Pure Cycle Corporation Announces Filing for Extension for February 28, 2007 Form 10-Q

THORNTON, Colo.--(BUSINESS WIRE)--

Pure Cycle Corporation (NASDAQ: PCYO) today announced it has filed for an extension for reporting its financial results for the three and six months ended February 28, 2007.

We entered into an Asset Purchase Agreement with High Plains A&M on the last day of our 2006 fiscal year, August 31, 2006. Pursuant to this agreement, we acquired (i) approximately 60,000 acre-feet of water rights in the Arkansas River and its tributaries, (ii) approximately 17,500 acres of real property, and (iii) certain contract rights, tangible personal property, mineral rights, and other water interests associated with the real property.

The transaction substantially increased our assets and service capacities and included a number of complex features. In January 2007, we requested concurrence from the Securities and Exchange Commission (the "SEC") on certain aspects of the agreement. Following several discussions between the SEC, our former and current auditors and us, on March 14, 2007, the SEC completed its review and informed us that we accounted for the "Tap Participation Fees payable to HP A&M" incorrectly. The SEC disagreed with the way we valued the Tap Participation Fees and stated that we needed to re-value this liability using a discounted cash flow method. We have completed our valuation of the Tap Participation Fees payable to HP A&M and our former and current auditors are in the process of finalizing the required auditing and review procedures. Upon completion of these procedures, which is anticipated to be before the extension deadline for our February 28, 2007 Form 10-Q on April 16, 2007, we expect to amend and restate our August 31, 2006 Form 10-K, our November 30, 2006 Form 10-Q and file our February 28, 2007 Form 10-Q.