Cet Services Inc – ‘10-Q’ for 8/5/08

On:  Wednesday, 8/6/08, at 5:37pm ET   ·   As of:  8/7/08   ·   For:  8/5/08   ·   Accession #:  1263279-8-181   ·   File #:  1-13852

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Quarterly Report   —   Form 10-Q
Filing Table of Contents

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 1: 10-Q        Quarterly Report                                      14±    63K 
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10-Q   —   Quarterly Report
Document Table of Contents

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

   FORM 10-Q

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

  For the quarterly period ended June 30, 2008

OR  

(   )     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 Services, Inc.
      (Exact name of registrant as specified in its charter)

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

12503 E Euclid Dr #30, Centennial, CO                         80111             
(Address of principal executive offices)                     (Zip Code)         

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

(Former name, former address and former fiscal year, if changed since last      
report)                                                                         

 Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the preceding 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.  [X]  Yes   [  ]  No             

Indicate by check mark whether the registrant is a large accelerated filer,     
an accelerated filer, a non-accelerated filer, or a smaller reporting           
company. See the definitions of "large accelerated filer," "accelerated         
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.       

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

Indicate by check mark whether the registrant is a shell company (as defined    
in Rule 12b-2 of the Exchange Act).   [  ] Yes     [ X]  No                     

As of August 1, 2008, 5,606,989 shares of common stock, no par value per        
share, were outstanding.                                                        

PART I  
FINANCIAL INFORMATION 

 ITEM 1.  FINANCIAL STATEMENTS

CET SERVICES, INC.

CONSOLIDATED BALANCE SHEETS 

                                   June 30, 2008       December 31, 2007
           (unaudited)
                                  -----------------      -----------------
ASSETS                                                                          
Cash                                     $  333,242          $   229,179        
Accounts receivable                          21,119               83,428        
Real estate inventories                   1,664,090            3,269,230        
Prepaid expenses and other receivables        8,217               17,392        
Deposits                                     14,123               88,114        
Investment in LLC                           318,963              297,110        
                                  -----------------      -----------------
TOTAL ASSETS                            $ 2,359,754           $3,984,453        
                                  =================      =================

LIABILITIES AND STOCKHOLDERS' EQUITY                                            
Accounts payable                        $    31,807          $    84,709        
Accrued expenses                              6,515               83,427        
Accrued construction expense                      -              235,591        
Construction loan                                 -              937,810        
Retainage Payable                                 -               65,895        
Notes payable                               471,495              471,495        
                                 -----------------      ----------------
TOTAL LIABILITIES                           509,817            1,878,927        
                                 -----------------      ----------------
COMMITMENTS AND CONTINGENCIES                                                   

STOCKHOLDERS' EQUITY:                                                           
Common stock (no par value) - authorized                                        
20,000,000 shares; 5,606,989 shares                                             
issued and outstanding                    8,331,007            8,331,007        
Paid-in capital                             112,662              107,785        
Accumulated deficit                      (6,593,732)           6,333,266)       
                                  -----------------      -----------------
Total stockholders' equity                1,849,937            2,105,526        
                                  -----------------      -----------------
                              $   2,359,754          $ 3,984,453
                                  =================      =================

The accompanying notes are an integral part of these financial statements.      

CET SERVICES, INC.  

CONSOLIDATED STATEMENTS OF OPERATIONS     
(Unaudited)     

                                      Three Months Ended
                                      June 30, 2008    June 30, 2007
                                        ----------------  ----------------
REVENUE                                     $  1,795,406     $   1,341,193      

COST OF REVENUE:                                                                
Direct                                         1,870,834         2,077,866      
                                        ----------------  ----------------
Gross (loss) profit                              (75,428)         (736,673)     
                                        ----------------  ----------------

SELLING, GENERAL & ADMINISTRATIVE EXPENSES        80,738           158,801      
                                        ----------------  ----------------
Operating (loss) income                         (156,166)         (895,474)     
                                        ----------------  ----------------
OTHER INCOME (EXPENSE):                                                         
Interest (expense) income                         (2,025)             2,995     
Other income                                            -           147,180     
                                        ----------------  ----------------
                                             (2,025)           150,175
                                        ----------------  ----------------
NET LOSS                                    $   (158,191)     $    (745,299)    
                                        ================  ================
Net loss per common share -                                                     
basic and diluted                           $      (0.03)     $       (0.13)    

Weighted average number of common                                               
shares outstanding                              5,606,989          5,554,489    
                                        ================  ================

The accompanying notes are an integral part of these financial statements.      

CET SERVICES, INC.      

CONSOLIDATED STATEMENTS OF OPERATIONS     
(Unaudited)     

                                      Six Months Ended
                                      June 30, 2008          June 30, 2007
                                      --------------         -------------
REVENUE                                   $  1,894,431          $  1,913,130    

COST OF REVENUE                              1,965,596             2,638,935    
                                      -------------          -------------
Gross loss                                     (71,165)             (725,805)   
                                      -------------          -------------
SELLING, GENERAL & ADMINISTRATIVE EXPENSES     184,908               352,227    
                                      -------------          -------------
Operating loss                                (256,073)           (1,078,032)   
                                      -------------          -------------
OTHER INCOME (EXPENSE):                                                         
Interest (expense) income                       (3,593)                7,048    
Other (expense) income                            (800)              147,705    
                                      -------------          -------------
                                            (4,393)              154,753
                                      --------------        --------------
NET LOSS                                 $    (260,466)         $   (923,279)   
                                      ==============       ===============
Net loss per common share -                                                     
basic and diluted                        $       (0.05)         $      (0.17)   
                                      ==============       ===============
Weighted average number of                                                      
common shares outstanding                     5,606,989         5,554,489       
                                      ==============       ===============

The accompanying notes are an integral part of these financial statements.

CET SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited) 

                                    Six Months Ended
                                      June 30, 2008          June 30, 2007
                                     -----------------      --------------
CASH FLOWS FROM OPERATING ACTIVITIES:                                           
Net loss                                 $   (260,466)         $    (923,279)   
Adjustments to reconcile net loss to                                            
net cash used in operating activities:                                          
Depreciation and amortization                        -                   534    
Real estate impairment                               -               750,000    
Non-cash compensation                                -                 2,500    
Stock issued under severance agreements          4,877                     -    
Changes in operating assets and liabilities:                                    
Decrease in accounts receivable                 62,309                22,799    
Decrease (increase) in prepaid expenses                                         
and other receivables                            9,175              (141,025)   
Decrease in real estate inventories          1,605,140              1,402,447   
Decrease (increase) in deposits                                                 
and other assets                                73,991               (85,090)   
(Decrease) increase in accounts payable        (52,902)                30,257   
(Decrease) increase in retainage payable       (65,895)                11,038   
Decrease in accrued construction expense      (235,591)                     -   
Decrease in accrued expenses                   (76,912)              (16,624)   
                                         -------------      --------------
Net cash provided by operating activities   1,063,726             1,053,557 
                                         -------------      --------------
CASH FLOWS FROM INVESTING ACTIVITIES:                                           
Investment in LLC                            (21,853)              (16,633) 
                                         -------------      --------------
Net cash used in investing activities        (21,853)              (16,633) 
                                         -------------      --------------
CASH FLOWS FROM FINANCING ACTIVITIES:                                           
Payments on construction loan               (937,810)                  -    
Payments on notes payable                       -                 (938,000) 
                                         -------------      --------------
Net cash used in financing activities     (937,810)             (938,000)   
                                         -------------      --------------
NET INCREASE IN CASH                            104,063                98,924   
                                         -------------      --------------
CASH AT BEGINNING OF PERIOD                     229,179               396,362   
                                         -------------      --------------
CASH AT END OF PERIOD                       $   333,242               495,286   
                                         =============      ==============

The accompanying notes are an integral part of these financial statements.

CET SERVICES, INC.    

  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007   

Note 1.  Basis of Presentation and Proposed Merger.  The accompanying           
unaudited consolidated 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-Q and     
Item 8-03 of Regulation S-X.  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, 2007 has been derived from the   
audited consolidated financial statements at that date.  Operating results      
for the three and six months ended June 30, 2008 are not necessarily            
indicative of results that may be expected for the year ending December 31,     
2008.  For further information, refer to the audited financial statements and   
notes thereto included in the Company's Annual Report on Form 10-KSB for the    
year ended December 31, 2007.                                                   

In the Company's Annual Report on Form 10-KSB for the year ended      
December 31, 2007, the Report of the Independent Registered Public Accounting   
Firm includes an explanatory paragraph that describes substantial doubt about   
the Company's ability to continue as a going concern. The Company's financial   
statements for the six months ended June 30, 2008 have been prepared on a       
going concern basis, which contemplates the realization of assets and the       
settlement of liabilities and commitments in the normal course of business.     
As of and for the six months ended June 30, 2008, the Company reported a net    
loss of $260,466 and has notes payable of $471,495 due in June 2010.            

These factors raise substantial doubt about the Company's ability to  
continue as a going concern.  The financial statements do not contain any       
adjustments relating to the recoverability and classification of assets or      
the amounts and classification of liabilities that might be necessary should    
the Company be unable to continue as a going concern.                           

  On May 8, 2008, CET Services, Inc. (the "Company" or "CET") entered into
an Agreement and Plan of Merger by and among the Company, BioMedical            
Technology Solutions, Inc., a Colorado corporation ("BMTS") and CET             
Acquisition Corp., a subsidiary of CET to be formed as a Colorado corporation   
("CETAC") (the "Merger Agreement").                                             

Under the terms of the Merger Agreement, CETAC will merge into BMTS,  
BMTS would become a wholly-owned subsidiary of CET, and the shareholders of     
BMTS will receive shares of CET common stock in exchange for their BMTS         
shares ("Merger"). The Merger Agreement further provides that CET would issue   
to the shareholders of BMTS a total of approximately 78,994,826 shares of CET   
common stock and will assume all of BMTS's outstanding options, warrants and    
convertible debt, which convertible securities will become exercisable for      
CET common stock. The exact number of shares to be issued in exchange for the   
BMTS shares will be adjusted at closing so that the total number of CET         
shares issued to the BMTS shareholders will represent, when issued, 94% of      
the total issued and outstanding shares of CET on a fully diluted basis. The    
Merger, when consummated, will result in a change in control of CET.            

Subject to certain conditions, the Merger Agreement also provides for 
certain ancillary transactions,("Ancillary Transactions") including (i) that    
CET will change its jurisdiction of incorporation from California to Colorado   
and change its name to "BioMedical Technology Solutions, Inc.", (ii) that CET   
will increased its authorized capital to consist of 100,000,000 shares of       
common stock and 10,000,000 shares of preferred stock, (iii) that CET will      
undertake a reverse split of its outstanding securities at a future date and    
on a basis determined by the Board of Directors, and (iv) that CET adopt an     
Equity Incentive Plan. In addition, the directors and officers of the           
combined company will be designated by BMTS, and the companies anticipate       
that these individuals will consist of the officers and directors of BMTS       
immediately before the Merger. The closing of the transaction contemplated by   
the Merger Agreement is subject to the satisfaction of customary conditions,    
including approval of the Merger and Ancillary Transactions by the              
stockholders of CET, the approval of the Merger by the stockholders of BMTS.    
The transaction is expected to close by August 15, 2008.                        

Prior to the Effective Date of the Merger all ownership of Community  
Builders, Inc., CET's wholly owned subsidiary, shall be transferred and         
assigned by CET to Steve Davis, the Company's CEO and Principal Accounting      
Officer,  or his designee, so as to divest CET of all right, title and          
interest in Community Builders.  This proposed transaction will essentially     
result in the assignment of real estate inventories with a carrying value of    
$673,000 at June 30, 2008 to Mr. Davis or his designee in exchange for cash     
of $510,000.                                                                    

BioMedical Technology Solutions, Inc. is a privately held corporation,
located in Englewood, Colorado, which sells and leases devices that convert     
infectious biomedical waste into non-biohazardous material using the patented   
Demolizer(R) technology which it owns.  BMTS's products provide safe,           
environmentally sound, biomedical waste treatment solutions for medical,        
dental and veterinary offices, nursing homes, assisted living facilities, and   
other health care facilities                                                    

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 2008 and 2007, basic loss per share data was computed by dividing net
loss by the weighted average number of common shares outstanding during the     
period. For the six months ended June 30 2008 and 2007 diluted loss per share   
is equivalent to basic loss per share since the computation does not give       
effect to potentially dilutive securities including stock options and           
warrants, as their effect would have been anti-dilutive.                        

Note 3.  Stock-Based Compensation.  The Company applies the provisions of,      
and accounts for stock-based compensation in accordance with the Financial      
Accounting Standards Board's ("FASB") Statement of Financial Accounting         
Standards No. 123-revised 2004 ("SFAS 123R"), "Share-Based Payment". Under      
the fair value recognition provisions of this statement, stock-based            
compensation cost is measured at the grant date based on the fair value of      
the award and is recognized as expense on a straight-line basis over the        
requisite service period, which is the vesting period.                          

Through March 1, 2005, the Company had an incentive stock option plan 
("the Plan") which is more fully described in the Company's form 10-KSB for     
the year-ended December 31, 2006. The Plan terminated on March 1, 2005, and     
no additional options may be granted under the Plan.                            

  At June 30, 2008, the Company had outstanding options to purchase 20,000
shares of common stock at $.25 to $.32 per share. All options are exercisable   
at June 30, 2008. The intrinsic value of all of the Company's options at June   
30, 2008 is not significant.                                                    

Note 4.   Segment Information and Concentrations.  The Company operates in      
two business segments - water/wastewater services, and residential housing      
development and construction.  All of the Company's operations and customers    
are located in Colorado. A summary of the Company's business segments is        
shown below (in thousands).                                                     

Three months ended:       Residential   Water/wastewater                        
June 30, 2008             Housing       Services          Corporate     Total   
---------------------     ---------------------------------------------------   
  Revenues             $  1,723      $  72             $  -         $1,795

  Net income (loss)    $   (79)      $  4              $ (83)       $(158)

  Segment assets       $  1,983      $ -               $  377       $2,360

Three months ended:       Residential   Water/wastewater                        
June 30, 2007             Housing       Services          Corporate     Total   
---------------------     ---------------------------------------------------   
  Revenues             $  1,256      $  85             $   -        $1,341

  Net income (loss)    $   (746)     $   4             $  (3)       $(745)

  Segment assets       $   2,324     $   -             $  782       $3,106

Six months ended:         Residential   Water/wastewater                        
June 30, 2008             Housing       Services          Corporate     Total   
---------------------     ---------------------------------------------------   
  Revenues              $  1,723     $ 171             $   -        $1,894

  Net income (loss)     $   (79)     $   8             $ (189)      $(260)

  Segment assets        $  1,983     $   -             $  377       $2,360

Six months ended:         Residential   Water/wastewater                        
June 30, 2007             Housing       Services          Corporate     Total   
---------------------     ---------------------------------------------------   
  Revenues              $  1,725     $ 188             $   -        $1,913

  Net income (loss)     $  (740)     $   9             $ (192)      $(923)

  Segment assets        $  2,324     $   -             $   782      $3,106

  As of and for the three and six months ended June 30, 2008 and
2007, one customer accounted for 100% of total accounts receivable and          
wastewater revenues.                                                            

Note 5.  Real Estate Inventories.                                     

Real estate inventories consist of the following (in thousands):      

                                       June 30, 2008     December 31, 2007

Retail/office building                  $     -               $1,619  
   Apartment building                     248                  253
   Land - Westminster                     425                  417
   Land - Aurora                          991                  980
                                         ----------          -----------
                                       $1,664               $3,269
                                         ==========          ===========

Note 6.   Investment.  In January 2005 the Company entered into an operating    
agreement with a newly-formed entity, Arizona Avenue, LLC, a Colorado limited   
liability corporation in which the Company is a 50% owner.  The Company         
accounts for this investment using the equity method of accounting.  The        
Company has been engaged by the LLC to manage the development of a five-acre    
site in Aurora, Colorado. There were no management fees in connection           
therewith during the six months ended June 30, 2008. As of June 30 2008, the    
Company has invested approximately $319,000 to develop this project. Profits    
and losses, which are generally to be allocated 50% to the Company and 50% to   
the other owner, were not material for the six months ended June 30, 2008.      
This property is currently listed for sale with a local real estate broker.     

Note 7.   Deposits. At June 30, 2008, deposits include $11,000 deposited with   
the City of Westminster in lieu of a private improvement bond. In April 2008,   
the Company received $74,000 of the original $85,000 deposited with the City.   
The $11,000 is expected to be refunded in April 2009 when the Company           
completes the warranty on an office building in Westminster, Colorado.          

Note 8.  Construction Loan. In July 2007, the Company secured a $1.42 million   
construction loan from a bank to construct an 11,200 sq. ft. office building    
in Westminster, Colorado. The loan is for a term of one year bearing interest   
at prime plus 0.75%. The loan was paid in full upon sale of the office          
building in June 2008.                                                          

Note 9.  Notes Payable. In June 2004, the Company signed a Brownfields          
Cleanup Revolving Loan Fund Agreement with the City of Aurora, Colorado, for    
approximately $471,000, to finance the remediation of a five-acre site on       
which the Company has approval to construct 54 residential townhomes.  The      
loan is for a period of three years with interest at 2% per annum payable       
monthly. In June 2007, the Company signed a First Amendment to the              
Brownfields Cleanup Revolving Loan Fund Agreement which extends the loan for    
an additional three year period. The principal is to be repaid at 1/54th of     
the outstanding balance within 30 days of each residential unit sale, and the   
loan is collateralized by a deed of trust on the property. This property is     
listed for sale with a local real estate broker.                                

Note 10.   Commitments and Contingencies.  The Company is not a party to any    
material legal proceedings, which are pending before any court,                 
administrative agency, or other tribunal.  Further, the Company is not aware    
of any material litigation, which is threatened against it in any court,        
administrative agency, or other tribunal.  Management believes the outcome on   
any pending litigation that would have a material adverse effect on the         
Company's financial position or results of operations is remote.                

Note 11.   Recent Accounting Pronouncements.  The Company has evaluated all     
recent accounting pronouncements and believes such pronouncements do not have   
a material effect on the Company's financial statements.                        

ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                  
CONDITION AND RESULTS OF OPERATIONS.                  

 This Quarterly Report on Form 10-Q contains forward-looking statements,
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.                                 

  On May 8, 2008, the Company entered into an Agreement and Plan of Merger
by and among the Company, BioMedical Technology Solutions, Inc., a Colorado     
corporation ("BMTS") and CET Acquisition Corp., a subsidiary of CET to be       
formed as a Colorado corporation ("CETAC") (the "Merger Agreement"). Upon       
completion of the merger, the Company expects to wind-down its real estate      
operations. Additional information about this plan of merger is included in     
Note 1 of the accompanying consolidated financial statements.                   

Results of Operations                                                           
Quarter Ended June 30, 2008 Compared to the Quarter Ended June 30, 2007         

Revenue.  Revenues for the second quarter of 2008 were $1,795,406, up 
from the $1,341,193 reported for the year-earlier period. The sale of an        
office building accounted for 96% of the revenue with water services            
accounting for the remaining 4%. In the year earlier period, the sale of a      
commercial building and the sale of a housing unit accounted for 94% of         
revenues and the remaining 6% of revenue arose from water services.             

Cost of Revenue.  Cost of revenue for the June 2008 period was        
$1,870,834, down from the $2,077,866 recorded in the second quarter of 2007.    
Additional costs of approximately $25,000, which includes interest, property    
taxes and utilities, were incurred due to a delay in the closing of the sale    
of the office building which is reflected in cost of revenue.  In the second    
quarter of 2007, a $750,000 impairment charge related to certain of the         
Company's real estate properties was recorded.                                  

Selling, General & Administrative Costs.  Selling, General and        
Administrative costs were $80,738, down from the year-earlier comparable of     
$158,801, largely as a result of a decrease in salaries.                        

Other Income (Expense).  Other expense of $2,025 was recorded in the  
second quarter of 2008 as compared to other income of $150,175 in the           
respective period of 2007 in which a gain of $147,125 was realized from the     
recovery of a previously written-off bad debt from 2001.                        

Net Loss.  For the second quarter of 2008, a net loss of $158,191 or  
$0.03 a share was recorded compared to a net loss of $745,299, or $0.13 a       
share, in the second quarter of 2007. The decrease in net loss was mainly       
attributable to the $750,000 allowance for impaired real estate recorded in     
the second quarter of 2007.                                                     

Results of Operations                                                           

Six Months Ended June 30, 2008 Compared to the Six Months Ended June 30, 2007   

Revenue.  Revenues were $1,894,431, down slightly from the $1,913,130 
reported for the year-earlier period.  An office building was sold in the       
current period and an industrial building and housing units were sold in the    
prior period. Water services activity accounted for 9% and 10% of revenues in   
the respective periods.                                                         

Cost of Revenue.  Cost of revenue was $1,965,596, down from the       
$2,638,935 recorded in 2007, reflecting a $750,000 impairment charge related    
to certain of the Company's real estate properties. This charge reflects        
market conditions in the residential housing industry and was based on          
appraisals obtained for certain real estate properties.                         

Selling, General & Administrative Costs.  Selling, General and        
Administrative costs were $ 184,908, down from $352,227 in the first half of    
2007, reflecting lower salaries and benefit costs.                              

Other Income.  Other expense was $4,393 in the second quarter of 2008 
and other income of $154,753 was recorded in the respective period of 2007      
reflecting the recovery of a previously written-off bad debt from 2001.         

 Net Loss.  A net loss of $260,466, or $0.05 a share was incurred during
the six months ended June 30, 2008, compared to the net loss of $923,279, or    
$0.17 a share in the first six months of 2007. The $750,000 allowance for       
impaired real estate resulted in a larger net loss for the first half of        
2007.                                                                           

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.         

 The Company owns a five-acre residential site in Aurora, Colorado, "the
Aurora project", and during 2004, completed a major remediation at the site,    
aided by a Brownfields Cleanup Revolving Loan Fund Agreement with City of       
Aurora in the amount of approximately $471,000 (see Note 9 - Notes Payable).    
The Company currently has this property listed for sale with a local real       
estate broker.                                                                  

 In November 2004, the Company executed a development agreement with the
City of Westminster under which the City would provide approximately $410,000   
and other assistance to the Company for the development of a retail/office      
building of approximately 11,000 square feet as well as twelve townhomes. The   
Company acquired the property necessary for this project in May 2005. The       
Company has obtained a construction loan (see Note 8 - Construction Loan) to    
finance the construction of an office building. On June 9, 2008 the Company     
sold the building and paid the construction loan in full. The Company had       
deposited $85,000 with the City of Westminster in lieu of a private             
improvement bond for this project (see Note 7 - Deposits) and the Company       
received a refund of this deposit of approximately $74,000.                     

Also, in January 2005, the Company entered into an operating agreement
with a newly-formed entity, Arizona Avenue, LLC, a Colorado limited liability   
corporation in which the Company is a 50% owner.  The Company has been          
engaged by the LLC to manage the development of a five-acre site in Aurora,     
Colorado. There were no management fees in connection therewith during the      
period. Through June 30, 2008, the Company has invested approximately           
$319,000 to develop this project. The Company currently has this property       
listed for sale with a local real estate broker.                                

The Company's financial statements have been prepared assuming that we
will continue in business as a going-concern. As discussed in our financial     
statements and in this section, during the six months ended June 30, 2008 we    
incurred a net loss of $260,466 and we had notes payable of $471,495 due in     
June 2010. The report of our Independent Registered Public Accounting Firm on   
the Company's financial statements as of and for the year ended December 31,    
2007 includes a "going concern" explanatory paragraph which means that the      
accounting firm expressed substantial doubt about the Company's ability to      
continue as a going concern. Management's plans with respect to these matters   
are described in this section and in our financial statements, and this         
material does not include any adjustments that might result from the outcome    
of this uncertainty.                                                            

Contractual Obligations                                                         
                              Payments Due By Period
                    ----------------------------------------------------
Contractual                                   Less Than                         
Obligations                 Total               1 Year            1-3 Years     
                    --------------     ---------------      ------------
Operating Leases            6,600               6,600               -           
Notes Payable             471,495                  -                471,495     
                    --------------     ---------------      ------------
       Total     $   478,095              $6,600             $ 471,495
                    ==============     ===============      ============

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT                      
MARKET RISK                                             

Not required.                                                         

ITEM 4.     CONTROLS AND PROCEDURES                                             

Disclosure Controls and Procedures                                              

  As of June 30, 2008, under the supervision and with the participation of
the Company's Chief Executive Officer and Principal Financial Officer,          
management has evaluated the effectiveness of the design and operation of the   
Company's disclosure controls and procedures. Based on that evaluation, the     
Chief Executive Officer and Principal Financial Officer have concluded that     
the Company's disclosure controls and procedures were effective as of June      
30, 2008.                                                                       

Changes in Internal Control over Financial Reporting                            

 There were no changes in internal control over financial reporting that
occurred during the period covered by this report that have materially          
affected, or are reasonably likely to affect, the Company's internal control    
over financial reporting, except as follows:                                    

  On April 16, 2008 the Company and Dale Bleck, Chief Financial Officer of
the Company, mutually agreed to the termination of Mr. Bleck's services as      
Chief Financial Officer of the Company. Effective April 16, 2008, Steven H.     
Davis, the Company's President and CEO, assumed all the responsibilities of     
the Principal Financial Officer of the Company.  As a result, the controls      
have changed as Mr. Bleck no longer serves as Chief Financial Officer.          

PART II   

OTHER INFORMATION   

ITEM 1.  LEGAL PROCEEDINGS                                                      

The Company is not a party to any material legal proceedings which are
pending before any court, administrative agency, or other tribunal.  Further,   
the Company is not aware of any material litigation which is threatened         
against it in any court, administrative agency, or other tribunal.              
Management believes that no pending litigation in which the Company is named    
as a defendant will have a material adverse effect on the Company's financial   
position or results of operations.                                              

ITEM 1A.  RISK FACTORS                                                          

Not required.                                                         

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS            

  During the quarter ended June 30, 2008, the Company issued 32,500 shares
of Common Stock to Dale W. Bleck which shares were not registered under the     
Securities Act of 1933, as amended.  The shares were issued pursuant to the     
terms of a severance agreement between Mr. Bleck and the Company dated          
September 24, 2007.  Mr. Bleck served as Chief Financial Officer of the         
Company until April 16, 2008.                                                   

In connection with this issuance, the Company relied on the exemption 
from registration under the Securities Act of 1933, as amended (the "Act") as   
provided in Section 4(2) of the Act. Mr. Bleck was sophisticated as to the      
nature of the transaction and was given access to complete information          
concerning the Company and was advised of the restricted status of the          
securities. Mr. Bleck represented to the Company that he was acquiring the      
common stock for investment purposes and not with a view toward distribution.   
A customary restrictive legend was placed on the certificate for the common     
stock and stop transfer instructions were given to the Company's transfer       
agent.                                                                          

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                                                               

The following exhibits are filed herewith:                                      

Exhibit 31     Certification of Chief Executive Officer and Principal           
        Financial Officer Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002                                 

Exhibit 32     Certification of Chief Executive Officer and Principal           
  Financial Officer Pursuant to 18 U.S.C. Section 1350

SIGNATURES    

  Pursuant to the requirements of the Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned thereunto      
duly authorized.                                                                

                  CET SERVICES, INC.

Dated:  August 6, 2008                  By:  /s/ Steven H. Davis                
                              Steven H. Davis, President and Principal
                      Financial and Accounting Officer

1                                                                               

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing		Date		Other Filings
		12/31/08
		8/15/08
Filed as of:		8/7/08
Filed on:		8/6/08
For Period End:		8/5/08
		8/1/08
		6/30/08
		6/9/08
		5/8/08		8-K
		4/16/08		8-K
		12/31/07		10KSB,  NT 10-K
		9/24/07		4,  8-K
		6/30/07		10QSB,  10QSB/A,  NT 10-Q
		12/31/06		10KSB,  10KSB/A,  NTN 10K
		3/1/05
				List all Filings