Exhibit 99.1

FOR IMMEDIATE RELEASE

Company Contact:	IR Agency Contact:
Investor Relations	Becky Herrick
408-952-8402	415-433-3777
investorrelations@raesystems.com	bherrick@lhai.com

RAE Systems Reports Second Quarter 2009 Results
Second Quarter 2009 Revenue Increased 4% Over First Quarter 2009

SAN JOSE, Calif. — August 5, 2009 —RAE Systems Inc. (NYSE AMEX: RAE), a leader in delivering innovative sensor solutions to serve industrial, energy, environmental, and government safety markets worldwide, reported financial results and business highlights for the second quarter ended June 30, 2009.

Financial Results

For the second quarter of 2009, RAE Systems reported revenue of $19.9 million, an increase of four percent over the first quarter of 2009 and a 19 percent decrease from the second quarter 2008 revenue of $24.6 million. For the second quarter of 2009, the Americas contributed 42 percent of total revenue, Asia contributed 41 percent and Europe contributed 17 percent of revenue. Gross margin for the second quarter was 50 percent, compared with 49 percent for the first quarter 2009 and 53 percent for the second quarter of 2008. Operating expenses for the second quarter 2009 were $11.9 million or 60 percent of revenue, compared with $12.6 million or 51 percent of revenue for the second quarter of 2008. The second quarter net loss was $2.3 million or $0.03 per share, compared with a net loss of $0.5 million or $0.01 per share for the second quarter of 2008.

For the six months ended June 30, 2009, revenue was $39.0 million compared, with $42.5 million for the same period in 2008. The net loss for the six months ended June 30, 2009 was $3.2 million, compared with $2.8 million for the same period in 2008. The net loss per share was $0.05 for both the 2009 and 2008 six month periods.

“While the global recession has impacted our global customer spending, we believe our mix of new and existing product offerings positions us well to benefit when the global economy begins to improve,” said Robert Chen, RAE Systems president and CEO. “Our wireless product initiatives

1

FOR IMMEDIATE RELEASE

address the continued demand for time and life critical information. Many of our new products enable our customers to increase their productivity while benefiting from reduced operating costs.”

“Due to the uncertainty of the worldwide economic outlook for 2009 combined with our first half revenue performance, as well as performance issues at RAE Fushun we now expect full year 2009 revenue of between $83.0 million and $86.0 million and we no longer expect to be profitable for the year,” Chen commented.

Business Highlights

Following are key business highlights in the company’s second quarter:

• In the Oil and Gas market:

• Sold UltraRAE 3000 benzene monitors to multiple refineries, chemical plants and pipelines in Colorado, New Mexico and Utah.

• Received the first Americas order for the new MeshGuard, single gas wireless monitors.

• Sold wireless AreaRAE Rapid Deployment Kits to several multi-national petroleum and refining companies.

• Delivered QRAE2’s and AutoRAE Lite Calibration Stations to the oil sands services sector in Canada.

• Won a major bid to provide an AreaRAE Wireless Gas-Detection Network to the Puguang Gas Field in China.

• In the Hazardous Material Management market:

• Delivered ppbRAE 3000 VOC monitors, EntryRAE 5-gas monitors, HazRAE decision support tools and wireless AreaRAE Rapid Deployment Kits to several fire departments in the Asia-Pacific region.

• In the Industrial Safety market:

• Sold ppbRAE’s, MultiRAE Plus and MultiRAE IR Carbon Dioxide monitors, AutoRAE calibration stations and EntryRAE 5-gas monitors to companies in Korea, Taiwan, Canada and Malaysia.

2

FOR IMMEDIATE RELEASE

About RAE Systems

RAE Systems is a leading global provider of rapidly deployable sensor networks that enable customers to identify safety and security threats in real time. Products include disposable gas detection tubes, single gas personal monitors, multi-sensor chemical detection monitors, photoionization (PID) monitors for volatile organic compounds (VOCs), wireless gas detection systems, and radiation monitoring networks for energy production and refining, industrial and environmental safety, and public and government first responder security sectors. RAE Systems’ products are used in over 95 countries by many of the world’s leading corporations and by many U.S. government agencies. For more information about RAE Systems, please visit www.RAESystems.com.

Safe Harbor Statement

This press release may contain “forward-looking” statements, as that term is used in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include, without limitation: expressions of “belief,” “anticipation,” or “expectations” of management; statements as to industry trends or future results of operations of RAE Systems and its subsidiaries; and other statements that are not historical fact. 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 Systems 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 Form 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.

[Tables to Follow]

3

RAE Systems Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and par value data)
(unaudited)

	June 30,			December 31,
	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	15,316		$	14,845
Trade notes receivable		1,722			1,870
Accounts receivable, net of allowances of $4,840 and $3,472, respectively		19,006			20,961
Accounts receivable from affiliate		151			100
Inventories		14,510			17,604
Prepaid expenses and other current assets		4,716			4,991
Income taxes receivable		846			895
Total current assets		56,267			61,266
Property and equipment, net		15,996			14,976
Intangible assets, net		2,876			3,342
Investments in unconsolidated affiliates		334			467
Other assets		694			1,124
Total assets	$	76,167		$	81,175
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,392		$	6,387
Accounts payable to affiliate		76			382
Payable to Fushun shareholder		2			64
Bank lines of credit		3,741			2,584
Accrued liabilities		11,839			12,318
Notes payable to related parties, current		624			1,329
Income taxes payable		454			425
Deferred revenue, current		550			631
Total current liabilities		22,678			24,120
Deferred revenue, non-current		564			685
Deferred tax liabilities, non-current		357			83
Deferred gain on sale of real estate, non-current		4,761			5,079
Other long-term liabilities		1,362			1,292
Notes payable to related parties, non-current		729			1,219
Total liabilities		30,451			32,478
COMMITMENTS AND CONTINGENCIES (NOTE 5)
SHAREHOLDERS’ EQUITY:
Common stock, $0.001 par value, 200,000,000 shares authorized; 59,443,914 and 59,443,914 shares issued and outstanding, respectively		59			59
Additional paid-in capital		63,272			62,549
Accumulated other comprehensive income		6,687			6,555
Accumulated deficit		(29,185	)		(25,947	)
Total RAE Systems Inc. shareholders’ equity		40,833			43,216
Noncontrolling interest		4,883			5,481
Total shareholders’ equity		45,716			48,697
Total liabilities and shareholders’ equity	$	76,167		$	81,175

RAE Systems Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share data)
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Net sales	$	19,907		$	24,647		$	39,020		$	42,516
Cost of sales		10,039			11,556			19,822			20,570
Gross profit		9,868			13,091			19,198			21,946
Operating expenses:
Sales and marketing		4,849			5,421			9,231			10,801
Research and development		1,384			1,545			2,979			3,281
General and administrative		5,692			5,627			10,105			9,923
Total operating expenses		11,925			12,593			22,315			24,005
Operating (loss) income from continuing operations		(2,057	)		498			(3,117	)		(2,059	)
Other income (expense):
Interest income		8			38			17			86
Interest expense		(90	)		(99	)		(235	)		(201	)
Other, net		53			(225	)		(8	)		82
Equity in loss of unconsolidated affiliate		(66	)		(27	)		(133	)		(36	)
(Loss) income from continuing operations before income taxes		(2,152	)		185			(3,476	)		(2,128	)
Income tax expense		(401	)		(469	)		(360	)		(665	)
Loss from continuing operations		(2,553	)		(284	)		(3,836	)		(2,793	)
Gain from discontinued operations, net of tax		—			5			—			15
Net loss		(2,553	)		(279	)		(3,836	)		(2,778	)
Net loss (income) attributable to the noncontrolling interest		303			(188	)		598			(25	)
Net loss attributable to RAE Systems Inc.	$	(2,250	)	$	(467	)	$	(3,238	)	$	(2,803	)
Net loss per share-basic and diluted:
Continuing operations	$	(0.03	)	$	(0.01	)	$	(0.05	)	$	(0.05	)
Discontinued operations		—			—			—			—
Net loss per share-basic and diluted	$	(0.03	)	$	(0.01	)	$	(0.05	)	$	(0.05	)
Weighted-average common shares outstanding-Basic		59,359			59,178			59,351			59,089

The following table sets forth the components of our Condensed Consolidated Statements of Operations as a percentage of net sales:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Net sales		100	%		100	%		100	%		100	%
Cost of sales		50	%		47	%		51	%		48	%
Gross profit		50	%		53	%		49	%		52	%
Operating expenses:
Sales and marketing		24	%		22	%		24	%		26	%
Research and development		7	%		6	%		7	%		8	%
General and administrative		29	%		23	%		26	%		23	%
Adjustment to lease abandonment accrual		0	%		0	%		0	%		0	%
Total operating expenses		60	%		51	%		57	%		57	%
Operating (loss) income from continuing operations		-10	%		2	%		-8	%		-5	%
Other income (expense):
Interest income		0	%		0	%		0	%		0	%
Interest expense		-1	%		0	%		-1	%		0	%
Other, net		0	%		-1	%		0	%		0	%
Equity in loss of unconsolidated affiliate		0	%		0	%		0	%		0	%
(Loss) income from continuing operations before income taxes		-11	%		1	%		-9	%		-5	%
Income tax expense		-2	%		-2	%		-1	%		-2	%
Loss from continuing operations		-13	%		-1	%		-10	%		-7	%
Gain from discontinued operations, net of tax		0	%		0	%		0	%		0	%
Net loss		-13	%		-1	%		-10	%		-7	%
Net loss (income) attributable to the noncontrolling interest		2	%		-1	%		2	%		0	%
Net loss attributable to RAE Systems Inc.		-11	%		-2	%		-8	%		-7	%