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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended SEPTEMBER 30, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.

For the transition period from ________ to ________.

Commission File Number 1-13852

CET ENVIRONMENTAL SERVICES, INC.
(Exact name of small business issuer as specified in its charter)

CALIFORNIA 33-0285964
(State or other jurisdiction of incorporation or (IRS Employer Identification No.)
organization)

7032 SOUTH REVERE PARKWAY, ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (720) 875-9115

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ].

As of October 10, 2002, 5,757,792 shares of common stock, no par value per
share, were outstanding.

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PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CET ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30,
2002 DECEMBER 31,
ASSETS (UNAUDITED) 2001
------------ ------------

CURRENT ASSETS:
Cash ........................................................ $ 1,028,778 $ 469,939
Accounts receivable, less allowance for doubtful accounts of
$48,595 in 2002 and $63,753 in 2001 ....................... 98,141 3,858,004

Contracts in process, less allowance for doubtful accounts of
$8,944 in 2002 and $38,944 in 2001 ........................ 125,518 1,751,874

Retention receivable ........................................ 54,375 65,288
Other receivables ........................................... 63,479 19,233
Inventories ................................................. 13,972 15,838
Land under development ...................................... 884,000 185,350
Prepaid expenses ............................................ 158,457 228,260
------------ ------------
Total Current Assets ............................... 2,426,720 6,593,786
------------ ------------

EQUIPMENT AND IMPROVEMENTS:
Field equipment ............................................. 208,596 1,210,037
Vehicles .................................................... 311,199 316,494
Furniture & fixtures ........................................ 75,378 75,378
Office equipment ............................................ 420,603 421,205
Leasehold improvements ...................................... 24,931 49,862
------------ ------------
1,040,707 2,072,976
Less allowance for depreciation and amortization ............ (910,405) (1,267,959)
------------ ------------
Equipment and improvements, net .................... 130,302 805,017
------------ ------------

OTHER ASSETS:
Deposits .................................................... 12,269 123,368
Accounts receivable - non current ........................... 3,234,738 3,313,575
------------ ------------
Total Other Assets ................................. 3,247,007 3,436,943
------------ ------------

============ ============
$ 5,804,029 $ 10,835,746
============ ============

The accompanying notes are an integral part of these statements.

CET ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30,
2002 DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED) 2001
------------ ------------

CURRENT LIABILITIES:
Accounts payable ................................................ $ 819,641 $ 3,341,708
Accrued expenses ................................................ 101,196 143,520
Accrued contract costs .......................................... -- 49,570
Accrued payroll and benefits .................................... 41,416 101,124
Notes payable - current ......................................... -- 98,466
------------ ------------
Total current liabilities .............................. 962,253 3,734,388
------------ ------------

COMMITMENTS AND CONTINGENT LIABILITIES ................................... -- --

STOCKHOLDERS' EQUITY:

Common stock (no par value) - authorized 20.0 million shares;
5,757,792 and 5,976,549 shares issued and outstanding in 2002
and 2001, respectively ...................................... 8,419,407 8,506,007

Paid-in capital ................................................. 104,786 104,786

Accumulated deficit ............................................. (3,682,417) (1,509,435)
------------ ------------

Total stockholders' equity ............................. 4,841,776 7,101,358
------------ ------------

$ 5,804,029 $ 10,835,746
============ ============

The accompanying notes are an integral part of these statements.

CET ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

THREE MONTHS ENDED
---------------------------------
SEPTEMBER 30, SEPTEMBER 30,
2002 2001
------------- -------------

PROJECT REVENUE .................................................. $ 420,891 $ 4,044,444

PROJECT COSTS:
Direct .................................................. 468,532 3,132,552
Indirect ................................................ 65,108 233,568
----------- -----------
533,640 3,366,120
----------- -----------
Gross profit (loss) ............................ (112,749) 678,324
----------- -----------

OPERATING EXPENSES:
Selling ................................................. 39,261 41,207
General and administrative .............................. 237,782 450,935
----------- -----------
277,043 492,142
----------- -----------
Operating loss ................................. (389,792) 186,182
----------- -----------

OTHER INCOME (EXPENSE):
(Loss) gain on sale of equipment ........................ (2,623) 27,023
Interest income, net .................................... 2,133 9,262
Other income (expense) .................................. 2,674 (10,091)
----------- -----------
2,184 26,194
----------- -----------
Income (loss) before income taxes .............. (387,608) 212,376
----------- -----------

Provision for income taxes ..................... -- --

----------- -----------
NET INCOME (LOSS) ................................................ $ (387,608) $ 212,376
=========== ===========

Earnings (loss) per common share ................................. $ (0.07) $ .04
=========== ===========
Weighted average number of common shares outstanding ............. 5,757,792 5,978,722
=========== ===========

Earnings (loss) per common share - assuming dilution ............. $ (0.07) $ .04
=========== ===========
Weighted average number of fully diluted common shares outstanding 5,757,792 5,988,532
=========== ===========

The accompanying notes are an integral part of these statements.

CET ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

NINE MONTHS ENDED
---------------------------------
SEPTEMBER 30, SEPTEMBER 30,
2002 2001
------------- -------------

PROJECT REVENUE .................................................. $ 2,001,023 $10,619,182

PROJECT COSTS:
Direct .................................................. 1,963,631 7,949,337
Indirect ................................................ 437,706 906,906
----------- -----------
2,401,337 8,856,243
----------- -----------
Gross profit (loss) ............................ (400,314) 1,762,939
----------- -----------

OPERATING EXPENSES:
Selling ................................................. 100,582 135,307
General and administrative .............................. 1,298,748 1,461,302
----------- -----------
1,399,330 1,596,609
----------- -----------
Operating loss ................................. (1,799,644) 166,330
----------- -----------

OTHER INCOME (EXPENSE):
(Loss) gain on sale of equipment ........................ (385,523) 38,477
Interest income, net .................................... 8,421 23,935
Other income ............................................ 3,764 11,476
----------- -----------
(373,338) 73,888
----------- -----------
Income (loss) before income taxes .............. (2,172,982) 240,218
----------- -----------

Provision for income taxes ..................... -- --

----------- -----------
NET INCOME (LOSS) ................................................ $(2,172,982) $ 240,218
=========== ===========

Earnings (loss) per common share ................................. $ (0.38) $ .04
=========== ===========
Weighted average number of common shares outstanding ............. 5,787,440 6,111,173
=========== ===========

Earnings (loss) per common share - assuming dilution ............. $ (0.38) $ .04
=========== ===========
Weighted average number of fully diluted common shares outstanding 5,787,440 6,123,979
=========== ===========

The accompanying notes are an integral part of these statements.

CET ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

NINE MONTHS ENDED
---------------------------------
SEPTEMBER 30, SEPTEMBER 30,
2002 2001
------------- -------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................................ $(2,172,982) $ 240,218
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization ....................................... 142,829 309,041
Loss on disposal of equipment ....................................... 385,523 (38,477)
Changes in operating assets and liabilities:
Decrease (Increase) in accounts receivable ................. 3,838,700 (880,329)
Decrease in contracts in process ........................... 1,626,356 1,718,840
Decrease (Increase) in income tax, retention and other
receivables ........................................ (33,333) 326,789
Decrease (Increase) in prepaid expenses .................... 69,803 (17,826)
Decrease (Increase) in inventory and deposits .............. 112,965 (87,856)
Increase (Decrease) in accounts payable .................... (2,522,067) (1,586,715)
(Increase) in land under development ....................... (698,650) --
(Decrease) in accrued expenses and income taxes ............ (151,602) (295,511)
----------- -----------
Net cash provided by (used in) operating activities 597,542 (311,826)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment ..................................... -- (8,330)
Proceeds for sales of equipment ............................ 146,363 43,000
----------- -----------
Net cash provided by investing activities ......... 146,363 34,670
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes .......................................... (98,466) --
Payments on capital lease obligations ...................... -- (38,039)
Payments on repurchases of common stock .................... (86,600) (123,748)
Proceeds from issuance of short-term debt .................. -- 54,125
----------- -----------
Net cash (used in) financing activities .... (185,066) (107,662)
----------- -----------

INCREASE (DECREASE) IN CASH: .......................................................... 558,839 (384,818)

CASH AT BEGINNING OF PERIOD: .......................................................... 469,939 953,641
----------- -----------

CASH AT END OF PERIOD: ................................................................ $ 1,028,778 $ 568,823
=========== ===========

The accompanying notes are an integral part of these statements.

CET ENVIRONMENTAL SERVICES, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2002

NOTE 1. BASIS OF PRESENTATION. The accompanying unaudited financial
statements have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim
financial statements and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial
statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair
presentation have been included. The consolidated balance sheet at
December 31, 2001 has been derived from the audited consolidated
financial statements at that date. Operating results for the nine
months ended September 30, 2002 are not necessarily indicative of
results that may be expected for the year ending December 31, 2002. For
further information, refer to the audited financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2001.

NOTE 2. EARNINGS PER SHARE. The Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 128, Earnings Per Share
("SFAS 128") requires the presentation of basic earnings per share
("EPS") and, for companies with potentially dilutive securities such as
convertible debt, options and warrants, diluted EPS.

In 2002, basic earnings per share data was computed by dividing net
loss by weighted average number of common shares outstanding during the
period. Diluted earnings per share computations do not give effect to
potentially dilutive securities including stock options and warrants as
their effect would have been anti-dilutive.

In 2001, basic earnings per share data was computed by dividing net
income by the weighted average number of common shares outstanding
during the period. Diluted earnings per share was adjusted for the
assumed conversion of potentially dilutive securities including stock
options of 9,810 shares for the three months ended September 30, 2001
and 12,806 shares for the nine months ended September 30, 2001.

NOTE 3. ACCOUNT RECEIVABLE - REMEDIATION FINANCIAL, INC. - During the third
quarter of 2000, the Company experienced problems collecting
receivables from Remediation Financial, Inc. ("RFI"), and its
affiliated partnerships Santa Clarita, LLC and LCRI Investments, LLC,
the developers of the two Brownfields projects. The severity of the
problems was of such sufficiency to cause the Company to suspend work
on the Santa Clarita, CA project. Subsequently, the Company was
presented with termination notices for both projects with the Santa
Clarita termination effective October 6, 2000 and the Hercules
termination effective October 31, 2000. At December 31, 2001, the
Company had receivables of $2,021,164 for the Santa Clarita project and
$3,313,575 for the Hercules project. In February, 2002, the Company
entered into a settlement agreement with respect to the Santa Clarita
project and received $2.1 million. On August 7, 2002, after a lengthy
court-ordered arbitration, the Company entered into an agreement with
RFI allowing for the recovery of $3.2 million plus accrued interest at
an annual rate of 8% from October 19, 2001, contingent upon the sale of
the Hercules property (see Note 8, Contingencies for additional
information).

NOTE 4. OTHER ASSETS - ACCOUNTS RECEIVABLE - NON CURRENT - As a result of
the agreement related to the Hercules receivable mentioned in Note 3
above and more fully described in Note 8 below, the $3.2 million
carrying value at September 30, 2002 and the $3.3 million carrying
value at December 31, 2001 has been reclassified from a current asset
receivable to Non Current. The balance at December 31, 2001 has also
been reclassified to conform with this presentation. The Company has a
secured lien on the Hercules property and management believes it will
recover most, if not all, of the stated value even under adverse
conditions. However, failure to collect this non current receivable
will have a material adverse effect on the Company's financial
position. The prolonged delay in collecting this receivable has
impaired the Company's cash flow.

NOTE 5. EQUIPMENT DISPOSITIONS - During the nine months ended September 30,
2002, field equipment dispositions consisted of $531,886 of net
equipment disposals for proceeds of $146,363. The Company recorded a
loss of $385,523 on the equipment dispositions.

NOTE 6. STOCK REPURCHASE - On May 2, 2001, the Company reached an agreement
to purchase 631,514 shares of the Company's common stock from 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
would be purchased for a maximum of $175,000, the payment would be
contingent upon receipt of the $6.2 million of past due receivables
from RFI and its affiliated partners. Under the terms of the agreement,
5% of the proceeds from RFI as collected, up to the maximum of
$175,000, would be applied to the purchase of the stock. In February
2002, as a result of the Santa Clarita settlement with RFI and its
affiliated partners, the Company purchased 218,757 shares of common
stock for $86,600 or $0.395 per share.

NOTE 7. LAND UNDER DEVELOPMENT - The Company has signed a pre-development
agreement with a Colorado municipality to redevelop a residential
real-estate project. The project would entail purchasing subject
property, demolition and environmental remediation, and construction of
new affordable housing units and other related structures. At this
time, there has been no revenue recorded. All direct costs, including
land, land development costs, and indirect costs related to development
are capitalized during the development period.

NOTE 8. CONTINGENCIES - On February 8, 2001, the Company filed an action in
the Superior Court of the State of California, County of Contra Costa
for, among other things, breach of contract, foreclosure of a
previously filed mechanics' lien, and judicial foreclosure of the deed
of trust in the amount of $10.1 million against LCRI Investments, LLC,
an affiliated partnership of RFI, in response to non-payment for
services performed by the Company on the Hercules project located in
Hercules, CA. On March 5, 2001, the Company recorded a notice of
default under the subject secured deed of trust in order to pursue a
trustee's sale of the subject property. Following a prolonged
court-ordered arbitration proceeding, the Company and RFI, on August 7,
2002, entered into a settlement agreement whereby the Company shall
receive $3.2 million plus accrued interest at an annual rate of 8% from
October 19, 2001, contingent upon, but not limited to, the sale of the
Hercules property by not later than November 1, 2003. After such date,
if the Hercules property has not been sold, the Company may resume all
legal action necessary including foreclosure to recover the amount due
at November 1, 2003. Due to the uncertainty regarding the timing of the
realization of the receivable, the Company has not and will not record
interest until paid.

The Company, LCRI Investments, and RFI are parties to a Commercial
Insurance Premium Finance and Security Agreement under which the
Company guaranteed a $10.1 million Bond to Secure Financial Obligation
for the Hercules, CA project. The bond secures a note that requires
quarterly principal payments of $542,278 which are made by LCRI
Investments, LLC. As of September 30, 2002, LCRI Investment, LLC was in
default on their 2001 and 2002 quarterly payments. On July 11, 2001, a
letter was issued to LCRI Investments, LLC, RFI, and the Company
calling for the immediate payment of remaining principal and interest
of $7.2 million. LCRI and/or RFI allegedly entered into certain
agreements with the note holder and the bond company providing for a
temporary forbearance from pursuing their respective claims. There has
been no legal action taken against the Company for the default.
Management believes the Company is entitled to be indemnified to the
extent it is ultimately obligated to make any payments

under any of these arrangements. Based on the secured deed of trust
mentioned above, management believes that any amounts paid as a result
of the guarantee will be recovered.

Since early 1998, the Company has been the subject of an investigation
by the Office of the Inspector General (OIG) of the Environmental
Protection Agency (EPA). While initially broad in scope, the
investigation is now focused on labor billing-rates to the EPA
beginning in the 1992-1994 period and selected subsequent years. The
Company has cooperated fully in all OIG inquiries and will continue to
do so when and if required. Independent audits by the Defense Contract
Audit Agency (DCAA), subsequent to initiation of the OIG investigation,
have not been adverse nor have resulted in claims against the Company.
In an effort to resolve the dispute, the Company requested non-binding
arbitration which allows for a full discussion of the issues before a
neutral party. The OIG rejected this proposal. Subsequently, during the
third quarter of 2002, the Company attempted to reach a settlement
agreement in order to limit further legal costs. In response to this
initiative, OIG has offered to settle the case for $8.7 million based
on certain scenarios and imputed costs generated within its offices.
The Company strongly disputes and rejects the basis upon which the
scenarios were developed and denies any wrongdoing in dealings with the
EPA. No loss provision has been made at September 30, 2002 relating to
this matter as the probable outcome is unknown.

The Company is party to various legal actions arising out of the normal
course of its business. Management believes that the ultimate
resolution of such actions, except as previously disclosed, will not
have a material adverse effect on the Company's financial position,
results of operations, and liquidity of the Company.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

This Quarterly Report on Form 10-QSB contains forward-looking
statements (as such term is defined in the private Securities Litigation Reform
Act of 1995), and information relating to the Company that is based on beliefs
of management of the Company, as well as assumptions made by and information
currently available to management of the Company. When used in this Report, the
words "estimate," "project," "believe," "anticipate," "intend," "expect," and
similar expressions are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events based on currently available information and are subject to risks and
uncertainties that could cause actual results to differ materially from those
contemplated in such forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof. The Company does not undertake any obligation to release
publicly any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2001

PROJECT REVENUE. Project revenues were $0.4 million in 2002, down $3.6
million from $4.0 million in 2001. The Company's contract with the EPA expired
on January 8, 2002 and there were no revenues in the current period from the EPA
compared to $3.7 million in the year-earlier period. Water/waste water revenues
were $0.3 million up $0.1 million from $0.2 million in the year-earlier from
period.

DIRECT COSTS. Direct costs were $0.5 million in 2002, down $2.6 million
from $3.1 million in 2001. Despite the substantial reduction on a year-to-year
basis, direct costs exceeded revenues for the current period. Cost over-runs at
two water-wastewater projects were the primary causes of higher-than-anticipated
direct costs. In the year-earlier period, direct costs amounted to 78% of
revenues.

INDIRECT COSTS. Indirect project costs were $65,000 in 2002, a decrease
of $169,000 from $234,000 in 2001. As a percentage of revenue, indirect costs
for 2002 were 16%, up from 6% in 2001. The relatively higher level of indirect
costs to revenue for the current period stems in part from retaining a minimal
level of personnel, the cost of which may not be directly allocated to projects.

SELLING AND GENERAL & ADMINISTRATIVE COSTS. Selling and General and
Administrative costs were $277,000 in 2002, down $215,000 from $492,000 in 2001.
This decrease arises from the reductions in Company personnel and office space
related to the EPA contract expiration.

OTHER INCOME (EXPENSE). Other income, net of other expenses, resulted
in income of $2,200, the bulk of which arose from interest income of $2,100. In
the year earlier period, gains on sales of equipment of $27,000 and interest
income of $9,300 offset by other expenses of $10,100, resulted in other income
of approximately $26,200.

NET INCOME (LOSS). A net loss of $387,608 was recorded during the
current period compared to the net income of $212,376 for the year earlier
period. The loss in 2002 was the result of losses incurred on the water/waste
water projects.

RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2001

PROJECT REVENUE. Project revenues were $2.0 million in 2002, down $8.6
million from $10.6 million in 2001. The decrease in revenues largely reflects
the completion of work orders from the EPA. The Company's contract with the EPA
expired on January 8, 2002 and EPA related revenues were only $338,000 during
the period, as compared with $9.1 million in the year-earlier period. The
reduction in EPA revenues was partially offset with increases in other
commercial revenues of $0.5 million over the year earlier period.

DIRECT COSTS. Direct costs were $2.0 million in 2002, down $5.9 million
from $7.9 million in 2001. As a percentage of revenues, direct costs for 2002
were nearly equal to total revenues or 98%, up from 75% in 2001. The relatively
high level of direct costs during the current period reflects close-out expenses
related to EPA work orders and cost over-runs arising from unanticipated
difficulties at three water/wastewater projects which were completed in the
third quarter.

INDIRECT COSTS. Indirect project costs were $438,000 in 2002, a
decrease of $469,000 from $907,000 in 2001. As a percentage of revenue, indirect
costs for 2002 were 22%, up from 9% in 2001. The relatively higher level of
indirect costs to revenues for the 2002 period is caused, in part, by close-out
expenses related to EPA work orders.

SELLING AND GENERAL & ADMINISTRATIVE COSTS. Selling and General and
Administrative costs were $1.4 million in 2002, down $0.2 million from $1.6
million in 2001. This slight decrease is the result of additional legal expenses
relating to the RFI and its affiliated partners litigation and employee
severance costs incurred during the first quarter following the expiration of
the EPA contract.

OTHER INCOME (EXPENSE). Other expenses, net of other income, resulted
in a loss of $373,000, the bulk of which arose from the loss on equipment
dispositions of $386,000. In the year earlier period, other income of $12,000
and interest income of $24,000, along with net gains on equipment disposals of
$38,000, resulted in other income of $74,000.

NET INCOME (LOSS). A net loss of $2,172,982 was recorded during the
current period compared to net income of $240,218 for the year earlier period.
The loss in 2002 was the result of the expiration of the EPA contract and
reduced profit margins on the water/waste water projects.

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of liquidity and capital resources historically
have been net cash provided by operating activities, funds available under its
financing arrangements, and proceeds from offerings of equity securities. In the
past, these sources have been sufficient to meet its needs and finance the
Company's business. The Company can give no assurance that the historical
sources of liquidity and capital resources will be available for future
development and acquisitions, and it may be required to seek alternative
financing sources not necessarily favorable to the Company.

During the third quarter of 2000, the Company experienced problems
collecting receivables from RFI and its affiliated partnerships for work
performed at Brownfields projects located at Santa Clarita and Hercules, CA. The
severity of the problems caused the Company to suspend work on the Santa
Clarita, CA project. Subsequently, the Company was presented with termination
notices for both the projects, with the Santa Clarita termination effective
October 6, 2000 and the Hercules termination effective October 31, 2000. At
December 31, 2001 receivables from the Santa Clarita project were approximately
$2.0 million while those arising from the Hercules project were $3.3 million for
a total of $5.3 million or 74% of total accounts receivable.

In February, 2002, the Company reached a settlement agreement with
respect to the Santa Clarita project and received $2.1 million. On August 7,
2002, the Company entered into a settlement agreement with respect to the

Hercules project whereby the Company shall receive $3.2 million plus interest at
an annual rate of 8% from October 19, 2001,contingent upon, but not limited to,
the sale of the Hercules property by RFI no later than November 1, 2003. After
such time, if the Hercules property has not been sold, the Company may resume
all legal actions necessary to secure the amount due at that date. At September
30, 2002, the Company had a receivable of approximately $3.2 million for the
Hercules project which has been reclassed to Non Current (See Note 4. Other
Assets and Note 8, Contingencies). The delay in collecting the aforementioned
receivable on a timely basis has adversely effected the Company's cash flow.

In 2001, the Company elected not to bid on a new contract with the EPA.
Under terms of the prior contract, the fourth and final option year expired on
January 8, 2002. The Company has completed the EPA work-orders awarded up to the
date of expiration. Personnel levels have been reduced in conjunction with the
completion of work-orders. The Seattle operations were closed in December 2001
with related assets being disposed. For the year ended December 31, 2001, EPA
revenues were approximately $12.3 million or 87% of total revenues.

Management is attempting to replace EPA activities by focusing on
water/wastewater projects, Brownfields developments, and other environmental
activities. The Company has signed a pre-development agreement with a Colorado
municipality to redevelop a residential real-estate project. The project would
entail purchasing subject property, demolition and environmental remediation,
and construction of new affordable housing units and other related structures.
The initial phase is estimated to have a value of approximately $10 million, and
the Company is currently negotiating financing for this project. At this time,
no estimate can be made as to the amount and timing of revenues. At best, the
project is anticipated to generate nominal, if any, revenues for the current
year. There can be no assurance that final redevelopment project plans or
financing will be approved. Meanwhile, the Company is engaged in discussions
regarding another Colorado Brownfields project of approximately five acres in
size. There can be no assurance that these redevelopment projects or any other
effort will be successful in offsetting the loss of EPA revenues.

Management believes that the potential future cash flows from
operations and current cash balances will be sufficient to fund the Company's
immediate needs for working capital. Management has decided not to renew the
$1.0 million line of credit with Compass Bank as the semi-annual renewal fees,
the anticipated reduced cash requirements, and the Company's current cash
balances did not warrant its renewal.

The Company's working capital decreased to $1.5 million as of September
30, 2002, down $1.4 million from $2.9 million as of December 31, 2001. The
change in working capital is the net result of a decrease in current assets of
$4.3 million and a decrease in current liabilities of $2.8 million. The decrease
in current assets results from collections of combined receivables of $5.4
million, an increase in cash of $0.6 million and a combined other current assets
of $0.5 million. The decrease in current liabilities results primarily from
payment of accounts payable and accrued liabilities of $2.7 million and notes of
$0.1 million.

The Company's cash and cash equivalents increased approximately $0.5
million to $1.0 million at September 30, 2002 from $0.5 million at December 31,
2001. The increase in cash and cash equivalents of approximately $0.5 million
reflects a reduction in combined receivables of $5.4 million plus $0.5 million
of depreciation and other non-cash charges, less a decrease of $2.7 million in
accounts payable and accrued expenses and minus the net loss of $2.2 million.
Cash flow from investing activities of $146,000 is from sale of equipment. Cash
used in financing activities of $0.2 million is primarily for payment of notes
and the repurchase of the Company's common stock.

At present, the Company has no material commitments with respect to
capital expenditures. However, if and when actual Brownfields development
construction begins, capital expenditures of a material size may be required.
Management believes that such capital requirements could be met through secured
lending arrangements, but can give no assurance that such financing will be
available when required, nor under terms acceptable to the Company.

ITEM 3. CONTROLS AND PROCEDURES

Under the supervision and with the participation of management,
including the principal executive officer and the principal financial officer,
disclosure controls and procedures were evaluated with respect to effectiveness
and operation within 90 days of the filing date of this quarterly report. Based
on this evaluation, the principal executive officer and principal financial
officer deem the controls and procedures to be effective. Subsequent to the date
of the evaluation, there were no significant changes or other factors that would
impact disclosure controls or procedures.

Certain controls and procedures are designed to ensure that management,
including the principal executive officer and the principal financial officer,
as appropriate, receive information requiring disclosure under the Securities
Exchange Act on a timely and complete basis. Such controls and procedures allow
the Company to file or submit required disclosure information on the appropriate
formats as required by the rules and regulations prescribed by the Securities
and Exchange Commission.

PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 8, 2001, the Company filed an action in the Superior Court
of the State of California, County of Contra Costa for, among other
things, breach of contract, foreclosure of a previously filed
mechanics' lien, and judicial foreclosure of the deed of trust in the
amount of $10.1 million against LCRI Investments, LLC, an affiliated
partnership of RFI, in response to non-payment for services performed
by the Company on the Hercules project located in Hercules, CA. On
March 5, 2001, the Company recorded a notice of default under the
subject secured deed of trust in order to pursue a trustee's sale of
the subject property. Following a prolonged court-ordered arbitration
proceeding, the Company and RFI, on August 7, 2002, entered into a
settlement agreement whereby the Company shall receive $3.2 million
plus accrued interest at an annual rate of 8% from October 19, 2001,
contingent upon, but not limited to, the sale of the Hercules property
by not later than November 1, 2003. After such date, if the Hercules
property has not been sold, the Company may resume all legal action
necessary including foreclosure to recover the amount due at November
1, 2003.

On August 8, 2002, the Company was named as a third-party defendant in
a pending lawsuit in the U. S. District Court for the Western District
of Washington in which the United States Environmental Protection
Agency ("EPA") sued Dan Alexander and Harriett Alexander (the
"Alexanders"). The EPA alleges that the Alexanders caused the pollution
of soil and groundwater through its use and storage of a certain weed
killer, and is seeking reimbursement of costs the EPA expended to clean
up the site, which totaled approximately $2,570,000. The Alexanders
have denied liability but have asserted that, if they are held liable,
the Company and Dow Chemical Company, the other third-party defendant
named in the lawsuit, should be held at least partially responsible. In
1998 and 1999, as required under the then-existing Emergency and Rapid
Response and Clean-Up Services contract with the EPA, the Company
provided and was compensated for clean-up operations at the site. The
Alexanders allege that the Company caused the amount of pollution to
increase through negligent actions in its clean-up operations. The
Alexanders are also seeking monetary damages from the Company to
reimburse them for damage to their property which they allege the
Company caused during the clean-up operations. The Company is in the
process of preparing its answer to the Alexanders' third-party
complaint which will deny any liability.

ITEM 2. CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

None.

(b) Reports on Form 8-K

None.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

CET ENVIRONMENTAL SERVICES, INC.

Dated: October 30, 2002 By: /s/ Steven H. Davis
----------------------------------
Steven H. Davis, President, and
Chief Executive Officer

By: /s/ Dale W. Bleck
----------------------------------
Dale W. Bleck, Chief Financial
Officer

CERTIFICATIONS

I, Steven H. Davis, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of CET
Environmental Services, Inc.;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated: October 30, 2002 /s/ Steven H. Davis
-------------------------------------
Steven H. Davis
President and Chief Executive Officer
(Principal Executive Officer)

I, Dale W. Bleck, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of CET
Environmental Services, Inc.;

(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls; and

Dated: October 30, 2002 /s/ Dale W. Bleck
-------------------------------------
Dale W. Bleck
Chief Financial Officer
(Principal Financial Officer)

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER OF
CET ENVIRONMENTAL SERVICES, INC.
PURSUANT TO 18 U.S.C. SECTION 1350

We certify that, to the best of our knowledge and belief, the Quarterly
Report on Form 10Q-SB of CET Environmental Services, Inc. for the period ending
September 30, 2002:

(1) complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operation of CET Environmental Services, Inc.

/s/ Steven H. Davis /s/ Dale W. Bleck
- --------------------------------- -------------------------------------
Steven H. Davis Dale W. Bleck
Chief Executive Officer Chief Financial Officer
October 30, 2002 October 30, 2002