EXHIBIT 99.1
The Hazardous Environment Detection Company
RAE Systems Inc.
NASDAQ OTC BB: RAEE.OB
Robert I. Chen
President and CEO
Joseph Ng
CFO, and VP Business Development
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The Hazardous Environment Detection Company
Safe Harbor
Safe Harbor Statement
This presentation contains "forward- looking" statements, as that term is used in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are denoted by such words as "plan to accelerate", and "substantially increase". 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 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 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.
[LOGO] RAE SYSTEMS
The Hazardous Environment Detection Company
Market Model
Total available market
[Pie Chart]
Portable $400M
Portable market expanding (2X?)
1. Homeland Security
2. Radiation Sensing
Energy
Wireless Network
Homeland Security ($7.9B)
Environmental
Industrial (process control)
Medical (drug detection)
IAQ/security ($2.4B)
Source: Frost and Sullivan 2001, and 1998 Homeland Security Budget 2003
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The Hazardous Environment Detection Company
Growth
[BAR CHART]
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The Hazardous Environment Detection Company
Profit
[BAR CHART]
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The Hazardous Environment Detection Company
Homeland Security Customers
Since 1996
- U.S. Secret Service
- U.S. State Department
- U.S. Department of Justice
- U.S. Marines
- U.S. Navy
- U.S. Army
- U.S. Coast Guard
- Many other state and local and federal agencies
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The Hazardous Environment Detection Company
Homeland Security Funding
RAE Systems addressable
| $ Million | FY2002 | FY2003 | FY2004 |
| Equip First Responder Teams (1) | 347 | 770 | |
| Train State and Local First Responders (2) | 227 | 665 | |
Enhance Communications Infrastructure to
Support Interoperability (3) | 113 | 1,365 | |
| Border Patrol – INS (4) | 1,324 | 1,471 | |
| Inspections – INS (1, 4) | 946 | 999 | |
| US Customs – North Border Inspections (1, 4) | 649 | 744 | |
| US Customs – Maritime Inspections (1,4) | 464 | 684 | |
US Coast Guard – ports, waterways, and coastal
security (1, 4) | 682 | 1,213 | |
| Total Budget addressable | 4,752 | 7,911 | ~ 2003 |
(1) RAE instruments
(2) RAE Training classes
(3) AreaRAE
(4) ASPEN plus radiation/motion/video
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The Hazardous Environment Detection Company
Market Segments and RAE Systems Focus
Right products for the right areas: MultiRAE, AreaRAE, GammaRAE, NeutronRAE
| National Strategy Category | Equipment | Systems & IT | Training | Mgmt Consult |
| Intelligence and Warning | $$ | $$$ | $ | $ |
| Border and Transportation Security | $$$ [Logo] | $$$ | $$ | $$ |
| Domestic Counterterrorism | $ | $$ | $$ | $ |
Protecting Critical Infrastructure &
Key Assets | $ [Logo] | $$ | $ | $ |
| Defending Against Catastrophic Threats | $$ [Logo] | $ | $$ | $ |
| Emergency Preparedness & Response | $$$ [Logo] | $$ | $$$ [Logo] | $ |
Key (over three years) $ = tens of millions $$ = hundreds of millions $$$ = billions
[Logo] = RAE FOCUS
Source: The Homeland Security Market and Investment Strategies, page 19, The O’Gara Company 5/03
[LOGO] RAE SYSTEMS
The Hazardous Environment Detection Company
Strategy for Growth
- Core Business
– Capture Homeland Security (HLS) grants to grow core business; continue selling to first responders
- Emerging opportunities
– Leverage RAE wireless sensing technologies to capture emerging opportunities such as cargo container security and indoor air quality/security applications
- Explore Financing Options
– No debt, cash positive (>$7M)
– Major investment banker signed
[LOGO] RAE SYSTEMS
The Hazardous Environment Detection Company
Market Size, Strategy and Share Objective
| Market | TAM ($M) 2003 | Penetration Strategy | Share Objective (2007) |
| Core Business | $400M and growing rapidly – Homeland Defense | Continue current mix of industrial, environmental and security focus using existing distributor channel. Focus on first responder trainers. Radiation sensors for borders and port patrol | 10-15% |
[LOGO] RAE SYSTEMS
The Hazardous Environment Detection Company
Market Size, Strategy and Share Objective
| Market | TAM ($M) 2003 | Penetration Strategy | Share Objective (2007) |
| Cargo Containers Security | 12M Retrofit Containers
1-1.5M p.a. New Containers
| Provide the "missing link" by integrating sensors to RFID, e-Seals, to create Secure and Smart Containers and wireless data on-ramp to transmit data to US Customs and Coast Guard Partners:
Network: Savi Tech, All Set, Qualcomm
Logistic Providers: LINE of Hutchison, Maersk
Container Mfg: CIMC (40–60% market share)
Carriers: Maersk, OOCL, Hyundai, Evergreen, P&O, COSCO | 3-5% |
[LOGO] RAE SYSTEMS
The Hazardous Environment Detection Company
Market Size, Strategy and Share Objective
| Market | TAM ($M) 2003 | Penetration Strategy | Share Objective (2007) |
| Indoor-air- quality/ security | $2,000 | Provide sensor modules and gateway to building security, HVAC & energy management system. Angles: demand for better building security and indoor air quality. | 1-2% |
[LOGO] RAE SYSTEMS
The Hazardous Environment Detection Company
TOPOFF II
Seattle and Chicago, May 2003
RAE Systems sensor data test
- Near real-time tactical information sharing on global basis (if required)
- GOTS/COTS interoperability
[GRAPHIC]
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The Hazardous Environment Detection Company
Secure Smart Container
RAE Sensor
- Intrusion: light, motion, sound all-in-1
- Radiation, chemical & environment monitors
- Local or remote (wireless)
ALLSeal
- Secure electronic seal
- Global tracking
RAE Sensor Receptacle
- Standard sensor interface
- Snap-in / snap-out operation
RAEPower
- Snap-in battery pack
- Primary or rechargeable batter
[GRAPHIC]
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The Hazardous Environment Detection Company
Indoor Air Quality / Security
NYSE [GRAPHIC]
Buffalo Stadium [GRAPHIC]
Theatre [GRAPHIC]
- 12.3 billion square feet of office building space
- Symbols of American power are high risk
- Embassies
- Federal buildings
- HVAC-Sensor actuator to screen air
- Public venues
- A $2.4 billion market
[LOGO] RAE SYSTEMS
The Hazardous Environment Detection Company
Highest Priority Spending
- Cargo Screening technology for WMD at ports
- Equipment for First Responders
- Multi-modal cargo security: tracking and authentication
- Screening technology for aviation security
- Physical security upgrades
Source: The Homeland Security Market and Investment Strategies, page 30, The O’Gara Company 5/03
[LOGO] RAE SYSTEMS
The Hazardous Environment Detection Company
Summary
- Patented technology (17 patents)
- Well-positioned to win in Homeland Security
- Strong board and management
- Profit and growth are accelerating
- Worldwide presence in Europe, North America and Asia
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