MOUNTAIN VIEW, Calif., (BUSINESS WIRE), Aug. 26, 2002–Drexler Technology Corporation (Nasdaq:DRXR), has received Canadian government approval to announce that the 400,000 LaserCard order announced by Drexler on August 14, 2002 and the 350,000 LaserCard order announced February 7, 2002 are slated for use as Canada’s new Permanent Resident Cards for non-citizens.

The 750,000 optical memory cards priced at $3.4 million were ordered under a subcontract which provides for a minimum purchase of 2.3 million cards over the five-year term of the subcontract. The LaserCard orders were placed through Information Spectrum, Inc. by the Canadian Bank Note Company, Limited (CBK.TO), the Canadian government’s prime contractor for this program.

Richard M. Haddock, Drexler’s president, commented that “Drexler Technology is pleased and proud that LaserCard utilization for digital governance by millions of people in both the United States and Mexico now has been extended to the entire North American continent.”

The following description of the Canadian Permanent Resident Card program is from a Canadian government website http://www.cic.gc.ca/english/pr-card/prc-about.html:

The new Permanent Resident Card “contains several security features that make it a safe proof of status document for the cardholder. As of December 31, 2003, the new card is a necessary document for every Permanent Resident reentering Canada by commercial carrier (airplane, boat, train and bus) after international travel.

“The card has a laser engraved photograph and signature, as well as a description of the physical characteristics (height, eye colour, gender) of the cardholder printed on the front.

“The card’s optical stripe will contain all the details from the cardholder’s Confirmation of Permanent Resident form. This encrypted information will only be accessible to authorized officials (such as immigration officers) as required to confirm the status of the cardholder. The card cannot be used to monitor the activities or track the movement of the cardholder; this will protect the cardholder’s privacy.

“The card’s optical stripe is more advanced than a magnetic stripe (commonly used on bank cards) both in terms of information storage capacity and security of information. Much like a commercial compact disc (CD), it is impossible to change, erase or add the information already encoded on the optical stripe.”

Canada’s new Permanent Resident Card program will expand LaserCard utilization to the entire North American continent. More than 5.5 million of Drexler’s digitally recordable, multi-biometric ID cards have been issued by the U.S. Department of State as machine-readable “biometric Border Crossing Cards” that are high-security visas enabling Mexican citizens to make short visits to the United States. Over 6.5 million Drexler-made cards have been issued by the U.S. Immigration and Naturalization Service as U.S. Permanent Resident Cards (“Green Cards”) that authorize immigrants and non-citizen residents to work and reside in the United States. The U.S. government maintains an inventory of unissued cards of both types.

Canadian Bank Note Company, Limited (http://www.cbnco.com), headquartered in Ottawa, Ontario, Canada, develops and implements sophisticated passport issuing systems, travel document readers, border control solutions, and related products. Its stock is listed under the symbol CBK.TO on the Toronto Stock Exchange. Canadian Bank Note issued a related news release last week, entitled “Canadian Bank Note Company, Limited: Canada’s International Identification Systems Supplier Provides Government of Canada With Secure Permanent Resident Cards and System” (http://www.cbnco.com/bluepages/press.html).

Privately held Information Spectrum, Inc. (http://www.informationspectrum.com) is a LaserCard value-added reseller and systems integrator based in Annandale, Virginia.

Headquartered in Mountain View, Drexler Technology Corporation (http://www.lasercard.com) develops and manufactures optical data storage products and systems, including LaserCard® optical memory cards and chip-ready Smart/Optical™ 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. The Company is a supplier of optical memory cards for the U.S. Immigration and Naturalization Service, U.S. Department of State, U.S. Department of Defense, Government of Canada, Government of Italy, and a state government of India. The LaserCard optical memory card is capable of recording and storing up to 2,800 kilobytes (2.8 megabytes) of digital data.

Forward-Looking Statements: Except for the historical information contained herein, the matters set forth in this press release contain forward-looking statements–including statements as to customers, applications, market segments, orders, and expected delivery schedules for optical memory card products; statements as to the timing, scope, quantities, and protocols for the Canadian government’s Permanent Resident Card program implementation; expectations as to continuation of U.S. government card programs and other governmental card programs; estimates of customer card issuance levels; and the Company’s plans, objectives, and anticipated economic performance. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to, the impact of governmental or regulatory proceedings; 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; lengthy sales cycles and reliance on government policy-making; the Company’s reliance on value-added resellers, licensees, or other third parties; risks, difficulties, and uncertainties associated with development, manufacture, and deployment of optical memory cards, drives, and systems; the impact of technological advances and competitive products; the U.S. government’s right to withhold orderreleases, reduce the quantities released, and extend delivery dates; and other risks detailed from time to time in the SEC reports of Drexler Technology Corporation, including its annual report on Form 10-K for the year ended March 31, 2002. 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 mentioned governments will purchase or continue to purchase the Company’s optical memory card products in material quantities.

CONTACT: Drexler Technology Corp., Mountain View

J. P. Protsik, 650/969-7277