Arotech Awarded Additional Funding from U.S. Army for Phase III of New Generation Zinc Air Development Program; Program Funding Received by Arotech to Date Totals $1.2 Million.

AUBURN, Ala. -- Arotech Corporation (NasdaqNM: ARTX) announced today that its Electric Fuel subsidiary has received additional funding from the U.S. Army's Communications and Electronics Command, CECOM, for further development of the Gen4 Zinc-Air Battery.

The funding covers the third phase of a research and development program 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 new funding was received following the successful completion of Phases I and II of the program and will be used for increasing the production rate of the Generation 4 battery, the BA-8150/U.

Electric Fuel's Gen4 portable battery pack is 12 or 24 Volts and has a total capacity exceeding 400Wh with battery energy Density above 300Wh/kg.

"The additional funding from the U.S. Army further demonstrates the significance of our Gen4 technology," said Robert S. Ehrlich, Chairman and CEO of Arotech. "Our new-generation battery will be very effective in facilitating longer mission times."

Arotech's Zinc-Air technology outperforms competing technologies in energy density. The Zinc-Air batteries are considerably safer in combat situations, lighter for extended missions, more economical and more environmentally friendly than lithium batteries.

Arotech's Battery and Power Systems Division is a leading provider of zinc-air and lithium batteries and chargers for defense and security products and other military applications. Arotech develops and produces high power zinc-air batteries and is believed to be the sole supplier of this technology to the US military. In addition, Arotech develops high-end primary and secondary batteries and associated chargers and has vast experience in working with government agencies, the military and large corporations. The division also pioneers advancements in zinc-air technology for electric vehicles.

The Battery and Power Systems Division consists of Electric Fuel Battery Corporation, Electric Fuel Ltd., and Epsilor Electronic Industries Ltd.

About Arotech Corporation

Arotech Corporation is a leading provider of quality defense and security products for the military, law enforcement and homeland 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 Battery 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. 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; 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.