UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                         Washington, D.C.  20549

                                 FORM 10-KSB

          X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

               For the fiscal year ended:  September 30, 2004

	                                         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:   33-4882-D

                   CLANCY SYSTEMS INTERNATIONAL, INC.
           (Exact name of Company as specified in its charter)

   _____COLORADO_______                             ______84-1027964______
  State or other jurisdiction of             (IRS Employer  Identification
  incorporation or organization              Number)

               2250 S. Oneida #308, Denver, Colorado 80224
          (Address of principal executive offices and Zip Code)

                         (303) 753-0197
      (Company's telephone number, including area code)

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

   Securities registered pursuant to Section 12(b) of the Act:
                      None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Company (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, and (2) has
been subject to such filing requirements for the past 90 days.

   (1) Yes __X__   No _____
   (2) Yes __X__   No _____



<PAGE>





     Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B, and no disclosure will be
contained, to the best of Company's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendments to this Form 10-KSB.  [X]

     The Company's revenues for its most recent fiscal year were
$3,243,746.

     The aggregate market value of the voting stock held by
non affiliates (based upon the average of the bid and asked price
of these shares on the over-the-counter market) as of December
28, 2004 was approximately $4,147,803.

Class                      Outstanding at January 6, 2004

Common stock, $.0001 par value           365,117,938 shares


Documents incorporated by reference:  None

Transitional Small Business Disclosure Format:

               Yes___ No  X





<PAGE>




























             CLANCY SYSTEMS INTERNATIONAL, INC.
                         Form 10-KSB



                     TABLE OF CONTENTS


   PART I
   Item 1.  Description of Business

   Item 2.  Description of Property

   Item 3.  Legal Proceedings

   Item 4.  Submission of Matters to a Vote of Security Holders


   PART II

   Item 5.  Market for Common Equity and Related Stockholder Matters

   Item 6.  Management's Discussion and Analysis or Plan of Operations

   Item 7.  Financial Statements

   Item 8.  Changes In and Disagreements with Accountants on Accounting
            and Financial Disclosure

   Item 8A.  Controls and Procedures


   PART III

    Item 9.  Directors, Executive Officers, Promoters and Control
             Persons; Compliance with Section 16(a) of the Exchange Act

   Item 10.  Executive Compensation

   Item 11.  Security Ownership of Certain Beneficial Owners and
             Management and Related Stockholder Matters

   Item 12.  Certain Relationships and Related Transactions

   Item 13.  Exhibits

   Item 14.  Principal Accountant Fees and Services





<PAGE>



              CLANCY SYSTEMS INTERNATIONAL, INC.
                       Form 10-KSB
                         PART I

Item 1.  Description of Business

Business Development.

In April 1987 Oxford Financial,Inc. (Oxford) merged with
Clancy Systems International, Inc.(Old Clancy).  Oxford,
as the surviving company in the merger, changed its name
to Clancy Systems International, Inc. (the "Company").
Oxford was organized under the laws of the State of Colorado
on March 3, 1986.  Old Clancy was organized under the laws
of the State of Colorado on June 28, 1984.

In February 1998, the Company acquired 60% ownership in a
partnership with Urban Transit Solutions (UTS).  UTS is a
consolidated subsidiary and is therefore included in the
consolidated financial statements of Clancy as of September
30, 2002 and 2003.

In December 2003, the company advanced additional funds to UTS
which resulted in additional shares being issued to bring
its ownership to 72%.

The Company designs, develops and manufactures automated
parking enforcement systems primarily for lease to municipalities,
universities and institutions, including a ticket writing system
and other enforcement systems.

The Company has installed numerous parking enforcement
systems for various clients, towns and universities.
To augment the enforcement element of the system, the Company
manufactures and markets the original Denver Boot and other
enforcement tools.  By utilizing an  integrated approach, the
Company offers a complete parking citation processing system
including tracking, enforcement, collection and automatic
identification of delinquent violators in an effective and
efficient manner.

 The Company also acquired and developed several stand alone
computer programs for special niche operations including
IDBadge.com, WhatsImportantNow.com, VirtualPermit.com, Remit-
online.com, Expo1000.com, Permit-sales.com and Park-by-phone.com.
The Company acquired Expo1000.com and Remit-online.com during
fiscal year 2001. The Company developed IDBadge.com,
WhatsImportantnow.com, VirtualPermit.com, Permit-sales.com and
Park-by-phone.com internally.

The Company also provides hardware and software for special
projects for Hertz Corporation including a project called Fleet
Control.  Fleet Control was developed in 1987 as an internal
security system used by Hertz to track the transfer of cars
between locations.
                          -1-
<PAGE>

The Company's principal executive offices are located at 2250
S. Oneida Street, #308, Denver, Colorado 80224 and its
telephone number is (303) 753-0197. The Company's web site is
www.clancysystems.com.

Business of the Issuer.

Principal Products or Services and Markets and
Distribution Methods.

The Company's parking enforcement system is an automated system
which generates parking citations.  The system consists of a
hand-held, light-weight, portable data entry terminal, a light-weight
printer to generate the parking citation and a data collection
computer system to store parking citation data at the end of each day.
The data entry terminal includes features such as large keys for
use with gloved hands, easily readable liquid crystal display,
phosphorescent keypad for illuminated night use and a large memory.
The printer contains a "no-wait" buffer which acts to eliminate delay
in entering citation data. The printer has been streamlined and along
with the hand-held terminal weighs less than two pounds and is battery
charged to last for at least eight hours with overnight recharging
capability. The citations are printed on a continuous fan fold flat
forms.  The  data collection computer is used for uploading and
downloading data and contains the capacity for interfacing directly
to a user's computer.  There are currently approximately 2000
ticket-writing units in operation.

The Company's system also includes a complete back office
processing and filing system.  The Company provides computers,
printers and software to enable the user to obtain state Department of
Motor Vehicle lookups, maintain citation information storage and
recall, generate delinquent notices and have immediate access to
files of all tickets previously written.  In addition, the
Company's system maintains a current, readily accessible list of
vehicles with multiple outstanding citations, stolen vehicles, or
vehicles otherwise wanted by local law enforcement officials.  The
system also generates reports of citations by number and officer,
revenues collected, names of scofflaws, officer productivity and
other reports as deemed necessary or valuable to the agency.

The Company offers Internet payment processing  of tickets,
permit registrations, and clearing of funds for its clients and
industry affiliates.  The program accepts credit cards and checks
at its Remit-online.com web site 24 hours a day.  As the items are
accepted, email notification goes immediately to the client for
notification and posting of payment.  Settlement of funds is weekly
or monthly per contract arrangement.

A service first offered to clients during the 2001 year was a
permit fulfillment program.  Patrons can purchase permits at
on-line web addresses for specific agencies.  Payment processing
is done for checks and credit cards and the permits are
mailed directly for the agencies.
                             -2-
<PAGE>

The Company's contracts for its parking enforcement systems
generally provide that the Company will provide the ticket writers,
a back office processing system, custom software and training and
support in consideration of a fee per citation issued, a monthly
fee for computer equipment rental and/or a set  monthly fee.
Occasionally, the Company will provide its system through an
outright sale rather than through its typical lease arrangement.
The Company generally warrants its equipment, provides updating
and improvements to its system hardware and software and provides
customary indemnification. The Company also contracts its systems
under a privatization program whereby the Company provides a
complete facilities management program for the client.  The
operation includes personnel to operate the system, issue tickets,
and take care of enforcement tasks, along with the collection of
ticket revenues, backlog ticket collections and other related
duties.  These programs are offered under a revenue guarantee or
revenue split contract.

The Company currently has systems installed in municipalities
and universities representing approximately 9,000,000 tickets
issued per year.

The Denver Boot

The Denver Boot is a metal clamp which is fastened around a
wheel which effectively prevents a vehicle from being moved.  The
Denver Boot is removed by unlocking a padlock.  The Company
acquired all rights to the product in a transaction with Grace
Berg in June of 1994.  The Company paid Mrs. Berg  royalties on
all sales for a period extending through June 1999.   The Denver
Boot is used by a number of law enforcement agencies on vehicles
with multiple offenses. The Denver Boot can be integrated into the
Company's parking control and enforcement system or may be sold
separately.  The Company recently introduced a Super Boot to fit
some of the larger pickup trucks and SUV models.

Fleet Control

The Company sells charger/communication cradles to the Hertz
Corporation for its fleet control project and maintains the
equipment for Hertz under a maintenance service contract
agreement.

Phoenix Group Systems

In conjunction with the Phoenix Group, of Torrance, California,
the Company has installed computerized parking citation
issuance systems at Phoenix Group client locations. The data is
then sent to Phoenix Group for ticket collection.  These clients
write approximately 200,000 tickets per year.


                            -3-

<PAGE>

Remit-online.com

Remit-online.com is an Internet based payment processing
system which allows for credit card and check payments to be made
for parking citations and other payment processing activities.
The business was developed independent of Clancy and funded by
Stanley Wolfson, the President of Clancy.  The Company acquired
Remit-online.com (with Expo1000.com) from  Wolfson in February
2001, in exchange for 17,489,315 shares of Clancy Systems
International, Inc. restricted stock.

Remit-online.com has been expanding and is being offered to
all clients of the Company as well as to other parking industry
businesses.  The company is able to process credit card and check
payments through services provided by 3rd parties. The company
receives a processing fee for each transaction.  As each
transaction is processed, notification is sent to the paid agency
by email so that posting of the account can be made promptly as
parking citations are date critical regarding amount due and
potential late fees.  Settlement of collected funds between the
Company and the agency is made based on contractual agreement
either weekly or monthly.

Expo1000.com

Expo1000.com is an Internet based industry guide that is
structured as a virtual trade show with links to the actual
exhibitors Web sites.  Expo1000.com was developed and funded
independent of the Company, and acquired from Stanley J. Wolfson
with the Remit-online business on November 18, 1999. The final
agreement and issuance of shares took place in early 2001.

The business has been developed for specific industries with
focus at this time on Parking. Expo1000.com contains an internal
search engine which searches key words industry specific.  Client
company listings are available by company name, product, as well
as search engine within the industry.  The listings are
subscription based and billed annually.  To make the site viable,
the primary focus in addition to selling the listings is to increase
the visits and exposure to sites. The Expo1000.com site highlights
"what's new" for the industry (press releases, new product
announcements, new service announcements). The site contains a
message board and an email services to its subscribers and its
visitors.

Expo1000.com is also a parking advocacy forum  and sponsors one
day solution seminars in strategic locations for exhibition and
education purposes.  Expo1000.com vendors demonstrate their product
to invitees from strategic municipal, university and commercial
parking agencies.  During  fiscal 2003-2004 Expo forums were held
in Los Angeles, Clearwater, San Francisco, and San Juan Puerto Rico.


                            -4-

<PAGE>

Permitsales.com

Permitsales.com is a comprehensive program for online permit
registration. Through this program registration and renewals
for decal permits can be done.  The program also is used
to register, create, and print special event permits and
periodic transit permits.  The company provides permit
fulfillment services.

WhatsImportantNow.com

This is a PC based messaging program which allows users to
send critical data and messages to pagers and cell phones. This
program is marketed as a stand alone product and is sold for $79
per license. While available for purchase to outside customers,
this program is made available to the Company's clients and is
used extensively in-house.

IDBadgemaker.com

This is a PC based badge and security ID program that is used
in conjunction with digital photos to allow users to easily and
inexpensively make two-sided ID badges (with critical information
and bar codes).  The program is sold as a stand alone program and
has been marketed  directly to our clients as well as through
several on-line software product/download sites such as
Download.com.  The product sells for $199 per license.  The
download version can be used for demonstration with the word DEMO
stamped across any badge produced.  The Company has had a great
deal of interest in the program and sales are commencing on a
regular basis.  The program receives "excellent" ratings at
download.com.

VirtualPermit.com

This program is a paperless (and hard copy) permit system
now being used by many of the Company's clients.  It includes
monitoring lots and garages, inventory of spaces, and can validate
active or lapsed permits.

Park-by-phone.com

Launched at the end of fiscal 2002-2003, this program is a
technology based parking reservation and payment system that will
benefit the customers by allowing them to pay and park by making one
telephone call to the Park-by-phone data center.  Through strategic
alliances with parking operators, cities, and venues, this system
will allow customers to have paid parking in an instant.






                            -5-
<PAGE>


Competition.

The Company is aware of other companies that currently offer
an automated ticket writing system: Enforcement Technologies,
Inc.; Cardinal; Com-Plus; DMS;  Radix-T-2, and others. The Company
believes that it is able to compete effectively in the field
because of its fee per citation and leased system marketing
approach which eliminates any significant capital expenditures
by the user, its excellent program for customer support and
because of the various enforcement products which it offers
to complement its system.

Initially, the Company provides potential parking control
clients with consulting services to analyze the client's ticketing
and enforcement needs.  The Company then develops a proposal based
upon those needs, which indicates how the Company's system and
related products would aid the client in achieving the two primary
goals of ticket writing and enforcement:  creation of an equitable
enforcement policy and an increase in revenues.  The Company
believes that a system which is perceived by the public to provide
a greater certainty of enforcement will result in a greater
willingness upon the part of the public to promptly and
consistently pay fines, thus increasing the flow of revenues to
the client. Depending upon the size of the client, the Company's
services may range from the simple sale of hardware (i.e., the
Denver Boot) to providing a ticketing and enforcement system and
related equipment through a lease or sale arrangement, training
users and handling data processing of tickets and the collection
of fines.  The Internet based services added to client programs as
well as the Remit-online.com payment processing program makes the
Company's system more comprehensive and advantageous than
competitor systems.

Although a few of the Company's systems provide for the
purchase of systems or fees based on set monthly amounts, the
Company has been marketing its system and other products to
municipalities, universities, colleges, institutions and parking
companies primarily under a professional services contract  geared
to a transactional or per citation basis.  The Company supplies
all hardware, software, training, supplies and maintenance for the
system, thus eliminating all significant capital expenditures by
the user.

The Company markets its ticket writing and enforcement system
directly to municipalities, universities, colleges, institutions
and parking companies through commissioned sales representatives
and members of management.  The Company currently has marketing
alliances with two  organizations throughout the United States.
The Company's management attends trade shows and makes direct sales
calls.




                               -6-
<PAGE>


Raw Materials and Principal Suppliers.


The Company purchases its hand-held computers from outside
vendors and the Company builds the printer units that incorporate
the hand-held terminal.  The printer units for the various systems
are the same. The Company's latest generation printers feature
injection molded cases and an automatic top-of-form feature for
the paper feed. Other new technology for the electronics enable
interfacing with auxiliary hardware such as radio communications
devices, magnetic credit card readers and other peripheral devices.
The Company purchases its hand-held terminals from several different
vendors who sell computers that are all comparable in quality.
One type of handheld the Company uses for its parking enforcement
systems is a Palm PDA.

Component parts for the Company's products are purchased from
various sources.  The Company has established relationships with
various vendors for such parts.  The Company is not reliant on
sole source vendors for any item.

The Company's paper products are purchased from outside
vendors.  Should any of these vendors be unable to supply these
specialized products, the Company believes that there are many
other available sources of supply.

The Company has manufactured a  printer to interface to Palm
Computing devices.  In December 2001, the Company  began
production of a special keyboard/cradle  for the Palm 500 series.
The cradle is called a Palmtype.

Other products sold by the Company which complement the
parking citation issuance programs, include: ID BADGEMAKER
(which is sold for $199 per license) and PalmTicketer which
is a program to issue special event tickets. The Company has
enhanced features on its ticket processing system; digital photo
system; virtual permit system which is a fully operational permit
issuance, payment and tracking system which reduces paperwork,
decal distribution and employee time to administer a parking permit
program; a daily permit one use parking permit program for short
duration parking validation; an employee badge ID system which
can be used by parking systems, rental car systems, and other
industries; a management alert system which is an automated data
analysis program which emails information and alerts  directly to
management to reveal such information as permit violations, ticket
issuance productivity numbers, revenue numbers and other
and timely information.   Other software products include the
on-line permit renewal system.

                               -7-

<PAGE>





Significant Customers.

Presently, the Company has 140 customers.  The Company
continually updates the hardware and software products provided
to these and all of its customers in an effort to ensure quality
service and customer satisfaction.

Privatization Contracts.  In a contract for privatization,
the Company provides a full facilities management operation for
the city of Logan, UT and Los Angeles Metropolitan Transportation
Authority. For the City of Logan, the Company provides personnel,
vehicles, an office, ticket issuance and ticket payment processing.
The Company pays the City a 50/50 split after all expenses are
paid. For the LAMTA, the Company provides lot services including
signage and striping, ticket issuance, permit fulfillment, special
event parking, and other related services.  Fees are based on
the different service levels.

Urban Transit Solutions, Puerto Rico. In February 1998, the
Company acquired 60% ownership in a partnership with Urban Transit
Solutions (UTS). The Company  committed to $500,000 in funding to
UTS between January 20, 1998 and April 30, 1999.  At September 30,
2001, the Company had paid $500,000 to UTS. UTS currently has
contracts in Mayaguez, Humacao, Carolina, San German, Manati, Aricebo
and Cauguas Puerto Rico. In Mayaguez, UTS has installed 600 parking
meters and is responsible for collection of parking meter revenues.
In Cauguas, UTS leases a parking facilities from the City and
collects the parking revenues from the lot.  UTS has installed
meters and provides ticket issuance parking enforcement. In
Humacao, UTS installed meters and collects revenues from the
meters as well as provides ticket issuance parking enforcement.
UTS is completing installation of parking meters in San German
and will also provide ticket issuance and enforcement.
UTS anticipates additional contracts in Puerto Rican cities
for meter installation, collections and ticket issuance
enforcement.  The marketing approach is to bring Puerto
Rican cities into the 21st century by organizing parking
operations and providing current technology to modernize city
operations.

Patents and Licenses.

The Company obtained a patent (#5,006,002) for its printer
used in its parking enforcement, rental car return and inventory
control systems in April 1991. This patent expires April 2008.

The Company also obtained a patent for a printer latch on
June 27, 2000. The patent expires in June 2019.

The Company applied for a patent for its palmtype and
Palm specific software in July of 2002.  The Company has
abandoned its claim on the hardware application but is
pursuing its patent on the software claims.

                         -8-
<PAGE>

Need for Governmental Approval.

Many of the Company's contracts are awarded after a
Request for Proposal has been tendered by the agency.
Other companies with similar technologies also bid on
the Request for Proposal tenders.

Research and Development.

In order to keep its products and systems from becoming
obsolete, the Company regularly modifies and updates its
hardware and software.  In order to streamline its ticket
writing and car rental equipment, the Company has redesigned
the printer so that it weighs less than two pounds. New
battery technology has also allowed the Company to reduce
the weight in the printers.

During fiscal 2001/2002, Clancy began manufacturing of
a new printer to interface to Palm handheld devices.  It
incorporates a state of the art print mechanism, light weight
battery technology and flat forms. In 2003/20034 a new case
design was completed and tooling will was finished mid 2004.

The Company has developed a keyboard and cradle for Palm
devices.

Management keeps informed of new developments in components
so that the printer is up-to-date, fast and suits user
requirements. The Company communicates with vendors on a regular
and ongoing basis so that management is aware of upgraded
components, new components and new processes to upgrade its
hardware.  By adapting its equipment to user needs and keeping
current of the latest technology, the Company anticipates that its
enforcement ticket writing and rental car systems will not become
obsolete. The company is currently developing new applications
with the new printer and Palm computing devices which will move
outside the parking and rental car industries. The Company's
software is developed in-house by five full-time programmers and
by Stanley J. Wolfson, the Company's President and a director,
and is maintained and updated on a regular basis.

The office computer software allows the daily ticket and
rental and inventory information to be transferred from the
portable units to a central computer.  The information is compiled
and then processed further according to user requirements.

Through sophisticated communications software developed
internally, the Company is able to update, modify, repair, enhance
and change most software at the client's location via a modem and
the Internet.

The Company spent $33,471 and $60,079 on research and
development activities for the fiscal years ended September 30,
2003 and 2004, respectively.  None of the cost of such activities
was borne directly by the customers.
                               -9-
<PAGE>
Compliance with Environmental Laws.

Compliance with federal, state and local provisions regulating
the discharge of materials into the environment or otherwise
relating to the protection of the environment will have no material
effect on the capital expenditures, earnings and competitive position
of the Company.  The Company has entered into an arrangement with
RBRC (Rechargeable Battery Recycling Corporation) for the recycling of
all batteries).

The Company donates its used computer equipment to various
churches.  The program has been very successful as the computers
are capable of early computer training programs even though they
are no longer acceptable to operate the Company's systems.

Employees.

The Company currently has eleven employees in Company operations
and four employees in privatization projects, all of whom are employed
on a full time basis. Urban Transit Solutions has 2 employees in
upper management, 4 employees in field management and 22 employees
in operations.

Item 2.    Description of Properties.

The Company is leasing  approximately 1,700 square feet of
office space located at 2250 South Oneida Street, #308, Denver,
Colorado for its corporate offices for $2283 per month pursuant
to a lease agreement with an unaffiliated party which expires
May 31, 2006.

The Company also leases approximately 3,000 square feet of
manufacturing space located at 5789 S. Curtice, Littleton,
Colorado, from an unaffiliated party. Rental payments are $630 per
month pursuant to a lease agreement that expires August 1, 2005.

The Company leases an office in Logan, Utah which is
approximately 500 square feet from an unaffiliated party.  Rental
payments are $500 per month plus utilities pursuant to a lease
agreement which expires June 30, 2005.

The Company believes that these facilities are suitable and
adequate for its needs.

The Company has always entered into 1 and 2 year lease agreements
and is confident that it can renew its leases under the same
terms and conditions.



                              -10-

<PAGE>




Item 3.     Legal Proceedings.

In August 2000, the Company hired the law firm of Bingham Dana Ltd
to commence actions on behalf of the Company against several John
Does that bashed the company by posting false information about
the Company and its officers and directors on the Raging Bull
Internet chat room site and other chat rooms.  On September 19,
2000, the Company filed an action in Suffolk Superior Court
against John Short, Syracuse NY, who posted as Darth4, MrDarth4
and possible other aliases. Relief sought includes monetary
damages for harm done to the Company and its officers,
retraction of false and damaging statements and for the subject
to cease and desist posting or discussing the Company, its officers
and any activities related thereto.

After a final appeal by Mr. Short, the Massachusetts State Supreme
Court upheld the earlier judgement awarded in favor of the Company.
The court awarded an additional $23,000 in damages to the Company.
The Company's attorney in Syracuse New York has filed a motion to
restore the case to the court's motion calendar for a decision on
an earlier motion to schedule a sheriff's sale.

On March 21, 2002, a complaint was filed in Denver District Court
by Francis Salazar against the Company.  Mr. Salazar was seeking
compensation for alleged loss of profit on the sale of 6,000,000
shares of the Company's common stock that carried a restrictive
legend under Rule 144 of the Securities Act of 1933, as amended.
The complaint alleges that the restrictive legend prevented
Salazar from selling the shares during an uptick in the Company's
share price.  The Company filed a motion to dismiss which was
granted in December, 2002, but subsequently overtunred on appeal
in October 2003.

Clancy filed a motion with the District Court, City and County of
Denver, Colorado, Case #02-CV-2391, for Summary Judgment to dismiss
the case in June 2004.  That motion was granted and the case was
dismissed on August 13, 2004.  Management is pleased with the
results.  The Company has been severely damaged by Mr. Salazar as
it had to incur substantial legal fees on this matter which are
not recoverable and have had a negative impact on the Company's
profits and shareholder value.

Mr. Salazar has brought other lawsuits against the Company over
the years and the defense of these suits has been costly to the
Company.  All suits have been dismissed and have been resolved
in favor of the Company.  However, in November 2004, Mr. Salazar
filed a notice of appeal in the Colorado Court of Appeals with
respect to the suit dismissed by the District Court in August,
2004.




                              -11-
<PAGE>


Item 4.    Submission of Matters to a Vote of Security Holders.
     None.

PART II

Item 5(a). Market for Company's Common Stock and Related Security
Holder Matters.

The principal market on which the Company's Common Stock is
traded is the over-the-counter market and the Company's Common
Stock is quoted in the OTC Bulletin Board.

The range of high and low bid quotations for the Company's
Common Stock for the last two fiscal years are provided below.
The quotations are obtained daily from Yahoo.com stock quotations
via the Internet. These over-the-counter market quotations reflect
inter-dealer prices without retail markup, markdown or commissions
and may not necessarily represent actual transactions.


                             High bid   Low bid

10/01/02 - 12/30/02          .0045       .004
01/01/03 - 03/31/03          .013        .005
04/01/03 - 06/30/03          .017        .015
07/01/03 - 09/30/03          .015        .011
10/01/03 - 12/30/03          .039        .01
01/01/04 - 03/31/04          .034        .02
04/01/04 - 06/30/04          .0245       .019
07/01/04 - 09/30/04          .0235       .014



On January 5,  2005 the reported bid and asked prices for
the Company's Common Stock were $.019 and $.021, respectively.

The approximate number of record holders of the Company's
Common Stock on January 5, 2005  was 571. The Company has paid
no dividends with respect to its Common Stock.

There are no contractual restrictions on the Company's
present or future ability to pay dividends.



                             -12-
<PAGE>










Item 6.   Management's Discussion and Analysis or Plan of
          Operation

Management's Statement Regarding Forward Looking Information

Statements of the Company's or management's intentions,
beliefs, anticipations, expectations and similar expressions
concerning future events contained in this document constitute
"forward looking statements."   As with any future event, there
can be no assurance that the events described in forward looking
statements made in this report will occur or that the results
of future events will not vary materially from those described
in the forward looking statements made in this document.
Important factors that could cause the Company's actual
performance and operating results to differ materially from the
forward looking statements include, but are not limited to, (i)
the ability of the Company to obtain new customers, (ii) the
ability of the Company to obtain sufficient financing for
business opportunities, (iii) the ability of the Company to
reduce costs and thereby maintain adequate profit margins. In
the following discussion, reference to Clancy is to the
parent company on a stand-alone basis and reference to
Clancy consolidated is for Clancy and UTS combined.

Management's Discussion and Analysis of Financial Condition
and Results of Operations

At September 30, 2004, the Company had working capital of
$957,718 for Clancy and $ 134,508 for Clancy consolidated with
UTS as compared to $1,007,082 for Clancy and $361,991 for Clancy
consolidated with UTS at September 30, 2003.

The Company anticipates using its working capital to fund ongoing
operations, including general and administrative expenses, equipment
purchases, equipment manufacturing, travel, marketing and research
and development.  The Company anticipates having sufficient working
capital to fund operations for the fiscal year ending September 30,
2005.

Clancy's current ratio increased from  4.51 to 1 to 6.56 to 1
from September 30, 2003 to September 30, 2004. The consolidated
current ratio decreased from 1.35 to 1 to 1.14 to 1
from September 30, 2003 to September 30, 2004.

REVENUES.  From fiscal 2003 to fiscal 2004 revenues increased by
approximately $31,961 or 1.62% from $1,975,429 to $2,007,390 for
Clancy and $139,484 or 12.72% from $1,096,872 to $1,236,356 for UTS.
The increase in revenues is due to the addition of new customers
and products during the year ended September 30, 2004.

COST OF SERVICES.  From fiscal 2003 to fiscal 2004, cost of
services increased by $34,712 or 9.5% from $676,118 to $710,830
for Clancy.  Cost of services as a percentage of service contract
income was 39.6% for fiscal 2003 and 51.2% for 2004.
                         -13-
<PAGE>


For UTS, cost of services increased by $7,031 or 3.7% from $190,215
in fiscal 2003 to $197,246 for fiscal 2004. Cost of services
as a percentage of service contract income was 17.3% for fiscal
2003 and 16% for 2004.

RESEARCH AND DEVELOPMENT.  The Company's parking enforcement systems
research and development costs increased from $33,471 to $60,079, or
79.5%, from fiscal 2003 to 2004. Product development and improvement
to current products is paramount to the Company and the company has
some new products in development.

GENERAL AND ADMINISTRATIVE.  General and administrative
expenses increased by $106,376 or 14.58% from $729,114 to $835,490
for Clancy and increased $198,494 or 21.6% from $918,977, to
$1,117,471 for UTS from fiscal 2003 to 2004.  The increase in
general and administrative costs for the Company is primarily
due to the substantial increase  in legal fees, directors and
officers insurance of $29,995, accounting and other professional
services,increased salaries and related expenses of expanding
operations, increased health insurance costs, and increases due
to Sarbanes-Oxley requirements.

NET INCOME.  The Company reported net income of $243,063
for fiscal 2003 as compared to $102,852 for fiscal 2004.
The Company reported net income of $96,789 for fiscal
2002 as compared to net income of $243,063 for fiscal
2003.  The primary reason for the decrease in net income of
$140,211 for fiscal 2004 is the increase in legal fees, research
and development costs, and other costs, the components of which
are described above.

During the fiscal years ended September 30, 2003 and 2004,
the Company had in place a total of approximately 132 and
140 ticket issuance systems respectively.

During the next twelve months, the Company will continue to expand
its Internet parking services and operations. A concentrated effort
will be put on "Park-by-phone" which will include an aggressive
advertising campaign.  The Company will also be manufacturing
its printer in a new and smaller case.

In order to keep its products and systems from becoming obsolete,
the Company regularly modifies and updates its
hardware and software.  In order to streamline its ticket
writing and car rental equipment, the Company redesigned
the printer so that it weighs less than two pounds.
                         14
<PAGE>

New battery technology has also allowed the Company to reduce
the size and weight of the printers.

During 2001/2002, the Company began manufacturing a new
printer board to interface to Palm handheld devices.  It
incorporates a state of the art print mechanism, light
weight battery technology, and flat forms.  The company
has also developed a keyboard cradle for the Palm devices.
The Palm type has a 45 key full alpha/numeric keypad with
function keys and assignable function keys.

Management keeps informed of new developments in components
so that the printer and keypads are up-to-date, fast and
suit user requirements.  The Company communicates with
vendors on a regular and ongoing basis so that management
is aware of upgraded components, new technologies and
processes that can be used to upgrade its hardware.  The
Company has a relationship with an engineer, who, although
he works as an independent contractor, dedicates as much
time as the company requires to develop and enhance its
products.  The engineer also does R&D for the company and
makes prototype boards for testing and evaluation.

The Company's software is developed in-house by five full-
time programmers and by the Company's President, Stanley
Wolfson, and is maintained and updated on a regular basis.

Clancy has qualified to be a Microsoft Certified Partner.

The office computer software allows daily ticket, rental
and inventory information to be transferred from the
portable data entry units to a central computer database.
The information is compiled and then processed further
according to user requirements.

Through sophisticated communications software developed
internally, the Company is able to update, modify, repair,
enhance and change programs at the client's location
via modem and the Internet.

The Company has developed numerous Internet based parking
programs which include payment processing, permit
registrations, and pre-paid parking and parking reservations,
special event parking and permitting, and it's Expo1000
Parking Industry Guide.

URBAN TRANSIT SOLUTIONS

The Company provided a total financial investment of $500,000 to
Urban Transit Solutions between March 1998 and April 1999. UTS
has been generating revenue since August 1998.  Collections from
parking lot fees from Cauguas commenced in January of 1999.  The
Company's loan to its primary bank and private lender have been
paid back by the Company's cash flows.
                             -15-
<PAGE>

The settlement of ownership between the Company and UTS set forth
the opportunity for Clancy management to take a more significant
role in the operations of UTS. In June, 2003, a new management
team was installed at UTS.  Kenneth Stewart is the President
of UTS.  Damaris Carasquillo is the operations manager. The UTS
Board of Directors includes Kenneth Stewart, Stanley Wolfson,
and Lizabeth Wolfson. The new management team has taken an
aggressive approach to bringing the accounts payable current,
reducing unnecessary expenses and reducing debt obligations.
The Company expects to see a significant improvement
to UTS profitability during the 2004-2005 fiscal year.

UTS has funded its operations primarily by loans and cash
flows.  It has notes payable and capital lease obligations
arising from borrowings for working capital and purchases
of equipment.

TRENDS AND CONDITIONS

The Company anticipates no major impact as a result of
trends of the past few years.  A further discussion
appears below.  If current trends continue, the Company's
liquidity will continue to improve on a short-term and
a long-term basis.

The Company anticipates that its expenses shall increase
as a direct result of the Sarbanes-Oxley legislation as
it pertains to additional accounting and auditing
procedures.  The Company now utilizes three
different accounting firms for preparation of financial
statements, reviews and auditing functions.  Director and
Officer insurance premiums have tripled for the Company
(this is consistent with the industry as a result of the
public company accounting scandals of several years ago).
The Company is able to qualify for Directors and Officers
insurance when many companies are no longer able to
qualify.  The Company's newest equipment has proven to be
a capital intensive program.  The Company has designed its
printer board to work and fit in both its current model
case as well as its new case, which will prove to be
a cost savings.  While the Company has adequate cash flow
to accomplish the upgrades without incurring debt, it is
anticipated that the ongoing upgrades and tooling for
newer product shall continue to require a large capital
commitment.





                     -16-

<PAGE>



With the weakened economy as of recent years, municipalities
are in search of additional revenues and the installation and
implementation of means to efficiently and effectively collect
parking ticket revenues is a viable source of such additional
revenues for many locales.  As on street parking spaces are
finite, and populations increase, a structured management
system of turnover, enforcement and accountability of
parking revenues will be imperative for all cities.

In addition, the Company supplies all hardware, software,
training, supplies and maintenance for the system, thus
eliminating all significant capital expenditures by the user.

The Company has experienced a large number of inquiries about
its system related to the total program and special features and
anticipates growth in this area in the next fiscal year.

Uncertainties that can impact revenues from the Company's
service contract agreements would be related to dramatic
weather changes and municipal disaster occurrences (i.e.
September 11, 2001).  As parking ticket issuance
operations are primarily "out-of-doors" tasks, severe
weather such as a major blizzard, hurricane, or rains could
impact ticket production for a limited period in certain
locales.  While such reductions are temporary, they can impact
revenues as the Company bills most clients on a fee-per-ticket
basis.  The meter collections for UTS could be temporarily
reduced during a hurricane or tropical storm.  Further, as
the Company is contracting primarily with City government
agencies, a  deployment of personnel to other duties during
a disaster could temporarily reduce ticket issuance activities.

Internal and external sources of liquidity

The Company anticipates using its working capital to fund
ongoing operations, including general and administrative
expenses, equipment manufacturing, travel, marketing and
research and development.  The Company anticipates having
sufficient working capital to fund operations for the
fiscal year ending September 30, 2005.

UTS has funded its operations primarily by cash flows and
bank debt.  It has notes payable and capital lease
obligations arising from borrowings for working capital
and purchases and installation of meter equipment.

The Company has experienced significant interest in the Denver
Boot for vehicles as well as for security on other mobile
devices including construction trailers and communications
generators.  There has also been a demand for the Denver Boot
for enforcement on private property.  Exposure on the Internet
has been favorable for sales of this product.

                           -17-

<PAGE>

The Company has experienced an interest in its IDBadgemaker
software.  The program is utilized by news services,
janitorial companies, social service agencies, private clubs
and others for security and identification purposes.  The
program receives "excellent" ratings at download.com.

Remit-on-line.com has grown as a ticket payment site.  It is
offered to Clancy ticket system clients and other companies
in parking industry businesses.  Remit processes an average
of $500,000 per month in transactions.  The Company has
observed a continuing increase in activity monthly.

CONTRACTUAL OBLIGATIONS

The following obligations are those of the consolidated
Company.  The long-term  debt is that of UTS.

                             Payment Due by Period

Contractual           Less than
Obligations   Total    1 year     1-3 years   4-5 years   Over
                                                        5 years

Long Term
debt        $ 239,449 $ 239,449  $      -   $     -    $   -

Capital
Lease
Obligations    73,762    41,460     32,302        -        -

Operating
Expenses
   UTS         10,800     3,600      7,200        -       -
   Clancy      45,655    27,393     18,262

Purchase
Obligations         -         -          -         -      -

Other Long-
term
obligations         -         -          -         -         -
            --------- ---------  ----------  ----------  ---------

Total
Contractual
Cash
Obligations $ 369,666  $ 311,902  $ 57,764 $       -   $     -
            =========  ========== ========= ==========  ==========


                        -18-
<PAGE>




CRITICAL ACCOUNTING POLICIES

The Company has identified the accounting policies described
below as critical to its business operations and the
understanding of the Company's results of operations.  The impact
and any associated risks related to these policies on the
Company's business operations is discussed throughout this
section where such policies affect the Company's reported and
expected financial results.  The preparation of this Annual
Report requires the Company to make estimates and assumptions
that affect the reported amount of assets and liabilities of
the Company, revenues and expenses of the Company during the
reporting period and contingent assets and liabilities as of
the date of the Company's financial statements.  There can be
no assurance that the actual results will not differ from
those estimates.

REVENUE RECOGNITION:  Revenue derived from professional service
contracts on equipment and support services is included in
income ratably over the contract term; related costs consist
mainly of depreciation, supplies and sales commissions.

The Company defers revenue for equipment and services under
service contracts that are billed to customers on a quarterly,
semi-annual, annual, or other basis and are included in
income ratably over the expected term of the contract.

Revenue from the issuance of parking citations for the
Company's privatization projects is recognized on a cash basis
when received as collectibility is not reasonably assured.

Revenue derived from professional service contracts on
parking meter and lots fees collections is recognized net of
municipalities' fees as services are provided.  Related costs
consist mainly of depreciation and lot rents.

Revenue derived from professional service contracts for permit
fulfillment and remit-online services is recognized based on
add-on fees earned for each transaction.

COMPUTER SOFTWARE.  Costs incurred prior to establishment of
the technological feasibility of computer software are research
and development costs, which are expensed as incurred.  Software
development costs incurred subsequent to establishment of
technological feasibility are capitalized and subsequently
amortized based on the lesser of the straight line method
over the remaining estimated economic life of the product
(generally 5 years) or the estimate of current and future
revenues for the related product.


                           -19-




<PAGE>

GOODWILL.


The excess of the purchase price over net assets acquired by the
Company from unrelated third parties is recorded as goodwill.
Goodwill resulted from the acquisition of UTS.  On January 1, 2002,
the Company adopted Statement of Financial Accounting Standards
No. 142 (SFAS 142), Goodwill and Intangible Assets, which
clarifies the accounting for goodwill and intangible assets.
Under SFAS 142, goodwill and intangible assets with indefinite
lives will no longer be amortized, but will be tested for impairment
at least annually and also in the event of an impairment indicator.
There is no impairment of goodwill considered necessary as of September
30, 2003 or 2004.


RECENT ACCOUNTING PRONOUNCEMENTS

The Company recognizes revenue in accordance with the Securities and
Exchange Commission Staff Accounting Bulletin 104 ("SAB 104").
SAB 104 provides that the conditions for realization of revenue are
as follows:
(1) persuasive evidence of an arrangement exists; (2) delivery has
occurred or services have been rendered; (3) the seller's price to
the buyer is fixed or determinable, and (4) collectibility is
reasonably assured.

In addition, the Company presents revenue gross or net of direct
expenses in accordance with Emerging Issues Task Force Issue 99-16
(EITF 99-19), "Reporting Revenue Gross as a Principal Versus Net
as an Agent".  Under EITF 99-19, revenue is presented gross,
determined on a contract by contract basis, where the Company acts
as principal, takes title to the products sold, has the risks and
rewards of ownership, such as the risk of loss for collection,
delivery, or product returns.  Revenue is presented net of direct
costs, determined on contract by contract basis, where the
Company primarily acts as agent by providing services for a
commission or fee.

The Company accounts for deferred income taxes under Statement
of Financial Accounting Standards No. 109 ("SFAS 109"). Under
SFAS 109, deferred income taxes are accounted for under an asset
and liability approach that requires recognition of deferred tax
assets and liabilities for the epected future tax consequences
of transactions based on temporary differences.Temporary differences
are differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements that will result in
taxable or deductible amounts in future years.  The Company's
temporary differences consist primarily of tax operating loss carry
forwards, depreciation differences and capitalized section 263A costs.

                            20
<PAGE>

The Company accounts for marketable securities in accordance with
SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities.  In accordance with SFAS No. 115, the investment
in securities has been classified as available-for-sale because
then securities are being held for an indefinite period of time.
Under available-for-sale classification, the securities are recorded
as an asset at current market value on the balance sheet with any
amount representing unrealized gains and losses recorded as
comprehensive income in stockholder's equity.  The current market
value is derived from published newspaper quotations as of September
30 of each fiscal year.  At the time of sale, a gain or loss is
recognized in the statement of operations using the cost basis
of securities sold as determined by specific identification.

The Company evaluates the carrying value of assets, other than
investments in marketable securities, for potential impairment on
an ongoing basis under the tenets of SFAS No. 144. Under SFAS No.
144, the Company periodically evaluates the carrying value of
long-lived assets and long-lived assets to be disposed of and
certain identifiable intagibles related to those assets for
potential impairment.  The Company considers projected future
operating results, cash flows, trends and other circumstances
in making such estimates and evaluations and, if necessary,
reduces the carrying value of impaired assets to fair value.

The Company follows SFAS No. 128 in presenting earnings per
share.  SFAS No. 128 established the methodology of calculating
basic earnings per share and diluted earnings per share.  The
calculations differ by adding any instruments convertible to
common stock (such as stock options, warrants, and convertible
preferred stock) to weighted average shares outstanding when
computing diluted earnings per share.

Company follows SFAS No. 130, "Reporting Comprehensive Income",
which establishes standards for reporting of comprehensive
income.  The pronouncement requires that all items recognized
under accounting standards as components of comprehensive
income, as defined in the pronouncement, be reported in a
financial statement that is displayed with the same prominence
as other financial statements.  Comprehensive income includes
changes in equity during a period, except those resulting from
investments by owners and distribution to owners.  Under
comprehensive income, the Company reports unrealized gains
and losses on investments in debt and equity securities as
changes in equity.


                             -21-
<PAGE>

In June 2003, the FASB approved SFAS No. 150, "Accounting
for Certain Financial Instruments with Characteristics of
both Liabilities and Equity".  SFAS No. 150 establishes
standards for how an issuer classifies and measures certain
financial instruments with characteristics of both
liabilities and equity.  This Statement is effective for
financial instruments entered into or modified after May
31,2003, and otherwise is effective at the beginning of
the first intermim period beginning after June 15, 2003.
The adoption of SFAS No. 150 did not have an effect on
the Company's financial statements.

In December 2003, the FASB issued a revised Interpretation
No. 46, "Consolidation of Variable Interest Entities".  The
interpretation clarifies the application of Accounting
Research Bulletin No. 51, "Consolidated Financial
Statements", to certain types of variable interest entities.
The Company does not expect the adoption of this
interpretation to have any impact on its financial
statements.


CHAT ROOM DISCLAIMER

This forum of exposure to publicly traded companies presents
a venue for the public to inquire about companies from other
individuals as well as post opinions.

The Company has no way to regulate postings nor monitor,
affirm or dispute information disclosed on these boards.

                          -22-
<PAGE>

Management can only provide information to shareholders and
potential shareholders when contacted directly and such
information can only be provided when it is based on fact
and has been filed as required by law with the Securities and
Exchange Commission and other regulatory agencies.

HUMAN RESOURCES

Our greatest resources are our dedicated employees who
devote their talents and energies to bettering our systems
and improving our products.  Their efforts have driven the
Company's success and they continue to be the most valuable
resource of the Company.

Item 7.    Financial Statements.

The following financial statements are filed as a part of
this Form 10-KSB and are included immediately following the
signature page.

  Reports of Independent Registered Public Accounting
      Firms                                              F-1

  Consolidated Balance Sheets - September 30, 2003 and
                               September 30, 2004        F-4

  Consolidated Statements of Income -
               Years ended September 30, 2003 and 2004   F-6

  Consolidated Statements of Stockholders' Equity -
               Years ended September 30, 2003 and 2004   F-7

 Consolidated Statements of Cash Flows -
               Years ended September 30, 2003 and 2004   F-8

 Notes to Consolidated Financial Statements              F-10

Item 8.   Changes in and Disagreements With Accountants
          on Accounting and Financial Disclosure.

On October 1, 2004, the Board of Directors of the Company
elected to engage Gordon Hughes & Banks, LLP to conduct
the audit for the year ended September 30, 2004.  Causey,
Demgen & Moore, PC, will be retained to provide financial
statements, financial services, tax preparation and other
services as needed.




                               -23-
<PAGE>


Item 8A.  Controls and Procedures

An evaluation was performed under the supervision and with
the participation of the Company's management, including the Chief
Executive Officer and Chief Financial Officer of the effectiveness
of the design and operation of the Company's disclosure controls
and procedures within 90 days before the filing date of this
annual report.  Based on that evaluation, the Company's
management, including the CEO and CFO, concluded that the Company's
disclosure controls and procedures were effective.

There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect
internal controls subject to their evaluation.

PART III

Item 9. Directors, Executive Officers, Promoters and Control
        Persons; Compliance with Section 16(a) of the Exchange
        Act.

Identification of Directors and Executive Officers.
                                                         Dates
                           Position                       of
Name                    held with Company          Age   service

Stanley J. Wolfson    President, Chief Executive    61    1987
                      Officer and Director

Lizabeth M. Wolfson   Secretary-Treasurer and       59    1987
                      Chief Financial and Chief
                      Accounting Officer and Director

James R. Nyman        Director                      58    2003

The business experience of the Company's officers and
directors is as follows:

Stanley J. Wolfson, President, Chief Executive Officer and a
director of the Company since February 1987.  Mr. Wolfson attended
the University of Colorado at Boulder and the University of
Colorado at Denver. Mr. Wolfson had been president and a director
of Clancy from inception until its merger into the Company in
April 1987.  Since 1967 Mr. Wolfson has been president and
director of Portion Controlled Foods, Inc. d/b/a Stan Wolfson and
Associates, Inc., a data processing  systems consulting firm
located in Denver, Colorado which employs two persons on a
part-time basis.  His firm's clients include The Hertz Corporation
that utilizes Stan Wolfson and Associates, Inc.'s hand-held data
entry equipment as part of its on-site national inventory control
system.  The Hertz Corporation has been a major customer of the
Company.  See Part I, Item 1.  Mr. Wolfson has served as remote
data acquisition consultant for AT&T as well as a consultant for a
number of small local companies.  Mr. Wolfson is the husband of
Lizabeth Wolfson, an officer and director of the Company.

                           -24-
<PAGE>
Lizabeth M. Wolfson, Secretary-Treasurer and Chief Financial
and Chief Accounting Officer of the Company since February 1987.
Mrs. Wolfson attended the University of Colorado at Boulder and
the University of Colorado at Denver. Mrs. Wolfson had been
secretary and treasurer of Clancy from 1986 and a director since
June 1999.  Since 1978, Mrs. Wolfson has served as secretary of
Stan Wolfson and Associates, Inc.   She is the wife of Stanley J.
Wolfson, President, Chief Executive Officer and a director of the
Company.

James R. Nyman, Director since October 2003. Mr. Nyman is a graduate
of University of Minnesota with a degree in Aerospace Engineering and
received his Master's Degree in Business Administration at California
State University, Long Beach.  Mr. Nyman as 23 years of experience in
local government services.  He served as the director of Information
Services for the City of Inglewood, CA, from January, 1976 until
May, 2002 and from May 2002 to present he is serving as
President of California Municipal Technologies, Inc.  Mr. Nyman served
two terms as Mayor of Palos Verdes Estates, Palos Verdes, CA.

Audit Committee

The Board of Directors is performing the functions of the audit
committee.  The Company does not have an audit committee financial
expert because its limited resources have not permitted it to search
for and locate an appropriate financial expert.

Nominating Committee

The entire Board of Directors fulfills the duties of our Nominating
Committee ("Nominating Committee"), which include overseeing the
process by which individuals may be nominated to our board of directors.
While the Company hopes to establish a separate nominating committee
consisting of independent directors if the number of directors is
expanded, the current size of the Company's Board of Directors
does not facilitate the establishment of a separate committee. Our
Nominating Committee's charter was adopted by the board of directors
effective as of September 30, 2004.

The functions performed by the Nominating Committee include
identifying potential directors and making recommendations as to the
size, functions and composition of the Board and its committees. In
making nominations, our Nominating Committee is required to submit
candidates who have the highest personal and professional integrity,
who have demonstrated exceptional ability and judgment and who shall
be most effective, in conjunction with the other nominees to the
board, in collectively serving the long-term interests of the
shareholders.

The Nominating Committee considers nominees proposed by our
shareholders.  To recommend a prospective nominee for the Nominating
Committee's consideration, you may submit the candidate's name
by delivering notice in writing to Clancy Systems International,
Inc., 2250 S. Oneida St., Suite 308, Denver, CO 80224, attention Liz
Wolfson, Nominating Committee chairperson.

                                  -25-
<PAGE>
The facsimile number is 303.759.4681.  Email address is
clancy@clancysystems.com.

A shareholder nomination submitted to the nomination committee must
include at least the following information (and can include
such other information the person submitting the recommendation
desires to include), and must be submitted to the Company in writing:


(i).  The name, address, telephone number, fax number and e-mail
      address of the person submitting the recommendation;
(ii). The number of shares and description of the Company voting
      securities held by the person submitting the nomination and
      whether such person is holding the shares through a brokerage
      account (and if so, the name of the broker-dealer) or directly;
(iii). The name, address, telephone number, fax number and e-mail
      address of the person being recommended to the nominating
      committee to stand for election at the next annual
      meeting (the "proposed nominee") together with information
      regarding such person's education (including degrees
      obtained and dates), business experience during the past
      ten years, professional affiliations during the past ten
      years, and other relevant information.
(iv). Information regarding any family relationships of the
      proposed nominee as required by Item 401(d) of SEC Regulation
      S-K. (v)
(v).  Information whether the proposed nominee or the person
         submitting the recommendation has (within the ten years prior
         to the recommendation)  been involved in legal proceedings
         of the type described in Item 401(f) of SEC Regulation
         S-K (and if so, provide the information regarding those legal
         proceedings required by Item 401(f) of Regulation S-K).
(vi). Information regarding the share ownership of the
      proposed nominee required by Item 403 of Regulation S-K.
(vii). Information regarding certain relationships and
      related party transactions of the proposed nominee as required
      by Item 404 of Regulation S-K.
(viii). The signed consent of the proposed nominee in which he
      or she
a. consents to being nominated as a director of the Company
   if selected by the nominating committee,
b. states his or her willingness to serve as a director
   if elected for compensation not greater than that described
   in the most recent proxy statement;
c. states whether the proposed nominee is "independent" as
   defined by Nasdaq Marketplace Rule 4200(a)(15); and
d. attests to the accuracy of the information submitted
   pursuant to paragraphs (i), (ii), (iii), (iv), (v), (vi),
   and (vii), above.

Although the information may be submitted by fax, e-mail, mail, or
courier,  the nominating committee must receive the proposed
nominee's signed consent, in original form, within ten days
of making the nomination.
                           -26-
<PAGE>

When the information required above has been received, the
nominating committee will evaluate the proposed nominee based
on the criteria described below, with the principal criteria being
the needs of the Company and the qualifications of such proposed
nominee to fulfill those needs.

The process for evaluating a director nominee is the  same whether
a nominee is recommended by a shareholder or by an existing
officer or director. The Nominating Committee will:

1. Establish criteria for selection of potential directors,
taking into consideration the following attributes which are
desirable for a member of our Board of Directors:
leadership; independence; interpersonal skills; financial acumen;
business experiences; industry knowledge; and diversity of
viewpoints. The Nominating Committee will periodically assess
the criteria to ensure it is consistent with best practices
and the goals of the Company.

2. Identify individuals who satisfy the criteria for
selection to the Board  and, after consultation with the Chairman
of the Board, make recommendations to the Board on new
candidates for Board membership.

3. Receive and evaluate nominations for Board membership
which are recommended by existing directors, corporate
officers, or shareholders in accordance with policies
set by the Nominating Committee and applicable laws.

The Nominating Committee has held no formal meetings and taken
no action by unanimous written consent through the December 28, 2004.

The Company has not engaged the services of or paid a fee to any
third party or parties to identify or evaluate or assist in
identifying or evaluating potential nominees. Neither the Company
nor the Company's Nominating Committee has received a recommended
nominee from any shareholder that beneficially owns more than
5% of the Company's common stock or group of shareholders that
beneficially own more than 5% of the Company's common stock.


Family Relationships

Lizabeth M. Wolfson, Secretary-Treasurer and Chief Financial and Chief
Accounting Officer of the Company, is the wife of Stanley J. Wolfson,
President, Chief Executive Officer and a director of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

Officers, directors and beneficial owners of more than 10% of the
Company's common stock are not required to file reports under Section
16(a)and therefore no disclosure of delinquent reports is included
in this annual report.

                              -27-
<PAGE>

Code of Ethics

In December, 2003, the Company adopted a Code of Ethics and has
posted the Code of Ethics on its website.

Item 10. Executive Compensation.

General.  For the fiscal year ended September 30, 2004
the Company paid a ten percent sales commission totaling $2,773
to Stanley J. Wolfson, the President, Chief Executive Officer
and a director of the Company, based upon gross sales
(excluding supplies) to the Hertz Corporation.  In addition,
Mr. Wolfson received a salary of $77,700 for the most recent
fiscal year ended.

Summary Compensation Table.

Name and                                           Other annual
principal position            Year        Salary    compensation

Stanley J. Wolfson            2004       $77,700       $2,773
President and Chief           2003        62,500        2,278
Executive Officer             2002        60,000        2,825

Compensation of Directors

Each member of the Board of Directors is paid an annual fee of
$5,000, distributed at $1250 per quarter.

Item 11.  Security Ownership of Certain Beneficial Owners and
          Management.

Security Ownership of Beneficial Owners and Management.

The following table sets forth information as of December 28,
2004 with respect to the ownership of the Company's Common Stock
for all directors, individually, all officers and directors as a
group, and all beneficial owners of more than five percent of
the Common Stock.


Name and address                   Number of
of beneficial owner                 shares              Percentage

Stanley J. Wolfson and
Lizabeth M. Wolfson             130,887,779 (1)            35.9%
2250 S. Oneida Ste. 308
Denver, Colorado  80224

James R. Nyman                   26,835,000 (2)             7.3%
2529 Via Olivera
Palos Verdes, CA 90274

All officers and directors      157,727,779 (1&2)          43.2%
as a group (3 persons)
                                 -28-
<PAGE>
  Includes 4,075,642 shares of Common Stock owned of record by
Lizabeth M. Wolfson and 126,812,137 owned by Stanley J. Wolfson.

 (2)   Includes 26,510,000 shares owned by CMTI (an entity controlled
by Mr. Nyman) and 325,000 shares owned by James R. and Alice Nyman.

Item 12.     Certain Relationships and Related Transactions.

     Stanley Wolfson, President and Chief Executive Officer,
receives a 10% commission on all sales to Hertz Corporation based
on an agreement made between the Company and Mr. Wolfson in 1986.
During the years ended September 30, 2003 and 2004, the commissions
totaled $2,278 and $2,779 respectively.

Item 13.     Exhibits and Reports.

   (a) Exhibits.

The following is a complete list of exhibits filed as a part
of this Report on Form 10-KSB and are those incorporated herein by
reference.

Exhibit Number         Title of Exhibit

     3.1   Articles of Incorporation filed with the
           Colorado Secretary of State on March 3, 1986 (2)

     3.1(a)  Articles of Amendment to Articles of Incorporation
            (2)
     3.3    Bylaws (2)

     10.1   Partnership agreement between the Company and
            Urban Transit Solutions (4)

     10.6   Indemnification Agreements between the Company
            and Robert M. Brodbeck, Stanley J. Wolfson and
            Lizabeth M. Wolfson dated February 26, 1987 (1)

     10.12  Indemnity Agreements between Company and
            Stanley J. Wolfson, and Lizabeth M. Wolfson (3)

     14.1   Code of Ethics (5)

     21.1   List of Subsidiaries, included herewith

     31.1   Certification Pursuant to 18 USC Section 302
            for Stanley Wolfson, included herewith
     31.2   Certification Pursuant to 18 USC Section 302
            for Lizabeth Wolfson, included herewith

     32.1   Certification Pursuant to 18 USC Section 1350
            as adopted pursuant to Section 906 of Sarbanes-
            Oxley Act of 2002 for Stanley Wolfson, included
            herewith
                               -29-
<PAGE>

     32.2   Certification Pursuant to 18 USC Section 1350
            as adopted pursuant to Section 906 of Sarbanes-
            Oxley Act of 2002 for Lizabeth Wolfson, included
            herewith

________


(1)  Incorporated by reference from exhibit 2.1 filed with the
     Company's current report on Form 8-K dated February 26,
     1987.

(2)  Incorporated by reference from the like numbered exhibits
     filed with the Company's Registration Statement on Form
     S-18, SEC File No. 33-4882-D.

(3)  Incorporated by reference from the like numbered exhibits
     filed with the Company's Annual Report on Form 10-KSB for
     the year ended September 30, 1987.

     (b)  Reports on Form 8-K.  During the last quarter of the
          period covered by this report the Company filed no
          reports on form 8-K.

(4)  Incorporated by reference from like numbered exhibits
     filed with the Company's Annual Report on Form 10-KSB for
     the year ended September 30, 1998.

(5)  Incorporated by reference from like numbered exhibits
     filed with the Company's Annual Report on Form 10-KSM
     for the year ended September 30, 2003






                             -30-
<PAGE>

















Item 14.  Principal Accountant Fees and Services.

..
AUDIT RELATED FEES.  The aggregate fees billed in each of the
last two fiscal years ended September 30, 2004 and 2003 by
Causey, Demgen & Moore, Inc. for assurance and related services
that were reasonably related to the performance of the audit or
review of the financial statements were $24,725 and $20,975,
respectively.

The Company's newly chosen independent auditors, Gordon Hughes &
Banks, LLP did not commence the audit prior to September 30,
2004, and no service related fees were billed to the Company
prior to year end September 30, 2004.

TAX FEES.  The aggregate fees billed for tax services rendered
by Causey, Demgen & Moore, Inc. for tax compliance and tax
advice for the two fiscal years ended September 30, 2004 and
2003, were $2,900 and $2,415, respectively.

ALL OTHER FEES.  The aggregate fees billed for other services
rendered by Causey, Demgen & Moore, Inc., for the two fiscal years
ended September 30, 2004 and 2003 were $3,315 and $595, respectively.

The Board of Directors is requested to and did approve the retention
of Causey, Demgen & Moore, Inc. and the fees and other significant
compensation paid to it for the fiscal year ended September 30,
2004 and 2003. The Board of Directors approved the selection of
Gordon Hughes & Banks LLP to conduct its audit work on October 1,
2004.








                                    -31-
<PAGE>

















                                SIGNATURES


     In accordance with the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                              CLANCY SYSTEMS INTERNATIONAL, INC.


                               By  /s/ Stanley J. Wolfson
                               Stanley J. Wolfson, President


Date:  January  10,  2005

     In accordance with the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Company and in the capacities
and on the dates indicated.


Date:  January 10,  2005        /s/ Stanley J. Wolfson
                                 Stanley J. Wolfson, resident,
                                 Chief Executive Officer and a
                                 Director

Date: January  10, 2005         /s/ Lizabeth M. Wolfson
                                 Lizabeth M. Wolfson, Secretary-
                                 Treasurer and Chief Financial
                                 and Chief Accounting Officer


Date: January 10,  2005         /s/James R.Nyman
                                 Director




                                  -32-


<PAGE>












SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT BY NON-REPORTING
ISSUERS.

      None.


                        Index of Exhibits

Exhibit Number         Title of Exhibit

     3.1   Articles of Incorporation filed with the
           Colorado Secretary of State on March 3, 1986 (2)

     3.1(a)  Articles of Amendment to Articles of Incorporation
             (2)
     3.3    Bylaws (2)

     10.1   Partnership agreement between the Company and
            Urban Transit Solutions (4)

     10.6   Indemnification Agreements between the Company
            and Robert M. Brodbeck, Stanley J. Wolfson and
            Lizabeth M. Wolfson dated February 26, 1987 (1)

     10.12  Indemnity Agreements between Company and
            Stanley J. Wolfson, and Lizabeth M. Wolfson (3)

     14.1   Code of Ethics (5)

     21.1   List of Subsidiaries, included herewith

     31.1   Certification Pursuant to 18 USC Section 906
            for Stanley Wolfson, included herewith
     31.2   Certification Pursuant to 18 USC Section 906
            for Lizabeth Wolfson, included herewith

     32.1   Certification Pursuant to 18 USC Section 1350
            as adopted pursuant to Section 906 of Sarbanes-
            Oxley Act of 2002 for Stanley Wolfson, included
            herewith

     32.2   Certification Pursuant to 18 USC Section 1350
            as adopted pursuant to Section 906 of Sarbanes-
            Oxley Act of 2002 for Lizabeth Wolfson, included
            herewith
________

(1)  Incorporated by reference from exhibit 2.1 filed with the
     Company's current report on Form 8-K dated February 26,
     1987.

(2)  Incorporated by reference from the like numbered exhibits
     filed with the Company's Registration Statement on Form
     S-18, SEC File No. 33-4882-D.
                             -33-
<PAGE>

 (3) Incorporated by reference from the like numbered exhibits
     filed with the Company's Annual Report on Form 10-KSB for
     the year ended September 30, 1987.

     (b)  Reports on Form 8-K.  During the last quarter of the
          period covered by this report the Company filed no
          reports on form 8-K.

(4)  Incorporated by reference from like numbered exhibits
     filed with the Company's Annual Report on Form 10-KSB for
     the year ended September 30, 1998.

(5)  Incorporated by reference from like numbered exhibits
     filed with the Company's Annual Report on Form 10-KSM
     for the year ended September 30, 2003



                            -34-

<PAGE>












































                 CLANCY SYSTEMS INTERNATIONAL, INC.
                 CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Board of Directors
Clancy Systems International, Inc.
  and Subsidiary


We have audited the consolidated balance sheet of Clancy Systems
International, Inc. and subsidiary as of September 30, 2003,
and the related consolidated statements of income, stockholders'
equity and cash flows for the year then ended.  These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.  We did
not audit the financial statements of Urban Transit Solutions,
Inc. (UTS), a partially owned subsidiary, which statements
reflect 37% of total consolidated assets as of September 30,
2003 and 36% of consolidated revenues for the year ended
September 30, 2003.  Those statements were audited by other
auditors whose report is included herein and our opinion,
insofar as it relates to the amounts included for UTS as of
September 30, 2003 and for the year ended September 30, 2003
is based solely on the report of the other auditors.

We conducted our audit in accordance with auditing standards
of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit and the report of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of other
auditors, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Clancy Systems International, Inc. and subsidiary at
September 30, 2003, and the consolidated results of their
operations and their consolidated cash flow for the year then
ended, in conformity with accounting principles generally accepted
in the United States of America.


                              CAUSEY DEMGEN & MOORE INC.
                              Denver, Colorado
                              December 23, 2003

                               F-1
<PAGE>

Report of Independent Registered Public Accounting Firm

To the Board of Directors
Clancy Systems International, Inc.
  and Subsidiary

We have audited the accompanying consolidated balance sheet of
Clancy Systems International, Inc. as of September 30, 2004, and
the related consolidated statements of income, stockholders'
equity and cash flows  for the year the ended. These consolidated
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. We did not
audit the financial statements of Urban Transit Solutions, Inc., a
72% owned subsidiary, which statements reflect 37% of total
consolidated assets as of September 30, 2004 and 38% of consolidated
revenues for the year ended September 30, 2004.  Those financial
statements were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to the
amounts included for Urban Transit Solutions, Inc. as of September
30, 2004 and for the year ended September 30, 2004 is based
solely on the report of the other auditor.

We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are
free of material misstatement.  An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, and based on that of the other auditor,  the
consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Clancy Systems International, Inc.
as of September 30, 2004, and the consolidated results of its operations
and cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.


GORDON, HUGHES & BANKS, LLP
Greenwood Village, Colorado
December 9, 2004






                             F-2
 <PAGE>












Report of Independent Registered Public Accounting Firm


To the Board of Directors and Stockholders of
Urban Transit Solutions, Inc.


We have audited the balance sheet of Urban Transit Solutions,
Inc. as of September 30, 2003 and 2004, and the related
statements of operations, stockholders' equity and cash flows
for the years then ended.  These financial statements are the
responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial statements based
on our audits.

We conducted our audit in accordance with auditing standards
generally accepted in the United States of America.  Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation.  We believe that our audit provides a
reasonable basis for our opinions.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Urban
Transit Solutions, Inc. as of September 30, 2004 and 2003, and the
results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted
in the United States of America.


LANDA UMPIERRE PSC

San Juan, Puerto Rico
November 24, 2004



Stamp number 1892524 of the Puerto Rico Society of CPA's
was affixed to the record copy of this report.


                              F-3



<PAGE>







                CLANCY SYSTEMS INTERNATIONAL, INC.
                   CONSOLIDATED BALANCE SHEETS
                   SEPTEMBER 30, 2003 AND 2004

                           ASSETS
                                          2003       2004
Current assets:                           ----       ----

 Cash, including interest bearing
   accounts of $231,945 (2003)       $  669,292  $  306,691
Accounts receivable, net of
   allowance for doubtful accounts
   of $5,250 at (2003)
   and $10,000 (2004)                   488,361     579,798
  Accounts receivable, related party
   (Note 3)                              30,019      30,019
  Income tax refund receivable
   (Note 7)                               9,450       8,539
  Inventories (Note 2)                  135,437     101,539
  Prepaid expenses                       77,389      74,566
                                      ---------   ---------
   Total current assets               1,409,948   1,101,152

Furniture and equipment, at cost:
  Office furniture and equipment        269,523     322,137
  Equipment under service contracts
   (Note 10)                          2,109,045   2,058,386
  Leasehold improvements                 96,604      98,935
  Equipment and vehicles under
   capital leases (Note 6)              439,286     467,221
                                       --------   --------
                                      2,914,458   2,946,679
  Less accumulated depreciation      (1,328,226) (1,604,762)
                                     ----------- -----------
   Net furniture and equipment        1,586,232   1,341,917

Other assets:
  Deferred tax asset (Note 7)                 0      11,000
  Marketable Securities Pledged
    (Note 4)                                ---     353,837
  Deposits and other                     76,025      60,125
  Goodwill (Note 1)                     225,214     225,214
  Software development costs, net
   of accumulated amortization
   of $431,627 (2003) and $505,907
   (2004)                               180,163     213,870
                                      ---------   ---------

 Total other assets                     481,405     864,046
                                      ---------   ---------
                                    $ 3,477,585 $ 3,307,115
                                     ==========  ==========

   See accompanying notes to consolidated financial statements.

                              F-4
<PAGE>

           CLANCY SYSTEMS INTERNATIONAL, INC.
               CONSOLIDATED BALANCE SHEETS
               SEPTEMBER 30, 2003 AND 2004

           LIABILITIES AND STOCKHOLDERS' EQUITY

                                           2003       2004
Current liabilities:                       ----       ----

  Accounts payable                    $  229,229  $  126,198
  Accrued expenses                       276,176     316,947
  Accounts payable, related party         11,000     101,867
  Bank overdraft                             ---      14,645
  Income taxes payable                    21,852         ---
  Current portion of long term debt
   (Note 5)                              250,197     239,449
  Current portion of obligations
   under capital leases (Note 6)         125,102      41,460
  Deferred revenue                       134,401     126,078
                                       ----------  ---------
    Total current liabilities          1,047,957     966,644
 Long-term debt, net of current
  portions (Note 5)                      124,866         ---
Obligations under capital leases,
  net of current portion  (Note 6)        75,948      27,430
 Minority interest in subsidiary
 (Note 4)                                123,084     109,059
Deferred tax liability (Note 7)            4,600         ---

Commitments (Notes 6 and 9)

Stockholders' equity (Note 9):

  Preferred stock, $.0001 par value;
   100,000,000 shares authorized,
    none issued                              ---         ---
  Common stock, $.0001 par value;
    800,000,000 authorized,
    365,117,938 shares issued and
    outstanding (2003 and 2004)           36,512      36,512
  Additional paid-in capital           1,151,547   1,151,547
  Retained earnings                      913,071   1,015,923
                                       ---------   ---------
    Total stockholders' equity         2,101,130   2,203,982
                                       ---------   ---------
                                     $ 3,477,585 $ 3,307,115
                                     =========== ===========



    See accompanying notes to consolidated financial statements.
                              F-5

<PAGE>



              CLANCY SYSTEMS INTERNATIONAL, INC.
              CONSOLIDATED STATEMENTS OF INCOME
         FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2004

                                             2003       2004
Revenues:                                    ----       ----
  Sales                                 $  167,369   $  231,003
  Service contract income
   (Notes 9 & 10)                        2,686,947    2,623,640
  Parking ticket collections and
   other (Notes 9 & 10)                    217,985      389,103
                                        ----------    ---------
  Total revenues                         3,072,301    3,243,746

Costs and expenses:
  Cost of sales                             72,281       43,029
  Cost of services  (Note 3)               866,332      908,076
  Cost of parking ticket collections
   (Note 10)                               110,730      115,844
  General and administrative             1,648,091    1,946,269
  Research and development                  33,471       60,079
                                         ---------    ---------
  Total costs and expenses               2,730,905    3,073,297
                                         ---------    ---------
Income from operations                     341,396      170,449

Other income (expense):
  Loss on disposal of assets                   ---      (19,334)
  Interest income                            1,466          885
  Interest expense                         (47,079)     (32,994)
  Other income                              10,185        9,087
  Minority interest in loss of
     subsidiary (Note 4)                    19,686       34,025
                                         ---------     --------
   Total other income (expense)            (15,742)      (8,331)
                                         ---------     --------
Income before provision for income
  taxes                                    325,654      162,118

Provision for income taxes: (Note 7 )
  Current expense                          (39,791)     (74,866)
  Deferred expense                         (42,800)      15,600
                                         ---------     --------
Total income tax expense                   (82,591)     (59,266)
                                         ---------     --------
Net income                               $ 243,063    $ 102,852
                                         =========    =========
Basic and diluted net income per
  common share                           $       *    $       *
                                         =========    =========
Weighted average number of shares
outstanding                            365,118,000  365,118,000
                                       ===========  ===========
*Less than $.01 per share

   See accompanying notes to consolidated financial statements.
                           F-6
<PAGE>

                          CLANCY SYSTEMS INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2004

<TABLE>
<CAPTION>
<S>
                                                   Additional
                               Common Stock          Paid-In        Retained
                            Shares       Amount      Capital        Earnings
                            -------------------     ----------       --------
                             <C>         <C>           <C>             <C>
Balance, September 30,
    2002                 361,617,938   $   36,162  $  1,151,547     $ 670,008


Net income for the year
  ended September 30,
  2003                         ---          ---            ---        243,063
                        ----------     --------     ----------     -----------
Balance, September 30,
 2003                  365,117,938      36,512       1,151,547        913,071

Net income for the
  year ended September
  30, 2004                    ---          ---             ---        102,852
                        ---------      -------        --------        --------
Balance, September
 30, 2004              365,117,938    $  36,512   $  1,151,547     $1,015,923
                       ============   =========     ==========     ==========









See accompanying notes to consolidated financial statements.




                             F-7

</TABLE>
<PAGE>








               CLANCY SYSTEMS INTERNATIONAL, INC.
               CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2004

                                           2003         2004
                                           ----         ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                             $  243,063   $ 102,852
Adjustments to reconcile net income
 to net cash provided by operating
 activities:
   Depreciation and amortization          497,298     567,159
   Deferred income tax expense             42,800     (15,600)
   Minority interest                      (19,686)    (34,025)
   Stock issued for by UTS for                ---      20,000
     expenses paid by shareholder
   Loss on disposal of equipment           17,068      19,334
   Changes in assets and liabilities:
     Accounts receivable                  175,898)    (91,437)
     Accounts receivable, related party    (2,883)        ---
     Inventories                           13,080      33,898
     Income taxes refundable               25,613         911
     Prepaid expenses                      60,752       2,823
     Other assets                             ---      48,375
     Accounts payable                      88,137    (103,031)
     Accrued expenses                     110,017      40,771
     Accounts payable, related party       11,000      90,867
     Income taxes payable                  21,852     (21,852)
     Deferred revenue                      23,679      (8,323)
                                          -------    --------
     Total Adjustments                    712,829     549,870
                                          -------     -------
Net cash provided by operating
  activities                              955,892     652,722
                                          -------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of furniture and equipment (592,640)   (274,642)
  Increase in software licenses and
    software development costs            (93,586)   (107,986)
  Proceeds from sales of equipment         91,438      16,583
  Increase in investments in marketable
    securities                                ---    (353,837)
  Increase in deposits and other assets   (57,963)    (36,712)
                                          -------    --------
Net cash (used in) investing
  activities                             (652,751)   (756,594)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings on long term debt            320,000      84,215
  Payments on long term debt and capital
   leases                                (311,164)   (357,589)
  Increase in bank overdraft                  ---      14,465
                                         --------    --------
continued on following page
 See accompanying notes to consolidated financial statements.
                      F-8

<PAGE>

              CLANCY SYSTEMS INTERNATIONAL, INC.
            CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2004

                 (continued from preceding page)

                                              2003      2004
                                              ----      ----
Net cash provided by (used in) financing
   activities                                8,836   (258,729)
                                          --------   --------
Increase (decrease) in cash and
  cash equivalents                         311,977   (362,601)
Cash and cash equivalents at
     beginning of period                   357,315    669,292
                                          --------    --------
Cash and cash equivalents at end
  of period                              $ 669,292  $ 306,691
                                          ========= =========



                                             2003      2004
                                             ----      ----

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:

 Borrowings on capital leases                87,640      5,600
                                          =========  =========

Cash paid during the year for interest    $  47,079  $  29,615
                                          =========  =========
Cash paid (refunded) during the year
  for income taxes                        $  (7,674)    70,805
                                          =========  =========


Supplemental disclosure of non-cash investing and financing
 activities:

During the year ended September 30, 2003, UTS entered into
capital leases for the purchase of equipment in the amount
of $87,640.







See accompanying notes to consolidated financial statements.

                     F-9

<PAGE>





               CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004

1.  Organization and Summary of Significant Accounting Policies

Organization:

Clancy Systems International, Inc. (the "Company")_ was organized
in Colorado on June 28, 1984.  The Company is in the business of
developing and marketing parking ticket writing systems, rental
car return systems, internet payment remittance systems, and Internet
industry guides.  The Company's revenues are derived primarily
from cities, universities and car rental companies throughout the
United States and Canada. The Company manufactures some of its
equipment for field operations including printers, chargers,
Palmtype keypad, and other items used in its applications.

The Company's 72% owned subsidiary, Urban Transit Solutions, Inc.
("UTS") was incorporated on March 6, 1997 under the Laws of the
Commonwealth of Puerto Rico and is engaged in providing a wide
variety of services in the areas of consulting design and the
management of digital parking meter systems in Puerto Rico and
Latin America.  The financial statements of UTS have been prepared
on the basis of accounting principles generally accepted in the
United States of America and are denominated in US dollars.  Therefore,
there are no amounts recorded for foreign currency translation or for
transactions denominated in a foreign currency.

Principles of Consolidation:

The consolidated financial statements include the accounts of the
Company and its subsidiary, UTS. Significant inter company
transactions and balances have been eliminated in consolidation.

Use of estimates:

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period.  Actual results could differ from those
estimates.



                             F-10
<PAGE>







               CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

1.  Organization and Summary of Significant Accounting Policies
    (continued)

Accounts receivable:

The allowance for doubtful accounts at September 30, 2003 and
2004 was $5,250 and $10,000 respectively.  Bad debt expense
amounted to $28,638 in 2003 and $9,422 in 2004. The company
evaluates trade receivables that are past due to determine the
appropriate allowance for doubtful accounts. The receivables
are charged off in the period in which they are deemed
uncollectable. The Company contracts primarily with government
agencies and takes into account budget year issues in evaluating
its past due receivables.  Recoveries of trade receivables
previously charged off are recorded when received.

Inventories:


Inventories are carried at the lower of cost (first-in, first-out)
or market.  Inventory costs include materials, labor and
manufacturing overhead.  Inventories consist primarily of computer
and printer parts and supplies and are subject to technical
obsolescence.

Computer software:

Costs incurred to establish the technological feasibility of
computer software are classified as research and development costs,
which are charged to expense as incurred.  Software development costs
incurred subsequent to establishment of technological feasibility
are capitalized and subsequently amortized based on the lesser of the
straight line method over the remaining estimated economic life of
the product (generally five years) or the estimate of current and
future revenues for the related software product.  Amortization
expense for the years ended September 30, 2003 and 2004 amounted
to $63,616 and $74,279, respectively, and is included in cost of
services. The cost of direct labor is periodically capitalized
as computer software costs.

Furniture and equipment:

Furniture and equipment are stated at cost. Depreciation is provided
by the Company on the straight line method over the assets' estimated
useful lives of three to five years.  Leasehold improvements are
being amortized over the shorter of the useful life of the improvement
or the remaining term of the lease.  Vehicles under capital leases
are amortized over the related lease term.  Property and equipment
consists partly of computers and printers which are subject to
technical obsolescence.  During the year ended September 30, 2003
and 2004, depreciation amounted to $433,682 and $488,980,
respectively.

                        F-11

<PAGE>

                CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

1.  Organization and Summary of Significant Accounting Policies
    (continued)


Sales and retirements of depreciable property are recorded
by removing the related cost and accumulated depreciation from
the accounts.  Gains and losses on sales and retirements of
property are reflected in results of operations.

Other assets:

The excess of the purchase price over net assets acquired by the
Company from unrelated third parties is recorded as goodwill.
Goodwill resulted from the acquisition of UTS in 1998.  On January 1,
2002, the Company adopted Statement of Financial Accounting
Standards No. 142 (SFAS 142), Goodwill and Intangible Assets, which
clarifies the accounting for goodwill and intangible assets.
Under SFAS 142, goodwill and intangible assets with indefinite
lives are no longer be amortized, but are tested for impairment
at least annually and also in the event of an impairment indicator.
There is no impairment of goodwill considered necessary as of September
30, 2003 or 2004.

Revenue recognition:

Revenue derived from professional service contracts
on equipment and support services is included in income as
earned over the contract term; related costs consist mainly
of depreciation, supplies and sales commissions.  The Company
defers revenue for equipment and services under service contracts
that are billed to customers on a quarterly, semi-annual, annual
or other basis.  Revenue from the issuance of parking tickets is

                      F-12
<PAGE>









               CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

1.  Organization and Summary of Significant Accounting Policies
    (continued)

recognized on a cash basis when received since collectibility
cannot be reliably predicted at this time.  Revenue derived
from professional service contracts on parking meter and lots
fees collections is recognized on a cash basis when received.
Related costs consist mainly of Municipalities' fees, depreciation
and lot rents.

The Company recognizes revenue in accordance with the Securities and
Exchange Commission Staff Accounting Bulletin 104 ("SAB 104").
SAB 104 provides that the conditions for realization of revenue are
as follows:
(1) persuasive evidence of an arrangement exists; (2) delivery has
occurred or services have been rendered; (3) the seller's price to
the buyer is fixed or determinable, and (4) collectibility is
reasonably assured.

In addition, the Company presents revenue gross or net of direct
expenses in accordance with Emerging Issues Task Force Issue 99-16
(EITF 99-19), "Reporting Revenue Gross as a Principal Versus Net
as an Agent".  Under EITF 99-19, revenue is presented gross,
determined on a contract by contract basis, where the Company acts
as principal,  has the risks and rewards of services rendered, such as the
risk of loss for collection, delivery, or product returns.  Revenue
is presented net of direct costs, determined on contract by contract
basis, where the Company primarily acts as agent by providing services
for a commission or fee.

Before the Company recognizes revenue, a contract is entered into
with the client (which details the fees to be charged), all software
and equipment per the contract is delivered, and as most of the
Company's clients are municipalities or universities, in general,
collectibility is reasonably assured.

Contracts for the Company's ticket writing system are entered into
under one of three different pricing options. The Company (1) sells
the equipment, ticket stock and licenses the software separately,
(2) charges a monthly fee for the use of  equipment and software,
(3) charges a fee per ticket at the time the ticket stock is
provided to the client, or (4) provides a full privatization program.
In a sale transaction, revenue is recognized on the sale of the
equipment, license and ticket stock (less an amount for customer support).
When the Company charges a monthly fee, that fee is recognized in income
in the period the services are provided. When the Company charges a
fee per ticket, the Company recognizes revenue for the portion
considered a sale of the ticket stock on delivery of the tickets
and the remainder is recognized over the period of estimated usage
of the tickets based on past history with the client.


                             F-13
<PAGE>

                 CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

1.  Organization and Summary of Significant Accounting Policies
    (continued)

In a privatization program, client revenue guarantees may be entered
into for a period of time, generally one year at a time.  A ratable
portion of the client revenue guarantee is recognized each month as an
expense.  In revenue split arrangements, the portion of the cash
collected and owed each month is recognized as a liability and an
expense.


The Company does not offer a right of return on sales of equipment
or ticket stock.  Equipment sold, other than the Company's proprietary
products, is covered under the manufacturer's warranty.


Warranty expense for the Company's products has been immaterial
in the past.  Revenue recognition does not start until the
equipment has been delivered and the software has been installed
and is operational.

Advertising costs:

The Company expenses the costs of advertising as incurred.
Advertising expense was $27,798 and $28,657 for the years
ended September 30, 2003 and 2004, respectively.

Deferred Income taxes:

The Company accounts for deferred income taxes under Statement
of Financial Accounting Standards No. 109 ("SFAS 109") Accounting
for Income Taxes. Under SFAS 109, deferred income taxes are
accounted for using an asset and liability approach that requires
recognition of deferred tax assets and liabilities for the
expected future tax consequences of transactions based on
temporary differences.Temporary differences are differences between the
tax basis of assets and liabilities and their reported amounts
in the financial statements that will result in taxable or
deductible amounts in future years.  The Company's temporary
differences consist primarily of tax operating loss carry
forwards, depreciation differences and capitalized section
263A costs.

Cash equivalents:

For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.



                          F-14
<PAGE>

               CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

1.  Organization and Summary of Significant Accounting Policies
    (continued)

Concentrations of credit risk:

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash,
trade receivables and marketable securities.  The Company
places its cash with high quality financial institutions.
At September 30, 2003 and 2004 and at various times during
the years, the balance at one of the financial institutions
exceeded FDIC insured limits.

The Company provides credit, in the normal course of business,
to customers throughout the United States and Canada.  The Company
performs ongoing credit evaluations of its customers. Credit
terms are typically 30 days from billing date.

The Company's marketable securities consist of Colorado local
government and municipal bonds that are triple A rated that
are subject to market risk related to changes in interest rates.
All bonds are insured.

Significant portions of the Company's revenues are derived
from contracts with universities, car rental companies and
municipalities.

Marketable Securities

The Company accounts for marketable securities in accordance with
SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities.  In accordance with SFAS No. 115, the investment
in securities has been classified as available-for-sale because
the securities are being held for an indefinite period of time.
Under available-for-sale classification,  securities are recorded
as an asset at current fair value on the balance sheet with any
amount representing unrealized gains and losses recorded as
comprehensive income in stockholder's equity.  The current fair
value is derived from published market quotations.  At the
time of sale, a gain or loss is recognized using the cost basis
of securities sold as determined by specific identification.



                          F-15

<PAGE>









                CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

1.  Organization and Summary of Significant Accounting Policies
    (continued)


Fair value of financial instruments:

All financial instruments are held for purposes other than trading.
The following methods and assumptions were used to estimate the
fair value of each financial instrument for which it is practicable
to estimate that value.

The carrying amount of financial instruments is equivalent to
their fair value as follows:

For cash, cash equivalents and notes payable, the carrying amount
is assumed to approximate fair value due to the short-term
maturities of these instruments.

Marketable securities - The carrying amounts approximate the fair
value because the securities are valued at  prices based
on published market quotations.

Impairment of Long-lived Assets

The Company evaluates the carrying value of assets, other than
investments in marketable securities, for potential impairment on
an ongoing basis under the tenets of SFAS No. 144. Under SFAS No.
144, the Company periodically evaluate the carrying value of
long-lived assets and long-lived assets to be disposed of
and certain identifiable intagibles related to those assets for
potential impairment.  The Company considers projected future
operating results, cash flows, trends and other circumstances in
making such estimates and evaluations and, if necessary, reduces
the carrying value of impaired assets to fair value.

Earnings Per Share

The Company follows SFAS No. 128 in presenting earnings per
share.  SFAS No. 128 established the methodology of calculating
basic earnings per share and diluted earnings per share.  The
calculations differ by adding any financial instruments convertible
to common stock (such as stock options, warrants, and convertible
preferred stock and debt) to weighted average shares outstanding
when computing diluted earnings per share.



                          F-16

<PAGE>


Comprehensive Income

Company follows SFAS No. 130, "Reporting Comprehensive Income",
which establishes standards for reporting of comprehensive
income. Items recognized under accounting standards as
components of comprehensive income, as defined in the
pronouncement, must be displayed with the
same prominence as other financial statements.  Comprehensive
income includes changes in equity during a period, except those
resulting from investments by owners and distribution to owners.
Under comprehensive income, the Company reports unrealized gains
and losses on investments in debt and equity securities as
changes in equity.

Comparative Financial Statements

Certain amounts for 2003 have been reclassified so as to
comparative with certain amounts in 2004.

Recent accounting pronouncements:

In June 2003, the FASB issued SFAS No. 150, "Accounting
for Certain Financial Instruments with Characteristics of
both Liabilities and Equity".  SFAS No. 150 establishes
standards for how an issuer classifies and measures certain
financial instruments with characteristics of both
liabilities and equity.  This Statement is effective for
financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of
the first intermim period beginning after June 15, 2003.
The adoption of SFAS No. 150 did not have an effect on
the Company's financial statements.

In December 2003, the FASB issued a revised Interpretation
No. 46, "Consolidation of Variable Interest Entities".  The
interpretation clarifies the application of Accounting
Research Bulletin No. 51, "Consolidated Financial
Statements", to certain types of variable interest entities.
The Company does not expect the adoption of this
interpretation to have any impact on its financial
statements.





                       F-17

<PAGE>





2.  Inventories

Inventories consist of the following at September 30:

                                   2003       2004
                                   ----       ----

  Finished goods                $  21,521     25,157
  Work in process                   4,563     15,863
  Purchased parts and supplies    109,353     60,519
                                ---------  ---------
                                $ 135,437  $ 101,539
                                =========  =========

3.  Related Party Transactions

The Company pays a 10% sales commission to an officer
and director of the Company for gross sales (excluding
supplies) to The Hertz Corporation.  For the years ended
September 30, 2003 and 2004, commissions of $2,278 and
$2,773 have been paid under this agreement, respectively.

As of September 30,2004, the following are the related
party account balances:
                                    2003          2004
                                    ----          ----
Accounts receivable,
   related party                 $ 30,019     $  30,019
                                 =========    =========
Accounts payable,
 related party                   $ 11,000     $ 101,867
                                 =========    =========
                            F-18


<PAGE>





               CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

3.  Related Party Transactions (continued)

Accounts receivable, related party is due from Pan
American Parking Solutions, Inc. which is a company
owned by the former president of UTS.

Accounts payable, related party is due to Pan American
Products, a company owned by the current president of UTS.

4.  Investment in partnership

On January 31, 1998, the Company entered into a partnership
agreement (the Partnership) with its partially owned subsidiary,
Urban Transit Solutions, Inc. of Puerto Rico (UTS).  The Partnership
was formed to contract with cities and towns in Puerto Rico for
the privatization of their parking ticket management and collection
services. As provided in the Partnership agreement, the Company
contributed $500,000 in exchange for a 60% ownership in the
Partnership and related share of net income or losses. During 2001,
UTS issued additional stock diluting the ownership interest of the
Company  in UTS below 50%. However, pursuant to the partnership
agreement, substantially all management authority rested in UTS,
and consequently, the Company accounted for their investment
in the Partnership using the equity method through September
30, 2001.

During 2001, the Company filed suit against UTS and the officers
of UTS claiming that UTS unlawfully issued dilutive shares of
stock in UTS.  During , 2002, the Company entered
into a settlement agreement with UTS reaffirming the Company's
60% ownership interest. On December 31, 2004, the Company
acquired 30,000 new shares of common stock in UTS for payment
of $60,000 of legal services paid  by the Company on UTS's behalf,
which increased the Company's ownership to 72%.


                              F-19

<PAGE>

                  CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

4.  Investments (continued)

Marketable Securities:

Investments in marketable securities at September 30, 2004
consists of Colorado government bonds that are available-for-sale.
Unrealized gains and losses have not been reflected in the
financial statements as book value is not significantly
different from fair value.

At September 30, 2004 investments in marketable securities have
been pledged (up to the amount of $400,000) as a performance
bond on a sales contract agreement.

5.  Long-term Debt

Long term debt consisted of the following at September 30:

                                        2003          2004
                                        ----          ----
Note payable to bank, interest at
 2% over prime rate (4.0% as of
 September 30, 2003 and 2004),
 secured by third mortgage real
 estate property owned by the
 former president of UTS,
 payable in monthly installments
 of $9,259 plus interest through
 June 2005                            $ 173,565    $  71,713

Note payable to bank, interest
 at 6.3%, secured by certain assets
 payable in monthly
 installments of $4,445, due in
 July 2005                                84,098       58,074

Note payable to bank, interest at
  6.75%, secured by certain assets
  of the Company, payable in monthly
  installments of $7,823, due in
  March 2005                             117,400       81,243

Note payable - unsecured, interest
  at 9% payable in monthly installments
  of $2,000 due in February 2005              -       28,419
                                       --------      --------
                                        375,063      239,449
Less current maturities                (250,197)    (239,449)
                                       --------    ---------
                                      $ 124,866    $       -
                                    ===========    ==========

                                 F-20
<PAGE>

                  CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

5.  Long term debt (continued)

In May 2000, UTS entered into a loan agreement with the Banco
de Desarrollo Economico para Puerto Rico for an aggregate amount
of $500,000.  During the first six months, interest only was
due and payable monthly at 2% over the prime rate.  Beginning
on January 5, 2001, principal of $9,259, plus interest was due
and payable in 54 monthly installments.  The loan is evidenced
by a promissory note, collateralized by real estated owned by
the former president of UTS  located at Toa Baja, Puerto Rico,
and the personal guarantees of certain UTS stockholders.  As part
of the loan agreement, UTS has agreed to comply with certain
covenants. These consist primarily, of reporting requirements,
insurance coverage, restrictions on dividends or other distribution
without the prior written consent of the Bank, and other
administrative requirements.

6.  Lease Commitments

UTS is party to certain non-cancelable capital lease arrangements
for equipment and vehicles with a lease finance company.  Terms
of such leases call for UTS to make monthly lease payments of
$269 to $602 for leases that expire on various dates through
the year 2007.  The effective annual interest rates,  vary from
8.50% to 14.95%.

In addition, UTS leases office space in various cities in
Puerto Rico totaling $3550 per month. The Company leases office
space in Denver, Colorado under a 24 month lease through May 31,
2006 and is party to various other short term leases for office
and warehouse space.  Total rent expense under all operating
leases for the years ended September 30, 2003 and 2004 amounted
to $127,302 and $133,110, respectively.

The following is a schedule by years of the future minimum lease
payments under operating and capital leases together with the
present value of the net minimum lease payments for capital
leases as of September 30, 2004:
                              F-21
<PAGE>

                   CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

6.  Lease Commitments (continued)

                             Capital       Real Estate
                              Leases         Leases         Total
                            --------       -----------      -----
Year ended September
   30,  2005              $  41,460        $  30,993     $  72,453
        2006                 10,016           20,562        30,578
        2007                 10,359            2,400        12,759
        2008                 11,927            2,500        14,427
                             ------           ------        ------
Total minimum lease
   payments               $  73,762        $  56,455     $ 130,217
                                           =========     =========
Amount representing
   interest                  (4,872)
                            -------
Present value of future
 minimum lease payments      68,890

Current portion of
 lease obligations          (41,460)
                            -------
Obligations under capital
 leases due after one year $ 27,430
                           ========

The Company's property under capital leases,
which is included in property and equipment,
is summarized as follows:
                                     2003           2004
                                     ----           ----
Equipment                       $  256,799      $ 312,669
Vehicles                           182,487        154,552
                                ----------      ---------
                                   439,286        467,221
Accumulated amortization          (118,183)      (140,324)
                                ----------       --------
Net capitalized leased
  property                      $  321,103      $ 326,897
                               ===========     ==========


                              F-22

<PAGE>






                 CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

7.  Income Taxes

The components of the Company's deferred tax assets and
liabilities at September 30 are as follows:

                                 2003          2004
                                 ----          ----
Non-current deferred tax
   assets                     $  68,400       86,900
Non-current deferred tax
  liabilities                   (73,000)     (75,900)
                              ---------    ---------
Net non-current deferred
   taxes                     $   (4,600)      11,000
                             ===========  ===========
Deferred tax assets:
  Loss on equity investment  $   30,900   $   50,900
  Section 263A capitalization    28,500       36,000
  Website acquired from
  shareholder                     9,000            -
                             ----------     --------
                                 68,400       86,900
Deferred tax liabilities:
 Depreciation and amortization  (73,000)     (75,900)
                             ----------     --------
Net non-current deferred
 taxes                        $ (4,600)    $  11,000
                           ============   ============


The  following is a reconciliation of the statutory
federal income tax rate applied to pre-tax accounting net
income compared to the income taxes in the consolidated
statements of income:
                         For the years ended September 30,
                                2003             2004
                                ----             ----
Income tax expense at
  the statutory rate        $ 110,722        $  65,120
State and local income
  taxes, net of federal
  income tax                    9,951            4,954
Nondeductible expenses          1,306              629
Effect of graduated tax rate   (9,313)          (2,269)
Other                         (30,075)           1,247
                            ---------        ---------
                            $  82,591        $  59,266
                            =========        ==========

                                F-23
<PAGE>



                 CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

8.  Basic and Diluted Net Income Per Common Share

Basic and diluted net income per common share is based on
the weighted average number of shares outstanding during
each of the years ended September 30, 2003 and 2004, of
365,117,938 shares and 365,117,938 shares respectively.

9.  Professional Service Contracts

The Company provides equipment and support services under 12
month professional service contracts.  At September 30, 2003
and 2004, all of the contracts contained cancellation provisions
requiring notice of 30 days or less.

The cost of the equipment provided in the contracts and related
accumulated depreciation are as follows at September 30:

                                  2003            2004
                                  ----            ----
Equipment under service
  contracts                   $ 1,122,573     $ 1,109,892
Less accumulated
   depreciation                  (715,605)       (792,942)
                              -----------      ----------
                              $   406,968     $   316,950
                              ===========       ==========

10. Parking Citation Collection Services:

The Company has an agreement with Logan City, Utah
to provide parking citation issuance, ticket processing, meter
collections and maintenance, and ticket collection services. The
Company receives half of all revenues after payment of all
associated costs related to collections.  The agreement can
be extended or discontinued with 30 days written notice.

UTS has service contracts with five Puerto Rican municipalities
to provide equipment and management of digital parking meter
systems.  Under the terms of the contracts, UTS will pay to
the municipalities 25% of the income before income taxes.

                          F-24

<PAGE>


                 CLANCY SYSTEMS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      SEPTEMBER 30, 2003 AND 2004
                           (continued)

11.  Sales by geographic region

The Company's revenues for the years ended September 30, by
geographic region, are as follows:

                                2003               2004
                                ----               ----
United States              $1,920,369        $ 1,937,476

Puerto Rico                $1,096,872        $ 1,236,356

Canada                       $ 55,060        $    69,914
                           ----------        -----------
Total                      $3,072,301         $3,243,746
                           ==========         ==========




                               F-25
<PAGE>