Italy Orders $3.8 Million of Drexler Technologys LaserCard Optical Memory Cards for Italian National

Drexler Technology has received an order valued at $3.8 million for LaserCard optical memory cards slated for use as Italys new national ID card, called the Carta dIdentita Elettronica ("CIE"). Deliveries under the new order are scheduled to be completed by June 2004. For an earlier, $2.4 million CIE card order announced on July 28 of this year, deliveries began in November and should be completed by the end of March 2004. The $3.8 million purchase order was placed by Laser Memory Card SRL, of Rome, Italy, a value-added reseller for Drexlers optical memory cards. The national ID card will be distributed in phases, starting with 56 cities in 2004, according to Italian government sources. Developed in close cooperation with various agencies of the Italian government, the CIE card is a specialized LaserCard optical memory card which contains a 1 megabyte optical memory stripe for security and which is designed so that the Italian government can add an integrated circuit (IC) "smart chip," currently supplied by Siemens. The Company understands that Italy plans to record each citizens demographics, color photograph, digitized signature, and other biometrics onto the CIE cards optical memory stripe and to undertake an extensive security authorization and personalization process prior to issuing the card to the citizen. This process would include multiple levels of government-controlled approvals between each stage of card production, registration, activation, and issuance. The high data capacity and data permanence of the optical memory are required for this process. The Company expects that Italys protocol will be that each of these approval steps generates a digitally signed record of the approval step -- including where, when, and by whom it was approved -- which is saved as a digital certificate onto the optical media of each CIE. Each subsequent step would generate a new "digitally signed envelope" over all the previous steps, in addition to the new step. These multiple layers of digital certificates would make this card-issuance process extremely secure.