UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2002

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ___________to____________

Commission file number: 33-4882-D

CLANCY SYSTEMS INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

Colorado 84-1027964

(State or other jurisdiction of (IRS Employer Identification

incorporation or organization) Number)

2250 S. Oneida #308, Denver, Colorado 80224

(Address of principal executive offices and Zip Code)

(303) 753-0197

(Registrant's telephone number)

N/A

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months

(or for such Mr. Shorter period that the registrant was required to file such reports), and (2)

has been subject to such filing requirements for the past 90 days: Yes _X_ No ___

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of the issuer's classes of common stock, as of February

12, 2003 is 365,117,938 shares, $.0001 par value.

CLANCY SYSTEMS INTERNATIONAL, INC.

INDEX

Page No.

PART I. FINANCIAL INFORMATION

Consolidtated Balance Sheet - September 30, 2002

and December 31, 2002 (unaudited) 2 and 3

Consolidated Statement of Income - For the Three Months

Ended December 31, 2001 and 2002 (unaudited) 4

Consolidated Statement of Stockholders' Equity - For the

Three Months Ended December 31, 2002 (unaudited) 5

Consolidated Statement of Cash Flows - For the Three Months

Ended December 31, 2001 and 2002 (unaudited) 6

Notes to Unaudited Consolidated Financial Statements 7

Management's Discussion and Analysis of Financial Condition and

Results of Operations 9

PART II. OTHER INFORMATION 11

CLANCY SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEET

September 30, 2002 and December 31, 2002

(unaudited)

ASSETS

September December

Current assets:

Cash, including interest bearing accounts $ 357,315 $ 414,136

Accounts receivable 339,599 447,855

Income tax refund receivable 35,063 8,410

Inventories (Note 2) 148,517 135,839

Prepaid expenses 138,141 114,341

__________ _________

Total current assets 1,018,635 1,120,581

Furniture and equipment, at cost:

Office furniture and equipment 259,595 199,424

Equipment under service contracts 1,893,995 2,446,790

Leasehold improvements 105,259 95,482

Equipment and vehicles under capital leases 356,745 169,582

_________ _________

2,615,594 2,911,278

Less accumulated depreciation (1,170,030) (1,224,851)

__________ _________

Net furniture and equipment 1,445,564 1,686,427

Other assets:

Deferred tax asset (Note 3) 38,200 25,150

Deposits 20,640 21,996

Goodwill 225,214 225,214

Software development costs, net of

accumulated amortization 150,193 157,869

_________ _________

Total other assets 434,247 430,229

_________ _________

$ 2,898,446 $ 3,237,237

‗‗‗‗‗‗‗‗‗‗‗ ‗‗‗‗‗‗‗‗‗‗‗

See accompanying notes

CLANCY SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEET

September 30, 2002 and December 31, 2002

(unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY

September December

Current liabilities:

Accounts payable $ 141,092 $ 234,114

Accrued Expenses 166,159 183,029

Current portion of long term debt 111,111 169,715

Current portion of obligations

under capital leases 132,279 132,279

Deferred revenue 110,722 103,222

__________ _________

Total current liabilities 661,363 882,359

Long-term debt, net of current portions 182,824 238,985

Obligations under capital leases, net of

current portion 53,423 83,408

Minority interest in subsidiary 142,769 146,619

Commitments

Stockholders' equity:

Preferred stock, $.0001 par value;

100,000,000 shares authorized,

none issued - -

Common stock, $.0001 par value;

800,000,000 shares authorized,

365,117,938 shares issued and

outstanding 36,512 36,512

Additional paid-in capital 1,151,547 1,151,547

Retained earnings 670,008 757,807

_________ _________

Total stockholder's Equity 1,858,067 1,945,866

___________ __________

$ 2,898,446 $ 3,237,237

‗‗‗‗‗‗‗‗‗‗‗ ‗‗‗‗‗‗‗‗‗‗‗

See accompanying notes

CLANCY SYSTEMS INTERNATIONAL, INC.

CONSOLIATED STATEMENT OF OPERATIONS

For the Three Months Ended December 31, 2001 and 2002

(unaudited)

2001 2002

Revenues:

Sales $ 39,395 $ 40,775

Service contract income 342,319 621,451

Parking ticket collections 21,230 38,286

_________ _________

Total revenues 402,944 700,512

Costs and expenses:

Cost of sales 34,538 20,443

Cost of services 114,238 122,096

Cost of parking ticket collections 26,274 35,688

General and administrative 181,408 338,928

Research and development 14,123 8,925

Minority interest in loss of subsidiary - 3,849

_________ ________

Total costs and expenses 370,581 529,929

Income from operations 32,363 170,583

Other income (expense):

Loss on disposal of assets - (17,762)

Interest income 951 548

Interest expense - (11,507)

_________ _________

Total other income (expense) 951 (28,721)

Income before provision for income

taxes and loss in equity-basis

partnership 33,314 141,862

Provision for income taxes:

Current expense (14,545) (41,013)

Deferred expense - (13,050)

_________ _________

Total income tax expense (14,545) (54,063)

Loss in equity basis

partnership (net of tax benefit

of $2,936 - 2001) (4,791) -

_________ ________

Net income $ 13,978 $ 87,799

‗‗‗‗‗‗‗‗‗‗‗ ‗‗‗‗‗‗‗‗‗‗‗

Basic net income per common share $ * $ *

‗‗‗‗‗‗‗‗‗‗‗ ‗‗‗‗‗‗‗‗‗‗‗

Weighted average number of shares

outstanding 361,600,000 365,118,000

*Less than $.01 per share ‗‗‗‗‗‗‗‗‗‗‗ ‗‗‗‗‗‗‗‗‗‗‗

See accompanying notes

CLANCY SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Three Months Ended December 31, 2001 and 2002

(unaudited)

2001 2002

Cash flows from operating activities:

Net income $ 13,978 $ 87,799

Adjustments to reconcile net

income to net cash provided by operating

activities:

Depreciation and amortization 47,431 69,615

Deferred income tax expense 4,500 13,050

Changes in assets and liabilities:

Investment in equity-basis partnership 7,728 -

Accounts receivable 55,180 (108,256)

Inventories (2,892) (305)

Income taxes refundable - 26,653

Prepaid expenses 4,209 36,783

Accounts payable (16,008) 93,022

Accrued Expenses - 16,870

Income taxes payable 7,030 -

Deferred Revenue (11,982) (7,500)

Minority Interest - 3,850

________ _______

Total adjustments 95,196 143,782

________ _______

Net cash provided by operating activities 109,174 231,581

Cash flows from investing activities:

Acquisition of furniture and equipment (30,033) (250,099)

Increase in software licenses and software

development costs (7,675) (21,826)

Decrease in note receivable-employee 35 -

Increase in deposits and other assets - (2,000)

________ _______

Net cash used in investing activities (37,673) (273,925)

Cash flows from financing activities:

Borrowings on notes payable - 160,000

Payments on notes payable and capital leases - (60,835)

________ _______

Net cash provided by financing activities - 99,165

________ _______

Increase in cash and cash equivalents 71,501 56,821

Cash and cash equivalents at beginning

of period 385,491 357,315

________ ________

Cash and cash equivalents at end

of period $ 456.992 $ 414,136

‗‗‗‗‗‗‗‗‗‗‗ ‗‗‗‗‗‗‗‗‗‗‗

See accompanying notes

1. Basis of presentation

The accompanying financial statements have been prepared by the Company,

without audit. In the opinion of management, the accompanying unaudited

financial statements contain all adjustments (consisting of only normal

recurring accruals) necessary for a fair presentation of the financial

position as of September 30, 2002 and December 31, 2002, and the results

of operations and cash flows for the periods ended December 31, 2001 and

2002.

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.

2. Inventories

Inventories consist of the following at:

September 30, December 31,

2002 2002

Finished goods $ 22,272 $ 40,784

Work in process 4,795 42,247

Purchased parts and supplies 121,450 52,808

________ ________

$148,517 $135,839

‗‗‗‗‗‗‗‗‗‗ ‗‗‗‗‗‗‗‗‗

3. Income taxes

The provision for income taxes for the three months ended December

31, 2001 and 2002 is based on the expected tax rate for the year.

As of September 30, 2002 and December 31, 2002, total deferred tax

assets and liabilities are as follows:

September 30, December 31,

2002 2002

Deferred tax assets $ 87,700 $ 98,700

Deferred tax liabilities (49,500) (73,550)

_________ ________

$ 38,200 $ 25,150

‗‗‗‗‗‗‗‗‗ ‗‗‗‗‗‗‗‗‗

4. Investment in UTS

Pro Forma consolidated financial information for the quarter

ended December 31, 2001 is as follows:

Pro Forma consolidated For quarter ended

statement of operations December 31, 2001

Total Revenues $ 685,784

Total costs and expenses (671,806)

____________

Net income $ 13,978

‗‗‗‗‗‗‗‗‗‗‗‗

Item 2.

Management's Discussion and Analysis of Financial Condition and

Results of Operations

Critical Accounting Policies:

The Company has identified the accounting policies described

below as critical to its business operations and the understanding

of the Company's results of operations. The impact and any

associated risks related to these policies on the Company's

business operations is discussed throughout this section where

such policies affect the Company's reported and expected financial

results. The preparation of this Quarterly Report requires the

Company to make estimates and assumptions that affect the reported

amount of assets and liabilities of the Company, revenues and

expenses of the Company during the reporting period and contingent

assets and liabilities as of the date of the Company's financial

statements. There can be no assurance that the actual results

will not differ from those estimates.

Revenue Recognition:

Revenue derived from professional service contracts on equipment and

support services is included in income 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.

Computer software:

Costs incurred to establish the technological feasibility of computer

software are research and development costs, which are charged to

expense as incurred. Software development costs incurred subsequent

to establishment of technological feasibility are capitalized and

subsequently amortized based on the greater of the straight line method

over the remaining estimated economic life of the product (generally five

years) or the estimate of current and future revenues for the related

software product.

Goodwill

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.

Material Changes in Financial Condition

At December 31, 2002, the Company had working capital of $238,222

derived primarily from contract sales and contract service, as compared

to working capital of $357,272 at September 30, 2002. The Company

anticipates that working capital will be sufficient to meet its

working capital requirements for the current year. Funds will continue

to be used for general and administrative purposes, equipment purchases,

equipment manufacturing, travel, marketing and research and development.

Material Changes in Results of Operations

During the quarter ended December 31, 2002, the Company generated

revenues from contract sales from its professional services contracts,

sales, remit-online payment processing, privatization contract, and

meter operations in Puerto Rico. New contracts signed during the

quarter included Loudoun County VA, Mountain Village CO, Ellensburg WA,

and Bay Area Rapid Transit. UTS added 663 meters to it's Cauguas

contract. Enforcement efforts have also begun. Consolidated revenues

during the quarter were higher than the prior year's quarter by 74%.

Consoliated expenses increased by 43% over the prior year's quarter.

The Company reported a profit of $87,799 ($82,028 for Clancy directly

and $5,771 for UTS)for the quarter as compared to a net profit of

$13,978 for the prior year's quarter. The consolidated revenues are

reported as $700,512 ($421,246 for Clancy directly, up 5% from the

prior year's quarter, and $279,266 for UTS). The consolidated expenses

are reported as $529,929 ($320,807 for Clancy directly, down 10% from

the prior year's quarter and $209,122 for UTS). Long term debt, capital

lease, and interest expenses are attributed to the obligations of UTS.

Clancy directly has no outstanding debt.

Forward Looking Information

Statements of the Company's or management's intentions, beliefs,

anticipations, expectations and similar expressions concerning future

events contained in this document constitute "forward looking statements"

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

with any future event, there can be no assurance that the events described

in the 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 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

information posed on these boards. Management can only provide accurate

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.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On September 19, 2000, the Company filed an action in Suffolk County

Superior Court against Mr. John Mr. Short, Syracuse, New York, who posted

as Darth4, MrDarth4, and other aliases on Raging Bull and other message

boards. Relief sought includes monetary damages for harm done to the

Company and its officers in an amount not yet determined, 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. In a judgment rendered by the Superior Court Department

of the Trial Court of Suffolk County, a default judgment against

Mr. Short was entered on October 31, 2001. The Judgment orders Mr. Short

to pay the Company attorney's fees and costs of $16,699 and an

additional fine of $50,000 for his willful failure to comply with a Court

order of June 28, 2001. On November 19, 2002 Short filed a Motion for

Relief of Default Judgment. The motion was denied on December 13, 2002.

On December 20,2002, Short filed a Notice of Appeal from Order Denying

Motion for Relief from Default Judgment. This appeal is still pending.

On January 23, 2003, Short filed an Emergency Motion for Stay of Execution

of Judgment Pending Appeal from Order Denying Motion for Relief from

Default Judgment. On February 6, 2003 this Motion was denied.

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. 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 quarterly 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.

Item 6. Exhibits and Reports on Form 8-K

Section 302 Certification by Chief Executive Officer

Section 302 Certification by Chief Financial Officer

Exhibit 99.1 Section 906 Certification by Chief Executive

Officer

Exhibit 99.2 Section 906 Certification by Chief Financial

Officer

Filed herewith.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the

Registrant has duly caused this report to be signed on its behalf by the

undersigned thereunto duly authorized.

Date: February 14, 2003 CLANCY SYSTEMS INTERNATIONAL, INC.

(Registrant)

By: /s/ Stanley J. Wolfson

Stanley J. Wolfson, President

and Chief Executive Officer

Section 302 Certification

Quarterly Report on Form 10-QSB

I, Stanley J. Wolfson, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Clancy

Systems International, Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other

financial information included in this quarterly 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 quarterly 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 quarterly 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 quarterly report (the "Evaluation Date"); and

c) presented in this quarterly 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):

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 quarterly 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: February 14, 2003

/s/Stanley J. Wolfson

Chief Executive Officer

Section 302 Certification

Quarterly Report on Form 10-QSB

I, Lizabeth M. Wolfson, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Clancy

Systems International, Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other

financial information included in this quarterly 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 quarterly 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 quarterly 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 quarterly report (the "Evaluation Date"); and

c) presented in this quarterly 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):

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 quarterly 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: February 14, 2003

/s/Lizabeth M. Wolfson

Chief Financial Officer

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 Quarterly Report of Clancy Systems International,

Inc. (the "Company") on Form 10-QSB for the period ended December 31,2002

as filed with the Securities and Exchange Commission on the date hereof

(the "Report"), I, Stanley J. Wolfson, Chief Executive 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 Report fully complies with the requirements of

section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents,

in all material respects, the financial condition and result of

operations of the Company.

/s/ Stanley J. Wolfson

_______________________

Chief Executive Officer

February 14, 2003

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 Quarterly Report of Clancy Systems International,

Inc. (the "Company") on Form 10-QSB for the period ended December 31 2002

as filed with the Securities and Exchange Commission on the date hereof

(the "Report"), I, Lizabeth M. Wolfson, Chief Financial 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 Report fully complies with the requirements of section

13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents,

in all material respects, the financial condition and result of operations

of the Company.

/s/ Lizabeth M. Wolfson

_______________________

Chief Financial Officer

February 14, 2003