HALIFAX ANNOUNCES FIRST QUARTER
FINANCIAL RESULTS

Company Reports Return to Profitability, with Diluted EPS of $0.3;
Gross Margin Increases to 12% from 8%

ALEXANDRIA, VA – August 15, 2006 – Halifax Corporation (AMEX:HX) today announced its financial results for the quarter ended June 30, 2006.

The Company reported revenues of $12.7 million compared to $14.7 million for the same period a year ago. The revenue decrease was primarily due to the cessation of an unprofitable nationwide contract.

Halifax reported a gross margin of $1.5 million, or 12% of revenues, for the first quarter of fiscal 2007. This compares to a gross margin of $1.2 million, or 8% of revenues, for the comparable quarter a year ago.

Operating income was $326,000 for the first fiscal quarter of 2007 compared to an operating loss of $143,000 for the first fiscal quarter of 2006. Income from continuing operations for the first quarter of fiscal 2007 was $84,000 as compared to a loss from continuing operations of $234,000 for the same period a year ago.

The Company reported net income of $84,000, or $0.03 per basic and diluted share, in the first quarter of 2007 versus $76,000, or $0.02 per basic and diluted share, for the quarter ended June 30, 2005. Net income for the first quarter of last year included $310,000 of income from discontinued operations.

Charles McNew, president and chief executive officer, stated, “As anticipated, we have returned the Company to profitability and our aggressive cost containment program has resulted in meaningful improvement in our gross margins. The recent announcement of several new contracts, coupled with our delivery systems enhancement efforts, should have us on target for additional bottom line enhancement."

The Company also reported continuing balance sheet improvement, with bank debt declining and shareholders’ equity in excess of $8 million.

McNew added, “Our confidence in our long-term business prospects remains high. The managed services marketplace is ripe with opportunity, particularly with the evolving industry consolidation. We continue to seek and evaluate various strategic alternatives to further position Halifax for near and long term growth.”

The Company will host a conference call for investors at 11 a.m. EDT on Tuesday, August 15, 2006, 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. EDT on Tuesday, August 15, 2006, to 1 p.m. EDT on Wednesday, August 16, 2006. The replay number is 800-633-8284 for U.S. callers and 402-977-9140 for international callers. The reservation number is 21301345.

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.