Arotech Establishes European Headquarters to Expand Reach into Non-US Markets

European Effort Will Be Run by Retired Brigadier General David Shoval

June 28, 2004 - Arotech Corporation (NasdaqNM: ARTX) announced today that it has established its new European headquarters in Berlin, Germany. Arotech plans to leverage its established US presence to expand into the European defense markets. Retired brigadier general David Shoval, former Head of Israeli Ministry of Defense Delegation in Germany and former Head of Israel's Military Export Directorate, Ministry of Defense, will act as President of the new subsidiary.

The new subsidiary, Arotech Europa, will open European markets for Arotech's power, simulation and armoring products. Arotech's proven military products - batteries and power systems, simulation and training, and armored vehicles - will be offered to the European military, security and defense organizations.

"Europe holds significant growth potential for Arotech," said Robert S. Ehrlich, Arotech Chairman and CEO. "General Shoval's extensive ties and experience in defense marketing in Europe will help us introduce the wide range of Arotech's products."

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, FAAC Incorporated and Arocon Security Consulting. 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.