Rainbow Technologies

Nature of Business: Develops, manufactures and markets computer security devices.

Total Employees: 72

In Orange County: 65

Stock Listing in The Times: On NASDAQ as “RainTc”

Ticker Symbol: “RNBO”

Friday’s Stock Close: $31.75

One-Week Change: Up $3.25

Analyst Review: “The key to Rainbow Technologies is management, and they’ve got an absolutely fabulous team. Company president Walt Straub is a very talented, very smart guy. He’s gotten every employee involved with the company and has littered them with stock options. They had a second public offering recently and raised $11.8 million. These guys are smart. The best time to borrow money is when you don’t need it. The market window for public offering was open. They exposed a whole new group of people to the stock and put the money in the bank until they needed it. Their balance sheet is perfect--no debt, lots of cash. Anybody can look at the numbers, but management is that intangible that decides a recommendation. Would I invest with this guy? The answer is unequivocally yes.”

-Jeffrey G. Foster, partner, Van Kasper & Co. Inc., San Francisco

SALES VS. PROFITS

Dollar amounts in millions

Sales:

‘87 $2.8

‘88 $6.2

‘89: $11.5

‘90: $13.9

‘91: $18.9

Profits:

‘87: $.370

‘88: $.951

‘89: $1.7

‘90: $1.9

‘91: $3.4

Corporate Outlook: “Rainbow Technologies has been doubling in size every year since our inception in 1985 until 1989; since then we’ve been growing 30% to 35% every year, and we expect that trend to continue. Our main goal is to expand our product line through internal development and outside acquisitions of technologies and technology companies.”

--Patrick Fevery, chief financial officer

5-YEAR SUMMARY: RETURN ON STOCKHOLDER INVESTMENT

Fiscal year ending Dec. 31 Dec. 31 Dec. 31 Dec. 31 1987* 1988 1989 1990 52-Week High $2.81 $4.00 $11.63 $13.88 52-Week Low $1.25 $1.38 $3.13 $4.75 Book Value Per Share $1.46 $1.29 $1.69 $2.21 Price Per Share $1.50 $3.13 $6.94 $6.88 Net Earnings Per Share $0.14 $0.27 $0.45 $0.49 Price-to-Earnings Ratio 11:1 12:1 15:1 14:1 Avg. Return on Investor Equity 11% 27% 44% 49%

Fiscal year ending Dec. 31 1991* 52-Week High $25.00 52-Week Low $5.75 Book Value Per Share $5.70 Price Per Share $23.25 Net Earnings Per Share $0.80 Price-to-Earnings Ratio 29:1 Avg. Return on Investor Equity 14%

* Rainbow Technologies sold 700,000 shares in its initial public offering September, 1987, raising $2.8 million; in its second offering in September, 1991, the company sold 950,000 shares, raising $11.8 million.

For more information call or write, Rainbow Technologies Inc.: 9292 Jeronimo, Irvine, Calif., 92718. (714) 454-8557

Source: Rainbow Technologies Inc.