Rainbow Claims Leadership in Software Security; High Security Authentication

SAN FRANCISCO, SAN JOSE, and IRVINE, Calif., April 10, 2001 – The Digital Rights Management group of Rainbow Technologies, Inc. (Nasdaq: RNBO) a leading provider of high-performance security solutions for the Internet, eCommerce and software protection, today claimed leadership of the worldwide smart-token security market by announcing that Rainbow has sold 26 million software security keys, high-security authentication tokens, and workstation security solutions. Rainbow made the announcement at today’s 2001 RSA Data Security Conference and Software Development West trade shows.

Stacked token-to-token, these smart tokens stretch nearly 900 miles and could fill up 15 international soccer fields. Rainbow’s family of smart tokens include the Sentinel software security keys and the iKey workstation security token, the Fortezza and Fortezza Plus Crypto Cards, and the MYK 82 and KMU high-assurance products from Rainbow-Mykotronx. For a representation of the volume of smart tokens sold by Rainbow, click on the link provided: http://www.rainbow.com/viz/index.html.

With a recent joint study from the Business Software Association (BSA) and the Software Information Industry of America, the need for securing enterprise-level software applications should continue to grow, as some $12 billion worldwide was lost to software piracy in 1999, the latest year statistics were available. The study suggests that incidents of software piracy increase during tougher economic times. For software publishers and ISVs, an investment in security technology can prevent unauthorized execution and illegal distribution of their valuable applications.

“As the Internet, eCommerce and enterprise software markets continue to expand, the protection of a company’s digital intellectual property from unauthorized access or use represents a key weapon in revenue erosion,” said Robert Shields, senior director of strategic marketing, Rainbow Technologies. “Since software pirates can steal and distribute software over the Internet quickly and hackers can spread malicious computer virus or assume someone’s digital identity, Rainbow’s family of smart tokens are a proven and tested solution for preserving an organization’s business-critical data and intellectual property investment. We intend to build on our market leadership by providing continued product innovation, developing strong strategic partnerships and building powerful smart-token security solutions for the enterprise and the individual.”

The Sentinel Suite of Products The Sentinel product family enables software security for ISVs and software developers through secure hardware and software-based license software distribution and management tools. Sentinel secures applications from unauthorized execution and protects developers and ISVs from illegal licensing and distribution. These products represent the industry’s most powerful and flexible solution for securing critical applications in stand-alone or networked environments. Rainbow’s Digital Rights Management group markets the industry’s leading software security, electronic software licensing and management, and digital rights management solution. Rainbow has sold more keys to more customers than any other competitive solution.

Rainbow’s Sentinel solutions provide the tools to enable:

* Digital Rights Management (DRM) for software and applications

* Electronic License Distribution/Management (ELD/M)

* Electronic Software Distribution (ESD)

* Electronic Commerce Licensing Tools and Security

Members of the Rainbow Sentinel family include Sentinel SuperPro, SuperProNet, SentinelLM, and SentinelExpress.

The Sentinel SuperPro and SuperProNet security keys are the industry’s most comprehensive, full-featured, easy-to-use software protection solution that allows IT professionals to increase software demonstration limits and upgrade demos to fully licensed versions of an application without having to ship a new security key or visit the end-user site. Both SuperPro and SuperProNet provide powerful multiple algorithm protection and 128-byte programmable read/write memory.

SuperProNet , the newest member of Rainbow’s Sentinel product family, is perfect for securing client/server-based software applications from unauthorized execution and protects these applications from illegal licensing and distribution over a networked environment. The security key easily connects to the network via a parallel or USB port on a network server and allows for the concurrent use of a protected application by multiple clients. Sentinel SuperProNet’s network-licensing capabilities are also enhanced through a server-monitoring tool that lets system administrators track license usage on the network. In addition, a one-time update option for license codes prevents license codes from being applied more than once during a field exchange. SuperProNet allows developers and software publishers to program keys specifically for use by their distributors to provide a measure of control over the number of end-user keys each distributor can activate and update.

Rainbow’s latest release of SentinelLM 7.1.1 is a secure software-based solution for managing, controlling and administering software distribution, updates, new releases and software patches. SentinelLM provides support for Microsoft Windows 2000 operating system and is localized for six of the world’s most-used business languages; English, French, Spanish, Japanese, Traditional Chinese and Simplified Chinese. Other key features of SentinelLM include License Server Usage log file reporting capability, change in Network Trial License behavior, enhanced Subscription Trial License file and UNIX support.

SentinelExpress enables electronic software distribution and works in conjunction with SentinelLM to offer software developers and ISVs the ability to securely distribute and license software via the Internet. The key benefits of this combination are:

* Secured applications from unauthorized execution

* Protection from illegal licensing

* Customized software packages to customers

Rainbow’s iKey Workstation Security Solution

Rainbow’s expertise in developing hardware keys for software protection provide a solid foundation for the development of a powerful, two-factor authentication token called iKey. This “smart key” workstation security solution functions in the same manner as a smart card, but does not require a reader and is easily inserted in the USB port of a desktop or notebook computer. The iKey 1000 series is a cost-effective security token for B2C loyalty and branding, Windows 2000 security and Public Key Infrastructure (PKI) applications. The iKey 2000 series is designed for B2B, enterprise security, and other sophisticated PKI applications.

The iKey places a user’s credentials, or digital identity, directly on the cryptographically secure token itself, so the user’s credentials no longer need to be stored on a client PC or notebook. Unless a computer system has a high level of assurance as to the identity of the user, the iKey should not allow that user access to sensitive data or services. As a bare minimum, password protection should be turned on and a strong password selected, but passwords are not enough. The iKey’s powerful two-factor authentication, such as something you know (for example, a password and PIN number) and something you hold (for example, a secure token), and easy-to-use, easy-to-install form factor make it a popular workstation security choice.

Because of the iKey’s ability to store a user’s credentials on the token, coupled with strong security, the iKey is growing more popular in a host of environments. For example, online banking systems, government information systems, and corporate networks have started using tokens rather than passwords. Tokens are starting to replace passwords in the enterprise, in B2B environments (such as Identrus), and B2C systems. Many of these new systems are often replacing previous password-based security solutions.

High-Assurance SmartTokens from Rainbow-Mykotronx

The Rainbow-Mykotronx Fortezza Crypto Card implements cutting-edge cryptographic security and authentication methods in a PCMCIA SmartToken for Federal government and high-assurance commercial applications. The Fortezza Crypto Card is self-contained, standardized, and easily integrated to provide users with the ultimate in portable security, together with on-board storage of user credentials, keys, and digital certificates. Fully Fortezza-compliant, the card incorporates the National Security Agency-certified CAPSTONE RISC-based cryptographic processor. It is the hardware SmartToken of choice for securing the Defense Messaging System (DMS).

Used by the government to protect top-secret information, the Fortezza(tm) Plus Crypto Card is the next-generation solution for both current and evolving information security (INFOSEC) applications. MISSI-compatible and PC CARD 95, 16-bit data I/O-compliant, the Fortezza(tm) Plus Crypto Card is the cryptographic engine for the Secure Terminal Equipment (STE). The size of a credit card, Fortezza(tm) Plus takes advantage of such commercial network technologies as ISDN to deliver high-quality secure digital voice/data services. This SmartToken provides on-board storage of user credentials, keys, and digital certificates. In addition, the card incorporates the National Security Agency-certified Krypton 4C RISC-based cryptographic processor.

For more details on these, and other high-assurance SmartTokens from Rainbow-Mykotronx, visit http://www.rainbow.com/mykoweb/.

About Rainbow Technologies

Founded in 1984, Rainbow Technologies is a leading provider of security solutions for the Internet and eCommerce. Rainbow applies its core technology to a variety of Internet applications-from securing software, to the acceleration of secure communication for eCommerce and Virtual Private Networks (VPNs). Rainbow’s products include secure Web server and VPN acceleration boards; anti-piracy and Internet software distribution solutions; PKI security solutions; voice, data and satellite security systems; and USB-based authentication tokens. Rainbow’s Digital Rights Management group is headquartered in Irvine, California and maintains offices throughout the United States, United Kingdom, France, Germany, Australia, China, The Netherlands, Brazil, India, and Taiwan. A network of nearly 80 authorized distributors sells Rainbow products worldwide. For more information, visit our Web site at www.rainbow.com.

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Rainbow Technologies, iKey, Fortezza, Sentinel, SuperPro, SuperProNet, SentinelLM and SentinelExpress are trademarks of Rainbow Technologies. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in our Annual Report on Form 10-K and other materials filed with the Securities and Exchange Commission (“SEC”) (as well as information included in oral statements or other written statements made or to be made by the Company) contain statements relating to the following: dependence upon existing and new product offerings, competition, intellectual property and licensing, future growth, rapid technological and market change, manufacturing and sourcing risks, Internet infrastructure and regulation, the inclusion of network security functionality in hardware or system software, international operations, among others. These conditions involve important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. Statements made in this document that are not purely historical are forward-looking statements, including any statements as to beliefs, plans, expectations, or intentions regarding the future. The Company assumes no obligation to update information concerning its expectations.

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