Arotech’s IES Interactive Training Receives $800,000 in New Orders; Continues Expansion Into International Law Enforcement Markets

New Orders for Range 3000 XP4 Digital Training Simulators from
Mexico and UK Authorities

July 28, 2004 - Arotech Corporation (NasdaqNM: ARTX) announced today that its simulation and training division has recently received new simulator contracts from multiple law enforcement agencies totaling more than $800,000. Today’s announcement makes total sales for Arotech’s simulation and training division in July nearly $2.5 million, which includes the $1.6 million in orders announced on July 12.

IES Interactive Training received purchase orders from law enforcement agencies in Mexico and the UK for multiple Range 3000 XP4 digital training simulators. In addition, the Mexican law enforcement agency order includes the A2Z Classroom Trainer option for its Range 3000 XP4 systems. All systems have been shipped to both agencies and training on the systems is scheduled to complete by end of August.

“IES continues to strengthen international sales by expanding its network of sales representative that focus exclusively on foreign markets,” said Greg Otte, president of IES. “The orders from both the Mexican and UK law enforcement agencies confirm our belief that foreign law enforcement authorities have just as strong a need for interactive simulation training as do US agencies.”

“Both units in our simulation and training division are making good progress,” said Robert S. Ehrlich, Arotech Chairman and CEO. “Sales for interactive training simulators in both local and international markets continue to grow.”

About The Simulation and Training Division

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

FAAC Incorporated (www.faac.com) has been providing high fidelity training and simulation products to its military and commercial customer base for more than 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. More than 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 armoring.

The Battery and Power Systems Group includes Electric Fuel Battery Corporation and Epsilor Electronic Industries. The Simulation, Training and Consulting Group includes IES Interactive Training and FAAC Incorporated. The Armor Group includes MDT Armor Corporation 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.