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| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----|-----------------------------------------------------------------------------------------|

| Colorado                                                     |                                                                   | 13-4228144                         |
|--------------------------------------------------------------|------------------------------------------------------------------------|------------------------------------|
| State or other jurisdiction of incorporation or organization |                                                                   | I.R.S. Employer Identification No. |
|                                                         | 2000 South Colorado Boulevard, Annex Ste 200, Denver, CO 80222         |                               |
|                                                         | (Address of principal executive offices) (Zip Code)                    |                               |
|                                                         |                                                                   |                               |
|                                                         | Registrant’s telephone number, including area code:(303)222-1000 |                               |
|                                                         |                                                                   |                               |

| Large accelerated filer                                            | [___] |   | Accelerated filer         | [___] |
|--------------------------------------------------------------------|-------|--------|---------------------------|-------|
| Non-accelerated filer(Do not check if a smaller reporting company) | [___] |   | Smaller reporting company | [X]   |

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TABLE OF CONTENTS

|                                    |                                                                                                   | Page   |
|-----------------------------------------|--------------------------------------------------------------------------------------------------------|--------|
| Item 1                                  | Financial Statements (Unaudited)                                                                       |   |
|                                    | Consolidated Balance SheetsJune 30, 2010 and  December 31, 2009                              | 1      |
|                                    | Consolidated Statements of Operations – Three months and six months ended June 30, 2010 and 2009 | 2      |
|                                    | Consolidated Statements of Cash Flows –Six months ended June 30, 2010 and 2009                   | 3      |
|                                    | Consolidated Statement of Changes in Stockholders’ Equity – June 30, 2010                  | 5      |
|                                    | Notes to Consolidated Financial Statements                                                             | 6      |
| Item 2                                  | Management’s Discussion and Analysis of Financial Conditionand Results of Operations             | 32     |
| Item 3                                  | Quantitative and Qualitative Disclosures About Market Risk                                             | 40     |
| Item 4                                  | Controls and Procedures                                                                                | 40     |
|  PART II – OTHER INFORMATION |                                                                                                   |
| Item 1                                  | Legal Proceedings                                                                                      | 42     |
| Item 2                                  | Unregistered Sales of Equity Securities and Use of Proceeds.                                           | 42     |
| Item 3                                  | Defaults Upon Senior Securities – Not Applicable                                                 | 43     |
| Item 4                                  | Rescinded and Removed                                                                                  | 43     |
| Item 5                                  | Other Information – Not Applicable                                                               | 43     |
| Item 6                                  | Exhibits                                                                                               | 44     |
|                                    | SIGNATURES                                                                                             | 45     |

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Consolidated Balance Sheets  (In Thousands)

|                                                                                                                                                                             |   | June 30, 2010RESTATED |   |   | December 31, 2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|-------------------|--------|
| ASSETS:                                                                                                                                                                          |   | Unaudited             |   |   | Audited           |   |
| Current Assets:                                                                                                                                                                  |   |                  |   |   |              |   |
| Cash and cash equivalents                                                                                                                                                        |   | $                     | 207    |   |              | $      | 616 |   |
| Restricted cash                                                                                                                                                                  |   |                  | 13     |   |              |   | - |   |
| Note receivable - Aegis/Grizzle (Note 4)                                                                                                                                         |   |                  | -      |   |              |   | 295 |   |
| Accrued interest receivable                                                                                                                                                      |   |                  | -      |   |              |   | 4 |   |
| Advances and accounts receivable                                                                                                                                                 |   |                  | 58     |   |              |   | 1 |   |
| Income taxes receivable (Notes 2, 8)                                                                                                                                             |   |                  | 427    |   |              |   | 489 |   |
| Deposits                                                                                                                                                                         |   |                  | -      |   |              |   | 202 |   |
| Prepaid expenses                                                                                                                                                                 |   |                  | 3      |   |              |   | 16 |   |
| Assets held for sale                                                                                                                                                             |   |                  | -      |   |              |   | 134 |   |
| Total Current Assets                                                                                                                                                             |   |                  | 708    |   |              |   | 1,757 |   |
|   Property, equipment and software, net (Note 2)                                                                                                                       |   |                  | 185    |   |              |   | 94 |   |
| Other Assets                                                                                                                                                                     |   |                  |   |   |              |   |   |   |
| Mortgages receivable - Net of allowance for bad debts of $139 on June 30, 2010 and December 31, 2009 (Notes 2, 4)                                                                |   |                  | 232    |   |              |   | 232 |   |
| Investment in Boston Property, net of impairment of $1,297 and $889  on June 30, 2010 and on December 31, 2009, respectively (Note 3)                                  |   |                  | 1,934  |   |              |   | 2,073 |   |
| Land (Notes 2, 3)                                                                                                                                                                |   |                  | 1,294  |   |              |   | 991 |   |
| Water shares (Notes 2, 3)                                                                                                                                                        |   |                  | 24,196 |   |              |   | 2,267 |   |
| Options on real estate (Notes 2, 3)                                                                                                                                              |   |                  | -      |   |              |   | 2,586 |   |
| Dam Construction (Note 3)                                                                                                                                                        |   |                  | 436    |   |              |   | 163 |   |
| Other real estate owned - net of impairment of $150 and $313 and accumulated depreciation of $33 and $40 on June 30, 2010 and December 31, 2009, respectively (Note 2)           |   |                  | 467    |   |              |   | 1,042 |   |
| Farm product                                                                                                                                                                     |   |                  | 113    |   |              |   | - |   |
| Other assets                                                                                                                                                                     |   |                  | 9      |   |              |   | - |   |
| Total Other Assets                                                                                                                                                               |   |                  | 28,681 |   |              |   | 9,354 |   |
| TOTAL ASSETS                                                                                                                                                                     |   | $                     | 29,574 |   |              | $      | 11,205 |   |
|                                                                                                                                                                             |   |                  |   |   |              |   |   |   |
| LIABILITIES & STOCKHOLDERS' EQUITY:                                                                                                                                          |   |                  |   |   |              |   |   |   |
| Current Liabilities:                                                                                                                                                             |   |                  |   |   |              |   |   |   |
| Accounts payable                                                                                                                                                                 |   | $                     | 538    |   |              | $      | 281 |   |
| Short term borrowings  (Note 5)                                                                                                                                        |   |                  | 950    |   |              |   | 950 |   |
| Deposits held                                                                                                                                                                    |   |                  | -      |   |              |   | 30 |   |
| Accrued liabilities                                                                                                                                                              |   |                  | 29     |   |              |   | 5 |   |
| Total Current Liabilities                                                                                                                                                        |   |                  | 1,517  |   |              |   | 1,266 |   |
|                                                                                                                                                                             |   |                  |   |   |              |   |   |   |
| Notes Payable - Long Term (Note 5)                                                                                                                                               |   |                  | 7,119  |   |              |   | 2,175 |   |
| Total Liabilities                                                                                                                                                                |   |                  | 8,636  |   |              |   | 3,441 |   |
|                                                                                                                                                                             |   |                  |   |   |              |   |   |   |
| Commitments and Contingencies (Notes 1, 2, 3, 4, 5, 7, 8, 9, 10, 12, 13)                                                                                                         |   |                  |   |   |              |   |   |   |
|                                                                                                                                                                             |   |                  |   |   |              |   |   |   |
| Stockholders' Equity:                                                                                                                                                            |   |                  |   |   |              |   |   |   |
| Common stock, $0.001 par value, 100,000,000 shares authorized, 11,484,583 and  9,214,583 shares issued and outstanding at June 30, 2010 and Dec 31, 2009, respectively |   |                  | 11     |   |              |   | 9 |   |
| Additional paid-in capital                                                                                                                                                       |   |                  | 11,943 |   |              |   | 9,200 |   |
| Accumulated (deficit)                                                                                                                                                            |   |                  | (6,228 | )      |              |   | (4,120 | ) |
| Total Two Rivers Water Company Shareholders' Equity                                                                                                                              |   |                  | 5,726  |   |              |   | 5,089 |   |
| Noncontrolling interest in subsidiaries (Note 2)                                                                                                                                 |   |                  | 15,212 |   |              |   | 2,675 |   |
|         Total Stockholders' Equity                                                                                                       |   |                  | 20,938 |   |              |   | 7,764 |   |
| TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                                                                                                                                     |   | $                     | 29,574 |   |              | $      | 11,205 |   |

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Table of Contents

Consolidated Statements of Operations  (In Thousands)

|                                                                                                                                                                                                                    |   | Three Months Ended |   |   | Six Months Ended |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                                                                                                                                                                                    |   | June 30, 2010      |   |   | June 30, 2009    |   |   | June 30, 2010 |   |   | June 30, 2009 |   |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |
| Revenue                                                                                                                                                                                                                 |   |               |   |   |             |   |   |   |   |   |   |   |
| Loan Fees and real estate income                                                                                                                                                                                        |   | $                  | 2      |   |             | $      | - |   |   | $ | 2 |   |   | $ | - |   |
| Interest revenues                                                                                                                                                                                                       |   |               | 5      |   |             |   | 10 |   |   |   | 9 |   |   |   | 45 |   |
| Member assessments                                                                                                                                                                                                      |   |               | 35     |   |             |   | - |   |   |   | 53 |   |   |   | - |   |
| Total Revenue                                                                                                                                                                                                           |   |               | 42     |   |             |   | 10 |   |   |   | 64 |   |   |   | 45 |   |
| Direct cost of revenue                                                                                                                                                                                                  |   |               | -      |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Gross Profit                                                                                                                                                                                                            |   |               | 42     |   |             |   | 10 |   |   |   | 64 |   |   |   | 45 |   |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                                                                                                                                                                                                     |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|     General and administrative                                                                                                                                                                      |   |               | 957    |   |             |   | 98 |   |   |   | 1,675 |   |   |   | 189 |   |
|     Depreciation and amortization                                                                                                                                                                   |   |               | 8      |   |             |   | 3 |   |   |   | 13 |   |   |   | 6 |   |
|         Total operating expenses                                                                                                                                                |   |               | 965    |   |             |   | 101 |   |   |   | 1,688 |   |   |   | 195 |   |
| (Loss) from operations                                                                                                                                                                                                  |   |               | (923   | )      |             |   | (91 | ) |   |   | (1,624 | ) |   |   | (150 | ) |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense)                                                                                                                                                                                                  |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    Gain (loss) on sale of investments                                                                                                                                                                    |   |               | 1      |   |             |   | (133 | ) |   |   | 41 |   |   |   | (69 | ) |
|    Interest income                                                                                                                                                                                       |   |               | -      |   |             |   | 1 |   |   |   | - |   |   |   | 4 |   |
|    Interest (expense)                                                                                                                                                                                    |   |               | (116   | )      |             |   | (8 | ) |   |   | (174 | ) |   |   | (10 | ) |
| Other income (expense)                                                                                                                                                                                                  |   |               | (39    | )      |             |   | 13 |   |   |   | (88 | ) |   |   | - |   |
|    Total other income (expense)                                                                                                                                                                          |   |               | (154   | )      |             |   | (127 | ) |   |   | (221 | ) |   |   | (75 | ) |
| Net (Loss) from continuing operations before taxes                                                                                                                                                                      |   |               | (1,077 | )      |             |   | (218 | ) |   |   | (1,845 | ) |   |   | (225 | ) |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Income tax benefit (Note 8)                                                                                                                                                                                             |   |               | -      |   |             |   | 83 |   |   |   | - |   |   |   | 76 |   |
| Net (Loss) from continuing operations                                                                                                                                                                                   |   |               | (1,077 | )      |             |   | (135 | ) |   |   | (1,845 | ) |   |   | (149 | ) |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued Operations (Note 10)                                                                                                                                                                                       |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations of discontinued real estate and mortgage business (including loss on disposal of real estate of $44 and a  $56 gain for six months ending June 30, 2010 and June 30, 2009, respectively) |   |               | (370   | )      |             |   | (265 | ) |   |   | (536 | ) |   |   | (910 | ) |
| Income tax benefit                                                                                                                                                                                                      |   |               | -      |   |             |   | 58 |   |   |   | - |   |   |   | 128 |   |
| (Loss) on discontinued operations                                                                                                                                                                                       |   |               | (370   | )      |             |   | (207 | ) |   |   | (536 | ) |   |   | (782 | ) |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss)                                                                                                                                                                                                              |   |               | (1,447 | )      |             |   | (342 | ) |   |   | (2,381 | ) |   |   | (931 | ) |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Less net loss attributable to the noncontrolling interest (Note 2)                                                                                                                                                      |   |               | 200    |   |             |   | - |   |   |   | 273 |   |   |   | - |   |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss) attributable to Two Rivers Water Company                                                                                                                                                                     |   | $                  | (1,247 | )      |             | $      | (342 | ) |   | $ | (2,108 | ) |   | $ | (931 | ) |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) Per Share - Basic:                                                                                                                                                                                               |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) from continuing operations                                                                                                                                                                                       |   |               | (0.10  | )      |             |   | (0.02 | ) |   |   | (0.17 | ) |   |   | (0.02 | ) |
| (Loss) from discontinued operations                                                                                                                                                                                     |   |               | (0.03  | )      |             |   | (0.02 | ) |   |   | (0.05 | ) |   |   | (0.08 | ) |
| Total                                                                                                                                                                                                                   |   |               | (0.13  | )      |             |   | (0.04 | ) |   |   | (0.22 | ) |   |   | (0.10 | ) |
|                                                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Shares Outstanding:                                                                                                                                                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    Basic                                                                                                                                                                                                 |   |               | 11,267 |   |             |   | 8,957 |   |   |   | 10,700 |   |   |   | 8,957 |   |

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Table of Contents

Consolidated Statements of Cash Flows (In Thousands)

|                                                                                    |   | For the six months ended June 30, |   |
|-----------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                    |   | 2010                              |   |   | 2009 |   |
| Cash Flows from Operating Activities:                                                   |   |                              |   |   |   |   |
| Net (Loss) Income                                                                       |   | $                                 | (2,381 | ) |   | $ | (931 | ) |
| Adjustments to reconcile net income or (loss) to net cash used in operating activities: |   |                              |   |   |   |
| Depreciation (including discontinued operations)                                        |   |                              | 32     |   |   |   | 27 |   |
| (Decrease) in bad debt allowance on note receivables                                    |   |                              | -      |   |   |   | (478 | ) |
| Bad debt written off from sale of Legendary Investment                                  |   |                              | 70     |   |   |   | - |   |
| Increase in reserves and impairments                                                    |   |                              | 337    |   |   |   | 566 |   |
| Recapture of impairments from REOs sold                                                 |   |                              | (75    | ) |   |   | - |   |
| (Gain) from REOs sold (discontinued operations)                                         |   |                              | (17    | ) |   |   | (56 | ) |
| (Gain) on sale of investments and assets held                                           |   |                              | (40    | ) |   |   | 69 |   |
| Net (Gain) on sale of Legendary Investments                                             |   |                              | (12    | ) |   |   | - |   |
| (Increase) in note receivable on Legendary sale                                         |   |                              | (9     | ) |   |   | - |   |
| Stock based compensation and warrant extension                                          |   |                              | 630    |   |   |   | 38 |   |
| Noncontrolling interest in net loss                                                     |   |                              | 273    |   |   |   | - |   |
| Changes in operating assets and liabilities:                                            |   |                              |   |   |   |   |   |   |
| (Decrease) in deferred revenue                                                          |   |                              | -      |   |   |   | (6 | ) |
| (Increase) in accounts receivable                                                       |   |                              | (53    | ) |   |   | (4 | ) |
| Decrease in prepaid expenses and other assets                                           |   |                              | 13     |   |   |   | 17 |   |
| Decrease in mortgage loans receivable                                                   |   |                              | -      |   |   |   | 986 |   |
| (See Supplemental Information below)                                                    |   |                              |   |   |   |   |   |   |
| Decrease (increase) in income tax receivable                                            |   |                              | 62     |   |   |   | (171 | ) |
| (Increase) in deferred tax asset                                                        |   |                              | -      |   |   |   | (184 | ) |
| Decrease in accrued  interest and expenses                                    |   |                              | -      |   |   |   | 8 |   |
| Increase (decrease) in accounts payable                                                 |   |                              | 257    |   |   |   | (131 | ) |
| (Decrease) in accrued liabilities and other                                             |   |                              | (6     | ) |   |   | (94 | ) |
| Net Cash (Used in) Operating Activities                                                 |   |                              | (919   | ) |   |   | (344 | ) |
|                                                                                    |   |                              |   |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                   |   |                              |   |   |   |   |   |   |
| Investments (increased)/decreased                                                       |   |                              |   |   |   |   |   |   |
| Boston real estate                                                                      |   |                              | (269   | ) |   |   | (199 | ) |
| Marketable securities purchased                                                         |   |                              | -      |   |   |   | (123,702 | ) |
| Proceeds from marketable securities sold                                                |   |                              | -      |   |   |   | 123,276 |   |
| Proceeds from REO properties sold                                                       |   |                              | 498    |   |   |   | 1,196 |   |
| Proceeds from asset held for sale                                                       |   |                              | 176    |   |   |   | - |   |
| Purchase of property, equipment and software                                            |   |                              | (128   | ) |   |   | - |   |
| Proceeds from fixed assets sold                                                         |   |                              | 13     |   |   |   | - |   |
| Other assets                                                                            |   |                              | -      |   |   |   | (7 | ) |
| Purchase of land, water shares, and options                                             |   |                              | (5,939 | ) |   |   | - |   |
| Dam construction                                                                        |   |                              | (273   | ) |   |   | - |   |
| Farm product                                                                            |   |                              | (113   | ) |   |   | - |   |
| Net Cash Provided by/(Used in) Investing Activities                                     |   |                              | (6,035 | ) |   |   | 564 |   |

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Table of Contents

|                                                          |   |    |                                                                                                                                         |    |   |    |                                                                                                                                                                |    |   |
|---------------------------------------------------------------|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------|---------|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|--------|
| Cash Flows from Financing Activities:                         |   |    |                                                                                                                                         |    |   |    |                                                                                                                                                                |    |
| Increase (decrease) in long term borrowings                   |   |    |                   4,944                            |    |   |    |                       (250                            | )  |
| Private placement - net of placement costs                    |   |    |                   1,620                            |    |   |    |                            - |    |
| Retirement of Common Stock                                    |   |    |                        (6 | )  |   |    |                        (68                       | )  |
| Net Cash Provided by Financing Activities                     |   |    |                   6,558                            |    |   |    |                       (318                            | )  |
| Net (Decrease) in Cash & Cash Equivalents                 |   |    |                     (396                 | )  |   |    |                        (98                       | )  |
| Beginning Cash & Cash Equivalents                         |   |    |                      616            |    |   |    |                        874                       |    |
| Ending Cash & Cash Equivalents                            |   | $  |                220                                                |    |   | $  |                  776                                                           |    |
|                                                          |   |    |                                                                                                                                         |    |   |    |                                                                                                                                                                |    |
| Supplemental Disclosure of Cash Flow Information              |   |    |                                                                                                                                         |    |   |    |                                                                                                                                                                |    |
| Non cash settlement on short term mortgages and transfers     |   |  $ |                    -                          |    |   |  $ |                1,256                                                                     |    |
| Non-controlling interest                                      |   |  $ |                 (345)                                        |    |   |  $ |                      -                                     |    |
| Cash paid for Interest                                        |   |  $ |   78                                                                                                                               |    |   |  $ |                       21                              |    |
| Cash paid for Income Taxes                                    |   |  $ |             -                                                                    |    |   |  $ |                        -                         |    |
| Cash received from Income tax refunds                         |   |  $ |          61                                                                                     |    |   |  $ |                    227                                               |    |
| Margin debt incrase                                           |   |  $ |             -                                                                    |    |   |  $ |                  484                                                           |    |
| Common stock issued for land and water share purchase         |   |  $ |               500                                                      |    |   |  $ |                      -                                     |    |
| Conversion of note receivable for loan on land                |   |  $ |                  295                                    |    |   |  $ |                  -                                                             |    |
| Increase in Water Shares due to acquisition costs             |   |  $ |             174                                                                  |    |   |  $ |                         -                   |    |
| Increase in note receivable from sale of Legendary Investment |   |  $ |                     9                    |    |   |  $ |                       -                               |    |

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Table of Contents

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

|                                               |   |         |   |   |       |   |   |          |   |   | Accumulated |   |   |        |   |   |          |   |   |   |   |
|----------------------------------------------------|--------|--------------|--------|--------|------------|--------|--------|---------------|--------|--------|-------------|--------|--------|-------------|--------|--------|---------------|--------|--------|--------|--------|
|                                               |   | Voting       |   |   | Additional |   |   | Other         |   |   | Non-        |   |   |        |   |   |          |   |
|                                               |   | Common Stock |   |   | Paid-in    |   |   | Comprehensive |   |   | Controlling |   |   | Accumulated |   |   | Stockholders' |   |
|                                               |   | Shares       |   |   | Amount     |   |   | Capital       |   |   | Income      |   |   | Interest    |   |   | (Deficit)     |   |   | Equity |   |
|                                               |   |         |   |   |       |   |   |          |   |   |        |   |   |        |   |   |          |   |   |   |   |
| Balances, December 31, 2007                        |   |         | 8,924  |   |       | $      | 9      |          |   | $      | 8,758       |   |   | $           | 1,578  |   |          | $      | -      |   |   | $ | (1,377 | ) |   | $ | 8,968 |   |
|                                               |   |         |   |   |       |   |   |          |   |   |        |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net Income                                         |   |         | -      |   |       |   | -      |          |   |   | -           |   |   |        | -      |   |          |   | -      |   |   |   | 182 |   |   |   | 182 |   |
| Options exercised                                  |   |         | 100    |   |       |   | -      |          |   |   | 5           |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 5 |   |
| Change in unrealized gains                         |   |         | -      |   |       |   | -      |          |   |   | -           |   |   |        | (1,578 | )      |          |   | -      |   |   |   | - |   |   |   | (1,578 | ) |
| Stock-based compensation expense                   |   |         | -      |   |       |   | -      |          |   |   | 114         |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 114 |   |
| Retirement of Stock- open market purchases         |   |         | (5     | )      |       |   | -      |          |   |   | (4          | )      |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | (4 | ) |
| Balances, December 31, 2008                        |   |         | 9,019  |   |       |   | 9      |          |   |   | 8,873       |   |   |        | -      |   |          |   | -      |   |   |   | (1,195 | ) |   |   | 7,687 |   |
|                                               |   |         |   |   |       |   |   |          |   |   |        |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss)                                         |   |         | -      |   |       |   | -      |          |   |   | -           |   |   |        | -      |   |          |   | (175   | )      |   |   | (2,925 | ) |   |   | (3,100 | ) |
| Stock-based compensation expense                   |   |         | -      |   |       |   | -      |          |   |   | 118         |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 118 |   |
| Retirement of Stock - open market purchases        |   |         | (155   | )      |       |   | -      |          |   |   | (94         | )      |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | (94 | ) |
| Stock purchased through private placement          |   |         | 150    |   |       |   | -      |          |   |   | 150         |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 150 |   |
| Options exercised                                  |   |         | 200    |   |       |   | -      |          |   |   | 10          |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 10 |   |
| Recovered BPZ stock                                |   |         | -      |   |       |   | -      |          |   |   | 143         |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 143 |   |
| Non-controlling interest in a subsidiary           |   |         | -      |   |       |   | -      |          |   |   | -           |   |   |        | -      |   |          |   | 2,850  |   |   |   | - |   |   |   | 2,850 |   |
| Balances, December 31, 2009                        |   |         | 9,214  |   |       |   | 9      |          |   |   | 9,200       |   |   |        | -      |   |          |   | 2,675  |   |   |   | (4,120 | ) |   |   | 7,764 |   |
|                                               |   |         |   |   |       |   |   |          |   |   |        |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss)                                         |   |         | -      |   |       |   | -      |          |   |   | -           |   |   |        | -      |   |          |   | (273   | )      |   |   | (2,108 | ) |   |   | (2,381 | ) |
| Non-controlling interest in subsidiaries           |   |         | -      |   |       |   | -      |          |   |   | -           |   |   |        | -      |   |          |   | (72    | )      |   |   | - |   |   |   | (72 | ) |
| Stock-based compensation expense                   |   |         | -      |   |       |   | -      |          |   |   | 580         |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 580 |   |
| Warrant extension expense                          |   |         | -      |   |       |   | -      |          |   |   | 50          |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 50 |   |
| Stock issued in exchange for land and water shares |   |         | 500    |   |       |   | -      |          |   |   | 499         |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 499 |   |
| Stock purchased through private placement          |   |         | 1,776  |   |       |   | 2      |          |   |   | 1,774       |   |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | 1,776 |   |
| Direct cost of private placement                   |   |         | -      |   |       |   | -      |          |   |   | (154        | )      |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | (154 | ) |
| Valuation of Mutual Ditch Company                  |   |         | -      |   |       |   | -      |          |   |   | -           |   |   |        | -      |   |          |   | 12,882 |   |   |   | - |   |   |   | 12,882 |   |
| Retirement of Stock - open market purchases        |   |         | (6     | )      |       |   | -      |          |   |   | (6          | )      |   |        | -      |   |          |   | -      |   |   |   | - |   |   |   | (6 | ) |
| Balances, June 30, 2010                            |   |         | 11,484 |   |       | $      | 11     |          |   | $      | 11,943      |   |   | $           | -      |   |          | $      | 15,212 |   |   | $ | (6,228 | ) |   | $ | 20,938 |   |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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|                                                                       |   | June 30, 2010 |   |
|----------------------------------------------------------------------------|--------|---------------|--------|
|                                                                       |   |          |   |   |   |   |   | Restated |   |
| ASSETS:                                                                    |   | Unaudited     |   |   | Adjustments |   |   | Unaudited |   |
| Current Assets:                                                            |   |          |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                  |   | $             | 207    |   |   |   |   |   |   | 207 |   |
| Restricted cash                                                            |   |          | 13     |   |   |   |   |   |   | 13 |   |
| Advances and accounts receivable                                           |   |          | 58     |   |   |   |   |   |   | 58 |   |
| Income taxes receivable                                                    |   |          | 427    |   |   |   |   |   |   | 427 |   |
| Deposits and prepaid expenses                                              |   |          | 3      |   |   |   |   |   |   | 3 |   |
| Total Current Assets                                                       |   |          | 708    |   |   |   |   |   |   | 708 |   |
|   Property, equipment and software, net (Note 2)                 |   |          | 185    |   |   |   |   |   |   | 185 |   |
| Other Assets                                                               |   |          |   |   |   |   |   |   |   |   |   |
| Mortgages receivable - Net of allowance for bad debts                      |   |          | 232    |   |   |   |   |   |   | 232 |   |
| Investment in Boston Property, net of impairment                           |   |          | 1,934  |   |   |   |   |   |   | 1,934 |   |
| Land                                                                       |   |          | 1,294  |   |   |   |   |   |   | 1,294 |   |
| Water shares (HCIC)                                                        |   |          | 10,677 |   |   |   | 13,519 |   |   |   | 24,196 |   |
| Options on real estate                                                     |   |          | 637    |   |   |   | (637 | ) |   |   | - |   |
| Dam Construction                                                           |   |          | 436    |   |   |   |   |   |   |   | 436 |   |
| Other real estate owned - net of impairment and accumulated depreciation   |   |          | 467    |   |   |   |   |   |   |   | 467 |   |
| Farm product                                                               |   |          | 113    |   |   |   |   |   |   |   | 113 |   |
| Other assets                                                               |   |          | 9      |   |   |   |   |   |   |   | 9 |   |
| Total Other Assets                                                         |   |          | 15,799 |   |   |   |   |   |   |   | 28,681 |   |
| TOTAL ASSETS                                                               |   | $             | 16,692 |   |   |   | 12,882 |   |   |   | 29,574 |   |
|                                                                       |   |          |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES & STOCKHOLDERS' EQUITY:                                    |   |          |   |   |   |   |   |   |   |   |   |   |
| Current Liabilities:                                                       |   |          |   |   |   |   |   |   |   |   |   |   |
| Accounts payable                                                           |   | $             | 538    |   |   |   |   |   |   |   | 538 |   |
| Short term borrowings                                                      |   |          | 950    |   |   |   |   |   |   |   | 950 |   |
| Accrued liabilities                                                        |   |          | 29     |   |   |   |   |   |   |   | 29 |   |
| Total Current Liabilities                                                  |   |          | 1,517  |   |   |   |   |   |   |   | 1,517 |   |
| Notes Payable - Long Term                                                  |   |          | 7,119  |   |   |   |   |   |   |   | 7,119 |   |
| Total Liabilities                                                          |   |          | 8,636  |   |   |   |   |   |   |   | 8,636 |   |
|                                                                       |   |          |   |   |   |   |   |   |   |   |   |   |
| Stockholders' Equity:                                                      |   |          |   |   |   |   |   |   |   |   |   |   |
| Common stock                                                               |   |          | 11     |   |   |   |   |   |   |   | 11 |   |
| Additional paid-in capital                                                 |   |          | 11,943 |   |   |   |   |   |   |   | 11,943 |   |
| Accumulated (deficit)                                                      |   |          | (6,228 | ) |   |   |   |   |   |   | (6,228 | ) |
| Total Two Rivers Water Company Shareholders' Equity                        |   |          | 5,726  |   |   |   |   |   |   |   | 5,726 |   |
| Noncontrolling interest in subsidiaries                                    |   |          | 2,330  |   |   |   | 12,882 |   |   |   | 15,212 |   |
|         Total Stockholders' Equity |   |          | 8,056  |   |   |   |   |   |   |   | 20,938 |   |
| TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                               |   | $             | 16,692 |   |   |   | 12,882 |   |   |   | 29,574 |   |

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| (in thousands)       |   | Six months ending June 30, 2010 |   |   | Year ending December 31, 2009 |   |
|----------------------|--------|---------------------------------|--------|--------|-------------------------------|--------|
| HCIC Holdings, LLC   |   | $                               | (312   | )      |                          |   | (175 |  ) |
| Mutual Ditch Company |   |                            | 39     |   |                          |   | - |   |
| Total                |   | $                               | (273   | )      |                          | $      | (175 |  ) |

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| Part 1—Real estate owned at end of period (in thousands)    | Part 2—Rental income (in thousands) |
|-------------------------------------------------------------------|-------------------------------------------|
| Column A—List classification of property as indicated below | Column B—Amount of encumbrances     | Column C—Initial cost to company | Column D—Cost of improvements, etc. | Column E—Amount at which carried at close of period | Column F—Reserve for depreciation and impairments | Column G—Rents due and accrued at end of period | Column H—Total rental income applicable to period | Column I—Expended for interest, taxes, repairs and expenses | Column J—Net income applicable to period |
| Farms                                                             |                                      |   |   |   |   |   |   |   |   |
| Residential                                                       |                                      |   |   |   |   |   |   |   |   |
| Arizona                                                           |                                      | 113 | 3 | 115 | 50 | 0 | 10 | 4 | 6 |
| Colorado                                                          |                                      | 407 | 5 | 412 | 46 | 0 | 26 | 16 | 10 |
| Massachusetts                                                     | 950                                       | 1,200 | 2,031 | 3,231 | 1,297 | 0 | 0 | 0 | 0 |
|                                                              |                                      |   |   |   |   |   |   |   |   |
| Apartments and business                                           | 0                                         | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Unimproved                                                        | 0                                         | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| VA                                                                | 0                                         | 123 | 0 | 123 | 87 | 0 | 0 | 1 | -1 |
| CO                                                                | 600                                       | 1,324 | 0 | 1,324 |   |   |   | 1 | -1 |
|       Total                         | 1,550                                     | 3,167 | 2,038 | 5,205 | 1,480 | 0 | 37 | 22 | 15 |
| Rent from properties sold during period                           |                                      |   |   |   |   |   |   |   |   |
| AZ                                                                |                                      |   |   |   |   |   | 1 | 0 | 0 |
|       Total                         | 1,550                                     | 3,167 | 2,038 | 5,205 | 1,480 | 0 | 38 | 22 | 15 |

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| Real Estate Detail (in thousands)               |   | Boston Property |   |   | Other Real Estate Owned |   |   | Total  |   |
|------------------------------------------------------|--------|-----------------|--------|--------|-------------------------|--------|--------|--------|--------|
| Beginning Balance:                                   |   | $               | 2,146  |   |                    | $      | 1,867  |   |   | $ | 4,013 |   |
| Additions during the period:                         |   |            |   |   |                    |   |   |   |   |   |   |   |
| Acquisitions through foreclosure                     |   |            |   |   |                    |   |   |   |   |   | - |   |
| Other acquisitions                                   |   |            |   |   |                    |   |   |   |   |   | - |   |
| Improvements, etc.                                   |   |            | 129    |   |                    |   | 7      |   |   |   | 136 |   |
| Other (describe) – impairment reclassification |   |            |   |   |                    |   |   |   |   |   | - |   |
| Deductions during the period:                        |   |            |   |   |                    |   |   |   |   |   | - |   |
| Cost of  real estate sold                  |   |            |   |   |                    |   | (64    | )      |   |   | (64 | ) |
| Impairments                                          |   |            | (341   | )      |                    |   | (16    | )      |   |   | (357 | ) |
| Other (describe) - depreciation                      |   |            |   |   |                    |   | (3     | )      |   |   | (3 | ) |
| Ending Balance, June 30, 2010                        |   | $               | 1,934  |   |                    | $      | 1,791  |   |   | $ | 3,725 |   |

| Asset Type                       |   | Life in Years |        |   | June 30, 2010 |   |    | December 31, 2009 |   |
|----------------------------------|--------|---------------|-------------|--------|---------------|--------|---------|-------------------|--------|
| Office equipment & Furniture |   |          | 5 – 7 |   |          | $      | 86,000  |              |   | $ | 86,000 |   |
| Computers                        |   |          | 3           |   |          |   | 58,000  |              |   |   | 52,000 |   |
| Vehicles                         |   |          | 5           |   |          |   | 51,000  |              |   |   | - |   |
| Farm equipment                   |   |          | 7           |   |          |   | 47,000  |              |   |   | - |   |
| Mobile office                    |   |          | 10          |   |          |   | 10,000  |              |   |   | - |   |
| Irrigation system                |   |          | 10          |   |          |   | 15,000  |              |   |   | - |   |
| Website                          |   |          | 3           |   |          |   | 2,000   |              |   |   | 2,000 |   |
| Subtotal                         |   |          |        |   |          |   | 269,000 |              |   |   | 140,000 |   |
| Less Accumulated Depreciation    |   |          |        |   |          |   | 84,000  |              |   |   | 46,000 |   |
| Net Book Value                   |   |          |        |   |          | $      | 185,000 |              |   | $ | 94,000 |   |

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| Note From                 | Due                  |   | Principal Amount |    |   | 3/31/10 Balance |   | Annual Interest rate |   | Accrued Interest |   | Collateral |
|---------------------------|----------------------|--------|------------------|---------|--------|-----------------|--------|----------------------|--------|------------------|--------|------------|
| Short term home mortgages | Various and on-going |   | $                | 371,000 |   |            | $      | 371,000              |   | 9.95% to 14%     |   | $          | - |   | First mortgage |
| Less: Impairments         |                 |   |             |    |   |            |   | (139,000             | )      |             |   |       |   |   |   |
| Net Balance               |                 |   |             |    |   |            | $      | 232,000              |   |             |   |       |   |   |   |

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|                                                                          | For the six months ended June 30, 2010 |                 |
|-------------------------------------------------------------------------------|----------------------------------------|----------------------|
|                                                                          | (In thousands)                         |                 |
|                                                                          |                                   | Two Rivers Water Co. |   |   | Northsight, Inc. |   |   | Southie, LLC |   |   | Legendary Investment Group, LLC |   |   | TRWC |   |   | HCIC Holdings JV |   |   | Two Rivers Farms |   |   | Two Rivers Energy |   |   | Mutual Ditch Company |   |
| Revenue                                                                       |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan fees, interest and other                                                 |                                   | $                    | 9 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Assessments                                                                   |                                   |                 | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 463 |   |
| Other & misc.                                                             |                                   |                 | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Less: Cost of Services                                                        |                                   |                 | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Gross Profit                                                                  |                                   |                 | 9 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 463 |   |
|                                                                          |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Operating Expenses                                                      |                                   |                 | 1,266 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 29 |   |   |   | 453 |   |   |   | 23 |   |   |   | 15 |   |   |   | 312 |   |
|                                                                          |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Other Income/(Expense)                                                  |                                   |                 | (48 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (173 | ) |   |   | 1 |   |   |   | - |   |   |   | - |   |
| Net (Loss) Income from continuing operations before income taxes              |                                   |                 | (1,305 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (29 | ) |   |   | (626 | ) |   |   | (22 | ) |   |   | (15 | ) |   |   | 151 |   |
| Income Taxes (Expense)/Credit                                                 |                                   |                 | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                          |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss) from continuing operations                                  |                                   |                 | (1,305 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (29 | ) |   |   | (626 | ) |   |   | (22 | ) |   |   | (15 | ) |   |   | 151 |   |
|                                                                          |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued operations:                                                      |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) gain from operations of discontinued real estate and mortgage business |                                   |                 | - |   |   |   | (67 | ) |   |   | (528 | ) |   |   | 59 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Income tax benefit                                                            |                                   |                 | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Loss on discontinued operations                                               |                                   |                 | - |   |   |   | (67 | ) |   |   | (528 | ) |   |   | 59 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                          |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-controlling interest                                                      |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 313 |   |   |   | - |   |   |   | - |   |   |   | (39 | ) |
|                                                                          |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss) Income                                                             |                                   | $                    | (1,305 | ) |   |   | (67 | ) |   |   | (528 | ) |   |   | 59 |   |   |   | (29 | ) |   |   | (313 | ) |   |   | (22 | ) |   |   | (15 | ) |   |   | 112 |   |
|                                                                          |                                   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Segment assets                                                                |                                   | $                    | 827 |   |   |   | 113 |   |   |   | 2,383 |   |   |   | - |   |   |   | 5 |   |   |   | 12,624 |   |   |   | 208 |   |   |   | 1 |   |   |   | 531 |   |

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|                                                                          | For the six months ended June 30, 2009 |                |
|-------------------------------------------------------------------------------|----------------------------------------|---------------------|
|                                                                          | (In thousands)                         |                |
|                                                                          |                                   | Two Rivers Water Co |   |   | Northsight, Inc. |   |   | Southie, LLC |   |   | Legendary Investment Group, LLC |   |
| Revenue                                                                       |                                   |                |   |   |   |   |   |   |   |   |   |   |
| Loan fees, interest and other                                                 |                                   | $                   | 45 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Assessments                                                                   |                                   |                | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other & misc.                                                             |                                   |                | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Less: Cost of Services                                                        |                                   |                | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Gross Profit                                                                  |                                   |                | 45 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                          |                                   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Operating Expenses                                                      |                                   |                | 195 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                          |                                   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Other Income/(Expense)                                                  |                                   |                | (74 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Net (Loss) Income from continuing operations before income taxes              |                                   |                | (224 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Income Taxes (Expense)/Credit                                                 |                                   |                | 75 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                          |                                   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss) from continuing operations                                  |                                   |                | (149 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                          |                                   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued operations:                                                      |                                   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) gain from operations of discontinued real estate and mortgage business |                                   |                | - |   |   |   | (264 | ) |   |   | 617 | ) |   |   | (28 | ) |
| Income tax benefit                                                            |                                   |                | - |   |   |   | 69 |   |   |   | 48 |   |   |   | 10 |   |
| Loss on discontinued operations                                               |                                   |                | - |   |   |   | (195 | ) |   |   | (569 | ) |   |   | (18 | ) |
|                                                                          |                                   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-controlling interest                                                      |                                   |                | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                          |                                   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss) Income                                                             |                                   | $                   | (149 | ) |   |   | (195 | ) |   |   | (569 | ) |   |   | (18 | ) |
|                                                                          |                                   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Segment assets                                                                |                                   | $                   | 2,233 |   |   |   | 148 |   |   |   | 5,716 |   |   |   | 24 |   |

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|                                    |   | Shares |       |   | Weighted AverageExercise Price |   |
|-----------------------------------------|--------|--------|------------|--------|--------------------------------|--------|
| Outstanding,  January 1, 2009 |   |   | 3,941,510  |   |                           | $      | 1.33 |   |
| Granted                                 |   |   | -          |   |                           |   | - |   |
| Cancelled                               |   |   | (110,000   | )      |                           | $      | 2.00 |   |
| Expired                                 |   |   | -          |   |                           |   | - |   |
| Exercised                               |   |   | (200,000   | )      |                           | $      | 0.05 |   |
| Outstanding, January 1, 2010            |   |   | 3,631,510  |   |                           | $      | 1.38 |   |
| Granted                                 |   |   | -          |   |                           |   | - |   |
| Cancelled                               |   |   | (1,905,948 | )      |                           | $      | 1.41 |   |
| Expired                                 |   |   | -          |   |                           |   | - |   |
| Exercised                               |   |   | -          |   |                           |   | - |   |
| Outstanding, June 30, 2010              |   |   | 1,725,562  |   |                           | $      | 1.36 |   |
| Options Exercisable , June 30, 2010     |   |   | 1,725,562  |   |                           | $      | 1.36 |   |

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|                                    |   | Shares |     |   | Weighted AverageExercise Price |   |
|-----------------------------------------|--------|--------|----------|--------|--------------------------------|--------|
| Outstanding, January 1, 2009            |   |   | 582,777  |   |                           | $      | 0.50 |   |
| Granted                                 |   |   | -        |   |                           |   | - |   |
| Cancelled                               |   |   | (562,777 | )      |                           | $      | 0.50 |   |
| Expired                                 |   |   | -        |   |                           |   | - |   |
| Exercised                               |   |   | -        |   |                           |   | - |   |
| Outstanding,  January 1, 2010 |   |   | 20,000   |   |                           | $      | 0.50 |   |
| Granted                                 |   |   | 200,000  |   |                           | $      | 0.50 |   |
| Cancelled                               |   |   | -        |   |                           |   | - |   |
| Expired                                 |   |   | -        |   |                           |   | - |   |
| Exercised                               |   |   | -        |   |                           |   | - |   |
| Outstanding, June 30, 2010              |   |   | 220,000  |   |                           | $      | 0.50 |   |
| Options Exercisable , June 30, 2010     |   |   | 206,667  |   |                           | $      | 0.50 |   |

| Expected stock price volatility | 35%        |
|---------------------------------|------------|
| Risk-free interest rate         | 2.64%      |
| Expected option life (years)    | 3.3 to 5.2 |
| Expected annual dividend yield  | 0%         |

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| Number of commonshares covered by warrants |      |   | Exercise Price |   | Expiration Date |
|--------------------------------------------|-----------|--------|----------------|--------|-----------------|
|                                       | 1,332,500 |   |           | $      | 4.00            |   | December 31, 2010 |
|                                       | 1,332,500 |   |           |   | 2.00            |   | December 31, 2010 |
|                                       | 150,000   |   |           |   | 1.00            |   | December 31, 2010 |
|                                       | 2,815,000 |   |           |   |            |   |   |

| Expected stock price volatility | 35%        |
|---------------------------------|------------|
| Risk-free interest rate         | 2.64%      |
| Expected option life (years)    | 3.3 to 5.2 |
| Expected annual dividend yield  | 0%         |

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| Federal Rate                  | 34.00%  |
|-------------------------------|---------|
| State Rate                    | 4.63%   |
| Federal benefit of State Rate | (1.57)% |
| Net Effective Rate            | 37.06%  |

| Loss reported on financials before taxes     |   | $      | (2,108 | )      |
|----------------------------------------------|--------|--------|--------|--------|
| Tax adjustments:                             |   |   |   |   |
| Non-deductible impairment expense            |   |   | 438    |   |
| Stock option and warrant expense             |   |   | 628    |   |
| Entertainment and other items                |   |   | 13     |   |
| Adjusted taxable loss                        |   |   | (1,029 | )      |
| Net Effective Rate                           |   |   | 37.06  | %      |
| Tax benefit from loss carryback              |   | $      | (381   | )      |
|                                         |   |   |   |   |
| Refund expected as of December 31, 2009      |   | $      | 489    |   |
| Refunds received                             |   |   | (61    | )      |
| Deferred tax asset carried forward from 2009 |   |   | 277    |   |
| Additional benefit from loss carryback above |   |   | 381    |   |
| Deferred tax asset valuation allowance       |   |   | (658   | )      |
| Tax receivable as of June 30, 2010           |   | $      | 427    |   |

| (in thousands)                                                                             |   | June 30, 2010 |   |   | Dec 31, 2009 |   |
|--------------------------------------------------------------------------------------------|--------|---------------|--------|--------|--------------|--------|
| Mortgages receivable                                                                       |   | $             | 371    |   |         | $      | 371 |   |
| Thomas Park project                                                                        |   |          | 3,231  |   |         |   | 2,962 |   |
| Other real estate owned                                                                    |   |          | 650    |   |         |   | 1,529 |   |
| Subtotal                                                                                   |   |          | 4,252  |   |         |   | 4,862 |   |
| Less allowances and depreciation                                                           |   |          | (1,619 | )      |         |   | (1,381 | ) |
| Net book value of property to sell                                                         |   |          | 2,633  |   |         |   | 3,481 |   |
| Less amounts owed on real estate to be sold                                                |   |          | (950   | )      |         |   | (950 | ) |
| Net projected proceeds from mortgage receivables, Thomas Park, and other real estate owned |   | $             | 1,683  |   |         | $      | 2,531 |   |

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| Period |   | Amount Due |   |
|--------|--------|------------|--------|
| 2010   |   | $          | 30,000 |   |
| 2011   |   | $          | 10,000 |   |

| Period |   | Amount Due |   |
|--------|--------|------------|--------|
| 2010   |   | $          | 3,000  |   |
| 2011   |   | $          | 5,000  |   |

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ITEM 2.  

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| -   | Equity proceeds through private placements of Two Rivers securities; |
|---------------|----------------------------------------------------------------------|

| -   | Revenue generated from operations; |
|---------------|------------------------------------|

| -   | Loans and lines of credit; |
|---------------|----------------------------|

| -   | Sales of residential properties acquired through deed-in-lieu actions; |
|---------------|------------------------------------------------------------------------|

| -   | Sales of equity investments, and |
|---------------|----------------------------------|

| -   | Proceeds from the exercise of legacy Navidec, Inc. options |
|---------------|------------------------------------------------------------|

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|                                                                       |   | June 30, 2010 |   |
|----------------------------------------------------------------------------|--------|---------------|--------|
|                                                                       |   |          |   |   |   |   |   | Restated |   |
| ASSETS:                                                                    |   | Unaudited     |   |   | Adjustments |   |   | Unaudited |   |
| Current Assets:                                                            |   |          |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                  |   | $             | 207    |   |   |   |   |   |   | 207 |   |
| Restricted cash                                                            |   |          | 13     |   |   |   |   |   |   | 13 |   |
| Advances and accounts receivable                                           |   |          | 58     |   |   |   |   |   |   | 58 |   |
| Income taxes receivable                                                    |   |          | 427    |   |   |   |   |   |   | 427 |   |
| Deposits and prepaid expenses                                              |   |          | 3      |   |   |   |   |   |   | 3 |   |
| Total Current Assets                                                       |   |          | 708    |   |   |   |   |   |   | 708 |   |
|   Property, equipment and software, net (Note 2)                 |   |          | 185    |   |   |   |   |   |   | 185 |   |
| Other Assets                                                               |   |          |   |   |   |   |   |   |   |   |   |
| Mortgages receivable - Net of allowance for bad debts                      |   |          | 232    |   |   |   |   |   |   | 232 |   |
| Investment in Boston Property, net of impairment                           |   |          | 1,934  |   |   |   |   |   |   | 1,934 |   |
| Land                                                                       |   |          | 1,294  |   |   |   |   |   |   | 1,294 |   |
| Water shares (HCIC)                                                        |   |          | 10,677 |   |   |   | 13,519 |   |   |   | 24,196 |   |
| Options on real estate                                                     |   |          | 637    |   |   |   | (637 | ) |   |   | - |   |
| Dam Construction                                                           |   |          | 436    |   |   |   |   |   |   |   | 436 |   |
| Other real estate owned - net of impairment and accumulated depreciation   |   |          | 467    |   |   |   |   |   |   |   | 467 |   |
| Farm product                                                               |   |          | 113    |   |   |   |   |   |   |   | 113 |   |
| Other assets                                                               |   |          | 9      |   |   |   |   |   |   |   | 9 |   |
| Total Other Assets                                                         |   |          | 15,799 |   |   |   |   |   |   |   | 28,681 |   |
| TOTAL ASSETS                                                               |   | $             | 16,692 |   |   |   | 12,882 |   |   |   | 29,574 |   |
|                                                                       |   |          |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES & STOCKHOLDERS' EQUITY:                                    |   |          |   |   |   |   |   |   |   |   |   |   |
| Current Liabilities:                                                       |   |          |   |   |   |   |   |   |   |   |   |   |
| Accounts payable                                                           |   | $             | 538    |   |   |   |   |   |   |   | 538 |   |
| Short term borrowings                                                      |   |          | 950    |   |   |   |   |   |   |   | 950 |   |
| Accrued liabilities                                                        |   |          | 29     |   |   |   |   |   |   |   | 29 |   |
| Total Current Liabilities                                                  |   |          | 1,517  |   |   |   |   |   |   |   | 1,517 |   |
| Notes Payable - Long Term                                                  |   |          | 7,119  |   |   |   |   |   |   |   | 7,119 |   |
| Total Liabilities                                                          |   |          | 8,636  |   |   |   |   |   |   |   | 8,636 |   |
|                                                                       |   |          |   |   |   |   |   |   |   |   |   |   |
| Stockholders' Equity:                                                      |   |          |   |   |   |   |   |   |   |   |   |   |
| Common stock                                                               |   |          | 11     |   |   |   |   |   |   |   | 11 |   |
| Additional paid-in capital                                                 |   |          | 11,943 |   |   |   |   |   |   |   | 11,943 |   |
| Accumulated (deficit)                                                      |   |          | (6,228 | ) |   |   |   |   |   |   | (6,228 | ) |
| Total Two Rivers Water Company Shareholders' Equity                        |   |          | 5,726  |   |   |   |   |   |   |   | 5,726 |   |
| Noncontrolling interest in subsidiaries                                    |   |          | 2,330  |   |   |   | 12,882 |   |   |   | 15,212 |   |
|         Total Stockholders' Equity |   |          | 8,056  |   |   |   |   |   |   |   | 20,938 |   |
| TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                               |   | $             | 16,692 |   |   |   | 12,882 |   |   |   | 29,574 |   |

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| Allowance for:                                    |   | June 30, 2010 |      |   | Dec 31, 2009 |   |
|---------------------------------------------------|--------|---------------|-----------|--------|--------------|--------|
| Short Term Mortgages                              |   | $             | 139,000   |   |         |   | 139,000 |   |
| Boston Property – Thomas Park               |   |          | 1,297,000 |   |         |   | 889,000 |   |
| Real Estate  owned – depreciation |   |          | 33,000    |   |         |   | 40,000 |   |
| Real Estate owned – impairments             |   |          | 150,000   |   |         |   | 313,000 |   |
| Total                                             |   | $             | 1,619,000 |   |         |   | 1,381,000 |   |

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|   |  (i) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
|--------|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (ii) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made on in accordance with authorizations of our management and directors; and |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | provide reasonable  assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | An inability to ensure there is timely analysis and review of accounting records, spreadsheets, and supporting data; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | an inability to effectively monitor access to, or maintain effective controls over changes to, certain financial application programs and related data. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we have trained additional staff members to assist in the finance and accounting functions to ensure that there are separation of duties, as much as possible given our limited staff; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we are in the process of analyzing our processes for all business units and the establishment of formal policies and procedures with necessary segregation of duties, which will establish mitigating controls to compensate for the risk due to lack of segregation of duties. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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PART II.  OTHER INFORMATION

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| Number | Description |   |
|--------|-------------|--------|

| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act     | Filed Herewith |
|------|----------------------------------------------------------------------------------------------------|----------------|
| 31.2 | Certification of Principal Financial Officer pursuant to the Section 302 of the Sarbanes-Oxley Act | Filed Herewith |
| 32.1 | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act     | Filed Herewith |
| 32.2 | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act     | Filed Herewith |

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SIGNATURES

|                                 | TWO RIVERS WATER COMPANY (Registrant)                     |
|--------------------------------------|----------------------------------------------------------------|
|   Dated: February 28, 2011 |   By: /s/ John McKowen                               |
|                                 | Chief  Executive Officer & Chairman of the Board |
|                                 | By: /s/ Wayne Harding                                          |
|                                 | Chief Financial Officer & Principal Accounting Officer     |

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