Italian Government Orders Drexler Encoding Units for National ID Card Program; Provides Secure Encoding Capacity of Up to 40,000 Cards per Day.

Business Editors and Security Writers

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--June 13, 2002

Drexler Technology Corporation (Nasdaq:DRXR), has received an order for a supply of optical memory card "Crypto 1" encoders for use by the government of Italy for the secure issuance of its new national ID card.

Thirty-nine of the "Crypto 1" encoders, manufactured by Drexler's subsidiary, LaserCard Systems Corporation, will be configured into a card initialization system and a card authorization system capable of encoding up to 40,000 cards per day, in support of Italy's national ID card requirements. The high-speed, highly secure, card initialization and authorization systems were developed for this application by Muhlbauer A.G., a well know German supplier of smart IC card manufacturing equipment. The Muhlbauer systems represent the first building block to support the Italian government's goal of issuing optical "CIE" identification cards to almost all Italian citizens over a six-year period.

The new Italian national ID card, known as the "CIE" card (Carta d'Identita Elettronica), is based on the highly secure LaserCard(R) optical memory card manufactured by Drexler Technology, which previously sold 200,000 of the cards to Italy for this purpose. These special cards will be prepared for issuance through a two-step security process. The cards are first initialized, which links the serial number from the optical media and the IC chip together as a digitally signed card serial number, known as the CIE number, which is written into the optical and IC media. Then, the information is laser engraved into the card's front and back surfaces. Intended to be in service this August, one of the new Muhlbauer systems will perform this initializing function utilizing 50 IC chip card units and one set of 16 "Crypto" optical card encoders.

After card initialization, a card authorization system is used for the process of authorizing the release of serialized CIE cards to requesting cities throughout Italy. The authorization function consists of writing a digitally signed certificate into the optical media -- creating on each card a permanent audit trail of each step of the card's issuance. This system will contain another set of 16 optical "Crypto 1" encoders, which are a special version of the optical memory card read/write drive manufactured by LaserCard Systems Corporation.

Once the cards are securely shipped to the designated cities, the personal data of each citizen will be printed on the surface of the cards, and the digital demographic and biometric data are stored as required in the optical media stripe of the CIE cards, using LaserCard read/write drives of the type shipped to Italy last year in a batch of 95 units. All the data is digitally signed when recorded into the optical media, completing the secure issuing process.

The order was placed by LC Sistemia, S.p.A., of Rome, Italy, the authorized value-added reseller of Drexler Technology optical memory card products in Italy.

Headquartered in Mountain View, Drexler Technology Corporation (www.lasercard.com) develops and manufactures LaserCard(R) optical memory cards and chip-ready Smart/Optical(TM) cards, a combination of optical memory card and smart card. Drexler's wholly owned subsidiary, LaserCard Systems Corporation, makes optical card read/write drives, develops optical card system software, and markets card-related data systems and peripherals.

Forward-Looking Statements: Except for the historical information contained herein, the matters set forth in this press release, including estimates of encoder equipment requirements and performance for the Italian ID card program; statements as to the timing, scope, quantities, and protocols for the Italian government's national ID card implementation; statements as to the anticipated delivery and performance of the Muhlbauer-produced systems; expectations that the Company's optical memory cards will be used for the Italian ID card program; and the Company's plans, objectives, and anticipated economic performance, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to, unforeseen manufacturing or performance difficulties; general economic trends; the unpredictability of customer demand for products and customer issuance and release of corresponding orders; risks associated with doing business in and with foreign countries; the Company's reliance on VARs and licensees; risks associated with development, manufacture, and deployment of optical card drives and systems; the impact of technological advances and competitive products; and other risks detailed from time to time in the SEC reports of Drexler Technology Corporation, including its annual report on Form 10-K/A for the year ended March 31, 2001. These forward-looking statements speak only as of the date hereof. Drexler Technology disclaims any intention or obligation to update or revise any forward-looking statements. There is no assurance that the government of Italy will purchase the Company's optical memory card products in material quantities.