Computerized Motor Vehicle Registration Certificates on ``Smart Optical Cards'' Planned by State of Maharastra, India

    MOUNTAIN VIEW, Calif.--May 16, 2001--Drexler Technology Corporation said that its Smart/Optical cards have been offered through an Indian systems integration company in response to a Tender Notice (request for proposal) by the Indian State of Maharastra for the implementation of a computerized motor vehicle registration system utilizing "Smart Optical Cards."
    The Tender Notice states, in part:

    "Transport Commissioner's Office, Maharashtra State, Mumbai.
    Tender Notice -- Sealed Tenders are invited for
    implementation of computerised Motor Vehicles Registration
    System for issuing Motor Vehicle Registration Certification
    on Smart Optical Cards on BUILD, OWN AND OPERATE (BOO) basis,
    at all Transport Offices throughout in the State, for a
    period of 5 years.

    The intended parties having experience in designing,
    installing and issuing of Smart Optical cards and having
    latest annual turnover of more than 2 (two) crores should
    submit their offer in two envelope bidding system comprising
    of (i) Technical Proposal in the form of qualification
    documents (issued by the department) and (ii) Financial offer
    (Tenderer own way)."

    Drexler Technology's Smart/Optical(TM) card is part of the bid submitted by an Indian systems integration company for this program; however, there is no assurance that the program will proceed or that the bid will be successful. As a matter of corporate policy, the Company will not be discussing the status or estimating the period of time required for the potential contract award.
    One of India's 26 states, Maharastra had a population of 79 million people at the time of the 1991 census and is estimated to have 94 million people today. The capital city of Maharastra is Mumbai (Bombay). The population of Maharastra is almost three times that of the Indian State of Kerala, which has issued a similar Tender Notice for a motor vehicle registration system incorporating "Smart Optical Cards," as reported by the Company on May 8, 2001.
    Headquartered in Mountain View, Drexler Technology Corporation (www.lasercard.com) invents, develops, and manufactures optical data storage products and systems, including LaserCard(R) optical memory cards and chip-ready Smart/Optical(TM) cards. Its 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. LaserCard(R) optical memory cards are used for "digital governance" applications such as immigration, visas, cargo manifests, motor vehicles, import-duty collection, pay-per-use systems, and ID/access; and for healthcare and other digital read/write wallet-card applications.

    Forward-Looking Statements: Certain statements made above relating to plans, objectives, and economic performance go beyond historical information and may provide an indication of future results. To that extent, they are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and each is subject to factors that could cause actual results to differ from those in the forward-looking statement. Such factors are described in the Report on Form 10-K and other documents filed by Drexler Technology Corporation (the "Company") from time to time with the Securities and Exchange Commission. The Company's business plan depends upon the initiation and growth of new programs utilizing the Company's optical memory card products and is subject to adverse economic and technological developments. There is no guarantee that Maharastra, Kerala, or other state governments in India will purchase the Company's products in material quantities.