content: SECURITIES AND EXCHANGE COMMISSION
  
  Washington, D.C.  20549
  
  FORM 8-K
  
  CURRENT REPORT
  
  Pursuant to Section 13 and 15(d) of
  the Securities Exchange Act of 1934
  
  
  Date of Report (Date of earliest event reported):    April 15, 1996
  (April 1, 1996)
  
  
  HALIFAX CORPORATION
  
  (Exact name of registrant as specified in charter)
  
  
  
            Virginia                  2-84160-W             54-0829246
  (State or other jurisdiction        (Commission           (IRS Employer
   of incorporation)                   File Number         Identification No.)
  
  
  
  
   5250 Cherokee Avenue,  Alexandria, Virginia                        22312
  (Address of principal executive offices)                          (Zip Code)
  
  
  
  
  Registrant's telephone number, including area code:     (703) 750-2202
  
  
  
                                 Not Applicable
      (Former name or former address, if changed since last report)
  
  
  
  <PAGE>
  Item 2.  Acquisition or Disposition of Assets
  
  
  (a) In accordance with a Plan of Merger ("Plan") attached as
  Exhibit A hereto which was duly adopted by the board of directors
  of both parties to the merger, CMS Automation, Inc. ("CMS"), a
  Virginia corporation, merged into CMSA Acquisition Corporation
  ("CMSA"), a Virginia corporation wholly owned by Halifax
  Corporation, a Virginia corporation.  CMS merged into CMSA on the
  following basis.  Pursuant to the Plan, each issued and
  outstanding share of CMS common stock was converted into, and
  become exchangeable for, the number of shares of validly issued,
  fully paid and nonassessable common stock of Halifax equal to a
  conversion ratio meaning a fraction, the numerator of which is
  139,630 and the denominator of which is equal to the sum of the
  number of shares of CMS issued and outstanding on the effective
  date of the merger plus the number of shares that would be
  represented by the conversion of $450,000 worth of debt to
  equity.  In this regard, CMS shareholders who held promissory
  notes of CMS in the amount of $450,000 converted said debt to
  equity in CMS.  In addition to the initial issuance of 139,630
  shares of Halifax stock to CMS shareholders which was based on
  the net equity value of CMS, Halifax stock will be awarded
  annually for three (3) years subsequent to the merger to the CMS
  shareholders on a pro-rate basis, excluding Halifax stock issued
  as a result of the conversion of debt to equity, having a value
  equal to one-third of the net after tax income of CMSA operating
  as a wholly owned subsidiary of Halifax.
  
  The assets acquired included accounts receivable and the
  inventory and equipment used in conducting and operating the
  business of CMS which consists of computer systems integration
  including wide area and local area networking, consulting,
  application development and training.
  
  Closing of the transaction took place on April 1, 1996 with a
  Certificate of Merger issued by the State Corporation Commission
  of Virginia effective April 9, 1996.
  
  Item 7.  Financial Statements and Exhibits
  
  (a) & (b) It is impracticable to provide the required financial
  statements and pro forma financial information at the time of the
  filing of this report.  Said financial statements and information
  will be filed as soon as available but not later than 60 days
  from the date of this report.
  
  (c) Attached as Exhibit A is a copy of the plan of acquisition as
  contained in the Agreement and Plan of Reorganization entered
  into by the parties.
  
  
  
  <PAGE>
  AGREEMENT AND PLAN OF REORGANIZATION
  
  AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 1, 1996, by
  and among HALIFAX CORPORATION, a Virginia corporation ("Parent"), CMSA
  ACQUISITION CORPORATION, a Virginia corporation and a wholly-owned subsidiary
  of Parent ("Sub").  CMS AUTOMATION, INC., a Virginia corporation (the
  "Target") (Sub and Target being hereinafter collectively referred to as (the
  "Constituent Corporations") and those individuals who are shareholders of the
  Target on the Closing Date ("Shareholders").
  
  ARTICLE III
  
  PLAN OF MERGER
  
  3.1 Conversion of Target Shares in the Merger. Pursuant to this Agreement, at
  the Effective Time, by virtue of the Merger and without any action on the
  part of any holder of any capital stock of Target; each issued and
  outstanding share of Target Common Stock, other than Target Dissenting
  Shares (as defined in Section 3.4 hereof), shall be converted into, and
  become exchangeable for, the number of shares of validly issued, fully paid
  and nonassessable common stock of Parent ("Parent Common Stock") equal to
  the Conversion Ratio.  In this Agreement, the term "Conversion Ratio" means
  a fraction, the numerator of which is equal to 139,630 and the denominator
  of which is equal to the sum of the number of shares of Target Common Stock
  issued and outstanding as of the Closing plus the number of shares that
  would be represented by the conversion of $450,000 of debt to equity.  In
  this regard, prior to Closing, Shareholders who hold promissory notes of the
  Target in the amount of $450,000 (hereafter sometimes separately referred to
  as "Converting Shareholders") shall convert the notes to Target equity. The
  consideration referred to in this Section 3.1, together with any cash
  payments in lieu of fractional shares as provided herein, and the Contingent
  Additional Purchase Price Consideration set forth in Section 3.6 hereof is
  hereinafter referred to as the "Merger Consideration."
  
  3.2 Status of Sub Shares. At the Effective Time, by virtue of the Merger and
  without any action on the part of any holder of any capital stock of Sub,
  each issued and outstanding share of common stock of Sub shall continue
  unchanged and remain outstanding as a share of common stock of the Surviving
  Corporation.
  
  3.3 Exchange of Company Capital Stock Certificates. (a) On or prior to the
  Closing Date, Parent shall deposit with the Escrow Agent (as that term is
  defined below) the certificates representing shares of Parent Common Stock
  required to effect the exchange referred to in Section 3.3(b) below. Parent
  shall also deposit with the Escrow Agent the cash payment in lieu of
  fractional shares referred to in Section 3.3(d) below. Shares of Parent
  Common Stock into which shares of Target Common Stock shall be converted in
  the Merger shall be deemed to have been issued at the Effective Time and the
  Shareholders shall have full voting rights with respect to such shares
  immediately following the Effective Time.  In addition, the Shareholders
  shall be entitled to receive any dividends or other distributions with a
  record date after the Effective Time.
  
  (b) From and after the Effective Time, each holder of a certificate which
  immediately prior to the Effective Time represented outstanding shares of
  Target Common Stock, other than shares with respect to which dissenters'
  rights, if any, are granted by reason of the Merger under the VGCL, shall be
  entitled to receive in exchange therefor, upon delivery thereof to Williams,
  Mullen, Christian & Dobbins (the "Escrow Agent"), and following the period
  of the Escrow, a certificate or certificates representing the number of
  whole shares of Parent Common Stock into which such holder's shares of Target
  Common Stock were converted pursuant to Section 3.1 and cash in lieu of any
  fractional shares of such Parent Common Stock pursuant to
  Section 3.3(d). From and after the Effective Time, Parent shall be entitled
  to treat the certificates which immediately prior to the Effective Time
  represented shares of Target Common Stock and which have not yet been
  surrendered for exchange as evidencing the ownership of the number of full
  shares of Parent Common Stock into which the shares of Target Common Stock
  represented by such certificates shall have been converted pursuant to
  Section 3.1, notwithstanding the failure to surrender such certificates.
  However, notwithstanding any other provision of this Agreement, until
  holders or transferees of certificates which immediately prior to the
  Effective Time represented shares of Target Common Stock have surrendered
  them for exchange as provided herein, no dividends shall be paid with
  respect to any shares represented by such certificates and no
  payment for fractional shares shall be made.  Such dividends or other
  distributions with a record date after the Effective Time shall be held
  by the Escrow Agent in trust for the benefit of such holders of undelivered
  certificates.  Upon surrender of a certificate which immediately prior to
  the Effective Time represented outstanding shares of Target Common Stock,
  there shall be paid to the holder of such certificate the amount of any
  dividends which theretofore became payable, but which were not paid by
  reason of the foregoing, with respect to the number of whole shares of
  Parent Common Stock represented by the certificate or certificates issued
  upon such.
  
  (c) As soon as practicable after the Effective Time, the Escrow Agent shall
  mail to each holder of record of a certificate or certificates that
  immediately prior to the Effective Time represented outstanding shares of
  Target Common Stock (collectively, the "Target Certificates") (i) a form
  letter of transmittal (which shall specify that delivery shall be effected,
  and risk of loss and title to Target Certificates shall pass, only upon
  actual delivery of Target Certificates to the Escrow Agent) and (ii)
  instructions for use in effecting the surrender of Target Certificates
  in exchange for certificates representing shares of Parent Common Stock.
  Upon surrender of Target Certificates for cancellation to the Escrow
  Agent, together with a duly executed letter of transmittal and such other
  documents as the Escrow Agent shall reasonably require and following the
  period of the Escrow, the holder of such Target Certificates shall receive
  in exchange therefor a certificate representing that number of whole shares
  of Parent Common Stock into which the shares of Target Common Stock
  represented by Target Certificates so surrendered shall have been converted
  pursuant to the provisions of Section 3.1 less any adjustments pursuant to
  Section 4.5 hereof, and Target Certificates so surrendered shall forthwith
  be canceled. Notwithstanding the foregoing, neither the Escrow Agent nor
  any party hereto shall be liable to a holder of shares of Target
  Common Stock for any shares of Parent Common Stock or dividends
  or distributions thereon delivered to a public official pursuant
  to applicable escheat laws.
  
  (d) Notwithstanding any other provision of this Agreement, no certificates
  or scrip for fractional shares of Parent Common Stock shall be issued upon
  the surrender for exchange of Target Certificates pursuant to this Article
  III in the Merger and no Parent Common Stock dividend, stock split or
  interest shall relate to any fractional security, and such fractional
  interests shall not entitle the owner thereof to vote or to any other
  rights of a security holder. In lieu of any such fractional shares, each
  holder of Target Common Stock who would otherwise have been entitled to a
  fraction of a share of Parent Common Stock upon surrender of Target
  Certificates for exchange pursuant to this Article III, shall be entitled
  to receive from the Escrow Agent a cash payment in lieu of such fractional
  share equal to such fraction multiplied by the Valuation Price of $7.00
  per share of Parent Common stock.
  
  3.4 Dissenting Shares. Notwithstanding anything to the contrary contained in
  this Agreement or the Merger Agreement, holders of shares of Target Common
  Stock with respect to which dissenters' rights, if any, are granted by
  reason of the Merger under the VGCL and who do not vote in favor of the
  Merger and otherwise comply with the VGCL ("Target Dissenting Shares"),
  shall not be entitled to shares of Parent Common Stock pursuant to Section
  3.1, unless and until the holder thereof shall have failed to perfect or
  shall have effectively withdrawn or lost such holder's right to dissent from
  the Merger under the VGCL, and shall be entitled to receive only the payment
  provided for pursuant to the VGCL. If any such holder shall have failed to
  perfect or shall have effectively withdrawn or lost such holder's
  dissenters' rights under the VGCL, such holder's Target Dissenting
  Shares shall thereupon be deemed to have been converted into and to
  have become exchangeable for, as of the Effective Time, the right to
  receive the Merger Consideration.
  
  3.5 Closing of Transfer Books. From and after the Effective Time, the stock
  transfer books of Target shall be closed and no transfer of shares of Target
  Common Stock shall thereafter be made. If, after the Effective Time, Target
  Certificates are presented to Parent, they shall be canceled and exchanged
  for the Merger Consideration in accordance with the procedures set forth in
  this Article III.
  
  3.6 Contingent Additional Purchase Price Consideration. (a) In addition to
  the Parent Common Stock transferred to Shareholders at Closing, on or before
  May 31, 1997, 1998, and 1999, Parent shall deliver to the Shareholders
  shares of Parent Common Stock having a value, as determined by the then
  current market value of the Parent Common Stock, equal to one-third of the
  net after tax income of Sub (Formerly Target) operating as a wholly owned
  subsidiary of Parent for each of the tax years ending March 31, 1997, 1998
  and 1999.  Such additional shares of Parent Common Stock shall be distributed
  among the Shareholders on a pro rate basis, based on the Shareholders holdings
  as of the date of Closing and set forth in Exhibit A hereto; provided,
  however, that for the purposes of determining a Shareholder's pro rate
  share, any shares of Target received by such Shareholders as a result of
  converting a promissory note into equity of Target prior to the Merger
  pursuant to Article III hereof shall not be included.  For the purposes of
  this paragraph only, the first period for calculating the additional
  consideration shall commence January 1, 1996 and continue through March 31,
  1997.  The two remaining periods shall consist of twelve month intervals
  beginning April 1, 1997 and April 1998, respectively.  Notwithstanding the
  foregoing, the parties hereto agree that (i) for the purposes of determining
  the additional shares of Parent Common Stock due to the Shareholders for the
  period ending March 31, 1997, the fair market value of the Parent Common
  Stock shall be deemed to be $7.00 per share and (ii) for the purposes of
  determining the additional shares of Parent Common Stock due to the
  Shareholders for the periods ending March 31, 1998 and 1999, the fair
  market value of the Parent Common Stock shall not exceed $10.00 per
  share or be less than $6.00 per share.
  Notwithstanding anything contained herein to the contrary, in the event that
  a distribution of shares of Parent Common Stock pursuant to this Section
  3.6, in combination with shares previously distributed pursuant to Article
  III, would increase the number of outstanding shares of Parent Common Stock
  by more than 20.0% of the number of outstanding shares of Parent Common
  Stock outstanding immediately before the Closing, Parent may deliver in lieu
  of additional shares of Parent Common Stock, to the Shareholders a cash
  payment equal to the value of the shares of Parent Common Stock they would
  have received pursuant hereto. (b) Sub's after-tax net income shall be
  determined by Parent's accounting firm.  For purposes of calculating
  the Contingent Additional Purchase Price Consideration the following
  factors will be in effect:
  
            (i) Sub's tax liability will be calculated as if Sub was an
  independent entity and the tax rate of the Sub will be no more than Parent's
  overall corporate tax rate.
  
            (ii) Sub will get the benefit of any allowable tax-loss carry
  forward from Target.
  
  	(iii) For purposes of calculating additional consideration none of
  the Parent corporate overhead will be assigned to Sub other than costs
  transferred from Sub to Parent.
  
            (iv) Only Sub operating debt will be assigned to Sub.
  
            (v) Future acquisitions of similar companies will not affect
  additional consideration calculations.
  
  (c) Parent shall notify the Shareholders in writing no later than May 31 of
  each year of the accountant's determination of Sub's after-tax net income
  and of the number of additional shares, if any, that the Shareholders are
  entitled to receive.  Such notice shall include a copy of the accountants
  calculations.  The Shareholders shall then have 30 days to deliver to Parent
  a written notice disputing the accountant's calculations.  In the event
  the Shareholders deliver such a notice, such dispute shall be submitted
  for arbitration in accordance with Section 10.8 hereof.
  
  
  3.7 Closing. The closing (the "Closing") of the transactions contemplated by
  this Agreement shall take place (a) at the offices of Target at 10:00 a.m.,
  local time on April 1, 1996, or the second business day immediately
  following the date on which the last of the conditions set forth in Article
  VII hereof is fulfilled or waived, or (b) at such other time and place and
  on such other date as Parent and Target shall agree (the "Closing Date").
  <PAGE>
  Item 7.  Financial Statements and Exhibits
  
  A.        Financial Statements of Business Acquired
  
  The following Audited Financial Statements of CMS Automation, Inc. (CMSA) are
  included as Exhibits 99(a) and 99(b) to this Current Report on Form 8-K:
  
            Audited Financial Statements dated December 31, 1995 including
                      Independent Auditor's Report
                      Balance Sheet
                      Statement of Income
                      Statement of Cash Flows
                      Notes to Financial Statements
  
            Audited Financial Statements dated December 31, 1994 including
                      Independent Auditor's Report
                      Balance Sheet
                      Statement of Income
                      Statement of Cash Flows
                      Notes to Financial Statements
  
  B.        Pro Forma Financial Information
  
  Unaudited Pro Forma Combined Condensed Financial Statements
  
  The following unaudited pro forma combined condensed financial statements
  have been prepared by Halifax's management from the consolidated financial
  statements of Halifax and CMSA.  The Unaudited Pro Forma Combined Condensed
  Statement of Earnings reflects adjustments as if the acquisition transaction
  had occurred on April 1, 1995.  The Unaudited Pro Forma Combined Condensed
  Balance Sheet reflects adjustments as if the CMSA transaction had occurred
  on March 31, 1996.  See "Note 1 - Basis of Presentation." The unaudited pro
  forma adjustments described in the accompanying notes are based upon
  preliminary estimates and certain assumptions that management of Halifax
  believes are reasonable in the circumstances.
  
  The unaudited pro forma combined condensed financial statements are not
  necessarily indicative of financial position or results of operations that
  would have resulted if the CMSA transaction had occurred on the applicable
  dates indicated above.  Moreover, they are not intended to be indicative of
  future results of operations or financial position.  The pro forma combined
  condensed financial statements should be read in conjunction with the
  historical consolidated financial statements of Halifax and related notes
  thereto, included in the Corporation's Annual Report on Form 10-K for the
  year ended March 31, 1996; and the historical financial statements of
  CMSA and related notes thereto, included in this Current Report on Form 8-K.
  
  <PAGE>
  
  <TABLE>
  Unaudited Pro Forma Combined Condensed Statement of Earnings
  
  
  
  <CAPTION>
                                                                   For the Year Ended
                                               March 31, 1996       December 31, 1995       Proforma               Proforma
                                                    Halifax              CMSA              Adjustments             Combined
                                                         ($ In thousands, except per share data)
                                                  <C>                  <C>                  <C>              <C>
  
  Revenues                                         $          47,159    $    21,249                          $        68,408
  
  Operating costs & Expenses:
  
   Cost of Services                                           41,675         14,582                                   56,257
  
   Selling, General &
   Administrative Expenses                                     3,650          6,300               14(c)                9,964
  
  Total Operating Costs &
   Expenses                                                   45,325         20,882               14                  66,221
  
  Operating Income                                             1,834            367              (14)                  2,187
  
  Interest Expense                                               573            543             (240)(d)                 876
  
  Other Income (Expense), Net                                    -               68                                       68
  
  Earnings Before Tax                                          1,261           (108)              226                  1,379
  
  Income Taxes                                                   498              1                89(e)                 588
  
  Net Income/(Loss)                                $             763    $      (109)               137                   791
  Earnings per Share                               $                .65         N/A                            $            .60
  
  Weighted Average Number of
   Common Shares Outstanding                        #      1,171,254            N/A                            #       1,310,884
  
  
  <FN>
       See accompanying notes to unaudited pro forma combined condensed financial statements
  </TABLE>
  <PAGE>
  
  <TABLE>
  Unaudited Pro Forma Combined Condensed Balance Sheet
  
                                                                                   As of
  
                                                   March 31, 1996       December 31, 1995              Proforma             Proforma
                                                       Halifax              CMSA                     Adjustments            Combined
                                                                                   ($ In thousands)
  
  <S>                                             <C>                   <C>                          <C>          <C>
  Assets:
  
  Current Assets:
     Cash & Cash Equivalents                       $           2,743    $              98                          $           2,841
     Receivables, Net                                         11,734                3,212                                     14,946
     Inventory, Net                                            2,792                2,176                                      4,968
     Other Current Assets                                        566                   57                                        623
        Total Current Assets                                  17,835                5,543                                     23,378
  
  Property & Equipment, Net                                    4,527                1,412                                      5,939
  
  Costs in Excess of Net Assets
   Acquired & Other Assets                                     2,313                  185              348(a)                  2,846
      Total Assets                                            24,675                7,140              348                    32,163
  
  Liabilities and Stockholders' Equity:
  
  Current Liabilities:
     Accounts Payable & Accrued Expenses                      11,462                1,500                                     12,962
     Current Maturities Debt                                     556                4,327         (4,327)(a)                     556
     Unearned Revenues & Other                                    -                   324                                        324
        Total Current Liabilities                             12,018                6,151         (4,327)                     13,842
  
  Long-Term Operating Debt                                       739                  450           3,877(a)(b)                5,066
  Mortgage Note                                                2,574                   -                                       2,574
  Other Liabilities                                              560                   12                                        572
     Total Liabilities                                        15,891                6,613           (450)                     22,054
  
  Stockholders' Equity:
     Common Stock                                                518                   97            (97)(a)                     518
     Additional Paid-In Capital                                3,401                  706             446(a)(b)                4,553
     Treasury Stock at Cost                                     (388)                  -              173(a)(b)                 (215)
     Retained Earnings (Deficit)                               5,253                 (276)            276(a)                   5,253
        Total Stockholders' Equity                             8,784                  527             798                     10,109
  
  
    Total Liabilities & Stockholders' Equity       $          24,675    $           7,140    $        348          $          32,163
  
  
  <FN>
  See accompanying notes to unaudited pro forma combined condensed financial statements
  </TABLE>
  <PAGE>
  
  NOTES TO UNAUDITED PRO FORMA
  COMBINED CONDENSED FINANCIAL STATEMENTS
  
  
  1.       Basis of Presentation
  
  The accompanying Unaudited Pro Forma Combined Condensed Statement of
  Earnings presents the historical results of operations of Halifax for its
  fiscal year ended March 31, 1996 and the historical results of operations
  for CMSA for its fiscal year ended December 31, 1995 with pro forma
  adjustments as if the CMSA transaction had been consummated as of  April 1,
  1995.  The Unaudited Pro Forma Combined Condensed Balance Sheet presents the
  historical balance sheets of Halifax and CMSA as of March 31, 1996 and
  December 31, 1995, respectively, with pro forma adjustments as if the
  CMSA transaction had been consummated as of March 31, 1996, in a transaction
  accounted for as a purchase in accordance with Generally Accepted Accounting
  Principles.
  
  2.      Pro Forma Adjustments
  
  a.      To record the consideration assumed to be exchanged for CMSA
  	consisting of Halifax's common stock and the assumption of CMSA
  	short-term debt and its conversion to long-term debt by Halifax;
  	and to record the estimated expense of the transaction.
  
          Halifax Treasury Stock                                  $    93,000
          Halifax Additional Paid-In Capital                      $   434,000
          CMSA Common Stock Extinguished                          $   (97,000)
          CMSA Additional Paid-In Capital Extinguished            $   706,000)
          CMSA Retained Earnings Extinguished                     $   276,000
          Halifax Cost in Excess of Net Assets Acquired
  		& Other Assets 					$   348,000
          Halifax Additional Paid-In Capital                      $   348,000
          Halifax Long-Term Operating Debt                        $ 4,327,000
          CMSA Current Maturities Debt                            $(4,327,000)
  
          CMSA Net Book Value                                     $   527,000
          Number of Halifax Common Shares Exchanged @ $7.00 each  $    75,345
          Average Cost of Halifax Treasury Share                  $      1.24
          Halifax Treasury Stock at Cost                          $   388,000
          Number of Halifax Treasury Shares                           311,786
  
          Estimated expenses of the Transaction                   $   348,000
  
  <PAGE>
  
  b.      To record the issuance of common stock to satisfy
  	long-term notes payable of CMSA.
  
  	CMSA Long-Term Notes Payable                            $  (450,000)
          Treasury Stock Exchanged                                $    80,000
          Additional Paid-In Capital                              $   370,000
  
          Number of Halifax Common Shares Exchanged @ $7.00 each       64,285
          Average Cost of Treasury Stock Share                    $      1.24
          Treasury Stock at Cost                                  $   388,000
          Number of Treasury Shares                                   311,786
  
  
   c.     To record the amortization of estimated cost in excess of
  	net assets including capitalizable acquisition costs acquired
  	in the CMSA transaction over an estimated life of 25 years.
  
          Halifax Selling General & Administrative Expense        $    14,000
  
          Halifax Cost in excess of Net Assets Acquired in
  		the Transaction                                 $   348,000
          Amortization Period.                                       25 years
  
  d.      To record estimated interest expense at the Halifax's
  	cost of borrowing under its borrowing agreement, resulting from
          the assumption of the CMSA short-term debt and the conversion of
          the CMSA long-term notes payable.
  
          Reduction in CMSA interest expense due to conversion of debt
          to equity and change from short-term to long-term debt.    $ (543,000)
  
          Interest expense on CMSA average outstanding debt converted to
          long-term at Halifax borrowing rates.                      $  303,000
  
  e.      To record the total income tax effect, using a 39.5% rate, on
  	the net pro forma adjustments.
  
  
  The accompanying unaudited pro forma combined condensed financial statements
  do not include the effects of any estimated transition or restructuring
  costs which may be incurred in connection with integrating the operations of
  CMSA into Halifax.  It is not feasible at this time to estimate these
  costs.  Similarly, no effects for changes in costs related to CMSA employee
  pension benefits have been included as such changes cannot be estimated at
  this time.
  
  <PAGE>
  
  The Unaudited Pro Forma Combined Condensed Statement of Earnings does not
  reflect any net cost savings or economies of scale that management believes
  would have been achieved had the CMSA transaction occurred on April 1,
  1995.
  
  
  C.       Exhibits
  
  Exhibit No.                                           Description
  
  
  99(a)           Audited Financial Statements of CMS Automation, Inc.,
  		for the year ended December 31, 1995, and related Notes to
  		Financial Statements.
  
  99(b)           Audited Financial Statements of CMS Automation, Inc., for
  		the year ended December 31, 1994, and related Notes to
  		Financial Statements.
  
  <PAGE>
  
  SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
  
  
  HALIFAX CORPORATION
  (Registrant)
  
  
  
  
  
  Date:    June 17, 1996               By:
                                           Howard C. Mills,
                                           President & Chief Executive Officer
  
  
  
  
  
  Date:     June 17, 1996              By:
                                            John D. D'Amore
                                            Vice President & Controller
  
  <PAGE>
  
  Index to Exhibits
  
  
  
  Exhibit No.    Description                                            Page
  
  
  
  99(a)          Audited Financial Statements of CMS Automation, Inc.,    19
                 for the year ended December 31, 1995, and related
                 Notes to Financial Statements
  
  99(b)          Audited Financial Statements of CMS Automation, Inc.,    38
                 for the year ended December 31, 1994, and related
                 Notes to Financial Statements
  
  
  
  <PAGE>
  
  
  CMS AUTOMATION, INC.
  
  Financial Statements
  
  December 31, 1995 and 1994<PAGE>
  CMS AUTOMATION, INC.
  
  Table of Contents
  
                                                                        Page
  
  Independent Auditors' Report                                          2
  
  
  Exhibit
     A         Balance Sheets                                           3-4
     B         Statements of Income                                     5
     C         Statements of Changes in Stockholders' Equity            6
     D         Statements of Cash Flows                                 7-8
  
  Notes to Financial Statements                                         9-15
  
  Independent Auditors' Report on Additional Information                16
  
  Schedule
     1          Schedules of Operating Expenses                         17
  
  <PAGE>
  
  INDEPENDENT AUDITORS' REPORT
  
  
  To the Stockholders
  CMS Automation, Inc.
  Richmond, Virginia:
  
  
            We have audited the accompanying balance sheet of CMS Automation,
  Inc. as of December 31, 1995, and the related statements of income, changes
  in stockholders' equity, and cash flows for the year then ended.  These
  financial statements are the responsibility of the Company's management.
  Our responsibility is to express an opinion on these financial statements
  based on our audit.
  
            Except as explained in the following paragraph, we conducted our
  audit in accordance with generally accepted auditing standards.  Those
  standards require that we plan and perform the audit to obtain reasonable
  assurance about whether the financial statements are free of material
  misstatement.  An audit includes examining, on a test basis, evidence
  supporting the amounts and disclosures in the financial statements.  An audit
  also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial
  statement presentation.  We believe that our audit provides a reasonable
  basis for our opinion.
  
            Because we were not engaged as auditors until after December 31,
  1994, we were not present to observe the physical inventory taken at that
  date, and we have not satisfied ourselves by means of other auditing
  procedures about inventory quantities.  Also, we have not applied audit
  procedures necessary to satisfy ourselves about the classifications and
  amounts comprising the balance sheet at December 31, 1994.  The amount of
  the inventory at December 31, 1994, and other significant aspects of the
  balance sheet at that date, including classifications and amounts,
  materially affect the determination of the results of operations and
  cash flows for the year ended December 31, 1995.  Accordingly, the scope of
  our work was not sufficient to enable us to express, and we do not express,
  an opinion on the accompanying statements of income, changes in
  stockholders' equity, and cash flows for the year ended December 31,
  1995, or on the consistency of application of accounting
  principles with the preceding year.
  
            In our opinion, the balance sheet referred to in the first
  paragraph presents fairly, in all material respects, the financial position
  of CMS Automation as of December 31, 1995, in conformity with generally
  accepted accounting principles.
  
  <PAGE>
            The 1994 financial statements were reviewed by us, and our report
  thereon, dated July 20, 1995, except for Note 14, as to which the date is
  December 20, 1995, stated we were not aware of any material modifications
  that should be made to those statements for them to be in conformity with
  generally accepted accounting principles.  However, a review is
  substantially less in scope than an audit and does not provide a basis for
  the expression of an opinion on the financial statements taken as a whole.
  
  
  
  
                                  Keiter, Stephens, Hurst, Gary & Shreaves
  				March 23, 1996
  
  
  
                             2
  
  <PAGE>
  
  Exhibit A
  <TABLE>
  CMS AUTOMATION, INC.
  Balance Sheets
  December 31, 1995 (Audited) and 1994 (Unaudited)
  <CAPTION>
  												1995                1994
  Assets                                                                                     (Audited)              (Unaudited)
  
  <S>                                                                                <C>                    <C>
  Current assets:
      Cash                                                                           $          97 954      $          22 473
      Accounts receivable, net of allowance for
       uncollectible accounts of $50,000 in 1995
       and $15,000 in 1994                                                                   3 212 001              3 595 750
      Inventory                                                                              2 176 089              2 308 661
      Loans to employees                                                                        16 875                 13 325
      Loans to officers                                                                         26 028                 16 292
      Prepaid expenses                                                                          13 621                  6 491
      Refundable income taxes                                                                    -                     71 255
  
                      Total current assets                                                   5 542 568              6 034 247
  
  Fixed assets                                                                               2 824 461              2 268 153
  Less accumulated depreciation                                                              1 411 842              1 024 047
  
                      Net fixed assets                                                       1 412 619              1 244 106
  
  Software, net of amortization                                                                 61 791                 81 601
  Organization costs, net of amortization                                                       22 080                 26 503
  Franchise fee, net of amortization                                                             3 042                  3 542
  Deposits                                                                                      23 756                 28 830
  Client lists                                                                                  49 500                  -
  Investment                                                                                    24 664                  -
  
                      Total other assets                                                       184 833                140 476
  
  
  
                                                                                     $       7 140 020      $       7 418 829
  
  
  
  <FN>
  See accompanying notes to financial statements.
  
  </TABLE>
  3
  <PAGE>
  Exhibit A
  
  CMS AUTOMATION, INC.
  <TABLE>
  Balance Sheets
  December 31, 1995 (Audited) and 1994 (Unaudited)
  <CAPTION>
                                                                                                1995                   1994
      Liabilities and Stockholders' Equity                                                     (Audited)              (Unaudited)
  <S>                                                                                   <C>                    <C>
  Current liabilities:
      Short-term debt                                                                   $       4 203 658      $       2 181 973
      Notes payable, current portion                                                              117 743                189 831
      Capital lease obligation, current portion                                                     4 674                 20 365
      Accounts payable                                                                          1 422 351              3 237 644
      Unearned revenues                                                                           320 183                445 776
      Accrued expenses                                                                             78 161                139 600
      Customer deposits                                                                             3 112                 53 864
      Income taxes payable                                                                          1 000                  -
  
                 Total current liabilities                                                      6 150 882              6 269 053
  
  Notes payable, less current portion                                                             450 000                547 743
  Capital lease, less current portion                                                               -                      4 674
  Deferred credit                                                                                  12 618                 12 946
  
                      Total liabilities                                                         6 613 500              6 834 416
  
  Commitments
  
  Stockholders' equity:
      Common stock, $.20 par value; 750,000 shares
       authorized; 484,226 and 467,399 shares issued
       and outstanding at December 31, 1995 and 1994,
       respectively                                                                                96 845                 93 480
      Additional paid-in capital                                                                  705 758                658 123
      Retained earnings (deficit)                                                        (        276 083)      (        167 190)
  
                      Total stockholders' equity                                                  526 520                584 413
  
                                                                                             $       7 140 020      $       7 418 829
  
  
  
  
  
  
  
  <FN>
  See accompanying notes to financial statements.
  </TABLE>
  4
  <PAGE>
  
  Exhibit B
  
  CMS AUTOMATION, INC.
  <TABLE>
  Statements of Income
  For the Years ended December 31, 1995 (Audited) and 1994 (Unaudited)
  <CAPTION>
                                                                                                     1995                    1994
                                                                                                   (Audited)               (Unaudited)
  <S>                                                                                       <C>                    <C>
  Sales                                                                                $       21 248 701     $       26 982 367
  
  Cost of sales                                                                                14 582 334             19 617 630
  
                      Gross profit                                                              6 666 367              7 364 737
  
  Operating expenses                                                                            6 299 738              6 923 808
  
                      Operating income                                                            366 629                440 929
  
  Other income (expense):
      Miscellaneous income                                                                        139 333                160 397
      Interest income                                                                               3 872                    142
      Interest expense                                                                  (         543 231)     (         569 582)
      Loss on asset disposal                                                                        -          (             792)
      Loss from investment                                                              (          29 496)                 -
      Litigation settlement                                                             (          45 000)                 -
  
                      Total other expense                                               (         474 522)     (         409 835)
  
                      Income (loss) before provision for income tax                     (         107 893)                31 094
  
  Provision for income taxes (benefit)                                                              1 000      (           1 851)
  
                      Net income (loss)                                                $(         108 893)    $           32 945
  
  
  
  
  
  
  
  
  
  
  
  
  <FN>
  See accompanying notes to financial statements.
  </TABLE>
  5
  <PAGE>
  Exhibit C
  CMS AUTOMATION, INC.
  <TABLE>
  Statements of Changes in Stockholders' Equity
  For the Years ended December 31, 1995 (Audited) and 1994 (Unaudited)
  <CAPTION>
  
                                                                                 Additional             Retained          Total
                                                 Common Stock                Paid-In               Earnings         Stockholders'
                                        Shares             Amount            Capital             (Deficit)            Equity
  <S>                                  <C>          <C>                 <C>                 <C>
  Balance, December
   31, 1993                             467 399     $        93 480     $       658 123     $(       177 846)    $       573 757
  
  Prior period adjustment                 -                   -                   -          (        22 289)     (       22 289)
  
  Net income                              -                   -                   -                   32 945              32 945
  
  Balance, December
   31, 1994                             467 399              93 480             658 123      (       167 190)            584 413
  
  Stock issued                           16 827               3 365              47 635                -                  51 000
  
  Net loss                                -                   -                   -          (       108 893)     (      108 893)
  
  Balance, December
   31, 1995                             484 226     $        96 845     $       705 758     $(       276 083)    $       526 520
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  <FN>
  See accompanying notes to financial statements.
  </TABLE>
  6
  <PAGE>
  Exhibit D
  CMS AUTOMATION, INC.
  <TABLE>
  Statements of Cash Flows
  For the Years ended December 31, 1995 (Audited) and 1994 (Unaudited)
  <CAPTION>                                                                                  1995                   1994
                                                                                          (Audited)              (Unaudited)
  <S>                                                                              <C>                    <C>        
  Cash flows from operating activities:
      Net income (loss)                                                            $(        108 893)     $          32 945
      Adjustments to reconcile net loss to
       net cash provided by operating activities:
          Depreciation and amortization                                                      432 260                415 220
          Loss on disposal of assets                                                           -                        792
          Loss from investment                                                                29 496                  -
      (Increase) decrease in:
          Accounts receivable                                                                370 463                347 134
          Inventory                                                                          132 572       (         40 201)
          Prepaid expenses                                                          (          7 130)                   161
          Refundable income taxes                                                             71 255       (          1 851)
      (Decrease) increase in:
          Accounts payable                                                          (      1 815 293)               311 010
          Unearned revenues                                                         (        125 593)               187 145
          Income taxes payable                                                                 1 000                   -
          Accrued expenses                                                          (         61 439)                33 227
          Customer deposits                                                         (         50 752)      (          8 800)
          Deferred credit                                                           (            328)                12 946
  
                Net cash provided by (used in) operating activities                 (      1 132 382)             1 289 728
  
  Cash flows from investing activities:
      Acquisition of fixed assets                                                   (        556 308)      (        247 269)
      Acquisition of intangible assets                                              (         69 232)      (         91 915)
      Decrease (increase) in deposits                                                          5 074       (         14 036)
      Proceeds from asset disposal                                                             -                        400
      Investment advances                                                           (         54 160)                 -
  
                Net cash used in investing activities                               (        674 626)      (        352 820)
  
  Cash flows from financing activities:
      Proceeds from short-term debt, net of repayments                                     2 021 685       (        614 892)
      Repayment of long-term debt                                                   (        169 831)      (        356 679)
      Repayment of capital lease obligations                                        (         20 365)      (         22 693)
      Proceeds from long-term debt                                                             -                    200 000
      Proceeds from stock issued                                                              51 000                  -
  
                Net cash provided by (used in) financing activities                        1 882 489       (        794 264)
  <FN>
  See accompanying notes to financial statements.
  </TABLE>
  7
  <PAGE>
  Exhibit D
  CMS AUTOMATION, INC.
  <TABLE>
  Statements of Cash Flows, Continued
  For the Years ended December 31, 1995 (Audited) and 1994 (Unaudited)
  <CAPTION>
  
                                                                                           1995                   1994
                                                                                          (Audited)              (Unaudited)
  <S>                                                                              <C>                    <C>                        
  Net increase (decrease) in cash                                                  $          75 481      $         142 644
  
  Cash at beginning of period                                                                 22 473       (        120 171)
  
  Cash at end of period                                                            $          97 954      $          22 473
  
  Supplemental disclosures of cash flow information:
      Interest                                                                     $         571 154      $         571 057
      Income taxes                                                                             -                       -
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  <FN>
  See accompanying notes to financial statements.
  </TABLE>
  8
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements
  
  
  (1)     Accounting policies:
  
          The accounting and reporting policies of CMS Automation, Inc.,
  	conform to generally accepted accounting principles.  The following
  	describe the more significant of those policies:
  
            (a)  	Organization:
  
                  The Company was incorporated in January, 1990, for the
  		primary purpose of sales and service of computer hardware,
  		software and networking.  The Company has locations in
  		the Eastern part of the United States.
  
            (b)   Inventories:
  
                  Inventories are valued at the lower of cost or market, with
  		cost being determined by the average cost method.
  
            (c)   Fixed assets:
  
                  Fixed assets are stated at cost.  Depreciation is computed
  		by the use of accelerated and straight-line methods and is
  		based on the estimated useful life of the asset.
  
            (d)   Other assets:
  
                  Software and organization costs are being amortized over
  		periods of thirty-six to sixty months.  Franchise fees are
  		being amortized over 10 years.
  
            (e)   Unearned revenues:
  
                  Unearned revenues result from customer contract prepayments.
  		This results in a large amount of revenue being received prior
  		to its realization.  These unearned revenues are shown as
  		current liabilities on the balance sheet and are amortized
  		monthly over the terms of the contracts.
  
  
  
  
  
  
  
  
  
  
                                                      
  9
  <PAGE>
  CMS AUTOMATION, INC.
  
  Notes to Financial Statements, Continued
  
  
  (1)       Accounting policies, continued:
  
            (f)  	Credit risk:
  
                  Financial instruments which potentially subject the Company
  		to concentrations of credit risk consist principally of cash
  		and receivables.
  
                  The Company maintains its cash balances in several financial
  		institutions.  The balances are insured by the Federal
  		Deposit Insurance Corporation up to $100,000 in each
  		institution.
  
                  The Company has funds in excess of $100,000 in a financial
  		institution.
  
                  Receivables consist principally of trade accounts receivable
  		resulting from sales to customers primarily in the Eastern
  		part of the United States.  Credit is extended to customers
  		after an evaluation for credit worthiness.
  
            (g)   Estimates:
  
                  The preparation of financial statements in conformity with
  		generally accepted accounting principles requires management
  		to make estimates and assumptions that affect the reported
                  amounts of assets and liabilities and disclosure of contingent
  		assets and liabilities at the date of the financial statements
  		and the reported amounts of revenues and expenses during the
                  reporting period.  Actual results could differ from those
  		estimates.
  
  (2)       Loans to Officers:
  
            Loans to officers are unsecured advances to the officers of the
  	  Corporation.  No interest is currently being charged on these
  	  advances.
  
  (3)       Fixed assets:
  
            The following comprise the Corporation's fixed assets at December
  	  31, 1995 and 1994:
  
  <TABLE>
  <CAPTION>
                                                                                             1995                        1994
                      <S>                                                          <C>                         <C>
                      Support equipment                                            $        2 073 115          $        1 571 645
                      Furniture and fixtures                                                  616 448                     591 761
                      Vehicles                                                                 20 396                      20 396
                      Leasehold improvements                                                  114 502                      84 351
  
                                                                                   $        2 824 461          $        2 268 153
  </TABLE>
  (4)     Investment:
  
          In 1995, the Company advanced $54,160 to an entity that is expected
  	to be accounted for under the equity investment rules.  This entity
  	had a loss in 1995, of which CMS Automation reduced its investment
  	by $29,496, its share of the total loss.
  
  (5)     Short-term debt:
  
          In September 1991, the Corporation entered into an agreement with ITT
  	Commercial Financial Corporation to borrow funds under an accounts
   	receivable line of credit.  This agreement allows the Corporation to
  	borrow funds up to $5,000,000 at December 31, 1994, based upon the
  	eligible accounts receivable submitted to ITT Commercial Financial
  	Corporation.  Principal repayments are made as the monies from the
  	eligible accounts receivable are collected.  Interest is charged
  	monthly on the outstanding balance at prime plus 1.5%.  This agreement
  	is secured by inventory, fixed assets, accounts receivable, and
  	intangibles.  This agreement was terminated in 1995.
  
          During 1995, the Company entered into an agreement with IBM Credit
  	Corporation for wholesale financing.  This agreement allows the
  	Company to borrow funds up to $7,000,000, based upon eligible
  	accounts receivable, and inventory.  Interest is charged on the
  	outstanding balance at prime plus 3.25%.  This agreement is secured
  	by accounts receivable, inventory, fixed assets and intangibles.  It
  	is guaranteed by the shareholders of the Company.
  
  (6)     Notes payable:
  
          The following comprise the Company's notes payable at December 31,
  	1995 and 1994:
  <TABLE>
  <CAPTION>
                                                                                              1995                   1994
  	  <S>                                                                          <C>                   <C>
            Term note payable to Signet Bank, due in monthly
             installments of $10,000 plus interest at 9.25%,
             through May, 1996.  Secured by accounts
             receivable, inventory, equipment, general
             intangibles and subordination agreement.
             Guaranteed by stockholders.                                                 $           70 000     $          170 000
  
            Unsecured term note payable to G. Nolde, due in monthly
             installments of $4,951 including interest at 8%, through
             October, 1996.                                                                          47 743                101 002
  
            Unsecured term note payable to I. Cox, due in monthly
             installments of $1,719 including interest at 8%, through
             October, 1995.                                                              $            -         $           16 572
  
            Unsecured subordinated demand note to G. Nolde with
             interest at 8%.                                                                        285 000                285 000
  
            Unsecured subordinated demand note to I. Cox with
             interest at 8%.                                                                        165 000                165 000
  
                                Total long-term debt                                                567 743                737 574
  
                                Less current maturities                                             117 743                189 831
  
                                                                                         $          450 000     $          547 743
  
            The future maturities of long-term debt at December 31, 1994 are as follows:
  
  
                               Thereafter                                                $          450 000
  
                                                                                         $          450 000
  </TABLE>
  (7)     Capital leases:
  
          The Corporation has acquired equipment under the provisions of
  	long-term leases.  For financial reporting purposes, minimum lease
  	rentals relating to these leases have been capitalized.
  <TABLE>
  <CAPTION>                                                                                       1995                   1994
  
                                <S>                                                      <C>                    <C>
                                Equipment costs                                          $           57 752     $           57 752
                                Accumulated depreciation                                             26 224                 21 707
  
                                                                                         $           31 528     $           36 045
  
  </TABLE>
  12
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  
  (7)     Capital leases, continued:
  
          The following is a schedule by years of future minimum lease
  	payments under capital leases together with the present value of the
  	net minimum lease payments as of December 31, 1995:
  
          Year ended December 31:
                        1996                           $           4 736
  
          Total minimum lease payments                             4 736
  
          Less amount representing interest             (             62)
  
          Present value of net minimum lease payments  $           4 674
  
          Current portion                              $           4 674
  
  (8)     Income taxes:
  
          The provision (benefit) for income taxes consists of the
  	following:
  
                                                 1995                   1994
          Current                    $           3 300      $(          1 851)
          Deferred                    (          2 300)                 -
  
           Total                     $           1 000      $(          1 851)
  
          Deferred income taxes are provided for differences in timing, in
  	reporting income for financial statement and tax purposes, arising
  	from differences in the methods of accounting for bad debts,
  	inventory, and litigation settlements.
  
          For tax purposes, bad debts are expensed as incurred, while the
  	allowance method is used for financial purposes.  Inventory for
  	income tax purposes includes Section 263A costs which are not
  	included for financial statement purposes.  For financial statement
  	purposes litigation settlements are expensed as incurred, while for
  	tax purposes they are deductible when paid.
  
          Valuation allowances are established when necessary to reduce
  	deferred tax assets to the amount expected to be realized.  Income
  	tax expense is the tax payable or refundable for the period plus or
          minus the change during the period in deferred tax assets and
  	liabilities.
  
  
  
  13
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  
  (8)     Income taxes, continued:
  
          Net deferred tax assets are composed of the following:
                                                    1995                   1994
  
             Deferred tax assets arising from:
               Temporary differences     $         24 565      $           9 356
               AMT credits                         15 101                 17 401
               Valuation allowance        (        39 666)      (         26 757)
  
               Net deferred tax asset    $           -         $           -
  
         	The Company has alternative minimum tax credit carryforwards of
  	approximately $15,000 which are available to offset future federal
  	income tax liability.  The Company also has contribution
  	carryforwards of approximately $8,000 which expire in 1999.
  
  (9)     Commitments:
  
          The Corporation leases its facilities in Virginia, Georgia and
  	South Carolina.  Total net rent expense under facility leases for
  	1995 and 1994 was $293,624 and $349,648, respectively.  The
  	Corporation was also obligated under a lease for an automobile.
  	Lease expense under this agreement was $4,193 and $7,188 for 1995
  	and 1994, respectively. Future obligations under these leases as of
  	December 31, 1995 are as follows:
  
                                           Minimum                      Minimum
                                           Rental                      Sublease
                                           Payments                    Receipts
  
             1996                    $      257 755             $        21 467
             1997                           240 520
             1998                           207 589
             1999                            35 552
  
  (10)    Profit sharing plan:
  
          The Corporation has a qualified contributory profit-sharing plan
  	covering substantially all of its employees.  Annual contributions
  	are at the discretion of the Board of Directors but may not exceed
          the maximum amount allowable under applicable provisions of the
  	Internal Revenue Code.  No contribution was made for 1995 and 1994.
  
  
  
  
  14
  <PAGE>
  CMS AUTOMATION, INC.
  
  Notes to Financial Statements, Continued
  
  (11)    Business combinations:
  
          On May 31, 1994, the Company acquired the net assets of Systems
  	Integration Associates, Inc. for $17,000, in a business combination
  	accounted for as a purchase.
  
  (12)    Prior period adjustment:
  
          A prior period adjustment of $22,289 was made to retained earnings
  	at December 31, 1993 to account for an overstatement of refundable
  	income taxes.
  
  (13)    Subsequent event:
  
          Effective April 1, 1996, CMS Automation, Inc. merged into CMSA
  	Acquisition Corporation, a wholly-owned subsidiary of Halifax
  	Corporation.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  15
  <PAGE>
  INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION
  
  
  
  To the Stockholders
  CMS Automation, Inc.
  Richmond, Virginia:
  
  
            Our report on our audit of the basic financial statements of CMS
  Automation, Inc., for the year ended December 31, 1995 appears on page 2.
  That audit was made for the purpose of forming an opinion on the basic
  financial statements taken as a whole.  The schedules of operating expenses
  are presented for purposes of additional analysis and are not a required
  part of the basic financial statements.  Such information has not been
  subjected to the auditing procedures applied in the audit to the basic
  financial statements, and accordingly, we express no opinion on it.  The
  additional information for the year ended December 31, 1994 has been
  subjected to the inquiry and analytical procedures applied in the review of
  the basic financial statements, and we are not aware of any material
  modifications that should be made thereto.
  
  
  
  
  
  Keiter, Stephens, Hurst, Gary & Shreaves
  
  
  March 23, 1996
  <PAGE>
  Schedule 1
  CMS AUTOMATION, INC.
  Schedules of Operating Expenses
  For the Years ended December 31, 1995 and 1994
                                          1995                 1994
  Operating expenses:
      Advertising                       $    43 330      $     24 491
      Amortization                           44 464            30 561
      Auto expenses                         109 643           103 495
      Bad debts                              58 763            75 515
      Commissions                           378 218           571 471
      Contributions                           1 150             1 691
      Depreciation                          387 795           384 659
      Dues and subscriptions                 17 473            19 896
      Employee benefit programs             190 246           201 032
      Freight                               150 435           162 236
      Insurance                              45 807            59 059
      Miscellaneous                          18 339               193
      Office expense                         64 193            53 459
      Outside services                       71 506            82 531
      Payroll taxes                         296 952           330 533
      Penalties                              36 430            72 446
      Printing services                      18 513            29 669
      Professional fees                      63 431            54 287
      Recruitment                            24 632            14 296
      Rent                                  333 103           349 648
      Repairs and maintenance                20 639            12 730
      Salaries                            3 353 877         3 588 069
      Small equipment and tools               5 189             9 485
      Supplies                               34 172            24 866
      Taxes and licenses                     48 249            85 889
      Telephone                             217 793           223 069
      Training                               48 756            54 986
      Travel and entertainment              152 147           244 403
      Utilities                              64 493            59 143
  
       Total operating expenses      $    6 299 738      $  6 923 808
  
  
  
  See independent auditors' report on additional information.  
  
  17
  <PAGE>
  
  CMS AUTOMATION, INC.
  Financial Statements
  
  December 31, 1994<PAGE>
  CMS AUTOMATION, INC.
  
  Table of Contents
                                                                          Page
  
  Independent Auditors' Report                                            2
  
  
  
  Exhibit
     A                Balance Sheet                                      3-4
     B                Statement of Income                                5
     C                Statement of Changes in Stockholders' Equity       6
     D                Statement of Cash Flows                            7-8
  
                      Notes to Financial Statements                      9-15
  
                      Independent Auditors' Report on
                        Additional Information                          16
  
  Schedule
     1                Schedule of Operating Expenses                    17
  
  <PAGE>
  INDEPENDENT AUDITORS' REPORT
  
  
  
  To the Stockholders
  CMS Automation, Inc.
  Richmond, Virginia:
  
  
            We were engaged to audit the accompanying balance sheet of CMS
  Automation, Inc. as of December 31, 1994, and the related statements of
  income, changes in stockholders' equity, and cash flows for the year then
  ended.  These financial statements are the responsibility of the Company's
  management.
  
            Because we were not engaged as auditors until after the end of the
  year, we were not present to observe the taking of physical inventories at
  December 31, 1994 and 1993 (stated at $2,308,661 and $2,268,460,
  respectively), and we were unable to satisfy ourselves concerning inventory
  quantities on hand at those dates by other auditing procedures.
  
            Since the inventory balances as of December 31, 1994 and 1993,
  materially affect the determination of financial position, results of
  operations, and cash flows, the scope of our work was not sufficient to
  enable us to express, and we do not express, an opinion on the financial
  statements referred to in the first paragraph.
  
  
                       Keiter, Stephens, Hurst, Gary & Shreaves  1996
  
  <PAGE>                                               
  Exhibit A
  
  
  CMS AUTOMATION, INC.
  
  Balance Sheet
  December 31, 1994
  
               Assets
  
  Current assets:
   Cash                                       $         22 473
   Accounts receivable, net of allowance
    for uncollectible accounts of $15,000            3 595 750
    Inventory                                        2 308 661
    Loans to employees                                  13 325
    Loans to officers                                   16 292
    Prepaid expenses                                     6 491
    Refundable income taxes                             71 255
  
        Total current assets                         6 034 247
  
  Fixed assets                                       2 268 153
  Less accumulated depreciation                      1 024 047
  
        Net fixed assets                             1 244 106
  
  Software, net of amortization                         81 601
  Organization costs, net of amortization               26 503
  Franchise fee, net of amortization                     3 542
  Deposits                                              28 830
  
                      Total other assets               140 476
  
  
                                              $      7 418 829
  
  
  See accompanying notes to financial statements.
  3
  <PAGE>
  Exhibit A
  CMS AUTOMATION, INC.
  Balance Sheet
  December 31, 1994
  
  
      Liabilities and Stockholders' Equity
  
  Current liabilities:
      Short-term debt                         $      2 181 973
      Notes payable, current portion                   189 831
      Capital lease obligation, current
           portion                                      20 365
      Accounts payable                               3 237 644
      Unearned revenues                                445 776
      Accrued expenses                                 139 600
      Customer deposits                                 53 864
  
         Total current liabilities                   6 269 053
  
  Notes payable, less current portion                  547 743
  Capital lease, less current portion                    4 674
  Deferred credit                                       12 946
  
         Total liabilities                           6 834 416
  
  Commitments
  
  Stockholders' equity:
      Common stock, $.20 par value; 750,000 shares
       authorized; 467,399 shares issued and
       outstanding                                     93 480
      Additional paid-in capital                      658 123
      Retained earnings                       (       167 190)
  
         Total stockholders' equity                   584 413
  
  					   $      7 418 829
  
  
  See accompanying notes to financial statements.
  4
  <PAGE>
  Exhibit B
  
  CMS AUTOMATION, INC.
  Statement of Income
  For the Year ended December 31, 1994
  
  
  Sales                                       $        26 982 367
  
  Cost of sales                                        19 617 630
  
                      Gross profit                      7 364 737
  
  Operating expenses                                    6 923 808
  
                      Operating income                    440 929
  
  Other income (expense):
      Miscellaneous income                                160 397
      Interest income                                         142
      Interest expense                         (          569 582)
      Loss on asset disposal                   (              792)
  
                      Total other expense      (          409 835)
  
                      Income before provision
  			for income tax                   31 094
  
  Provision for income taxes (benefit):
      Federal                                               -
      State                                    (            1 851)
  
                      Total provision for
  			income taxes
  			(benefit)            (            1 851)
  
                      Net income              $            32 945
  
  
  See accompanying notes to financial statements.
  5
  <PAGE>
  Exhibit C
  
  CMS AUTOMATION, INC.
  <TABLE>
  Statement of Changes in Stockholders' Equity
  For the Year ended December 31, 1994
  <CAPTION>
  
  
                                                                              Additional                             Total Stock-
                                                    Common Stock               Paid-In               Retained           holders'
                                          Shares             Amount            Capital               Earnings            Equity
  <S>                                   <C>                <C>                 <C>                <C>                  <C>
  Balance, December 31,
   1993     			      467 399             $ 93 480            $658 123           $(177 846)           $573 757
  
  Prior period adjustment                 -                   -                   -                 ( 22 289)           ( 22 289)
  
  Net income                              -                   -                   -                   32 945              32 945
  
  Balance, December 31,
   1994                                 467 399             $ 93 480            $658 123           $(167 190)          $ 584 413
  
  <FN>
  See accompanying notes to financial statements.
  </TABLE>
  6
  <PAGE>
  Exhibit D
  CMS AUTOMATION, INC.
  
  Statement of Cash Flows
  For the Year ended December 31, 1994
  
  
  Cash flows from operating activities:
      Net income                                   $         32 945
      Adjustments to reconcile net income to
       net cash provided by operating activities:
          Depreciation and amortization                     415 220
          Loss on disposal of assets                            792
      (Increase) decrease in:
          Accounts receivable                               347 134
          Inventory                                 (        40 201)
          Prepaid expenses                                      161
          Refundable income taxes                   (         1 851)
      (Decrease) increase in:
          Accounts payable                                  311 010
          Unearned revenues                                 187 145
          Accrued expenses                                   33 227
          Customer deposits                         (         8 800)
          Deferred credit                                    12 946
  
                Net cash provided by operating
  			activities                      1 289 728
  
  Cash flows from investing activities:
      Acquisition of fixed assets                   (       247 269)
      Acquisition of intangible assets              (        91 915)
      Decrease (increase) in deposits               (        14 036)
      Proceeds from asset disposal                              400
  
                Net cash used in investing
                   activities                       (       352 820)
  
  Cash flows from financing activities:
      Repayment of short-term debt, net of advances (       614 892)
      Repayment of long-term debt                   (       356 679)
      Repayment of capital lease obligations        (        22 693)
      Proceeds from long-term debt                          200 000
  
                Net cash used in financing
  		activities                        (       794 264)
  
  
  See accompanying notes to financial statements.
  7
  <PAGE>
  Exhibit D
  
  CMS AUTOMATION, INC.
  Statement of Cash Flows, Continued
  For the Year ended December 31, 1994
  
  Net increase in cash                               $        142 644
  
  Cash at beginning of period                         (       120 171)
  
  Cash at end of period                              $         22 473
  
  Supplemental disclosures of cash flow information:
      Interest                                       $        571 057
      Income taxes                                              -
  
  
  See accompanying notes to financial statements.
  8
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements
  
  (1)     Accounting policies:
  
          The accounting and reporting policies of CMS Automation, Inc.,
  	conform to generally accepted accounting principles.  The following
  	describe the more significant of those policies:
  
            (a) 	Organization:
  
                  The Company was incorporated in January, 1990, for the
  		primary purpose of sales and service of computer hardware,
  		software and networking.  The Company has locations in the
  		Eastern part of the United States.
  
            (b) 	Inventories:
  
                 	Inventories are valued at the lower of cost or market, with
  		cost being determined by the average cost method.
  
            (c) 	Fixed assets:
  
                	Fixed assets are stated at cost.  Depreciation is computed
  		by the use of accelerated and straight-line methods and is
  		based on the estimated useful life of the asset.
  
            (d) 	Other assets:
  
                 	Software and organization costs are being amortized over
  		periods of thirty-six to sixty months.  Franchise fees are
  		being amortized over 10 years.
  
            (e)  	Unearned revenues:
  
                 	Unearned revenues result from customer contract
  		prepayments.  This results in a large amount of revenue
  		being received prior to its realization.  These unearned
  		revenues are shown as current liabilities on the balance
  		sheet and are amortized monthly over the terms of the
  		contracts.
  
  9
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  
  (1)  	Accounting policies, continued:
  
        	(f) 	Credit risk:
  
                	Financial instruments which potentially subject the Company
  		to concentrations of credit risk consist principally of cash
  		and receivables.
  
                	The Company maintains its cash balances in several financial
  		institutions.  The balances are insured by the Federal
  		Deposit Insurance Corporation up to $100,000 in each
  		institution.  The Company has funds in excess of $100,000 in
  		a financial institution.
  
                  Receivables consist principally of trade accounts receivable
  		resulting from sales to customers primarily in the Eastern
  		part of the United States.  Credit is extended to customers
  		after an evaluation for credit worthiness.
  
        	(g) 	Estimates:
  
                 	The preparation of financial statements in conformity with
  		generally accepted accounting principles requires management
  		to make estimates and assumptions that affect the reported
  		amounts of assets and liabilities and disclosure of
  		contingent assets and liabilities at the date of the
  		financial statements and the reported amounts of revenues
                	and expenses during the reporting period.  Actual results
  		could differ from those estimates.
  
  (2)   	Loans to Officers:
  
        	Loans to officers are unsecured advances to the officers of the
  	Corporation.  No interest is currently being charged on these
  	advances.
  
  (3)   	Fixed assets:
  
        	The following comprise the Corporation's fixed assets at December
  	31, 1994:
  
              Support equipment                      $      1 571 645
              Furniture and fixtures                          591 761
              Vehicles                                         20 396
              Leasehold improvements                           84 351
  
                                                     $      2 268 153
  
  
  
  
  10
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  
  (4) 	Letter of Credit:
  
      	The Company has a $40,000 Standby Letter of Credit which expires
  	August 31, 1995.  There were no outstanding balances at
  	December 31, 1994.
  
  (5)  	Short-term debt:
  
        	In September 1991, the Corporation entered into an agreement with
  	ITT Commercial Financial Corporation to borrow funds under an
  	accounts receivable line of credit.  This agreement allows the
  	Corporation to borrow funds up to $5,000,000 at December 31,
  	1994, based upon the eligible accounts receivable submitted to ITT
  	Commercial Financial Corporation.  Principal repayments are made as
  	the monies from the eligible accounts receivable are collected.
  	Interest is charged monthly on the outstanding balance at prime plus
  	1.5%.  This agreement is secured by inventory, fixed assets,
  	accounts receivable, and intangibles.
  
  (6)   	Notes payable:
  
        	The following comprise the Company's notes payable at
  	December 31, 1994:
  
            Term note payable to Signet Bank, due in monthly
             installments of $10,000 plus interest at 9.25%,
             through May, 1996.  Secured by accounts
             receivable, inventory, equipment, general
             intangibles and subordination agreement.
             Guaranteed by stockholders.                       $        170 000
  
            Unsecured term note payable to G. Nolde, due in monthly
             installments of $4,951 including interest at 8%, through
             October, 1996.                                             101 002
  
            Unsecured term note payable to I. Cox, due in monthly
             installments of $1,719 including interest at 8%, through
             October, 1995.                                             16 572
  
            Unsecured subordinated demand note to G. Nolde with
             interest at 8%.                                           285 000
  
  
  
  
  
  
  
  
  11
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (6)       Notes payable, continued:
  
            Unsecured subordinated demand note to I. Cox with
             interest at 8%.                                  $        165 000
  
                                Total long-term debt                   737 574
  
                                Less current maturities                189 831
  
                                                              $        547 743
  
            The future maturities of long-term debt at December 31, 1994
  		are as follows:
  
                                1996                           $        97 743
                                Thereafter                             450 000
  
                                                               $       547 743
  
  (7)   	Capital leases:
  
          The Corporation has acquired equipment under the provisions of
  	long-term leases.  For financial reporting purposes, minimum lease
  	rentals relating to these leases have been capitalized.
  
                                Equipment costs                $       57 752
                                Accumulated depreciation               21 707
  
                                                              $        36 045
  
         	The following is a schedule by years of future minimum lease
  	payments under capital leases together with the present value of
  	the net minimum lease payments as of December 31, 1994:
  
  
  
  
  
  
  
  
  
  
  
  
  
  12
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  
  (7)       Capital leases, continued:
  
                      Year ended December 31:
                                1995                       $       21 609
                                1996                                4 736
  
                      Total minimum lease payments                 26 345
  
                      Less amount representing interest     (       1 306)
  
                      Present value of net minimum lease
  			payments                          $       25 039
  
                      Current portion                       $       20 365
                      Noncurrent portion                             4 674
                                                            $       25 039
  
  (8)     Income taxes:
  
          The provision (benefit) for income taxes consists of the
  	following:
  
                      Current                               $(       1 851)
                      Deferred                                       -
  
                                Total                       $(       1 851)
  
       	Deferred income taxes are provided for differences in timing,
  	in reporting income for financial statement and tax purposes,
  	arising from differences in the methods of accounting for bad
  	debts and inventory.
  
          For tax purposes, bad debts are expensed as incurred, while the
  	allowance method is used for financial purposes.  Inventory for
  	income tax purposes includes Section 263A costs which are not
  	included for financial statement purposes.
  
          Valuation allowances are established when necessary to reduce
  	deferred tax assets to the amount expected to be realized.
  	Income tax expense is the tax payable or refundable for the period
  	plus or minus the change during the period in deferred tax assets
  	and liabilities.
  
  13
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (8)     Income taxes, continued:
  
          Net deferred tax assets are composed of the following:
  
                      Deferred tax assets arising from:
                           Temporary differences           $           9 356
                           AMT credits                                17 401
                           Valuation allowance              (         26 757)
  
                                     Net deferred tax asset $           -
  
          The Company has alternative minimum tax credit carryforwards
  	of approximately $17,500 which are available to offset
  	future federal income tax liability.  The Company also has
  	contribution carryforwards of approximately $8,400 which expire in
  	1999.
  
  (9)     Commitments:
  
          The Corporation leases its facilities in Virginia, North Carolina,
  	South Carolina and New York.
          Total net rent expense under these leases for 1994 was $349,648.
  	The Corporation is also obligated under a lease for an automobile.
  	Lease expense under this agreement was $7,188 for
          1994. Future obligations under these leases as of December 31, 1994
  	are as follows:
  
                                           Minimum           Minimum
                                           Rental           Sublease
                                                            Payments    Receipts
  
             1995                   $       317 316     $        55 676
             1996                           313 993              48 507
             1997                           301 757              48 507
             1998                           207 589
  	   1999                            35 552
  
  (10)  	Profit sharing plan:
  
          The Corporation has a qualified contributory profit-sharing plan
  	covering substantially all of its employees.  Annual contributions
  	are at the discretion of the Board of Directors but may not
         	exceed the maximum amount allowable under applicable provisions
  	of the Internal Revenue Code.  No contribution was made for 1994.
  
  (11)  	Business combinations:
  
         	On May 31, 1994, the Company acquired the net assets of Systems
  	Integration Associates, Inc. for $17,000, in a business combination
  	accounted for as a purchase.
  
  14
  <PAGE>
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  
  (12)  	Prior period adjustment:
  
       	A prior period adjustment of $22,289 was made to retained earnings
  	at December 31, 1993 to account for as overstatement of refundable
  	income taxes.
  
  (13)  	Subsequent events:
  
        	The Company has entered into an agreement with IBM Credit
  	Corporation for wholesale financing.  This agreement allows the
  	Company to borrow funds up to $7,000,000, based upon eligible
  	accounts receivable, and inventory.  Interest is charged
  	on the outstanding balance at prime plus 3.25%. This agreement is
  	secured by accounts receivable, inventory, fixed assets and
         	intangibles.  It is guaranteed by the shareholders of the Company.
  
       	Effective April 1, 1996, CMS Automation, Inc. merged into CMSA
  	Acquisition Corporation, a wholly-owned subsidiary of Halifax
  	Corporation.
  
  
  15
  <PAGE>
  INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION
  
  To the Stockholders
  CMS Automation, Inc.
  Richmond, Virginia:
  
  
            Our report on our audit of the basic financial statements of CMS
  Automation, Inc., for the year December 31, 1994 appears on page 2.  That
  audit was made for the purpose of forming an opinion on the basic financial
  statements taken as a whole.  The schedule of operating expenses is
  presented for purposes of additional analysis and is not a required part
  of the basic financial statements. Such information has not been subjected
  to the auditing procedures applied in the audit to the basic
  financial statements, and accordingly, we express no opinion on it.
  
  
  Keiter, Stephens, Hurst, Gary & Shreaves
  
  
  May 22, 1996
  <PAGE>
  Schedule 1
  
  CMS AUTOMATION, INC.
  
  Schedule of Operating Expenses
  For the Year ended December 31, 1994
  
  
  Operating expenses:
       Advertising                          $          24 491
       Amortization                                    30 561
       Auto expenses                                  103 495
       Bad debts                                       75 515
       Commissions                                    571 471
       Contributions                                    1 691
       Depreciation                                   384 659
       Dues and subscriptions                          19 896
       Employee benefit programs                      201 032
       Freight                                        162 236
       Insurance                                       59 059
       Miscellaneous                                      193
       Office expense                                  53 459
       Outside services                                82 531
       Payroll taxes                                  330 533
       Penalties                                       72 446
       Printing services                               29 669
       Professional fees                               54 287
       Recruitment                                     14 296
       Rent                                           349 648
       Repairs and maintenance                         12 730
       Salaries                                     3 588 069
       Small equipment and tools                        9 485
       Supplies                                        24 866
       Taxes and licenses                              85 889
       Telephone                                      223 069
       Training                                        54 986
       Travel and entertainment                       244 403
       Utilities                                       59 143
  
  
        Total operating expenses            $       6 923 808
  
  
  
  
  
  
  
  See independent auditors' report on additional information.
  17
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text: SECURITIES AND EXCHANGE COMMISSION
  
  Washington, D.C.  20549
  
  FORM 8-K
  
  CURRENT REPORT
  
  Pursuant to Section 13 and 15(d) of
  the Securities Exchange Act of 1934
  
  Date of Report (Date of earliest event reported):    April 15, 1996
  (April 1, 1996)
  
  HALIFAX CORPORATION
  
  (Exact name of registrant as specified in charter)
  
            Virginia                  2-84160-W             54-0829246
  (State or other jurisdiction        (Commission           (IRS Employer
   of incorporation)                   File Number         Identification No.)
  
   5250 Cherokee Avenue,  Alexandria, Virginia                        22312
  (Address of principal executive offices)                          (Zip Code)
  
  Registrant's telephone number, including area code:     (703) 750-2202
  
                                 Not Applicable
      (Former name or former address, if changed since last report)
  Item 2.  Acquisition or Disposition of Assets
  
  (a) In accordance with a Plan of Merger ("Plan") attached as
  Exhibit A hereto which was duly adopted by the board of directors
  of both parties to the merger, CMS Automation, Inc. ("CMS"), a
  Virginia corporation, merged into CMSA Acquisition Corporation
  ("CMSA"), a Virginia corporation wholly owned by Halifax
  Corporation, a Virginia corporation.  CMS merged into CMSA on the
  following basis.  Pursuant to the Plan, each issued and
  outstanding share of CMS common stock was converted into, and
  become exchangeable for, the number of shares of validly issued,
  fully paid and nonassessable common stock of Halifax equal to a
  conversion ratio meaning a fraction, the numerator of which is
  139,630 and the denominator of which is equal to the sum of the
  number of shares of CMS issued and outstanding on the effective
  date of the merger plus the number of shares that would be
  represented by the conversion of $450,000 worth of debt to
  equity.  In this regard, CMS shareholders who held promissory
  notes of CMS in the amount of $450,000 converted said debt to
  equity in CMS.  In addition to the initial issuance of 139,630
  shares of Halifax stock to CMS shareholders which was based on
  the net equity value of CMS, Halifax stock will be awarded
  annually for three (3) years subsequent to the merger to the CMS
  shareholders on a pro-rate basis, excluding Halifax stock issued
  as a result of the conversion of debt to equity, having a value
  equal to one-third of the net after tax income of CMSA operating
  as a wholly owned subsidiary of Halifax.
  
  The assets acquired included accounts receivable and the
  inventory and equipment used in conducting and operating the
  business of CMS which consists of computer systems integration
  including wide area and local area networking, consulting,
  application development and training.
  
  Closing of the transaction took place on April 1, 1996 with a
  Certificate of Merger issued by the State Corporation Commission
  of Virginia effective April 9, 1996.
  
  Item 7.  Financial Statements and Exhibits
  
  (a) & (b) It is impracticable to provide the required financial
  statements and pro forma financial information at the time of the
  filing of this report.  Said financial statements and information
  will be filed as soon as available but not later than 60 days
  from the date of this report.
  
  (c) Attached as Exhibit A is a copy of the plan of acquisition as
  contained in the Agreement and Plan of Reorganization entered
  into by the parties.
  AGREEMENT AND PLAN OF REORGANIZATION
  
  AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 1, 1996, by
  and among HALIFAX CORPORATION, a Virginia corporation ("Parent"), CMSA
  ACQUISITION CORPORATION, a Virginia corporation and a wholly-owned subsidiary
  of Parent ("Sub").  CMS AUTOMATION, INC., a Virginia corporation (the
  "Target") (Sub and Target being hereinafter collectively referred to as (the
  "Constituent Corporations") and those individuals who are shareholders of the
  Target on the Closing Date ("Shareholders").
  
  ARTICLE III
  
  PLAN OF MERGER
  
  3.1 Conversion of Target Shares in the Merger. Pursuant to this Agreement, at
  the Effective Time, by virtue of the Merger and without any action on the
  part of any holder of any capital stock of Target; each issued and
  outstanding share of Target Common Stock, other than Target Dissenting
  Shares (as defined in Section 3.4 hereof), shall be converted into, and
  become exchangeable for, the number of shares of validly issued, fully paid
  and nonassessable common stock of Parent ("Parent Common Stock") equal to
  the Conversion Ratio.  In this Agreement, the term "Conversion Ratio" means
  a fraction, the numerator of which is equal to 139,630 and the denominator
  of which is equal to the sum of the number of shares of Target Common Stock
  issued and outstanding as of the Closing plus the number of shares that
  would be represented by the conversion of $450,000 of debt to equity.  In
  this regard, prior to Closing, Shareholders who hold promissory notes of the
  Target in the amount of $450,000 (hereafter sometimes separately referred to
  as "Converting Shareholders") shall convert the notes to Target equity. The
  consideration referred to in this Section 3.1, together with any cash
  payments in lieu of fractional shares as provided herein, and the Contingent
  Additional Purchase Price Consideration set forth in Section 3.6 hereof is
  hereinafter referred to as the "Merger Consideration."
  
  3.2 Status of Sub Shares. At the Effective Time, by virtue of the Merger and
  without any action on the part of any holder of any capital stock of Sub,
  each issued and outstanding share of common stock of Sub shall continue
  unchanged and remain outstanding as a share of common stock of the Surviving
  Corporation.
  
  3.3 Exchange of Company Capital Stock Certificates. (a) On or prior to the
  Closing Date, Parent shall deposit with the Escrow Agent (as that term is
  defined below) the certificates representing shares of Parent Common Stock
  required to effect the exchange referred to in Section 3.3(b) below. Parent
  shall also deposit with the Escrow Agent the cash payment in lieu of
  fractional shares referred to in Section 3.3(d) below. Shares of Parent
  Common Stock into which shares of Target Common Stock shall be converted in
  the Merger shall be deemed to have been issued at the Effective Time and the
  Shareholders shall have full voting rights with respect to such shares
  immediately following the Effective Time.  In addition, the Shareholders
  shall be entitled to receive any dividends or other distributions with a
  record date after the Effective Time.
  
  (b) From and after the Effective Time, each holder of a certificate which
  immediately prior to the Effective Time represented outstanding shares of
  Target Common Stock, other than shares with respect to which dissenters'
  rights, if any, are granted by reason of the Merger under the VGCL, shall be
  entitled to receive in exchange therefor, upon delivery thereof to Williams,
  Mullen, Christian & Dobbins (the "Escrow Agent"), and following the period
  of the Escrow, a certificate or certificates representing the number of
  whole shares of Parent Common Stock into which such holder's shares of Target
  Common Stock were converted pursuant to Section 3.1 and cash in lieu of any
  fractional shares of such Parent Common Stock pursuant to
  Section 3.3(d). From and after the Effective Time, Parent shall be entitled
  to treat the certificates which immediately prior to the Effective Time
  represented shares of Target Common Stock and which have not yet been
  surrendered for exchange as evidencing the ownership of the number of full
  shares of Parent Common Stock into which the shares of Target Common Stock
  represented by such certificates shall have been converted pursuant to
  Section 3.1, notwithstanding the failure to surrender such certificates.
  However, notwithstanding any other provision of this Agreement, until
  holders or transferees of certificates which immediately prior to the
  Effective Time represented shares of Target Common Stock have surrendered
  them for exchange as provided herein, no dividends shall be paid with
  respect to any shares represented by such certificates and no
  payment for fractional shares shall be made.  Such dividends or other
  distributions with a record date after the Effective Time shall be held
  by the Escrow Agent in trust for the benefit of such holders of undelivered
  certificates.  Upon surrender of a certificate which immediately prior to
  the Effective Time represented outstanding shares of Target Common Stock,
  there shall be paid to the holder of such certificate the amount of any
  dividends which theretofore became payable, but which were not paid by
  reason of the foregoing, with respect to the number of whole shares of
  Parent Common Stock represented by the certificate or certificates issued
  upon such.
  
  (c) As soon as practicable after the Effective Time, the Escrow Agent shall
  mail to each holder of record of a certificate or certificates that
  immediately prior to the Effective Time represented outstanding shares of
  Target Common Stock (collectively, the "Target Certificates") (i) a form
  letter of transmittal (which shall specify that delivery shall be effected,
  and risk of loss and title to Target Certificates shall pass, only upon
  actual delivery of Target Certificates to the Escrow Agent) and (ii)
  instructions for use in effecting the surrender of Target Certificates
  in exchange for certificates representing shares of Parent Common Stock.
  Upon surrender of Target Certificates for cancellation to the Escrow
  Agent, together with a duly executed letter of transmittal and such other
  documents as the Escrow Agent shall reasonably require and following the
  period of the Escrow, the holder of such Target Certificates shall receive
  in exchange therefor a certificate representing that number of whole shares
  of Parent Common Stock into which the shares of Target Common Stock
  represented by Target Certificates so surrendered shall have been converted
  pursuant to the provisions of Section 3.1 less any adjustments pursuant to
  Section 4.5 hereof, and Target Certificates so surrendered shall forthwith
  be canceled. Notwithstanding the foregoing, neither the Escrow Agent nor
  any party hereto shall be liable to a holder of shares of Target
  Common Stock for any shares of Parent Common Stock or dividends
  or distributions thereon delivered to a public official pursuant
  to applicable escheat laws.
  
  (d) Notwithstanding any other provision of this Agreement, no certificates
  or scrip for fractional shares of Parent Common Stock shall be issued upon
  the surrender for exchange of Target Certificates pursuant to this Article
  III in the Merger and no Parent Common Stock dividend, stock split or
  interest shall relate to any fractional security, and such fractional
  interests shall not entitle the owner thereof to vote or to any other
  rights of a security holder. In lieu of any such fractional shares, each
  holder of Target Common Stock who would otherwise have been entitled to a
  fraction of a share of Parent Common Stock upon surrender of Target
  Certificates for exchange pursuant to this Article III, shall be entitled
  to receive from the Escrow Agent a cash payment in lieu of such fractional
  share equal to such fraction multiplied by the Valuation Price of $7.00
  per share of Parent Common stock.
  
  3.4 Dissenting Shares. Notwithstanding anything to the contrary contained in
  this Agreement or the Merger Agreement, holders of shares of Target Common
  Stock with respect to which dissenters' rights, if any, are granted by
  reason of the Merger under the VGCL and who do not vote in favor of the
  Merger and otherwise comply with the VGCL ("Target Dissenting Shares"),
  shall not be entitled to shares of Parent Common Stock pursuant to Section
  3.1, unless and until the holder thereof shall have failed to perfect or
  shall have effectively withdrawn or lost such holder's right to dissent from
  the Merger under the VGCL, and shall be entitled to receive only the payment
  provided for pursuant to the VGCL. If any such holder shall have failed to
  perfect or shall have effectively withdrawn or lost such holder's
  dissenters' rights under the VGCL, such holder's Target Dissenting
  Shares shall thereupon be deemed to have been converted into and to
  have become exchangeable for, as of the Effective Time, the right to
  receive the Merger Consideration.
  
  3.5 Closing of Transfer Books. From and after the Effective Time, the stock
  transfer books of Target shall be closed and no transfer of shares of Target
  Common Stock shall thereafter be made. If, after the Effective Time, Target
  Certificates are presented to Parent, they shall be canceled and exchanged
  for the Merger Consideration in accordance with the procedures set forth in
  this Article III.
  
  3.6 Contingent Additional Purchase Price Consideration. (a) In addition to
  the Parent Common Stock transferred to Shareholders at Closing, on or before
  May 31, 1997, 1998, and 1999, Parent shall deliver to the Shareholders
  shares of Parent Common Stock having a value, as determined by the then
  current market value of the Parent Common Stock, equal to one-third of the
  net after tax income of Sub (Formerly Target) operating as a wholly owned
  subsidiary of Parent for each of the tax years ending March 31, 1997, 1998
  and 1999.  Such additional shares of Parent Common Stock shall be distributed
  among the Shareholders on a pro rate basis, based on the Shareholders holdings
  as of the date of Closing and set forth in Exhibit A hereto; provided,
  however, that for the purposes of determining a Shareholder's pro rate
  share, any shares of Target received by such Shareholders as a result of
  converting a promissory note into equity of Target prior to the Merger
  pursuant to Article III hereof shall not be included.  For the purposes of
  this paragraph only, the first period for calculating the additional
  consideration shall commence January 1, 1996 and continue through March 31,
  1997.  The two remaining periods shall consist of twelve month intervals
  beginning April 1, 1997 and April 1998, respectively.  Notwithstanding the
  foregoing, the parties hereto agree that (i) for the purposes of determining
  the additional shares of Parent Common Stock due to the Shareholders for the
  period ending March 31, 1997, the fair market value of the Parent Common
  Stock shall be deemed to be $7.00 per share and (ii) for the purposes of
  determining the additional shares of Parent Common Stock due to the
  Shareholders for the periods ending March 31, 1998 and 1999, the fair
  market value of the Parent Common Stock shall not exceed $10.00 per
  share or be less than $6.00 per share.
  Notwithstanding anything contained herein to the contrary, in the event that
  a distribution of shares of Parent Common Stock pursuant to this Section
  3.6, in combination with shares previously distributed pursuant to Article
  III, would increase the number of outstanding shares of Parent Common Stock
  by more than 20.0% of the number of outstanding shares of Parent Common
  Stock outstanding immediately before the Closing, Parent may deliver in lieu
  of additional shares of Parent Common Stock, to the Shareholders a cash
  payment equal to the value of the shares of Parent Common Stock they would
  have received pursuant hereto. (b) Sub's after-tax net income shall be
  determined by Parent's accounting firm.  For purposes of calculating
  the Contingent Additional Purchase Price Consideration the following
  factors will be in effect:
  
            (i) Sub's tax liability will be calculated as if Sub was an
  independent entity and the tax rate of the Sub will be no more than Parent's
  overall corporate tax rate.
  
            (ii) Sub will get the benefit of any allowable tax-loss carry
  forward from Target.
  
  	(iii) For purposes of calculating additional consideration none of
  the Parent corporate overhead will be assigned to Sub other than costs
  transferred from Sub to Parent.
  
            (iv) Only Sub operating debt will be assigned to Sub.
  
            (v) Future acquisitions of similar companies will not affect
  additional consideration calculations.
  
  (c) Parent shall notify the Shareholders in writing no later than May 31 of
  each year of the accountant's determination of Sub's after-tax net income
  and of the number of additional shares, if any, that the Shareholders are
  entitled to receive.  Such notice shall include a copy of the accountants
  calculations.  The Shareholders shall then have 30 days to deliver to Parent
  a written notice disputing the accountant's calculations.  In the event
  the Shareholders deliver such a notice, such dispute shall be submitted
  for arbitration in accordance with Section 10.8 hereof.
  
  3.7 Closing. The closing (the "Closing") of the transactions contemplated by
  this Agreement shall take place (a) at the offices of Target at 10:00 a.m.,
  local time on April 1, 1996, or the second business day immediately
  following the date on which the last of the conditions set forth in Article
  VII hereof is fulfilled or waived, or (b) at such other time and place and
  on such other date as Parent and Target shall agree (the "Closing Date").
  Item 7.  Financial Statements and Exhibits
  
  A.        Financial Statements of Business Acquired
  
  The following Audited Financial Statements of CMS Automation, Inc. (CMSA) are
  included as Exhibits 99(a) and 99(b) to this Current Report on Form 8-K:
  
            Audited Financial Statements dated December 31, 1995 including
                      Independent Auditor's Report
                      Balance Sheet
                      Statement of Income
                      Statement of Cash Flows
                      Notes to Financial Statements
  
            Audited Financial Statements dated December 31, 1994 including
                      Independent Auditor's Report
                      Balance Sheet
                      Statement of Income
                      Statement of Cash Flows
                      Notes to Financial Statements
  
  B.        Pro Forma Financial Information
  
  Unaudited Pro Forma Combined Condensed Financial Statements
  
  The following unaudited pro forma combined condensed financial statements
  have been prepared by Halifax's management from the consolidated financial
  statements of Halifax and CMSA.  The Unaudited Pro Forma Combined Condensed
  Statement of Earnings reflects adjustments as if the acquisition transaction
  had occurred on April 1, 1995.  The Unaudited Pro Forma Combined Condensed
  Balance Sheet reflects adjustments as if the CMSA transaction had occurred
  on March 31, 1996.  See "Note 1 - Basis of Presentation." The unaudited pro
  forma adjustments described in the accompanying notes are based upon
  preliminary estimates and certain assumptions that management of Halifax
  believes are reasonable in the circumstances.
  
  The unaudited pro forma combined condensed financial statements are not
  necessarily indicative of financial position or results of operations that
  would have resulted if the CMSA transaction had occurred on the applicable
  dates indicated above.  Moreover, they are not intended to be indicative of
  future results of operations or financial position.  The pro forma combined
  condensed financial statements should be read in conjunction with the
  historical consolidated financial statements of Halifax and related notes
  thereto, included in the Corporation's Annual Report on Form 10-K for the
  year ended March 31, 1996; and the historical financial statements of
  CMSA and related notes thereto, included in this Current Report on Form 8-K.
  Unaudited Pro Forma Combined Condensed Statement of Earnings
  For the Year Ended
                                               March 31, 1996       December 31, 1995       Proforma               Proforma
                                                    Halifax              CMSA              Adjustments             Combined
                                                         ($ In thousands, except per share data)
  Revenues                                         $          47,159    $    21,249                          $        68,408
  
  Operating costs & Expenses:
  
   Cost of Services                                           41,675         14,582                                   56,257
  
   Selling, General &
   Administrative Expenses                                     3,650          6,300               14(c)                9,964
  
  Total Operating Costs &
   Expenses                                                   45,325         20,882               14                  66,221
  
  Operating Income                                             1,834            367              (14)                  2,187
  
  Interest Expense                                               573            543             (240)(d)                 876
  
  Other Income (Expense), Net                                    -               68                                       68
  
  Earnings Before Tax                                          1,261           (108)              226                  1,379
  
  Income Taxes                                                   498              1                89(e)                 588
  
  Net Income/(Loss)                                $             763    $      (109)               137                   791
  Earnings per Share                               $                .65         N/A                            $            .60
  
  Weighted Average Number of
   Common Shares Outstanding                        #      1,171,254            N/A                            #       1,310,884
  See accompanying notes to unaudited pro forma combined condensed financial statements
  Unaudited Pro Forma Combined Condensed Balance Sheet
  
                                                                                   As of
  
                                                   March 31, 1996       December 31, 1995              Proforma             Proforma
                                                       Halifax              CMSA                     Adjustments            Combined
                                                                                   ($ In thousands)
  Assets:
  
  Current Assets:
     Cash & Cash Equivalents                       $           2,743    $              98                          $           2,841
     Receivables, Net                                         11,734                3,212                                     14,946
     Inventory, Net                                            2,792                2,176                                      4,968
     Other Current Assets                                        566                   57                                        623
        Total Current Assets                                  17,835                5,543                                     23,378
  
  Property & Equipment, Net                                    4,527                1,412                                      5,939
  
  Costs in Excess of Net Assets
   Acquired & Other Assets                                     2,313                  185              348(a)                  2,846
      Total Assets                                            24,675                7,140              348                    32,163
  
  Liabilities and Stockholders' Equity:
  
  Current Liabilities:
     Accounts Payable & Accrued Expenses                      11,462                1,500                                     12,962
     Current Maturities Debt                                     556                4,327         (4,327)(a)                     556
     Unearned Revenues & Other                                    -                   324                                        324
        Total Current Liabilities                             12,018                6,151         (4,327)                     13,842
  
  Long-Term Operating Debt                                       739                  450           3,877(a)(b)                5,066
  Mortgage Note                                                2,574                   -                                       2,574
  Other Liabilities                                              560                   12                                        572
     Total Liabilities                                        15,891                6,613           (450)                     22,054
  
  Stockholders' Equity:
     Common Stock                                                518                   97            (97)(a)                     518
     Additional Paid-In Capital                                3,401                  706             446(a)(b)                4,553
     Treasury Stock at Cost                                     (388)                  -              173(a)(b)                 (215)
     Retained Earnings (Deficit)                               5,253                 (276)            276(a)                   5,253
        Total Stockholders' Equity                             8,784                  527             798                     10,109
  
    Total Liabilities & Stockholders' Equity       $          24,675    $           7,140    $        348          $          32,163
  See accompanying notes to unaudited pro forma combined condensed financial statements
  NOTES TO UNAUDITED PRO FORMA
  COMBINED CONDENSED FINANCIAL STATEMENTS
  
  1.       Basis of Presentation
  
  The accompanying Unaudited Pro Forma Combined Condensed Statement of
  Earnings presents the historical results of operations of Halifax for its
  fiscal year ended March 31, 1996 and the historical results of operations
  for CMSA for its fiscal year ended December 31, 1995 with pro forma
  adjustments as if the CMSA transaction had been consummated as of  April 1,
  1995.  The Unaudited Pro Forma Combined Condensed Balance Sheet presents the
  historical balance sheets of Halifax and CMSA as of March 31, 1996 and
  December 31, 1995, respectively, with pro forma adjustments as if the
  CMSA transaction had been consummated as of March 31, 1996, in a transaction
  accounted for as a purchase in accordance with Generally Accepted Accounting
  Principles.
  
  2.      Pro Forma Adjustments
  
  a.      To record the consideration assumed to be exchanged for CMSA
  	consisting of Halifax's common stock and the assumption of CMSA
  	short-term debt and its conversion to long-term debt by Halifax;
  	and to record the estimated expense of the transaction.
  
          Halifax Treasury Stock                                  $    93,000
          Halifax Additional Paid-In Capital                      $   434,000
          CMSA Common Stock Extinguished                          $   (97,000)
          CMSA Additional Paid-In Capital Extinguished            $   706,000)
          CMSA Retained Earnings Extinguished                     $   276,000
          Halifax Cost in Excess of Net Assets Acquired
  		& Other Assets 					$   348,000
          Halifax Additional Paid-In Capital                      $   348,000
          Halifax Long-Term Operating Debt                        $ 4,327,000
          CMSA Current Maturities Debt                            $(4,327,000)
  
          CMSA Net Book Value                                     $   527,000
          Number of Halifax Common Shares Exchanged @ $7.00 each  $    75,345
          Average Cost of Halifax Treasury Share                  $      1.24
          Halifax Treasury Stock at Cost                          $   388,000
          Number of Halifax Treasury Shares                           311,786
  
          Estimated expenses of the Transaction                   $   348,000
  b.      To record the issuance of common stock to satisfy
  	long-term notes payable of CMSA.
  
  	CMSA Long-Term Notes Payable                            $  (450,000)
          Treasury Stock Exchanged                                $    80,000
          Additional Paid-In Capital                              $   370,000
  
          Number of Halifax Common Shares Exchanged @ $7.00 each       64,285
          Average Cost of Treasury Stock Share                    $      1.24
          Treasury Stock at Cost                                  $   388,000
          Number of Treasury Shares                                   311,786
  
   c.     To record the amortization of estimated cost in excess of
  	net assets including capitalizable acquisition costs acquired
  	in the CMSA transaction over an estimated life of 25 years.
  
          Halifax Selling General & Administrative Expense        $    14,000
  
          Halifax Cost in excess of Net Assets Acquired in
  		the Transaction                                 $   348,000
          Amortization Period.                                       25 years
  
  d.      To record estimated interest expense at the Halifax's
  	cost of borrowing under its borrowing agreement, resulting from
          the assumption of the CMSA short-term debt and the conversion of
          the CMSA long-term notes payable.
  
          Reduction in CMSA interest expense due to conversion of debt
          to equity and change from short-term to long-term debt.    $ (543,000)
  
          Interest expense on CMSA average outstanding debt converted to
          long-term at Halifax borrowing rates.                      $  303,000
  
  e.      To record the total income tax effect, using a 39.5% rate, on
  	the net pro forma adjustments.
  
  The accompanying unaudited pro forma combined condensed financial statements
  do not include the effects of any estimated transition or restructuring
  costs which may be incurred in connection with integrating the operations of
  CMSA into Halifax.  It is not feasible at this time to estimate these
  costs.  Similarly, no effects for changes in costs related to CMSA employee
  pension benefits have been included as such changes cannot be estimated at
  this time.
  The Unaudited Pro Forma Combined Condensed Statement of Earnings does not
  reflect any net cost savings or economies of scale that management believes
  would have been achieved had the CMSA transaction occurred on April 1,
  1995.
  
  C.       Exhibits
  
  Exhibit No.                                           Description
  
  99(a)           Audited Financial Statements of CMS Automation, Inc.,
  		for the year ended December 31, 1995, and related Notes to
  		Financial Statements.
  
  99(b)           Audited Financial Statements of CMS Automation, Inc., for
  		the year ended December 31, 1994, and related Notes to
  		Financial Statements.
  SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
  HALIFAX CORPORATION
  (Registrant)
  
  Date:    June 17, 1996               By:
                                           Howard C. Mills,
                                           President & Chief Executive Officer
  
  Date:     June 17, 1996              By:
                                            John D. D'Amore
                                            Vice President & Controller
  Index to Exhibits
  
  Exhibit No.    Description                                            Page
  
  99(a)          Audited Financial Statements of CMS Automation, Inc.,    19
                 for the year ended December 31, 1995, and related
                 Notes to Financial Statements
  
  99(b)          Audited Financial Statements of CMS Automation, Inc.,    38
                 for the year ended December 31, 1994, and related
                 Notes to Financial Statements
  CMS AUTOMATION, INC.
  
  Financial Statements
  
  December 31, 1995 and 1994
  CMS AUTOMATION, INC.
  
  Table of Contents
  
                                                                        Page
  
  Independent Auditors' Report                                          2
  
  Exhibit
     A         Balance Sheets                                           3-4
     B         Statements of Income                                     5
     C         Statements of Changes in Stockholders' Equity            6
     D         Statements of Cash Flows                                 7-8
  
  Notes to Financial Statements                                         9-15
  
  Independent Auditors' Report on Additional Information                16
  
  Schedule
     1          Schedules of Operating Expenses                         17
  INDEPENDENT AUDITORS' REPORT
  
  To the Stockholders
  CMS Automation, Inc.
  Richmond, Virginia:
  
            We have audited the accompanying balance sheet of CMS Automation,
  Inc. as of December 31, 1995, and the related statements of income, changes
  in stockholders' equity, and cash flows for the year then ended.  These
  financial statements are the responsibility of the Company's management.
  Our responsibility is to express an opinion on these financial statements
  based on our audit.
  
            Except as explained in the following paragraph, we conducted our
  audit in accordance with generally accepted auditing standards.  Those
  standards require that we plan and perform the audit to obtain reasonable
  assurance about whether the financial statements are free of material
  misstatement.  An audit includes examining, on a test basis, evidence
  supporting the amounts and disclosures in the financial statements.  An audit
  also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial
  statement presentation.  We believe that our audit provides a reasonable
  basis for our opinion.
  
            Because we were not engaged as auditors until after December 31,
  1994, we were not present to observe the physical inventory taken at that
  date, and we have not satisfied ourselves by means of other auditing
  procedures about inventory quantities.  Also, we have not applied audit
  procedures necessary to satisfy ourselves about the classifications and
  amounts comprising the balance sheet at December 31, 1994.  The amount of
  the inventory at December 31, 1994, and other significant aspects of the
  balance sheet at that date, including classifications and amounts,
  materially affect the determination of the results of operations and
  cash flows for the year ended December 31, 1995.  Accordingly, the scope of
  our work was not sufficient to enable us to express, and we do not express,
  an opinion on the accompanying statements of income, changes in
  stockholders' equity, and cash flows for the year ended December 31,
  1995, or on the consistency of application of accounting
  principles with the preceding year.
  
            In our opinion, the balance sheet referred to in the first
  paragraph presents fairly, in all material respects, the financial position
  of CMS Automation as of December 31, 1995, in conformity with generally
  accepted accounting principles.
  The 1994 financial statements were reviewed by us, and our report
  thereon, dated July 20, 1995, except for Note 14, as to which the date is
  December 20, 1995, stated we were not aware of any material modifications
  that should be made to those statements for them to be in conformity with
  generally accepted accounting principles.  However, a review is
  substantially less in scope than an audit and does not provide a basis for
  the expression of an opinion on the financial statements taken as a whole.
  
                                  Keiter, Stephens, Hurst, Gary & Shreaves
  				March 23, 1996
  
                             2
  Exhibit A
  
  CMS AUTOMATION, INC.
  Balance Sheets
  December 31, 1995 (Audited) and 1994 (Unaudited)
  1995                1994
  Assets                                                                                     (Audited)              (Unaudited)
  Current assets:
      Cash                                                                           $          97 954      $          22 473
      Accounts receivable, net of allowance for
       uncollectible accounts of $50,000 in 1995
       and $15,000 in 1994                                                                   3 212 001              3 595 750
      Inventory                                                                              2 176 089              2 308 661
      Loans to employees                                                                        16 875                 13 325
      Loans to officers                                                                         26 028                 16 292
      Prepaid expenses                                                                          13 621                  6 491
      Refundable income taxes                                                                    -                     71 255
  
                      Total current assets                                                   5 542 568              6 034 247
  
  Fixed assets                                                                               2 824 461              2 268 153
  Less accumulated depreciation                                                              1 411 842              1 024 047
  
                      Net fixed assets                                                       1 412 619              1 244 106
  
  Software, net of amortization                                                                 61 791                 81 601
  Organization costs, net of amortization                                                       22 080                 26 503
  Franchise fee, net of amortization                                                             3 042                  3 542
  Deposits                                                                                      23 756                 28 830
  Client lists                                                                                  49 500                  -
  Investment                                                                                    24 664                  -
  
                      Total other assets                                                       184 833                140 476
  
                                                                                     $       7 140 020      $       7 418 829
  See accompanying notes to financial statements.
  3
  Exhibit A
  
  CMS AUTOMATION, INC.
  
  Balance Sheets
  December 31, 1995 (Audited) and 1994 (Unaudited)
  1995                   1994
      Liabilities and Stockholders' Equity                                                     (Audited)              (Unaudited)
  Current liabilities:
      Short-term debt                                                                   $       4 203 658      $       2 181 973
      Notes payable, current portion                                                              117 743                189 831
      Capital lease obligation, current portion                                                     4 674                 20 365
      Accounts payable                                                                          1 422 351              3 237 644
      Unearned revenues                                                                           320 183                445 776
      Accrued expenses                                                                             78 161                139 600
      Customer deposits                                                                             3 112                 53 864
      Income taxes payable                                                                          1 000                  -
  
                 Total current liabilities                                                      6 150 882              6 269 053
  
  Notes payable, less current portion                                                             450 000                547 743
  Capital lease, less current portion                                                               -                      4 674
  Deferred credit                                                                                  12 618                 12 946
  
                      Total liabilities                                                         6 613 500              6 834 416
  
  Commitments
  
  Stockholders' equity:
      Common stock, $.20 par value; 750,000 shares
       authorized; 484,226 and 467,399 shares issued
       and outstanding at December 31, 1995 and 1994,
       respectively                                                                                96 845                 93 480
      Additional paid-in capital                                                                  705 758                658 123
      Retained earnings (deficit)                                                        (        276 083)      (        167 190)
  
                      Total stockholders' equity                                                  526 520                584 413
  
                                                                                             $       7 140 020      $       7 418 829
  See accompanying notes to financial statements.
  4
  Exhibit B
  
  CMS AUTOMATION, INC.
  
  Statements of Income
  For the Years ended December 31, 1995 (Audited) and 1994 (Unaudited)
  1995                    1994
                                                                                                   (Audited)               (Unaudited)
  Sales                                                                                $       21 248 701     $       26 982 367
  
  Cost of sales                                                                                14 582 334             19 617 630
  
                      Gross profit                                                              6 666 367              7 364 737
  
  Operating expenses                                                                            6 299 738              6 923 808
  
                      Operating income                                                            366 629                440 929
  
  Other income (expense):
      Miscellaneous income                                                                        139 333                160 397
      Interest income                                                                               3 872                    142
      Interest expense                                                                  (         543 231)     (         569 582)
      Loss on asset disposal                                                                        -          (             792)
      Loss from investment                                                              (          29 496)                 -
      Litigation settlement                                                             (          45 000)                 -
  
                      Total other expense                                               (         474 522)     (         409 835)
  
                      Income (loss) before provision for income tax                     (         107 893)                31 094
  
  Provision for income taxes (benefit)                                                              1 000      (           1 851)
  
                      Net income (loss)                                                $(         108 893)    $           32 945
  See accompanying notes to financial statements.
  5
  Exhibit C
  CMS AUTOMATION, INC.
  
  Statements of Changes in Stockholders' Equity
  For the Years ended December 31, 1995 (Audited) and 1994 (Unaudited)
  Additional             Retained          Total
                                                 Common Stock                Paid-In               Earnings         Stockholders'
                                        Shares             Amount            Capital             (Deficit)            Equity
  Balance, December
   31, 1993                             467 399     $        93 480     $       658 123     $(       177 846)    $       573 757
  
  Prior period adjustment                 -                   -                   -          (        22 289)     (       22 289)
  
  Net income                              -                   -                   -                   32 945              32 945
  
  Balance, December
   31, 1994                             467 399              93 480             658 123      (       167 190)            584 413
  
  Stock issued                           16 827               3 365              47 635                -                  51 000
  
  Net loss                                -                   -                   -          (       108 893)     (      108 893)
  
  Balance, December
   31, 1995                             484 226     $        96 845     $       705 758     $(       276 083)    $       526 520
  See accompanying notes to financial statements.
  6
  Exhibit D
  CMS AUTOMATION, INC.
  
  Statements of Cash Flows
  For the Years ended December 31, 1995 (Audited) and 1994 (Unaudited)
  1995                   1994
                                                                                          (Audited)              (Unaudited)
  Cash flows from operating activities:
      Net income (loss)                                                            $(        108 893)     $          32 945
      Adjustments to reconcile net loss to
       net cash provided by operating activities:
          Depreciation and amortization                                                      432 260                415 220
          Loss on disposal of assets                                                           -                        792
          Loss from investment                                                                29 496                  -
      (Increase) decrease in:
          Accounts receivable                                                                370 463                347 134
          Inventory                                                                          132 572       (         40 201)
          Prepaid expenses                                                          (          7 130)                   161
          Refundable income taxes                                                             71 255       (          1 851)
      (Decrease) increase in:
          Accounts payable                                                          (      1 815 293)               311 010
          Unearned revenues                                                         (        125 593)               187 145
          Income taxes payable                                                                 1 000                   -
          Accrued expenses                                                          (         61 439)                33 227
          Customer deposits                                                         (         50 752)      (          8 800)
          Deferred credit                                                           (            328)                12 946
  
                Net cash provided by (used in) operating activities                 (      1 132 382)             1 289 728
  
  Cash flows from investing activities:
      Acquisition of fixed assets                                                   (        556 308)      (        247 269)
      Acquisition of intangible assets                                              (         69 232)      (         91 915)
      Decrease (increase) in deposits                                                          5 074       (         14 036)
      Proceeds from asset disposal                                                             -                        400
      Investment advances                                                           (         54 160)                 -
  
                Net cash used in investing activities                               (        674 626)      (        352 820)
  
  Cash flows from financing activities:
      Proceeds from short-term debt, net of repayments                                     2 021 685       (        614 892)
      Repayment of long-term debt                                                   (        169 831)      (        356 679)
      Repayment of capital lease obligations                                        (         20 365)      (         22 693)
      Proceeds from long-term debt                                                             -                    200 000
      Proceeds from stock issued                                                              51 000                  -
  
                Net cash provided by (used in) financing activities                        1 882 489       (        794 264)
  See accompanying notes to financial statements.
  7
  Exhibit D
  CMS AUTOMATION, INC.
  
  Statements of Cash Flows, Continued
  For the Years ended December 31, 1995 (Audited) and 1994 (Unaudited)
  1995                   1994
                                                                                          (Audited)              (Unaudited)
  Net increase (decrease) in cash                                                  $          75 481      $         142 644
  
  Cash at beginning of period                                                                 22 473       (        120 171)
  
  Cash at end of period                                                            $          97 954      $          22 473
  
  Supplemental disclosures of cash flow information:
      Interest                                                                     $         571 154      $         571 057
      Income taxes                                                                             -                       -
  See accompanying notes to financial statements.
  8
  CMS AUTOMATION, INC.
  Notes to Financial Statements
  
  (1)     Accounting policies:
  
          The accounting and reporting policies of CMS Automation, Inc.,
  	conform to generally accepted accounting principles.  The following
  	describe the more significant of those policies:
  
            (a)  	Organization:
  
                  The Company was incorporated in January, 1990, for the
  		primary purpose of sales and service of computer hardware,
  		software and networking.  The Company has locations in
  		the Eastern part of the United States.
  
            (b)   Inventories:
  
                  Inventories are valued at the lower of cost or market, with
  		cost being determined by the average cost method.
  
            (c)   Fixed assets:
  
                  Fixed assets are stated at cost.  Depreciation is computed
  		by the use of accelerated and straight-line methods and is
  		based on the estimated useful life of the asset.
  
            (d)   Other assets:
  
                  Software and organization costs are being amortized over
  		periods of thirty-six to sixty months.  Franchise fees are
  		being amortized over 10 years.
  
            (e)   Unearned revenues:
  
                  Unearned revenues result from customer contract prepayments.
  		This results in a large amount of revenue being received prior
  		to its realization.  These unearned revenues are shown as
  		current liabilities on the balance sheet and are amortized
  		monthly over the terms of the contracts.
  
                                                      
  9
  CMS AUTOMATION, INC.
  
  Notes to Financial Statements, Continued
  
  (1)       Accounting policies, continued:
  
            (f)  	Credit risk:
  
                  Financial instruments which potentially subject the Company
  		to concentrations of credit risk consist principally of cash
  		and receivables.
  
                  The Company maintains its cash balances in several financial
  		institutions.  The balances are insured by the Federal
  		Deposit Insurance Corporation up to $100,000 in each
  		institution.
  
                  The Company has funds in excess of $100,000 in a financial
  		institution.
  
                  Receivables consist principally of trade accounts receivable
  		resulting from sales to customers primarily in the Eastern
  		part of the United States.  Credit is extended to customers
  		after an evaluation for credit worthiness.
  
            (g)   Estimates:
  
                  The preparation of financial statements in conformity with
  		generally accepted accounting principles requires management
  		to make estimates and assumptions that affect the reported
                  amounts of assets and liabilities and disclosure of contingent
  		assets and liabilities at the date of the financial statements
  		and the reported amounts of revenues and expenses during the
                  reporting period.  Actual results could differ from those
  		estimates.
  
  (2)       Loans to Officers:
  
            Loans to officers are unsecured advances to the officers of the
  	  Corporation.  No interest is currently being charged on these
  	  advances.
  
  (3)       Fixed assets:
  
            The following comprise the Corporation's fixed assets at December
  	  31, 1995 and 1994:
  1995                        1994
  Support equipment                                            $        2 073 115          $        1 571 645
                      Furniture and fixtures                                                  616 448                     591 761
                      Vehicles                                                                 20 396                      20 396
                      Leasehold improvements                                                  114 502                      84 351
  
                                                                                   $        2 824 461          $        2 268 153
  (4)     Investment:
  
          In 1995, the Company advanced $54,160 to an entity that is expected
  	to be accounted for under the equity investment rules.  This entity
  	had a loss in 1995, of which CMS Automation reduced its investment
  	by $29,496, its share of the total loss.
  
  (5)     Short-term debt:
  
          In September 1991, the Corporation entered into an agreement with ITT
  	Commercial Financial Corporation to borrow funds under an accounts
   	receivable line of credit.  This agreement allows the Corporation to
  	borrow funds up to $5,000,000 at December 31, 1994, based upon the
  	eligible accounts receivable submitted to ITT Commercial Financial
  	Corporation.  Principal repayments are made as the monies from the
  	eligible accounts receivable are collected.  Interest is charged
  	monthly on the outstanding balance at prime plus 1.5%.  This agreement
  	is secured by inventory, fixed assets, accounts receivable, and
  	intangibles.  This agreement was terminated in 1995.
  
          During 1995, the Company entered into an agreement with IBM Credit
  	Corporation for wholesale financing.  This agreement allows the
  	Company to borrow funds up to $7,000,000, based upon eligible
  	accounts receivable, and inventory.  Interest is charged on the
  	outstanding balance at prime plus 3.25%.  This agreement is secured
  	by accounts receivable, inventory, fixed assets and intangibles.  It
  	is guaranteed by the shareholders of the Company.
  
  (6)     Notes payable:
  
          The following comprise the Company's notes payable at December 31,
  	1995 and 1994:
  1995                   1994
  Term note payable to Signet Bank, due in monthly
             installments of $10,000 plus interest at 9.25%,
             through May, 1996.  Secured by accounts
             receivable, inventory, equipment, general
             intangibles and subordination agreement.
             Guaranteed by stockholders.                                                 $           70 000     $          170 000
  
            Unsecured term note payable to G. Nolde, due in monthly
             installments of $4,951 including interest at 8%, through
             October, 1996.                                                                          47 743                101 002
  
            Unsecured term note payable to I. Cox, due in monthly
             installments of $1,719 including interest at 8%, through
             October, 1995.                                                              $            -         $           16 572
  
            Unsecured subordinated demand note to G. Nolde with
             interest at 8%.                                                                        285 000                285 000
  
            Unsecured subordinated demand note to I. Cox with
             interest at 8%.                                                                        165 000                165 000
  
                                Total long-term debt                                                567 743                737 574
  
                                Less current maturities                                             117 743                189 831
  
                                                                                         $          450 000     $          547 743
  
            The future maturities of long-term debt at December 31, 1994 are as follows:
  
                               Thereafter                                                $          450 000
  
                                                                                         $          450 000
  (7)     Capital leases:
  
          The Corporation has acquired equipment under the provisions of
  	long-term leases.  For financial reporting purposes, minimum lease
  	rentals relating to these leases have been capitalized.
  1995                   1994
  Equipment costs                                          $           57 752     $           57 752
                                Accumulated depreciation                                             26 224                 21 707
  
                                                                                         $           31 528     $           36 045
  12
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (7)     Capital leases, continued:
  
          The following is a schedule by years of future minimum lease
  	payments under capital leases together with the present value of the
  	net minimum lease payments as of December 31, 1995:
  
          Year ended December 31:
                        1996                           $           4 736
  
          Total minimum lease payments                             4 736
  
          Less amount representing interest             (             62)
  
          Present value of net minimum lease payments  $           4 674
  
          Current portion                              $           4 674
  
  (8)     Income taxes:
  
          The provision (benefit) for income taxes consists of the
  	following:
  
                                                 1995                   1994
          Current                    $           3 300      $(          1 851)
          Deferred                    (          2 300)                 -
  
           Total                     $           1 000      $(          1 851)
  
          Deferred income taxes are provided for differences in timing, in
  	reporting income for financial statement and tax purposes, arising
  	from differences in the methods of accounting for bad debts,
  	inventory, and litigation settlements.
  
          For tax purposes, bad debts are expensed as incurred, while the
  	allowance method is used for financial purposes.  Inventory for
  	income tax purposes includes Section 263A costs which are not
  	included for financial statement purposes.  For financial statement
  	purposes litigation settlements are expensed as incurred, while for
  	tax purposes they are deductible when paid.
  
          Valuation allowances are established when necessary to reduce
  	deferred tax assets to the amount expected to be realized.  Income
  	tax expense is the tax payable or refundable for the period plus or
          minus the change during the period in deferred tax assets and
  	liabilities.
  
  13
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (8)     Income taxes, continued:
  
          Net deferred tax assets are composed of the following:
                                                    1995                   1994
  
             Deferred tax assets arising from:
               Temporary differences     $         24 565      $           9 356
               AMT credits                         15 101                 17 401
               Valuation allowance        (        39 666)      (         26 757)
  
               Net deferred tax asset    $           -         $           -
  
         	The Company has alternative minimum tax credit carryforwards of
  	approximately $15,000 which are available to offset future federal
  	income tax liability.  The Company also has contribution
  	carryforwards of approximately $8,000 which expire in 1999.
  
  (9)     Commitments:
  
          The Corporation leases its facilities in Virginia, Georgia and
  	South Carolina.  Total net rent expense under facility leases for
  	1995 and 1994 was $293,624 and $349,648, respectively.  The
  	Corporation was also obligated under a lease for an automobile.
  	Lease expense under this agreement was $4,193 and $7,188 for 1995
  	and 1994, respectively. Future obligations under these leases as of
  	December 31, 1995 are as follows:
  
                                           Minimum                      Minimum
                                           Rental                      Sublease
                                           Payments                    Receipts
  
             1996                    $      257 755             $        21 467
             1997                           240 520
             1998                           207 589
             1999                            35 552
  
  (10)    Profit sharing plan:
  
          The Corporation has a qualified contributory profit-sharing plan
  	covering substantially all of its employees.  Annual contributions
  	are at the discretion of the Board of Directors but may not exceed
          the maximum amount allowable under applicable provisions of the
  	Internal Revenue Code.  No contribution was made for 1995 and 1994.
  
  14
  CMS AUTOMATION, INC.
  
  Notes to Financial Statements, Continued
  
  (11)    Business combinations:
  
          On May 31, 1994, the Company acquired the net assets of Systems
  	Integration Associates, Inc. for $17,000, in a business combination
  	accounted for as a purchase.
  
  (12)    Prior period adjustment:
  
          A prior period adjustment of $22,289 was made to retained earnings
  	at December 31, 1993 to account for an overstatement of refundable
  	income taxes.
  
  (13)    Subsequent event:
  
          Effective April 1, 1996, CMS Automation, Inc. merged into CMSA
  	Acquisition Corporation, a wholly-owned subsidiary of Halifax
  	Corporation.
  
  15
  INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION
  
  To the Stockholders
  CMS Automation, Inc.
  Richmond, Virginia:
  
            Our report on our audit of the basic financial statements of CMS
  Automation, Inc., for the year ended December 31, 1995 appears on page 2.
  That audit was made for the purpose of forming an opinion on the basic
  financial statements taken as a whole.  The schedules of operating expenses
  are presented for purposes of additional analysis and are not a required
  part of the basic financial statements.  Such information has not been
  subjected to the auditing procedures applied in the audit to the basic
  financial statements, and accordingly, we express no opinion on it.  The
  additional information for the year ended December 31, 1994 has been
  subjected to the inquiry and analytical procedures applied in the review of
  the basic financial statements, and we are not aware of any material
  modifications that should be made thereto.
  
  Keiter, Stephens, Hurst, Gary & Shreaves
  
  March 23, 1996
  Schedule 1
  CMS AUTOMATION, INC.
  Schedules of Operating Expenses
  For the Years ended December 31, 1995 and 1994
                                          1995                 1994
  Operating expenses:
      Advertising                       $    43 330      $     24 491
      Amortization                           44 464            30 561
      Auto expenses                         109 643           103 495
      Bad debts                              58 763            75 515
      Commissions                           378 218           571 471
      Contributions                           1 150             1 691
      Depreciation                          387 795           384 659
      Dues and subscriptions                 17 473            19 896
      Employee benefit programs             190 246           201 032
      Freight                               150 435           162 236
      Insurance                              45 807            59 059
      Miscellaneous                          18 339               193
      Office expense                         64 193            53 459
      Outside services                       71 506            82 531
      Payroll taxes                         296 952           330 533
      Penalties                              36 430            72 446
      Printing services                      18 513            29 669
      Professional fees                      63 431            54 287
      Recruitment                            24 632            14 296
      Rent                                  333 103           349 648
      Repairs and maintenance                20 639            12 730
      Salaries                            3 353 877         3 588 069
      Small equipment and tools               5 189             9 485
      Supplies                               34 172            24 866
      Taxes and licenses                     48 249            85 889
      Telephone                             217 793           223 069
      Training                               48 756            54 986
      Travel and entertainment              152 147           244 403
      Utilities                              64 493            59 143
  
       Total operating expenses      $    6 299 738      $  6 923 808
  
  See independent auditors' report on additional information.  
  
  17
  CMS AUTOMATION, INC.
  Financial Statements
  
  December 31, 1994
  CMS AUTOMATION, INC.
  
  Table of Contents
                                                                          Page
  
  Independent Auditors' Report                                            2
  
  Exhibit
     A                Balance Sheet                                      3-4
     B                Statement of Income                                5
     C                Statement of Changes in Stockholders' Equity       6
     D                Statement of Cash Flows                            7-8
  
                      Notes to Financial Statements                      9-15
  
                      Independent Auditors' Report on
                        Additional Information                          16
  
  Schedule
     1                Schedule of Operating Expenses                    17
  INDEPENDENT AUDITORS' REPORT
  
  To the Stockholders
  CMS Automation, Inc.
  Richmond, Virginia:
  
            We were engaged to audit the accompanying balance sheet of CMS
  Automation, Inc. as of December 31, 1994, and the related statements of
  income, changes in stockholders' equity, and cash flows for the year then
  ended.  These financial statements are the responsibility of the Company's
  management.
  
            Because we were not engaged as auditors until after the end of the
  year, we were not present to observe the taking of physical inventories at
  December 31, 1994 and 1993 (stated at $2,308,661 and $2,268,460,
  respectively), and we were unable to satisfy ourselves concerning inventory
  quantities on hand at those dates by other auditing procedures.
  
            Since the inventory balances as of December 31, 1994 and 1993,
  materially affect the determination of financial position, results of
  operations, and cash flows, the scope of our work was not sufficient to
  enable us to express, and we do not express, an opinion on the financial
  statements referred to in the first paragraph.
  
                       Keiter, Stephens, Hurst, Gary & Shreaves  1996
  Exhibit A
  
  CMS AUTOMATION, INC.
  
  Balance Sheet
  December 31, 1994
  
               Assets
  
  Current assets:
   Cash                                       $         22 473
   Accounts receivable, net of allowance
    for uncollectible accounts of $15,000            3 595 750
    Inventory                                        2 308 661
    Loans to employees                                  13 325
    Loans to officers                                   16 292
    Prepaid expenses                                     6 491
    Refundable income taxes                             71 255
  
        Total current assets                         6 034 247
  
  Fixed assets                                       2 268 153
  Less accumulated depreciation                      1 024 047
  
        Net fixed assets                             1 244 106
  
  Software, net of amortization                         81 601
  Organization costs, net of amortization               26 503
  Franchise fee, net of amortization                     3 542
  Deposits                                              28 830
  
                      Total other assets               140 476
  
                                              $      7 418 829
  
  See accompanying notes to financial statements.
  3
  Exhibit A
  CMS AUTOMATION, INC.
  Balance Sheet
  December 31, 1994
  
      Liabilities and Stockholders' Equity
  
  Current liabilities:
      Short-term debt                         $      2 181 973
      Notes payable, current portion                   189 831
      Capital lease obligation, current
           portion                                      20 365
      Accounts payable                               3 237 644
      Unearned revenues                                445 776
      Accrued expenses                                 139 600
      Customer deposits                                 53 864
  
         Total current liabilities                   6 269 053
  
  Notes payable, less current portion                  547 743
  Capital lease, less current portion                    4 674
  Deferred credit                                       12 946
  
         Total liabilities                           6 834 416
  
  Commitments
  
  Stockholders' equity:
      Common stock, $.20 par value; 750,000 shares
       authorized; 467,399 shares issued and
       outstanding                                     93 480
      Additional paid-in capital                      658 123
      Retained earnings                       (       167 190)
  
         Total stockholders' equity                   584 413
  
  					   $      7 418 829
  
  See accompanying notes to financial statements.
  4
  Exhibit B
  
  CMS AUTOMATION, INC.
  Statement of Income
  For the Year ended December 31, 1994
  
  Sales                                       $        26 982 367
  
  Cost of sales                                        19 617 630
  
                      Gross profit                      7 364 737
  
  Operating expenses                                    6 923 808
  
                      Operating income                    440 929
  
  Other income (expense):
      Miscellaneous income                                160 397
      Interest income                                         142
      Interest expense                         (          569 582)
      Loss on asset disposal                   (              792)
  
                      Total other expense      (          409 835)
  
                      Income before provision
  			for income tax                   31 094
  
  Provision for income taxes (benefit):
      Federal                                               -
      State                                    (            1 851)
  
                      Total provision for
  			income taxes
  			(benefit)            (            1 851)
  
                      Net income              $            32 945
  
  See accompanying notes to financial statements.
  5
  Exhibit C
  
  CMS AUTOMATION, INC.
  
  Statement of Changes in Stockholders' Equity
  For the Year ended December 31, 1994
  Additional                             Total Stock-
                                                    Common Stock               Paid-In               Retained           holders'
                                          Shares             Amount            Capital               Earnings            Equity
  Balance, December 31,
   1993     			      467 399             $ 93 480            $658 123           $(177 846)           $573 757
  
  Prior period adjustment                 -                   -                   -                 ( 22 289)           ( 22 289)
  
  Net income                              -                   -                   -                   32 945              32 945
  
  Balance, December 31,
   1994                                 467 399             $ 93 480            $658 123           $(167 190)          $ 584 413
  See accompanying notes to financial statements.
  6
  Exhibit D
  CMS AUTOMATION, INC.
  
  Statement of Cash Flows
  For the Year ended December 31, 1994
  
  Cash flows from operating activities:
      Net income                                   $         32 945
      Adjustments to reconcile net income to
       net cash provided by operating activities:
          Depreciation and amortization                     415 220
          Loss on disposal of assets                            792
      (Increase) decrease in:
          Accounts receivable                               347 134
          Inventory                                 (        40 201)
          Prepaid expenses                                      161
          Refundable income taxes                   (         1 851)
      (Decrease) increase in:
          Accounts payable                                  311 010
          Unearned revenues                                 187 145
          Accrued expenses                                   33 227
          Customer deposits                         (         8 800)
          Deferred credit                                    12 946
  
                Net cash provided by operating
  			activities                      1 289 728
  
  Cash flows from investing activities:
      Acquisition of fixed assets                   (       247 269)
      Acquisition of intangible assets              (        91 915)
      Decrease (increase) in deposits               (        14 036)
      Proceeds from asset disposal                              400
  
                Net cash used in investing
                   activities                       (       352 820)
  
  Cash flows from financing activities:
      Repayment of short-term debt, net of advances (       614 892)
      Repayment of long-term debt                   (       356 679)
      Repayment of capital lease obligations        (        22 693)
      Proceeds from long-term debt                          200 000
  
                Net cash used in financing
  		activities                        (       794 264)
  
  See accompanying notes to financial statements.
  7
  Exhibit D
  
  CMS AUTOMATION, INC.
  Statement of Cash Flows, Continued
  For the Year ended December 31, 1994
  
  Net increase in cash                               $        142 644
  
  Cash at beginning of period                         (       120 171)
  
  Cash at end of period                              $         22 473
  
  Supplemental disclosures of cash flow information:
      Interest                                       $        571 057
      Income taxes                                              -
  
  See accompanying notes to financial statements.
  8
  CMS AUTOMATION, INC.
  Notes to Financial Statements
  
  (1)     Accounting policies:
  
          The accounting and reporting policies of CMS Automation, Inc.,
  	conform to generally accepted accounting principles.  The following
  	describe the more significant of those policies:
  
            (a) 	Organization:
  
                  The Company was incorporated in January, 1990, for the
  		primary purpose of sales and service of computer hardware,
  		software and networking.  The Company has locations in the
  		Eastern part of the United States.
  
            (b) 	Inventories:
  
                 	Inventories are valued at the lower of cost or market, with
  		cost being determined by the average cost method.
  
            (c) 	Fixed assets:
  
                	Fixed assets are stated at cost.  Depreciation is computed
  		by the use of accelerated and straight-line methods and is
  		based on the estimated useful life of the asset.
  
            (d) 	Other assets:
  
                 	Software and organization costs are being amortized over
  		periods of thirty-six to sixty months.  Franchise fees are
  		being amortized over 10 years.
  
            (e)  	Unearned revenues:
  
                 	Unearned revenues result from customer contract
  		prepayments.  This results in a large amount of revenue
  		being received prior to its realization.  These unearned
  		revenues are shown as current liabilities on the balance
  		sheet and are amortized monthly over the terms of the
  		contracts.
  
  9
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (1)  	Accounting policies, continued:
  
        	(f) 	Credit risk:
  
                	Financial instruments which potentially subject the Company
  		to concentrations of credit risk consist principally of cash
  		and receivables.
  
                	The Company maintains its cash balances in several financial
  		institutions.  The balances are insured by the Federal
  		Deposit Insurance Corporation up to $100,000 in each
  		institution.  The Company has funds in excess of $100,000 in
  		a financial institution.
  
                  Receivables consist principally of trade accounts receivable
  		resulting from sales to customers primarily in the Eastern
  		part of the United States.  Credit is extended to customers
  		after an evaluation for credit worthiness.
  
        	(g) 	Estimates:
  
                 	The preparation of financial statements in conformity with
  		generally accepted accounting principles requires management
  		to make estimates and assumptions that affect the reported
  		amounts of assets and liabilities and disclosure of
  		contingent assets and liabilities at the date of the
  		financial statements and the reported amounts of revenues
                	and expenses during the reporting period.  Actual results
  		could differ from those estimates.
  
  (2)   	Loans to Officers:
  
        	Loans to officers are unsecured advances to the officers of the
  	Corporation.  No interest is currently being charged on these
  	advances.
  
  (3)   	Fixed assets:
  
        	The following comprise the Corporation's fixed assets at December
  	31, 1994:
  
              Support equipment                      $      1 571 645
              Furniture and fixtures                          591 761
              Vehicles                                         20 396
              Leasehold improvements                           84 351
  
                                                     $      2 268 153
  
  10
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (4) 	Letter of Credit:
  
      	The Company has a $40,000 Standby Letter of Credit which expires
  	August 31, 1995.  There were no outstanding balances at
  	December 31, 1994.
  
  (5)  	Short-term debt:
  
        	In September 1991, the Corporation entered into an agreement with
  	ITT Commercial Financial Corporation to borrow funds under an
  	accounts receivable line of credit.  This agreement allows the
  	Corporation to borrow funds up to $5,000,000 at December 31,
  	1994, based upon the eligible accounts receivable submitted to ITT
  	Commercial Financial Corporation.  Principal repayments are made as
  	the monies from the eligible accounts receivable are collected.
  	Interest is charged monthly on the outstanding balance at prime plus
  	1.5%.  This agreement is secured by inventory, fixed assets,
  	accounts receivable, and intangibles.
  
  (6)   	Notes payable:
  
        	The following comprise the Company's notes payable at
  	December 31, 1994:
  
            Term note payable to Signet Bank, due in monthly
             installments of $10,000 plus interest at 9.25%,
             through May, 1996.  Secured by accounts
             receivable, inventory, equipment, general
             intangibles and subordination agreement.
             Guaranteed by stockholders.                       $        170 000
  
            Unsecured term note payable to G. Nolde, due in monthly
             installments of $4,951 including interest at 8%, through
             October, 1996.                                             101 002
  
            Unsecured term note payable to I. Cox, due in monthly
             installments of $1,719 including interest at 8%, through
             October, 1995.                                             16 572
  
            Unsecured subordinated demand note to G. Nolde with
             interest at 8%.                                           285 000
  
  11
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (6)       Notes payable, continued:
  
            Unsecured subordinated demand note to I. Cox with
             interest at 8%.                                  $        165 000
  
                                Total long-term debt                   737 574
  
                                Less current maturities                189 831
  
                                                              $        547 743
  
            The future maturities of long-term debt at December 31, 1994
  		are as follows:
  
                                1996                           $        97 743
                                Thereafter                             450 000
  
                                                               $       547 743
  
  (7)   	Capital leases:
  
          The Corporation has acquired equipment under the provisions of
  	long-term leases.  For financial reporting purposes, minimum lease
  	rentals relating to these leases have been capitalized.
  
                                Equipment costs                $       57 752
                                Accumulated depreciation               21 707
  
                                                              $        36 045
  
         	The following is a schedule by years of future minimum lease
  	payments under capital leases together with the present value of
  	the net minimum lease payments as of December 31, 1994:
  
  12
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (7)       Capital leases, continued:
  
                      Year ended December 31:
                                1995                       $       21 609
                                1996                                4 736
  
                      Total minimum lease payments                 26 345
  
                      Less amount representing interest     (       1 306)
  
                      Present value of net minimum lease
  			payments                          $       25 039
  
                      Current portion                       $       20 365
                      Noncurrent portion                             4 674
                                                            $       25 039
  
  (8)     Income taxes:
  
          The provision (benefit) for income taxes consists of the
  	following:
  
                      Current                               $(       1 851)
                      Deferred                                       -
  
                                Total                       $(       1 851)
  
       	Deferred income taxes are provided for differences in timing,
  	in reporting income for financial statement and tax purposes,
  	arising from differences in the methods of accounting for bad
  	debts and inventory.
  
          For tax purposes, bad debts are expensed as incurred, while the
  	allowance method is used for financial purposes.  Inventory for
  	income tax purposes includes Section 263A costs which are not
  	included for financial statement purposes.
  
          Valuation allowances are established when necessary to reduce
  	deferred tax assets to the amount expected to be realized.
  	Income tax expense is the tax payable or refundable for the period
  	plus or minus the change during the period in deferred tax assets
  	and liabilities.
  
  13
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (8)     Income taxes, continued:
  
          Net deferred tax assets are composed of the following:
  
                      Deferred tax assets arising from:
                           Temporary differences           $           9 356
                           AMT credits                                17 401
                           Valuation allowance              (         26 757)
  
                                     Net deferred tax asset $           -
  
          The Company has alternative minimum tax credit carryforwards
  	of approximately $17,500 which are available to offset
  	future federal income tax liability.  The Company also has
  	contribution carryforwards of approximately $8,400 which expire in
  	1999.
  
  (9)     Commitments:
  
          The Corporation leases its facilities in Virginia, North Carolina,
  	South Carolina and New York.
          Total net rent expense under these leases for 1994 was $349,648.
  	The Corporation is also obligated under a lease for an automobile.
  	Lease expense under this agreement was $7,188 for
          1994. Future obligations under these leases as of December 31, 1994
  	are as follows:
  
                                           Minimum           Minimum
                                           Rental           Sublease
                                                            Payments    Receipts
  
             1995                   $       317 316     $        55 676
             1996                           313 993              48 507
             1997                           301 757              48 507
             1998                           207 589
  	   1999                            35 552
  
  (10)  	Profit sharing plan:
  
          The Corporation has a qualified contributory profit-sharing plan
  	covering substantially all of its employees.  Annual contributions
  	are at the discretion of the Board of Directors but may not
         	exceed the maximum amount allowable under applicable provisions
  	of the Internal Revenue Code.  No contribution was made for 1994.
  
  (11)  	Business combinations:
  
         	On May 31, 1994, the Company acquired the net assets of Systems
  	Integration Associates, Inc. for $17,000, in a business combination
  	accounted for as a purchase.
  
  14
  CMS AUTOMATION, INC.
  Notes to Financial Statements, Continued
  
  (12)  	Prior period adjustment:
  
       	A prior period adjustment of $22,289 was made to retained earnings
  	at December 31, 1993 to account for as overstatement of refundable
  	income taxes.
  
  (13)  	Subsequent events:
  
        	The Company has entered into an agreement with IBM Credit
  	Corporation for wholesale financing.  This agreement allows the
  	Company to borrow funds up to $7,000,000, based upon eligible
  	accounts receivable, and inventory.  Interest is charged
  	on the outstanding balance at prime plus 3.25%. This agreement is
  	secured by accounts receivable, inventory, fixed assets and
         	intangibles.  It is guaranteed by the shareholders of the Company.
  
       	Effective April 1, 1996, CMS Automation, Inc. merged into CMSA
  	Acquisition Corporation, a wholly-owned subsidiary of Halifax
  	Corporation.
  
  15
  INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION
  
  To the Stockholders
  CMS Automation, Inc.
  Richmond, Virginia:
  
            Our report on our audit of the basic financial statements of CMS
  Automation, Inc., for the year December 31, 1994 appears on page 2.  That
  audit was made for the purpose of forming an opinion on the basic financial
  statements taken as a whole.  The schedule of operating expenses is
  presented for purposes of additional analysis and is not a required part
  of the basic financial statements. Such information has not been subjected
  to the auditing procedures applied in the audit to the basic
  financial statements, and accordingly, we express no opinion on it.
  
  Keiter, Stephens, Hurst, Gary & Shreaves
  
  May 22, 1996
  Schedule 1
  
  CMS AUTOMATION, INC.
  
  Schedule of Operating Expenses
  For the Year ended December 31, 1994
  
  Operating expenses:
       Advertising                          $          24 491
       Amortization                                    30 561
       Auto expenses                                  103 495
       Bad debts                                       75 515
       Commissions                                    571 471
       Contributions                                    1 691
       Depreciation                                   384 659
       Dues and subscriptions                          19 896
       Employee benefit programs                      201 032
       Freight                                        162 236
       Insurance                                       59 059
       Miscellaneous                                      193
       Office expense                                  53 459
       Outside services                                82 531
       Payroll taxes                                  330 533
       Penalties                                       72 446
       Printing services                               29 669
       Professional fees                               54 287
       Recruitment                                     14 296
       Rent                                           349 648
       Repairs and maintenance                         12 730
       Salaries                                     3 588 069
       Small equipment and tools                        9 485
       Supplies                                        24 866
       Taxes and licenses                              85 889
       Telephone                                      223 069
       Training                                        54 986
       Travel and entertainment                       244 403
       Utilities                                       59 143
  
        Total operating expenses            $       6 923 808
  
  See independent auditors' report on additional information.
  17