N@N

Pacific Safety Products Inc. Announces Fiscal Year 2010 Third Quarter Results

KANATA, ONTARIO--(Marketwire - May 27, 2010) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or "the Company"), today announced consolidated financial results for the three and nine month period ended March 31, 2010.

Recent Developments:

- As outlined in the May 13, 2010 press release, a Special General Meeting has been scheduled for June 17, 2010 to seek Shareholder approval for the sale of the company.

- Revenue decreased by approximately 30% during the quarter as compared to the prior year.

- Announced a $1.2M contract extension with the Department of National Defence.

- Received two additional U.S. National Institute of Justice standard 06 certifications of U.S. law enforcement products.

Mr. David Scott, Chief Executive Officer commented: "Revenue during the quarter was down almost 30% as compared to the prior year. The lowered sales volume continue to reflect reduced customer buying activity and increased competition as both domestic and foreign suppliers pursue fewer revenue dollars. The soft body armour market in both Canada and the United States is facing challenging times. Major competitors are reducing or eliminating operations and in two recent cases have been forced into bankruptcy protection. The Company made deep cuts to its expense base in the fall of 2009 including voluntary reduction and/or elimination of base compensation for senior management. These actions and others have helped the Company improve its financial results. However, we continue to violate a covenant set by our key Canadian lender and this lender has stated that they will waive the covenant violation subject to among other things, the approval of the sale of the Company. Given this environment and the priority of protecting shareholder value the Company, subject to shareholder approval has entered into an Agreement for the sale of the Company. This agreement was announced on May 13, 2010."

For complete consolidated financial statements with notes and management discussion and analysis please refer to PSP's annual report to shareholders. This report is posted on SEDAR ([ www.sedar.com ]) and on the Company's web site. Summary consolidated financial results for the quarter ended March 31, 2010 are as follows:

SUMMARY CONSOLIDATED BALANCE SHEETS (unaudited)
$Thousand

 MARCH 31, JUNE 30,
AS AT 2010 2009
---------------------------------------------------------------------------

ASSETS
CURRENT ASSETS $ 8,719 $ 8,799
PROPERTY, PLANT AND EQUIPMENT 1,635 1,711
OTHER ASSETS 2,550 1,912
INTANGIBLE ASSETS 2,829 3,078

---------------------------------------------------------------------------
TOTAL ASSETS $ 15,733 $ 15,500
---------------------------------------------------------------------------
---------------------------------------------------------------------------

LIABILITIES
CURRENT LIABILITIES $ 7,648 $ 6,628
LONG-TERM DEBT 1,000 1,220
---------------------------------------------------------------------------

TOTAL LIABILITIES 8,648 7,848
SHAREHOLDERS' EQUITY 7,085 7,652
---------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15,733 $ 15,500
---------------------------------------------------------------------------
---------------------------------------------------------------------------


SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
$Thousands

 THREE THREE NINE NINE
 MONTHS MONTHS MONTHS MONTHS
 ENDED ENDED ENDED ENDED
 MARCH 31, MARCH 31, MARCH 31, MARCH 31,
 2010 2009 2010 2009
---------------------------------------------------------------------------

SALES 7,699 10,549 22,765 27,848
COST OF SALES 5,860 7,934 18,114 20,950
---------------------------------------------------------------------------

GROSS MARGIN 1,839 2,615 4,651 6,898
 23.9% 24.8% 20.4% 24.8%

OPERATING EXPENSES 1,658 1,724 4,720 5,505
---------------------------------------------------------------------------

OPERATING INCOME/(LOSS) 181 891 (69) 1,393
AMORTIZATION 178 224 545 602
FOREIGN EXCHANGE LOSS/(GAIN) 11 (19) 35 131
INTEREST 69 51 193 166

---------------------------------------------------------------------------

INCOME/(LOSS) BEFORE OTHER COSTS (77) 635 (842) 494
RESTRUCTURING COSTS - - 87 152
---------------------------------------------------------------------------

INCOME/(LOSS) BEFORE INCOME TAX
 EXPENSE/(RECOVERY) (77) 635 (929) 342
INCOME TAX EXPENSE/(RECOVERY) 10 217 (319) (125)
---------------------------------------------------------------------------

NET AND COMPREHENSIVE INCOME/(LOSS) (87) 418 (610) 467
---------------------------------------------------------------------------
---------------------------------------------------------------------------


SUPPLEMENTARY DISCLOSURE (unaudited)
$Thousands

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")

Adjusted EBITDA is not a recognized performance measure under GAAP and does not have a standardized meaning prescribed by GAAP. The term EBITDA consists of net and comprehensive income/(loss) and excludes interest, income tax recovery, depreciation and amortization. Adjusted EBITDA excludes stock based compensation and one-time costs. Adjusted EBITDA is included as a supplemental disclosure because management believes that such a measurement provides a better assessment of the Company's operations on a continuing basis by eliminating certain non-cash charges and charges that are nonrecurring. The most directly comparable measure to Adjusted EBITDA calculated in accordance with GAAP is net and comprehensive income/(loss). The following is a reconciliation of the Company's Adjusted EBITDA to net and comprehensive income/(loss):

 THREE THREE NINE NINE
 MONTHS MONTHS MONTHS MONTHS
 ENDED ENDED ENDED ENDED
 MARCH 31, MARCH 31, MARCH 31, MARCH 31,
 2010 2009 2010 2009
---------------------------------------------------------------------------

NET AND COMPREHENSIVE INCOME/(LOSS) (87) 418 (610) 467
INTEREST 69 51 193 166
INCOME TAX EXPENSE/(RECOVERY) 10 217 (319) (125)
STOCK BASED COMPENSATION 5 10 20 92
AMORTIZATION 236 287 722 768
RESTRUCTURING COSTS - - 87 152

---------------------------------------------------------------------------

ADJUSTED EBITDA 233 983 93 1,520
---------------------------------------------------------------------------
---------------------------------------------------------------------------

About PSP

The mission statement of Pacific Safety Products Inc. is ...we bring everyday heroes home safely^TM. PSP is an established industry leader in the production, distribution and sale of high-performance and high-quality safety products for the defence and security market. These products include body armour to protect against ballistic, stab and fragmentation threats, ballistic blankets to reduce blast effects, and protective products against chemical and biological hazards. PSP is the largest armour manufacturer in Canada, directly supplying the Canadian Department of Defence, Federal Government Agencies and major Canadian law enforcement organizations. The Company also provides specialized law enforcement and safety products through APS Distributors, a division of PSP that services law enforcement and public safety agencies across the country. The Company, through its U.S. subsidiary Sentry Armor Systems Inc., provides body armour products to U.S. based law enforcement and private security firms. The Company also produces tactical clothing and emergency medical kits. Pacific Safety Products is a reporting issuer in British Columbia, Alberta and Ontario, Canada and publicly trades under the symbol PSP on the TSX Venture Exchange. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Forward Looking Statements: This news release may contain forward looking statements based on management's expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company's strategy for growth, product development, market position, expected expenditures, results of cost reduction initiatives and financial results are forward looking statements. Some of the forward looking statements may be identified by words like "expects", "anticipates", "plans", "intends", "projects", "indicates", and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the British Columbia Securities Commission, the Alberta Securities Commission, the Ontario Securities Commission, the TSX Venture Exchange, as well as others, could cause results to differ materially from those anticipated. These factors include, but are not limited to the potential impact of the current economic downturn on the Company's business, the unpredictability of purchasing patterns by governmental agencies, the possibility of a deterioration in the Company's working capital position, the impact on the Company's liquidity if it were to go offside of the covenants in its debt facilities, the impact that changes in supplier payment terms or slow payment of accounts receivable could have on the Company's liquidity, the unavailability of or increase in price of external capital to finance the Company's research, development and growth initiatives, changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates fluctuations of countries in which the Company does business; competitive pressures; successful integration of structural changes or downsizing initiatives, including restructuring plans, acquisitions, divestitures and alliances; cost of raw material, the uncertainty associated with the outcome of research and development of new products, including regulatory approval and market acceptance; and seasonality of sales in some products. Although the forward-looking statements contained in this report are based on what we believe to be reasonable assumptions, we cannot assure readers that actual results will be consistent with these forward-looking statements and we take no obligation to update such statements except as expressly required by law.