August 12, 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 six months ending June 30, 2008.

Second Quarter Results

Revenues for the second quarter reached $12.6 million, compared to $13.0 million for the corresponding period in 2007, a decrease of 3.2% over the same period last year.

Gross profit for the quarter was $2.8 million, or 22.5% of revenues, compared to $3.7 million, or 28.8% of revenues, for the corresponding period in 2007.

The net loss for the second quarter was $(1.9) million, or $(0.15) per share, versus $(1.5) million, or $(0.13) per share, for the corresponding period last year.

“During the second quarter we experienced material shortages and model changeover start up issues in our Armor Division,” noted Arotech’s Chairman and CEO Robert S. Ehrlich. “Our Battery Division had significant negative currency adjustments between the dollar and the Israeli shekel and a corresponding decline in margins, but our Simulation Division continued with another strong quarter, with revenues up 39% over the same quarter, last year,” continued Ehrlich. “We are optimistic that our Armor and Battery Divisions will get back on scheduled production and deliveries for a strong second half of 2008,” concluded Ehrlich.

First Six Months Results

Revenues for the first six months reached $25.9 million, compared to $24.6 million for the corresponding period in 2007, an increase of 5.3% over the same period last year.

Gross profit for the six months was $6.1 million, or 23.5% of revenues, compared to $7.9 million, or 32.1% of revenues, for the corresponding period in 2007.

The net loss for the first six months was $(2.9) million, or $(0.23) per share, versus $(3.2) million, or $(0.28) per share, for the corresponding period last year.

Backlog

Backlog of orders totaled approximately $51.6 million as of June 30, 2008, as compared to $54.2 million at June 30, 2007.

Cash Position at Quarter End

As of June 30, 2008, the Company had $1.7 million in cash, $179,000 in restricted collat-eral securities and restricted held-to-maturity securities due within one year, and $55,000 in available-for-sale marketable securities, as compared to December 31, 2007, when the Company had $3.4 million in cash, $320,000 in restricted collateral deposits, $1.5 million in an escrow re-ceivable, and $47,000 in available-for-sale marketable securities. Cash was invested in the Company’s Armor Division and a paydown of its working capital bank line.

Short term bank borrowings were $2.3 million at the end of the second quarter 2008 compared to $4.6 million at the end of the year 2007.

The Company had trade receivables of $7.9 million as of June 30, 2008, compared to $14.6 million as of December 31, 2007. The Company had a current ratio (current assets/current liabilities) of 1.95, up from the December 31, 2007 current ratio of 1.93.

Conference Call

The Company will host a conference call tomorrow, Wednesday, August 13, 2008 at 9:00 a.m. EDT. Those wishing to access the conference call should dial 1 888 282 4019 (U.S.) or +1 913 312 1264 (international) a few minutes before the 9:00 a.m. EDT start time. A replay of the conference call will be available starting Wednesday, August 13, 2008 at 11:00 a.m. until Friday, August 15, 2008 at 12:00 p.m. The replay telephone number is 1 888 203 1112 (U.S) and +1 719 457 0820 (international). The replay passcode is: 1561483.

About Arotech Corporation
Arotech Corporation is a leading provider of quality defense and security products for the military, law enforcement and homeland security markets. Arotech provides multimedia interactive simulators/trainers, lightweight armoring and advanced zinc-air and lithium batteries and chargers. Arotech operates through three major business divisions: Armor, Training and Simula-tion, 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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