Years Ended August 31,                                      2008          2007          2006                                  ------------  ------------  ------------Total revenues                    $    282,400  $    265,700  $    271,700Total cost of revenues                (166,000)     (165,200)      (73,900)                                  ------------  ------------  ------------Gross margin                           116,400       100,500       197,800Total operating expenses            (2,609,600)   (2,754,800)   (1,556,500)Other (expense) income  Including imputed interest of   $4.4 million, $4.7 million and   $0, respectively                 (4,433,500)   (4,260,400)      565,800                                  ------------  ------------  ------------Net loss                          $ (6,926,700) $ (6,914,700) $   (792,900)                                  ============  ============  ============Weighted average shares outstanding (basic and diluted)    20,188,675    18,589,737    14,693,585                                  ============  ============  ============Loss per share                    $      (0.34) $      (0.37) $      (0.05)                                  ============  ============  ============

Fiscal 2008 revenues increased over fiscal 2007 revenues mainly as a resultof higher water usage fees and higher wastewater service fees.

Operating expenses decreased from 2007 to 2008 as a result of (i)management and employee wages remaining unchanged and no incentivecompensation being paid in 2008, (ii) an $84,300 reduction in certainprofessional fees due to an SEC consultation in 2007 not incurred in 2008,and (iii) a reduction in public entity costs of approximately $92,900mainly due to the elimination of franchise fees to the State of Delaware asa result of our reincorporation in Colorado.

However, these decreases were offset by us incurring approximately $223,600in consulting fees in 2008 related to ongoing discussions with the LandBoard and Lend Lease over water and wastewater services for the proposeddevelopment at the Lowry Range as opposed to $39,200 in 2007.

As will be further explained in our Form 10-K to be filed with the SEC onNovember 14, 2008, the results reported above were impacted by thefollowing items that do not require the use of current assets:

                                                   Years ended August 31,                                                      2008         2007                                                  ------------ -----------Imputed expenses or non-cash expenses:  Imputed Interest on the Tap Participation Fee   $  4,393,000 $ 4,669,700  Loss (gain) on extinguishment of contingent   obligations                                         273,700    (271,100)  Depreciation and depletion                           381,300     366,100  Stock based compensation expense                     351,500     287,300                                                  ------------ -----------Total imputed and non-cash expenses               $  5,399,500 $ 5,052,000                                                  ============ ===========

Because these items do not require the use of current assets, managementdoes not include these items in its analysis of the financial results orhow we allocate our resources. Because of this, we deemed it meaningful toprovide a non-GAAP disclosure of the impact of these significant items onour financial results. Adjusting our US GAAP net loss to exclude theexpenses described above, our net loss for the years ended August 31, 2008and 2007, respectively, would have been:

                                    Years ended August 31,                                      2008          2007         Change                                  ------------  ------------  ------------Net losses as reported            $ (6,926,700) $ (6,914,700) $    (12,000)  Imputed and non-cash   items described above             5,399,500     5,052,000  $    347,500                                  ------------  ------------  ------------As adjusted net losses            $ (1,527,200) $ (1,862,700) $    335,500                                  ============  ============  ============

Financial Position Data

                                                 August 31,    August 31,                                                    2008          2007                                                ------------- -------------Current assets                                  $   5,502,200 $   7,288,400                                                ------------- -------------Total assets                                    $ 109,899,400 $ 111,891,900                                                ------------- -------------Current liabilities                             $     163,900 $     183,300                                                ------------- -------------Total liabilities                               $  56,731,600 $  54,047,100                                                ------------- -------------Total stockholders' equity                      $  53,167,800 $  57,844,800                                                ------------- -------------

We will host a conference call to discuss the results on November 17, 2008at 2 pm Mountain. The call will be hosted by our President, Mark W.Harding. Call details are presented below.

CALL INFORMATIONWhat:           Fiscal year end August 31, 2008 Financial ReleaseWhen:           November 17, 2008 at 2:00 pm MountainTo listen:      Click on the link posted on the Company's website:                www.purecyclewater.com                Log-on 5 minutes early in case downloads are required.Call in Number: Toll free:  (866) 314-4483Passcode:       93536889REPLAY INFORMATIONThe call will be available for replay until 9:59 p.m. onNovember 24, 2008:Toll free:      (888) 286-8010Passcode:       54264249

Company Information

Pure Cycle owns water assets in several river basins in the State ofColorado as well as certain aquifers in the Denver, Colorado metropolitanarea. Pure Cycle provides water and wastewater services to customerslocated in the Denver metropolitan area including the design, construction,operation and maintenance of water and wastewater systems.

Additional information including our recent press releases and AnnualReports are available at www.purecyclewater.com, or you may contact ourPresident, Mark W. Harding, at 303-292-3456 or at info@purecyclewater.com.