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<SEC-DOCUMENT>0001104659-07-048479.txt : 20080211
<SEC-HEADER>0001104659-07-048479.hdr.sgml : 20080211
<ACCEPTANCE-DATETIME>20070619130025
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001104659-07-048479
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20070619

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:		CORRESP

	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>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<html>

<head>







</head>

<body lang="EN-US">

<div>


<p align="center" style="margin:0pt 0pt 12.0pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">June 19, 2007</font></p>

<p style="font-weight:bold;margin:0pt 0pt 12.0pt;text-decoration:underline;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Via EDGAR </font></u></b></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Mr.
H. Christopher Owings<br>
Securities and Exchange Commission<br>
Division of Corporate Finance<br>
100 F Street, N.E.<br>
Washington, D.C.&#160; 20549</font></p>

<p style="font-family:Times New Roman;margin:12.0pt 5.65pt 12.0pt 108.0pt;text-indent:-36.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Re:</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Pure Cycle
Corporation<br>
Amendment No. 1 to Form S-3<br>
Filed May 30, 2007<br>
File No. 333-142335<br>
Form 10-K for Fiscal Year Ended August 31, 2006<br>
Form 10-Q for the fiscal quarter ended February 28, 2007<br>
File No. 0-08814</font></p>

<p style="line-height:normal;margin:11.0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dear Mr. Owings:</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Set
forth below are the responses of Pure Cycle Corporation (the &#147;Company&#148;) to the
comments of the Staff of the Division of Corporate Finance, which were
delivered in your letter dated June 14, 2007, regarding the Company&#146;s Amended Form
S-3 filed on May 30, 2007 and the Company&#146;s Form 10-K for the fiscal year ended
August 31, 2006 filed November 21, 2006, amended on April 16, 2007, and the
Company&#146;s Form 10-Q for the fiscal quarter ended February 28, 2007 filed on
April 16, 2007.</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">With
respect to your comments on the Company&#146;s proposed restatement of its Form 10-K/A-1
for the fiscal year ended August 31, 2006, we have included proposed revisions
to the amendement in this letter.&#160; With respect to the Company&#146;s Form 10-Q, we
have provided additional information which we hope will clarify the Company&#146;s
accounting as well as a proposed restatement. If such proposed revisions
satisfactorily address your comments, the Company will file, by EDGAR,
Amendment No.&nbsp;2 to the Registration Statement on Form S-3, amendment number
2 to its Form 10-K, and amendment number 1 to its Form 10-Q incorporating the
proposed revisions.</font></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">We
acknowledge that (i) the Company is responsible for the adequacy and accuracy
of the disclosure in the filing; (ii) staff comments or changes to disclosure
in response to staff comments do not foreclose the Commission from taking any
action with respect to the filing; and (iii) the Company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any
person under the federal securities laws of the United States.</font></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">For your
convenience, the Staff&#146;s comments are indicated in bold below, followed by
responses on behalf of the Company.</font></p>


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<p style="margin:0pt 0pt 12.0pt;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Form S-3:</font></u></b></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 27.0pt;text-indent:-27.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">1.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b>Please file an updated
auditor&#146;s consent</b></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The
Company will file, by EDGAR, Amendment No.&nbsp;2 to the Registration Statement
on Form S-3 which includes updated auditor&#146;s consents as soon as the Company
and the Staff have resolved all the Staff&#146;s comments.</font></p>

<p style="margin:0pt 0pt 12.0pt;page-break-after:avoid;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Form 10-K for the fiscal year
ended August 31, 2006</font></u></b></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 27.0pt;text-indent:-27.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">2.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b>We note your response to comment
4 in our letter dated May 21, 2007. Please revise to clarify that the revisions
were based on U.S. GAAP, thather than based on consultations with the staff of
the Commission.</b></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The
Company&#146;s proposed language in <i>Item 9A. Controls and
Procedures</i> is consistent with that of the disclosure in the
Explanatory Note on page 3 of the Company&#146;s Form 10-K/A and Note 1 to the financial
statements. Although this language was discussed at legnth with the Accounting
Interpretations Group of the Office of the Chief Accountant (please contact
Mark Mahar at 202-551-5308 for further details), the Company is proposing to revise
its wording in its proposed restatement of Item 9A(b) as follows (changes to the
Company&#146;s proposed revised Item 9A(b) included with the Company&#146;s response
letter dated May 30, 2007 is bolded and underlined for your convience):</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The
disclosure in Item 9A(b) is proposed to be revised in an amendment to the
Company&#146;s Form 10-K, as set forth below:</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <i>Management&#146;s
Report on Internal Control Over Financial Reporting</i></font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting. The Securities and Exchange
Act of 1934 defines internal control over financial reporting in Rule 13a-15(f)
as a process designed by, or under the supervision of, the Company&#146;s principal
executive and principal financial officers and effected by the Company&#146;s board
of directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America and includes
those policies and procedures that:</font></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 72.0pt;text-indent:-36.0pt;"><font size="2" face="Symbol" style="font-size:10.0pt;">&#183;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company;</p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 72.0pt;text-indent:-36.0pt;"><font size="2" face="Symbol" style="font-size:10.0pt;">&#183;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the
United States of America, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors
of the Company; and</p>


 <p style="margin:24.0pt 0pt .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p> <br><hr size="3" width="100%" noshade color="#010101" align="center">

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<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 72.0pt;text-indent:-36.0pt;"><font size="2" face="Symbol" style="font-size:10.0pt;">&#183;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company&#146;s assets that could have a material effect on the financial
statements.</p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The
Company&#146;s management assessed the effectiveness of the Company&#146;s internal
control over financial reporting as of August 31, 2006. In making this
assessment, the Company&#146;s management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in<i> Internal Control-Integrated Framework</i>.</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Based
upon its assessment, management concluded that, as of August 31, 2006, the
Company has inadequate controls over the process for the identification and
implementation of the proper accounting for&nbsp;certain transactions which
resulted in material errors not corrected prior to the issuance of the original
Form 10-K. The correction of these errors resulted in the Company amending its
original Form 10-K to restate its balance sheet and statement of stockholders&#146;
equity to (the correction of the following errors are described in greater
detail in the Explanatory Note on page 3 as well as NOTE 1 &#151; ORGANIZATION AND&#173;
RESTATEMENT in the accompanying financial statements):</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Remove the
liability <i>Contingent obligations payable
upon default by HP A&amp;M</i> and the contra-equity account <i>Receivable from HP A&amp;M in event of default</i>.
As described in the Explanatory Note, certain of the real properties the
Company acquired pursuant to the Arkansas River Agreement are subject to
promissory notes which are secured by deeds of trust on the properties.<b><strike><font style="font-weight:bold;">Based on consultations the Company had with the
Staff of the Commission, i</font></strike></b> Due to the likelihood of HP A&amp;M
defaulting on the promissory notes being remote and therefore the likelihood of
the Company losing the properties and water rights subject to the promissory
notes being remote, this did not require recognition of a liability pursuant to
Statement of Financial Accounting Standard (&#147;SFAS&#148;) No. 5 <i>Accounting for Contingencies</i><b><u style="font-weight:bold;"> under U.S. GAAP</u></b>.</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Restate the
liability <i>Tap Participation Fees payable to
HP A&amp;M</i> and adjust the values assigned to the assets acquired
from HP A&amp;M accordingly. <b><strike><font style="font-weight:bold;">As a result of the
consultations the Company had with the Staff of the Commission, </font></strike></b>The
Company should not have accounted for the Tap Participation Fees as contingent
consideration pursuant to SFAS No. 141 <i>Business
Combinations</i>, nor should the Company have valued the liability using
a residual value method as described in the Explanatory Note. Instead, <b><u style="font-weight:bold;">pursuant to U.S. GAAP,</u></b> the Company
should have valued the Tap Participation Fees using a discounted cash flow
method and then allocated the total value of the consideration paid to the
acquired assets. As a result of this, the Company completed a discounted </font></p>


 <p style="margin:24.0pt 0pt .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p> <br><hr size="3" width="100%" noshade color="#010101" align="center">

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<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">cash flow model and reduced the value of the <i>Tap Participation Fees payable to HP A&amp;M</i> and the assets
acquired from HP A&amp;M accordingly.</font></p>

<p style="background:white;margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A
material weakness represents a significant deficiency (as defined in the Public
Company Accounting Oversight Board&#146;s Auditing Standard No.&nbsp;2), or a
combination of significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected on a timely basis.</font></p>

<p style="background:white;margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Because
the Company&#146;s controls over the process for the identification and
implementation of the proper accounting for&nbsp;certain transactions resulted
in the aforementioned errors, management concluded that the Company did not
maintain effective internal control over financial reporting as of August 31, 2006,
which constitutes a material weakness. As a result of the material weakness,
the Company restated its originally filed Form 10-K.</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Anton
Collins Mitchell LLP, the Company&#146;s independent registered public accounting
firm, who has audited the Company&#146;s financial statements included herein, has
issued an attestation report on management&#146;s assessment of the effectiveness of
the Company&#146;s internal control over financial reporting at August 31, 2006
which report is included herein.</font></p>

<p style="margin:0pt 0pt 12.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Management&#146;s
Discussion and Analysis of Financial Condition...page 25</font></b></p>

<p style="margin:0pt 0pt 12.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Critical
Accounting Policies, page 25</font></b></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 27.0pt;text-indent:-27.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">3.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b>In future filings, please
revise the discussion of your critical accounting policies to focus on the
assumptions and uncertainties that underlie your critical accounting estimates.
Please also quantify, where material, and provide an analysis of the impact of
critical accounting estimates on your financial position and results of
operations for the periods presented, including the effects of changes in
critical accounting estimates between periods. In addition, please include a
qualitative and quantitative analysis of the sensitivity of reported results to
changes in your assumptions, judgements, and estimates, including the
likelihood of obtaiing materially differenct results if differenct assumptions
were applied. For example, if reasonably likely changes in an assumption used
in assessing your water and other long-lived assets for impairment would have a
material effect on your financial condition or results of operation, the impact
that could result given the range of reasonably outcomes should be disclosed
and quantified. Please refer to SEC Release No. 33-8350.</b></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Beginning
with the filing of the Company&#146;s Form 10-Q for the three and nine months ending
May 31, 2007, the Company will revise its disclosure of its ciritical
accounting policies to focus on the assumptions and uncertainties that underlie
the Company&#146;s accounting estimates.</font></p>


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<p style="margin:0pt 0pt 12.0pt;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 7 &#151;
Stockholders&#146; Equity, page 60</font></u></b></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 27.0pt;text-indent:-27.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b>In future filings, please
disclose the aggregate intrinsic value and weighted-average remaining
contractual term of options outstanding as of fiscal year-end. See paragraphs
A240(d)(1) and A241 of SFAS 123(R).</b></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Beginning
with the filing of the Company&#146;s Form 10-K for the fiscal year ending August
31, 2007, the Company will ensure its stock option disclosures include all
disclosures required by SFAS 123(R) as amended, including the aggregate
intrinsic value and weighted-average remaining contractual term of outstanding
options as of August 31, 2007.</font></p>

<p style="margin:0pt 0pt 12.0pt;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 10
&#151; Information Concerning Business Segments, page 63</font></u></b></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 27.0pt;text-indent:-27.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">5.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b>We note that your two
operating segments consist of your construction and service provider lines of
business. If, as we assume, these operating segments are also reportable
segments, please tell us why your segment footnote does not present the
information required by paragraphs 27-28 of SFAS 131. While the majority of
your operations appear to derive from your service provider segment, please
note that you still are required to provide a tabular presentation of segment
data under SFAS 131. Please provide us with these disclosures for the
historical period presented.</b></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company&#146;s operating segments do not meet any of
the quantitative thresholds of paragraph 18 of SFAS 131.</font> Therefore, the information required by
paragraphs 27-28 of SFAS 131 is not required to be reported. &#160;The
Company provides general information about the construction business because
the Company believes it is useful to the readers of the financial statements in
understanding the Company&#146;s operations. However, because the construction
business results do not meet the quantitative thresholds of paragraph 18, the
Company does not believe providing numerical information about the construction
business is relevant or useful to the readers. The Company is proposing to
revise its business segment footnote in future filings beginning with the Form
10-K for the fiscal year ending August 31, 2007 to better clarify that this is
not a quantitative reportable segment per SFAS 131 and is provided because the
Company deems the information useful for the readers of the financial
statements.</p>

<p style="margin:0pt 0pt 12.0pt;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit
31.1</font></u></b></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 27.0pt;text-indent:-27.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">6.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b>Please confirm that Mark W.
Harding acts as both your principal executive officer and principal financial
officer. If so, in future filings, please revise the title underneath his name
to clearly indicate the roles in which he functions. Refer to Question 12 of
the Staff&#146;s frequently Asked Questions regarding the Srabanes-Oxley Act of 2002
issued in November 2002 and available on our website at www.sec.gov.</b></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">The Company
confirms that Mark W. Harding does act as both the principal executive officer
and principal financial officer of the Company. Beginning with the filing of
the Company&#146;s Form 10-Q for </font></p>


 <p style="margin:24.0pt 0pt .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p> <br><hr size="3" width="100%" noshade color="#010101" align="center">

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<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">the three
and nine months ending May 31, 2007, the Company will revise the titles
underneath Mr. Harding&#146;s signature to clearly indicate the roles in which he
functions.</font></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><b><u><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;font-weight:bold;">Form 10-Q
for the Fiscal Quarter Ended February 28, 2007</font></u></b></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><b><u><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;font-weight:bold;">Note 3 &#151;
Investments in Water and Water Systems, page 10</font></u></b></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 27.0pt;text-indent:-27.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">7.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b>We note you disclose on page 11
the per-share impact of imputed interest on your Tap Participation Fees
payable. Please tell us why you believe you are permitted to include this
non-GAAP measure in your filing considering Question 11 of the Staff&#146;s
Fequently Asked Questions Regarding the Use of Non-GAAP Financial Measures,
available on our website at www.sec.gov. If you believe inclusion of this
measure in your filing appropriate, please explain how the measure is used by
management and in what way it provides meaningful infomration to investors.
Also, ensure you provide a reconciliation of the measurement to the GAAP EPS
figure.</b></p>

<p style="color:black;font-family:Times New Roman;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">17 CFR &#167;244.100&nbsp;</font><i><font size="2" color="black" style="color:windowtext;font-size:10.0pt;font-style:italic;"> General rules regarding disclosure of
non-GAAP financial measures</font></i><font size="2" color="black" style="color:windowtext;font-size:10.0pt;"> (&#147;Regulation
G&#148;) provides that a &#147;non-GAAP financial measure, when considered together with accompanying
information, may not contain an untrue statement of a material fact nor may it
omit to state a material fact necessary to make the non-GAAP financial measure not misleading, in-light
of the circumstances.&#148; The disclosure of the per share impact of the imputed
interest does not provide an untrue statement of a material fact, nor does it
omit any information which makes the note misleading. Management provided the
information as means to highlight the magnitude of the imputed interest as a
result of accounting for the Tap Participation Fee payable to HP A&amp;M (as
defined in the Form 10-Q). Upon review, the Company believes it should have
disclosed the most directly comparable financial measure computed in accordance
with GAAP (total net loss EPS) in the same footnote. However, since that is
disclosed in the statement of operations, and the amount of the imputed
interest is disclosed in the notes and the statement of operations, the reader can
easily reconcile the GAAP and non-GAAP financial measures. Therefore, the
Company does not believe this is a material omission requiring restatement. It
should further be noted that Accounting Series Release No. 142 states &#147;per
share data other than that relating to net income, net assets and dividends <b>should (emphasis added) </b>be avoided in reporting financial
results,&#148; but this is not specifically prohibited by ASR 142.</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">However,
the Company is proposing to remove this information from future filings
beginning with the Form 10-Q for the three and nine months ending May 31, 2007.</font></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 27.0pt;text-indent:-27.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">8.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b>We note you recorded a purchase
price adjustment during the second quarter of fiscal 2007 to reflect the
acquisition of 554 LAWMA shares that were acquired from HP A&amp;M on August
31, 2006. Citing authoritative accounting guidance, please provide us with the
following information regarding the LAWMA share adjustment:</b></p>


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<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 36.0pt;text-indent:-18.0pt;"><font size="2" face="Symbol" style="font-size:10.0pt;">&#183;</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><b>Considering
that the assets were not acquired in a business combination, please tell us how
you determined that deferment of the purchase price allocation was allowable
under GAAP;</b></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">The purpose
of this acquisition was to acquire water rights in the Fort Lyon Canal which
will ultimately be transferred to the Denver, Colorado metropolitan market.
Along with these water rights, the Company also acquired various agricultural
assets and other &#147;non-strategic&#148; water rights (the LAWMA shares) from HP
A&amp;M (the seller). The Company&#146;s main purpose for this acquistion was not to
acquire these LAWMA shares, but they were offered as part of the transaction
with HP A&amp;M. Due to restrictions on the use of LAWMA shares, complexities
with Colorado water laws and the fact that the Company had no intentions on
pursuing use of the LAWMA shares, at August 31, 2006, the LAWMA shares were
deemed to have no value. Subsequent to the closing date the Company was able to
find a party willing to purchase 509 of the LAWMA shares. Because this was done
within one year of the closing date, the Company applied the provisions of SFAS
141 and re-allocated the costs to the LAWMA shares at the date the value became
known (the date the LAWMA shares were sold). Based on the Staff&#146;s objections to
the use of SFAS 141 and the re-allocation of the acquistion price, the Company
is proposing the following.</font></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">Based on
information the Company had as of August 31, 2006, the value of the LAWMA
shares was $0. Therefore, the value assigned to the LAWMA shares at August 31,
2006 was properly reflected in the Company&#146;s Form 10-K at $0. However, the
Company, in its second fiscal quarter of 2007, was able to sell the shares and
therefore, the Company is proposing to amend and restate its Form 10-Q for the
three and six months ended February 28, 2007, to reflect the sale of the LAWMA
shares as a second quarter event and recognize the proceeds received from the
sale of the LAWMA shares as a gain in the second fiscal quarter and not a
re-allocation of the purchase price allocation. The result of this would be a
gain on the sale of fixed assets of approximately $849,700.</font></p>

<p style="color:black;font-family:Times New Roman;margin:0pt 0pt 12.0pt 36.0pt;text-indent:-18.0pt;"><font size="2" color="black" face="Symbol" style="color:windowtext;font-size:10.0pt;">&#183;</font><font size="1" color="black" style="color:windowtext;font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><b><font size="2" color="black" style="color:windowtext;font-size:10.0pt;font-weight:bold;">Please tell us
why you recorded the LAWMA shares at their full net reliazable value instead of
at the relative fair value of total assets acquired; and</font></b></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">As noted
above, the Company is proposing to restate and amend its Form 10-Q for the
three and six months ended February 28, 2007 to reflect that the value of the
LAWMA shares at August 31, 2006 was $0 and then in its February 28, 2007 Form
10-Q, recognize the proceeds from the sale of the LAWMA shares as a gain.</font></p>

<p style="color:black;font-family:Times New Roman;margin:0pt 0pt 12.0pt 36.0pt;text-indent:-18.0pt;"><font size="2" color="black" face="Symbol" style="color:windowtext;font-size:10.0pt;">&#183;</font><font size="1" color="black" style="color:windowtext;font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><b><font size="2" color="black" style="color:windowtext;font-size:10.0pt;font-weight:bold;">It appears that
shares did not have a readily determinable fair value at the acquisition date
and, therefore, should have been scoped out of SFAS 115 and accounted for under
the cost method. Since the investments in equity securities accounted for under
the cost method are scoped out of SFAS 144, please tell us why you classify the
shares as held for sale on your balance sheet and analyze them for impairment
under SFAS 144.</font></b></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">SFAS 115 is
not applicable as the LAWMA shares are not debt or equity securities with
readily determinable fair values (as per the scope requirements of paragraph 3
of SFAS 115).&#160; LAWMA </font></p>


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<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">shares are
not ownership shares of an entity. Instead, much like the Fort Lyon Canal
Company shares acquired and maintained by the Company, LAWMA shares represent
water rights ownership. Because these shares represent the amount of water the
Company owns in a given canal, SFAS 115 is not applicable.</font></p>

<p style="color:black;margin:0pt 0pt 12.0pt;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">Based on
the Company&#146;s proposed restatement of the sale of the LAWMA shares described
above, the Company will remove the line item <i>Assets held
for sale</i> in its February 28, 2007 balance sheet and disclose in the
footnotes that these shares are owned but due to restrictions on the use of
LAWMA shares and complexities with Colorado water laws the value assigned to
the LAWMA shares is $0.</font></p>

<p style="margin:0pt 0pt 12.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We
respectfully request that the Staff indicate as soon as possible whether the
proposed revisions to the Company&#146;s Form S-3 and Form 10-K are acceptable, in
which case it will file an amendment to the Form S-3 and Form 10-K as soon as
practical, and whether there will be any further comments. Any comments or
questions regarding this letter should be directed to the undersigned at 303-292-3456.</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;font-family:Times New Roman;width:100.0%;">
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  <p style="margin:0pt 0pt .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Very truly yours,</font></p>
  </td>
 </tr>
 <tr style="page-break-inside:avoid;">
  <td width="50%" valign="top" style="padding:0pt .7pt 0pt 0pt;width:50.0%;">
  <p style="margin:0pt 0pt .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="50%" valign="top" style="padding:0pt .7pt 0pt 0pt;width:50.0%;">
  <p style="margin:0pt 0pt .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr style="page-break-inside:avoid;">
  <td width="50%" valign="top" style="padding:0pt .7pt 0pt 0pt;width:50.0%;">
  <p style="margin:0pt 0pt .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="50%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0pt .7pt 0pt 0pt;width:50.0%;">
  <p style="margin:0pt 0pt .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Mark W. Harding</font></p>
  </td>
 </tr>
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  <td width="50%" valign="top" style="padding:0pt .7pt 0pt 0pt;width:50.0%;">
  <p style="margin:0pt 0pt .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="50%" valign="top" style="border:none;padding:0pt .7pt 0pt 0pt;width:50.0%;">
  <p style="margin:0pt 0pt .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Mark W. Harding</font></p>
  </td>
 </tr>
</table>

<p style="line-height:1.0pt;margin:0pt 0pt 12.0pt;"><font size="1" face="Times New Roman">&nbsp;</font></p>

<p style="font-family:Times New Roman;font-size:10.0pt;margin:0pt 0pt 12.0pt 36.0pt;text-indent:-36.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">cc:</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Wanda J. Abel, Davis, Graham &amp; Stubbs,
LLP<br>
Michael F. Filkoski, GHP Horwath P.C.</p>

<p style="margin:0pt 0pt 12.0pt;text-indent:36.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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