Arotech Simulation and Training Division Receives $1.6 Million New Orders

First order for the new Incident Command Simulator for
Homeland Defense teams

July 12, 2004 - Arotech Corporation (NasdaqNM: ARTX) announced today that its Simulation and Training Division has recently received new simulator contracts from multiple customers totaling more than $1.6 million.

One of the contracts is the first in an anticipated series of purchases from FAAC Inc. of the new Incident Command Simulator. This simulator is designed to train the nation's first responders – fire and police personnel – in handling incidents ranging from a house fire or a local SWAT incident up to the aftermath of the use of a weapon of mass destruction. The student is immersed in the scenario visually and aurally as the incident unfolds in front of him on a large screen. He or she must direct the on-site personnel (fire, EMS, police, National Guard, HAZMAT, etc.). The student does this using his or her natural voice over a radio, as well as deciding what outside agencies should be contacted for additional resources, assistance, and coordination.

“This is an important next step in FAAC's strategy of gaining increased Homeland Defense related opportunities,” stated Al Jordan, FAAC President. “This area of training is critically needed but – until now – there was no satisfactory method of delivering this training”.

“The Incident Command Simulator expands FAAC’s reach into the Homeland Defense markets,” said Robert S. Ehrlich, Arotech Chairman and CEO. “FAAC is taking its military simulation and adapting it for this growing market.”

About The Simulation and Training Division

The Arotech Simulation and Training Division includes FAAC Inc. and IES Interactive Training Inc.

FAAC Incorporated has been providing high fidelity training and simulation products to it's military and commercial customer base for over 30 years. FAAC supplies driving simulators for training operators of automobiles, trucks, police/fire/EMS vehicles, bus drivers, light rail operators, and airport ground vehicles. Over 80,000 drivers have been trained on FAAC's installed base of 173 driving simulators. FAAC also provides pilot decision-making support software for the F-15, F-18, and JSF aircraft as well as simulation models for the ACMI/TACTS air combat training ranges.

IES Interactive Training (www.ies-usa.com), a wholly owned subsidiary of Arotech Corporation, is a manufacturer of interactive digital training solutions to corporations, government agencies, military and law enforcement professionals around the globe. By providing unique judgment-driven systems designed by an experienced team of professionals, IES sets the standard for interactive simulation training. Flagship products include the Range 3000 XP4, a multimedia simulator; the Range FDU, advanced firearm diagnostics unit; and the A2Z Classroom Trainer for interactive, real-time learning.

About Arotech Corporation

Arotech Corporation provides quality defense and security products for the military, law enforcement and homeland security markets, including advanced zinc-air and lithium batteries and chargers, multimedia interactive simulators/trainers and lightweight vehicle armoring.

The Battery and Power Systems Division includes Electric Fuel Battery Corporation and Epsilor Electronic Industries. The Simulation, Training and Consulting Division includes IES Interactive Training and FAAC Incorporated. The Armored Vehicle Division includes MDT Armor Corp and MDT Protective Industries Ltd.

Arotech is incorporated in Delaware, with corporate offices in New York, and research, development and production subsidiaries in Alabama, Colorado, Michigan 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; and other risk factors detailed in Arotech’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and other filings 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.