New Arotech Technology Allows Electric Bus to Run on Commercially Available Zinc

New development may pave way to faster commercial implementation

August 12, 2004 - Arotech Corporation (NasdaqNM: ARTX) announced today that its Electric Vehicle unit has developed technology that will allow its zinc-air batteries to use commercially available zinc, eliminating the need for the special dendritic zinc used to date. Arotech’s technological breakthrough for utilizing readily available zinc will boost commercialization plans for the zinc-air hybrid bus, which until now required heavy investments in zinc producing infrastructure.

Eliminating costly infrastructure will allow transit bus operators to achieve reasonable economies even when deploying small or medium fleets. Furthermore, the new technology will enable small scale tests, which otherwise would have required a significant investment in zinc regeneration infrastructure. Zinc supplier and recycler will be able to supply zinc fuel using existing commercial production technology and capacity -- removing a major market entry barrier.

This technological breakthrough is a result of optimizing the hybrid bus propulsion system during the first three phases of an FTA-funded development and demonstration program. A prototype bus using Electric Fuel’s refuelable zinc-air batteries and a hybrid electric drive system attained an inner-city driving range of up to 145 miles on a single charge – enough for a full day of transit service.

As the new technology has been proven in laboratory testing, Electric Fuel plans to conduct field tests of the alternative commercial zinc during an upcoming performance test of the zinc-air all-electrical bus.

“Independently commissioned studies have shown that zinc-air bus fleets can reach per-mile operating costs comparable to those of diesel-hybrid buses”, said Robert S. Ehrlich, Arotech Chairman and CEO. “Moreover, zinc-air buses would cost significantly less, overall, than current projections for hydrogen fuel-cell buses, thus providing a cheaper alternative to the competing zero-emission solution.”

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 armoring.

The Battery and Power Systems Division includes Electric Fuel Battery Corporation and Epsilor Electronic Industries Ltd. The Simulation, Training and Consulting Division includes IES Interactive Training, FAAC Incorporated and Arocon Security Consulting. The Armoring Division includes MDT Armor Corp., MDT Protective Industries Ltd. and Armour of America, Incorporated.

Arotech is incorporated in Delaware, with corporate offices in New York, and research, development and production subsidiaries in Alabama, Colorado, Michigan, California 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.