The Company

Nighthawk Systems, Inc. (OTCBB: NIHK) is a leading provider of intelligent wireless power control products that enable simultaneous activation or de-activation of multiple assets or systems on demand. Nighthawk's installed customer base includes major electric utilities, Internet service providers and fire departments in forty states. Nighthawk's products also enable custom message display, making them ideal for use in traffic control and emergency notification situations.

The company developed a specialized circuit-board, branded as '"The Nighthawk", which can receive wireless signals and switch electrical power. It can also receive and relay digital messages to signs and printers. Nighthawk products attach to existing customer hardware and act as a 'brain', receiving wireless instructions sent from a remote location, allowing the hardware to perform as instructed.

Nighthawk Systems has delivered hundreds of thousands of dollars of products that are being used to 1) wirelessly connect and disconnect power to thousands of utility meters for utility companies such as El Paso Electric, Nebraska Public Power District and the City of Roseville, California; 2) control loads on the electrical grids of PECO Energy, Central Vermont Public Service and the Alabama Municipal Electric Authority; 3) awaken fire fighters in Washington and activate civil defense sirens in Colorado; 4) alert motorists of construction hazards along roadways in Arizona and North Carolina; 5) reboot critical network components in Texas and Indiana for Internet service providers; and 6) turn off irrigation systems in New Mexico.

The company's customers include over 40 utilities, dozens of State Departments of Transportation, Federal and State government facilities, Fortune 500 Companies, Internet service providers, and a multitude of customers with varying control needs.

Once a customer has adopted the Nighthawk Systems technology, the customer typically continues to re-order the products for any further system buildouts or installations. Companies have identified and discussed with Nighthawk needs in excess of $20,000,000, and Nighthawk delivered quotes on over $6,000,000 in product requests during the last half of 2005 alone!

The Technology & Products

Nighthawk Systems developed a line of data receiving boards that obtained pages and translated its message into a command that electronic devices could understand. This command turns virtually any electrical device "on" or "off"! The Nighthawk technology was developed for scalability and ease of use, while offering significant efficiencies for customers managing large, widespread networks of devices such as computer kiosks, traffic signs, utility meters and pumps. Paging technology is extremely reliable, secure and affordable. It also allows Nighthawk customers the ability to access and control multiple, widespread assets simultaneously. The key, proprietary feature of Nighthawk devices is The Nighthawk, an 'intelligent' combination of firmware and logic board. The Nighthawk is loaded into off the shelf products for specific applications. No engineering or software installation is needed to operate these products; they are ready to use when purchased. The products come pre-coded for the customer's particular application. Nighthawk also has the ability to provide and bill for the wireless access to its products, or the customers can arrange for the access themselves.

Facilitated by Paging Network

Nighthawk Systems, Inc. offers the following wireless automation and notification applications:

Wireless Electric Utility Applications

Nighthawk has devoted a significant amount of research and development efforts specifically for Utility Industry applications. While the company's products can be used to remotely control virtually any electrical on\off application, they have focused their development efforts in two areas that have short term pay back for utilities; whole house disconnect and load control.

Whole House Disconnect. The CEO-700 is an integrated whole house disconnect package complete with meter adapter, 200 amp switch, and Nighthawk control board. Installation is lightning fast requiring only the removal of the existing meter, plug in of the CEO-700, and replacement of the meter into the CEO-700. Upon installation the utility command center can then page the switch on or off. It is literally that simple. An optional homeowner reset switch is available that would require the homeowner to push an easy to see button on the meter housing before the switch would actually close.

The CEO-700 can be programmed to work on any public or private paging network. The devices can be activated by any touch tone phone or by computer modem using our user-friendly software. The CEO-700 is ideal for seasonal use buildings, student apartment complexes, chronic no pays, and remote safety disconnect.

Load Control. Nighthawk's PT1-LC load control units can be placed on high energy using air conditioners and hot water heaters, giving a utility the ability to periodically turn off thousands of appliances on demand when energy use reaches critical levels on their grid.

Wireless Rebooting

Nighthawk has designed simple, easy to install, wireless remote rebooting devices specifically for computer users, IT and ISP professionals. Anyone who has ever experienced the frustration of having to travel to a remote site simply to reboot a locked-up computer, router, or other electronically controlled device prone to system lock-up will appreciate the benefit of this simple, 'plug and play' solution.

A fundamental characteristic of all computerized devices is that they frequently lock-up. Whether due to programming overload, increased network traffic, power surge, or some other effect, computerized equipment just gets stuck and, as a consequence, needs to be rebooted. Anyone, from the Network Administrator in a large corporation to the small business person with a server at a remote location, knows that this means they cannot access the locked-up computer, router or server until the power to the operating system has been re-cycled allowing the device to reset itself. Whether that means a drive back downtown to the server at the office at 3 AM, or a walk up to the 3rd floor at 3 PM, it's a hassle.

Nighthawk solves these rebooting dilemmas quickly, conveniently, and cost-effectively with its NH100 and NH8 rebooting devices. These controls operate wirelessly, using paging signals as the means for the user to remotely control the activation of the rebooting function. The user simply installs the NH100 or NH8 at the remote location desired, and then sends a 'message' to the unit in the form of a page when the rebooting function becomes necessary. The message can be sent using a phone or through a computer modem - the same as when calling a personal pager. It is that simple. No additional phone lines or software installations are necessary. The controls are shipped fully programmed and can be activated the minute they are installed. Because the NH100 operates using paging signals, the cost savings benefits realized are immediate.

Wireless Traffic Control

Nighthawk Systems have been used extensively in traffic applications all over the US. The low cost, wide coverage, and group call capability of paging make our controls the ideal solution for remote control of traffic applications of all types. Paging will always outperform cellular in up front cost, monthly air time cost, geographic coverage, and the ability to address multiple signs with one call.

The Nighthawk™ is perfect for the remote activation of intermittent warning signs such as "ICY ROAD", "WATER ON ROAD", "LOW VISIBILITY AHEAD" etc. The user simply sends a page via any touch tone phone, modem, or cell phone and activates the flashing lights either on or off. The group call feature allows the user to activate dozens of signs with one page. Simple, low cost and very reliable. Our super low power requirements make a perfect match with solar powered systems.

Wireless Emergency Notification Systems

Nighthawk Systems continues to provide a great low cost solution for Firehouse automation. Using paging signals, our Firehouse FAS 8 can turn on lights, open doors, activate wake up alarms, activate firehouse traffic lights, and send messages to printers or variable message signs. The EA1 can be placed in high occupancy buildings and used to sound alarms, activate strobe lights and print messages on LED signs.

Key Achievements and Strategic Initiatives

H. Douglas Saathoff, Nighthawk's CEO, commented, "The past year was one of significant transition and considerable achievement for Nighthawk. We entered 2005 with objectives to increase the profile and marketability of our Company and products. I'm extremely encouraged today that those efforts have resulted in increased demand for our products and larger sales opportunities with enterprise and municipal customers. Our sales pipeline has never been bigger. As a result, I believe that 2006 will be a record year for Nighthawk Systems."

Key achievements for 2005 were:

• Hiring of the Company's first ever full time sales force
• Development and launch of key products including the NH100, the Hydro 1 and the EA1
• Hiring of GM Rex Lee, a well respected wireless industry veteran
• Establishment of a utility reseller network
• Current pipeline in excess of $6 million in outstanding bids including Fortune 500 companies

Strategic initiatives for 2006 include:

• Capitalize on existing enterprise sales opportunities
• Cultivate and capitalize on indirect sales channels
• Enhance their marketing effort to support direct and indirect sales channels
• Bundle their products with ancillary products and services to enhance revenue opportunities
• Develop and sell a device that functions on multiple wireless protocols
• Form an advisory board with relevant industry expertise and relationships
• Execute on a strategic acquisition that is scalable and complementary to their existing business

Management & Board Member

• H. Douglas Saathoff , Chief Executive Officer
• Myron Anduri, President
• Rex Lee, General Manager
• Eric Berg, Vice President of Engineering
• Max Polinsky, Chairman of the Board of Directors
• Patrick A. Gorman, Director