Arotech’s FAAC Delivers First Full Mission Light Rail Simulator

Developed under $490,000 contract with Houston Metropolitan Transit Authority

March 31, 2004 - Arotech Corporation (NasdaqNM: ARTX) announced today that its FAAC subsidiary has delivered the transit industry’s first full-mission light rail train (LRT) simulator using computer-generated imagery (CGI). As part of a $490,000 contract to the Metropolitan Transit Authority of Harris County (Houston), FAAC developed the MR-2000 municipal rail simulator in a partnership with METRO using subject matter experts to ensure that all training objectives would be met.

The LRT simulator system is installed at METRO’s Rail Operations Center in Houston and incorporates a full size front end of a Siemens train. A seamless 225 degree panoramic field of view is projected to the operator providing a complete CGI visual scene, including rear mirror views.

FAAC and METRO are developing a range of computer based training products to complement the MR-2000 simulator. This includes desktop LRT simulators and authoring software tools that transit agencies can use to construct new LRT track alignments and training scenarios. Virtually everything can be controlled in the CGI environment including weather, street traffic, pedestrians, signals, switches and LRT malfunctions.

“We are excited about our partnership with FAAC and they have exceeded our expectations with delivery of the LRT simulator,” said Tom Greufe, Director of Safety and Training for METRO. “METRO has enjoyed its safest years of bus operations since training with FAAC’s MB-2000 bus simulators, achieving an overall 15% reduction in accidents the first year of use (2002). We believe the new rail technology will have a great impact on safety throughout the rail community.”

“Transit bus and rail simulators are commercial derivatives of our advanced military simulators,” said Robert S. Ehrlich, Arotech Chairman and CEO. “The commercial market is an important component of our business strategy, alongside our key defense and military business.”

About FAAC

FAAC Incorporated (www.faac.com) has been providing high fidelity training and simulation products to its 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.

About Arotech Corporation

Arotech Corporation (www.arotech.com) 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 (www.electric-fuel.com) and Epsilor Electronic Industries (www.epsilor.com). The Simulation, Training and Consulting Division includes IES Interactive Training (www.ies-interactive.com), FAAC Incorporated (www.faac.com) and Arocon Security Consulting (www.arocon-security.com). The Armored Vehicle Division includes MDT Armor Corp. (www.mdt-armor.com) and MDT Protective Industries Ltd. (www.mdtisrael.com).

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.