As filed with the Securities and Exchange Commission on December 24, 1997
SEC Registration No. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CET ENVIRONMENTAL SERVICES, INC.
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(Exact Name of Registrant as Specified in its Charter)
California 33-0285964
- ---------------------------- -----------------------------------
(State or Other Jurisdiction (IRS Employer Identification Number)
of Incorporation)
7670 South Vaughn Court, Suite 130, Englewood, Colorado 80112
(303) 708-1360
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(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Steven H. Davis, President
7670 South Vaughn Court, Suite 130, Englewood, Colorado 80112
(303) 708-1360
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(Name, Address and Telephone Number of Agent for Service)
Copy to:
Jon D. Sawyer, Esq.
Krys Boyle Freedman & Sawyer, P.C.
600 17th Street, Suite 2700 South Tower
Denver, Colorado 80202
(303) 893-2300
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: ___
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: _X_
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: ___
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering: ___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: ___
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Each Class Offering Aggregate Amount of
of Securities to be Amount to be Price Per Offering Registration
Registered Registered Unit<FN1> Price<FN1> Fee
- ------------------------------------------------------------------------------
Common Stock, No 729,248 $6.75 $4,922,424 $1,452.12
Par Value
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<FN>
<FN1>
Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c) of the Securities Act of 1933, based upon the closing sale
price of the Common Stock as reported on the American Stock Exchange on
December 22, 1997.
</FN>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
PROSPECTUS SUBJECT TO COMPLETION DATED DECEMBER 24, 1997
- ------------------------------------------------------------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY STATE.
CET ENVIRONMENTAL SERVICES, INC.
729,248 Shares of Common Stock
The 729,248 shares of Common Stock, $.0001 par value ("Common Stock") of
CET Environmental Services, Inc., a California corporation (the "Company"),
offered hereby (the "Shares") are being sold by the selling stockholders
identified herein (the "Selling Stockholders"). Such offers and sales may be
made on the American Stock Exchange, or otherwise, at prices and on terms then
prevailing, or at prices related to the then-current market price, or in
negotiated transactions, or by underwriters pursuant to an underwriting
agreement in customary form, or in a combination of any such methods of sale.
The Selling Stockholders may also sell such shares in accordance with Rule 144
under the Securities Act of 1933, as amended (the "1933 Act"). The Selling
Stockholders are identified and certain information with respect to them is
provided under the caption "Selling Stockholders" herein. The expenses of the
registration of the securities offered hereby, including fees of counsel for
the Company, will be paid by the Company. The following expenses will be borne
by the Selling Stockholders: underwriting discounts and selling commissions,
if any, and the fees of legal counsel, if any, for the Selling Stockholders.
The filing by the Company of this Prospectus in accordance with the
requirements of Form S-3 is not an admission that any person whose shares are
included herein is an "affiliate" of the Company.
The Selling Stockholders have advised the Company that they have not
engaged any person as an underwriter or selling agent for any of such shares,
but they may in the future elect to do so, and they will be responsible for
paying such a person or persons customary compensation for so acting. The
Selling Stockholders and any broker executing selling orders on behalf of any
Selling Stockholders may be deemed to be "underwriters" within the meaning of
the 1933 Act, in which event commissions received by any such broker may be
deemed to be underwriting commissions under the 1933 Act. The Company will not
receive any of the proceeds from the sale of the securities offered hereby.
The Common Stock is listed on the American Stock Exchange under the
symbol "ENV". On December 22, 1997, the closing sale price of the Common
Stock, as reported on the American Stock Exchange, was $6.75 per share.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________.
No person is authorized in connection with any offering made hereby to
give any information or to make any representations other than as contained in
this Prospectus, and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company. This
Prospectus is not an offer to sell, or a solicitation of an offer to buy, by
any person in any jurisdiction in which it is unlawful for such person to make
such an offer or solicitation. Neither the delivery of this Prospectus nor any
sales made hereunder shall under any circumstances create any implication that
the information contained herein is correct as of any time subsequent to the
date hereof.
AVAILABLE INFORMATION
The Company is subject to certain informational reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in
accordance therewith files reports and other information with the Securities
and Exchange Commission (the "Commission"). These reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024 of the Commission's
office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549, and
at its regional offices located at 7 World Trade Center, Suite 1300, New York,
NY 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661. Copies of such reports, proxy statements and other information can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, DC 20549 at prescribed rates. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically. Additional updating information with respect to the
securities covered herein may be provided in the future to purchasers by means
of appendices to this Prospectus.
The Company has filed with the Commission in Washington, DC a
registration statement (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the 1933 Act with respect
to the securities offered or to be offered hereby. This Prospectus does not
contain all of the information included in the Registration Statement, certain
items of which are omitted in accordance with the rules and regulations of the
Commission. For further information about the Company and the securities
offered hereby, reference is made to the Registration Statement and the
exhibits thereto. The Registration Statement has been filed electronically
through the Commission's Electronic Data Gathering, Analysis and Retrieval
System and may be obtained through the Commission's Web site
(http://www.sec.gov.).
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any document incorporated herein by reference, excluding exhibits. Requests
should be made to CET Environmental Services, Inc., 7670 South Vaughn Court,
Suite 130, Englewood, Colorado 80112, telephone (303) 708-1360, and directed
to the attention of Steven H. Davis.
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TABLE OF CONTENTS
PAGE
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
RECENT EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SELLING SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . 12
PLAN OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . 15
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . 16
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THE COMPANY
CET Environmental Services, Inc. (the "Company") was incorporated in
February 1988 under the name "Thorne Environmental, Inc." to conduct business
in environmental consulting, engineering, remediation and construction. The
Company's initial growth resulted from its successful performance of emergency
response cleanup services in certain western states and the Trust Territory of
the Pacific Islands for the U.S. Government. The Company has since developed
a broad range of expertise in non-proprietary technology-based environmental
remediation and water treatment techniques for both the public and private
sectors throughout North and South America and the Trust Territory of the
Pacific Islands. The Company was purchased by its existing majority
shareholders in November 1991, and for the last five years has engaged in a
program of expansion through internal client development and add-on contracts,
the acquisition of personnel and assets in desirable geographic locations, and
the acquisition of smaller companies involved with target growth technologies.
The Company has built a large backlog of government work through the award of
several multi-year contracts primarily with the Environmental Protection
Agency and the Department of Defense. The Company has achieved and maintains
a balance between its commercial and government sector business through an
aggressive industrial marketing strategy. To date, the Company has performed
remediation services for both public and private sector customers at more than
500 sites.
The Company's strategy has been to distinguish itself in the market by
providing full service environmental contracting, municipal and industrial
water and wastewater treatment, and emergency response services. Through
several major government contracts and a diversified commercial client base,
the Company provides turnkey waste management for a complete range of water,
soil and air pollution issues. The Company's personnel have developed
expertise in a broad range of remediation techniques such as bioremediation,
bioventing, vapor extraction, gas/air sparging, thermal desorption, soil
washing and groundwater remediation systems. The Company also offers a broad
range of services in support of municipal and industrial water and wastewater
treatment, military base closures, and other operations with significant
environmental components. The Company believes it has gained a solid
reputation for promptly providing cost effective and innovative remediation
solutions.
In November 1996, the Company relocated its corporate headquarters to
Englewood, Colorado from Tustin, California to be more centrally located for
its expanding business. The Company also maintains offices in Tustin,
California; Richmond, California; Portland, Oregon; Edmonds, Washington;
Phoenix, Arizona; Pasadena, Texas; New Orleans, Louisiana; Jackson,
Mississippi; and Mobile, Alabama.
The Company's headquarters are located at 7670 South Vaughn Court, Suite
130, Englewood, Colorado 80112, and its telephone number is (303) 708-1360.
The Company's fax number is (303) 708-1349 and its internet address is
http://www.cetenvironmental.com.
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RISK FACTORS
An investment in the securities being offered by this Prospectus
involves a high degree of risk. In addition to the other information
contained in this Prospectus or incorporated herein by reference, prospective
investors should carefully consider the risk factors discussed below before
purchasing the shares of Common Stock offered hereby.
This Prospectus contains and incorporates by reference forward-looking
statements within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Such statements are based on
management's current expectations and are subject to a number of factors and
uncertainties which could cause actual results to differ materially from those
described in the forward-looking statements. Reference is made in particular
to the description of the Company's plans and objectives for future
operations, assumptions underlying such plans and objectives and other
forward-looking statements included or incorporated in this Prospectus.
Factors which could cause such results to differ materially from those
described in the forward-looking statements include those set forth in the
risk factors below.
1. COSTS OF COMPLIANCE WITH, AND POTENTIAL LIABILITY UNDER,
ENVIRONMENTAL LAWS AND REGULATIONS. Due to the nature of the Company's
business and the intense regulatory climate in which it operates, the services
of the Company are subject to extensive federal, state and local laws and
regulations which are constantly changing. Such regulations impose stringent
guidelines on companies which handle hazardous materials as well as other
companies involved in various aspects of the environmental remediation
services industry. Failure to comply with applicable federal, state and local
regulations could result in substantial costs to the Company, the imposition
of penalties or in claims not covered by insurance, any of which could have a
material adverse effect on the Company's business.
In addition to the burdens imposed on Company operations by various
environmental regulations, federal law imposes strict joint and several
liability upon present and former owners and operators of facilities that
release hazardous substances into the environment and the generators and
transporters of such substances as well as persons arranging for the disposal
of such substances. All such persons may be liable for the costs of waste site
investigation, waste site clean up, natural resource damages and related
penalties and fines. Such costs can be very substantial.
Environmental remediation operations may expose the Company's employees
and others to dangerous and potentially toxic quantities of petroleum or other
hazardous products. Such products can cause cancer and other debilitating
diseases. Although the Company takes extensive precautions to minimize worker
exposure and has not experienced any such claims from workers or others, there
can be no assurance that the Company will avoid liability to persons who
contract diseases which may be related to such exposure. Such persons
potentially include the Company's employees, persons occupying or visiting
facilities in which contaminants are being, or have been, removed or stored,
persons in surrounding areas, and persons engaged in the transportation and
disposal of waste material. In addition, the Company is subject to general
risks inherent in the construction industry. The Company may also be exposed
to liability from the acts of its subcontractors or other contractors on a
work site.
Currently, the Company has $5,000,000 per occurrence and $5,000,000
aggregate comprehensive general liability insurance coverage. In addition, the
Company carries environmental impairment liability insurance in the amount of
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2,000,000 per occurrence with a $2,000,000 aggregate. Errors and omissions
liability insurance for petroleum and chemical exposure for claims made in the
coverage period is also provided. While the Company has never been subject to
a claim relating to petroleum/chemical exposure and believes that its current
coverage is adequate, there can be no assurance that the Company will be able
to maintain its existing coverage, that claims will not exceed the amount of
insurance coverage or that there will not be claims relating to prior periods
that were not covered by insurance, any of which could have a material adverse
effect upon the Company. Because of the nature of the Company's operations and
the industry in which it operates, the potential for liability and the extent
of such potential liability is very substantial. Any such liability could have
a material adverse impact on the Company's business and financial condition.
2. DEPENDENCE ON CONTINUED ENVIRONMENTAL REGULATION. The growth of
the environmental remediation services industry, as well as the growth of the
Company, has been largely attributable to, and tracks the increase in,
environmental regulation since the 1970s and the response of governmental and
commercial entities and financial institutions to public concern with
environmentally contaminated facilities. The demand for environmental
remediation services has been largely the result of facility and property
owners attempting to comply with, or avoid liability under, existing or newly
imposed environmental regulations at the federal, state and local levels.
Because of the burden imposed on industry in complying with such regulations,
efforts have been made by various groups to seek the relaxation or repeal of
certain forms of environmental regulation. While such efforts have been
largely unsuccessful to date, there can be no assurance that the scope or
growth of such regulation will not be curtailed in the future. Any relaxation
of environmental regulation may result in a decline in demand for
environmental remediation services and may adversely affect the operations of
the Company. For example, the Resource Conservation and Recovery Act ("RCRA")
mandates that by December 31, 1998, every single walled underground storage
tank ("UST") in the United States must be removed and replaced with a double
walled tank, and that any environmental damage to the soil or water caused by
tank leakage must be remediated. As a result, the Company's business in UST
removals and installations will likely be reduced after that date. Management
doesn't expect that this reduction after December 31, 1998, will have a
material adverse effect on the Company because this line of business
represents less than ten percent of the Company's business at the present
time.
3. DEPENDENCE ON MAJOR CUSTOMER. The Company is dependent upon its
relationship and contract with the EPA which accounted for approximately 20%
and approximately 27% of the Company's revenues in 1996 and 1995,
respectively. While the Company continues to increase the amount of work
performed for entities other than the EPA and thereby reduce its dependence on
the EPA, the Company will continue to be significantly dependent on EPA
contracts for the foreseeable future.
4. DEPENDENCE ON SPENDING LEVELS OF GOVERNMENTAL AND INDUSTRIAL
ENTITIES. Because of the nature of sites requiring environmental remediation
services, the growing public emphasis on environmental matters and the cost of
environmental remediation services, a significant portion of all funds spent
for such services has been spent by governmental agencies and large industrial
concerns. While third party reimbursement may be sought in various cleanups,
most Superfund cleanups as well as weapons and other nuclear facility cleanups
involve significant spending by governmental agencies. As budget constraints
and emphasis on employment, international competition and other considerations
grow, certain governmental agencies and industrial concerns may choose to
delay or curtail expenditures for environmental remediation services. Any
curtailment or delays
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in spending for environmental remediation services by governmental agencies or
large industrial concerns can be expected to have a material adverse effect on
the environmental remediation services industry generally, and on the
operations and financial results of the Company.
5. MANAGEMENT OF GROWTH. The Company has experienced a period of
rapid growth in its operations. This growth has resulted in an increase in the
level of responsibility for members of the Company's management team. Few of
these managers have had experience managing businesses which have experienced
a rate of growth similar to that of the Company. The Company's ability to
manage growth successfully will require it to continue to improve its
operational, management and financial systems and controls and to expand,
train, manage and retain its employee base. Failure of the Company's
management to do so could have a material adverse effect on the Company's
business, operating results and financial condition.
6. BUSINESS SUBJECT TO WEATHER CONDITIONS. While the Company
provides its services on a year round basis, the Company's services provided
outdoors or outside of a sealed environment may be adversely affected by
inclement weather conditions. Extended periods of rain, cold weather or other
inclement weather conditions may result in delays in commencing or completing
projects, in whole or in part. Any such delays may adversely affect the
Company's operations and financial results and may adversely affect the
performance of other projects due to scheduling and staffing conflicts.
7. DEPENDENCE ON ABILITY TO SECURE BONDING. In order to successfully
bid on and secure contracts to perform environmental remediation services of
the nature offered by the Company, the Company oftentimes must provide surety
bonds with respect to each respective project. Thus the number and size of
contracts which the Company can perform is directly dependent upon the
Company's ability to obtain bonding which, in turn, is dependent upon the
Company's net worth and liquid working capital. There can be no assurance that
the Company will have adequate bonding capacity to bid on all of the projects
which it would otherwise bid upon were it to have such bonding capacity or
that it will in fact be successful in obtaining additional contracts on which
it may bid.
8. FIXED PRICE AND PER UNIT CONTRACTS. Historically, less than 5% of
the Company's remediation contracts are on a fixed price or per unit basis.
Cost overruns on projects covered by such contracts due to such things as
unanticipated price increases, unanticipated problems, inefficient project
management, inaccurate estimation of labor or material costs or disputes over
the terms and specifications of contract performance could have a material
adverse effect on the Company and its operations. There can be no assurance
that cost overruns will not occur in the future and have a material adverse
effect on the Company. In addition, in order to remain competitive in the
future, the Company may have to agree to enter into more fixed price and per
unit contracts than in the past.
9. LACK OF SIGNIFICANT OPERATING HISTORY. The Company has been in
existence since 1988 and was acquired by current management in November 1991.
As such, the Company is subject to many of the risks common to enterprises
with a limited operating history, including potential under capitalization,
limitations with respect to personnel, financial and other resources and
limited customers and revenues. There is no assurance that the Company's
activities will be successful and the likelihood of success must be considered
in light of its current stage of development.
-7-
10. FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FINANCING. The
Company's long term capital requirements will depend on many factors,
including, but not limited to, cash flow from operations, the level of capital
expenditures, working capital requirements and the growth in its business.
Historically, the Company has relied upon commercial borrowings, a public
offering, borrowings from shareholders and affiliates of shareholders and
retained earnings to fund its operations and capital needs. The Company has
established a line of credit with a commercial bank which provides up to $9
million in credit depending on the amount of eligible accounts receivable and
contracts in progress. As of September 30, 1997, there was $4,594,078
outstanding under this line of credit. The Company may need to incur
additional indebtedness to fund the capital needs related to its growth. To
the extent additional debt financing cannot be raised on acceptable terms, the
Company may need to raise additional funds through public or private equity
financings. No assurance can be given that additional equity financing will be
available or that, if available, the terms of such financing will be favorable
to the Company or to its shareholders without substantial dilution of their
ownership and rights. If adequate funds are not available, the Company may be
required to curtail its future operations significantly or to forego market or
expansion opportunities.
11. COMPETITION. Competition in the environmental remediation
services industry is intense, and the success of the Company is dependent upon
its ability to secure contracts. Government, state and local contracts are
awarded based upon competitive bidding, and the Company is not always the
lowest bidder. The Company's future success will be dependent upon the
Company's ability to competitively bid contracts and to perform them on a
profitable basis. In addition, the Company will need to grow in order to
remain competitive with larger competitors.
The industry is dominated by a few large engineering construction firms.
Such firms are called upon to serve as primary contractors and consultants on
a large portion of the federal and state government projects. Additionally,
many smaller engineering firms, construction firms, consulting firms and other
specialty firms have entered the environmental remediation services industry
in recent years and additional firms can be expected to enter into the
industry in the future. Many of the firms with which the Company competes in
the environmental remediation services industry have significantly greater
financial resources and more established market positions than the Company.
While management believes that the Company's experience and expertise in the
broad range of services which it offers allows the Company to compete
successfully, there can be no assurance that this will continue or that other
firms will not expand into or develop expertise in the areas in which the
Company specializes, thus increasing competition to the Company.
12. CONCENTRATION OF CREDIT RISK. The Company contracts with a
limited number of customers which are involved in a wide range of industries.
A small number of customers may therefore be responsible for a majority of
revenues at any time. While management assesses the credit risk associated
with each proposed customer prior to the execution of a definitive contract,
no assurances can be given that such assessments will be correct and that the
Company will not sustain substantial, noncollectible accounts receivable.
13. DEPENDENCE ON EXECUTIVE MANAGEMENT AND OTHER QUALIFIED PERSONNEL.
The operations of the Company are substantially dependent on its executive
officers who are also its principal shareholders and directors. The Company
has no employment contracts with these persons. The loss of their services
could have a material adverse effect on the Company. The Company's further
success will also depend significantly on its ability to attract and retain
additional skilled
-8-
personnel, including highly trained technical personnel, project managers and
supervisors. The Company believes it currently has adequate qualified
supervisory personnel, but there is no assurance that experienced and
qualified management level personnel will be available to the Company in the
future to fill positions as needed.
14. CONTROL BY OFFICERS, DIRECTORS AND MAJOR SHAREHOLDERS. Officers
and directors of the Company, specifically Messrs. Craig C. Barto, Steven H.
Davis, John G. L. Hopkins and Douglas W. Cotton, beneficially own an aggregate
of approximately 57.0% percent of the issued and outstanding shares of the
Company's Common Stock. Under California law, shareholders of the Company have
cumulative voting rights; however, it is likely that despite such rights,
present management will continue to be able to control the Board of Directors
of the Company.
15. DIVIDENDS. The Company does not anticipate paying any cash
dividends for the foreseeable future. The Company expects that future
earnings, if any, will be used to finance growth. No person seeking dividend
income from an investment should invest in this offering.
16. SHARES ELIGIBLE FOR FUTURE SALE. Of the 5,804,585 shares of the
Company's Common Stock issued and outstanding as of December 22, 1997,
approximately 4,013,248 are "restricted securities" as that term is defined
under Rule 144 promulgated under the 1933 Act. Of these shares, 729,248 are
being offered for resale by the Selling Shareholders listed in this
Prospectus. Craig C. Barto, Douglas W. Cotton, Steven H. Davis, and John G.
L. Hopkins, Officers and Directors of the Company, have agreed that, without
the prior written consent of the selling agent in the Company's December 1996
private offering, they and their affiliates will not sell any Common Stock
until July 19, 1998, except that Mr. Hopkins will be allowed to sell a number
of shares to be agreed upon by the selling agent. Such persons have also
agreed that all of their Rule 144 sales during the two year period ending
December 9, 1998, will be executed through the selling agent acting as a
broker or dealer. Sales of shares of the Company's Common Stock which might
be registered or sales made pursuant to Rule 144 or otherwise could adversely
affect the market price of the Company's Common Stock and make it more
difficult for the Company to sell equity securities in the future at a time
and price which it deems appropriate. The Company is unable to predict the
effect that sales made under registration statements or Rule 144 or otherwise
may have on the then prevailing market price of the Common Stock. Nonetheless,
the possibility exists that the sale of these shares may depress the price of
the Company's Common Stock.
-9-
RECENT EVENTS
At its Annual Meeting of Shareholders held on May 15, 1997, Rick C.
Townsend, who has been Executive Vice President and Chief Financial Officer of
the Company since November 1996, was elected as an additional Director of the
Company. The six other Directors of the Company were also re-elected at that
meeting. Effective January 1, 1998, Mr. Townsend will become Secretary of the
Company.
In July 1997, the Company announced that it had received a delivery
order to construct a groundwater extraction, treatment and discharge system at
the Cornhusker Army Ammunition Plant near Grand Island, Nebraska. This
project is valued at $9 million and involves the remediation of a subsurface
explosives contaminant plume. The work is scheduled to last approximately 18
months. This project has been issued under the Company's $25 million U.S.
Army Corps of Engineers Preplaced Remedial Action Contract ("PRAC").
In August 1997, the Company acquired Water Quality Management
Corporation ("WQM"), a privately held company headquartered in Golden,
Colorado. WQM specializes in the contract operations of industrial and
municipal water and wastewater treatment facilities. WQM has 17 current
water/wastewater treatment contracts including sanitation districts such as
Black Hawk/Central City, Perry Park, Town of Larkspur, Stonegate Metropolitan
District, and Cherry Creek Village Metro District. With this acquisition, the
Company now has approximately 50 water and wastewater treatment facility
operation and maintenance contracts in Colorado. This acquisition did not
have a material impact on the revenue or net profit of the Company.
In August 1997, the Company also announced that it had been awarded
contracts totaling $1 million for water and wastewater facilities in Idaho
Springs, Silverthorne, and Parshall, Colorado, and a $1.55 million groundwater
treatment project for a Department of Energy site in Wyoming. The first
project with the Colorado Department of Public Health and Environment is for
the start-up, operation and maintenance of the Argo Tunnel Water Treatment
Facility in Idaho Springs. The $500,000 project is for the first year of
operation and is renewable for up to four additional years. The project is
funded jointly by the State of Colorado and the U.S. Environmental Protection
Agency and is part of the Clear Creek/Central City Superfund site. The
facility will treat acid mine drainage from the Argo Tunnel, which has
historically been a pollution source into Clear Creek.
The second contract is to prepare a preliminary plan to design, build
and operate, and provide financing options for, water supply improvements for
the Hamilton Creek Metropolitan District near Silverthorne. The project
includes the development of a new deep aquifer water supply well, distribution
lines, booster pumps, and improved treatment. The project is scheduled for
preliminary planning in August 1997, and construction is to begin as early as
the spring of 1998.
The third contract was awarded by Climax Molybdenum Company, a
subsidiary of Cyprus Amax, to design, build and operate a microfiltration
water treatment plant at their Henderson Mill facility near Parshall,
Colorado. The plant will be a replacement system designed to treat high
turbidity surface water from a mountain water source to meet the potable water
requirements set forth by the State of Colorado for the molybdenum processing
plant.
The Company was also issued a delivery order to construct a groundwater
remediation system at the Hoe Creek Department of Energy site near Gillette,
Wyoming. This project is valued at $1.55 million and involves the air
sparging
-10-
treatment of two aquifers impacted with benzene and phenols. The work has
been started and will last approximately 18 months. This project has been
issued under the Company's $25 million U.S. Army Corps of Engineers Preplaced
Remedial Action Contract ("PRAC").
On August 25, 1997, the Company received notice that the Air Force
Center for Environmental Excellence ("AFCEE") selected the Company as one of
three firms eligible to receive work under the $75 million small-business set-
aside program. The Company is also a team member with Montgomery/Watson,
Pasadena, California, which was selected as one of four firms eligible to
receive work under the AFCEE large-business contracts worth a combined value
of $400 million. The Company will perform approximately 15 percent of
Montgomery/Watson's work. There is no assurance as to how much work, if any,
the Company will receive under these two programs.
In August, 1997, the Company was awarded a contract to design, build and
operate for one year a wastewater treatment facility for Monfort, Inc. at
Monfort's beef packing plant in Garden City, Kansas. The contract is valued
at approximately $6.8 million.
In August, 1997, the Company was awarded a $2.6 million contract by a
unit of Coastal Corporation to perform soil and groundwater remediation
services at a refinery in San Pedro, California. The project includes the
design, construction and operation of a soil vapor extraction and air sparging
system.
In September 1997, the Company announced that it had been awarded an
Emergency and Rapid Response Services ("ERRS") contract by the U.S.
Environmental Protection Agency ("EPA") Region 10. This region includes the
states of Washington, Oregon, Idaho, and Alaska. This five-year contract has
a potential value of $40 million and will involve the cleanup of contaminants
and hazardous materials on an emergency and planned basis.
In October, 1997, the Company received a $1.1 million contract to
perform soil remediation services for a 25 acre parcel of land in Chandler,
Arizona, being redeveloped for commercial use.
-11-
SELLING STOCKHOLDERS
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock as of December 22, 1997,
and as adjusted to reflect the sale of the Common Stock offered hereby by each
Selling Stockholder.
Shares Bene- Shares Bene-
ficially Owned Number of ficially Owned
Prior to Shares Being After Offering
Selling Stockholder Offering<FN1> Offered <FN1><FN2>
- ------------------ -------------- ------------ ----------------
Pitt & Co. FBO GCIU 16,250 16,250 -0-
Employer Retirement
Fund
Nina Christina Berrigan 6,000 6,000 -0-
Henry M. Kendall 6,000 6,000 -0-
Vincent L. Mikelonis 4,000 4,000 -0-
& Barbara G.
Mikelonis
Kenneth Sillavan 5,000 5,000 -0-
Delaware Charter G&T 5,000 5,000 -0-
TTEE FBO Andre Chustz
Delaware Charter G&T 8,125 8,125 -0-
TTEE FBO Robert Bazley
Robert Kassenbrock 31,250 31,250 -0-
Edward J. Bertagnolli 8,125 8,125 -0-
DDS PC Pension Plan
dtd 7/10/90
Delaware Charter G&T 8,125 8,125 -0-
TTEE FBO John P. Kanouff
IRA #862830
Mary R.Osborn 8,125 8,125 -0-
Stacey Hart & Karen Hart 16,250 16,250 -0-
JTWROS
TBD Investment Group Inc. 10,000 10,000 -0-
Thadeus J. Zagrobelny, Jr. 4,062 4,062 -0-
& Anne M. Zagrobelny JTWROS
Robert H. Taggart, Jr. 8,125 8,125 -0-
George D. Thompson 8,125 8,125 -0-
Robert E. Swartwood & 3,000 3,000 -0-
Dolores Swartwood JTWROS
Robert Ableman 15,000 15,000 -0-
Ardell J. Schelich Revoc- 8,125 8,125 -0-
able Living Trust dtd 9/10/90
Dolores S. Swartwood JTWROS
Ross T. Krueger MDPA EMP PSP 13,125 13,125 -0-
Ross T. Krueger TTEE
John Madfis 4,100 4,100 -0-
Elsa Rush & Norman Rush JTWROS 4,100 4,100 -0-
Ronald L. Schuchman & Barbara 8,125 8,125 -0-
L. Schuchman JTTEN
Eugene P. Schumacher & Mary H. 8,125 8,125 -0-
Schumacher JTWROS
Alan Pius 5,000 5,000 -0-
John N. Walker 3,800 3,800 -0-
-12-
Harvey Rhoads, DBA Rhoads 4,000 4,000 -0-
Chiropractic
Robert W. Streett Rev Trust 16,250 16,250 -0-
Robert W. Streett TTEE
Mark W. Longman 4,000 4,000 -0-
Bryan Allen & Linda Allen 8,125 8,125 -0-
JTWROS
Phillip T. Sims & Brenda F. 16,250 16,250 -0-
Sims JTWROS
D. Walker Smith & Carolyn G. 16,250 16,250 -0-
Smith JTWROS
Maurice Gozlan & Stacy Gozlan 76,562 76,562 -0-
ATIC
William Vasey 8,125 8,125 -0-
Howard Wall 31,250 31,250 -0-
John J. Lais & Kimberly A. 4,063 4,063 -0-
Lais JTWROS
Mark Beesley 4,062 4,062 -0-
Leon Walker & Goldie B. 8,125 8,125 -0-
Walker JTWROS
Paul E. Myers 8,125 8,125 -0-
Dennis W. Obraitis & John H. 4,063 4,063 -0-
Obraitis JTWROS
Anil J. Patel & Bina A. 12,500 12,500 -0-
Patel JTWROS
Delaware Charter G&T TTEE 10,000 10,000 -0-
FBO William R. Teele IRA R/O
George B. Bernstein & Carol B. 8,125 8,125 -0-
Bernstein CR TR
Gang-Len Chang 12,500 12,500 -0-
Consulting on Government Inc. 5,000 5,000 -0-
Procurement Defined Benefit
Plan, J.S. Sansone USN (Ret)
TTEE
Charles E. Nightengale & B. 8,125 8,125 -0-
Jeanne Nightengale JTWROS
Thomas D. Fiorino 8,125 8,125 -0-
Joseph F. Hering & Lance M. 4,063 4,063 -0-
Hering JTWROS
Par Vatz Ishaq 4,062 4,062 -0-
Tadahiko Nakumura 8,125 8,125 -0-
Delaware Charter G&T TTEE 5,000 5,000 -0-
FBO Richard G. Belcher IRA
#889039
Great Atlantic Graphics Inc. 4,062 4,062 -0-
Alan J. Rubin 8,125 8,125 -0-
Alan J. Rubin 8,437 8,437 -0-
Alan David Cohen 10,000 10,000 -0-
Michal Pivonka & Renata 10,000 10,000 -0-
Pivonka JTWROS
Peter Bondra & Luba Bondra JTWROS 9,000 9,000 -0-
Craig P. Berube & Rebecca J. 2,625 2,625 -0-
Berube JTWROS
Pat M. Peake & Carrie L. Peake 9,000 9,000 -0-
JTWROS
Jeffrey W. Savell 4,000 4,000 -0-
E. Pat Manuel 13,000 13,000 -0-
Robert E. Wright & Judith A. 4,000 4,000 -0-
Wright JTWROS
-13-
Wilbert J. Landry Jr. 8,000 8,000 -0-
Gary J. Blanchard 7,500 7,500 -0-
Jerome Randolph Babbitt & 3,000 3,000 -0-
Katherine H. Babbitt JTWROS
Mercantile Bank C/F 5,000 5,000 -0-
Cotton-O'Neal Clinic PA Profit
Sharing Plan FBO Dennis Artzer
Howard W. Pike 3,000 3,000 -0-
Jeffrey W. Salinger & Jeanne B. 3,000 3,000 -0-
Salinger JTWROS
Mercantile Bank C/F 5,000 5,000 -0-
Cotton-O'Neil Clinic PA Profit
Sharing Plan FBO Robert Braun
Fred Caslavka & Wendy Caslavka 5,000 5,000 -0-
JTWROS
Jerome L. King Account B 3,000 3,000 -0-
Mercantile Bank C/F 10,000 10,000 -0-
Cotton-0'Neil Clinic PA Profit
Sharing Plan FBO Kent E. Palmberg
Gregory A. Messenger 3,000 3,000 -0-
Garner R. Strout Living Trust 4,300 4,300 -0-
Garner R. Strout TTEE
Richard J. Leonard 4,400 4,400 -0-
Eric G. Stroud 4,300 4,300 -0-
Ronald R. Cronwell 1,500 1,500 -0-
Jon R. Lindvall & Laurie R. 4,000 4,000 -0-
Lindvall JTWROS
Patrick M. Sheridan 4,000 4,000 -0-
Joseph Ingram & Debra Ingram 2,500 2,500 -0-
JTWROS
Robert W. Weldon Trust 6,000 6,000 -0-
Robert W. Weldon TTEE
Dennis A. Feicke & Mary K. 2,000 2,000 -0-
Feicke JTWROS
William Hanfland & Linda 2,000 2,000 -0-
Hanfland JTWROS
Robert W. Gargett 8,125 8,125 -0-
Park Cities Dental Assoc PC 8,125 8,125 -0-
Delaware Charter G&T TTEE 8,125 8,125 -0-
FBO Robert L. Marez IRA
Bob Dundon's Service Station 4,062 4,062 -0-
John D. Lane 5,000 5,000 -0-
John H. Miller & Dorris Miller 3,125 3,125 -0-
________________
<FN>
<FN1>
The Company believes that the persons named in this table have sole voting and
investment control with respect to all shares of Common Stock shown as
beneficially owned by them, subject to the information contained in the
footnotes to this table.
<FN2>
Assumes the sale of all shares offered hereby to unaffiliated third parties.
</FN>
-14-
PLAN OF DISTRIBUTION
The Shares offered hereby may be offered and sold from time to time by
the Selling Stockholders, or by pledgees, donees, transferees or other
successors in interest. Such offers and sales may be made from time to time on
the American Stock Exchange, or otherwise, at prices and on terms then
prevailing or at prices related to the then-current market price, or in
negotiated transactions. The Shares may be sold by one or more of the
following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the Shares as agent or may position and resell the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer
as principal and resale by such broker or dealer for its account; (c) an
exchange distribution in accordance with the rules of such exchange (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; (e) privately negotiated transactions; and (f) a combination of
any such methods of sale. In effecting sales, brokers or dealers engaged by
the Selling Stockholders may arrange for other brokers or dealers to
participate. Brokers or dealers may receive commissions or discounts from
Selling Stockholders or from the purchasers in amounts to be negotiated
immediately prior to the sale. The Selling Stockholders may also sell such
shares in accordance with Rule 144 under the 1933 Act.
The Selling Stockholders and any brokers participating in such sales may
be deemed to be underwriters within the meaning of the 1933 Act. There can be
no assurance that the Selling Stockholders will sell any or all of the shares
of Common Stock offered hereunder.
All proceeds from any such sales will be the property of the Selling
Stockholders who will bear the expense of underwriting discounts and selling
commissions, if any, and their own legal fees.
-15-
LEGAL MATTERS
The legality of the Common Stock offered hereby is being passed upon for
the Company by Krys Boyle Freedman & Sawyer, P.C., 600 17th Street, Suite 2700
South, Denver, Colorado 80202.
EXPERTS
The financial statements as of December 31, 1996 and 1995, and for the
years then ended, incorporated by reference in this Prospectus, have been
audited by Grant Thornton LLP, independent auditors, as stated in their report
appearing herein, and have been so included in reliance upon the reports of
such firm given upon the authority of that firm as experts in accounting and
auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996, filed pursuant to Section 13 or 15(d) of the 1934 Act (File
Number 1-13852).
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed pursuant to Section 13 or 15(d) of the 1934 Act (File
No. 1-13852).
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, filed pursuant to Section 13 or 15(d) of the 1934 Act (File
No. 1-13852).
(d) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, filed pursuant to Section 13 or 15(d) of the 1934 Act
(File No. 1-13852).
(e) The description of the Company's capital stock contained in the
Company's Registration Statement on Form 8-A (File No. 1-13852) declared
effective on July 18, 1995.
All reports and other documents subsequently filed by the Company with
the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934
Act, prior to the filing of a post-effective amendment which indicates that
all securities covered by this Prospectus have been sold or which deregisters
all such securities then remaining unsold, shall be deemed to be incorporated
by reference herein and to be a part hereof from the date of the filing of
such reports and documents.
-16-
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses incurred in connection with the sale of the
securities being registered will be borne by the Registrant. Other than the
registration fee, the amounts stated are estimates.
Registration Fees . . . . . . . . . . . . . . $ 1,452.12
Legal Fees and Expenses . . . . . . . . . . . 8,000.00
Accounting Fees and Expenses. . . . . . . . . 2,000.00
Miscellaneous . . . . . . . . . . . . . . . . 547.88
----------
TOTAL . . . . . . . . . . . . . . . . . . $12,000.00
The Selling Stockholders will bear the expense of their own legal
counsel and miscellaneous fees and expenses, if any.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
In accordance with the California Corporations Code, the Registrant has
included provisions in its Articles of Incorporation to indemnify its officers
and directors and to limit the personal liability of its directors to the
fullest extent possible under California law.
ITEM 16. EXHIBITS.
Exhibit
Number Description
- ------- -----------
5 Opinion of Krys Boyle Freedman & Sawyer, P.C., with respect to
the legality of the securities being registered
23.1 Consent of Grant Thornton LLP
23.2 Consent of Krys Boyle Freedman & Sawyer, P.C. (contained in
Exhibit 5)
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3) of
the 1933 Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the
II-1
Commission pursuant to Rule 424(b) ([Section] 230.424(b) of this chapter) if,
in the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (l)(I) and (l)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the 1934 Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the 1934 Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, hereunto duly authorized, in Englewood, Colorado, on December 24,
1997.
CET ENVIRONMENTAL SERVICES, INC.
By:/s/ Steven H. Davis
Steven H. Davis, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURES TITLE DATE
/s/ Steven H. Davis President, Chief Executive December 24, 1997
Steven H. Davis Officer and Director
/s/ Rick C. Townsend Executive Vice President, December 24, 1997
Rick C. Townsend Chief Financial Officer
(Principal Accounting
Officer), and Director
- ------------------------- Director
Craig C. Barto
/s/ Douglas W. Cotton Executive Vice President, December 24, 1997
Douglas W. Cotton Chief Operating Officer
and Director
/s/ John G.L. Hopkins Senior Vice President, December 24, 1997
John G. L. Hopkins and Director
/s/ Robert A. Taylor Director December 24, 1997
Robert A. Taylor
- ------------------------- Director
Robert S. Coldren
CET ENVIRONMENTAL SERVICES, INC.
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
Exhibit
Number Description
- ------- -----------
5 Opinion of Krys Boyle Freedman & Sawyer, P.C., with respect
to the legality of the securities being registered
23.1 Consent of Grant Thornton LLP
23.2 Consent of Krys Boyle Freedman & Sawyer, P.C. (contained
in Exhibit 5)