Company Name: CET Services, Inc.
Public Availability Date: March 28, 2006

Document Sections:

INQUIRY LETTER
STAFF REPLY LETTER

[INQUIRY LETTER]
January 26, 2006

Via Federal Express

Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549

Re: CET Services, Inc. Shareholder Proposal of Robert L. Surdam Securities Exchange Act of 1934 - Rule 14a-8

Ladies and Gentlemen:

We are securities counsel to CET Services, Inc. (the "Company"). This letter is to inform you that the Company intends to omit from its proxy statement and form of proxy for its 2006 Annual Meeting of Stockholders (the "2006 Proxy Materials") a shareholder proposal (the "Proposal") consisting of five recitals and a resolution received from Robert L. Surdam, a shareholder (the "Proponent").

The Proposal requests "a vote to compel the Company to release a copy of the plan filed with the Amex to shareholders." A copy of the Proposal is attached to this letter as Attachment A.

The "plan" referred to in the Proposal is the confidential submission made by the Company to the American Stock Exchange ("Amex") in October 2005 in connection with a notification from the Amex that the Company was not in compliance with the continued listing standards of the Amex. In that notification the Amex requested, and the Company provided, quarterly financial projections and details concerning strategic initiatives for the 18 month period following the date of the notification. That information was included in the submission. By letter dated October 31, 2005, the Amex notified the Company that based on the submission the Amex had determined that the Company had reasonably demonstrated its ability to regain compliance with the continued listing standards within the time period permitted.

The Company hereby respectfully requests that the staff of the Division of Corporation Finance concur in its opinion that the Proposal may be excluded from the Company's 2006 Proxy Materials on the bases set forth below.

Pursuant to Rule 14a-8(j), enclosed are six (6) copies of this letter and the attachment. Also in accordance with Rule 14a-8(j), a copy of this letter and the attachment is being mailed on this date to the Proponent informing him of the Company's intention to omit the Proposal from the 2006 Proxy Materials. The Company expects to mail its definitive 2006 Proxy Materials on or about April 28, 2006. Accordingly, pursuant to Rule 14a-8(j), this letter is being filed with the Commission no later than 80 calendar days before the Company files its definitive 2006 Proxy Materials with the Commission.

The Company believes the Proposal may properly be excluded from the 2006 Proxy Materials pursuant to the following provisions:

1. The Proposal may be excluded under Rule 14a-8(i)(1) because the Proposal is not a proper subject for action by shareholders under California law.

Rule 14a-8(i)(1) allows a company to omit from its proxy materials a proposal that "is not a proper subject for action by shareholders under the laws of the jurisdiction of the company's organization." It is our opinion that California corporation law, which applies to the Company, only gives shareholders the right to inspect a company's accounting books and records and minutes on written demand made to the corporation. The proposal would, if implemented, allow shareholders to view records beyond those which they would be permitted to inspect under California law. As a result, the proposal would be contrary to California law by expanding shareholder inspection rights.

The Proposal is not in the form of a recommendation or request to the Board of Directors that the information be released, but instead would force the Company to release a copy of the plan to the Company's shareholders. As a result, the Note to Rule 14a-8(i)(1) would not apply because the Proposal is not in the form of a recommendation or request.

2. The Proposal may be excluded under Rule 14a-8(i)(4) because the Proposal relates to the redress of a personal claim or grievance against the Company.

Rule 14a-8(i)(1) allows a company to omit from its proxy materials a proposal that "relates to the redress of a personal claim or grievance against the company or any other person." In his letter, Mr. Surdam makes it clear that he has a personal grievance with the Company over the fact that the Company did not give him the documents he requested and for other reasons. He calls the Company's refusal an example of "the Managements contempt and utter disregard of their shareholders, and only shows further evidence of the obfuscatory manner they use in running the Company, and its businesses." We believe that this statement further demonstrates that the Proposal is intended to redress what he perceives as a grievance against the Company.

Mr. Surdam's request for the documents was turned down by the Company because, as discussed above, they included non-public forecasts and other confidential information provided to the Amex. A release of the information could have caused the Company to violate Regulation FD, or otherwise exposed the Company to additional liability and possibly harmed its operations.

The Proposal is an attempt by Mr. Surdam to force the Company to allow him to inspect records which he is not entitled to view and which could cause the Company to incur harm. This represents a personal grievance that should be excluded from the Company's proxy materials.

3. The Proposal may be excluded under Rule 14a-8(i)(7) because the Proposal deals with a matter relating to the Company's ordinary business operations.

Rule 14a-8(i)(7) allows a company to omit from its proxy materials a proposal that "deals with a matter relating to the company's ordinary business operations." The information contained in the Company's plan submitted in the confidential submission to the Amex includes internal projections and other non-public internal information about the Company's operations. The Company does not publicly disclose internal management forecasts of the type provided to the Amex. These forecasts were not prepared with a view toward public disclosure. In addition, these forecasts were based upon numerous variables and assumptions that are inherently uncertain.

If the Company were forced to allow shareholders to view the documents submitted to the Amex, the Company could be exposed to potential liability under applicable securities laws. In addition, the disclosure could have an adverse impact on its ability to undertake the planned projects and jeopardize its competitive position in its local market. The plan provided to the Amex includes specific information about a project that has not yet been fully negotiated with a third party. If, as a result of the release of the information to shareholders, that party has access to the information prior to the completion of negotiations, the Company's ability to obtain the best possible terms could be adversely affected.

The Commission's staff has generally allowed companies to exclude proposals regarding day-to-day operations unless significant policy issues related to operational matters are implicated. The Company believes that the Proposal deals with the Company's ordinary business operations and may be excluded from the Company's proxy materials.

4. The Proposal may be excluded under Rule 14a-8(i)(3) because the Proposal is contrary to the Commission's proxy rules because it contains false and misleading statements.

Rule 14a-8(i)(3) and Rule 14a-9 permit the exclusion of shareholder proposals that contain false and misleading statements. The Proposal contains a number of false and misleading statements, including the following:

(a) The statement that the Company's refusal to provide Mr. Surdam with the requested documents "was incorrect and in direct contradiction of 'material facts' and 'blue skies' laws." Mr. Surdam provides no basis for the statements that the Company's refusal to provide him with the documents was a violation of any law. It is the Company's position that the refusal to provide the documents was intended to avoid a violation of law.

(b) The statement that the "denial is another example of the managements contempt and utter disregard of their shareholders, and only shows further evidence of the obfuscatory manner they use in running the company and its businesses." These inflamatory statements by Mr. Surdam are not supported by any facts. The Company considers them to be completely false. They are clearly intended to impugn the Company's management in an attempt to resolve a personal grievance.

Because the Proposal includes the false and misleading statements described above, we believe that the Proposal may properly be excluded from the 2006 Proxy Materials.

For the reasons set forth in this letter, the Company respectfully requests that the staff concur in its opinion that the Proposal may be excluded from the 2006 Proxy Materials. We would be happy to provide you with any additional information and answer any questions that you may have regarding this matter. Should you disagree with the conclusions set forth in this letter, we respectfully request the opportunity to confer with you prior to the determination of the staff's final position. Please do not hesitate to call the undersigned at (303) 893-2300 if you should need further assistance in this matter.

Sincerely,

KRYS BOYLE, P.C.

By /s/

James P. Beck

JPB/va

Attachment

cc: CET Services, Inc.

Robert L. Surdam This graphic not available in DOS This graphic not available in DOS This graphic not available in DOS This graphic not available in DOS This graphic not available in DOS

[STAFF REPLY LETTER]
March 28, 2006

Response of the Office of Chief Counsel Division of Corporation Finance

Re: CET Services, Inc. Incoming letter dated January 26, 2006

The proposal requires the company release a copy of a report filed with the American Stock Exchange regarding the company's compliance with the exchange's listing standards.

There appears to be some basis for your view that CET Services may exclude the proposal under rule 14a-8(i)(7), as relating to CET Services' ordinary business operations (i.e., public disclosure matters). Accordingly, we will not recommend enforcement action to the Commission if CET Services omits the proposal from its proxy materials in reliance on rule 14a-8(i)(7). In reaching this position, we have not found it necessary to address the alternative bases for omission upon which CET Services relies.

Sincerely,

/s/

Ted Yu
Special Counsel