Kelowna Company Lands Huge Contract

Pacific Safety Products has landed another big contract.

Public Works and Government Services Canada has awarded PSP a $24 million contract to supply biological chemical protection coveralls to the Canadian military.

These coveralls are designed to protect members of the Canadian Forces from toxicological agent threats that might be encountered while on duty.

The contract is for a minimum quantity of 47,000 training and operational coveralls. The Department of National Defence has an option to increase the quantity up to 56,000 units, which would increase the total contract up to $28 million. This contract follows the announcement of a $19.8 million contract for Fragmentation Protection Vests announced March 3, 2004.

The award of this contract increases the Company’s order book to between $46 million and $57 million depending on whether the Crown exercises its options to purchase the full amount of each of the contracts.

“The award of the Horizon 1 contract represents another significant watershed event for PSP and is the result of a significant amount of advance work to ensure the product would meet the customer’s requirements,” stated Brad Field, President and Chief Executive Officer. “The award of this contract will result in new, exciting opportunities to expand sales of PSP protective products world wide.”

“We anticipate that fiscal 2005 to 2007 will be the strongest growth years, for both revenue and profitability, in the Company’s history,” noted Shawn VanderMeer, Chief Financial Officer. “The cash generated from the two contracts in hand will allow the Company to significantly increase its financial strength and shareholder value.”

Manufacturing for both contracts will commence in the Company’s second quarter of this fiscal year (October 2004 to December 2004) and will reach full production in January 2005. Completion of the contracts is expected to take two to three years and is dependent on the final purchase quantities. As a result, the Company will employ up to 80 additional personnel throughout its three facilities during the term of the contracts.