8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):
March 28, 2008

RAE Systems Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-31783	77-0280662
(State or other jurisdiction	(Commission File No.)	(I.R.S. Employer
of incorporation)		Identification No.)

3775 North First Street
San Jose, California 95134
408-952-8200
(Address and telephone number of registrant’s principal executive offices)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EXHIBIT 99.1

Item 2.05 Costs Associated with Exit or Disposal Activities.

     On March 28, 2008, RAE Systems Inc. (the “Company”) committed to and announced a ten percent reduction of its Americas’ workforce in order to reduce expenses, to take effect immediately. In connection with one time termination benefits expected to be paid by the Company as a result of this workforce reduction, the Company expects to record approximately an aggregate of $100,000 in severance costs in the first quarter of 2008.

     The press release issued on March 28, 2008 is attached as Exhibit 99.1 hereto.

Item 2.06. Material Impairments.

     The information set forth under Item 2.05 of this Current Report on Form 8-K is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits. The following exhibit is filed herewith:

Exhibit No.	Description
99.1	Press release dated March 28, 2008.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: March 27, 2008

RAE SYSTEMS INC.
By:	/s/Randall Gausman
	Name:	Randall Gausman
	Title:	Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release dated March 28, 2008.

EX-99.1

Exhibit 99.1

For Immediate Release

Company Contact:	IR Agency Contact:
Investor Relations	Christiane Pelz
408-952-8449	Lippert/Heilshorn & Assoc., Inc.
investorrelations@raesystems.com	415-433-3777
	cpelz@lhai.com

RAE Systems Implements Cost Reductions

Reduces Americas’ Workforce by 10%

SAN JOSE, Calif. — March 28, 2008 — RAE Systems Inc. (AMEX: RAE), a leader in delivering innovative sensor solutions to serve industrial, energy, environmental and government safety markets worldwide, announced a ten percent reduction of its Americas’ workforce. After recording approximately $100,000 in severance costs in the first quarter of 2008, the company expects to save approximately $1.3 million annually. Also, the company has implemented specific cost reductions that will be realized beginning in the second quarter of 2008, including the elimination of non-essential marketing programs, streamlining its service processes, decreasing certain product costs to sustain its targeted gross margins, and consolidating engineering and manufacturing in China for better facility utilization.

“Driving profitable revenue growth is our top priority in 2008,” said Robert I. Chen, president and chief executive officer. “As we discussed in early March, we have begun implementing specific programs to improve gross margins increase productivity and reduce operating expenses without impacting product quality. RAE Systems values its employees and the contributions they make to the company; this decision was reached after careful consideration of current business conditions balanced against our objective to return to sustainable profitable growth in 2008.”

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 multi-sensor chemical detection networks, wireless gas detection systems and radiation

For Immediate Release

monitors for energy production and refining, industrial and environmental safety, and public and government first responder security. RAE Systems’ products are used in over 85 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.