Homeland Defense Technology Leader RAE Systems Builds Momentum in Revenue, Customers, Technology.

Business Editors/High-Tech Writers

SUNNYVALE, Calif.--(BUSINESS WIRE)--May 5, 2003

Hazardous environment detection solutions are rapidly adopted by

federal, state and local authorities

RAE Systems (OTCBB:RAEE.OB), a leading provider of hazardous environment detection solutions for homeland defense, today announced three quarters of profitability and growing momentum. The company's growing roster of U.S. and international customers and focus on technological leadership has translated into record revenues and a strong outlook. Some highlights of the company's traction in the homeland defense technology market include:

-- Three consecutive quarters of profitability, with revenue

growth increasing from $5.9 million in Q3 2002 to $6.3 million

in Q4 2002 to $7.3 million in Q1 2003. This growth was driven

by several factors. First, homeland security grants to first

responders are beginning to reach municipalities, a group RAE

Systems has supported since 1996. Second, the terrorist event

at a Moscow theater last winter has influenced perceptions and

spending decisions in Europe. Law enforcement agencies in the

U.K. and on the continent are beginning to plan and budget for

anti-terror needs.

-- RAE Systems' products and networks are in use in every U.S.

state. Recent projects include Connecticut, Delaware, Iowa and

New York. Applications range from outfitting weapons of mass

destruction response teams to installing redeployable sensing

networks in high profile government buildings. At the recent

Illinois Governor's Inaugural Gala, a RAE device detected a

propane leak before crowds arrived, preventing an accident.

-- US Federal Government Agencies including the ATF, the

Department of Justice, National Guard Civil Support Teams,

Marine Corps, the EPA and NASA are turning to RAE Systems to

protect their employees and the public. In February 2003, the

Texas Urban Search and Rescue Task Force and the Texas

National Guard, sixth WMD/Civil Support Team called on RAE

Systems to help protect the shuttle recovery teams from toxic

gas threats. RAE detectors were used to determine whether

monomethylhydrazine (MMH) or nitrogen tetra oxide (N2O4) were

present in any of the 78,000 shuttle fragments that were

ultimately recovered. "There were no injuries at all, no

exposure," said Jesse Ybarra, a member of the Texas Task Force

and firefighter with the Houston Fire Department. "Recovery

conditions in the field were always changing and uncertain,

and RAE Systems gave us peace of mind that our search teams

were safe from potentially toxic hazards."

-- RAE Systems joined forces with All Set Tracking AB, a provider

of technology and security solutions to intermodal container

transportation companies around the world, to respond to the

U.S. Government's Maritime Transportation Security Act, signed

into effect as Public Law 107-295 by President George W. Bush

in November of 2002. The goal of the partnership is to offer

joint solutions that address the security and integrity of the

13 million containers of ocean freight that enter the United

States' 361 seaports each year.

-- Rae Systems added radiation detection to their hazardous

environment sensor portfolio. The GammaRAE and NeutronRAE

pager-sized detectors are front line security devices to

provide life critical, real-time detection of hidden radiation

sources. The GammaRAE and NeutronRAE deliver instantaneous

feedback to front line homeland defense personnel such as

border guards, coastal defense forces, and cargo port

screeners to prevent illicit trafficking of radioactive

materials in compliance with the rigorous ITRAP (Illicit

Trafficking Radiation Assessment Program) compliance

standards.

-- RAE Systems received its 17th patent for "Non-Dispersive

Infrared Gas Sensor Technology." The technology is deployed in

the MultiRAE IR gas detector, a handheld, five-gas monitor

with the capability to simultaneously read and display carbon

dioxide (CO2), volatile organic compounds (VOCs), combustible 

gas levels, oxygen, and toxic gases, as well as in the

AreaRAE-IAQ, a wireless gas monitor incorporating both NDIR 

and PID technologies for indoor air quality (IAQ) measurement.

It combines VOC measurement with traditional IAQ parameters

like temperature, humidity, CO2 and carbon monoxide (CO) in a

single package.

"Around the world, militaries, governments, emergency response teams and industrial manufacturers increasingly rely on RAE Systems to protect lives and secure assets," said Bob Chen, president and CEO of RAE Systems. "By aggressively developing innovative technologies and products that provide superior safety and security, we have achieved three consecutive quarters of growth and profitability."

About RAE Systems

RAE Systems Inc. is the leader in rapidly deployable sensing networks for homeland defense and a leading manufacturer of portable, wireless and fixed atmospheric monitors, photo-ionization detectors, radiation detectors, gas detection tubes, sampling pumps and security monitoring devices. Our customers use our products to monitor gas and other volatile organic compounds in confined spaces, to establish a perimeter security around hazardous material sites and to detect the illicit traffic of radioactive materials. RAE Systems' customers operate in such industries as safety and security, oil and gas, pharmaceuticals, utilities, food, chemical, airlines, military and hazardous material storage and disposal, and its monitors 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," "growing roster," "strong outlook," and "aggressively developing." 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.

Note: In N2O4, the 2 and 4 should be subscript.