U.S. 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 March 31, 2005

[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF  1934
              For the transition period from _________ to ________

                         Commission File Number: 0-30786

                             NIGHTHAWK SYSTEMS, INC
                             ----------------------
        (Exact name of small business issuer as specified in its charter)

            Nevada                                      87-0627349
            ------                                      ----------
  (State or other jurisdiction of                         (I.R.S
   incorporation or organization)               Employer Identification No.)

                            10715 Gulfdale, Suite 200
                             San Antonio, TX  78216
                             ----------------------
                    (Address of principal executive offices)

                                  210 341-4811
                                  ------------
                           (Issuer's telephone number)

       __________________________________________________________________
    (Former name, former address and former fiscal year, if changed since last
                                     report)

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period  that the registrant was required to file such reports), and (2) has been
subject  to  such  filing  requirements  for  the  past 90 days.  Yes [X] No [ ]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEEDING FIVE YEARS

Check  whether  the  registrant  filed  all documents and reports required to be
filed  by  Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities  under  a  plan  confirmed  by  a  court.  Yes  [  ]  No  [  ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

As  of May 5, 2005 there were 37,025,035 shares of common stock, par value $.001
per  share,  of  the  registrant  issued  and  outstanding.

Transitional  Small  Business  Disclosure  Format  (Check one):  Yes [ ]  No [X]

<TABLE>
<CAPTION>
                                      Index
<S>                                                                                                 <C>
Part I    Financial Information

Item 1    Financial Statements (unaudited)
          Report  of  Independent  Registered  Public  Accounting  Firm                              2
          Condensed  consolidated  balance  sheet  as  of  March 31, 2005                            3
          Condensed  consolidated  statements of operations for the three months
          Ended  March  31,  2005  and  2004                                                         4
          Condensed  consolidated  statement  of  stockholders'  deficit for the
          Three  months  ended  March  31,  2005                                                     5
          Condensed  consolidated statements of cash flows for the three months ended
          March  31,  2005  and  2004                                                                6
          Notes  to  condensed  consolidated  financial  statements                                  8

Item 2    Management's Discussion and Analysis or Plan of Operation                                 16
Item 3    Controls and Procedures                                                                   21

Part II   Other Information

Item 1    Legal Proceedings                                                                         23
Item 2    Unregistered Sales of Equity Securities and Use of Proceeds                               23
Item 3    Defaults Upon Senior Securities                                                           23
Item 4    Submissions of Matters to a Vote of Security Holders                                      24
Item 5    Other Information                                                                         24
Item 6    Exhibits and Reports on Form 8-K                                                          24

          Signatures and Certifications                                                             25
</TABLE>

                         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  March  31, 2005, the related
condensed  consolidated  statements  of  operations  for the three-month periods
ended  March  31,  2005  and  2004,  the  condensed  consolidated  statement  of
stockholders'  deficit  for the three-month period ended March 31, 2005, and the
condensed  consolidated  statements  of  cash  flows for the three-month periods
ended  March  31,  2005 and 2004. 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.

GHP  Horwath,  P.C.

Denver,  Colorado
May  12,  2005

<TABLE>
<CAPTION>



                                     Nighthawk Systems, Inc.
                              Condensed Consolidated Balance Sheet
                                         March 31, 2005


<S>                                                                         <C>

        ASSETS

Current assets:
     Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    47,099
     Accounts receivable, net of allowance for doubtful accounts of
     $134                                                                   $    81,508
     Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       36,685
     Prepaids. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      102,750
                                                                            ------------
               Total current assets. . . . . . . . . . . . . . . . . . . .      268,042
                                                                            ------------

Furniture, fixtures and equipment, net . . . . . . . . . . . . . . . . . .       13,359
Intangible and other assets. . . . . . . . . . . . . . . . . . . . . . . .       13,742
                                                                            ------------
                                                                            $   295,143
                                                                            ============


      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
    Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   383,515
    Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .      211,708
    Line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . .       19,792
    Notes payable:
        Related parties. . . . . . . . . . . . . . . . . . . . . . . . . .       15,190
        Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      774,747
                                                                            ------------
               Total current liabilities . . . . . . . . . . . . . . . . .    1,404,952
                                                                            ------------

Long-term liabilities:
   Convertible debt. . . . . . . . . . . . . . . . . . . . . . . . . . . .      183,145
                                                                            ------------

Commitments and contingencies

Stockholders' deficit:
    Preferred stock, $0.001 par value; 5,000,000 shares authorized;
    5,000 issued and outstanding; liquidation preference $12,500 . . . . .       12,500
    Common stock; $0.001 par value; 200,000,000 shares authorized;
    35,394,735 issued and outstanding. . . . . . . . . . . . . . . . . . .       35,395
    Special warrants . . . . . . . . . . . . . . . . . . . . . . . . . . .      188,775
    Additional paid- in capital. . . . . . . . . . . . . . . . . . . . . .    4,453,998
    Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . .   (5,983,622)
                                                                            ------------
               Total stockholders' deficit . . . . . . . . . . . . . . . .   (1,292,954)
                                                                            ------------
                                                                            $   295,143
                                                                            ============

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

<TABLE>
<CAPTION>


                                        Nighthawk Systems, Inc.
                            Condensed Consolidated Statements of Operations
                                     Three months ended March 31,


<S>                                                                         <C>           <C>
                                                                                   2005          2004
                                                                            ------------  ------------
Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   171,222   $   102,838

Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . .      104,524        72,566
                                                                            ------------  ------------
     Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . .       66,698        30,272


Selling, general and administrative expenses . . . . . . . . . . . . . . .      561,660       276,080
                                                                            ------------  ------------
     Loss from operations. . . . . . . . . . . . . . . . . . . . . . . . .     (494,962)     (245,808)

 Interest expense:
     Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . .          691         3,373
     Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      130,627        18,018
                                                                            ------------  ------------
         Total interest expense. . . . . . . . . . . . . . . . . . . . . .      131,318        21,391
                                                                            ------------  ------------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (626,280)     (267,199)
Less: preferred stock dividends. . . . . . . . . . . . . . . . . . . . . .         (219)
                                                                            ------------  ------------
Net loss to common stockholders. . . . . . . . . . . . . . . . . . . . . .  $  (626,499)  $  (267,199)
                                                                            ============  ============

Net loss per basic and diluted common share. . . . . . . . . . . . . . . .  $     (0.02)  $     (0.01)
                                                                            ============  ============

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

Weighted average common shares outstanding - basic and diluted . . . . . .   33,733,867    24,958,301

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

<TABLE>
<CAPTION>


                                                    Nighthawk Systems, Inc.

                                  Condensed Consolidated Statements of Stockholders' Deficit

                                               Three months ended March 31, 2005


<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, 2004
                              5,000   $      12,500   31,959,247   $ 31,960  $3,884,516  $ 188,775  $(5,357,342)  $(1,239,591)
                    ----------------  --------------  -----------  --------  ----------  ---------  ------------  ------------
Common stock
issued, and
puts and warrants
exercised
for cash . . . . .                                     1,971,310      1,971     310,576                                312,547

Common stock
issued as
incentive for
notes payable                                            250,000        250      52,250                                 52,500

Common stock
and options
issued for
consulting
services                                                 650,000        650     119,350                                120,000

Conversion of
accrued
expenses to
common stock                                             313,100        313      56,307                                 56,620

Conversion of
notes payable
to common stock. .                                       250,000        250      31,000                                 31,250

Series A
preferred
dividend . . . . .                                         1,078          1         (1)                                      -

Net loss . . . . .                                                                                    (626,280)       (626,280)
                    ----------------  --------------  -----------  --------  ----------  ---------  ------------  ------------

Balances,
 March 31, 2005. .            5,000   $      12,500   35,394,735   $ 35,395  $4,453,998  $ 188,775  $(5,983,622)  $(1,292,954)
                    ================  ==============  ===========  ========  ==========  =========  ============  ============

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


<TABLE>
<CAPTION>


                                NIGHTHAWK SYSTEMS, INC.
                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              THREE MONTHS ENDED MARCH 31,


<S>                                                              <C>         <C>
                                                                      2005        2004
                                                                 ----------  ----------
Cash flows from operating activities:
      Net loss. . . . . . . . . . . . . . . . . . . . . . . . .  $(626,280)  $(267,199)
                                                                 ----------  ----------

Adjustments to reconcile net loss to net cash used in operating
activities:
   Depreciation and amortization. . . . . . . . . . . . . . . .      1,681       1,928
   Amortization of loan discounts and warrants. . . . . . . . .     66,063           -
   Common stock issued for consulting services. . . .               15,000      33,060
   Amortization of incentive interest on notes payable. . . . .     50,250           -
   Amortization of prepaid consulting expenses        . . . . .    121,666           -
Changes in assets and liabilities:
   (Increase) decrease in accounts receivable . . . . . . . . .    (35,754)     28,955
   (Increase) decrease in inventories . . . . . . . . . . . . .     (9,976)     25,183
   Decrease in prepaids . . . . . . . . . . . . . . . . . . . .     23,596           -
   Decrease in other assets and liabilities . . . . . . . . . .          -         665
   Decrease in accounts payable . . . . . . . . . . . . . . . .    (38,739)    (51,595)
   Increase in accrued expenses. . . . . . . . . . .                24,275      88,313
                                                                 ----------  ----------
Total adjustments . . . . . . . . . . . . . . . . . . . . . . .    218,062     126,509
                                                                 ----------  ----------
Net cash used in operating activities of continuing operations.   (408,218)   (140,690)
                                                                 ----------  ----------

Cash flows from investing activities:
   Purchases of furniture, fixtures and equipment . . . . . . .     (1,973)          -
                                                                 ----------  ----------
Net cash used in investing activities . . . . . . . . . . . . .     (1,973)          -
                                                                 ----------  ----------

Cash flows from financing activities:
   Cash overdraft . . . . . . . . . . . . . . . . . . . . . . .          -      (3,902)
   Proceeds from the sale of preferred stock. . . . . . . . . .          -       7,500
   Proceeds from notes payable, related parties . . . . . . . .        339           -
   Payments on notes payable, related parties . . . . . . . . .       (550)     (9,169)
   Proceeds from notes payable, other . . . . . . . . . . . . .    225,000           -
   Payments on notes payable, other . . . . . . . . . . . . . .   (127,765)     (9,299)
   Payments on long term notes payable. . . . . . . . . . . . .    (13,399)          -
   Payments on other related party payable. . . . . . . . . . .          -     (18,750)
   Net proceeds from the sale of common stock, and the exercise
   of puts and warrants. . . . . . . . . . . . . . . . . . . . .   312,547     177,350
                                                                 ----------  ----------
Net cash provided by financing activities . . . . . . . . . . .    396,172     143,730
                                                                 ----------  ----------
Net (decrease) increase in cash . . . . . . . . . . . . . . . .    (14,019)      3,040
                                                                 ----------  ----------
Cash, beginning balance . . . . . . . . . . . . . . . . . . . .     61,118           -
                                                                 ----------  ----------
Cash, ending balance. . . . . . . . . . . . . . . . . . . . . .  $  47,099   $   3,040
                                                                 ==========  ==========
</TABLE>

<TABLE>
<CAPTION>


                                  CONDENSED CONSOLIDATE STATEMENTS OF CASH FLOWS
                                                   (CONTINUED)


<S>                                                                          <C>                 <C>
Supplemental disclosures of cash flow information: . . . . . . . . . . . .       THREE MONTHS ENDED MARCH 31,
                                                                                    2005               2004
                                                                              --------------      --------------

Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . .       $    18,312       $       1,019
                                                                              ==============      ==============

Supplemental disclosure of non-cash investing and financing
activities:

Common shares issued as incentive interest on notes payable  . . . . . . .       $    52,500
                                                                              ==============

Common shares issued for prepaid consulting agreements . . . . . . . . . .       $   105,000
                                                                              ==============

Conversion of accrued expenses to common stock . . . . . . . . . . . . . .       $    56,620
                                                                              ==============

Conversion of notes payable and accrued interest to common
stock
   Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $    29,498
   Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . .             1,752
                                                                              --------------
Total amount converted . . . . . . . . . . . . . . . . . . . . . . . . . .       $    31,250
                                                                              ==============


Preferred stock dividends issued in common stock . . . . . . . . . . . . .       $       219
                                                                              ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>

                             NIGHTHAWK SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                   THREE MONTHS ENDED MARCH 31, 2005 AND 2004
                                   (unaudited)

1.  Organization,  going  concern,  results of operations and management's plans

Organization

Nighthawk  Systems,  Inc.  ("the  Company") designs and manufactures intelligent
remote power control products that are easy to use, inexpensive and can remotely
control  virtually  any  device  from  any  location. The Company's proprietary,
wireless  products  are ready to use upon purchase, so they are easily installed
by  anyone, regardless of technical ability, and are also easily integrated into
third-party  products, systems and processes. They allow for intelligent control
by  interpreting instructions sent via paging and satellite media, and executing
the  instructions  by 'switching' the electrical current that powers the device,
system  or  process.  Nighthawk's  intelligent  products  can  be  activated
individually, in pre-defined groups, or en masse, and for specified time periods
with  a  simple  click  of  a  mouse  or  by  dialing  a  telephone  number.

Going  concern,  results  of  operations  and  management's  plans

The  Company  incurred a net loss of approximately $1.38 million during the year
ended  December  31,  2004  and  a net loss of approximately $626,000 during the
quarter  ended  March  31,  2005.  The  Company  had a stockholders' deficit and
working  capital  deficiency  of  approximately $1.24 million and $1.04 million,
respectively,  as  of  December  31,  2004  and  $1.29 million and $1.14 million
respectively,  as  of  March  31, 2005. These conditions raise substantial doubt
about  the  Company's  ability  to  continue  as  a  going concern.  Although no
assurance  can  be  given  that  such  plans  will  be successfully implemented,
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.
3.     Implementation  of  a  sales  and  marketing  plan.

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. Dutchess also required the Company to hire Edgarization, LLC for
consulting  services  and Nighthawk issued the consulting company 500,000 shares
of  common stock. The Company recorded the fair value of these shares as prepaid
consulting  and  will  expense  their  value over the term of the agreement. 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.

On December 3, 2004 Dutchess loaned the Company an additional $250,000. The note
had  no stated interest rate but had a face amount of $300,000 and matured April
3,  2005.  Under  the  terms  of the note, Dutchess was issued 250,000 incentive
shares  of  common stock. The Company recorded the fair value of these incentive
shares  as  prepaid  interest, and will expense their value over the term of the
note.  Dutchess  also  required  the  Company  to  hire  Edgarization,  LLC  for
consulting  services  and Nighthawk issued the consulting company 500,000 shares
of  common stock. The Company recorded the fair value of these shares as prepaid
consulting  and  will  expense  their  value over the term of the agreement. The
implied  annual  rate  of interest is 119.7%. The note was intended to be repaid
via  puts  exercised  under  the  investment  agreement  with the Company making
payments  of  the  greater of $75,000 every 30 days or 50% of each put until the
note is paid in full. The note was repaid on April 7, 2005 with a partial use of
the  proceeds  of  a  new  note.

On  January  18,  2005,  Dutchess loaned the Company an additional $225,000. The
note  has  no stated interest rate but has a face amount of $270,000 and matures
on  May  18,  2005.  Under  the  terms  of the note, Dutchess was issued 250,000
incentive  shares  of common stock. The Company recorded the fair value of these
incentive shares as prepaid interest, and will expense their value over the term
of  the  note.  Dutchess also required the Company to hire Edgarization, LLC for
consulting  services  and Nighthawk issued the consulting company 500,000 shares
of  common stock. The Company recorded the fair value of these shares as prepaid
consulting  and  will  expense  their  value over the term of the agreement. The
implied  annual  rate  of  interest  is  194.5%.

On  April  7, 2005, Dutchess loaned the Company an additional $488,500. The note
has  no  stated  interest  rate but has a face amount of $586,200 and matures on
June  7, 2005. A portion of the proceeds of this loan was used to repay the note
dated December 3, 2004 with a face amount of $300,000, which matured on April 3,
2005.  Under the terms of the note, Dutchess was issued 250,000 incentive shares
of  common  stock. The Company recorded the fair value of these incentive shares
as  prepaid  interest,  and  will expense their value over the term of the note.
Dutchess  also  required  the  Company  to hire Edgarization, LLC for consulting
services  and  Nighthawk  issued the consulting company 300,000 shares of common
stock. The Company recorded the fair value of these shares as prepaid consulting
and  will  expense  their  value  over  the  term  of  the  agreement.

During  the  period  from  January  1,  2005 through March 31, 2005, the Company
exercised  five  (5) puts to Dutchess totaling 1,071,310 shares for net proceeds
of  $183,797.  Of  the  total  proceeds,  $125,633 was used to repay portions of
previously  issued  notes  to  Dutchess  and  $58,164  went  to  the  Company.

On  March 9, 2005, Dutchess exercised 250,000 warrants at $0.125 each, for total
proceeds  of  $31,250,  $15,000  of  which  was  applied  to  outstanding notes.

Also  during  the  period  from January 1, 2005 through March 31, 2005, Dutchess
elected  to  convert  a  total  of  $31,250 of the 36-month convertible note for
250,000  shares  of  the  Company's  common  stock.

During  the period from April 1, 2005 through May 5, 2005, the Company exercised
one (1) put to Dutchess totaling 205,300 shares for proceeds of $29,255.

During  the  period  from April 1, 2005 through May 5, 2005, Dutchess elected to
convert  a  total of $76,250 of the 36-month convertible note for 625,000 shares
of  the  Company's  common  stock.

Although  no  assurance  may be given that it will be able to do so, the Company
expects to be able to continue to access funds under this arrangement to help it
fund near-term and long-term sales and marketing efforts, and to cover cash flow
deficiencies.

The  sales  and  marketing  plan  for  2005  includes  the  following:

     -    Hiring  sales and marketing personnel. The Company increased its sales
          force  in  the first quarter of 2005 with experienced salespeople with
          the  goal  of  effectively  targeting  existing  and  new  markets.

     -    Product marketing including print media and attendance at trade shows.
          This method has proved the most effective for the Company to date, and
          it  plans  to  increase  its  presence  in  these areas to attract new
          customers.

     -    An  improved  Internet presence. The Company launched a new website in
          May  2005  to  improve  content  and to make the site more friendly to
          search  engines. The Company has plans to add e-commerce functionality
          at  a  future  date.

     -    Leveraging  existing customer relationships by up-selling new products
          or  fully  integrating  systems  with  the  Company's  products.

     -    The  establishment  of  distribution  and  dealer networks. Through an
          effective  dealer  network,  the Company can increase awareness in its
          products  and  utilize  a dealer's sales force to actively promote its
          products.

     -    New  applications  in  irrigation control, civil defense and emergency
          management. The current product design can be altered with little cost
          to  the  Company  to  be  effectively implemented into a wide array of
          fields.  Through  the  commitment  of  funding,  the  Company  can now
          research all possible applications and begin to market directly to new
          customers.

     -    The  development  and  launch  of  a  product  designed to be used for
          multiple  purposes  by  consumers.

In  addition  to  the marketing and sales objectives, the Company has identified
the  following  strategic  goals  for  2005:

     -    Joint  ventures  with  wireless  service  providers  and  equipment
          manufacturers.

     -    The  identification  of  complementary  products  and  companies  for
          potential  acquisition.

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.

2.  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 the financial statements and notes thereto included in the
Company's  Annual  Report  on Form 10-KSB for 2004 filed with the Securities and
Exchange  Commission  (the  "SEC").

3.  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.  The
Company  had  no  bill  and  hold  sales at December 31, 2004 or March 31, 2005.
Revenue  related to airtime billing is recognized when the service is performed.
Some  customers  pre-pay airtime on a quarterly or annual basis and the pre-paid
portion  is recorded as deferred revenue.  Deferred revenue, included in accrued
expenses  on  the  balance sheet at March 31, 2005, is approximately $15,800.

Provision  for  doubtful  accounts

The  Company  reviews  accounts  receivable  periodically for collectibility and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed  necessary.

Concentrations

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist primarily of trade accounts receivable.  Receivables arising
from  sales  to  customers  are  not collateralized and, as a result, management
continually monitors the financial condition of its customers to reduce the risk
of  loss.  At  March 31, 2005, the Company had approximately $81,500 in accounts
receivable,  net  of the allowance for doubtful accounts.  Approximately $37,655
of  this  balance was from one customer, which was collected subsequent to March
31,  2005.

During  the  three  months  ended  March  31,  2005,  one customer accounted for
approximately  46%  of  total  revenue.  During the three months ended March 31,
2004,  one  customer  accounted  for  approximately  53%  of  total  revenue.

During  the  three  months  ended March 31, 2005, the Company's largest supplier
accounted  for  approximately 68% of the Company's purchases of pre-manufactured
component  materials.

Inventories

Inventories  consist  of  parts  and  pre-manufactured  component  materials and
finished goods.  Inventories are valued at the lower of cost or market using the
first-in,  first-out  (FIFO)  method.

Income  taxes

Deferred  tax  assets  and liabilities are recorded for the estimated future tax
effects of temporary differences between the tax basis of assets and liabilities
and  amounts reported in the accompanying balance sheets, and for operating loss
and tax credit carry forwards. The change in deferred tax assets and liabilities
for  the  period  measures the deferred tax provision or benefit for the period.
Effects  of  changes  in enacted tax laws on deferred tax assets and liabilities
are  reflected  as  adjustments to the tax provision or benefit in the period of
enactment.  The  Company's deferred tax assets have been completely reduced by a
valuation  allowance  because  management  does  not  believe realization of the
deferred  tax  assets  is  sufficiently  assured  at  the  balance  sheet  date.

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 quarter ended March 31, 200 and
the year ended December 31, 2004, 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.

Use  of  estimates

The  preparation  of  the  financial  statements  in  conformity with accounting
principles  generally  accepted in the United States requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and  disclosure of contingent assets and liabilities at the date of
the  financial  statements  and  the  reported  amounts of revenues and expenses
during  the reporting period.  Actual results could differ from those estimates.

Reclassifications

Certain  amounts reported in the consolidated financial statements for the three
months  ended  March 31, 2004 have been reclassified to conform to the March 31,
2005  presentation.

Stock-based  compensation

The  Company  has  adopted  Statement of Financial Accounting Standards No. 123,
"Accounting  for  Stock-Based Compensation" ("SFAS 123"). The provisions of SFAS
123  allow companies to either expense the estimated fair value of stock options
or  to  continue  to  follow  the intrinsic value method set forth in Accounting
Principles  Bulletin  Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB  25") but disclose the pro forma effects on net income (loss) had the fair
value of the options been expensed. The Company has elected to continue to apply
APB  25  in  accounting  for  its  employee  stock  option  incentive  plans.

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.  As  all  employee options were issued at or above
market  during  2004  and the first quarter of 2005, no compensation expense was
recognized  in either of the periods.  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  March  31,
                                         --------------------------------

                                                  2005        2004
                                             ----------  ----------
Net loss applicable to common stockholders:
As reported . . . . . . . . . . . . . . . .  $(626,499)  $(267,199)
Total stock-based employee compensation
 expense determined under fair value based
 method for all employee awards, net. . . .     (6,148)     (3,454)
                                             ----------  ----------
Pro forma net loss. . . . . . . . . . . . .  $(632,647)  $(270,653)
                                             ==========  ==========

Net loss per share:
As reported:
Basic and diluted . . . . . . . . . . . . .  $   (0.02)  $   (0.01)
Pro forma:
Basic and diluted . . . . . . . . . . . . .  $   (0.02)  $   (0.01)
</TABLE>

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.

For  the  purpose  of  the  above  table, 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>


                     Three  months  ended  March  31,
                     --------------------------------
<S>                        <C>       <C>
Black-Scholes Assumptions
                              2005      2004
                           --------  --------

Dividend yield. . . . . .     0.00%     0.00%
Expected volatility . . .     1.31     1.122
Risk-free interest rate .     4.50%     4.50%
Expected life in years. .  2 years   3 years
</TABLE>


The  weighted average fair value at date of grant for options granted during the
first  quarter  of 2005 was $0.132 per share using the above assumptions.  There
were  no  options  granted  to  employees  during  the  first  quarter  of 2004.

Recently  issued  accounting  pronouncements

In  December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  123R  "Share-Based Payment", which addresses the accounting for share-based
payment  transactions.  SFAS  123R  eliminates  the  ability  to  account  for
share-based  compensation  transactions  using  APB  25,  and instead, generally
requires  that such transactions be accounted and recognized in the statement of
operations based on their fair value.  SFAS No. 123R will be effective for small
business  issuers  as  of the beginning of the first interim or annual reporting
period  that  begins  after December 15, 2005.  SFAS No. 123R offers the Company
alternative  methods  of  adopting  this  standard.  The  Company  has  not  yet
determined  which alternative method it will use.  Depending upon the number and
terms  of  options  that may be granted in future periods, the implementation of
this  standard  could have a material impact on the Company's financial position
and  results  of  operations.

3.  Related  party  transactions

During  the  year  ended  December 31, 2004, a business partner of the Company's
Chairman  billed the Company $20,000 for consulting services.  The liability was
settled for 175,000 shares of the Company's common stock in the first quarter of
2005.

4.  Notes  payable

<TABLE>
<CAPTION>



<S>                                                                                 <C>
At March 31, 2005, notes payable consist of the following:

Related parties:
Note payable, officer; unsecured; interest at prime rate plus 5.5% (10.5% at
March 31, 2005); due on demand . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 10,107
Note payable, officer; unsecured; interest at 23.99%, revolving. . . . . . . . . .     5,083
                                                                                   ---------
                                                                                    $ 15,190
                                                                                   =========
Other:
Convertible note payable to stockholder, 8% interest rate, in default as of the
date of this report (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $160,000
Notes payable to stockholder, 8% interest rate, in default as of the date of this
report (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    165,000
Unsecured note with a financial institution, 14.99% interest rate, revolving . . .    23,380
Note payable, $300,000 face amount, no stated interest rate but with an implied
annual rate of 119.7%, due April 3, 2005 (2) . . . . . . . . . . . . . . . . . . .   300,000
Note payable, $270,000 face amount, no stated interest rate but with an implied
annual rate of 194.5%, due May 18, 2005 (2). . . . . . . . . . . . . . . . . . . .   126,367
                                                                                   ---------
                                                                                    $774,747
                                                                                   =========

Long Term:
Convertible debenture, 8% interest rate, due July 11, 2007 (2) . . . . . . . . . .  $183,144
                                                                                   =========
<FN>

1)  The  Company  is currently in discussions with Mr. Revesz, the holder of the
notes  that  are  in default as of the date of this report and expects to extend
the  maturity  dates  on those notes as it has done several times previously. In
April  2004,  the Company reached an agreement with Tomas Revesz, a former board
member,  under  which, in return for an additional $25,000 in borrowings and the
extension  of  the  maturity  dates of 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.
In August 2004, the creditor extended the maturity dates of the notes to October
31,  2004,  and  converted $50,000 of the convertible notes to 250,000 shares of
common  stock  of the Company. For the period of March through December of 2004,
the  Company  issued  61,875 shares to the creditor for $12,750 of interest owed
under  this arrangement. In December of 2004, the creditor extended the maturity
dates  of  the  notes  to  March  31,  2005.

2)  On  April  7,  2005, Dutchess loaned the Company an additional $488,500. The
note  has  no stated interest rate but has a face amount of $586,200 and matures
on  June  7,  2005. A portion of the proceeds of this loan was used to repay the
note  dated  December  3,  2004 with a face amount of $300,000, which matured on
April  3,  2005.  Under  the  terms  of  the  note,  Dutchess was issued 250,000
incentive  shares  of common stock. The Company recorded the fair value of these
incentive shares as prepaid interest, and will expense their value over the term
of  the  note.  Dutchess also required the Company to hire Edgarization, LLC for
consulting  services  and Nighthawk issued the consulting company 300,000 shares
of  common stock. The Company recorded the fair value of these shares as prepaid
consulting  and  will  expense  their  value  over  the  term  of the agreement.

During  the  period  from  January  1,  2005 through March 31, 2005, the Company
exercised  five  (5) puts to Dutchess totaling 1,071,310 shares for net proceeds
of  $183,797.  Of  the  total  proceeds,  $125,633 was used to repay portions of
previously  issued  notes  to  Dutchess  and  $58,164  went  to  the  Company.

On  March 9, 2005, Dutchess exercised 250,000 warrants at $0.125 each, for total
proceeds  of  $31,250,  $15,000  of  which  was  applied  to  outstanding notes.

Also  during  the  period  from January 1, 2005 through March 31, 2005, Dutchess
elected  to  convert  a  total  of  $31,250 of the 36-month convertible note for
250,000  shares  of  the  Company's  common  stock.

During  the period from April 1, 2005 through May 5, 2005, the Company exercised
one (1) put to Dutchess totaling 205,300 shares for proceeds of $29,255.

During  the  period  from April 1, 2005 through May 5, 2005, Dutchess elected to
convert  a  total of $76,250 of the 36-month convertible note for 625,000 shares
of  the  Company's  common  stock.


</TABLE>

5.  Stockholders'  Deficit

Preferred  stock

Preferred  stock  dividends of $219 were accrued in the form of a stock dividend
equal to 1,078 shares of common stock of the Company during the first quarter of
2005.

Common  stock

The  Company  held  a  special shareholders' meeting on January 6, 2005 where an
amendment  to  the  Amended  and Restated Articles of Incorporation of Nighthawk
Systems,  Inc.  was  approved to increase the number of authorized shares of our
common  stock  from  50,000,000  to  200,000,000.

During  the  first  quarter  of  2005,  the  Company  issued  463,100 shares for
consulting and other services, of which 175,000 shares were issued to a business
partner  of  the Company's Chairman to settle a $20,000 liability for consulting
services  performed  and  expensed  in  2004.

During  the  first  quarter  of  2005, the Company sold 650,000 shares of common
stock  to  an  investor  for  cash  at  a price of $0.15 per share.  Warrants to
purchase  650,000 shares of common stock at an exercise price of $0.25 per share
were  also  included  in the sale.  We did not publicly offer the securities and
the  investor  is  an accredited investor.  No underwriters were involved in the
sale.

In  April  2005,  the  Company issued 250,000 shares of common stock to Prospect
Hunter,  Inc. for marketing services for a period of one year beginning in April
2005.

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.

General

The  Company  designs  and  manufactures intelligent remote monitoring and power
control  products  that  are  easy  to use, inexpensive and can remotely control
virtually  any device from any location.  Our proprietary, wireless products are
ready  to  use upon purchase, so they are easily installed by anyone, regardless
of  technical ability, and are also easily integrated into third-party products,
systems  and  processes.  They  allow  for  intelligent  control by interpreting
instructions sent via paging and satellite media, and executing the instructions
by 'switching' the electrical current that powers the device, system or process.
Our  intelligent  products can be activated individually, in pre-defined groups,
or en masse, and for specified time periods with a simple click of a mouse or by
dialing  a  telephone  number.

Our  products  have been uniquely designed and programmed to be simple and ready
to use upon purchase by anyone, almost anywhere, at affordable prices.  As such,
it  is  the Company's goal to have its products become commonplace, accepted and
used  by  businesses  and  consumers  alike  in  their  daily  routines.

We  save  consumers  and  businesses time, effort and expense by eliminating the
need  for a person to be present when and where an action needs to be taken.  By
utilizing  existing  wireless  technology,  we give our users the flexibility to
move  their  application  from  place  to  place,  without  re-engineering their
network.  Currently,  most  commercial  control  applications  utilize telephone
lines,  which  tether  the  system  to  a  single  location  and have associated
installation  and  monthly charges.  Our products make companies more profitable
by  eliminating  installation costs and monthly charges for telephone lines, and
allow  for  remote  control  of unmanned or remote locations that may operate on
traditional  electrical  power,  or  solar  or  battery  generated  power.

Applications  for  our  intelligent  products  include,  but are not limited to:

     -  Rebooting  remotely  located  computer  equipment
     -  Remote  switching  of  residential  power
     -  Managing  power  on  an  electrical  grid
     -  Activation/deactivation  of  alarm  and  warning  devices
     -  Displaying  or  changing  a  digital  or printed message or warning sign
     -  Turning  pumps  on  or  off
     -  Turning  heating  or  cooling  equipment  on  or  off

Companies both large and small are seeking ways to save money and lower the risk
of  liability  by  replacing  processes  that  require  human  intervention with
processes  that  can  be controlled remotely without on-site human intervention.
Today,  the  remote  control of industrial or commercial assets and processes is
performed mainly through the use of telephone-line based systems.  Opportunities
exist  for  companies  that provide intelligent wireless solutions, as telephone
lines  are  expensive  and  limited  in  availability  and function. Nighthawk's
products  are  wireless,  and can be designed to work with a variety of wireless
media.  The  number  of  applications  for  wireless remote control is virtually
limitless.  The  Company  has  identified  primary  markets  (Utility,  IT
Professional,  Traffic  Control),  as  well  as  secondary  markets (Irrigation,
Outdoor  Advertising,  Oil/Gas,  Security)  for  its  products.


The  Company  has  historically had minimum funds available to it to support its
operations  and  has  been  largely  dependent on private equity placements with
accredited  investors  to  fund its negative cash flows.  As such, the Company's
ability  to  fund  and  sustain sales and marketing efforts was very limited. 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,  subsequent to the December 2004 effectiveness  of its  SB-2 registration
statement  filed with the Securities  and  Exchange Commission ("SEC"), 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.
As is more fully explained in Liquidity and Capital Resources below, the Company
began  utilizing  this  investment  agreement  in December 2004 and continued to
utilize  this  agreement  in  the  first quarter of 2005 in order to implement a
sales  and  marketing  effort designed to stimulate revenue growth.   This sales
and  marketing  plan  for  2005  includes  the  following:

     -    Hiring  sales and marketing personnel. The Company increased its sales
          force  in  the first quarter of 2005 with experienced salespeople with
          the  goal  of  effectively  targeting  existing  and  new  markets.

     -    Product marketing including print media and attendance at trade shows.
          This method has proved the most effective for the Company to date, and
          it  plans  to  increase  its  presence  in  these areas to attract new
          customers.

     -    An  improved  Internet presence. The Company launched a new website in
          May  2005  to  improve  content  and to make the site more friendly to
          search  engines. The Company has plans to add e-commerce functionality
          at  a  future  date.

     -    Leveraging  existing customer relationships by up-selling new products
          or  fully  integrating  systems  with  the  Company's  products.

     -    The  establishment  of  distribution  and  dealer networks. Through an
          effective  dealer  network,  the Company can increase awareness in its
          products  and  utilize  a dealer's sales force to actively promote its
          products.

     -    New  applications  in  irrigation control, civil defense and emergency
          management. The current product design can be altered with little cost
          to  the  Company  to  be  effectively implemented into a wide array of
          fields.  Through  the  commitment  of  funding,  the  Company  can now
          research all possible applications and begin to market directly to new
          customers.

     -    The  development  and  launch  of  a  product  designed to be used for
          multiple  purposes  by  consumers.

In  addition  to  the marketing and sales objectives, the Company has identified
the  following  strategic  goals  for  2005:

     -    Joint  ventures  with  wireless  service  providers  and  equipment
          manufacturers.

     -    The  identification  of  complementary  products  and  companies  for
          potential  acquisition.

Critical  Accounting  Policies  and  Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and  disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the  reporting  period.  Actual  results  could  differ  from  those  estimates.

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.  There
were  no  bill  and  hold  items  at March 31, 2005.  Revenue related to airtime
billing  is  recognized  when  the service is performed.  Some customers pre-pay
airtime  on  a quarterly or annual basis and the pre-paid portion is recorded as
deferred revenue.  Deferred revenue, included in accrued expenses on the balance
sheet  at  March  31,  2005,  is  approximately  $15,800.

Stock-based  compensation

We  believe  that  stock-based compensation is a critical accounting policy that
affects  our  financial  condition  and  results  of  operations.  Statement  of
Financial  Accounting  Standards  ("SFAS")  No.  123, Accounting for Stock-Based
Compensation  defines  a  fair-value  based method of accounting for stock-based
employee  compensation  plans  and  transactions  in  which an entity issues its
equity  instruments  to  acquire  goods  or  services  from  non-employees,  and
encourages  but  does  not  require  companies  to  record compensation cost for
stock-based employee compensation plans at fair value. The Company has chosen to
continue  to  account  for employee stock-based compensation using the intrinsic
value  method  prescribed  in  Accounting  Principles  Board  Opinion  No.  25,
Accounting  for  Stock  Issued  to  Employees  ("APB  No.  25")  and  related
interpretations.

In  December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  123R  "Share-Based Payment", which addresses the accounting for share-based
payment  transactions.  SFAS  123R  eliminates  the  ability  to  account  for
share-based  compensation  transactions  using  APB  25,  and instead, generally
requires  that such transactions be accounted and recognized in the statement of
operations based on their fair value.  SFAS No. 123R will be effective for small
business  issuers  as  of the beginning of the first interim or annual reporting
period  that  begins  after December 15, 2005.  SFAS No. 123R offers the Company
alternative  methods  of  adopting  this  standard.  The  Company  has  not  yet
determined  which alternative method it will use.  Depending upon the number and
terms  of  options  that may be granted in future periods, the implementation of
this  standard  could have a material impact on the Company's financial position
and  results  of  operations.

Comparison  of  the  Three  Months  Ended  March  31,  2005  and  March 31, 2004

Revenue

The  components  of  revenue and their associated percentages of total revenues,
for  the  three  months  ended  March  31,  2005  and  2004  are  as  follows:

<TABLE>
<CAPTION>



<S>                          <C>       <C>    <C>        <C>     <C>     <C>
                              Three  months  Ended  March  31,
                             --------------------------------
                                 2005               2004        Change %   Change $
                             ---------------  ----------------  --------  ----------
Revenues:
Nighthawk NH1, NH2 & NH8. .  $ 21,604    13%  $  56,858    55%    -62%    $(35,254)
PT 1000, PT1 LC & PT Boards    25,853    15%     14,831    14%     74%      11,022
CEO 700 . . . . . . . . . .    31,225    18%      9,935    10%    214%      21,290
Hydro 1 . . . . . . . . . .    76,750    45%          -     0%    n/a       76,750
Airtime sales . . . . . . .    14,233     8%     10,166    10%     40%       4,067
Other product . . . . . . .       355     0%      9,464     9%    -96%      (9,109)
Freight . . . . . . . . . .     1,202     1%      1,584     2%    -24%        (382)
                             --------  -----  ---------  ---------  ----  ---------
Total revenues. . . . . . .  $171,222   100%  $ 102,838   100%     66%    $ 68,384
                             --------  -----  ---------  ---------  ----  ---------
</TABLE>

Revenues  for  the  three-month  period  ended  March  31, 2005 were $171,222 as
compared to $102,838 for the corresponding period of the prior year, an increase
of  66%  between  periods.  During  the  three  months ended March 31, 2005, one
customer, who purchased the Company's Hydro 1 product, represented approximately
46%  of  the  Company's  total  revenue. During the three months ended March 31,
2004,  the Company's largest customer, who purchased the Company's NH1 rebooting
product,  accounted  for  approximately  53%  of  total  revenue.

Cost  of  goods  sold  includes  parts  and  pre-manufactured components used to
assemble our products as well as allocated overhead for production personnel and
facilities  costs.  Cost  of  goods sold increased by $31,958 or 44% to $104,524
for  the  three  months  ended March 31, 2005 from $72,566 for the corresponding
period  of  the prior year but decreased as a percentage of revenues between the
periods  from  71%  in 2004 to 61% in 2005. The increase in the gross amount was
due to increased sales volume while the increase in gross margin was due in part
to  our  ability to order parts in larger quantities and spread fixed costs over
greater  unit  volume.

Selling,  general  and  administrative expenses for the three months ended March
31,  2005  increased  by  $285,580  or  103%  to  $561,660 from $276,080 for the
three-month  period  ended  March  31, 2004.  The Company incurred approximately
$137,000  in  non-cash  expenses in the first quarter of 2005 for consulting and
other  services.  This  represents  an  increase  of  approximately  $104,000 in
non-cash  expenses  when  compared to the quarter ended March 31, 2004.  For the
three months ended March 31, 2005, the Company recognized $105,000 in consulting
expense  for 500,000 shares issued to a company in which an employee of Dutchess
is  a  member  of management. Also during the first quarter of 2005, the Company
spent  $125,000  in  cash  for  investor  relations  programs.

Interest  expense  increased  $109,927  or  514% between the three-month periods
presented.  The  increase  was  due primarily to interest expense related to the
Dutchess  notes, some of which have no stated interest rate but have a repayment
amount  greater  than  the  funded amount. The Company recognizes the difference
between  the  face amount of the notes and the amounts actually received in cash
as  interest  expense  over the life of the loans. In addition, the value of the
incentive  shares issued in conjunction with the notes is recognized as interest
expense  over  the  life  of  the  loans.  In  total,  the  Company  recognized
approximately  $66,000 in non-cash expenses related to the amortization of these
loan  discounts  and  approximately  $50,000  in  non-cash  expenses  related to
inventive  shares.

The  net  loss  for  the  three-month  period  ended March 31, 2005 was $626,280
compared  to  $267,199  for  the  three-month  period  ended March 31, 2004. The
increase  in  net loss from continuing operations was due primarily to increased
non-cash  expenses  for  consulting  and  other  services,  placement  fees  and
incentives  related  to  fundraising  efforts,  and  increased non-cash interest
expense.

Liquidity  and  Capital  Resources

The  Company's  financial  statements  for the three months ended March 31, 2005
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.  The  Company  incurred  a net loss of approximately $1.38 million
during the year ended December 31, 2004 and a net loss of approximately $626,000
during  the  quarter  ended  March  31,  2005.  The  Company had a stockholders'
deficit  and working capital deficiency of approximately $1.24 million and $1.04
million,  respectively,  as  of  December  31,  2004 and $1.29 million and $1.14
million  respectively,  as  of  March  31,  2005.

The  Report  of  Independent  Registered Public Accounting Firm on the Company's
financial  statements  as of and for the year ended December 31, 2004 includes 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  quarter ended March 31, 2005, cash used in operating activities was
approximately  $408,000.  The net loss of approximately $626,000 for the quarter
was  partially offset by approximately $255,000 in non-cash expenses. Other uses
of  cash  were  increases  in  accounts  receivable  and  inventories as well as
declines  in  accounts payable. Cash used in operating activities in the quarter
ended  March 31, 2004 was approximately $141,000. Uses of cash during the period
were  the net loss for the period and a decrease in accounts payable. Sources of
cash  for  the  period consisted primarily of adjustments for non-cash expenses,
decreases  in  accounts  receivable and prepaid expenses as well as increases in
accrued  expenses  and  deferred  revenue.

There  were  no cash flows used in investing activities during the quarter ended
March  31,  2004.  The  Company  purchased  approximately  $2,000  in  computer
equipment  in  the  first  quarter  of  2005.

Net  cash  provided by financing activities for the quarter ended March 31, 2005
was  approximately $396,000 and resulted primarily from the sale of common stock
and  warrants,  the  exercise  of  puts  with Dutchess and the issuance of notes
payable  to  Dutchess.  The  Company  issued 1,971,310 shares of common stock in
return  for  $312,547  in net cash proceeds during the period.  The Company also
received  $225,000  from  Dutchess  during  the  quarter in exchange for a note.
These  cash  inflows  were offset to some degree by payments on notes payable of
approximately  $142,000  during  the  period.  Net  cash  provided  by financing
activity  for  the  quarter  ended March 31, 2004 was approximately $144,000 and
resulted  primarily  from  the  sale of common stock offset by payments on notes
payable.

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.

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. Dutchess also required the Company to hire Edgarization, LLC for
consulting  services  and Nighthawk issued the consulting company 500,000 shares
of  common stock. The Company recorded the fair value of these shares as prepaid
consulting  and  will  expense  their  value over the term of the agreement. 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.

On December 3, 2004 Dutchess loaned the Company an additional $250,000. The note
had  no stated interest rate but had a face amount of $300,000 and matured April
3,  2005.  Under  the  terms  of the note, Dutchess was issued 250,000 incentive
shares  of  common stock. The Company recorded the fair value of these incentive
shares  as  prepaid  interest, and will expense their value over the term of the
note.  Dutchess  also  required  the  Company  to  hire  Edgarization,  LLC  for
consulting  services  and Nighthawk issued the consulting company 500,000 shares
of  common stock. The Company recorded the fair value of these shares as prepaid
consulting  and  will  expense  their  value over the term of the agreement. The
implied  annual  rate  of interest is 119.7%. The note was intended to be repaid
via  puts  exercised  under  the  investment  agreement  with the Company making
payments  of  the  greater of $75,000 every 30 days or 50% of each put until the
note is paid in full. The note was repaid on April 7, 2005 with a partial use of
the  proceeds  of  a  new  note.

On  January  18,  2005,  Dutchess loaned the Company an additional $225,000. The
note  has  no stated interest rate but has a face amount of $270,000 and matures
on  May  18,  2005.  Under  the  terms  of the note, Dutchess was issued 250,000
incentive  shares  of common stock. The Company recorded the fair value of these
incentive shares as prepaid interest, and will expense their value over the term
of  the  note.  Dutchess also required the Company to hire Edgarization, LLC for
consulting  services  and Nighthawk issued the consulting company 500,000 shares
of  common stock. The Company recorded the fair value of these shares as prepaid
consulting  and  will  expense  their  value over the term of the agreement. The
implied  annual  rate  of  interest  is  194.5%.

On  April  7, 2005, Dutchess loaned the Company an additional $488,500. The note
has  no  stated  interest  rate but has a face amount of $586,200 and matures on
June  7, 2005. A portion of the proceeds of this loan was used to repay the note
dated December 3, 2004 with a face amount of $300,000, which matured on April 3,
2005.  Under the terms of the note, Dutchess was issued 250,000 incentive shares
of  common  stock. The Company recorded the fair value of these incentive shares
as  prepaid  interest,  and  will expense their value over the term of the note.
Dutchess  also  required  the  Company  to hire Edgarization, LLC for consulting
services  and  Nighthawk  issued the consulting company 300,000 shares of common
stock. The Company recorded the fair value of these shares as prepaid consulting
and  will  expense  their  value  over  the  term  of  the  agreement.

During  the  period  from  January  1,  2005 through March 31, 2005, the Company
exercised  five  (5) puts to Dutchess totaling 1,071,310 shares for net proceeds
of  $183,797.  Of  the  total  proceeds,  $125,633 was used to repay portions of
previously  issued  notes  to  Dutchess  and  $58,164  went  to  the  Company.

On  March 9, 2005, Dutchess exercised 250,000 warrants at $0.125 each, for total
proceeds  of  $31,250,  $15,000  of  which  was  applied  to  outstanding notes.

Also  during  the  period  from January 1, 2005 through March 31, 2005, Dutchess
elected  to  convert  a  total  of  $31,250 of the 36-month convertible note for
250,000  shares  of  the  Company's  common  stock.

During  the period from April 1, 2005 through May 5, 2005, the Company exercised
one (1) put to Dutchess totaling 205,300 shares for proceeds of $29,255.

During  the  period  from April 1, 2005 through May 5, 2005, Dutchess elected to
convert  a  total of $76,250 of the 36-month convertible note for 625,000 shares
of  the  Company's  common  stock.

Although  no  assurance  may be given that it will be able to do so, the Company
expects to be able to continue to access funds under this arrangement to help it
fund near-term and long-term sales and marketing efforts, and to cover cash flow
deficiencies.

Item  3.  Controls  and  Procedures

(a)  Evaluation  of  Disclosure  Controls  and  Procedures:

The  Company's  management,  including the Company's principal executive officer
and  principal accounting and financial officer, has evaluated the effectiveness
of  the  Company's  disclosure  controls  and  procedures  (as  defined in Rules
13a-15(e)  and  15d-15(e)  under  the Securities Exchange Act of 1934) as of the
quarter ended March 31, 2005, the period covered by the Quarterly Report on Form
10-QSB.  Based  upon  that evaluation, the Company's principal executive officer
and  principal  financial  and  accounting  officer  have  concluded  that  the
disclosure  controls  and  procedures  were  effective  as  of March 31, 2005 to
provide  reasonable  assurance that material information relating to the Company
is  made  known  to  management  including  the  CEO.

There were no changes in the Company's internal control over financial reporting
that  occurred  during  the  Company's  last fiscal quarter that have materially
affected,  or are reasonably likely to materially affect, the Company's internal
control  over  financial  reporting.  However,  as  noted  in  previous filings,
throughout  2002  and until March 26, 2003, the Company's former Chief Executive
Officer  was  responsible  for,  among  other  duties,  opening the mail, making
accounting  entries,  writing  checks  and  producing  financial  reports.
Disbursements of cash and stock issuances were made during this time period that
were  not  substantiated as relating to Company business, or were made in error.
At  the  meeting  of  the  Board of Directors held on March 26, 2003, the former
Chief  Executive  Officer  resigned, and the Chief Financial Officer, H. Douglas
Saathoff,  was  appointed  as  his  replacement  by  the  board  of  directors.
Consequently, Mr. Saathoff held both the position of Chief Executive Officer and
Chief Financial Officer, but procedures were implemented subsequent to March 26,
2003  to  segregate  responsibilities in order to reduce the opportunities for a
single  person  to  be  in  a  position to both perpetrate and conceal errors or
irregularities  in  the  normal  course of business.  In addition, the new Chief
Executive  Officer  and  the board of directors initiated a process to establish
and implement a written policy on disclosure controls and procedures and hired a
corporate  controller  on  January  1,  2005  to add additional oversight to the
accounting  function.  On April 12, 2005, the Board of Directors agreed that Mr.
Saathoff  should  no  longer  act  as  both  Chief  Executive  Officer and Chief
Financial  Officer.  Mr.  Saathoff  relinquished  his  duties as Chief Financial
Officer  as  of  April 12, 2005 and Daniel P. McRedmond, the Company's Corporate
Controller  assumed the role of the Company's Principal Accounting and Financial
Officer.

                           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, we made a cash payment to
McCarthy  of  $10,000  during October 2004, a cash payment of $15,000 in January
2005  and  will  settle  the  remaining  balance  in the fourth quarter of 2005.

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.  Unregistered  Sales  of  Equity  Securities  and  Use  of  Proceeds

During  the  first  quarter  of  2005, the Company sold 650,000 shares of common
stock  to  an  investor  for  cash  at  a price of $0.15 per share.  Warrants to
purchase  650,000 shares of common stock at an exercise price of $0.25 per share
were  also  included  in the sale.  We did not publicly offer the securities and
the  investor  is  an accredited investor.  No underwriters were involved in the
sale.

These  securities were issued to the investor in reliance upon an exemption from
the  registration  requirements  of  the Securities Act of 1933, as set forth in
Section  4(2)  under  the  Securities  Act  of 1933 and Rule 506 of Regulation D
promulgated  thereunder  relative to sales by an issuer not involving any public
offering,  to  the extent an exemption from such registration was required.  The
purchaser  represented  to  us  in  connection  with the purchase that; he is an
accredited  investor  and  was acquiring the shares for investment purposes only
and  not  for  distribution,  that he could bear the risks of the investment and
could  hold  the  securities  for  an  indefinite period of time.  The purchaser
received  written  disclosures that the securities had not been registered under
the  Securities  Act  of  1933  and  that  any resale must be made pursuant to a
registration  statement  or  an available exemption from such registration.  The
participant  in  the  offering  described  above  was  given  access to full and
complete  information  regarding  us, together with the opportunity to meet with
our  officers  and  directors  for  purposes  of  asking questions and receiving
answers  in order to facilitate such participant's independent evaluation of the
risks  associated  with  the  purchase  of  our  securities.

Item  3.  Defaults  upon  senior  securities

The  Company  is in default on two loans from Mr. Revesz, a former board member,
as of the date of this report and is in discussions to extend the maturity dates
on  those  notes.  In  April  2004,  the Company reached an agreement with Tomas
Revesz  under  which,  in return for an additional $25,000 in borrowings and the
extension  of  the  maturity  dates of three notes to July 31, 2004, the Company
granted  the  creditor  a  secured  position  in  the  assets  of  the  Company.



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

The  Company  held  a  special shareholders' meeting on January 6, 2005 where an
amendment  to  the  Amended  and Restated Articles of Incorporation of Nighthawk
Systems,  Inc.  was  approved to increase the number of authorized shares of our
common  stock  from  50,000,000  to  200,000,000.

Item  5.  Other  information

None

Item  6.  Exhibits  and  Reports

(a)  Exhibits

31.1  Certification of H. Douglas Saathoff, Chief Executive Officer, 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.

31.2  Certification  of  Daniel P. McRedmond, Principal Financial and Accounting
Officer,  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.

32.1  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:  May 20, 2005          By: /s/ H. Douglas Saathoff
                             ------------------------------------------
                             H. Douglas Saathoff,
                             Chief Executive Officer

Date:  May 20, 2005          By: /s/ Daniel P. McRedmond
                             ------------------------------------------
                             Daniel P. McRedmond
                             Principal Accounting and Financial Officer