Mail Stop 7010
August 10, 2005
via U.S. mail and facsimile
Steven H. Davis
President and Chief Executive Officer
CET Services, Inc.
7032 South Revere Parkway
Englewood, CO 80112
Re: CET Services, Inc.
Form 10- KSB for the Fiscal Year Ended December 31, 2004
Filed March 4, 2005
Form 10-QSB for the Fiscal Quarter Ended March 31, 2005
File No. 3-91602
Dear Mr. Davis:
We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your documents. Where indicated, we think you should
revise your document in future filings in response to these
comments.
If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary. Please be
as
detailed as necessary in your explanation. In some of our
comments,
we may ask you to provide us with information so we may better
understand your disclosure. After reviewing this information, we
may
or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-KSB for the Fiscal Year Ended December 31, 2004
Consolidated Balance Sheet, page F-4
1. We note that you have accrued construction expenses of $271,196
as
of December 31, 2004 and $331,328 as of March 31, 2005. Please
tell
us the material components included in your accrual. In addition,
please include an accounting policy for this accrual in future
filings. Please provide us with the policy you intend to include
in
future filings.
Note M - Legal, page F-17
2. We note that you state, "Management believes that no pending
litigation in which the Company is named as a defendant is likely
to
have a material adverse effect on the Company`s financial position
or
results of operations." The language you use to describe your
loss
contingencies should be consistent and clear regarding whether you
believe that the described contingency is remote, reasonably
possible, or probable. Depending upon that determination, all
other
appropriate disclosures should be made. Please also note that a
statement that the contingency is not expected to be material does
not satisfy the requirements of SFAS 5 if there is at least a
reasonable possibility that a loss exceeding amounts already
recognized may have been incurred and the amount of that
additional
loss would be material to a decision to buy or sell your
securities.
In that case, you must either (a) disclose the estimated
additional
loss, or range of loss, or (b) state that such an estimate cannot
be
made. Refer to SFAS 5 and SAB Topic 5:Y for guidance.
3. We note that you have not recorded a loss contingency for the
labor billing-rates to the EPA for the period 1992-1994 and select
subsequent periods, "as the probable outcome is unknown." The
criteria for recording an estimated loss from a loss contingency
in
accordance with SFAS 5 is (a) it is probable that an asset has
been
impaired or a liability has been incurred and (b) the amount of
loss
can be reasonably estimated, not when you are able to predict the
outcome. As such, please provide us with your detailed analysis
as
to whether this loss contingency is both probable and reasonably
estimable. Refer to paragraph 8 of SFAS 5 for guidance. If you
believe this loss contingency is both probable and reasonably
estimable and you believe the range of loss is between $0 and $8.7
million, please provide us with disclosure you intend to include
in
future filings that supports why you believe such a range is
reasonable. Refer to FIN 14 for guidance. Finally, please tell
us
what consideration you gave to including loss contingencies as a
critical accounting policy and estimate, since it has the
potential
to have a significant impact to your consolidated financial
statements.
Form 10-QSB for the quarter ended March 31, 2004
Note 10 - Notes Payable, page 6
4. In future filings, please include the material terms of the
loan
(e.g., maturity, interest rate, and debt covenant information)
from
the local lender in which you used the proceeds to purchase a
commercial/industrial building in Westminster, Colorado.
* * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a letter that keys your responses to our comments
and
provides any requested information. Detailed response letters
greatly facilitate our review. Please file your response letter
on
EDGAR. Please understand that we may have additional comments
after
reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide,
in
writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in their filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Tracey McKoy, Staff Accountant, at (202) 551-
3772 or, in her absence, Tracey Houser at (202) 551-3736, or me at
(202) 551-3255 if you have questions regarding comments on the
financial statements and related matters.
Sincerely,
Nili Shah
Accounting Branch Chief
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Mr. Davis
CET Services, Inc.
August 10, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE