Nighthawk Systems Announces Purchase of IPTV Assets/Technology

Production of Set-Top Boxes to Enhance Revenues and Cash Flows

SAN ANTONIO — Nighthawk Systems, Inc. (OTCBB: NIHK), a leading provider of intelligent wireless power management and emergency notification solutions, announced today that it has purchased the IPTV set-top box business assets of Eagle Broadband (OTCBB: EAGB). The purchase is expected to significantly bolster revenues and cash flows at Nighthawk based on existing purchase orders for high-definition Media-Pro IP3000HD set-top boxes with a leading hospitality solutions provider. Under terms of the purchase, Nighthawk assumes responsibility for production on a contract under which the customer has forecasted purchases that could generate in excess of $6 million in revenues to Nighthawk over a period of just over one year.

As disclosed in Nighthawk’s Form 8-k filing with the Securities and Exchange Commission last Friday, the assets were purchased for $4.75 million. The transaction was facilitated by a $6 million sale of unregistered Series B Convertible Preferred Stock and Warrants to Dutchess Private Equities Fund, Ltd. Under terms of the sale, the Preferred Stock is not convertible for a period of one year, and is redeemable solely at Nighthawk’s option.

H. Douglas Saathoff, Nighthawk’s Chief Executive Officer, commented, “This is a huge event for Nighthawk Systems. This funding and subsequent acquisition of the set-top box business present Nighthawk with an incredible opportunity to take a quick and large step forward in creating additional value in the Company. Here are some of the near-term benefits that I expect to realize from this transaction:

• Strengthening of our balance sheet through the investment of $6 million and the purchase of the assets. The investment in Nighthawk will result in a return to a positive net equity position for the Company, enhancing our ability to attract larger customers and larger contracts for both traditional Nighthawk control products and set-top boxes.
• Enhanced revenues and cash flows from orders that already exist for the set-top box products, as well as future orders that we expect to receive. Nighthawk receives existing purchase orders that, when completed, will produce revenues in excess of $400,000. Additional orders are also expected, which will supplement Nighthawk’s existing, growing revenue base for control products.
• Lower costs due to higher production volumes. All Nighthawk products, including set-top boxes, utilize printed circuit boards. Higher volume production runs should lead to lower per unit costs.
• Integration of IP-based technology into Nighthawk’s traditional, wireless control products. We acquire an experienced team of hardware and software engineers as part of this transaction.
• Opportunities to sell traditional Nighthawk products into set-top box markets. Set-top boxes are endpoint devices on complex networks that often require the integration of rebooting or power control solutions.

To summarize, I believe that the acquisition of industry-leading technology and existing revenue-generating opportunities, financed by the sale of unregistered equity securities, provides Nighthawk with a significant near-term opportunity to enhance the value of the Company. I believe this acquisition will provide operational and financial synergies for a long time to come.”