10QSB 1 a10q1206.txt 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, 2006 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 33-4882-D CLANCY SYSTEMS INTERNATIONAL, INC. (Exact name of Registrant as specified in its charter) Colorado 84-1027964 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 2250 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 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 14, 2007 is 382,617,938 shares, $.0001 par value. Transitional Small Business Disclosure Format: Yes No X Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X CLANCY SYSTEMS INTERNATIONAL, INC. INDEX Page No. PART I. FINANCIAL INFORMATION Consolidated Balance Sheets - September 30, 2006 and December 31, 2006 (unaudited) 2 and 3 Consolidated Statements of Income - For the Three Months Ended December 31, 2005 and 2006 (unaudited) 4 Consolidated Statement of Stockholders' Equity - For the Three Months Ended December 31, 2006 (unaudited) 5 Consolidated Statements of Cash Flows - For the Three Months Ended December 31, 2005 and 2006 (unaudited) 6 and 7 Notes to Unaudited Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Controls and Procedures 16 PART II. OTHER INFORMATION 16 Item 1. Legal Proceedings 16 Item 6. Exhibits 16 -1- CLANCY SYSTEMS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS ASSETS September 30, December 31, 2006 2006 (Unaudited) Current assets: ------------ ----------- Cash and cash equivalents $ 387,663 $ 1,107,274 Accounts receivable, net of allowance for doubtful accounts 642,056 578,520 Income tax receivable 23,264 1,187 Inventories 104,224 112,803 Prepaid expenses 89,124 62,158 ---------- ---------- Total current assets 1,246,331 1,861,942 ---------- ---------- Furniture and equipment, at cost: Office furniture and equipment 226,011 226,011 Computers and equipment under service contracts 2,638,800 2,704,561 Leasehold improvements 81,424 81,424 Vehicles, including vehicles under capital leases 149,886 149,885 --------- --------- 3,096,121 3,161,881 Less accumulated depreciation (2,250,994) (2,323,875) ---------- --------- Net furniture and equipment 845,127 838,006 ---------- ---------- Other assets: Deferred tax asset 65,100 48,400 Investment in marketable securities 588,212 588,212 Deposits and other 21,740 21,096 Goodwill 404,547 404,547 Software development costs, net of accumulated amortization 221,878 225,048 --------- -------- Total other assets 1,301,477 1,287,303 --------- --------- $ 3,392,935 $ 3,987,251 =========== =========== See accompanying notes to consolidated financial statements. -2- CLANCY SYSTEMS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 2006 2006 (Unaudited) ------------ ----------- Current liabilities: Accounts payable $ 27,826 $ 418,673 Accrued expenses 376,075 342,516 Income taxes payable - 40,122 Current portion of obligations under capital leases 3,279 3,335 Deferred revenue 128,853 111,890 --------- -------- Total current liabilities 536,033 916,536 Obligations under capital leases, net of current portion 9,941 8,998 --------- ------- Total liabilities 545,974 925,534 --------- ------- 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, 382,617,938 shares issued and outstanding 38,262 38,262 Additional paid-in capital 1,359,797 1,359,797 Retained earnings 1,448,902 1,663,658 --------- --------- Total stockholders' equity 2,846,961 3,061,717 ----------- ----------- $ 3,392,935 $ 3,987,251 =========== =========== See accompanying notes to consolidated financial statements. -3- CLANCY SYSTEMS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended December 31, 2005 and 2006 (Unaudited) December December 31, 2005 31, 2006 Revenues: -------- -------- Sales $ 36,463 $ 38,962 Service contract income 679,006 712,797 Parking ticket collections 146,775 304,780 ---------- ---------- Total revenues 862,244 1,056,539 ---------- ---------- Costs and expenses: Cost of sales 36,177 9,376 Cost of services 164,198 152,778 Cost of parking ticket collections 25,636 24,156 General and administrative 479,222 554,769 Research and development 14,650 - --------- --------- Total costs and expenses 719,883 741,079 --------- --------- Income from operations 142,361 315,460 -------- --------- Other income (expense): Interest income 7,033 10,803 Interest expense (6,552) ( 948) Other Income 1,838 - --------- --------- Total other income (expense) 2,319 9,855 --------- --------- Income before provision for income taxes 144,680 325,315 --------- ---------- Provision for income taxes: Current expense (benefit) 21,509 93,859 Deferred expense (benefit) 14,600 16,700 ---------- --------- Total income tax expense (benefit) 36,109 110,559 ---------- --------- Net income $ 108,571 $ 214,756 =========== ========== Basic and diluted net income per common share $ * $ * ========== =========== Weighted average number of shares outstanding 382,617,938 382,617,938 ============ =========== *Less than $.01 per share See accompanying notes to consolidated financial statements. -4- CLANCY SYSTEMS INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY For the Three Months Ended December 31, 2006 (unaudited)
Additional Common Stock Paid-In Retained Shares Amount Capital Earnings ------ ------ --------- -------- Balance, September 30, 2006 382,617,938 $ 38,262 $ 1,359,797 $ 1,448,902 Net income for the three months ended December 31, 2006 - - - 214,756 ---------- --------- ---------- ---------- Balance, December 31, 2006 382,617,938 $ 38,262 $ 1,359,797 $ 1,663,658 =========== ========= ============= =========== See accompanying notes to consolidated financial statements. -5-
CLANCY SYSTEMS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended December 31, 2005 and 2006 (Unaudited) December December 31, 2005 31, 2006 ------- ------- Cash flows from operating activities: Net income $ 108,571 $ 214,756 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 107,596 95,967 Deferred income tax expense 14,600 16,700 Changes in assets and liabilities: Accounts receivable 16,100 63,536 Inventories (9,594) (8,579) Income taxes refundable (14,505) 22,077 Prepaid expenses 20,519 26,966 Accounts payable 57,370 390,847 Accounts payable, related party (1,530) - Accrued expenses (46,310) (33,559) Income taxes payable (92,753) 40,122 Deferred revenue (7,002) (16,963) ---------- --------- Total adjustments 44,491 597,114 ---------- --------- Net cash provided by operating activities 153,062 811,870 ---------- --------- Cash flows from investing activities: Acquisition of furniture and equipment (34,330) (65,760) Increase in software licenses and software development costs (20,561) (25,111) Increase in investments in marketable securities (84,242) - Decrease in deposits and other assets 10,374 (501) ---------- --------- Net cash(used in) investing activities (128,759) (91,372) ---------- --------- Cash flows from financing activities: Payments on long-term debt and capital leases (3,895) (887) ---------- ---------- Net cash (used in) financing activities (3,895) (887) ----------- ---------- See accompanying notes to consolidated financial statements. -6 CLANCY SYSTEMS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) For the three months ended December 31, 2005 and 2006 (Unaudited) December December 31, 2005 31, 2006 ------- ------- Increase in cash and cash equivalents 20,408 719,611 Cash and cash equivalents at beginning of period 533,485 387,663 ---------- --------- Cash and cash equivalents at end of period $ 553,893 $ 1,107,274 ========== ========== See accompanying notes to consolidated financial statements. -7- CLANCY SYSTEMS INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2006 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying unaudited consolidated financial statements reflect all adjustments that, in the opinion of management, are considered necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. The results of operations for such periods are not necessarily indicative of the results expected for the full fiscal year or for any future period. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Clancy Systems International, Inc. and Subsidiary included in the Form 10-KSB for the fiscal year ended September 30, 2006. The Company's subsidiary, Urban Transit Solutions, Inc. ("UTS") was incorporated under the Laws of the Commonwealth of Puerto Rico. The financial statements of UTS have been prepared on the basis of accounting principles generally accepted in the United States of America and are denominated in U.S. dollars. Therefore, there are no amounts recorded for foreign currency translation or for transactions denominated in a foreign currency. The Company has consolidated the financial results of UTS with those of the Company for the three months ended December 31, 2005 and 2006. All significant intercompany transactions and balances have been eliminated in consolidation. 2. Inventories Inventories consist of the following at: September 30, December 31 2006 2006 ------------ ----------- Finished goods $ 15,574 $ 15,064 Work in process 2,962 46,297 Purchased parts and supplies 85,688 51,442 ---------- --------- $ 104,224 $ 112,803 ========== ========= -8- CLANCY SYSTEMS INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2006 3. Income taxes The provision for income taxes for three months ended December 31, 2005 and 2006 is based on the expected rate for the tax year. The components of the Company's deferred tax assets and liabilities are as follows: September 30, December 31, 2006 2006 ------------ ----------- Non-current deferred tax assets $ 132,700 $ 122,200 Non-current deferred tax liabilities (67,600) (73,800) ------------ ----------- $ 65,100 $ 48,400 ============ =========== 4. Recent Accounting Pronouncements SFAS 157, "Fair Value Measurements", defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. Management has not evaluated the impact of this statement. The effective date for SFAS 157 is effective for years beginning after November 15, 2007. FIN No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (Issued 6/06)." This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This Interpretation prescribes a recognition and measurement of a tax position taken or expected to be taken in a tax return. The enterprise determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. -9- CLANCY SYSTEMS INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2006 (continued) This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. Management does not expect adoption of FIN No. 48 to have a material impact on our financial statements. Item. 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Management's Statement Regarding Forward Looking Information Statements of the Company's or management's intentions, beliefs, anticipations, expectations and similar expressions concerning future events contained in this document constitute "forward looking statements". As with any future event, there can be no assurance that the events described in forward looking statements made in this report will occur or that the results of future events will not vary materially from those described in the forward looking statements made in this document. Important factors that could cause the Company's actual performance and operating results to differ materially from the forward looking statements include, but are not limited to, (i) the ability of the Company to obtain new customers, (ii) the ability of the Company to maintain its competitive position in the parking enforcement business by continuing to offer competitive products and services, (iii) the ability of the Company to reduce costs and thereby maintain adequate profit margins. At December 31, 2006, the Company had consolidated working capital of $945,406 derived primarily from contract sales and contract service. 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, 2007. The company settles funds for permit collections after the end of each month. Occasionally this overlaps into a next quarter. This is reflected in an accounts payable amount of $418,673 and an increase in revenues by approximately the same amount. The timing of the payout is captured as a an accounts payable amount if it falls into a subsequent quarter by a few days. COMPARISON OF RESULTS FOR THE THREE MONTHS ENDED December 31, 2005 AND 2006 REVENUES. From the quarter ended December 31, 2005 to the quarter ended December 31, 2006 revenues increased by $194,295 or 22.5% from $862,244 to $1,056,539. The increase in revenues is due to the addition of new customers and products during the quarter ended December 31, 2006. Clancy's Remit-online.com service has processed 54,198 transactions totaling $2,238,410 for the quarter ended December 31, 2006. Revenues are generated based on a per transaction fee less bank processing costs. Parking ticket collections under revenues have more than doubled compared to the same period last year due to an increase in transactions resulting in an increase in transaction fees booked through Remit-online services. -10- The gross amount of cash flowing through Remit-online.com cannot be presented as revenue based on the SEC accounting guidance. The Company only presents its net profit from each transaction as revenue in the statements of operations. COST OF SERVICES. From the quarter ended December 31, 2005 to the quarter ended December 31, 2006, cost of services decreased by $11,420 or 7.0% from $164,198 to $152,778 for the Company. Cost of services as a percentage of service contract income was 24.2% for the 2005 quarter and 21.4% for the 2006 quarter. RESEARCH AND DEVELOPMENT. The Company's parking enforcement systems research and development costs decreased from $14,650 to $0, or 100%, from the quarter ended December 31, 2005 to 2006. Product development and improvement is still paramount to the Company, and costs will be incurred for development of new items. GENERAL AND ADMINISTRATIVE. General and administrative expenses increased by $75,547 or 15.8% from $479,222 to $554,769 the for quarter ended December 31, 2005 and 2006, respectively. The increase relates primarily to increased rent, salaries, office supplies and repairs and maintenance expenses at UTS from opening of new office locations. NET INCOME. For the quarter ended December 31, 2006, the Company reported net income of $214,756 compared to $108,571 for the quarter ended December 31, 2005. The primary reason for the increase in net income relates to an increase in permit processing, online payments, and ticket collections. In order to keep its products and systems from becoming obsolete, the Company regularly modifies and updates its hardware and software. In order to streamline its ticket writing and car rental equipment, the Company redesigned the printer so that it weighs less than two pounds. New battery technology has also allowed the Company to reduce the size and weight of the printers. During the quarter ended December 31, 2005, the Company began production of a printer using wireless Bluetooth technology. The Company manufactures a 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 also developed a keyboard cradle for the Palm devices. The Palm keyboard has a 45 key full alpha/numeric keypad with function keys and assignable function keys. Management keeps informed of new developments in components so that the printer and keypads are up-to-date, fast and suit user requirements. The Company communicates with vendors on a regular and ongoing basis so that management is aware of upgraded components, new technologies and processes that can be used to upgrade its hardware. The Company has a relationship with an engineer, who, although he works as an independent contractor, dedicates as much time as the Company requires to develop and enhance its products. The engineer also performs research and development for the Company and makes prototype boards for testing and evaluation. -11- The Company's software is developed in-house by four full- time programmers and by the Company's President, Stanley Wolfson, and is maintained and updated on a regular basis. Clancy is a qualified Microsoft Certified Partner. This relationship allows the Company to receive pre-releases of software products which gives the Company a leading edge on upgrading programs and embedding new services into our systems. The office computer software allows daily ticket, rental and inventory information to be transferred from the portable data entry units to a central computer database. The information is compiled and then processed further according to user requirements. Through sophisticated communications software developed internally, the Company is able to update, modify, repair, enhance and change programs at the client's location via modem and the Internet. The Company has developed numerous Internet based parking programs which include payment processing, permit registrations, and pre-paid parking and parking reservations, special event parking and permitting, and its Expo1000 Parking Industry Guide. URBAN TRANSIT SOLUTIONS The Company provided a total financial investment of $500,000 to Urban Transit Solutions between March 1998 and April 1999. UTS has been generating revenue since August 1999. Collections from parking lot fees from Cauguas commenced in January 1999. In September 2005, the Company acquired all outstanding shares of UTS stock in exchange for shares of the Company's common stock. Damaris Carasquillo is the operations manager. The UTS Board of Directors includes Kenneth Stewart, Stanley Wolfson, and Lizabeth Wolfson. UTS has funded its operations primarily by loans and cash flows. During fiscal 2005-2006 UTS consolidated all of its loans into one note payable to the Company. The note is a five year note payable in monthly installments. UTS continues to add new clients. For the city of Ponce, UTS will install 800 meters. For the city of Aqua Buena, UTS will install 500 meters. For the city of Isabela, UTS will install 500 meters. These installations will be completed by June 2007. TRENDS AND CONDITIONS The Company anticipates no major impact as a result of trends of the past few years. A further discussion appears below. If current trends continue, the Company's liquidity will continue to improve on a short-term and a long-term basis. The Company anticipates that its expenses shall increase as a direct result of the Sarbanes-Oxley Act of 2002 as it pertains to additional accounting and auditing procedures for compliance with new corporate governance mandates. The Company now utilizes three different accounting firms for preparation of financial statements, reviews and auditing functions. -12- Director and Officer insurance premiums are consistent with the industry as a result of the public company irregularities of several years ago. The Company is able to qualify for Directors and Officers insurance when many companies are no longer able to qualify. The Company's newest equipment has proven to be a capital intensive program. The Company has designed its printer board to work and fit in both its current model case as well as its new case, which will prove to be a cost savings. While the Company has adequate cash flow to accomplish the upgrades without incurring debt, it is anticipated that the ongoing upgrades and tooling for newer products shall continue to require a large capital commitment. Municipalities are in search of additional revenues and the installation and implementation of means to efficiently and effectively collect parking ticket revenues as a viable source of such additional revenues for many locales. In addition, the Company supplies all hardware, software, training, supplies and maintenance for the system, thus eliminating all significant capital expenditures by the user. The Company has experienced a large number of inquiries about its system related to the total program and special features and anticipates growth in this area in the next fiscal year. Uncertainties that can impact revenues from the Company's service contract agreements would be related to dramatic weather changes and municipal disaster occurrences (i.e. September 11, 2001). As parking ticket issuance operations are primarily "out-of-doors" tasks, severe weather such as a major blizzard, hurricane, or rains could impact ticket production for a limited period in certain locales. While such reductions are temporary, they can impact revenues as the Company bills most clients on a fee-per- ticket basis. The meter collections for UTS could be temporarily reduced during a hurricane or tropical storm. Further, as the Company is contracting primarily with City government agencies, a deployment of personnel to other duties during a disaster could temporarily reduce ticket issuance activities. Internal and external sources of liquidity The Company anticipates using its working capital to fund ongoing operations, including general and administrative expenses, equipment manufacturing, travel, marketing and research and development. The Company anticipates having sufficient working capital to fund operations for the fiscal year ending September 30, 2007. UTS has funded its operations primarily by cash flows, bank debt, and advances from the Company. It has notes payable and capital lease obligations arising from borrowings for working capital and purchases and installation of meter equipment. With UTS under new management, the Company anticipates that UTS will be profitable for the year ending September 30, 2007. The Company manufactures and markets the Denver Boot for vehicles as well as for security on other mobile devices including construction trailers and communications generators. There is a demand for the Denver Boot for enforcement on private property. Exposure on the Internet has been favorable for sales of this product. -13- The Company has experiences interest in its IDBadgemaker software. The program is utilized by news services, janitorial companies, social service agencies, private clubs and others for security and identification purposes. The program receives "excellent" ratings at download.com. Remit-on-line.com has grown as a ticket payment site. It is offered to Clancy ticket system clients and other companies in parking industry businesses. Remit processes an average of $720,000 per month in transactions. The Company has observed a continuing increase in activity monthly. The Company generates revenue from Remit-online.com based on a per transaction fee. In addition, outstanding ticket fines of approximately $2,720,255 for UTS and $738,670 for Clancy, have not been recognized as revenue at December, 31, 2006 based on SEC accounting guidance. 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 financial statements requires the Company to make estimates and assumptions that affect the reported amount of assets and liabilities of the Company, revenues and expenses of the Company during the reporting period and contingent assets and liabilities as of the date of the Company's financial statements. There can be no assurance that the actual results will not differ from those estimates. REVENUE RECOGNITION: Revenue derived from professional service contracts on equipment and support services is included in income ratably over the contract term; related costs consist mainly of depreciation, supplies and sales commissions. The Company defers revenue for equipment and services under service contracts that are billed to customers on a quarterly, semi-annual, annual, or other basis and are included in income ratably over the expected term of the contract. Revenue from the issuance of parking citations for the Company's privatization projects is recognized on a cash basis when received as collectibility is not reasonably assured. Revenue derived from professional service contracts on parking meter and lot fees collections is recognized net of municipalities' fees as services are provided. Related costs consist mainly of depreciation and lot rents. Revenue derived from professional service contracts for permit fulfillment and remit-online services is recognized based on add-on fees earned for each transaction. -14- 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. 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 changes in the Company's internal controls or in other factors that could significantly affect internal controls subject to their evaluation. PART II - OTHER INFORMATION Item 1. Legal Proceedings No changes in legal proceedings occurred during the quarter ended December 31, 2006. Item 6. Exhibits (a) Exhibits Exhibit 31.1 Section 302 Certification by Chief Executive Officer Exhibit 31.2 Section 302 Certification by Chief Financial Officer Exhibit 32.1 Section 906 Certification by Chief Executive Officer Exhibit 32.2 Section 906 Certification by Chief Financial Officer Filed herewith. -16- 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 20, 2007 CLANCY SYSTEMS INTERNATIONAL, INC. (Registrant) By: /s/ Stanley J. Wolfson Stanley J. Wolfson, President and Chief Executive Officer -17-