this asset
or sell the water profitably.

CONFLICTS OF INTEREST MAY ARISE RELATING TO THE OPERATION OF THE RANGEVIEW
METROPOLITAN DISTRICT.

     Our officers and employees constitute a majority of the directors of the
Rangeview Metropolitan District and Pure Cycle, along with our officers and
employees and one unrelated individual, own as tenants in common the 40 acres
that form the District.  We have made loans to the District to fund its
operations.  At February 29, 2004, total principal and interest owed to us by
the District was approximately $400,000.  The District is a party to our
agreements with the State Land Board and receives fees of 5% of the revenues
from the sale of water on the Lowry Range, and will hold title to the water
distribution system at the Sky Ranch development.  Proceeds from the fee
collections will initially be used to repay the District's obligations to us,
but after these loans are repaid, the District is not required to use the funds
to benefit Pure Cycle.  We have received benefits from our activities undertaken
in conjunction with the District, but conflicts may arise between our interests
and those of the District, and with our officers who are acting in dual
capacities in negotiating contracts to which both we and the District are
parties.  We expect that the District will expand when more properties are


                                       12
<PAGE>
developed and become part of the District, and our officers acting as directors
of the District will have fiduciary obligations to those other constituents.
There can be no assurance that all conflicts will be resolved in the best
interests of Pure Cycle and its stockholders.  In addition, other landowners
coming into the District will be eligible to vote and to serve as directors of
the District.  There can be no assurances that our officers and employees will
remain as directors of the District or that the actions of a subsequently
elected board would not have an adverse impact on our operations.

WEATHER CONDITIONS CAN IMPACT OUR FINANCIAL RESULTS AND OPERATIONS.

     Rainfall and weather conditions may affect our operations, with most water
consumption occurring during the summer months when weather tends to be hot and
dry.  Drought or unusually wet conditions may also adversely impact our results
of operations.  During a drought, we may experience lower revenues, due to
consumer conservation efforts and regulatory mandates.  Since a fairly high
percentage of our water is used outside our customers' homes, unusually wet
conditions could result in decreased customer demand and lower revenues.  In
addition, heavy rainfall may limit our ability to perform certain work such as
pipeline maintenance, manhole rehabilitation and other outdoor services.

WE ARE REQUIRED TO MAINTAIN STRINGENT WATER QUALITY STANDARDS AND ARE SUBJECT TO
REGULATORY AND ENVIRONMENTAL RISKS.

     We must provide water that meets all federal and state regulatory water
quality standards and operate our water and wastewater facilities in accordance
with the standards. We face contamination and pollution issues regarding our
water supplies. Improved detection technology, increasingly stringent regulatory
requirements, and heightened consumer awareness of water quality issues
contribute to an environment of increased focus on water quality. In contrast
with other providers in Colorado, we are combining the water delivery and
wastewater treatment processes, which may introduce technical treatment issues
that make compliance with water quality standards more difficult.  We plan to
return effluent wastewater for irrigation and other nonpotable uses, although
the CDPHE is currently evaluating the use of effluent wastewater for residential
irrigation.  We cannot assure you that we will be able in the future to reduce
the amounts of contaminants in our water to acceptable levels. In addition, the
standards that we must meet are constantly changing and becoming more stringent.
For example, in February 2002, the U.S. Environmental Protection Agency lowered
the arsenic standard in drinking water from 50 parts per billion to 10 parts per
billion.  Future changes in regulations governing the supply of drinking water
and treatment of wastewater may have a material adverse impact on our financial
results.

     We handle certain hazardous materials at our water treatment facilities,
primarily sodium hypochlorite.  Any failure of our operation of the facilities
in the future, including sewage spills, noncompliance with water quality
standards, hazardous materials leaks and spills, and similar events could expose
us to environmental liabilities, claims and litigation costs.  We cannot assure
you that we will successfully manage these issues, and failure to do so could
have a material adverse effect on our future results of operations by increasing
our costs for damages and cleanup.

WE HAVE ENGAGED IN TRANSACTIONS WITH RELATED PARTIES.

     We have engaged in transactions, particularly the issuance of debt and
equity securities, with related parties, most significantly our chief executive
officer, Mr. Thomas P. Clark.  Mr. Clark beneficially owns approximately 31% of
our common stock.  In addition, we have outstanding borrowings at February 29,
2004 totaling $546,163 from Mr. Clark and $402,104 from other stockholders who
hold 10% or more of our common stock, and have issued warrants to certain
investors in connection with these loans.  Those related party lenders have been
willing to forgo periodic payments of principal and interest on such debt.  Many
of the Selling Stockholders are related parties that have engaged in


                                       13
<PAGE>
transactions with Pure Cycle.  There can be no assurance that our equity and
debt issuances or other related party transactions have been on arms length
terms.

OUR CONTRACTS FOR THE CONSTRUCTION OF WATER AND WASTEWATER PROJECTS MAY EXPOSE
US TO CERTAIN COMPLETION AND PERFORMANCE RISKS.

     We will rely on independent contractors to construct our water and
wastewater facilities. These construction activities may involve risks,
including shortages of materials and labor, work stoppages, labor relations
disputes, weather interference, engineering, environmental, permitting or
geological problems and unanticipated cost increases.  These issues could give
rise to delays, cost overruns or performance deficiencies, or otherwise
adversely affect the construction or operation of the water delivery system.

     In addition, we may experience quality problems in the construction of our
systems and facilities, including equipment failures.  We cannot assure you that
we will not face claims from customers or others regarding product quality and
installation of equipment placed in service by contractors.

     Certain of our contracts may be fixed-price contracts, in which we may bear
all, or a significant portion of, the risk for cost overruns. Under these
fixed-price contracts, contract prices are established in part based on fixed,
firm subcontractor quotes on contracts and on cost and scheduling estimates.
These estimates may be based on a number of assumptions, including assumptions
about prices and availability of labor, equipment and materials, and other
issues. If these subcontractor quotations or cost estimates prove inaccurate, or
if circumstances change, cost overruns may occur, and our financial results
would be negatively impacted.  In many cases, the incurrence of these additional
costs are not within our control.

     We may have contracts in which we guarantee project completion by a
scheduled date. At times, we may guarantee that the project, when completed,
will achieve certain performance standards. If we fail to complete the project
as scheduled, or if we fail to meet guaranteed performance standards, we may be
held responsible for cost impacts and/or penalties to the customer resulting
from any delay or for the costs to alter the project to achieve the performance
standards. To the extent that these events occur, and are not due to
circumstances for which the customer accepts responsibility, and cannot be
mitigated by performance bonds or the provisions of our agreements with
contractors, the total costs of the project would exceed our original estimates
and our financial results would be negatively impacted.

     Our customers may require us to secure performance and completion bonds for
certain contracts and projects.  The market environment for surety companies has
become more risk averse.  We secure performance and completion bonds for our
contracts from these surety companies.  To the extent we are unable to obtain
bonds, we may not be awarded new contracts.  We cannot assure you that we can
secure performance and completion bonds where required.

     We may operate engineering and construction activities for water and
wastewater facilities where design, construction or system failures could result
in injury to third parties or damage to property.  Any losses that exceed claims
against our contractors, the performance bonds and our insurance limits at
facilities so managed could result in claims against us.  In addition, if there
is a customer dispute regarding performance of our services, the customer may
decide to delay or withhold payment to us.

OUR CONTRACT TO PROVIDE WATER SERVICES TO THE LOWRY RANGE TERMINATES IN 2081.

     Our contract with the Rangeview Metropolitan District grants us the
exclusive right to use water underlying the Lowry Range and to provide water to
customers on the Lowry Range until 2081, at which time ownership and control of
the water delivery system (other than the wastewater system) reverts to the
State Land Board and our ability to use such water to serve customers on the


                                       14
<PAGE>
Lowry Range will cease.  While we may negotiate a new agreement to operate  the
water assets, the selection process will be competitive and there can be no
assurance that we would continue as operator.  In such event, our receipt of the
monthly water usage fees will terminate with respect to all customers located on
the Lowry Range.  We estimate that our income from Lowry Range customers will
represent a significant component of our overall revenues at such date, so the
loss of such revenues will be material.

WE WILL HAVE BROAD DISCRETION IN ALLOCATION OF NET PROCEEDS TO US IN THIS
OFFERING.

     Approximately $________, or ___%, of the estimated net proceeds to us in
this offering has been allocated to working capital and general corporate
purposes.  Accordingly, our management will have broad discretion as to the
application of these proceeds.  We may use a portion of the proceeds allocated
to working capital for acquisitions and to purchase contract rights under the
Commercialization Agreement.  We currently have no agreement, arrangement or
understanding with respect to any acquisition or purchase under the
Commercialization Agreement.

THE MARKET PRICE OF OUR COMMON STOCK COULD BE VOLATILE.

     A number of factors could cause the market price of our common stock to
fluctuate significantly, including:

     -    Small number of shares of our common stock available for purchase or
          sale in the public markets;

     -    Large number of shares of our common stock held by insiders and
          related parties;

     -    Our announcement of significant new development agreements,
          acquisitions, strategic partnerships or capital commitments.

     -    Changes in general conditions or trends in the water industry;

     -    Announcements regarding development of the Lowry Range;

     -    Changes in regulatory guidelines that restrict our operations,
          including the rates we can charge our customers;

     -    Adverse or unfavorable publicity regarding us or our services;

     -    Additional issuances of debt or equity; and

     -    Natural disasters, terrorist attacks or acts of war.

OUR REVERSE STOCK SPLIT MAY CONTRIBUTE TO UNCERTAINTY REGARDING OUR STOCK PRICE.

     On April 26, 2004, we will effect a 1-for-10 reverse split of our common
stock with the goal of improving the liquidity of our stock by increasing the
stock price and thereby increasing interest of a broader range of investors in
our stock.  There can be no assurance that the market price per share of our
common stock after the reverse stock split will increase in proportion to the
reduction in the number of shares of common stock outstanding before the reverse
stock split.  For example, based on the closing price of our common stock on the
OTC Bulletin Board on April 15, 2004 of $0.93 per share, there can be no
assurance that the post-split market price of the common stock would be $9.30
per share.  Accordingly, the total market capitalization of the common stock
(the aggregate value of all our common stock at the then market price) after the
proposed reverse stock split may be lower than the total market capitalization


                                       15
<PAGE>
before the reverse stock split.  Even if the initial post-split stock price
reflects the reverse stock split ratio, if the market price of the common stock
declines after the reverse stock split is effected, the percentage decline may
be greater than would occur in the absence of a reverse stock split.  There can
be no assurance that the reverse stock split will result in a per-share price
that will attract new investors or that the post-split share price will satisfy
the investing guidelines of institutional investors.  As a result, the trading
liquidity of the common stock may not necessarily improve.

FUTURE SALES OF OUR COMMON STOCK MAY CAUSE OUR STOCK PRICE TO DECLINE.

     At the conclusion of this offering, we will have outstanding options and
warrants to purchase 2,742,858 shares of common stock with an exercise price of
$1.80 per share, 105,800 shares of Series A preferred stock that are convertible
into 587,778 shares of common stock and a stock option plan that permits the
issuance of options to purchase an additional 1,600,000 shares of common stock.
Sales of  substantial amounts of common stock by our stockholders, including
shares issued upon the exercise of outstanding options and warrants, or even the
potential for such sales, may have a depressive effect on the market price of
our common stock and could impair our ability to raise capital through the sale
of our equity securities.


                           FORWARD-LOOKING STATEMENTS

     This prospectus contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
our financial condition, results of operations and business.  The words
"anticipate," "believe," "estimate," "expect," "plan," "intend" and similar
expressions, as they relate to us, are intended to identify forward-looking
statements. Such statements reflect our current views with respect to future
events and are subject to certain risks, uncertainties and assumptions.  We
cannot assure you that any of our expectations will be realized.  Factors that
may cause actual results to differ materially from those contemplated by such
forward-looking statements include, without limitation, the timing of
development of the areas where we are selling our water, the market price of
water, changes in applicable statutory and regulatory requirements,
uncertainties in the estimation of water available under decrees, costs of
delivery of water, uncertainties in the estimation of revenues and costs of
construction projects, the strength and financial resources of our competitors,
our ability to find and retain skilled personnel, climatic conditions, labor
relations, availability and cost of material and equipment, delays in
anticipated permit and construction dates, environmental risks, the results of
financing efforts and the ability to meet capital requirements, and general
economic conditions.


                                       16
<PAGE>
                                 USE OF PROCEEDS

     We estimate that the net proceeds from the sale of the shares of common
stock we are offering will be approximately $________ million, assuming a stock
price of $_____ per share in this offering.  If the underwriters fully exercise
their over-allotment option, the net proceeds of the shares we sell will be
$_______ million.  "Net proceeds" is what we expect to receive after paying the
underwriting discount and other expenses of the offering.

     The following table summarizes the use of the net proceeds from this
offering:

     Repayment of outstanding debt to related parties     $1,109,061     ___%

     Water system expenditures                            $1,200,000     ___%

     Working capital and general corporate purposes       $________      ___%
                                                          ----------     ----
     Total                                                               100%

     $512,439 of the debt to be repaid bears interest at prime plus 2% (6% at
April 7, 2004) and $596,622 bears interest at 10.25%.  All debt to be repaid
matures in August 2007.  Except for the Harrison Augur Money Purchase Plan, the
holders of this indebtedness are all selling stockholders:  Apex Investment Fund
II, L-P., Proactive Partners, L.P., The Environmental Venture Fund, L.P., The
Environmental Venture Fund II, L.P., Productivity Fund II, L.P., and Gregory M.
Morey.  Accordingly, these persons will also receive proceeds from the sale of
shares in the offering.

     The net proceeds allocated to water system expenditures will be used to
drill wells and build the infrastructure needed to provide water services to Sky
Ranch.

     We anticipate that a portion of the proceeds allocated to working capital
and general corporate purposes will be used for acquisition of water rights and
acquisition of contractual rights to receive payments under the
Commercialization Agreement, in each case if and to the extent agreements can be
reached.  Amounts to be utilized for these purposes will depend on the
opportunities that arise, but we do not expect to spend more than $5,000,000 on
acquisition of water rights or more than $3,600,000 on purchase of contract
rights under the Commercialization Agreement.  We are not currently in
discussions regarding any specific acquisition of water rights.

     We intend following the completion of this offering to approach certain of
the persons who have contractual rights to receive payments under the
Commercialization Agreement and offer to buy out a portion of those contractual
rights.  We have had preliminary discussions regarding such purchases with some
of the parties to the Commercialization Agreement, but no firm commitments have
been made regarding any such sale.  Many of the selling stockholders that are
exercising warrants are parties to the Commercialization Agreement.
Accordingly, if we purchase their contract rights, they will receive additional
proceeds from this offering.  No assurance can be given that any of the parties
to the Commercialization Agreement will be willing to sell their contract rights
at all or on terms that would be acceptable to us.

     While the amounts indicated above reflect what we currently expect to spend
on these matters, opportunities may arise that cause us to change the allocation
of proceeds among the categories described.  Prior to using the net proceeds, we
plan to invest the net proceeds in bank deposits or short-term interest-bearing
investment grade securities.


                                       17
<PAGE>
     Most of the selling stockholders are exercising options or warrants
immediately prior to the completion of this offering to obtain the shares to be
sold in this offering.  In connection with this exercise, we will receive
$_______, $_____ of which will be paid in the form of promissory notes secured
by the shares we issue.  The selling stockholders will pay the promissory notes
with the proceeds of this offering.  We are paying the expenses, other than
underwriting discounts and expenses of separate counsel for the selling
stockholders, relating to the sale of the selling stockholder shares.


                                       18
<PAGE>
                                 CAPITALIZATION

     The following table sets forth:

     -    our actual cash and cash equivalents and capitalization as of February
          29, 2004, adjusted to reflect the reverse stock split; and

     -    our cash and cash equivalents and capitalization as of February 29,
          2004, as adjusted to reflect (i) the increase in our authorized shares
          of common stock, (ii) the exercise by the Selling Stockholders of
          certain options and warrants and the issuance of the 2,297,442
          underlying shares of common stock, and our receipt of $4,135,395 of
          proceeds upon such exercise, (iii) the conversion of the Series D
          preferred stock and Series D-1 preferred stock into 845,500 shares of
          common stock, and (iv) completion of the offering of 700,000 shares of
          our common stock at an assumed public offering price of $_____ per
          share and the use of net proceeds as described under "Use of
          Proceeds."

<TABLE>
<CAPTION>
                                                     AS OF FEBRUARY 29, 2004
                                                   --------------------------
                                                      ACTUAL      AS ADJUSTED
                                                   -------------  -----------
<S>                                                <C>            <C>
Cash and cash equivalents . . . . . . . . . . . .  $    338,599
                                                   =============
Current liabilities . . . . . . . . . . . . . . .        44,650
                                                   =============
Long-term debt - related parties, including
  accrued interest. . . . . . . . . . . . . . . .     4,976,511

Participating interests in Rangeview water rights    11,090,630

Preferred stock, par value $.001 per share;
  authorized - 25,000,000 shares:

 Series A-1 - 1,058,000 shares issued and
  outstanding actual and as adjusted. . . . . . .         1,058

 Series B -  432,513 shares issued and
  outstanding actual and as adjusted. . . . . . .           433

 Series D - 6,455,000 shares issued and
  outstanding actual, no shares issued and
  outstanding as adjusted . . . . . . . . . . . .         6,455

 Series D-1 - 2,000,000 shares issued and
  outstanding actual, no shares issued and
  outstanding as adjusted . . . . . . . . . . . .         2,000

Common stock, par value 1/3 of $.01 per share;
  authorized - 135,000,000 shares actual,
  225,000,000 shares as adjusted; 8,145,087
  shares issued and outstanding actual, ____
  shares issued and outstanding as adjusted . . .       271,621

Additional paid in capital. . . . . . . . . . . .    25,267,494

Accumulated deficit . . . . . . . . . . . . . . .   (21,406,554)

Total stockholders' equity. . . . . . . . . . . .     4,142,507

Total noncurrent liabilities and stockholders'
equity. . . . . . . . . . . . . . . . . . . . . .    20,254,298
                                                   =============
</TABLE>



                                       19
<PAGE>
               MARKET PRICE OF AND DIVIDENDS FOR OUR COMMON EQUITY
                         AND RELATED STOCKHOLDER MATTERS

     Our common stock is quoted on the OTC Bulletin Board under the symbol
"PCYL."  We have applied for listing of our common stock on the NASDAQ Small Cap
Market under the symbol "      ".  The following table shows, for the fiscal
periods indicated, the high and low sales prices for our common stock as
reported by the OTC Bulletin Board.

<TABLE>
<CAPTION>
                                         LOW    HIGH
                                        -----  ------
<S>                                     <C>    <C>
FISCAL 2004
- -----------
First Quarter. . . . . . . . . . . . .  $2.00  $ 5.10
Second Quarter . . . . . . . . . . . .   4.00   13.00
Third Quarter (through April 15, 2004)   8.70   10.60

FISCAL 2003
- -----------
First Quarter. . . . . . . . . . . . .  $ .90  $ 1.80
Second Quarter . . . . . . . . . . . .   1.00    2.80
Third Quarter. . . . . . . . . . . . .   1.60    2.70
Fourth Quarter . . . . . . . . . . . .   1.70    3.00

FISCAL 2002
- -----------
First Quarter. . . . . . . . . . . . .  $ .80  $ 1.50
Second Quarter . . . . . . . . . . . .    .60    1.20
Third Quarter. . . . . . . . . . . . .    .60    2.10
Fourth Quarter . . . . . . . . . . . .    .90    1.90
</TABLE>

     On April 15, 2004, the last reported sale price of our common stock on the
OTC Bulletin Board was $9.30 per share.  As of March 18, 2004, there were
approximately 3,418 holders of record of our common stock.

     We have never paid any dividends on our common stock and expect for the
foreseeable future to retain all of our earnings from operations for use in
expanding and developing our business.  Any future decision as to the payment of
dividends will be at the discretion of our board of directors and will depend
upon our earnings, financial position, capital requirements, plans for expansion
and such other factors as our board of directors deems relevant.



                                       20
<PAGE>
                             SELECTED FINANCIAL DATA

     This section presents our selected historical financial data.  You should
read carefully the financial statements included in this prospectus, including
the notes to the financial statements.  The selected data in this section is not
intended to replace the financial statements.

     The following tables as of August 31, 2003 and 2002 and for each of the
years in the two year period ended August 31, 2003, and as of February 29, 2004
and February 28, 2003 and for the six month periods ended February 29, 2004 and
February 28, 2003, present selected financial information of the Company which
has been derived from our financial statements included elsewhere in this
prospectus.  The financial statements as of August 31, 2003 and 2002 and for the
two years ended August 31, 2003 have been audited by KPMG LLP, our independent
auditors.  The consolidated balance sheet data at February 29, 2004 and February
28, 2003 and the consolidated statement of operations data for the six months
ended February 29, 2004 and February 28, 2003 are derived from unaudited
financial statements which have been prepared on the same basis as the audited
annual financial statements and, in the opinion of management, contain all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the consolidated position at such dates and the operating
results for such periods.  Operating results for the six months ended February
29, 2004 are not necessarily indicative of the results that may be expected for
the year ending August 31, 2004.  This selected financial data should be read in
conjunction with the consolidated financial statements of Pure Cycle and notes
thereto, and Management's Discussion and Analysis of Financial Condition and
Results of Operations, included elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                 SIX MONTHS ENDED              YEAR ENDED
                                             -------------------------  --------------------------
                                               Feb. 29,     FEB. 28,     AUGUST 31,    AUGUST 31,
                                                 2004         2003          2003          2002
                                             ------------  -----------  ------------  ------------
<S>                                          <C>           <C>          <C>           <C>
                                                     (UNAUDITED)
STATEMENT OF OPERATIONS
Revenues. . . . . . . . . . . . . . . . . .  $    85,731   $  103,812   $   225,432   $   204,858
Expenses:
  Operating . . . . . . . . . . . . . . . .       11,338       10,732        37,496        27,792
  General and administrative. . . . . . . .      219,302      124,556       318,182       221,872
Operating loss. . . . . . . . . . . . . . .     (147,691)     (34,784)     (135,841)      (49,764)
Other expense, net. . . . . . . . . . . . .       91,259       92,572       185,212       195,383

Net loss. . . . . . . . . . . . . . . . . .     (238,950)    (127,356)     (321,043)     (245,147)

Basic and diluted net loss per common share  $      --(1)  $     --(1)  $      --(1)  $      --(1)
                                             ============  ===========  ============  ============
Weighted average number of shares
  of common stock outstanding -
  basic and diluted . . . . . . . . . . . .    8,056,418    7,843,976     7,843,976     7,843,976
</TABLE>

<TABLE>
<CAPTION>
                                           FEBRUARY 29,   AUGUST 31,   AUGUST 31,
                                               2004          2003         2002
                                           -------------  -----------  -----------
<S>                                        <C>            <C>          <C>
BALANCE SHEET DATA:
Cash and cash equivalents                  $     338,559  $   525,780  $   287,720
Investment in water and systems, net. . .     19,410,635   19,342,994   19,201,683
Total assets. . . . . . . . . . . . . . .     20,254,298   20,413,404   20,028,279
Working capital . . . . . . . . . . . . .        327,790      541,695      316,760
Long-term debt-related parties, including
  accrued interest. . . . . . . . . . . .      4,976,511    4,889,545    4,713,270
Participating interests in Rangeview
  water supply. . . . . . . . . . . . . .     11,090,630   11,090,630   11,090,630
Stockholders' equity. . . . . . . . . . .      4,142,507    4,381,457    4,202,500
</TABLE>


__________
     (1)  Less than $.01 per share



                                       21
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     You should read this discussion together with the financial statements and
other financial information included in this prospectus.  This prospectus
contains forward-looking statements that involve risks and uncertainties.  Our
actual results may differ materially from those indicated in the forward-looking
statements.  Please see "Forward-Looking Statements" elsewhere in this
prospectus.

GENERAL

     We own or have rights to use significant water assets which we have begun
to utilize to provide water and wastewater services to customers located in the
Denver, Colorado metropolitan area near our principal water assets.  We will
operate water and wastewater systems to deliver and treat the water we provide.
Our services will include designing, constructing, operating and maintaining
systems to service our customers.

     We have exclusive access to approximately 29,000 acre feet per year of
water from, and the exclusive right to provide water and wastewater services to,
24,000 acres of primarily undeveloped land in eastern Colorado known as the
Lowry Range.  The Lowry Range is located in Arapahoe County approximately 15
miles southeast of Denver and 12 miles south of the Denver International
Airport.  Of the approximately 29,000 acre feet of water to which we have
access, 17,500 acre feet are available to us for use on the Lowry Range.  We own
the remaining 11,650 acre feet and can "export" it from the Lowry Range to
supply water to nearby communities and developers in need of additional water
supplies.  We acquired these rights and the Export Water in 1996 when we entered
into an agreement with the State Land Board, which owns the Lowry Range, and
85-year agreements with the District.

     The 17,500 acre feet of water designated for use within the Lowry Range
service area is capable of providing water service to approximately 47,000 SFE
units.  We will design, construct, operate and maintain the water and wastewater
systems on the Lowry Range service area on behalf of the District and the State
Land Board.  The District will own all water and wastewater facilities
constructed to serve customers in the Lowry Range service area during our
contract service period.  At the end of our contract service period, ownership
of the water facilities will revert to the State Land Board.

     Our annual entitlements to 11,650 acre feet of surface water and
groundwater on and beneath the Lowry Range service area can be developed for
"export" off the property to service approximately 32,000 SFE equivalent
customers throughout the Denver metropolitan region.  We will design, construct,
operate and maintain facilities for water and/or wastewater service for
customers located off the Lowry Range service area and we will own these
facilities.

     Water and/or wastewater service, whether to customers located in the Lowry
Range service area or off the Lowry Range service area in other parts of the
Denver metropolitan area, is subject to individual water and wastewater service
agreements.  We will negotiate individual service agreements with developers
and/or homebuilders to provide water and wastewater service.  Our service
contracts will outline our obligations to construct certain facilities necessary
to develop and treat water and/or wastewater, including the timing of
installation of the facilities, capacities of the systems, and where the
services will be provided.  Developers and/or homebuilders are required to
purchase water and/or wastewater taps from us in exchange for our obligation to
construct the water and/or wastewater facilities.

     Revenues we earn from providing water and/or wastewater service are divided
into two components:  one-time tap fees, which are generally paid by the
developer, and service charges, which are monthly charges based on metered water
delivery or wastewater usage.  Water tap fees are further divided into two


                                       22
<PAGE>
components: system development fees, which are used to construct facilities
necessary to develop and treat water and/or wastewater; and water resource fees,
which are used to defray the acquisition costs of the water rights.  We are
generally required to use the water resource portion of the tap fees received
from water exported off the Lowry Range service area to repay investors.  Under
the Commercialization Agreement that we entered into in conjunction with our
agreement to obtain our Rangeview water assets, we are obligated to pay
investors that are parties to the Commercialization Agreement the first
$31,807,000 from the water resource fees we receive from the sale of the Export
Water.  In another agreement (the "LCH Agreement"), we agreed to pay the next
$4,000,000 of these revenues to another investor.  Under the terms of our
certificate of designations for the Series B preferred stock, we are obligated
to pay the next $433,000 of these revenues to the holders of our Series B
preferred stock (collectively, the Commercialization Agreement, the LCH
Agreement and the Series B preferred stock are referred to as the "Financing
Agreements").  We will retain 100% of the water resource fees we receive in
excess of $36,240,000 from tap fees we receive from sale of Export Water.

     In agreements marketing our Export Water, developers that own rights to
groundwater underlying their property may choose to dedicate the water to us for
service to their properties, in exchange for credit against a portion of their
water resource fees.  Such dedicated water would not be subject to obligations
under any Financing Agreements.  Similarly, water resource fees received from
the sale of taps to customers located in the Lowry Range service area are not
subject to obligations under any Financing Agreements.

     Due to the continuing growth of the Denver metropolitan region and the
limited availability of new water supplies, many metropolitan planning agencies
are requiring property developers to first demonstrate adequate water
availability prior to any consideration for zoning requests for property
development.  As a result, we believe we are well positioned to market and sell
our water and wastewater services to developers and home builders seeking to
develop new communities both within the Lowry Range service area as well as in
other areas in the Denver metropolitan region.

     We also own conditional water rights in western Colorado enabling us to
build a 70,000 acre-foot reservoir to store tributary water on the Colorado
River, a right-of-way permit from the U.S. Bureau of Land Management for
property at the dam and reservoir site, and four tributary water wells with a
theoretical capacity to produce approximately 56,000 acre feet of water annually
(collectively known as the Paradise Water Supply).  Although we will seek to
utilize the Paradise Water Supply to deliver water to customers located in the
Denver metropolitan area or to customers in the downstream states of Nevada,
Arizona and California, legal issues relating to interstate water transfers and
inter-basin water transfers make the short-term realization on these assets
unlikely.

     The State Land Board is in the initial stages of developing a plan to
solicit requests for proposals this summer to engage a development partner to
assist in the planning for future development of the Lowry Range.  We are not
able to determine the timing of development of property in and around the Lowry
Range service area, although residential, commercial and industrial development
is under way outside of the Lowry Range service area along its southern, western
and northern borders, and we anticipate that initial development of Sky Ranch
will begin shortly.  Water sales will only occur after development has
commenced.  We cannot assure you regarding the pace of development or that water
sales can be made on terms acceptable to us.  In the event development of the
property within the Lowry Range service area or of Sky Ranch and surrounding
areas is delayed, we may be required to incur additional short or long-term debt
obligations or seek to sell equity services to generate operating capital.


                                       23
<PAGE>
CRITICAL  ACCOUNTING  POLICIES

     Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America ("GAAP").  The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ significantly from those
estimates.

     We have identified certain key accounting policies on which our financial
condition and results of operations are dependent. These key accounting policies
most often involve complex matters or are based on subjective judgments or
decisions.  In the opinion of management, our most critical accounting policies
are those related to revenue recognition, impairment of water assets and other
long-lived assets, depletion and depreciation, accounting for participating
interests, royalty and other obligations, and income taxes.  Management
periodically reviews its estimates, including those related to the
recoverability and useful lives of assets.  Changes in facts and circumstances
may result in revised estimates.

Revenue Recognition

     For customers located on the Lowry Range service area, the District will
sell the taps and contract with us to construct the water delivery
infrastructure.  We will recognize revenues relating to tap fees on the Lowry
Range service area as construction project income using the
percentage-of-completion method, measured by the contract costs incurred to date
as a percentage of the estimated total contract costs.  Since we do not own the
facilities constructed for customers located in the Lowry Range service area, we
believe the treatment of these revenues as construction project income is the
most correct accounting methodology.  Contract costs include all direct
material, labor and equipment costs and those indirect costs related to contract
performance, such as indirect labor and supplies costs.  If the construction
project revenue is not fixed, we estimate revenues that are most likely to
occur.  Provisions for estimated losses on uncompleted contracts are made in the
period in which such losses are determined.  Billings in excess of costs and
estimated earnings represent payments received on construction projects for
which the work has not been completed.  These amounts, if any, are recognized as
construction progresses in accordance with the percentage-of-completion method.

     We will recognize revenues from the sale of taps relating to properties
located off the Lowry Range service area, and related costs of providing water
access, as water service is made available to the property under the tap fee
agreement.

     We recognize water and wastewater service revenues as services are
performed, which are based upon metered water deliveries to customers or a flat
fee per SFE.  We recognize costs of delivering water and processing wastewater
as incurred.

Impairment of Water Assets and Other Long-Lived Assets

     We review our long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable.  We measure recoverability of assets to be held and used by a
comparison of the carrying amount of an asset to future undiscounted net cash
flows we expect to be generated by the asset.  If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets.  We
report assets to be disposed of at the lower of the carrying amount or fair
value less costs to sell.  We believe there were no impairments in the carrying
amounts of our investments in water and water systems at February 29, 2004.


                                       24
<PAGE>
Depletion and Depreciation

     We deplete our water assets on the basis of units produced divided by the
total volume of water adjudicated in the water decrees.  Water and wastewater
facilities we own are depreciated on a straight line basis over their estimated
useful lives.

Accounting for Participating Interests

     The balance sheet liability captioned "participating interests in Rangeview
water supply" represents an obligation which arose under the Commercialization
Agreement.  We recorded a liability of $11.1 million, which represents the cash
we received and applied to the purchase of the Rangeview water assets.  The
remainder of the participating interest of $20.7 million represents a contingent
return to the financing investors, Series A-1 preferred stockholders, and the
sellers of the Rangeview water assets that are parties to the Commercialization
Agreement.  These amounts, totaling $31.8 million, will only be payable from the
water resource portion of the tap fees we receive from the sale of Export Water.
As we recognize revenues from the sale of Export Water to make payments to
investors, we will allocate a ratable percentage of the repayment to the
principal portion of the participating interest represented by the $11.1 million
(i.e., 35%), and the balance to the expense portion, $20.7 million (i.e., 65%),
as amounts are payable.  The portion allocated to the principal portion will be
recorded as a reduction in participating interest in Rangeview water supply.

Royalty and other obligations

     Pursuant to our service agreements, royalties we incur relating to gross
revenues received will be expensed in the same period that the revenue is
recognized.

Income taxes

     We use the asset and liability method of accounting for income taxes.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.  Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which we expect to recover or settle those temporary differences.  The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.  A
valuation allowance is provided for deferred tax assets until realization is
more likely than not.

RESULTS  OF  OPERATIONS

Year Ended August 31, 2003 Compared with Year Ended August 31, 2002

     During fiscal 2003, we delivered approximately 47.3 million gallons of
water generating water usage revenues of $156,217 from the sale of water to
customers within the Lowry Range service area, compared to the delivery of 54.5
million gallons of water generating revenues of $156,026 for fiscal 2002.  Our
water service charges are based on a tiered pricing structure that provides for
higher prices as customers use greater amounts of water.  The following table
outlines our tiered pricing structure:


                                       25
<PAGE>
<TABLE>
<CAPTION>
Consumption                  Price
(1,000 gallons/month)  ($/1,000 gallons)
- ---------------------  -----------------
<S>                    <C>
0 to 10                $            2.40
>10 to 20              $            3.10
>20                    $            5.40
</TABLE>

     This pricing structure is sensitive to the date and volume of water use.
Actual water deliveries in fiscal 2003 decreased approximately 13% while
revenues remained the same, due primarily to seasonal water deliveries with
higher water rates during peak times.

     Prior to May 2002, we contracted for the operation of our water and
wastewater systems through an agreement with a third party contract operations
firm.  Beginning in May 2002, we began operating our water and wastewater system
using our in-house licensed water and wastewater operator.  We incurred
approximately $20,580 in water service operating costs in fiscal 2003 compared
to $13,896 for fiscal 2002.  Water service operating costs increased
approximately $7,000 in 2003 compared to fiscal 2002 due primarily to this
change from contracting out those services in 2002 to providing these services
in-house in 2003.

     During fiscal 2003, we had wastewater usage revenues of $56,780 and
incurred $10,692 in wastewater service operating costs.  This compares to
wastewater usage revenues of $48,832 and wastewater operating costs of $13,896,
in fiscal 2002.  In 2003, we changed from a variable pricing structure to a
fixed pricing structure, resulting in higher revenues.

     General and administrative expenses for fiscal 2003 were $318,182, or
approximately $96,310 higher than for fiscal 2002, due primarily to the hiring
of an additional employee beginning in January 2003.  Interest income decreased
to $16,263 in fiscal 2003, compared to $22,181 for fiscal 2002, due primarily to
a decrease in interest rates and a decrease in the average balance in our
operating cash accounts.  Interest expense decreased $18,376 in fiscal 2003 to
$176,275, as compared to $194,651 in fiscal 2002 due primarily to a decrease in
the prime lending rate.  Net loss for fiscal 2003 of $321,043 was $75,896
greater than the net loss of $245,147 for fiscal year 2002, primarily due to the
addition of one employee.

Six Months Ended February 29, 2004 Compared With Six Months Ended February 28,
2003

     During the six months ended February 29, 2004, we delivered approximately
22.0 million gallons of water generating water service revenues of $55,314,
compared to delivery of approximately 19.3 million gallons of water generating
$77,225 for the six months ended February 28, 2003.  The higher revenues in the
six month period ended February 28, 2003 were the result of an approximately
$20,000 reversal of a water service revenue recorded in 2003.  We incurred water
service operating expenses of $5,190 during the six month period ended February
29, 2004, compared to $5,719 during the six months ended February 28, 2003.
During the six months ended February 29, 2004, we generated revenues from
wastewater fees of $27,002 from customers in the Lowry Range service area, as
compared to revenues from wastewater fees of $26,587 during the six months ended
February 28, 2003.  We incurred wastewater operating costs of $3,819 during the
six month period ending February 29, 2004 as compared to $5,013 for the
six-month period ending February 28, 2003.

     General and administrative expenses for the six months ended February 29,
2004 were $94,748 higher than for the six months ended February 28, 2003,
primarily due to an increase in salary and overhead expenses from the addition
of one employee beginning in January 2003 and legal costs incurred in connection
with our annual meeting held on April 12, 2004.  Net loss for the six months
ended February 29, 2004 was $238,950 compared to a net loss of $127,356 for the


                                       26
<PAGE>
six months ended February 28, 2003.  The $111,595 increase in net loss is due to
additional overhead costs from an additional employee, as well as additional
legal fees incurred in connection with our annual meeting.

Liquidity and Capital Resources

     At February 29, 2004, our working capital, defined as current assets less
current liabilities, was $327,790.  We believe that at February 29, 2004, we had
sufficient working capital to fund our operations for the next year.  However,
there can be no assurance that we will be successful in marketing the water from
our two primary water projects in the near term.  In the event revenues from
providing water service are not achieved, we may incur additional short or
long-term debt or seek to sell additional equity securities to generate working
capital.

     Development of any of the water that we have, or are seeking to acquire,
will require substantial capital investments.  We anticipate that additional
capital for the development of the water will be financed by the entity
purchasing such water, through the sale of water taps to developers and water
delivery charges to users.  A water tap charge refers to a charge we impose to
permit access to a water delivery system (e.g., a single-family home's tap into
our water system), and a water service charge refers to a water customer's
monthly water bill, generally charged per 1,000 gallons of water consumed by the
customer.  Annually, the developer must purchase not less than a minimum number
of taps, the proceeds from which are used to expand the capacity of our water
system to deliver water to additional customers in the development.  We
anticipate that the system development portion of tap fees will be sufficient to
generate funds with which we can design and construct the necessary water
facilities.  However, once we receive tap fees from a developer, we are
contractually obligated to construct the water delivery system for the taps paid
for, even if our costs are not covered by the fees we receive.  We can not
assure you that our revenues will be sufficient to cover our capital costs.

     In October 2003, we entered into a water service agreement with a developer
to provide water to approximately 4,000 SFE units that are being built on
approximately 800 acres known as "Sky Ranch" located 4 miles north of the Lowry
Range along Interstate 70.  We expect that the construction of the project will
begin in October 2004, with the first homes available in February 2005.  Based
on housing market demands of similar projects in the area and projections
provided by the developer, we expect that the project will be fully built out
within 10 years.  Under the agreement, the developer must purchase at least 400
water taps before occupancy of the first home.  The agreement permits the
developer to add additional taps annually, with at least 250 taps to be
purchased each year.  This schedule is designed to provide us with adequate
funds with which to construct the facilities needed to provide water service to
the areas being built.

     The water service agreement for Sky Ranch incorporates 4,000 SFE
connections, which at current rates and charges would generate approximately $50
million in total water tap fee revenues and approximately $2.3 million annually
in water service revenues.  These represent gross fees and, to the extent that
water service is provided using Export Water, we are be required to pay a
royalty to the State Land Board equal to 12% of the net revenue after deducting
our costs.  We expect to dedicate approximately 1,200 acre feet, or
approximately 10%, of our Export Water supply (which is about 4.2% of our
overall Rangeview water supply) for this project.  We estimate we will spend
approximately $25 million for infrastructure related to the development and
delivery of water to the 4,000 single family equivalent units.

     For the initial development at Sky Ranch, we anticipate receiving tap fees
of approximately $1.9 million, representing approximately 156 taps, in the
current fiscal year ending August 31, 2004, and approximately $3.0 million,
representing an additional 244 taps, prior to January 2005.  We estimate that it
will cost approximately $2.5 million to construct the infrastructure to service
the initial 400 taps.  We will expand the infrastructure to meet demand as


                                       27
<PAGE>
houses are built at Sky Ranch.  We will initially develop the water beneath the
Sky Ranch property, which is being dedicated to us by the developer in exchange
for credit of a portion of the water resource tap fee.  The dedicated water is
sufficient to provide water service to approximately 1,400 customers.  No
payments will be required to be made under the Financing Agreements or for
royalty payments to the State Land Board with respect to tap fee revenues from
the first 1,400 taps at Sky Ranch.  Because the project has not yet commenced,
we cannot assure you that these revenue and expense estimates will be the actual
revenues and expenses that we will experience.

     At February 29, 2004, we had outstanding debt to seven related parties
totaling $1,109,061, $512,439 of which bears interest at prime plus 2% (6% at
April 7, 2004) and $596,622 of which bears interest at 10.25%.  All notes mature
in August 2007.  Interest is not payable on a current basis, but accrues and is
added to principal monthly.

     In addition, we are obligated under notes totaling $848,023 at February 29,
2004 which bear interest at rates at 7.18% and 8.04% and notes totaling
$2,473,263 at February 29, 2004 which bear interest at prime plus 3% (7% at
February 29, 2004).  These notes mature in August 2007.  The holders of these
notes are parties to the Commercialization Agreement and have agreed that if the
amount of principal and accrued interest on these notes is paid under the
Commercialization Agreement prior to the maturity date of the notes, the notes
will be canceled.

Operating Activities

     Operating activities include revenues we receive from the sale of water and
wastewater service to our customers, costs incurred in the delivery of those
services, general and administrative expenses, and depreciation and depletion
expenses.

     During fiscal 2003, cash used in operating activities was approximately
$115,000, compared to cash used of approximately $39,000 in fiscal 2002.
Operating costs increased in 2003 due principally to additional overhead costs
from the addition of one person to our staff.  Accrued interest on notes
receivable of $14,000 was offset by accrued interest on notes payable of
$176,000, for a change in accrued interest of approximately $162,000.

     During the six months ended February 29, 2004, cash used in operating
activities was approximately $117,000, compared to approximately $9,000 during
the six months ended February 28, 2003.  Operating costs increased due to
additional costs of operating the domestic water and wastewater systems.  We
anticipate that a similar level of cash will be used in our operations during
the remainder of fiscal 2004.  We continue to provide domestic water and
wastewater service to customers in the Lowry Range service area and operate and
to maintain our water and wastewater systems with our own employees.

Investing Activities

     We continue to invest in the acquisition, maintenance and development of
both the Rangeview and Paradise water assets.  These investments include legal
and engineering fees associated with adjudicating additional water through the
Water Court system, as well as right-of-way permit fees to the Department of
Interior Bureau of Land Management.

     Cash used in investing activities for fiscal 2003 was approximately
$147,000, of which $144,000 was capitalized to the Rangeview assets and $3,000
was capitalized to the Paradise Water Supply.  Cash used in investing activities
for fiscal 2002 was approximately $109,000.


                                       28
<PAGE>
     Cash used in investing activities for the six month ended February 29, 2004
was approximately $70,000, which costs were capitalized to the Rangeview Water
Supply.  We capitalize certain legal, engineering and permitting costs relating
to the improvement of our water assets.

Financing Activities

     In August 2003, we entered into a Plan of Recapitalization and a Stock
Purchase Agreement with Mr. Thomas Clark, our Chief Executive Officer.  Under
this agreement, we issued 200,000 shares of Series D-1 preferred stock in
exchange for 200,000 shares of common stock owned by Mr. Clark.  We sold 200,000
shares of our common stock at $2.50 per share to 11 accredited investors, four
of whom were existing common stockholders, generating proceeds of $500,000.  We
issued the preferred stock under Section 4(2) of the Securities Act.  We sold
the common stock pursuant to Regulation D, Rule 506, promulgated under the
Securities Act.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring).  Generally, SFAS
No. 146 requires that a liability for a cost associated with an exit or disposal
activity be recognized as incurred, whereas EITF Issue No. 94-3 required such a
liability to be recognized at the time that an entity committed to an exit plan.
SFAS No. 146, which is effective for exit or disposal activities that are
initiated after December 31, 2002, did not have a material impact on us.

     In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51.  FIN 46 requires
an entity to consolidate a variable interest entity if it is designated as the
primary beneficiary of that entity even if such entity does not have a majority
of voting interests.  A variable interest entity is generally defined as an
entity whose equity is insufficient to finance its activities or whose owners
lack the risk and rewards of ownership.  The Company has determined that it is
not a party to a variable interest entity.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based Compensation". SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation.  In addition, Statement 148
amends the disclosure requirements of SFAS No. 123 to require more prominent and
more frequent disclosures in financial statements about the effects of
stock-based compensation, including requiring that this information be included
in interim as well as annual financial statements.  We have no plans to change
to the fair value based method of accounting for stock-based employee
compensation based on current literature, and therefore are not affected by the
transition provisions of SFAS No. 148.  We adopted the disclosure provisions of
SFAS No. 148 effective December 31, 2002.

     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others."  FIN 45 clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing the guarantee, including its
ongoing obligation to stand ready to perform over the term of the guarantee in
the event that the specified triggering events or conditions occur.  The
objective of the initial measurement of the liability is the fair value of the
guarantee at its inception.  The initial recognition and initial measurement
provisions of FIN 45 are effective on a prospective basis to guarantees issued
after December 31, 2002.  However, the disclosure requirements are effective for


                                       29
<PAGE>
interim and annual financial statement periods ending after December 15, 2002.
Our adoption of FIN 45 had no impact on our results of operations or financial
position.

     In June 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity."  The
statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003, except for mandatory redeemable financial
instruments of a nonpublic entity.  The adoption of this statement did not have
a material effect on our results of operations.

TOTAL CONTRACTUAL CASH OBLIGATIONS

     A summary of our total contractual cash obligations (in millions) as of
August 31, 2003 is as follows:

<TABLE>
<CAPTION>
                                  PAYMENTS DUE BY PERIOD:
                                                                        MORE
                                      LESS THAN                         THAN
CONTRACTUAL OBLIGATIONS      TOTAL      1 YR.    1-3 YRS.   3-5 YRS.   5 YRS.
- --------------------------  --------  ---------  --------  ----------  ------
<S>                         <C>       <C>        <C>       <C>         <C>
Long-term debt              $ 5.0(1)         --        --  $   5.0(1)      --
Participating interests in
    Rangeview water supply  $36.2(2)         --        --         --       --
</TABLE>

(1)     As of February 29, 2004, $3,321,287 of this debt, due in August 2007, is
subject to reduction through payments to holders of the notes under the
Commercialization Agreement.  If the amount of principal and accrued interest on
the notes is paid under the Commercialization Agreement prior to the maturity of
the notes, the notes will be canceled.

(2)     These amounts are payable under the Financing Agreements entered into to
finance our acquisition of the Rangeview water assets.  We are only required to
make payments from the water resource portion of tap fees we receive from the
sale of Export Water.  If we do not receive sufficient proceeds from the sale of
Export Water to satisfy these obligations, the obligations will not become
payable.

OFF-BALANCE SHEET ARRANGEMENTS

     We have no off balance sheet arrangements.


                                       30
<PAGE>
                                    BUSINESS

BACKGROUND

     Pure Cycle was founded and continues to be managed based on the belief that
water is a precious commodity, one that is often undervalued and therefore used
inefficiently.

     We own or have rights to use significant water assets which we have begun
to utilize to provide water and wastewater services to customers located in the
Denver, Colorado metropolitan area near our principal water assets.  We will
operate water and wastewater systems to deliver and treat the water we provide.
Our services will include designing, constructing, operating and maintaining
systems to service our customers.

     We have exclusive access to approximately 29,000 acre feet per year of
water from, and the exclusive right to provide water and wastewater services to,
the Lowry Range service area.  The Lowry Range is located in Arapahoe County
approximately 15 miles southeast of Denver and 12 miles south of the Denver
International Airport.  Of the 29,000 acre feet of water to which we have
access, 17,500 acre feet are available to us for use on the Lowry Range.  We own
the remaining 11,650 acre feet that we can "export" from the Lowry Range to
supply water to nearby communities and developers in need of additional water
supplies.  We acquired these rights and the Export Water in 1996 when we entered
into an agreement with the State Land Board, which owns the Lowry Range, and the
District, a quasi-municipal political subdivision formed for the sole purpose of
providing water and wastewater services to the Lowry Range.

HISTORY

     Pure Cycle was incorporated in 1976 to commercialize a patented single
family water recycling technology and became a public company in 1977.  During
the late 1970's, we manufactured, installed and maintained approximately 50
water recycling systems that captured and treated wastewater flows from homes
and recycled that water for potable use.  However, these individual recycling
systems proved to be too costly for us to operate, monitor and maintain, and we
discontinued the business in the early 1980's.

     Beginning in 1987, concurrent with a change of management and ownership
control, we shifted our business to the acquisition, development and wholesale
marketing of water and large scale wastewater utility systems, principally for
sale to municipalities in the Denver area.  We acquired rights to what we refer
to as the Paradise Water Supply, which includes several water wells and rights
to divert and store up to 70,000 acre feet of Colorado River water near DeBeque,
Colorado.  Our ability to provide water service was greatly enhanced in 1996
when we entered into a water privatization agreement with the District and the
State Land Board and purchased annual entitlement rights to 11,650 acre feet of
water available for service to customers located off the Lowry Range service
area and entered into a water service agreement extending through 2081 which
grants us the rights to an additional 17,500 acre feet of water per year to
serve customers located in the Lowry Range service area.

WATER  TO  MEET  COLORADO  DEMANDS

     In common with large portions of the desert West, the Denver metropolitan
area is semi-arid, receiving an average of only 13 inches of precipitation
annually.  Eighty percent of the State's water supplies reside west of the
Continental Divide, while 80 percent of the population resides east of the
Continental Divide.  Roughly 80 percent of Colorado's annual surface water
supply comes from snow.  Due to wide fluctuations in snowfall from year to year
and area to area, the amount of surface water that can be captured for use


                                       31
<PAGE>
varies greatly.  Further, the State is obligated through compacts and treaties
to allow much of the water that originates in the State to pass out of Colorado
for use by downstream out-of-state users.

     Most of the state's population resides along the "front range," which
extends from Pueblo to Fort Collins and lies along the eastern side of the Rocky
Mountains.  The largest population center is the greater Denver metropolitan
area which has been growing at above average rates for decades.  By the 1960s,
water available during an average precipitation year from Denver's primary
source of surface water, the South Platte River, was no longer sufficient to
meet the area's needs.  To address this imbalance, numerous reservoirs and
tunnels have been built to transport an average of 500,000 acre feet per year of
Colorado River water located in western Colorado to eastern Colorado users.
Even with this diversion, the U.S. Department of the Interior has identified the
Denver metropolitan area as one that is 'highly likely' to experience a 'water
supply crisis' by 2025.

     The Denver Regional Council of Governments, a voluntary association of 50
county and municipal governments in the Denver metropolitan area, estimates that
between 2000 and 2025 the population in the Denver metropolitan area will grow
from 2.4 million to 3.4 million.  To accommodate for this growth, the
metropolitan area is expected to grow from about 500 square miles to about 770
square miles during the same 25-year period.  We expect that servicing this
population expansion will require an additional 300,000 acre feet of water
annually.

     With our Rangeview water assets, we are positioned to supply water to meet
the needs of approximately 80,000 single family homes, or approximately 240,000
people.

PURE  CYCLE  ASSETS

     Rangeview Water Assets.  Our primary assets are a combination of
nontributary groundwater rights and tributary surface water and storage rights
associated with the Lowry Range property, which we collectively call the
"Rangeview Water Supply."  We own the rights to use 1,650 acre feet of tributary
surface water, together with 10,000 acre feet of non-tributary water, that can
be exported off the Lowry Range property to serve area users.  We have the right
to use an additional 1,650 acre feet of surface water together with over 16,000
acre feet of nontributary groundwater to serve customers within our Lowry Range
service area.  We provide additional information regarding tributary and
non-tributary water rights under "Colorado Water Law Principles" below.  The
Export Water we own, together with water available under our service agreements,
total over 29,000 acre feet.

     Beginning in 1988, we began to pursue acquisition of a portion of the Lowry
Range water.  Our initial interest was the water which could be exported off the
property to serve customers throughout the Denver area.  Through a series of
transactions between the initial project principals, the State Land Board and
the District, we ultimately acquired the rights we now own.  These assets were
acquired using a financing instrument, called the Commercialization Agreement,
in which we raised approximately $11,100,000 to purchase the Rangeview water
supply, and issued in exchange therefore 1,821,907 shares of common stock,
warrants to purchase 2,038,000 shares of common stock, 1,600,000 Series A
Preferred Stock and an obligation to pay to these investors the first
$31,807,000 we receive from the sale or other disposition of the Export Water.
Also, as part of the Rangeview water supply acquisition, we raised an additional
$950,000 from another investor, and incurred an incremental obligation to pay
the next $4,000,000 we receive from the sale or other disposition of Export
Water to this investor.  The investors that are parties to the Commercialization
Agreement comprise the majority of the selling stockholders in this prospectus.
The shares being sold by the selling stockholders will be issued to them upon
exercise of warrants issued in connection with the Commercialization Agreement
transactions.


                                       32
<PAGE>
     We are the exclusive water and wastewater service provider for the
24,000-acre Lowry Range property through 2081.  Under this agreement we are
entitled to manage 17,500 acre feet of water capable of servicing up to 47,000
SFE equivalents (or approximately 140,000 people).  We also own the rights to an
additional 11,650 acre feet of water annually that we can sell to other areas
throughout the Denver metropolitan region.  We estimate that this amount of
Export Water is sufficient to service up to 32,000 single family homes (or
approximately 96,000 people).

     We will design, construct and operate facilities to provide water and
wastewater service to customers located on the Lowry Range through our service
contract period ending in 2081.  The District owns both the water and the
wastewater systems during our contract period, and we will operate both systems
during this period pursuant to our service contract.  After 2081, ownership of
the water system will revert to the State Land Board.  We will also design,
construct and operate the facilities to provide water and wastewater service to
customers located off the Lowry Range that will use our Export Water, and will
own these assets.  We will contract with third parties for construction of these
facilities.  We will design, engineer, and develop these systems as a single
unified system to improve reliability and economies of scale for customers
located both on and off the Lowry Range property.

     Paradise Water Assets.  In 1987, we acquired assets known as the Paradise
Water Supply.  These assets include a Water Court decree for conditional water
rights enabling us to build a 70,000 acre-foot reservoir to store tributary
water on the Colorado River, a right-of-way permit for U.S. Bureau of Land
Management property at the dam and reservoir site, and four existing tributary
water wells with a theoretical capacity to produce approximately 56,000 acre
feet of water per year.  The reservoir site is located in western Colorado on
the Colorado River about 60 miles east of the Utah border.  Our ability to use
this asset may be limited, however, because of constraints imposed by the
difficulties and costs involved in transporting the water out of  the Colorado
River watershed to the Denver metropolitan area and because of legal
complications in transferring such water to down-stream states like California
under the interstate Colorado River Compact.  See "Governmental Regulation -
Water Deliveries."  Due to the strict regulatory requirements for constructing
an on-channel reservoir, completing this conditional storage right at its
decreed location would also be difficult.  As a result, we cannot assure you
that we will ever be able to make use of this asset or sell the water
profitably.

     We continue to evaluate prospects for the acquisition of additional water
rights in the Denver metropolitan area to expand our water service capabilities.

REVENUE

     We will derive revenue from two principal sources:  one-time tap fees,
which are typically paid by the developer of a property and become part of the
cost of the lot or home, and service fees, which are monthly metered water
deliveries paid by all customers connected to our water and wastewater systems.
Under our privatization agreement with the District and the State Land Board,
pricing for water and wastewater services is controlled through a market-driven
pricing mechanism in which our rates and charges may not exceed similar rates
and charges of three nearby communities.

     Table 1 provides a summary of our tap fees over the past several years.  We
base our tap fees on the average of the tap fees that have been charged by the
three communities whose rates determine our allowable charges.


                                       33
<PAGE>
<TABLE>
<CAPTION>
                          TABLE 1 - WATER SYSTEM TAP FEES

Year                   1998    1999    2000     2001     2002      2003      2004
- --------------------  ------  ------  ------  --------  -------  --------  --------
<S>                   <C>     <C>     <C>     <C>       <C>      <C>       <C>
Tap Fee (per SFE)     $8,165  $8,165  $8,165  $10,500   $10,500  $11,150   $12,420
- --------------------  ------  ------  ------  --------  -------  --------  --------
Percentage increase      ---     ---     ---       29%      ---      6.2%     11.4%
- --------------------  ------  ------  ------  --------  -------  --------  --------
</TABLE>

     Water system tap fees consist of two components:  a system development fee
and a water resource charge.  System development fees are typically used to
defray the cost to develop and deliver the water into the distribution system.
Water resource charges are typically used to defray the costs associated with
the water rights.  Our current water system development fee is $9,020 per single
family equivalent (SFE), and our water resource charge is $3,400 per SFE.  An
SFE is defined as the amount of water required each year by a family of three
persons living in a single family house on a standard   acre lot.  We will also
collect an additional wastewater system development fee of $4,883 per SFE to
develop, operate and maintain the wastewater system.  Currently, for a typical
residential customer using approximately 0.4 acre feet of water annually, the
water service fee is approximately $578 per year and the wastewater service fees
are approximately $404 per year for a typical residential customer.  We also
collect other relatively small fees and charges from residential customers and
other end users to cover miscellaneous administrative and service expenses, such
as application fees, review fees and permit fees.

     We negotiate the payment terms for tap fees and other water/wastewater
service obligations with each land developer or builder before we commit to
providing service and  begin construction of the project.  In some cases where
service is provided off the Lowry Range, we may provide only water service, but
will typically retain the right to reuse treated effluent wastewater in our
dual-pipe distribution system.  We are typically responsible for the
construction of wholesale facilities, which are those facilities necessary to
develop and treat the water, including water wells, water collection pipelines,
water reservoirs, water treatment plants, storage tanks, pump stations and
wastewater treatment plants.  The costs for these facilities are financed by the
system development fee portion of the tap fees paid by developers to gain access
to the water and wastewater systems.

     Developers are typically responsible for the construction of retail
facilities - the water distribution system that transports the water throughout
the subdivision or community.  Retail facilities are constructed pursuant to our
design standards and are inspected by our engineers prior to completion.  Once
we certify that the retail facilities have been constructed in accordance with
our design criteria, the developer is required to dedicate the retail facilities
to us at no cost.  In the Sky Ranch transaction, the developer will dedicate the
retail facilities to the District.  We are then responsible for the operation
and maintenance of those facilities.

     Customer facilities consist of water service pipelines, plumbing, meters
and other components that carry potable water and re-use water from the street
to the customer's house and collect wastewater from the customer's house to the
street.  In many cases, a portion of the customer's facilities are also
constructed by the developer, again pursuant to our design standards, but are
owned and maintained by the customer.

     Under our water privatization agreements, the State Land Board is entitled
to a royalty and the District is entitled to retain a fee, each based on a
percentage of revenues from water sales that utilize water from the Rangeview
water assets.  Royalties and fees are calculated either on a gross or net
revenue basis depending on whether the customer is located within the Lowry
Range or elsewhere in the Denver metropolitan area.  Payments from customers who
are within the Lowry Range generate royalties to the State Land Board and fees
to the District based on gross revenues.  Payments from customers located
outside the Lowry Range generate royalties to the State Land Board based on net
revenues, which are defined as gross revenues less costs incurred to develop and


                                       34
<PAGE>
deliver water.  The District collects fees from customers, pays the royalties
and fees, and remits the remainder to Pure Cycle.  Table 2 below sets forth
these payments:

<TABLE>
<CAPTION>
               TABLE 2 - OBLIGATIONS RELATING TO USE OF RANGEVIEW WATER ASSETS

REVENUE SOURCE                     STATE LAND BOARD               RANGEVIEW METROPOLITAN
                                                                         DISTRICT
- --------------------------  -------------------------------  --------------------------------
<S>                         <C>                              <C>
Water Tap Fees & Service              12% of gross revenue   5% of gross revenue after State
Fees within Lowry Range                                      Land Board royalty

Water Tap Fees & Service    12% of net revenue (gross                                      0%
Fees from Export Water      revenue less costs incurred to
                            deliver water)

Wastewater Tap Fees                                      0%                                0%

Wastewater Service Charges                               0%             10% of gross revenue
</TABLE>

     Developers having rights to groundwater underlying their properties can
receive a credit against a portion of their tap fees if they dedicate their
water to us.   The credit is equal to the water resource charge portion of the
tap fee - currently $3,400 of the total $12,420 tap fee, based on 0.7 acre feet
of water being dedicated to us for each water resource tap credit issued.  In
the Sky Ranch transaction, we are crediting the developer the water resource
charge portion of the tap fee for the first 1,400 taps and combining the water
resources underlying the Sky Ranch property with a portion of our Export Water
to provide the full amount of water required for the Sky Ranch development.

     We are obligated to pay investors in the Commercialization Agreement the
water resource fee component from the sale of Export Water taps up to a total of
$36,240,000.  The obligations under the Commercialization Agreement will not
prevent us from utilizing the system development portion of the tap fee to
construct the infrastructure we will need to build to provide our water
services.

WATER  RECLAMATION

     With interest heightened by an ongoing drought, most water providers in
Colorado are actively pursuing the re-use of treated wastewater for irrigation
and other non-potable uses.  Our master plan for the Lowry Range and other areas
in which we will work with developers to install water service calls for the
installation of a dual water distribution system, with one pipe supplying the
customer with potable water and the second pipe providing treated effluent
wastewater, or "reclaimed" water, for irrigation and other nonpotable uses.  A
third pipe would retrieve effluent wastewater for treatment and subsequent
reuse.  About one-half of the water needed to meet Denver-area municipal water
demands is used for irrigation of lawns and landscape.  We believe that treated
wastewater would provide an essentially drought-proof supply of irrigation water
for the areas we will serve.  The Colorado Department of Public Health and
Environment is currently evaluating the use of effluent wastewater for
residential irrigation, and, pending the outcome of their review, we may not be
able to deliver this water to residential customers.  However, even if we cannot
use this reclaimed water for residential irrigation , we will be able to use it
in other approved commercial irrigation uses, such as for golf course watering.
We expect that the implementation of an extensive water reclamation system, in
which essentially all wastewater treatment plant effluent will be re-used to
meet nonpotable water demands, will greatly expand our capability to provide
quality water service and will reinforce our philosophy that emphasizes the
importance of water recycling.


                                       35
<PAGE>
THE  LOWRY  RANGE

     The State Land Board acquired the Lowry Range, which was formerly a
military reservation, in the 1960s.  The Lowry Range encompasses approximately
27,000 acres, of which 24,000 acres are within our exclusive service area.

     The Lowry Range is located in unincorporated Arapahoe County 15 miles
southeast of downtown Denver and 12 miles directly south of Denver International
Airport.  The State Land Board has stated that the Lowry Range is the most
valuable property in its nearly 2,500,000 acre portfolio.  It has explored a
number of development models for the property, including continued development
similar to that which is ongoing adjacent to the property's western borders, a
new planned community, and a compact development model with high density village
centers surrounded by large expanses of open space.  The State Land Board
continues to review and refine the development opportunities for the Lowry Range
and anticipates approaching the development community for "requests for
qualification" and "requests for proposals" during 2004.

     We believe that the Lowry Range is among the single largest contiguous
parcel of primarily undeveloped land in the United States that is near a
metropolitan area and owned by a single landowner.  In October 2003, the State
Land Board directed its staff to prepare a request for proposal to send to the
development community to seek assistance with the planning and development of
this tract of property.  The State Land Board has engaged the Urban Land
Institute to assist in the preparation of evaluation criteria for a request for
qualification and request for proposal.  The Urban Land Institute's criteria are
expected to be completed in June 2004.  The State Land Board has indicated that
it will shortly thereafter send a request for qualification followed by a
request for proposal to local and national developers to assist in the
development of the Lowry Range.

     We have designed and constructed, and we currently operate and maintain,
water and wastewater facilities that service customers on the Lowry Range.  We
currently have one facility that during 2003 provided, treated and delivered
approximately 47 million gallons of potable water and treated approximately 7
million gallons of wastewater.  We intend to plan, construct and operate the
facilities serving the Lowry Range and areas outside the Lowry Range in a
unified manner to capitalize on economies of scale.

     Full build-out of the Lowry Range is likely to take more than 30 years,
with initial development occurring as soon as two to three years from now,
depending on the decisions of State Land Board and the results of the proposal
process.

EXPORT  WATER

     Colorado municipalities have strong incentives to attract commercial
development to their areas, as a large portion of their revenues are derived
through sales tax receipts.  Cities and municipalities historically have used
water availability as a means to attract development in competition with other
municipalities.  As water has become scarce, cities and municipalities have
begun requiring property developers to demonstrate that they have sufficient
water supplies for their proposed projects before the cities and municipalities
will consider rezoning applications.  This is forcing developers to find
adequate water supplies in order to develop new property.

     Our water marketing activities are centered around targeting our water and
wastewater services to developers and homebuilders developing new areas of the
Denver metropolitan area.  Our water supplies are largely undeveloped and are
located in southeast Arapahoe County, one of the fastest growing regions of the
Denver metropolitan area.  We work with area developers to investigate water
supply constraints, water and wastewater utility issues, market demand,


                                       36
<PAGE>
transportation concerns, employment centers and other issues in order to
identify suitable areas for development.

CURRENT  OPERATIONS

     At this time, we operate and maintain all of our water supply and
wastewater treatment facilities with limited assistance from third party
maintenance contractors.  Water deliveries during 2003 totaled about 47 million
gallons, ranging from 2 million gallons per month in the winter to 7 million
gallons per month in the summer.  Our wastewater treatment plant currently has a
permitted capacity of 130,000 gallons per day and receives about 20,000 gallons
per day.

     Presently, approximately 81% of our water and wastewater treatment revenues
are from one customer.  In 1998, we entered into a water service agreement with
the State of Colorado Department of Human Services to provide water and
wastewater services to a juvenile correction facility on the western edge of the
Lowry Range known as the Ridge View Youth Services Center.  We designed and
built this facility to provide water and wastewater services serving the
approximately 200 single family equivalents of the Ridge View Youth Services
Center.  Upon completion in 2001, we commenced service to this facility.

     In October 2003, we entered into a water service agreement with a developer
to provide water to approximately 4,000 SFE that are being built on
approximately 800 acres known as "Sky Ranch" located 4 miles north of the Lowry
Range along Interstate 70.  We expect that the construction of the project will
begin in October 2004, with the first homes available in February 2005.  Based
on housing market demand in similar projects in the area and projections
provided by the developer, we expect that the project will be fully built out
within 10 years.  Under the agreement, the developer must purchase at least 400
water taps before occupancy of the first home.  The agreement permits the
developer to add additional taps annually, with at least 250 taps to be
purchased each year.  This schedule is designed to provide us with adequate
funds with which to construct the facilities needed to provide water service to
the areas being built.

     The water service agreement for Sky Ranch incorporates 4,000 SFE
connections, which at current rates and charges would generate approximately $50
million in total water tap fee revenues and approximately $2.3 million annually
in water service revenues.  These represent gross fees and, to the extent that
water service is provided using Export Water, we are be required to pay a
royalty to the State Land Board equal to 12% of the net revenue after deducting
our costs.  We expect to dedicate approximately 1,200 acre feet, or
approximately 10%, of our Export Water supply (which is about 4.2% of our
overall Rangeview water supply) for this project.  We estimate we will spend
approximately $25 million for infrastructure related to the development and
delivery of water to the 4,000 single family equivalent units.

     For the initial development at Sky Ranch, we anticipate receiving tap fees
of approximately $1.9 million, representing approximately 156 taps, in the
current fiscal year ending August 31, 2004, and approximately $3.0 million,
representing an additional 244 taps, prior to January 2005.  We estimate that it
will cost approximately $2.5 million to construct the infrastructure to service
the initial 400 taps.  We will expand the infrastructure to meet demand as
houses are built at Sky Ranch.  We will initially develop the water beneath the
Sky Ranch property, which is being dedicated to us by the developer in exchange
for credit of a portion of the water resource tap fee.  The dedicated water is
sufficient to provide water service to approximately 1,400 customers.  No
payments will be required to be made under the Financing Agreements or for
royalty payments to the State Land Board with respect to tap fee revenues from
the first 1,400 taps at Sky Ranch.  Because this project has not yet commenced,
we cannot assure you that these revenue and expense estimates will be the actual
revenues and expenses that we will experience.


                                       37
<PAGE>
PROJECTED  OPERATIONS

     We will develop water and wastewater infrastructure in stages to meet
demand.  We anticipate that development of the entire 29,000 acre feet of
non-tributary water will require between 250 and 300 high capacity water wells
ranging in depth from 800 feet to over 2,500 feet.  We will drill separate wells
into each of the three principal aquifers and each well will deliver water to
central water treatment facilities for treatment prior to delivery to customers.
We also intend to build structures to divert surface water to four storage
reservoirs to be located in the Lowry Range.  The surface water will be diverted
when available and, prior to distribution to our customers, will be treated by a
separate water treatment facility that we will build specifically to treat
surface water.  We anticipate that full build-out of water facilities on the
Lowry Range will cost approximately $340 million and will accommodate up to
water service to 80,000 single family equivalent units incorporating both
customers located in and outside the Lowry Range service area.

     We intend to design, construct and operate our own wastewater treatment
facilities using advanced wastewater treatment technologies currently available
in the market.  We plan to store our treated effluent water in surface water
reservoirs for reuse in our irrigation water system.  The combination of deep
well water from our non-tributary water supplies, surface water supplies from
two surface water streams that flow through the Lowry Range and the reuse of the
treated effluent water supplies will provide an advanced water management system
that maximizes the use and reuse of our valuable water supplies.

     We currently operate one system serving customers on the Lowry Range that
has a capacity to treat approximately 130,000 gallons of wastewater per day;
current utilization is approximately 20,000 gallons per day.  We anticipate that
the full build-out of wastewater facilities on the Lowry Range will cost
approximately $68.4 million and will accommodate up to approximately 12.3
million gallons of wastewater per day serving an estimated 47,000 single family
equivalent units.

     We intend to utilize third party contractors to construct our facilities
and we will employ licensed water and wastewater operators to operate our water
and wastewater systems.  At full buildout, we expect to employ approximately 50
professionals to operate our systems, read meters, bill customers, and manage
our affairs.  We will take advantage of advanced technologies to keep personnel
requirements and operating costs low.  Currently available technologies enable
meter reading and billing to be done automatically, reducing associated handling
and labor costs.  A vehicle driving past a home can send a signal to the meter,
and the meter reading goes directly into a database, which automatically prints
billing information for the customer.

RANGEVIEW METROPOLITAN DISTRICT

     The Rangeview Metropolitan District is a quasi-municipal corporation and
political subdivision of Colorado formed in 1986 for the sole purpose of
providing water and wastewater service to the Lowry Range, using water leased to
the District by the State Land Board.  The District was formed following, and
based on, the purchase in 1986 of a 40 acre parcel of vacant land located in
unincorporated Arapahoe County near but not on the Lowry Range.  This land
comprises all of the property currently within the boundaries of the District.

     The District is run by an elected board of directors.  The only eligible
voters and the only persons eligible to serve as directors are the owners of
property in the 40 acre boundary of the District.  The current directors of the
District are Thomas P. Clark, Mark W. Harding, Scott E. Lehman (all employees of
Pure Cycle) and Tom Lamm.


                                       38
<PAGE>
     We are party to a Right of First Refusal Agreement with the owners of the
property comprising the District.  Pursuant to a tenancy in common agreement, in
the event of death, bankruptcy or incompetence of any tenant, that tenant's
estate or representative must offer the property interest of that tenant to the
remaining tenants for purchase.  If the remaining tenants do not purchase all of
such person's interest, the property must be offered to us pursuant to its Right
of First Refusal Agreement.  In addition, if any tenant wants to sell his
interest in the parcel, such tenant must find a bona fide buyer and then offer
the property to us.  We have the right, at our option, to buy the property by
matching the terms of the bona fide third party offer or by paying the appraised
value of the property, as determined by independent appraisers.  A tenant may
also negotiate a sale directly with us if he elects not to locate a bona fide
buyer.  Each of the directors currently owns an undivided one-fifth interest in
the land comprising the District.  We also own an undivided one-fifth interest.
Under applicable Colorado law, entities are not qualified to serve as directors
of municipal districts and may not vote.

     We and the directors have attempted to transact business between the
District and us on an arms-length basis.  The conflicts of interest of the
directors in transactions between us and the District are disclosed in filings
with the Colorado Secretary of State.  The District and we were each represented
by separate legal counsel in negotiating the water service agreement and
wastewater service agreement between the parties.  The agreements were also
approved by the two members of the District's board who were not our employees
and by the State Land Board.

     It is likely that at some point in the future, the board of directors of
the District will be comprised entirely of directors independent from Pure
Cycle.  As the State Land Board develops the Lowry Range, landowners on the
Lowry Range may petition to include their land within the District's boundaries.
Provided such petition complies with applicable law, the District is required by
its lease with the State Land Board to proceed with due diligence to include the
area designated in such petition within the District's boundaries.  As the
District's boundaries expand beyond the initial 40 acre parcel, the base of
persons eligible to serve as directors and eligible to vote will also increase.
A board of the District that is not controlled by us would not have the power to
take away from us the water rights embedded in our existing agreements.

COMPETITION

     Although we have exclusive, long term water and wastewater service
contracts for the Lowry Range service area, our business of providing water
service using our Export Water is subject to competition.  Alternate sources of
water are available, principally from other private parties, such as farmers
owning senior water rights that are no longer being economically used in
agriculture, and municipalities seeking to annex newly developed areas in order
to increase their tax base.  Our principal competition in areas close to the
Lowry Range would be the City of Aurora.  The principal factors affecting
competition for potential purchasers of Export Water include the availability of
water for the particular purpose, the cost of delivering the water to the
desired location, and the reliability of the water supply during drought
periods.  We believe that our assets provide us with a competitive advantage
because our legal rights to the assets have been confirmed for municipal use,
our water supply is close to Denver area water users and our pricing structure
is competitive.  Further, the size of the Lowry Range service area and the
amount of property that can be served by the Export Water will provide us with
economies of scale that should give us advantages over our competitors.

COLORADO  WATER  LAW  PRINCIPLES

     Under Colorado water law, a person generally does not own the water itself
but only the right to use the water from a certain source.  A water right,
however, is considered a property right that can be owned and conveyed, separate
from land, in the same manner as a real property interest.


                                       39
<PAGE>
     Generally, we own two types of water rights:  tributary water rights and
nontributary groundwater rights.  In addition, we own water storage or recharge
rights, which consist of both the right to use the water stored or recharged,
and the right to construct, maintain and/or use the reservoir or aquifer in
which the water is stored.

     Colorado water rights are administered jointly by special State Water
Courts and the State Engineer's Office.  Water Courts adjudicate and confirm the
nature and scope of water rights by issuing decrees.  The State Engineer is
responsible for issuing well permits, implementing interstate compacts and
administering tributary water rights.

     Tributary water rights are covered by the Colorado Constitution, which
provides that all surface and ground water in or tributary to natural streams in
Colorado is the property of the public and subject to appropriation.  Such
tributary water includes all springs, surface drainage and groundwater that is
hydrologically connected to surface streams.  Tributary water in Colorado is
subject to the "prior appropriation" doctrine, which is grounded on the
"first-in-time, first-in-right" principle.  Under this doctrine, an absolute
tributary water right is acquired by the act of diverting and placing the water
to some beneficial use, and the right is confirmed and assigned a priority based
on the date of initial use through a decree issued by a State Water Court.  The
Water Court decree legally confirms the appropriation date, the specific type
and place of use, and the amount of water permitted to be diverted under the
water right.  Decreed water that is appropriated earlier in time holds senior
priority over later-acquired water rights.  In times of shortage, a senior water
right must be fully satisfied before any junior right can use any water.  This
means that the relative priority of a tributary water right is critical to its
value.  A tributary water right cannot typically be used and reused successively
to exhaustion.

     Tributary water rights can also be "conditional" as opposed to absolute.  A
conditional water right permits an owner to take an initial step towards
appropriating water, such as planning a storage or diversion structure, and
demonstrating to the Water Court every six years that additional steps are
diligently being taken to put the water to a beneficial use.  The water right
can ultimately be perfected and become an absolute water right, with the date of
appropriation being the date of the initial action.  Our Paradise Water Supply
consists in part of conditional rights in tributary water in the Colorado River
basin in western Colorado.

     Nontributary groundwater is defined by statute as water that is not
hydrologically connected to surface water.  In Colorado, nontributary water is
most commonly found in the Denver Basin, which is a series of four aquifers
stretching from the town of Greeley south to Colorado Springs, and from the
foothills of the Rocky Mountains to east of the Denver metropolitan area.
Nontributary groundwater is not subject to the prior appropriation doctrine and
the related priority administration system.  Rather, the right to use
nontributary water is generally incident to overlying land ownership.  By
statute, owners of surface land have rights to withdraw the calculated amount of
nontributary groundwater that lies beneath their land, and these rights are
perfected by drilling a well or obtaining a Water Court decree.  An owner can
withdraw one percent of the total volume of nontributary groundwater to which it
is entitled each year, in order to allow this resource, to the extent
non-renewable, to last 100 years.  Nontributary water is permitted to be used
and reused successively to exhaustion.  As a result, rights to nontributary
water are extremely valuable, particularly in times of drought and water
shortages.

GOVERNMENT  REGULATION

Water Quality

     The water we deliver for use by customers must meet water quality standards
for public water supply systems that are set under the federal Safe Drinking
Water Act (SDWA), 42 U.S.C. Sec. 300f et seq. and related Colorado state law.


                                       40
<PAGE>
These standards are subject to periodic revision and may become more strict in
the future.  In general, we anticipate that groundwater from wells located on
the Lowry Range will conform with these water quality standards without
treatment, other than residual disinfection prior to use.  Lower quality
groundwater, if encountered, may be used directly in the non-potable irrigation
system, blended with other potable water supplies to yield an acceptable quality
mixture, or receive additional treatment.  We will build water filtration plants
to treat surface waters prior to use.  We believe that we should have no
difficulty meeting existing SDWA standards.

     Wastewater that we treat that is or will be discharged to any stream,
drainage or aquifer, must also comply with various water quality standards and
other requirements under the Federal Water Pollution Control Act (FWPCA), 33
U.S.C. Sec. 1251 et seq., as delegated to and administered by the State of
Colorado.  We currently operate a wastewater treatment plant that discharges
treated wastewater effluent to Coal Creek under a State discharge permit.  We
believe we should also have no difficulty meeting any applicable FWPCA or
related State requirements associated with any regulated treated wastewater
discharges.  As noted above, our master plan calls for a dual distribution
system under which treated wastewater can be reclaimed and redistributed to
customers for irrigation use, which would limit regulation under the above FWPCA
discharge permit program.

Water Deliveries

     While we are exploring the potential sale of our Paradise Water Supply to
customers in Arizona, Nevada and California, such out-of-state transactions are
subject to several significant regulatory hurdles.  Colorado is a signatory to
interstate compacts with six other western states to apportion fixed amounts of
water from the Colorado River.  These compacts contain complex provisions that
impose obligations on the states to ensure that each state receives and uses
only its allotted amount of Colorado River water.  Rights created by interstate
compacts are superior to state water rights granted by the State of Colorado;
Colorado may create and vest in-state water rights as property, but these rights
are subject to Colorado's allocated share of Colorado River water and its
obligation to deliver water to downstream states under the compacts.  Recently,
the U.S. Department of Interior began strictly enforcing the provisions of the
Colorado River Compact of 1922 to require that California limit the amount of
Colorado River water it diverts to 4.4 million acre-feet, the amount it was
originally allocated under that compact.  Significant demand for water exists in
California, Nevada and Arizona as a result of increased populations in these
states, giving rise to water needs that exceed the supplies of water originally
allocated to these states under the compact.  However, as a result of
obligations imposed on Colorado by the compacts to send water to the downstream
states, Colorado law restricts the export of water out of state without
obtaining a Water Court decree, and to issue a decree, the Water Court must find
that such export is not in violation of provisions of interstate compacts and
does not prevent Colorado from complying with its interstate compact
obligations.  Obtaining such a decree would likely involve significant
litigation cost.

EMPLOYEES

     We currently have three employees, none of whom is subject to any
collective bargaining agreements.  We believe that our relations with our
employees are good.

                                   PROPERTIES

OFFICE  LEASE

     We currently occupy approximately 1,800 square feet of office space at no
cost from Thomas P. Clark, our Chief Executive Officer and one of our directors.
There is no written lease.


                                       41
<PAGE>
FACILITIES

     Generally, we will own and operate the water and wastewater facilities to
be constructed for service to customers located off the Lowry Range that are
using our Export Water.  While we have an exclusive right to provide water and
wastewater services to customers on the Lowry Range until 2081, as well as the
obligation to construct and operate the wastewater facilities to provide this
water, the facilities (other than the wastewater system) will be owned by the
State Land Board, and the District will own the wastewater system.  We intend to
construct the water supply facilities for both the Lowry Range service area and
for our Export Water services as part of a unified plan.  Under our service
agreement with the State Land Board and the District, we have a perpetual right
to construct, operate and maintain water supply facilities on the Lowry Range as
needed to produce and supply Export Water.

RANGEVIEW  METROPOLITAN  DISTRICT

     We own an undivided one-fifth interest as a tenant-in-common in a 40-acre
parcel of undeveloped land located in unincorporated Arapahoe County comprising
the Rangeview Metropolitan District.

                                   MANAGEMENT

DIRECTORS  AND  EXECUTIVE  OFFICERS

     The following table sets forth the names, ages and titles of the persons
who are currently our directors and executive officers of the Company, along
with other positions they hold with us.

Name                       Age              Position
- -------------------------  ---  ---------------------------------
Harrison H. Augur(1)(2)     62  Chairman of the Board
Thomas P. Clark             67  Director, Chief Executive Officer
Mark W. Harding             40  Director, President
George M. Middlemas(1)(2)   57  Director
Margaret S. Hansson         79  Director
Richard L. Guido (1)(2)     59  Director

________________

(1)  Member of Audit Committee.

(2)  Member of Compensation Committee.

     HARRISON H. AUGUR was elected Chairman of the Board in April 2001.  For the
past 20 years, Mr. Augur has been involved with investment management and
venture capital investment groups.  Mr. Augur has been a General Partner of  CA
Partners since 1987, and General Partner of Patience Partners LLC since 1999.
Mr. Augur received a Bachelor of Arts degree from Yale University, an LLB degree
from Columbia University School of Law, and an LLM degree from New York
University School of Law.

     THOMAS P. CLARK was appointed Chief Executive Officer in April 2001.  Prior
to his appointment as our Chief Executive Officer, Mr. Clark served as our
President and Treasurer from 1987 to April 2001. Mr. Clark is primarily involved
in the management of our business.  His other business activities include:
President, LC Holdings, Inc. (business development), 1983 to present, and


                                       42
<PAGE>
partner (through a wholly owned corporation) of Resource Technology Associates
(development of mineral and energy technologies), 1982 to present.  Mr. Clark
serves on the board of the Rangeview Metropolitan District.  Mr. Clark received
his Bachelor of Science degree in Geology and Physics from Brigham Young
University.

     MARK W. HARDING joined Pure Cycle in April 1990 as Corporate Secretary and
Chief Financial Officer.  He was appointed President in April 2001, and on
February 13, 2004 was appointed to fill a vacancy on the board.  He brings a
background in public finance and management consulting.  From 1988 to 1990, Mr.
Harding worked for Price Waterhouse, where he assisted clients in providing
public finance and other investment banking related services.  Mr. Harding is
the President of the Rangeview Metropolitan District.  Mr. Harding has a B.S.
Degree in Computer Science and a Masters in Business Administration in Finance
from the University of Denver.

     GEORGE M. MIDDLEMAS has been a Director since April 1993.  Mr. Middlemas
has been a general partner with Apex Investment Partners, a diversified venture
capital management group, since 1991.  From 1985 to 1991, Mr. Middlemas was
Senior Vice President of Inco Venture Capital Management, primarily involved in
venture capital investments for INCO Securities Corporation.  From 1979 to 1985,
Mr. Middlemas was a Vice President and a member of the Investment Committee of
Citicorp Venture Capital Ltd., where he sourced, evaluated and completed
investments for Citicorp.  Mr. Middlemas is a director of Tut Systems, and
Pennsylvania State University - Library Development Board. Mr. Middlemas
received a Bachelors degree in History and Political Science from Pennsylvania
State University, a Masters degree in Political Science from the University of
Pittsburgh and a Master of Business Administration from Harvard Business School.

     MARGARET S. HANSSON has been a director since April 1977, Chairman from
1983 to 2001, Vice President from 1992 to 2003, and was our Chief Executive
Officer from September 23, 1983 to January 31, 1984.  From 1976 to May 1981, she
was President of GENAC, Inc., a Boulder, Colorado firm which she founded.  From
1960 to 1975, Ms. Hansson was CEO and Chairman of Gerry Baby Products Company
(formerly Gerico, Inc.), now a division of Evenflo.  She is a Director of Wells
Fargo Bank, Boulder, Colorado, Wells Fargo Banks, PC, Colorado Capital Alliance,
Realty Quest, Inc. (now RQI, Inc.), and the Boulder Technology Incubator.   Ms.
Hansson is currently President of two companies, Adrop, LLC and Erth, LLC,
companies engaged in development of a centrifuge for water purification systems.
Ms. Hansson received her Bachelor of Arts degree from Antioch College.

     RICHARD L. GUIDO served as a director from July 1996 through August 31,
2003, and on February 13, 2004 was appointed to fill a vacancy on the board.
Mr. Guido was an employee of INCO Securities Corporation, a 5.5% stockholder,
from 1980 through August 2003, and previously served on our board pursuant to a
voting agreement between INCO and us that is no longer in effect.  Mr. Guido was
Associate General Counsel of Inco Limited and President, Chief Legal Officer and
Secretary of Inco United States, Inc.  Mr. Guido is a Director on the
American-Indonesia Chamber of Commerce and the Canada-United States Law
Institute.  Mr. Guido received a Bachelor of Science degree from the United
States Air Force Academy, a Master of Arts degree from Georgetown University,
and a Juris Doctor degree from the Catholic University of America.


                                       43
<PAGE>
                COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

     The following table sets forth information concerning the compensation
received by or awarded to (i) our chief executive officer and (ii) our other
executive officers for the fiscal years ended August 31, 2003, 2002 and 2001:

<TABLE>
<CAPTION>
                                Annual Compensation
                       --------------------------------------
Name and               Fiscal  Salary   Bonus   Other Annual
Principal Position      Year     ($)     ($)    Compensation
                                                     ($)
- ---------------------  ------  -------  ------  -------------
<S>                    <C>     <C>      <C>     <C>
Thomas P. Clark , CEO    2003   60,000       0              0
                         2002   60,000       0              0
                         2001   60,000       0              0

Mark W. Harding,         2003   80,000       0              0
President and CFO        2002   80,000       0              0
                         2001   80,000       0              0
</TABLE>

     Each director who is not an employee of Pure Cycle receives a payment of
$10,000 for each full year in which he or she serves as a director, with an
additional payment of $1,000 for each committee on which he or she serves, and
$1,000 for serving as chairman of the board.  An additional $500 is paid to each
non-employee director for attendance at each board meeting and, if committee
meetings are held separate from board meetings, $500 is paid for attendance at
such committee meetings.  Directors who are employees of Pure Cycle receive no
additional compensation for serving as a director.

     In addition to cash compensation, as part of the 2004 Equity Incentive
Plan, each non-employee director will receive an option to purchase 5,000 shares
of common stock upon election to the board, and an option to purchase 2,500
shares for each subsequent full year in which he or she serves as a director.

     The functions to be performed by the audit committee include the
appointment, retention, compensation and oversight of the Company's independent
auditors, including pre-approval of all audit and non-audit services to be
performed by such auditors.

     Effective February 13, 2004, the Company appointed a compensation
committee.  The functions to be performed by the compensation committee include
establishing in the compensation of officers and directors, and administering
management incentive compensation plans.

                        Option Grants in Last Fiscal Year

     There were no grants of stock options made during the fiscal year ended
August 31, 2003 to our executive officers.


                                       44
<PAGE>
<TABLE>
<CAPTION>
          Aggregated Option Exercises and Fiscal Year End Option Values

                                            Number of           Value of
                                           Unexercised      Unexercised In-
                                            Securities         The-Money
                                        Underlying Options     Options at
                                           at 08/31/03          08/31/03
                 Acquired on   Value       Exercisable/       Exercisable/
Named Officer     Exercise    Received    Unexercisable      Unexercisable
- ---------------  -----------  --------  ------------------  ----------------
<S>              <C>          <C>       <C>                 <C>
Thomas P. Clark            -         -                   -                 -
Mark W. Harding            -         -      975,000/25,000  $  39,000/$1,000
</TABLE>

                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                            OWNERSHIP AND MANAGEMENT

     The following table sets forth, as of February 29, 2004, the beneficial
ownership of our issued and outstanding common stock and Series A-1 Preferred
Stock by (i) each person who owns of record (or we know to own beneficially) 5%
or more of each such class of stock, (ii) each of our directors, (iii) each of
our executive officers and (iv) all directors and executive officers as a group.
Except as otherwise indicated, we believe that each of the beneficial owners of
the stock listed has sole investment and voting power with respect to such
shares, based on information provided by such holders

<TABLE>
<CAPTION>
                                                               Series A-1
                                            Common Stock    Preferred Stock
                                            ------------    ---------------
Name and Address of                       # of                # of
Beneficial Owner                         Shares         %    Shares     %
- ----------------------------------  ----------------  -----  -------  -----
<S>                                 <C>               <C>    <C>      <C>
Thomas P. Clark
8451 Delaware St.
Thornton, CO 80260                   2,546,485        31.3%

George M. Middlemas
225 W. Washington, #1500
Chicago, IL  60606                   1,842,114(1)(2)  19.8%

Harrison H. Augur
P.O. Box 4389
Aspen, CO  81611                        53,166(3)      0.7%

Margaret S. Hansson
2220 Norwood Avenue
Boulder, CO  80304                     824,600(4)      9.2%

Richard L. Guido
121 Antebellum Drive
Meridianville, AL 35759                      0           0

Mark W. Harding
8451 Delaware St.
Thornton, CO 80260                   1,021,000(5)     10.9%


                                       45
<PAGE>
All Directors and Officers as a
group (6 persons)                    6,262,365(6)     56.2%

____________________

INCO Securities Corporation
145 King St. West, #1500
Toronto, Ontario Canada  M5H4B7      1,470,000(7)      5.5%

Apex Investment  Fund II L.P.
("Apex")
225 W. Washington
#1500
Chicago, IL  60606                   1,708,781(2)(8)  18.6%  408,000  38.6%

Environmental Venture Fund
Limited Partnership ("EVFund")
233 S. Wacker Drive
 Suite 9500
Chicago, IL 60606                      629,137(2)(9)   7.5%

Environmental Private Equity Fund
II, L.P. ("EPFund")
233 S. Wacker Drive
 Suite 9500
Chicago, IL 60606                     712,146(2)(10)  8.47%  600,000  56.7%

The Productivity Fund II, L.P.
("PFund')
233 S. Wacker Drive
Suite 9500
Chicago, IL 60606                     478,948(2)(11)   5.8%
</TABLE>


(1) Includes 100,000 shares of common stock issuable upon exercise of options
and 1,708,781 shares of common stock which Mr. Middlemas may be deemed to own
but of which he disclaims beneficial ownership as described in more detail in
footnote (2) below.

(2) Each of the Apex, EVFund, PFund, and EPFund (the "Apex Partnerships") is
controlled through one or more partnerships.  The persons who have or share
control of such stockholders are referred to herein as "ultimate general
partners."  The ultimate general partners of Apex are:  First Analysis
Corporation, a Delaware corporation ("FAC"), Stellar Investment Co. ("Stellar"),
a corporation controlled by James A. Johnson ("Johnson"); George Middlemas
("Middlemas"); and Chartwell Holdings Inc. ("Chartwell"), a corporation
controlled by Paul J. Renze ("Renze").  The ultimate general partners of EVFund
are:  FAC; Felsen, Genack Associates ("FGA"); William D. Ruckelshaus Associates,
a Limited Partnership ("WDRA"); and RS Investment Management ("RSIM").  The
ultimate general partners of PFund are FAC and Bret R. Maxwell ("Maxwell").  The
ultimate general partners of EPFund are FAC, Maxwell, RSIM, Argentum
Environmental Corporation ("AEC") and Schneur Z. Genack, Inc. ("SZG").

By reason of its status as ultimate general partner of each of Apex
Partnerships, FAC may be deemed to be the indirect beneficial owner of 3,529,013
shares of common stock, or 36.4% of such shares.  By reason of his status as the


                                       46
<PAGE>
majority stockholder of FAC, F. Oliver Nicklin may also be deemed to be the
indirect beneficial owner of such shares. By reason of their status as ultimate
general partners of Apex, Stellar (and through Stellar, Johnson), Middlemas,
Chartwell (and through Chartwell, Renze) may be deemed to be the indirect
beneficial owners of 1,708,781 shares of common stock, or 18.6% of such shares.
When these shares are combined with his personal holdings of 33,333 shares of
common stock and his currently exercisable option to purchase 100,000 shares of
common stock, Middlemas may be deemed to be the beneficial owner (directly with
respect to his shares and the option shares and indirectly as to the balance) of
1,842,114 shares of common stock, or 19.8% of such shares.

By reason of his status as a general partner of an ultimate general partner of
PFund and EPFund, Maxwell may be deemed to be the indirect beneficial owner of
1,191,094 shares of common stock, or 14.2% of such shares.

By reason of their status as ultimate general partners of EVFund, FGA, WDRA and
RSIM and their respective controlling persons may be deemed to be the indirect
beneficial owners of 629,137 shares of common stock, or 7.8% of such shares.  By
reason of AEC's and SZG's status as ultimate general partners of EPFund, AEC,
SZG, and their and their controlling persons may be deemed to be the indirect
beneficial owners of 712,146 shares of common stock, or 8.7% of such shares.  By
reason of Genack's interest in FGA, AEC and SZG, he may be deemed to be the
indirect beneficial owner of 1,341,283 shares of common stock, or 15.9% of such
shares.

By reason of RSIM's status as ultimate general partner of EPFund and EVFund,
RSIM and its controlling persons may be deemed to be the indirect beneficial
owners of 1,341,283 shares of common stock, or 15.9% of such shares.

Each of the Apex Partnerships disclaims beneficial ownership of all shares of
common stock described herein except those shares that are owned by that entity
directly.  We understand that each of the other persons named as an officer,
director, partner or other affiliate of any Apex Partnership disclaims
beneficial ownership of all the shares of common stock described herein, except
for Middlemas with respect to the shares and options to purchase 133,333 shares
owned by him.

Each of the Apex Partnerships disclaims the existence of a "group" among any or
all of them and further disclaims the existence of a "group" among any or all of
them and any or all of the other persons named as an officer, director, partner
or those affiliate of any of them, in each case within the meaning of Section
13(d) of the 1934 Act.

The information herein was derived from a filing dated April 16, 2001 made by
the APEX Partnerships with the SEC.

(3) Includes (i) 30,000 shares of common stock issuable upon exercise of
warrants and (ii)  2,500 shares of common stock held by Patience Partners, L.P.,
a limited partnership in which a foundation controlled by Mr. Augur is a 60%
limited partner and Patience Partners LLC is a 40% general partner.  Patience
Partners LLC is a limited liability company in which Mr. Augur owns a 50%
membership interest.

(4) Includes 800,000 shares of common stock issuable upon exercise of options,
200,000 of the shares underlying these options are being sold in this offering.

(5) Includes 100,000 shares of common stock issuable upon exercise of options.

(6) Includes 1,875,000 shares of common stock issuable upon exercise of options,
880,619  shares  of  common stock issuable upon exercise of warrants and 237,777
shares  of  common  stock  purchasable  on  conversion of outstanding Series A-1
Convertible  Preferred  Stock.  The  directors  and officers disclaim beneficial
ownership  of  1,708,781  such  shares.

(7) Consists of 470,000 shares of common stock issuable upon exercise of
warrants.

(8) Includes 850,619 shares of common stock issuable upon exercise of warrants
and 226,666 shares of common stock purchasable on conversion of 408,000 shares
of Series A-1 Convertible Preferred Stock.

(9) Includes 260,981 shares of common stock issuable upon exercise of warrants.

(10) Includes 30,143 shares of common stock issuable upon exercise of warrants
and 333,333 shares of common stock purchasable on conversion of 600,000 shares
of Series A-1 Convertible Preferred Stock.

(11) Includes 178,380 shares of common stock issuable upon exercise of warrants.


                                       47
<PAGE>
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     From time to time since December 6, 1987, Thomas P. Clark, our president
and a director, loaned funds to us to cover operating expenses.  We have treated
these funds as unsecured debt, and the promissory notes, with interest at 8.36%
and 9.01% per annum issued to Mr. Clark on various dates are payable October 1,
2007.  To date, Mr. Clark has loaned us $310,720, of which $43,350 has been
repaid, leaving a balance of $267,370.  As of February 29, 2004, accrued
interest on the notes totaled $278,792.  The board members, other than Mr.
Clark, determined that all loans were made at market rates.

     In 1996 and 1997, we entered into loan agreements with five related party
investors:  Apex, EVFund, EPFund and PFund, each a 5% stockholder, and Harrison
Augur, a director.  The loan balances to such persons totaled $1,109,061 at
February 29, 2004.  The loans are unsecured and bear interest at the rate of
10.25% and prime plus 2%.  The notes mature August 31, 2007.  In connection with
the loan agreements, we issued warrants to such persons to purchase 402,300
shares of our common stock with an exercise price of $1.80 per share.  Such
warrants expire August 31, 2007.  These loans are being repaid with the proceeds
of this offering, and the common stock underlying these warrants is being sold
by selling stockholders in this offering.

     In 1995, we extended a line of credit to the District, a related party.
Three of our officers and employees are directors of the District.  The loan
provides for borrowings of up to $250,000, is unsecured, bears interest based on
the prevailing prime rate plus 2% and matures on December 31, 2004.  The balance
of the note receivable at February 29, 2004 was $406,782, including accrued
interest.

                            DESCRIPTION OF SECURITIES

     The summary of the terms of the shares of our capital stock set forth below
does not purport to be complete and is subject to and qualified in its entirety
by reference to our Certificate of Incorporation, as amended (the
"Certificate"), and our Bylaws, as amended (the "Bylaws"), both of which may be
further amended from time to time and both of which are incorporated herein by
reference. References to the "DGCL" are to the Delaware General Corporation Law,
as amended.

GENERAL

     We are authorized to issue 250,000,000 shares of stock, consisting of
225,000,000 shares of common stock, $.00333 par value per share, and 25,000,000
shares of preferred stock, par value $0.001 per share.  We have designated
1,600,000 shares of our preferred stock as Series A-1 Convertible Preferred
Stock and 432,513 shares of our preferred stock as Series B Preferred Stock.  As
of February 29, 2004, there were 8,145,087 shares of common stock issued and
outstanding, 1,058,000 shares of Series A-1 Preferred Stock issued and
outstanding, and 432,513 shares of Series B Preferred Stock issued and
outstanding.

COMMON STOCK

     All of the outstanding shares of common stock are fully paid and
nonassessable.  Each share of common stock has an equal and ratable right to
receive dividends when declared by our board of directors out of assets legally
available for that purpose and subject to the dividend obligations of Pure Cycle
to holders of any preferred stock then outstanding.

     In the event of a liquidation, dissolution or winding up, the holders of
our common stock are entitled to share equally and ratably in the assets
available for distribution after payment of all liabilities, and subject to any
prior rights of any holders of preferred stock outstanding at that time.


                                       48
<PAGE>
     The holders of common stock have no preemptive, subscription, conversion or
redemption rights, and are not subject to further calls or assessments.  Each
share of common stock is entitled to one vote in the election of directors and
on all other matters submitted to a vote of stockholders.  Cumulative voting in
the election of directors is not permitted.  Meetings of our stockholders may be
called on no fewer than 10 days nor more than 50 days notice.  The presence of a
majority of the shares outstanding, in person or by proxy, is required to
establish a quorum and conduct business at meetings of the stockholders.

     On April 12, 2004, our stockholders authorized the board of directors to
implement a reverse stock split.  On April 12, 2004, our board approved a
1-for-10 reverse stock split.  The reverse stock split will be effective on
April 26, 2004.  All information in this prospectus, other than the financial
statements, reflects this reverse stock split.

SERIES A-1 CONVERTIBLE PREFERRED STOCK

Liquidation Rights

     Upon any voluntary or involuntary liquidation, dissolution or winding up of
Pure Cycle, the holders of shares of Series A-1 Preferred Stock will be entitled
to be paid, before any distribution or payment is made upon any of our other
equity securities, $2.00 per share less an amount equal to all dividends paid
thereon.  This liquidation preference shall only be paid from the Export Water
or the proceeds of a disposition of such asset.  Holders of Series A-1 Preferred
Stock are then entitled to participate with the holders of common stock in any
other distribution or payment made to the holders of common stock, whether from
the Export Water or otherwise.

Dividends

     Holders of the Series A-1 Preferred Stock are entitled to receive
dividends, when and as declared by the Company's board of directors, in a total
amount of $2.00 per share.  The Series A-1 Preferred Stock shall only earn and
accrue dividends when gross proceeds, after payment of royalties, are received
from the marketing, sale or other disposition of our interest in the Export
Water as set forth in the Certificate.  Until all accrued dividends on the
Series A-1 Preferred Stock have been paid, we may not declare or pay dividends
on the common stock or the Series B Preferred Stock.  Upon the sale, transfer or
other conveyance by us of our interest in the Export Water, the Series A-1
Preferred Stock will cease to accrue dividends.

Conversion

     At the option of the holder, each share of Series A-1 Preferred Stock is
convertible into 5.5556 shares of common stock, subject to proportional
adjustments in the event of combinations or consolidations of common stock, and
the merger or reorganization of Pure Cycle.

     In the event that (i) the full dividends on the Series A-1 Preferred Stock
have been paid, (ii) we have transferred our interest in the Export Water, or
(iii) a majority of the Board and the holders of a majority of the Series A-1
Preferred Stock determine that it is no longer economically feasible to develop
the Export Water, all shares of Series A-1 Preferred Stock will automatically
convert in to shares of common stock on a 1 for 5.5556 basis, subject to
proportional adjustments in the event of combinations or consolidations of
common stock, and the merger or reorganization of Pure Cycle.

Voting Rights

     Holders of Series A-1 Preferred Stock are entitled to vote together with
holders of common stock on all matters on which holders of common stock are
entitled to vote.  Each holder of Series A-1 Preferred Stock shall have the


                                       49
<PAGE>
number of votes equal to the number of shares of common stock that his or her
shares are convertible into on the record date.  Certain changes to the terms of
the Series A-1 Preferred Stock that would be materially adverse to the rights of
holders of the Series A-1 Preferred Stock cannot be made without the approval of
the holders of a majority of the outstanding Series A-1 Preferred Stock.  These
consist of the following:

     -    alter or change terms, preferences or privileges of Series A-1
          Preferred Stock;

     -    increase or decrease number of authorized shares of Series A-1
          Preferred Stock;

     -    authorize a new security ranking prior to or on parity with the Series
          A-1 Preferred Stock as to dividends from earnings from the Export
          Water or the distribution of the Export Water or the proceeds
          therefrom;

     -    any transaction by us which would have the effect of decreasing the
          surplus, as defined in the DGCL, of Pure Cycle by more than $500,000
          or which would cause its surplus to be equal to less than $1,000,000;

     -    any expenditure by us in excess of $50,000 in any one month at any
          time that the surplus is equal to or less than $1,000,000; and

     -    the merger or consolidation of Pure Cycle with or into one or more
          corporations or business entities where Pure Cycle is not the
          surviving entity.

Right of Purchase

     We have the right to purchase shares of Series A-1 Preferred Stock in the
public market at such prices as may be available in the public market and the
right at any time to acquire any Series A-1 Preferred Stock from holders on such
terms as may be agreeable to holders.

SERIES B PREFERRED STOCK

Liquidation Rights

     Upon any voluntary or involuntary liquidation, dissolution or winding up of
Pure Cycle, the holders of shares of Series B Preferred Stock will be entitled
to be paid, before any distribution or payment is made upon any other equity
securities of Pure Cycle, $1.00 per share less an amount equal to all dividends
paid thereon; provided, however, that with respect to the Rangeview Water
              --------  -------
Supply, the Series B Preferred shall be subject to and junior to the rights and
preferences of the holders of the Series A-1 Preferred Stock in the Rangeview
Water Supply.

Dividends

     Holders of the Series B Preferred Stock are entitled to receive dividends,
when and as declared by the Company's board of directors, in a total amount of
$1.00 per share.  The Series B Preferred Stock shall only earn and accrue
dividends from the marketing, sale or other disposition of our interest in the
Export Water in an amount greater than $35,000,000 as set forth in the
Certificate.  Until all accrued dividends on the Series B Preferred Stock have
been paid, we may not declare or pay dividends on the common stock.

Redemption


                                       50
<PAGE>
     The Series B Preferred Stock is redeemable for cash at the option of the
Company at a redemption price equal to $1.00 per share less an amount equal to
all dividends paid thereon.  The Series B Preferred Stock may not be redeemed
using the Rangeview assets or any proceeds therefrom unless it would be
permissible under the Certificate to use such assets to pay a dividend on the
Series B Preferred Stock.  Holders of Series B Preferred Stock do not have any
right to require Pure Cycle to redeem any or all shares of the Series B
Preferred Stock.

Voting Rights

     Holders of Series B Preferred Stock generally will have no voting rights
except as required by law.  Certain changes to the terms of the Series B
Preferred Stock that would be materially adverse to the rights of holders of the
Series B Preferred Stock cannot be made without the approval of the holders of a
at least 66 2/3% of the outstanding Series B Preferred Stock voting separately
as a class.  These consist of the following:

     -    alter or change terms, preferences or privileges of Series B Preferred
          Stock; and

     -    authorize a new security ranking senior to the Series B Preferred
          Stock as to dividend or liquidation rights.

     In addition, when dividends on the Series B Preferred Stock have accrued
but have not been declared by the Board, the holders of the Series B Preferred
Stock shall be entitled to vote with the holders of common stock  at any meeting
of shareholders held during the period such dividends remain in arrears.  Each
share of Series B Preferred Stock shall have one vote when voting with the
common stock.

WARRANTS

     At  February  29, 2004, there were warrants outstanding to purchase a total
of  2,440,284  shares  of  common  stock.  This  includes  warrants  to purchase
1,970,775  shares of common stock that will be exercised by selling stockholders
in  connection  with this offering.  There is no public market for our warrants.
The following table summarizes information on our outstanding warrants:

<TABLE>
<CAPTION>
               NUMBER OF SHARES
                  UNDERLYING     EXERCISE   EXPIRATION
DATE OF GRANT      WARRANTS        PRICE       DATE
- -------------  ----------------  ---------  ----------
<S>            <C>               <C>        <C>
12/11/1990               79,800  $    1.80           *
02/12/1991              550,200  $    1.80           *
09/23/1991              108,000  $    1.80           *
11/20/1991              120,000  $    1.80           *
12/10/1991            1,059,999  $    1.80           *
08/12/1992              120,000  $    1.80           *
08/30/1996              166,984  $    1.80  08/30/2007
07/18/1997              179,999  $    1.80  08/30/2007
08/08/1997               55,302  $    1.80  08/30/2007
               ----------------
                      2,440,284
</TABLE>


                                       51
<PAGE>
________________________
* Expire six months from the earlier of (i) the date all of the Export Water is
sold or otherwise disposed of, (ii) the date the Comprehensive Amendment
Agreement is terminated with respect to the original holder of this Warrant, or
(iii) the date on which the Company makes the final payment pursuant to Section
2.1(r) of the Comprehensive Amendment Agreement.

REGISTRATION RIGHTS

     We are party to a Stock Purchase Agreement and Investment Agreement dated
December 10, 1991, or the Stock Purchase Agreement, together with certain
stockholders of the Company.  The stockholders who are party to the Stock
Purchase Agreement are entitled to piggyback registration rights covering the
shares of common stock issued to them pursuant to the Stock Purchase Agreement
and the shares of common stock issuable to them upon exercise of warrants
granted to them pursuant to the Stock Purchase Agreement, subject to certain
limitations.  The registration rights granted under the Stock Purchase Agreement
expire on December 10, 2006.

ANTI-TAKEOVER PROVISIONS

     We are subject to the provisions of Section 203 of the DGCL, which restrict
certain business combinations with interested stockholders even if such a
combination would be beneficial to all stockholders.  In general, Section 203
would require a two-thirds vote of stockholders for any business combination
(such as a merger or sale of all or substantially all of our assets) between us
and an "interested stockholder" unless such transaction is approved by a
majority of the disinterested directors or meets certain other requirements.  An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of our voting
stock.  These provisions could deprive stockholders of an opportunity to receive
a premium for their common stock as part of a sale of us or may otherwise
discourage a potential acquirer from attempting to obtain control of us.

TRANSFER AGENT

     Our transfer agent is Computershare Trust Company, Inc., 350 Indiana
Street, Suite 800, Golden, Colorado 80401, telephone (303) 262-0600.

                              SELLING STOCKHOLDERS

     The following table sets forth certain information as of February 29, 2004
regarding the Selling Stockholders in this offering.

<TABLE>
<CAPTION>
                                  NUMBER OF                          NUMBER OF
                                    SHARES                             SHARES
                                 BENEFICIALLY                       BENEFICIALLY
                                OWNED PRIOR TO   SHARES OFFERED     OWNED AFTER      PERCENT OF
NAME                            THIS OFFERING   IN THIS OFFERING  THIS OFFERING(1)  OUTSTANDING
- ------------------------------  --------------  ----------------  ----------------  ------------
<S>                             <C>             <C>               <C>               <C>
Inco Securities Corporation            470,000           470,000               -0-            *

Landmark Water Partners, L.P.          160,000           136,600            23,400            *

Alan C. Stormo                          36,000            18,000            18,000            *

D. W. Pettyjohn                         36,000            36,000               -0-            *

Warwick Partners L.P.                   70,000            38,500            31,500            *


                                       52
<PAGE>
Beverly A. Beardslee, Robert            36,000            36,000               -0-            *
Douglas Beardslee
Bradley Kent Beardslee

Asra Corporation                        60,000            60,000               -0-            *

International Properties, Inc.          60,000            25,000            35,000            *

Apex Investment Fund II, L.P.        1,708,781           500,000         1,208,781         9.38%

The Environmental Venture              629,137           166,667           462,470         3.80%
Fund, L.P.

Productivity Fund II, L.P.             478,948           166,667           312,281         2.60%

Landmark Water Partners II,
L.P.                                    70,000            38,500            31,500            *

Proactive Partners, L.P.                80,125            80,125               -0-            *

The Environmental Private              712,146           166,667           545,479         4.48%
Equity Fund II, L.P.

Gregory M. Morey                        16,025            16,025               -0-            *

Don Fogel                               16,025            16,025               -0-            *

George Middlemas                       133,333           100,000            33,333            *

Margaret S. Hansson                    824,600           200,000           624,600         4.89%

Susan Byrom Evans                      233,333            26,667           206,666         1.85%

Thomas P. Clark                      2,546,485           100,000         2,446,485        17.32%

Mark W. Harding                      1,021,000            21,000         1,000,000         7.89%
                                                ----------------
                                                       2,418,443
</TABLE>

_______________________
* Less than 1%.

(1) For purposes of calculating shares beneficially owned after this offering,
it is assumed that shares being registered for the benefit of the selling
stockholders have been sold pursuant to this offering. The selling stockholders
may have sold, transferred or otherwise disposed of their offered shares since
the date on which they provided information in transactions exempt from the
registration requirements of the Securities Act.

     Except as described below, none of the Selling Stockholders has, or has had
within the last three years, any position, office, or other material
relationship with the issuer.

     Margaret S. Hansson, Thomas P. Clark, George Middlemas and Mark Harding are
directors of Pure Cycle.  Mr. Clark also serves as the chief executive officer
and Mr. Harding serves as president and chief financial officer.

     Susan Byrom Evans is the daughter of Fletcher Byrom, who served as a
director of Pure Cycle from 1988 until his retirement on February 13, 2004.

     Apex Investment Fund II, L.P. ("Apex") is controlled by several general
partners including George Middlemas, a director.


                                       53
<PAGE>
     The EP Fund is a party to a Voting Agreement, as amended and restated
August 12, 1992.  Pursuant to the voting agreement, Margaret Hansson and Thomas
Clark (current directors) and Fletcher Byrom (retired director) have agreed to
vote all of their shares of common stock in favor of a director candidate
designated by EP Fund.  The current EP Fund director candidate is George
Middlemas.

     Each of the Selling Stockholders (other than Don Fogel, Susan Byrom and
Mark Harding) have at various dates prior to 1996 made an investment in Pure
Cycle which resulted in the Selling Stockholder being entitled to a contingent
return on such Selling Stockholder's investment from the proceeds of the sale of
Export Water pursuant to the Commercialization Agreement.

     Apex, EV Fund, EP Fund and Productivity Fund hold promissory notes payable
by us with aggregate principal and interest outstanding as of February 29, 2004
in the amount of $512,439.  The notes are due in August 2007.

     Apex, EV Fund, EP Fund, Productivity Fund, Gregory M. Morey and Proactive
Partners, L.P. hold promissory notes payable by us with aggregate principal and
interest outstanding as of February 29, 2004 in the amount of $596,622.  The
notes are due in August 2007.

                              PLAN OF DISTRIBUTION

     Flagstone Securities is acting as representative of the underwriters named
below. Subject to the terms and conditions described in an underwriting
agreement among us, the selling stockholders and the underwriters, we and the
selling stockholders have agreed to sell to the underwriters, and the
underwriters severally have agreed to purchase from us and the selling
stockholders, the number of shares listed opposite their names below.

          UNDERWRITERS                             NUMBER OF
                                                    SHARES

          Flagstone Securities




          Total

     The underwriters have agreed to purchase all of the shares sold under the
underwriting agreement if any of these shares are purchased. If an underwriter
defaults, the underwriting agreement provides that the purchase commitments of
the nondefaulting underwriters may be increased or the underwriting agreement
may be terminated.

     We have agreed to pay the representative an expense allowance of $30,000 on
a non-accountable basis.  We have also agreed to pay all expenses in connection
with qualifying our securities offered hereby for sale under the laws of such
states as the underwriters may designate and the filing fees incurred in
registering the offering with the National Association of Securities Dealers,
Inc., or NASD.

     We and the selling stockholders have agreed to indemnify the several
underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the underwriters may be required to
make in respect of those liabilities.


                                       54
<PAGE>
     The underwriters are offering the shares, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the shares and other conditions
contained in the underwriting agreement, such as the receipt by the underwriters
of officers' certificates and legal opinions. The underwriters reserve the right
to withdraw, cancel or modify offers to the public and to reject orders in whole
or in part.

     The representative has advised us and the selling stockholders that the
underwriters propose initially to offer the shares to the public at the initial
public offering price on the cover page of this prospectus and to dealers at
that price less a concession not in excess of $             per share. The
underwriters may allow, and the dealers may reallow, a discount not in excess of
$              per share to other dealers. After the offering, the public
offering price, concession and discount may be changed.

     The table below shows the public offering price, underwriting discounts and
commissions to be paid to the underwriters by us and proceeds before expenses to
us.  These amounts are shown assuming both no exercise and full exercise of the
underwriters' option to purchase additional shares.

<TABLE>
<CAPTION>
                                          PER SHARE   WITHOUT OPTION   WITH OPTION
<S>                                       <C>         <C>              <C>

Public offering price                     $           $                $
Underwriting discount                     $           $                $
Proceeds, before expenses, to Pure Cycle  $           $                $
</TABLE>

     The table below shows the public offering price, underwriting discounts and
commissions to be paid to the underwriters by the selling stockholders and
proceeds before expenses to the selling stockholders.

<TABLE>
<CAPTION>
                                                        PER SHARE
<S>                                                     <C>

Public offering price                                   $
Underwriting discount                                   $
Proceeds, before expenses, to the selling stockholders  $
</TABLE>

OPTION  TO  PURCHASE  ADDITIONAL  SHARES

     We have granted an option to the underwriters to purchase up to an
additional _______ shares if the underwriters sell more shares in this offering
than the total number set forth in the table above. The underwriters may
exercise that option for 45 days. If any shares of common stock are purchased
pursuant to this option, the underwriters will severally purchase shares of
common stock in approximately the same proportion as set forth in the table
above.

NO  SALES  OF  SIMILAR  SECURITIES

     We, our executive officers, directors and each of our existing stockholders
who holds at least ____ shares (which includes each of the selling stockholders
participating in this offering) will agree with the underwriters not to,
directly or indirectly, offer, sell, transfer or otherwise dispose of any shares
of common stock, or any securities convertible into, exchangeable for or that
represent the right to receive shares of common stock, during the period from
the date of this prospectus continuing through the date 180 days after the date
of this prospectus, except with the prior written consent of the representative
on behalf of the underwriters.


                                       55
<PAGE>
NASDAQ  LISTING

     We have applied to have our common stock approved for listing on the Nasdaq
SmallCap under the symbol "____."

PRICE  STABILIZATION  AND  SHORT  POSITIONS

     Until the distribution of the shares is completed, SEC rules may limit
underwriters and selling group members from bidding for and purchasing our
common stock.  However, the underwriters may engage in transactions that
stabilize the price of the common stock.  These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales.  Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the common
stock while the offering is in progress.  The underwriters also may impose a
penalty bid.  This occurs when a particular underwriter repays to the
underwriters a portion of the underwriting discount received by it because the
representative has repurchased shares sold by or for the account of such
underwriter in stabilizing or short covering transactions.

     These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock.  As a result, the price of the
common stock may be higher than the price that otherwise might exist in the open
market.  If these activities are commenced, they may be discontinued by the
underwriters at any time.  These transactions may be effected on the Nasdaq
SmallCap, in the over-the-counter market or otherwise.

     Certain persons participating in this offering may also engage in passive
market making transactions in the common stock on the Nasdaq SmallCap.  Passive
market making consists of displaying bids on the Nasdaq SmallCap limited by the
prices of independent market makers and affecting purchases limited by such
prices and in response to order flow.  Rule 103 of Regulation M under the
Securities Exchange Act of 1934 limits the amount of net purchases that each
passive market maker may make and the displayed size of each bid.  Passive
market making may stabilize the market price of the common stock at a level
above that which might otherwise prevail in the open market and, if commenced,
may be discontinued at any time.

     Neither we nor any of the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters make any representation that the representatives
or the lead managers will engage in these transactions or that these
transactions, once commenced, will not be discontinued without notice.



                                  LEGAL MATTERS

     The validity of the securities offered by this prospectus will be passed
upon by Davis Graham & Stubbs LLP, Denver, Colorado.  Certain matters in
connection with this offering will be passed upon for the underwriters by Davis
& Gilbert LLP.


                                       56
<PAGE>
                                     EXPERTS

     The audited financial statements for Pure Cycle as of August 31, 2003 and
2002 and for the two years in the period ended August 31, 2003 included in this
prospectus have been audited by KPMG, LLP, independent certified public
accountants, for the periods set forth in their report with respect thereto, and
are included, in reliance on the authority of that firm as experts in accounting
and auditing.

                       WHERE YOU CAN FIND MORE INFORMATION

     Pure Cycle files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission.  You may read
and copy any of these documents at the Commission's public reference room at 450
Fifth Street N.W., Washington, D.C. 20549.  Please call the SEC at
1-800-SEC-0330 for further information on the public reference room.  Our SEC
filings are also available to the public at the SEC's website at
http://www.sec.gov.
- ------------------

     You may receive a copy of any of these filings, at no cost, by writing or
calling Pure Cycle Corporation, 8451 Delaware St., Thornton, Colorado 80260,
telephone (303) 292-3456, and directed to the attention of Mark Harding,
President.


                                       57
<PAGE>
<TABLE>
<CAPTION>
                          INDEX TO FINANCIAL STATEMENTS


                                                                                       PAGE
<S>                                                                                    <C>
Independent Auditors' Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Balance Sheets as of August 31, 2003 and 2002 . . . . . . . . . . . . . . . . . . . . . F-3

Statements of Operations for each of the years ended December 31, 2003 and 2002 . . . . F-4

Statements of Stockholders' Equity for the years ended December 31, 2003 and 2002 . . . F-5

Statements of Cash Flows for the years ended December 31, 2003 and 2002 . . . . . . . . F-6

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7


Balance Sheet as of February 29, 2004 and August 31, 2003. . . . . . . . . . . . . . . F-16

Statements of Operations for the six-month periods ended February 29, 2004 and
February 28, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-17

Statements of Cash Flows for the six-month periods ended February 29, 2004 and
February 28, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18

Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-19
</TABLE>


                                      F-1
<PAGE>
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


The Board of Directors
Pure Cycle Corporation:

We  have audited the accompanying balance sheets of Pure Cycle Corporation ("the
Company")  as  of  August  31,  2003  and  2002,  and  the related statements of
operations,  stockholders'  equity,  and  cash  flows  for the years then ended.
These  financial  statements are the responsibility of the Company's management.
Our  responsibility is to express an opinion on these financial statements based
on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all  material  respects,  the financial position of Pure Cycle Corporation as of
August  31,  2003  and 2002 and the results of its operations and its cash flows
for  the  years  then  ended, in conformity with accounting principles generally
accepted  in  the  United  States  of  America.




                                                    /s/  KPMG  LLP

Denver, Colorado
October 10, 2003


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                       PURE CYCLE CORPORATION
                                           BALANCE SHEETS
                                                                                 August 31,
                                                                       -----------------------------
              ASSETS                                                        2003           2002
              ------                                                   --------------  -------------
<S>                                                                    <C>             <C>
Current assets:
  Cash and cash equivalents                                            $     525,780   $    287,720
  Trade accounts receivable                                                   67,687         50,919
                                                                       --------------  -------------
      Total current assets                                                   593,467        338,639

Investment in water and systems:
  Rangeview water supply (Note 3)                                         13,710,773     13,566,777
  Paradise water supply                                                    5,494,323      5,491,423
  Rangeview water system (Note 3)                                            148,441        148,441
                                                                       --------------  -------------
      Investment in water and systems                                     19,353,537     19,206,641
  Accumulated depreciation & depletion                                       (10,543)        (4,958)
                                                                       --------------  -------------
      Total water and water systems                                       19,342,994     19,201,683

Note receivable - related party, including accrued interest (Note 4)         399,902        385,716
Other assets                                                                  77,041        102,241
                                                                       --------------  -------------
                                                                       $  20,413,404   $ 20,028,279
                                                                       ==============  =============
              LIABILITIES AND STOCKHOLDERS' EQUITY
              ------------------------------------

Current liabilities:
  Accounts payable                                                     $       8,244   $      2,384
  Accrued liabilities (Note 5 )                                               43,528         19,495
                                                                       --------------  -------------
      Total current liabilities                                               51,772         21,879

Long-term debt - related parties, including accrued interest (Note 6)      4,889,545      4,713,270

Participating interests in Rangeview water supply (Note 3)                11,090,630     11,090,630

Stockholders' equity (Notes 7):
  Preferred stock, par value $.001 per
     share; authorized - 25,000,000 shares:
        Series A1 -  1,600,000 shares issued  and outstanding                  1,600          1,600
        Series B -    432,513 shares issued and outstanding                      433            433
        Series D -    6,455,000 shares issued and outstanding                  6,455          6,455
        Series D1-  2,000,000 shares issued and outstanding in 2003            2,000             --

  Common stock, par value 1/3 of $.01 per
        share; 135,000,000 shares authorized;
        78,439,763 shares issued and outstanding                             261,584        261,584
  Additional paid-in capital                                              25,276,989     24,778,989
  Accumulated deficit                                                   ( 21,167,604)   (20,846,561)
                                                                       --------------  -------------

  Total stockholders' equity                                               4,381,457      4,202,500
                                                                       --------------  -------------
                                                                       $  20,413,404   $ 20,028,279
                                                                       ==============  =============
</TABLE>


                 See Accompanying Notes to Financial Statements


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                             PURE CYCLE CORPORATION
                            STATEMENTS OF OPERATIONS


                                           Years ended August 31,
                                         --------------------------
                                             2003          2002
                                         ------------  ------------
<S>                                      <C>           <C>
Water service revenues:
  Water usage revenues                       156,217       156,026
  Wastewater processing revenues              56,780        48,832
  Revenue - Other                             12,435            --
                                         ------------  ------------
                                             225,432       204,858

Water service operating expense              (20,580)      (13,896)
Wastewater service operating expense         (10,692)      (13,896)
Other expense                                 (6,224)           --
                                         ------------  ------------
Gross margin                                 187,936       177,066

General and administrative expense          (318,182)     (221,872)
Depreciation expense                          (4,948)       (4,220)
Depletion expense                              ( 637)        ( 738)
                                         ------------  ------------
Operating income (loss)                     (135,841)      (49,764)


Other income (expense):
  Interest income                             16,263        22,181
  Interest expense - related parties        (176,275)     (194,651)
  Amortization of warrants                   (25,200)      (25,200)
Other income                                      --         2,287
                                         ------------  ------------
  Total other income (expense)              (185,212)     (195,383)
                                         ------------  ------------

        Net loss                         $  (321,043)  $  (245,147)
                                         ============  ============

Basic and diluted net
  loss per common share                  $         *   $         *
                                         ============  ============


Weighted average common
  shares outstanding basic and diluted    78,439,763    78,439,763
                                         ============  ============
</TABLE>


* Less than $.01 per share


                 See Accompanying Notes to Financial Statements


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                         PURE CYCLE CORPORATION
                                   STATEMENTS OF STOCKHOLDERS' EQUITY
                                  Years Ended August 31, 2003 and 2002


                                      PREFERRED STOCK        COMMON STOCK          TREASURY STOCK
                                    -------------------  --------------------  ------------------------
                                      SHARES    AMOUNT     SHARES     AMOUNT     SHARES       AMOUNT
                                    ----------  -------  ----------  --------  -----------  -----------
<S>                                 <C>         <C>      <C>         <C>       <C>          <C>
Balance at August 31, 2001           8,487,513  $ 8,488  78,439,763  $261,584           0   $        0
                                    ==========  =======  ==========  ========  ===========  ===========
Net loss                                    --       --          --        --          --           --
                                    ----------  -------  ----------  --------  -----------  -----------
Balance at August 31, 2002           8,487,513  $ 8,488  78,439,763  $261,584           0   $        0
                                    ==========  =======  ==========  ========  -----------  ===========
Preferred Stock issued in
Exchanges, net (Note 7)              2,000,000    2,000          --        --  (2,000,000)   ( 500,000)

Common Stock issued from treasury
stock (Note 7)                              --       --          --        --   2,000,000      500,000

Net loss                                    --       --          --        --          --           --
                                    ----------  -------  ----------  --------  -----------  -----------
Balance at August 31, 2003          10,487,513  $10,488  78,439,763  $261,584           -           --
                                    ==========  =======  ==========  ========  ===========  ===========
</TABLE>


<TABLE>
<CAPTION>
                                                   ADDITIONAL                        TOTAL
                                                     PAID-IN     ACCUMULATED     STOCKHOLDERS'
                                                     CAPITAL       DEFICIT          EQUITY
                                                   -----------  --------------  ---------------
<S>                                                <C>          <C>             <C>
Balance at August 31, 2001                         $24,778,989  $ (20,601,414)  $    4,447,647
                                                   ===========  ==============  ===============
Net loss                                                    --       (245,147)        (245,147)
                                                   -----------  --------------  ---------------
Balance at August 31, 2002                         $24,778,989  $ (20,846,561)  $    4,202,500
                                                   ===========  ==============  ===============
Preferred Stock issued in Exchanges, net (Note 7)      498,000             --               --

Common Stock

  Issued from treasury stock (Note 7)                       --             --          500,000

Net loss                                                    --       (321,043)        (321,043)
                                                   -----------  --------------  ---------------
Balance at August 31, 2003                         $25,276,989   ($21,167,604)  $    4,381,457
                                                   ===========  ==============  ===============
</TABLE>


                 See Accompanying Notes to Financial Statements


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                               PURE CYCLE CORPORATION
                              STATEMENTS OF CASH FLOWS


                                                             Years ended August 31,
                                                             -----------------------
                                                                2003        2002
                                                             ----------  -----------
<S>                                                          <C>         <C>
Cash flows from operating activities:
  Net loss                                                   $(321,043)  $( 245,147)
  Adjustments to reconcile
  net loss to net cash used in operating activities:
       Depreciation expense                                      4,948        4,220
       Depletion expense                                           637          738
       Change in accrued interest                              162,089      178,741
       Changes in operating assets and liabilities:
            Trade accounts receivable                          (16,768)     (17,664)
       Other assets                                             25,200       36,459
            Accounts payable and accrued liabilities            29,893        3,885
                                                             ----------  -----------
              Net cash used in operating activities           (115,044)     (38,768)
                                                             ----------  -----------

Cash used in investing activities-
  Investments in water supply                                 (146,896)     (87,342)
  Investments in water systems                                      --      (21,830)
                                                             ----------  -----------
     Net cash provided by investing activities                (146,896)    (109,172)

Cash flows from financing activities-
  Proceeds from sale of equity instruments                     500,000           --
                                                             ----------  -----------

     Net increase (decease) in cash and cash equivalents       238,060     (147,940)
                                                             ----------  -----------
     Cash and cash equivalents beginning of year               287,720      435,660
                                                             ----------  -----------

     Cash and cash equivalents end of year                   $ 525,780   $  287,720
                                                             ==========  ===========
</TABLE>


                 See Accompanying Notes to Financial Statements


                                      F-6
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2003 and 2002


NOTE 1 - ORGANIZATION AND BUSINESS

     Pure Cycle Corporation (Company) owns certain water assets and is providing
water and wastewater services to customers located in the Denver metropolitan
area (Service Area).  The Company operates water and wastewater systems and its
operating activities include designing, constructing, operating and maintaining
systems serving customers in the Denver metropolitan area. The Company also owns
patented water recycling technologies which are capable of processing wastewater
into pure potable drinking water. The Company's focus continues to be to provide
water and wastewater service to customers within its Service Area and the
Company expects to expand its service to other areas throughout the Denver
metropolitan area and the southwestern United States.

     Although the Company believes it will be successful in marketing the water
from one or both of its water projects, there can be no assurance that sales can
be made on terms acceptable to the Company.  The Company's ability to ultimately
realize its investment in its two primary water projects is dependent on its
ability to successfully market the water, or in the event it is unsuccessful, to
sell the underlying water assets.

     The Company believes that at August 31, 2003, it has sufficient working
capital and financing sources to fund its operations for the next year or
longer.  There can be no assurances, however, that the Company will be
successful in marketing the water from its two primary water projects in the
near term.  In the event sales are not achieved, the Company may sell additional
participating interests in its water projects, incur additional short or
long-term debt or seek to sell additional shares of common or preferred stock or
stock purchase warrants, as deemed necessary by the Company, to generate working
capital.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue recognition
- -------------------

     The Company recognizes construction project income using the
percentage-of-completion method, measured by the contract costs incurred to date
as a percentage of the estimated total contract costs. Contract costs include
all direct material, labor, and equipment costs and those indirect costs related
to contract performance such as indirect labor and supplies costs. If the
construction project revenue is not fixed, the Company estimates revenues that
are most likely to occur. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Billings
in excess of costs and estimated earnings represent payments received on
construction projects under which the work has not been completed. These
amounts, if any, are recognized as construction progresses in accordance with
the percentage-of-completion method.

     The Company recognizes water usage revenues upon delivering water to
customers. The Company recognizes wastewater processing revenues based on flat
fees assessed per single family equivalent unit served. Costs of delivering
water and providing wastewater service to customers are recognized as incurred.
Revenues from the sale of water and wastewater taps is recognized when taps are
sold.

Use  of  estimates
- ------------------

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United State of America requires management
to make estimates and assumptions that affect the reported amounts of assets and


                                      F-7
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2003 and 2002


liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those estimates.

Cash equivalents
- ----------------

     Cash and cash equivalents include all liquid debt instruments with an
original maturity of three months or less.

Cash  flows
- -----------

     No cash was paid for interest or taxes in 2003 or 2002.  See Note 6 for
discussion regarding non cash exchange of common stock for preferred stock.

Long lived assets
- -----------------

     The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.  Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset.  If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets.  Assets
to be disposed of are reported at the lower of the carrying amount or fair value
less costs to sell.  The Company believes there are no impairments in the
carrying amounts of its investments in water and water systems at August 31,
2003.

Water and wastewater systems
- ----------------------------

     The Company capitalizes certain legal, engineering and permitting costs
relating to the adjudication and improvement of its water assets.

Depletion and Depreciation of water assets
- ------------------------------------------

     The Company depletes its water assets on the basis of units produced
divided by the total volume of water adjudicated in the water decrees.  Water
systems are depreciated on a straight line basis over their estimated useful
lives of 30 years.

Stock-Based  Compensation
- -------------------------

     The Company accounts for stock-based compensation using the intrinsic value
method prescribed in Accounting Principals Board ("APB No. 25"), Accounting for
Stock Issued to Employees.  The Company has adopted the disclosure requirements
of Statement of Financial Accounting Standards ("SFAS No. 123"), "Accounting for
Stock-Based Compensation" as specified in SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment of SFAS No.
123". The pro forma disclosure of net loss and loss per share required by SFAS
No. 123 is shown below.


                                      F-8
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                              2003       2002
                                                            ---------  ---------
<S>                                                         <C>        <C>
Net loss, as reported                                       (321,043)  (245,147)
Add: Stock-based employee compensation
  Expense included in reported net income                         --         --
Deduct:  Total stock-based employee compensation
  expense determined under fair value based method for all
  options and warrants                                            --         --
Pro forma net loss                                             (  --)     (  --)
</TABLE>

Actual  and pro forma earnings per share for the year ended August 31, 2003 were
less  than  $.01  per  share.

Income  taxes
- -------------

     The Company uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases.  Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Loss  per  common  share
- ------------------------

     Loss per common share is computed by dividing net loss by the weighted
average number of shares outstanding during each period.  Convertible preferred
stock and common stock options and warrants aggregating   67,746,889 common
share equivalents outstanding as of August 31, 2003 have been excluded from the
calculation of loss per share as their effect is anti-dilutive.

NOTE  3  -  RANGEVIEW  WATER  SUPPLY  AND  SYSTEM
- -------------------------------------------------

     Beginning  in  1987,  the  Company  initiated the purchase of the Rangeview
water  assets.  From 1987 through 2003, the Company made payments to the sellers
of  the  Rangeview  water  assets and capitalized costs incurred relating to the
acquisition  of  the  water assets totaling $12,038,161, and capitalized certain
direct  costs  relating  to  improvements  to  the asset which include legal and
engineering  costs  totaling  $1,672,612.

     In April 1996, the Company completed the purchase of the Rangeview water
assets and entered into a water privatization agreement with the State of
Colorado and the Rangeview Metropolitan District (the "District"), a related
party, which enabled the Company to acquire ownership rights to a total gross
volume of 1,165,000 acre feet of groundwater (approximately 11,650 acre feet per
year), an option to substitute 1,650 acre feet of surface water in exchange for
a total gross volume of 165,000 acre feet of groundwater, and the use of surface
reservoir storage capacity (collectively referred to as the "Export Water
Supply").


                                      F-9
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2003 and 2002


     In  addition  to  the Export Water Supply, the Company entered into a water
and  wastewater  service  agreement ("The Service Agreements") with the District
which  grants  the  Company  an  eighty-five  year  exclusive  right  to design,
construct, operate and maintain the District's water and wastewater systems.  In
exchange  for  designing, constructing, operating and maintaining the District's
water  and  wastewater  system,  the  Company will receive 95% of the District's
water  revenues  remaining  after  payment  of  royalties  totaling 12% of gross
revenues  to  the  State  Land  Board,  100% of the District's wastewater system
development  charges  and  90%  of  the District's wastewater usage charges. The
Company  delivered  approximately  47.3  and  54.5  million  gallons of water to
customers  in  the  Service  Area  in  fiscal  2003 and 2002, respectively.  The
Company  processed approximately 6.95 and 3.7 million gallons of wastewater from
customers  within  its  Service  Area during fiscal 2003 and 2002, respectively.

     The Company capitalizes certain legal, engineering and other costs relating
to the acquisition of the Rangeview Water Supply due to improvements of the
water assets through adjudication and engineering services.

     Participating  interests  in  the  Comprehensive  Amendment  Agreement (the
"CAA"),  in  the  aggregate,  have  the right to receive the first approximately
$31,807,000  from  the  proceeds  of  a  sale or other disposition of the Export
Water  Supply.  As  monies  from the sale of the Export Water are received, they
are  required  to  be  paid  to  the holders of the CAA participation interests,
including  holders  of Series A-1 Preferred Stock, on a pari passu basis for the
first  $31,807,000.  After  payment of the $31,807,000 in participating interest
pursuant  to the CAA, LCH Inc., a company affiliated with the Company's CEO, has
the right to receive the next $4,000,000 in proceeds in exchange for $950,000 in
notes  payable  entered  into between LCH and the Company in 1987 and 1988.  The
next  $433,000  in proceeds are payable to the holders of the Company's Series B
Preferred  Stock.  In  1994,  the Company issued the Series B Preferred Stock in
exchange for certain accounts payable totaling $433,000 to LC Holdings Inc.  The
total obligation of $36,240,000 is non-interest bearing, and if the Export Water
is  not sold, the parties to the agreement have no recourse against the Company.
If  the  Company  does not sell the Export Water, the holders of the Series A-1,
and  Series  B  Preferred  Stock are not entitled to payment of any dividend and
have  no  contractual  recourse  against  the  Company.

     The  participating  interests  liability  of  $11.1  million represents the
obligation  recorded  by the Company relating to actual cash financings received
and  costs incurred to acquire the Rangeview water supply.  The remainder of the
participating  interests  ($20.7  million)  represent  a  contingent  return  to
financing  investors  and  certain  preferred  stock  holders  that will only be
payable  from  the  sale of Export Water and will be recognized if and when such
sale  occurs.

     During fiscal 2003 and 2002, the Company had revenues from two significant
customers that accounted for 81%  and 11%, respectively of the Company's
revenues during 2003 and 76% and 14%, respectively of revenues during 2002.

NOTE  4  -  NOTE  RECEIVABLE
- ----------------------------

     In 1995, the Company extended a line of credit to the District, a related
party.  The loan provides for borrowings of up to $250,000, is unsecured, bears
interest based on the prevailing prime rate plus 2% and matures on December 31,
2003.  The balance of the note receivable at August 31, 2003 was $399,902,
including accrued interest.  The Company intends to extend the due date to
December 31, 2004.  Accordingly, the note has been classified as non-current.


                                      F-10
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2003 and 2002


NOTE  5  -  ACCRUED  LIABILITIES
- --------------------------------

     During fiscal year ended August 31, 2003, the Company had accrued
liabilities of $43,528, of which approximately $26,000 were for audit fees and
the remainder was for operating trade accounts payables.  During fiscal year
ended August 31, 2002, the Company had accrued liabilities of $19,495, of which
approximately 18,000 were for audit fees.

NOTE 6 - LONG-TERM DEBT
- -----------------------

     Long-term  debt, including accrued interest, at August 31, 2003 and 2002 is
comprised  of  the  following:

<TABLE>
<CAPTION>
                                                                                       2003        2002
                                                                                    ----------  ----------
<S>                                                                                 <C>         <C>
Notes payable, including accrued interest to six related parties, due August 2007,
  interest at prime plus 2% (6.25% at August 31, 2003), unsecured                   $  503,439  $  484,876

Notes payable, including accrued interest to five related parties, due August
  2007, interest at 10.25%, unsecured, net of unamortized discount of $0 and
  $9,000, respectively                                                                 578,685     542,809

Note payable, to CEO, due October 2007, non-interest bearing, unsecured                 26,542      26,542

Notes payable, including accrued interest, to CEO due October 2007, interest at
  8.36% to 9.01%, unsecured                                                            508,941     487,581

Notes payable, including accrued interest, to related party, due October, 2007,
  interest at the prime rate plus 3% (7.25% at August 31, 2003), secured by
  shares of the Company's common stock owned by the President                        2,440,014   2,371,733

Notes payable, including accrued interest, to a related party, due August 2007,
  interest ranging from 7.18% to 8.04%, unsecured                                      831,924     799,729
                                                                                    ----------  ----------

Total long-term debt                                                                $4,889,545  $4,713,270
                                                                                    ==========  ==========
</TABLE>

Aggregate maturities of long-term debt are as follows:

     Year Ending August 31,            Amount
     ----------------------            ------
          2007                       1,914,048
          2008 and thereafter        2,975,497
                                  ------------
          Total                   $  4,889,545
                                  ============

     In 1996 and 1997, the Company entered into loan agreements with eleven
related party investors.  The loan balances total $1,082,124 at August 31, 2003,
the loans are unsecured, and bear interest at the rate of 10.25% and prime plus
2%.  In connection with the loan agreements, the Company issued warrants to
purchase 2,100,000 shares of the Company's common stock at $.18 per share.  A
portion of the proceeds received under the agreement ($45,000) was attributed to
the estimated fair value of the warrants issued.  The resulting discount is
being amortized over the term of the loan.  In 2001, the term of the warrants
and debt was extended to 2007.  The fair value of the warrants extension are
being amortized over the revised term of the debt.  See further discussion of
the warrant in Note 7.

     As of August 31, 2003, the CEO of the Company has pledged a total of
20,000,000 shares of the Company's common stock from his personal holdings as
collateral on certain of the above notes payable.


                                      F-11
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2003 and 2002


NOTE  7  -  STOCKHOLDERS'  EQUITY
- ---------------------------------

     Preferred and Common Stock
     --------------------------

     In August 2003, the Company entered into a Plan of Recapitalization and a
Stock Purchase Agreement whereby the Company issued 2,000,000 shares of  Series
D-1 Preferred Stock to the Company's CEO, Mr. Thomas Clark in exchange for
2,000,000 shares of Common Stock owned by Mr. Clark.  The Company sold 2,000,000
shares of the Company's Common Stock at $.25 per share to eleven accredited
investors, four of whom had previously invested with the Company.  Proceeds to
the Company were $500,000.  The Series D-1 Preferred Stock does not earn
dividends and is convertible into 2,000,000 shares of common stock at such time
that the Company has sufficient shares of authorized Common Stock.  The shares
were issued under Section 4(2) of the Securities Act of 1933.

     Stock Options
     -------------

     Pursuant to the Company's Equity Incentive Plan approved by stockholders in
June of 1992, the Company granted Mr. Fletcher Byrom, Ms. Margaret Hansson, Mr.
George Middlemas, and Mr. Mark Harding options to purchase 7,000,000, 8,000,000,
1,000,000, and 7,000,000 shares of common stock respectively at an exercise
price of $.18 per share.  In April of 2001, the Board extended the expiration
date of options granted to Mr. Fletcher Byrom, Ms. Margaret Hansson, Mr. George
Middlemas and Mr. Mark Harding from August 2002 to August 2007.  In connection
with their extension of the expiration dates and whereas the related options
were fully vested in April 2001, and whereas these options were not in the money
at the time of their extension, no compensation expense was recognized for the
extensions.  Also in April 2001, the Board granted Mr. Harding options pursuant
to employment arrangements outside the Equity Incentive Plan to purchase an
additional 3,000,000 shares of common stock at an exercise price of $.18 per
share of which 2,250,000 vested immediately and 250,000 shares vest on each
anniversary date of the grant over the following three years.   Mr. Harding's
new options also expire in August 2007.

     No options were granted in fiscal year 2003.

     A summary of the status of the Company's Equity Incentive Plan and other
compensatory options as of August 31, 2003 and 2002, and changes during the
years then ended is presented below:

<TABLE>
<CAPTION>
                                             2003                         2002
                                   ---------------------------  ---------------------------
                                                  WEIGHTED                     WEIGHTED
                                                   AVERAGE                      AVERAGE
FIXED OPTIONS                        SHARES    EXERCISE PRICE     SHARES    EXERCISE PRICE
                                   ----------  ---------------  ----------  ---------------
<S>                                <C>         <C>              <C>         <C>
Outstanding at beginning of year.  26,000,000  $           .18  26,000,000  $           .18

Granted                                    --               --          --               --
                                   ----------                   ----------
Outstanding at end of year         26,000,000  $           .18  26,000,000  $           .18
                                   ==========                   ==========

Options exercisable at year end    25,750,000  $           .18  25,500,000  $           .18

Weighted average fair value of
  options granted during the year                           --                           --
</TABLE>


                                      F-12
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2003 and 2002


     The weighted average remaining contractual life of the Options Outstanding
and Options Exercisable as of August 31, 2003 is 4 years.

     No options were exercised during the years ended August 31, 2003 and 2002.

     Warrants
     --------

     In addition to the warrants discussed in Note 6, the Company issued
warrants from 1990 through 1996 to purchase 22,303,000 shares of the Company's
stock at $.18 per share in connection with the sale of profits interests in the
Rangeview project, which remain outstanding as of August 31, 2003.  In 1996, all
interests held in the Rangeview water rights were converted into participating
interests in the CAA.  The warrants expire 6 months after the payment of the
participating interests in the Comprehensive Amendment Agreement ("CAA").

     Certain related parties, who hold notes payable from the Company which
aggregate a total of $1,082,124, as of August 31, 2003, extended the maturity
date of the notes from August 2002 to August 2007.  In connection with the
extension of the  maturity of the notes, the expiration date of the warrants was
extended to August 2007.  The $126,000 recorded in connection with extension of
the warrants' expiration date is the fair value of the warrants as of April 9,
2001, calculated using a Black-Scholes option-pricing model with the following
assumptions: no dividend yield; annualized expected volatility of 101%; and a
weighted average risk-free interest rate of 4.65%.  This amount is being
amortized straight-line over the period August 2002 to August 2007 as the
imputed consideration relating to the extension of the debt terms.

     No warrants were exercised during the years ended August 31, 2003 and 2002.

NOTE  8  -  SIGNIFICANT  CUSTOMERS
- ----------------------------------

     The Company had accounts receivable from two significant customers totaling
approximately  $56,546  and  $7,187,  respectively,  as  of  August 31, 2003 and
$38,700  and  $12,200,  respectively, as of August 31, 2002.  The same customers
accounted  for  approximately 81% and 11%, respectively of the Company's revenue
during  the  year  ended  August  31,  2003  and  approximately  76%  and  14%,
respectively  of  the  Company's  revenue during the year ended August 31, 2002.

NOTE  9  -  INCOME  TAXES
- -------------------------

     The  tax effects of the temporary differences that give rise to significant
portions  of the deferred tax assets and liabilities at August 31, 2003 and 2002
are  presented  below.

<TABLE>
<CAPTION>
                                           2003          2002
                                       ------------  ------------
<S>                                    <C>           <C>
Deferred tax assets:
    Net operating loss carry forwards  $ 2,483,000   $ 2,423,000
    Less valuation allowance            (2,483,000)   (2,423,000)
                                       ------------  ------------
    Net deferred tax asset             $        --   $        --
                                       ============  ============
</TABLE>

          The valuation allowance for deferred tax assets as of August 31, 2003
was $2,483,000.  The net change in the valuation allowance for the year ended
August 31, 2003 was  a net increase of $60,000, primarily attributable to the
net operating loss incurred during the year, expiration of a portion of net


                                      F-13
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2003 and 2002


operating loss carry forwards, and difference in amortization.  The deferred tax
asset at August 31, 2003, for which a valuation allowance has been recorded,
will be recognized, if ever, when realization is more likely than not.

     The expected statutory tax rate applied to the book loss is equal to the
increase in the net operating tax loss carry forwards less the expiration of any
tax loss carry forwards.  At August 31, 2003, the Company has estimated net
operating loss carry forwards for federal income tax purposes of  approximately
$6,423,000, which are available to offset future federal taxable income, if any,
through fiscal 2023.

NOTE 10 - INFORMATION CONCERNING BUSINESS SEGMENTS
- --------------------------------------------------

     The Company has two lines of business:  one is the design and construction
of water and wastewater systems pursuant to the Service Agreements to provide
water and wastewater service to customers within the Service Area; and the
second is the operation and maintenance of the water and wastewater systems
which serve customers within the Service Area.  The Company did not recognize
construction revenues during fiscal years 2003 or 2002.

     The accounting policies of the segments are the same as those of the
Company, described in note 2.  The Company evaluates the performance of its
segments based on gross margins of the respective business units.

     Segment information for the years ended August 31, 2003 and 2002 is as
follows:

<TABLE>
<CAPTION>
                                2003                     2002
                      ------------------------  ------------------------
                        Service       Total       Service       Total
                      -----------  -----------  -----------  -----------
<S>                   <C>          <C>          <C>          <C>
Revenues              $   225,432  $   225,432  $   204,858  $   204,858
Gross margin              187,936      187,936      177,066      177,066
Total assets           20,413,404   20,413,404   20,028,279   20,028,279
Capital expenditures      146,896      146,896      109,172      109,172
</TABLE>

NOTE 11 - RELATED PARTY TRANSACTIONS

     During the years ended August 31, 2003 and 2002, the Company has occupied
office space from a related party at no cost to the Company.   Additionally, the
Company has certain debt instruments between related parties (see notes 3, 4 and
5).

NOTE 12 - SUBSEQUENT EVENT TRANSACTION
- --------------------------------------

     Subsequent to fiscal year end August 31, 2003, subject to final
governmental approvals, the Company entered into a long-term Water Service
Agreement ("Agreement") whereby the Company will provide domestic water service
to a new master planned community located in the Denver metropolitan area in
Arapahoe County.  The new community will be developed over several years and be
composed of up to 4,000 single family residences.  The Company will generate
one-time revenues from the sale of water taps (currently $11,100 per tap) and
annual revenues through the delivery of water.  The agreement is expected to
generate gross revenues of $44 million in tap fee revenues and approximately $2
million annually from water usage sales.  The Company is responsible for
developing the associated infrastructure, which is expected to commence in the


                                      F-14
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2003 and 2002


summer of 2003 to provide water service to the development and expects the tap
fee revenues will provide sufficient capital to the Company to construct
facilities necessary to deliver water to the development.



                                      F-15
<PAGE>
<TABLE>
<CAPTION>
                             PURE CYCLE CORPORATION
                                 BALANCE SHEETS
                      February 29, 2004 and August 31, 2003


                                                                   February 29,    August 31,
          ASSETS                                                       2004           2003
          ------                                                  --------------  -------------
<S>                                                               <C>             <C>
                                                                    (unaudited)
Current assets:
  Cash and cash equivalents                                       $     338,599   $    525,780
  Trade accounts receivable                                              33,841         67,687
                                                                  --------------  -------------
     Total current assets                                               372,440        593,467

Investment in water and systems:
  Rangeview water supply                                             13,777,395     13,710,773
  Paradise water supply                                               5,498,124      5,494,323
  Rangeview water system                                                148,441        148,441
  Accumulated depreciation & depletion                                  (13,325)       (10,543)
                                                                  --------------  -------------
     Total investment in water and systems                           19,410,635     19,342,994

Note receivable, including accrued interest                             406,782        399,902

Other assets                                                             64,441         77,041
                                                                  --------------  -------------
                                                                  $  20,254,298   $ 20,413,404
                                                                  ==============  =============

             LIABILITIES AND STOCKHOLDERS' EQUITY
             ------------------------------------

Current liabilities:
  Accounts payable                                                $      23,550          8,244
  Accrued liabilities                                                    21,100         43,528
                                                                  --------------  -------------
     Total current liabilities                                           44,650         51,772

Long-term debt - related parties, including accrued interest          4,976,511      4,889,545

Participating interests in Rangeview
  water rights                                                       11,090,630     11,090,630

Stockholders' equity:
  Preferred stock, par value $.001 per
    share; authorized - 25,000,000 shares:
      Series A1 - 1,058,000 and 1,600,000 shares issued and
      outstanding, respectively                                           1,058          1,600
      Series B - 432,513 shares issued and outstanding                      433            433
      Series D - 6,455,000 shares issued and outstanding                  6,455          6,455
      Series D1- 2,000,000 shares issued and outstanding                  2,000          2,000
  Common stock, par value 1/3 of $.01 per
      share; authorized - 135,000,000 shares;
      81,450,875 and 78,439,763 shares issued and
      outstanding, respectively                                         271,621        261,584
  Additional paid-in capital                                         25,267,494     25,276,989
  Accumulated deficit                                               (21,406,554)   (21,167,604)
                                                                  --------------  -------------
      Total stockholders' equity                                      4,142,507      4,381,457
                                                                  --------------  -------------
                                                                  $  20,254,298   $ 20,413,404
                                                                  ==============  =============
</TABLE>


               See Accompanying Notes to the Financial Statements


                                      F-16
<PAGE>
<TABLE>
<CAPTION>
                             PURE CYCLE CORPORATION
                            STATEMENTS OF OPERATIONS
            Six Months Ended February 29, 2004 and February 28, 2003


                                                   Six months ended
                                             ------------------------------
                                              February 29,    February 28,
                                                  2004            2003
                                             --------------  --------------
<S>                                          <C>             <C>
Water service revenue
       Water usage revenues                  $      55,314   $      77,225
       Wastewater usage fees                        27,002          26,587
       Revenues - other                              3,415              --
                                             --------------  --------------
                                                    85,731         103,812
                                             --------------  --------------


Water service operating expense                   (  5,190)       (  5,719)
Wastewater service operating expense              (  3,819)       (  5,013)
Consulting services expense                       (  2,329)             --
                                             --------------  --------------

Gross margin                                        74,393          93,080

General and administrative expense               ( 219,302)      ( 124,556)
Depreciation expense                                (2,474)        ( 2,482)
Depletion expense                                   (  308)           (826)

Other income (expense):

    Interest income                                  8,307           8,556
    Interest expense related parties             (  86,966)       ( 88,528)
    Interest expense other                         (12,600)        (12,600)
                                             --------------
Net loss                                     $    (238,950)  $    (127,356)
                                             ==============  ==============


Basic and diluted net loss per common share  $         --*   $         --*
                                             ==============  ==============

Weighted average common shares outstanding      80,564,182      78,439,763
                                             ==============  ==============
</TABLE>


*    less than $.01 per share


               See Accompanying Notes to the Financial Statements


                                      F-17
<PAGE>
<TABLE>
<CAPTION>
                             PURE CYCLE CORPORATION
                            STATEMENTS OF CASH FLOWS
            Six Months Ended February 29, 2004 and February 28, 2003


                                                                   Six months ended
                                                            ------------------------------
                                                             February 29,    February 28,
                                                                 2004            2003
                                                            --------------  --------------
<S>                                                         <C>             <C>
Cash flows from operating activities:
  Net loss                                                  $    (238,950)  $    (127,356)
      Adjustment to reconcile
      net loss to net cash provided by
        operating activities:
        Depreciation on water systems                               2,474           2,482
        Depletion expense                                             308             826

      Increase (decrease) in accrued interest
        on note receivable                                         (6,880)        ( 7,166)
      Increase in accrued interest on long
        term debt and other non-current
        liabilities                                                86,966          88,528
      Changes in operating assets and liabilities:
        Trade accounts receivable                                  33,846          23,284
        Other assets                                               12,600          12,600
        Accounts payable and accrued liabilities                 (  7,122)       (  2,455)
                                                            --------------
          Net cash used in
            operating activities                                 (116,758)         (9,257)
                                                            --------------  --------------

Cash flows provided by (and in) from investing activities:
  Investments in water supply                                     (70,423)        (95,716)
  Investment in Rangeview water system                                 --              --
                                                            --------------  --------------
      Net cash used in investing  activities                      (70,423)        (95,716)

Cash flows from financing activities:

      Net decrease
        in cash and cash
        equivalents                                              (187,181)       (104,973)
      Cash and cash equivalents
        beginning of period                                       525,780         287,720
                                                            --------------  --------------
      Cash and cash equivalents
        end of period                                       $     338,599   $     182,747
                                                            ==============  ==============
</TABLE>


               See Accompanying Notes to the Financial Statements


                                      F-18
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
            Six Months Ended February 29, 2004 and February 28, 2003


NOTE 1 - ACCOUNTING PRINCIPLES
- ------------------------------

     The  balance sheet as of February 29, 2004 and the statements of operations
and  statements  of cash flows for the six month periods ended February 29, 2004
and  February  28,  2003  have  been  prepared  by the Company and have not been
audited.  In  the  opinion  of  management,  all adjustments, consisting only of
normal  recurring  adjustments,  necessary  to  present  fairly  the  financial
position,  results of operations and cash flows at February 29, 2004 and for all
periods  presented  have  been  made.

     Certain information and footnote disclosures normally included in financial
statements  prepared in accordance with generally accepted accounting principles
have been condensed or omitted.  It is suggested that these financial statements
be  read in conjunction with the financial statements and notes thereto included
in  the Company's fiscal year 2003 Annual Report on Form 10-KSB.  The results of
operations  for  interim periods presented are not necessarily indicative of the
operating  results  for  the  full  year.

     Certain  prior  period  amounts  have  been  reclassified to conform to the
current  period  presentation.

NOTE  2  -  STOCKHOLDERS'  EQUITY
- ---------------------------------

     In August 2003, the Company entered into a Plan of Recapitalization and a
Stock Purchase Agreement whereby the Company issued 2,000,000 shares of  Series
D-1 Preferred Stock to the Company's CEO, Mr. Thomas Clark, in exchange for
2,000,000 shares of Common Stock owned by Mr. Clark.  The Company sold
2,000,000, shares of the Company's Common Stock at $.25 per share to eleven
accredited investors, four of whom had previously invested with the Company.
Proceeds to the Company were $500,000.  The Series D-1 Preferred Stock does not
earn dividends and is convertible into 2,000,000 shares of common stock at such
time that the Company has sufficient shares of authorized Common Stock.  The
shares were issued under Section 4(2) of the Securities Act of 1933.

     During the six months ended February 29, 2004, the Company issued 3,011,111
shares of Common Stock in exchange for 542,000 shares of Series A-1 Preferred
Stock, pursuant to the certificate of designation of the Series A-1 Preferred
Stock.  The holders of the 542,000 shares of Series A-1 Preferred Stock
surrendered the shares to the Company for retirement.

NOTE 3 - WATER CONTRACT
- -----------------------

     On October 31, 2003, the Company entered into a long-term Water Service
Agreement ("Agreement") whereby the Company will provide domestic water service
to a new master planned community located in the Denver metropolitan area in
Arapahoe County.  The new community will be developed over several years and be
composed of up to 4,000 single family residences.  The Company will generate
one-time revenues from the sale of water taps (currently $11,100 per tap) and
annual revenues through the delivery of water.  The agreement is expected to
generate gross revenues of $44 million in tap fee revenues and approximately $2
million annually from water usage sales.  The Company is responsible for
developing the associated infrastructure, which is expected to commence in the
summer of 2004 to provide water service to the development and expects the tap
fee revenues will provide sufficient capital to the Company to construct
facilities necessary to deliver water to the development.

NOTE  4  -  RECENT  ACCOUNTING  PRONOUNCEMENTS
- ----------------------------------------------

     In  January 2003, the FASB issued FASB Interpretation No. 46, Consolidation
of  Variable  Interest  Entities,  an  interpretation  of ARB No. 51. FIN No. 46
requires an entity to consolidate a variable interest entity if it is designated


                                      F-19
<PAGE>
                             PURE CYCLE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
            Six Months Ended February 29, 2004 and February 28, 2003


as  the  primary  beneficiary  of that entity even if the entity does not have a
majority of voting interests. A variable interest entity is generally defined as
an  entity  where  its  equity  is unable to finance its activities or where the
owners  of  the entity lack the risk and rewards of ownership. The provisions of
this statement apply at inception for any entity created after January 31, 2003.
For  small  business  entities,  the  provisions  of this Interpretation must be
applied  at  the  end of the first reporting period that ends after December 15,
2004.  The Company has determined it is not party to a variable interest entity.

     In  June  2003,  the  FASB  issued  SFAS  No.  150, "Accounting for Certain
Financial  Instruments with Characteristics of Both Liabilities and Equity." The
statement  is effective for financial instruments entered into or modified after
May  31,  2003, and otherwise is effective at the beginning of the first interim
period  beginning after June 15, 2003, except for mandatory redeemable financial
instruments of a nonpublic entity.  The adoption of SFAS No. 150 did not have an
impact  on  the  Company's  financial  statements.



                                      F-20
<PAGE>
================================================================================



     You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement to this prospectus.  We have
authorized no one to provide you with different information.  We are not making
an offer of these securities in any state where the offer is not permitted.  You
should not assume that the information in this prospectus is accurate as of any
date other than the date on the front of this prospectus.


                             PURE CYCLE CORPORATION

                                  COMMON STOCK






                                  ____________
                                   PROSPECTUS
                                  ____________




                               ____________, 2004


================================================================================


<PAGE>
                                     PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     Pure Cycle is incorporated in the State of Delaware.  The Delaware General
Corporation Law (the "DGCL") permits corporations to indemnify a present or
former director or officer of the corporation (and certain other persons serving
at the request of the corporation in related capacities) for liabilities,
including legal expenses, arising by reason of service in such capacity if such
person shall have acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and in any
criminal proceeding if such person had no reasonable cause to believe his
conduct was unlawful. However, in the case of actions brought by or in the right
of the corporation, no indemnification may be made with respect to any matter as
to which such director or officer shall have been adjudged liable, except in
certain limited circumstances.

     Pure Cycle's Certificate of Incorporation, as amended (the "Certificate")
and Bylaws, as amended (the "Bylaws") provide that the registrant shall
indemnify directors and executive officers to the fullest extent now or
hereafter permitted by the DGCL.

     The indemnification provided by the DGCL and the registrant's Certificate
and Bylaws is not exclusive of any other rights to indemnification to which a
director or officer may be entitled. The general effect of the foregoing
provisions may be to reduce the number of circumstances in which an officer or
director may be required to bear the economic burden of the foregoing
liabilities and expenses.

     Pure Cycle is in the process of obtaining a liability policy for its
directors and officers as permitted by the DGCL which extends to, among other
things, liability arising under the Securities Act of 1933, as amended.

ITEM 25.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

     The following table sets forth various expenses in connection with the sale
and distribution of the securities being registered, other than the underwriting
discounts and commissions.  All amounts shown are estimates except the
Commission's registration fee and the NASD filing fee.

<TABLE>
<CAPTION>
<S>                                                        <C>
Registration fee--Securities and Exchange Commission. . .  $4,112.08
                                                           ---------
NASD filing fee . . . . . . . . . . . . . . . . . . . . .   3,745.52
                                                           ---------
Legal Fees and Expenses . . . . . . . . . . . . . . . . .          *
                                                           ---------
Accountants Fees and Expenses . . . . . . . . . . . . . .          *
                                                           ---------
Printing Expenses . . . . . . . . . . . . . . . . . . . .          *
                                                           ---------
Blue sky filing fees and expenses . . . . . . . . . . . .
                                                           ---------
Transfer agent fees and expenses. . . . . . . . . . . . .
                                                           ---------

Total . . . . . . . . . . . . . . . . . . . . . . . . . .$         *
                                                           =========
</TABLE>

     *Estimated.

     The  selling  stockholders  have  paid none of the expenses related to this
offering.


                                      II-1
<PAGE>
ITEM 26.  RECENT SALES OF UNREGISTERED SECURITIES (REPORTED ON A PRE-REVERSE
SPLIT BASIS)

     In August 2003, we entered into a Plan of Recapitalization and a Stock
Purchase Agreement whereby we issued 2,000,000 shares of Series D-1 Convertible
Preferred Stock to our CEO, Mr. Thomas Clark in exchange for 2,000,000 shares of
common stock owned by Mr. Clark.  We sold 2,000,000 shares of our common stock
at $.25 per share to eleven accredited investors, four of whom had previously
invested with us.  Proceeds to us were $500,000.  The Preferred Stock was issued
under Section 4(2) of the Securities Act of 1933.  The common stock was sold
pursuant to Regulation D, Rule 506.

     In August 2001, we entered into a Plan of Recapitalization and a Stock
Purchase Agreement whereby we issued 6,455,000 shares of Series D Preferred
Stock to our CEO, Mr. Thomas Clark in exchange for 421,666 shares of common
stock, 3,200,000 shares of Series C Preferred Stock, 500,000 shares of Series
C-1 Preferred Stock, 666,667 shares of Series C-2 Preferred Stock, and 1,666,667
shares of Series C-3 Preferred Stock, all of which were owned by Mr. Clark.  We
retired 3,200,000 shares of Series C Preferred Stock, 500,000 shares of Series
C-1 Preferred Stock, 666,667 shares of Series C-2 Preferred Stock, and 1,666,667
shares of Series C-3 Preferred Stock.  We sold 625,000 shares of our common
stock at $.16 per share to two accredited investors.  Proceeds to us were
$100,000.  The shares were issued under Section 4(2) of the Securities Act of
1933.

ITEM 27.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit
 No.           Description  of  Exhibit
- ----           ------------------------

1.1            Underwriting  Agreement.*

3.1            Certificate  of  Incorporation,  as  amended  (incorporated  by
               reference  from  Exhibit  4-A  to  Registration  Statement  No.
               2-65226).

3.2            Certificate  of  Amendment  to Certificate of Incorporation dated
               August  27, 1987 (incorporated by reference from Annual Report on
               Form  10-K  for  the  fiscal  year  ended  August  31,  1987).

3.3            Certificate  of  Amendment  to Certificate of Incorporation dated
               May  27,  1988  (incorporated  by  reference from Proxy Statement
               filed  with  the  SEC  on  May  28,  1988).

3.4            Certificate  of  Amendment  to Certificate of Incorporation dated
               April  13,  1993  (incorporated by reference from Proxy Statement
               filed  with  the  SEC  on  March  18,  1993).

3.5            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  A  Convertible  Preferred  Stock  dated  May  25,  1994
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1994).

3.6            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  B  Preferred Stock dated August 31, 1994 (incorporated by
               reference  from  Annual Report on Form 10-KSB for the fiscal year
               ended  August  31,  1994).

3.7            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  A-1  Convertible  Preferred  Stock  dated  July  21, 1998
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1998).

3.8            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  C  Convertible  Preferred  Stock  dated September 2, 1998
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1998).


                                      II-2
<PAGE>
3.9            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  C-1  Convertible  Preferred  Stock dated November 5, 1999
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1999).

3.10           Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  C-2  Convertible  Preferred  Stock dated November 5, 1999
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1999).

3.11           Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  C-3  Convertible  Preferred  Stock  dated August 31, 2000
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  2000).

3.12           Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  D  Convertible  Preferred  Stock  dated  October 16, 2001
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  2001).

3.13           Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  D-1  Convertible  Preferred  Stock  dated August 13, 2003
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  2003).

3.14           Certificate  of  Amendment  to Certificate of Incorporation dated
               April  12,  2004.**

3.15           Bylaws  (incorporated  by  reference  from  Exhibit  4.C  to
               Registration  Statement  No.  2-62483).

3.16           Amendment  to  Bylaws  effective  April 22, 1988 (incorporated by
               reference  from  Annual Report on Form 10-KSB for the fiscal year
               ended  August  31,  1989).

5.1            Opinion of Davis Graham & Stubbs LLP*

10.1           Letter  Agreement  dated  August 31, 1987 between the Company and
               Paradise  Oil,  Water  &  Land Development, Inc. (incorporated by
               reference  from  Current Report on Form 8-K filed with the SEC on
               August  5,  1988).

10.2           Right  of  First  Refusal Agreement dated August 12, 1992 between
               Inco  Securities  Corporation  and  Richard  F.  Myers,  Mark  W.
               Harding,  Thomas  P.  Clark,  Thomas  Lamm  and  Rowena Rogers.**

10.3           Stock  Purchase Agreement and Investment Agreement dated December
               10,  1991  by  and among the Company and Apex Investment Fund II,
               L.P.,  the  Environmental Fund II, L.P. and Productivity Fund II,
               L.P. (incorporated by reference from Annual Report on Form 10-KSB
               for  the  fiscal  year  ended  August  31,  1992).

10.4           Service Agreement dated April 11, 1996 by and between the Company
               and the District (incorporated by reference from Quarterly Report
               on  Form  10-QSB  for  the  fiscal  quarter  ended May 31, 1996).

10.5           Settlement  Agreement  and Mutual Release dated April 11, 1996 by
               and  among  the  State  Land Board and the District, the Company,
               INCO  Securities  Corporation,  Apex  Investment  Fund  II, L.P.,
               Landmark  Water Partners, L.P., Landmark Water Partners II, L.P.,
               Environmental  Venture  Fund,  L.P., Environmental Private Equity
               Fund  II,  L.P.,  The  Productivity  Fund  II,  L.P.,  Proactive
               Partners,  L.P., Warwick Partners, L.P., Auginco, Anders C. Brag,
               Amy  Leeds, and D.W. Pettyjohn, and OAR, Incorporated, Willard G.
               Owens  and  H.F.  Riebesell,  Jr. (incorporated by reference from
               Quarterly  Report on Form 10-QSB for the fiscal quarter ended May
               31,  1996).


                                      II-3
<PAGE>
10.6           Agreement  for  Sale  of Export Water dated April 11, 1996 by and
               among  the  Company  and  the District (incorporated by reference
               from Quarterly Report on Form 10-QSB for the fiscal quarter ended
               May  31,  1996).

10.7           Comprehensive  Amendment  Agreement  No. 1 dated April 1, 1996 by
               and  among  ISC,  the Company, the Bondholders, Gregory M. Morey,
               Newell Augur, Jr., Bill Peterson, Stuart Sundlun, Alan C. Stormo,
               Beverlee  A.  Beardslee,  Bradley  Kent Beardslee, Robert Douglas
               Beardslee,  Asra Corporation, International Properties, Inc., and
               the  State  Land  Board (incorporated by reference from Quarterly
               Report on Form 10-QSB for the fiscal quarter ended May 31, 1996).

10.8           Wastewater  Service  Agreement  dated  January  22,  1997  by and
               between  the  Company and the District (incorporated by reference
               from  Annual  Report  on  Form  10-KSB  for the fiscal year ended
               August  31,  1998).

10.9           Water  Service  Agreement for the Sky Ranch PUD dated October 31,
               2003 by and between Airpark Metropolitan District, Icon Investors
               I,  LLC,  the  Company  and  the  District.**

10.10          1992  Equity Incentive Plan (incorporated by reference from Proxy
               Statement  filed  with  the  SEC  on  March  18,  1993).

10.11          2004  Incentive  Plan  (incorporated  by  reference  from  Proxy
               Statement  filed  with  the  SEC  on  March  25,  2004).

10.12          Non-Statutory Stock Option Agreement dated April 19, 2001 between
               the  Company  and  Mark  W.  Harding.**

10.13          Amendment  to Water Service Agreement for the Sky Ranch PUD dated
               January  6,  2004.*

10.14          Amendment  to Water Service Agreement for the Sky Ranch PUD dated
               January  30,  2004.*

10.15          Amendment  to Water Service Agreement for the Sky Ranch PUD dated
               January  30, 2004 pertaining to amendment of the Option Agreement
               for  Export  Water.*

10.16          Amendment  to Water Service Agreement for the Sky Ranch PUD dated
               March  5,  2004.*

23.1           Consent of Davis Graham & Stubbs LLP (included in Exhibit 5.1).

23.2           Consent of KPMG, LLP.**

_________________
* To be filed by amendment to this registration statement.

**Filed  herewith.


ITEM  28.  UNDERTAKINGS.

     (a)     Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.  In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the small business issuer will, unless in the


                                      II-4
<PAGE>
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

     (b)  The undersigned small business issuer will:

          (1)     For determining any liability under the Securities Act, treat
     the information omitted from the form of prospectus filed as part of this
     registration statement in reliance upon Rule 430A and contained in a form
     of prospectus filed by the small business issuer under Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act as part of this registration
     statement as of the time the SEC declared it effective; and

          (2)     For determining any liability under the Securities Act, treat
     each post-effective amendment that contains a form of prospectus as a new
     registration statement for the securities offered in the registration
     statement, and that offering of the securities at that time as the initial
     bona fide offering of those securities.


                                      II-5
<PAGE>
                                   SIGNATURES

     In  accordance  with  the  requirements  of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of  the  requirements  for  filing on Form SB-2 and authorized this registration
statement  to  be  signed  on  its  behalf  by  the  undersigned, thereunto duly
authorized, in the City of Denver, State of Colorado, on April 16, 2004.

                                            PURE CYCLE CORPORATION

                                            By:  /s/  Mark W. Harding
                                               ------------------------------
                                            Name:  Mark W. Harding
                                            Title:  President

                                POWER OF ATTORNEY

     KNOW  ALL  PERSONS  BY  THESE PRESENTS that each individual whose signature
appears  below  constitutes and appoints Wanda Abel and Mark W. Harding his true
and  lawful  attorney-in-fact and agent with full power of substitution, for him
and in his name, place and stead, in any and all capacities, to sign any and all
amendments  (including  post-effective  amendments filed in accordance with Rule
462  or  otherwise) to this registration statement on Form SB-2, and to file the
same  with  all  exhibits  and schedules thereto and all documents in connection
therewith,  with  the  Securities  and  Exchange  Commission, granting unto said
attorneys-in-fact  and  agents, and each of them, full power and authority to do
and  perform  each and every act and thing requisite and necessary to be done in
and  about  the  premises,  as  fully to all intents and purposes as he might or
could  do  in  person,  hereby  ratifying  and  confirming  all  that  said
attorneys-in-fact  and  agents  or  any  of  them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

     Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  this
registration  statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

     Signature                Title                            Date
     ---------                -----                            ----


  /s/ Thomas P. Clark         Chief Executive Officer          April 16, 2004
- --------------------------    and Director (Principal
Thomas P. Clark               Executive Officer)

  /s/ Mark W. Harding         President and Director           April 16, 2004
- --------------------------    (Principal Financial
Mark W. Harding               Officer and Principal
                              Accounting Officer)

  /s/ Harrison H. Augur       Chairman of the Board            April 16, 2004
- --------------------------
Harrison H. Augur

  /s/ Richard L. Guido        Director                         April 16, 2004
- --------------------------
Richard L. Guido



<PAGE>
  /s/ Margaret S. Hansson     Director                         April 16, 2004
- --------------------------
Margaret S. Hansson

  /s/ George M. Middlemas     Director                         April 16, 2004
- --------------------------
George M. Middlemas




<PAGE>
                                  EXHIBIT INDEX

Exhibit
 No.           Description  of  Exhibit
- ----           ------------------------

1.1            Underwriting  Agreement.*

3.1            Certificate  of  Incorporation,  as  amended  (incorporated  by
               reference  from  Exhibit  4-A  to  Registration  Statement  No.
               2-65226).

3.2            Certificate  of  Amendment  to Certificate of Incorporation dated
               August  27, 1987 (incorporated by reference from Annual Report on
               Form  10-K  for  the  fiscal  year  ended  August  31,  1987).

3.3            Certificate  of  Amendment  to Certificate of Incorporation dated
               May  27,  1988  (incorporated  by  reference from Proxy Statement
               filed  with  the  SEC  on  May  28,  1988).

3.4            Certificate  of  Amendment  to Certificate of Incorporation dated
               April  13,  1993  (incorporated by reference from Proxy Statement
               filed  with  the  SEC  on  March  18,  1993).

3.5            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  A  Convertible  Preferred  Stock  dated  May  25,  1994
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1994).

3.6            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  B  Preferred Stock dated August 31, 1994 (incorporated by
               reference  from  Annual Report on Form 10-KSB for the fiscal year
               ended  August  31,  1994).

3.7            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  A-1  Convertible  Preferred  Stock  dated  July  21, 1998
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1998).

3.8            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  C  Convertible  Preferred  Stock  dated September 2, 1998
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1998).

3.9            Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  C-1  Convertible  Preferred  Stock dated November 5, 1999
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1999).

3.10           Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  C-2  Convertible  Preferred  Stock dated November 5, 1999
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  1999).

3.11           Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  C-3  Convertible  Preferred  Stock  dated August 31, 2000
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  2000).

3.12           Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  D  Convertible  Preferred  Stock  dated  October 16, 2001
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  2001).

3.13           Certificate  of  Designations,  Powers, Preferences and Rights of
               Series  D-1  Convertible  Preferred  Stock  dated August 13, 2003
               (incorporated  by reference from Annual Report on Form 10-KSB for
               the  fiscal  year  ended  August  31,  2003).

3.14           Certificate  of  Amendment  to Certificate of Incorporation dated
               April  12,  2004.**


<PAGE>
3.15           Bylaws  (incorporated  by  reference  from  Exhibit  4.C  to
               Registration  Statement  No.  2-62483).

3.16           Amendment  to  Bylaws  effective  April 22, 1988 (incorporated by
               reference  from  Annual Report on Form 10-KSB for the fiscal year
               ended  August  31,  1989).

5.1            Opinion  of  Davis  Graham  &  Stubbs  LLP*

10.1           Letter  Agreement  dated  August 31, 1987 between the Company and
               Paradise  Oil,  Water  &  Land Development, Inc. (incorporated by
               reference  from  Current Report on Form 8-K filed with the SEC on
               August  5,  1988).

10.2           Right  of  First  Refusal Agreement dated August 12, 1992 between
               Inco  Securities  Corporation  and  Richard  F.  Myers,  Mark  W.
               Harding,  Thomas  P.  Clark,  Thomas  Lamm  and  Rowena Rogers.**

10.3           Stock  Purchase Agreement and Investment Agreement dated December
               10,  1991  by  and among the Company and Apex Investment Fund II,
               L.P.,  the  Environmental Fund II, L.P. and Productivity Fund II,
               L.P. (incorporated by reference from Annual Report on Form 10-KSB
               for  the  fiscal  year  ended  August  31,  1992).

10.4           Service Agreement dated April 11, 1996 by and between the Company
               and the District (incorporated by reference from Quarterly Report
               on  Form  10-QSB  for  the  fiscal  quarter  ended May 31, 1996).

10.5           Settlement  Agreement  and Mutual Release dated April 11, 1996 by
               and  among  the  State  Land Board and the District, the Company,
               INCO  Securities  Corporation,  Apex  Investment  Fund  II, L.P.,
               Landmark  Water Partners, L.P., Landmark Water Partners II, L.P.,
               Environmental  Venture  Fund,  L.P., Environmental Private Equity
               Fund  II,  L.P.,  The  Productivity  Fund  II,  L.P.,  Proactive
               Partners,  L.P., Warwick Partners, L.P., Auginco, Anders C. Brag,
               Amy  Leeds, and D.W. Pettyjohn, and OAR, Incorporated, Willard G.
               Owens  and  H.F.  Riebesell,  Jr. (incorporated by reference from
               Quarterly  Report on Form 10-QSB for the fiscal quarter ended May
               31,  1996).

10.6           Agreement  for  Sale  of Export Water dated April 11, 1996 by and
               among  the  Company  and  the District (incorporated by reference
               from Quarterly Report on Form 10-QSB for the fiscal quarter ended
               May  31,  1996).

10.7           Comprehensive  Amendment  Agreement  No. 1 dated April 1, 1996 by
               and  among  ISC,  the Company, the Bondholders, Gregory M. Morey,
               Newell Augur, Jr., Bill Peterson, Stuart Sundlun, Alan C. Stormo,
               Beverlee  A.  Beardslee,  Bradley  Kent Beardslee, Robert Douglas
               Beardslee,  Asra Corporation, International Properties, Inc., and
               the  State  Land  Board (incorporated by reference from Quarterly
               Report on Form 10-QSB for the fiscal quarter ended May 31, 1996).

10.8           Wastewater  Service  Agreement  dated  January  22,  1997  by and
               between  the  Company and the District (incorporated by reference
               from  Annual  Report  on  Form  10-KSB  for the fiscal year ended
               August  31,  1998).

10.9           Water  Service  Agreement for the Sky Ranch PUD dated October 31,
               2003 by and between Airpark Metropolitan District, Icon Investors
               I,  LLC,  the  Company  and  the  District.**

10.10          1992  Equity Incentive Plan (incorporated by reference from Proxy
               Statement  filed  with  the  SEC  on  March  18,  1993).


<PAGE>
10.11          2004  Incentive  Plan  (incorporated  by  reference  from  Proxy
               Statement  filed  with  the  SEC  on  March  25,  2004).

10.12          Non-Statutory Stock Option Agreement dated April 19, 2001 between
               the  Company  and  Mark  W.  Harding.**

10.13          Amendment  to Water Service Agreement for the Sky Ranch PUD dated
               January  6,  2004.*

10.14          Amendment  to Water Service Agreement for the Sky Ranch PUD dated
               January  30,  2004.*

10.15          Amendment  to Water Service Agreement for the Sky Ranch PUD dated
               January  30, 2004 pertaining to amendment of the Option Agreement
               for  Export  Water.*

10.16          Amendment  to Water Service Agreement for the Sky Ranch PUD dated
               March  5,  2004.*

23.1           Consent of Davis Graham & Stubbs LLP (included in Exhibit 5.1).

23.2           Consent of KPMG, LLP.**

_________________

*To be filed by amendment to this registration statement.

**Filed  herewith.


<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.14
<SEQUENCE>3
<FILENAME>doc2.txt
<DESCRIPTION>EXHIBIT 3.14
<TEXT>
                            CERTIFICATE OF AMENDMENT

                                     TO THE

                          CERTIFICATE OF INCORPORATION

                                       OF

                             PURE CYCLE CORPORATION,
                             A DELAWARE CORPORATION

                                    * * * * *

                Pursuant to the Delaware General Corporation Law

                                    * * * * *

     Pure Cycle Corporation, a Delaware corporation (the "Corporation"), DOES
HEREBY CERTIFY:

     FIRST:  This  Certificate  of  Amendment  amends  the  provisions  of  the
Corporation's Certificate of Incorporation (the "Certificate of Incorporation").

     SECOND: The terms and provisions of this Certificate of Amendment have been
duly  adopted  in  accordance with Section 242 of the General Corporation Law of
the  State  of  Delaware  and  shall  become  effective  when  filed.

     THIRD:  Article IV of the Certificate of Incorporation is hereby amended by
deleting Section 1 thereof in its entirety and substituting the following in
lieu thereof:

     Section 1.  Authorized Shares.  The number of shares of capital stock of
                 -----------------
all classes which the Corporation shall have authority to issue is two hundred
fifty million (250,000,000) shares, of which two hundred twenty-five million
(225,000,000) shares shall be of a class designated as "common stock," with a
par value of one-third of one cent ($.00333) per share, and twenty-five million
(25,000,000) shares shall be of a class designated as "Preferred Stock," with a
par value of one-tenth of one cent ($.001) per share.


                                    * * * * *


<PAGE>
     IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to the Certificate of Incorporation to be executed by its duly
authorized officer as of this 12th day of April, 2004.


                                     Pure Cycle Corporation,
                                     a Delaware corporation

                                     By:  /s/Mark W. Harding
                                          ------------------------------
                                          Mark W. Harding
                                          President



<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>doc3.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
                        RIGHT OF FIRST REFUSAL AGREEMENT
                        --------------------------------


          THIS  RIGHT  OF  FIRST  REFUSAL  AGREEMENT  ("Agreement")  is made and
entered  into this 12th day of August, 1992, between INCO SECURITIES CORPORATION
("Corporation")  and  RICHARD F. MYERS, MARK W. HARDING, THOMAS P. CLARK, THOMAS
LAMM  and  ROWENA  ROGERS  (collectively  the  "Tenants").

                                 R E C I T A L S

          WHEREAS,  the  Tenants  have  each  acquired  an undivided interest in
certain  real  property  located  in  Arapahoe County as more fully described on
Exhibit  A  attached  hereto  and  made  a  part  hereof  ("Property");  and

          WHEREAS,  the Tenants have entered into that certain Tenancy in Common
Agreement  dated August 12, 1992 ("Tenancy in Common Agreement") whereby certain
rights  and  responsibilities  of  the  Tenants  are  set  forth;  and

          WHEREAS,  the Corporation has an interest in maintaining the integrity
and  potential  development  of  the  Property;  and

          WHEREAS, the Corporation and the Tenants, by this Agreement, desire to
set  forth  the  method  and  procedures  by  which the Corporation may exercise
certain  rights  in  connection  with  the  Property.

          NOW  THEREFORE,  in  consideration  of  the premises and of the mutual
benefits to accrue to each of the parties hereto, the parties have agreed and do
hereby  agree  as  follows:

          1.     Granting of Right of First Refusal.  In  consideration of their
                 ----------------------------------
receipt  of  $198,000  (the "First Refusal Premium") , the Tenants hereby grant,
for  a  period  of  99  years  from the date noted above, to the Corporation, in
accordance  with  the  terms  of  this  Agreement,  the exclusive right of first
refusal  on  the  Property,  such  right  of first refusal being limited only as
described  under  Section  4  below.

          2.     Procedures for Exercise of Right of First Refusal.
                 -------------------------------------------------

               a.     First Notice. In the event any Tenant shall desire to sell
                      ------------
all  or  any  portion  or otherwise transfer its interest in the Property to any
third  party  and  it  shall have received a bona fide offer therefore, which is
acceptable  to  it,  it  shall,  not  less than 60 days prior to the date of the
proposed  sale or transfer, give written notice of such offer to the Corporation
("First  Notice").  The  Notice  shall  state  that  a  bona fide offer has been
received  by  the  selling  Tenant  from  such third party and shall contain the
following  information:

                    (1)     The portion of the selling Tenant's interest  in the
Property offered  for  sale;

                    (2)     The  price,  terms,  and  conditions of the proposed
sale;


                                      -1-
<PAGE>
                    (3)     The name and address of the third party to whom such
Property interest is proposed to be sold. The First notice shall further contain
an  affirmative  offer by the selling Tenant granting the Corporation the option
to  purchase  the  selling  Tenant's  interest  in  the Property, or the portion
thereof  offered  for  sale,  upon  the  terms  and  conditions outlined in this
Agreement.

               b.     Purchase  Price.  Following receipt of the First Notice as
                      ---------------
outlined  in  a. above, the Corporation shall have the option, for the period of
60 calendar days from the date of such First Notice within which to exercise the
option  to  purchase  the  selling Tenant's interest in the Property offered for
sale. The Corporation may, during such 60 calendar day period, by written notice
("Second  Notice") to the selling Tenant, elect to purchase the selling Tenant's
Property  interest  either:

                    (1)     Upon the terms and conditions of the bona fide offer
received by the selling tenant as set forth in the First Notice; or

                    (2)     By  cash  purchase  of the selling Tenant's Property
interest  at  its appraised value, as determined by an M.A.I. appraiser mutually
chosen  by  the  selling  Tenant  and the Corporation. If an appraiser cannot be
agreed  upon within 15 business days of the First Notice, the selling Tenant and
the  Corporation  shall  each  choose  an  M.A.I. appraiser and those two M.A.I.
appraisers  shall  choose a third M.A.I. appraiser who shall provide the selling
Tenant  and  the  Corporation with the appraised value. If the M.A.I. appraisers
chosen  cannot  agree  on  a  third M.A.I. appraiser, the selling Tenant and the
Corporation  shall each obtain an M.A.I. appraisal and the appraised value shall
be  the  average of the two appraisals. If the Corporation requests an appraisal
of the Property and a single appraisal is done, the costs of the appraisal shall
be  borne  by  the  Corporation.  If  a second appraisal is required as outlined
above,  the costs of the appraisals shall be borne equally by the selling Tenant
and  the  Corporation.

               c.     Title Commitment. Selling Tenant shall, within 10 business
                      ----------------
days  after  sending  the  First  Notice, furnish to the Corporation, at selling
Tenant's  expense,  a  current  commitment  ("Commitment")  for an owner's title
insurance policy in an amount equal to the price in the First Notice (the amount
to  be  adjusted  to  the actual Purchase Price when that is determined) showing
merchantable  title  to be vested in selling Tenant, free and clear of all liens
and encumbrances, subject only to a lien for real property taxes for the year of
closing,  payable  in  the  following  year,  and  building,  zoning,  and other
applicable  ordinances  and regulations of Arapahoe County. The Commitment shall
be accompanied by copies of all instruments listed in the schedule of exceptions
thereto  and  any recorded instruments described in the schedule of requirements
thereto.

               d.     Title  Defects.  Within  20  business  days  after  the
                      --------------
Corporation's  receipt  of  the Commitment (together with copies of the recorded
instruments  referred  to  therein),  the  Corporation shall give selling Tenant
notice  of  all  title defects shown thereon or otherwise determined to exist by
the  Corporation,  specifying  which  defects  the  Corporation  consent  to  as
permitted  exceptions and which defects are not permitted exceptions. Failure to
give  notice  of title defects as set forth herein shall be a waiver thereof. In
the event the Corporation gives the selling Tenant notice of title defects which
are  not  permitted  exceptions,  the selling Tenant shall, at its sole cost and
expense,  cure  such  defects, which cure may, if acceptable to the Corporation,


                                      -2-
<PAGE>
include  the obligation to obtain title insurance protection for the Corporation
and  its  successors  and  to  pay  any  additional  premium  or  cost  for such
protection. If each of said defects is not cured by the date of Closing (as such
time may be extended by the Corporation) , the Corporation may at its option (i)
terminate  its  decision  to exercise its right of first refusal, or (ii) accept
the uncured defect as a permitted exception with a commensurate reduction in the
purchase  price  to  cover  the  cost  of curing the defect, or if the defect is
incurable,  to  reflect  the  reduction  in the value of the Property due to the
defect.  In  the  event  of  such  termination,  all  other  obligations  of the
Corporation  and  the  selling  Tenant  under  that  particular  exercise of the
Corporation's  right  of  first  refusal  shall  be  terminated.

               e.     Closing.  Following  the Second Notice, the closing on the
                      -------
transfer  of  the  Property  interest from the selling Tenant to the Corporation
("Closing")  shall  take  place  at  the  offices  of  the Corporation within 10
business  days  of  the receipt of the Second Notice by the selling Tenant. Such
transfer  shall  occur  by  special  warranty  deed.  As  soon as possible after
Closing,  selling  Tenant  shall  cause  to  be delivered to the Corporation, at
selling  Tenant's  cost  and expense, an owner's title insurance policy insuring
the title of the Corporation in accordance with the Commitment. All taxes, fees,
and  special  assessments  shall  be  prorated  to  the  date  of  Closing.

               f.     Credit Against Purchase Price.  Any purchase of a Tenant's
                      -----------------------------
Property interest by the Corporation, whether under this Agreement or otherwise,
shall  include  a  credit  against  the  purchase  price equal to the percentage
interest  in  the  Property  being  purchased  multiplied  by the sum of (1) any
subdivision  costs expended by the Corporation pursuant to Section 5. below, and
(2)  80%  of  the  First  Refusal Premium. In no event, however, may such credit
exceed  the  purchase  price.

               g.     Direct Purchase by the Corporation.  Except in the case of
                      ----------------------------------
death, bankruptcy or incompetence, which is subject to the provisions of Section
9.c  of the Tenancy in Common Agreement, nothing contained herein shall prohibit
any  Tenant  desiring  to  sell  all  or  any  portion or otherwise transfer its
interest  in  the Property from separately negotiating and selling such Property
interest  to  the  Corporation  directly, regardless of the existence of a third
party  offer.

          3.     Non-Exercise  or  Default.  In  the  event that the Corporation
                 -------------------------
elects  not  to  exercise  the  option  to  purchase the Property interest being
offered  or  defaults  in  its  obligations under this Agreement, selling Tenant
shall  have  the  right  to  sell  and  convey  such interest to the third party
strictly  in accordance with the terms of the Notice provided to the Corporation
pursuant to this Agreement. If no such conveyance is made within the 60 calendar
day  period  following the expiration of the option period, a new notice of sale
shall  be  required  in the manner provided herein. In the event the Corporation
fails  to  close  the  purchase of the selling Tenant's interest in the Property
after  properly notifying the selling Tenant of its agreement to so purchase and
after  full  compliance by selling Tenant of its obligations herein, the selling
Tenant may either enforce specific performance against the Corporation, or treat
such  failure  to  close  as  a  default  by  the  Corporation,  and immediately
re-institute  its  rights  under this paragraph allowing it to sell the Property
interest  to  the  third  party, with no further duty to grant the Corporation a
right  of  first  refusal  on  the  Property  offered  for  sale.


                                      -3-
<PAGE>
          4.     Limitation  on  Scope  of  Right  of  First  Refusal.  The
                 ----------------------------------------------------
Corporation's  right  of  first refusal under this Agreement shall be limited to
those  events involving bona fide offers received by Tenants from third parties.
The  right  of  first  refusal hereby granted is not effective in the event of a
transfer to a Tenant or Tenants as a result of a Tenant's death, incompetence or
bankruptcy,  such  right  of first refusal having been previously granted to the
Tenants  pursuant to the Tenancy in Common Agreement. The right of first refusal
hereby granted shall apply, however, if no Tenant exercises the applicable right
of  first  refusal  so  granted  under  the  Tenancy  in  Common  Agreement.

          5.     Subdivision Rights.  As  described  in  the  Tenancy  in Common
                 ------------------
Agreement,  the  parties  hereto  acknowledge  that  it  is  desirable to pursue
subdivision  of  the  Property, but that the funds required for such subdivision
may  be substantial. In the event that the Corporation guarantees payment of and
pays  the  costs  therefore,  Tenants  agree  to  cooperate  in  the subdivision
procedures  and  to provide such approvals as may be necessary to accomplish the
Property's  subdivision in the manner recommended by the Corporation. If, in the
reasonable  opinion  of  the  Corporation,  any  Tenant  does  not  provide such
cooperation and those Tenants controlling greater than 50% of the Property agree
in  writing,  the  Corporation  may  notify  the  non-cooperating  Tenant of the
Corporation's  desire  to  purchase  and  may  purchase  such  Tenant's Property
interest  in  the  manner  described  below.  The  Tenants  also agree that upon
subdivision  of  the Property, and payment by the Corporation of all subdivision
costs,  they  will sell to the Corporation their interests in any portion of the
Property  requested  by  the  Corporation  so long as the total area sold to the
Corporation  its  successors  or  assigns  pursuant  to this provision, does not
constitute  more than 80% of the Property's acreage. The price and terms for any
purchase  of  the Property, or portion thereof, under this Section 5 shall be as
outlined in 2.b.(2), 2.c., 2.d., 2.e., 2.f. and 2.g. above. For purposes of this
Section  5 only, the First Notice referenced in 2.b.(2) shall mean the notice to
the  non-cooperating  or  selling  Tenant  or  Tenants  as  described  herein.

          6.     Covenants Running  With  the  Land.  This Agreement and each of
                 ----------------------------------
the  provisions  hereof  touch  and  concern the Property and shall be covenants
running  with  the  land,  shall  be  binding  on  the  parties hereto and their
respective  successors as owners or interest in the Property, and shall inure to
the  benefit  of  and  be enforceable by the parties hereto and their respective
successors  as  owners  of  the  Property and interests therein. Any transfer or
encumbrance  of the Property shall be subject to the terms and provisions hereof
and to the rights and obligations of the parties hereto. Any transfer, lease, or
encumbrance  of  any  interest in the Property shall be subject to the terms and
conditions  of  this  Agreement  and  the rights and obligations created hereby.

          7.     Remedies.  In  addition  to  any  remedies  provided  bv  this
                 --------
Agreement, the parties hereto may enforce this Agreement by specific performance
or  any  other  method  allowed  by  law.

          8.     Notices. Any notice required or permitted to be given hereunder
                 -------
shall  be  personally delivered or sent by first class mail, postage pre-paid to
the  address  of the party set forth below and shall be deemed given on the date
of  delivery  or  three  business  days  after the date of mailing, whichever is
earlier.  A party's address for notices may be changed and a new party's address
may  be  added  by  written  notice to all other parties in accordance with this
paragraph.

          INCO Securities Corporation
          c/c George Middlemas
          One New York Plaza
          New York, NY  10004

          Thomas Lamm
          7942 Fairview Rd
          Boulder
          Colorado  80302

          Mark W. Harding
          1825 S. Downing
          Denver, CO  80210
          (303) 744-3436

          Thomas P. Clark
          803 29th Street, #502
          Boulder, CO  80303
          (303) 443-8170

          Richard F. Myers
          Western Aggregate, Inc.
          11728 Highway 93
          Boulder, CO  80303

          Rowena Rogers

          -----------------------

          -----------------------

          9.     Governing Law.  This Agreement shall be governed by the laws of
                 -------------
the State  of  Colorado.

          10.     Modification.  This Agreement may not be amended  or modified,
                  ------------
except in writing executed by all of the parties to this Agreement.

          11.     Severability Provisions. In the event that any portion of this
                  ------------------------
Agreement  shall  be  declared invalid by order, decree, or judgment of a court,
this  Agreement  shall  be  construed  as  if such portion had not been inserted
herein,  except when such construction would operate as an undue hardship on any
party  hereto  or  constitute  substantial deviation from the general intent and
purpose  of  the  parties  that  are  reflected  in  this  Agreement.

          12.     Assignment. Except as otherwise provided in this Agreement, no
                  ----------
assignment  may  be  made of this Agreement to any other party by Tenant without
the  express  written  consent  of  all  parties  hereto.  Any  such  attempt to
assignment  shall  be determined to be null and void and of no force and affect.



                                      -4-
<PAGE>
          IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed this
Agreement  on  the  date  noted  above.

ATTEST:                                      INCO SECURITIES CORPORATION

                                             By:  /s/ Richard Guido
- --------------------------------                 -----------------------------
                                                      Vice President

STATE OF COLORADO          )
                           )  ss.
COUNTY OF                  )

          The  foregoing  instrument was acknowledged before me this 12th day of
August,  1992 by Richard Guido as Vice President of INCO Securities Corporation.

          WITNESS my hand and official seal.

          My commission expires:              Jan. 17, 1993
                                          ---------------------

                                          /s/ Linda M. Vumbaco
                                          ---------------------
                                          Notary Public


                             /s/ Thomas Lamm
                             --------------------------
                             Thomas Lamm

STATE OF COLORADO          )
                           )  ss.
COUNTY OF                  )

          The  foregoing  instrument was acknowledged before me this 12th day of
August,  1992  by  Thomas  Lamm.

          WITNESS my hand and official seal.

          My commission expires:              Jan. 17, 1993
                                          ---------------------

                                          /s/ Linda M. Vumbaco
                                          ---------------------
                                          Notary Public



                             /s/ Mark W. Harding
                             --------------------------
                             Mark W. Harding

STATE OF COLORADO          )
                           )  ss.
COUNTY OF                  )


                                      -5-
<PAGE>
          The  foregoing  instrument was acknowledged before me this 12th day of
August,  1992  by  Mark  W.  Harding.

          WITNESS  my  hand  and  official  seal.

          My commission expires:              Jan. 17, 1993
                                          ---------------------

                                          /s/ Linda M. Vumbaco
                                          ---------------------
                                          Notary Public



                             /s/ Thomas P. Clark
                             --------------------------
                             Thomas P. Clark

STATE OF COLORADO          )
                           )  ss.
COUNTY OF                  )

          The  foregoing  instrument was acknowledged before me this 12th day of
August,  1992  by  Thomas  P.  Clark.

          WITNESS  my  hand  and  official  seal.

          My commission expires:              Jan. 17, 1993
                                          ---------------------

                                          /s/ Linda M. Vumbaco
                                          ---------------------
                                          Notary Public



                             /s/ Richard F. Meyers
                             --------------------------
                             Richard F. Meyers

STATE OF COLORADO          )
                           )  ss.
COUNTY OF                  )

          The  foregoing  instrument was acknowledged before me this 12th day of
August,  1992  by  Richard  F.  Myers.

          WITNESS  my  hand  and  official  seal.

          My commission expires:              Jan. 17, 1993
                                          ---------------------



                                      -6-
<PAGE>
                                          /s/ Linda M. Vumbaco
                                          ---------------------
                                          Notary Public


                             /s/ Rowena Rogers by Richard Myers Attorney In Fact
                             ---------------------------------------------------
                             Rowena Rogers

STATE OF COLORADO          )
                           )  ss.
COUNTY OF                  )

          The  foregoing  instrument was acknowledged before me this 12th day of
August,  1992  by  Rowena  Rogers.

          WITNESS my hand and official seal.

          My commission expires:              Jan. 17, 1993
                                          ---------------------

                                          /s/ Linda M. Vumbaco
                                          ---------------------
                                          Notary Public


                                      -7-
<PAGE>
                                   EXHIBIT "A"



                        NW 1/4 of SW 1/4 of Section 11,
                        Township 5 South, Range 64 West
                        of the 6th P.M.



                                      -8-
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>5
<FILENAME>doc4.txt
<DESCRIPTION>EXHIBIT 10.9
<TEXT>

                             WATER SERVICE AGREEMENT

                                     for the

                                  SKY RANCH PUD


     THIS  AGREEMENT  is  entered  into  this ______ day of October, 2003 by and
between  AIRPARK  METROPOLITAN  DISTRICT,  a  quasi-municipal  corporation  and
political subdivision of the State of Colorado ("AMD"); ICON INVESTORS I, LLC, a
Colorado  limited  liability  company  ("DEVELOPER");  PURE CYCLE CORPORATION, a
Delaware  corporation  ("PURECYCLE");  and  RANGEVIEW  METROPOLITAN  DISTRICT, a
quasi-municipal  corporation and political subdivision of the State of Colorado,
acting  by  and  through  its  Water  Activity  Enterprise  ("RANGEVIEW").

                                    RECITALS

     WHEREAS,  urban  density  development  in  general  accordance  with  the
"Preliminary  Development  Plan"  (Arapahoe County Case No. Z01-010) is proposed
for  the  Sky  Ranch  PUD ("Property").  The Property occupies about 772.3 acres
generally located south of Interstate-70 frontage road, north of Alameda Avenue,
west  of  Hayesmont  Road,  and east of Powhaton Road in unincorporated Arapahoe
County  Colorado;  as  more specifically described in Exhibit A attached hereto.

     WHEREAS,  the  Property can be so developed only if adequate and sufficient
domestic  water  service  is  provided  thereto.

     WHEREAS,  the  Property  lies  within  the boundaries of AMD and one of the
services  of  AMD  is  to  provide  domestic  water  service.

     WHEREAS,  in  order  to efficiently provide water service to the  Property,
AMD and DEVELOPER desire to enter into an agreement with RANGEVIEW and PURECYCLE
to  finance,  acquire,  design,  construct,  operate  and maintain certain water
facilities  to  serve  the  Property,  under  the  terms  set  forth  below.

     WHEREAS,  subject  to the terms and conditions of the "Amended and Restated
Lease  Agreement"  ("Lease")  dated  April 4, 1996 between the State of Colorado
Board  of  Land Commissioners ("Land Board") and RANGEVIEW and the Agreement for
Sale  of  Export  Water  ("Export Water Agreement") dated April 11, 1996 between
PURECYCLE  and  RANGEVIEW,  the  Land  Board  conveyed  to  RANGEVIEW,  which
subsequently  conveyed  to  PURECYCLE,  certain  rights  to  surface  water  and
groundwater  on  and beneath the Land Board's property known as the Lowry Range,
which  water  rights are more specifically outlined in Section 6.1 of the Lease.

     WHEREAS,  PURECYCLE  serves  as  the  service  provider  for  RANGEVIEW.


                                                                    Page 1 of 55
<PAGE>
     WHEREAS, pursuant to Section 8.3 of the Lease, RANGEVIEW and PURECYCLE have
the  right  to  provide a water delivery system for use by customers both on and
off  the  Lowry  Range,  which  system  shall be developed pursuant to a unified
master  plan.

     WHEREAS,  facilities  developed  for  use  by customers off the Lowry Range
shall  be  integrated  with facilities developed for use by customers within the
Lowry  Range.

     WHEREAS,  subject  to  the  terms and conditions of an Option Agreement for
Export  Water  Service  anticipated to be entered into between PURECYCLE and the
DEVELOPER  attached  hereto  as Exhibit F,  PURECYCLE desires to reserve certain
Export  Water  Rights sufficient to provide water service to the Property at the
development  densities  anticipated  for  the  Property.

     WHEREAS,  PURECYCLE  and  RANGEVIEW are capable of providing domestic water
service  to  the  Property  subject  to  the  terms and conditions of the Lease.

     WHEREAS,  in  order  to  induce  RANGEVIEW and PURECYCLE to cause the Water
Facilities  to  be  constructed on a schedule which will accommodate anticipated
development  of  the  Property,  AMD  and  DEVELOPER  desire to participate with
RANGEVIEW  and  PURECYCLE  as  provided  herein  with  financing  and  otherwise
promoting  the  construction  of  such  Water  Facilities.

     WHEREAS,  to  make  water  service  available,  RANGEVIEW and PURECYCLE are
relying  in  part  upon AMD's and DEVELOPER's timely payment of certain fees and
charges  and  also  on  their  timely  execution  of  other  obligations, all as
identified  in  this  Agreement.

     WHEREAS,  the  Water  Facilities  will benefit and enhance the value of the
Property.

     WHEREAS,  the  execution  of this Agreement will serve a public purpose and
promote  the health, safety, prosperity and general welfare by providing for the
planned  and  orderly  provision  of  domestic  water  service.

     WHEREAS,  AMD  intends to provide a wastewater treatment plant to serve the
development  of  the  Property.

     WHEREAS,  AMD  will  provide wastewater treatment services to RANGEVIEW and
PURECYCLE  as  well  as  allowing  RANGEVIEW and PURECYCLE to use the wastewater
effluent  from  the  wastewater  treatment  plant  for  irrigation  purposes.

     NOW  THEREFORE, in consideration of the above recitals, the mutual promises
and  covenants  herein contained, and other good and valuable consideration, the
receipt  and  sufficiency  of  which are hereby acknowledged, the parties hereby
agree  as  follows:


                                                                    Page 2 of 55
<PAGE>
                                    ARTICLE 1
                         DEFINITIONS AND INTERPRETATIONS
                         -------------------------------

1.01  Definitions.  As  used  herein unless the context indicates otherwise, the
      -----------
words  defined below and capitalized throughout the text of this Agreement shall
have  the  respective  meanings  set  forth  below:

     (a)  Agreement:  This  Water  Service  Agreement  and any amendments hereto
          ---------
     made  in  accordance  herewith.

     (b)  AMD:  Airpark  Metropolitan  District,  a party to this Agreement, and
          ---
     its  employees,  agents,  officers,  directors,  successors  and  assigns.

     (c)  Corporation Stop:  The valve which     connects to a water main by its
          ----------------
     upstream  connection  and  to  the Customer's water service pipeline by its
     downstream  connection.

     (d)  Customer:  Customer  shall  refer  to  an  end  user  of  water  from
          --------
     PURECYCLE's  Water  Facilities  whose property and place of use are located
     within  the  Property.

     (e)  Dedicated  Groundwater:  443  acre-feet  per  year  of  water from the
          ----------------------
     Arapahoe  and Laramie-Fox Hills aquifers underlying the Property as decreed
     in  Case  No. 85CW157 in the Water Court for Colorado, Water Division No. 1
     and  which  DEVELOPER  is  obligated  to  dedicate to PURECYCLE pursuant to
     Section  2.01(e)  herein.

     (f)  DEVELOPER:  ICON  INVESTORS I, LLC, a party to this Agreement, and its
          ---------
     employees,  agents,  officers,  directors,  successors  and  assigns.

     (g)     Effective Date:  The Effective Date of this Agreement as defined in
             --------------
     Section  10.01  herein.

     (h)  Equivalent  Residential Unit (EQR):  The measure of demand placed upon
          ----------------------------------
     the  Water  Facilities  by  a  typical  and  average single-family detached
     residence,  as  determined  under  RANGEVIEW's Rules and Regulations and as
     further  described  in  Section  2.01(d).

     (i)  Export  Water:  Water  from  the  Lowry  Range  that PURECYCLE can use
          -------------
     outside  of  the  Lowry Range service area, as more specifically defined in
     Section  6.1  of  the  Lease.

     (j)  Export Water Agreement:  The Agreement for Sale of Export Water by and
          ----------------------
     among  RANGEVIEW  and  PURECYCLE  executed  April  11,  1996.

     (k)  Export  Water  Deed:  The  Bargain and Sale Deed among the Land Board,
          -------------------
     RANGEVIEW  and  PURECYCLE  executed April 11, 1996, as recorded on July 31,
     1996  at Reception No. A6097803 in the Arapahoe County Clerk and Recorder's
     Office,  together  with  any  and  all  amendments  thereto.

     (l)  Lease:  The Amended and Restated Lease Agreement between RANGEVIEW and
          -----
     the  State  of  Colorado,  acting  by and through the Land Board (Lease No.
     S-37280), executed April 4, 1996, as recorded on July 31, 1996 at Reception
     No.  A6097802  in  the


                                                                    Page 3 of 55
<PAGE>
     Arapahoe  County  Clerk  and  Recorder's  Office, together with any and all
     amendments  thereto.

     (m)  Option  Agreement:  The  Option  Agreement  for  Export  Water Service
          ------------------
     attached  hereto  as  Exhibit  F  and  referenced  in  Section 2.01(e)(ii).

     (n)  Person:  Any  individual,  corporation,  joint venture, estate, trust,
          ------
     partnership,  association  or  other  legal  entity other than PURECYCLE or
     RANGEVIEW.

     (o)  PURECYCLE:  Pure Cycle Corporation, a party to this Agreement, and its
          ---------
     employees,  agents,  officers,  directors,  successors,  and  assigns.

     (p)  Property:  The  real  property  known  as  the  "Sky Ranch PUD" and as
          --------
     specifically  described  in  Exhibit  A  hereto.

     (q)  RANGEVIEW:  Rangeview  Metropolitan  District,  a  party  to  this
          ---------
     Agreement,  and its employees, agents, officers, directors, successors, and
     assigns.

     (r)  Rules  and  Regulations:  The  Rules  and  Regulations  adopted  by
          -----------------------
     RANGEVIEW,  as  they  may  be  amended  from  time  to  time.

     (s)  Water  Facilities:  Those  facilities  required  for  the  production,
          -----------------
     treatment,  storage,  and delivery of both potable and irrigation water to,
     on,  or  for  the  Property,  all as more particularly described hereunder.

     (t)  Water  Tap:  The  written  authorization,  in the form of sequentially
          ----------
     numbered  tap  licenses  issued  by  PURECYCLE,  to  connect  to  the Water
     Facilities,  as  governed  by  RANGEVIEW's  Rules  and  Regulations. Unless
     otherwise  provided  for herein, a Water Tap shall be assumed to be for one
     EQR.

     (u)  Water  Tap  Fee:  Collective reference to the Water System Development
          ---------------
     Charge  and  the  Water Resource Charge, both as defined and established in
     Article  12  of  RANGEVIEW's  Rules  and  Regulations.

1.02  Interpretation.  In this Agreement, unless the context otherwise requires:
      --------------

     (a)  The  terms "herein," "hereunder," "hereby," "hereto," "hereof" and any
     similar  term, refer to this Agreement as a whole and not to any particular
     Article,  Section or subdivision hereof; the term "heretofore" means before
     the  date  of execution of this Agreement; the term "now" means at the date
     of  execution  of  this Agreement; and the term "hereafter" means after the
     date  of  execution  of  this  Agreement.

     (b)  All  definitions,  terms and words shall include both the singular and
     the  plural.

     (c)  Words  of  the  masculine  gender  include  correlative  words  of the
     feminine  and  neuter  genders,  and  words  importing  the singular number
     include  the  plural  number  and  vice  versa.


                                                                    Page 4 of 55
<PAGE>
     (d)  The  captions  or  headings of this Agreement are for convenience only
     and  in  no  way  define,  limit  or  describe  the  scope or intent of any
     provision,  Article  or  Section  of  this  Agreement.


                                    ARTICLE 2
                                  WATER SERVICE
                                  -------------

2.01  Conditions  of  Service.  PURECYCLE  and  RANGEVIEW agree to provide water
      -----------------------
service  to  the Property subject to the terms and conditions of this Agreement.
The  Water  Facilities  will include a "dual pipe distribution system" that will
provide  both  potable  water  and  irrigation  water  service  to the Property.

     (a)  Development  of  the  Property  is anticipated to occur in phases over
     several  years. Construction of Water Facilities will also occur in phases,
     as  mutually  determined by PURECYCLE, RANGEVIEW, the DEVELOPER and AMD, to
     reasonably  meet  the  anticipated  water  demands  of the Property and the
     service  for  Water Taps as outlined in Exhibit C. Certain water facilities
     will  be  constructed  by PURECYCLE, RANGEVIEW and AMD as more specifically
     described  herein.

     (b)  Water service to the Property hereunder shall be generally governed by
     and  subject to RANGEVIEW's Rules and Regulations (providing inter alia for
     rates,  fees  and charges), which are incorporated herein by reference, and
     to  the  laws,  ordinances  and regulations of all federal, state and local
     governmental  entities  and  agencies  having  jurisdiction.  PURECYCLE
     acknowledges  that  the  Water Tap Fees, user charges, service charges, and
     any  other rates, fees, tolls, and charges imposed in connection with water
     service  to  the  Property  provided  by PURECYCLE in connection therewith,
     except  for  the  Special Facilities Surcharge described in Section 4.03(b)
     below, shall be subject to Section 8.2 of the Lease. RANGEVIEW acknowledges
     that,  to  the  extent  DEVELOPER or the Customers pay fees to PURECYCLE in
     accordance  with  the  fee  schedule  set  forth in the RANGEVIEW Rules and
     Regulations,  that  no  additional  fees  shall  be imposed or collected by
     RANGEVIEW.

     (c)  Water  service  to  the Property hereunder is subject to the Lease and
     the Export Water Deed. If any provision of this Agreement creates or causes
     a breach or violation of the Lease or of the Export Water Deed, the parties
     shall  work  together  to revise such provision so that it no longer causes
     such  breach  or  violation.

     (d)  RANGEVIEW's  Rules  and  Regulations  establish  the  use  of EQRs for
     determining the impact of different water customers on the Water Facilities
     and for assessing rates and charges. To the extent that they apply to water
     service  to  the  Property, the standards for determination of an EQR shall
     not  be changed during the term of this Agreement without the prior written
     consent  of  AMD,  except  that  AMD's consent shall not be required in the
     event that development of the Property is not substantially consistent with
     the  Sky  Ranch  Preliminary  Development Plan, Arapahoe County Case Number
     Z01-010  ("PDP").


                                                                    Page 5 of 55
<PAGE>
     (e)  The  DEVELOPER and/or AMD will secure sufficient water rights to serve
     the  proposed  development  of  the  Property  as  follows:

          (i)  DEVELOPER shall acquire, transfer and convey, or otherwise effect
               the  transfer  and  conveyance,  to  PURECYCLE  of  good  and
               merchantable  title  without  encumbrances  for  the  Dedicated
               Groundwater  underlying  the Property by a conveyance in the form
               of  the  "Water Rights Special Warranty Deed" attached as Exhibit
               D.  DEVELOPER shall convey the Dedicated Groundwater to PURECYCLE
               upon  DEVELOPER's  request for construction water as provided for
               in  Exhibit  C.

          (ii) In  order  to  assure  sufficient  and adequate amounts of Export
               Water  to serve reasonable demands as identified in Exhibit C for
               the  Property,  PURECYCLE shall grant the DEVELOPER an option for
               obtaining  water  service  utilizing Export Water pursuant to the
               Option  Agreement attached hereto as Exhibit F. In the event that
               the  DEVELOPER  exercises  the  Option  for  export water service
               ("Option")  pursuant to the Option Agreement, the DEVELOPER shall
               purchase  Water  Taps and receive such service in accordance with
               the  terms  and  conditions  of  this  Agreement.  The  terms and
               conditions  of  this  Agreement  shall  be deemed incorporated by
               reference into the Option Agreement except to the extent they are
               contrary  to  or  inapplicable to the terms and conditions of the
               Option  Agreement.  In  the  event  that  the  DEVELOPER does not
               exercise the Option, this Agreement shall be deemed effective for
               water  service  only  up  to  1,500  EQRs.

          (iii) DEVELOPER  shall  be  entitled  to  receive  a  credit  for  the
               Dedicated  Ground  Water  in  accordance  with  Section  4.03(a).

     (f)  PURECYCLE  shall  cause  the Water Facilities to be designed to comply
     with applicable requirements of the federal Safe Drinking Water Act or such
     other  similar  or successor laws (the "Safe Drinking Water Act") in effect
     at  the  time  the Water Facilities are constructed. In addition, PURECYCLE
     shall  operate  and  maintain  the  Water  Facilities,  and  to  the extent
     necessary,  modify  or  upgrade  the  Water Facilities, such that the water
     provided through the Water Facilities complies with the Safe Drinking Water
     Act.

     (g)  The  responsibilities for the construction, operation, and maintenance
     and  the  ownership  and/or transfer of ownership, for the Water Facilities
     generally  are  set  out  in  Article  3  below.


                                    ARTICLE 3
                                WATER FACILITIES
                                ----------------

3.01  Classification  of  Water Facilities.  For the purposes of this Agreement,
      ------------------------------------
Water  Facilities  are  segregated  into  four  categories:  Wholesale,  Retail,
Customer,  and  Special.


                                                                    Page 6 of 55
<PAGE>
     (a)  Wholesale  Facilities.  Wholesale  Facilities  consist of water wells,
          ---------------------
     well  water  collection  pipelines,  water  treatment plants, water storage
     tanks,  water  storage  reservoirs,  major  water  pumping  stations, water
     transmission  pipelines,  and  related  appurtenances,  all  except  as may
     otherwise  be  identified  as  Retail  Facilities,  Special  Facilities, or
     Customer  Facilities  below.  PURECYCLE shall own the Wholesale Facilities.
     PURECYCLE  shall  have  direct responsibility for the design, construction,
     operation  and  maintenance  of the Wholesale Facilities in accordance with
     all  state  and  local governmental requirements. DEVELOPER shall convey or
     otherwise  have  transferred  to  PURECYCLE  fee  title  to  or  easements
     acceptable  to  PURECYCLE  for  property  required  for the Wholesale Water
     Facilities  to be located on the Property, including but not limited to the
     following:

          (i)  The  pump  station/water  tank  site  identified as the 3.4-acre,
               planning  area A19, public facility tract on Sheet 5 of 23 of the
               PDP.

          (ii) A  northern  and  a  southern  wellfield allowing for completing,
               operating, maintaining, and replacing the wells described in Case
               No. 85CW157 in the Water Court for Colorado, Water Division No. 1
               The  northern well field is situated in planning area A8 as shown
               on  the PDP. The southern well field is situated in planning area
               D10  as  shown  on the PDP. The dedicated area for each wellfield
               will  be  about one acre. PURECYCLE shall work cooperatively with
               DEVELOPER  to  establish  acceptable  legal  boundaries  for each
               wellfield,  with approval by the DEVELOPER not being unreasonably
               withheld.

     Should  DEVELOPER  not  have or choose not to provide suitable property for
     the Water Facilities, DEVELOPER shall reimburse PURECYCLE for its costs for
     acquiring  suitable  property as an additional designated Special Facility,
     as  is  anticipated for the effluent reservoir site in Section 3.01(d)(ii).

     (b)  Retail  Facilities.  Retail Facilities shall be the water distribution
          ------------------
     system  to  transport  potable  and irrigation water from connection points
     with  the  Wholesale Facilities to all areas of use on the Property. Retail
     Facilities  include,  and  are  limited  to,  water  distribution pipelines
     ("Water  Mains"), valves, fire hydrants, and other appurtenances related to
     such  distribution  system.  All  Water Mains located on or adjacent to the
     Property  shall  be  considered Retail Facilities. AMD shall be responsible
     for the design and construction of the Retail Facilities in accordance with
     the  minimum design standards and other provisions contained in RANGEVIEW's
     Rules  and  Regulations.  Any  changes to RANGEVIEW's Rules and Regulations
     shall  be  applied  consistently to all of RANGEVIEW's customers and to the
     Property  and  such changes will not be applied retroactively. AMD shall be
     solely  responsible  for  all  costs for the design and construction of the
     Retail  Facilities independent from any fees, rates and charges assessed by
     RANGEVIEW.  Upon completion of construction, and prior to being placed into
     operation,  AMD  shall dedicate and transfer title to all Retail Facilities
     to  RANGEVIEW  in  accordance  with  Article  5  of  RANGEVIEW's  Rules and
     Regulations.  RANGEVIEW's  obligations for operation and maintenance of the
     Retail  Facilities  shall commence upon its "conditional acceptance" of the
     Retail  Facilities.  RANGEVIEW's


                                                                    Page 7 of 55
<PAGE>
     obligations  for  repair  or  replacement  of  defective work of the Retail
     Facilities  shall  commence  upon  its  "final  acceptance"  of  the Retail
     Facilities. The terms "conditional acceptance" and "final acceptance" shall
     have  the  meanings  provided  for  in  Article  5 of RANGEVIEW's Rules and
     Regulations.

     (c)  Customer  Facilities.   Customer  Facilities  consist of water service
          --------------------
     pipelines,  piping,  meters,  plumbing,  and  related appurtenances used to
     convey  water  from  a  Water Main to an individual Customer, including the
     physical  connection  of a service line to a Water Main. The dividing point
     between the Water Main and the Customer Facilities is the downstream end of
     the  Corporation  Stop.  Customer  Facilities  shall  be  constructed  in
     accordance  with  the  requirements  contained  in  RANGEVIEW's  Rules  and
     Regulations  and  with  applicable  building  codes.

     (d)  Special  Facilities.  Special  Facilities  are  specified  facilities
          -------------------
     required  to  provide  water  service  to  the  Property  but which are not
     considered Wholesale Facilities, Retail Facilities, or Customer Facilities.
     Responsibility  for  funding, planning, design, construction, operation and
     maintenance of the Special Facilities are set out below. Special Facilities
     anticipated  to  serve  the  Property  consist  of, and are limited to, the
     following:

          (i)    Special Facility "A" includes extraordinary facilities required
               to  allow  for the interim use of the irrigation Water Facilities
               for  potable  water  service  to  accommodate  the  Property's
               development  schedule  and to allow for the deferred construction
               of  an  Offsite  Water  Transmission  Pipeline  and certain other
               facilities. Funding for Special Facility "A" shall be pursuant to
               Section  4.03  below.  PURECYCLE  shall  own  and  shall  assume
               responsibilities  for  the  planning,  design,  construction,
               operation  and  maintenance  of  Special  Facility  "A".

          (ii)   Special Facility  "B"  is an approximately 18-acre site for the
               proposed  effluent  storage  reservoir.  Although  the  reservoir
               itself  is considered a Wholesale Facility, the property on which
               the  reservoir  is to be located is considered a Special Facility
               since  AMD  and  DEVELOPER represent they do not currently have a
               suitable  site  on the Property to dedicate to RANGEVIEW. Funding
               for Special Facility "B" shall be pursuant to Section 4.04 below.
               RANGEVIEW  shall  assume  responsibilities for the planning, site
               selection,  and  acquisition  of  Special Facility "B". RANGEVIEW
               shall  own  and  hold the Property interests for Special Facility
               "B". RANGEVIEW shall request AMD's and DEVELOPER's approval prior
               to entering into a purchase contract for the reservoir site, with
               said  approval  not  being  unreasonably  withheld.

          (iii)  Special Facility "C" is the Offsite Water Transmission Pipeline
               that  will  transport Export Water to the Property. Said pipeline
               is  to  consist of an 18" (or larger) water transmission pipeline
               and  appurtenances  located  outside of and not directly abutting
               the  Property.  Special  Facility  "C"  shall  be scheduled to be
               complete  and  operational  by the time that Water Taps for 1,500
               EQRs are purchased for the Property. Funding for Special Facility
               "C"  shall be pursuant to Section 4.03 below. PURECYCLE shall own
               and  shall  assume  responsibilities


                                                                    Page 8 of 55
<PAGE>
               for the planning, design, construction, operation and maintenance
               of  Special  Facility  "C". AMD shall cooperate with RANGEVIEW in
               obtaining  rights-of-way  outside  of  its  boundaries  as may be
               necessary  for  construction  of  the  Offsite Water Transmission
               Pipeline,  which  may  include  exercising  the  power of eminent
               domain.

          (iv)   Special Facility "D" includes extraordinary facilities required
               by  PURECYCLE  to  provide  effluent  water  to  the Property for
               irrigation  purposes.  Special Facility "D" shall be scheduled to
               be  complete  and operational by the applicable date shown in the
               "Special  Facilities  Schedule" in Exhibit C. Funding for Special
               Facility  "D"  shall be pursuant to Section 4.03 below. PURECYCLE
               shall  own  and  shall  assume responsibilities for the planning,
               design,  construction,  operation  and  maintenance  of  Special
               Facility  "D".

3.02  Construction of Wholesale and Special Facilities.  RANGEVIEW and PURECYCLE
      ------------------------------------------------
shall  use  all reasonable efforts to cause the Wholesale Facilities and Special
Facilities,  having sufficient capacity to meet the demands described in Exhibit
C, to be permitted, designed, acquired, constructed, installed and made ready to
be  placed  into  service  according  with the schedule also shown in Exhibit C.
RANGEVIEW's  and  PURECYCLE's  obligations  shall  be  contingent  on the timely
payment  of  fees,  rates  and  charges  and  on  the  timely execution of other
obligations  by  AMD  and  DEVELOPER  as  identified  in  this  Agreement.

3.03  Regulatory  Approval  Contingencies.  All  parties  to  this  Agreement
      -----------------------------------
acknowledge that the design, construction and operation of the Water Facilities,
     ----
the  Special  Facilities,  and  the  wastewater  facilities  require permits and
approvals  from  regulatory  entities  including the State of Colorado, Arapahoe
County,  Tri-County  Health  Department,  Bennett  Fire Protection District, and
others.  The  granting  of  such  regulatory permits and approvals is beyond the
direct  control  of  the  parties  to  this  Agreement.  In the event one of the
parties  receives  notice from any regulatory agency of a potential delay in the
issuance  of  a permit or necessary approval, such party shall provide immediate
written notice to the other parties of such potential delay.   The parties shall
mutually  cooperate  to  determine  a potential solution to lessen the impact of
such  delay(s).

3.04  Force Majeure.  Without limiting the foregoing, should any party be unable
      -------------
to  perform  any obligation required of them under this Agreement because of any
cause  beyond its control, including but not limited to war, insurrection, riot,
civil  commotion,  strikes, lockout, fire, earthquake, windstorm, flood, acts of
governmental  authorities,  moratoriums,  material shortages, or any other force
majeure,  each  party's performance of the obligation affected shall, subject to
the  provisions  of  Section  9.01 below, be suspended for so long as such cause
prevents  it  from  performing  such  obligation.

3.05 Unified Operation and Use of Water Facilities.   The Water Facilities to be
     ---------------------------------------------
constructed  to  serve  the  Property  are  components  of a larger water system
planned  and  to  be operated by RANGEVIEW and PURECYCLE.  The  Water Facilities
shall  be  available for use by all of  PURECYCLE's customers in accordance with
RANGEVIEW's  Rules  and  Regulations  and  with  sound  domestic  water  system
engineering, management and operational practices.  If PURECYCLE defaults in its
obligations  under  this  Agreement  and  AMD  assumes  operation  of  the Water
Facilities  in  accordance  with Section 9.02, AMD shall have the right to serve
its  existing Customers first and then to provide water service to the remaining
Export  Water


                                                                    Page 9 of 55
<PAGE>
customers.  The  parties  agree  that  every  effort  shall  be taken to provide
continuous,  uninterrupted  water  service  to  existing  Customers.

3.06  Deeds of Trust and Security Interests.  In order to secure the obligations
      -------------------------------------
of  PURECYCLE  under this Agreement, PURECYCLE shall provide, to the extent held
by  PURECYCLE,  AMD  and  DEVELOPER  with  a first-priority deed of trust and/or
Uniform  Commercial  Code  security  interest  ("UCC  Security  Interest"),  as
appropriate,  in  PURECYCLE's  rights  to  the  following  collateral:  (i)  the
Dedicated  Groundwater,  immediately  upon  any  conveyances  by  DEVELOPER  to
PURECYCLE  pursuant  to  Section  2.01(e)(i);  (ii)  the  Wholesale  Facilities,
together  with  any  real  property  associated  therewith  upon commencement of
construction  of  such facilities; (iii) Special Facilities A, C and D, together
with any real property associated therewith upon commencement of construction of
such  facilities;  and  (iv) any other real property or easements (together with
any  existing  or future improvements thereon) conveyed or granted by AMD or the
DEVELOPER to PURECYCLE, simultaneously with such conveyance.  In order to secure
the obligations of RANGEVIEW under this Agreement, RANGEVIEW shall provide AMD a
first-priority  deed of trust and/or UCC Security Interest in Special Facility B
and  the  Retail Facilities, together with any real property conveyed or granted
to  RANGEVIEW  associated with the Special Facilities and the Retail Facilities.
PURECYCLE  previously granted a first-priority deed of trust and/or UCC Security
Interest  to  the Land Board in the Export Water.  PURECYCLE shall grant AMD and
DEVELOPER  with  a second-priority deed of trust and/or UCC Security Interest in
the  Dedicated Export Water, as defined in the Option Agreement, at the time the
Option is exercised by the DEVELOPER.  Upon the payment of Water Tap Fees by the
DEVELOPER,  PURECYCLE  shall  obtain, with respect to the Dedicated Export Water
applicable  to  such  Water  Tap Fees, the release of any first-priority deed of
trust  and/or  UCC Security Interests in the Export Water, such that AMD and the
DEVELOPER  Deed  of  Trust and/or UCC Security Interest shall remain as the only
first-priority  Deed  of Trust and/or UCC Security Interest in the Export Water.
PURECYCLE  covenants  that it shall not place any additional encumbrances on the
Dedicated  Export  Water without AMD's and/or DEVELOPER's prior written consent.
All  of  the  deeds  of  trusts and/or UCC Security Interests referenced in this
Section  3.06  shall  remain  in  place until DEVELOPER has purchased all of the
Water  Taps  pursuant  to  Exhibit  C.

3.07  Parties  Obligated.  RANGEVIEW  is  liable  and  responsible  only for the
      ------------------
specific undertakings provided for in Sections 3.01(b) and 3.01(d)(ii) above and
     -
shall  have  no  liability  or  responsibility  whatever  for performance of any
obligations  imposed  upon  PURECYCLE  under  this  Agreement.  Services  to  be
provided  by  RANGEVIEW  pursuant  to Section 3.01(b) above shall be provided by
PURECYCLE,  but  RANGEVIEW  shall  nevertheless  be  primarily  obligated  and
responsible  to the other parties to this Agreement for the performance of those
services.  Notwithstanding  the foregoing, RANGEVIEW shall still be obligated to
enforce  the  provisions of any agreements it has with PURECYCLE that affect the
rights  and  obligations  of  AMD  and/or  the  DEVELOPER  under this Agreement.

3.08 Delegation of Authority.  AMD represents that it has power and authority to
     -----------------------
provide  water  service to users on the Property and to design and construct the
Retail  Water  Facilities  in aid thereof.  AMD and RANGEVIEW each recognizes in
the other the right to make and enforce rules and regulations and to perform the
terms  of  this  Agreement,  but  AMD  shall  not  interfere  with RANGEVIEW and
PURECYCLE  in  the  enforcement  of  RANGEVIEW's  Rules  and


                                                                   Page 10 of 55
<PAGE>
Regulations  or  the  performance  of  its  obligations  under this Agreement to
provide  water  service  to  the  Property.  AMD  hereby delegates and grants to
RANGEVIEW  and  PURECYCLE  all  such authority deemed necessary by RANGEVIEW and
PURECYCLE  to  perform  their  respective  obligations  under  this  Agreement,
including without limitation all of the power and authority needed to impose and
collect  RANGEVIEW's rates, fees, and charges for all service provided hereunder
and  for  normal  incidental  purposes  reasonably  related  thereto.  AMD shall
require  the  Customers  on  the  Property  to  pay RANGEVIEW's rates, fees, and
charges,  and  RANGEVIEW and PURECYCLE shall have power to enforce collection of
all  such  rates,  fees,  and  charges in the manner provided for in RANGEVIEW's
Rules  and  Regulations.


                                    ARTICLE 4
                FEES, RATES, CHARGES, CREDITS AND REIMBURSEMENTS
                ------------------------------------------------

4.01  General.  RANGEVIEW shall establish and from time to time may amend rates,
      -------
fees  and charges for water service, which are incorporated herein by reference.
Except as otherwise provided for in this Agreement, such rates, fees and charges
shall  apply  to  all Customers on the Property obtaining domestic water service
from  PURECYCLE.  For information purposes, the Water Tap Fees and water service
charges  in  effect  as  of  the  Effective  Date of this Agreement are shown in
Exhibit  E.

4.02 Water Tap Fees.  DEVELOPER shall purchase Water Taps from PURECYCLE for use
     --------------
on  the Property in accordance with the "Water Tap Takedown Schedule" in Exhibit
C.

4.03  Special  Facilities"A","C" and"D".  DEVELOPER shall participate in funding
      ---------------------------------
the  construction  of  Special  Facilities  "A",  "C"  and "D", as identified in
Section  3.01(d),  using  a  combination  of  groundwater dedication credits and
special  facilities  surcharges:

     (a)  Groundwater  Dedication  Credits:  In  lieu  of  DEVELOPER  receiving
     credits  towards  the  Water  Resource Charge portion of Water Tap Fees for
     DEVELOPER's  dedication  of  approved  Dedicated  Groundwater  per  Section
     2.01(e)(i),  these  credits shall be used to fund a portion of the Fund, as
     hereafter  defined. The credit shall be calculated using the Water Resource
     Charge portion of the Water Tap Fee and shall be granted in accordance with
     RANGEVIEW's  Rules  and  Regulations, with only one credit being applied to
     each  Water Tap purchased by DEVELOPER. The amount of the credit, using the
     current Water Resource Charge, is approximately $2,152,000 (which is $3,400
     per  EQR  times  443 acre feet/year divided by 0.7 acre feet/year per EQR).
     This  amount  shall  be  allocated  to  the  Fund.

     (b)  Special  Facilities  Surcharge:  DEVELOPER  shall  pay  a  special
     facilities  surcharge for the first 1,500 Water Taps purchased. The initial
     surcharge  shall  be  $442  per  EQR; however, if additional facilities are
     required  with respect to Special Facility "D", PURECYCLE and the DEVELOPER
     will  renegotiate  the  amount  of  the  surcharge.

DEVELOPER's  sole  obligations for participating in Special Facilities "A", "C",
and  "D"  shall be the Groundwater Dedication Credits per Section 4.03(a) above,
payment  of  the  special facilities surcharges as described in Sections 4.03(b)
above,  and  the  provision  of  acceptable


                                                                   Page 11 of 55
<PAGE>
easements  for  the  Special Facilities in accordance with Section 6.02(c).  The
parties  shall  establish a Special Facilities Fund (the "Fund"), which shall be
held  by  the  Bank  of  Cherry  Creek,  a  Branch of Western National Bank (the
"BANK").  The  Escrow  Agreement  between  the DEVELOPER, PURECYCLE and the BANK
substantially  in  the  form  of  Exhibit G is attached hereto.  DEVELOPER shall
deposit  amounts  equal  to  the  Groundwater Dedication Credits and the Special
Facilities Surcharges into the Fund in accordance with the provisions of the Tap
Fee  Schedule  set  forth in Exhibit C.  Interest shall accrue to the benefit of
the  Fund.  Funds  shall be used by PURECYCLE only for direct and indirect costs
for  the  planning,  right-of-way acquisition, design, construction, inspection,
and  other  necessary  activities for Special Facilities "A", "C", and "D", with
these  activities  being  performed  in  a  timely manner such that each special
facility  is ready to be placed into service as needed and in general accordance
with  Table C-2, the Special Facilities Schedule, in Exhibit C.   The BANK shall
maintain  a  ledger of the Fund and shall provide DEVELOPER and PURECYCLE with a
copy  of  the  ledger  within  seven  days  of notice by DEVELOPER and PURECYCLE
requesting  same.  If  any  funds remain in the Fund following completion of the
construction  of  Special  Facilities  "A",  "C",  and  "D", said funds shall be
disbursed  to PURECYCLE.  In the event that the Fund is insufficient to complete
the  construction  of  Special  Facilities "A", "C", and "D", PURECYCLE shall be
responsible  for  providing  additional  funds.  In the event that the DEVELOPER
does  not  exercise  the  Option,  any  unused funds remaining in the Fund after
construction  of  Special  Facilities  "A","C" and "D" shall be disbursed to the
DEVELOPER.

4.04  Special  Facility"B".   AMD shall reimburse RANGEVIEW for the actual costs
      --------------------
and  expenses  for  Special  Facility "B" in an amount not to exceed $270,000.00
(the  "Maximum  SFB  Budget").  If the costs for Special Facility "B" exceed the
Maximum  SFB  Budget,  RANGEVIEW shall provide AMD with documentation supporting
such increased cost.  AMD will have fifteen days to review such information.  If
AMD  is  satisfied  with the documentation regarding the increased cost AMD will
agree  to  pay  such  increased  costs.  If  AMD  is  not  satisfied  with  the
documentation  regarding  such  increased  costs,  RANGEVIEW  and  AMD will work
together  to  mutually resolve the issue, including further negotiation with the
property  owner  to  reduce  the  cost  or  parties  may  determine  to  pursue
condemnation of such property.  If the parties are unable to reach resolve about
the increased costs of Special Facility "B", RANGEVIEW will pay 60% and AMD will
pay  40%  of  those  costs  exceeding the Maximum SFB Budget.  The selection and
purchase  of  the  reservoir site is anticipated to be completed on or about the
date  set  forth  in the "Special Facilities Schedule" in Exhibit C.  Payment by
AMD to RANGEVIEW shall be due upon closing for the site purchase, with RANGEVIEW
providing  AMD at least thirty days advanced notice of the closing date.  Should
AMD  subsequently  obtain  a  reservoir  site,  suitable  in  time  and place to
RANGEVIEW,  and  convey  this  site  to RANGEVIEW, then AMD shall only reimburse
RANGEVIEW  for  the  costs  and expenditures incurred by RANGEVIEW for obtaining
title  for  the  reservoir  site.  Title for the reservoir site shall be held by
RANGEVIEW.

4.05  DEVELOPER  Reimbursement.  Reimbursement opportunities, as provided for in
      ------------------------
Article  5  of  RANGEVIEW's  Rules  and  Regulations,  shall be available to the
DEVELOPER  only  for  the  Offsite Water Transmission Pipeline, Special Facility
"C".


                                                                   Page 12 of 55
<PAGE>
                                    ARTICLE 5
                    DOMESTIC WASTEWATER TREATMENT FACILITIES
                    ----------------------------------------

5.01  Service  to PURECYCLE.  AMD shall arrange for the collection and treatment
      ---------------------
of  domestic  wastewater  from  the  Property  and shall arrange for the treated
wastewater  to  be available to PURECYCLE for use in PURECYCLE's reclaimed water
system,  all  as  provided  for  in  Exhibit  B.

5.02  Wastewater Service Charges. AMD will establish the rates, fees, tolls, and
      --------------------------
charges  for  connection  to and use of the wastewater system in accordance with
rules  and regulations to be adopted by AMD and that are to be uniformly applied
to all wastewater customers on the Property, including PURECYCLE, subject to the
provisions  of  Exhibit  B.  PURECYCLE shall be subject to applicable conditions
and provisions of AMD's rules and regulations with regards solely to PURECYCLE's
obtaining  wastewater  service  from  AMD.

5.03  IrrigationSystem.  AMD and DEVELOPER shall cooperate with PURECYCLE in the
      ----------------
planning,  design,  construction,  operation, maintenance, and management of the
irrigation  Water  Facilities such that almost all irrigation demands throughout
the Property are met using reclaimed water or raw water.  If PURECYCLE is unable
to  use  reclaimed  water,  the  acre-foot  per EQR calculation will be adjusted
accordingly.


                                    ARTICLE 6
                    REPRESENTATIONS, WARRANTIES AND COVENANTS
                    -----------------------------------------

6.01  AMD  Representations  and  Covenants.  In  addition  to  the  other
      ------------------------------------
representations,  warranties  and  covenants  made  by AMD herein, AMD makes the
following  representations,  warranties  and  covenants:

     (a)  AMD  is  duly  authorized  to  execute  this Agreement and perform its
     obligations  hereunder,  and  all  action on its part for the execution and
     delivery  of this Agreement has been or will be duly and effectively taken.

     (b)  AMD  shall  at  its sole cost develop, design, acquire, construct, and
     install  all  Retail  Facilities in accordance with Section 3.01(b) herein.
     Upon completion of construction, all Retail Facilities shall be conveyed to
     RANGEVIEW  pursuant  to  Article  5  of  RANGEVIEW's Rules and Regulations.

     (c)  AMD  shall  participate  in  all Special Facilities as provided for in
     Sections  3.01(d)  and  4.04  and  elsewhere  in  this  Agreement.

     (d)  AMD  anticipates  performing  over  lot  grading,  installing streets,
     sanitary  sewers, and storm sewers, and other development activities on the
     Property.  AMD  acknowledges  that construction of the Water Facilities can
     only  proceed  concurrently  with  these  other development activities. AMD
     shall  endeavor to schedule and cause these other development activities to
     occur  in  a  manner  and  on a schedule that allow for the efficient, cost
     effective,  and  timely  construction  of  all  water  facilities.


                                                                   Page 13 of 55
<PAGE>
     (e)  AMD  shall  abide  by  all  applicable  conditions  and  provisions of
     RANGEVIEW's  Rules  and Regulations with regard solely to water service for
     the  Property.

     (f)  AMD  shall  keep  and  perform  all  of their covenants and agreements
     contained  herein  in  a  timely  manner  that  will  not impede RANGEVIEW,
     PURECYCLE  or  DEVELOPER  from  meeting  their  respective  obligations.

     (g)  Neither  the  execution  of  this  Agreement,  the consummation of the
     transactions  contemplated  hereunder,  nor  the  fulfillment  of  or  the
     compliance  with  the  terms  and  conditions of this Agreement by AMD will
     conflict  with or result in a breach of any terms, conditions or provisions
     of,  or  constitute  a  default  under,  or result in the imposition of any
     prohibited  lien,  charge or encumbrance of any nature under any agreement,
     instrument,  indenture  or  any judgment, order or decree to which AMD is a
     party  or  by  which  AMD  is  bound.

6.02  DEVELOPER  Representations  and  Covenants.  In  addition  to  the  other
      ------------------------------------------
representations,  warranties  and  covenants made by DEVELOPER herein, DEVELOPER
makes  the  following  representations,  warranties  and  covenants:

     (a)  DEVELOPER is duly authorized to execute this Agreement and perform its
     obligations  hereunder,  and  all  action on its part for the execution and
     delivery  of this Agreement has been or will be duly and effectively taken.

     (b)  DEVELOPER  shall at no cost to PURECYCLE provide or otherwise transfer
     to  PURECYCLE  acceptable  easements for pipelines, utilities and access to
     the  wholesale  water  facilities described in Section 3.01(a) above and to
     Special  Facilities  to  be  located  on  the  Property.

     (c)  DEVELOPER  shall  provide or otherwise transfer to AMD, or directly to
     RANGEVIEW  upon  AMD's  direction, easements in accordance with RANGEVIEW's
     Rules  and  Regulations  for  all  Retail  Facilities  to be located on the
     Property.

     (d)  DEVELOPER  anticipates installation of the electric power distribution
     system,  and  other  development  activities  on  the  Property.  DEVELOPER
     acknowledges  that  construction  of  the Water Facilities can only proceed
     concurrently  with  these  other  development  activities.  DEVELOPER shall
     endeavor  to schedule and cause these other development activities to occur
     in a manner and on a schedule that allow for the efficient, cost effective,
     and  timely  construction  of  the  water  facilities.

     (e)  DEVELOPER anticipates installing a portion of the Customer Facilities.
     In any event, RANGEVIEW and PURECYCLE shall not incur or be responsible for
     any  cost  or  expense  related to any Customer Facilities except as may be
     specifically  provided  for  in  RANGEVIEW's  Rules  and  Regulations.

     (f)     DEVELOPER  shall  abide by all applicable conditions and provisions
     of  RANGEVIEW's  Rules  and Regulations with regard solely to water service
     for  the  Property.


                                                                   Page 14 of 55
<PAGE>
     (g)  DEVELOPER shall keep and perform all of their covenants and agreements
     contained  herein  in  a  timely  manner  that  will  not impede RANGEVIEW,
     PURECYCLE  and  AMD  from  meeting  their  obligations.

     (h)  Neither  the  execution  of  this  Agreement,  the consummation of the
     transactions  contemplated  hereunder,  nor  the  fulfillment  of  or  the
     compliance  with  the  terms  and conditions of this Agreement by DEVELOPER
     will  conflict  with  or  result  in  a  breach of any terms, conditions or
     provisions  of,  or constitute a default under, or result in the imposition
     of  any  prohibited  lien,  charge  or  encumbrance of any nature under any
     agreement,  instrument, indenture or any judgment, order or decree to which
     DEVELOPER  is  a  party  or  by  which DEVELOPER or the Property are bound.

6.03  PURECYCLE  Representations  and  Covenants.  In  addition  to  the  other
      ------------------------------------------
representations,  warranties  and  covenants made by PURECYCLE herein, PURECYCLE
makes  the  following  representations,  warranties  and  covenants:

     (a)  PURECYCLE is duly authorized to execute this Agreement and perform its
     obligations  hereunder,  and  all  action on its part for the execution and
     delivery  of this Agreement has been or will be duly and effectively taken.

     (b)  PURECYCLE  shall  keep and perform all of its covenants and agreements
     contained  herein in a timely manner that will not impede AMD, DEVELOPER or
     RANGEVIEW  from  meeting  their  respective  obligations.

     (c)  PURECYCLE  shall  reserve  Export  Water  sufficient  to provide water
     service  to  the  Property  in substantial conformance with the development
     approved in the PDP and pursuant to the provisions of the Option Agreement.

     (d)  Neither  the  execution  of  this  Agreement,  the consummation of the
     transactions  contemplated  hereunder,  nor  the  fulfillment  of  or  the
     compliance  with  the  terms  and conditions of this Agreement by PURECYCLE
     will  conflict  with  or  result  in  a  breach of any terms, conditions or
     provisions  of,  or constitute a default under, the Export Water Agreement,
     the  Export  Water  Deed,  or  any other agreement, mortgage, indenture, or
     instrument  to  which  PURECYCLE is a party, or result in the imposition of
     any  prohibited  lien,  charge  or  encumbrance  of  any  nature  under any
     agreement,  instrument,  indenture  or any judgment, order or decree of any
     court  to  which  PURECYCLE  is  a  party  or  by which PURECYCLE is bound.

     (e)  Water Rights.  PURECYCLE shall provide to AMD and DEVELOPER an opinion
          ------------
     letter  of water counsel in the form of Exhibit H within sixty (60) days of
     the  mutual  execution  of  this  Agreement prepared by Petrock and Fendel,
     P.C.,  for  the  benefit of AMD and the DEVELOPER. Petrock and Fendel, P.C.
     will  provide  to  AMD  and  DEVELOPER  evidence of its liability insurance
     coverage,  including  the  amount  of  coverage  provided.

     (f)  PURECYCLE  shall  abide by all applicable conditions and provisions of
     AMD's  Rules  and  Regulations  with  regard  solely to Wastewater Service.


                                                                   Page 15 of 55
<PAGE>
     (g)  Estoppels.  RANGEVIEW  and PURECYCLE shall request from the Land Board
          ---------
     assurances  concerning  the  current  status and validity of the Lease. The
     Land  Board's  assurances  shall  be  in  the  general form of the Estoppel
     Certificate provided in Exhibit I. RANGEVIEW shall also provide an estoppel
     concerning the current status and validity of the Lease in the general form
     of  the Estoppel Certificate provided in Exhibit J within 60 days of mutual
     execution  of  this  Agreement

6.04  RANGEVIEW Representations.  RANGEVIEW makes the following representations,
      -------------------------
warranties  and  covenants:

     (a)  RANGEVIEW is duly authorized to execute this Agreement and perform its
     obligations  hereunder,  and  all  action on its part for the execution and
     delivery  of this Agreement has been or will be duly and effectively taken.

     (b)  RANGEVIEW shall keep and perform all of their covenants and agreements
     contained  herein  in  a  timely  manner  that  will  not impede PURECYCLE,
     DEVELOPER  and  AMD  from  meeting  their  respective  obligations.

     (c)  Neither  the  execution  of  this  Agreement,  the consummation of the
     transactions  contemplated  hereunder,  nor  the  fulfillment  of  or  the
     compliance  with  the  terms  and conditions of this Agreement by RANGEVIEW
     will  conflict  with  or  result  in  a  breach of any terms, conditions or
     provisions  of,  or constitute a default under, the Lease, the Export Water
     Agreement,  the  Export  Water  Deed,  or  any  other  agreement, mortgage,
     indenture,  or  instrument  to  which  RANGEVIEW  is  a  party  or by which
     RANGEVIEW  is  bound,  or  result in the imposition of any prohibited lien,
     charge  or  encumbrance  of  any  nature  under  any agreement, instrument,
     indenture  or any judgment, order or decree of any court to which RANGEVIEW
     is  a  party  or  by  which  RANGEVIEW  is  bound.

6.05 Instruments of Further Assurance.  AMD, DEVELOPER, PURECYCLE and  RANGEVIEW
     --------------------------------
covenant  that  they  will  do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged and delivered, such acts, instruments and transfers
as  may  reasonably  be  required  for  the  performance  of  their  obligations
hereunder.


                                    ARTICLE 7
                    DEFAULT BY AMD; REMEDIES AND ENFORCEMENT
                    ----------------------------------------

7.01  Events  of  Default.  The  occurrence  of any one or more of the following
      -------------------
events  or  the  existence  of any one or more of the following conditions shall
constitute  an  Event  of  Default  by  AMD  under  this  Agreement:

     (a)  Failure  by  AMD  to  make  payment  of any fees or charges identified
     herein  when  the  same  shall  become  due and payable as provided herein.

     (b)  Failure  by  AMD  to  design  and construct the Retail Facilities in a
     timely  manner.


                                                                   Page 16 of 55
<PAGE>
     (c)  Failure  by  AMD  to  provide  wastewater  service  to PURECYCLE or to
     provide  adequately  treated wastewater effluent to PURECYCLE in accordance
     with  Section  5.02  above.

     (d)  Default  in  the  performance  or  observance  of  any  other  of  the
     covenants,  agreements  or conditions on the part of AMD in this Agreement.

7.02  Remedies  on  Occurrence  of  Event of Default.  Upon the occurrence of an
      ----------------------------------------------
Event  of  Default  by  AMD, and after all cure periods have expired, RANGEVIEW,
acting  on its own or on PURECYCLE's behalf, shall have the following rights and
remedies,  any  or  all  of  which  may  be  pursued  in  the sole discretion of
RANGEVIEW:

     (a)  To  protect  and  enforce  its  rights  under  this  Agreement and any
     provision  of  law by such suit, action or special proceedings as RANGEVIEW
     may  deem  appropriate, including without limitation for the enforcement of
     any  appropriate  legal or equitable remedy, or for the recovery of damages
     caused by breach of this Agreement, including attorneys' fees and all other
     costs  and  expenses  incurred  in  enforcing  this  Agreement.

     (b)  To  exercise  any and all other remedies provided by RANGEVIEW's Rules
     and  Regulations  and this Agreement, until the default is fully cured. Any
     delay  in  a  payment  due  pursuant  to Article 4 shall extend the time of
     performance  of  PURECYCLE's and RANGEVIEW's obligations under Section 3.02
     above.

     (c)  To  take or cause to be taken such other actions as it deems necessary
     to  enforce  its  rights  hereunder.

7.03  Cure of Default.  In the Event of Default by AMD, the default may be cured
      ---------------
as  described  following:

     (a)  For  default  caused  due  to a failure by AMD to make payments, or by
     DEVELOPER  on  behalf of AMD, making payment to PURECYCLE within sixty days
     of RANGEVIEW's notice of the default of all amounts due through the date of
     payment  plus  all  costs incurred by PURECYCLE as a result of the default.

     (b)  For  other  defaults,  by  AMD's  performance,  or  by  DEVELOPER's
     performance  on  behalf  of AMD, within sixty days of RANGEVIEW's notice of
     the Default, or if more than sixty days is reasonably required to cure such
     default,  by commencing to correct the default within said sixty-day period
     and  thereafter  prosecuting  the  same  to  completion  with  reasonable
     diligence.

7.04  Delay or Omission of Waiver.  No delay or omission of RANGEVIEW, PURECYCLE
      ---------------------------
or  DEVELOPER  to exercise any right or power accruing upon any Event of Default
shall  exhaust  or  impair any such right or power or shall be construed to be a
waiver  of  any  such  Event  of  Default  or  acquiescence  therein.

7.05  No  Waiver  of One Default to Affect Another; All Remedies Cumulative.  No
      ---------------------------------------------------------------------
waiver  of  any  Event of Default hereunder by RANGEVIEW, PURECYCLE or DEVELOPER
shall  extend  to  or  affect any subsequent or any other then existing Event of
Default  or  shall  impair  any  rights


                                                                   Page 17 of 55
<PAGE>
or remedies consequent thereon.  All rights and remedies of RANGEVIEW, PURECYCLE
and  DEVELOPER provided herein may be exercised with or without notice, shall be
cumulative,  may  be  exercised  separately, concurrently or repeatedly, and the
exercise  of any such right or remedy shall not affect or impair the exercise of
any  other  right  or  remedy.

                                    ARTICLE 8

                    DEFAULT BY DEVELOPER; REMEDIES AND ENFORCEMENT
                    ----------------------------------------------

8.01  Events  of Default.  The  occurrence  of  any one or more of the following
      ------------------
events  or  the  existence  of any one or more of the following conditions shall
constitute  an  Event  of  Default  by  DEVELOPER  under  this  Agreement:

     (a)  Failure  by  DEVELOPER  to make payment of any Water Tap Fees or other
     fees  or  charges  identified  herein  when  the  same shall become due and
     payable  as  provided  herein.

     (b)  Failure by DEVELOPER to convey, or otherwise effect the conveyance of,
     the  Dedicated  Groundwater  to  PURECYCLE  as  provided  herein.

     (c)  Failure  by  DEVELOPER  to  provide  fee title to or easements for any
     property  required  by  PURECYCLE  for the Wholesale Water Facilities to be
     located  on  the  Property.

     (d)  Default  in  the  performance  or  observance  of  any  other  of  the
     covenants,  agreements  or  conditions  on  the  part  of DEVELOPER in this
     Agreement.

8.02  Remedies  on  Occurrence  of  Event of Default.  Upon the occurrence of an
      ----------------------------------------------
Event  of  Default  by  DEVELOPER,  and  after  all  cure  periods have expired,
PURECYCLE,  acting on its own or on RANGEVIEW's behalf, shall have the following
rights  and  remedies, any or all of which may be pursued in the sole discretion
of  PURECYCLE:

     (a)  To  protect  and  enforce  its  rights  under  this  Agreement and any
     provision  of  law by such suit, action or special proceedings as PURECYCLE
     may  deem  appropriate, including without limitation for the enforcement of
     any  appropriate  legal or equitable remedy, or for the recovery of damages
     caused by breach of this Agreement, including attorneys' fees and all other
     costs  and  expenses  incurred  in  enforcing  this  Agreement in the event
     PURECYCLE  prevails  in its exercise of such remedies, and DEVELOPER agrees
     that  PURECYCLE  shall  have  the  right  to  proceed against DEVELOPER for
     specific  performance  of  any  covenant  or  agreement  contained  herein.

     (b)  To  exercise  any  and all other remedies provided by RANGEVIEW  Rules
     and  Regulations  and this Agreement, until the default is fully cured. Any
     delay  in  a  payment  due  pursuant  to Article 4 shall extend the time of
     performance  of  PURECYCLE's and RANGEVIEW's obligations under Section 3.02
     above.

     (c)  To  take or cause to be taken such other actions as it deems necessary
     to  enforce  its  rights  hereunder.


                                                                   Page 18 of 55
<PAGE>
     (d)  In  the event PURECYCLE prevails in its exercise of such remedies, any
     expenses  incurred  by  PURECYCLE in connection with the remedies set forth
     herein shall become due and payable by DEVELOPER immediately without notice
     and  shall  bear  interest  at  a  percentage rate of ten percent (10%) per
     annum.

8.03  Cure of Default.  In the Event of Default by DEVELOPER, the default may be
      ---------------
cured  as  described  following:

     (a)  For  default  caused due to a failure by DEVELOPER to make payments as
     set  forth  in  Section 8.01(a) above, by DEVELOPER, or by AMD on behalf of
     DEVELOPER,  making  payment to RANGEVIEW and/or PURECYCLE within sixty days
     of PURECYCLE's notice of the default of all amounts due through the date of
     payment  plus  all  costs incurred by PURECYCLE as a result of the default.

     (b)  For  other  defaults,  by  DEVELOPER's  performance,  or  by  AMD's
     performance  on  behalf  of DEVELOPER, within sixty days after the Event of
     Default,  or  if  more  than sixty days is reasonably required to cure such
     default,  by commencing to correct the default within said sixty-day period
     and  thereafter  prosecuting  the  same  to  completion  with  reasonable
     diligence.

8.04  Delay or Omission of Waiver.  No delay or omission of RANGEVIEW, PURECYCLE
      ---------------------------
or  AMD  to exercise any right or power accruing upon any Event of Default shall
exhaust  or  impair any such right or power or shall be construed to be a waiver
of  any  such  Event  of  Default  or  acquiescence  therein.

8.05  No  Waiver  of One Default to Affect Another; All Remedies Cumulative.  No
      ---------------------------------------------------------------------
waiver  of  any  Event of Default hereunder by RANGEVIEW, PURECYCLE or AMD shall
extend  to  or affect any subsequent or any other then existing Event of Default
or  shall  impair  any  rights  or  remedies consequent thereon.  All rights and
remedies  of  RANGEVIEW, PURECYCLE and AMD provided herein may be exercised with
or  without  notice,  shall  be  cumulative,  may  be  exercised  separately,
concurrently  or  repeatedly, and the exercise of any such right or remedy shall
not  affect  or  impair  the  exercise  of  any  other  right  or  remedy.


                                    ARTICLE 9
           DEFAULT BY RANGEVIEW OR PURECYCLE; REMEDIES AND ENFORCEMENT
           -----------------------------------------------------------

9.01  Termination  for  Frustration  of  Essential  Purpose.
      -----------------------------------------------------

     (a)  If  a  failure  to  obtain  necessary  regulatory  approval, any force
     majeure,  or  any  default  by RANGEVIEW or PURECYCLE in the performance of
     their  obligations  hereunder  causes  a  delay  in the construction of any
     essential  element  of  the  Water Facilities, and it is impossible for any
     reconfiguration  of  the Water Facilities, or for any assumption of control
     pursuant  to Section 9.02 below (if applicable under the circumstances), to
     achieve  water  service  to  the  Property, AMD or DEVELOPER shall have the
     right  to  terminate  this  Agreement  upon written notice to RANGEVIEW and
     PURECYCLE.  Notwithstanding  the  foregoing,  the  parties  will  mutually
     cooperate  to  the


                                                                   Page 19 of 55
<PAGE>
     extent  possible with respect to delays pursuant to this Section.  However,
     if AMD or the DEVELOPER determine that such delays pursuant to this Section
     will  not  be  resolved in a timely manner, AMD or the DEVELOPER shall have
     the  right  to terminate the Agreement upon sixty (60) days' written notice
     to  PURECYCLE  and  RANGEVIEW.

     (b)  Upon  receipt  of  a  notice  issued pursuant to subsection (a) above,
     RANGEVIEW  and  PURECYCLE  shall  immediately  cease  all work on the Water
     Facilities,  except  such  work  as  may  be required for the protection of
     public safety, to secure and protect the site of any construction work, and
     to  preserve  the  utility of any non-construction work for possible future
     use.

     (c)  In  the  event  of  a  termination  under  this  Section 9.01, AMD and
     DEVELOPER  shall  pay  RANGEVIEW  and  PURECYCLE for all work performed and
     materials  purchased  through and including the date on which RANGEVIEW and
     PURECYCLE  receive  such  notice and for reasonable termination expenses it
     incurred  unless  RANGEVIEW or PURECYCLE has committed a material breach of
     this Agreement which is the proximate cause of the impossible circumstance.
     In  that event, AMD and DEVELOPER shall not be required to pay RANGEVIEW or
     PURECYCLE for any work performed and materials purchased. In addition, if a
     material  breach  of  this  Agreement  by  RANGEVIEW  or  PURECYCLE  is the
     proximate  cause  of the impossible circumstance, this subsection (c) shall
     not  be construed to bar AMD or DEVELOPER from claiming whatever damages it
     may  be  entitled  to  as  a  result  of  such  breach.

     (d)  For  the  purposes  of  this Section 9.01, the term "impossible" shall
     mean a circumstance in which RANGEVIEW or PURECYCLE is truly prevented from
     performing,  and  not that continued performance is merely impracticable or
     unreasonably  expensive.  Such a circumstance must be beyond the control of
     and  not  created  by  AMD  or  DEVELOPER.

9.02  AMD's  Right  to  Assume  Control  of  Water  Facilities.
      --------------------------------------------------------

     (a)  In  the  event  of a material default by PURECYCLE or RANGEVIEW in the
     performance of their obligations hereunder, AMD shall be entitled to assume
     the  rights  and  obligations  of  RANGEVIEW  and PURECYCLE with respect to
     operation  of  those Water Facilities which directly provide service to the
     Property, including the right to use the Dedicated Export Water reserved by
     PURECYCLE  to  service  the Property provided AMD has exercised the Option,
     along  with  the  concomitant  groundwater  supply  and  water transmission
     facilities  for  said Dedicated Export Water. To the extent that any of the
     Dedicated  Export  Water  facilities  also serve other customers, AMD shall
     have  the right to provide water service to its Customers first and then to
     provide service to other customers receiving service from the Export Water.

     (b)  The assumption rights granted to AMD herein are subject to any and all
     applicable  terms  and  conditions of the Lease, the Export Water Deed, and
     any obligations recorded in the Arapahoe County Clerk and Recorder's Office
     with  respect  to  the  Lease  or  the  Export  Water.


                                                                   Page 20 of 55
<PAGE>
     (c)  If  the  DEVELOPER  has  exercised  the Option provided for in Section
     2.01(e)(ii),  and  to  the extent that more than 1,500 Water Taps have been
     purchased  for  the  Property,  PURECYCLE  shall,  upon  AMD's  request and
     following a material default by PURECYCLE or RANGEVIEW, convey title to AMD
     of  the  number  of  acre  feet  of  Export Water allocable on an EQR basis
     necessary to service Water Taps purchased by AMD and/or the DEVELOPER prior
     to  the date of transfer. PURECYCLE shall convey such Export Water pursuant
     to  the  terms  of  a  deed  in  the same form and with the same rights and
     obligations  as the Export Water Deed. Such transfer will be free and clear
     of  any  security  interests  and  other  liens provided AMD pays the Water
     Resource Charge allocable to such taps to the trust account of Davis Graham
     & Stubbs LLP to enable that firm to release outstanding security interests.

     (d)  If  AMD places additional Water Taps in service after assuming control
     of  the  Water  Facilities  pursuant  to  this Section 9.02, PURECYCLE will
     convey  title  to AMD of the additional Dedicated Export Water allocable to
     such  taps,  provided  AMD pays the Water Resource Charge allocable to such
     taps  to the trust account of Davis Graham & Stubbs LLP to enable that firm
     to  release  outstanding  security  interests.

     (e)  If  AMD  assumes  control  of  the  Water  Facilities pursuant to this
     Section  9.02,  AMD  will  not be responsible for paying any fees, rates or
     charges  to  PURECYCLE  except  as  provided  in  Section  9.02(d)  above.

     (f)  For  the  purposes  of  this Section 9.02, a material default shall be
     defined  as  a failure to perform a material term, covenant or condition in
     this  Agreement  which  continues  uncured  for a period of sixty (60) days
     after  written  notice specifically setting forth the nature of the default
     has  been  given by AMD or DEVELOPER to RANGEVIEW and PURECYCLE, or if more
     than  sixty (60) days is reasonably required to cure such matter complained
     of,  if  RANGEVIEW and PURECYCLE shall fail to commence to correct the same
     within said sixty (60) day period or shall thereafter fail to prosecute the
     same  to completion with reasonable diligence. Unless otherwise agreed upon
     by  AMD  and  DEVELOPER, any material defaults shall be cured within ninety
     (90)  days  of  such  notice.

     (g)  Insolvencyand  OtherProceedings.  In  the  event  of any bankruptcy or
          -------------------------------
     insolvency  proceedings,  any other debtor-creditor actions or proceedings,
     or  any  other  litigation,  actions,  or  proceedings whatsoever involving
     PURECYCLE  and/or  RANGEVIEW,  whether  voluntary  or  involuntary,  both
     PURECYCLE  and  RANGEVIEW  each  hereby  agree  that  each of them will use
     reasonable efforts to prevent water service, or rights to water service for
     any  existing  water  users  within AMD from being terminated, interrupted,
     reduced,  modified,  or  threatened.

9.03  Foreclosure.  In  addition to all of the foregoing rights and remedies, in
      -----------
the  event of a material default by PURECYCLE or RANGEVIEW in the performance of
their  obligations  under this Agreement or the Option Agreement, AMD and/or the
DEVELOPER  may  exercise  any rights provided pursuant to the deeds of trust and
security  interests granted under Section 3.06, including the right to foreclose
on any Deeds of Trust or Security Interests, and to exercise, enforce, or assert
any  and  all  other rights and remedies that are available in law or in equity.


                                                                   Page 21 of 55
<PAGE>
                                   ARTICLE 10
                            MISCELLANEOUS PROVISIONS
                            ------------------------

10.01 Effective  Date;  Contingency.  This  Agreement shall be in full force and
      -----------------------------
effect  and be legally binding on the date it is fully executed and delivered by
the Parties hereto and upon the meeting of the contingency described immediately
below.  This  entire  Agreement  is  expressly  contingent  upon  approval  from
Arapahoe  County  of  the PDP.  If said approval of the PDP is not obtained in a
timely manner, but in no event later than June 1, 2004,  any Party may terminate
the Agreement on or before September 1, 2004, upon thirty days written notice to
all  Parties  and  this Agreement shall be terminated and of no force or effect,
except  that,  in  the  event of termination pursuant to this Section, DEVELOPER
shall  reimburse RANGEVIEW and PURECYCLE for all administrative, engineering and
attorney  fees  and expenses incurred by RANGEVIEW and PURECYCLE in pursuing and
planning  for  water  service to the Property prior to such date of termination.

10.02 Termination  Contingency.
      ------------------------

     (a)  Development Approvals.  Development of the Property is contingent upon
          ---------------------
     DEVELOPER  obtaining  approval  from Arapahoe County of a Final Development
     Plan  ("FDP")  for  a  portion  of  the  Property  targeted  for  initial
     development,  as  identified as "Phase 1 (Neighborhood A-1)" in the PDP. If
     said  approval  of  the  FDP  is not obtained in a timely manner, but in no
     event  later  than twenty four (24) months after the Effective Date of this
     Agreement,  any Party may terminate the Agreement on or before July 1, 2006
     upon  thirty  days  written  notice  to  all  Parties.

     (b)  Water  Service Marketability.  DEVELOPER has raised concerns about the
          ----------------------------
     marketability  of  the  Property  based  on the Export Water supply. If the
     DEVELOPER is unable to consummate a sale or sales of at least 700 lots to a
     nationally  recognized  homebuilder or homebuilders within 24 months of the
     date  of  approval  of  the  FDP  for  the Property, due principally to the
     homebuilders'  or  the  homebuilder's  concern over the Export Water, which
     concern  must be supported and documented, then the DEVELOPER and AMD shall
     be  entitled to terminate the Agreement by giving written notice thereof to
     RANGEVIEW  and PURECYCLE. Termination shall be contingent upon the right of
     RANGEVIEW  and  PURECYCLE  to  address such documented homebuilder concerns
     with  engineering  evaluations  and  other documentation as they choose. If
     PURECYCLE  is  unable  to  persuade the homebuilder or homebuilders to meet
     with  PURECYCLE  and  RANGEVIEW  to address the documented homebuilder's or
     homebuilders' concerns, or to consummate the acquisition of the property as
     evidenced  by a deed for all or a portion of the property within 60 days of
     notice  of  termination,  then  this  Agreement shall be deemed effectively
     terminated  on  said  60th  day.

     (c)  Water  Rights.    If  AMD  or  the  DEVELOPER are unsatisfied with the
          -------------
     opinion  of  water counsel provided pursuant to Section 6.03(e), AMD or the
     DEVELOPER  shall  have  the  right  to  terminate  this Agreement by giving
     written  notice  to  RANGEVIEW  and PURECYCLE. In no event shall AMD or the
     DEVELOPER  have  the  right  to  terminate


                                                                   Page 22 of 55
<PAGE>
     this  Agreement  pursuant  to  this  Section  after  the  Board  of  County
     Commissioners  of  Arapahoe  County  has  approved  the  PDP.

     (d)  In  the event of termination pursuant to this Section 10.02, PURECYCLE
     shall  retain  ownership  of  any  and  all Wholesale Facilities completed,
     substantially  completed,  or  as  may be under construction at the date of
     termination,  including  any property, rights-of-way and easements required
     for  their  access,  operation  and  maintenance.  DEVELOPER  shall  fully
     reimburse  PURECYCLE  and  RANGEVIEW  for all direct and indirect costs and
     expenses  incurred  by  them  in  pursuance of their respective obligations
     hereunder  prior to the date of termination up to a maximum of $100,000.00.
     PURECYCLE  and RANGEVIEW shall provide DEVELOPER with invoices and canceled
     checks  evidencing such obligations. The DEVELOPER will reimburse PURECYCLE
     and  RANGEVIEW  within  60  days  of  receipt  of  the  same.

10.03 Time is of the Essence.  Time is of the essence hereof; provided, however,
      ----------------------
that  if  the  last  day  permitted  or  the  date  otherwise determined for the
performance  of  any  act  required or permitted under this Agreement falls on a
Saturday, Sunday or legal holiday, the time for performance shall be extended to
the  next  succeeding  business  day,  unless  otherwise  expressly  stated.

10.04 Term.  This  Agreement  shall  extend  in  perpetuity  unless  otherwise
      ----
terminated  as  provided  for  herein.

10.05 Parties Interested Herein.  Nothing expressed or implied in this Agreement
      -------------------------
is  intended  or  shall  be  construed to confer upon, or to give to, any Person
other  than  AMD, DEVELOPER, PURECYCLE and RANGEVIEW, any right, remedy or claim
under  or  by  reason  of  this Agreement or any covenants, terms, conditions or
provisions thereof.  All the covenants, terms, conditions and provisions in this
Agreement  by  and on behalf of AMD, DEVELOPER, PURECYCLE and RANGEVIEW shall be
for  the  sole  and  exclusive  benefit  of  the  Parties  hereto.

10.06 Covenants  Run  With  the  Land.  The  covenants,  terms,  conditions  and
      -------------------------------
provisions  set  forth  in this Agreement shall inure to and be binding upon the
representatives, successors and assigns of the Parties hereto and shall run with
the  Property.  This Agreement or a Memorandum of Agreement shall be executed by
the  Parties  and  recorded  against  the  Property.

10.07 Notices.  Except  as  otherwise  provided  herein, all notices or payments
      -------
required  to  be  given  under  this  Agreement shall be in writing and shall be
hand-delivered  or  sent  by  certified  mail,  return receipt requested, to the
following  addresses:

          To  AMD:        Airpark  Metropolitan  District
                          141  Union  Boulevard,  Suite  150
                          Lakewood,  Colorado  80228-1556
                          Tel  (303)987-0835
                          Fax  (303)987-2032

          To  DEVELOPER:  Icon  Investors  I,  LLC
                          5299  DTC  Boulevard,  Suite  815


                                                                   Page 23 of 55
<PAGE>
                          Greenwood  Village,  CO  80111
                          Tel  (303)984-9800
                          Fax  (303)984-9874

          To  PURECYCLE:  Pure  Cycle  Corporation
                          8451  Delaware  Street
                          Thornton,  Colorado  80260
                          Tel  (303)292-3456
                          Fax  (303)292-3475

          To  RANGEVIEW:  Rangeview  Metropolitan  District
                          141  Union  Boulevard,  Suite  150
                          Lakewood,  Colorado  80228-1556
                          Tel  (303)987-0835
                          Fax  (303)987-2032

All  notices  will  be deemed effective one (1) day after hand-delivery or three
(3)  days  after  mailing  by registered or certified mail, postage prepaid with
return  receipt.  Any Party by written notice so provided may change the address
to  which  future  notices  shall  be  sent.

10.08 Severability.  If  any  covenant,  term, condition or provision under this
      ------------
Agreement  shall,  for  any  reason, be held to be invalid or unenforceable, the
invalidity  or  unenforceability  of such covenant, term, condition or provision
shall  not affect any other provision contained herein, the intention being that
such  provisions  are  severable.

10.09 Counterparts.  This Agreement may be executed in one or more counterparts,
      ------------
each  of  which  shall constitute an original, but all of which shall constitute
one  and  the  same  document.

10.10 Amendment.  This  Agreement  may be amended from time to time by agreement
      ---------
between  the  Parties hereto; provided, however, that no amendment, modification
or  alteration  of  the  terms  or provision hereof shall be binding upon either
party  unless  the  same  is in writing and duly executed by all Parties hereto.

10.11 Integration.  This  Agreement constitutes the entire agreement between the
      -----------
Parties hereto concerning the subject matter hereof, and all prior negotiations,
representations,  contracts,  understandings  or  agreements  pertaining to such
matters  are  merged  into  and  superseded  by  this  Agreement.

10.12 Governing  Law.  This  Agreement arises out of the transaction of business
      --------------
in  the  State  of  Colorado  by  the  Parties  hereto.  This Agreement shall be
governed  and  construed  in  accordance with the laws of the State of Colorado.
The  performance  by the Parties hereto of their respective obligations provided
for in this Agreement shall be in strict compliance with all applicable laws and
the rules and regulations of all governmental agencies, municipal, county, state
and  federal,  having  jurisdiction  in  the  premises.

10.13 Assignment.  Except  for  the  assignment  by  AMD  to  another  Title  32
      ----------
metropolitan  district,  this  Agreement  shall  not be assignable by any of the
parties  hereto,  without the prior written consent of all of the other parties,
which  consent  shall  not  be  unreasonably withheld or


                                                                   Page 24 of 55
<PAGE>
delayed.  Any  attempted assignment not in accordance with this Section shall be
void  and of no force or effect. AMD will provide each of the other parties with
written  notice  of  such  permitted  assignment.

                                   ARTICLE 11

                           Insurance, Bonds, and Liens
                           ---------------------------

11.01 Insurance.  PURECYCLE  shall  at  all times carry insurance in amounts and
      ---------
with  carriers  acceptable  to  AMD  for  workers'  compensation  coverage fully
covering  all persons engaged in the performance of this Agreement in accordance
with  Colorado law, and for public liability insurance covering death and bodily
injury with limits of not less than $1,500,000 for one person and $5,000,000 for
any  one  accident  or disaster, and property damage coverage with limits of not
less  than  $500,000,  which  insurance  shall  name  AMD  and  the DEVELOPER as
additional  insureds.

11.02 Insurance and Bonds of Contractors.  PURECYCLE shall cause its contractors
      ----------------------------------
and  subcontractors  to  maintain  adequate  insurance and to obtain performance
bonds  and  labor  and materials payments bonds in accordance with all statutory
requirements.  Insurance  provided by contractors for construction activities to
PURECYCLE  must  list  AMD  and  the  DEVELOPER  as  additional  insureds.

11.03 Liens.  With  respect  to  any  work  to  be performed by PURECYCLE and/or
      -----
RANGEVIEW  on  the  Property, the party performing the actual work shall protect
the  Property  from  mechanic's liens, and shall indemnify the DEVELOPER and any
other  property  owner from and against and with respect to any such liens which
attach  to such Property or easements rights and shall cause any such lien to be
removed  as  a  lien  within  thirty  (30)  days  of  recording  thereof.

11.04 Indemnification.  Any  party  entering  upon  any  other  party's property
      ---------------
pursuant  to  the rights granted under this Agreement or otherwise in connection
herewith  including, without limitation, for purposes of constructing any of the
Water  Facilities,  including  any  of  the  Special  Facilities,  to the extent
permitted by law, hereby indemnifies and saves the other party harmless from and
against  any  and  all  loss,  liability,  damage,  claim, fee, penalty, cost or
expense (including court costs and reasonable attorneys' fees) arising out of or
related  to  any  entry  by  said  party,  its  agents,  employees,  officers,
contractors,  tenants,  licensees  or  invitees (collectively, the "Indemnifying
Parties")  onto  said  other party's property including, without limitation, any
and all construction, installation, utility connection or other work or activity
performed  thereon,  the  exercise  of its rights pursuant to this Agreement, or
arising  out  of  the  negligent  acts or omissions of said Indemnifying Parties
incurred  by  or  asserted  against  said  other party, its officers, employees,
agents,  representatives,  lessees,  contractors,  licensees  or  invitees.


                      [SIGNATURE PAGE AND EXHIBITS FOLLOW]


                                                                   Page 25 of 55
<PAGE>
                                   Airpark Metropolitan District


                                   By:
                                      ------------------------------------------
                                           Andrew R. Klein, President
ATTEST:

By:
   ------------------------------
     Otis C. Moore, III, Director

(SEAL)

                                   Icon Investors I, LLC, a Colorado Limited
                                   Liability Company

                                   By:  Airway Park Manager, LLC, a Colorado
                                        limited liability company

                                        By:
                                           -------------------------------------
                                            Andrew R. Klein, its Manager


                                   Pure Cycle Corporation, a Delaware
                                   Corporation


                                   By:
                                      ------------------------------------------
                                      Mark Harding, President

ATTEST:

By:
   ------------------------------
   Scott Lehman, Secretary

(SEAL)


                                                                   Page 26 of 55
<PAGE>

                                   Rangeview Metropolitan District


                                   By:
                                      ------------------------------------------
                                       Thomas P. Clark, Director

ATTEST:


By:
   ------------------------------
   Tom Lamm, Assistant Secretary

(SEAL)




STATE  OF  COLORADO                  )
                                     )  ss.
COUNTY  OF  ____________________     )

     The  foregoing  instrument  was  acknowledged  before me this ______ day of
November,  2003, by Andrew R. Klein, as President, and by Otis C. Moore, III, as
Director,  of  Airpark  Metropolitan  District.

     Witness  my  hand  and  official  seal.

     My  commission  expires:  ________________________


                                           -------------------------------------
                                           Notary Public
(  S  E  A  L  )


                                                                   Page 27 of 55
<PAGE>
STATE  OF  COLORADO                  )
                                     )  ss.
COUNTY  OF  ____________________     )

     The  foregoing  instrument  was  acknowledged  before me this ______ day of
November,  2003,  by  Andrew R. Klein, as Manager of Airway Park Manager, LLC, a
Colorado  limited  liability  company,  as  Manger  of  ICON  INVESTORS  I,  LLC

     Witness  my  hand  and  official  seal.

     My  commission  expires:  ________________________


                                           -------------------------------------
                                           Notary Public
(  S  E  A  L  )




STATE  OF  COLORADO                  )
                                     )  ss.
COUNTY  OF  ____________________     )

     The  foregoing  instrument  was  acknowledged  before me this ______ day of
November,  2003,  by Mark Harding, as President, and Scott Lehman, as Secretary,
of  Pure  Cycle  Corporation,  a  Delaware  corporation.

     Witness  my  hand  and  official  seal.

     My  commission  expires:  ________________________


                                           -------------------------------------
                                           Notary Public
(  S  E  A  L  )


                                                                   Page 28 of 55
<PAGE>
STATE  OF  COLORADO                  )
                                     )  ss.
COUNTY  OF  ____________________     )

     The  foregoing  instrument  was  acknowledged  before me this ______ day of
November,  2003,  by  Thomas  P.  Clark, as Director, and Tom Lamm, as Assistant
Secretary,  of  Rangeview Metropolitan District, acting by and through its water
activity  enterprise.

     Witness  my  hand  and  official  seal.

     My  commission  expires:  ________________________


                                           -------------------------------------
                                           Notary Public
(  S  E  A  L  )


                                                                   Page 29 of 55
<PAGE>
                                    EXHIBIT A

                             DESCRIPTION OF PROPERTY

A  Replat  of  Lots 1 thru 16, Lots 17 thru 28, and Lots 30 thru 32 of Montclair
Gardens  Second Filing and unplatted parcels of land located in the West Half of
Section  3, the Southeast Quarter of Section 4, and the East Half of Section 10,
all  in  Township 4 South, Range 65 West of the 6th Principal Meridian, Arapahoe
County,  Colorado,  and  all  as  more  particularly described on Sheet 1 of the
Preliminary  Plat  for Sky Ranch, prepared by Vision Land Consultants, Inc., and
dated  8/23/2003.

The  Property occupies 772.3 acres, more or less, which includes about 6.7 acres
of  property  to  be  vacated  as  rights-of-way  to  Arapahoe  County.


                                                                   Page 30 of 55
<PAGE>
                                    EXHIBIT B

                             WASTEWATER TERMS SHEET

A.   DESCRIPTION:  Airpark  Metropolitan  District  (AMD)  shall arrange for the
     collection  and treatment of wastewater from the Property and shall arrange
     for  the  treated  wastewater  to  be  available  to  PURECYCLE  for use in
     PURECYCLE's  reclaimed  water  system  ("Reclaimed  Water  System").

B.   GENERAL:  All  wastewater  treatment and collection obligations established
     herein, except the Reclaimed Water System, shall be assumed and executed by
     AMD  at  no  cost  to  PURECYCLE unless specifically provided for otherwise
     herein.

C.   WASTEWATER  PERMITTING:  AMD  shall be responsible for obtaining regulatory
     approval for the construction of the wastewater treatment plant ("WWTP") or
     connection  to  a  wastewater  treatment  facility  not  on  the  Property.

D.   DOMINION  OVER  WATER:  PURECYCLE will maintain ownership and dominion over
     all treated wastewater (after consumptive use treatment losses), except for
     the  treated  wastewater  from the Foxridge Farms mobile home park or other
     sites  or  projects  which are not part of the Property ("PURECYCLE Treated
     Wastewater").  PURECYCLE  intends  to  use  and reuse the PURECYCLE Treated
     Wastewater  for  irrigation,  augmentation,  storage,  exchange  and  other
     purposes  until  extinction.  Wastewater  treatment  plant inflows from the
     Property  will  be  metered,  recorded and totalized and consumptive losses
     shall  be  determined  to  quantify  the  PURECYCLE  Treated Wastewater and
     PURECYCLE  shall  be  provided  with a monthly accounting of the wastewater
     inflows from the Property. The flow metering equipment for inflows from the
     Property  shall  be  maintained  in good and operating condition. PURECYCLE
     will  be  allowed access to inspect the metering equipment and may request,
     no  more  frequently than annually, a calibration of the metering equipment
     by  AMD  which  costs  shall  be  paid  by  PURECYCLE.

E.   POINT  OF DELIVERY:  The PURECYCLE Treated Wastewater shall be delivered to
     a mutually acceptable point at Planning Tract B7 identified on the PDP (the
     "Point  of  Delivery")  for use in the Reclaimed Water System. Unless other
     mutually  satisfactory  arrangements are made, any of the PURECYCLE Treated
     Wastewater not delivered to PURECYCLE for the Reclaimed Water System, shall
     be  discharged  to  First  Creek  to  the  benefit  of  PURECYCLE.

F.   WASTEWATER  TREATMENT  AND TREATED WASTEWATER QUALITY:  Wastewater from the
     Property  shall  be  treated  with  secondary  treatment,  filtration  and
     disinfection  processes,  which  shall  meet  the following criteria at the
     outlet  of  the  WWTP:


                                                                   Page 31 of 55
<PAGE>
<TABLE>
<CAPTION>
                                             30-day average  7-day average
                                             --------------  --------------
<S>       <C>                                <C>             <C>
     a.   Biochemical Oxygen Demand (5-day)         30 mg/l         45 mg/l
     b.   Fecal Coliform                     200 per 100 ml  400 per 100 ml
     c.   Total Ammonia                              8 mg/l         16 mg/l
</TABLE>

     AMD  or  the  wastewater  treatment  operator shall notify PURECYCLE in the
     event  of  a  process  upset,  equipment malfunction, or other problem that
     results  or reasonably could result in the delivery of inadequately treated
     wastewater,  and  PURECYCLE shall advise AMD whether the treated wastewater
     should  be  delivered  to  the  RWPS  or  discharged.

G.   RECLAIMED  WATER  SYSTEM:  PURECYCLE shall be responsible for obtaining all
     regulatory approvals and permits necessary for the use of PURECYCLE Treated
     Wastewater  in  the Reclaimed Water System. AMD or the wastewater treatment
     operators  shall  provide  wastewater  treatment  information,  monitoring
     reports, and other information in the possession of AMD or the operators as
     may  reasonably  be  requested by PURECYCLE for PURECYCLE's administration,
     operation,  monitoring  and  reporting  obligations for the Reclaimed Water
     System.  However,  nothing  herein  shall  require  AMD or the operators to
     conduct additional monitoring, collect data or prepare reports that are not
     otherwise required for the WWTP's regular reporting nor on a schedule other
     than  would  be  required  for  WWTP  reporting  for it's discharge permit.

H.   RECLAIMED  WATER  PUMP  STATION:  AMD  shall  provide  rights-of-way  and
     easements  at  mutually  acceptable  locations  for PURECYCLE to construct,
     modify,  access,  operate  and  maintain  a  Reclaimed  Water  Pump Station
     ("RWPS")  at  the  Point  of  Delivery  and  for  the associated pipelines.
     Notwithstanding  other  provisions herein, including but not limited to the
     objectives  below,  nothing in this Agreement shall be construed to require
     AMD  to  provide  PURECYCLE  Treated  Wastewater  flows  that  exceeds  the
     quantities, volumes, hydraulic head, quality reasonably achievable with the
     volume,  quantity and quality of inflow treated wastewater and the WWTP and
     facilities  then  existing::

     a.   PURECYCLE's  Treated  Wastewater  shall  be delivered with a hydraulic
          head  of not less than three feet below the proposed finished grade at
          and  around  the  Point  of  Delivery.

     b.   PURECYCLE's  Treated Wastewater shall be delivered at a flow equalized
          rate  not  exceeding  150%  of  the  design  day  wastewater flow rate
          assigned  to  serve  customers  on  the  Property.

     c.   PURECYCLE's  Treated  Wastewater  shall  be  delivered  more  or  less
          contemporaneously  with  the  wastewater  flows  from  the  Property.

     d.   Truck  access  to the RWPS shall be reasonably provided by the overall
          layout of any other facilities which AMD intends to locate on Planning
          Tract  B7.

     AMD  shall  allow  PURECYCLE unrestricted access to the RWPS and associated
     pipelines.  PURECYCLE will provide a copy of the construction plans for the
     reclaimed water pump


                                                                   Page 32 of 55
<PAGE>
     station  to  AMD  for  review  and  approval,  which  approval shall not be
     unreasonably  withheld.

I.   WASTEWATER  SERVICE  TO  PURECYCLE.  AMD  shall  provide  PURECYCLE  with
     treatment  of  the  residuals from it's reclaimed water treatment plant,(1)
     provided  the  quantity  of  such  flows  shall  not  exceed 5% of the WWTP
     capacity and shall not cause AMD to exceed permitted hydraulic capacity for
     the  WWTP,  and  (2)  the  quality  of  such  flows shall not cause upsets,
     bypassed  or  other  interference  with  the normal operations of the WWTP.

     AMD  may  charge  PURECYCLE  its regular rates, as established from time to
     time, for wastewater treatment. Usage charges shall be based on the metered
     flow  of  wastewater  from  each  of  PURECYCLE's  water  treatment plants.
     PURECYCLE  shall not be assessed any sewer system development fees or other
     charges for connecting the water treatment plants to the wastewater system,
     unless  treatment  of  PURECYCLE's  wastewater requires special operations,
     systems  or  additional  processes,  in  which  cases  PURECYCLE  shall  be
     responsible  for  all  such costs. Notwithstanding the foregoing, PURECYCLE
     agrees  to  fully  comply with all provisions of AMD's pretreatment program
     and  shall  be  fully  responsible  for all fees, penalties and liabilities
     arising  from PURECYCLE's failure to comply with pretreatment requirements.


                                                                   Page 33 of 55
<PAGE>
                                    EXHIBIT C
      WATER SERVICE SCHEDULE, WATER TAP TAKEDOWN SCHEDULE, SPECIAL FACILITIES
                   SCHEDULE, AND WATER SYSTEM DEMAND ESTIMATES


WATER SERVICE SCHEDULE

In  accordance  with  Section 3.02 of the Agreement, PURECYCLE shall endeavor to
cause  the  below-described Wholesale Facilities to be constructed in accordance
with  the  schedule  shown  below:

1.   Phase Zero - Completion of Wholesale Water Facilities sufficient to furnish
     non-potable  construction  water  near  the  well  and  at  a flow rate not
     exceeding  the production capacity from the initial Denver Basin well to be
     drilled  at  the  northern  Dedicated  Groundwater wellfield ("Construction
     Water") not later than six months after the date of DEVELOPER's request for
     construction  water,  or  within  thirty  days after the date that electric
     power  is  extended  to  or  otherwise  made  available  to  the well-site,
     whichever  shall  last  occur.

2.   Phase  One - Completion of Wholesale Water Facilities sufficient to provide
     potable  water  service  including  municipal-level  fire  protection flows
     ("Municipal  Water  Service");  not  later  than  nine  months  after  the
     DEVELOPER's  request  for  Municipal  Water  Service. The DEVELOPER may not
     request Municipal Water Service without the prior or concurrent request for
     Construction  Water.

3.   Completion  of  subsequent  phases and construction of additional Wholesale
     Water  Facilities  as  required  to provide water service to the developing
     Property  in  general  conformance  with  the  Water  Tap Takedown Schedule
     described  herein.

WATER  TAP  TAKEDOWN  SCHEDULE

In  accordance  with Section 4.02 of the Agreement, DEVELOPER agrees to purchase
the  minimum  number  of  Water  Taps  described or shown below on or before the
schedule  or  development  milestone  described  and shown below.  DEVELOPER may
purchase  additional  Water  Taps  (up  to a maximum number of 4,000 EQR) or may
purchase Water Taps at an accelerated schedule provided that, in the judgment of
PURECYCLE,  water  facilities  are  available  or  can  be  made  available in a
commercially  reasonable  manner  by PURECYCLE to accommodate the demands of the
additional  Customers.

     (i)  Twenty (20) Water Taps to be purchased 60 days after the date that the
          Preliminary  Development  Plan  is  recorded  by  Arapahoe  County.

     (ii) An  additional  eighty  (80)  Water  Taps  to  be  purchased  upon the
          DEVELOPER's  request to PURECYCLE for Construction Water, resulting in
          a  total  of  100  Water  Taps  purchased.

     (iii)  An  additional  fifty  six  (56) Water Taps to be purchased upon the
          DEVELOPER's  request  to  PURECYCLE  for  Municipal  Water  Service,
          resulting  in  a  total  of  156  Water  Taps  purchased.


                                                                   Page 34 of 55
<PAGE>
     (iv) An  additional two hundred forty four (244) Water Taps to be purchased
          within  90  days following the DEVELOPER's request for Municipal Water
          Service,  resulting  in  a total of 400 Water Taps purchased. The date
          that  Municipal  Water  Service  is  made  available  by PURECYCLE, as
          evidenced by a certification letter from PURECYCLE to DEVELOPER, shall
          be  the  anniversary  date  ("Anniversary") for subsequent minimum tap
          purchases  and  certain  other  actions  described  herein.

     (v)  An  additional  two hundred and fifty (250) Water Taps to be purchased
          on  the  first Anniversary and each subsequent Anniversary through the
          twelfth  (12th)  Anniversary, or until a total of 4,000 Water Taps are
          purchased,  whichever  is  earlier. If the DEVELOPER has not purchased
          4,000  Water  Taps  on the twelfth Anniversary, PURECYCLE shall not be
          obligated  to sell additional Water Taps to the Property or to reserve
          Export  Water  to  serve  these  additional  Water  Taps.

 Table  C-1  summarizes required minimum Water Tap purchases by DEVELOPER, along
with  the  schedule  or  development  milestone  for  each  takedown.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
                         TABLE C-1   WATER TAP TAKEDOWN SCHEDULE
- -----------------------------------------------------------------------------------------
                                                  Scheduled Tap          Minimum Tap
                                                    Takedown              Takedown
                                               ------------------------------------------
                                               EQR Per   Cumulative  EQR Per   Cumulative
Development Milestone or Schedule              Takedown         EQR  Takedown         EQR
- -----------------------------------------------------------------------------------------
<S>                                            <C>       <C>         <C>       <C>
60 days after PDP Approval by Arapahoe County        20          20        20          20
- -----------------------------------------------------------------------------------------
DEVELOPER's Request for Construction Water           80         100        80         100
- -----------------------------------------------------------------------------------------
DEVELOPER's Request for Municipal Water
Service                                              56         156        56         156
- -----------------------------------------------------------------------------------------
90 days after DEVELOPER's Request for
Municipal Water Service                             244         400       244         400
- -----------------------------------------------------------------------------------------
1st Anniversary of Municipal Water Service          400         800       250         650
- -----------------------------------------------------------------------------------------
2nd Anniversary of Municipal Water Service          400       1,200       250         900
- -----------------------------------------------------------------------------------------
3rd Anniversary of Municipal Water Service          400       1,600       250       1,150
- -----------------------------------------------------------------------------------------
4th Anniversary of Municipal Water Service          400       2,000       250       1,400
- -----------------------------------------------------------------------------------------
5th Anniversary of Municipal Water Service          400       2,400       250       1,650
- -----------------------------------------------------------------------------------------
6th Anniversary of Municipal Water Service          400       2,800       250       1,900
- -----------------------------------------------------------------------------------------
7th Anniversary of Municipal Water Service          400       3,200       250       2,150
- -----------------------------------------------------------------------------------------
8th Anniversary of Municipal Water Service          400       3,600       250       2,400
- -----------------------------------------------------------------------------------------
9th Anniversary of Municipal Water Service          400       4,000       250       2,650
- -----------------------------------------------------------------------------------------
10th Anniversary of Municipal Water Service                               250       2,900
- -----------------------------------------------------------------------------------------
11th Anniversary of Municipal Water Service                               250       3,150
- -----------------------------------------------------------------------------------------
12th Anniversary of Municipal Water Service                               250       3,400
- -----------------------------------------------------------------------------------------
</TABLE>


                                                                   Page 35 of 55
<PAGE>
SPECIAL  FACILITIES  SCHEDULE

DEVELOPER  and AMD shall participate with the construction of Special Facilities
in  accordance with Section 4.03 of the Agreement.  Table C-2 shows the schedule
for  the  Special  Facilities  anticipated  for the Property and PURECYCLE shall
endeavor  to have each Special Facility fully operational in accordance with the
schedule.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
                           TABLE C-2    SPECIAL FACILITIES SCHEDULE
- ---------------------------------------------------------------------------------------------
Special Facility                                Development Milestone or Schedule
- ---------------------------------------------------------------------------------------------
<S>                                             <C>
"A" - Interim use of irrigation facilities for
potable service                                 Municipal Water Service
- ---------------------------------------------------------------------------------------------
"B" - Effluent  reservoir site                  Second Anniversary of Municipal Water Service
- ---------------------------------------------------------------------------------------------
"C" - Offsite Water Transmission Pipeline       DEVELOPER's Purchase of 1,500 Water Taps
- ---------------------------------------------------------------------------------------------
"D" - Separate Wastewater Service Provider      Use of Reclaimed Water for Irrigation
- ---------------------------------------------------------------------------------------------
</TABLE>

WATER  SYSTEM  DEMAND  ESTIMATES

Development  of  the Water Facilities is to be phased.  PURECYCLE has undertaken
the  planning  and  design  of  the  Water  Facilities to provide domestic water
service  for  the  Property's  anticipated  Customers  based,  in  part,  on the
development  schedule  and  other  information  provided  by  DEVELOPER and AMD.
PURECYCLE  shall  use  commercially reasonable efforts to provide sufficient and
adequate water service to accommodate water demands in excess of those necessary
to  serve  the Water Taps provided for in Table C-1.  In the event that there is
inadequate  capacity  to satisfy excess demands, PURECYCLE reserves the right to
restrict  issuance  of  Water  Taps  to  those  provided  for  in  Table  C-1.


                                                                   Page 36 of 55
<PAGE>
                                    EXHIBIT D
                       WATER RIGHTS SPECIAL WARRANTY DEED

This Water Rights Special Warranty Deed is made and given effective ___________,
200_,  by  and from __________________________, a _____________________________,
whose  address  is  _________________________________________________________
("Grantor"),  to PURECYCLE CORPORATION, a Delaware Corporation, whose address is
8451  Delaware  Street,  Thornton  CO  80260  ("Grantee").

Grantor  hereby  sells,  conveys,  and assigns to Grantee all of Grantor's water
rights,  title  and  related  rights  and  interests of every kind in and to 443
acre-feet  per  year  of nontributary groundwater from the Upper Arapahoe, Lower
Arapahoe  and  Laramie-Fox  Hills  aquifers  underlying  the  lands described on
Exhibit  A  attached hereto (the "Property"), in the following proportions:  (1)
158  acre-feet  per  year from the Upper Arapahoe aquifer, (2) 105 acre-feet per
year  from  the  Lower Arapahoe aquifer, and (3) 180 acre-feet per year from the
Laramie-Fox  Hills  aquifer  (collectively  the  "Dedicated  Groundwater").  The
Dedicated  Groundwater  conveyed  herein  was decreed in Case No. 85CW157 in the
Water  Court  for  Water  Division  No.  1,  State  to  Colorado.

Grantor  hereby expressly reserves all of its rights, title and interests in and
to  all  non-tributary waters in the Denver aquifer underlying or appurtenant to
the  Property  and  related  interests  not  conveyed  herein  to  Grantee.

Grantor  further  warrants  the  title  and agrees to defend quiet and peaceable
possession  of the Dedicated Groundwater against all and every person or persons
claiming  title  by,  through  or  under  Grantor.

Date  this  _________  day  of  ______________,  200_.


                                           ___________________________
Attest:

By: __________________________________     By: ________________________________


Its: _________________________________     Title:______________________________


                                                                   Page 37 of 55
<PAGE>
STATE  OF  COLORADO                  )
                                     )  ss.
COUNTY  OF  ____________________     )

     The  foregoing  instrument  was  acknowledged  before me this ______ day of
__________,  2003,  by  _______________________,  as  ______________,  and  by
____________________________,  as  _______________,  of  ____________________, a
__________________________________.

     Witness  my  hand  and  official  seal.

     My  commission  expires:  ________________________


                                           -------------------------------------
                                           Notary Public
(  S  E  A  L  )


                                                                   Page 38 of 55
<PAGE>
                                    EXHIBIT E

                             FEES, RATES AND CHARGES

RANGEVIEW's  Water Tap Fee and water service charges as of the Effective Date of
this  Agreement  are  listed  following  for  information  purposes.

Water Tap Fee:  3,400 per EQR Water Resource Charge
                7,750 per EQR Water System Development Charge
                -----
                11,150 per EQR combined Water Tap Fee

     Potable  Water  Service  Charges:  $11.11  per  month  per  EQR  base  fee
       (plus)  $2.26  per  1,000  gallons used for up to 10,000 gallons
               per  billing  cycle month (1)
       (plus)  $2.90  per  1,000  gallons  from  10,000 gallons up to 20,000
               gallons  used  per  billing  cycle  month
       (plus)  $6.31  per 1,000 gallons over 20,000 gallons used per billing
               cycle  month


     Irrigation  Tap  Fee:  No  separate  tap  fee  for  typical  residential
                            Customers
                            Same  as  Water  Tap  Fee  for  other  Customers

     Irrigation  Water  Service  Charges:  No  separate  base  fee  for  typical
     residential  Customers
       Base  fee  same  as that for potable water service for other Customers
       (plus)  $1.92  per  1,000  gallons used for up to 10,000 gallons
               per  billing  cycle  month
       (plus)  $2.46  per  1,000  gallons  from  10,000 gallons up to 20,000
               gallons  used  per  billing  cycle  month
       (plus)  $5.36  per 1,000 gallons over 20,000 gallons used per billing
               cycle  month

_______________
(1)  Gallons per billing cycle month are for combined potable and irrigation use
where  customers  are  provided  service  from  both  systems.


                                                                   Page 39 of 55
<PAGE>
                                    EXHIBIT F

                    OPTION AGREEMENT FOR EXPORT WATER SERVICE
                                     for the

                                  SKY RANCH PUD

     THIS  OPTION  AGREEMENT  FOR  EXPORT WATER SERVICE ("Agreement") is entered
into  this  ______  day of October, 2003 by and between ICON INVESTORS I, LLC, a
Colorado  limited liability company ("DEVELOPER"); and PURE CYCLE CORPORATION, a
Delaware  corporation  ("PURECYCLE").

                                       RECITALS

     WHEREAS,  urban  density  development  in  general  accordance  with  the
"Preliminary  Development  Plan"  (Arapahoe County Case No. Z01-010) is proposed
for  the  Sky  Ranch  PUD ("Property").  The Property occupies about 772.3 acres
generally located south of Interstate-70 frontage road, north of Alameda Avenue,
west  of  Hayesmont  Road,  and east of Powhaton Road in unincorporated Arapahoe
County  Colorado.

     WHEREAS,  the  Property can be so developed only if adequate and sufficient
domestic  water  service  is  provided  thereto.

     WHEREAS,  the Property is owned by the DEVELOPER and one of the obligations
of  the  DEVELOPER  is  to  provide  domestic  water  service.

     WHEREAS,  in  order  to  facilitate future development of the Property, the
DEVELOPER  desires to enter into an agreement with PURECYCLE to secure an option
to  acquire  water  service  to  the  Property, under the terms set forth below.

     WHEREAS,  subject  to  the terms and conditions of the Amended and Restated
Lease  Agreement  ("Lease")  dated  April  4, 1996 between the State of Colorado
Board  of Land Commissioners ("Land Board") and RANGEVIEW METROPOLITAN DISTRICT,
a  quasi-municipal  corporation  and  political  subdivision  of  the  State  of
Colorado, acting by and through its Water Activity Enterprise ("RANGEVIEW"), and
the  Agreement  for  Sale of Export Water ("Export Water Agreement") dated April
11,  1996 between PURECYCLE and RANGEVIEW, the Land Board conveyed to RANGEVIEW,
which  subsequently  conveyed  to PURECYCLE, certain rights to surface water and
groundwater  on  and beneath the Land Board's property known as the Lowry Range,
which  water  rights are more specifically outlined in Section 6.1 of the Lease.

     WHEREAS,  simultaneously herewith, the DEVELOPER, PURECYCLE, RANGEVIEW, and
AIRPARK  METROPOLITAN  DISTRICT,  a  quasi-municipal  corporation  and political
subdivision  of  the State of Colorado ("AMD") are entering into a Water Service
Agreement  ("Service  Agreement")  which provides for RANGEVIEW and PURECYCLE to
provide  water  service  to  the  Property.


                                                                   Page 40 of 55
<PAGE>
     WHEREAS,  PURECYCLE  is  capable of providing domestic water service to the
Property  subject  to  the  terms  and  conditions  of  the  Lease.

     WHEREAS,  the  execution  of this Agreement will serve a public purpose and
promote  the health, safety, prosperity and general welfare by providing for the
planned  and  orderly  provision  of  domestic  water  service.

     NOW  THEREFORE, in consideration of the above recitals, the mutual promises
and  covenants  herein contained, and other good and valuable consideration, the
receipt  and  sufficiency  of  which  are  hereby  acknowledged,  DEVELOPER  and
PURECYCLE  hereby  agree  as  follows:

                                    ARTICLE 1
                         DEFINITIONS AND INTERPRETATIONS
                         -------------------------------

1.01  Definitions. All terms which are not defined herein shall have the meaning
assigned  to  them  in the Service Agreement.  As used herein unless the context
indicates otherwise, the words defined below and capitalized throughout the text
of  this  Agreement  shall  have  the  respective  meanings  set  forth  below:

     (a)  Anniversary:  The  annual  recurrence  of  the date falling sixty (60)
          -----------
     days  after the date that the Preliminary Development Plan for the Property
     is  recorded  by  Arapahoe  County and which is the basis for the making of
     payments  and  for  certain  other  actions  under  this  Agreement.

     (b)  Dedicated  Export  Water:  The  Dedicated  Export  Water is the Export
          ------------------------
     Water  subject  to  this  Agreement  as  defined  in  Section  2.01 herein.

     (c)  Effective  Date:  The  Effective  Date of this Agreement as defined in
          ---------------
     Section  4.01  herein.

     (d)  Equivalent  Residential  Unit (EQR):  The  measure  of  demand  placed
          -----------------------------------
     upon  the  water facilities servicing the Property by a typical and average
     single-family detached residence, as determined under RANGEVIEW's Rules and
     Regulations.

     (e)  Export  Water:  Water  from  the  Lowry  Range  that PURECYCLE can use
          -------------
     outside  of  the  Lowry Range service area, as more specifically defined in
     Section  6.1  of  the  Lease.

     (f)  Export  Water  Deed:  The  Bargain  and Sale Deed for the Export Water
          -------------------
     among  the  Land Board, RANGEVIEW and PURECYCLE executed April 11, 1996, as
     recorded  on July 31, 1996 at Reception No. A6097803 in the Arapahoe County
     Clerk  and  Recorder's  Office,  together  with  any  and  all  amendments
     subsequently  entered  into  by  the  said  parties.

     (g)  Lease:  The Amended and Restated Lease Agreement between RANGEVIEW and
          -----
     the  State  of  Colorado,  acting  by and through the Land Board (Lease No.
     S-37280), executed April 4, 1996, as recorded on July 31, 1996 at Reception
     No.  A6097802  in  the


                                                                   Page 41 of 55
<PAGE>
     Arapahoe  County  Clerk  and  Recorder's  Office, together with any and all
     amendments  subsequently  entered  into  by  the  said  parties.

     (h)  Rules  and  Regulations:  The  Rules  and  Regulations  adopted  by
          -----------------------
     RANGEVIEW,  as  they  may  be  adopted  or  amended  from  time  to  time.

     (i)  Water  Tap:  The  written  authorization,  in the form of sequentially
          ----------
     numbered  tap licenses issued by PURECYCLE, to connect to PURECYCLE's water
     facilities,  as  governed  by  RANGEVIEW's  Rules  and  Regulations.

     (j)  Water  Tap  Fee:  Collective reference to the Water System Development
          ---------------
     Charge  and  the  Water Resource Charge, both as defined and established in
     Article  12  of  RANGEVIEW's  Rules  and  Regulations.

1.02  Interpretation.  In this Agreement, unless the context otherwise requires:
      --------------

     (a)  The  terms "herein," "hereunder," "hereby," "hereto," "hereof" and any
     similar  term, refer to this Agreement as a whole and not to any particular
     Article,  Section or subdivision hereof; the term "heretofore" means before
     the  date  of execution of this Agreement; the term "now" means at the date
     of  execution  of  this Agreement; and the term "hereafter" means after the
     date  of  execution  of  this  Agreement.

     (b)  All  definitions,  terms and words shall include both the singular and
     the  plural.

     (c)  Words  of  the  masculine  gender  include  correlative  words  of the
     feminine  and  neuter  genders,  and  words  importing  the singular number
     include  the  plural  number  and  vice  versa.

     (d)  The  captions  or  headings of this Agreement are for convenience only
     and  in  no  way  define,  limit  or  describe  the  scope or intent of any
     provision,  Article  or  Section  of  this  Agreement.

                                    ARTICLE 2
                                  OPTION TERMS
                                  ------------

2.01  Option. In consideration for the payment of the option fee pursuant to the
      ------
schedule  set  forth  in  2.02 (the "Option Fee") by the DEVELOPER to PURECYCLE,
PURECYCLE  shall  grant  and  convey  to  DEVELOPER  an option (the "Option") to
purchase  Water  Taps for customers on the Property beyond 1,500 EQR and up to a
total  of 4,000 EQR.  One Thousand Two Hundred (1,200) acre-feet per year of the
Export  Water  (the "Dedicated Export Water") shall be so reserved by PURECYCLE.
The  valuation  for  the Dedicated Export Water shall be set forth in accordance
with  Section  2.05.  The  DEVELOPER  shall be authorized to exercise the Option
beginning  upon  the  Effective Date and expiring on the earliest date described
following:

     (a)  date  on  which  the  DEVELOPER  has  purchased  Water  Taps for 1,500
     Equivalent  Residential  Units  ("EQR")  on  the  Property;  or


                                                                   Page 42 of 55
<PAGE>
     (b)  at  5:00  p.m.  on  the  fifth  (5th),  sixth  (6th), or seventh (7th)
     Anniversary,  unless  in  each  case  the  DEVELOPER  extends the option in
     accordance  with  Section  2.03;

     (c)  at  5:00  p.m.  on  the  eighth  (8th)  Anniversary.

PURECYCLE's  obligations  to  convey  and  deliver Export Water to the DEVELOPER
shall be expressly subject to the terms and conditions of the Export Water Deed.

2.02  Payment  Terms.  The  Option  Fee  shall  be  payable  by the DEVELOPER to
      --------------
PURECYCLE  in  cash,  by wire transfer or by certified check with payments being
made  directly  to  the  trust  account of Davis Graham & Stubbs LLP as follows:

     (a)  Fifty  Thousand  Dollars ($50,000) payable 60 days after the date that
     the  Preliminary  Development  Plan  is  recorded  by  Arapahoe  County;

     (b)  Fifty Thousand Dollars ($50,000) payable on each of the first, second,
     third  and  fourth Anniversary unless the Option is exercised prior to such
     anniversary  date,  in  which  case  no  further  Option  Fee shall be due.

2.03  Extension of Option. In the event that the DEVELOPER has not exercised the
      -------------------
Option  in accordance with Section 2.01, the DEVELOPER may extend the Option for
up  to an additional three one-year terms by making payments to PURECYCLE of One
Hundred  Thousand  Dollars  ($100,000)  (the  Option  Extension  Fee)  for  each
additional  one-year  extension  term.  Payments  shall  be  due  on  the  fifth
Anniversary for a one year extension, on the fifth and sixth Anniversaries for a
two  year  extension,  and  on  the fifth, sixth and seventh Anniversaries for a
three  year  extension.

2.04  Exercise Terms.  The Option shall be exercised by the DEVELOPER delivering
      --------------
to  PURECYCLE  written  notice  of its intent to proceed with development beyond
1,500  EQR,  provided such notice is delivered during the term of the Option and
the  DEVELOPER  is  then  in  compliance  with  any  other contracts between the
DEVELOPER  and PURECYCLE and/or RANGEVIEW.  Upon the DEVELOPER's exercise of the
Option,  PURECYCLE  shall  reserve  the  Dedicated  Export  Water for use on the
Property  and shall diligently complete construction of the facilities necessary
to  deliver  the  Dedicated  Export  Water  to  the Property, and PURECYCLE will
provide  domestic  water  service to the Property in accordance with the Service
Agreement.

2.05  Dedicated Export Water Valuation.  The value of the Dedicated Export Water
      --------------------------------
shall  be calculated based on RANGEVIEW's Rules and Regulations in effect at the
time  of  exercise.  The  Rules  and  Regulations establish an allocation of 0.7
acre-feet  per  year  per EQR.  The 1,200 acre-feet per year of Dedicated Export
Water  is  allocated  to 1,714 EQR's which, when multiplied by the current Water
Resource  Charge of  $3,400 per EQR, results in a total valuation of $5,827,600.
Upon receipt of the payment of the Water Resource Charge for each tap, PURECYCLE
will  provide  evidence  to DEVELOPER that the Export Water associated with such
tap  has  been  released  from  any  encumbrances.

2.06  Termination  of  Option.  PURECYCLE shall have the right to terminate this
      -----------------------
Agreement  if  the  DEVELOPER  fails to pay any portion of the Option Fee or any
Option  Extension  Fee when due, unless such failure is cured within thirty (30)
days  by  the  DEVELOPER  making


                                                                   Page 43 of 55
<PAGE>
payment  of  all  amounts due, plus interest at the rate of (10%) per annum from
the date of default to the date of payment, and payment of all costs incurred by
PURECYCLE  as  a  result of the default, including but not limited to attorneys'
fees.

                                    ARTICLE 3
                    REPRESENTATIONS, WARRANTIES AND COVENANTS
                    -----------------------------------------

3.01  DEVELOPER  Representations  and  Covenants.  In  addition  to  the  other
      ------------------------------------------
representations,  warranties  and  covenants  made  by the DEVELOPER herein, the
DEVELOPER  makes  the  following  representations,  warranties  and covenants to
PURECYCLE:

     (a)  The DEVELOPER is duly authorized to execute this Agreement and perform
     its obligations hereunder, and all action on its part for the execution and
     delivery  of this Agreement has been or will be duly and effectively taken.

     (b)  Neither  the  execution  of  this  Agreement,  the consummation of the
     transactions  contemplated  hereunder,  nor  the  fulfillment  of  or  the
     compliance with the terms and conditions of this Agreement by the DEVELOPER
     will  conflict  with  or  result  in  a  breach of any terms, conditions or
     provisions  of,  or constitute a default under, or result in the imposition
     of  any  prohibited  lien,  charge  or  encumbrance of any nature under any
     agreement,  instrument, indenture or any judgment, order or decree to which
     the  DEVELOPER  is  a  party  or by which the DEVELOPER or the Property are
     bound.

3.02  PURECYCLE  Representations  and  Covenants.  In  addition  to  the  other
      ------------------------------------------
representations,  warranties  and  covenants made by PURECYCLE herein, PURECYCLE
makes  the  following  representations,  warranties  and  covenants  to  AMD:

     (a)  PURECYCLE is duly authorized to execute this Agreement and perform its
     obligations  hereunder,  and  all  action on its part for the execution and
     delivery  of this Agreement has been or will be duly and effectively taken.

     (b)  Neither  the  execution  of  this  Agreement,  the consummation of the
     transactions  contemplated  hereunder,  nor  the  fulfillment  of  or  the
     compliance  with  the  terms  and conditions of this Agreement by PURECYCLE
     will  conflict  with  or  result  in  a  breach of any terms, conditions or
     provisions  of,  or constitute a default under, the Export Water Agreement,
     the Export Water Deed, or any other mortgage, indenture or other instrument
     to  which  PURECYCLE  is  a party or by which it is bound, or result in the
     imposition  of  any  prohibited  lien,  charge or encumbrance of any nature
     under any agreement, instrument, indenture or any judgment, order or decree
     of  any court to which PURECYCLE is a party or by which PURECYCLE is bound.

3.03  Instruments  of  Further  Assurance.  The DEVELOPER and PURECYCLE covenant
      -----------------------------------
that  they  will  do,  execute,  acknowledge  and  deliver, or cause to be done,
executed,  acknowledged  and  delivered, such acts, instruments and transfers as
may  reasonably  be required for the performance of their obligations hereunder.


                                                                   Page 44 of 55
<PAGE>
                                    ARTICLE 4
                            MISCELLANEOUS PROVISIONS
                            ------------------------

4.01  Effective  Date;  Contingency.  This  Agreement shall be in full force and
      -----------------------------
effect  and be legally binding on the date it is fully executed and delivered by
the Parties hereto and upon the meeting of the contingency described immediately
below.  This  entire  Agreement  is  expressly  contingent  upon  approval  from
Arapahoe  County of the Preliminary Development Plan ("PDP"), County Case Number
Z01-010.  If said approval of the PDP is not obtained in a timely manner, but in
no  event  later than June 1, 2004,  either party may terminate the Agreement on
or  before September 1, 2004, upon thirty days written notice to the other party
and  this  Agreement shall be terminated and of no force or effect, except that,
in  the event of termination pursuant to this Section, DEVELOPER shall reimburse
PURECYCLE  for  all  administrative,  engineering and attorney fees and expenses
incurred by PURECYCLE in pursuing and planning for water service to the Property
prior  to  such  date  of  termination.

4.02  Savings  Clause.  If  any  provision  of this Agreement causes a breach or
      ---------------
violation of the Lease or the Export Water Deed, the parties shall work together
to  revise  such provision so that it no longer causes such breach or violation.

4.03  Time is of the Essence.  Time is of the essence hereof; provided, however,
      ----------------------
that  if  the  last  day  permitted  or  the  date  otherwise determined for the
performance  of  any  act  required or permitted under this Agreement falls on a
Saturday, Sunday or legal holiday, the time for performance shall be extended to
the  next  succeeding  business  day,  unless  otherwise  expressly  stated.

4.04  Parties Interested Herein.  Nothing expressed or implied in this Agreement
      -------------------------
is  intended  or  shall  be  construed to confer upon, or to give to, any person
other  than  PURECYCLE and the DEVELOPER, any right, remedy or claim under or by
reason  of  this  Agreement  or  any  covenants, terms, conditions or provisions
hereof.  All  the  covenants, terms, conditions and provisions in this Agreement
by  and  on  behalf  of  PURECYCLE  and  the DEVELOPER shall be for the sole and
exclusive  benefit  of  the  parties  hereto.

4.05  Covenants  Run  With  the  Land.  The  covenants,  terms,  conditions  and
      -------------------------------
provisions  set  forth  in this Agreement shall inure to and be binding upon the
representatives, successors and assigns of the parties hereto and shall run with
the  Property.  This  Agreement  or a Memorandum of Agreement may be executed by
the  parties  and  recorded  against  the  Property.

4.06  Notices.  Except  as  otherwise  provided  herein, all notices or payments
      -------
required  to  be  given  under  this  Agreement shall be in writing and shall be
hand-delivered  or  sent  by  certified  mail,  return receipt requested, to the
following  addresses:

          To  PURECYCLE:  Pure  Cycle  Corporation
                          8451  Delaware  Street
                          Thornton,  Colorado  80260
                          Tel  (303)292-3456
                          Fax  (303)292-3475


                                                                   Page 45 of 55
<PAGE>
          To  DEVELOPER:  Icon  Investors  I,  LLC
                          5299  DTC  Boulevard,  Suite  815
                          Greenwood  Village,  CO  80111
                          Tel  (303)984-9800
                          Fax  (303)984-9874

All  notices  will  be deemed effective one (1) day after hand-delivery or three
(3)  days  after  mailing  by registered or certified mail, postage prepaid with
return  receipt.  Any party by written notice to provided may change the address
to  which  future  notices  shall  be  sent.

4.07  Severability.  If  any  covenant,  term, condition or provision under this
      ------------
Agreement  shall,  for  any  reason, be held to be invalid or unenforceable, the
invalidity  or  unenforceability  of such covenant, term, condition or provision
shall  not affect any other provision contained herein, the intention being that
such  provisions  are  severable.

4.08  Counterparts.  This Agreement may be executed in one or more counterparts,
      ------------
each  of  which  shall constitute an original, but all of which shall constitute
one  and  the  same  document.

4.09  Amendment.  This  Agreement  may be amended from time to time by agreement
      ---------
between  the  Parties hereto; provided, however, that no amendment, modification
or  alteration  of  the  terms  or provision hereof shall be binding upon either
party  unless  the  same  is in writing and duly executed by all parties hereto.

4.10 Governing Law.  This Agreement arises out of the transaction of business in
     -------------
the  State  of Colorado by the parties hereto.  This Agreement shall be governed
and  construed  in  accordance  with  the  laws  of  the State of Colorado.  The
performance  by  the parties hereto of their respective obligations provided for
in this Agreement shall be in strict compliance with all applicable laws and the
rules and regulations of all governmental agencies, municipal, county, state and
federal,  having  jurisdiction  in  the  premises.

4.11  Assignment.  DEVELOPER  may assign their rights and obligations under this
      ----------
Option  Agreement  for  Export  Water  Service  to another entity with the prior
written  consent  of PURECYCLE, which consent shall not be unreasonably withheld
or  delayed.

4.12  Enforcement.  The parties agree that this Agreement may be enforced in law
      -----------
or  equity,  for specific performance, mandamus, injunctive or other appropriate
relief,  including  damages,  as  may  be  available  according  to the laws and
statutes  of  the  State  of  Colorado.

4.13  Service Agreement.  The parties agree that all of the terms and provisions
      -----------------
of  the  Service  Agreement  are  incorporated herein by this reference.  To the
extent  there  is  any conflict between the provisions of this Agreement and the
Service  Agreement,  the  Service  Agreement  shall  control.

4.14  Attorneys'  Fees.  In  the event either party finds it necessary to employ
      ----------------
legal counsel or to bring an action at law or other proceeding against the other
party  to  enforce any of the terms, covenants, or conditions of this Agreement,
the  party  prevailing  in any such action or other proceeding shall be paid all
reasonable  attorneys'  fees  by  the  other  party,  and  in  the  event  any


                                                                   Page 46 of 55
<PAGE>
judgment  is  secured  by  such  prevailing  party, all such attorneys' fees, as
determined  by  a court and not by jury, shall be included in any such judgment.

                                   Pure  Cycle  Corporation,  a  Delaware
                                   Corporation


                                   By:
                                      ------------------------------------------
                                        Mark Harding, President

                                   Icon Investors I, LLC, a Colorado Limited
                                   Liability Company

                                   By:  Airway Park Manager, LLC, a Colorado
                                        limited liability company

                                        By:
                                           -------------------------------------
                                             Andrew R. Klein, its Manager

STATE OF COLORADO         )
                          )  ss.
COUNTY  OF  _________     )

     The  foregoing  instrument  was  acknowledged  before me this ______ day of
November,  2003,  by  Mark  Harding,  as  President of Pure Cycle Corporation, a
Delaware  corporation.

     Witness  my  hand  and  official  seal.

     My  commission  expires:  ________________________



                                           -------------------------------------
                                           Notary Public
(  S  E  A  L  )


                                                                   Page 47 of 55
<PAGE>
STATE OF COLORADO         )
                          )  ss.
COUNTY  OF  _________     )

     The  foregoing  instrument  was  acknowledged  before me this ______ day of
November,  2003,  by  Andrew R. Klein, as Manager of Airway Park Manager, LLC, a
Colorado  limited  liability  company,  as  Manger  of  ICON  INVESTORS  I,  LLC

     Witness  my  hand  and  official  seal.

     My  commission  expires:  ________________________



                                           -------------------------------------
                                           Notary Public
(  S  E  A  L  )


                                                                   Page 48 of 55
<PAGE>
                                    EXHIBIT G

                                ESCROW AGREEMENT

     The  undersigned  principals  wish  to establish an escrow account with The
Bank  of  Cherry  Creek, N. A., hereinafter referred to as Escrow Agent, for the
purposes  established  herein.

     FIRST: Detail of the assets and other items to be deposited into escrow are
listed  on  the  attached  Schedule  A  which  is  attached hereto and is hereby
incorporated  into  this  agreement.

     SECOND:  Specific  instructions  to  the  Escrow  Agent are detailed in the
attached  Schedule  B  which  is attached hereto and is hereby incorporated into
this  agreement.

     THIRD:  The provisions of this agreement may only be supplemented, altered,
amended,  modified or revoked in writing signed by all of the parties hereto and
after  payment  of  all  fees,  costs  and  expenses  of  the  Escrow  Agent.

     FOURTH:  No assignment, transfer, conveyance or hypothecation of any right,
title  or  interest in and to the subject matter of this escrow shall be binding
upon  the  Escrow  Agent  unless written notice thereof shall be served upon the
Escrow  Agent  and all fees, costs and expenses incident thereto shall have been
paid  and  then  only  upon  the  Escrow  Agent's  assent  thereto  in  writing.

     FIFTH:  Any  notice  required or desired to be given by the Escrow Agent to
any  party  to  this  Escrow  may be given by mailing the same addressed to such
party  at the address given below or the most recent address of such party shown
on  the records of the Escrow Agent, and notice so mailed shall for all purposes
hereof be as effectual as though served upon such party in person at the time of
depositing  such  notice  in  the  mail.

     SIXTH:  The Escrow Agent may receive any payment called for hereunder after
the due date thereof unless subsequent to the due date of such payment and prior
to the receipt thereof the Escrow Agent shall have been instructed in writing to
refuse  such  payment.

     SEVENTH:  The  Escrow  Agent  shall not be personally liable for any act it
may  do or omit to do hereunder as such agent, while acting in good faith and in
the  exercise  of  its  own  best  judgment.

     EIGHTH:  Except as set forth in this Agreement or its schedules, the Escrow
Agent  is  hereby  expressly  authorized  to  disregard  any  and all notices or
warnings  given  by  any  of the parties hereto, or by any other person, firm or
corporation,  excepting only orders or process of court, and is hereby expressly
authorized  to  comply  with  and obey any and all process, orders, judgments or
decrees  of  any  court, and in case the Escrow Agent obeys or complies with any
such  process,  order, judgment or decree of any court it shall not be liable to
any  of the parties hereto or to any other person, firm or corporation by reason
of  such compliance, notwithstanding any such process, order, judgment or decree
be  subsequently reversed, modified, annulled, set aside or vacated, or found to
have  been  issued  or  entered  without  jurisdiction.


                                                                   Page 49 of 55
<PAGE>
     NINTH:  In  consideration  of  the  acceptance of this escrow by the Escrow
Agent,  the  undersigned  agree,  jointly  and  severally, for themselves, their
heirs, legal representatives, successors and assigns to pay the Escrow Agent its
charges  hereunder  and  to release it as to any liability by it incurred to any
other person, firm or corporation by reason of its carrying out any of the terms
thereof,  and  to  reimburse  it  for  all  its expenses, including, among other
things,  reasonable  counsel  fees  and  court costs incurred in connection with
litigation  arising  out  of  this  Agreement.  Escrow  fees  or  charges,  as
distinguished  from  other  expenses  hereunder,  are those fees detailed in the
nineteenth  paragraph  hereof.

     TENTH:  The  Escrow  Agent  shall  comply strictly with the requirements of
this  Agreement  but  shall  be  under  no  duty  or obligation to ascertain the
identity,  authority  or  rights  of  the  parties  executing  or  delivering or
purporting  to  execute or deliver these instructions or any documents or papers
of  payments deposited or called for hereunder, and assumes no responsibility or
liability for the validity or sufficiency of these instructions or any documents
or  papers  or  payments  deposited  or  called  for  hereunder.

     ELEVENTH:  The  Escrow  Agent  shall not be liable for the outlawing of any
rights  under  any  Statute  of  Limitation or by reason of laches in respect to
these  instructions  or  any  documents  or  papers  deposited.

     TWELFTH:  In  the event of any dispute between the parties hereto as to the
facts  of  default,  the  validity or meaning of these instructions or any other
fact or matter relating to the transaction between the parties, the Escrow Agent
is  instructed  as  follows:

     That  it shall be under no obligation to act, except under process or order
of  court,  and  shall  sustain no liability for its failure to act pending such
process  or  court  order;

     That  it  may  in  its  sole  and absolute discretion, deposit the property
herein or so much thereof as remains in its hands with the then Clerk, or acting
Clerk,  of  the District Court of Arapahoe County, State of Colorado, interplead
the  parties  hereto,  and  upon  so  depositing  such  property  and filing its
complaint  in interpleader it shall be relieved of all liability under the terms
hereof  as to the property so deposited, and furthermore, the parties hereto for
themselves, their heirs, legal representatives, successors and assigns do hereby
submit  themselves  to  the  jurisdiction of said court.  The institution of any
such  interpleader  action shall not impair the rights of the Escrow Agent under
ninth  paragraph  above.

     THIRTEENTH:  Any  expenses  to  transfer  any instruments or other property
deposited  hereunder  may be paid by the Escrow Agent from funds held in Escrow,
or  if  none  then  the  undersigned will pay or reimburse for any such expense.

     FOURTEENTH:   If  the  deposits  hereunder  are  not  withdrawn  before
_____________,  20__,  then PureCycle Corporation and Icon Investors I, LLC will
jointly  provide  the  Escrow  Agent  with  written  instructions  regarding
disbursements  of  the  deposits.

     FIFTEENTH:  The  provisions of these instructions shall be binding upon the
legal  representatives,  heirs,  successors  and  assigns of the parties hereto.


                                                                   Page 50 of 55
<PAGE>
     SIXTEENTH:   The  parties  hereto  shall be entitled to any income produced
from  investments  held  in  this  Escrow.

     SEVENTEENTH:  Other  provisions:

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------

     EIGHTEENTH:  This  agreement shall be construed under the laws of the State
of  Colorado.

     NINETEENTH:  The  undersigned  principals  hereby  agree  to pay the Escrow
Agent  the  following  fees:

- -----------------------------------------------------------------------
               $500.00  ANNUALLY  (DEDUCTED  FROM  ACCOUNT  EACH  JUNE)
- -----------------------------------------------------------------------

Fees  will  be  charged  as  follows:

Deduct  from  account   XX           Send  invoice  _____        Charge Checking
                      ------
#___________      Fee  at  closing  _____

Party(ies)  responsible  for  fees  PureCycle  Corporation and Icon Investors I,
                                    --------------------------------------------
LLC
- -----------------------------


     This  agreement  consists of four typewritten pages including this page and
the  additional  three  schedules  which  are  incorporated  by  reference.


                                                                   Page 51 of 55
<PAGE>
     IN  WITNESS  WHEREOF the undersigned have hereunto affixed their signatures
on  the  _____  day  of  ___________,  2003.



- -----------------------------       -------------------------------
Principal                           Principal

PureCycle  Corporation              Icon  Investors  I,  LLC
8451  Delaware  Street              5299 DTC Boulevard, Suite 815
Thornton,  Colorado  80260          Greenwood  Village,  CO  80111


- -----------------------------       -------------------------------
Tax  Identification  No.            Tax  Identification  No.

(303)292-3456  /303)292-3475        (303)984-9800 /(303)984-9874
- -----------------------------       -------------------------------
Telephone  No.  /  Fax  No.         Telephone  No.  /  Fax  No.

ACCEPTED:

The  Bank  of  Cherry  Creek,  N.  A.,  Escrow  Agent


By:__________________________________


                                                                   Page 52 of 55
<PAGE>
                                    EXHIBIT H

                           WATER OPINION REQUIREMENTS


     1.   PURECYCLE  owns  the  right to divert and sell outside the Lowry Range
the use of the Dedicated Export Water which will be used to supply the Property.

     2.   The  Dedicated  Export     Water has not been conveyed or committed to
ECCV  under  the  ECCV  Agreement,  or  otherwise.

     3.   The  Dedicated Export Water is not reserved to the Land Board pursuant
to  Section 5.1(c) of the Amended and Restated Lease Agreement and per Exhibit A
thereto.

     4.   The Dedicated Export Water may be used for purposes as contemplated by
the  Water Use Agreement, including re-use to extinction except for augmentation
obligations.

     5.   The  Dedicated  Export  Water  is  not  part  of  the "Reserved Water"
described  in  Section  5.1(e)  of  the  Amended  and  Restated Lease Agreement.

     6.   Rangeview  has  diligently  pursued  and  obtained the adjudication of
Water  Rights  as  contemplated by Section 5.4 of the Amended and Restated Lease
Agreement.

     7.   The  only  encumbrances  on  the  Dedicated Export Water to be used to
provide  service  under  the  Water  Service Agreement are the provisions of the
Amended  and Restated Lease Agreement and the Mortgage Deed, Security Agreement,
and  Financing  Statement dated 4/11/96 made by PURECYCLE for the benefit of the
Land  Board.

     8.   The  Dedicated  Export  Water  to be used to provide service under the
Water  Service  Agreement  is  not  subject  to  rights of first refusal for the
benefit  of  ECCV  or  Arapahoe  County.


                                                                   Page 53 of 55
<PAGE>
                                    EXHIBIT I

                         LAND BOARD ESTOPPEL CERTIFICATE


This  Estoppel  Certificate is given jointly to Airpark Metropolitan District, a
quasi-governmental  corporation  and  political  subdivision  of  the  State  of
Colorado  ("AMD"),  and  ICON  Investors  I,  LLC,  a Colorado limited liability
company  ("Developer"), by the State of Colorado, acting through its State Board
of  Land  Commissioners  (the  "State"),  with  the  understanding  that AMD and
Developer will rely on this Certificate in connection with entering into a Water
Service  Agreement  among  AMD,  Developer,  Pure  Cycle Corporation, a Delaware
corporation  ("PureCycle"),  and  Rangeview  Metropolitan  District,  a
quasi-governmental  corporation  and  political  subdivision  of  the  State  of
Colorado  ("Rangeview").
The  State  hereby  certifies  as  follows:
     1.   The  State is the Lessor under that certain Amended and Restated Lease
Agreement between Rangeview and the State (Lease No. S-37280), executed April 4,
1996,  as  recorded  on  July 31, 1996 at Reception No. A6097802 in the Arapahoe
County  Clerk and Recorder's Office (the "Lease").  A true, correct and complete
copy  of  the Lease, together with any amendments, modifications and supplements
thereto,  is  attached  hereto.  The  Lease  is the entire agreement between the
State  and  Rangeview  pertaining  to the use of all the waters on and under the
Lowry  Range  (as  defined  under  the  "Lease").  There  are  no  amendments,
modifications,  supplements,  arrangements, side letters or understandings, oral
or  written  of  any  sort,  of  the  Lease,  except  as  attached.
     2.   The Lease has been duly executed and delivered by, and is a binding
obligation of, the State, and the Lease is in full force and effect.
     3.   All current obligations of the State under the Lease have been
performed, and to the best of the State's knowledge Rangeview is not currently
in default under the Lease.
     4.   The State is not in default under the Lease.  The State has not
assigned, transferred or hypothecated the Lease or any interest therein.
     5.   The person executing this Estoppel Certificate is authorized by the
State to do so and execution hereof is the binding act of the State enforceable
against the State.

IN WITNESS WHEREOF, the State has executed this Estoppel Certificate this __ day
of  _____________,  200_.
                              STATE  OF  COLORADO
                              STATE  BOARD  OF  LAND  COMMISSIONERS


                              By:_____________________________________
                                   President


                                                                   Page 54 of 55
<PAGE>
                                    EXHIBIT J

                         RANGEVIEW ESTOPPEL CERTIFICATE

This  Estoppel  Certificate is given jointly to Airpark Metropolitan District, a
quasi-governmental  corporation  and  political  subdivision  of  the  State  of
Colorado  ("AMD"),  and  ICON  Investors  I,  LLC,  a Colorado limited liability
company  ("Developer"),  by  the  Rangeview  Metropolitan  District,  a
quasi-governmental  corporation  and  political  subdivision  of  the  State  of
Colorado  ("Rangeview"), with the understanding that AMD and Developer will rely
on  this  Certificate in connection with entering into a Water Service Agreement
among  AMD,  Developer,  Pure  Cycle  Corporation,  a  Delaware  corporation
("PureCycle"),  and  Rangeview.

Rangeview  hereby  certifies  as  follows:
     1.   Rangeview is Lessee under that certain Amended and Restated Lease
Agreement between Rangeview and the State Board of Land Commissioners (Lease No.
S-37280), executed April 4, 1996, as recorded on July 31, 1996 at Reception No.
A6097802 in the Arapahoe County Clerk and Recorder's Office (the "Lease").  A
true, correct and complete copy of the Lease, together with any amendments,
modifications and supplements thereto, is attached hereto.  The Lease is the
entire agreement between Rangeview and the State pertaining to the use of all
the waters on and under the Lowry Range (as defined under the "Lease").  There
are no amendments, modifications, supplements, arrangements, side letters or
understandings, oral or written of any sort, of the Lease, except as attached.
     2.   The Lease has been duly executed and delivered by, and is a binding
obligation of,  Rangeview, and the Lease is in full force and effect.
     3.   All current obligations of the Rangeview under the Lease have been
performed, and to the best of Rangeview's knowledge, neither the State or
Rangeview are currently in default under the Lease.
     4.   Rangeview has not assigned, transferred or hypothecated the Lease or
any interest therein.
     5.   The person executing this Estoppel Certificate is authorized by
Rangeview  to do so and execution hereof is the binding act of Rangeview
enforceable against the Rangeview.

IN WITNESS WHEREOF, Rangeview has executed this Estoppel Certificate this __ day
of  _________,  200_.
                              RANGEVIEW  METROPOLITAN  DISTRICT


                              By:_____________________________________


                                                                   Page 55 of 55
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>6
<FILENAME>doc5.txt
<DESCRIPTION>EXHIBIT 10.12
<TEXT>
                                OPTION AGREEMENT

                           NON-STATUTORY STOCK OPTION

     THIS AGREEMENT is made and entered into as of April 9, 2001, by and between
PURE CYCLE CORPORATION (the "Company") and Mark W. Harding (the "Optionee")
(together, the "Parties").

                                    RECITALS

     A.     The Board of Directors of the Company (the "Board") has resolved to
issue to Mr. Harding non-statutory stock options to purchase common stock of the
Company, 1/3 of $0.01 par value per share ("Stock").

     B.     The Optionee is desirous of obtaining the non-statutory stock
options on the terms and conditions contained herein.

                                    AGREEMENT

     For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties agree as follows:

     1.     Option Grant.  The Company hereby confirms and acknowledges that its
            ------------
Board of Directors has granted to the Optionee, as of April 9, 2001, an option
(the "Option") to purchase up to 3,000,000 shares of Stock (the "Option Shares")
     upon the terms and conditions set forth herein.

     2.     Exercise Price.   The purchase price of the Option Shares is $0.18
            --------------
per share.

     3.     Option Period.  The Option shall continue until August 30, 2007,
            -------------
unless sooner terminated or modified under the provisions of this Agreement, and
shall automatically expire on such date.

     4.     Vesting Schedule.  Subject to the provisions of Section 5 and the
            ----------------
right of the Company to accelerate the date upon which any or all of this Option
becomes vested, the Option may be exercised by the Optionee to purchase the
number of Option Shares specified in Section 1 as follows:

          (a)     2,250,000 Option Shares shall be immediately exercisable;

          (b)     250,000 Option Shares shall become exercisable on the first
anniversary of the date of grant; and

          (c)     An additional 250,000 Option Shares shall become exercisable
on each succeeding annual anniversary date of the grant until all such shares
are vested.


<PAGE>
     5.     Limitation on Exercise; Change of Control.
            -----------------------------------------

          (a)     Definition.  For purposes of this Agreement, a "change of
control" shall be deemed to have occurred if (i) any "person" or "group" (within
the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "1934 Act")), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or Mr. Thomas
P. Clark is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the 1934 Act), directly or indirectly, of more than 33-1/3 percent of the then
outstanding voting stock of the Company; or (ii) at any time during any period
of three consecutive years (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period constitute the Board
(and any new director whose election by the Board or whose nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority thereof;
or (iii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation of
the Company which would result in the voting securities of the Company or such
surviving entity outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; or (iv) a
reorganization of the Company (other than a reorganization under the United
States Bankruptcy Code). A change of control shall not include any transaction
undertaken for the purpose of reincorporating the Company under the laws of
another jurisdiction, if such transaction does not materially affect the
beneficial ownership of the Company's capital stock.

          (b)     Options.  In the event of a change of control of the Company
as defined in Section 5(a), then the Board may, in its sole discretion, without
obtaining stockholder approval, prescribe the terms and conditions for the
exercise of, or modification of, any outstanding Options. By way of
illustration, and not by way of limitation, the Board may provide for the
complete or partial acceleration of the dates of exercise of the Options, or may
provide that such Options will be exchanged or converted into options to acquire
securities of the surviving or acquiring corporation, or may provide for the
payment or distribution in respect of outstanding Options (or the portion
thereof that is currently exercisable) in cancellation thereof. The Board may
provide that Options granted hereunder must be exercised in connection with the
closing of such transaction, and that is not so exercised such Options will
expire. The Board may not, however, adversely affect the rights of any Optionee
with respect to previously granted Options without the consent of the Optionee.

     6.     Adjustment for Stock Split, Stock Dividend, Etc.  If the Company
            -----------------------------------------------
shall at any time increase or decrease the number of its outstanding shares of
Stock or change in any way the rights and privileges of such shares by means of
the payment of a stock dividend or any other distribution upon such shares
payable in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the Stock, then in
relation to the Stock that is affected by one or more of the above events, the
numbers, rights and


                                      -2-
<PAGE>
privileges of the shares of Stock included in the outstanding Option granted
hereunder shall be increased, decreased or changed in like manner as if they had
been issued and outstanding, fully paid and nonassessable at the time of such
occurrence.

     7.     Fractional Shares.  In no event shall any fractional share of Stock
            -----------------
be issued upon any exercise of this Option. If any adjustment or substitution
provided for in this Agreement shall result in the creation of a fractional
share, the Company shall, in lieu of selling or otherwise issuing such
fractional share, pay to the Optionee a cash sum in an amount equal to the
product of such fraction multiplied by the fair market value of a share of Stock
on the date the fractional share would otherwise have been issued. In the case
of any such substitution or adjustment affecting an Option, the total exercise
price for the shares of Stock then subject to an Option shall remain unchanged
but the exercise price per share shall be equitably adjusted by the Board to
reflect the greater or lesser number of shares of Stock or other securities into
which the Stock subject to the Option may have been changed.

     8.     Termination of Employment; Retirement; Death; Disability.
            --------------------------------------------------------

          (a)     If the employment of the Optionee is terminated within the
Option Period for cause, as determined by the Company, the Option shall
thereafter be void for all purposes. As used in this Section 8, "cause" shall
mean a gross violation, as determined by the Company, of the Company's
established policies and procedures. The effect of this Section 8 shall be
limited to determining the consequences of a termination, and nothing in this
Section shall restrict or otherwise interfere with the Company's discretion with
respect to the termination of any employee.

          (b)     If the Optionee terminates his employment with the Company in
a manner determined by the Board, in its sole discretion, to constitute
retirement (which determination shall be communication to the Optionee within 10
days of such termination), the Option may be exercised by the Optionee within
twelve months following his or her retirement (provided that such exercise must
occur within the Option Period), but not thereafter. In any such case, the
Option may be exercised only as to Option Shares which had become exercisable on
or before the date of the Optionee's termination of employment.

          (c)     If the Optionee dies or becomes disabled (within the meaning
of Section 22(e) of the Internal Revenue Code) during the Option Period while
still employed, or within the twelve-month period following his or her
retirement as defined in (b) above, the Option may be exercised by those
entitled to do so under the Optionee's will or by the laws of descent and
distribution, or in the case of disability, by the Optionee's guardian or legal
representative, within twelve months following the Optionee's death or
disability, but not thereafter. In any such case, the Option may be exercised
only as to the Option Shares which had become exercisable on or before the date
of the Optionee's death or disability.

          (d)     If the employment of the Optionee by the Company is terminated
(which for this purpose means that the Optionee is no longer employed by the
Company or by an Affiliated Corporation) within the Option Period for any reason
other than cause, retirement as provided in (b) above, disability or the
Optionee's death, the Option may be exercised by the Optionee within the three
months following the date of such termination (provided that such


                                      -3-
<PAGE>
exercise must occur within the Option Period), but not thereafter. In any case,
the Option may be exercised only as to the Option Shares which had become
exercisable on or before the date of termination of employment.

     9.     Transferability.  The Option granted herein is not transferable by
            ---------------
the Optionee except by will or pursuant to the laws of descent and distribution,
and this Option is exercisable during the Optionee's lifetime only by him, or in
the event of a disability or incapacity, by his guardian or legal
representative.

     10.     Exercise.  The Option may be exercised in whole or in part by
             --------
delivering to the Company written notice of exercise, together with payment in
full for the shares being purchased upon such exercise. The written notice must
specify the number of shares with respect to which such Option is exercised
(which must be in an amount evenly divisible by 100) and payment of the exercise
price. Such notice shall be in an form satisfactory to the Board and shall
specify the particular Option being exercised. The purchase of the Stock shall
take place at the principal offices of the Company upon delivery of such notice,
at which time the exercise price of the Stock shall be paid in full by any of
the methods or any combination of the methods set forth in Section 11. A
properly executed certificate or certificates representing the Stock shall be
issued by the Company and delivered to the Optionee. If Option Shares are to be
used to pay all or part of the exercise price, a certificate for the number of
shares of Stock used to pay the exercise price shall be issued by the Company
and a copy thereof delivered to the Optionee, and a separate certificate shall
be issued by the Company and delivered to the Optionee representing the shares,
in excess of the exercise price, to which the Optionee is entitled as a result
of the exercise of the Option.

     11.     Payment of Exercise Price.  The exercise price shall be immediately
             -------------------------
due upon exercise of the Option and shall, subject to the tax withholding
requirements, be payable in one or more of the following forms:

          (a)     Cash;

          (b)     Cashier's check payable to the order of the Company;

          (c)     Delivery to the Company of certificates representing the
number of shares then owned by the Optionee, the fair market value of which
equals the purchase price of the Stock purchased pursuant to the Option,
properly endorsed for transfer to the Company. For purposes of this Agreement,
the fair market value of any shares delivered in payment of the purchase price
upon exercise of the Option shall be their fair market value as of the exercise
date. The exercise date shall be the date of delivery of the certificates for
the Stock used as payment of the exercise price; or

          (d)     Delivery to the Company of a properly executed notice of
exercise together with irrevocable instructions to a broker to deliver to the
Company promptly the amount of the proceeds of the sale of all or a portion of
the Stock or of a loan from the broker to the Optionee necessary to pay the
exercise price.

     12.     Adjustment of Options.  Subject to the limitations contained in
             ---------------------
this Agreement, the Board may make any adjustment in the exercise price, the
number of shares subject to, or the


                                      -4-
<PAGE>
terms of, an outstanding Option and a subsequent grant of an Option by amendment
or substitution of an outstanding Option. Such amendment, substitution or
re-grant may result in terms and conditions (including exercise price, number of
shares covered, vesting schedule or exercise period) that differ from the terms
and conditions of the original Option. The Board may not, however, adversely
affect the rights of any Optionee to previously granted Options without the
consent of the Optionee. If such action is effected by amendment, the effective
date of such amendment shall be the date of the original grant.

     13.     Securities Law Limitations.  Neither this Option nor the Option
        --------------------------
Shares have been registered under the Securities Act of 1933, as amended (the
"1933 Act"), or under any blue sky or other state securities laws. The Optionee
therefore represents and agrees that: (a) the Option shall not be exercisable
unless the purchase of Option Shares upon the exercise of the Option is pursuant
to an applicable effective registration statement under the 1933 Act, or unless
in the opinion of counsel for the Company, the proposed purchase of such Option
Shares would be exempt from the registration requirements of the 1933 Act, and
from the qualification requirements of any state securities laws; (b) upon
exercise of the Option, it will acquire the Option Shares for its own account
for investment and not with any intent or view to any distribution, resale or
other disposition of the Option Shares; and (c) it will not sell or transfer the
Option or the Option Shares, unless the Option or the Option Shares, as
applicable, are registered under the 1933 Act, except in an transaction that is
exempt from registration under the 1933 Act, and each certificate issued to
represent any of the Option Shares shall bear a legend calling attention to the
foregoing restrictions and agreements. The Company may require as a condition of
the exercise of the Option, that the Optionee sign such further representations
and agreements as it reasonably determines to be necessary or appropriate to
assure and to evidence compliance with the requirements of the 1933 Act. Legends
evidencing such restrictions may be placed on the certificates evidencing the
Stock.

     14.     Stockholder Rights.  The Optionee shall have no stockholder rights
             ------------------
with respect to shares subject to the Option until such person shall have
exercised the Option, paid the exercise price and become the holder of record of
the purchased shares.

     15.     Withholding
             -----------

          (a)     Withholding Requirement.  The Company's obligations to deliver
shares upon the exercise of an Option shall be subject to the Optionee's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements.

          (b)     Withholding With Stock.  The Optionee may, subject to Board
approval, pay all such amounts of tax withholding, or any part thereof, by
electing to transfer to the Company, or to have the Company withhold from shares
otherwise issuable to the Optionee, shares having a value equal to the amount
required to be withheld or such lesser amount as may be elected by the Optionee.
The value of the shares to be withheld shall be based on the fair market value
of the Stock on the date that the amount of tax to be withheld is determined
(the "Tax Date"). Any such elections by the Optionee to have shares withheld for
this purpose will be subject to the following restrictions:

               (i)     All elections must be made prior to the Tax Date;


                                      -5-
<PAGE>
               (ii)     All elections shall be irrevocable; and

               (iii)    If the Optionee is an officer or director of the Company
within the meaning of Section 16 of the 1934 Act ("Section 16") , the Optionee
must satisfy the requirements of such Section 16 and any applicable rules
thereunder with respect to the use of Stock to satisfy such tax withholding
obligation.

     16.     General Restrictions.
             --------------------

          (a)     Compliance with Securities Laws.  Each Option grant shall be
subject to the requirement that, if at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such grant upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental or regulatory body, is necessary as
a condition of, or in connection with, the issuance or purchase of shares
thereunder, such grant may not be accepted or exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the Board. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration or qualification.

          (b)     Stock Restriction Agreement.  The Board may provide that
shares of Stock issuance upon the exercise of an Option shall, under certain
conditions, be subject to restrictions whereby the Company has the right of
first refusal with respect to such shares or a right or obligation to repurchase
all or a portion of such shares, which restrictions may survive an Optionee's
term of employment with the Company. The acceleration of time or times at which
an Option becomes exercisable may be conditioned upon the Optionee's agreement
to such restrictions.

     17.     Governing Law.  This Agreement is entered into and shall be
             -------------
governed by, construed and enforced in accordance with the laws of the State of
Delaware.

     18.     Optionee's Affirmation.  In consideration of the granting by the
             ----------------------
Company of the Option, the Optionee hereby affirms that he has a present
intention to remain in the employ and service of the Company for the period that
this Option continues. This affirmation, however, shall confer no right to the
Optionee to continue in the employ of the Company, nor interfere in any way with
the right of the Company to discharge the Optionee at any time for any reason
whatsoever, with or without cause.


                                      -6-
<PAGE>
     IN WITNESS HEREOF, the Parties have hereunto affixed their signatures in
acknowledgement and acceptance of the above terms and conditions as of the date
first written above.


                                                COMPANY


                                                PURE CYCLE CORPORATION


                                                By:
                                                   ----------------------------
                                                     Thomas P. Clark,
                                                     Chief Executive Officer




                                                OPTIONEE


                                                By:
                                                   ----------------------------
                                                     Mark W. Harding



                                      -7-
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>7
<FILENAME>doc6.txt
<DESCRIPTION>EXHIBIT 23.2
<TEXT>
                                                                    EXHIBIT 23.2


                          INDEPENDENT AUDITORS' CONSENT

The Board of Directors and Stockholders
Pure Cycle Corporation:

We  consent  to the use of our report dated October 10, 2003 in the registration
statement  on  Form  SB-2,  with  respect  to  the  balance sheets of Pure Cycle
Corporation  as  of  August  31,  2003  and 2002, and the related  statements of
operations,  stockholders'  equity, and cash flows for the years then ended, and
to  the  reference  to  our  firm under the heading "Experts" in the prospectus.


                                        /s/  KPMG LLP

                                        KPMG LLP


Denver, Colorado
April 16, 2004


<PAGE>

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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