RAE Rae Systems Common Stock

RAE Systems Inc. (NYSE Amex: RAE), a leader in delivering innovative sensor solutions to serve industrial, energy, environmental, and government safety markets worldwide, announced it has signed a definitive agreement to sell its 70 percent interest in the RAE Fushun joint venture (the "Joint Venture") to the Shenyang Research Institute of China Coal Research. Although the company will not receive any direct compensation for its ownership interest in the Joint Venture, under the terms of the agreement the Shenyang Research Institute of China Coal Research will assume all documented joint venture liabilities at the closing of the transaction as well as repay to RAE Systems amounts owed to RAE KLH and RAE Shanghai for products and services previously provided to the joint venture. The agreement is expected to close on or before March 31, 2011, subject to customary closing conditions.

Robert Chen, RAE Systems president and CEO, stated: "We previously stated our intention to exercise a disciplined exit from our investment in RAE Fushun as the performance of this business has not met our long-term revenue and operating margin growth expectations. We expect going forward that the exclusion of RAE Fushun operating losses will result in improved operating and net income for the company in the future. We are focusing on long-term growth prospects that fit within our mission to be the leading innovator of safety and security products that deliver wireless real-time data to enable our customers to make faster, better decisions to keep people and property safe."

Established in December of 2006, the joint venture was established with Liaoning Coal Industry Group Co., Ltd for the purposes of engaging in the manufacturing and sale of safety equipment for the coal mine industry.

About RAE Systems

RAE Systems is a leading global provider of rapidly deployable connected, intelligent gas detection systems that enable real-time safety and security threat detection. RAE Systems products are used in more than 95 countries by many of the world's leading corporations and government agencies.

RAE Systems offers a full line of wirelessly enabled solutions including personal, hand-held, transportable, and fixed instruments designed to meet the needs of any usage scenario. Applications include energy production, refining, industrial and environmental safety, public venue safety, and government first responder markets.

For more information about RAE Systems, please visit raesystems.com.

Safe Harbor Statement

This presentation 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, and the failure to close the sale of the interest in the Fushun joint venture. 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.

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Company Contact: Investor Relations 408-952-8449 investorrelations@raesystems.com IR Agency Contact: Becky Herrick 415-433-3777 bherrick@lhai.com