'Net Income Increases Over Prior Year'



    ALEXANDRIA, Va., Aug. 6 /EMWNews/ -- Halifax Corporation

(Amex: HX) today announced its financial results for the quarter ended June

30, 2008.



    Revenues for the first quarter of fiscal 2009 were $9.0 million

compared to $12.5 million for the same quarter last year. The decrease in

revenues was attributable to the termination of certain large nationwide

enterprise maintenance contracts, including the loss of a large

aeronautical manufacturing customer.



    Gross Profit margin for this year's first quarter was $1.51 million, or

17% of revenues, versus $1.48 million, or 12% of revenues, for the same

period a year ago. The margin improvement was attributable to a more

profitable sales mix coupled with an aggressive cost containment program.



    The Company reported net income of $203,000, or $0.06 per basic and

diluted share as compared to $135,000, or $0.04 per basic and diluted share

for the first quarter of last year.



    Charles McNew, President and Chief Executive Officer, stated, "We are

pleased with our improving profitability profile. We have worked diligently

to drive our costs down by utilization of a variable workforce model and by

taking actions to move away from business that is dependent on major

inventory investment and parts risk.



    "Our cash flow is improving, we have a new long-term financing in place

and our borrowing levels remain low by historical standards.



    "We are confident that our new service model, which has positioned the

Company as a leader in global supply chain solutions for the middle market,

is presenting a significant opportunity for a return to market share

expansion.



    "In addition, we continue to develop a robust pipeline of new business

opportunities for both Enterprise Logistics Services and Field Maintenance

Solutions."



    The Company will host a conference call for investors at 11 a.m. EDT on

Wednesday, August 6, 2008, to review the financial and operational results

for the quarter. The conference call phone number is 800-768-5901 for U.S.

callers and 212-231-2906 for international callers. The conference call

replay will be available from 1 p.m. EDT on Wednesday, August 6, 2008, to 1

p.m. EDT on Thursday, August 7, 2008. The replay number is 800-633-8284 for

U.S. callers and 402-977-9140 for international callers. The reservation

number is 21390175.



    Founded in 1967, Halifax Corporation is an enterprise logistics and

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 enterprise logistics solutions and high

availability hardware maintenance services. More information on Halifax can

be found at http://www.hxcorp.com.



    Certain statements made by the Company which are not historical facts

may be considered forward-looking statements, including, without

limitation, statements as to trends, management's beliefs, views,

expectations and opinions, which are based upon a number of assumptions

concerning future conditions that ultimately may prove to be inaccurate.

Such forward-looking statements are subject to risks and uncertainties and

may be affected by various factors described in the Risk Factors section in

the Company's Annual Report on Form 10-K that may cause actual results to

differ materially from those in the forward-looking statements. For further

information that could affect the Company's financial statements, please

refer to the Company's reports filed with the Securities and Exchange

Commission.










                             Halifax Corporation

                            Summary Financial Data



    (in 000's except per share amounts)



    Statements of operations               For the three months ended June 30,

                                                     2008              2007



    Revenues                                        $9,017           $12,461



    Cost of services                                 7,504            10,979



    Gross profit                                     1,513             1,482



    Selling, marketing, general &

     administrative                                  1,196             1,161



    Operating Income                                   317               321



    Other income                                       -                  11

    Interest expense                                   (83)             (192)



    Income before income taxes                         234               140



    Income tax expense                                  31                 5



    Net income                                        $203              $135





    Earnings per common share - basic

     and diluted                                     $0.06             $0.04



    Weighted average number of common

     shares outstanding:

      Basic                                          3,175             3,175

      Diluted                                        3,175             3,181







    Balance Sheets                            June 30, 2008     March 31, 2008



    Current assets

      Cash                                            $709              $232

      Trade accounts receivable, net                 6,533            10,206

      Inventory, net                                 3,149             3,240

      Prepaid expenses and other current assets        253               220



    Total current assets                            10,644            13,898



    Property and equipment, net                        921             1,001

    Goodwill and intangibles, net                    3,508             3,580

    Other assets                                       103               111



    Total assets                                   $15,176           $18,590



    Liabilities and Stockholders' Equity



    Current liabilities

      Accounts payable and accrued expenses         $4,523            $5,280

      Income tax payable                                65                35

      Deferred maintenance revenue                   3,515             4,309

      Bank debt                                      2,493             4,448

      Auxiliary line of credit                         -                  60

      Current portion of long-term debt                277               276



    Total current liabilities                       10,873            14,408



    Other long-term debt                               252               325

    Subordinated debt - affiliate                    1,000             1,000

    Deferred income                                     84                99



    Total liabilities                               12,209            15,832



    Stockholders' equity                             2,967             2,758



    Total liabilities and stockholders' equity     $15,176           $18,590