RAE Systems Reports Record Third Quarter Revenue of $12.3 Million

Strong showing by RAE Systems' core business and its recently-acquired subsidiary boost revenue by 53.9% over Q3 2003

"Our strong performance this quarter is a reflection of our continued emphasis on operational execution and working with our customers and partners to commercialize our cutting edge technologies into sensing solutions that save lives," said Robert I. Chen, CEO of RAE Systems. "We have continued to make substantial gains in new application markets and new global territories as we focus on providing more, better and faster sensing data to the men and women on the front lines of security and protection."

Key sales highlights during the quarter included a $5 million, multi-year contract from the United States Environmental Protection Agency for RAE Systems' redeployable ad hoc wireless sensing networks. The Company had further success in the first responder market, with adoptions coming from a wide range of state, county and municipal organizations across the U.S., including teams in St. James Parish, Louisiana; the Las Vegas, Nevada Police Department; the municipality of Grand Forks, North Dakota; Gallia and Huron counties in Ohio; and several counties across Florida.

Some of the global deployments during the quarter included one of the largest insurance companies in the world, which purchased RAE Systems' wireless sensing solutions for continuous monitoring of indoor air security in its buildings in New York. International oil and gas companies continued to turn to RAE Systems' solutions, including Petr'leos de Venezuela (PDVSA), which purchased sensing solutions for worker safety and confined space entry monitoring in its exploration and refining operations, and Q8, a Netherlands-based petroleum exploration company, which purchased BadgeRAEs.

Other key developments during the quarter included

* New product launches, including the ppbRAE Plus, the AreaConnect 500, and the AutoRAE

* Appointment of Susan Barnes, Senior Vice President and Chief Financial Officer at Intuitive Surgical, to the board of directors

* The expansion of the technology advisory board with leading experts in the fields of radiation, power management, sensor networks and biochemical safety

* Announcement of a partnership with supply chain application company Vastera to launch integrated homeland security controls for maritime trade.