July 9, 2002

News Release: API ELECTRONICS RECEIVES CONTRACT VALUED AT $649,650

NEW YORK, Jul 9, 2002 /PRNewswire-FirstCall via COMTEX/ -- API Electronics Group Inc. (OTCBB: APIEF), a leading provider of custom replacement parts for military and commercial electronics applications, announced today that it has been awarded a contract worth US $649,650. Under the terms of the agreement, API will provide integrated hybrid circuits for a leading manufacturer in the semiconductor industry. Due to client confidentiality requirements, the company's name and the intended military application cannot be disclosed at this time. In a press release dated February 19, 2002, API disclosed that their client had approved the custom design specifications for these circuits and that API would hold exclusive manufacturing rights to the new products it develops. The prototype units are currently pending U.S. government approval.

"API will recognize revenue from this significant contract in two phases," said Tom Mills, President and COO for API Electronics. "When full production commences, API will receive a payment of 20% of the total contract. The remaining 80% will be paid upon delivery of the product."

API expects to fulfill this contract during the 2002 calendar year.

"The surge in defense spending and growing demand for military equipment is creating new opportunities for our company," said Mills. "This contract confirms the viability of custom designing parts for military applications, another niche space in which API can achieve market dominance and substantial recurring revenues on a go forward basis. API is well ahead of its competitors in the design and manufacture of these kinds of components. We believe this contract recognizes our strong capabilities and leading position in our sector while adding further value for the company and its shareholders."



ABOUT API ELECTRONICS:

API Electronics Group Inc. and its wholly owned subsidiaries are leading designers and manufacturers of superior quality electronic components and microcircuits with precisely defined functional capabilities. API and its subsidiaries have been providing top of the line parts to numerous global producers of military hardware, telecommunications equipment, computer peripherals, process control equipment and instrumentation for a combined total of over 50 years. With a growing list of blue chip customers, including Honeywell/Allied Signal, General Dynamics, Lockheed Martin, Litton Systems, Harris Corporation and numerous other top technology-based firms around the world, API regularly ships off-the-shelf and custom designed products to clients in more than 34 countries.
API owns state-of-the-art manufacturing and technology centers in New York state and Ontario, Canada totaling 48,500 square feet. The company also has manufacturing capabilities in China and a distribution center in Britain. API subsidiary, Filtran, is an ISO 9001 Registered Company. API Electronics trades on the OTC Bulletin Board under the symbol APIEF. For further information about Filtran Group and API Electronics, please visit the company websites at www.filtran.com and www.apielectronics.com.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward- looking statements are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in API's Annual and Quarterly Reports filed with the Securities and Exchange Commission, include changes in market conditions in the industries in which the Company operates. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated.

SOURCE API Electronics Group Inc.

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(APIEF)

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