Arotech's MDT Forms Joint Venture in India for Armored Vehicles; Teams with Armor Materials Supplier MKU and Vehicle Body Builder JN Group to Create Concord Safety Solutions Limited.

NEW DELHI, India -- Arotech Corporation (NasdaqNM:ARTX) announced today that its Armor Division has entered into a joint venture with two prominent Indian companies for the design and manufacture of armored vehicles in India. The joint venture - Concord Safety Solutions Limited - will offer armored vehicles to the Indian military and paramilitary organizations.

The companies forming Concord Safety Solutions are MKU PVT Limited, the JN Group and MDT Armor Corporation.

MKU is one of India's leading manufacturer and defense contractor for ballistic protection solutions for individual and vehicle protection. Its leading stature is a result of in-house capability to process composite materials and to design customized solutions for its customers. First-hand expertise and top-grade resources enable MKU to produce hard and soft armor that conform to the highest quality standards.

The JN Group began its operations as an automobile dealership in 1933. In time it has become India's largest automotive body builder. Its portfolio also includes the manufacture of vehicle parts, tire re-treading, and vehicle maintenance. It also manages one of the largest networks of commercial vehicle dealerships in India.

The new armored vehicle company, Concord, will be launched at DefExpo 2006 - the 4th Land and Naval Systems Exhibition - that will take place in New Delhi, India, from January 31 to February 3, 2006.

"We are proud to have MDT as our partner for armored vehicles in India," said Manoj Gupta, MKU's Managing Director. "MDT's technology and experience, combined with our strong composite armor materials technology and JN's automotive capabilities form a perfect basis for Concord Safety Solutions."

"As the biggest vehicle body builder in India, we have often been asked to supply armored vehicles," said Vineet Chandra, Managing Director, JN group. "We have decided to form Concord with MKU and MDT, so that we can offer our customers armored vehicles based on cutting edge technology."

"With our partners MKU and JN Group, Concord is well positioned to move into the emerging market for armored vehicles in India," said Steven Esses, President and Chief Operating Officer, Arotech Corporation. "This is our first entry into the defense market in India, which holds great potential for Concord, MDT and Arotech."

About Arotech's Armor Division:

Arotech's Armor Division is an innovative leader in lightweight armoring for vehicles and aircraft. The Armor Division has years of battlefield and commercial protection experience and has provided life saving protection under the most extreme conditions. In addition to armoring vehicles for military and commercial customers, Arotech manufactures aviation armor both for helicopters and for fixed wing aircraft, marine armor, personnel armor and fragmentation blankets.

The Armor Division consists of MDT Armor Corporation, MDT Protective Industries Ltd. and Armour of America Incorporated.

About Arotech Corporation

Arotech Corporation is a leading provider of quality defense and security products for the military, law enforcement and security markets, including multimedia interactive simulators/trainers, lightweight armoring and advanced zinc-air and lithium batteries and chargers. Arotech operates through three major business divisions: Armor, Simulation and Security and Batteries and Power Systems.

Arotech is incorporated in Delaware, with corporate offices in Auburn, Alabama, 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, including the results of our restructuring program. Forward-looking statements reflect management's current knowledge, assumptions, judgment and expectations regarding future performance or events. Although management believes that the expectations reflected in such statements are reasonable, 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 materially. 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; Arotech's ability to remain listed on the Nasdaq Stock Market in accordance with the Nasdaq's $1.00 minimum bid price and other continued listing standards; dilution resulting from issuances of Arotech's common stock upon conversion or payment of its outstanding convertible debt, which would be increasingly dilutive if and to the extent that the market price of Arotech's stock decreases; and other risk factors detailed in Arotech's most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as amended, 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.