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PACIFIC SAFETY PRODUCTS INC. ANNOUNCES SIGNIFICANT PUBLIC WORKS / GOVERNMENT OF CANADA WIN TOTALING UP TO $33 MILLION INCLUDING OPTIONS FOR ADDITIONAL ORDERS

Pacific Safety Products Inc. (PSP.V) was awarded a significant long-term contract from the government of Canada for the supply of fragmentation vests to the Canadian Armed Forces. The contract has an estimated total value of up to $33-million, assuming all additional optional orders are fully exercised.

The contract provides for the delivery of an initial order of 12,500 fragmentation vests and additional carriers, valued at approximately $11,171,000, as well as options for the government to subsequently order additional fragmentation vests in minimum orders of 1,500. PSP will negotiate a delivery schedule for the contract but currently expects that the initial order will be delivered within two years, while optional additional orders would be delivered during the subsequent eight-year period.

Production of the fragmentation vests is expected to begin later this summer at the company’s plant in Arnprior, ont. PSP has the scalable resources to manufacture these goods with minimal to no investment required, which PSP expects will have a positive impact on gross margin due to superior efficiencies in the business.

The contract is beneficial to PSP as it allows the company to deliver products to the Canadian Armed Forces over an eight-year to 10-year period without the requirement to retender its business. The built-in option to order additional vests will allow the government of Canada to order larger quantities of vests from the company should they be required. Although additional optional orders are at the discretion of the government, PSP expects that some or all of the options will be exercised. If all options are exercised, the total value of the contract would be approximately $33-million.

PSP pursued this contract for some time and believes that the company’s efforts to strengthen its quality system and ballistic performance aided in securing the contract. PSP continues to pursue additional tender opportunities with the government of Canada with a view to increasing and protecting shareholder value.