Arotech Corporation Posts Record Year End and Fourth Quarter 2002 Revenues with Sharp Reduction in Loss Per Share

Year-end revenues tripled to $6.4 million; gross profit increased to $2.0 million;
loss per share for continuing operations reduced to $0.15

Fourth quarter revenues quadrupled to $2.1 million; gross profit increased to $155,525;
loss per share for continuing operations at $0.06;

Backlog of orders in excess of $8 million with cash-on-hand at
beginning of 2003 at $5.0 million

February 27, 2003 - Arotech Corporation (NasdaqNM: ARTX), a provider of quality advanced zinc-air batteries, multimedia interactive simulators/trainers and lightweight armoring for the military, law enforcement and homeland security markets, today reported fourth quarter and year end 2002 results.

Revenues for the year ended December 31, 2002 increased to $6.4 million as compared with $2.1 million, excluding discontinued operations, for 2001. Gross profit for the year ended December 31, 2002 increased to $2.0 million as compared with $101,000 for 2001. The respective increases in revenues and gross profit are largely attributed to the two acquisitions completed early in the third quarter of 2002, i.e., IES Interactive Training and MDT Protective Industries. Revenues derived from the newly designated BA-8180 military battery are not expected to be realized until the first quarter of 2003 due to the terms of the defense contract.

Loss Before Income Taxes, Depreciation and Amortization (LBITDA), excluding discontinued operations, for the year ended December 31, 2002 increased to $17.1 million as compared with $16.6 million for 2001. This increase largely stems from the increased research and development resulting from the ramping up of the military battery technology at the request of the US military branches that currently have orders for the Company's products and increased sales and marketing expenses attributed to international marketing efforts in respect of the use-of-force division.

Combined basic and diluted net loss per share, including discontinued operations, for the year ended December 31, 2002 decreased to $0.57 as compared with $0.71 for 2001.

Revenues for the quarter ended December 31, 2002 increased to $2.1 million as compared with $556,790, excluding discontinued operations, in the similar period of 2001. Gross profit for the quarter ended December 31, 2002 increased to $156,000 as compared with a gross loss of $61,000 in the similar period of 2001. The respective increases are largely attributed to sales in the Company's new vehicle armoring division, which were not included in 2001 revenues.

Loss Before Income Taxes, Depreciation and Amortization (LBITDA), excluding discontinued operations, for the quarter ended December 31, 2002 increased to $1.7 million as compared with $1.3 million for the corresponding quarter 2001. This increase largely stems from the increased research and development and sales and marketing expenses attributed to international marketing efforts in respect of the use-of-force division.

Combined basic and diluted net loss per share, including discontinued operations, for the quarter ended December 31, 2002 narrowed to $0.08 as compared with $0.18 for the corresponding quarter in 2001.

Cash-on-hand and cash equivalents, including proceeds of a sale of debentures, stood at the beginning of 2003 at approximately $5 million with backlog of orders in excess of $8 million.

Arotech Chairman and CEO Robert S. Ehrlich commented, "2002 was a year of significant events as we successfully repositioned the Company to a defense and homeland security holding company. This transformation did not come easily. In turning the Company around, we had to go through a significant staff reduction, change senior management and take a one-time $7.1 million write-off of inventory and fixed assets related to discontinued operations.

"For 2003, Arotech is looking forward to tripling revenues and achieving cash flow breakeven as we head to profitability. When the market recovers, we believe that our stock price should reflect the major turnaround underway. We appreciate the support of our shareholders and associates, and look forward to continued improvement in 2003."

Conference Call

Arotech Corporation will hold its quarterly and year-end 2002 conference call on Thursday, February 27, 2003 at 10:00 AM EST. To take part in the conference call, please call 1-888-857-6929 (US) or +1-719-457-2600 (International) a few minutes before the 10:00 AM EST start time. For your convenience, an instant reply will be available Thursday February 27, 2003 at 1:00 PM EST until Saturday, March 1, 2003 at 8:00 PM EST. The replay telephone number is 1-888-203-1112 (US); +1-719-457-0820 (International). The confirmation number is 741032.

About Arotech Corporation

Arotech Corporation operates in three business subsidiaries: Electric Fuel Batteries - developing and manufacturing zinc-air batteries for military and homeland security applications; IES Interactive - multimedia training systems for law enforcement and paramilitary organizations; and MDT Armor - vehicle armoring for the military, industrial and private sectors. Electric Fuel Batteries also continues developing Zinc-Air batteries for public transportation, which could help reduce the nation's dependence on foreign oil while eliminating tailpipe emissions.

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 of purchase orders; significant future capital requirements; the Company's ability to quickly and smoothly execute the change in leadership as a result of its former CEO's resignation; and other risk factors detailed in Arotech's most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2001, Arotech's most recent Quarterly Report on Form 10-Q, 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.

ELECTRIC FUEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)