Israel has suspended the export licence granted to Aeronautics covering the sale of its Orbiter 1K armed loitering unmanned air vehicle to Azerbaijan.
The suspension relates to an ongoing investigation into claims that the system was demonstrated improperly.
Aeronautics denies any wrongdoing, however. "We never demonstrate our systems against live targets and that rule was kept in this case,"
it says. "Operational use is always performed by the customer and is his responsibility."
In a filing to the Tel Aviv stock exchange, Aeronautics says it believes the export suspension is "temporary".
The current evaluation is a continuation of a co-operation agreement between Aeronautics and Baku that has resulted in local production of the Israeli company's Orbiter 2 and 3 UAVs.