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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 K+kHIjJiqwZl5HhfFj+sCY4Wts1UIkkJE9OMN2gePaD4IPVMwgtufskQ1gmGAA1b
 TXwHrU/dIiD7Ujnm0k2i3g==

<SEC-DOCUMENT>0001181431-04-036759.txt : 20040727
<SEC-HEADER>0001181431-04-036759.hdr.sgml : 20040727
<ACCEPTANCE-DATETIME>20040723124507
ACCESSION NUMBER:		0001181431-04-036759
CONFORMED SUBMISSION TYPE:	4
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20040722
FILED AS OF DATE:		20040723

ISSUER:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			RAE SYSTEMS INC
		CENTRAL INDEX KEY:			0001084876
		STANDARD INDUSTRIAL CLASSIFICATION:	MEASURING & CONTROLLING DEVICES, NEC [3829]
		IRS NUMBER:				770588488
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	BUSINESS ADDRESS:	
		STREET 1:		1339 MOFFETT PARK DRIVE
		CITY:			SUNNYVALE
		STATE:			CA
		ZIP:			95112
		BUSINESS PHONE:		408-752-0723

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NETTAXI INC
		DATE OF NAME CHANGE:	19990422

REPORTING-OWNER:	

	OWNER DATA:	
		COMPANY CONFORMED NAME:			FEISEL LYLE
		CENTRAL INDEX KEY:			0001261089

	FILING VALUES:
		FORM TYPE:		4
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-31783
		FILM NUMBER:		04928408

	BUSINESS ADDRESS:	
		STREET 1:		1339 MOFFETT PARK DR
		CITY:			SUYNNYVALE
		STATE:			CA
		ZIP:			95112
		BUSINESS PHONE:		408 752 0723

	MAIL ADDRESS:	
		STREET 1:		1339 MOFFETT PARK DR
		CITY:			SUNNYVALE
		STATE:			CA
		ZIP:			95112
</SEC-HEADER>
<DOCUMENT>
<TYPE>4
<SEQUENCE>1
<FILENAME>rrd48645.xml
<DESCRIPTION>OPTION GRANT
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0202</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2004-07-22</periodOfReport>

    <notSubjectToSection16>0</notSubjectToSection16>

    <issuer>
        <issuerCik>0001084876</issuerCik>
        <issuerName>RAE SYSTEMS INC</issuerName>
        <issuerTradingSymbol>AMEX: RAE</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001261089</rptOwnerCik>
            <rptOwnerName>FEISEL LYLE</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>C/O RAE SYSTEMS, INC.</rptOwnerStreet1>
            <rptOwnerStreet2>1339 MOFFETT PARK DRIVE</rptOwnerStreet2>
            <rptOwnerCity>SUNNYVALE</rptOwnerCity>
            <rptOwnerState>CA</rptOwnerState>
            <rptOwnerZipCode>94089</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
        </reportingOwnerRelationship>
    </reportingOwner>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Option (Right to Buy)</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>5.00</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2004-07-22</value>
            </transactionDate>
            <deemedExecutionDate>
                <value>2004-07-22</value>
            </deemedExecutionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>5000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>0</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <value>2004-07-22</value>
            </exerciseDate>
            <expirationDate>
                <value>2014-07-22</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>5000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>45000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <ownerSignature>
        <signatureName>Lea-Anne Matsuoka</signatureName>
        <signatureDate>2004-07-23</signatureDate>
    </ownerSignature>
</ownershipDocument>

</XML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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