The Company is in the process of enhancing the existing Challenge Card Design factory in order that finished optical cards may be manufactured in Germany. This will introduce the world’s first full-service card manufacturing facility ready to supply cards featuring the key technologies demanded by the market — optical memory, contact IC chip, contactless RFID, and magnetic stripe, as well as many other high security features — either singly or in combination. The addition of cards & more GmbH also enhances the sales and marketing base for the Company’s European, Middle Eastern, and African (EMEA) operations, as well as providing a strong regional systems integration capability. This strategic move will position the Company and its wholly owned subsidiary, LaserCard Systems Corporation, to build on their current pre-eminent position in the secure, biometric-based ID market in North America. Cards & more will continue to serve and support its existing customer base, while adding new resources to build optical memory card business throughout the EMEA region. In expanding its European presence, the Company intends to focus principally on biometric ID solutions for national and regional governments, as well as promoting optical cards in commercial and industrial markets which can benefit from the large data capacity and robust security that optical cards offer. In the acquisition transaction, Drexler Technology agreed to assume approximately 500,000 Euros of debt and to pay approximately 4.75 million Euros in cash, consisting of approximately 2.25 million Euros payable at closing and the remaining approximately 2.5 million Euros payable in five equal annual installments, subject to certain future adjustments. The acquired German companies have a total staff of approximately 70 people. jprotsik@drexlertechnology.com www.drexlertechnology.com