RAE Systems (RAE)

RAE Systems Announces Completion of SEC Filings

SAN JOSE, Calif. –June 7, 2005—RAE Systems Inc. (Amex: RAE), a leading global developer and manufacturer of rapidly deployable, multi-sensor chemical detection monitors and networks for homeland security and industrial applications, announced today the filing of an amended Form 10-K/A for 2004 and Form 10-Q for the first quarter of 2005 with the Securities and Exchange Commission (“SEC”). These filings complete the Company’s plan, which was submitted to the American Stock Exchange (“Amex”) on May 27, 2005, to retain the Company’s Amex listing.

“We are pleased to have completed our restatement work and to again be current with our SEC filing requirements,” said Don Morgan, chief financial officer. “While the result of the restatement changed the timing of one percent of the Company’s revenue in the year 2000 and by lesser amounts in the other four years, we chose to restate all five years to provide investors with a clear disclosure on our findings. The findings from the final report of the independent audit firm we engaged to conduct the revenue recognition study have been included in our restatements. Our restatements, incorporated in these SEC filings, corrected the timing of revenue recognition for the three reasons we mentioned in our May 17, 2005 press release – purchase orders from some of our customers had non-standard delivery terms of free-on-board (FOB) destination, a right of return was asserted by one distributor and to properly defer some service contracts. The final impact of additional revenue deferrals as of December 31, 2004, resulting from the restatement of 2004 and prior years, totaled approximately $500,000. We have now completed the plan that we submitted at the end of May to Amex, designed to retain our listing status.”