-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DBZoh/bGp2tPi8nczFKkU/nxHUBySrAIuvGZlDAOkJiCvW0k1l12r+X88v9b/BGX ccuIJ8TTsKh5iLAU6C+FrQ== 0000789318-08-000002.txt : 20080214 0000789318-08-000002.hdr.sgml : 20080214 20080214151737 ACCESSION NUMBER: 0000789318-08-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20071231 FILED AS OF DATE: 20080214 DATE AS OF CHANGE: 20080214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLANCY SYSTEMS INTERNATIONAL INC /CO/ CENTRAL INDEX KEY: 0000789318 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 841027964 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-04882-D FILM NUMBER: 08614258 BUSINESS ADDRESS: STREET 1: 2250 S ONEIDA STREET 2: STE 308 CITY: DENVER STATE: CO ZIP: 80224 BUSINESS PHONE: 3037530197 MAIL ADDRESS: STREET 1: 2250 S ONEIDA STREET 2: STE 3308 CITY: DENVER STATE: CO ZIP: 80224 FORMER COMPANY: FORMER CONFORMED NAME: OXFORD FINANCIAL INC DATE OF NAME CHANGE: 19600201 10QSB 1 a10q1207.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, 2007 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, 2008 is 381,102,938 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, 2007 2007 (Unaudited) Current assets: ------------ ----------- Cash and cash equivalents $ 619,642 $ 1,042,954 Accounts receivable, net of allowance for doubtful accounts 709,419 717,376 Income tax receivable - 26,677 Inventories 135,010 130,129 Prepaid expenses 64,075 47,402 ---------- ---------- Total current assets 1,528,146 1,964,538 ---------- ---------- Furniture and equipment, at cost: Office furniture and equipment 218,337 218,337 Computers and equipment under service contracts 2,771,942 2,854,894 Leasehold improvements 81,424 81,424 Vehicles, including vehicles under capital leases 149,886 149,885 --------- --------- 3,221,589 3,304,540 Less accumulated depreciation (2,505,867) (2,572,526) ---------- --------- Net furniture and equipment 715,722 732,014 ---------- ---------- Other assets: Investment in marketable securities 733,244 733,244 Deposits and other 24,312 18,922 Goodwill 404,547 404,547 Software development costs, net of accumulated amortization 222,212 219,315 --------- -------- Total other assets 1,384,315 1,376,028 --------- --------- $ 3,3628,183 $ 4,072,580 =========== =========== See accompanying notes to consolidated financial statements. -2- CLANCY SYSTEMS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 2007 2007 (Unaudited) ------------ ----------- Current liabilities: Accounts payable $ 150,319 $ 208,111 Accrued expenses 361,019 335,693 Income taxes payable 74,323 93,307 Current portion of obligations under capital leases 3,393 3,393 Deferred revenue 95,453 65,577 --------- -------- Total current liabilities 684,507 706,081 Obligations under capital leases, net of current portion 6,648 5,797 --------- ------- Total liabilities 709,955 750,678 --------- ------- 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, 381,102,938 shares issued and outstanding 38,110 38,110 Additional paid-in capital 1,354,414 1,354,414 Retained earnings 1,525,704 1,929,378 --------- --------- Total stockholders' equity 2,918,228 3,321,902 ----------- ----------- $ 3,628,183 $ 4,072,580 =========== =========== See accompanying notes to consolidated financial statements. -3- CLANCY SYSTEMS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended December 31, 2006 and 2007 (Unaudited) December December 31, 2006 31, 2007 Revenues: -------- -------- Sales $ 38,962 $ 15,758 Service contract income 712,797 779,866 Parking ticket collections 304,780 360,683 ---------- ---------- Total revenues 1,056,539 1,156,307 ---------- ---------- Costs and expenses: Cost of sales 9,376 27,445 Cost of services 152,778 202,128 Cost of parking ticket collections 24,156 25,094 General and administrative 554,769 613,633 Research and development - 2,593 --------- --------- Total costs and expenses 741,079 870,893 --------- --------- Income from operations 315,460 285,414 -------- --------- Other income (expense): Interest income 10,803 18,653 Interest expense (948) (893) Other Income - 200,707 --------- --------- Total other income (expense) 9,855 218,467 --------- --------- Income before provision for income taxes 325,315 503,881 --------- ---------- Provision for income taxes: Current expense (benefit) 93,859 80,207 Deferred expense (benefit) 16,700 20,000 ---------- --------- Total income tax expense (benefit) 110,559 100,207 ---------- --------- Net income $ 214,756 $ 403,674 =========== ========== Basic and diluted net income per common share $ * $ * ========== =========== Weighted average number of shares outstanding 382,617,938 381,102,938 ============ =========== *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, 2007 (unaudited)
Additional Common Stock Paid-In Retained Shares Amount Capital Earnings ------ ------ --------- -------- Balance, September 30, 2007 381,102,938 $ 38,110 $ 1,354,414 $ 1,525,704 Net income for the three months ended December 31, 2007 - - - 403,674 ---------- --------- ---------- ---------- Balance, December 31, 2007 381,102,938 $ 38,110 $ 1,354,414 $ 1,929,378 =========== ========= ============= =========== See accompanying notes to consolidated financial statements. -5-
CLANCY SYSTEMS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended December 31, 2006 and 2007 (Unaudited) December December 31, 2006 31, 2007 ------- ------- Cash flows from operating activities: Net income $ 214,756 $ 403,674 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 95,967 89,602 Deferred income tax expense 16,700 20,000 Changes in assets and liabilities: Accounts receivable 63,536 (7,957) Inventories (8,579) 4,881 Income taxes refundable 22,077 (26,677) Prepaid expenses 26,966 16,673 Accounts payable 390,847 57,792 Accounts payable, related party - - Accrued expenses (33,559) (25,326) Income taxes payable 40,122 18,984 Deferred revenue (16,963) (29,876) ---------- --------- Total adjustments 597,114 118,096 ---------- --------- Net cash provided by operating activities 811,870 521,770 ---------- --------- Cash flows from investing activities: Acquisition of furniture and equipment (65,760) (82,951) Increase in software licenses and software development costs (25,111) (19,401) Increase in investments in marketable securities - - Decrease in deposits and other assets (501) 4,745 ---------- --------- Net cash(used in) investing activities (91,372) (97,607) ---------- --------- Cash flows from financing activities: Proceeds from notes payable related party - - Payments on notes - - Payments on long-term debt and capital leases (887) (851) ---------- ---------- Net cash (used in) financing activities (887) (851) ----------- ---------- 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, 2006 and 2007 (Unaudited) December December 31, 2006 31, 2007 ------- ------- Increase in cash and cash equivalents 719,611 423,312 Cash and cash equivalents at beginning of period 387,663 619,642 ---------- --------- Cash and cash equivalents at end of period $ 1,107,274 $ 1,042,954 ========== ========== See accompanying notes to consolidated financial statements. -7- CLANCY SYSTEMS INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2007 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, 2007. 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, 2006 and 2007. All significant inter company transactions and balances have been eliminated in consolidation. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates 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. Net Income Per Common Share: The Company computes net income per common share in accordance with Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"). SFAS 128 provides for the calculation of diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive earnings per share reflects the potential dilution of securities that could share in the earnings of the company. -8- CLANCY SYSTEMS INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2007 2. Inventories Inventories consist of the following at: September 30, December 31 2007 2007 ------------ ----------- Finished goods $ 44,316 $ 36,826 Work in process 2,861 34,989 Purchased parts and supplies 87,833 58,315 ---------- --------- $ 135,010 $ 130,129 ========== ========= 3. Income taxes The provision for income taxes for three months ended December 31, 2006 and 2007 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, 2007 2007 ------------ ----------- Non-current deferred tax assets $ 233,700 $ 187,000 Valuation allowance (192,600) (146,000) Non-current deferred tax liabilities (59,900) (79,800) ------------ ----------- $ (18,800) $ (38,800) ============ =========== -9- 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. In the following discussion, reference to Clancy is to the parent company on a stand-alone basis and reference to Clancy consolidated is for Clancy and UTS combined. Management's Discussion and Analysis of Financial Conditions and Results of Operations At December 31, 2007, the Company had consolidated working capital of $1,258,457 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, 2008. The company settles funds for permit collections after the end of each month. Occasionally this overlaps into a next quarter. 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, 2006 AND 2007 REVENUES. During the quarter ended December 31, 2006 as compared to the quarter ended December 31, 2007 revenues increased by $99,768 or 9.4% from 1,056,539 to $1,156,307. The increase in revenues is due to the addition of new customers and increased remit-online activity for the quarter ended December 31, 2007. Clancy's Remit-online.com service has processed 71,936 transactions totaling $2,859,456 for the quarter ended December 31,2007. Revenues are generated based on per transaction fees less bank processing costs. -10- The gross amount of cash flowing through Remit-online.com cannot be presented as revenue based on SEC accounting guidance. The Company only presents its net profit from each transaction as revenue in the statements of operations. COST OF SERVICES. During the three month quarter ended December 31, 2006, as compared to the three month quarter ended December 31, 2007, cost of services increased by $49,350 or 32.3% from $152,778 to $202,128 for the Company. Cost of services as a percentage of service contract income was 21.4% for the 2006 quarter and 25.9% for the 2007 quarter. RESEARCH AND DEVELOPMENT. The Company's parking enforcement systems research and development costs increased from $0 to $2,593, or 2500% from the quarter ended December 31, 2006 to 2007. GENERAL AND ADMINISTRATIVE. General and administrative expenses increased by $58,864 or 10.6% from $554,769 to $613,633 the for quarter ended December 31, 2006 and 2007, respectively. NET INCOME. During the quarter ended December 31, 2007, the Company reported net income of $403,674 compared to $214,756 for the quarter ended December 31, 2006. The primary reason for the increase in net income is the Company received a $200,000 contract termination fee from the City of Arecibo, Puerto Rico. 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. In December, 2007, UTS entered into a contract for a full service program for the city of San Juan Puerto Rico, which will include the installation of single space meters, multi-space meters, signs, ticket issuance an collection and enforcement. The program will be operational by June 2008. -11- 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. 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. -12- 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, 2008. 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, 2008. The Company has experienced significant interest in the Denver Boot for vehicles as well as for security on other mobile devices including construction trailers and communications generators. There is a demand for the Denver Boot for enforcement on private property. Exposure on the Internet has been favorable for sales of this product. 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 $925,000 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 $770,442 for Clancy, have not been recognized as revenue at December, 31, 2007 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. -13- 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. COMPUTER SOFTWARE. Costs incurred prior to establishment of 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 5 years) or the estimate of current and future revenues for the related product. GOODWILL The excess of the purchase price over net assets acquired by the Company from unrelated third parties is recorded as goodwill. Goodwill resulted from the acquisition of UTS. On January 1, 2002, the Company adopted Statement of Financial Accounting Standard No. 142 (SFAS 142), "Goodwill and Intangible Assets", which clarifies the accounting for goodwill and intangible assets. Under SFAS 142, goodwill and intangible assets with indefinite lives will no longer be amortized, but will be tested for impairment at least annually and also in the event of an impairment indicator. -14- STOCK PURCHASE The Company has implemented a reacquisition of equity securities to commence in December 2006. Under Rule 10b-18, the Company intends to regularly repurchase shares of its common stock. Based on profitability at the end of each month, the Company will determine the dollar amount to allocate to the buyback program. No shares were purchased during the quarter ended December 31, 2007. Item 3. Controls and Procedures We have established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiary, is made know to the officers who certify the Company's financial reports and to other members of senior management and the Board of Directors. Based on their evaluation, the Company's principal executive and principal financial officers have concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934) were effective as of September 30, 2007 to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed and reported within the time periods specified in the SEC rules and forms. PART II - OTHER INFORMATION Item 1. Legal Proceedings No changes have occurred in the quarter ended December 31, 2007. 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. -15- 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, 2008 CLANCY SYSTEMS INTERNATIONAL, INC. (Registrant) By: /s/ Stanley J. Wolfson Stanley J. Wolfson, President and Chief Executive Officer -17- EX-31 2 a10cert311.txt Exhibit 31.1 Section 302 Certification Annual Report on Form 10-QSB I, Stanley J. Wolfson, certify that: I have reviewed this annual report on Form 10-QSB of Clancy Systems International, Inc.; 1. Based on my knowledge, this 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 report; 2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 3. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 4. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: February 14, 2008 /s/Stanley J. Wolfson Chief Executive Officer [00000-0000/DOCUMENT.01] -2- 10/6/98 [00000-0000/DOCUMENT.01] 10/6/98 EX-31 3 a10cert312.txt Exhibit 31.2 Section 302 Certification Annual Report on Form 10-QSB I, Lizabeth M. Wolfson, certify that: I have reviewed this annual report on Form 10-QSB of Clancy Systems International, Inc.; 1. Based on my knowledge, this 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 report; 2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 3. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 4. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: February 14, 2008 /s/Lizabeth M. Wolfson Chief Financial Officer [00000-0000/DOCUMENT.01] -2- 10/6/98 [00000-0000/DOCUMENT.01] 10/6/98 EX-32 4 a10qcert321.txt Exhibit 32.1 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. (the "Company") on Form 10-QSB for the period ended December 31, 2007 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 results of operations of the Company. /s/ Stanley J. Wolfson _______________________ Chief Executive Officer February 14, 2008 EX-32 5 a10qcert322.txt Exhibit 32.2 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. (the "Company") on Form 10-QSB for the period ended December 31, 2007 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 results of operations of the Company. /s/ Lizabeth M. Wolfson _______________________ Chief Financial Officer February 14, 2008 [00000-0000/DOCUMENT.01] -5- 10/6/98 [00000-0000/DOCUMENT.01] 10/6/98 -----END PRIVACY-ENHANCED MESSAGE-----