SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.

                           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, 1998

                                  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 Registrant as specified in its charter)

           Colorado                              84-1027964
(State or other jurisdiction of                (IRS Employer
incorporation or organization)             Identification Number)


            2250 South Oneida Street, #308
                 Denver, Colorado                       80224
(Address of principal executive offices)        (Zip Code)

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

   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  Registrant (1) has filed  all
reports required  to be  filed  by Section  13  or 15(d)  of  the
Securities Exchange Act of 1934  during the preceding 12  months,
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 Registrant'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
$1,447,810.  The aggregate market value of the voting stock  held
by nonaffiliates (based  upon the average  of the  bid and  asked
price of  these  shares on  the  over-the-counter market)  as  of
January 11, 1999 was approximately $827,370.

Class                        Outstanding at January 11, 1999

Common stock, $.0001 par value           336,889,149 shares


           Documents incorporated by reference:  None

         Transitional Small Business Disclosure Format:

                                  Yes___ No  X



<PAGE>

               CLANCY SYSTEMS INTERNATIONAL, INC.

                           FORM 10-KSB

                             PART I

Item 1.  Description of Business

     (a)  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 or Registrant_).  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.

     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.  The Company
also  has  installed  numerous  systems  through  joint   venture
relationships.  See _Phoenix Group Systems", _City of  Inglewood_
and "Urban Transit Solutions" below.  To augment the  enforcement
element of the  system, the Company  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 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.

     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.

      (b)     Business of the Issuer.

      (b),(1),(2)  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

                                 -1-

<PAGE>



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 only three and one-half 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 form.   The data collection computer  is
used for uploading and downloading data and contains the capacity
for interfacing directly, or data transfer to a user's  mainframe
computer.  There are currently approximately 1500  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  do 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  also 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's contracts for its parking enforcement  systems
generally   provide   that   the   Company   will   provide   the
ticketwriters, 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
contract's 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  7,000,000  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

                               -2-

<PAGE>

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 will pay Mrs. Berg a  royalty
on all sales for a  period extending to 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.

Fleet Control

     During the  quarter ended  September  30, 1987  the  Company
developed a  vehicle  inventory  control  system  for  The  Hertz
Corporation referred to  as Fleet Control.  Fleet Control  system
tracks the  transfer  of rental  cars  between locations  and  is
designed to enhance the security and control of inventory  during
such movements.

     The system  provides Hertz  with information  pertaining  to
each vehicle from the  moment it leaves  a location and  includes
the name
and employee  number of  the hiker  (driver), the  Hertz  vehicle
number, the vehicle license number and a bar code  identification
symbol.    The  information   is  readily  transferable   between
locations and is reproduced in a  report format. This system  now
deals with "non revenue" movement of vehicles.

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

Phoenix Group Systems

     In  joint   venture  with   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 500,000 tickets per year.

     (b)(3)    Status  of   Publicly-Announced  New  Product   or
Services. 

     The Company has become a 60%  equity owner of Urban  Transit
Solutions, San  Juan, Puerto  Rico.   UTS offers  parking  system
privatization to cities in Puerto Rico.   At September 30,  1998,
UTS had contracts  in Mayaguez,  Puerto Rico  and Caugas,  Puerto
Rico.   The Mayaguez  project included  the installation  of  600
parking meters.  Meter revenue collection began in August,  1998.
For Cauguas, parking lots  will be monitored  and meters will  be
installed.   Revenue  collection  in  Cauguas  is  expected  begin
December 1998.

                                -3-
<PAGE>




     (b)(4)  Competition.   The  Registrant is  aware of  several
other companies that currently offer an automated ticket  writing
system: Enforcement Technologies, Inc.; Cardinal; Com-Plus;  DMS;
Radix-T-2, Duncan 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 and because  of
the various enforcement  products which it  offers to  complement
its system.

    The Registrant  believes  that  its  rental  car  return  and
inventory control  systems are  competitive with  other types  of
similar systems in that they  are "stand-alone" systems which  do
not require a  compatible main frame  computer to  operate.   The
Registrant is aware of no other companies which currently offer a
"stand-alone"  rental  car  return  system  or  a   "stand-alone"
inventory control 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.

     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  three organizations throughout  the
United States.  The Company's management attends trade shows  and
makes direct sales calls.

                                -4-

<PAGE>




    (b)(5)  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.   Robert M.  Brodbeck, the  Company's Chairman  of  the
Board  and  a  director,  supervises  the  manufacturing  of  the
Company's  printer   units  and   is  responsible   for   product
engineering.  The hand-held terminals for the parking enforcement
system and rental car return system  are identical and the  hand-
held terminals for  the rental car  inventory control system  are
different only in  that they have  an expanded memory  and a  bar
code  wand  for  identifying   vehicles  for  inventory   control
purposes.   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 obtained a  patent on its printer in  April
1991. The Company purchases its hand-held terminals from  several
different vendors who sell computers  that are all comparable  in
quality.

    Component parts for the Company's products are purchased from
various sources.  The Company has established certain vendors for
such parts; however, should any of them become unavailable to the
Company, the  Company believes  that there  are many  alternative
sources of supply available to it.

    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.

    (b)(6) Significant Customers.  Presently, the Registrant  has
104 customers.  The Registrant in general is greatly dependent  on
these customers, but the Registrant is particularly dependent  on
its contracts with Oklahoma City, Oklahoma; the City of Berkeley,
California;  the  Phoenix Group; and  the City  of Inglewood,  CA
which together  represented approximately  33% of  the  Company's
total revenues for the year ended September 30, 1998. 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.

     Oklahoma City, Oklahoma.  The  Company has provided a  fully
implemented automated  parking  ticket  writing,  processing  and
enforcement system to Oklahoma City, Oklahoma, its first parking

                               -5-
<PAGE>




enforcement system, since June 1986.  Under the current contract
the Company receives a monthly fee for leasing equipment and
providing supplies and support.  The contract may be terminated
by either party upon 15 days written notice and may be extended
for two additional 12-month terms upon mutual agreement of the
parties on terms to be negotiated.  The current contract with the
City of Oklahoma expires June 30, 1999.  Under the contract, the
Company has agreed to indemnify the City of Oklahoma, its
officers, agents and employees against any claims resulting from
acts or omissions of the Company or its officers, employees,
representatives or agents.  During the 1998 fiscal year, the
revenues from the Oklahoma City system represented approximately
6% of the Company's total revenues.

     Berkeley, California.   On  September  8, 1989  the  Company
entered into a contract with the City of Berkeley, California  to
provide a parking enforcement system to issue citations, assemble
data and interface to  the City's database.   Under the  contract
the Company  provides  hardware,  custom  software,  maintenance,
training and support.   The  Company   receives a  fee per  valid
citation issued.  The contract  term  has been  extended  through
January 31, 2000. The Company has agreed to warrant all  hardware
and to replace or repair any broken hardware free of charge.  The
Company has agreed  to indemnify the  City, its officers,  agents
and employees against  any claims  arising out  of the  Company's
performance under  the  contract.  The  City  has  the  right  to
terminate the contract with 30 days  written notice.  The  system
currently provides  hardware  for 30  parking  control  officers.
During the  1998  fiscal year,  the  revenues from  the  City  of
Berkeley system  represented approximately  7% of  the  Company's
total revenues.

     Cicero, Illinois.   The  Company entered  into a  three-year
agreement with the  Town of  Cicero, IL  in February,  1996,   to
provide  complete facilities  management service for its  parking
ticket issuance division. Under the agreement, the Company agreed
to pay  the Town  of Cicero   an  annual fee  of $575,000.    The
Company provided the  complete system,  personnel, hardware,  and
supplies.  The Company retained all ticket revenues collected  as
well as any revenues collected on backlog tickets. The  agreement
may be terminated by  either party upon  30 days written  notice.
The Company began  operations with respect  to the agreement  the
last week of March  1996. In connection  with the Agreement,  the
Company entered into  an agreement with  J &  J Consulting  under
which the Company agreed to pay J  & J an annual fee of  $175,000
and monthly commissions  equal to  a percentage  of all  revenues
generated by the  Company from its  operations in  Cicero, and  a
bonus percentage once revenues to the Company exceed  $1,000,000.
In November  1996, the  Town terminated  the agreement  effective
December 5, 1996 due to certain political issues unrelated to the
Company.  In settlement  of the breach  of contract, the  Company
was reimbursed $185,484  from the Town  of Cicero.   The  Company
continues to  collect  tickets  issued by  the  Company  and  the
earlier backlog which amounted to less  than 1% of the  Company's
total revenue for fiscal 1998.

                                -6-
<PAGE>


     Inglewood, CA. In a joint venture agreement with the City of
Inglewood, CA, Department of MIS, Clancy has agreed to sell hand-
held ticket issuance equipment, ticket forms and envelopes to the
City of Inglewood and clients that  the City services for  ticket
processing. In the year  ended September 30,  1998, sales to  the
City of Inglewood represented 9% of the Company's total revenues.

     Phoenix Group, Torrance, CA.  In a joint venture arrangement
with Phoenix Group,  Clancy provides ticket  issuance systems  to
Phoenix Group clients  based on  transactional pricing  schedules
related to  ticket  issuance volume.    All billings  go  through
Phoenix Group, although Clancy services the clients directly.  In
the year  ended  September  30,  1998,  sales  to  Phoenix  Group
represented 11% of the Company's total revenues.


     Maywood, IL.  In a  contract for privatization, the  Company
provides a full facilities  management operation for the  Village
of Maywood.  The Company provides personnel, vehicles, an office,
ticket issuance  and ticket  payment  processing.   The  contract
provides for a 50/50 split of  profit after all expenses  between
the Company and Village.

     Logan, UT.   In a  contract for  privatization, the  Company
provides a full facilities management  operation for the city  of
Logan, UT.  The company provides personnel, vehicles, an  office,
ticket issuance  and ticket  payment  processing.   The  contract
provides for  a $35,000  annual revenue  guarantee to  the  city.
After all expenses, including the $35,000 guarantee, the city and
the Company  split additional profit on a 50/50 basis.


     Urban Transit  Solutions,  Puerto  Rico.   The  Company  has
acquired 60%  ownership of  Urban  Transit Solutions  (UTS).  The
Company has  committed  to $500,000  in  funding to  UTS  between
January 20, 1998 and April 30, 1999.  At September 30, 1998,  the
Company had paid $364,500 to UTS. UTS currently has contracts  in
Mayaguez and Cauguas Puerto Rico.  In Mayaguez, UTS has installed
600 parking meters  and will be  responsible for issuing  tickets
and collection of parking meter revenues.   In Cauguas, UTS will  be
responsible for  installing meters,  managing parking  lots,  and
collection of meter revenues and  issuing tickets.  UTS  anticipates
additional  contracts   in   Puerto  Rican   cities   for   meter
installation  and  collections  and   ticket  issuance.     Their
marketing approach has been to bring Puerto Rican cities into the
21st century  by  organizing  parking  operations  and  providing
current technology to modernize city operations.

     (b)(7)  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.

                               -7-
<PAGE>


     (b)(8)    Need for Governmental Approval.  None.

     (b)(9)    Effect of Governmental Regulations.  None.

     (b)(10)  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  only
three and one-half pounds instead of five pounds.

     The Company  has  continually been  modifying  its  patented
printer and is beginning to market  its printer as a  stand-alone
product to parking  enforcement entities,  delivery services  and
vendors who have a need for computer-generated receipts.   During
the 1996 fiscal year  the Company made significant  modifications
to the  printer, which  include a  memory module  and upgrade  of
components and board design.

    During fiscal 1997, Clancy began production of a new  printer
that utilizes  a thermal  line printer.   This  printer has  been
designed to print  special fonts including  the new  PDF 417  bar
code symbology.   The  printer  is   utilized  as a  stand  alone
device,  but  has  been  designed   to  accept  a  module   which
incorporates a handheld terminal, mag stripe reader, PCMCIA  card
and can accept  wands, bar  codes and  other peripheral  devices.
Estimated completion time  for the  module has  been extended  to
October 1999.  Other  features include graphic display,  back-lit
keypad, phosphorescent keypad and expandable memory. The  Company
believes that a tremendous market  exists for this product  which
may increase future revenues.  The  ability to print PDF 417  bar
codes will be a  significant marketing advantage; however,  there
can be no assurance that the Company's marketing efforts will  be
successful.

    The Company developed a printer with an infrared interface
which it sells to a Canadian company.  It is anticipated that
this product will be sold to others who can benefit from the
infrared technology and require a portable field printing device.

     Robert M. Brodbeck, the Company's Chairman of the Board  and
a director, oversees developement  and manufacturing of  hardware
produced by the Company.

     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.

                               -8-

<PAGE>

      The  Company's  software  is  developed  in-house  by  four
full-time programmers and  by Stanley J.  Wolfson, the  Company's
President and a director.

     The Company's  software  is  maintained  and  updated  on  a
regular  basis.    The   software  for  the  enforcement   system
ticketwriter and  rental car  return  systems were  developed  by
Stanley Wolfson.   The software for  the Fleet Control  inventory
control system  initially was  developed by  Mr. Wolfson  in  his
capacity  as  an  officer  and  employee  of  Stan  Wolfson   and
Associates,  Inc.,  and  subsequently  was  transferred  to   the
Company.  The software allows the ticketing, rental and inventory
information to  be entered  and stored  and the  tickets,  rental
agreements and inventory information to  be printed. The user  of
the enforcement  system also  may use  the  computer to  look  up
information relating  to possible  stolen or  multiple  violation
vehicles.

     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, 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's  Lot  and  Street Survey  programs  have  been
provided to clients for use with their parking systems.

     The Company  spent  $60,591  and  $48,127  on  research  and
development activities for the  fiscal years ended September  30,
1997 and 1998, respectively.  None of the cost of such activities
was borne directly by the customers.

     (b)(11)   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
for the recycling of all batteries.

     (b)(12)   Employees.   The  Company currently  has  thirteen
employees in Company operations and 11 employees in privatization
projects,  all of who are employed on a full time basis.


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,

                              -9-

<PAGE>

Colorado for its corporate offices for $1,717 per month  pursuant
to a lease agreement with an unaffiliated party which expires May
31, 2000.

     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  $575
per month pursuant to  a lease agreement  that expires August  1,
1999.

     The Company  leases  an  office  in  Logan,  Utah  which  is
approximately 700 square fee from an unaffiliated party.   Rental
payments are $528 per  month plus utilities  pursuant to a  lease
agreement which expires June 10, 1999.

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

Item 3.     Legal Proceedings.

     The Registrant knows of no litigation pending, threatened or
contemplated, or  unsatisfied judgments  against the  Registrant,
nor any other proceedings to which the Registrant is a party.

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

     None.


                              -10-

<PAGE>




                             PART II


Item 5. Market for Registrant's Common Stock and Related Security
        Holder Matters.

     (a)(1)   The  principal  market on  which  the  Registrant's
Common Stock is  traded is  the over-the-counter  market and  the
Registrant's Common Stock is quoted in the OTC Bulletin Board.

     (a)(1)(i)  Not applicable.

     (a)(1)(ii) The range of high and low bid quotations for  the
Registrant'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

10/1/96 - 12/31/96           .005        .005
1/1/97 - 3/31/97             .005        .005
4/1/97 - 6/30/97             .005        .004
7/1/97 - 9/30/97             .005        .005
10/1/97 - 12/31/97           .005        .005
1/1/98 - 3/31/98             .003        .003
4/1/98 - 6/30/98             .003        .002
7/1/98 - 9/30/98             .003        .003


     On January 11, 1999  the reported bid  and asked prices  for
the Registrant's Common Stock were $.003 and $.01, respectively.

     (a)(2)  Not applicable.

     (b)   The  approximate  number  of  record  holders  of  the
Registrant's Common Stock on January 11, 1999 was 611.

     (c)(1)  The Registrant has paid no dividends with respect to
its Common Stock.

     (c)(2)  There  are  no   contractual  restrictions  on   the
Registrant's present or future ability to pay dividends.



                                  -11-
<PAGE>



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


     From  fiscal   1996  to   fiscal  1997   revenues   declined
approximately 2%.  This is primarily  due to a slight decline  in
ticket  issuance  by  existing  customers  for  various   reasons
including staff  cutbacks  and  weather related  problems.    The
Company's parking enforcement  systems research and  developement
costs increased  from $54,303 to $60,591, or 8% from fiscal  1996
to fiscal 1997.  General and administrative costs decreased by 1%
from 1996  to fiscal  1997.   The Company  reported a  profit  of
$16,792 for fiscal 1996  as compared to a  profit of $35,068  for
fiscal 1997.

     From  fiscal   1997  to   fiscal  1998   revenues   declined
approximately 18%.  This  is primarily due to start-up costs with 
privatization  projects and start-up costs with projects for Urgan
Transit Solutions.  The Company's parking  enforcement systems
research  and development costs  decreased  from  $60,591  to $48,127, 
or  21%, from fiscal 1997 to fiscal 1998. General and administrative
costs increased by 3%   from fiscal 1997 to  fiscal 1998.  The  Company
reported a loss of $28,028 for fiscal 1998 as compared to  profit
of $35,068 for fiscal 1997.   This loss reflects start-up  costs,
financing charges,  and  additional  general  and  administrative
expenses for the  two privatization contracts  and Urban  Transit
Solutions as  well  as  expenses  for  hardware  replacement  for
clients for year 2000 system upgrades.

    Since   November 1986,  the Company  has had  a  professional
services contract with  Oklahoma City to provide a ticket writing
system for  a  set monthly  fee.    For the  fiscal  years  ended
September 30,  1997 and  1998, the  contract with  Oklahoma  City
accounted for 4.5% and 6%,  respectively, of the Company's  total
professional services  contract  revenue.   See  Part I,  Item  1
(b)(6).

   During the fiscal  year ended September  30, 1989 the  Company
entered into a contract with the City of Berkeley, California  to
provide its parking  enforcement system.   For  the fiscal  years
ended September 30, 1997 and 1998, the contract with the City  of
Berkeley accounted for 7% of the  Company's total professional services
contract revenue.

    During the fiscal  years ended September  30, 1997 and  1998,
the Company had  in place  a total  of approximately  97 and  104
systems,  respectively,  representing   both  systems   installed
directly by  the  Company  and systems  installed  through  joint
venture relationships.

                              -12-

<PAGE>

     At September 30,  1997, the Company  had working capital  of
$554,707 as  compared to  $465,991 at  September 30,  1996.   The
Company's current ratio increased  from 1.95 to 1  to 11.14 to  1
from September 30, 1996 to September 30, 1997.

     At September 30,  1998, the Company  had working capital  of
$440,204 as  compared to  $554,707 at  September 30,  1997.   The
Company's current ratio decreased  from 11.14 to 1  to 4.49 to  1
from September 30, 1997 to September 30, 1998.

    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, 1999.

    The balance  of the  $500,000  committment to  Urban  Transit
Solutions will be advanced between November 1998 and April  1999.
The Company will  provide these funds  from cash  flows and  from
additional loans from its bank and/or  private lenders.  UTS  has
been  generating  revenue  since  August  1998  and  will  see  a
substantial increase in its meter collections when its  personnel
begin  issuing   parking   advice  notices   in   January   1999.
Collections from parking lot fees  from Cauguas will commence  in
January of 1999, and  when meters are installed in June of  1999,
revenue collections from Cauguas will be greatly increased.   The
Company's loans to its primary bank and a private lender will  be
paid back  by Company  revenue and  UTS revenue  payments to  the
Company.

     The Company  has  continually been  modifying  its  patented
printer and has marketed its printer as a stand-alone  product to
delivery services  and  vendors who  have  a need  for  computer-
generated receipts.   During the  1996 fiscal  year, the  Company
developed a new printer utilizing thermal line print  technology.
The Company  also  made  significant  upgrades  to  its  standard
printer. The Company  believes there exists  a tremendous  market
for the  new printer  as it  is  able to  print  a new  bar  code
symbology (PDF  417)  which is  expected  to become  an  industry
standard in the next few years. This product  may increase future
revenues; however, there can be  no assurance that the  Company's
marketing efforts will be successful.

Year 2000 Compliance

     During the fiscal year ended September 30, 1997, the Company
completed a  total  revision  of its  ticket  system  (and  other
systems) software which  includes total operations  in a  Windows
environment and complete capability for the handling of the  year
2000 date issue.  All new clients installed beginning January  1,
1997 are operating  on the new  system and  existing clients  are
presently being converted. Some cities already have the need  for
year 2000 dating as license plates for mulitiple years are  dated
in year 2000 and later. In addition to the software, computer


                             -13-
<PAGE>


equipment is being upgraded  for existing clients  as well.   The
equipment requirement  for  the Windows  system  requires  faster
computing capability with more memory along with the need for new
bios that will handle year 2000 dating on the computer itself.

     During fiscal  year ended September 30, 1998,  the
Company upgraded  70%  of  its  clients  to  its  new  year  2000
compliant software and hardware.  The Company anticipates that by
June 30,  1999, all  client upgrades  will have  been  completed.
Costs associated  with  the software  portion  of the  year  2000
upgrade  have   been  insignificant   because  the   Company   is
continually upgrading and improving its software for its  clients
as a  normal  course  of  business.    The  hardware  replacement
represents approximately $65,000 in costs during fiscal 1998. The
Company estimates a  similar cost  during fiscal  1999 for  completion
of upgrades to remaining clients.

    The Company  has already  had an  increase in  the number  of
inquiries  about  the   system  based  on   year  2000   software
capabilities and  the Company  anticipates that  during the  next
year the client base  could increase   as potential clients  find
the need  to  outsource  their  ticket  issuance  and  processing
programs in order to be operational in the year 2000.

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 defined in the Private Securities
Litigation Reform Act of 1995.   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.

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.

     Report of Independent Certified Public Accountants

     Balance Sheet - September 30, 1997 and September 30, 1998


                                 -14-
<PAGE>


     Statement of Operations - Years ended September 30, 1997
                        and 1998

     Statements of Stockholders' Equity - Years ended September
                        30, 1997 and 1998

     Statements of Cash Flows - Years ended September 30, 1997
                        and 1998

     Notes to Financial Statements


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

     Not applicable.



                                  -15-

<PAGE>

                            PART III


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

     (a)(1),(2),(3)   Identification of  Directors and  Executive
Officers.

                                                                Dates
                               Position                          of
Name                     held with  Registrant        Age     service

Stanley J.  Wolfson    President,  Chief  Executive   55       1987
                       Officer and Director

Robert M.  Brodbeck    Chairman of  the  Board of     65       1987
                       Directors

Mark G. Lawrence       Director                       49       1986

Lizabeth M.  Wolfson   Secretary-Treasurer  and       53       1987
                       Chief Financial and Chief
                       Accounting Officer

     (a)(4)  The business experience of the Registrant'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 of the Company.

     Robert M. Brodbeck, Chairman of the Board of Directors and a
director of the Company  since February 1987.   Mr. Brodbeck  has
been chairman of the board of directors and a director of  Clancy
from June 29, 1985 until April 1987.  Mr. Brodbeck was a founder


                             -16-

<PAGE>


of Clancy, served as an initial director of Clancy until Clancy's
first organizational meeting and had  been active as a  principal
shareholder Clancy since its inception.  From December 1983 until
November 1986 Mr. Brodbeck had been president and director of I/O
Services,Inc., (now known  as Sabre Industries,  Inc.), a  public
company located  in Denver,  Colorado which  is involved  in  the
development of systems for small  block data transmission.   From
July 1978 to May 1984, Mr. Brodbeck was co-owner of Computer Tel,
Inc. (d/b/a  Loadmaster),  located  in  Denver,  Colorado,  which
developed a computerized load posting system in use nationally by
the trucking  industry.   From November  1973  to May  1984,  Mr.
Brodbeck was the owner of Kwik Kall, Inc., a direct dial courtesy
phone system located  in Denver, Colorado,  serving the  trucking
industry in the southwestern United States as well as the eastern
seaboard, Oklahoma and Texas.  Mr. Brodbeck sold his interests in
both Computer Tel, Inc.  and Kwik Kall, Inc.  in 1984.  Prior  to
1972 Mr.  Brodbeck was  an electronics  and computer  maintenance
technician with Martin Marietta Corporation for 17 years.

     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  1974 and a director  from
December 1986 until  April 1987.   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.

    Mark G. Lawrence, a director of the Company since April 1986.
Mr. Lawrence served  as Chairman of  the Board  of Directors  and
Secretary of the Company from April 1986 until February 1987 when
the Exchange  took  place with  Clancy.   Since  March  1988  Mr.
Lawrence has served as executive vice president and a partner  of
Vintage Marketing Group, Inc., a company engaged in the sales and
marketing of  residential  real  estate. He  graduated  from  the
University of  Denver  in  1971 with  a  B.A.  degree  in  social
sciences and attended  the University of  the Americas in  Mexico
City in 1969.   Mr.  Lawrence is a  member of  the Home  Builders
Association, the  Sales  and Marketing  Council  of  Metropolitan
Denver and the National Sales and Marketing Council.

     (a)(5)  Directorships Held in Reporting Companies.  None.

     (b)     Identification  of  Certain  Significant  Employees.
             None.

     (c)   Family    Relationships.    Lizabeth    M.    Wolfson,
Secretary-Treasurer and  Chief  Financial  and  Chief  Accounting
Officer of the  Registrant, is the  wife of  Stanley J.  Wolfson,
President,  Chief  Executive  Officer  and  a  director  of   the
Registrant.

                                  -17-
<PAGE>


     (d)  Involvement in Certain Legal Proceedings.  None

Compliance with Section 16(a) of the Exchange Act

     Not Applicable.

Item 10.  Executive Compensation.

     (a)  General.  For the fiscal year ended September 30,  1998
the Company paid a ten  percent sales commission totaling  $2,276
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  $50,400 for  the most  recent fiscal  year
ended.

     (b)  Summary Compensation Table.
                              -16-
        (a)                   (b)       (c)           (e)
     Name and                                       Other annual
principal position            Year        Salary    compensation


Stanley J. Wolfson            1998       $50,400       $2,276
President and Chief           1997        49,400        5,665
Executive Officer             1996        48,500        6,320

     (c)  Option/SAR Grants.  None.

     (d)  Option/SAR Exercises and Fiscal Year End Option/SAR
          Values.  Not applicable.

     (e)  Long-Term Incentive Plan.  None.

     (f)  Compensation of Directors.  None.

     (g)  Employment Contracts and Arrangements.  None.

     (h)  Report on Repricing of Options/SARs.  Not applicable.


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

     (a), (b)    Security  Ownership  of  Beneficial  Owners  and
Management.  The  following table  sets forth  information as  of
January 11, 1999 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.

                              -18-


<PAGE>


Name and address                   Number of
of  beneficial  owner               shares               Percentage

Stanley J. Wolfson                 113,998, 464 (1)         33.8%
2250 S. Oneida Ste. 308
Denver, Colorado  80224

Robert M. Brodbeck                   92,509,608             27.5%
2250 S. Oneida Ste. 308
Denver, CO 80224

Mark G. Lawrence                      3,100,000               .9%
2250 S. Oneida Ste. 308
Denver, Colorado  80224

All officers and directors          209,608,072 (1)         62.2%
as a group (four persons)
__________

(1)  Includes 4,075,642 shares of Common Stock owned of record by
Lizabeth M. Wolfson, the wife of Stanley Wolfson and an   officer
of the Company and 400,000 shares of Common Stock owned of record
by the Wolfson children.

     (c)  Changes in Control.

     The Registrant  knows of  no arrangement,  the operation  of
which may, at a subsequent date,  result in change in control  of
the Registrant.

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.

     Stanley Wolfson  and Lizabeth  Wolfson have  guaranteed  the
Company's loan  with Mountain  States Bank  personally, and  have
pledged personal collateral in the form of certificate of deposit
to secure a portion of the loan.

Item 13.     Exhibits and Reports on Form 8-K.

     (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)

                              -19-
<PAGE>

     3.3       Bylaws (2)

     10.1      Partnership agreement between the Company and
               Urban Transit Solutions

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

     10.12     Indemnity Agreements between Registrant and
               Stanley J. Wolfson, Robert M. Brodbeck, Mark G.
               Lawrence and Lizabeth M. Wolfson (3)

     __________

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

(2)  Incorporated by reference from the like numbered exhibits
     filed with the Registrant'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 Registrant's Annual Report on Form 10-K 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 Registrant filed no
          reports on form 8-K.

     SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS  FILED
PURSUANT TO SECTION 15(d)  OF THE ACT  BY REGISTRANTS WHICH  HAVE
NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.

      None.

                                -20-
<PAGE>







                           SIGNATURES


     In accordance with the requirements  of Section 13 or  15(d)
of the Securities Exchange Act of  1934, the Registrant 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 11, 1999

     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  Registrant  and  in  the
capacities and on the dates indicated.


Date:  January 11, 1999             /s/ Stanley J. Wolfson
                                   Stanley J. Wolfson, President,
                                   Chief Executive Officer and a
                                   Director


Date:  January 11, 1999            /s/ Robert M. Brodbeck
                                   Robert M.  Brodbeck,  Chairman
                                   of the Board of Directors and
                                   Director


Date:  January 11, 1999             /s/ Lizabeth M. Wolfson
                                   Lizabeth      M.      Wolfson,
                                   Secretary-Treasurer and Chief Financial
                                   and Chief Accounting Officer

Date:  January 11, 1999             /s/ Mark G. Lawrence
                                   Mark G. Lawrence, Director






                              -21-
<PAGE>

               REPORT OF INDEPENDENT CERTIFED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Clancy Systems International, Inc.

We have audited the balance sheet of Clancy  Systems  International,  Inc.
as of September  30,  1997  and  1998,  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  audits  in  accordance  with  generally   accepted 
auditing standards. Those standards require that we plan and perform the
audits 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 audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Clancy Systems  
International, Inc. at September 30, 1997 and 1998,  and the results of its
operations and its cash flow for the years  then  ended,  in  conformity 
with  generally  accepted accounting principles.





Denver, Colorado
November 11, 1998                                     CAUSEY DEMGEN & MOORE INC.




                                       F-1
<PAGE>


                       CLANCY SYSTEMS INTERNATIONAL, INC.
                                  BALANCE SHEET
                           September 30, 1997 and 1998

                                     ASSETS

                                                         1997        1998
                                                     ----------  ----------
                                                 
Current assets:
   Cash, including interest bearing accounts
    of $57,017 (1997) and $58,308                    $  199,195  $   91,432
   Accounts receivable                                  196,646     244,448
   Inventories (Note 2)                                 210,608     190,960
   Investment in contract, net (Note 9                        -      23,334
   Income taxes refundable                                1,970      16,000
   Deferred tax asset (Note 6)                            1,000          -
                                                     ----------  ----------
     Total current assets                               609,419     566,174

Furniture and equipment, at cost:
   Office furniture and equipment                       228,680     235,180
   Equipment under service contracts (Note 9)         1,182,632   1,442,295
                                                     ----------  ----------
                                                      1,411,312   1,677,475
   Less accumulated depreciation                        994,732   1,204,775
                                                     ----------  ----------
    Net furniture and equipment                         416,580     472,700

Other assets:
   Investment in partnership (Note 4)                         -     329,915
   Deposits and other                                    26,835      28,310
   Deferred tax asset (Note 6)                                -       5,000
   Software licenses                                     16,882      16,882
   Software development costs                           286,763     356,353
                                                     ----------  ----------
                                                        330,480     736,460
   Less accumulated amortization                        167,415     225,040
                                                     ----------  ----------
     Net other assets                                   163,065     511,420
                                                     ----------  ----------
                                                     $1,189,064  $1,550,294
                                                     ==========  ==========
                                                       
                             See accompanying notes.
                                       F-2

<PAGE>


                       CLANCY SYSTEMS INTERNATIONAL, INC.
                                 BALANCE SHEET
                          September 30, 1997 and 1998

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                        1997        1998
                                                     ----------  ----------
Current liabilities:
   Accounts payable                                  $        -  $   37,999
   Other accrued expenses                                 2,286           -
   Warranty reserve                                         400           -
   Deferred revenue                                      52,026      87,971
                                                     ----------  ----------
     Total current liabilities                           54,712     125,970

Long-term note payable - bank (Note 5)                        -     320,000

Deferred tax liability (Note 6)                           2,000           -

Commitments (Notes 8 and 9)

Stockholders' equity:
   Preferred stock, $.0001 par value; 100,000,000 shares
    authorized, none issued                                   -           -
   Common stock, $.0001 par value; 800,000,000 shares 
    authorized, 336,889,149 shares issued and 
    outstanding                                          33,689      33,689
   Additional paid-in capital                         1,030,674   1,030,674
   Retained earnings                                     67,989      39,961
                                                     ----------  ----------

     Total stockholders' equity                       1,132,352   1,104,324
                                                     ----------  ----------

                                                     $1,189,064  $1,550,294
                                                     ==========  ==========


                             See accompanying notes.
                                       F-3

<PAGE>


                       CLANCY SYSTEMS INTERNATIONAL, INC.
                            STATEMENT OF OPERATIONS
                For the Years Ended September 30, 1997 and 1998


                                                        1997         1998
                                                    -----------  ----------
Revenues:
   Sales                                            $  200,374   $  238,020
   Service contract income (Notes 9 and 10)          1,064,292    1,062,760
   Parking ticket collections (Notes 9 and 10)         508,234      147,030
                                                    ----------   ---------

    Total revenues                                   1,772,900    1,447,810

Costs and expenses:
   Cost of sales                                       154,944      148,819
   Cost of services (Note 3)                           576,501      599,021
   Cost of parking ticket collections (Note 9)         500,030      214,492
   General and administrative                          431,228      440,884
   Research and development                             60,591       48,127
                                                    ----------   ----------

    Total costs and expenses                         1,723,294    1,451,343
                                                       

Income (loss) from operations                           49,606       (3,533)

Other income (expense):
   Interest income                                       2,275        5,411
   Interest expense                                    (14,063)     (14,520)
                                                     ----------   ---------

   Total other income (expense)                        (11,788)      (9,109)
                                                    ----------   ----------
Income (loss) before provision for income taxes 
   and loss in equity-basis partnership                 37,818      (12,642)

Provision for income taxes (Note 6):
   Current expense                                      13,750          801
   Deferred benefit                                    (11,000)      (6,000)
                                                    ----------   ----------
    Total income tax expense (benefit)                   2,750       (5,199)

Loss in equity-basis partnership (net of tax benefit 
   of $14,000)(Note 4)                                       -      (20,585)
                                                    ----------   ---------- 

Net income (loss)                                   $   35,068   $  (28,028)
                                                    ==========   ==========

Basic net income (loss) per common share 
   (Note 7)                                         $        *   $        *
                                                    ==========   ==========

*  Less than $.01 per share

                             See accompanying notes.
                                       F-4

<PAGE>
<TABLE>


                       CLANCY SYSTEMS INTERNATIONAL, INC.
                       STATEMENT OF STOCKHOLDERS' EQUITY
                For the Years Ended September 30, 1997 and 1998
<CAPTION>
                                                                                  Additional
                                                 Common stock                paid-in     Retained
                                                    Shares        Amount     capital     earnings
                                                 ------------     -------   ----------   --------
<S>                                              <C>              <C>       <C>          <C>

Balance, September 30, 1996                       336,889,149     $ 33,689  $1,030,674    $ 32,921
   net income for the year ended
    September 30, 1997                                     -            -            -      35,068
                                                  -----------     --------  ----------    --------

Balance, September 30, 1997                       336,889,149       33,689    1,030,674     67,989

   Net loss for the year ended
    September 30, 1998                                     -            -            -     (28,028)
                                                  -----------     --------  -----------   --------

Balance, September 30, 1998                       336,889,149     $ 33,689  $ 1,030,674   $ 39,961
                                                  ===========     ========  ===========   ========

</TABLE>
                            See accompanying notes.
                                       F-5

<PAGE>


                       CLANCY SYSTEMS INTERNATIONAL, INC.
                            STATEMENT OF CASH FLOWS
                For the Years Ended September 30, 1997 and 1998


                                                        1997         1998
                                                    ----------   ----------
Cash flows from operating activities:
   Net income (loss)                                $   35,068   $  (28,028)
   Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization                    675,636      279,334
      Deferred income tax benefit                      (11,000)      (6,000)
      Loss in equity basis partnership                       -       34,585
      Decrease (increase) in accounts receivable        90,285      (47,802)
      Decrease (increase) in inventories               (20,353)      19,648
      Increase in income taxes refundable               (1,250)     (14,030)
      Increase (decrease) in accounts payable          (15,046)      37,999
      Decrease in accrued expenses                      (3,600)      (2,686)
      Increase (decrease) in deferred revenue          (24,095)      35,945
                                                    ----------   ----------

       Total adjustments                               690,577      336,993
                                                    ----------   ----------
       Net cash provided by operating activities       725,645      308,965

Cash flows from investing activities:
   Acquisition of furniture and equipment - net       (157,091)    (266,163)
   Increase in software licenses and software 
    development costs                                  (84,844)     (69,590)
   Investment in partnership                                 -     (364,500)
   Investment in contract                                    -      (35,000)
   Decrease (increase) in deposits and other assets     17,975       (1,475)
                                                    ----------   ----------
      Net cash used in investing activities           (223,960)    (736,728)

Cash flows from financing activities:
   Proceeds from note payable - bank                         -      320,000
   Payments on note payable - bank                    (393,000)           -
                                                    ----------   ----------
Net cash provided by (used in) financing activities   (393,000)     320,000
                                                    ----------   ----------
Increase (decrease) in cash and cash equivalents       108,685     (107,763)

Cash and cash equivalents at beginning of year          90,510      199,195
                                                    ----------   ---------
Cash and cash equivalents at end of year            $  199,195   $   91,432
                                                    ==========   ==========

                          (Continued on following page)
                             See accompanying notes.
                                       F-6

<PAGE>


                       CLANCY SYSTEMS INTERNATIONAL, INC.
                            STATEMENT OF CASH FLOWS
                For the Years Ended September 30, 1997 and 1998

                        (Continued from preceding page)

Supplemental disclosure of cash flow information:
                                                        1997         1998
                                                      --------     --------
Cash paid during the year for interest                $ 14,063     $ 14,520
                                                      ========     ========

Cash paid during the year for income taxes            $ 15,000     $      -
                                                      ========     ========

Depreciation and amortization expense is allocated as follows:

   Cost of services                                  $ 299,608    $ 267,668
   Cost of parking ticket collections                  376,028       11,666
                                                     ---------    ---------
                                                     $ 675,636    $ 279,334
                                                     =========    =========

                             See accompanying notes.
                                       F-7

<PAGE>




                      CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 1997 and 1998




1.   Organization and summary of significant accounting policies

     Organization:

     The Company was  organized in Colorado on June 28, 1984.  The Company 
     is in the business of developing and marketing  ticket writing systems
     and rental car return  systems.  The  Company's  revenues are derived 
     primarily  from  cities, universities and car rental companies
     throughout the United States,  Canada and England.

     Use of estimates:

     The  preparation  of financial  statements  in  conformity  with
     generally accepted  accounting  principles  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.

     Accounts receivable:

     No provision  for doubtful  accounts was deemed  necessary at September 
     30, 1997 or 1998.

     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 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  greater  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,
     1997 and 1998 amounted to $52,456 and $ 57,534,  respectively. 
     Unamortized computer software  development  costs amounted to $147,037 
     and $159,402 at September 30, 1997 and 1998, respectively.

                                       F-8

<PAGE>


                      CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 1997 and 1998




1.   Organization and summary of significant accounting policies (continued)

     Furniture and equipment:

     Furniture and equipment are stated at cost.

     Depreciation  is provided by the Company on an accelerated  method 
     over the  assets'  estimated  useful  lives of five  years.  Property
     and  equipment consists primarily of computers and printers which are
     subject to technical obsolescence.

     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:

     Software  license  agreements are being amortized over a five-year 
     period, the period estimated by management to be benefited.

     Research and development costs:

     Company  funded  research and  development  costs are charged to 
     expense as incurred.

     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 recognized on a cash 
     basis when received.

     Income taxes:

     The  Company  accounts  for  income  taxes  under  Statement  of
     Financial Accounting  Standards No. 109 ("FASB No. 109").  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  carryforwards,   depreciation differences and 
     capitalized ss.263A costs.



                                       F-9

<PAGE>


                      CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 1997 and 1998




1.   Organization and summary of significant accounting policies (continued)

     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.

     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:

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

     Concentrations of credit risk:

     Financial   instruments   which   potentially   subject   the   
     Company  to concentrations  of  credit  risk  consist  principally  of 
     cash  and  trade receivables.  The  Company  places  its cash  with 
     high  quality  financial institutions.  At times during the year,  the
     balance at any one  financial institution may exceed FDIC limits.

     The Company provides credit, in the normal course of business, to
     customers throughout  the United  States,  Canada and England.  The
     Company  performs ongoing credit evaluations of its customers. 
     A significant  portion of the Company's revenues are derived from
     contracts with universities, car rental companies and municipalities.

2.   Inventories

     Inventories consist of the following at September 30:
                                                      1997         1998
                                                   ----------   ---------- 
       Finished goods                              $       -     $ 19,690
       Work in process                                13,570            -
       Purchased parts and supplies                  197,038      171,270
                                                   ---------     --------
                                                   $ 210,608    $ 190,960
                                                   =========    =========

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, 1997 and 1998,
     commissions  of $5,665 and $2,276 have been paid under this agreement,
     respectively.

                                      F-10
<PAGE>



                       CLANCY SYSTEMS INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           September 30, 1997 and 1998

4.   Investment in partnership

     On January 31, 1998, the Company entered into a partnership  agreement
     (the Partnership)  with  Urban  Transit  Solutions  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 of September 30, 1998, the
     Partnership had contracted with the city of Mayaguez,  Puerto Rico to
     install  parking meters and provide meter collection services and was
     negotiating a contract with the city of Caguas, Puerto Rico to
     administer a parking  facility and provide parking  metering services. 
     As  of  September  30,  1998,  the   Partnership  had  invested
     approximately  $350,000 toward the purchase and installation of 
     600 parking meters in Mayaguez but has not yet received  substantial
     revenues from the contract.

     As  provided  in the  partnership  agreement,  the  Company  has
     agreed to  contribute  $500,000 in exchange for a 60% ownership in the
     Partnership and will share in the net income and losses of the
     partnership  based on their  percentage   of   ownership.   Pursuant
     to  the   partnership   agreement,  substantially  all  management
     authority  will be  retained  by  UTS,  and  consequently,  the Company
     accounts for their investment in the Partnership  using the equity
     method.

     The Company's investment in the net assets of the Partnership accounted
     for under the equity  method  amounted to $329,915 at September  30,
     1998.  The condensed results of the operations and financial position
     of the Company's  equity-basis partnership investment is summarized 
     below:

     Condensed statement of               For the period from
     of operations information             January 31, 1998
                                                through
                                           September 30, 1998
                                           ------------------
     Total revenues                             $  21,813
     Total costs and expenses                     (79,455)
                                                ---------
                                                $ (57,642)
                                                =========


     Condensed balance sheet information        September 30,
                                                    1998
                                               -------------
     Current assets                            $     672
     Non-current assets                          394,638
     Current liabilitiies                        (40,519)
     Long-term liabilities                       (26,983)
                                                ---------
      Partnership capital                      $ 327,808
                                               =========




                                       F-11

<PAGE>


                      CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 1997 and 1998




4.   Investment in partnership (continued)

     As of  September  30,  1998  the  Company  and UTS were in the
     process  of  renegotiating the terms of the partnership agreement.

5.   Notes payable - bank

     On May 5, 1998, the Company  executed a  fifteen-month  promissory
     note for $220,000 secured by personal guarantees of two officers of
     the Company. The  note bore  interest at 9.5% and was  originally
     due on August 15, 1999. On June 12,  1998,  the  Company  executed a 
     four-month  promissory  note for $100,000 secured by a certificate of
     deposit in the name of two officers of the  Company.  The note bore 
     interest  at 7.5% and was  originally  due on  October 15, 1998.

     On October 15,  1998,  the  Company  executed a one-year  note 
     payable for  $320,000  refinancing  the two previously  executed
     notes.  The note bears interest at 9% with interest payable monthly
     and outstanding  principal due on October 15, 1999. The note is secured
     by a certificate of deposit in the name of two officers of the Company.

6.   Income taxes

     The book to tax temporary  differences resulting in deferred tax assets
     and liabilities  are primarily net operating loss  carryforwards,
     depreciation differences and capitalized ss.263A costs for tax purposes.

     As  of  September  30,  1997  and  1998,  total  deferred  tax  assets
     and liabilities are as follows:

                                                   1997         1998
                                                 -------      -------
          Deferred tax assets                    $ 1,000      $10,000
          Deferred tax liabilities                (2,000)      (5,000)
                                                 -------      -------
                                                 $(1,000)     $ 5,000
                                                 =======      =======


7. Basic net income (loss) per common share

     Basic net income  (loss) per common share is based on the weighted
     average number of shares outstanding during the years, 336,889,149
     shares.


                                       F-12


<PAGE>


                      CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 1997 and 1998




8.   Lease agreements - as lessee

     The Company leases office space in Denver under a 24 month lease and 
     office space in Logan, Utah under a 12 month lease which commenced on
     June 1, 1998 and June 10,  1998,  respectively.  The rental  rates for
     the  offices  are $1,717 and $528 per month, respectively. In addition,
     the Company maintains  month-to-month  leases for manufacturing  space
     in Littleton, CO.  The monthly  rental  rate this  lease is $575.
     Total rent expense for the years ended  September 30,
     1997 and 1998 amounted to $21,959 and $26,867, respectively.

     The future minimum lease payments under these obligations are as
     follows:

         Year ending September 30,

              1999                     $ 22,724
              2000                       13,741
                                       --------

                                       $ 36,465
                                       ======== 

9.   Professional service contracts

     The  Company  provides  equipment  and  support  services  under  12
     month  professional service contracts. At September 30, 1998, 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:

                                                   1997        1998
                                               ----------   ----------
        Equipment under service contracts      $1,182,632   $1,442,295
        Less accumulated depreciation            (852,345)  (1,034,483)
                                              -----------   ----------

                                               $  330,287    $ 407,812
                                               ==========    =========




                                       F-13

<PAGE>


                      CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 1997 and 1998



9.   Professional service contracts (continued)

     Agreement with the Town of Logan, Utah:

     On May 19, 1998, the Company entered into a one year contract with
     the Town of Logan,  Utah (the  Town),  whereby  the  Company  will
     issue all parking tickets  for the Town and provide  collection 
     services  for those  parking tickets issued and all outstanding parking
     tickets previously issued by the Town. In  conjunction  with the
     contract the Company and the Town will each receive half of all
     revenues after payment of all associated  costs related to the 
     collections.  The Company has paid a  non-refundable  guarantee  of
     $35,000  to  the  Town  which  amount  is  being  amortized  monthly
     on  a straight-line basis over the period of the agreement.

10.  Major customer and export sales

     The following  table  summarizes  customers which accounted for over 
     10% of revenues for the years ended September 30:

       Customer                                        1997        1998
       --------                                        ----        ----
          A                                               *         11%
          B                                             11%           *
          C                                             29%           *


     * less than 10% of total revenues

     The Company's  export sales for the years ended September 30, by
     geographic area, are as follows:

                                                     1997       1998
                                                   -------   --------
          Canada                                   $35,000   $ 94,000
          England                                   35,000     53,000
                                                   -------   --------

                                                   $70,000   $147,000
                                                   =======   ========




                                       F-14