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, 2002

	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
$2,759,099. 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 December 30,
2002 was approximately $1,171,151.

Class                        Outstanding at December 30, 2002

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
                         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 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.

     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" 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 acquired and developed several stand alone
computer programs for special niche operations including
IDBadge.com, WhatsImportantNow.com, VirtualPermit.com, Remit-
online.com and Expo1000.com. The Company acquired Expo1000.com and
Remit-online.com during fiscal year 2001. The Company developed
IDBadge.com, WhatsImportantnow.com and VirtualPermit.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.

    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
clancysystems.com.


                            -1-

<PAGE>




  (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
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 form.  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 1800 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 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 new service offered to clients during the 2001 year is 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 8,000,000 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 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 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 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 2001-2002 Expo forums were held
in Denver, Washington DC, St. Petersburg, San Jose, Yonkers, and
Houston.


                            -4-
<PAGE>


WhatsImportantNow.com

     This is a PC based messaging program which allows user 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 user 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.

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

The Company has developed and is currently manufacturing a product
named "Palmtype" which is a keyboard/cradle for a Palm PDA.  The
Palmtype is a cradle that the device docks into for the purpose
of using keys with tactile feedback for entering data into the
Palm device.  Unique software created for the Palmtype allows
for assignable keys for specific functions.

      (b)(4)  Competition.  The Company is aware of several 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.



                              -5-
<PAGE>


     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.

     (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.  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 it's parking enforcement systems
is a Palm PDA.

                            -6-
<PAGE>


    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 which provides alternative
sources of supply to ensure availability.

    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.

    (b)(6) Significant Customers.  Presently, the Company has 120
customers. No customer has generated more than 7.5% of total
revenues.  The City of Berkeley, California; the City of Yonkers,
and Phoenix Group are customers each generating more than 5% of
the Company's revenues for the year ended September 30, 2002.  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.

     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,
2004. The Company has agreed to warrant all hardware and to
replace or repair any broken hardware free of charge.

                                -7-

<PAGE>
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 fiscal year 2002, the revenues from the City of Berkeley
system represented approximately 7.4% of the Company's
unconsolidated revenues.

     Yonkers, NY.  On July 1, 1995, the Company entered into a
contract with Yonkers, NY to provide a parking ticket issuance
system for its Parking Violations Bureau and its Yonkers Parking
Authority.  The Company provides hardware, custom software,
maintenance, support and supplies.  The Company receives a fee for
each citation form purchased.  During fiscal year 2002, revenues
from the City of Yonkers system represented approximately 6.9% 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, 2002, sales to Phoenix Group
represented 7% of the Company's total revenues.

     Privatization Contracts.  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 Company pays the City a 50/50 split after all expenses are
paid.

     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, Cauguas Puerto Rico. In
Mayaguez, UTS has installed 600 parking meters and will be
responsible for collection of parking meter revenues.  In Cauguas,
UTS leases a parking facility from the City and collects the
parking revenues from the lot. In Humacao, UTS installed meters
and collects revenues from the meters.  UTS anticipates additional
contracts in Puerto Rican cities for meter installation and
collections.  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. The Company reported a gain of $21,358 from UTS at
September 30, 2001 and a loss of $14,792 from UTS at September
30, 2002 . See legal proceedings.


                          -8-
<PAGE>


     (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.

      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 it's Palmtype and
Palm specific software in July of 2002.

     (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 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.

    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.
                                -9-
<PAGE>
     The Company spent $42,296 and $41,507 on research and
development activities for the fiscal years ended September 30,
2001 and 2002, 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.

     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.

     (b)(12)  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.

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,
2004.

     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, 2003.

     The Company leases an office in Logan, Utah which is
approximately 700 square feet from an unaffiliated party.  Rental
payments are $578 per month plus utilities pursuant to a lease
agreement which expires June 10, 2003.The Company believes that
these facilities are suitable and adequate for its needs.












                              -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. The Company is currently
pursuing identities of and subsequent action against several
other John Does.

In a judgment rendered by the Superior Court Department of the
Trial Court of Suffolk County, MA, a default judgment against Mr.
John Short was entered on October 31, 2001.  The judgment orders
Short to pay the Company attorney's fees and costs of $16,699.61
and an additional fine of $50,000 for his willful failure to
comply with a Court order of June 28, 2001.  Mr. Short filed an
appeal on December 2, 2001, 3 days late of the 30 day appeal
period.  The Company is filing a motion to strike the notice of
appeal as untimely. The appeal was denied.  Mr. Short filed a
Motion for Relief from Default Judgment on November 19, 2002.
The Motion was denied by the court on December 13, 2002.  On
December 20, 2002, Mr. Short filed an Emergency Motion for Stay
of Execution Pending Appeal From Order Denying Motion for Relief
From Judgment.

In a civil action filed by the Company in the District Court of
Puerto Rico on August 22, 2001, the Company has filed for remedies

for non performance by Urban Transit Solutions.  The company sought
a declaratory judgment, injunctive and mandatory relief, as well
as damages and loss of profits from the defendants for their
actions in systematically and intentionally denying and excluding
Clancy from all of its rights in Urban Transit Solutions.

In July 2002, the principals of Urban Transit Solutions
and the Company entered into a settlement agreement which
reaffirmed the Company's 60% ownership position.
agreements.


On March 21, 2002, a lawsuit was filed against the Company by
Francis R. Salazar to seek compensation for alleged loss of
profit on sale of 6,000,000 shares of the Company's stock which
carried a restrictive legend subject to Rule 144 regulations,
and that such restriction prevented him from selling the shares
during an uptick in stock price.  The Company views this as

                               -11-
<PAGE>


yet another frivolous lawsuit by Mr. Salazar and filed a motion
to Dismiss on April 29, 2002.  The Company is seeking costs
and attorney's fees from Mr. Salazar.  The case was dismissed
by the court in November 2002.  Mr. Salazar has filed an appeal
in December 2002.

On October 17, 2002, Iparq LLC and American Housing Assoc.,
Inc. filed suit against Harris Tessler, the Company, and Does
1-50.  The complaint alleges unfair business practices and
misappropriation of trade secrets among other claims.  The
company has not been served.  The company views the complaint
as a frivolous suit with no basis other than harassment and
malicious prosecution.  If and when served the Company intends
to vigorously defend the allegations.  The Company believes
this harassment is the result its award of a contract with
BART (Bay Area Rapid Transit).


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


     None.
































                                  -12-
<PAGE>



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

10/1/00 - 12/31/00           .031        .015
1/1/01  - 3/31/01            .031        .015
4/1/01  - 6/30/01            .02         .01
7/1/01  - 9/30/01            .01         .005
10/1/01 - 12/30/01           .009        .007
1/01/02 - 03/31/02           .008        .006
04/01/02 - 06/30/02          .008        .005
07/02/02 - 09/30/02          .005        .005



     On December 30, 2002 the reported bid and asked prices for
the Company's Common Stock were $.005 and $.005, respectively.

     The approximate number of record holders of the Company's
Common Stock on December 30, 2002 was 623.


     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.











                              -13-
<PAGE>

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

     As a result of the July 2002 settlement agreement with
the principals of UTS (Urban Transit Solutions) we have changed
the reporting method for the Company's 60% ownership in UTS
from the  equity method of accounting to presenting the
information on a consolidated basis.

    The difference in presentation between the equity method
of accounting and on a consolidated basis is significant.  For,
2001, Clancy presented its investment in UTS as a single line
item "investment in partnership" on the balance sheet and as
a single line item on the statement of operations.  For 2002,
the consolidated financial statements combine each line item
on the balance sheet and statement of operations of Clancy
with those of UTS.

     From fiscal 2001 to fiscal 2002 revenues increased by
approximately 3% from $1,631,590 to $1,683,542 for Clancy and
7%  from $1,002,883 to $1,075,557 for UTS.  The Company's parking
enforcement systems research and  development costs decreased
from $42,296  to $41,507 or 2%  from fiscal 2001 to fiscal
2002.  General and Administrative costs increased by 20% from
$610,830 to $735,851 for Clancy and 16% from $801,783 to $928,251
for UTS from fiscal 2001 to fiscal 2002. The Company reported
an after tax profit of $168,022 for fiscal 2001 as compared to
an after tax profit of $96,789 for  for fiscal 2002. The increase
in General and Administrative costs for the Company and resulting
decrease in net income was primarily the result of legal
expenses during 2002.

From fiscal 2000 to fiscal 2001 revenues increased
approximately 2% for Clancy. The Company's parking enforcement
research and development costs decreased from $59,170 to $42,296
or 28.5%, from fiscal 2000 to 2001.  General and administrative
costs increased  by 11.3% from fiscal 2000 to fiscal 2001. The
Company reported a profit of  $201,400 for fiscal 2000 as
compared to a profit of $168,022 for fiscal 2000. The  Company
disposed of and charged off obsolete components and fixed assets
during this business year.

   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, 2001 and 2002, the contract with the City of
Berkeley accounted for 6.2%  and 7.4% of the Company's total
revenue.

    On July 1, 1995, the Company entered into a contract with
Yonkers, NY to provide a parking ticket issuance system for its
Parking Violations Bureau and its Yonkers Parking Authority.
For fiscal years  ended September 30, 2001 and 2002 the Yonkers
contract accounted for 5% and 6.9% of the Company's total revenue.


                             -14-
<PAGE>


     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.  For fiscal years ended September 30, 2001 and
2002, Phoenix Group accounted for 7% and 7% of the Company's
total revenue.

    During the fiscal years ended September 30, 2001 and 2002, the
Company had in place a total of approximately 116 and 120 systems,
respectively, representing both systems installed directly by the
Company and systems installed through joint venture relationships.

     At September 30, 2002, the Company had working capital of
$843,151 for Clancy and $357,272 for Clancy combined with UTS as
compared to $812,133 for Clancy and $696,913 for Clancy combined
with UTS at September 30, 2001.

   Clancy's current ratio increased from  7.23 to 1 to 8.17 to
1 from September 30, 2001 to September 30, 2002. The consolidated
current ratio decreased from 2.77 to 1 (Pro Forma) to 1.54 to 1
from September 30, 2001 to September 30, 2002.

    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, 2003.

    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 loans to its primary bank and a private lender have were
paid back by Company revenue.

     In August 2000, the Company began design of a new printer to
work with Palm devices. The product is currently in production.

     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.  In
addition, the Company has had a significant growth in interest in
the Denver Boot for vehicles as well as for security on other
mobile devices including construction trailers and communications
generators.  The Company has experienced a pattern of growth with
this product and anticipates future sales to increase
significantly.  Management believes exposure via the Internet has
been favorable for this product.  There has been a demand for the
Denver boot for enforcement on private property.

     The Company has experienced a significant interest in its ID
Badgemaker software.  The demand for the program has increased
significantly and the company has provided its program to news
services, janitorial services, and social services organizations.
                                 -15-
<PAGE>


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.

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.

     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 we have.













                                 -16-
<PAGE>


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

     Consolidated Balance Sheet - September 30, 2001 and
                                  September 30, 2002

     Consolidated Statement of Operations - Years ended September
                                  30, 2001 and 2002

     Consolidated Statements of Stockholders' Equity - Years ended
                                  September 30, 2001 and 2002

     Consolidated Statements of Cash Flows - Years ended September
                                  30, 2001 and 2002

     Notes to Consolidated Financial Statements


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

     Not applicable.



















                                  -17-


<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.
                              Position                   Dates
                                                         of
Name                    held with Company          Age   service

Stanley J. Wolfson    President, Chief Executive    59    1987
                      Officer and Director

Lizabeth M. Wolfson   Secretary-Treasurer and       57    1987
                      Chief Financial and Chief
                      Accounting Officer and Director

(a)(4)  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 of the Company.


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.


                           -18-
<PAGE>



     (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 Company, is the wife of Stanley J. Wolfson,
President, Chief Executive Officer and a director of the Company.

     (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, 2002
the Company paid a ten percent sales commission totaling $2,825 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 $60,000 for the most recent fiscal year
ended.

(b)  Summary Compensation Table.

        (a)                   (b)            (c)           (e)
     Name and                                       Other annual
principal position            Year        Salary    compensation

Stanley J. Wolfson            2002       $60,000       $2,825
President and Chief           2001        55,200        3,106
Executive Officer             2000        50,400        2,551

(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.



                               -19-
<PAGE>

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
December 30, 2002 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

Robert M. Brodbeck               54,165,000              14.7%
9310 Watson Gulch
Littleton, CO 80128

All officers and directors      130,887,779 (1)          35.9%
as a group (2 persons)

__________

 (1)  Includes 4,075,642 shares of Common Stock owned of record by
Lizabeth M. Wolfson and 126,812,137 owned by Stanley J. Wolfson.























                              -20-
<PAGE>



     (c)  Changes in Control.

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

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.

     On November 18, 1999 the board of directors of the Company
approved the acquisition of two Internet business opportunities
funded and developed independent of the Company by Mr. Wolfson.
The final acquisition was completed in February 2001. Under the
terms of the final agreement, the Company issued 17,489,315 shares
of its common stock in exchange for the Remit-online.com and
Expo1000.com web sites.


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)
     3.3    Bylaws (2)

     10.1   Partnership agreement between the Company and
            Urban Transit Solutions

     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, Robert M. Brodbeck, Mark G.
            Lawrence and Lizabeth M. Wolfson (3)

     99.1   Certification Pursuant to 18 USC Section 906
            for Stanley Wolfson, included herewith


     99.2   Certification Pursuant to 18 USC Section 906
            for Lizabeth Wolfson, included herewith
________

                              -21-
<PAGE>

(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-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 Company filed no
          reports on form 8-K.

Item 14.  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.

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

      None.


















                                    -22-
<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:  December 30, 2002

     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:  December 30, 2002          /s/ Stanley J. Wolfson
                                 Stanley J. Wolfson, resident,
                                 Chief Executive Officer and a
                                 Director

Date: December 30, 2002           /s/ Lizabeth M. Wolfson
                                 Lizabeth M. Wolfson, Secretary-
                                 Treasurer and Chief Financial
                                 and Chief Accounting Officer



















                                 -23-
<PAGE>




Section 302 Certification
Annual Report on Form 10-KSB

I,  Stanley J. Wolfson certify that:

1.	I have reviewed this annual report on Form 10-KSB of Clancy
      Systems International,Inc.

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

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

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

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

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

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

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




                              -24-
<PAGE>


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

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

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

Date: December 30, 2002


/s/Stanley J. Wolfson
President


























                                 -25-
<PAGE>


Section 302 Certification
Annual Report on Form 10-KSB

I,  Lizabeth Wolfson certify that:

1.	I have reviewed this annual report on Form 10-KSB of
      Clancy Systems International,Inc.

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

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

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

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

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

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

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

                                 -26-
<PAGE>




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

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

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

Date: December 30, 2002


/s/Lizabeth Wolfson
Secretary-Treasurer





























                                  -27-
<PAGE>

Exhibit 99.1

CERTIFICATION PURSUANT TO
18 U. S. C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Clancy Systems
International, Inc. on Form 10-KSB for the period ended
September 30, 2002 as filed with the  Securities and Exchange
Commission  on the date hereof (the "Form 10-KSB"), I, Stanley
J. Wolfson,  the Chief Executive Officer and President of
the Company, certify, pursuant to 18 U.S.C. 1350, as adopted
pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-KSB fully complies with the requirements of
    Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Form 10-KSB fairly
    presents,in all material respects, the financial condition
    and results  of operations of the Companies.


Dated:  December 30, 2002

/s/Stanley J. Wolfson
Chief Executive Officer and President


























                                -28-

<PAGE>

Exhibit 99.2

CERTIFICATION PURSUANT TO
18 U. S. C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Clancy Systems
International, Inc. on Form 10-KSB for the period ended
September 30, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Form 10-KSB"), I,
Lizabeth M. Wolfson, Secretary-Treasurer and Chief
Financial and Chief Accounting Officer of the Company,
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant
to 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Form 10-KSB fully complies with the requirements
     of Section 13(a) of the Securities Exchange Act of 1934;
     and

(2)   The information contained in the Form 10-KSB fairly
      presents, in all material respects, the financial
      condition and results of operations of the Companies.

Dated: December 30, 2002

/s/Lizabeth M. Wolfson
Secretary-Treasurer and Chief Financial
and Chief Accounting Officer














                             -29-
<PAGE>




Board of Directors and Shareholders
Clancy Systems International, Inc.
  and Subsidiary


We have audited the consolidated balance sheet of Clancy Systems International,
Inc. and subsidiary as of September 30, 2001 and 2002, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years 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
audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Clancy
Systems International, Inc. and subsidiary at September 30,
2001 and 2002, and the consolidated results of their operations and their
consolidated cash flow for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.




Denver, Colorado
December 11, 2002           	CAUSEY DEMGEN & MOORE INC.


                            F-1
<PAGE>



              CLANCY SYSTEMS INTERNATIONAL, INC.
                    BALANCE SHEET
               September 30, 2001 and 2002

                         ASSETS

Current assets:                                     2001          2002
                                                    ----          ----
  Cash, including interest bearing accounts
   of $263,945 (2001) and $213,945 (2002)       $  385,491     $  357,315
  Accounts receivable                              342,323        339,599
  Income tax refund receivable (Note 7)             55,346         35,063
  Inventories (Note 2)                             144,602        148,517
  Prepaid expenses                                  14,645        138,141
                                                ----------     ----------
    Total current assets                           942,407      1,018,635

Furniture and equipment, at cost:
  Office furniture and equipment                    97,501        259,595
  Equipment  and equipment
   under service contracts (Note 10)               982,290      1,893,995
Leasehold improvements                                   -        105,259
Equipment and vehicles under capital leases
  (Note 6)                                               -        356,745
                                                ----------     ----------
                                                 1,079,791      2,615,594
Less accumulated depreciation and
  amortization                                    (811,211)    (1,170,030)
                                                ----------     ----------
Net furniture and equipment                        268,580      1,445,564

Other assets:
 Investment in partnership (Note 4)                454,159              -
 Deferred tax asset (Note 7)                        46,400         38,200
 Note receivable - employee                         10,277              -
 Deposits                                            3,194         20,640
 Goodwill (Note 4)                                       -        225,214
 Software development costs, net of
   accumulated amortization of $305,212
   (2001) and $368,012 (2002)                      146,035        150,193
                                                 ---------      ---------
   Total other assets                              660,065        434,247
                                                 ---------      ---------
                                               $ 1,871,052     $2,898,446
                                               ===========     ==========

                        See accompanying notes
                                 F-2
<PAGE>



              CLANCY SYSTEMS INTERNATIONAL, INC.
                    BALANCE SHEET
               September 30, 2001 and 2002

          LIABILITIES AND STOCKHOLDER'S EQUITY

                                                  2001            2002
Current liabilities:                              ----            ----

  Accounts payable                          $    16,008     $   141,092
  Accrued expenses                                    -         166,159
  Current portion of long-term debt
    (Note 5)                                          -         111,111
  Current portion of obligations
    under capital leases (Note 6)                     -         132,279
  Deferred revenue                              114,266         110,722
                                             ----------      ----------
   Total current liabilities                    130,274         661,363

Long-term debt, net of current portion
    (Note 5)                                          -         182,824
Obligations under capital leases, net
    of current portion (Note 6)                       -          53,423
Minority interest in subsidiary (Note 4)              -         142,769

Commitments (Notes 6 and 10)

Stockholders' equity (Note 9):
  Preferred stock, $.0001 par value;
   100,000,000 shares authorized, none issued         -               -

  Common stock, $.0001 par value; 800,000,000
    shares authorized, 361,617,938 shares
    (2001) 365,117,938 shares (2002) issued
    and outstanding                              36,162           36,512
  Additional paid-in capital                  1,131,397        1,151,547
  Retained earnings                             573,219          670,008
                                             ----------       ----------
    Total stockholders' equity                1,740,778        1,858,067
                                             ----------       ----------
                                            $ 1,871,052      $ 2,898,446
                                            ===========      ===========




                             See accompanying notes
                                   F-3
<PAGE>


                     CLANCY SYSTEMS INTERNATIONAL, INC.
                        STATEMENT OF OPERATIONS
            For the Years Ended September 30, 2001 and 2002

                                                      2001           2002
Revenues:                                             ----           ----
  Sales                                           $  219,250     $  213,082
  Service contract income (Notes 10 and 11)        1,293,299      2,418,208
  Parking ticket collections (Notes 10 and 11)       119,041        127,809
                                                  ----------     ----------
   Total revenues                                  1,631,590      2,759,099

Costs and expenses:
  Cost of sales                                      139,158         91,499
  Cost of services (Note 3)                          492,822        632,829
  Cost of parking ticket collections (Note 10)       116,176        114,025
  General and administrative                         610,830      1,664,102
  Research and development                            42,296         41,507
  Minority interest in loss of subsidiary
    (Note 4)                                               -         (9,861)
                                                  ----------      ---------
    Total costs and expenses                       1,401,282      2,534,101
                                                  ----------      ---------
Income from operations                               230,308        224,998

Other income (expense):
  Loss on disposal of assets                          (1,044)             -
  Interest income                                     12,143          3,702
  Interest expense                                    (5,986)       (53,185)
                                                   ---------      ---------
  Total other income (expense)                         5,113        (49,483)
                                                   ---------      ---------
Income before provision for income
  taxes and loss in equity-basis partnership         235,421        175,515

Provision for income taxes (Note 7):
  Current expense                                    (52,694)       (70,526)
  Deferred  expense                                  (28,822)        (8,200)
                                                  ----------      ---------
  Total income tax expense                           (81,516)       (78,726)


Income (loss) in equity-basis partnership
  (net of tax expense of $7,241, 2001) (Note 4)       14,117              -
                                                  ----------      ---------
Net income                                        $  168,022     $   96,789
                                                  ==========     ==========

Basic net income  per common share (Note 8)       $        *     $        *
                                                  ==========     ==========
*  Less than $.01 per share


                           See accompanying notes
                                  F-4

<PAGE>


                              CLANCY SYSTEMS INTERNATIONAL, INC.
                              STATEMENT OF STOCKHOLDERS' EQUITY
                         For the Years Ended September 30, 2001 and 2002

<TABLE>
<CAPTION>
<S>


                                                                   Additional
                                          Common stock               paid-in                Retained
                                      Shares        Amount           capital                earnings
                                      ------        ------           -------                --------
                                       <C>           <C>               <C>                     <C>
Balance, September 30, 2000        344,128,623   $  34,413        $  1,045,175            $  405,197

  Issuance of common stock in
   exchange for acquisition
   of web sites from an officer
   of the Company (Note 9)          17,489,315       1,749               86,222                    -


  Net income for the year ended              -           -                    -               168,022
                                   -----------    --------        -------------           -----------
Balance, September 30, 2001        361,617,938      36,162            1,131,397               573,219


  Issuance of stock for services
    (Note 9)                         3,500,000         350               20,150                     -

  Net income for the year ended
    September 30, 2002                       -           -                    -                96,789
                                   -----------    --------        -------------           -----------
Balance September 30, 2002         365,117,938   $  36,512         $  1,151,547            $  670,008
                                   ===========   =========         ============            ==========

                                        See accompanying notes
                                               F-5
</TABLE>
<PAGE>


                         CLANCY SYSTEMS INTERNATIONAL, INC.
                               STATEMENT OF CASH FLOWS
                   For the Years Ended September 30, 2001 and 2002

                                                          2001        2002
                                                          ----        ----
Cash flows from operating activities:
  Net income                                          $  168,022   $    96,789
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Loss on disposal of assets                             1,044             -
    Depreciation and amortization                        216,103       373,328
    Deferred income tax expense                           28,822         8,200
    Common stock issued for services
      and for acquisition of web sites                     1,749        20,500
    Changes in assets and liabilities:
     Investment in equity basis partnership              (21,358)            -
     Accounts receivable                                 (47,802)       95,049
     Inventories                                          19,650        (3,915)
     Income taxes refundable                             (55,346)       20,283
     Prepaid expenses                                     (2,545)     (100,380)
     Other assets                                              -          (845)
     Accounts payable                                      6,512        74,338
     Accrued expenses                                          -        14,694
     Income taxes payable                                (46,000)            -
     Deferred revenue                                     (9,904)       (3,544)
     Minority interest                                         -        (9,861)
                                                      ----------     ---------
       Total adjustments                                  90,925       487,847
                                                      ----------     ---------
  Net cash provided by operating activities              258,947       584,636

Cash flows from investing activities:
  Acquisition of furniture and equipment                 (97,015)     (332,917)
  Increase in software licenses and
    software development costs                           (77,020)      (68,533)
  Decrease in note receivable-employee                       341        10,277
  Increase in deposits and other assets                        -        (8,425)
                                                      ----------     ---------
    Net cash used in investing activities               (173,694)     (399,598)

Cash flows from financing activities:
  Payments on note payable - shareholder                 (45,000)            -
  Payments on notes payable and capital leases           (90,000)     (241,404)
                                                      ----------     ---------
    Net cash used in financing activities               (135,000)     (241,404)
                                                      ----------     ---------
Increase (decrease) in cash and cash equivalents         (49,747)      (56,366)

Cash and cash equivalents at beginning of year           435,238       413,681
                                                      ----------     ---------
Cash and cash equivalents at end of year             $   385,491   $   357,315
                                                     ===========   ===========

                             (continued on following page)
                               See accompanying notes
                                     F-6
<PAGE>

                         CLANCY SYSTEMS INTERNATIONAL, INC.
                               STATEMENT OF CASH FLOWS
                   For the Years Ended September 30, 2001 and 2002

                         (continued from preceding page)

Supplemental disclosure of cash flow information:

                                                       2001         2002
                                                       ----         ----
Cash paid during the year for interest             $    5,985    $   53,185
                                                   ----------    ----------
Cash paid during the year for income taxes         $  163,475    $   50,243
                                                   ----------    ----------

Supplemental disclosure of non-cash investing and financing activities:

During the year ended September 30, 2002, UTS entered into capital leases
for the purchase of equipment in the amount of $219,560.


                              See accompanying notes
                                     F-7
<PAGE>

                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

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, 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's 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.

Principles of Consolidation:

For the year ended September 30, 2001, the Company accounted for its investment
in UTS under the equity method of accounting. During the year ended September
30, 2002, the Company entered into a settlement agreement with the other owners
of UTS which affirmed the Company's 60% ownership interest in UTS. As a result,
the Company gained control of UTS and therefore has consolidated the financial
results of UTS with those of the Company for the entire year ended September
30, 2002. All significant intercompany 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.

Accounts receivable:

No provision for doubtful accounts was deemed necessary at September 30, 2001
or 2002.

                                 F-8

<PAGE>
                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

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.

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

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 techno-
logical 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, 2001 and 2002 amounted to $59,678 and $62,800,
respectively and is included in cost of services.

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 quarter ended September 30, 2002, the Company initiated a plan to replace
much of the equipment under service contracts over the next two years. As a
result, the Company recorded a change in estimate relating to the remaining
useful life of this equipment to two years. The change resulted in a charge
against income of approximately $12,000 during the quarter ended September
30, 2002 (no effect on loss per share) and will result in increased
depreciation charges over the next two years. Depreciation expense for the
years ended September 30, 2001 and 2002 amounted to $156,425 and $326,206,
respectively, and is included in cost of services.

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:

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 indefinitive lives will no longer be amortized,
but will be tested for impairment annually and also in the event of an
impairment indicator. The adoption of SFAS 142 did not result in a material
change in current or future operations.

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

                         F-9
<PAGE>
                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

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

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.

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 lots rents.

Advertising costs:

The Company expenses the costs of advertising as incurred. Advertising expense
was $15,963 and $12,633 for the years ended September 30, 2001 and 2002,
respectively.

Income taxes:

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS 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 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.

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.

                              F-10
<PAGE>
                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

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

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.

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 September 30,
2001 and 2002 and at various times during the years, the balance at
one of the financial institutions exceeded FDIC 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. A significant portion of the Company's revenues
are derived from contracts with universities, car rental companies and
municipalities.

Recent accounting pronouncements:

In 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146 (SFAS 146), Accounting for Costs
Associated with Exit or Disposal Activities. This standard requires the
recognition of a liability for certain costs associated with exit or disposal
activities. SFAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002. The Company does not expect SFAS 146 to
have a material effect on the Company's financial position, results of
operations or cash flows.

2.	Inventories

Inventories consist of the following at September 30:

                                              2001           2002
                                              ----           ----
     Finished goods                        $  24,233      $  22,272
     Work in process                           1,885          4,795
     Purchased parts and supplies            118,484        121,450
                                           ---------      ---------
                                           $ 144,602      $ 148,517
                                           =========      =========

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, 2001 and 2002, commissions
of $3,106 and $2,825 have been paid under this agreement, respectively.

                                F-11
<PAGE>
                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002


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 provided in the partnership agreement, the Company contributed $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. During
2001, UTS issued additional stock diluting the ownership interest of the Company
below 50%. Pursuant to the partnership agreement,substantially all management
authority was retained by UTS, and consequently, the Company accounted for their
investment in the Partnership using the equity method through September 30,
2001.

During the year ended September 30, 2001, the Company filed suit against UTS
and the officers of UTS claiming that UTS unlawfully issued dilutive shares of
stock in UTS. During the quarter ended September 30, 2002, the Company entered
into a settlement agreement with UTS reaffirming the Company's 60% ownership
interest. UTS was reorganized as a corporation. Therefore, the Company has
consolidated the results of operations of UTS as if the Company owned 60%
for the entire year ended September 30, 2002.

The Company's investment in the net assets of the UTS accounted for under
the equity method amounted to $454,159 at September 30, 2001. The condensed
results of the operations and financial position of UTS are summarized below:


Condensed statement of operations    For the year ended   For the year ended
---------------------------------    September 30, 2001   September 30, 2002
                                     ------------------   ------------------
   Total revenues                       $  1,002,883         $ 1,075,557
   Total costs and expenses                 (967,287)         (1,100,210)
                                        ------------         ------------
      Net income (loss)                 $     35,596             (24,653)
                                        ============         ===========

Condensed balance sheet                  September 30,       September 30,
----------------------                      2001                 2002
                                            ----                 ----
   Current assets                        $  155,251           $   62,834
   Non-current assets                     1,095,571            1,079,048
   Current liabilities                     (182,945)            (548,713)
   Long-term liabilities                   (369,971)            (236,247)
                                         ----------           ----------
   Stockholders' equity                  $  697,906           $  356,922
                                         ==========           ==========

                               F-12
<PAGE>
                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

4.	Investment in partnership (continued)

Pro forma consolidated financial information for the year ended September
30, 2001 is as follows:


  Pro forma consolidated                   For the year ended
  statement of operations                  September 30, 2001
  -----------------------                  ------------------

  Total revenues                             $    2,634,473
  Total costs and expenses                       (2,466,451)
                                             --------------
  Net income                                $      168,022
                                             ==============

                                               September 30,
Pro forma consolidated balance sheet               2001
------------------------------------               ----
  Current assets                              $ 1,090,290
  Non-current assets                            1,574,482
  Current liabilities                            (393,377)
  Long-term liabilities                          (530,617)
                                              -----------
  Stockholders' equity                        $ 1,740,778
                                              ===========

5.	Long-term debt

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 is due and payable in 54 monthly installments.

The loan is evidenced by a promissory note, collateralized by a second
mortgage of $85,000 on property located at Toa Baja, Puerto Rico, 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, no dividends or other distribution without the written
consent of the Bank and other administrative requirements.

                                F-13
<PAGE>
                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

5.	Long-term debt (continued)

The balance of long-term debt at September 30, 2002 was as follows:

                                                    2002
                                                    ----
  Total long-term debt                          $   293,935
  Less current portion                             (111,111)
                                                -----------
  Long-term debt, net of current portion        $   182,824
                                                ===========

Estimated scheduled maturities of principal during the next three years
are as follows:

Year ending September 30,:
                       2003                      $  111,111
                       2004                         111,111
                       2005                          71,713
                                                 ----------
                                                 $  293,935
                                                 ==========

6.	Lease commitments

UTS is party to certain non-cancelable lease arrangements for vehicles with
a lease finance company. Terms of such leases call for UTS to make monthly
lease payments of from $135 to $577 which leases expire on various dates
through the year 2006. The effective annual interest rate, on
the present value of the monthly payments vary from 12.25% to 14.95%.

On December 2001, UTS entered into a lease agreement for the acquisition of
parking meters and associated equipment. The lease term is for 20 months and
provides for a payment of $14,390 per month for 11 months beginning 30 days
from the date of delivery of the first of the equipment to UTS and a payment
of $10,940 per month for an additional 9 months thereafter.

UTS leases office spaces in Catafno and Mayaguez under a three year lease,
and in Humacao, Manati and Carolina, Puerto Rico under a five year lease,
which commenced on October 1, 2002, April 27, 2000, May 26, 1999, April 1, 2000
and September 1999, respectively. The rental rates for the offices are $1,400,
$850, $800, $550, and $885 per month, respectively.

The Company leases office space in Denver, Colorado under a 24 month lease
through May 31, 2003 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, 2001 and 2002 amounted to $41,958 and $98,492,
respectively.

                            F-14
<PAGE>

                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

6.	Lease commitments (continued)

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, 2002.

                                                   Real
Year ended December 31,       Capital leases    estate leases    Total
                              --------------    -------------    -----
    2003                       $  156,807        $   35,412   $ 192,219
    2004                           30,209            26,349      56,558
    2005                           24,384            13,184      37,568
    2006                              374                 -         374
                               ----------        ----------   ---------
Total minimum lease payments   $   211,774       $   74,945   $ 286,719
                                                 ==========   =========
Amount representing interest        26,072
                               -----------
Present value of future
  minimum payments                 185,702
Current portion of lease
  obligations                      132,279
                               -----------
Obligations under capital
  leases due after
  one year                     $    53,423
                               ===========
The Company's property under capital leases, which is included in property
and equipment, is summarized as follows:

Property recorded under capital leases include the following amounts:

                                                         2002
                                                         ----
Equipment                                             $   238,755
Vehicles                                                  117,990
                                                      -----------
                                                          356,745
Accumulated amortization                                  (83,999)
                                                      -----------
Net capitalized leased property                       $   272,746
                                                      ===========
                                 F-15
<PAGE>
                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

7.	Income taxes

The components of the Company's deferred tax assets and liabilities at
September 30 are as follows:
                                              2001           2002
                                              ----           ----
Non current deferred tax assets           $  118,100     $   87,700
Non current deferred tax liabilities         (71,700)       (49,500)
                                          ----------     ----------
                                          $   46,400     $   38,200
                                          ==========     ==========
Deferred tax assets:
  Loss on equity investment               $   16,000     $   16,600
  Section 263A Capitalization                 35,000         35,000
  Website acquired from shareholder           67,100         36,100
  Other                                            -              -
                                          ----------     ----------
                                             118,100         87,700
Deferred tax liabilities:
  Depreciation and amortization              (71,700)       (49,500)
                                          ----------     ----------
  Net non-current deferred taxes          $   46,400     $   38,200
                                          ==========     ==========
8.	Basic net income per common share

Basic net income per common share is based on the weighted average number
of shares outstanding during the years ended September 30, 2001 and 2002,
of 354,670,128 shares and 362,782,322 shares respectively.

9.	Stockholders' equity

In November 1999, the Company entered into a letter of intent to acquire
two website related businesses owned and developed by the Company's president
and major shareholder for shares of the Company's common stock valued at
$255,344 (17,489,315 shares of common stock at $.0146 per share). The
businesses were acquired in February 2002 and were recorded at the president's
historical cost basis in the trademarks and proprietary technology related to
the websites which approximates the par value of the shares issued of $1,749.
The income tax benefit to be derived from the amortization of the tax basis
of the web sites is recorded as an addition of $86,222 to additional
paid-in-capital.

                              F-16
<PAGE>
                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

9.	Stockholders' equity (continued)

During the year ended September 30, 2002, the Company issued 3,000,000 shares
of common stock to an employee of the Company valued at $18,000 ($.006 per
share based on market value) and 500,000 shares of common stock to an employee
of the Company valued at $2,500 ($.005 per share based on market value) for
services performed.

10.	Professional service contracts

Clancy provides equipment and support services under 12 month professional
service contracts. At September 30, 2002, all of the contracts contained
cancellation provisionsrequiring 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:
                                              2001          2002
                                              ----          ----
  Equipment under service contracts        $  982,290   $  1,062,867
  Less accumulated depreciation              (731,210)      (734,107)
                                           ----------   ------------
                                           $  251,080   $    328,760
                                           ==========   ============

Parking citation collection services:

Clancy formed an agreement with the town of Logan, Utah for the
period of June 1998 through May 1999, for the purpose of providing parking
citation issuance, ticket processing, meter collections and maintenance,
and ticket collections. In conjunction with the contract, Clancy
and the Town each receive half of all revenues after payment of all
associated costs related to the collections. In May 1998, Clancy paid
a non-refundable guarantee of $35,000 to Logan which was amortized monthly
on a straight-line basis over the period of the agreement.

The terms of the agreements can be extended or discontinued with 30 days
written notice. At September 30, 2002 the Logan, Utah agreement was in
effect until June 30, 2003.

UTS has professional service contracts with the Municipal
Governments of Mayaguez, Humacao, Manati, Arecibo and Carolina, Puerto Rico,
to provide the equipment and management of its digital parking meter system.
Under the terms of the contracts, UTS will pay to the Municipalities
25% of the income before income taxes.

                                   F-17
<PAGE>
                        CLANCY SYSTEMS INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                         September  30, 2001 and 2002

11.	Export sales

The Company's export sales for the years ended September 30, by geographic
area, are as follows:
                                                    2001           2002
                                                    ----           ----

     Canada                                     $  105,000     $     84,782
                                                ----------     ------------
     Puerto Rico                                $        -     $  1,075,557
                                                ==========     ============


























                                      F-18
<PAGE>