HALIFAX ANNOUNCES THIRD QUARTER FINANCIAL RESULTS

Company Reports Third Successive Quarter of Profitability;  
Gross Margin Improves to 11% from 2%

ALEXANDRIA, VA – February 12, 2007 – Halifax Corporation (AMEX:HX) today announced its financial results for the quarter ended December 31, 2006.

Revenues for the third quarter of fiscal 2007 were $12.6 million versus $13.4 million for the same period in fiscal 2006.  The revenue decrease, primarily due to the cessation of an unprofitable nationwide contract in April 2006, was partially offset by new, more profitable business.

The gross profit margin for this year’s third quarter was $1.4 million, or 11% of revenues, versus $314,000, or 2% of revenues, for the same period a year ago.  Operating income was $311,000 compared to an operating loss of $1.1 million for the same period the prior year.

Income from continuing operations was $51,000 for the quarter ended December 31, 2006, versus a loss of $783,000 for the same quarter of last year.

The Company reported net income of $51,000, or $0.02 per basic and diluted share, for the fiscal 2007 third quarter.  In the fiscal 2006 third quarter, net income of $1.4 million had included a $2.2 million gain on the sale of discontinued operations related to the sale of Secure Network Services.  The Company also reported that the reclassification of goodwill resulted in a restatement for the third quarter and first nine months of fiscal 2006.  The restatement had no effect on net income.   

Charles McNew, president and chief executive officer, stated, “I’m especially pleased that operating income rose 65% compared to the prior quarter. This is a clear indication of the success of our strategic effort to achieve overall profitability for each of our contracts, as we’ve taken a number of steps to build customer satisfaction and contain fixed costs.

“Despite the competitive marketplace, we are encouraged by the present volume of potential new deals.  In fact, the number of large-scale opportunities we’re pursuing is higher than we’ve seen in recent quarters.”

He added, “We’re continuing to make progress on the balance sheet as well, and it’s important to note that working capital is approaching $10 million.”

For the nine months ended December 31, 2006, revenues were $37.7 million compared to $42.0 million for the same period last year.  Operating income for the first nine months of fiscal 2007 was $823,000 versus an operating loss of $1.4 million for the comparable period a year ago.  Income from continuing operations was $157,000 compared to a loss from continuing operations of $1.2 million for the same period of fiscal 2006.  Net income for the nine months of this year was $157,000, or $0.05 per basic and diluted share.  The prior year’s net income of $1.3 million, or $ 0.41 per basic and diluted share, for the nine months had included $310,000 of income from discontinued operations and a gain on sale of discontinued operations of $2.2 million.

The Company will host a conference call for investors at 11 a.m. EST on Monday, February 12, 2007, to review the financial and operational results for the quarter.  The conference call phone number is 888-898-1327 for U.S. callers and 706-679-5341 for international callers.  The conference call replay will be available from 1 p.m. EST on Monday, February 12, 2007, to 1 p.m. EST on Tuesday, February 13, 2007.  The replay number is 800-633-8284 for U.S. callers and 402-977-9140 for international callers.  The reservation number is 213289938.

Founded in 1967, Halifax Corporation is an enterprise maintenance solutions company providing a wide range of technology services to commercial and government customers throughout the United States.  The Company’s principal products are high availability hardware maintenance services, technology deployment and integration services.  More information on Halifax can be found at www.hxcorp.com.  This web site reference is intended to be an inactive textual reference, and the information on this web site is not incorporated into this document.