HALIFAX SIGNS SIX-YEAR EXTENSION ON MAJOR CONTRACT FOR $25 MILLION AND RESIGNS A LOSS-GENERATING CONTRACT

Company Expects Profitability for the Upcoming Fiscal Year

Alexandria, VA – May 3, 2006 – Halifax Corporation (AMEX:HX) today announced that it has signed a six-year extension on a nationwide contract for enterprise maintenance services with a retailer that has over 5,500 locations throughout the U.S. The total value of the contract over the six-year period is expected to exceed $25 million. Halifax has provided services to this client for the past four years.

In addition, Halifax reported that it resigned a nationwide maintenance services account with another customer, a national retailer, effective April 30, 2006. Although revenues were more than $5 million in the last year, the contract generated significant losses for the Company during the past two years. Halifax had discussed its plans to resolve this problem in its last financial press release and conference call, and it took a charge related to the potential cessation of the contract in the fiscal third quarter ended December 31, 2005.

The Company also announced that during the fiscal fourth quarter, which ended March 31, it signed a number of new enterprise maintenance contracts valued at over $1.5 million annually. As a result of the recent contract extension and new awards, the Company’s backlog at April 30, 2006, stands at a record $81 million.

Charles McNew, president and chief executive officer, stated, “As a result of our new business and the cessation of losses associated with the contract that we’ve resigned, we are now forecasting profitability for fiscal 2007, which began on April 1, 2006.

“We are also continuing to aggressively pursue new enterprise maintenance and managed services business, and there are several major new opportunities on the horizon. I’m pleased to say that we have a bullish outlook on our prospects for the coming year.”

McNew added, “The record backlog portends well for our future. Although the market remains challenging and it’s difficult to resign existing business, we are pleased to be signing multiple new profitable agreements and returning our Company to sustained, long-term profitability.”

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.