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<SEC-DOCUMENT>0001035704-06-000837.txt : 20061222
<SEC-HEADER>0001035704-06-000837.hdr.sgml : 20061222
<ACCEPTANCE-DATETIME>20061222124645
ACCESSION NUMBER:		0001035704-06-000837
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20070116
FILED AS OF DATE:		20061222
DATE AS OF CHANGE:		20061222
EFFECTIVENESS DATE:		20061222

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PURE CYCLE CORP
		CENTRAL INDEX KEY:			0000276720
		STANDARD INDUSTRIAL CLASSIFICATION:	WATER SUPPLY [4941]
		IRS NUMBER:				840705083
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-08814
		FILM NUMBER:		061295970

	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>DEF 14A
<SEQUENCE>1
<FILENAME>d42283ddef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>SCHEDULE 14A</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 18pt"><B>Proxy Statement Pursuant to Section&nbsp;14(a) of the<BR>
Securities Exchange Act of 1934</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt; font-weight: bold" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Filed by the Registrant
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#254;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Filed by a party other than the Registrant
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Check the appropriate box:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT face="Wingdings">&#111;</FONT> Preliminary Proxy Statement<BR>
<FONT face="Wingdings">&#111;</FONT> Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2))<BR>
<FONT face="Wingdings">&#254;</FONT> Definitive Proxy Statement<BR>
<FONT face="Wingdings">&#111;</FONT> Definitive Additional Materials<BR>
<FONT face="Wingdings">&#111;</FONT> Soliciting Material under Section&nbsp;240.14a-12
</B>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B><FONT style="border-bottom: 1px solid #000000">PURE CYCLE CORPORATION </FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Name of Registrant as Specified in Its Charter)</DIV>


<DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt">(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Payment of Filing Fee (Check the appropriate box):
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left">No fee required.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(1</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title of each class of securities to which transaction applies:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(2</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Aggregate number of securities to which transaction applies:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(3</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Per unit price or other underlying value of transaction computed pursuant to Exchange
Act Rule&nbsp;0-11 (set forth the amount on which the filing fee is calculated and state how it
was determined):</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(4</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Proposed maximum aggregate value of transaction:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" nowrap valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(5</TD>
    <TD nowrap valign="top">)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Total fee paid:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD colspan="5" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5"  valign="top" align="left">Fee paid previously with preliminary materials:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5"  valign="top" align="left">Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of
its filing.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left">(1) Amount Previously
Paid:&nbsp;&nbsp;
<DIV style="font-size: 3pt; margin-left: 22%; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 0px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left">(2) Form, Schedule or Registration Statement No.:&nbsp;&nbsp;
<DIV style="font-size: 3pt; margin-left: 37%; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 0px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="7">(3) Filing Party:&nbsp;&nbsp;
<DIV style="font-size: 3pt; margin-left: 13%; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left" style="border-top: 0px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="7">(4) Date Filed:&nbsp;&nbsp;
<DIV style="font-size: 3pt; margin-left: 12%; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left" style="border-top: 0px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">








<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PURE CYCLE CORPORATION<BR>
8451 Delaware Street<BR>
Thornton, Colorado 80260<BR>
(303)&nbsp;292-3456</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS<BR>
To be held on January&nbsp;16, 2007</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">TO OUR STOCKHOLDERS:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">You are cordially invited to attend an Annual Meeting of the Stockholders of PURE CYCLE
CORPORATION. The Meeting will be held at 1550 Seventeenth Street, Suite&nbsp;500, Denver, Colorado
80202, at the offices of Davis Graham &#038; Stubbs LLP, on January&nbsp;16, 2007 at 2 p.m. Mountain Time for
the following purposes:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To elect a board of six directors to serve until the next Annual Meeting of
Stockholders, or until their successors are elected and have qualified.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To ratify the appointment of GHP Horwath, P.C. as our independent registered public
accounting firm for the 2007 fiscal year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To transact such other business as may properly come before the Meeting or any
adjournment(s) thereof.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Only stockholders of record as of 5:00 p.m. Mountain Time on December&nbsp;1, 2006 will be entitled to
notice of or to vote at this Meeting or any adjournment thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR
PROXIES AND VOTE IN PERSON IF THEY SO DESIRE.</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BY ORDER OF THE BOARD OF DIRECTORS</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Scott E. Lehman</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Scott E. Lehman, Secretary</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">December&nbsp;19, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<!-- TOC -->
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</TR>
<TR><TD colspan="9"><A HREF="#000">ABOUT THE MEETING</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">COMMON STOCK</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">DIRECTORS AND EXECUTIVE OFFICERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">STOCK PRICE PERFORMANCE GRAPH</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">COMPARISON OF 5 YEAR COMMULATIVE TOTAL RETURN</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">REPORT OF THE AUDIT COMMITTEE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">ELECTION OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">ACTION TO BE TAKEN UNDER THE PROXY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">STOCKHOLDER PROPOSALS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">FORM 10-K EXHIBITS</A></TD></TR>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PURE CYCLE CORPORATION<BR>
8451 Delaware Street<BR>
Thornton, Colorado 80260<BR>
(303)&nbsp;292-3456</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>PROXY STATEMENT<BR>
FOR THE<BR>
ANNUAL MEETING OF STOCKHOLDERS<BR>
To be held on January&nbsp;16, 2007</B>

</DIV>
<!-- link1 "ABOUT THE MEETING" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ABOUT THE MEETING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This proxy statement is furnished to stockholders in connection with the solicitation of proxies by
the board of directors of PURE CYCLE CORPORATION (the &#147;Company&#148;) for use at the Annual Meeting of
stockholders of the Company (the &#147;Meeting&#148;) to be held at 1550 Seventeenth Street, Suite&nbsp;500,
Denver, Colorado 80202, at the offices of Davis Graham &#038; Stubbs LLP on January&nbsp;16, 2007 at 2 p.m.
Mountain Time or at any adjournment thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Proxies were first mailed to stockholders on or about December&nbsp;19, 2006 and will be solicited
chiefly by mail. The cost of soliciting proxies is being paid by the Company. In addition to the
mailings, the Company&#146;s officers, directors and other regular employees may, without additional
compensation, solicit proxies personally or by other appropriate means.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>What is the purpose of the Meeting?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At the Meeting, stockholders are asked to act upon the matters outlined above in the Notice of
Annual Meeting of Stockholders and as described in this proxy statement. The matters to be
considered are the election of directors, ratification of the appointment of the Company&#146;s
independent auditors for the fiscal year ending August&nbsp;31, 2007, and such other matters as may
properly come before the meeting. Additionally, management will be available to respond to
appropriate questions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Who is entitled to vote at the meeting?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Only stockholders of record as of 5 p.m. Mountain Time on December&nbsp;1, 2006 (the Record Date), are
entitled to vote on matters presented at the Meeting. If you were a stockholder on that date, you
will be entitled to vote all of the shares that you held on that date at the Meeting or any
postponements or adjournments thereof. On December&nbsp;1, 2006, 18,368,807 shares of the Company&#146;s 1/3
of $.01 par value common stock (&#147;common stock&#148;) were issued and outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>What are the voting rights of the stockholders entitled to vote?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Each outstanding share of the Company&#146;s common stock will be entitled to one vote on each matter
acted upon. There is no cumulative voting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>How do I vote my shares without attending the Meeting?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Whether you hold shares directly as the stockholder of record or beneficially in street name, you
may direct how your shares are voted without attending the Meeting. If you are the stockholder of
record, you may vote your shares by completing, signing and dating the enclosed proxy card and then
mailing it to the Company&#146;s transfer agent in the pre-addressed envelope provided. You may also
vote your shares by phone by calling the Company&#146;s transfer agent at the number listed on the proxy
card. If your shares are held beneficially in street name, you may vote your shares by following
the instructions provided by your broker.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>May I revoke or change my vote?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A proxy may be revoked by a stockholder at any time prior to the exercise thereof by written notice
to the Secretary of the Company, by submission of another proxy bearing a later date or by
attending the Meeting and voting in person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Is my vote confidential?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Proxy instructions, ballots and voting tabulations that identify individual stockholders are
handled in a manner that protects your voting privacy. Your vote will not be disclosed within the
Company or to third parties, except: (1)&nbsp;as necessary to meet applicable legal requirements, (2)&nbsp;to
allow for the tabulation of votes and certification of the vote, and (3)&nbsp;to facilitate a successful
proxy solicitation. Occasionally stockholders provide written comments on their proxy cards, which
are forwarded to management of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>What is the voting requirement to approve each of the proposals?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The election of directors requires the affirmative vote of a plurality of the votes cast by shares
represented in person or by proxy and entitled to vote for the election of directors. This means
that the nominees receiving the most votes from those eligible to vote will be elected. You may
vote &#147;FOR&#148; all of the nominees or your vote may be &#147;WITHHELD&#148; with respect to one or more of the
nominees; however, a &#147;withheld&#148; vote or a broker &#147;non-vote&#148; (defined below) will have no effect on
the outcome of the election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">An affirmative vote of the majority of the shares of common stock represented and entitled to vote
at the Meeting, assuming a quorum is present, is necessary for the approval of proposal 2 and other
matters. For proposal 2, and any other business matters to be voted on, you may vote &#147;FOR,&#148;
&#147;AGAINST,&#148; or you may &#147;ABSTAIN.&#148; For the purpose of determining whether a proposal (except for the
election of directors) has received a majority vote, abstentions will be included in the vote
totals. An abstention has the same effect as a negative vote. Broker non-votes will not be included
in the vote totals and, therefore, will have no effect on the vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A broker &#147;non-vote&#148; occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power with respect to
that item and has not received voting instructions from the beneficial owner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If no specification is made, then the shares will be voted &#147;FOR&#148; the directors nominated by the
board of directors and &#147;FOR&#148; Proposal 2 and otherwise, in accordance with the recommendations of
the board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>What constitutes a quorum?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The presence, in person or by proxy, of the holders of a majority of the outstanding shares of
common stock constitutes a quorum at the Meeting for the election of directors and for the other
proposals. Abstentions and broker &#147;non-votes&#148; are counted for the purposes of determining whether a
quorum is present at Meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>What happens if additional matters are presented at the Meeting?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other than the two items of business described in this proxy, the Company is not aware of any other
business to be acted upon at the Meeting. If you grant a proxy, the persons named as proxy-holders,
Mark W. Harding and Harrison H. Augur, will have the discretion to vote your shares on any
additional matter properly presented for a vote at the Meeting. If for any unforeseen reason any of
our director nominees are not available for election at the date of the Meeting, then the named
proxy-holders will vote your shares for such other candidates as may be nominated by the board.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>What if multiple stockholders share the same address?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has adopted a procedure approved by the Securities and Exchange Commission (the &#147;SEC&#148;),
called &#147;householding,&#148; which reduces printing costs and postage fees. Under this procedure,
stockholders of record who have the same address and last name will receive only one copy of the
annual report and proxy statement unless one or more of these stockholders notify the Company that
they wish to continue receiving individual copies.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Stockholders who do not participate in householding will continue to receive separate copies of the
annual report, proxy statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If a stockholder of record residing at such an address wishes to receive a separate document in the
future, he or she may contact our transfer agent at Computershare Trust Company, Inc., 350 Indiana
St., Suite #800, Golden, CO 80401, telephone (303)&nbsp;262-0600, or write to the Company&#146;s Secretary at
the Company&#146;s address set forth above. Eligible stockholders of record receiving multiple copies of
the annual report and proxy statement can request householding by contacting the Company in the
same manner. If shares are owned through a bank, broker or other nominee, the holder can request
householding by contacting the nominee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Where can I find the voting results of the Meeting?</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company intends to announce preliminary results at the Meeting and will publish final results
in the Form 10-Q for the quarter ending February&nbsp;28, 2007.
</DIV>

<!-- link1 "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth, as of December&nbsp;1, 2006, the beneficial ownership of the Company&#146;s
issued and outstanding common stock by (i)&nbsp;each person who owns of record (or is known by the
Company to own beneficially) 5% or more of the common stock, (ii)&nbsp;each director of the Company and
each nominee for director, (iii)&nbsp;each executive officer and (iv)&nbsp;all directors and executive
officers as a group. Except as otherwise indicated, the Company believes that each of the
beneficial owners of the stock listed has sole investment and voting power with respect to such
shares, based on information filed by such person with the Securities and Exchange Commission or
based on information provided by such stockholders to the Company.
</DIV>

<!-- link1 "COMMON STOCK " -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>COMMON STOCK</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Amount and nature of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name and Address of Beneficial Owner</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">beneficial ownership</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Percent of Shares</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mark W. Harding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8451 Delaware St.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thornton, CO 80260
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">864,875</TD>
    <TD nowrap valign="top">(1)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.6</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Harrison H. Augur</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">P.O. Box 4389</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Aspen, CO 81611
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">91,551</TD>
    <TD nowrap valign="top">(2)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mark D. Campbell</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">333 West Hampden, Suite&nbsp;810</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Englewood, CO 80110
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">810,000</TD>
    <TD nowrap valign="top">(3)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.4</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Richard L. Guido</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">7037 Old Madison Pike</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Huntsville, AL 35806
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7,500</TD>
    <TD nowrap valign="top">(4)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Peter C. Howell</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">15289 Russell Road</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chagrin Falls, OH 44022
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,000</TD>
    <TD nowrap valign="top">(5)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">George M. Middlemas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">225 W. Washington, #1500</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chicago, IL 60606
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">27,500</TD>
    <TD nowrap valign="top">(6)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">All officers and directors as a group (6 persons)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,804,426</TD>
    <TD nowrap valign="top">(7)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">9.5</TD>
    <TD nowrap valign="top">%</TD>
</TR>


<TR style="font-size:6pt"><TD>&nbsp;</TD></TR>



<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">High Plains A&#038;M, LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">333 West Hampden, Suite&nbsp;810</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Englewood, CO 80110
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,000,000</TD>
    <TD nowrap valign="top">(8)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">16.3</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TPC Ventures, LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8451 Delaware Street</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thornton, CO 80260
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,619,705</TD>
    <TD nowrap valign="top">(9)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">8.8</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Par Capital Management, Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Par Investment Partners, L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Par Group, L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">One International Place,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Suite&nbsp;2401</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Boston, MA 02110
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,996,739</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.9</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Less than 1%</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-3-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes 514,163 shares purchasable by Mr.&nbsp;Harding under currently exercisable options.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes 7,500 shares purchasable by Mr.&nbsp;Augur under currently exercisable options.
Includes 10,000 shares of common stock held by Patience Partners, L.P., a limited partnership
in which a foundation controlled by Mr.&nbsp;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.&nbsp;Augur owns a 50% membership interest.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Excludes 2,190,000 shares owned by High Plains A&#038;M, LLC. By reason of his status as a
member and manager of High Plains A&#038;M, LLC, Mr.&nbsp;Campbell has voting authority over the
3,000,000 shares issued to High Plains A&#038;M, LLC, but does not have investment control. Mr.
Campbell disclaims beneficial ownership of the shares held by High Plains A&#038;M, LLC except to
the extent of his pecuniary interest therein, which is 27% or 810,000 shares of common stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes 7,500 shares purchasable by Mr.&nbsp;Guido under currently exercisable options.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes 2,500 shares purchasable by Mr.&nbsp;Howell under currently exercisable options.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes 7,500 shares purchasable by Mr.&nbsp;Middlemas under currently exercisable options.
By virtue of his position with Apex Investment Fund II L.P. (&#147;Apex&#148;), Mr.&nbsp;Middlemas is deemed
to be the indirect beneficial owner of 677,239 shares owned by Apex. Mr.&nbsp;Middlemas disclaims
beneficial ownership of these shares. Apex is controlled through one or more partnerships. The
persons who have or share control of Apex after looking through one or more intermediate
partnerships are referred to herein as &#147;ultimate general partners.&#148; The ultimate general
partners of Apex are: First Analysis Corporation, a Delaware corporation (&#147;FAC&#148;), Stellar
Investment Co. (&#147;Stellar&#148;), a corporation controlled by James A. Johnson (&#147;Johnson&#148;); Mr.
Middlemas and Chartwell Holdings Inc. (&#147;Chartwell&#148;), a corporation controlled by Paul J. Renze
(&#147;Renze&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The business address of Stellar, Johnson, and Middlemas is 225 W. Washington Street, Suite&nbsp;1500,
Chicago, Illinois 60606. The business address of FAC is 1 S. Wacker Dr., Suite&nbsp;3900, Chicago, IL
60606. The business address of Renze and Chartwell is 5 Three Lakes Road, Barrington Hills, IL
60010.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition to being the ultimate general partner of Apex, FAC is also the liquidating trustee
of Environmental Private Equity Fund II Liquidating Trust (&#147;EPEF&#148;), Environmental Venture Fund
Liquidating Trust (&#147;EVF&#148;) and the Productivity Fund II Liquidating Trust (&#147;PF II&#148;), all of whom
own the Company&#146;s common stock but are less than 5% owners (with Apex this group is collectively
referred to as the &#147;Apex/FAC partnerships&#148;). Due to these relationships, FAC may be deemed to be
the indirect beneficial owner of 1,414,528 shares of the common stock held directly by Apex,
EPEF, EF and PF II, which represents 7.7% of our outstanding common stock. By reason of his
status as the majority stockholder of FAC, F. Oliver Nicklin, Jr. may also be deemed to be the
indirect beneficial owner of such shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>By reason of their status as ultimate general partners of Apex, Stellar (and through Stellar,
Johnson), Middlemas and Chartwell (and through Chartwell, Renze) may be deemed to be the
indirect beneficial owners of 677,239 shares of common stock, or 3.7% of our outstanding stock.
When these shares are combined with his personal holdings of 27,500 (including 7,500 shares
purchasable under currently exercisable options) shares of common stock, Mr.&nbsp;Middlemas may be
deemed to be the beneficial owner (directly with respect to his shares and indirectly as to the
balance) of 704,739 shares of common stock, or 3.8% of the total outstanding stock.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->-4-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each of the Apex/FAC partnerships disclaims beneficial ownership of all shares of common stock
described herein except those shares that are owned directly by that entity. We understand that
each of the other persons named as an officer, director, partner or other affiliate of any Apex
Partnership herein disclaims beneficial ownership of all the shares of common stock described
herein.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each of the Apex/FAC partnerships disclaims the existence of a &#147;group&#148; among any or all of them
and further disclaims the existence of a &#147;group&#148; 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) (3)&nbsp;of the 1934 Act.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes 539,163 shares purchasable by directors and officers under currently
exercisable options and 10,000 shares of common stock held by Patience Partners, L.P., as
described in note 2 above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>By reason of the status of each of H. Hunter White, Mark D. Campbell and M. Walker Baus
as a member and manager of High Plains A&#038;M, LLC, each of them is deemed a beneficial owner of
these shares. Each of them disclaims beneficial ownership of the shares held by High Plains
A&#038;M, LLC, except to the extent of his pecuniary interest in the limited liability company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>By reason of his role as manager of TPC Ventures, LLC, Ryan T. Clark is deemed the
indirect beneficial owner of these shares.</TD>
</TR>

</TABLE>
</DIV>
<!-- link1 "DIRECTORS AND EXECUTIVE OFFICERS" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DIRECTORS AND EXECUTIVE OFFICERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the names, ages and titles of the persons who are currently our
directors and executive officers, along with other positions they hold with us.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="7" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mark W. Harding
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, President and CFO</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Harrison H. Augur (1)(2)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">65</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mark D. Campbell
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">51</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Richard L. Guido (1)(2)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">62</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Peter C. Howell (1)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">57</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">George M. Middlemas (2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="7" valign="top" align="left" style="border-top: 0px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Audit Committee.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Compensation Committee.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Nominating and Corporate Governance Committee</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Board Committees:</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Audit Committee </I></B><B>&#151; </B>Mr.&nbsp;Howell was appointed to the Audit Committee and was appointed the Audit
Committee Chairman on April&nbsp;18, 2005. The Board has determined that the Audit Committee members
meet the independence standards of The NASDAQ Stock Market (&#147;NASDAQ&#148;). In addition, the board has
determined that at least one member of the Audit Committee is a financial expert. That person, Mr.
Howell, meets the SEC criteria of Audit Committee financial expert by reason of his education and
his experiences in acquisitions and financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The functions to be performed by the Audit Committee include the appointment, retention,
compensation and oversight of the Company&#146;s independent auditors, including pre-approval of all
audit and non-audit services to be performed by such auditors. The Company adopted an Audit
Committee Charter, which is incorporated by reference from the Proxy Statement for the Annual
Meeting held April&nbsp;12, 2004. The Audit Committee Charter is also available on the Company&#146;s website
at www.purecyclewater.com. The Audit Committee met six times during the fiscal year ended August
31, 2006.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->-5-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Compensation Committee </I></B>&#150; Mr.&nbsp;Middlemas is the Chairman of the Compensation Committee and
Messrs.&nbsp;Augur and Guido are members of the Compensation Committee. The functions to be performed
by the Compensation Committee include establishing the compensation of officers and directors and
administering management incentive compensation plans. The Compensation Committee held two
meetings during the year ended August&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Nominating and Corporate Governance Committee </I></B>&#150; Effective April&nbsp;18, 2005 the board appointed a
Nominating and Corporate Governance Committee (the &#147;Nominating Committee&#148;) consisting of Messrs.
Guido (Chairman), Howell and Augur. The board of directors has determined that the members of the
Nominating Committee meet the independence standards of NASDAQ. In selecting nominees for the
board, the Nominating Committee is seeking a board with a variety of experiences and expertise, and
in selecting nominees it will consider business experience in the industry in which the Company
operates, financial expertise, independence from the Company, experience with publicly traded
companies, experience with relevant regulatory matters in which the Company is involved, and a
reputation for integrity and professionalism. Nominees must be at least 21&nbsp;years of age and less
than 70. The Nominating Committee will consider nominations for director made by stockholders of
record entitled to vote. In order to make a nomination for election at the 2008 annual meeting, a
stockholder must provide notice, along with supporting information regarding such nominee, to the
Company&#146;s Secretary by August&nbsp;17, 2007. The Nominating Committee evaluates nominees recommended by
stockholders utilizing the same criteria it uses for other nominees. The Company has adopted a
Nominating Committee Charter which is available on its website at www.purecyclewater.com. The
Nominating Committee held one meeting during the fiscal year ended August&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Stockholder Communication</I></B><B>s </B>&#150; The board of directors has adopted a policy for stockholders to send
communications to the board. The policy is available on the Company&#146;s website at
www.purecyclewater.com. Stockholders wishing to send communications to the board may contact Mark
W. Harding, President of Pure Cycle, at the Company&#146;s principal place of business. All such
communications shall be shared with the members of the board, or if applicable, a specified
committee or director. All directors are expected to attend the Meeting. All but one board member
attended the 2006 Annual Meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Board meetings held </I></B><I>&#150; </I>During the fiscal year ended August&nbsp;31, 2006, the board of directors held
eight meetings. All board members were present at each of the meetings with the exception of two
board members who were each absent from one meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Relationship of Directors and Officers </I></B>&#150; None of the current directors or officers, or nominees for
director, is related to any other officer or director of the Company or to any nominee for
director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Terms of Directors and Officers </I></B><I>&#150; </I>All directors are elected for one-year terms which expire at the
annual meeting of stockholders or until their successors are elected and qualified. The Company&#146;s
officers are elected annually by the board of directors and hold office until their successors are
elected and qualified.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Compensation of Directors </I></B>&#150; Each non-employee director 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 will be paid to each director for attendance at each board meeting and, if committee meetings
are held separate from board meetings, $500 will be paid for attendance at such committee meetings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition to cash compensation, as part of the 2004 Equity Incentive Plan approved by
stockholders at the 2004 Annual Meeting, each non-employee director receives an option to purchase
5,000 shares of common stock upon initial election or appointment to the board (which vest one half
at each of the first and second anniversary dates of the grant), and an option to purchase 2,500
shares for each subsequent full year in which he or she serves as a director, which options vest
one year from the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Compensation of Officers </I></B><I>&#150; </I>The following table sets forth information concerning the compensation
received by or awarded to the Company&#146;s President and Chief Financial Officer for the fiscal years
ended August&nbsp;31, 2006, 2005 and 2004:
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-6-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="33" style="border-bottom: 1px solid #000000"><B><I>Summary Compensation Table</I></B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Annual Compensation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Long Term Compensation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Payouts</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(c)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(d)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(e)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(f)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(g)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(h)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Restricted</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Securities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other Annual</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Stock</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Underlying</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">LTIP</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Name and Principal</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Fiscal</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Salary</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Bonus</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Award(s)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Options/SARS</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Payouts</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">All Other</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">( # )</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Compensation</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mark W. Harding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">President and CFO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Option/SAR
Grants in the Last Fiscal Year </I></B>&#150; No option grants were made to executive officers
in the last fiscal year.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="17" style="border-bottom: 1px solid #000000"><B><I>Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year End Option/SAR Values</I></B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(c)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(d)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(e)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">securities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Value of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">underlying</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">unexercised in-</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">unexercised</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">the-money</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">options/SARs</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">options/SARs at</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">at FY-end (#)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">FY-end ($)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Shares acquired on</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Value Realized</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Exercisable/</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Exercisable/</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">exercise (#)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Unexercisable</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Unexercisable</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mark W. Harding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,640,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">514,163/0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,327,000/0</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The &#147;Value Realized&#148; on option exercises is equal to the difference between the fair market
value of the Company&#146;s common stock on the date of exercise less the exercise price. The &#147;Value of
Unexercised In-the-Money Options at FY-end&#148; is based on $8.27 per share, the closing sale price of
the Company&#146;s common stock on the NASDAQ Capital Market on August&nbsp;31, 2006 (last trading day of
the Company&#146;s fiscal year), on which exchange the Company&#146;s common stock was trading on such date,
less the exercise price, multiplied by the aggregate number of shares subject to outstanding
options.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="12" style="border-bottom: 1px solid #000000"><B><I>Securities Authorized for Issuance Under Equity Compensation Plans</I></B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of securities</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">remaining available for</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of securities to</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">future issuance under</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">be issued upon</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Weighted-average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">equity compensation</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">exercise of outstanding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">exercise price of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">plans (excluding</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">options, warrants and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">outstanding options,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">securities reflected in</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Plan category</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">rights</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">warrants and rights</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">column (a))</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(c)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity Compensation plans approved
by security holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">361,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,477,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation plans not approved
by security holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">661,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,477,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-7-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Long-Term Incentive Plans &#150; Awards in the Last Fiscal Year &#150; </I></B>With the exception of stock
option plans described above, the Company does not have any long-term incentive plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Defined Benefit Plans </I></B>&#150; The Company does not have any defined benefit plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Compensation Committee Interlocks and Insider Participation </I></B>&#150; No interlocking relationship exists
between any member of the board of directors or the Compensation Committee and any other company&#146;s
board of directors or compensation committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The members of the Compensation Committee consist of Mr.&nbsp;Middlemas, Mr.&nbsp;Augur and Mr.&nbsp;Guido. Mr.
Augur and Mr.&nbsp;Middlemas (by reason of his status as ultimate general partner of Apex) are a party
to the Comprehensive Amendment Agreement No.&nbsp;1 (the &#147;CAA&#148;) with the Company. Under the CAA the
Company is required to distribute to numerous external parties, at varying levels of priority,
$18,682,388 of future proceeds received from the sale of Export Water (as defined therein). Mr.
Augur is a partner, with his wife, in a partnership that is entitled to receive a total of
$150,000 thereunder. Apex is entitled to receive $7,163,264 thereunder. By reason of his status as
ultimate general partner of Apex, Mr.&nbsp;Middlemas is entitled to receive a portion of that payment.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-8-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" -->
<DIV align="left"><A NAME="004"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compensation Philosophy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s executive compensation program is administered by the Compensation Committee of the
board of directors. The Compensation Committee is currently composed of three non-employee
directors. The Compensation Committee reviews the performance and compensation levels for the
President and determines option grants under the 2004 Equity Incentive Plan. The objectives of the
Compensation Committee are to correlate executive compensation with the Company&#146;s business
objectives and performance and to enable the Company to attract, retain and reward executive
officers who contribute to its long-term success.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Compensation Committee follows the following philosophy regarding compensation of the Company&#146;s
executive officers:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to provide competitive total pay opportunities in order to attract, retain and motivate high quality executive
talent critical to the Company&#146;s success;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to pay for performance through a compensation mix that emphasizes competitive cash incentives and merit-based
salary increases and de-emphasizes entitlements and perquisites;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to create a mutuality of interest between executives and stockholders through a stock option program; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to focus the executive&#146;s attention on overall corporate objectives as well as the executive&#146;s specific
operational objectives.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The goals of the Compensation Committee are to provide a total compensation package that considers
the compensation practices of companies with which the Company competes, provides variable
compensation that is linked to achievement of financial and individual performance goals, and
aligns the interests of the executive officer and employees with those of the Company by providing
them with an equity ownership in the Company. Compensation is designed to fall within the central
tendency of the range of that paid to comparable executives in corporations of similar size and in
like industry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compensation of Executive Officer Generally</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The compensation program for the Company&#146;s executive officer consists of the following components:
base salary, long-term stock option incentives and incentive bonus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Base Salary&#151;</I>The Compensation Committee reviewed and approved a salary for the President during the
year ending August&nbsp;31, 2006. His base was established by the Compensation Committee based upon
competitive compensation data for similarly sized public companies, job responsibilities, level of
experience, individual performance and contribution to the business. In making base salary
decisions, the committee exercised its discretion and judgment based upon these factors. No
specific formula was applied to determine the weight of each factor. Base Salary for fiscal year
2006 was unchanged from fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Long-Term Stock Option Incentives&#151;</I>The Compensation Committee provides the Company&#146;s President with
long-term incentive compensation through grants of options to purchase the Company&#146;s common stock.
The goal of the long-term stock option incentive programs is to align the interests of the
President with those of the Company&#146;s stockholders and to provide the President with a significant
incentive to manage the Company from the perspective of an owner with an equity stake in the
business. It is the belief of the Compensation Committee that stock options directly motivate an
executive to maximize long-term stockholder value. The philosophy of administering the long-term
stock option incentive plan is to tie the number of stock options awarded to each employee in the
plan to the performance of the Company and to the individual contribution of each employee in the
plan. The Compensation Committee believes the President currently has sufficient long-term stock
option incentives to achieve the goals described above, so no additional option grants were made
this year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Incentive Bonus&#151;</I>The Compensation Committee approved the President&#146;s bonus. The Compensation
Committee&#146;s goal in granting incentive bonuses is to tie a portion of the President&#146;s compensation
to the performance of the Company and to the President&#146;s individual contribution to the Company.
Mr.&nbsp;Harding&#146;s 2006 bonus was determined
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-9-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">by the Compensation Committee based on the performance of Mr.&nbsp;Harding in negotiating the Arkansas
River water acquisition, his continued commitment to the success of the Company and his efforts in
marketing the Company to the investing public. Additionally, Mr.&nbsp;Harding&#146;s bonus in 2006 was
granted to allow him to exercise stock options before they expired, which resulted in no cash
impact to the Company and further aligned Mr.&nbsp;Harding&#146;s interest with the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Discussion with Respect to Qualifying Compensation for Deductibility</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Section&nbsp;162(m) of the Internal Revenue Code imposes a limit on tax deductions for annual
compensation (other than performance-based compensation) in excess of one million dollars paid by a
corporation to its chief executive officer and its other four most highly compensated executive
officers. The Company has not established a policy with regard to Section 162(m) of the Code,
because the Company does not currently anticipate paying cash compensation in excess of one million
dollars per annum to any employee. The Compensation Committee will continue to assess the impact of
Section 162(m) on its compensation practices and determine what further action, if any, is
appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">/s/ George M. Middlemas<BR>
/s/ Harrison H. Augur<BR>
/s/ Richard L. Guido

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-10-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "STOCK PRICE PERFORMANCE GRAPH" -->
<DIV align="left"><A NAME="005"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STOCK PRICE PERFORMANCE GRAPH</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following line-graph provides a comparison of the cumulative total stockholder return on the
Company&#146;s common stock for the period from August&nbsp;31, 2001 through August&nbsp;31, 2006, against the S&#038;P
500 and a peer group. The comparisons in the graph are required by the rules promulgated by the SEC
and are not intended to forecast or be indicative of possible future performance of the Company&#146;s
common stock. Data for the S&#038;P 500 and the peer group assume reinvestment of dividends. The Company
has never paid dividends on its common stock and has no present plans to do so. The peer group is
comprised of the following companies: American States Water Company, Aqua America, Inc., Artesian
Resources Corp., BIW Limited, California Water Service, Connecticut Water, Middlesex Water Company,
Pennichuck Corp., SJW Corp and York Water Company.
</DIV>
<!-- link1 "COMPARISON OF 5 YEAR COMMULATIVE TOTAL RETURN" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN</B>*<BR>
Among Pure Cycle Corporation, The S &#038; P 500 Index<BR>
And A peer Group

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><IMG src="d42283dd4228301.gif" alt="(PERFORMANCE GRAPH)">

</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>$100 invested on 8/31/01 in stock or index-including reinvestment of dividends. Fiscal year
ending August&nbsp;31.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Copyright
<SUP style="font-size: 85%; vertical-align: text-top">&#169;</SUP> 2006, Standard &#038; Poor&#146;s, a division of The McGraw-Hill Companies, Inc. All rights reserved.<BR>
www.researchdatagroup.com/S&#038;P.htm

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Section&nbsp;16 (a)&nbsp;beneficial ownership reporting complianc</I></B><I>e &#150; </I>The Company&#146;s directors and executive
officers and persons who are beneficial owners of more than 10% of common stock are required to
file reports of their holdings and transactions in common stock with the Securities and Exchange
Commission and furnish the Company with such reports. Based solely upon the review of the copies
received by the Company, or upon written representations from these persons, the Company believes
that, during the fiscal year ended August&nbsp;31, 2006 all the directors, executive officers, and 10%
beneficial owners had complied with the applicable Section&nbsp;16 (a)&nbsp;filing requirements, except that
Messrs.&nbsp;Augur, Guido and Howell each filed a late Form&nbsp;4; Mr.&nbsp;Middlemas filed two late Form&nbsp;4s, and
Par Capital Management, Inc. filed one late Form&nbsp;3.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-11-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Code of Ethics </I></B><I>&#150; </I>The Company has a code of business conduct and ethics for its directors, officers
and employees, which can be viewed on our website at www.purecyclewater.com.
</DIV>
<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Notes Payable </I></B>From time to time since December&nbsp;6, 1987, Thomas P. Clark, a former director and
former Chief Executive Officer of the Company, loaned funds to the Company to cover operating
expenses. These funds were treated by the Company as unsecured debt, and promissory notes had been
issued to Mr.&nbsp;Clark. On December&nbsp;29, 2005, the Company and the Mr.&nbsp;Clark&#146;s estate agreed to terms
whereby the Company paid the estate $195,573 in full consideration of the notes payable and accrued
interest totaling $558,781. Because the estate of our former CEO is deemed a related party, the
Company recorded the $363,208 gain as a contribution of capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Comprehensive Amendment Agreement </I></B><B>&#150; </B>See disclosure under &#147;<I>Compensation Committee Interlocks and
Insider Participation</I>&#148; above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Arkansas River Agreement </I></B><I>&#150; </I>On August&nbsp;31, 2006, pursuant to an Asset Purchase Agreement (the
&#147;Arkansas River Agreement&#148;) with High Plains A&#038;M, LLC (&#147;HP A&#038;M&#148;), the Company purchased
approximately (i)&nbsp;60,000 acre-feet of senior 1883 water rights in the Arkansas River and (ii)
17,500 acres of real property and related rights from HP A&#038;M. As consideration for the assets, the
Company issued HP A&#038;M 3,000,000 shares of unregistered common stock and granted HP A&#038;M a &#147;Tap
Participation Fee&#148; consisting of the right to receive ten percent (10%) of the gross proceeds from
the sale of the next 40,000 water taps sold by Pure Cycle. HP A&#038;M also has the obligation to
manage and pay all expenses associated with the real property and the leases associated therewith
acquired by Pure Cycle for the next five years and the right to receive all rental income generated
by the leases on the real property. As a result of the acquisition, HP A&#038;M now owns 16.3% of the
outstanding shares of common stock of the Company. The members and managers of HP A&#038;M, namely Mark
D. Campbell, H. Hunter White and M. Walker Baus, are also deemed to own 16.3% of the common stock.
In addition, Mr.&nbsp;Campbell was appointed to the board of directors of the Company pursuant to the
terms of the Arkansas River Agreement. In 2007 and future years, HP A&#038;M (and indirectly its
members) will be entitled to receive the Tap Participation Fee and, for the next five (5)&nbsp;years,
the lease income from the real property. Because the timing of sales of water taps and the
development of the Company&#146;s water rights are indeterminable, the amount to be paid to HP A&#038;M
pursuant to the Arkansas River Agreement is not yet determinable, but it could ultimately be as
high as $100&nbsp;million. At the closing of the Arkansas River Agreement, Pure Cycle received a credit
for payment of the Tap Participation Fee to HP A&#038;M on 530 taps valued at approximately $892,340.
HP A&#038;M and its members had no affiliation with the Company prior to the closing of the Arkansas
River Agreement.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "REPORT OF THE AUDIT COMMITTEE" -->
<DIV align="left"><A NAME="008"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>REPORT OF THE AUDIT COMMITTEE</B><SUP style="font-size: 85%; vertical-align: text-top">1</SUP>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Audit Committee of the board of directors is comprised of three directors and operates under a
written charter adopted by the board of directors. The charter is reassessed and updated at least
annually, or as needed, in accordance with applicable rules of the Securities and Exchange
Commission and The NASDAQ Stock Market. Each of the members of the Audit Committee is a
non-employee director and is independent as defined by the NASDAQ standards for independence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Management is responsible for the Company&#146;s internal controls and financial reporting process. The
independent auditors are responsible for performing an independent audit of the Company&#146;s financial
statements in accordance with the standards of the Public Company Accounting Oversight Board
(United States) and issuing a report thereon. The Audit Committee&#146;s primary responsibility is to
monitor and oversee these processes and recommend to the board of directors the selection of the
Company&#146;s independent auditors. In fulfilling its oversight responsibilities, the Audit Committee
reviewed with management the Company&#146;s audited financial statements and discussed not only the
acceptability but also the quality of the accounting principles, the reasonableness of the
significant judgments and estimates, critical accounting policies and the clarity of disclosures in
the audited financial statements prior to issuance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Audit Committee reviewed and discussed the audited financial statements as of and for the year
ended August&nbsp;31, 2006 with Anton Collins Mitchell LLP (&#147;ACM&#148;) and discussed not only the
acceptability but also the quality of the accounting principles, the reasonableness of the
significant judgments and estimates, critical accounting policies and the clarity of disclosures in
the audited financial statements prior to issuance. The Audit Committee discussed with ACM matters
required to be discussed by the Statement on Auditing Standards No.&nbsp;61 (Communication with Audit
Committees) to the extent applicable. ACM provided the Audit Committee the written disclosures
required by Independence Standards Board Standard No.&nbsp;1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed ACM&#146;s independence with ACM.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Based on the foregoing, the Audit Committee recommended to the board of directors that the
Company&#146;s audited financial statements be included in the Company&#146;s Annual Report on Form 10-K for
the fiscal year ended August&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">/s/ Peter C. Howell<BR>
/s/ Harrison H. Augur<BR>
/s/ Richard L. Guido

</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>This section is not &#147;soliciting
material,&#148; is not deemed &#147;filed&#148; with the Commission and is
not to be incorporated by reference in any filing of the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.</TD>
</TR>

</TABLE>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">





<!-- link1 "ELECTION OF DIRECTORS" -->
<DIV align="left"><A NAME="009"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ELECTION OF DIRECTORS</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><B>(Proposal No.&nbsp;1)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The current number of members of the board of directors is fixed at six. The board of directors
nominates the following six persons currently serving on the board for reelection to the board:
Mark W. Harding, Harrison H. Augur, Mark D. Campbell, Richard L. Guido, Peter C. Howell and George
M. Middlemas. Biographical information regarding the directors follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Mark W. Harding. </I></B>Mr.&nbsp;Harding joined the Company in April&nbsp;1990 as Corporate Secretary and Chief
Financial Officer, he was appointed President of the Company in April&nbsp;2001 and joined the Board in
2004. Mr.&nbsp;Harding brings a background in investment banking and public finance, having worked from
1988 to 1990 for Price Waterhouse&#146;s management consulting services where he assisted clients in
public finance and other investment banking related services. Mr.&nbsp;Harding is the President and a
board member of the Rangeview Metropolitan District and serves on a number of advisory boards
relating to water and wastewater issues in the Denver region, including a statewide roundtable
created by the Colorado legislature charged with identifying ways in which Colorado can address the
significant water shortages facing Front Range cities including Denver and Colorado Springs. Mr.
Harding earned a B.S. Degree in Computer Science and a Masters in Business Administration in
Finance from the University of Denver.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Harrison H. Augur. </I></B>Mr.&nbsp;Augur joined the board and was elected Chairman in April&nbsp;2001. For more than
20&nbsp;years, Mr.&nbsp;Augur has been involved with investment management and venture capital investment
groups. Mr.&nbsp;Augur has been a general partner of CA Partners since 1987, and general partner of
Patience Partners LLC since 1999. Mr.&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Mark D. Campbell. </I></B>Mr.&nbsp;Campbell joined the board on August&nbsp;31, 2006. Mr.&nbsp;Campbell has spent the past
eight years as President of Southwestern Investment Group, Inc. (and its predecessor), a developer
of land, shopping centers, water assets and water storage facilities. Since August&nbsp;2001, Mr.
Campbell has also been a manager of High Plains A&#038;M, LLC, a real estate and water rights investment
company in the Denver metropolitan area. Mr.&nbsp;Campbell graduated in 1977 with a Bachelor of Science
in Business Administration from Colorado State University and became a CPA in 1978. Mr.&nbsp;Campbell
also serves as a director of several special districts in Colorado. Mr.&nbsp;Campbell is active in
supporting the communities in which he does business, organizations that support people with
disabilities, programs for troubled teens and areas that enhance education.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Richard L. Guido</I></B>. Mr.&nbsp;Guido served as a member of the Company&#146;s board from July&nbsp;1996 through August
31, 2003, and rejoined the Board in 2004. Mr.&nbsp;Guido has been Associate General Counsel of DeltaCom,
Inc., a telecommunications company, since March&nbsp;2006 and was an employee of Inco Limited, a
Canadian mining company, from 1980 through February&nbsp;2004. He previously served on the Company&#146;s
board pursuant to a voting agreement between Inco and the Company. That agreement is no longer in
effect. Mr.&nbsp;Guido was Associate General Counsel of Inco Limited and President, Chief Legal Officer
and Secretary of Inco United States, Inc. Mr.&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Peter C. Howell. </I></B>Mr.&nbsp;Howell was appointed to fill a vacancy on the board on February&nbsp;3, 2005. From
1997 to present, Mr.&nbsp;Howell has served as an advisor to various business enterprises in the area of
acquisitions, marketing and financial reporting. From August&nbsp;1994 to August&nbsp;1997, Mr.&nbsp;Howell served
as the Chairman and Chief Executive Officer of Signature Brands USA, Inc. (formerly known as
Health-O-Meter) and from 1989 to 1994 Mr.&nbsp;Howell served as Chief Executive Officer and a director
of Mr.&nbsp;Coffee, Inc. Mr.&nbsp;Howell is a member of the board of directors of Libbey, Inc. and a number
of private companies. Mr.&nbsp;Howell received a Master of Arts degree in Economics from Cambridge
University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>George M. Middlemas. </I></B>Mr.&nbsp;Middlemas has been a director since April&nbsp;1993. Mr.&nbsp;Middlemas has been a
general partner with Apex Venture Partners, a diversified venture capital management group, since
1991. From 1985 to 1991, Mr.&nbsp;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.&nbsp;Middlemas was 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 Patron Sytems, Inc., the Joffrey Ballet of
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Chicago, and Pennsylvania State University-Library Development Board. Mr.&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Proxy cannot be voted for more than the six nominees named. Directors are elected for one-year
terms or until the next Annual Meeting of the Stockholders and until their successors are elected
and qualified. All of the nominees have expressed their willingness to serve, but if because of
circumstances not contemplated, one or more nominees is not available for election, the
proxy-holders named in the enclosed proxy card intend to vote for such other person or persons as
the Nominating Committee may nominate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Campbell was designated as a nominee to the board of directors pursuant to the Arkansas River
Agreement, which agreement obligates the Company to nominate and solicit proxies for a director
nominee designated by HP A&#038;M through the earlier of (i)&nbsp;the annual meeting of the Company&#146;s
stockholders held following the fiscal year ended August&nbsp;31, 2010, (ii)&nbsp;the date on which the
Company fully discharges its obligation to pay the Tap Participation Fee, or (iii)&nbsp;August&nbsp;31, 2011.
In addition, Mr.&nbsp;Harding agreed to vote his shares of common stock in favor of the director
nominee of HP A&#038;M pursuant to a Voting Agreement for the same period that the Company is obligated
to solicit proxies for the HP A&#038;M director nominee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Middlemas was designated as a nominee to the board of directors pursuant to the Environmental
Private Equity Fund II, L.P. (&#147;EPEF&#148;) Voting Agreement, which agreement obligates TPC Ventures, LLC
(by reason of the transfer of Mr.&nbsp;Clark&#146;s shares in the Company for estate planning purposes); Ms.
Hansson, a former director of the Company; the Apex/FAC partnerships; and Fletcher Byrom, a former
director of the Company, to vote for the designee of the EPEF. This agreement will terminate at
such time as EPEF no longer owns shares of common stock of the Company, or warrants to acquire
shares of common stock, which aggregate 130,100 shares of common stock. As of December&nbsp;1, 2006,
EPEF owned 309,371 shares of common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE &#147;FOR&#148; THE ELECTION AS DIRECTORS OF THE
SIX PERSONS NOMINATED.</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>
<!-- link1 "RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS" -->
<DIV align="left"><A NAME="010"></A></DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>(Proposal No.&nbsp;2)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Action is to be taken by the stockholders at the Meeting with respect to the ratification and
approval of the selection by the Audit Committee of the Company&#146;s board of directors of GHP
Horwath, P.C. (&#147;GHP&#148;) to be the independent auditors of the Company for the fiscal year ending
August&nbsp;31, 2007. In the event of a negative vote on such ratification, the Audit Committee of the
board of directors will reconsider its selection. A representative of each of GHP and the Company&#146;s
previous auditors, Anton Collins Mitchell LLP (&#147;ACM&#148;), is expected to be present at the Meeting,
will have the opportunity to make a statement if he or she desires to do so, and is expected to be
available to respond to appropriate questions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Change in Auditors </I></B>&#150; On December&nbsp;15, 2006, Pure Cycle replaced ACM as its independent registered
public accountant. The decision to replace ACM was approved by the Audit Committee of the board of
directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ACM&#146;s reports on the financial statements of the Company for the fiscal years ended August&nbsp;31, 2006
and 2005, did not contain an adverse opinion or a disclaimer of opinion, nor was either qualified
or modified as to uncertainty, audit scope or accounting principles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ACM&#146;s report on effectiveness of the Company&#146;s internal control over financial reporting as of
August&nbsp;31, 2006, identified a material weakness in that the Company&#146;s closing process failed to
identify all necessary accounting adjustments for certain transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal years ended August&nbsp;31, 2006 and 2005, and the subsequent interim period through
December&nbsp;15, 2006 (the date of the change in auditors), there were (i)&nbsp;no disagreements with ACM on
any matter of accounting principles or practices, financial statement disclosure, or auditing scope
or procedures which, if not resolved to ACM&#146;s satisfaction, would have caused ACM to make reference
to the subject matter of such disagreement in
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">connection with its reports on the financial statements of the Company except as described below,
and (ii)&nbsp;no reportable events as listed in Item&nbsp;304(a)(1)(v) of Regulation&nbsp;S-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain of the assets the Company acquired pursuant to the Arkansas River Agreement are subject to
outstanding promissory notes with principal and accrued interest totaling approximately $14.6
million. The notes are secured by deeds of trust on the assets acquired by the Company from HP A&#038;M.
The Company did not assume any of these promissory notes and is not responsible for making any
payments thereunder. This responsibility remains solely with HP A&#038;M. In the event of default by HP
A&#038;M, at the Company&#146;s sole discretion, the Company has the option to assume some or all of the
notes in default and make payments pursuant to the notes. If HP A&#038;M defaults on the promissory
notes, the Company may foreclose on a defined amount of stock issued to HP A&#038;M being held in escrow
and reduce the Tap Participation Fee by two times the amount of principal and interest defaulted on
by HP A&#038;M. Pursuant to FASB Interpretation No.&nbsp;45 <I>Guarantor&#146;s Accounting and Disclosure
Requirements for Guarantees Including Indirect Guarantees of Indebtedness of Others (as amended)</I>,
because the Company would lose a portion of the land and water rights acquired from HP A&#038;M if the
defaulted notes are not cured, the Company&#146;s option to assume HP A&#038;M&#146;s obligations under any
defaulted promissory notes is considered an indirect guarantee of debt, and thus the outstanding
balance of the promissory notes has been reflected as a liability in the Company&#146;s balance sheet
included in the Company&#146;s Form 10-K which accompanies this proxy statement. It is ACM&#146;s position
that for periods commencing after August&nbsp;31, 2006, interest accrued on this debt, which is the
responsibility of HP A&#038;M and not the Company, should be treated as an expense paid by a principal
shareholder in accordance with Staff Accounting Bulletin No.&nbsp;79, <I>Accounting for Expenses or
Liabilities by Principal Stockholder(s)</I>, whereby all expense payments would be reflected as
interest expense with a corresponding increase to additional paid in capital. The Company continues
to evaluate the accounting for the HP A&#038;M promissory notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;15, 2006, the Company engaged its new independent registered public accountant, GHP.
Since its appointment, the Company has not consulted with GHP on matters of the type contemplated
by Item&nbsp;304(a)(2) of Regulation&nbsp;S-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">GHP has no direct or indirect financial interest in the Company and does not have any connection
with the Company in the capacity of promoter, underwriter, voting trustee, director, officer or
employee. Neither the Company, nor any officer, director or associate of the Company has any
interest in GHP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Audit Fees </I></B>&#150; For the fiscal year ended August&nbsp;31, 2006, ACM&#146;s billed fees for annual audit services
and the review of interim financial statements were $52,000. For the fiscal year ended August&nbsp;31,
2005, ACM&#146;s fees for annual audit services and the review of interim financial statements were
$31,500. The Audit Committee approved 100% of these fees in accordance with the Audit Committee
Charter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Audit-Related Fees </I></B>&#150; During the fiscal year ended August&nbsp;31, 2006, ACM&#146;s billed fees for
audit-related services were $20,000. These related to the review of the Company&#146;s internal controls
pursuant to the Sarbanes Oxley Act of 2002. The Audit Committee approved 100% of these fees. There
were no audit-related fees incurred during fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Tax and All Other Fees </I></B>&#150; The Company did not pay ACM any fees related to tax consultations, tax
return preparation or other professional services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Pre-Approval Policy </I></B>&#150; The Audit Committee has established a pre-approval policy in its Charter. In
accordance with the policy, the Audit Committee pre-approves all audit, non-audit and internal
control related services provided by the independent auditors prior to the engagement of the
independent auditors with respect to such services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>THE BOARD OF DIRECTORS RECOMMENDS A VOTE &#147;FOR&#148; THE RATIFICATION OF THE INDEPENDENT AUDITORS.</B>
</DIV>

<!-- link1 "ACTION TO BE TAKEN UNDER THE PROXY" -->
<DIV align="left"><A NAME="011"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ACTION TO BE TAKEN UNDER THE PROXY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Proxy will be voted &#147;FOR&#148; approval of proposal 2 and &#147;FOR&#148; the directors nominated
by the board, unless the Proxy is marked in such a manner as to withhold authority to so vote. The
accompanying Proxy will also be voted in connection with the transaction of such other business as
may properly come before the Meeting or any adjournment or adjournments thereof. Management knows
of no other matters, other than the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">matters set forth above, to be considered at the Meeting. If, however, any other matters properly
come before the Meeting or any adjournment thereof, the persons named in the accompanying Proxy
will vote such Proxy in accordance with their best judgment on any such matter. The persons named
in the accompanying Proxy will also, if in their judgment it is deemed to be advisable, vote to
adjourn the Meeting from time to time.
</DIV>
<!-- link1 "STOCKHOLDER PROPOSALS" -->
<DIV align="left"><A NAME="012"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STOCKHOLDER PROPOSALS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Stockholder proposals for inclusion in the Proxy Statement for the 2008 Annual Meeting of
Stockholders must be received at the principal executive offices of the Company by August&nbsp;17, 2007
but not before June&nbsp;18, 2007. For more information refer to the Company&#146;s Bylaws which were filed
as Exhibit&nbsp;3.2 to the Registration Statement on Form SB-2/A filed on June&nbsp;10, 2004. The Company is
not required to include proposals received outside of these dates in the proxy materials for the
2007 Annual Meeting of Stockholders, and any such proposals shall be considered untimely.
</DIV>
<!-- link1 "FORM 10-K EXHIBITS" -->
<DIV align="left"><A NAME="013"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FORM 10-K EXHIBITS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has included with this Proxy Statement a copy of its Form 10-K which is part of the
Annual Report for the fiscal year ending August&nbsp;31, 2006, including the financial statements,
schedules and list of exhibits. The Company will mail without charge, upon written request or by
sending an email to info@purecyclewater.com<B>, </B>a copy of its Form 10-K exhibits. Requests should be
sent to Pure Cycle Corporation, 8451 Delaware Street, Thornton, CO 80260. They are also available,
free of charge, at the SEC&#146;s web site, <U>www.sec.gov</U> which can also be accessed through the Company&#146;s
website at <U>www.purecyclewater.com</U>.
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<P><DIV style="position: relative; float: left; width: 48%">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(PURE CYCLE CORPORATION LOGO)

</DIV>
</DIV>

<P><DIV style="position: relative; float: right; width: 48%">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">

</DIV>
</DIV>

<BR clear="all"><BR>

<P><DIV style="position: relative; float: left; width: 7%">

<DIV align="left" style="font-size: 10pt; margin-top: 18pt">
</DIV>
</DIV>

<P><DIV style="position: relative; float: left; margin-left: 2%; width: 35%">

<DIV align="left" style="font-size: 8pt; margin-top: 6pt"><BR>
</DIV>

<DIV align="left" style="font-size: 8pt; margin-top: 6pt">MR A SAMPLE<BR>
DESIGNATION (IF ANY)<BR>
ADD 1<BR>
ADD 2<BR>
ADD 3<BR>
ADD 4<BR>
ADD 5<BR>
ADD 6
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; MARGIN-LEFT: 45%">000004<BR><BR><B>Least Address Line</B>
</DIV>
</DIV>

<DIV style="position: relative; float: right; width: 40%">

<DIV align="left" style="font-size: 8pt; margin-top: 6pt">000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext
</DIV>

<DIV align="left" style="font-size: 12pt; margin-top: 12pt">C 1234567890 JNT
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"></DIV>


<DIV align=center>
<TABLE style="FONT-SIZE: 8pt" cellSpacing=0 cellPadding=0 width="100%" border=0>
<!-- Begin Table Head -->
  <TR vAlign=bottom>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><FONT
      style="FONT-SIZE: 14pt"><FONT face=Wingdings>o</FONT></FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>Mark this box with an X if you have made<BR>
    changes to your name or address details above.</TD></TR>
<!-- End Table Body -->
</TABLE>
</DIV>
</DIV>


<BR clear="all"><BR>

<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 1px">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B><FONT style="font-size:10pt">Annual Meeting Proxy Card</FONT></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">1 <B>Election of Directors</B></DIV>

<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR style="FONT-SIZE: 8pt; BACKGROUND: none transparent scroll repeat 0% 0%; COLOR: #000000" vAlign=top>
    <TD noWrap align=left width="1%">1.&nbsp;&nbsp;</TD>
    <TD>The Board of Directors recommends a vote FOR the listed nominees.</TD></TR></TABLE>

<DIV align=center>
<TABLE style="FONT-SIZE: 8pt" cellSpacing=0 cellPadding=0 width="95%" border="0">
<!-- Begin Table Head -->
  <TR vAlign=bottom>
    <TD width="24%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD></TR><!-- End Table Head --><!-- Begin Table Body -->
  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><B>For</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><B>Withhold</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><B>For</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><B>Withhold</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
        </TR>

  <TR vAlign=bottom>
    <TD vAlign=top>
    <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
</TR>
<TR vAlign=bottom>
    <TD vAlign=top><DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">01 &#151; Mark W. Harding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>04 &#151; Richard L. Guido&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt">&nbsp;</FONT></TD>
</TR>
  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">02 &#151; Harrison H. Augur</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>05 &#151; Peter C. Howell</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt">&nbsp;</FONT></TD>
</TR>
  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">03 &#151; Mark D. Campbell</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>06 &#151; George M. Middlemas</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&#111;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt">&nbsp;</FONT></TD>
</TR>

  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD></TR>

  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&nbsp;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>&nbsp;</FONT></FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><FONT style="FONT-SIZE: 14pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD>
</TR>

<!-- End Table Body --></TABLE></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">2 <B>Ratification of Appointment of Independent Auditors</B></DIV>
<div style="FONT-SIZE: 8pt" align=left>&nbsp;</div>

<DIV align=left style="margin-top: 6pt">
<TABLE style="FONT-SIZE: 8pt" cellSpacing=0 cellPadding=0 width="55%" border=0>
<!-- Begin Table Head -->

  <TR vAlign=bottom>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="70%"></TD>
    <TD width="5%"></TD>
    <TD width="4%"></TD>
    <TD width="5%"></TD>
    <TD width="4%"></TD>
    <TD width="5%"></TD>
    <TD width="4%"></TD>
</TR>
<!-- End Table Head --><!-- Begin Table Body -->
  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><B>For</B></TD>

    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><B>Against</B></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center><B>Abstain</B></TD>

</TR>

  <TR style="FONT-SIZE: 1px">
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=bottom align=center>&nbsp;</TD></TR>

  <TR vAlign=bottom>
    <TD vAlign=top>2.</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">The Board of Directors recommends a vote FOR the ratification of appointment of
the independent auditors named in the proxy statement for the fiscal year ending<BR>
August&nbsp;31, 2007.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>o</FONT></FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>o</FONT></FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><FONT style="FONT-SIZE: 14pt"><FONT
      face=Wingdings>o</FONT></FONT></TD>

     </TR>
      <!-- End Table Body --></TABLE></DIV>

<DIV align="left" style="font-size: 8pt; margin-top: 6pt"><B>This proxy, when properly executed, will be voted in the manner directed herein by the stockholder.
If no instructions are specified, this proxy will be voted FOR the election of directors and
proposal 2.</B>
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Authorized Signatures &#151; Sign Here &#151; This section must be completed for your instructions to be executed.</B>
</DIV>

<DIV align="left" style="font-size: 8pt; margin-top: 6pt">NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint
holders must sign. When signing as attorney, trustee, executor, administrator, guardian or
corporate officer, please provide your FULL title.
</DIV>

<DIV style="FLOAT: left; WIDTH: 31%; POSITION: relative">
<div style="FONT-SIZE: 7pt; margin-top: 6pt ; font-family: Helvetica,Arial,sans-serif" align=left>Date (mm/dd/yyyy) </div>
<DIV
style="BORDER-RIGHT: black 1px solid; PADDING-RIGHT: 1px; BORDER-TOP: black 1px solid; PADDING-LEFT: 1px; PADDING-BOTTOM: 1px; BORDER-LEFT: black 1px solid; WIDTH: 100%; PADDING-TOP: 1px; BORDER-BOTTOM: black 1px solid">

<DIV align=center>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 cellPadding=0 width="100%"
border=0><!-- Begin Table Head -->

  <TR style="BACKGROUND: #eeeeee; COLOR: #ffffff" vAlign=bottom>
    <TD width="27%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="27%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="40%"></TD></TR><!-- End Table Head --><!-- Begin Table Body -->
  <TR style="BACKGROUND: #eeeeee; COLOR: #ffffff" vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><FONT
      style="FONT-SIZE: 18pt"><FONT face=Wingdings>n</FONT></FONT> <FONT
      style="FONT-SIZE: 18pt"><FONT face=Wingdings>n</FONT></FONT></DIV></TD>
    <TD style="BACKGROUND: #eeeeee; COLOR: #000000" vAlign=top align=left
    colSpan=3><FONT style="FONT-SIZE: 18pt">/</FONT></TD>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><FONT
      style="FONT-SIZE: 18pt"><FONT face=Wingdings>n</FONT></FONT> <FONT
      style="FONT-SIZE: 18pt"><FONT face=Wingdings>n</FONT></FONT></DIV></TD>
    <TD style="BACKGROUND: #eeeeee; COLOR: #000000" vAlign=top align=left
    colSpan=3><FONT style="FONT-SIZE: 18pt">/</FONT></TD>
    <TD vAlign=top noWrap>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><FONT
      style="FONT-SIZE: 18pt"><FONT face=Wingdings>n</FONT></FONT> <FONT
      style="FONT-SIZE: 18pt"><FONT face=Wingdings>n</FONT></FONT> <FONT
      style="FONT-SIZE: 18pt"><FONT face=Wingdings>n</FONT></FONT> <FONT
      style="FONT-SIZE: 18pt"><FONT face=Wingdings>n</FONT></FONT></DIV></TD></TR><!-- End Table Body --></TABLE></DIV>
      </DIV></DIV>



<DIV style="FLOAT: right; WIDTH: 31%; POSITION: relative">
<div style="FONT-SIZE: 7pt; margin-top: 6pt" align=left>Signature 2 - Please keep signature within
the box</div>
<DIV style="BORDER-RIGHT: black 1px solid; PADDING-RIGHT: 1px; BORDER-TOP: black 1px solid; PADDING-LEFT: 1px; PADDING-BOTTOM: 1px; BORDER-LEFT: black 1px solid; WIDTH: 100%; PADDING-TOP: 1px; BORDER-BOTTOM: black 1px solid">

<DIV align=center>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 cellPadding=0 width="100%"
border=0><!-- Begin Table Head -->

  <TR vAlign=bottom>
    <TD width="27%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="27%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="40%"></TD></TR><!-- End Table Head --><!-- Begin Table Body -->
  <TR vAlign=bottom>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top noWrap>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><FONT
      style="FONT-SIZE: 18pt">&nbsp;</font><FONT
      style="FONT-SIZE: 18pt">&nbsp;</FONT> <FONT
      style="FONT-SIZE: 18pt">&nbsp;</FONT> <FONT
      style="FONT-SIZE: 18pt">&nbsp;</FONT>
</DIV></TD></TR><!-- End Table Body --></TABLE></DIV></div>




<DIV align=center>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 cellPadding=0 width="100%"
border=0><!-- Begin Table Head -->

  <TR vAlign=bottom>
    <TD width="100%"></TD></TR><!-- End Table Head --><!-- Begin Table Body -->
  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><FONT
      style="FONT-SIZE: 18pt"></FONT>&nbsp;</DIV></TD></TR><!-- End Table Body --></TABLE></DIV></DIV>
<DIV style="FLOAT: left; MARGIN-LEFT: 2%; WIDTH: 31%; POSITION: relative">
<div style="FONT-SIZE: 7pt; margin-top: 6pt; font-family: Helvetica,Arial,sans-serif" align=left>Signature
1 - Please keep signature within
the box </div>

<DIV style="BORDER-RIGHT: black 1px solid; PADDING-RIGHT: 1px; BORDER-TOP: black 1px solid; PADDING-LEFT: 1px; PADDING-BOTTOM: 1px; BORDER-LEFT: black 1px solid; WIDTH: 100%; PADDING-TOP: 1px; BORDER-BOTTOM: black 1px solid">

<DIV align=center>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 cellPadding=0 width="100%"
border=0><!-- Begin Table Head -->

  <TR vAlign=bottom>
    <TD width="27%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="27%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="40%"></TD></TR><!-- End Table Head --><!-- Begin Table Body -->
  <TR vAlign=bottom>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top>&nbsp;</TD>
    <TD vAlign=top noWrap>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><FONT
      style="FONT-SIZE: 18pt">&nbsp;</font><FONT
      style="FONT-SIZE: 18pt">&nbsp;</FONT> <FONT
      style="FONT-SIZE: 18pt">&nbsp;</FONT> <FONT
      style="FONT-SIZE: 18pt">&nbsp;</FONT></DIV></TD></TR><!-- End Table Body --></TABLE></DIV></div>







<DIV align=center>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 cellPadding=0 width="100%"
border=0><!-- Begin Table Head -->

  <TR vAlign=bottom>
    <TD width="100%"></TD></TR><!-- End Table Head --><!-- Begin Table Body -->
  <TR vAlign=bottom>
    <TD vAlign=top>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><FONT
      style="FONT-SIZE: 18pt"></FONT>&nbsp;</DIV></TD>
    </TR>
    <!-- End Table Body -->
    </TABLE>
    </DIV>
    </DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center">0 1 1 4 5 8 1</TD>
    <TD align="left"><DIV style="margin-left:15px; text-indent:-15px">1 U P X</DIV></TD>
    <TD align="left" valign="top">C O Y</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV align="left" style="font-size: 12pt"><B>Proxy &#151; Pure Cycle Corporation</B></DIV>


<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Proxy Solicited by Board of Directors for Annual Meeting &#151; January&nbsp;16, 2007</B>
</DIV>

<DIV align="left" style="font-size: 8pt; margin-top: 6pt">Harrison H. Augur and Mark W. Harding, or either of them, each with the power of substitution,
are hereby authorized to represent and vote the shares of the undersigned, with all the powers
which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Pure Cycle
Corporation to be held on January&nbsp;16, 2007 at 2PM Mountain time at the offices of Davis, Graham &#038;
Stubbs LLP, 1550 17th Street, Suite&nbsp;500, Denver, CO 80202, or at any postponement or adjournment thereof.
</DIV>

<DIV align="left" style="font-size: 8pt; margin-top: 6pt"><B>In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.</B>
</DIV>


<DIV align="left" style="font-size: 8pt; margin-top: 12pt">(Continued and to be voted on reverse side.)
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio --><!-- /Folio -->
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