Exhibit 99.1

Contact Information:

		IR Agency Contact:
RAE Systems		Lippert/Heilshorn & Associates, Inc.
Investor Relations		Becky Herrick
408-952-8449		415-433-3777
investorrelations@raesystems.com		bherrick@lhai.com

RAE Systems Announces First Quarter 2011 Results

— Reports revenue of $22.4 million and gross margin of 61% —

SAN JOSE, Calif. — May 16, 2011 —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 first quarter ended March 31, 2011.

For the first quarter of 2011, RAE Systems reported revenue of $22.4 million, compared with $16.9 million in the same quarter in 2010. For the first quarter of 2011, The Americas contributed 49% of total revenue; Europe contributed 26%; and Asia contributed 25%. Gross margin for the first quarter of 2011 was 61%, compared with 56% for the first quarter of 2010, reflecting an improved product mix of sales primarily in the Americas and Europe. Total operating expenses for the first quarter of 2011 were $15.8 million, compared with $9.6 million for the first quarter of 2010. Total operating expenses for the first quarter of 2011 included legal expenses of $1.5 million related to the company’s previously announced merger with a private equity firm and payment of a termination fee of $3.4 million to Battery Ventures, in accordance with the terms of the Battery Merger Agreement. The net loss for the first quarter of 2011 was $2.9 million, or $0.05 per share, compared with a net loss of $364,000, or $0.01 per share, for the first quarter of 2010.

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 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 investigation 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]

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

		March 31,				December 31,
		2011				2010
ASSETS
Current assets:
Cash and cash equivalents		$	13,380			$	16,296
Restricted cash			—				2,000
Trade notes receivable			2,117				2,018
Accounts receivable, net of allowances of $3,821 and $3,539, respectively			14,793				14,286
Accounts receivable from affiliate			187				200
Inventories			13,320				11,546
Prepaid expenses and other current assets			5,522				4,557
Income taxes receivable			133				130
Current assets of discontinued operation			—				6,093
Total current assets			49,452				57,126
Property and equipment, net			12,251				10,730
Intangible assets, net			110				196
Investments in unconsolidated affiliates			139				184
Other assets			396				393
Noncurrent assets of discontinued operation			—				3,478
Total assets		$	62,348			$	72,107
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	7,308			$	5,475
Accounts payable to affiliate			13				25
Bank lines of credit			1,810				1,814
Accrued liabilities			9,878				11,957
Notes payable to related parties, current			286				278
Income taxes payable			428				128
Deferred revenue, current			586				557
Current liabilities of discontinued operation			—				5,790
Total current liabilities			20,309				26,024
Deferred revenue, non-current			796				776
Deferred tax liabilities, non-current			143				141
Deferred gain on sale of real estate			3,650				3,809
Other long-term liabilities			1,527				1,491
Noncurrent liabilities of discontinued operation			—				182
Total liabilities			26,425				32,423
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock, $0.001 par value, 200,000,000 shares authorized; 59,512,064 and 59,512,064 shares issued and outstanding as of March 31, 2011 and December 31, 2010, respectively			59				59
Additional paid-in capital			65,238				65,041
Accumulated other comprehensive income			6,693				7,786
Accumulated deficit			(36,735	)			(34,311	)
Total RAE Systems Inc. shareholders’ equity			35,255				38,575
Noncontrolling interest			668				1,109
Total shareholders’ equity			35,923				39,684
Total liabilities and shareholders’ equity		$	62,348			$	72,107

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

		Three Months Ended
		March 31,
		2011				2010
Net sales		$	22,447			$	16,855
Cost of sales			8,772				7,359
Gross profit			13,675				9,496
Operating expenses:
Sales and marketing			5,089				4,173
Research and development			1,761				1,579
General and administrative			8,961				3,826
Total operating expenses			15,811				9,578
Operating loss from continuing operations			(2,136	)			(82	)
Other income (expense):
Interest income			4				23
Interest expense			(26	)			(21	)
Other, net			(76	)			46
Equity in loss of unconsolidated affiliates			(46	)			(51	)
Loss from continuing operations before income taxes			(2,280	)			(85	)
Income tax expense			(585	)			(129	)
Loss from continuing operations			(2,865	)			(214	)
Loss from discontinued operations, net of tax			—				(194	)
Net loss			(2,865	)			(408	)
Net (income) loss attributable to the noncontrolling interest, continuing operations			(39	)			12
Net loss attributable to the noncontrolling interest, discontinued operations			—				32
Net (income) attributable to the noncontrolling interest			(39	)			44
Net loss attributable to RAE Systems Inc.		$	(2,904	)		$	(364	)
Earnings per common share — basic and diluted:
Continuing operations		$	(0.05	)		$	(0.01	)
Discontinued operations			—				—
Net loss per share — basic and diluted		$	(0.05	)		$	(0.01	)
Weighted-average common shares outstanding — basic and diluted			59,512				59,405

		Three Months
		Ended December 31,
		2011				2010
Net sales			100	%			100	%
Cost of sales			39	%			44	%
Gross profit			61	%			56	%
Operating expenses:
Sales and marketing			23	%			25	%
Research and development			8	%			9	%
General and administrative			40	%			22	%
Total operating expenses			71	%			56	%
Operating loss from continuing operations			-10	%			0	%
Other income (expense):
Interest income			0	%			0	%
Interest expense			0	%			0	%
Other, net			-1	%			0	%
Equity in loss of unconsolidated affiliates			0	%			0	%
Loss from continuing operations before income taxes			-11	%			0	%
Income tax expense			-2	%			-1	%
Loss from continuing operations			-13	%			-1	%
Loss from discontinued operations, net of tax			0	%			-1	%
Net loss			-13	%			-2	%
Net (income) loss attributable to the noncontrolling interest			0	%			0	%
Net loss attributable to the noncontrolling interest,discontinued operations			0	%			0	%
Net (income) loss attributable to the noncontrolling interest			0	%			0	%
Net loss attributable to RAE Systems Inc.			-13	%			-2	%