Arotech's Battery Division Receives CECOM Military Battery Research Contract

Phase I of program for new fourth generation Electric Fuel
Zinc Air cell has commenced

October 14, 2004 - Arotech Corporation (NasdaqNM: ARTX) announced today that its Battery and Power Systems Division has received a new research and development contract from the US Army Communications and Electronics Command (CECOM). The 3-phase program will focus on developing a new, fourth generation Electric Fuel Zinc Air cell for use in military batteries.

The new portable Zinc Air battery pack will be 12 or 24 Volt and have a total capacity of approximately 400Wh. Battery Energy Density will be above 300Wh/kg. The second and third phases of the program are optional.

The research program is aimed at the Future Force Warrior project – the US Army’s flagship Science and Technology initiative to develop and demonstrate revolutionary capabilities for Future Force soldier systems.

The 3rd generation cells now in production for the Electric Fuel BA-8180/U military zinc air battery are mono-cells (single air cathode) with plastic casing encapsulating the anodic zinc reactant. The new 4th generation bi-cell (dual air cathode) will utilize a folded air cathode without plastic casing material, increasing the respective energy density. The power density is expected to double.

“Our current Zinc Air battery technology already out-performs competing battery technologies,” said Robert S. Ehrlich, Arotech Chairman and CEO. “Our goal for the new Electric Fuel cell is for it to become the building block of a new generation of batteries with more energy, to better serve our armed forces.”

About the Battery and Power Systems Division

Arotech’s Battery and Power Systems Division specializes in the design and manufacture of primary and rechargeable batteries, related electronic circuits and associated chargers for military applications. The company’s products are sold to government agencies, the military and large original equipment manufacturers. The Electric Fuel and Epsilor Electronics technical teams have state of the art expertise in the fields of electrochemistry, electronics, software and battery design, production, packaging and testing, operating in three facilities in Alabama and in Israel.

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.