Elbit Vision Systems Ltd. to Acquire U.S.-Based ScanMaster IRT Holdings Inc.; EVS to Expand Into Field Of Ultrasonic Inspection.

YOQNEAM, Israel -- Elbit Vision Systems Ltd. (OTCBB: EVSNF.OB) announced that it has signed a term sheet to acquire ScanMaster IRT Holdings Inc., a Delaware corporation, as well as its fully-owned subsidiaries in Israel and the United States. ScanMaster IRT is engaged in the development, manufacturing and marketing of equipment for the ultrasonic inspection of industrial parts and components for the automotive and transportation industries, the metal industry, as well as applications for aircraft and jet engine inspection.

For fiscal 2003, ScanMaster had revenues of approximately $5.2 million and net income of approximately $100,000. ScanMaster expects aggregate revenues of approximately $8.5 million and $11 million in 2004 and 2005 respectively. Consummation of this transaction is subject to completion of due diligence by EVS, execution of definitive documentation and other customary closing conditions. Upon completion of the transaction ScanMaster will become a fully owned subsidiary of EVS. The acquisition, expected to close on September 1, 2004, calls for a total cash consideration of $3 million in addition to $5.5 million of EVS' common shares.

ScanMaster, established in 1986 by a group of researchers and engineers from the Tel Aviv University in Israel, manufactures nondestructive inspection systems utilizing ultrasonic (UT) technologies for a wide range of industrial applications. The Company has an installed base of more than 500 field-proven systems and instruments, including equipment for such inspection applications as: composite material-based aircraft and aerospace structural elements, aircraft engine turbine rings, automotive spot welds, train wheels and rails, as well as plates, bars, tubes and pipes manufactured from steel, aluminum and titanium alloys.

Commenting on the transaction, Mr. Menashe Shohat, CEO of ScanMaster: Through this transaction with EVS, ScanMaster's products will benefit from increased distribution channels via the global marketing networks of the both companies. Our R&D team will work closely with EVS' team to expand the market share for our next generation Non Destructive Testing (NDT) systems and instruments. The Company will continue to focus its R&D initiatives toward the development of advanced digital technologies to be combined with unique software-based operator interfaces and 'smart', high precision mechanics. I believe that the combined company will have the right combination of technology, sales, marketing and customer support necessary to become a leading provider of inspection solutions.

EVS' President, Mr. Zami Aberman, said: "We are extremely pleased with this potential acquisition, as it represents another step forward in our strategic growth plan to expand our product portfolio and penetrate new markets. ScanMaster is well established in the field of ultrasonic inspection, serving a blue chip customer base which includes such global companies as General Electric, Pratt & Whitney, General Motors, Mercedes, Daimler Chrysler, BMW, Volkswagen, Volvo Aero. We are confident that we can leverage the synergies that exist in technology, sales, marketing and customer support to expand our global customer base and take advantage of the opportunities that exist in the markets we serve."

"We believe the combined company will become a leading provider of high quality inspection systems. This acquisition will enable EVS to leverage its inspection expertise and apply it to the field of NDT applications, giving us the ability to offer a broader range of solutions to customers in the automotive, aircraft and metals industries.

Mr. Aberman concluded, "In addition, EVS' recently established presence in the Far East, made possible through our acquisition of Yuravision, represents significant market opportunity for ScanMaster's innovative products."

About ScanMaster

ScanMaster Systems (IRT) Ltd, (www.scanmaster-irt.com) is a fully integrated company which develops, manufactures and markets products for ultrasonic non-destructive inspection. The product focus is PC-based, software intensive instrumentation and systems.

ScanMaster manufactures instruments, transducers and turnkey non-destructive inspection systems for a wide range of industrial applications, using ultrasonic techniques ('UT'). ScanMaster's products generally enjoy a high technological barrier to entry that translates into a limited number of potential competitors in each application niche.

Among UT equipment suppliers, ScanMaster offers the widest range of field-proven, turnkey systems for Non Destructive Testing applications.

About EVS

Elbit Vision Systems Ltd. designs, develops, manufactures, markets and supports automatic optical inspection and quality monitoring systems for the industrial, web and microelectronics industries. Company product lines improve product quality and increase production efficiency in the textile, automotive, non-woven, plastics, wafer and LCD industries.

Forward looking statements in this release with respect to the Company's business, financial condition and results of operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements, including, but not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development, the effect of the Company's accounting policies as well as certain other risk factors which are detailed from time to time in the Company's SEC filings.