RAE Systems Drives into 2004 with Expanded Global Customer Base, Technology Developments and Strategic Alliances

SUNNYVALE, Calif. February 9, 2004 RAE Systems Inc. (AMEX: RAE), a leading global developer and manufacturer of rapidly-deployable, multi-sensor chemical and radiation detection monitors and networks for homeland security and industrial applications, today announced growing momentum as the company entered 2004 after a series of global customer wins, product introductions and strategic alliances.

We are striving to develop the most sensitive, accurate sensors and most robust wireless networks to generate the critical data used to make life saving decisions, said Robert I. Chen, CEO of RAE Systems. The common thread throughout all our solutions is our mission to protect human lives, and to that end, we continue to focus on delivering solutions for public venue protection, indoor air quality, homeland security, environmental remediation, first response and industrial hygiene.

Fourth quarter customer wins in North America highlighted the continued homeland security concerns:

The state of West Virginia expanded its existing HazMat fleet with additional AreaRAE, MultiRAE Plus and ProRAE software products to equip remote incident command centers;

The state of Connecticut purchased several hundred MiniRAE 2000 for their Office of Emergency Management Response Program;

The 2nd Civil Support Team of the National Guard purchased Rapid Deployment Kits to monitor and protect New Years Day celebrations in New York;

Robins Air Force Base in Georgia purchased dozens of Wing Tank Entry kits to service military aircraft;

HazMat teams and fire departments in Memphis, TN, Huntsville, AL, Hattiesburg, MS, Tupelo, MS, and Miami, FL purchased MultiRAE Plus and AreaRAE systems as well as Rapid Deployment Kits;

A major multinational pharmaceutical company purchased RAEGuard fixed VOC sensors to monitor isopropyl alcohol exposures during manufacturing processes.

Customer adoptions across Asia reflected growing government concern with environmental issues and indoor air quality monitoring:

Environmental protection agencies in China purchased hundreds of the ultra-sensitive ppbRAEs for indoor air monitoring;

The environmental protection agency in Macau adopted the AreaRAE-IAQ wireless integrated system for indoor air quality monitoring;

HazMat and public safety organizations in Australia bought dozens of MultiRAE Plus units and RAEGuard units.

In Europe and the Middle East, RAE Systems solutions were adopted to address strong trends in public safety and environmental remediation:

HazMat and public safety organizations in Israel purchased dozens of RAEGuard units for fixed monitoring applications;

HazMat and public safety organizations in the United Kingdom and Finland purchased dozens of MiniRAE 2000 units and ToxiRAE PID units.

Alliances
RAE Systems joined with best-of-breed technology companies to address the need to develop pervasive sensing applications for improved security in a variety of applications, including indoor air security, supply chain monitoring, manufacturing and environmental remediation. RAE Systems joined with wireless networking companies to develop solutions for supply chain monitoring.

Low power, short-haul data transmission. RAE Systems announced the selection of Ember Corporation to provide mesh RF network technology to extend the reach and range of RAE Systems ad hoc deployable sensing networks. Embers embedded radio chips and networking software use a flexible mesh routing algorithm, creating extremely resilient, self-organizing and self-healing radio data networks, with very low power requirements and no single point of failure.

Pervasive sensing for ocean cargo supply chain monitoring. RAE Systems tapped Savi Technology to unveil the use of RFID tags as the data portal for integrated cargo monitoring inside of intermodal shipping containers. This solution will let shipping companies and port security teams rapidly detect cargo container intrusions, sense shock history and interior environmental changes in temperature or humidity, detect radioactive material, and wirelessly communicate location and security status to a global network. RAE Systems demonstrated a prototype system at the U.S. Maritime Security Conference in October.

Technology and product developments included:

RAE Systems introduced AreaRAE-Gamma, the markets first wireless, integrated gas and radiation detector that enables a single unit or a networked system of units to communicate on a real-time basis with mobile incident commanders or remotely located tactical experts. The AreaRAE-Gamma is the latest offering in RAE Systems line of wireless monitors and joins AreaRAE IAQ and AreaRAE GPS products, widely accepted as the de facto choice of first responders around the country in this product category. The AreaRAE GPS products were successfully demonstrated in real world conditions at the TOPOFF II terrorism drills in early 2003.

RAE Systems enhanced the MultiRAE Plus, a configurable monitor that can be used as a simple, inexpensive Oxygen and Lower Explosive Limit (LEL) detector or an affordable five-gas monitor. The MultiRAE Plus combines a PID (Photo Ionization Detector) with the standard four gas sensors of a Confined Space Entry (CSE) monitor (O2, LEL, and two toxic gas sensors) into one compact monitor.

RAE Systems launched the ToxiRAE II family of single-gas personal, reusable monitors that provide continuous readouts of toxic gas concentrations at a price point that is competitive with many disposable detectors. While disposable products are turned on once and remain on until their batteries die, users decide when and where to use the ToxiRAE II, and turn it on and off accordingly. With the ToxiRAE II, users have the choice of renewing or disposing of the unit and starting out with a fresh, new monitor.

About RAE Systems
RAE Systems is a leading global developer and manufacturer of rapidly-deployable, multi-sensor chemical detection monitors and networks for homeland security and industrial applications. In addition, RAE Systems offers a full line of portable single-sensor chemical and radiation detection products. RAE Systems products enable the military and first responders such as firefighters, law enforcement and other emergency management personnel to detect and provide early warning of weapons of mass destruction and other hazardous materials. Industrial applications include the detection of toxic industrial chemicals, volatile organic compounds and petrochemicals. RAE Systems products are used by many U.S. government agencies, including the Department of Homeland Security, the Department of Justice, and the Department of State, as well as all branches of the U.S. military, and by numerous city and state agencies. Our end users also include many of the worlds leading corporations in the airline, automotive, computer and oil industries. Our products are used in civilian and government atmospheric monitoring programs in over 50 countries. For more information about RAE Systems, please visit www.RAESystems.com

Safe Harbor Statement
This press release contains “forward- looking” statements, as that term is used in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are denoted by such words as growing momentum, will let and enable. These types of statements address matters that are subject to risks and uncertainties, which could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the general economic and industry factors and receptiveness of the market to RAE and its products. In addition, our forward- looking statements should be considered in the context of other risk factors discussed in our filings with the Securities and Exchange Commission, including but not limited to our annual report on Form 10-K and 10-Q filings, available online at http://www.sec.gov. All forward-looking statements are based on information available
to the company on the date hereof, and the company assumes no obligation to update such statements.