Arotech Corp. may have misled investors about its financial condition and future business prospects.

This is a security fraud class action against Arotech Corporation and certain officers and directors.

The class action lawsuit alleges Arotech presented itself as a company that was adept at managing and integrating acquired assets (such as Armour of America, which it acquired in August 2004 at a cost of approximately $22 million), and a company that was achieving organic growth. Arotech repeatedly stated that Arotech maintained systems, procedures and controls that foreseeably would allow it to achieve remarkable year-over-year "record" quarterly revenue growth as high as 40%.

Arotech's representations concerning Arotech's business, management capabilities, systems and controls, and strength and profitability were either knowingly false when made or Arotech recklessly disregarded known, material adverse facts at the time the statements were made. In reality, throughout the Class Period, Arotech was suffering from a host of undisclosed adverse factors that were negatively impacting Arotech's business and that would foreseeably cause it to report declining financial results - - materially less than the market expectations Arotech had caused and cultivated.

It was only at the end of the Class Period that investors ultimately learned the truth - - that Arotech was operating far below expectations and that Arotech had significantly under-reserved for its impaired assets. These sudden and shocking disclosures, first reported on November 14, 2005, had an immediate impact on the price of Arotech stock. Accordingly, the following day, on November 15, 2005, shares of the Company declined almost 27% in the single trading day.