UNITED  STATES
                       SECURITIES  AND  EXCHANGE  COMMISSION
                             Washington,  D.C.  20549

                                   FORM  10-QSB

(MARK  ONE)

[X]  QUARTERLY  REPORT  UNDER  SECTION  13  OR 15(d) OF The Securities  Exchange
     Act  of  1934

                For  the  quarterly  period  ended  September  30,  2004

[  ]  TRANSITION  REPORT  UNDER  SECTION  13  OR  15(d)  OF  The  Securities
     Exchange  Act  of  1934

                         Commission  File  Number  0-30786

                             NIGHTHAWK  SYSTEMS,  INC.
             -----------------------------------------------------
             (Exact  name  of  registrant  as  specified  in  its  charter)

           NEVADA                                             87-0627349
-------------------------------                         ---------------------
(State  or  other  jurisdiction  of                             (IRS  Employer
 Incorporation  or  Organization)                          Identification  No.)

                                  10715  GULFDALE
                                    SUITE  200
                                SAN  ANTONIO,  TX  78216
                     ---------------------------------------
                    (Address  of  Principal  Executive  offices)

          Registrant's  telephone  number,  with  area  code:  (303)  337-4811

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  twelve  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

State the number of shares outstanding of each of the issuer's classes of common
equity  as  of  the  latest  practicable  date:

           Class                          Outstanding  at  November  19,  2004
     ------------------                   -----------------------------------
           Common                                  30,622,518


<PAGE>

                                     PART  I
                              FINANCIAL  INFORMATION

Item  1.  Financial  Statements  (unaudited)

         Report of Independent Registered Public Accounting Firm               3

         Condensed  consolidated  balance  sheet  as of September 30, 2004     4

         Condensed  consolidated  statements  of  operations  for  the
         three  and  nine  months  ended September 30, 2004 and 2003           5

         Condensed  consolidated  statement  of  stockholders'
         deficit  for  the  nine  months ended September 30, 2004              6

         Condensed  consolidated  statements  of  cash  flows  for  the
         nine  months  ended  September 30, 2004 and 2003                      7

         Notes  to  condensed  consolidated  financial statements              8

Item 2   Management's Discussion and Analysis or Plan of Operation            13

Item  3   Evaluation of Disclosure Controls and Procedures                    16

                                     PART  II
                              OTHER  INFORMATION

Item  1   Legal proceedings                                                   16

Item  2   Changes in securities and use of proceeds                           16

Item  3   Defaults upon senior securities                                     16

Item  4   Submission of matters to a vote of securities holders               16

Item  5   Other information                                                   17

Item  6   Exhibits and reports on Form 8-K                                    17

                                     2

PART  I  -  FINANCIAL  INFORMATION

           REPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM

Board  of  Directors
Nighthawk  Systems,  Inc.

We  have  reviewed  the  accompanying  condensed  consolidated  balance sheet of
Nighthawk  Systems,  Inc.  and  subsidiary as of September 30, 2004, the related
condensed  consolidated  statements  of  operations  for  the  three-month  and
nine-month periods ended September 30, 2004 and 2003, the condensed consolidated
statement of stockholders' deficit for the nine-month period ended September 30,
2004, and the condensed consolidated statements of cash flows for the nine-month
periods  ended September 30, 2004 and 2003. These interim condensed consolidated
financial  statements  are  the  responsibility  of  the  Company's  management.

We  conducted  our  reviews  in  accordance with standards of the Public Company
Accounting  Oversight  Board  (United  States).  A  review  of interim financial
information  consists  principally  of applying analytical procedures and making
inquiries  of  persons  responsible for financial and accounting matters.  It is
substantially  less  in  scope  than  an  audit conducted in accordance with the
standards  of the Public Company Accounting Oversight Board (United States), the
objective  of  which  is  the  expression  of an opinion regarding the financial
statements  taken  as  a whole.  Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to  above  for  them  to  be  in conformity with accounting principles generally
accepted  in  the  United  States  of  America.

GELFOND  HOCHSTADT  PANGBURN,  P.C.

Denver,  Colorado
November  17,  2004

                                      3

<TABLE>
<CAPTION>


                             Nighthawk Systems, Inc.
                      Condensed Consolidated Balance Sheet
                               September 30, 2004
                                   (unaudited)


<S>                                                            <C>
        ASSETS

Current assets :
     Cash                                                      $    98,344
     Accounts receivable, net of allowance for
       doubtful accounts of $134                                    56,148
     Inventories                                                    42,489
     Other                                                         129,794
                                                               ------------

               Total current assets                                326,775


Furniture, fixtures and equipment, net                              14,993
Intangible assets, net                                               9,967
                                                               ------------
                                                               $   351,735
                                                               ============


      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
    Accounts payable                                           $   371,298
    Accrued expenses                                               210,839
    Line of credit                                                  19,842
    Notes payable:
        Related parties                                             16,214
        Other                                                      391,912
    Other                                                           35,415
                                                               ------------
               Total  current liabilities                        1,045,520

Long term liabilities:
    Convertible debt                                               231,250
    Other                                                           25,000
                                                               ------------
           Total liabilities                                     1,301,770

Commitments and contingencies

Stockholders' deficit:
    Preferred stock; $0.001 par value; 5,000,000
      shares authorized; 5,000 shares issued and outstanding;
      liquidation preference $12,500                                     5
    Common stock; $0.001 par value; 50,000,000
      shares authorized; 30,622,518 issued and outstanding          30,622
    Additional paid-in capital                                   3,752,124
    Special warrants                                               188,775
    Accumulated deficit                                         (4,921,561)
                                                               ------------
               Total stockholders' deficit                        (950,035)
                                                               ------------

                                                               $   351,735
                                                               ============

<FN>

                     The accompanying notes are an integral
                       part of these financial statements.

                                           4

</TABLE>

<TABLE>
<CAPTION>


                                       Nighthawk Systems, Inc.
                           Condensed Consolidated Statements of Operations
                                             (unaudited)

<S>                                           <C>           <C>           <C>           <C>

                                                 Three months ended           Nine months ended
                                                     September 30,              September 30,
                                              --------------------------  --------------------------
                                                   2004          2003          2004          2003
                                              ------------  ------------  ------------  ------------

Product sales, net                            $   221,723   $   209,279   $   485,948   $   904,551

Cost of goods sold                                163,786       145,380       344,409       522,979
                                              ------------  ------------  ------------  ------------
     Gross profit                                  57,937        63,899       141,539       381,572

Selling, general and administrative expenses      348,005       287,876       888,950       911,946
Reversal of 2002 consulting expense                     -             -             -       (39,000)
                                              ------------  ------------  ------------  ------------
     Loss from operations                        (290,068)     (223,977)     (747,411)     (491,374)
                                              ------------  ------------  ------------  ------------

 Interest expense:
     Related parties                               34,041         4,726        39,641        11,387
     Other                                         97,329         5,113       153,918        23,600
                                              ------------  ------------  ------------  ------------

     Loss from continuing operations             (421,438)     (233,816)     (940,970)     (526,361)
                                              ------------  ------------  ------------  ------------

Discontinued operations:
    Loss from operations of
       discontinued segment                                      (5,778)                    (14,472)
    Gain on disposal of
       discontinued segment                                      92,443                      92,443
                                                            ------------                ------------


Net loss                                         (421,438)     (147,151)     (940,970)     (448,390)

Less: preferred stock dividends                      (223)            -          (420)            -
                                              ------------  ------------  ------------  ------------

Net loss to common stockholders               $  (421,661)  $  (147,151)  $  (941,390)  $  (448,390)
                                              ============  ============  ============  ============

Loss from continuing operations per
  basic and diluted common share              $     (0.01)  $     (0.01)  $     (0.03)  $     (0.02)
                                              ============  ============  ============  ============

Income from discontinued operations per
  basic and diluted common share                                      *                           *
                                                            ============                ============

Net loss to common stockholders per
  basic and diluted common share              $     (0.01)  $     (0.01)  $     (0.03)  $     (0.02)
                                              ============  ============  ============  ============

Weighted average common shares outstanding,
  basic and diluted                            28,714,168    22,994,057    27,190,261    22,970,851
                                              ============  ============  ============  ============

*  Less than $0.01 per share
<FN>

                               The accompanying notes are an integral
                                 part of these financial statements.

                                                  5

</TABLE>


<TABLE>
<CAPTION>

                                                Nighthawk Systems, Inc.
                               Condensed Consolidated Statement of Stockholders' Deficit
                                         Nine Months Ended September  30, 2004
                                                      (unaudited)

<S>                               <C>        <C>          <C>       <C>          <C>         <C>            <C>          <C>


                                  Preferred  Stock           Common  Stock       Additional
                                  -----------------          --------------      Paid-in      Special      Accumulated
                                  Shares      Amount      Shares      Amount     Capital     Warrants      Deficit       Total
                                  -------     -------     -------     -------    --------    ---------     --------      ------

Balances, December 31, 2003           -            -      24,320,902   $24,321   $2,855,289         -   $(3,980,591)  $(1,100,981)

Common stock and
  warrants issued and
  options exercised for cash                               1,488,333     1,488      235,862   $188,775                    426,125

Common stock issued for services                           1,340,000     1,340      195,760                               197,100

Common stock issued for interest                              56,667        57       11,276                                11,333

Conversion of notes payable
  to common stock and warrants                             1,364,423     1,364      302,113                               303,477

Preferred stock issued for cash       5,000  $      5                                12,495                                12,500

Issuance of stock
  options to consultants                                                             26,798                                26,798

Warrants issued for cash                                                             18,750                                18,750

Common stock
  issed for debenture
  placement fee                                              100,000       100       12,400                                12,500

Beneficial conversion
  feature of
  convertible debt                                                                   83,333                                83,333

Common stock issued
   for investment
  agreement placement fee                                  2,000,000     2,000       (2,000)                                    -

Cancelation of shares                                        (50,000)      (50)          50                                     -

Series A preferred dividends                                    2,193         2          (2)                                    -

Net loss                                                                                                    (940,970)     (940,970)
                                   ----------  ---------    ----------- --------- ------------ --------- ------------  ------------

Balances, September 30, 2004          5,000  $      5      30,622,518   $30,622   $3,752,124   $188,775  $(4,921,561)     (950,035)
                                   ========= =========    ===========  ========  ===========  ========  ============  ============


<FN>

                                        The accompanying notes are an integral
                                          part of these financial statements.

                                                         6

</TABLE>


<TABLE>
<CAPTION>


                                    Nighthawk Systems, Inc.
                        Condensed Consolidated Statements of Cash Flows
                                          (unaudited)


<S>                                                                      <C>         <C>

                                                                          Nine months ended
                                                                            September 30,
                                                                        -----------------------
                                                                              2004        2003
                                                                         ----------  ----------


Cash flows from operating activities:
      Net loss                                                           $(940,970)  $(448,390)
                                                                         ----------  ----------

Adjustments to reconcile net loss to
   net cash used in operating activities:

   Loss from operations of discontinued segment                                  -      14,472
   Gain on disposition of operating segment                                      -     (92,443)
   Depreciation and amortization                                             5,781       2,127
   Beneficial conversion feature                                            83,333           -
   Common stock issued for services                                        197,100           -
   Common stock and warrants issued for interest                            77,616      11,500
   Common stock issued for placement fee                                    12,500
   Issuance of stock options to consultants                                 26,798           -
   Cancellation of consulting agreement                                          -     (39,000)
   Loss from settlement of shareholder receivable                                -       4,992
Change in assets and liabilities:
   Decrease (increase) in accounts receivable                              (14,231)    154,556
   Decrease (increase) in inventories                                       32,840     (60,105)
   Increase in other assets and intangible assets                          (95,748)    (23,247)
   Increase (decrease) in accounts payable                                 (21,240)    129,811
   Increase in accrued expenses                                             32,430      30,984
   Decrease in deferred revenue                                                  -    (415,829)
   Increase (decrease) in customer deposits                                (58,129)     60,000
   Increase in other liabilities                                            55,000           -
                                                                         ----------  ----------
Total adjustments                                                          334,050    (222,182)
                                                                         ----------  ----------

Net cash used in operating activities of continuing operations           $(606,920)  $(670,572)
                                                                         ----------  ----------

Cash flows from investing activities:
   Purchases of furniture, fixtures and equipment                                -     (12,655)
                                                                         ----------  ----------
Net cash used in investing activities                                            -     (12,655)
                                                                         ----------  ----------

Cash flows from financing activities:
   Repayment of cash overdraft                                              (3,902)          -
   Proceeds from notes payable, related parties                             25,809      43,733
   Payments on notes payable, related parties                              (35,054)    (40,495)
   Payments made on factoring arrangement, net                                   -     (82,502)
   Proceeds from issuance of convertible debt and warrants                 250,000           -
   Proceeds from notes payable, other                                       85,000     250,000
   Payments on notes payable, other                                        (30,214)    (14,383)
   Payments on other related party payable                                 (25,000)          -
   Net proceeds from issuance of common stock and warrants                 237,350     128,000
   Proceeds from issuance of preferred stock                                12,500           -
   Net proceeds from issuance of special warrants                          188,775           -
                                                                         ----------  ----------
Net cash provided by financing activities                                  705,264     284,353
                                                                         ----------  ----------

Cash used in discontinued operations                                                   (25,636)
                                                                                     ----------

Net increase (decrease) in cash                                             98,344    (424,510)
Cash, beginning                                                                  -     428,677
                                                                         ----------  ----------
Cash, ending                                                             $  98,344   $   4,167
                                                                         ==========  ==========


Supplemental disclosure of cash flow information:

Cash paid for interest                                                   $  21,900   $   4,708
                                                                         ==========  ==========

Supplemental disclosure of non-cash investing and financing activities:

Conversion of notes payable and accrued interest to common stock
  Notes payable                                                          $ 215,015
  Accrued interest                                                          22,179
                                                                         ----------
  Total balance converted                                                $ 237,194
                                                                         ==========


Preferred stock dividends                                                $     420
                                                                         ==========

<FN>
                             The accompanying notes are an integral
                              part of these financial statements.

                                              7

</TABLE>




                             NIGHTHAWK  SYSTEMS,  INC.
              NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
                  NINE  MONTHS  ENDED  SEPTEMBER  30,  2004  AND  2003
                                  (unaudited)

1.   Basis  of  presentation:

The  accompanying  unaudited  condensed consolidated financial statements, which
include  the  accounts  of  Nighthawk  Systems,  Inc.  and  its  subsidiary  PCT
(collectively  referred  to  herein  as  "the  Company"),  have been prepared in
accordance with accounting principles generally accepted in the U.S. for interim
financial information. In the opinion of management, all adjustments (consisting
of  only  normal  recurring  items), which are necessary for a fair presentation
have  been  included.  The  results  for  interim  periods  are  not necessarily
indicative  of  results that may be expected for any other interim period or for
the  full year. These condensed consolidated financial statements should be read
in  conjunction  with  a  reading  of the financial statements and notes thereto
included  in  the  Company's  Form  10-KSB annual report for 2003 filed with the
Securities  and  Exchange  Commission  (the  "SEC").

    Going  concern,  results  of  operations  and  management's  plans:

The  Company  has incurred operating losses for several years. These losses have
caused  the  Company  to  operate  with  limited  liquidity  and  have created a
stockholders' deficit of approximately $950,000 and a working capital deficiency
of  approximately  $719,000  as  of  September  30, 2004. These conditions raise
substantial  doubt  about  the Company's ability to continue as a going concern.
Management's  plans  to  address  these  concerns  include:

     1.  Raising  working  capital  through  additional  borrowings.
     2.  Raising  equity  funding  through  sales  of the Company's common stock
         or  preferred  stock.
     3.  Improving  working  capital  through  increased  sales of the Company's
         products  and  services  and  the  reduction  of  expenses.

The accompanying financial statements do not include any adjustments relating to
the  recoverability and classification of assets or the amounts  of  liabilities
that might be necessary should the Company be unsuccessful in implementing these
plans,  or  otherwise  be  unable  to  continue  as  a  going  concern.

As  noted  in  Note 7 to these financial statements, in August 2004, the Company
signed  a  financing  arrangement  with  Dutchess  Private  Equities,  II,  L.P.
("Dutchess")  which  was  amended  on August 26, 2004 and on September 24, 2004.
Under  the  terms  of  the  amended arrangement, the Company received a total of
$250,000  under  a  debenture  during the three-month period ended September 30,
2004.  The  Company  also  signed  an  investment agreement under which, subject
to  the  effectiveness  of  an  SB-2 registration statement to be filed with the
Securities  and  Exchange Commission ("SEC") which will cover the sale of common
stock to be issued to Dutchess under the agreement, Dutchess agreed to  purchase
up  to  $10.0  million  in  common  stock  from  the  Company,  at the Company's
discretion, over the next three years, subject to certain limitations  including
the  Company's  then  current  trading  volume. On November 3, 2004, the Company
filed  an  SB-2  registration  statement  with  the  SEC  to register the shares
underlying  the  debenture  and  the  investment  agreement.

2.  Significant  accounting  policies

    Revenue  recognition

Revenue from product sales is recognized when all significant obligations of the
Company  have  been  satisfied.  Revenues  from  equipment  sales are recognized
either  on  the completion of the manufacturing process, or upon shipment of the
equipment  to  the customer, depending on the Company's contractual obligations.
The  Company  occasionally  contracts to manufacture items, bill for those items
and  then  hold  them  for  later  shipment  to  customer-specified  locations.

During  the  nine  months  ended  September  30,  2004,  the  Company's  largest
customers accounted  for 26%, 24% and 14% of sales respectively, and the Company
purchased  52%  and  13%  of  its materials from two suppliers. During the three
months  ended  September 30, 2004, the Company's largest customers accounted for
35%, 31% and 12% of sales, respectively and the Company purchased 51% and 29% of
its  materials from two suppliers. During the nine months  ended  September  30,
2003,  the  Company's two largest customers  accounted for approximately 55% and
33%  of  sales respectively. During the  three  months ended September 30, 2003,
the Company's two largest customers accounted  for  approximately 39% and 32% of
sales.

    Inventories

Inventories at September 30, 2004 consist entirely of parts and pre-manufactured
component  parts.  The Company monitors inventory for turnover and obsolescence,
and  records  reserves  for  excess  and  obsolete inventory as appropriate. The
Company  did not have a reserve for excess or obsolete inventory as of September
30,  2004.

                                      8

   Net  loss  per  share

Basic  net  loss  per  share  is computed by dividing the net loss applicable to
common  stockholders  by  the  weighted-average number of shares of common stock
outstanding  for  the  year.  Diluted  net loss per share reflects the potential
dilution  that  could  occur  if dilutive securities were exercised or converted
into  common  stock or resulted in the issuance of common stock that then shared
in the earnings of the Company, unless the effect of such inclusion would reduce
a loss  or  increase  earnings  per share.  For the three and nine month periods
ended  September  30,  2004  and  2003,  the effect of the inclusion of dilutive
shares  would  have  resulted  in  a  decrease in  loss per share.  Accordingly,
the  weighted  average  shares  outstanding  have not been adjusted for dilutive
shares.

    Stock-based  compensation

The  Company  has  elected  to  continue  to  account for stock option grants in
accordance  with  APB  25  and  related interpretations. Under APB 25, where the
exercise  price  of the Company's employee stock options equals the market price
of  the underlying stock on the date of grant, no compensation is recognized. No
employee  options  were  vested  during  the  three month and nine month periods
ending  September  30,  2003.  The Company issued employee options in September,
October and November 2003 that vest over three year periods. The Company has not
recognized compensation  expense  during  the three and nine month periods ended
September 30, 2004 because the exercise price of the options equaled or exceeded
the  market  price  of  the  Company's  common  stock  on  the dates the options
were  granted.  The  weighted  average  fair  value at date of grant for options
granted  during  2003 was from $0.009 to $0.027. If compensation expense for the
Company's  stock-based  compensation  plans  had been determined consistent with
SFAS  123,  the  Company's  net  loss  and  net  loss  per  share including  pro
forma  results  would have been  the  amounts  indicated  below:


<TABLE>
<CAPTION>
<S>                                                              <C>                   <C>
                                                                  Three Months Ended September 30,
                                                                 ---------------------------------
                                                                          2004        2003
                                                                      -----------  ----------
Net loss applicable to common stockholders:                           $ (421,661)  $(147,151)

As reported
Total stock-based employee compensation expense determined
  under fair value based method for all employee awards, net
  of related tax effects                                                   (3,510)          -
                                                                      ------------  ----------
Pro forma net loss applicable to common stockholders                  $  (425,171)  $(147,151)
                                                                      ============  ==========

Pro forma net loss per share applicable to common stockholders:
As reported:
Basic and diluted                                                     $     (0.01)  $   (0.01)
Pro forma:
Basic and diluted                                                     $     (0.01)  $   (0.01)

*  Less than $0.01 per share
</TABLE>

<TABLE>
<CAPTION>
<S>                                                              <C>                   <C>

                                                                 Nine Months Ended September 30,
                                                                 -------------------------------
                                                                         2004        2003
                                                                    -------------  ----------
Net loss applicable to common stockholders:                         $    (941,390) $(448,390)

As reported
Total stock-based employee compensation expense determined
  under fair value based method for all employee awards, net
  of related tax effects                                                  (10,305)         -
                                                                    -------------  ----------
Pro forma net loss applicable to common stockholders                $    (951,695) $(448,390)
                                                                    =============  ==========

Pro forma net loss per share applicable to common stockholders:
As reported:
Basic and diluted                                                   $      (0.03)  $   (0.02)
Pro forma:
Basic and diluted                                                   $      (0.04)  $   (0.02)
</TABLE>


                                       9

The  pro  forma  effect  on  net loss may not be representative of the pro forma
effect on net income or loss of future years due to, among other things: (i) the
vesting  period of the stock options and the (ii) fair value of additional stock
options  in  future  years.

During  March and August of 2004, the Company issued options to purchase 330,000
and  300,000  shares  of  common   stock  of   the  Company,  respectively,   to
non-employees  which vested immediately. The weighted average fair value at date
of  grant  for  the  options  granted  during  the first nine months of 2004 was
$0.042.  In  accordance with SFAS 123, the Company recognized $26,798 in expense
during the nine-month period ended September 30, 2004 related to these and other
previously  issued  options  to  consultants  which  vested  during  the period.

For  the purposes of the above, the fair value of each option grant is estimated
as  of  the  date of grant using the Black-Scholes option-pricing model with the
following  assumptions:


<TABLE>
<CAPTION>

<S>                             <C>         <C>
                               2004            2003

Dividend yield                 0.0%            0.0%
Expected volatility       1.094 - 1.122   1.229 - 1.316
Risk-free interest rate       4.50%           4.50%
Expected life in years          2             1 - 3

</TABLE>

2.  Related  party  transactions:

During  the  nine months ended September 30, 2004, the Company repaid $10,054 on
notes  payable  to  two  officers  of  the  Company,  as  well  as  $25,000 to a
shareholder  and  former  director under an arrangement entered into in December
2003.  The Company also borrowed and repaid approximately $25,000 from a company
in  which  its  Chairman  is  a  partner.


In  August  2004,  in  an  effort  to  improve its working capital position, the
Company  issued  739,423  common  shares  and  warrants  to  purchase  739,423
common  shares  at  $0.20  per  share  to  two  individuals  and  a  company  in
exchange  for  approximately  $107,000  in  notes  payable plus accrued interest
owed  them  by  the  Company.  One  of  the  individuals  is  an  officer of the
Company, one is a business partner of the Company's Chairman, and the company is
affiliated  with  the  father  of the Company's Chairman.  Based on calculations
using  Black-Scholes, the fair value of the warrants issued to the three parties
was  $38,533.  This  amount  is  reflected  in  interest  expense and additional
paid-in  capital  for  the  periods  ended  September  30,  2004.



3.  Notes  payable

In  April 2004, the Company reached an agreement with its largest creditor under
which,  in  return  for an additional $25,000 in borrowings and the extension of
the  maturity dates of his three notes to July 31, 2004, the Company granted the
creditor  a  secured  position  in  the  assets of the Company. The Company also
agreed  to pay the creditor cash interest at an annual rate of 8% retroactive to
the  signing  of the notes, and monthly at an annual rate of 8% on the new total
of  $375,000  in notes, with $750 of the monthly interest due being paid in cash
and  the  remainder  being  paid  in stock at a rate of $0.20 per share. For the
period  of  March  through  September  of 2004, the Company issued 56,667 shares
to  the  creditor for $11,333 of interest owed under this arrangement. In August
2004, the creditor  extended  the  maturity  dates  of  the notes to October 31,
2004,  and  converted  $50,000  of  his  $210,000  convertible  note  to 250,000
shares  of common stock of the Company.  The Company is currently in discussions
with  the  creditor  regarding  another  extension  of the maturity dates of the
creditor's  notes.

In July 2004, the creditor also loaned the Company an additional $60,000 under a
90-day arrangement for the purpose of purchasing parts needed to complete orders
that  had  been  placed  by  the Company's customers as of that date. Under this
arrangement, the creditor will receive varying percentages of the cash collected
from those customers until his note balance, plus interest at the annual rate of
10%  is  collected  in  full.

Effective  June  30,  2004,  a  creditor  of  the  Company  converted $71,640 in
principal  and  $8,876  in accrued interest into 375,000 shares of the Company's
common  stock  and a warrant to purchase 375,000 shares of common stock at $0.25
per  share. Based on a calculation using Black-Scholes, the warrant's fair value
at  that  date  was  $27,750.  This  amount is reflected in interest expense and
additional  paid-in  capital  for  the  nine-month  period  ended  September 30,
2004.

During  the  six-month  period  ended  June  30,  2004,  the  Company  repaid  a
stockholder  $7,543  owed  to  him  under  a short-term note, and made $3,725 in
payments  to  a  financial  institution.

                                       10

4.  Stock  transactions:

During  the nine months ended September 30, 2004, the Company received $127,850,
net  of  offering  costs  of  $900, for the issuance of 858,333 shares of common
stock and warrants  to purchase 858,333 additional shares for $0.25 per share. A
total  of  1,340,000  shares  of  common  stock  were  issued  during  the  nine
month  period to consultants  in  return  for  $197,100  in  services,  and  the
Company  received  $109,500  in  cash  proceeds  upon  the  exercise  of 630,000
options  issued  to  consultants  during  the  period.

In  order to provide the Company with working capital, a Canadian brokerage firm
sponsored  a  private placement of up to $300,000 in Special Warrants, which are
convertible  into  shares of common stock of the Company at $0.20 per share, and
also  provide the purchaser with a warrant to purchase an equal number of shares
of  common  stock  of  the Company for a period of two years at $0.30 per share.
The  Special  Warrants  will  automatically  convert  at  the  earlier  of i) an
effective  registration  statement  filed  with  the  Securities  and  Exchange
Commission  or  receipt  of  a  qualified  prospectus  by  a Canadian provincial
authority,  whichever comes later; or ii) one year from their date of issue.  As
of  June  30,  2004,  when  the  Special  Offering  was  closed, the Company had
issued  $188,775  in  Special  Warrants,  net  of  issuance  costs  of  $43,625.

In 2001, PCT issued 391,200 shares of its common stock in return for $391,200 in
cash  proceeds.  Based  on  a  review  of  Company  records during 2003, Company
management  determined  that  associated  warrants to purchase 391,200 shares of
common  stock  at  $1.50  per  share  were  never  delivered  to  the purchasers
subsequent  to  their  investment. Company management also determined this to be
the case with 255,000 shares issued by the Company between January and June 2002
in  return for $255,000 in cash proceeds, for which warrants to purchase 255,000
shares  at  $1.50  per  share  should  have been delivered. According to Company
records,  all  such  warrants  should  have been exercisable for a period of two
years  from  their  date  of issuance; therefore, the warrants owed to investors
from  2001 expired without being delivered to the investors. In order to fulfill
the  terms of their investment, in January 2004 the Company offered new warrants
to  each of the investors whose funds were received in 2001 and during the first
six months of 2002 in order to permanently replace those that were never issued.
Terms  of the new warrants allowed the investors to purchase one share of Series
A  Preferred  Stock for $2.50 per share for every $10 originally invested in the
Company.  The  Preferred  Stock  will  pay  a 7% annual dividend, on a quarterly
basis,  in  the form of Company common stock. The Preferred Stock is convertible
into  common  shares of the Company on a 1 for 10 basis at any date through June
30,  2005.  On that date, all outstanding Preferred Stock will convert to common
stock  on a 1 for 10 basis. The new warrants to purchase Preferred Stock were to
be  exercised  on  or before April 30, 2004. A total of 5,000 shares of Series A
Preferred  Stock  were purchased through the exercise of the warrants. Preferred
stock  dividends  of  $420  were  accrued  in the form of 2,193 shares of common
stock  of  the  Company.

During the second quarter of 2003, the Company canceled 300,000 shares of common
stock  previously  issued  to  a  consultant during 2002. A $39,000 reduction in
consulting  expense  was  recorded  during the second quarter of 2003 related to
this  cancellation, as the Board of Directors determined that the shares had not
been  properly  authorized for issuance, and that there was a lack of sufficient
evidence  that  any  services  had  been  performed.

5.  Discontinued  operations:

Effective  July  31, 2003, the Company sold the remaining assets and liabilities
of  its  paging  airtime business segment.  The financial results of this paging
business  segment  are  presented as discontinued operations in the accompanying
financial  statements.

6.  Legal  matters

In  May 2003, the Company was sued by a former Board member seeking recovery for
the  value  of  350,000  shares,  or $209,500, and $120,000 due his firm under a
retainer  agreement  between  the Company and his firm.  The former Board member
had previously signed a settlement agreement with the Company in which he agreed
to  cancel  all potential claims against the Company and its directors in return
for  150,000  unregistered  shares  trading  at  a value of $0.60 or higher.  In
October  2004  we  reached  an agreement with the former board member to  settle
the  case.  Under  the  Settlement  Agreement  and  Release,  we  made  a  cash
payment to the former director of $10,000 during October 2004, and are scheduled
to  make  cash  payments of $20,000 in January 2005 and $25,000 in October 2005.


The  Company,  along  with  the  current  officers and board members and several
former  directors,  were  sued by a former director and his son for, among other
things,  breach  of  contract  for  unlawful  termination and failure to provide
stock.  The  alleged  breaches  and  other claims all stem from their service as
director  of  the Company and chief financial officer, respectively, for part of
2001  and  part  of  2002.  The  aggregate  amount  of  damages  claimed  is not
specified.  The  case  is  proceeding  in  the  state court in Denver, Colorado.
Several  of the individually-named defendants have been voluntarily dismissed by
the  plaintiffs.  The  Company plans to vigorously defend itself and its current
directors  and  officers, and filed a counterclaim against  the  plaintiffs  for
non-performance  and breach of fiduciary duties. This counterclaim  was  allowed
to  proceed  by  the  court  over  the objection of the plaintiffs. No assurance
can  be  given,  however,  as  to  the  ultimate
outcome  of  the  case.

                                         11


7.     Convertible  debt  and  investment  agreement

In August 2004, the Company signed a financing arrangement with Dutchess Private
Equities,  II,  L.P.  ("Dutchess")  which  was amended on August 26, 2004 and on
September  24,  2004.  Under  the  terms of the amended arrangement, the Company
received  $100,000  under a convertible debenture on August 11, 2004, $25,000 on
August  26,  2004,  and  $125,000  under  the  debenture  on September 27, 2004.
Interest  accrues  on the debenture at an annual rate of 8%. As of September 30,
2004,  the  debenture  was  convertible  into common shares anytime prior to its
maturity  on  August 10, 2007 at the lesser of (i) 75% of the lowest closing bid
price  on the date of conversion, or  (ii)  twelve  and  a  half cents ($0.125).
Any  portion  of  the debenture that remains outstanding at August 10, 2007 will
automatically convert into common shares.  The number of shares converted at any
time is limited so as not to exceed 4.99% of the outstanding shares of Nighthawk
common stock outstanding. In addition, Dutchess was issued a warrant to purchase
up  to  250,000  shares  of  common  stock at a price of twelve and a half cents
($0.125)  for  a  period of up to five years.  The Company has recognized a debt
discount  of  $18,750 which represents the fair value of the warrant on its date
of  issuance,  and has recorded a beneficial conversion feature of $83,333 based
on  the  debenture's terms for conversion as of September 30, 2004.  The Company
also  issued  a placement agent fee $12,500 in cash and 100,000 shares of common
stock,  valued  at $12,500, for the issuance of the debenture.  The Company also
incurred  fees  of  $7,500  related  to the issuance of the debenture.  All fees
associated  with the issuance of the debenture have been capitalized and will be
amortized  over  the  period the debenture is outstanding.  On October 10, 2004,
the  conversion  rate  of  the debenture was lowered to 73% subject to a penalty
clause  in  the  Company's  agreement  with  Dutchess.  The  Company recorded an
additional  beneficial  conversion  feature  of  $9,132  related  to this change
subsequent  to  September  30,  2004.

The  Company  also  signed  an  investment agreement with Dutchess on August 10,
2004  under  which  Dutchess  agreed  to  purchase  up  to  $10.0  million  in
common  stock  from the Company,  at  the  Company's  discretion,  over the next
three  years,  subject  to  certain  limitations  including  the  Company's then
current  trading  volume. The Company issued 2.0 million shares to the placement
agent  involved  in  this  transaction  with Dutchess and incurred an additional
$7,500  in  costs  related  to  the  issuance  of the investment agreement.  The
Company  has  recorded the fees and costs related to the investment agreement as
an  offset  to  additional  paid-in  capital  in  the  accompanying  financial
statements.  The  Company  also  signed a consulting agreement with a company in
which  an  employee  of Dutchess is a member of management. Under the agreement,
the  company  was  issued  500,000  shares  of  Company  common  stock.

                                     12

Item  2.  Management's  Discussion  and  Analysis  or  Plan  of  Operation

Forward-Looking  Statements

Discussions  and  information  in this document, which are not historical facts,
should  be considered forward-looking statements. With regard to forward-looking
statements,  including  those  regarding  the  potential revenues from increased
sales,  and  the  business  prospects  or any other aspect of NightHawk Systems,
Inc.'s  business,  actual results and business performance may differ materially
from  that  projected or estimated in such forward-looking statements. NightHawk
Systems, Inc. ("the Company") has attempted to identify in this document certain
of the factors that it currently believes may cause actual future experience and
results  to differ from its current expectations. Differences may be caused by a
variety  of  factors, including but not limited to, adverse economic conditions,
entry  of  new and stronger competitors, inadequate capital and the inability to
obtain  funding  from  third  parties.

The  following  information  should  be  read  in conjunction with the unaudited
condensed  consolidated  financial statements included herein which are prepared
in accordance with accounting principles generally accepted in the United States
of  America  for  interim  financial  information.

The  Three  Months  Ended  September 30, 2004 Compared to the Three Months Ended
September  30,  2003

Net  sales  for the three month period ended September 30, 2004 were $221,723 as
compared to $209,279 for the corresponding period of the prior year, an increase
of  6%  between  periods  presented. During the three months ended September 30,
2003,  two  customers represented approximately 71% of the Company's total sales
volumes.  During  the  three  months  ended  September 30, 2004, three customers
represented  approximately  78%  of  the  Company's  revenues.

Cost  of goods sold increased by $18,406 or 11% to $163,786 for the three months
ended September 30, 2004 from $145,380 for the corresponding period of the prior
year,  and increased as a percentage of revenues between the periods from 69% in
2003  to  74% in 2004. Approximately 72% of the Company's revenues were produced
by sales of the Company's electric utility products, which traditionally produce
lower  margins  on  a per-unit basis, and only 11% were produced by sales of the
Company's  rebooting  unit,  which  traditionally  produces  higher margins on a
per-unit  basis.  During  last year's period, approximately 34% of the Company's
revenues were produced by sales of its rebooting product. As a result of the mix
of products sold, the Company's gross margin decreased from 31% to 26% from last
year's  period  to  this  year's  period.

Selling,  general  and  administrative  expenses  for  the  three  months  ended
September  30,  2004  increased  by $60,129 or 17% to $348,005 from $287,876 for
the  three  month period  ended  September  30, 2003.  Although amounts incurred
for  salaries  and  related benefits declined between the periods presented, the
Company  accrued  $55,000 during the current year period for the settlement of a
claim  with  a  former  board  member,  and  incurred  approximately $100,000 in
non-cash  expenses  related  to  consultants  during  the  current  year period.

Interest  expense  increased  by  approximately $121,531 between the three-month
periods  presented.  The  increase  was  due  in  large part to the recording of
approximately  $83,000  in expense during the current year period related to the
non-cash,  beneficial  conversion feature of the debenture agreement between the
Company  and  Dutchess  Private  Equities,  L.P.  ("Dutchess"). In addition, the
Company  recognized  $38,533  in  interest  expense  during  the  quarter  ended
September  30,  2004  associated  with the fair value of warrants given to three
entities  for  the  conversion  of  approximately  $157,000 in notes payable and
accrued  interest  to  common  stock  and  warrants  to  purchase  common stock.

The  net  loss  from  continuing operations for  the  three-month  period  ended
September  30,  2004  was $421,438 compared  to  $233,816  for  the  three-month
period  ended  September  30,  2003.   Although  revenues  increased  during the
period,  the  increase  in  net  loss  from continuing operations was due almost
entirely  to  the  increases in selling, general and administrative expenses and
interest  expense  noted  above.  The  majority  of these expenses were non-cash
expenses.

After  giving consideration to prior year results for the Company's discontinued
airtime  operations  in 2003, for which the Company recognized a gain of $92,443
during  July  2003, the net loss per share was $0.01 for both periods presented.

                                       13

The  Nine  Months  Ended  September  30,  2004 Compared to the Nine Months Ended
September  30,  2003

Net  sales  for  the  nine  month  period ended September 30, 2004 were $485,948
compared  to  $904,551   for  the  corresponding   period  of  the  prior  year.
Approximately  $642,231,  or  71%  of the product sales during the period ending
September  30,  2003  came  from  two  customers  who   placed  orders  totaling
approximately $816,000. These orders were for the Company's NH2 rebooting device
for  a  kiosk  manufacturer and operator, and load control units for an electric
utility  customer. The NH2 order was substantially completed during fiscal 2003,
while  the  load  control  unit  order  was  completed  during the period ending
September  30,  2004.  Although  the Company processed orders for more customers
during  the  2004  period  than  it  did during the 2003 period, the orders were
smaller  in  the  current  year  period  than  the  prior  period.

Cost  of  goods  sold  decreased  by  $178,570  or  52% to $344,409 for the nine
months  ended  September  30,  2004  from  $522,979 for the corresponding period
of  the  prior  year,  but  increased  as  a  percentage of revenues between the
periods from 58% in 2003  to  71%  in  2004.   This  increase  was  largely  due
to  the  increase in production  efficiency that that Company experienced in the
prior  year's period given  the  two  large  orders it was producing during that
period.  The  Company  currently produces all its units in-house and maintains a
staff  of  three  persons  for  such  purposes.  Salaries and benefits for these
personnel  are  recorded as a direct  cost  of  sales  regardless  of the number
of  products produced.  As the number  of units produced rises, the direct labor
cost  associated  with each unit typically  decreases.  In addition, the Company
sold  a larger number of its rebooting devices during last year's period than it
did  during  this  year's  period,  and the Company produces a relatively higher
margin  on  a  per-unit  basis  on  this product.  As a combined result of these
factors,  the Company's gross margin decreased from 42% to 29% from last  year's
period  to  this  year's  period.

Selling, general and administrative expenses for the nine months ended September
30, 2004 decreased by $22,996 or 3% to $888,950 from $911,946 for the nine month
period  ended September 30, 2003. Although the Company incurred costs of $55,000
for  a  legal  settlement  with  a  former  director,  approximately $197,000 in
consulting  fees for product marketing and investor relations, and costs for the
development  of  the Company's satellite-based unit during the nine-month period
ended  September  30,  2004,  these  costs  were  more than offset by reductions
between  the  2003 and 2004 periods presented in personnel and personnel-related
costs,  as  well  as  a  decrease  in  professional fees from legal and auditing
services.

During  the  period  ending  September  30,  2003,  the Company canceled 300,000
shares  of common stock previously issued to a consultant during 2002. A $39,000
reduction  in  consulting expense was recorded during the second quarter of 2003
related  to  this  cancellation, as the Board determined that the shares had not
been  properly  authorized for issuance, and that there was a lack of sufficient
evidence  that  any  services  had  been  performed.

Interest  expense  increased  by  approximately  $158,572 between the nine-month
periods  presented,  due  to  the  value  of  warrants  issued  to creditors who
exchanged  approximately $237,000 in notes and accrued interest for the warrants
and  common  stock,  and  the recognition of approximately $83,000 in beneficial
conversion  expense  related  to the debenture agreement between the Company and
Dutchess.

The  net  loss  from  continuing  operations  for  the  nine-month  period ended
September  30, 2004 was $940,970 compared to $526,361  for the nine-month period
ended September 30, 2003. The increase was due to the near-completion of the two
large  orders  discussed above that produced increased revenues during the first
nine  months of 2003, coupled with increases in consulting expenses and interest
expense  recorded  during  the  2004  period.

After  giving consideration to prior year results for the Company's discontinued
airtime  operations  in 2003, for which the Company recognized a gain of $92,443
during  July  2003,  the  net  loss  per share was increased from $0.02 to $0.03
between  periods.

                                       14

Liquidity  and  Capital  Resources

The  Company's  financial  statements  for  the  three  and  nine  months  ended
September  30,  2004  have  been  prepared  on  a  going  concern  basis,  which
contemplates  the  realization  of  assets and the settlement of liabilities and
commitments  in  the  normal  course  of  business.  For  the  nine months ended
September  30, 2004, the Company reported  a  net  loss  of  $941,970,   and has
a  stockholders'  deficit  of  approximately  $950,000  and  a  working  capital
deficiency  of  approximately  $719,000  as  of  September  30,  2004.

The  Report  of  Independent  Registered Public Accounting Firm on the Company's
financial  statements  as of and for the year ended December 31, 2003 included a
"going  concern"  explanatory  paragraph which means that the auditors expressed
substantial  doubt  about  the Company's ability to continue as a going concern.

During  the  nine-month  period  ended  September  30,  2004,  the  Company used
cash  of  approximately   $600,000  in  its  normal  operating  activities.  The
Company  raised approximately  $439,000  during  the  nine  months from the sale
of  common  stock,  warrants  to  purchase  common  stock,  and preferred stock.
Approximately  $110,000  in  cash  proceeds  were generated from the issuance of
short  term  notes, and an additional $250,000 in proceeds were generated by the
issuance  of the convertible debenture with Dutchess.  Funds provided from these
issuances  of debt and equity were used to fund the Company's operations  during
the  period  and  to  make  approximately  $102,000  in  payments  toward  the
Company's  debt  obligations  during  the  quarter.

Until  the Company is able to generate positive cash flows from operations in an
amount  sufficient to cover its current liabilities and debt obligations as they
become  due, it will remain reliant on borrowing funds or selling equity to meet
those  obligations.   The  Company  has  historically sold its equity securities
through  private  placements  with  various  individuals.  Raising funds in this
manner typically requires much time and effort to find new accredited investors,
and the terms of such an investment must be negotiated for each investment made.
Cash  from these types of investments has historically been generated in amounts
of  $50,000 or less, in an unpredictable manner, making it difficult to fund and
implement  a  broad-based  sales  and  marketing  program.

During  February  2004, the Company met with several brokerage firms and private
equity  groups  to  investigate  the  possibilities of raising an amount of cash
sufficient to both fund a comprehensive sales and marketing plan and improve its
working  capital  position  from  a  deficit  to a surplus. As a result of those
meetings,  the  Company  announced  in March 2004 that a brokerage firm based in
Vancouver,  British  Columbia  would sponsor an offering of equity securities of
the Company.  However, this offering would be performed on a best-efforts basis,
without any guarantee of success.  In an effort to fund the Company's operations
in advance of such an offering, the brokerage firm sponsored a private placement
of  Special  Warrants  which  are  convertible into units consisting of both one
share  of  common  stock  of  the  Company  at  $0.20 per share and a warrant to
purchase  one  share of common stock at $0.30 per share.  This private placement
effort  resulted  in  net  proceeds  of  $188,775.

In August 2004, the Company signed a financing arrangement with Dutchess Private
Equities,  II,  L.P.  ("Dutchess")  which  was amended on August 26, 2004 and on
September  24,  2004.  Under  the  terms of the amended arrangement, the Company
received  $100,000  under a convertible debenture on August 11, 2004, $25,000 on
August  26,  2004,  and  $125,000  under  the  debenture  on September 27, 2004.
Interest  accrues on the debenture at an annual rate of 8%. The debenture can be
converted into common shares anytime prior to its maturity on August 10, 2007 at
the lesser of (i) 73% of the lowest closing bid price on the date of conversion,
or  (ii)  twelve  and  a  half cents ($0.125). Any portion of the debenture that
remains  outstanding  at  August 10, 2007 will automatically convert into common
shares.  The  number  of  shares  converted  at any time is limited so as not to
exceed 4.99% of the outstanding shares of Nighthawk common stock outstanding. In
addition,  Dutchess  was  issued  a  warrant to purchase up to 250,000 shares of
common  stock  at a price of twelve and a half cents ($0.125) for a period of up
to  five  years.  The  Company  also  signed an investment agreement under which
Dutchess  agreed  to  purchase  up  to  $10.0  million  in common stock from the
Company,  at  the  Company's  discretion,  over the next three years, subject to
certain  limitations  including  the  Company's  then  current  trading  volume.
Although  the  amount and timing of specific  cash infusions available under the
entire financing arrangement cannot be predicted with certainty, the arrangement
represents  a  contractual  commitment  by  Dutchess  to  provide  funds  to the
Company.  Although  no  assurance may be given that  it  will  be able to do so,
the  Company  expects  to  be  able to access funds under  this  arrangement  to
help  it  fund  near-term  and  long-term  sales  and  marketing  efforts.

A  challenge  faced  by  the  Company is the ability to purchase and maintain an
inventory  of  parts  necessary  to complete orders as quickly as possible after
they  are  received.  If the Company is able to complete orders more quickly, it
can  generate  and  collect  cash  from its contracts more quickly.  The Company
generates  recurring  orders  from  several  of  its  customers;  therefore, the
expeditious  completion  of  orders  could  lead to the generation of additional
orders  from existing customers and improved cash flows for the Company.   Also,
as  noted earlier, the Company's cost of production will be higher on a per unit
basis  if  it  does  not  maintain minimum levels of production in its facility.
Delays  caused  by  the  purchasing  of  parts  during  the  nine-month  period
ending  September  30,  2004 resulted  in  higher  production  costs per product
because the Company has some fixed  costs  associated  with production of units,
and  therefore  decreased  cash  inflows  during  the  period.  The  delays  in
purchasing  also  result  in  a delay in receiving  follow-up  orders  from  the
customers.

In  an effort to assist the Company in completing orders for customers in a more
expeditious  manner,  in  August  2004 the Company's largest creditor loaned the
Company  an  additional  $60,000.  Proceeds from this loan were used to purchase
parts  required  to  complete  orders  held at that time by the Company, and the
creditor  is  being  repaid  from the receipts generated by the orders, plus 10%
annual  interest.  Although no assurance may be given that it will be able to do
so,  the Company anticipates that it will also be able to utilize its investment
agreement  with  Dutchess  to assist it in processing orders more expeditiously.
As  a result of funds expected to be raised subsequent to September 30, 2004 the
Company  believes  that  it  will be able to initiate a sales and marketing plan
designed  to  utilize  direct  sales  efforts, as well as indirect sales efforts
through  dealer  networks  and  through  improvements  to  its own web site. The
Company  also  plans  to  utilize  funds  generated  through  debt  and  equity
arrangements  to  expedite the production of the orders it receives in an effort
to  improve  the  Company's  ability to generate cash flows from operations on a
recurring  basis.  Additionally,  in order to lessen the Company's dependence on
securing large contracts for recurring cash flows, the Company is in the initial
stages  of developing a consumer-based product, which it believes may eventually
produce  recurring  cash  flows  from  sales.

                                       15

Item  3.  Controls  and  Procedures

(a)     Evaluation  of  Disclosure  Controls  and  Procedures:

As  required  by Rule 13a-15 of the Securities Exchange Act of 1934, the Company
conducted  an evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of the date of this filing.  The
evaluation  was  conducted  under the supervision of the chief executive officer
and  the  chief  financial  officer with the support of the principal accounting
personnel  who  determined  that  the  disclosure  controls  and  procedures are
effective.

The  Company's  disclosure  controls  and procedures are designed to ensure that
records are maintained in reasonable detail to reflect accurately and fairly all
of  the  transactions  and  dispositions  of  assets of the Company, prevent the
unauthorized use or disposition of the Company's assets and that the information
required  to  be  disclosed  in  reports  filed  pursuant to the Exchange Act is
accumulated  and  communicated  to  management,  including  the  Chief Executive
Officer and Chief Financial Officer, in order to provide them with adequate time
to  make  decisions  regarding  required disclosures.  There were no significant
changes  in  the disclosure controls or procedures since the prior public filing
by  the  Company  that  would  materially  affect  the  Company's  controls.

PART  II  -  OTHER  INFORMATION

Item  1   Legal  proceedings

Charles McCarthy vs. Nighthawk Systems, Inc., Case no CV03-5406, Second Judicial
District  Court, County of Washoe, State of Nevada. In May 2003, the Company was
sued  by a former Board member seeking recovery for the value of 350,000 shares,
or  $209,500,  and  $120,000  due  his  firm  under a retainer agreement between
Peregrine  Control  Technologies, Inc. and his firm. The former Board member had
previously  signed a settlement agreement with the Company in which he agreed to
cancel  all  potential claims against the Company and the Company's directors in
return for 150,000 unregistered shares trading at a value of $0.60 or higher. In
October  2004  the  Company reached an agreement with Mr. McCarthy to settle the
case.  Under the Settlement Agreement and Release, the Company will pay McCarthy
$55,000  in  three  payments  over  the course of one year from the  date of the
settlement.

Lawrence  Brady and Mark Brady vs. Peregrine Control Technologies, Inc., et al.,
District  Court,  City & County of Denver, Colorado. In April 2004, the Company,
along  with  the current officers and board members and several of the Company's
former  directors,  were  sued by a former director and his son for, among other
things,  breach  of  contract  for  unlawful  termination and failure to provide
stock.  The alleged breaches and other claims all stem from their service as our
director and chief financial officer, respectively, for part of 2001 and part of
2002.  The  aggregate  amount  of  damages claimed is not specified. The Company
filed  a  counterclaim  against  the  Bradys  for  non-performance and breach of
fiduciary duties. This counterclaim was allowed to proceed by the court over the
objection  of  the  Bradys.

Item  2   Changes  in  securities  and  use  of  proceeds

      None


Item  3   Defaults  upon  senior  securities

         None

Item  4   Submission  of  matters  to  a  vote  of  securities  holders

         None

                                     16


Item  5   Other  information

         None

Item  6   Exhibits  and  Reports

(a)    Exhibits

31  Certification  pursuant  to Rule 13A-14 or 15D-14 of the Securities Exchange
Act  of  1934,  as  adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

32  Certification pursuant to the 18 U.S.C. Section 1350, as adopted pursuant to
Section  906  of  the  Sarbanes-Oxley  Act  of  2002.

(b)     Reports  on  Form  8-K.


None

                                  SIGNATURES


In  accordance  with the requirements of the Exchange Act, the Registrant caused
this  report  to  be  signed  on  its  behalf by the undersigned, thereunto duly
authorized.

                                                 Nighthawk  Systems,  Inc.
                                                 (Registrant)


Date:  November  22,  2004                       By:  /s/  H.  Douglas  Saathoff
                                                 ------------------------------
                                                 H.  Douglas  Saathoff
                                                 Chief  Executive  Officer  and
                                                 Chief  Financial  Officer


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