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

                                  FORM 10-QSB/A

(MARK  ONE)

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

                  For the quarterly period ended March 31, 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 Identification
 Incorporation or Organization)                                  No.)

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

          Registrant's telephone number, with area code: (210) 341-4811




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.

                                    X Yes   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 October 12,
                                             2004
                  ------          ------------------------------
                  Common                   30,597,408





                               NIGHTHAWK SYSTEMS, INC.
                                  TABLE OF CONTENTS
                                     FORM 10-QSB

                                        PART I
                                FINANCIAL INFORMATION

Item  1.    Financial  Statements  (unaudited)

            Report of Independent Registered Public Accounting Firm          3

            Condensed consolidated balance sheet as of March 31, 2004.       4

            Condensed  consolidated statements of operations for the
            three months ended March 31, 2004 and 2003                       5

            Condensed  consolidated  statement  of  stockholders'
            deficit for the three months ended March 31, 2004                6

            Condensed  consolidated statements of cash flows for the
            three months ended March 31, 2004 and 2003                       7

            Notes to condensed consolidated financial statements             8

Item 2      Management's Discussion and Analysis or Plan of Operation       12

Item 3      Evaluation of Disclosure Controls and Procedures                14

                                       PART II
                                  OTHER INFORMATION

Item 1      Legal proceedings                                               14

Item 2      Changes in securities and use of proceeds                       15

Item 3      Defaults upon senior securities                                 15

Item 4      Submission of matters to a vote of securities holders           15

Item 5      Other information                                               15

Item 6      Exhibits and reports on Form 8-K                                15




                                        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  March  31, 2004, the related
condensed  consolidated  statements  of  operations  and  cash  flows  for  the
three-month  periods  ended  March  31,  2004  and  2003,  and  the  condensed
consolidated statement of stockholders' deficit for the three-month period ended
March  31,  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.

As discussed in Note 9 to these condensed consolidated financial statements, the
Company  has  restated  its March 31, 2004 condensed consolidated balance sheet,
and  its  condensed  consolidated statements of operations, stockholders' equity
and  cash  flows  for  the  three-month  period  then  ended.


GELFOND  HOCHSTADT  PANGBURN,  P.C.

Denver,  Colorado
September  8,  2004

<TABLE>
<CAPTION>




                            Nighthawk Systems, Inc.
                      Condensed Consolidated Balance Sheet
                                 March 31, 2004
                           (unaudited and restated)

<S>                                                                          <C>

                                    ASSETS

Current assets :
     Cash                                                                    $     3,040
     Accounts receivable, net of allowance for doubtful
       accounts of $134                                                           12,962
     Inventories                                                                  50,146
     Other                                                                        31,146
                                                                            -------------
               Total current assets                                               97,294

Furniture, fixtures and equipment, net                                            18,847
Intangible assets, net                                                             8,657
                                                                            -------------
                                                                             $   124,798
                                                                            =============

                        LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities :
    Accounts payable                                                         $   340,943
    Accrued expenses                                                             224,534
    Lines of credit                                                               19,842
    Notes payable
        Related parties                                                          109,665
        Other                                                                    449,467
    Deferred revenue                                                              64,367
    Customer deposit                                                              60,000
    Other                                                                          6,250
                                                                           --------------
               Total liabilities (all current)                                 1,275,068

Commitments and contingencies

Stockholders' deficit
    Preferred stock; $0.001 par value; 5,000,000
      shares authorized; 3,000 shares issued and
      outstanding, liquidation preference $7,500                                       3
    Common stock; $0.001 par value; 50,000,000
      shares authorized; 25,659,235 issued and
      outstanding                                                                 25,659
    Additional paid-in capital                                                 3,071,858
    Accumulated deficit                                                       (4,247,790)
                                                                            -------------
               Total stockholders' deficit                                    (1,150,270)
                                                                            -------------
                                                                             $   124,798
                                                                            =============

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,
                                   (unaudited)
<S>                               <C>                     <C>

                                          2004
                                       Restated                     2003
                                --------------------        ---------------------
 Product sales, net               $         102,838          $          167,176

 Cost of goods sold                          72,566                      94,530
                                --------------------        ---------------------
     Gross profit                            30,272                      72,646

 Selling,  general  and
   administrative expenses                  276,080                     314,648
                                --------------------       ----------------------
   Loss from operations                   (245,808)                   (242,002)
                                --------------------       ----------------------
 Interest  expense
   Related parties                            3,373                       2,943
   Other                                     18,018                       7,462
                                --------------------       ----------------------
   Loss from continuing operations        (267,199)                   (252,407)

 Discontinued  operations
   Income  from  operations  of
   discontinued segment                           -                      12,795
                                --------------------       ----------------------

 Net loss                         $        (267,199)         $        (239,612)
                                ====================       ======================
 Loss  from  continuing
  operations per basic
  and diluted common share        $           (0.01)         $           (0.01)
                                ====================       ======================
 Income  from  discontinued
  operations  per  basic
  and  diluted common share                      -                            *
                                ====================       ======================
 Net loss per basic and
  diluted  common share            $          (0.01)         $           (0.01)
                                ====================       ======================
 Weighted average
  shares outstanding                     24,958,301                  21,333,780
                                ====================       ======================
 *  Less  than  $0.01  per  share

    The accompanying notes are an integral part of these financial statements

</TABLE>


<TABLE>
<CAPTION>

                                                Nighthawk Systems, Inc.
                               Condensed Consolidated Statement of Stockholders' Deficit
                                           Three Months Ended March 31, 2004
                                               (unaudited and restated)



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


                                   Preferred   Stock      Common       Stock     Additional
                                   ---------------------  ---------------------  Paid-in     Accumulated
                                   Shares      Amount     Shares       Amount    Capital     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                                                    1,188,333    1,188     176,162                       177,350

Common stock issued for services.                             150,000      150      22,350                        22,500

Preferred stock issued for cash .     3,000    $      3                              7,497                         7,500

Issuance of stock
options to
consultant                                                                           10,560                        10,560

Net loss                                                                                         (267,199)       (267,199)
                                   --------    --------     ----------  ---------  ---------   ------------   -----------

Balances, March
   31, 2004                           3,000    $      3     25,659,235  $ 25,659  $3,071,858   $(4,247,790)   $(1,150,270)
                                   ========    ========     ==========  ========= ==========   =============  ============


<FN>

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



<TABLE>
<CAPTION>


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


                                                                                Three  months
                                                                              ended  March  31,
<S>                                                                         <C>         <C>
                                                                               2004        2003
                                                                             Restated
                                                                            ----------  ----------

Cash flows from operating activities:
      Net loss                                                              $(267,199)  $(239,612)
                                                                           -----------  ----------
Adjustments to reconcile net loss to
   net cash used in operating activities

   Income from operations of discontinued segment                                   -     (12,795)
   Depreciation and amortization                                                1,928       1,268
   Common stock issued for services                                            22,500           -
   Issuance of stock options to consultants                                    10,560           -
Change in assets and liabilities, net of business acquisition:
   Decrease in accounts receivable                                             28,955      73,748
   Decrease (increase) in inventories                                          25,183    (173,367)
   Increase (decrease) in accounts payable                                    (51,595)     99,109
   Increase in accrued expenses                                                23,946      22,709
   Increase (decrease) in deferred revenue                                     64,367     (94,554)
   Increase in customer deposits                                                    -      60,000
   Net decrease (increase) in other assets and liabilities                        665     (45,445)
                                                                           -----------  ----------
Total adjustments                                                             126,509     (69,327)
                                                                           -----------  ----------
Net cash used in operating activities                                        (140,690)   (308,939)
                                                                           -----------  ----------
Cash flows from investing activities:
   Purchases of furniture, fixtures and equipment                                   -      (1,306)
                                                                           -----------  ----------
Net cash used in investing activities                                               -      (1,306)
                                                                           -----------  ----------
Cash flows from financing activities:
   Repayment of cash overdraft                                                 (3,902)
   Payments on notes payable, related parties                                  (9,169)     (2,027)
   Payments made on factoring arrangement, net                                      -     (82,502)
   Payments on notes payable, other                                            (9,299)     (8,287)
   Payments on other related party payable                                    (18,750)          -
   Net proceeds from issuance of preferred stock                                7,500           -
   Net proceeds from issuance of common stock                                 177,350           -
                                                                           -----------  ----------
Net cash provided by (used in) financing activities                           143,730     (92,816)
                                                                           -----------  ----------
Cash used in discontinued operations                                                -      (6,467)


Net increase (decrease) in cash                                                 3,040    (409,528)
Cash, beginning                                                                     -     428,677
                                                                           -----------  ----------
Cash, ending                                                                $   3,040   $  19,149
                                                                           ===========  ==========

Supplemental disclosures of cash flow information:

Cash paid for interest                                                      $   1,019   $   4,764
                                                                           ===========  ==========
Supplemental disclosures of non-cash
   investing and financing activities:

Common stock and warrants subscribed                                                    $  98,000
                                                                                        ==========

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, 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  as  incurred operating losses for several years. These losses have
caused  the  Company  to  operate  with  limited  liquidity  and  have created a
stockholders'  deficit  and  working  capital  deficiency  of  $1,150,270  and
$1,177,774  respectively,  as  of  March  31,  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.

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) 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  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. 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.


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  three  months  ended March 31, 2004, the Company's largest Customer
accounted  for  53%  of sales. During the three months ended March 31, 2003, the
Company's  two  largest  customers  accounted  for  approximately 53% and 16% of
sales,  respectively.

                                        8


<PAGE>
    Inventories

Inventories  at  March 31, 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 March
31, 2004.

    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  month  periods
ended  March  31,  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 issued or vested during the three month period ended March
31, 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  month  period  ended  March  31, 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 the
first  three  months  of 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:

                                             Three  Months  Ended  March  31,
                                          -----------------------------------
                                                  2004             2003
                                          -----------------   ---------------
Net  loss  as  reported                 $        (267,199)  $      (239,612)

Total  stock-based  employee
compensation  expense  determined
 under  fair  value  based  method
 for  all  employee  awards,  net
 of  related  tax  effects                        (3,454)                -
                                          -----------------     -------------
Pro  forma  net  loss                   $       (270,653)   $      (239,612)
                                          -----------------     -------------
Pro  forma  net  loss  per
share  applicable:
As  reported:
Basic  and  diluted                     $          (0.01)   $          (0.01)
Pro  forma:
Basic  and  diluted                     $          (0.01)   $          (0.01)

                                        9

<PAGE>


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  the  first  three  months  of  2004,  the Company issued 330,000 options
to  purchase  common   stock  of  the  Company  to  non-employees  which  vested
immediately the  weighted  average fair value at date  of  grant for the options
granted  during  2003  was  $0.032.  In  accordance  with  SFAS 123, the Company
recognized $10,560 in expense related to these options during  the period  ended
March 31, 2004.

For  the  purpose  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                     1.122        1.229-1.316
Risk-free  interest rate                 4.50%           4.50%
Expected  life  in  years.                  3            1 - 3
</TABLE>



3.             Related  party  transactions

During the three months ended March 31, 2004, the Company repaid $9,169 on notes
payable  to two officers of the Company, as well as $18,750 to a shareholder and
former  director  under  an  arrangement  entered  into  in  December  2003.

4.             Stock  transactions

During the three months ended March 31, 2004, the Company received $127,850, net
of  offering  costs of $900, for the issuance of 858,333 shares of commons stock
and  warrants  to  purchase  858,333  additional shares for $0.25 per share. The
Company also issued 330,000 options to a consultant to purchase shares of common
stock  at  $0.15 per share which were exercised in full during March 2004.   The
Company  also  issued  150,000  shares  to the consultant in return for services
rendered  during  the  quarter and to be rendered in the second quarter of 2004.

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
                                       10

from  their  date of issuance; therefore, the 391,200 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 must be
exercised  on  or  before  April 30, 2004. As of March 31, 2004, 3,000 shares of
Series  A  Preferred  Stock had been purchased. During April 2004, an additional
2,000  shares  were  purchased.


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. The Company
does  not believe it owes the former Board member anything beyond the settlement
agreement  and  has  actively  defended  its  position. Discovery in the case is
proceeding  in  the  state  court  in  Reno,  Nevada. No assurance can be given,
however,  as  to  the  ultimate  outcome  of  the  case.

The  Company,  along  with  the  current  officers and board members and several
former  directors,  was  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 and the Company
and all the named defendants that have been served have filed motions to dismiss
the  various claims and will contest the lawsuit vigorously. No assurance can be
given,  however,  as  to  the  ultimate  outcome  of  the  case.


7.                  Notes  payable

During  the  three  month  period  ending  March  31, 2004, the Company repaid a
stockholder  $7,543 owed to him under a short-term note, and $1,756 under a note
to  a  financial  institution.

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 June of 2004, the Company issued 33,750 shares to the
creditor for $6,750 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 common stock of the
Company  at  the  prescribed  rate  of  $0.20  per  share.

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  periods  ending June 30, 2004.
                                        11


8.             Subsequent events

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) 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  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. 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. The Company also issued 2.1
million shares to the placement agent involved in the transaction with Dutchess.

In  August  2004,  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  $110,000 in notes payable and accrued
interest  owed  them  by  the  Company.

During  July  and  August  2004, the Company issued a total of 175,000 shares to
consultants  in  return  for  services  rendered during the quarter, and 300,000
shares  to  consultants  for  services  to  be  performed.



9.             Restatement

As  mentioned  in  Note 7 above, 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. The amount of
retroactive  interest  incurred  through March 31, 2004 of $15,693. Because this
retroactive  interest was not included in the Company's filing on Form 10-QSB on
May  24,  2004 for the period ended March 31, 2004, the Company has restated its
condensed  consolidated  balance  sheet  as of March 31, 2004, and its condensed
consolidated  statements of operations, stockholders' deficit and cash flows for
the  three  month  period  ended  March  31,  2004  to include this transaction.
Following  is  a summary comparison of amounts previously reported with restated
results:
<TABLE>
<CAPTION>
                                                             As of or for the Three Months Ended
                                                                        March 31, 2004
<S>                                                 <C>                             <C>
                                                                                     As Previously
                                                           Restated                  Reported
                                                    ---------------                  --------------
Accrued expenses                                    $      224,534                     $   208,841
Accumulated deficit                                 $   (4,247,790)                    $(4,232,097)
Interest expense, other                             $       18,018                     $     3,370
Net loss                                            $     (267,199)                    $  (251,506)
Net loss per basic and diluted common share         $        (0.01)                    $     (0.01)
</TABLE>

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 March 31, 2004 Compared to the Three Months Ended March
31,  2003

Net  sales  for  the  three  month  period ended March 31, 2004 were $102,838, a
decrease  of $64,338 from the $167,176 for the corresponding period of the prior
year. This decrease was mainly due to the completion of a large contract for the
Company's  NH2  re-booting device. This contract originally started in the first
quarter of 2003 was completed before December 31, 2003. The decrease in revenues
would  have been greatly reduced between years had the Company completed work on
its  contract  for  the  delivery  of  load control units to an electric utility
customer.  The  Company  has  a  $60,000  deposit  recorded on its balance sheet
related  to  this contract, which was originally scheduled to be completed prior
to  March  31, 2004. However, the customer has delayed shipment of approximately
$74,000  of  equipment remaining to be delivered under the contract, pending its
own  internal  requisition  of  the  airtime  required  to operate the Company's
equipment.  As  of  May  21,  2004,  the  Company has a backlog of approximately
$300,000  in  purchase  orders  from  customers.

Cost  of  goods sold decreased by approximately $22,000 to $72,566 for the three
months  ended  March  31,  2004 from $94,530 for the corresponding period of the
prior  year,  and increased as a percentage of revenues between the periods from
57%  in  2003  to 70% in 2004.  The direct cost of parts for production remained
relatively  constant  between  periods,  but  fixed charges related to labor and
overhead were higher on a per unit basis due to the decreased production between
periods.  The  Company  is  currently  in  the  process  of analyzing methods to
convert some of these fixed charges to variable charges in an effort to decrease
the per unit cost of production and increase its gross margins during periods of
slower  production.

Selling,  general  and  administrative expenses for the three months ended March
31, 2004 were $276,080, a decrease of $38,568 or 12% from the three month period
ended  March  31, 2003. The decrease is almost entirely due to decreased payroll
and  related  benefits  costs.  Non-production  payroll  and  related costs were
approximately  $194,000  for  the  first  quarter  of  2003,  as  compared  to
approximately  $129,000  for the first quarter of 2004. This decrease was offset
somewhat  by  an  increase in consulting fees for product marketing and investor
relations,  as well as an increase in expenses related to the development of the
Company's satellite-based unit. The Company expects sales of its satellite-based
unit  to  begin  producing  revenues  during  the  last  six  months  of  2004.

                                       12


The  loss  from continuing operations for the three month period ended March 31,
2004  was  $267,199  compared to $252,407 for the three month period ended March
31,  2003.  The  decrease in gross profit produced between periods was offset by
the  reduction  in  selling,  general  and  administrative  expenses.

After  giving  consideration to results of the Company's paging airtime segment,
which  was  discontinued  effective  July  31, 2003, the net loss for the period
ending March 31, 2004 was $267,199 as compared to $239,612 in 2003. Although the
Company's  paging  segment  produced positive operating results during the first
three  months of 2003, it produced negative cash flows for the same time period.
The  combined  effect  of  the items mentioned above was a net loss per share of
$0.01 in both periods presented, based on weighted average shares outstanding of
approximately  25.0 million and 21.3 million during the three months ended March
31,  2004  and  2003,  respectively.

  Liquidity  and  Capital  Resources

The  Company's  financial  statements  for the three months ended March 31, 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 three months ended March 31, 2004, the Company reported a
net  loss  of  $267,199  and has a stockholders' deficit as of March 31, 2004 of
approximately  $1.2  million.  In  addition,  the  Company had a working capital
deficiency  of  approximately  $1.2  million  at  March  31,  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  quarter  ended March 31, 2004, the Company used cash of $140,690 in
its  normal  operating  activities.  The  Company  raised approximately $185,000
during  the  first  quarter  from the sale of both common and preferred stock in
order to fund this cash shortfall from operations. Funds provided from the sales
of  the  Company's  securities  were  also used to make approximately $41,000 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. 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 a best-efforts offering
of  equity  securities  of  the  Company.

Until  and  unless such an offering or its equivalent is successfully completed,
the  Company  may be dependent on private placements of its equity securities to
fund  its operations. 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) 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 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.  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. 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.

In  addition,  as  of  May  21,  2004, the Company has approximately 5.0 million
warrants  outstanding  with  a  weighted average exercise prices $0.21 per share
that  expire  from  July  2004 through March 2006. These warrants, to the extent
they have exercise prices below current market prices, may represent a source of
cash  funds  for  the  Company in the future. However, no assurance can be given
that  the  Company will receive proceeds from the exercise of these warrants, or
from  any  other source, without which, the Company will have insufficient funds
to  fully  implement  a  comprehensive  sales and marketing plan during the next
twelve  months.

As  a  result  of funds raised and expected to be raised subsequent to March 31,
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.  To  date, the majority of revenues have been generated from customers who
have  found  the  Company via its web site, or through referrals from vendors or
existing  customers.  During  the  first three months of 2004, the Company spent
approximately  $11,000  for  marketing  initiatives,  as compared to only $2,700
during  the  first  three months of 2003. It is the Company's desire to generate
revenues  going  forward from a diverse customer base from the electric utility,
computer  rebooting  and traffic control markets. During the year ended December
31, 2003, approximately 78% of the Company's revenues were generated by sales of
two  of  the  Company's  products  to a total of two customers. The Company also
spent  approximately  $6,000  on  development  efforts  related  to  its  new
satellite-based  units,  which  it  anticipates  will  begin generating revenues
during  the  last  half  of  2004.

                                       13


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

There have been no material developments in the McCarthy lawsuit reported in the
Company's  10-KSB  filed  on  April  13,  2004.

In  this  reporting  period,  the  Company, along with its subsidiary, Peregrine
Controls  Technologies, Inc., the current officers and board members and several
former  directors,  was  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  Company  and  all  the  named  defendants  that have been served have filed
motions  to  dismiss the various claims and will contest the lawsuit vigorously.
The  case is proceeding in the state court in Denver, Colorado. No assurance can
be  given,  however,  as  to  the  ultimate  outcome  of  the  case.

                                       14


Item  2.  Changes  in  securities  and  use  of  proceeds

(c)  During  this  reporting  period,  the Company sold 858,333 shares of common
stock pursuant to a Rule 506 exemption of Regulation D. The total offering price
was  $128,750  and  a  commission  of  $900  was  paid.  There were less than 35
individual  purchasers  of  stock  and  they  are  all accredited investors. The
individuals  that  purchased  stock and the amount of stock they purchased is as
follows:

     Date         Purchaser          Investment    # Shares     # Warrants
     ----         ---------          ----------    --------     ----------
    1-16-04     B. Stoddard           $ 50,000     333,333        333,333
    1-18-04     B. Whitehead           $ 6,000      40,000         40,000
    1-19-04     B. Douglas            $ 15,000     100,000        100,000
    1-22-04     N. Fereira             $ 6,000      40,000         40,000
    2-18-04     G. Schwalfenburg       $ 6,000      40,000         40,000
    2-18-04     N. Fereira             $ 3,000      20,000         20,000
    2-23-04     M. Jacobson           $ 30,000     200,000        200,000
    3-4-04      Schwartz               $ 2,250      15,000         15,000
    3-4-04      W. Johnson             $ 6,000      40,000         40,000
    3-25-04     Riordan                $ 4,500      30,000         30,000

    Totals                            $128,750     858,333        858,333



The  terms  of the offering granted each purchaser shares at $0.15 per share and
granted  them  warrants  to  purchase an identical number of shares at $0.25 per
share.  The  warrants  have an expiration date of two years from the date of the
original  purchase  of  the  shares.

Item  3.  Defaults  upon  senior  securities

     None

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

     None

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.
None

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.

                 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:  October 12,  2004           By:  /s/  H.  DOUGLAS  SAATHOFF
                                      ----------------------------------------
                                                H.  Douglas  Saathoff
                                                Chief  Executive  Officer  and
                                                Chief  Financial  Officer