Arotech’s New Security Subsidiary to Market Rafael Homeland Security Products and Technology in the US

Arcon Security Corporation established to Market Homeland Security Products in the US

August 8, 2003 - Arotech Corporation (NasdaqNM: ARTX) announced today that its newly-formed Arcon Security subsidiary has signed an agreement with Rafael Armament Development Authority Ltd. under which Arcon Security will market certain Rafael homeland security products and technology in the US. Arotech has established Arcon Security as a US based subsidiary providing homeland security consulting and other services.

Rafael, as a leading provider of research and development services to the Israeli Ministry of Defense, has been a major defense pioneer in Israel, advancing new ideas and technologies for more than thirty years with remarkable success. While mostly known for its military air, land and sea systems, Rafael has also developed extensive technology in the field of homeland security.

Today’s worldwide low-intensity conflicts are characterized by the aggressor's aim to cause accumulative casualties and damage to the defender. Continuous, low intensity-assaults are used in order to gain political achievements. Homeland security events, such as suicide attacks and ambushes, shooting and missile firing at aircraft and helicopters, cross-border attempts, direct and indirect shooting and shelling, placement of mines and explosive charges and continuous enemy intelligence activities are some examples of the threats posed by low-intensity offensives.

“Rafael’s homeland security products greatly expand our defense presence in the US,” said Robert S. Ehrlich, Arotech Chairman and CEO. “With Rafael’s extensive technology, we will be able offer more solutions in this ever-growing market.”

About Arotech Corporation

Arotech's corporate mission is to provide quality defense and security products for the military, law enforcement and homeland security markets, including advanced zinc-air batteries, multimedia interactive simulators/trainers and lightweight armoring.

Arotech Corporation (www.arotech.com) operates two business divisions: Electric Fuel Batteries — developing and manufacturing zinc-air batteries for military and homeland security applications and developing electric vehicle batteries for zero emission public transportation; and Arotech Defense — consisting of IES Interactive, which provides advanced high-tech multimedia training systems for law enforcement and paramilitary organizations, MDT Armor, which provides vehicle armoring for the military, industrial and private sectors, and Arcon Security, which provides homeland security consulting and other services.

Arotech is incorporated in Delaware under the name “Electric Fuel Corporation” and has corporate and sales offices in New York and Denver with research, development and production subsidiaries in Alabama, Colorado and Israel.

Except for the historical information herein, the matters discussed in this news release include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties that may cause actual results to vary significantly. These risks and uncertainties include, but are not limited to, risks relating to: product and technology development; the uncertainty of the market for Arotech’s products; changing economic conditions; delay, cancellation or non-renewal, in whole or in part, of contracts or of purchase orders; significant future capital requirements; and other risk factors detailed in Arotech’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2002, as amended, and other filings (under the name Electric Fuel Corporation) with the Securities and Exchange Commission. Arotech assumes no obligation to update the information in this release. Reference to the Company’s website above does not constitute incorporation of any of the information thereon into this press release.