NIHK Video River Networks Inc (PK)

Nighthawk Systems, Inc. (OTCBB:NIHK), a leading provider of wireless and IP-based control devices and solutions, today reported record financial results for three and nine months ended September 30, 2008, with the filing of its amended Form 10-Q with the Securities and Exchange Commission. The Company generated more revenues during the three months ended September 30, 2008, than in any previous fiscal quarter in the Company�s history. Year to date revenues for the reporting period also set a record, more than doubling the total from the same period in 2007. While sales of the Company�s high-definition set-top boxes led to the record quarterly results, the Company also noted that sales of its legacy power control products also produced record results for the first nine months of the year. Revenues generated during the third quarter of 2008 were $849,582 as compared to $368,855 for the third quarter of 2007, an increase of 130% between periods. Revenues for the nine months ending September 30, 2008, were $$2,412,260 as compared to $920,560 for the same period in 2007, an increase of 162%. As a result of improvements made in the manufacturing of its set-top boxes during the quarter, gross margins increased from 25% to 34% from last year�s quarter to this year�s quarter, and the Company produced more gross profit, $291,092, during the quarter ended September 30, 2008, than in any previous fiscal quarter in the Company�s history. The Company expects the improved margins on the set-top boxes to continue going forward. The Company also expects to generate improvement in margins on the sale of power control products in the coming months as it nears completion of new circuit boards to be used in those products. The Company�s net loss for the quarter before recognition of non-cash preferred dividends was $510,492, which included approximately $90,000 of amortization of intangible assets recognized with the Company�s purchase of its set-top box operations in October 2007. This compares favorably with a net loss of $586,892 recognized during the third quarter of 2007. The net loss per common share narrowed to less than a penny per share for the third quarter of 2008, from a just over a penny per share in the same period in 2007. H. Douglas Saathoff, Nighthawk�s CEO, commented, �While I�m pleased with the continuation of top line growth, I�m even more pleased with the improved margins we�re now producing. Improved margins increase cash flows and the viability of the Company in the face of the tough economic times, and have opened the door to financing opportunities that can help the Company continue to grow. As we noted in our release earlier this week, tough economic times actually stand to increase demand for our power control products as companies feel the need to cut operating costs. We�re excited to have new products, both power control and set-top boxes, rolling out over the coming weeks and months that we are confident will be well received by the markets.� 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. � NIGHTHAWK SYSTEMS, INC. AND SUBSIDIARIES � � CONDENSED CONSOLIDATED BALANCE SHEETS � � September 30, December 31, � 2008 � � 2007 � ASSETS CURRENT ASSETS Cash and cash equivalents $ 142,638 $ 428,484 Accounts receivable, net 212,110 313,644 Inventories 362,624 359,636 Prepaid expenses 56,476 � 93,683 � TOTAL CURRENT ASSETS 773,848 1,195,447 � FIXED ASSETS Furniture, fixtures and equipment, net 273,383 269,619 Debt issuance cost 279,248 310,428 Intangible assets, net 940,693 1,218,677 Goodwill 3,397,537 � 3,397,537 � NET FIXED ASSETS $ 4,890,861 $ 5,196,261 � � � � TOTAL ASSETS $ 5,664,709 � $ 6,391,708 � � LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 688,816 $ 327,668 Accrued expenses 727,372 502,822 Deposits and other 112,670 218,148 Line of credit and notes Payable: Line of credit 18,292 18,892 Convertible notes, net of discount of $582,138 in 2008 and $883,117 in 2007 1,527,736 1,135,061 Other notes 720,730 � 558,320 � TOTAL CURRENT LIABILITIES 3,795,616 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; 672,000 shares issued and outstanding at September 30, 2008 and 618,000 shares issued and outstanding at December 31, 2007; liquidation preference of $6,000,000 5,958,192 5,417,699 Common stock; $0.001 par value; 200,000,000 shares authorized; 137,663,727 issued and outstanding at September 30, 2008 and 134,433,060 issued and outstanding at December 31, 2007 137,664 134,433 Additional paid in capital 12,799,184 13,091,713 Accumulated deficit (17,025,947 ) (15,013,048 ) TOTAL STOCKHOLDERS' EQUITY 1,869,093 3,630,797 � � � � TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,664,709 � $ 6,391,708 � � � � � Nighthawk Systems, Inc. Condensed Consolidated Statements of Operations � � Three Months Ended Nine Months Ended September 30, September 30, 2008 � 2007 � 2008 � 2007 (unaudited) (unaudited) Revenue $ 849,582 $ 368,855 $ 2,412,260 $ 920,560 � Cost of revenue � 558,490 � � � 276,783 � � � 1,779,756 � � � 641,147 � � Gross profit 291,092 92,072 632,504 279,413 � Selling, general and administrative expenses � 519,151 � � � 465,858 � � � 1,658,675 � � � 1,701,040 � � EBITDA (228,059 ) (373,786 ) (1,026,171 ) (1,421,627 ) � Depreciation and amortization � 92,292 � � � 2,550 � � � 284,515 � � � 7,673 � � Loss from operations � (320,351 ) � � (376,336 ) � � (1,310,686 ) � � (1,429,300 ) � Interest expense � 190,141 � � � 210,556 � � � 702,213 � � � 867,545 � � Net loss (510,492 ) (586,892 ) (2,012,899 ) (2,296,845 ) � Accumulated dividends on preferred stock � (181,479 ) � � - � � � (540,493 ) � � - � � Net loss applicable to common stockholders $ (691,971 ) � $ (586,892 ) � $ (2,553,392 ) � $ (2,296,845 ) � Net loss per basic and diluted common share $ (0.00 ) � $ (0.01 ) � $ (0.01 ) � $ (0.02 ) � Weighted average number of common shares outstanding, basic and diluted � 145,520,393 � � � 116,176,969 � � � 144,115,675 � � � 103,198,977 � �