March 25, 2008 - Arotech Corporation (NasdaqGM: ARTX), a provider of quality defense and security products for the military, law enforcement and security markets, today reported results for the quarter and full year ended December 31, 2007.

Fourth Quarter Results
Revenues for the fourth quarter reached $17.7 million, compared to $14.1 million for the corresponding period in 2006, an increase of 26%.

Gross profit for the fourth quarter was $5.8 million, or 33% of revenues, compared to $3.0 million, or 21% of revenues, for the corresponding period in 2006, a 12 point increase in the gross margin percentage.

The Company reported an operating profit for the fourth quarter of $412,000 compared to an operating loss of $(1.6) million for the corresponding period in 2006.

The Company’s net profit for the fourth quarter of 2007 was $1.0 million, or $0.08 per share, compared to a net loss of $(2.1) million, or $(0.19) per share, for the corresponding period in 2006.

“We are extremely pleased with the dramatic improvement in this year’s results, particularly our achievement of quarterly GAAP net earnings per share,” said Arotech Chairman and CEO Robert S. Ehrlich. “We will strive to match these achievements in 2008 despite what seems to be shaping up as a tough economic environment this year,” concluded Ehrlich.

Full Year Results
Revenues for 2007 were $57.7 million, compared to $43.1 million for 2006, an increase of 34%.

Gross profit for 2007 was $18.1 million, or 31% of revenues, compared to $10.6 million, or 25% of revenues, for 2006, a 6 point increase in the gross margin percentage.
The Company reported an operating loss for 2007 of $(2.5) million, compared to an oper-ating loss of $(8.6) million in 2006.

The Company’s net loss for 2007 was $(2.9) million, or $(0.26) per share, compared to a net loss (before deemed dividend) of $(15.6) million, or $(1.82) per share, for 2006. Included in the losses were non-cash, net financial expenses of $1.1 million and $7.5 million for 2007 and 2006, respectively.

Backlog
Backlog of orders totaled approximately $48.7 million as of December 31, 2007.

Cash Position at Year End
The Company had trade receivables of $14.6 million as of December 31, 2007, compared to $7.8 million as of December 31, 2006. The Company had a current ratio (current as-sets/current liabilities) of 1.93, up from the December 31, 2006 current ratio of 1.79.

As of December 31, 2007, the Company had $3.4 million in cash, $320,000 in restricted collateral securities and restricted held-to-maturity securities due within one year, $1.5 million in an escrow receivable, and $47,000 in available-for-sale marketable securities, as compared to December 31, 2006, when the Company had $2.4 million in cash, $649,000 in restricted collat-eral securities and restricted held-to-maturity securities due within one year, $1.5 million in an escrow receivable and $41,000 in available-for-sale marketable securities.

The Company ended 2007 with no long term financial debt and $4.6 million in bank debt. The Company also had $3.8 million available in unused bank lines of credit at year end.

Stockholders’ equity at the end of the year was approximately $57.4 million.

Conference Call
The Company will host a conference call tomorrow, Wednesday, March 26, 2008 at 9:00 am EDT. Those wishing to access the conference call should dial 1-877-879-6209 (U.S.) or 1- 719-325-4798 (international) a few minutes before the 9:00 a.m. EDT start time. A replay of the conference call will be available starting Wednesday, March 26, 2008 at 10:30 am EDT until Friday, March 28, 2008 at 11:59 p.m. The replay telephone number is 1-888-203-1112 (U.S) and 1-719-457-0820 (international). The pass code is: 1747365.

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: Armoring, Training and Simulation, and Batteries and Power Systems.

Arotech is incorporated in Delaware, with corporate offices in Ann Arbor, Michigan and research, development and production subsidiaries in Alabama, Michigan and Israel.

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