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

                                   FORM 10-KSB

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2002

                           Commission File No. 0-30786

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

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

                         8200 E. Pacific Place, Ste. 204
                                Denver, CO 80231
                                 (303) 337-4811
                -------------------------------------------------
               (Address, including zip code, and telephone number,
                      including area code, of registrant's
                          principal executive offices)


Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$0.001 par value

Check whether the issuer  (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
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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information statements
incorporated  by reference  in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

Registrant's revenues for its most recent fiscal year were $870,360.

As of May 20, 2003 there were 21,833,780 shares of common stock, par value
$.001 per share, of the registrant issued and outstanding.

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

                                       1
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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

NightHawk Systems, Inc. ("NightHawk" or "the Company") designs and manufactures
easy  to  use,  ready  to  use,  wireless  products  that  can remotely control
virtually any electrical device from any location. Our products are designed to
be easily installed and operated by anyone regardless of technical  capability.
NightHawk  has taken a complex technology, historically relegated to engineers,
and made it  simple for everyone.  Our products offer a reliable and economical
alternative to  mechanical  processes that have historically utilized telephone
line-based  systems  or human intervention.   Most  people  experience  "remote
control" through the use  of  garage  door  openers and TV channel changers; we
supply the technology, off the shelf, to allow  this  same simple functionality
to reach literally around the world to operate almost anything.

Effective  February  1,  2002,  the  Company acquired 100% of  the  issued  and
outstanding shares of Peregrine Control  Technologies, Inc. ("PCT") in exchange
for 14,731,200 post reverse split shares of  the  Company's  common  stock.  In
conjunction  with  the  acquisition  and  the  change in focus of the Company's
business, the Company changed its name to Peregrine,  Inc.  on January 10, 2002
and  later  to  NightHawk  Systems,  Inc.  on  April 29, 2002.   Prior  to  the
acquisition of PCT, the Company had conducted a  reverse split of its shares on
a  1:100  basis,  and had 4,600,256 shares outstanding.   The  acquisition  was
recorded as a reverse acquisition, with PCT being the accounting survivor.

PCT was originally  incorporated  as a Colorado company in 1992, and originally
operated as a family-owned business  specializing  in  paging  repair.  Through
knowledge gained in the operation of the business, the Company began developing
a  specialized  circuit  board  which  could receive paging signals and  switch
electrical power.  In its simplest form,  the  technology  gave  the  user  the
ability to turn devices "on" or "off" from or to remote sites.  Through limited
marketing,  the  Company  was  able to solve specific control problems for both
large and small companies through customization of the original circuit board.

During the approximate eighteen-month  period ending June 30, 2002, the Company
identified two large markets and successfully  developed  standardized products
to  meet  specific  needs  for  each market:  1) Within the electrical  utility
industry, utilities need to be able  to  control,  from a centralized location,
the  power going into and out of specific locations throughout  that  utility's
power grid; and 2) IT professionals, primarily network administrators, need the
ability  to  re-boot  unmanned  server or computer locations from a centralized
location.  NightHawk developed the  CEO-700 and the NightHawk NH2 to meet those
respective industry needs.  Countless  applications  exist  for  the  Company's
technology,  and the Company will continue to meet varying industry needs,  but
the Company believes  that  it  can  provide large-scale solutions and generate
significant revenues in the specific targeted markets identified above.

The Company has nine employees, each of which is full time.

MISSION STATEMENT

To  become the premier provider of inexpensive,  easy  to  use  remote  control
technology to consumers and industry alike.

                                       2
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THE MARKETPLACE

The controls  industry  is  characterized  by  companies that sell remote asset
management and tracking systems and related products, and is estimated by Frost
& Sullivan to be a $3.5 billion industry in 2003,  growing at a compound annual
rate of 25%.  It is the Company's belief that there  is no limit to the size of
the remote control market; the application of remote control is limited only by
one's imagination. On a consumer basis, most people think  of remote control in
a recreational sense.  However, many 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  physical
assets and processes  is  performed  mainly  through  the use of telephone-line
based  systems.   However,  separate  markets  exist for those  companies  that
require 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.  Almost any device that runs
off  an  electrical  current, whether battery, solar or line generated, can  be
controlled by a NightHawk  device.   The Company has identified primary markets
(Utility and Computer) as well as secondary  markets  (Traffic,  Irrigation and
Wide Area Notification) for its products.

TECHNOLOGY AND PRODUCTS

NightHawk products have been in service for over five years, primarily  to  fit
custom   applications.    Customers  using  NightHawk  products  today  include
Raytheon, Boeing, GE, AT&T,  Lockheed Martin, the U.S. Forestry Service and the
U.S. Army.  The Company distinguishes  itself  from  competitors  in the market
through its proprietary firmware and software, the design of its products,  the
ease  with  which  they are installed and operated, and the paging-based medium
typically used to operate  its  products,  which  allows  for  low cost access,
security and flexibility.

The Company's products are shipped ready for use and are pre-programmed  before
shipment  to  the customer.  Its utility products come in their own enclosures,
which fit underneath  electric meters.  Its computer products come as "plug and
play" devices; a user simply  plugs  his  computer  into  the NightHawk device,
which  is  then  plugged  into the electrical outlet.  NightHawk  is  the  only
company currently providing  a  "plug  and  play"  ready-to-use wireless remote
control device.

Through innovative engineering, NightHawk's products typically utilize a common
paging signal found virtually worldwide.  Paging is  often  used  because it is
very secure, yet inexpensive, and easy to use.  Customers can choose to operate
their  own  paging  accounts,  or  arrange  for  the  service  directly through
NightHawk.  The Company has also developed Windows-based software packages that
enable customers to activate the remote control units from a PC.   Paging, when
combined  with  NightHawk's  proprietary  firmware and software, allows  for  a
"group call" feature whereby a user can access  multiple sites at the same time
using a single paging number.  This exponentially  increases  the functionality
of  the  product.  It is important to note that the Company's products  can  be
adapted to  function  with  any  wireless,  or  wireline-based,  communications
medium.

The  Company assembles its finished products at its Denver, Colorado  facility.
The Company  sub-contracts  for  assembly  of  various components, and utilizes
several vendors for parts that do not require assembly.  Parts and sub-assembly
services are widely available.  During the final  assembly  process, individual
units  are programmed depending on their destination or customer  requirements,
tested, and then shipped to the customer for installation.

In September  2001,  the  Company  purchased certain assets and assumed certain
liabilities of Vacation Communication, Inc. (dba Gotta Go Wireless), a Colorado
corporation engaged in wireless paging  airtime  and product sales.  The assets
purchased  consisted primarily of a retail paging customer  base,  as  well  as
contracts for wholesale paging services with paging carriers for nationwide and
international coverage.  The Company utilizes these paging carrier contracts to
offer paging services to buyers of its products.

                                       3
<PAGE>

PATENTS PENDING

The Company  has two patent applications pending at the U.S. Patent Office: one
is titled "Remote  Disconnect  for  Utility  Meters"  and  is  for  whole house
disconnect  systems,  and  the  second  is  titled  "Paging  Remote  Disconnect
Systems"  and  is  for  the  remote  wireless  control for turning on  and  off
electrical and telephonic lines.

Under  the first patent application, the user dials  a  pager  number  that  is
already  pre-programmed  into  the  unit.   The paging service then transmits a
signal to a radio frequency ("RF") receiver in the module.   The signal is then
decoded and sent to a processor.   The processor then causes a relay to open or
close  in accordance with the decoded  signal  to  connect  or  disconnect  the
electrical power.

Under  the   second  application,  a  user  simply  plugs  the  power  cord  or
telecommunication  line  of their device, such as a computer or appliance, into
the outlet of the module.    The  user is then able to dial a pager number that
is already pre-programmed.   The paging  service  then  transmits a signal to a
radio frequency ("RF") receiver in the module.   The signal is then decoded and
sent to a processor.   The processor then causes a relay  to  open  or close in
accordance with the decoded signal to activate the power supply or to  turn the
power   off   to  the  electronic  device  or  to  connect  or  disconnect  the
telecommunications line.

COMPETITION

Wireless remote  control  through the use of radio signals is widespread.  Most
products available today use  private  system data radios, cellular telephones,
or satellite-based systems.  While NightHawk's  technology  can  be modified to
utilize any of these wireless media, our core expertise has been in  the use of
paging.   This medium, combined with our proprietary technology, allows  for  a
high  level   of  security,  the  lowest  overall  cost  and  greatest  control
flexibility.  Only  a  handful  of  small,  undercapitalized  companies utilize
paging  for  this  purpose.   To  our knowledge, NightHawk is the only  company
emphasizing paging technology that  manufactures a product that is ready-to-use
upon receipt.

SALES AND DISTRIBUTION

The Company believes that it has the  opportunity  to  meet  current demand for
applications  of  its  technology  within  specific  markets,  and  to   create
opportunities  in  many  other  markets  as  well.  Despite having little or no
marketing  resources  to target these markets, both  the  IT  professional  and
electrical  utility  markets   have   found   that   the  Company's  technology
successfully  meets  their  needs.  As such, NightHawk will  focus  significant
direct, and supplier-based, sales efforts in these industries.

NightHawk products attach to  existing  customer hardware and act as a "brain",
receiving  wireless instructions sent from  a  remote  location,  allowing  the
hardware to  perform  as  instructed.  As mentioned above, NightHawk's products
are typically set up to receive these instructions via a paging protocol, which
allows  for  secure, reliable  and  low  cost  operation.   NightHawk  products
literally serve  as  the  "brain"  between  the wireless service medium and the
hardware  which  must  perform  the  desired  action.    As  such,  we  believe
substantial opportunities exist to partner with wireless service  providers  as
well  as  hardware  manufacturers and dealers, each of which stand to gain from
the use of NightHawk's  products.    The Company will also attempt to establish
itself  as  a  supplier  of products  to  paging  and  other  wireless  service
providers, and establish dealer networks in a number of markets, including, but
not limited to, computer controls,  utilities, irrigation, traffic control, and
wide area notification.

                                       4
<PAGE>

PREDECESSOR OPERATIONS

The Company was incorporated as TPI,  Inc., under the laws of the State of Utah
on April 26, 1983.  In 1985, the  Corporation  changed  its situs  from Utah to
Nevada  and  its  name  to  Connections  Marketing  Corp.  In  July  1992,  the
shareholders of the Corporation voted to change the name to LSI Communications,
Inc. (LSI).

On June 21, 1999, the Company entered into a Plan  of Acquisition with Coaching
Institute,  Inc.,  a  Utah  corporation,  wherein  the Company issued 2,500,000
shares of common  stock  for 85,000 shares, 85% of the outstanding common stock
of Coaching Institute, Inc.  The agreement provided for  the Company to receive
options  to acquire  the remaining 15% of the issued and outstanding  stock  of
Coaching Institute, Inc. in  exchange  for  2,045,455  shares  of the Company's
common stock.  In February 1, 2001, the Company exercised its option by issuing
to  Coaching  Institute,  Inc.  2,045,455  shares of its common stock valued at
$2,045.   After the acquisition, both companies  were  surviving  with Coaching
Institute, Inc. being a wholly owned subsidiary of LSI Communications, Inc.

The acquisition  of  Coaching  Institute, Inc.  was recorded using the purchase
method of a business combination.  Operating activities have been included from
Coaching Institute in the consolidated financials since June  21, 1999.  Due to
the common ownership of Coaching and LSI, the Company valued the acquisition of
Coaching Institute at its historical cost, which was $34,728.

In  November  2001,  the  Company  sold  the assets and liabilities of Coaching
Institute, Inc. to a major shareholder.  The Company  recognized  a loss on the
sale of $574,236. At  the  time  of the reverse acquisition of PCT, the Company
had no assets or liabilities, or ongoing operations.

NASD OTC Bulletin Board Quotations

Our common stock has historically been quoted on the OTC Bulletin Board  of the
NASD  under  the symbol "NIHK". As of May 27, 2003, our stock began trading  on
the pink sheets  because  this filing on Form 10-KSB was considered delinquent.
For information concerning  these  stock  quotations during the past two years,
see the section entitled  "Market  for  Common  Equity  And Related Stockholder
Matters." The quotations presented do not represent  actual   transactions   or
broker/dealer  markups,  markdowns  or commissions.

ITEM 2. DESCRIPTION OF PROPERTY

The Company sales and operations departments  are  in leased facilities located
at 8200 East Pacific Place, Suite 204, Denver, Colorado.   The  lease  for  its
facilities  expired  on March 2002, but it has maintained use of the facilities
on a month-to-month basis  since  that  time.   The leased property consists of
approximately 2400 square feet, for which the Company  pays  $1,650  per month.
It consists of office space and a manufacturing floor.  The Company's financial
and accounting offices are located in 679 square feet of leased office space at
10715 Gulfdale, Suite 200, San Antonio, Texas. The lease expires on January 31,
2004,  and  calls  for  monthly payments of $808. The Company's Chief Executive
Officer currently works out of both the Denver and San Antonio locations.

ITEM 3.  LEGAL PROCEEDINGS

On May 6, 2003, the Company received notice that a former Board member intended
to prosecute his rights against  the Company, 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 will actively defend its position if necessary. No  assurance can
be  given,  however, as to the ultimate outcome should the former Board  member
decide to prosecute his rights.

                                       5
<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no  matters  submitted  to  a  vote  of shareholders during the last
quarter of the fiscal year ended December 31, 2002.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Market for Common Equity

From July 8, 2002 through May 23, 2002, our common stock traded on the Over the
Counter Bulletin Board ("OTCBB") under the symbol  "NIHK".   Beginning  May 27,
2003,  our stock is traded on the pink sheets under the same symbol.  The CUSIP
number is 65410X-10-4.   Knight  Securities, L.P., Schwab Capital Markets, L.P.
and ACAP Financial, Inc. are among the most active market makers for the stock.
From February 1, 2002 through July  8,  2002,  our  common  stock traded on the
OTCBB under the symbol "PGRN."  Prior to February 1, 2002, the  stock traded on
the OTCBB under the symbol "LSIM".

The following is a table of the high and low bid prices of our stock  for  each
of  the four quarters of the fiscal years ended December 31, 2002 and 2001, and
the first quarter of fiscal 2003:

  Quarter Ended         High      Low     Quarter Ended         High      Low
  -------------         ----      ---     -------------         ----      ---
  March 31, 2003       $0.730   $0.200
  December 31, 2002     0.320    0.110    December 31, 2001   $ 5.000   $2.200
  September 30, 2002    0.600    0.120    September 30,2001    31.000    3.000
  June 30, 2002         1.950    0.550    June 30, 2001        57.000    2.000
  March 31, 2002        5.000    0.162    March 31, 2001       10.000    2.500

These quotations reflect  interdealer prices, without retail mark-up, mark-down
or commission and may not represent  actual  transactions.   These  prices also
reflect the 1:100 reverse split that occurred in January 2002.

(b) Security Holders

The number of record holders of our common stock as year end was 155 according
to our transfer agent. This figure excludes an indeterminate number of
shareholders whose shares are held in "street" or "nominee" name.

(c) Dividends

There have been no cash dividends declared or paid since the inception  of  the
company,  and no cash dividends are contemplated in the foreseeable future. The
company may  consider a potential dividend in the future in either common stock
or the stock of future operating subsidiaries.

 ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following table sets forth for the fiscal periods indicated the percentage
of total revenues, unless otherwise indicated, represented by certain items
included in the Company's consolidated statements of operations:

                                       Fiscal Year Ended December 31,
                                             2002       2001

Product sales, net                            76%        59%
Airtime sales, net                            24%        41%
Cost of goods sold                            40%        75%
Cost of airtime sold                          14%        22%
Gross profit                                  45%         4%
Selling, general & administrative expenses   152%       272%
Amortization of deferred compensation        179%       217%
Reversal of 2001 deferred compensation       (42%)        -
Reversal of 2002 deferred compensation      (127%)        -
Impairment of customer base                   13%         -
Interest expense                               5%        69%
Net loss                                    (134%)     (553%)

                                       6
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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. ("the  Company"),  actual  results  and  business performance may
differ  materially  from  that  projected or estimated in such  forward-looking
statements.  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 Company's
audited financial statements for the years ended December 31, 2002 and 2001.

General

The Company's financial results include the accounts of NightHawk Systems, Inc.
(formerly Peregrine, Inc.) and its subsidiary, Peregrine  Control Technologies,
Inc.  ("PCT").   Effective  February  1, 2002, the two companies  were  brought
together under common management through  an  acquisition  in  which Peregrine,
Inc.  acquired  all of the outstanding shares of PCT.  Because Peregrine,  Inc.
issued more shares  to  acquire  PCT  than it had outstanding just prior to the
acquisition, the transaction was accounted  for  as  a  reverse  acquisition of
Peregrine,  Inc.  by  PCT.   Peregine,  Inc.  subsequently changed its name  to
NightHawk Systems, Inc.  Because Peregrine, Inc.  was  a  shell company with no
assets,  obligations  or  operations  at  the time of the reverse  merger,  the
operating results of NightHawk Systems, Inc.  for 2001 and 2002 discussed below
were generated by PCT.

Prior to the merger on February 1, 2002, PCT had been a privately owned, family
operated  company  since  its founding in 1992.    During  2001  and  2002  PCT
developed products it felt  could  be sold to targeted markets on a large-scale
basis.   Prior to 2001, the Company's revenues were generated primarily through
sales of a circuit board that could be utilized by various companies to perform
a variety of functions.  During 2001  and  2002, the Company developed "off the
shelf" whole-house disconnect and load control  units  which  could  be  easily
installed and used by electrical utilities, and the NightHawk, another ready to
use  product which can be used to reboot computers.  In an effort to strengthen
its operations and results, in September of 2001 PCT acquired certain assets of
Vacation  Communication,  Inc.  ("Vacation"),  a  retail  paging business.  The
Company felt that it could leverage off of the existing cash  flows of Vacation
to  fund  growth  of  its  own  remote  control equipment segment, and  utilize
Vacation's contracts with paging carriers to provide profitable paging services
to buyers of its remote control equipment.  Also, in an effort to bring outside
funds and additional exposure to the Company,  in November 2001 it entered into
discussions that culminated in the reverse acquisition  of  Peregrine,  Inc. in
February  2002.   Still,  during  2001  and 2002, the Company had minimal funds
available for sales and marketing efforts.   During  those years, it spent less
than $5,000 per year in advertising related to sales efforts  and  employed one
equipment sales person. The Company also spent an additional $9,000  on general
advertising efforts.

Comparison of Years Ended December 31, 2002 and 2001

Revenue

Revenue  increased  from  $239,268  during the year ended December 31, 2001  to
$870,360 during the year ended December 31, 2002, or 264%.

                                       7
<PAGE>

Equipment  sales revenues increased 368%  from  $141,333  to  $661,199  between
years, due mainly  to two large orders received by the Company during September
2002 that were completed  by  December 31, 2002.  Through the first nine months
of 2002, the Company's equipment  sales  had already more doubled from the same
period in the prior year, increasing from  $102,378  to  $292,533.   During the
fourth  quarter  of  2002,  the  Company  recognized  revenues of approximately
$270,000 from a single sale of NightHawk rebooting devices,  and  approximately
$84,000 from a single sale of load controllers to an electric utility.

Airtime  sales  increased  from $97,935 in 2001 to $209,161 in 2002.   However,
revenues from 2001 were generated during a three-month period in 2001 after the
purchase of Vacation, while  airtime revenues were generated for a full twelve-
month  period  in 2002.  Monthly  airtime  sales  revenues  declined  quarterly
throughout 2002,  from an average of $32,465 during the last quarter of 2001 to
a monthly average of  $21,140 during the last quarter of 2002.  This was due to
the closing of retail paging locations operated by Vacation during 2002.  Until
the paging services provided  to  remote  control  equipment  customers  of the
Company increases substantially, this trend of decreasing airtime revenues  can
be expected to continue.

Cost of sales/Gross margin

Total cost of sales increased from $230,005 in 2001 to $474,623 in 2002, due to
increased  volumes  of equipment and airtime sales between periods as mentioned
above, but decreased  as  a percentage of total sales from 96% to 54%.  Overall
gross margins increased from 4% in 2001 to 45% in 2002.  The Company produced a
negative gross margin in 2001  on equipment sales, but produced a margin of 53%
on equipment sales made during 2002.  The increase was due mainly to purchasing
benefits and operating efficiencies  realized  from  greater  volume production
between  years.  Gross margins on airtime sales decreased from 47%  to  40%  as
retail airtime  sales  volumes  decreased  with  the  closing  of  retail sales
locations.

Selling, general and administrative expenses

Selling,  general  and administrative expenses increased 104% from $650,019  in
2001 to $1,325,837 in  2002,  due  primarily  related  to increases in employee
costs,  professional  fees,  stock  compensation  expense and  amortization  of
intangibles.  From 2001 to 2002, the Company added several employees, including
two with the acquisition of Vacation in September 2001.  As a result, salaries,
wages and other personnel-related expenses increased  from  $224,197 in 2001 to
$478,818  in  2002.   Professional  fees  increased  from  $83,679 in  2001  to
$162,268, due mainly to legal and accounting fees associated  with  the reverse
acquisition  of  Peregrine, Inc. effective February 1, 2002.  During 2002,  the
Company recorded approximately  $290,000 in expenses related to stock issuances
to  consultants.   Amortization expense  increased  from  $44,510  in  2001  to
$156,288  in  2002 as  a  result  of  the  amortization  of  intangible  assets
associated with  the  purchase  of  Vacation over a 12-month period in 2002, as
opposed to a 3-month period in 2001.

Other operating expenses

The Company recognized a charge of $112,394  in  2002 for the impairment of the
customer base acquired from Vacation.

During 2001, the Company recognized consulting expense  of  $306,250 because it
issued 1,225,000 shares of its common stock to consultants for future services.
At  the  date  of  commitment, the total consulting cost was calculated  to  be
$1,225,000 ($1.00 per share), which was to be recognized over the one-year term
of  the  agreement.      Therefore,  an  additional  $918,750  of  expense  was
recognized during the year  ended December 31, 2002.  During the fourth quarter
of 2002, the Company recorded  a  reduction  in  stock  compensation expense of
$1,225,000  related  to  the  cancellation  of  the agreements,  as  management
determined that no services had been performed.

                                       8
<PAGE>

Also during 2001, the Company recognized consulting expense of $212,500 because
it  issued  an  aggregate of 850,000 shares of its common  stock  to  its  then
outside directors  for  services. At the date of commitment, total compensation
cost was calculated to be  $850,000,  which  was to be recognized over the one-
year term of the agreement.  An additional $637,500  of  consulting expense was
recognized during the year ended December 31, 2002.  During  the fourth quarter
of 2002, the Company canceled the issuance of 200,000 of these shares that were
returned  by  two  of  the directors to the Company, and reversed  $200,000  of
associated consulting expenses as the associated services were never performed.

Interest expense

Although  amounts outstanding  under  notes  payable  decreased  only  slightly
between December 31, 2001 and 2002, interest expense decreased from $164,470 in
2001 to $39,172  in  2002.   During  2001, the Company recognized approximately
$135,000 in interest expense as a result  of stock awards to both related party
and  other  creditors  of  the  Company.   Only  $14,640  of  interest  expense
resulting from stock transfers was recorded in 2002.

Net loss/Net loss per share

The net loss for 2002 was $1,162,916,  or  $0.06  per  share, compared to a net
loss for 2001 of $1,323,976, or $0.12 per share.  As explained in the preceding
paragraphs, the reason for the reduction of the net loss  between  years was an
increase in sales, which produced additional gross profit, and the decrease  in
interest  expense  recorded  by  the Company.  These positive factors more than
offset increases in selling, general and administrative expenses between years.

Liquidity and Capital Resources

The Company's financial statements  for  year ended December 31, 2002 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  2002,  the  Company reported a net loss of $1,162,916 and as of
December 31, 2002 has a stockholders'  deficit  of  $708,091.  In addition, the
Company  had  a  working  capital  deficiency of approximately $747,830  as  of
December 31, 2002.  The Independent Auditors' Report on the Company's financial
statements as of and for the year ended  December  31,  2001  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.

For the year ended December 31, 2002, the Company used $103,025 in net cash for
operating activities.   This  amount  included  the  receipt of $432,600 from a
single customer that the Company has recorded as deferred  revenue at year end.
During  2002,  aside  from  using  cash  generated from normal operations,  the
Company was able to meet its financial obligations  principally through private
placements of its common stock in which it generated  $521,650 in cash proceeds
in return for the issuance of 2,479,000 shares of common  stock  and  2,304,000
warrants.   The Company also received approximately $65,000 in short term  loan
proceeds from  related  parties  during 2002 to assist it in meeting short term
cash needs in an effort to maintain  production  schedules for customers.  Only
approximately $21,000 of these borrowings remained  outstanding at December 31,
2002.  To diminish the need for these short-term advances,  during  the  fourth
quarter  of 2002 the Company established purchase order and accounts receivable
financing  to  assist it in meeting the production costs of orders received. As
of December 31,  2002,  the Company had $82,502 outstanding under its factoring
agreement.  Approximately  half  of  the Company's debt outstanding at December
31, 2002 is held by related parties, and  was outstanding throughout 2002.  The
Company was able to arrange for minimal payments  to be made on the outstanding
amounts during fiscal 2002.  However, no assurance may be given that it will be
able to continue to do so without receiving demands for payment.

                                       9
<PAGE>

The Company continues to be cash flow negative from operations, but has enjoyed
increasing cash flows from operations since the end  of  the  third  quarter of
2002  due  to  increasing  sales volumes.  However, until the Company generates
sufficient cash flows from operations  to  cover its recurring expenses and any
debt requirements, it will need to continue  to  raise funds through private or
public placements of its equity securities, or debt  instruments.  No assurance
can be given that it will be able to do so in an amount  to  sufficiently cover
its  cash flow deficits.  However, during April and May 2003, the  Company  did
receive $300,000 in exchange for stock, warrants and a 90-day convertible note.
The Company anticipates using some portion of these funds to increase its sales
and marketing  efforts  in  an  effort to increase revenues and cash flows.  In
addition,  as  of  December  31,  2002,  the  Company  had  2,695,200  warrants
outstanding with exercise prices ranging  from  $0.20  to  $1.50 per share that
expire from January 2003 through November 2004.  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 execute its business plan for the next twelve months.

As a result of funds raised and expected to be raised  subsequent  to  December
31,  2002,  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.

The  Company  also believes that it can eventually generate additional revenues
by making improvements  to  existing  products and designing new products.  The
Company's current products utilize a paging  medium,  but  the  Company  is now
working  to develop a product that will utilize an alternative wireless medium,
such as satellite.

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.

We believe that the following are some of the more critical accounting policies
that currently affect our financial condition and results of operations:

- intangible assets
- stock based compensation

Intangible assets

Intangible assets include patent costs, a non-compete agreement and a  customer
base, and are stated at cost.  Amortization is provided by use of the straight-
line method over the estimated lives as follows:

           Patents                     Ten years
           Customer base               Twenty six months
           Non-compete agreement       One year

The  Company  reviews  these  and  any  other  long-lived assets for impairment
whenever events or changes in circumstances indicate their carrying amounts may
not be recoverable.  Recoverability of an asset to be held and used is measured
by a comparison of the carrying amount of the asset to future undiscounted cash
flows expected to be generated by the asset.  If  the asset is considered to be
impaired, the impairment to be recognized is measured  by  the  amount by which
the carrying amount of the asset exceeds the fair value of the asset.  Based on
management's  review  at  December 31, 2002, the Company recorded a  charge  of
$112,394 in 2002 related to an impairment of the customer base.

                                       10
<PAGE>

Stock based compensation

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.

ITEM 7. FINANCIAL STATEMENTS

The audited  consolidated  balance sheet of the Company as of December 31, 2002
and related consolidated statements  of  operations,  stockholders' deficit and
cash  flows  for  the  years  ended  December 31, 2002 and 2001  are  included,
following Item 14, in sequentially numbered  pages  numbered  F-1 through F-19.
The page numbers for the financial statement categories are as follows:

Index                                                                     Page
                                                                          -----

Report of Independent Auditors............................................ F-1
Consolidated Balance Sheet as of December 31, 2002........................ F-2
Consolidated Statements of Operations for the Years Ended December
31, 2002 and 2001 ........................................................ F-3
Consolidated Statements of Stockholders' Deficit for the Years Ended
December 31, 2002 and 2001................................................ F-4
Consolidated Statements of Cash Flows for the Years Ended December 31,
2002 and 2001............................................................. F-5
Notes to Consolidated Financial Statements ............................... F-6



ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS ON ACCOUNTING  AND
FINANCIAL DISCLOSURE

On  March 13, 2002, the client-auditor relationship  between  the  Company  and
Chisholm  &  Associates  ("C&A")  ceased  as  C&A  was  not  reappointed as the
Company's  auditor after a change in Company management, which  occurred  as  a
result of the  February  1,  2002 reverse merger with Peregrine, Inc.  On April
29, 2002, the Company engaged  Gelfond Hochstadt Pangburn, P.C. to serve as its
new independent accountants.

C&A's auditor's report on the financial  statements  of  the Registrant for the
years  ended  December  31,  2001  and December 31, 2000, did not  contain  any
adverse opinion or disclaimer of opinion  and  was not qualified or modified as
to uncertainty, audit scope or accounting principles  during  the  fiscal years
ended  December 31, 2001 and December 31, 2000 except as follows: C&A's  report
on the financial  statement  of  the  Company  as  of  and  for the years ended
December  31,  2001  and  2000,  contained  a  separate paragraph stating  "the
Company's  recurring   operating  losses  and  lack of  working  capital  raise
substantial  doubt  about  its  ability  to  continue   as   a  going  concern.
Management's  plans in regard to those matters are also described  in  Note  2.
The financial statements  do not include any adjustments that might result from
the outcome of this uncertainty."

During the audits of the Company's  financial  statements  for  the years ended
December  31,  2001  and  December  31, 2000 and any subsequent interim  period
through the date of dismissal, there  were  no  disagreements  with  C&A on any
matter  of  accounting principles or practices, financial statement disclosure,
or auditing scope  or  procedure,  which disagreements if not resolved to their
satisfaction would have caused them  to make reference in connection with their
opinion to the subject matter of the disagreement.

                                       11
<PAGE>

                                    PART III

ITEM  9.  DIRECTORS,  EXECUTIVE  OFFICERS,   PROMOTERS   AND  CONTROL  PERSONS;
          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT OF 1934, AS AMENDED

The following persons are executive officers and directors of the Company:

H. Douglas Saathoff, 41 - Chief Executive Officer, Chief Financial Officer

H. Douglas "Doug" Saathoff joined the Company as its full  time Chief Financial
Officer  on  January  1,  2003  after serving in that capacity on  a  part-time
consulting basis beginning in October 2002.  On March 26, 2003, he was promoted
to the position of Chief Executive  Officer.   Prior to joining the Company, he
served  as Chief Financial Officer for ATSI Communications,  Inc.  (AMEX:  AI),
from June  1994  through  July  2002  and  as a Board Member of ATSI's publicly
traded subsidiary, GlobalSCAPE, Inc. (GSCP.OB)  from  April  1997  through June
2002.   During his tenure at ATSI, he was directly responsible for establishing
and monitoring  all  accounting,  financial,  internal  reporting  and external
reporting  functions,  and had primary responsibility for fundraising  efforts.
ATSI raised over $60 million in debt and equity financing from both individuals
and institutions during  Doug's  tenure, and moved from the Canadian OTC market
to the U.S. OTC market and eventually  to  a  listing  on  the  American  Stock
Exchange  in February 2000.  ATSI grew from San Antonio-based start-up with  11
employees to  an  international  operation  with in excess of 500 employees and
operations  in the U.S., Mexico, Costa Rica, Guatemala  and  El  Salvador  with
annual revenues  in  excess  of  $60  million.   He  was  instrumental  in  the
acquisition  of  subsidiaries and customer bases, as well as the divestiture of
GlobalSCAPE in June  2002. Prior to joining ATSI, Doug served as the Accounting
Manager, Controller and  Financial  Reporting  Manager  for  U.S. Long Distance
Corp. from 1990 to 1993. While at USLD he was responsible for  supervising  all
daily   accounting   functions,  developing  internal  and  external  financial
reporting of budgeted  and  actual  information,  and  for  preparing financial
statements  for  shareholders,  lending  institutions  and  the Securities  and
Exchange  Commission.  Doug also served as Senior Staff Accountant  for  Arthur
Andersen & Co. where he  planned, supervised and implemented audits for clients
in  a  variety  of  industries,  including  telecommunications,  oil  &gas  and
financial services. Doug graduated from Texas A&M University with a Bachelor of
Business Administration degree in Accounting, and has passed the CPA exam.

Arlen Felsen, 43 - Chief Information Officer, Board Member

Mr. Felsen has been a  member  of  the  Board  since February 2002, and was re-
elected in April 2002.  He has an extensive background  in  the paging industry
including  in  depth  knowledge  of  paging technology.  In 1991 he  co-founded
(along with Amy Felsen) Vacation Communication,  Inc. d.b.a. Gotta Go Wireless,
retail and wholesale paging and wireless provider.  He built the company into a
leading  paging  provider  to the Denver metropolitan  area  and  expanded  the
operation throughout Colorado,  Utah  and  Idaho.   Within a few years Gotta Go
Wireless  had significant market share in this region  of  the  U.S.  When  the
Company purchased  Gotta  Go  in 2001, Mr. Felsen joined the Company to oversee
product development.

Myron Anduri, 47 - Vice President of Sales

Mr. Anduri joined the Company in  January  2000.  From 1999 to 2000 he was Vice
President-New  Business  Development  for Kyocera  Solar  Inc.  of  Scottsdale,
Arizona.  While with Kyocera, he worked  to  develop  new  market areas for the
company's solar power products.  From 1997 to 1999 he served as Vice President-
Telecommunications Division, a $21 million international unit, where he managed
all sales and engineering efforts. From 1993-1997 Mr. Anduri  was  Senior  Vice
President-Marketing  and Sales for Photocomm Inc. a Nasdaq-traded company based
in Scottsdale Arizona,  which  was  ultimately acquired by Kyocera in 1997.  He
also served as Vice President-Industrial  Division  of Photocomm from 1989-1993
and was the Rocky Mountain Regional Manager from 1987-89.   Mr.  Anduri holds a
BA in Economics from Colorado State University.

                                       12
<PAGE>

Max Polinsky, 45 - Chairman of the Board

Mr.  Polinsky was elected a member the Board in April 2002 and is a  member  of
our audit  committee.   He  is  a  director  and principal of Venbanc, Inc., an
investment  and  merchant bank located in Winnipeg,  Manitoba  Canada  that  he
founded with a partner  in  1994.   Venbanc  specializes in the structuring and
financing of start-up companies and provides follow-up financial and management
advisory  assistance.   It has successfully funded  and  taken  public  several
companies in Canada and the  United  States  in  the past seven years. Prior to
this Mr. Polinsky was the general manager of City  Machinery Ltd., a nationwide
power transmission parts distributor with offices across  Canada.  He began his
career  as a stockbroker at Canarim Investment Corp.  (now Canaccord   Capital)
in 1982.  Mr.  Polinsky  graduated  with honors from the University of Manitoba
with a degree in Business Administration, Finance Major.

Steven Goodbarn, 45 - Board Member

Mr. Goodbarn was elected a member of  the  Board in April 2002 and is the Chair
of  the  Audit  Committee.  He was chief financial  officer  of  Janus  Capital
Corporation from 1992 until late 2000. During that time, he was a member of the
executive  committee and served  on  the  board  of  directors  of  many  Janus
corporate and  investment entities. Mr. Goodbarn is a CPA and spent 12 years at
Price Waterhouse  prior  to joining Janus.  Steve is also a member of the Board
of Directors of EchoStar Communications Corp.

Patricia Thompson, 59 - Board Member

Ms. Thompson was elected a  member  of the Board in April 2002 and is the Chair
of our Compensation Committee.  She has  served  as  Senior  Vice  President of
Daniels  &  Associates  since  1991. During Ms. Thompson's tenure at Daniels  &
Associates, she has completed hundreds of transactions for small, independently
owned cable companies as well as  larger  multiple  systems operators. Over the
years,  she  has  won  several annual Daniels awards for  completing  the  most
transactions  within a given  year.  Prior  thereto,  Ms.  Thompson  owned  and
operated Pat Thompson  &  Co.  for  approximately ten years, the nation's first
woman-owned cable television brokerage  company.  Ms. Thompson currently serves
as a Director on the Small Cable Business Association  Board  and  is  an NCTA-
CablePac Committee Member.


Patrick A. Gorman, 38 - Board Member

Mr. Gorman was elected a member of the Board in April 2002, and is a member  of
the  compensation  committee.   He  is  the  managing  director  of  Gorman and
Associates,  Inc.,  a  strategic  consulting  firm for corporate and government
affairs.  Since its inception, the company has  been  dedicated  to  being  the
preeminent  business development firm for companies seeking to do business with
the Fortune 500  as  well  as  the advisory firm of choice in understanding the
federal  government in Washington,  D.C.  Mr.  Gorman's  focus  at  Gorman  and
Associates,  Inc.  includes  law  and  the legislative process, communications,
government relations, and operations. Over  the  last  10 years, he has advised
corporations,  NGOs,  non-profits,  and  individuals  on issues  pertaining  to
criminal  law, the environment, telecommunications, international  trade,  fund
raising,  community  development,  media  relations,  and  alternative  dispute
resolution.   Mr.  Gorman  is  a  member  of  the  Advisory  Board of New Media
Strategies,  Inc.,  an  Internet service provider focused on public  relations,
communications, and viral  marketing.  Mr. Gorman is also a Board member of the
Echo Hill Campership Fund, a  local  non-profit  whose  mission  is to send the
neediest, very low-income, inner-city youths to camp on the Chesapeake Bay. Mr.
Gorman is admitted to practice law in Maryland and the District of Columbia and
has  successfully  appeared  at  the  administrative,  district,  circuit,  and
appellate court levels.

                                       13
<PAGE>

Herbert I. Jacobson, 72 - Board Member

Mr.  Jacobson has been a member of the Board since February 2002, and  was  re-
elected  in April 2002.  He is an entrepreneur who has built several businesses
from the ground  up.  In  1984  he  founded Advanced Communication Services and
Aaron Communication Services, both sales  and  service  companies in paging and
cable.   He  started  PCT  in 1992 as a progression into the  wireless  control
industry.  He also was founder  of the Children's Metabolic Research Foundation
and a Director of the National Gaucher Foundation.  He volunteers at the Denver
Museum of Nature & Science and mentors  senior  citizens  on  the  use  of  the
Internet.   He  served  in  Army Finance and taught American history, political
science, business and literature  at  the high school level.  Mr. Jacobson is a
graduate of Montclair State University  and completed graduate level coursework
at Denver University and the University of Florida.

Steven Jacobson, 39 - Board Member

Mr. Jacobson has been a member of the Board  since  February  2002, and was re-
elected in April 2002.  He is a member of the compensation committee,  and  was
instrumental in the development of the Company from its inception.  In March of
1992  he  began  as  Vice  President  of  Marketing, assumed the roles of Chief
Operating Officer and Chief Financial Officer  in  1995,  and  later became the
Chief  Executive  Officer  of  the Company.  On March 26, 2003, he resigned  as
Chief Executive Officer, but remains at the Company as an employee.  From 1987-
1992 he was a legislative aide to  US  Senator Hank Brown and Congressman James
Schuer where his responsibilities included  the  oversight  and coordination of
joint  environmental  policy  legislation.  Mr.  Jacobson has a joint  MA  from
Rutgers and Princeton in Public Policy and Finance,  and  a  BA  from  Colorado
College.   He  received  a  Masters of Business Administration (MBA) through  a
joint program from the University of Colorado and Columbia University.

Robert Woodworth, 51 - Board Member

Mr. Woodworth was elected a member of the Board in April 2002.  He is a capital
markets financial specialist,  with  extensive  experience in arranging capital
for emerging companies.  He is a former managing  director  of Trust Company of
America, and has served as a director for several mutual funds  and  investment
advisory  firms.   Bob  has  over  twenty-five  (25)  years  experience  in the
financial services industry.

Each  member of the Board of Directors was elected for a one-year term on April
29, 2002.  Herbert I. Jacobson is the father of Steven Jacobson.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The following  officers  and directors did not file the indicated forms for the
indicated transactions or  events.  These transactions and events were reported
on Form 5 filings made subsequent  to  December  31,  2002, with respect to the
Company's fiscal year 2002.

H. Douglas Saathoff did not file a Form 4 upon joining the Company as its Chief
Financial Officer, and did not file Form 3's for six transactions  in  which he
became a beneficial owner of securities.

Arlen  Felsen  did  not file a Form 4 subsequent to the merger of PCT with  the
Company on February 1,  2002,  and did not file a Form 3 for one transaction in
which he became a beneficial owner of securities.

Max Polinsky did not file a Form  4  subsequent to his election to the Board of
Directors on April 29, 2002.

Steven Goodbarn did not file a Form 4  subsequent  to his election to the Board
of Directors on April 29, 2002, and did not file a Form  3 for two transactions
in which he became a beneficial owner of securities.

Patricia Thompson did not file a Form 4 subsequent to her election to the Board
of Directors on April 29, 2002, and did not file a Form 3  for  one transaction
in which she became a beneficial owner of securities.

                                       14
<PAGE>

Patrick Gorman did not file a Form 4 subsequent to his election to the Board of
Directors on April 29, 2002.

Herbert I. Jacobson did not file a Form 4 subsequent to the merger  of PCT with
the Company on February 1, 2002, and did not file a Form 3 for two transactions
in which he became a beneficial owner of securities.

Steven Jacobson did not file a Form 4 subsequent to the merger of PCT  with the
Company  on  February 1, 2002, and did not file a Form 3 for three transactions
in which he became a beneficial owner of securities

Bob Woodworth  did not file a Form 4 subsequent to his election to the Board of
Directors on April 29, 2002.



ITEM 10. EXECUTIVE COMPENSATION

<TABLE>
<CAPTION>
                                                   Summary Compensation Table
<S>             <C>  <C>      <C>   <C>    <C>            <C>   <C>           <C>                     <C>     <C>
                Annual Compensation                             Long Term Compensation
                                                                Awards                                Payouts
Name and        Year Salary         Bonus  Other annual         Restricted    Securities Underlying   LTIP    All other
principal                                  compensation         stock award   Options/SARS (#)        payouts compensation
position                                   ($)                  ($)                                   ($)     ($)
Steven Jacobson
Chief Executive
Officer (a)     2002 $177,000 (b)   $   -  $ 4,966        (c)   $         -   500,000                 $     - $          -

</TABLE>

Notes:
   (a)Steven Jacobson  was Chief Executive Officer of PCT when PCT was acquired
      by the Company effective  February  1,  2002.   He became Chief Executive
      Officer of the Company subsequent to this acquisition.
   (b)Salary  includes the issuance of 1,000,000 shares  valued  at  $0.14  per
      share  issued   in  lieu  of  cash  compensation,  and  $37,000  in  cash
      compensation.
   (c)Amount includes $4,966 in personal expenses.


ITEM 11. SECURITY OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS

                 Beneficial Owners of More Than 5%
              of NightHawk Systems, Inc. Common Stock

<TABLE>
<CAPTION>
Title of class Name and address of beneficial owner Amount and nature of beneficial owner  Percent of class
<S>            <C>                                  <C>          <C>                       <C>

Common stock   Steven Jacobson                      5,550,100    (a)(b)                    25%
               7995 E. Mississippi, #E6
               Denver, Co.  80247

Common stock   Herbert I. Jacobson                  3,001,000    (c)                       14%
               1011 S. Valentia St., #87
               Denver, Co.  80247

</TABLE>

                                       15
<PAGE>

Notes:
   (a)Includes 450,000 shares under options, none of which vest within 60 days.
   (b)Includes 550,000 shares held in a trust that expires on 6/11/06 for Aaron
   Guth and 550,000 shares held in a trust that expires  on  3/31/09  for  Adam
   Guth.   Steve  Jacobson  acts as trustee for both trusts, and has all rights
   afforded any shareholder, including voting rights, until the trusts expire.
   (c)Includes 1,500,500 shares held in the name of Mr. Jacobson's wife, Sharon
   Jacobson.





                     Security Ownership of Management

<TABLE>
<CAPTION>
Title of class Name and address of beneficial owner Amount and nature of beneficial owner  Percent of class
<S>            <C>                                  <C>          <C>                       <C>

Common stock   Steven Jacobson                       5,550,100   (a), (b)                  25%
               7995 E. Mississippi, #E6
               Denver, Co.  80247

Common stock   Herbert I. Jacobson                   3,001,000                             14%
               1011 S. Valentia St., #87
               Denver, Co.  80247

Common stock   Max Polinsky                            500,000                              2%
               138 Portage Ave. East, Ste. 406
               Winnipeg, Manitoba  R2COA1

Common  stock  Steven Goodbarn                         676,000   (c)                        3%
               93 Falcon Hills Dr
               Highlands Ranch, Co  80126

Common stock   Patricia Thompson                       200,000   (d)                        1%
               400 E. Third, #606
               Denver, Co  80203

Common stock   Arlen Felsen                            575,000   (e)                        3%
               PO Box 260980
               Highlands Ranch, Co  80163

Common stock   Patrick Gorman                                -                              0%
               1666 K Street NW, Ste 500
               Washington, D.C.  20006

Common stock   Bob Woodworth                                 -                              0%
               7100 E. Belleview, Ste. 203
               Greenwood Village, Co  80111

Common stock   Directors and officers as a group    12,000,424                             54%

</TABLE>

Notes:
   (a)Includes 450,000 shares under options, none of which vest within 60 days
   (b)Includes 550,000 shares  held  in  trust  for Aarom Guth which expires on
      6/11/06 and 550,000 shares held in trust for  Adam  Guth which expires on
      3/31/09.   Steve Jacobson acts as trustee for both, and  has  all  rights
      afforded any  shareholder,  including  voting  rights,  until  the trusts
      expire.
   (c)Includes 335,000 warrants currently exercisable
   (d)Includes 100,000 warrants currently exercisable
   (e)Includes  250,000  options  exercisable  in thirds on 1/1/04, 1/1/05  and
      1/1/06

                                       16
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On  September  30,  2001,  PCT  acquired  certain assets  and  assumed  certain
liabilities  of  Vacation   Communication, Inc.,  a  Colorado  corporation,  in
exchange for $50,000  cash, 150,000 shares of the Company's common stock valued
at  $150,000, and notes  payable  of   $183,135,  which  included a non compete
agreement.  Vacation Communication was owned by Arlen Felsen and his wife.  Mr.
Felsen is a board member and officer of the Company.  At December 31, 2002, the
balance  owed  was  $121,422,  and  in 2002 the Company made payments  totaling
$48,718 towards the notes.  In connection  with  the  acquisition  of  Vacation
Communication, Inc. the Company entered into employment agreements with Mr. and
Mrs.  Felsen  and  another  employee.   The agreement with Mr. Felsen calls for
annual salary of $25,000 through February 2005. The agreements with Mrs. Felsen
and  the  employee  call  for  annual  salaries   of   $25,000   and   $27,000,
respectively.  In addition, the agreements provide for covenants-not-to-compete
for a period of one year following separation from the Company.

In October 2001, PCT issued an aggregate of 850,000 shares of its  common stock
to its outside directors for services. The directors were Charles McCarthy, Jr,
Thomas Betterton, Lawrence Brady, Allen Gordon, Edwin Meese III, William  Odom,
Larry Pressler and Max Polinsky.  At the date of commitment, total compensation
cost was calculated to be $850,000, which is to be recognized over the one-year
term of the agreement.  During the fourth quarter of 2002, the Company canceled
the  issuance  of  200,000 of these shares that were returned by Mr. Gordon and
Mr.  Odom  to the Company,  and  reversed  $200,000  of  associated  consulting
expenses as  these  services  were  never performed.  With the exception of Mr.
Polinsky, the other directors of PCT listed above resigned in April 2002.

In December 2001, PCT entered into an employment agreement with Steve Jacobson,
its president/ chief executive officer.   The  agreement  called  for an annual
salary of $150,000 and a grant of options to purchase 450,000 shares  of  PCT's
common  stock.   These  options  were  never  issued.  Additionally,  under the
agreement, PCT was obligated to make monthly payments on the officer's  student
loans  in  the amount of $460.  The agreement also provided for a covenant-not-
to-compete for  a period of one year following separation from the Company.  At
a meeting held in December 2002, the Board of Directors of the Company voted to
terminate the existing  agreement  effective  January 1, 2003 and to replace it
with  a  new one-year agreement paying Mr. Jacobson  $72,000  per  year.   This
agreement was not executed.  The Board also voted to award Mr. Jacobson options
to purchase  450,000  shares  of  common  stock  on  January 1, 2003. No option
agreement has been executed. At a meeting of the Board  of  Directors  held  on
March  26,  2003,  the  Board  accepted  Steve  Jacobson's resignation as chief
executive officer.

As of December 31, 2001, PCT had a payable to Steve Jacobson of $92,780 for un-
reimbursed business expenses incurred by him over  a  period  of several years.
Also as of December 31, 2001 PCT had a receivable due from him of $118,629 as a
result of company payments of personal expenses incurred by him  over  a period
of  several years.  During 2002, the Company eliminated the amount owed to  Mr.
Jacobson  by  making  payments  of  $97,746  to various entities on his behalf.
Funds paid in excess of the amount owed to Mr. Jacobson were expensed as salary
to Mr. Jacobson.

In December 2001, PCT entered into an employment agreement with Mark Brady, the
son of Lawrence Brady, a director of PCT at the time, to be its chief financial
officer.  The agreement called for an annual salary of  $120,000 and a grant of
options to purchase 400,000 shares of PCT's common  stock.   These options were
never  issued.   In  addition,  the  agreement  provided for a covenant-not-to-
compete for a period of one year following separation  from PCT.  Subsequent to
year end the individual and PCT terminated their agreement.   Management of the
Company  does  not believe there are any amounts owing to Mr. Brady  under  the
agreement at December 31, 2002.

                                       17
<PAGE>

In December 2001,  PCT  entered  into  an  employment  agreement  with its vice
president of marketing, Celia Gray.  The agreement called for an annual  salary
of  $75,000  and  a grant of options to purchase 150,000 shares of PCT's common
stock.  These options  were  never  issued. In addition, the agreement provided
for a covenant-not-to-compete for a period  of  one  year  following separation
from  PCT.  During  2002, Ms. Gray and the Company terminated their  agreement.
Management of the Company  does  not believe there are any amounts owing to Ms.
Gray under the agreement at December 31, 2002.

In  December 2001, PCT entered into  an  employment  agreement  with  its  vice
president of sales, Myron Anduri.  The agreement called for an annual salary of
$60,000,  and  the  payment  of commissions on sales of the Company's products.
At a meeting held in December 2002, the Board of Directors of the Company voted
to terminate the existing agreement effective January 1, 2003 and to replace it
with  a new one-year agreement  paying  Mr.  Anduri  $75,000  per  year.   This
agreement has not been executed.  As of December 31, 2002, the Company owed Mr.
Anduri $11,100 in salary and $8,365 in commissions under the old contract.

At a meeting  held  in  December  2002, the Board of Directors voted to issue a
one-year  contract  to  the  Company's  chief  financial  officer,  H.  Douglas
Saathoff, effective January 1,  2003  including  an  annual salary of $120,000.
The Board also voted to award Mr. Saathoff options to  purchase  500,000 shares
of  common  stock  effective January 1, 2003.  These agreements have  not  been
executed.  At a meeting  of  the Board of Directors held on March 26, 2003, Mr.
Saathoff was named Chief Executive Officer of the Company.


ITEM 13.   EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

(a) 99.1     Certifications  Pursuant  to  18 U.S.C.  Section 1350,  as Adopted
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) None

ITEM 14.   CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures:


Disclosure  controls  and  procedures are designed to ensure  that  information
required to be disclosed in  the  reports filed or submitted under the Exchange
Act is recorded, processed, summarized  and  reported,  within the time periods
specified  in  the  SEC's rules and forms. Disclosure controls  and  procedures
include, without limitation,  controls  and  procedures designed to ensure that
information required to be disclosed in the reports  filed  under  the Exchange
Act  is  accumulated  and  communicated  to  management,  including  the  Chief
Executive  Officer  and  the  Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. Within the 90 days prior to the
filing  of  this report, the Company  carried  out  an  evaluation,  under  the
supervision and  with  the participation of the Company's management, including
the Company's Chief Executive  Officer  and its Chief Financial Officer, of the
effectiveness of the design and operation  of the Company's disclosure controls
and procedures. Based upon and as of the date  of  that  evaluation,  the Chief
Executive Officer, who is also the Chief Financial Officer, concluded that  the
Company's  disclosure  controls  and  procedures  are  effective to ensure that
information  required  to  be disclosed in the reports the  Company  files  and
submits under the Exchange Act  is recorded, processed, summarized and reported
as and when required.

                                       18
<PAGE>

(b) Changes in Internal Controls:

Prior  to  January 1, 2003, the Company  did  not  maintain  adequate  internal
controls related  to  treasury  activities. 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 have not been substantiated as relating to
Company business, or  were  made  in  error. In addition, filings made with the
Internal  Revenue  Service and other government  agencies  did  not  accurately
reflect activities of  the Company during this time period.   During the course
of the audit of the Company's  2002  fiscal year, unsubstantiated payments were
adjusted first as payments against amounts  previously owed to the former Chief
Executive Officer and then to salary expense  to  the  former  Chief  Executive
Officer  in  the  accompanying  audited financial statements for the year ended
December 31, 2002.  See related disclosure  in  Item  12.   Amounts owed to the
Internal Revenue Service and other government agencies have been  estimated and
included  in accrued expenses in the accompanying audited financial  statements
for the year  ended  December  31,  2002. Subsequent to the addition of a Chief
Financial Officer and accounting staff  in January 2003, the Board of Directors
and  management  of  the  Company implemented  control  procedures  related  to
treasury  activities at the  Company,  including,  but  not  limited  to,  dual
signature requirements on checks of $5,000 and above and board authorization of
all stock issuances. At the meeting of the Board of Directors held on March 26,
2003, the former  Chief  Executive  Officer  resigned,  and the Chief Financial
Officer   was  appointed  as  his  replacement  by  the  Board  of   Directors.
Consequently,  the  same  person  currently  holds  both  the position of Chief
Executive Officer and Chief Financial Officer, but a process has been initiated
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 Chief
Executive Officer and the audit committee have initiated a process to establish
and implement a written policy on disclosure controls and  procedures  to be in
place as soon as possible.

                                       19
<PAGE>

                                  SIGNATURES

Pursuant  to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934,  NightHawk  Systems, Inc. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                                  NIGHTHAWK SYSTEMS, INC.



Dated: May 28, 2003                            By: /s/ H. Douglas Saathoff
                                                   ------------------------
                                                   H. Douglas Saathoff
                                                   Chief Executive Officer
                                                   and
                                                   Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed  below by the following  persons on behalf of NightHawk
and in the capacities and on the date indicated:


Signature                       Title                                 Date
---------                       ------                              --------
/s/ Steven Jacobson            Director                          May 28, 2003
-------------------------
Steven Jacobson

/s/ Arlen Felsen               Director                          May 28, 2003
-------------------------
Arlen Felsen

/s/ Herbert I. Jacobson        Director                          May 28, 2003
-------------------------
Herbert I. Jacobson

/s/ Max Polinsky               Director                          May 28, 2003
--------------------------
Max Polinsky

/s/ Patricia Thompson          Director                          May 28, 2003
--------------------------
Patricia Thompson

/s/ Patrick Gorman             Director                          May 28, 2003
--------------------------
Patrick Gorman

/s/ Steven R. Goodbarn         Director                          May 28, 2003
--------------------------
Steven H. Goodbarn

/s/ Bob Woodworth              Director                          May 28, 2003
--------------------------
Bob Woodworth

                                       20
<PAGE>

                       CERTIFICATION OF PERIODIC REPORT


I, H. Douglas Saathoff, certify that:

   1.    I have  reviewed this  annual  report  on  Form  10-KSB  of  NightHawk
Systems, Inc. (the "Registrant");

   2.    Based on  my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements  made, in light of the circumstances under which such statements
were made, not misleading  with  respect  to the period         covered by this
annual report;

   3.    Based on my knowledge, the financial  statements,  and other financial
information  included  in  this annual report, fairly present in  all  material
respects the financial condition,  results  of operations and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

   4.    I am responsible for establishing and maintaining  disclosure controls
and  procedures  (as defined in Exchange Act Rules 13a-14 and 15d-14)  for  the
Registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the Registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities,  particularly  during the period in which this annual report
         is being prepared;

         b) evaluated the effectiveness of the Registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

   5.    I  have  disclosed, based  on  our  most  recent  evaluation,  to  the
Registrant's  auditors  and  the  audit  committee  of  Registrant's  board  of
directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the Registrant's ability to
         record, process, summarize and report financial data and have
         identified for the Registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the Registrant's
         internal controls; and

    6.   I have  indicated in this annual report in Item 14 (b) that there were
significant  changes in internal  controls  or  in  other  factors  that  could
significantly  affect  internal  controls  subsequent  to  the date of our most
recent evaluation, including any corrective actions with regard  to significant
deficiencies and material weaknesses.


Date:  May 28, 2003


                                            /s/ H. DOUGLAS SAATHOFF
                                            -----------------------------------

                                            H. Douglas Saathoff
                                            Chief Executive Officer and
                                            Chief Financial Officer


                                       21
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

Board of Directors
Nighthawk Systems, Inc.
Denver, Colorado

We have  audited  the  accompanying  consolidated  balance  sheet  of NightHawk
Systems, Inc.  and  subsidiary  as  of  December  31,  2002,  and  the  related
consolidated  statements of  operations, changes in  stockholders'  deficit and
cash flows for each of the years  in the  two-year period  ended  December  31,
2002.  These  financial statements are  the  responsibility  of  the  company's
management.  Our responsibility  is to  express an  opinion on  these financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with auditing  standards  generally
accepted in the United States of America.  Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable assurance  about  whether  the
financial  statements  are free of material  misstatement.  An  audit  includes
examining, on a test basis,  evidence supporting the amounts and disclosures in
the  financial statements. An audit  also  includes  assessing  the  accounting
principles  used  and  significant estimates made by the management, as well as
evaluating the overall financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all  material respects, the financial position of Nighthawk Systems,
Inc.  and  subsidiary  as  of  December 31,  2002,  and  the  results  of their
operations  and  their cash flows for each of the years in  the two-year period
ended  December 31, 2002, in conformity  with  accounting principles  generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared  assuming
that the Company will continue as a going concern.  As  discussed  in note 1 to
the  consolidated  financial  statements, the  Company  incurred net losses  of
$1,162,916  and $1,323,976 during  the years  ended December 31, 2002 and 2001,
respectively, and has  a  stockholders' deficit and  working capital deficiency
of  $708,091  and  $747,830,   respectively,   at  December  31,  2002.   These
conditions  raise substantial doubt about the Company's ability  to continue as
a going concern.  Management's  plans  with  regard  to these matters are  also
described in note 1.  The consolidated financial statements do  not include any
adjustments that  might result from the outcome of this uncertainty.



GELFOND HOCHSTADT PANGBURN, P.C.

Denver, Colorado
April 9, 2003

                                       F-1
<PAGE>

<TABLE>
<CAPTION>
                           Nighthawk Systems, Inc.
<S>                                                        <C>
                          Consolidated Balance Sheet
                              December 31, 2002

        ASSETS

Current assets :
     Cash                                                  $         428,677
     Accounts receivable, net of allowance for
       doubtful accounts of $6,035                                   205,290
     Inventories                                                      59,708
                                                           -----------------

               Total current assets                                  693,675


Furniture, fixtures and equipment, net (Note 4)                       17,750
Intangible assets, net (Note 5)                                       43,115
                                                           -----------------

                                                           $         754,540
                                                           =================

      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities :
    Accounts payable                                       $         340,122
    Accrued expenses                                                 191,945
    Lines of credit (Note 8)                                          19,842
    Notes payable (Note 9)
        Related parties                                              206,369
        Factoring arrangement                                         82,502
        Other                                                        119,213
    Deferred revenue                                                 432,600
    Other related party payable                                       48,912
                                                           -----------------

               Total current liabilities                           1,441,505

    Long term debt, related party (Note 9)                            21,126
                                                           -----------------

               Total liabilities                                   1,462,631
                                                           -----------------

Commitments and contingencies (Notes 3,6,10 and 11)

Stockholders' deficit (Notes 10 and 11):
    Preferred stock; $0.001 par value; 5,000,000
      shares authorized; none issued and outstanding
    Common stock; $0.001 par value; 50,000,000
      shares authorized; 21,333,780 issued and outstanding            21,334
    Additional paid- in capital                                    2,517,338
    Accumulated deficit                                           (3,128,134)
    Receivable from stockholder                                     (118,629)
                                                           -----------------

               Total stockholders' deficit                          (708,091)
                                                           -----------------

                                                           $         754,540
                                                           =================


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

                                       F-2
<PAGE>

<TABLE>
<CAPTION>
                                               Nighthawk Systems, Inc.
<S>                                              <C>                 <C>                      <C>
                                        Consolidated Statements of Operations

                                                                     Years ended December 31,
                                                                     ------------------------

                                                        2002                                         2001
                                                        ----                                         ----

Product sales, net                               $         661,199                            $         141,333
Airtimes sales, net                                        209,161                                       97,935
                                                 -----------------                            -----------------

                                                           870,360                                      239,268
                                                 -----------------                            -----------------

Cost of goods sold                                         349,075                                      178,315
Cost of airtime sold                                       125,548                                       51,690
                                                 -----------------                            -----------------

                                                           474,623                                      230,005
                                                 -----------------                            -----------------

     Gross profit                                          395,737                                        9,263

Selling, general and administrative expenses             1,325,837                                      650,019
Amortization of deferred compensation (Note 10)          1,556,250                                      518,750
Reversal of 2001 deferred compensation (Note 10)          (368,750)                                           -
Reversal of 2002 deferred compensation (Note 10)        (1,106,250)                                           -
Impairment of customer base (Note 2)                       112,394                                            -
                                                 -----------------                            -----------------

     Loss from operations                               (1,123,744)                                  (1,159,506)
                                                 -----------------                            -----------------

 Interest expense :
     Related parties                                        17,795                                      113,344
     Other                                                  21,377                                       51,126
                                                 -----------------                            -----------------

                                                            39,172                                      164,470
                                                 -----------------                            -----------------

Net loss                                         $      (1,162,916)                           $      (1,323,976)
                                                 =================                            =================

Net loss per basic and diluted common share      $           (0.06)                           $           (0.12)
                                                 =================                            =================

Weighted average shares outstanding                     18,128,254                                   11,494,013
                                                 =================                            =================


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

                                       F-3
<PAGE>

<TABLE>
<CAPTION>
                                                         Nighthawk Systems, Inc.
<S>              <C>       <C>       <C>          <C>       <C>          <C>          <C>           <C>         <C>
                                             Consolidated Statements of Stockholders' Deficit
                                              For the Years Ended December 31, 2002 and 2001

                                                            Additional
                 Preferred Stock       Common Stock         Paid-in      Accumulated  Deferred     Stockholder
                 ---------------       ------------
                 Shares    Amount    Shares       Amount    Capital      Deficit      Compensation Receivable   Total
                 ------    ------    ------       ------    -------      -------      -----------------------   -----

Balances,                             9,250,000    $9,250      $(1,066)    $(641,242)                $(27,349)   $(660,407)
December 31,
2000

Preferred stock   103,000  $432,600                                                                                      -
issued in
satisfaction of
notes payable

Common stock                            800,000       800        7,200                                               8,000
issued for
services

Common stock                          1,500,000     1,500      133,500                                             135,000
and options
issued for
interest
expense

Common stock                            150,000       150      149,850                                             150,000
issued for
acquisition of
assets of
Vacation
Communication,
Inc.

Private                                 391,200       391      375,346                                             375,737
placement of
common stock
(net of
offering costs)

Common stock                          2,075,000     2,075    2,072,925                $(2,075,000)                       -
issued for
services

Amortization of                                                                           518,750                  518,750
deferred
compensation
costs

Conversion of    (103,000) (432,600)    515,000       515      432,085                                             432,600
preferred stock
to common stock

Advances to                                                                                           (91,280)     (91,280)
stockholder

Net loss                                                                  (1,323,976)                           (1,323,976)
                 -------   -------   ----------    ------    ---------     ---------    ---------     -------    ---------
December 31,                         14,681,200    14,681    3,169,840    (1,965,218)  (1,556,250)   (118,629)    (455,576)
2001

Common stock                          2,479,000     2,479      519,171                                             521,650
issued for cash

Common stock                          1,473,324     1,473      285,027                                             286,500
issued for
services

Transfer of                                                     21,000                                              21,000
common stock by
stockholder for
obligations of
the Company

Common stock                          4,600,256     4,600       (4,600)                                                  -
retained by
Peregrine, Inc.

Amortization of                                                                            81,250                   81,250
deferred
compensation
cost

Cancellation of                      (1,900,000)   (1,900)  (1,473,100)                 1,475,000                        -
agreements
under deferred
compensation

Net loss                                                                  (1,162,916)                           (1,162,916)
                 -------   -------   ----------    ------    ---------     ---------    ---------     -------    ---------

December 31,                         21,333,780   $21,334   $2,517,338   $(3,128,134)  $        -   $(118,629)   $(708,091)
2002
                 =======   =======   ==========    ======    =========     =========    =========     =======    =========


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

                                       F-4
<PAGE>

<TABLE>
<CAPTION>
                                                    Nighthawk Systems, Inc.
<S>                                                                 <C>          <C>                      <C>
                                             Consolidated Statements of Cash Flows


                                                                                 Years ended December 31,
                                                                                 ------------------------
                                                                        2002                                    2001
                                                                        ----                                    ----

Cash flows from operating activities:
      Net loss                                                      $ (1,162,916)                         $ (1,323,976)
                                                                    ------------                          ------------

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

   Depreciation and amortization                                         156,288                                44,509
   Provision for bad debts                                                 6,035                                     -
   Common stock issued for services                                      286,500                                 8,000
   Common stock issued for interest                                            -                               135,000
   Amortization of deferred compensation (Note 10)                     1,556,250                               518,750
   Reversal of 2001 deferred compensation (Note 10)                     (368,750)                                    -
   Reversal of 2002 deferred compensation (Note 10)                   (1,106,250)                                    -
   Impairment of customer base (Note 2)                                  112,394                                     -
Change in assets and liabilities, net of business acquisition:
   Decrease (increase) in accounts receivable                           (200,468)                                2,971
   Decrease (increase) in inventories                                      6,873                               (52,481)
   Increase in accounts payable                                           54,830                               272,059
   Increase in accrued expenses                                          118,257                                59,533
   Increase in deferred revenue                                          432,600                                     -
   Net decrease in other assets and liabilities                            5,332                                     -
                                                                    ------------                          ------------

Total adjustments                                                      1,059,891                               988,341
                                                                    ------------                          ------------

Net cash used in operating activities                                   (103,025)                             (335,635)
                                                                    ------------                          ------------

Cash flows from investing activities:
   Purchases of furniture, fixtures and equipment                         (6,732)                               (3,373)
   Increase in patent applications                                             -                                (2,800)
   Cash paid in business acquisition (Note 3)                                  -                               (25,232)
                                                                    ------------                          ------------

Net cash used in investing activities                                     (6,732)                              (31,405)
                                                                    ------------                          ------------

Cash flows from financing activities:
   Proceeds from notes payable, related parties                           64,526                                67,000
   Payments on notes payable, related parties                           (141,513)                              (16,052)
   Proceeds from factoring arrangement, net                               82,502                                     -
   Proceeds from notes payable, other                                          -                                75,000
   Payments on notes payable, other                                      (18,529)                              (52,000)
   Net advances (payments) on lines of credit                               (158)                               15,232
   Payments on other related party payable                                  (355)                                    -
   Advances to stockholder                                                     -                               (91,280)
   Net proceeds from issuance of common stock                            521,650                               375,737
                                                                    ------------                          ------------

Net cash provided by financing activities                                508,123                               373,637
                                                                    ------------                          ------------

Net increase in cash                                                     398,366                                 6,597
Cash, beginning of year                                                   30,311                                23,714
                                                                    ------------                          ------------

Cash, end of year                                                   $    428,677                          $     30,311
                                                                    ============                          ============


Supplemental disclosures of cash flow information:

Cash paid for interest                                              $     13,345                          $     15,495
                                                                    ============                          ============

Supplemental disclosure of non-cash investing and financing activities:

Transfer of common stock by stockholder for obligations
of the Company (Note 10)                                            $     21,000
                                                                    ============

Note payable issued to related party in satisfaction of
  account payable                                                                                         $     25,000
                                                                                                          ============

Series A, 7% convertible preferred stock issued in
  satisfaction of notes payable                                                                           $    432,600
                                                                                                          ============

Purchase of assets of Vacation Communication, Inc.
  Customer base                                                                                           $    252,856
  Non-compete agreement                                                                                         85,337
  Accounts receivable                                                                                            6,121
  Furniture, fixtures and equipment                                                                              8,720
  Deposits                                                                                                       5,333
  Fair value of common stock issued                                                                           (150,000)
  Notes issued to seller                                                                                      (183,135)
                                                                                                          ------------
  Net cash paid                                                                                           $     25,232
                                                                                                          ============

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

                                       F-5
<PAGE>

                                       NIGHTHAWK SYSTEMS, INC.
                            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              YEARS ENDED DECEMBER 31, 2002 AND 2001

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

              Organization:

         NightHawk  Systems,  Inc.  ("NightHawk"  or "the Company"),  a  Nevada
         corporation,  designs and manufactures easy  to  use,  ready  to  use,
         wireless products  that  can remotely control virtually any electrical
         device from any location.  The  Company  has  developed  a specialized
         circuit-board which can receive wireless signals and switch electrical
         power.   In  its  simplest  form,  the  technology gives the user  the
         ability to turn devices "on" or "off" from or to remote sites.

         In November 2001, the Company sold the assets  and  liabilities of its
         investment in a majority owned subsidiary to a major  stockholder.  On
         February 1, 2002, the Company acquired Peregrine Control Technologies,
         Inc.  ("PCT").   The transaction represented a reverse acquisition  of
         the Company by PCT,  since  PCT  owned  approximately  76% of the post
         acquisition  shares of the consolidated entity immediately  after  the
         completion of  the  transaction.   At the date of the transaction, the
         Company  was  a  shell company with no  net  assets.   For  accounting
         purposes, the acquisition was treated as an acquisition of the Company
         by PCT and a recapitalization  of  PCT.   The historical stockholders'
         deficit of PCT has not been retroactively restated  since  the  shares
         exchanged  in  the  transaction  were  on  a  one-for-one  basis.  The
         accompanying consolidated financial statements include the accounts of
         NightHawk Systems, Inc., and its subsidiary, PCT.

         PCT was incorporated as a Colorado corporation in 1992.  In  September
         2001,  the  Company  purchased  certain  assets  and  assumed  certain
         liabilities of Vacation Communication, Inc. (dba Gotta Go Wireless), a
         Colorado corporation, engaged in providing wireless paging airtime and
         in product sales. Through Vacation Communication, the Company is  able
         to  provide  paging  services  to  customers  that purchase its remote
         control products.

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

         The Company incurred a net loss of $1,162,916 during  the  year  ended
         December  31, 2002 and has a stockholders' deficit and working capital
         deficiency  of $708,091 and $747,830, respectively, as of December 31,
         2002. 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.
         4.   Development  of  new  designs  and  markets  for   the  Company's
              products.

                                       F-6
<PAGE>


         Subsequent to December 31, 2002, the Company believes that  it will be
         able to raise funds through the private placement of common stock  and
         warrants, and/or the issuance of convertible notes. In addition, as of
         December 31, 2002, the Company had 2,695,200 warrants outstanding with
         exercise prices ranging from $0.20 to $1.50 per share that expire from
         January  2003  through  November  2004.  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.  See Note 14.

         As a result of funds raised and expected  to  be  raised subsequent to
         December  31,  2002,  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.

         The Company also believes that it can eventually  generate  additional
         revenues by making improvements to existing products and designing new
         products.  The Company's current products utilize a paging medium, but
         the  Company is now working to develop a product that will utilize  an
         alternative wireless medium, such as satellite.

         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.   Summary of significant accounting policies

              Cash and cash equivalents

         Cash on hand and in banks, together  with marketable securities having
         original maturities of three months or  less,  are  classified as cash
         and cash equivalents by the Company.

              Concentration of credit risk

         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
         December 31,  2002,  the  Company had $205,290 in accounts receivable,
         net of the allowance for doubtful accounts.  Approximately $113,000 of
         this balance was from one customer.   The entire balance was collected
         subsequent to December 31, 2002.  This  same  customer represented 36%
         of the Company's revenue during 2002. The Company was not dependent on
         any single industry     segment for its revenues.


         During  2002  and 2001, the Company's largest supplier  accounted  for
         approximately 22%  and  30% of purchases of pre-manufactured component
         materials.  During 2002, two customers accounted for approximately 36%
         and 10% of sales, respectively.


             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.

                                       F-7
<PAGE>
             Property and equipment

         Property and equipment are recorded at cost. Depreciation  is recorded
         using the straight-line method over the estimated useful lives of five
         to  seven years. Maintenance and repairs are expensed as incurred  and
         improvements  are  capitalized. Upon sale or retirement of assets, the
         cost  and  related  accumulated   depreciation   or  amortization  are
         eliminated  from  the respective accounts and any resulting  gains  or
         losses are reflected in operations.

             Intangible assets

         Intangible assets include  patent costs, a non-compete agreement and a
         customer base, and are stated  at  cost.   Amortization is provided by
         use of the straight-line method over the estimated lives as follows:

                     Patents                        Ten years
                     Customer  base                 Twenty-six months
                     Non-compete agreement          One year

        The  Company  reviews  these   and  any  other  long-lived  assets  for
        impairment whenever events or changes  in  circumstances indicate their
        carrying amounts may not be recoverable.  Recoverability of an asset to
        be held and used is measured by a comparison  of the carrying amount of
        the asset to future undiscounted cash flows expected to be generated by
        the asset.  If the asset is considered to be impaired,  the  impairment
        to be recognized is measured by the amount by which the carrying amount
        of   the  asset  exceeds  the  fair  value  of  the  asset.   Based  on
        management's review at December 31, 2002, the Company recorded a charge
        of $112,394 in 2002 related to an impairment of the customer base.


             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.  In these instances,  the  Company  will  bill the customer
         first  for  items manufactured, and then later for shipping.   Revenue
         from paging airtime  sales  is  recognized over the period of use on a
         monthly basis.

             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.

             Advertising:

         Advertising costs  are  expensed  as  incurred.  For  the  years ended
         December  31,  2002  and  2001,  advertising  costs were approximately
         $14,000 and $34,100, respectively.

                                       F-8
<PAGE>
             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.

             Financial instruments

         The  carrying  amounts   of   cash   and  cash  equivalents,  accounts
         receivable, accounts payable, and notes  with  floating interest rates
         approximate their fair values.  The fair values  of notes with related
         parties are not practicable to estimate based upon  the  related party
         nature of the underlying transactions.


             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.  During  the  year ended December 31, 2001
        the  Company  issued  2,075,000  shares under stock-based  compensation
        arrangements, which were to be earned  in  future  periods.  Until they
        were  earned,  or  canceled, during the year ended December  31,  2002,
        these shares were considered options for purpose of computing basic and
        diluted earnings per  share.  For the years ended December 31, 2002 and
        2001,  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.

            Shipping and handling fees and costs

         The Company records shipping and handling  fees billed to customers as
         revenue, and shipping and handling costs incurred with the delivery of
         its products as cost of sales.

            Comprehensive income

         For the years ended December 31, 2002 and 2001,  the  Company  had  no
         components of comprehensive income to report.

                                       F-9
<PAGE>
            Stock-based compensation

          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.
          Accordingly, compensation cost for stock options granted to employees
          is measured as the excess, if any, of the quoted market  price of the
          Company's stock at the date of the grant over the amount an  employee
          must pay to acquire the stock.


            Recently issued accounting pronouncements

         In December 2002, FASB issued SFAS No. 148, Accounting for Stock-Based
         Compensation Transition and Disclosure. This statement amends SFAS No.
         123  Accounting  for  Stock-Based  Compensation  and  establishes  two
         alternative  methods  of transition from the intrinsic value method to
         the  fair  value  method  of   accounting   for  stock-based  employee
         compensation. In addition, SFAS No. 148 requires  prominent disclosure
         about the effects on reported net income and requires  disclosure  for
         these effects in interim financial information. The provisions for the
         alternative  transition  methods are effective for fiscal years ending
         after December 15, 2002 and  the  amended  disclosure requirements are
         effective for interim periods beginning after  December  15, 2002. The
         Company  plans  to  continue  accounting  for stock-based compensation
         under APB 25. Therefore, this pronouncement  is not expected to impact
         the Company's financial position or results of operations.

         In  November 2002, the FASB issued SFAS Interpretation  No.  45  ("FIN
         45"),   Guarantor's   Accounting   and   Disclosure  Requirements  for
         Guarantees, Including Indirect Guarantees  and Indebtedness of Others.
         FIN 45 elaborates on the disclosures to be made  by  the  guarantor in
         its  interim  and  annual  financial  statements about its obligations
         under certain guarantees that it has issued.  It  also requires that a
         guarantor recognize, at the inception of a guarantee,  a liability for
         the fair value of the obligation undertaken in issuing the  guarantee.
         The   initial   recognition   and   measurement   provisions  of  this
         interpretation  are  applicable on a prospective basis  to  guarantees
         issued or modified after  December  31,  2002, while the provisions of
         the disclosure requirements are effective  for financial statements of
         interim or annual reports ending after December  15, 2002. The Company
         is currently evaluating the recognition provisions of FIN 45, but does
         not  expect  that  the  adoption  of  FIN  45 will have a  significant
         immediate impact on the financial condition  or  results of operations
         of the Company. In June 2001, the Company guaranteed  $50,000  in debt
         under  a  business  loan  agreement between a bank and a member of the
         Company's Board of Directors. See Note 6.


            Common stock split

         In January 2002, the Company  effected  a  1:100  reverse common stock
         thereby decreasing the number of issued and outstanding  shares.   All
         references  in  the accompanying financial statements to the number of
         common shares have been restated to reflect the common stock split.


                                       F-10
<PAGE>
         3.   Business acquisition

         On September 30, 2001, the Company acquired certain assets and assumed
         certain   liabilities  of  Vacation  Communication,  Inc.,  a Colorado
         corporation,  in  exchange  for  $50,000  cash, 150,000 shares of  the
         Company's  common  stock  valued at $150,000,  and  notes  payable  of
         $183,135, in a transaction  accounted  for as a purchase.  The Company
         acquired Vacation Communication, Inc. to  enable it to market and sell
         both control devices and paging airtime.


         4.   Furniture, fixtures and equipment

         Furniture, fixtures and equipment consist of the following at December
         31, 2002:

                  Equipment                                   $   16,831
                  Furniture and fixtures                          13,112
                                                              ----------

                                                                  29,943
                  Less accumulated depreciation                  (12,193)
                                                              ----------

                                                              $   17,750
                                                              ==========

         5.   Intangible assets

         Intangible assets consist of the following at December 31, 2002:

                  Customer base                               $  140,462
                  Non-compete agreement                           85,337
                  Patent costs                                     7,938
                                                              ----------

                                                                 233,737
                  Less accumulated amortization                  190,622
                                                              ----------

                                                              $   43,115
                                                              ==========

         Customer base consists of core customers that  rely  on  the Company's
         airtime paging services.  Customer base is being amortized  using  the
         straight-line  method  over  twenty-six  months.   The  customer  base
         expires  in  2003  and the amortization expense, based on the existing
         customer base, is expected to be approximately $35,200 in 2003.

         In  connection  with  the   acquisition  of  the  assets  of  Vacation
         Communication, Inc., one of the  selling  shareholders  entered into a
         non-compete agreement with the Company.  The non-compete  agreement is
         being amortized using the straight-line method over the one-year  term
         of the agreement.

         Patent  costs  consist  of  the  costs  for  two pending applications.
         Patent costs will be amortized using the straight-line method over ten
         years.

         6.   Commitments

              Leases

         The Company leases office and warehouse space  under  a month-to-month
         operating lease in Denver, Colorado, as well as office  space  in  San
         Antonio,  Texas.   Rent  expense incurred for the years ended December
         31, 2002 and 2001 was approximately $36,000 and $27,000, respectively.

                                       F-11
<PAGE>
              Loan guarantee

         The Company has guaranteed a $50,000 line of credit that a  member  of
         its Board of Directors has with a bank, which is due in June 2003. The
         outstanding  balance on this line  of credit, at December 31, 2002 was
         $48,912, which represents  the  maximum  potential  amount  of  future
         payments  the Company could be required   to   make   if   the   Board
         member defaults  on  his obligation. Proceeds from this line of credit
         were advanced to the Company by the  Board  member  under an unsecured
         arrangement.  The  Company has  historically paid interest owed, which
         is incurred at the bank's prime rate, under the line-of-credit to  the
         bank on  behalf of the Board  member.  The  Company  has  included the
         balance owed under the arrangement  at  December  31,  2002 in current
         liabilities  as  other  related  party  payable  in  the  accompanying
         financial  statements.  At  December  31, 2002, the  Company  has  not
         recorded  any liabilities related to the guarantee and the Company has
         no  recourse  against third parties for any obligations incurred under
         the guarantee.

         7.   Income taxes

         The Company recognizes deferred tax  liabilities  and  assets  for the
         expected  future  tax consequences of events that have been recognized
         in  the financial statements  or  tax  returns.   Under  this  method,
         deferred  tax  liabilities  and  assets  are  determined  based on the
         difference  between  the financial   statement   carrying amounts  and
         tax bases of assets and  liabilities using enacted tax rates in effect
         in the years in which the differences are expected to reverse.

         The Company did not incur  income  tax  expense  for  the  years ended
         December  31,  2002 and 2001. The difference between the expected  tax
         benefit computed  at  the federal statutory income tax rate of 34% and
         the effective tax rate  for the years ended December 31, 2002 and 2001
         was due primarily to the  tax  effect  of  the change in the valuation
         allowance.

         At December 31, 2002, the Company has approximately  $2,792,000 of net
         operating loss carryforwards, which expire from 2014 through 2022.  At
         December 31, 2002 the components of the Company's deferred  tax assets
         and liabilities are as follows:

                    Deferred tax assets:
                    Net operating loss carryforwards                $ 949,000
                    Customer base                                     (66,900)
                    Non-compete agreement                             (26,600)
                    Valuation allowance                              (855,500)
                                                                    ---------
                    Net deferred tax asset                          $       -
                                                                    =========

         A valuation allowance has been provided  to  reduce  the  deferred tax
         assets as realization is not assured.

         8.   Line of credit

         The  Company  has  $19,842  outstanding  at December 31, 2002 under  a
         $20,000 unsecured line of credit with a bank.   Borrowings  under  the
         line  of  credit  bear interest at the Wall Street Journal's published
         prime rate plus 3% (7.25% at December 31, 2002); interest due monthly.
         The line of credit  is  guaranteed by two board members, a stockholder
         and an officer of the Company.

                                       F-12
   <PAGE>

         9.   Notes payable

         At December 31, 2002, notes payable consist of the following:

              Short-term, related parties:

              Notes payable, officer; unsecured;
               non-interest bearing; due on demand                $    36,085

              Note payable, officer; imputed interest at 8%;
               principal and interest due in monthly installments
               of $2,083; due September 2005; currently in default     85,337

              Subordinated note payable, affiliate; unsecured;
               interest at 8%; due June 2002, currently in default     50,000

              Note payable, officer; unsecured; interest at prime
               rate plus 5.5% (9.75% at December 31, 2002);
               due on demand                                           11,347

              Note payable, officer, unsecured, interest at 17%,
               due December 2002, currently in default                 23,600
                                                                  -----------

                                                                  $   206,369
                                                                  ===========

              Factoring arrangement, 80% advance rate on
               certain receivables, purchased with full recourse,
               rate of 2.5% of face amount for 30 days, .83%
               every ten days thereafter, expires on
               October 31, 2003                                   $    82,502
                                                                  ===========

              Short-term, other:

              Subordinated note payable, unrelated party;
               unsecured; interest at 8%;  due  June 2002,
               currently in default                               $    81,640

              Unsecured line of credit with a bank.  Borrowings
               under the line of credit bear interest at the bank's
               prime rate plus 4.75% (14.49% at December 31, 2002);
               interest due monthly.                                   37,573
                                                                  -----------
                                                                  $   119,213
                                                                  ===========

              Long-term, related party:

              Note payable to a stockholder/business partner;
               unsecured; 8% annual interest rate;
               due April 1, 2004                                  $    21,126
                                                                  ===========




         10.  Stockholders' deficit

        Preferred stock:

        The  Company  has  authorized  5,000,000  shares  of $0.001 par  value,
        preferred  stock,  and  has  designated  107,000  shares  as  Series  A
        preferred stock.

        Series A 7% convertible preferred stock:

                                       F-13
<PAGE>
        During  2001,  the  Company  issued  103,000  shares  of  Series  A  7%
        convertible  preferred  stock   (the   "Series  A Preferred Stock")  in
        exchange for a reduction of $432,600 in notes payable.   The  Series  A
        Preferred  Stock  had  no  voting rights, was non-participating and was
        entitled to a 7% cumulative  annual  dividend  on  the  stated value of
        $4.20  per  share.   The  Series  A  Preferred  Stock had a liquidation
        preference of $432,600, equal to the stated value  per  share, plus any
        declared but unpaid dividends. In December 2001, the Company,  with the
        approval  of  its  board  of  directors,  elected to convert all of the
        issued and outstanding shares of Series A Preferred  Stock  into shares
        of the Company's common stock at a rate of five shares of common  stock
        for  each  share of Series A Preferred Stock outstanding equal to $5.00
        per share. At December 31, 2002 there were no Series A Preferred shares
        issued and outstanding.

        Common stock:

        In January 2001,  PCT  issued  425,000  shares  of  its common stock to
        consultants  for  services.  At  the  date  of  commitment,  the  total
        consulting cost was calculated to be $4,250  ($0.01  per  share), which
        was management's estimate of the fair value of the common stock  on the
        issue date.

        In  February  2001,  PCT  issued  375,000 shares of its common stock at
        $0.01 per share, which was equal to  management's  estimate of the fair
        value  of the common stock on the issue date, to its  president  and  a
        director   as   compensation.    Accordingly,   the   Company  recorded
        compensation expense of $3,750.

        In  connection  with  the  renewal of approximately $233,000  of  notes
        payable in February 2001, PCT  issued  1,200,000  shares  of its common
        stock, valued at $60,000 ($0.05 per share).  The issuance of the common
        stock  has  been  accounted for as additional interest expense  on  the
        notes.

        In September 2001,  PCT  issued 1,225,000 shares of its common stock to
        consultants for future services.  At  the date of commitment, the total
        consulting  cost  was calculated to be $1,225,000  ($1.00  per  share),
        which was to be recognized  over  the  one-year  term of the agreement.
        Through  December  31,  2001,  the  Company  had recognized  consulting
        expense of $306,250.  An additional $918,750 of  expense was recognized
        during the year ended December 31, 2002.  During the  fourth quarter of
        2002, the Company recorded a reduction in stock compensation expense of
        $1,225,250 related to the cancellation of the agreements, as management
        determined that no services had been performed.

        In  October  2001,  PCT  issued an aggregate of 850,000 shares  of  its
        common stock to its outside  directors  for  services.  At  the date of
        commitment,  total  compensation  cost  was  calculated to be $850,000,
        which  was to be recognized over the one-year term  of  the  agreement.
        Through  December  31,  2001,  the  Company  had  recognized consulting
        expense of $212,500. An additional $637,500 of consulting  expense  was
        recognized  during the year ended December 31, 2002.  During the fourth
        quarter of 2002,  the Company canceled the issuance of 200,000 of these
        shares that were returned  by  two of the directors to the Company, and
        reversed $200,000 of associated  consulting  expenses as the associated
        services were never performed.

        In connection with the issuance of a $50,000 note  payable  in  October
        2001, the Company's issued 50,000 shares of its common stock valued  at
        $50,000  ($1.00  per  share, management's estimate of the fair value of
        the common stock on the  issue  date),  and  issued options to purchase
        25,000  shares  Company's common stock, valued at  $12,500  ($0.50  per
        share, management's  estimate  of  the fair value of the options on the
        issue date).  The issuance of the common  stock  and  options  has been
        accounted for as additional interest expense on the note.

                                       F-14
<PAGE>
        In  connection  with  the  issuance  of  two  $75,000  notes payable in
        December  2000 and January 2001, the Company issued 250,000  shares  of
        common stock  valued  at $12,750 ($0.05 per share). The issuance of the
        common stock has been accounted  for  as additional interest expense on
        the notes.


        Throughout  fiscal  2001,  the  Company  issued  391,200   warrants  to
        purchase 391,200 shares of  common stock at  $1.50  per  share.  During
        fiscal  2002, the Company issued 2,479,000 shares  of its common  stock
        and  2,304,000  warrants,  at  prices  ranging  from $1.00 per share in
        January  to $0.10 per share in  November, in exchange  for  total  cash
        proceeds of $531,650.  The warrants are exercisable within two years of
        the  date of  grants  at  prices  ranging  from  $1.50 to $0.20.  Stock
        warrant transactions during 2002 and 2001 are summarized below:

                                                               Weighted Average
                                              Shares             Exercise Price
                                            -----------         ---------------
         Outstanding at December 31, 2000            --                      --
         Granted                                391,200                   $1.50
         Exercised                                   --                      --
         Forfeited                                   --                      --
                                            -----------         ---------------
         Outstanding at December 31, 2001       391,200                   $1.50
         Granted                              2,304,000                    0.37
         Exercised                                   --                      --
         Forfeited                                   --                      --
                                            -----------         ---------------
         Outstanding at December 31, 2002     2,695,200                   $0.53
                                            ===========         ===============

        The Company  issued 40,167 shares of common stock in September 2002 and
        58,157  shares  of  common  stock  in  December 2002 to a consultant in
        return  for $6,000 and $12,000 of  financial  and  accounting  services
        performed  during  the  third  and fourth  quarters, respectively.  The
        number of shares issued was  based on management's estimate of the fair
        value of the common stock  during the period in which the services were
        performed.

        In October 2002, the Company issued  300,000 shares of  common stock to
        a consultant for services  rendered, and  to  be rendered.  At the date
        of  the  commitment, the total consulting  cost was  calculated  to  be
        $40,750, which  was  based  on  the fair value of the  Company's common
        stock on that day.

        In October 2002, the Company issued 1,000,000 shares of common stock to
        its  chief  executive  officer  in lieu  of  unpaid  cash  compensation
        aggregating $140,000, or $0.14 per share, which was equal to the market
        price of the common stock on the  date  of stock award, and the Company
        recorded stock compensation of $140,000.   On  the same date, the chief
        executive officer transferred 150,000 and 300,000  of these shares to a
        creditor  of the Company and a consultant, respectively.   The  Company
        accounted for  the  transfer  as  a  capital  contribution by the chief
        executive officer aggregating $21,000 and $42,000  for the creditor and
        consultant, respectively, and the Company recorded a  note reduction of
        $6,360,  interest  expense  of  $14,640  and  compensation  expense  of
        $42,000.

             Receivable from stockholder

        At December 31, 2002 and 2001, the Company  had $118,629 outstanding in
        unsecured  and non-interest  bearing advances made by the Company.   No
        advances or repayments were made during 2002.

                                       F-15
<PAGE>
        11.  Related party transactions

        During 2002,  the  Company borrowed $41,126 from an individual who is a
        business partner of  a board member, and later repaid $24,150 including
        $4,150 in interest during  2002.  The  balance  of this note payable at
        December 31, 2002,is $21,126.

        At  December  31, 2001, the Company had a note payable  -  Non  compete
        due an employee, who is also a member of the board of directors, in the
        amount of $85,337.  The  balance  due  on  this note remained unchanged
        during 2002. The Company had a second note payable  to this employee at
        December  31,  2001  in the amount of $84,803 and made payments  during
        2002 totaling $48,718,  reducing the note payable balance to $36,085 at
        December 31, 2002.

        During 2002, two employees  made  short-term  loans  to the Company, in
        the amounts  of  $7,900 and $8,500, for the purpose of paying  critical
        vendors. Both notes payable  were  repaid in full prior to December 31,
        2002.

        In October 2001, PCT issued  an aggregate  of  850,000  shares  of  its
        common  stock to its outside directors who  were on PCT's board at that
        time in  exchange  for  services  to  be  performed.  At  the  date  of
        commitment,  total  compensation  cost  was calculated  to be $850,000,
        which was to be recognized over the  one-year  term  of  the agreement.
        With  the exception of one  Board member, all of the outside  directors
        resigned  in  April  2002.   During  the  fourth  quarter  of 2002, the
        Company  canceled 200,000 of these  shares that were  returned  to  the
        Company,  and   reversed   $200,000  of  consulting   expenses  as  the
        associated services were never performed.

        In September  2001, in connection  with  the  acquisition  of  Vacation
        Communication,   Inc.   the  Company  entered   into  three  employment
        agreements with  the two selling  shareholders  and  another  employee.
        One of  the sellers became the Company's chief information officer  and
        a  director.   The  agreement  with  the  Company's  chief  information
        officer and a  director  calls  for  annual salary of  $25,000  through
        February  2005.  The  agreements with the  other  seller  and  employee
        call  for  annual  salaries   of  $25,000  and   $27,000, respectively.
        In addition, the agreements provide for covenants-not-to-compete  for a
        period  of  one  year  following separation from the Company.

        Upon the reverse acquisition of Peregrine,  Inc.  on  February 1, 2002,
        2000   Performance   Stock   Option  Plan  (the  "Plan")  of  PCT   was
        automatically terminated.  As  such,  no options were outstanding as of
        December 31, 2002.  This option plan was  subsequently  adopted  by the
        Company's  Board  effective  January  1,  2003. The Company may issue a
        maximum of 4,000,000 shares of common stock  under  the Plan.  The Plan
        provides for awards in the form of options, including  incentive  stock
        options  and  non-qualified  stock  options.   Under  the plan, options
        granted  vest  at  a  rate  set by the board of directors or  committee
        appointed by the board directors,  options  are  exercisable  up  to 10
        years from the date of grant at not less than 100% of the fair value of
        the  common  stock on the date of grant.  If the option holder owns 10%
        or more of the  Company's common stock, the options are excercisable at
        not less than 110% of the fair value of the common stock on the date of
        grant.

                                       F-16
<PAGE>
              Employment contracts

        In  December 2001,  the  Company  entered  into an employment agreement
        with  its president/ chief executive officer.  The agreement called for
        an  annual  salary  of  $150,000  and a grant of  options  to  purchase
        450,000 shares of the  Company's  common  stock.   These  options  were
        never  issued.  Additionally,  under  the  agreement,  the  Company was
        obligated to make monthly payments on the  officer's student  loans  in
        the  amount  of $460.  The agreement  also provided for a covenant-not-
        to-compete for  a  period  of  one  year following  separation from the
        Company.  In December 2002, the Company reached an  agreement with that
        officer to pay the officer $72,000 per  year  beginning January 1, 2003
        and to award the officer options  to purchase  450,000 shares of common
        stock effective January 1, 2003.

        In  December  2001,  the  Company entered into an employment  agreement
        with an  individual to  be  its chief financial officer.  The agreement
        called for an annual  salary  of   $120,000  and  a grant of options to
        purchase 400,000 shares  of the Company's common stock.   These options
        were  never  issued.   In  addition,  the  agreement  provided   for  a
        covenant-not-to-compete  for a period of one year  following separation
        from the Company.  Subsequent  to the year ended  December 31, 2001 the
        individual  and the Company  terminated  their  agreement.   Management
        does not believe  there  are  any amounts owing to the individual under
        the agreement at December 31, 2002.

        In December 2001, the  Company  entered  into  an  employment agreement
        with its chief  technical officer. The agreement called  for  an annual
        salary of $90,000  and a grant of options to purchase 150,000 shares of
        the  Company's  common  stock.   These  options were never issued.   In
        addition,  the   agreement   provided   for   a covenant-not-to-compete
        for a period  of one year  following  separation from the Company.  The
        Board  also voted  to award the officer  options  to  purchase  150,000
        shares of common stock effective January 1, 2003.

        In  December  2001,  the  Company  entered into an employment agreement
        with its vice  president of marketing.   The  agreement  called  for an
        annual  salary  of  $75,000 and a  grant of options to purchase 150,000
        shares  of the  Company's  common  stock.   These  options  were  never
        issued. In  addition,  the  agreement  provided for  a covenant-not-to-
        compete  for  a  period  of  one year  following  separation  from  the
        Company. During 2002, the  individual  and the Company terminated their
        agreement.  Management  does not believe there are any amounts owing to
        the individual under  the agreement at December 31, 2002.

        In  December 2001, the  Company entered into  an  employment  agreement
        with  its vice  president of sales.  The agreement called for an annual
        salary  of  $60,000,  and  the  payment of commissions  on sales of the
        Company's products.   At a board  meeting  in  December 2002, the Board
        approved  an  annual  salary  for  the  officer  of  $75,000  per  year
        effective January 1, 2003.  As of  December  31, 2002, the Company owed
        the employee $11,100 in salary  and $8,365 in commissions under the old
        contract.

        At a meeting held  in December 2002, the Board  of  Directors  approved
        the  hiring of the  Company's Chief Financial Officer effective January
        1, 2003  at an annual  salary of $120,000.  The Board also approved the
        issuance of  options to  him to purchase 500,000 shares of common stock
        effective January 1, 2003.

                                       F-17
<PAGE>

        12.   Segment information

        The  Company   operates  in  two  business  segments,  remote   control
        equipment and paging services.   The  remote  control equipment segment
        is engaged in the design, manufacture and sale of easy to use, ready to
        use,  wireless  products  that  can   remotely  control  virtually  any
        electrical device from any location. The paging services  segment sells
        pagers and paging services, including services to some of the Company's
        equipment  customers  who desire to access their equipment via  paging.
        The paging services segment  was  acquired via the purchase of Vacation
        Communication, Inc. in September of  2001.   See  notes  1  and 3.  The
        Company  does  not  intend  to  remain  in  the retail paging business.
        Rather, the Company desires to resell paging  services to its equipment
        customers at a profit.

        The  accounting  policies  for these segments are  the  same  as  those
        described in Note 1 and there  are  no  intersegment transactions.  The
        Company  evaluates  the  performance  of  its  segments  and  allocates
        resources to them based primarily on employee  headcount  and estimated
        time  spent  on each segment.  All operating revenues and expenses  are
        directly incurred  by  one  or  the  other segment; no direct operating
        revenues or expenses are allocated to either segment.

         <TABLE>
         <CAPTION>

         The table below summarizes information about reported segments (in thousands):
         <S>                            <C>          <C>          <C>           <C>
                                        Equipment    Services     Corporate        Total
         Year ended December 31, 2001
         Sales                           $141,333    $ 97,935             -     $239,268
         Gross Profit                     (36,982)     46,245             -        9,263
         Property and equipment            10,297       8,720             -       19,017
         Capital expenditures               3,735           -             -        3,375
         Stock issued for services              -           -      $  8,000        8,000
         Depreciation and amortization      2,276      42,333             -       44,509
         Interest expense                       -           -       164,170      164,170

         Year ended December 31, 2002
         Sales                           $661,198    $209,161             -     $870,359
         Gross Profit                     312,124      83,613             -      395,737
         Property and equipment, net        8,509       9,241             -       17,750
         Capital expenditures               4,241       2,491             -        6,732
         Stock issued for services              -           -      $286,500      286,500
         Depreciation and amortization      7,999     148,289             -      156,288
         Amortization of deferred
          compensation                          -           -
         Impairment of customer base            -     112,394             -      112,394
         Interest expense                       -           -        39,172       39,172

         </TABLE>

         13.   Deferred Revenue

         In  December  2002,  the  Company received $432,600 from a customer in
         return  for a commitment to  build  1,400  remote  control  units  for
         specific  unmanned  computer kiosk sites throughout the United States.
         The Company will recognize  revenues from this sale as each individual
         unit is completed.  The Company  anticipates  that  all  units will be
         built  by  June 30, 2003; however, the actual timing is controlled  by
         the customer,  who  must  designate  destinations  for  each  piece of
         equipment before they can be completed by the Company.


                                       F-18
<PAGE>
         14.   Subsequent events

         During  a  meeting on March 26, 2003, the Company's Board of Directors
         accepted the  resignation  of  the  Company's chief executive officer.
         The former officer remains with the Company  as  an  employee and as a
         Board member.  The Company's chief financial officer was  promoted  to
         Chief Executive Officer at the same meeting.

         During  April  and  May 2003, the  Company  received  $300,000 in cash
         proceeds in exchange for:
         1) the  issuance  of 500,000  shares  of  common  stock  at $0.20  per
         share,  and   warrants  to  purchase  $200,000  of  additional  common
         stock  on  or  before  September  30,  2003  at the lesser of US $0.25
         per  share  or 50%  of  the consecutive 10-day  average  closing price
         prior  to  the  purchaser's  election to exercise the warrant,  or  on
         or  before  March 31, 2004,  at  the  lesser  of US $0.37 per share or
         50%  of  any  consecutive  10-day  average  closing price prior to the
         purchaser's  election  to   exercise  the  warrant;  or  on  or before
         September 30, 2004,  at  the  lesser  of US $1.00 per share or  50% of
         any   consecutive  10-day   average   closing   price   prior  to  the
         purchaser's  election  to  exercise  the  warrant;  or  on  or  before
         March 31, 2005, at  the  lesser  of  US $2.00 per  share or 50% of any
         consecutive  10-day  average  closing  price prior to  the purchaser's
         election to exercise the warrant; and
         2)  a  90-day  loan  for  $200,000  which  will  be  convertible  into
         common shares of the  Company  at  the lender's option on the 91st day
         at a price of no more than US$0.20  per  share.   Should  the  Company
         sell  any  shares during  the period  the note is outstanding for less
         than  US$0.20  per  share,  the conversion price  would be  lowered to
         match that selling price.  The Company will have the right  to  prepay
         the note anytime prior to the  91st day with no penalty.  Interest  on
         the note for the 90-day period will be 25,000  shares of the Company's
         common stock. Should the lender choose not to convert  the  note,  and
         should  the  Company  fail  to  repay  the  note on June 30, 2003, the
         Company  will incur a penalty of  25,000 common shares per month.  The
         Company   also   agreed   to   register   all  shares  underlying  the
         agreement on a best-efforts basis.


                                       F-19
<PAGE>


                                   INDEX TO EXHIBITS


            EXHIBIT
            NUMBER                                   DESCRIPTION
         ------------              --------------------------------------------
            99.1                   Certifications Pursuant to 18 U.S.C. Section
                                   1350, as Adopted Pursuant to Section 906 of
                                   the Sarbanes-Oxley Act of 2002



                                 EXHIBIT 99.1


                          CERTIFICATIONS PURSUANT TO
                            18 U.S.C. SECTION 1350,
                            AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Nighthawk Systems, Inc. (the "Company")
on  Form  10-KSB  for  the year ended December 31,  2002,  as  filed  with  the
Securities and Exchange  Commission  on  the  date  hereof (the "Report"), I, H
Douglas Saathoff, Chief Executive Officer and Chief Financial Officer, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant  to  Section 906 of the
Sarbanes-Oxley Act of 2002, that:

    (1)   The Report fully complies with the requirements of section  13(a)  or
15(d) of the Securities
Exchange Act of 1934; and

    (2)   The  information  contained  in  the  Report  fairly presents, in all
material respects, the financial
condition and result of operations of the Company, as of,  and  for the periods
presented in the
Report.



/s/  H. Douglas Saathoff
- ------------------------------------
H. Douglas Saathoff
Chief Executive Officer and
Chief Financial Officer
May 28, 2003


A signed original of this written statement required by Section 906 has been
provided to Nighthawk Systems, Inc. and will be retained by Nighthawk Systems,
Inc. and furnished to the Securities and Exchange Commission or its staff upon
request.