Nighthawk Systems Reports Full Year and Fourth Quarter 2007 Earnings

Business Wire,  April 16, 2008  

• E-mail
• Print
• Link

* Nighthawk Delivers Record Quarterly and Annual Revenue and Achieves Positive Shareholder Equity

* Nighthawk Initiates Guidance for 2008

SAN ANTONIO -- Nighthawk Systems, Inc. (OTCBB: NIHK) ("Nighthawk"), a leading provider of wireless and IP-based control devices and solutions, today reported financial results for its full year and fourth quarter ended December 31, 2007. Over the last twelve months the Company delivered sequential quarterly revenue growth, completed the acquisition and integration of a new business line, right-sized the Company and achieved positive stockholders' equity for the first time in its operating history.

Revenues for the full year 2007 increased 84 percent to a record $1.7 million as compared to $899,000 for 2006. The revenue growth was led by shipments of the Company's flagship CEO700 remote disconnect units to new and repeat customers; sales of its utility products more than doubled from the previous year level. While Nighthawk considers the utility market its largest source of revenues and anticipates an acceleration of the growth from this business in 2008, the Company additionally expects to generate significant revenues from a number of initiatives it introduced in 2007, including new opportunities with fault-tolerant, mission critical control systems for emergency notification and monitoring purposes. Nighthawk also expects significant revenue and cash flow contribution from the newly acquired set-top box product line.

The Company reported a net loss before non-operating costs related to funding efforts for 2007 of $3.3 million versus a net loss of $3.7 million for 2006. The Company incurred non-cash costs associated with a $6 million preferred stock funding conducted during the fourth quarter of 2007 of approximately $2.6 million. Including the funding costs, the Company incurred a net loss applicable to common stockholders of $5.9 million or $0.05 per basic share in 2007 as compared to a net loss applicable to common stockholders of $3.7 million or $0.05 per common share in 2006. The Company's gross profit on revenue in 2007 was $378,000 yielding a gross margin of approximately 23 percent. The Company anticipates a meaningful increase in its gross margins during 2008 as it achieves economies of scale from increased sales, as well as improvements implemented in its manufacturing process.

Revenues for the fourth quarter of 2007 increased to a record $735,000, a two and a half-fold increase compared to the same period in 2006 and the sixth sequential quarter of revenue growth. As a result, the Company's net loss for the fourth quarter decreased to $991,000 from $1.1 million in the comparable period in 2006.

The $6 million funding during the fourth quarter provided cash for the acquisition of the set-top box operation and necessary working capital subsequent to the acquisition. The funding led to the strengthening of the Company's balance sheet and a positive net equity position of $3.6 million at December 31, 2007. Even with the integration of the set-top business during the fourth quarter, selling, general and administrative ("SG&A") expenses fell by 13% during 2007 compared to 2006. The Company implemented operational efficiencies and costs management controls such that it expects SG&A levels will remain fairly constant for the foreseeable future.

H. Douglas Saathoff, Nighthawks Chief Executive Officer, commented, "Our goal over the next several quarters is to achieve production economies as we increase contract volumes, introduce new Nighthawk capabilities that could provide both pricing flexibility and enhanced performance, and continue to fine-tune our balance sheet. We anticipate consistent sequential quarterly growth in revenues and progress towards profitability. Now that we have completed the integration of a material contributor to our future growth, we are able to concentrate on enhancing both cash flows and the bottom line. We are projecting revenues for 2008 of approximately $10 million and anticipate delivering positive cash flows and profitability by the fourth quarter.

About Nighthawk Systems, Inc.

Nighthawk is a leading provider of intelligent devices and systems that allow for the centralized, on-demand management of assets and processes. Nighthawk products are used throughout the United States in a variety of mission critical applications, including remotely turning on and off and rebooting devices, activating alarms, and emergency notification, including the display of custom messages. Nighthawk's IPTV set top boxes are utilized by the hospitality industry to provide in-room standard and high definition television and video on demand. Individuals interested in Nighthawk Systems can sign up to receive email alerts by visiting the Company's website at www.nighthawksystems.com.

Forward-looking statements

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.