NIHK Video River Networks Inc (PK)

Nighthawk Systems, Inc. (Pink Sheets:NIHK) (the "Company") announced that it has entered into an agreement with Dutchess Private Equities Fund, Ltd. ("Dutchess") that settles all claims and counterclaims filed between Dutchess and the Company in January and February of this year.

Under terms of the settlement, Nighthawk has granted and assigned to Dutchess all personal and intangible assets, excluding cash, used by the Company's Power Controls Division, including intellectual property rights, domain names, contracts and customer relationships. The Company has also agreed to change its name in due course, and has assigned the rights to the name "Nighthawk Systems" and its associated trademark to Dutchess. The net book value of the assets at the time of the transfer was approximately $125,000.  

In return, Dutchess has made a $150,000 payment to the Company and has released the Company of any and all debt owed to Dutchess by the Company, and has released any liens or claims against any assets remaining in the Company. At the time of the release, the book value of debt and accrued interest owed to Dutchess by the Company was approximately $4.4 million. Dutchess also agreed to surrender all shares of and warrants to buy shares of Company common stock, and has surrendered all of the approximately $6.9 million in Series B Preferred Stock which it previously owned. The Company has issued $5 million of non-voting Series C Preferred Stock to Dutchess which bears no dividend and cannot be converted for a period of 12 months. After 12 months, no more than $1 million of the Series C Preferred Stock can be converted annually, nor can daily conversion to common shares exceed 10% of the then-current average trading volume of Company shares.

H. Douglas Saathoff, Nighthawk's Chief Executive Officer, stated, "We expect to recognize a significant gain during the first quarter as a result of the settlement, which eliminated substantially all secured debt from the books of the Company. The disposition of the Power Controls Division has resulted in a corresponding decrease in employee headcount and associated overhead expenses, and we look forward to re-branding the Company and growing the ongoing Set Top Box operation."

About Nighthawk Systems, Inc.

Nighthawk designs and manufactures a suite of IP set top boxes for use in hotels, casinos, cruise ships, hospitals, and digital signage applications. Scalable and flexible, our fan-less units can deliver 1080p source material at full resolution as well as the PC-like performance required by the latest software programs and in-room control products and services. Nighthawk has partnered with hardware and software companies to provide digital content and services to customers around the world.

Statements contained in this release, which are not historical facts, including statements about plans and expectations regarding business areas and opportunities, acceptance of new or existing businesses, capital resources and future business or financial results are "forward-looking" statements. You should not place undue reliance on these forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, including, but not limited to, customer acceptance of our products, our ability to raise capital to fund our operations, our ability to develop and protect proprietary technology, government regulation, competition in our industry, general economic conditions and other risk factors which could cause actual results to differ materially from those projected or implied in the forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. We do not intend to update any of the forward-looking statements after the date of this press release to conform these statements to actual results or to changes in our expectations, except as required by law.

CONTACT: Nighthawk Systems, Inc.

Doug Saathoff, Chief Executive Officer

210.341.4811

dsaathoff@nighthawksystems.com