Wave Systems Corp. (fka WAVXQ)

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OT...Italian Government Places $2.4 Million Order for Digital National ID Cards Manufactured by Drexler Technology
Monday July 28, 4:00 am ET

LaserCard ID Establishes Foothold in European Union

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--July 28, 2003--Drexler Technology Corporation (Nasdaq:DRXR - News) today announced the receipt of a $2.4 million order for LaserCard optical memory cards for use by the Italian government as Italy's national ID card. Called the Carta d'Identita Elettronica ("CIE"), this digital ID card program represents the first use of a LaserCard national identification card within the European Union.


Deliveries are expected to be completed during the Company's current fiscal year, which ends March 31, 2004.

These secure cards have been developed in close cooperation with various agencies of the Italian government to meet the stringent requirements as set forth in the government decree announced three years ago for the CIE card. The card is based on a secure optical memory card manufactured by Drexler Technology, which is then further processed in Italy to add an IC chip.

During the past three years, the Company has shipped optical memory cards and read/write devices that enabled the Italian government to complete its evaluation of the technology. These earlier sales included 200,000 optical memory cards and 134 optical memory card read/write drives, mainly for encoding and initializing the cards.

CIE identification cards are expected to be issued to Italian citizens in selected cities initially. Every card will have undergone an extensive security authorization and personalization process prior to the citizen receiving the card, including multiple levels of government-controlled approvals between each stage of card production and issuance. The high data capacity and data permanence of the optical memory card are required for this process. The expected protocol is that each of these approval steps generates a digitally signed record of the approval step, including who, where, and when it was approved, which is saved as a digital certificate onto the optical media of each CIE. Each subsequent step generates a new "digitally signed envelope" over all the previous steps, in addition to the new step. These multiple layers of digital certificates make this card- issuance process extremely secure.

In addition to a 1,000-kilobyte optical memory stripe, the digitally recordable CIE card also contains a Siemens-made integrated circuit (IC) "smart chip" which the Italian government indicates may be used for "city services." This would be a separate application from the secure identification provided via the optical memory stripe that contains the citizen's identification information. The citizen's demographics, color photograph, digitized signature, and other biometrics are to be contained in the CIE card's optical memory stripe.

Under this program, it is anticipated that the central and municipal public administrations in Italy will be able to select the types of services they will offer with the CIE card. The Italian government indicates that the national services offered may include healthcare, voting, and social security, while municipal local services may include transportation and education.

The purchase order was placed by Laser Memory Card SRL, of Rome, Italy, a value-added reseller for Drexler's optical memory cards. A member of the European Union, Italy has a population of 58 million and a diversified industrial economy with roughly the same total and per capita output as France and the UK.

The Italian national ID and social services card is an example of a "digital governance" application, which represents Drexler's principal LaserCard market today. "Digital governance" means the utilization of digital information technology to facilitate or expedite the process of governing by a nation, state, region, municipality, agency, institution, or commercial enterprise. The card is used as proof that the cardholder has a formal permission, privilege, or right from the card issuer. The LaserCard's high-security features inhibit counterfeiting and data tampering and provide controlled access to the benefits granted by the card issuer.

Based in Mountain View, Drexler Technology Corporation (www.drexlertechnology.com), has manufactured over 20 million digitally recordable, multi-biometric ID cards for the U.S. government since 1997, including the U.S. Permanent Resident Card and U.S.-Mexico Border Crossing Card. Drexler also makes the Canadian government's new Permanent Resident Card, introduced in 2002. The Company develops and manufactures LaserCard® optical memory cards and chip-ready optical memory cards. Drexler's wholly owned subsidiary, LaserCard Systems Corporation (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.

"LaserCard" is a federally registered trademark of Drexler Technology Corporation for optical memory cards.

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