Pure Cycle Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 3 - Investments In Water, Water Systems, Land And Improvements

Note 3 - Investments In Water, Water Systems, Land And Improvements

3 Months Ended

Nov. 30, 2011

Note 3 - Investments In Water, Water Systems, Land And Improvements Disclosure

Note 3 - Investments In Water, Water Systems, Land And Improvements

NOTE 3 - INVESTMENTS IN WATER, WATER SYSTEMS, LAND AND IMPROVEMENTS

The Company’s water rights and current water and wastewater service agreements are more fully described in Note 4 to the 2011 Annual Report. There have been no significant changes to the Company’s water rights or water and wastewater service agreements during the three months ended November 30, 2011.

The Company’s water, water systems, land and improvements consist of the following costs and accumulated depreciation and depletion at November 30, 2011 and August 31, 2011:

	November 30, 2011					August 31, 2011
	Costs		Accumulated Depreciation and Depletion			Costs		Accumulated Depreciation and Depletion
Arkansas River Valley assets	$	81,318,800	$	(1,187,200	)	$	81,318,800	$	(1,144,100	)
Rangeview water supply		14,305,400		(6,700	)		14,299,700		(6,600	)
Paradise water supply		5,544,000		–			5,540,200		–
Sky Ranch water rights and other costs		3,915,200		(29,000	)		3,915,200		(21,800	)
Fairgrounds water and water system		2,899,900		(468,500	)		2,899,900		(446,400	)
Rangeview water system		167,700		(63,700	)		167,700		(62,400	)
Water supply – other		25,600		(14,800	)		25,600		(13,700	)
Totals		108,176,600		(1,769,900	)		108,167,100		(1,695,000	)
Net investments in water and water systems	$	106,406,700				$	106,472,100

Sky Ranch land and improvements	$	3,772,800		(500	)	$	3,743,300		–
Total net investments in water, water systems, land and improvements	$	110,179,000				$	110,215,400

Capitalized terms in this section not defined herein are defined in Note 4 to the 2011 Annual Report.

Depletion and Depreciation. The Company recorded $100 of depletion charges during each of the three month periods ended November 30, 2011 and 2010, respectively. This related entirely to the Rangeview Water Supply. No depletion is taken against the Arkansas River water, Paradise Water Supply or Sky Ranch Water Supply because the water located at these locations are not yet being utilized for their intended purpose as of November 30, 2011.

The Company recorded $75,500 and $75,100 of depreciation expense during the three months ended November 30, 2011 and 2010, respectively.

- Definition

The entire disclosure for investments accounted for under the cost-method. The carrying amount of such investments may be adjusted, for example, distributions in excess of cost (return of capital) or for other-than-temporary impairments. The cost method and lower-of-cost or market, an adaptation of the cost method, is generally followed for most investments in noncontrolled corporations, in some corporate joint ventures, and to a lesser extent in unconsolidated subsidiaries in which the entity does not have the ability to exercise significant influence.

+ References + Details