Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X|

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One).

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

The aggregate market value of voting stock held by non-affiliates of the registrant was approximately $40,472,000$36,594,000 as of December 31, 2011.June 30, 2012.

Two Rivers Waterhas developed and operates a revolutionary new water business model suitable for arid regions in the southwestern United States whereby the Company acquiressynergistically integrates irrigated farming and developswholesale water distribution into one company, utilizing a practice of rotational farm fallowing.  Rotational farm fallowing, as it applies to water, is a best methods farm practice whereby portions of farm acreage are temporarily fallowed in cyclic rotation to give soil an opportunity to reconstitute itself.  As a result of fallowing, an increment of irrigation water can be made available for municipal use without permanently drying up irrigated farmland.  Collaborative rotational farm fallowing agreements between farmers and municipalities make surplus irrigation water available for urban use during droughts and, conversely, make surplus urban water available for irrigation during relatively wet periods. The Company produces and markets high yieldvalue vegetable and fodder crops on its irrigated farmland and associatedprovides wholesale water rightsdistribution through farm fallowing agreements in its initial area of focus on the Arkansas River and infrastructureits tributaries on the southern Front Range of Colorado.

Two Rivers operates in the Arkansas River Basin, which includes the watershed of the two rivers for which the Company is named, the Huerfano and Cucharas Rivers.  This combined watershed of the Huerfano and Cucharas Rivers in Southeastern Colorado.  This combined watershed encompasses approximately 1,860 square miles and extends from the eastern crest of the Continental Divide in the Spanish Peaks and Sangre de Christo Mountains to the Huerfano River’s confluence with the Arkansas River, just downstream of Pueblo, Colorado.  The elevations in the two rivers’ watershed thus begin at more than 14,000 feet above sea level to approximately 4,500 feet at the confluence.  As noted, the Huerfano and Cucharas Rivers are tributaries of the Arkansas River, which, in turn, is a tributary of the Mississippi River.  The Arkansas River basinBasin is subject to legal administration under the 1948 compact between Colorado and Kansas.

In acquiring land and water assetsSince beginning operations in the Huerfano/Cucharas watershed, the Company plans to create an integrated system in which our farming assets and water assets work in synergy.  Our primary focus is the profitable production of annual crops.  As we build our agriculture business, we also acquire agriculture water rights.  In times of municipal need, we can deploy rotational farm fallowing and other conservation methods so as to reduce the need for irrigation water and thereby make surplus water available to support water users along Colorado’s Front Range.  Thus, our secondary focus is to integrate our water system with urban water delivery systems serving the Front Range.

In February 2011,2012, Two Rivers made a significant acquisition of irrigated farmland.  Two Rivers acquired Dionisio Farms & Produce (“DFP”), which consistently produces high value fruits and vegetables and animal fodder crops on 353 acres irrigated by the Company also purchased,Bessemer Ditch off the Arkansas River.  As an illustration of DFP’s ability to consistently produce crops, during the 2012 widespread United States drought and heat wave, DFP produced 200+ bushels of corn per acre, while the national average for a combinationcorn production fell to 120+ bushels of cash and stock, the Orlando Reservoir and Butte Valley water rights as well as a small amount of nearby farmland.  During the year ended December 31, 2011, the Company commenced a construction project to refurbish and improve the Orlando Reservoir; the project was completed and successfully tested in February 2012.  Similarly, the Company is incrementally refurbishing diversion, storage and distribution facilities throughout its water asset portfolio with the overall objective of improving the portfolio’s efficiency, reliability and operational flexibility.

The Company currently owns approximately 4,600 gross acres of irrigable farmland within the watershed91% of the Huerfano Cucharas Irrigation Company and Cucharas Rivers.  Based on progress in preparing this land for long-term farming, the Company expects that approximately 800 acres of our land will be in production during the 2012 growing season and an additional 2,200 acres of land developed for 2012 fall planting.   Each acre of irrigated farmland is capable of producing approximately six tons of alfalfa during a typical annual growing season.  The Company plans to acquire and develop in excess of 25,000 acres of such farmland within the Huerfano/Cucharas watershed within the next five years, subject to capital availability and operational constraints.

Two Rivers Water Company recognizes this opportunityhas developed and is developing an integrated system to re-aggregate and refurbish dispersedoperates a revolutionary new water assets and efficiently use them to irrigate farmland. In addition to producing valuable agricultural products, this irrigated farmland can be operated as a flexible “water bank” to support municipal usebusiness model suitable for arid regions in Huerfano County and, through exchanges, along the Front Range. Based on the foundation of efficient and independently profitable farming,southwestern United States whereby the Company plans to manage oursynergistically integrates irrigated farming and wholesale water assets, throughdistribution into one company, utilizing a practice of rotational farm fallowing and other farm water conservation techniques, to provide a reliable and affordable source of supplemental water for municipal and industrial use without damaging our farming business.fallowing.  Rotational farm fallowing, as it applies to water, is an agriculturala best methods farm practice whereby portions of farm acreage are temporarily fallowed onin cyclic rotation to give soil an opportunity to reconstitute itself.  As a result of fallowing, an increment of irrigation water can be made available for municipal use without permanently drying up irrigated farmland.  Collaborative rotational basis each yearfarm fallowing agreements between farmers and thereby allow themunicipalities make surplus irrigation water which would otherwise be usedavailable for urban use during droughts and, conversely, make surplus urban water available for irrigation to be diverted for alternative beneficial uses.

Along the Front Range of Colorado, water is a scarce and valuable resource.  Natural precipitation varies widely throughout the year and from one year to another.  Rivers, which flood with the spring melt from the mountain snowpack, in the mountains may be refreshed only with the occasional thunderstorm in the heat of the summer growing season.  Annual precipitation also varies between surplus and drought.  The resulting variability in stream flows leadAdditionally, the large majority of Colorado’s population resides on the Front Range (east of the Continental Divide) while the large majority of the State’s precipitation falls on the Western Slope (west of the Divide).  Over time, many communities, farms and enterprises developed trans-mountain diversions to bring more water to the developmentFront Range.  Precipitation on the Front Range, and water diverted from the Western Slope, drain to the Mississippi River through the South Platte and Arkansas Rivers.  Water on the Western Slope drains through the Colorado River.  All of the State’s rivers are administered pursuant to interstate compacts with neighboring states.  As a result of the variability of Colorado’s hydrology, its arrangements for diversions, storage and beneficial use, and its obligations to downstream states, Colorado has developed an integrated and complex water laws in Colorado.rights administration system.

This legal frameworkIn Colorado and the Western United States, the right to use water is based on the Prior Appropriation Doctrine which is often referred to as “first in time, first in right.”  Under this doctrine, water use is allocated to satisfy the “Prior Appropriation Doctrine.” This doctrine accords priority in times of shortageoldest (“most senior”) water right before water is allocated to the earliest sustained recorded use, so that the most seniornext water right in historic chronology (a “junior water right” in comparison to a water right perfected earlier).  Moreover, in Colorado, water rights and their relative priorities are protected by judicial decrees and are administered by the Office of the State Engineer (the “State Engineer”) within the Colorado Department of Water Resources (“DWR”).  The ability to consistently irrigate farmland, and thus avoid the inconsistencies of rainfall, is assured its full historic allotment before the next most senior right is honored and so on through a reverse hierarchytherefore tied to the most juniorrelative seniority of historic water rightrights.  Two Rivers is focused on a stream system which may be allowed to exercise its right through diversion only indeveloping irrigated farmland and maximizing beneficial use of the wettest period or the wettest years.  water rights associated with that farmland.

To manage water uses according to the Prior Appropriation Doctrine, Colorado maintains both judicial oversight through regional water courts with subject matter expertise and jurisdiction and administrative oversight through the Office of the SateState Engineer.  Water rights claims are filed in the court, adjudicated as necessary to resolve any adverse claims, and then decreed though an enforceable judgment.  The State Engineer is charged with administering the accorded priorities among the various water rights in each of the State’s river systems.

Colorado water law further recognizes two distinct but related prior appropriative rights: direct diversion rights and storage rights. Direct diversion rights permit a user in priority to divert water directly from the river for immediate beneficial use (such as irrigation); storage rights permit a user in priority to divert water from the river and impound the water in a reservoir to re-time the water for later beneficial use.  Thus, in Colorado, a direct diversion right must be conveyed to an immediate use; it cannot be stored without a storage right.  As a result, both types of appropriative rights are often paired, when possible, so that in priority diversion rights can be re-timed through the exercise of a companion storage right to address seasonal and year-to-year variability in natural supplies.  The older the appropriation date of any water right, the more value it holds;reliable is its yield; similarly, the more effectively a senior diversion right is paired with a senior storage right, the more valuablereliable each becomes. A corollary

In addition to the intra-state administration of water flowing in its rivers, Colorado also has inter-state water administration responsibilities because each of its major rivers (the Colorado, the North Platte and the Arkansas) is governed as well by interstate compacts with downstream states.  These compacts are subject to judicial review, interpretation and enforcement under the original jurisdiction of the U.S. Supreme Court to resolve disputes among the states.  In 1948, Colorado and Kansas reached an agreement that apportioned the water of the Arkansas River; Colorado was apportioned 60% of the water while Kansas is apportioned 40% of the River’s flow (Colorado Foundation for Water Education, 2009, p. 23).  In order to comply with Colorado’s obligations under the Arkansas River Compact, therefore, water rights on the Arkansas and its tributaries (including the Huerfano and Cucharas Rivers) are administered to assure the Compact-required water flows at the Colorado-Kansas state line.  When necessary, Colorado’s in-state uses are curtailed, in order of priority, to assure compliance with the compact.Compact.

The interstate compacts (beginning with the Colorado River Compact of 1922) increased Colorado’s need to husband its apportioned water to meet the needs of its growing population along the Front Range.  Trans-basin diversions (primarily tunnels and canals) were developed, under the Prior Appropriation Doctrine, to divert water from one watershed for conveyance to and use in another.  Mainly, water from the Colorado River Basin, west of the Continental Divide, was diverted east to meet the water needs along the earlier developing Front Range by so-called “conservancy districts”.  These projects began in the 1930’s and, although many have been in operation for decades, some remain incomplete (Driscoll, 2011, p. 3).  Increasingly, further trans-basin diversions are limited not only by competing appropriative water rights in the basins of origin but also by increasingly stringent environmental restrictions.

Stymied in their attempts to import additional surface water from distant watersheds, some municipalities and water providers began to rely on inherently unsustainable groundwater “mining” (depleting aquifers for current consumption at a rate in excess of the rate at which natural recharge occurs).  After decades of such groundwater mining, many of the aquifers on the Front Range have been severely depleted.  Some municipalities also purchased farms with water diversion rights and then ceased irrigating the farmland, transferring the water to their urban uses.  Because neither the practice of groundwater mining nor the practice of “buying up and drying up” farmland is sustainable, both Colorado and federal law havehas placed limits and regulations on both practices.

As early as 2005, the Colorado General Assembly created basin roundtables to convene regional water purveyors to address the looming municipal supply gap.  The roundtables were charged to identify “projects and methods to meet the consumptive and nonconsumptivenon-consumptive needs of the basin.” (Colorado House Bill 05-1177).  The potential solutions include Identified Plans and Process (“IPP’s”), Conservation, New Supply Development and Alternatives to Agricultural Transfers.

The Arkansas River Basin Roundtable has only a few IPPs to meet the municipal water supply gap identified in its basin.  The most significant of the Arkansas Basin IPPs is the Southern Delivery System (SDS), an $800 million, 62-mile water supply pipeline and associated pumping plants currently under construction by a consortium of four regional water purveyors including Colorado Springs. These purveyors will use a portion of the capacity in the SDS to transport water made available to each of them under their respective contracts with the United StateStates Bureau of Reclamation (USBR).  (U.S. Department of the Interior Bureau of Reclamation, 2005, p.1)  The SDS connects USBR’s Pueblo Reservoir on the Arkansas River, the point of delivery under the USBR contracts, with the purveyors’ service areas. (Colorado Springs Utilities, 2009)

In order to address a portion of the identified gap between forecast supply and demand within the Arkansas Basin and to provide a substitute source of water for Front Range communities that are too reliant on depleted groundwater aquifers, the design and planning for the SDS anticipate that other water purveyors will subscribe for pipeline capacity to transport renewable water supplies to their service areas.  (Recommended Terms and Conditions and Mitigation of Project Impacts, Southern Delivery System 1041 Application, March 18, 2009).

The Company has commenced discussions with some of these purveyors to determine whether the Company’s water storage and management assets can be integrated with other water resources to meet a portion of the identified gap between forecast supply and demand along the Front Range.  In order to facilitate such collaborative regional water resource planning, in late 2011, the Company filed a water court case seeking authorization for routine exchanges of water between the Company’s storage facilities in the Huerfano/Cucharas watershed and the main stem of the Arkansas River.  Through such exchanges, the water management infrastructure developed for and dedicated to the Company’s Farming Business could also support management of the urban water districts’ demand by delivering water to the SDS for transport to such districts’ service areas.  In February of 2012, the Office of the State Engineer administratively approved such exchanges as part of the Company’s substitute water supply plan (SWSP).  The SWSP is expected to remain in effect until the water court adjudicates the Company’s case.  Although no water management agreement has yet been reached, the Company believes that, based on the identified demand for renewable water supplies and the availability of conveyance capacity in the SDS, we will be able to negotiate mutually satisfactory water management contracts with one or more of these purveyors.

Two Rivers Water Company saw the opportunity to apply modern agronomy and sufficient capital to redevelop the main ditch system (still owned and operated in its reduced state by the Mutual Ditch Company) and other ditch systems (e.g., the Orlando Reservoir No. 2 Company, LLC) to deliver sufficient water to revitalize a portion of the neglected farmlands.   The Company commenced a program to systematically:

During 2011, the Company formed TR Water to secure additional water rights, rehabilitate water diversion, conveyance and storage facilities and to develop one or more special water districts.

In order to supply its farms with irrigation water, the Company began to acquire shares in the Mutual DitchHCIC Company, a historic mutual ditch company formed by area farmers in order to develop and put to use their water rights on the two rivers.  At the time the historic Mutual Ditch CompanyHCIC was formed in 1944, the water in the two rivers was continuously augmented by groundwater pumped from coal mines that operated in the watershed.  The augmented and natural flow of the rivers, along with the water rights and facilities of the Mutual DitchHCIC Company were sufficient to provide reliable irrigation water for the Mutual Ditch Company shareholders and their expanding farm enterprises.  However, in the years following World War II, the mines began to cease production and, therefore, stopped pumping groundwater out of the mine shafts and into the river channels.  As a result of the reduction in downstream flow in the rivers, the extent of farming in the watershed could no longer be reliably irrigated.  In some years, crops failed for lack of late summer irrigation water and, over time, once thriving farms withered.  Because of such failures and the reduced flow in the rivers, the shareholders of the Mutual Ditch CompanyHCIC were unable or unwilling to adequately maintain the water diversion, conveyance and storage facilities.  Therefore, at the time the Company decided to invest in the Huerfano/Cucharas watershed, the shares in the Mutual Ditch CompanyHCIC had become less valuable and the residual farming in the area had reverted primarily to pasture and dry grazing.

Orlando is a Colorado limited liability company originally formed to divert water from the Huerfano River, for storage in the Orlando Reservoir to be re-timed and used for irrigation of farmland in Huerfano and Pueblo Counties.  At the time the Company began investing in the Huerfano/Cucharas watershed, Orlando owned the historic diversion structure, a conveyance system and a reservoir and also owned a small amount of irrigable farmland.  However, the water facilities were in deteriorated condition.  Beginning in January, 2011, through a series of transactions, the latest of which closed on September 7, 2011, the Company acquired 100% ownership of Orlando (through its wholly-owned subsidiary, TR Water) for a combination of cash, stock and seller-financing.  Promptly following the acquisition, the Company began the program for refurbishing the facilities to restore their operating efficiency.  The stated purchase price for Orlando was $3,450,000; however, for reporting the financial statements dated September 30, 2011 (and pending the results of thean independent appraisal), we used the value of Company stock used as partial consideration, the purchase price was computed as $3,156,750 based on cash paid, the seller carry-back note and 650,000 of the Company’s common shares issued to the seller.  The purchase price was allocated $3 million$3,000,000 to water assets and $100,000 to farm land.  The Company also recorded a forgiveness of debt of $384,000.$384,000, which was computed as the difference between the cash paid plus the Company’s stock issued to the sellers plus the new seller carry back note less the previous note owed to the seller.

Following the purchase of Orlando and considering the refurbishment already underway, the Orlando was independently appraised as of January 16, 2012 at $5,195,000, considering agricultural irrigation as its highest and best use.  The gain from the bargain purchase of $1,736,000 was allocated $1,520,000 to water assets and $216,000 to land.

The Orlando assets include not only the reservoir, but also the senior-most direct flow water right on the Huerfano River (the #1 priority), along with the #9 priority and miscellaneous junior water rights.  These water rights are now integrated with the Company’s other water rights on the Huerfano and Cucharas River to optimize the natural water supply.  In addition, the water storage rights, and the physical storage reservoirs, are critical to water supply reliability in the watershed, because the storage system allows the natural spring runoff from snowmelt to be captured and re-timed for delivery to irrigate crops throughout the growing season.  Coupled with the Company’s distribution facilities and farmland, these water diversion and storage rights provide consistentincrease the reliability of water supplies to irrigate and grow our crops.