HALIFAX ANNOUNCES SECOND QUARTER FINANCIAL RESULTS

Company Reports Two Successive Quarters of Profitability;  
Gross Margin Improves to 10.7% from 7.8%

ALEXANDRIA, VA – November 14, 2006 – Halifax Corporation (AMEX:HX) today announced its financial results for the quarter ended September 30, 2006.

Revenues for the second quarter of fiscal 2007 were $12.4 million versus $14 million for the same period in fiscal 2006.  The revenue decrease was primarily due to the cessation of an unprofitable nationwide contract in April 2006.

The gross profit margin for this year’s second quarter was $1.3 million, or 10.7% of revenues, versus $1.1 million, or 7.8% of revenues, for the same period a year ago.  Operating income was $188,000 for the quarter ended September 30, 2006, compared to an operating loss of $170,000 for the same period the prior year.

The Company reported net income of $22,000, or $0.01 per basic and diluted share, for the fiscal 2007 second quarter.  This compares to a net loss of $172,000, or $0.05 per share, for the three months ended September 30, 2005.

Charles McNew, president and chief executive officer, stated, “Our ongoing profitability and the continuing improvement in gross margins is the direct result of investments in IT upgrades and cost containment actions.  It is worth noting that we incurred start-up costs associated with a major contract trial during the quarter, and this had a negative impact on margins.  On the positive side, we believe that this contract offers long-term revenue growth potential with a major customer.

“In addition, our backlog of more than $80 million and the pipeline for new business remain quite healthy,” he added.

For the six months ended September 30, 2006, revenues were $25.1 million compared to $28.7 million for the same period last year.  Operating income for the first half of fiscal 2007 was $514,000 versus an operating loss of $313,000 for the same period a year ago.  Income from continuing operations for the six months ended September 30, 2006, was $106,000 compared to a loss from continuing operations of $406,000 for the same period last year.  Net income for the first half of this year was $106,000, or $0.03 per basic and diluted share, versus a net loss of $96,000, or $ 0.03 per share, for the first half of fiscal 2006.

McNew added, “The balance sheet has been improving steadily; it is the strongest it’s been in seven years. We continue to remain optimistic about our prospects in the managed services marketplace, as the ongoing industry consolidation is creating multiple niche opportunities within our well-developed partner model.”

The Company will host a conference call for investors at 11 a.m. EST on Tuesday November 14, 2006, to review the financial and operational results for the quarter.  The conference call phone number is 800-834-5691 for U.S. callers and 212-676-5241 for international callers.  The conference call replay will be available from 1 p.m. EST on Tuesday November 14, 2006, to 1 p.m. EST on Wednesday, November 15, 2006.  The replay number is 800-633-8284 for U.S. callers and 402-977-9140 for international callers.  The reservation number is 21309569.

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.