Mountain View, Calif., September 1, 2004–LaserCard Systems Corporation (NasdaqNM:DRXR) today announced that it has received a purchase order release to ship 265,000 secure chip-ready optical memory cards for use in a Middle East national ID card program.

This quantity represents the balance required to fulfill the contract for Phase I of a program that called for a total of 300,000 cards. The prime contractor for the program issued the purchase order release following instructions from the customer, a Middle Eastern national government. The cards, which include highly secure customized optical memory and several other strong counterfeit resistance features, will be embedded with IC chips by a third party under contract by the prime contractor before delivery to the government customer. Deliveries under the purchase order release are scheduled to begin in the current quarter and to be completed by the end of January 2005.

Phase II of the same program, for which a Request for Proposal (RFP) was issued earlier this year, calls for an additional three million hybrid optical/smart cards and 220 optical card encoders to be used in card personalization and issuance. Responses to the RFP are currently under evaluation and the final selection of the prime contractor for Phase II is expected later this year.

Mountain View-based LaserCard Systems Corporation (http://www.lasercard.com) manufactures optical card read/write drives; develops optical card system software; and markets optical memory cards, card-related data systems, and peripherals. Parent company Drexler Technology Corporation (Nasdaq:DRXR) manufactures LaserCard optical memory cards and chip-ready OpticalSmart cards.