RAE Systems Wins $1 Million Radiation Sensor Contract From U.S. Military

SUNNYVALE, Calif. May 24, 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 that a branch of the U.S. Military has signed a contract worth approximately $1 million for radiation sensors to be used for base security at domestic and international locations.

The NeutronRAE Pager is a rapid detector of ?-ray (gamma) and neutron sources. Its cesium iodide (CsI) and lithium iodide (LiI) scintillators provide low level detection in a compact unit that is hundreds of times more sensitive than similar sized Geiger-Mller detectors. Even low energy neutrons in the thermal range can be counted. The NeutronRAE alerts first responders to the presence of a radiation threat well before they might be exposed to health threatening levels, and this same high sensitivity allows security personnel to instantly detect smuggled nuclear material.

The NeutronRAE Pager is particularly useful for detecting neutrons from weapons grade plutonium (239Pu), which are much more difficult to shield than ?-rays. Outfitting a large number of security personnel with NeutronRAEs can help establish a moving curtain of radiation protection that can be more effective than large, fixed radiation detectors.

The illicit traffic and use of radioactive material is clearly a growing concern for both government, military and civilian agencies, said Robert I. Chen, CEO of RAE Systems. Unlike dosimeters, our radiation products provide highly sensitive detection and instant data that a threat exists. Since military bases are a particularly high-profile target, this better, faster data enables better, faster decisions that protect lives and mitigate damage.

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 continue to be strong. 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.