CET ENVIRONMENTAL SERVICES, INC.
7032 South Revere Parkway
Englewood, Colorado 80112
(720) 875-9115
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 10, 2003
TO THE SHAREHOLDERS OF CET ENVIRONMENTAL SERVICES, INC.:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of CET
Environmental Services, Inc., a California corporation (the "Company"), will
be held at the Denver Marriott Courtyard Tech Center, 6565 South Boston
Street, Englewood, Colorado, on Tuesday, June 10, 2003, at 9:00 a.m., Mountain
Time, and at any and all adjournments thereof, for the purpose of considering
and acting upon the following matters.
1. The election of four (4) Directors of the Company to serve until the
next Annual Meeting of Shareholders and until their successors have been duly
elected and qualified;
2. The ratification of the appointment of Grant Thornton LLP, as the
Company's independent auditors;
3. The approval of an amendment to the Company's Articles of
Incorporation to change the name of the Company to "CET Services, Inc."; and
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the no par value common stock of the Company of record at
the close of business on April 24, 2003, will be entitled to notice of and to
vote at the Meeting or at any adjournment or adjournments thereof. The
proxies are being solicited by the Board of Directors of the Company.
All shareholders, whether or not they expect to attend the Annual Meeting
of Shareholders in person, are urged to sign and date the enclosed Proxy and
return it promptly in the enclosed postage-paid envelope which requires no
additional postage if mailed in the United States. The giving of a proxy will
not affect your right to vote in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
STEVEN H. DAVIS, PRESIDENT
Englewood, Colorado
April 24, 2003
CET ENVIRONMENTAL SERVICES, INC.
7032 South Revere Parkway
Englewood, Colorado 80112
(720) 875-9115
______________________________
PROXY STATEMENT
______________________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 10, 2003
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of CET Environmental Services, Inc., a California corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be held
at the Denver Marriott Courtyard Tech Center, 6565 South Boston Street,
Englewood, Colorado, on Tuesday, June 10, 2003, at 9:00 a.m., Mountain Time,
and at any adjournment thereof. It is anticipated that this Proxy Statement
and the accompanying Proxy will be mailed to the Company's shareholders on or
about May 9, 2003.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling, and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers,
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees, and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report for the year ended December 31, 2002, is
being simultaneously mailed to the Company's shareholders, but does not
constitute part of these proxy soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
no par value common stock, with each share entitled to one vote. Only
shareholders of record at the close of business on April 24, 2003, are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
On April 24, 2003, the Company had 5,757,792 shares of its no par value common
stock outstanding, each share of which is entitled to one vote on all matters
to be voted upon at the Meeting. Under California law, shareholders are
permitted to cumulate votes for the election of directors whose names have
been placed in nomination. Therefore, in voting for directors, each
outstanding share of common stock would be entitled to four votes which may be
cast for one candidate or distributed in any manner among the nominees for
director. However, the right to cumulate votes in favor of one or more
candidates may not be exercised until the candidate or candidates have been
nominated and any shareholder has given notice at the Annual Meeting of the
intention to cumulate votes.
Page 2
The proxy holders will have full discretion and authority to vote
cumulatively and to allocate votes among any or all of the Board of Directors
nominees as they may determine or, if authority to vote for a specified
candidate or candidates has been withheld, among those candidates for whom
authority to vote has not been withheld.
A majority of the Company's outstanding common stock represented in
person or by proxy shall constitute a quorum at the Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of the
Company's no par value common stock owned beneficially, as of April 24, 2003,
by any person, who is known to the Company to be the beneficial owner of 5% or
more of such common stock, and, in addition, by each Director, Nominee for
Director, and Executive Officer of the Company, and by all Directors, Nominees
for Director, and Executive Officers of the Company as a group. Information
as to beneficial ownership is based upon statements furnished to the Company
by such persons.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS
Craig C. Barto 713,554 (1) 12.4%
2440 Bayshore Drive
Newport Beach, CA 92663
Steven H. Davis 1,187,907 (2) 20.6%
7032 S. Revere Parkway
Englewood, CO 80112
George Pratt 14,000 (3) 0.2%
2208 Argyle Circle
Plano, TX 75023
John D. Hendrick 11,100 (4) 0.2%
5030 West Maplewood Place
Littleton, CO 80123
Dale W. Bleck 22,500 (5) 0.4%
7032 S. Revere Parkway
Englewood, CO 80112
Ann J. Heckler 10,000 (5) 0.2%
7032 S. Revere Parkway
Englewood, CO 80112
All directors, nominees for 1,959,061 33.7%
director, and executive officers
as a group (6 persons)
__________________
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(1) Includes 703,554 shares held directly and 10,000 shares underlying stock
options exercisable within 60 days.
(2) Includes 1,187,907 shares held directly.
(3) Includes 1,000 shares held directly, 3,000 shares held by his wife, and
10,000 shares underlying stock options exercisable within 60 days held by
Mr. Pratt.
(4) Includes 1,100 shares held directly and 10,000 shares underlying stock
options exercisable within 60 days held by Mr. Hendrick.
(5) Represents shares underlying stock options exercisable within 60 days
held by the named person.
The Company knows of no agreements the operation of which may at a
subsequent date result in a change in control of the Company.
ELECTION OF DIRECTORS
The number of Directors of the Company is currently set at four (4)
members. The Board of Directors recommends the election as Directors of the
four (4) nominees listed below, to hold office until the next Annual Meeting
of Shareholders and until their successors are elected and qualified or until
their earlier death, resignation or removal. Each of the current members of
the present Board of Directors has been nominated for reelection. The persons
named as "Proxies" in the enclosed form of Proxy will vote the shares
represented by all valid returned proxies in accordance with the
specifications of the shareholders returning such proxies. If at the time of
the Meeting any of the nominees named below should be unable to serve, which
event is not expected to occur, the discretionary authority provided in the
Proxy will be exercised to vote for such substitute nominee or nominees, if
any, as shall be designated by the Board of Directors.
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
POSITIONS AND OFFICES
NAME AGE HELD AND TERM AS A DIRECTOR
Craig C. Barto 45 Director since 1991
Steven H. Davis 49 Chief Executive Officer, President,
and Director since 1991
George Pratt 70 Director since 1998
John D. Hendrick 59 Director since 2000
There is no family relationship between any Director, Nominee for
Director, or Executive Officer of the Company.
The Company has no Nominating Committee but does have an Audit Committee
and a Compensation Committee.
Page 4
The Audit Committee presently consists of Craig C. Barto, George Pratt,
and John D. Hendrick. The Audit Committee reviews financial statements and
other data prior to release to the public. In addition, the Committee meets
with the Company's independent accountants in connection with the Company's
audit. During 2002, the Audit Committee met three (3) times.
The Compensation Committee presently consists of Craig C. Barto, George
Pratt, and John D. Hendrick. The Compensation Committee reviews compensation
matters relating to the Executive Officers of the Company and makes
recommendations to the Board of Directors. The Compensation Committee met two
(2) times during 2002.
Dale W. Bleck currently serves as an advisor to the Audit Committee, and
Steven H. Davis serves as an advisor to the Compensation Committee.
Set forth below are the names of all directors, nominees for director,
and executive officers of the Company, all positions and offices with the
Company held by each such person, the period during which he has served as
such, and the principal occupations and employment of such persons during at
least the last five years:
CRAIG C. BARTO has been a Director of the Company since 1991. He is also
the President and Chairman of the Board of Directors of Signal Hill Petroleum,
Inc., Barto/Signal Petroleum, Inc., Signal Hill Operating, Inc., and Signal
Oil and Refining, Inc., which operate businesses such as Paramount and
Fletcher oil refineries. A graduate of UCLA with a degree in Economics in
1979, Mr. Barto was instrumental in the growth of the Signal Hill Petroleum
companies in the oil business with the reclamation of a marginal operation in
the West Newport Oil Field in Orange County, California. In addition to the
oil and gas operations, Mr. Barto is also responsible for the commercial and
residential development of over 100 acres of some of the last undeveloped
hilltop property in Southern California.
STEVEN H. DAVIS has served as the Company's Chief Executive Officer,
President, and a Director since 1991. Prior to that time he was operating
partner of Lincoln Property Company which developed over 3 million square feet
of buildings in California, Nevada, and Colorado. He has almost 20 years of
experience in construction, financing, and developing industrial real estate.
Mr. Davis graduated from Brown University with an emphasis in Economics in
1975 and obtained an MBA from the University of Southern California in 1977.
As President, Mr. Davis manages the Company's business affairs and has been
instrumental in securing financing, negotiating bonding agreements, projecting
and analyzing the feasibility of expansion, mergers and acquisitions, and
formulating business relationships with customers, financial entities, and the
legal community.
GEORGE PRATT has been a Director of the Company since July 1998. Since
June 1993, Mr. Pratt has been employed by Pratt Associates, Inc, which
provides professional services in the area of corporate finance, merger-
acquisition analysis for small high-technology companies, and providing
services to the legal profession such as valuations of securities and
privately-owned companies for estate purposes and research and testimony for
securities-related litigation. From April 1988 to January 1993, he was
Chairman and Chief Executive Officer of Computer Automation, Inc., a
manufacturer of computer systems and automatic test equipment. Mr. Pratt
received a B.B.A. Degree in Finance from Hofstra University in 1958.
Page 5
JOHN D. HENDRICK has been a Director of the Company since November 2000.
Since March 2000, Mr. Hendrick has been General Manager of the Centennial
Water & Sanitation District in Highlands Ranch, Colorado. From 1996 to 2000,
he was owner of Hendrick Engineering, which provided consulting services for
water resources and water supply matters. Mr. Hendrick has over thirty years
experience in the water industry in various capacities including hydrologist,
engineer, manager, and consultant. Mr. Hendrick received a Bachelor's Degree
in Agricultural Engineering from Cornell University in 1965, a Master's Degree
in Agricultural Engineering from the University of Illinois in 1967, and a
Ph.D in Hydrology and Water Resources from Colorado State University in 1972.
DALE W. BLECK has been Chief Financial Officer since September 1999, and
he has been employed by the Company since March 1999. From May 1998 to March
1999, he was Chief Financial Officer of Spartan Steel Products, Inc., a
distributor of steel products in Evergreen, Colorado. From January 1987 to
May 1998, he was Controller (until April 1991) and then Corporate Analyst for
Western Dairymen Cooperative, Inc., a dairy cooperative in Thornton, Colorado.
Mr. Bleck received a B.S. Degree in Accounting from Illinois State University
in 1972 and a M.B.A. Degree from Colorado State University in 1998. Mr. Bleck
is 52 years old.
ANN J. HECKLER has been Secretary since June 2002, and has been employed
by the Company since April 1998. From January 1991 through April 1998, she
was a small business owner in the Denver metropolitan area. Ms. Heckler
graduated from the University of Oklahoma in 1971 with a degree in Business
Education. Ms. Heckler is 54 years old.
The Company's Board of Directors held four (4) meetings during the year
ended December 31, 2002. Each Director attended all of the meetings held by
the Board of Directors and its Committees during the time each such Director
was a member of the Board or of any Committee of the Board.
The Company's executive officers hold office until the next annual
meeting of directors of the Company, which currently is scheduled for June 10,
2003. There are no known arrangements or understandings between any director
or executive officer and any other person pursuant to which any of the above-
named executive officers or directors was selected as an officer or director
of the Company.
SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain written representations, no persons who were officers
and directors of the Company failed to file on a timely basis reports required
by Section 16(a) of the Exchange Act during the most recent fiscal year,
except that Ann J. Heckler, Secretary of the Company, filed a Form 3 late.
COMPENSATION
The following table sets forth information concerning the compensation
received for services rendered in all capacities to the Company for the years
ended December 31, 2002, 2001, and 2000, by the Company's President and each
other executive officer whose compensation exceeded $100,000 during such
years.
Page 6
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ ----------------- ---------------
SECURI-
TIES
OTHER UNDERLY-
ANNUAL RE- ING ALL
COMPEN- STRICTED OPTIONS/ OTHER
NAME AND PRINCIPAL SATION STOCK SARs LTIP COMPEN-
POSITION YEAR SALARY BONUS (1) AWARD(S) (NUMBER) PAYOUTS SATION
- ------------------ ---- ------ ----- ------ -------- -------- ------- -------
Steven H. Davis, 2002 $125,008 $15,000 $1,750 0 0 0 $0
President and 2001 $125,008 $12,023 $1,056 0 0 0 $0
Chief Executive 2000 $125,000 $ 0 $1,082 0 0 0 $0
Officer
Officer
Dale W. Bleck, 2002 $ 96,000 $15,000 $2,942 0 0 0 $0
Chief Financial 2001 $ 94,068 $12,023 $1,591 0 0 0 $0
Officer
Douglas W. Cotton, 2000 $117,204 $ 0 $1,625 0 0 0 $0
Executive Vice 1999 $282,692 $ 0 $4,241 0 0 0 $0
President and
Chief Operating
Officer (2)
_______________
(1) Includes 401K contributions by the Company.
(2) Mr. Cotton resigned on September 27, 2000.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SECURITIES
UNDERLYING VALUE OF UNEXER-
SHARES UNEXERCISED CISED IN-THE-
ACQUIRED OPTIONS MONEY OPTIONS/
ON SARs AT FY-END SARs AT FY-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (NUMBER) REALIZED UNEXERCISABLE UNEXERCISABLE
---- -------- -------- -------------- ---------------
Steven H. Davis 0 0 0 / 0 $ 0 / $ 0
Dale W. Bleck 0 0 21,000 / 11,500 $ 0 / $ 0
The Company has no formal employment agreements with any of its Executive
Officers.
Page 7
COMPENSATION OF DIRECTORS
Members of the Board of Directors receive a fee of $1,000 per Board
meeting attended, including telephone meetings. They are also entitled
reimbursement of reasonable travel expenses incurred by them in attending
board or committee meetings.
On August 7, 1998, the Board of Directors granted each of the Company's
non-employee Directors options to purchase 10,000 shares of common stock at
$1.75 per share. These options were not granted under any plan. The options
are exercisable commencing August 7, 1999 until August 7, 2003, except that
they will expire three months after the termination of serving as a Director
of the Company, for reasons other than death, and one year after termination
as a result of death.
Effective November 14, 2000, the Board of Directors granted options to
purchase 10,000 shares of common stock at $0.50 per share to John D. Hendrick
in connection with his election to the Board. These options are exercisable
commencing November 14, 2001, until November 14, 2005, except that they will
expire three months after termination of serving as a Director of the Company,
for reasons other than death, and one year after termination as a result of
death.
401K PLAN
The Company had a Non-standardized Cash or Deferred Profit Sharing Plan
pursuant to which all eligible employees could contribute a portion of their
income. Company contributions to the Profit Sharing Plan were discretionary.
The Company did, however, make matching contributions for the first six
percent of all elective deferrals. Until 2002, the matching contribution was
25%. Beginning April 1, 2002, the matching contribution was increased to 50%.
Effective March 31, 2003, the Plan was dissolved by the Board of Directors.
STOCK OPTION PLAN
On March 1, 1995, the Company adopted an Incentive Stock Option Plan (the
"Plan") for key personnel. A total of 550,000 shares of common stock are
reserved for issuance pursuant to the exercise of stock options (the
"Options") which may be granted to full-time employees of the Company. The
Plan is currently administered by the Board of Directors. In addition to
determining who will be granted Options, the Board of Directors has the
authority and discretion to determine when Options will be granted and the
number of Options to be granted. The Board of Directors may grant Options
intended to qualify for special treatment under the Internal Revenue Code of
1986, as amended ("Incentive Stock Options") and may determine when each
Option becomes exercisable, the duration of the exercise period for Options,
and the form of the instruments evidencing Options granted under the Plan. The
Board of Directors may adopt, amend, and rescind such rules and regulations as
in its opinion may be advisable for the administration of the Plan. The Board
of Directors may also construe the Plan and the provisions in the instruments
evidencing the Options granted under the Plan and make all other
determinations deemed necessary or advisable for the administration of the
Plan.
Page 8
The Board of Directors has broad discretion to determine the number of
shares with respect to which Options may be granted to participants. The
maximum aggregate fair market value (determined as of the date of grant) of
the shares as to which the Incentive Stock Options become exercisable for the
first time during any calendar year may not exceed $100,000. The Plan provides
that the purchase price per share for each Incentive Stock Option on the date
of grant may not be less than 100 percent of the fair market value of the
common stock on the date of grant. However, any Option granted under the Plan
to a person owning more than 10 percent of the common stock shall be at a
price of at least 110 percent of such fair market value.
If an optionee ceases to be employed by the Company for any reason other
than death or disability, the optionee may exercise all Options within three
months following such cessation to the extent exercisable on the date of
cessation. If an optionee dies while employed by the Company, or during the
three-month period following termination of the optionee's employment, or if
the optionee becomes disabled, the optionee's Options, unless previously
terminated, may be exercised, whether or not otherwise exercisable, by the
optionee or his legal representative or the person who acquires the Options by
bequest or inheritance at any time within one year following the date of death
or disability of the optionee.
An Option granted under the Plan is not transferable by the optionee
other than by will or by the laws of descent and distribution and, during the
lifetime of the optionee, may be exercised only by the optionee, his guardian,
or legal representative.
In August 1996, the Company filed a registration statement on Form S-8 to
register the 550,000 shares of the Company's common stock reserved for
issuance under the Company's Incentive Stock Option Plan.
As of December 31, 2002, options for 78,600 shares were outstanding at
prices ranging from $0.20 to $3.50 per share under this plan.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation", which requires entities to calculate the fair value of
stock awards granted to employees. This statement provides entities with the
option of either electing to expense the fair value of employee stock-based
compensation or continuing to recognize compensation expense under existing
accounting pronouncements and to provide proforma disclosures of net income
and, if presented, income per share, as if the above-mentioned fair market
value method of accounting was used in determining compensation expense.
Additionally, the statement requires that all equity awards granted to
nonemployees such as suppliers of goods and services be recognized based on
fair value.
The Company has elected the proforma method of disclosure. Under this
method, the fair value of each option grant is estimated on the date of grant
using the Black-Scholes options-pricing model with the following weighted-
average assumptions for grants used in 2002 and 2001: no expected dividends;
expected volatility of 84.1%; risk free interest rate of 6.0%; and expected
lives of ten years.
Using these assumptions, the Company's net income(loss) and
earnings(loss) per common share would have been:
Page 9
December 31, December 31,
2002 2001
------------ ------------
Net loss available to common stockholders:
As reported $(2,432,938) $ 218,586
Stock compensation expense (13,873) (52,278)
----------- ---------
Pro forma $(2,446,811) $ 166,308
=========== =========
Basic and diluted net loss available to
Common Stockholders per common share:
As reported $ (.42) $ .04
Pro forma $ (.42) $ .03
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2002, with
respect to shares of the Company's common stock that may be issued under
equity compensation plans:
Number of
securities
remaining
Number of available
securities Weighted- for future
to be issued average issuance under
upon exer- exercise equity compen-
cise of out- price of sation plans
standing outstanding (excluding
options, options, securities
warrants warrants reflected in
and rights and rights column (a))
Plan category (a) (b) (c)
- ------------- ---------- ---------- -------------
Equity compensation 78,600 $1.33 457,700
plans approved by
security holders
Equity compensation 30,000 $1.33 0
plans not approved ------- -------
by security holders
Total 108,600 $1.33 457,700
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company sells water it acquires under a water lease to the
Centennial Water & Sanitation District. John D. Hendrick, who became a
Director of the Company in November 2000, is the General Manager of the
Centennial Water & Sanitation District. The Centennial Water & Sanitation
District makes payments to an escrow agent who distributes the funds primarily
to the lessor and the remainder to the Company. During 2002 and 2001, the
Company invoiced the Centennial Water & Sanitation District $265,487 and
$262,742, respectively, and recorded a profit of $19,248 and $16,239,
respectively, under this arrangement.
Page 10
On May 2, 2001, the Company entered into an agreement to purchase 631,514
shares of the Company's common stock from Douglas W. Cotton, a former Director
and Executive Vice President of the Company, for a maximum of $250,000 or
approximately $0.395 per share. Initially, the Company purchased 189,454
shares for $75,000. The remaining 442,060 shares are to be purchased for a
maximum of $175,000, the payment of which is contingent upon receipt of the
$5.3 million of past due receivables from Remediation Financial, Inc. ("RFI").
Under the terms of the agreement, 5% of the proceeds from RFI as collected, up
to the maximum of $175,000 will be applied to the purchase of the stock. In
February 2002, following the receipt of $2.1 million from RFI, the Company
purchased an additional 218,757 shares from Mr. Cotton for $86,600.
All of these transactions were approved by the Board of Directors and
were made on terms as fair and reasonable to the Company as those that could
be obtained from non-affiliated third parties. Any future transactions between
the Company and its officers, directors, employees and affiliates that are
outside the scope of the Company's employment relationship with such persons
will be subject to the approval of a majority of the disinterested members of
the Board of Directors based upon a determination that the terms are at least
as favorable to the Company as those that could be obtained from unrelated
parties.
REPORT OF THE AUDIT COMMITTEE
The Company has a standing Audit Committee (the "Audit Committee") of the
Board of Directors. The Audit Committee presently consists of Craig C. Barto,
George Pratt,and John D. Hendrick, who are independent as defined in Section
121(A) of the American Stock Exchange's listing standards currently in effect.
The Audit Committee operates pursuant to a charter (the "Audit Committee
Charter") approved and adopted by the Board. The Audit Committee, on behalf
of the Board, oversees the Company's financial reporting process. In
fulfilling its oversight responsibilities, the Audit Committee reviewed with
Management the audited financial statements and the footnotes thereto in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2002,
and discussed with management the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of the disclosures in the financial statements. The Audit Committee
held three (3) meetings in 2002.
The Company's outside independent public accountants, Grant Thornton LLP,
are responsible for expressing an opinion on the conformity of the Company's
audited financial statements in all material respects, to accounting
principles generally accepted in the United States. The Audit Committee
reviewed and discussed with the independent public accountants their judgments
as to the quality, not just the acceptability, of the Company's accounting
principles and such other matters as are required to be discussed by the Audit
Committee with the Company's independent public accountants under Statement on
Auditing Standards 61, as amended by SAS 90. The Company's independent public
accountants have expressed the opinion that the Company's audited financial
statements conform, in all material respects, to accounting principles
generally accepted in the United States. The independent public accountants
have full and free access to the Audit Committee.
The Audit Committee discussed with the Company's independent public
accountants their independence from management and the Company, and received
from them the written disclosures and the letter concerning the independent
accountants' independence required by the Independence Standard Board Standard
No. 1.
Page 11
The Audit Committee discussed with the Company's independent public
accountants the overall scope and plans of the audit. The Audit Committee
discussed with the independent public accountants the results of their audit,
their evaluations of the Company's internal controls, and the overall quality
of the Company's financial reporting.
In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Annual Report on Form 10-KSB for the year ended December 31,
2002, for filing with the Securities and Exchange Commission. The Audit
Committee also recommended to the Board of Directors the selection of Grant
Thornton LLP to serve as the Company's independent public accountants for the
fiscal year ending December 31, 2003.
MEMBERS OF THE AUDIT COMMITTEE
Craig C. Barto
George Pratt
John D. Hendrick
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The independent accounting firm of Grant Thornton LLP audited the
financial statements of the Company for the year ended December 31, 2002, and
has been selected in such capacity for the current fiscal year. At the
direction of the Board of Directors, this appointment is being presented to
the shareholders for ratification or rejection at the Annual Meeting of
Shareholders. If the shareholders do not ratify the appointment of Grant
Thornton LLP, the appointment of auditors will be reconsidered by the Board of
Directors.
It is expected that representatives of Grant Thornton LLP, will be
present at the meeting and will be given an opportunity to make a statement if
they desire to do so. It is also expected that the representatives will be
available to respond to appropriate questions from shareholders.
AUDIT FEES. The fees billed for professional services rendered by the
independent auditors for the audit of the Company's financial statements for
the year ended December 31, 2002, and for the reviews of the financial
statements included in the Company's Form 10-QSB's during the last fiscal year
amounted to $47,375.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
independent auditors did not provide professional services during 2002
relating to financial information systems design and implementation.
ALL OTHER FEES. The fees billed by the independent auditors during the
fiscal year ended December 31, 2002 for non-audit services rendered amounted
to $25,278. These services consisted of tax return preparation and 401(k)
Plan audit fees. The Audit Committee has considered the other fees paid to
Grant Thornton LLP and concluded that they do not impair their independence.
Page 12
AMENDMENT TO ARTICLES OF INCORPORATION TO CHANGE NAME
The Board of Directors has approved, subject to shareholder approval, an
amendment to the Articles of Incorporation to change the name of the Company
to "CET Services, Inc." The proposed change would eliminate the word
"Environmental" from the Company's name. The Board of Directors believes that
the change is needed in light of the Board's decision to concentrate the
Company's business on developing "Brownfields" projects, and to not pursue
further environmental service contracts. The Board believes that the revised
name will help to avoid confusion about the Company's business.
An affirmative vote of a majority of the outstanding shares of common
stock will be required to approve the proposed amendment to the Company's
Articles of Incorporation.
The Board of Directors recommends a vote FOR the proposed amendment.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not
aware of any other matter to be presented at the Meeting other than as set
forth herein. However, if any other matters are properly brought before the
Meeting, the shares represented by valid proxies will be voted with respect to
such matters in accordance with the judgment of the persons voting them. A
majority vote of the shares represented at the meeting is necessary to approve
any such matters.
ANNUAL REPORT
The Company's Annual Report for the year ending December 31, 2002,
accompanies this Proxy Statement. The Annual Report is not incorporated into
this Proxy Statement and is not to be considered part of the solicitation
material.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN JUNE 2004
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in June 2004 must be received at the
offices of the Company, 7032 South Revere Parkway, Englewood, Colorado 80112,
no later than December 19, 2003, in order to be included in the Company's
proxy statement and proxy relating to that meeting.
Shareholders intending to bring any business before the Annual Meeting of
Shareholders to be held in June 2004 that is not to be included in the
Company's proxy statement and proxy related to that meeting must notify the
Company, in writing, prior to March 9, 2004, of the business to be presented.
Any such notices received after said date will be considered untimely under
Rule 14a-4(c)(1) under the Securities Exchange Act of 1934, as amended.
STEVEN H. DAVIS, PRESIDENT
Englewood, Colorado
April 24, 2003
Page 13
P R O X Y
CET ENVIRONMENTAL SERVICES, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven H. Davis with the power to appoint
his substitute, and hereby authorizes him to represent and to vote as
designated below, all the shares of common stock of CET Environmental
Services, Inc. held of record by the undersigned on April 24, 2003, at the
Annual Meeting of Shareholders to be held on June 10, 2003, or any adjournment
thereof.
1. The election of four (4) Directors of the Company to serve until the
next Annual Meeting of Shareholders and until their successors have been duly
elected and qualified:
___ FOR all nominees listed below (except as marked to the
contrary).
___ WITHHOLD authority to vote for all the nominees listed
below:
Craig C. Barto John D. Hendrick
George Pratt Steven H. Davis
[INSTRUCTION: To withhold authority to vote for any individual nominee,
cross out that nominee's name above.]
2. The ratification of the appointment of Grant Thornton LLP as the
Company's independent accountants for the fiscal year ending December 31,
2003:
___ FOR ___ AGAINST ___ ABSTAIN
3. The approval of an amendment to the Company's Articles of
Incorporation to change the name of the Company to "CET Services, Inc.":
___ FOR ___ AGAINST ___ ABSTAIN
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CET
ENVIRONMENTAL SERVICES, INC. PLEASE SIGN AND RETURN THIS PROXY IN THE
ENCLOSED PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
(To be signed on the other side)
CET ENVIRONMENTAL SERVICES, INC.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement.
Dated: ______________, 2003 _______________________________________
Signature(s) of Shareholder(s)
_______________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians, and attorneys should indicate when
signing. Attorneys should submit powers of attorney.