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Nighthawk Systems, Inc. (OTCBB: NIHK) (�Nighthawk�), a leading provider of wireless and IP-based control devices and solutions, today reported financial results for its first quarter ended March 31, 2008. The Company accomplished considerable progress during its first quarter of 2008, achieving growth in its core products, accelerating growth in its newly acquired set-top box business, and launching new initiatives in fault-tolerant control systems for mission critical monitoring applications, while continuing to lower overall costs. The Company reported revenues for the first quarter of $826,000, a 290 percent increase over the first quarter of 2007 revenue of $212,000 and an increase of approximately 13 percent from the fourth quarter 2007 revenue of $735,000. The increase in first quarter revenues predominately reflects the inclusion of the set-top box business in 2008, which represented 62 percent of revenues for the period. The Company shipped 2,239 set-top box units during the quarter, has a current backlog of approximately 3,300 units and expects to experience an acceleration in the frequency and magnitude of orders for these units throughout 2008. The Company also continued its trend of year-over-year growth of its remote power control business, driven by a 125% increase in product sales to electric utilities and the Company�s initial deliveries of custom power control units to a provider of photo traffic and electronic toll enforcement services. The increase in production, combined with reductions in operating costs and interest charges, led to a reduction in the net loss reported from $1.1 million in the first quarter of 2007 to $770,000 in the first quarter of 2008. After giving consideration to accumulated dividends on preferred stock of $180,000, the net loss applicable to common stockholders was $950,000 ($0.01 per share) in the 2008 period as compared to $1.1 million ($0.01 per share) in the 2007 period. �While Nighthawk has in the past viewed the utility market as its largest source of revenues and anticipates an acceleration of the growth from this business in 2008, we also expect significant revenue contributions in 2008 from a number of initiatives introduced in 2007. The newly acquired set-top box product line will be a major contributor to the near-term growth of the Company, and we expect significant growth this year from sales of our power control products into new, mission-critical applications,� commented Doug Saathoff, CEO of Nighthawk Systems, Inc. �While our operating costs have been right-sized, we anticipate material improvement in our gross margins during the remainder of 2008 through both improvements to our manufacturing process as well as increased contract volumes. Additionally, we intend to continue making meaningful improvements to our balance sheet over the remainder of the year as we move towards generating positive cash flows by year end.� About Nighthawk Systems, Inc. Nighthawk is a leading provider of intelligent devices and systems that allow for the centralized, on-demand management of assets and processes. Nighthawk products are used throughout the United States in a variety of mission critical applications, including remotely turning on and off and rebooting devices, activating alarms, and emergency notification, including the display of custom messages. Nighthawk�s IPTV set top boxes are utilized by the hospitality industry to provide in-room standard and high definition television and video on demand. Individuals interested in Nighthawk Systems can sign up to receive email alerts by visiting the Company�s website at www.nighthawksystems.com. Statements contained in this release, which are not historical facts, including statements about plans and expectations regarding business areas and opportunities, acceptance of new or existing businesses, capital resources and future business or financial results are "forward-looking" statements. You should not place undue reliance on these forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, including, but not limited to, customer acceptance of our products, our ability to raise capital to fund our operations, our ability to develop and protect proprietary technology, government regulation, competition in our industry, general economic conditions and other risk factors which could cause actual results to differ materially from those projected or implied in the forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. We do not intend to update any of the forward-looking statements after the date of this press release to conform these statements to actual results or to changes in our expectations, except as required by law. *** Financial Statements Follow *** NIGHTHAWK SYSTEMS, INC. AND SUBSIDIARIES � � � CONSOLIDATED BALANCE SHEETS � March 31, December 31, 2008 2007 ASSETS � CURRENT ASSETS Cash and cash equivalents $ 74,694 $ 428,484 Accounts receivable, net 217,417 313,644 Inventories 431,402 359,636 Prepaid expenses 64,754 93,684 TOTAL CURRENT ASSETS 788,267 1,195,447 � FIXED ASSETS Furniture, fixtures and equipment, net 260,434 269,619 Intangible assets, net 1,126,017 1,218,677 Debt issuance cost 283,955 310,428 Goodwill 3,397,537 3,397,537 NET FIXED ASSETS $ 5,067,943 $ 5,196,261 � � TOTAL ASSETS $ 5,856,210 $ 6,391,708 � LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 422,805 $ 327,668 Accrued expenses 570,669 502,822 Deposits and other 263,977 218,148 Line of credit and notes Payable: Line of credit 18,692 18,892 Convertible notes, net of discount of $808,446 in 2008 And $883,117 in 2007 1,209,732 1,135,061 Other notes � 558,320 TOTAL CURRENT LIABILITIES 2,988,443 2,760,911 � � � STOCKHOLDERS' EQUITY (DEFICIT) Series A Preferred stock; $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding - Series B Preferred stock; $0.001 par value; 1,000,000 shares authorized; 600,000 shares issued and outstanding at March 31, 2008 and December 31, 2007; liquidation preference of $6,000,000 5,597,206 5,417,699 Common stock; $0.001 par value; 200,000,000 shares authorized; 134,433,060 issued and outstanding at March 31, 2008 and December 31, 2007 134,433 134,433 Additional paid in capital 12,919,373 13,091,713 Accumulated deficit (15,783,246) (15,013,048) TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 2,867,766 3,630,797 � � TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,856,210 $ 6,391,708 Nighthawk Systems, Inc. Condensed Consolidated Statements of Operations Three Months Ended March 31, (unaudited) � � � 2008 � 2007 � Revenue $ 826,321 $ 212,021 � Cost of revenue � 668,497 � 126,104 � Gross profit 157,824 85,917 � Selling, general and administrative expenses 629,289 708,799 Depreciation and amortization � 107,388 � 2,535 � Loss from operations � (578,853) � (625,417) � Interest expense: Related parties - 480 Other � 191,344 � 491,405 � 191,344 � 491,885 � Net loss (770,198) (1,117,302) � Accumulated dividends on preferred stock � (179,507) � - � Net loss applicable to common stockholders $ (949,705) $ (1,117,302) � Net loss per basic and diluted common share $ (0.01) $ (0.01) � Weighted average number of common shares outstanding, basic and diluted � 141,789,726 � 90,083,937