Mail Stop 3561

									March 21, 2006



Mr. Mark W. Harding
President and Chief Financial Officer
Pure Cycle Corporation
8451 Delaware Street
Thornton, CO 80260

      Re:	Pure Cycle Corporation
      Form 10-KSB for the Fiscal Year Ended August 31, 2005
      Filed November 28, 2005
      File No. 0-08814

Dear Mr. Harding:

	We have reviewed your response letter filed on March 15, 2006
to
our comment letter dated February 23, 2006 and have the following
comments.  Please provide a written response to our comments.
Please
be as detailed as necessary in your explanation.  In our comments,
we
may ask you to provide us with information so we may better
understand your disclosure.  After reviewing this information, we
may
raise additional comments.

Form 10-KSB for the Fiscal Year Ended August 31, 2005

Financial Statements

Statements of Cash Flows, page 31

1. We have reviewed your response to comment 1 in our letter dated
February 23, 2006.  In order to facilitate our understanding of
how
receipt of export water proceeds and subsequent repayment of the
participating interests and contingent liabilities are reflected
in
your statements of cash flows, please provide us with the
following
information:

* Please tell us the journal entries you recorded surrounding the
receipt of the payment for export sales.  Show us the impact to
the
income statement and balance sheet and how the related cash flows
are
reflected in the statements of cash flows or how non-cash items
are
removed from the statements of cash flows.  In this regard, the
specific amounts and accounts that were affected by the $174,890
payment should be provided;
* We note that $178,010 of export water proceeds received during
fiscal 2005 were allocated to the participating interests
liability
and contingent obligation, with $3,120 of the amount paid in
fiscal
2005 and the remaining $174,890 paid during the first quarter of
fiscal 2006.  Please tell us why $3,120 is reflected as a
financing
outflow during fiscal 2005, and how the remaining $174,890, paid
in
fiscal 2006, is reflected in your statement of cash flows for
2005;
* Please explain how you calculated the fiscal 2005 deferred
revenues
amount on your statement of cash flows and why the amount does not
reconcile to the change in the balance sheet line item;

* To the extent that pass through of the contingent obligations
portion of export water proceeds results in a debit and credit to
the
same general ledger account, please explain your basis for net
presentation as opposed to gross;

* On your balance sheet, please consider renaming the restricted
cash
caption "Export Water proceeds to be remitted to escrow agent"
since
the payments appear to be payable on a cash basis as opposed to a
GAAP revenue basis; and

* Regarding the classification of Sky Ranch option payments
received
in investing activities, please explain in reasonable detail why
you
believe the proceeds do not represent operating activity cash
receipts from the sale of goods or services, as indicated in
paragraph 22.a of SFAS 95.    In this regard, a description of the
underlying of the option may be helpful to support an investing
activity.

In addition to the preceding, please consider providing us with an
explanation of how the proceeds and repayments are captured in
your
statements of cash flows, beginning with the receipt of export
water
proceeds and ending with the repayment of the participating
interests
and contingent liabilities.

Notes to Financial Statements

Note 3 - Water, Water Systems and Service Agreements, page 36

2. We have reviewed your response to comment 2 in our letter dated
February 23, 2006, noting that you have been made aware of two
objectors to your Paradise Water Supply conditional rights.
Please
explain why you believe the objections to your conditional rights
do
not currently represent triggering events under paragraph 8 of
SFAS
144 that require an updated impairment analysis.  Since it appears
that the objections increase the probability of losing your
conditional water rights, the impact on the fair value of those
assets using an expected present value method, as described in
paragraph 23 of SFAS 144, could be material.  If possible, please
provide us with a sensitivity analysis that quantifies the
potential
impairment charge, if any, resulting from one or more selected
hypothetical changes to the probability assigned to cancellation
of
your rights in your fair value model.

      Please respond to these comments within 10 business days or
tell us when you will provide us with a response.  Please furnish
a
letter that keys your responses to our comments and provides any
requested information.  Detailed letters greatly facilitate our
review.  Please understand that we may have additional comments
after
reviewing your responses to our comments.

      You may contact Andrew Blume (Staff Accountant) at (202)
551-
3254 if you have questions regarding the comments on the financial
statements and related matters.  Please contact me at (202) 551-
3849
with any other questions.


							Sincerely,




						Jim Allegretto
								Senior Assistant Chief
Accountant