EXHIBIT 99.1
RAE Systems Inc.
(AMEX: RAE) Roth Investment Partners 2005 Growth Stock Conference
Robert I. Chen, President & CEO
Donald Morgan, VP & CFO
Hazardous Environment Detection Solutions
Safe Harbor Statement
This presentation (including information incorporated or deemed incorporated by reference herein) contains “forward-looking statements” within the meaning of the Private Litigation Reform Act of 1995. Forward-looking statements are those involving future events and future results that are based on current expectations, estimates, forecasts, and projects as well as the current beliefs and assumptions of our management. Words such as “outlook”, “believes”, “expects”, “appears”, “may”, “will”, “should”, “anticipates”, or the negative thereof or comparable terminology, are intended to identify such forward looking statements. Any statement that is not a historical fact, including estimates, projections, future trends and the outcome of events that have not yet occurred, is a forward-looking statement. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed under the section entitled “Risk Factors” below and elsewhere in this prospectus, in any prospectus supplement, and in our other reports filed with the SEC. Many of such factors relate to events and circumstances that are beyond our control. You should not place undue reliance on forward-looking statements.
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Our Business
PRODUCTS SYSTEMS
Detect toxic gases & Provide integrated & radiological agents actionable threat information
Portable Rugged Battery operated
Wireless networks Remote monitoring / Web Integrated data (GPS, weather) Application-specific system SW
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Markets
Industrial / Environmental Safety & Hygiene
Confined Space Hazardous Waste Oil & Gas
Environmental Monitoring
Homeland Security
Military First Responders
Public Venue Port / Border Protection Security
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Customers
Enterprise
Purchase Drivers
Regulatory
Health & Safety
Security
Economic
Government
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RAE Systems Business Segments
Portables
Integrated Wireless Systems
Components & Accessories
Services
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Business Segment Mix
Distribution
17%
Service
4%
Consumables
13%
Integrated Wireless Systems
21%
Portables
48%
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Global Operations
Headquarters in Silicon Valley, USA
Cost-efficient infrastructure in China
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Worldwide Presence
Beijing
Shanghai
Sunnyvale, CA
Denmark
Singapore
Hong Kong
Tokyo
Benelux
U.K.
France
Spain
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Geographic Mix
Europe
10%
Asia
25%
Americas
65%
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Channels & Partnerships
Americas
Direct sales Distributors & reps
Europe
HQ in Denmark with pan-European direct sales staff Subsidiaries in U.K & France Direct presence in Middle East
Asia
Direct sales through KLH in China HK sales office Distributors elsewhere
OEM
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Products, Technology & Applications
Hazardous Environment Detection Solutions
Hazard Detection Evolution
Past Present Future
Pervasive Sensing
(unmanned multiple sensors, wireless mesh network)
Area Monitoring
(manned multiple monitoring products, wireless point-to-point network)
Measurement
(instrument data)
Personal Monitoring
Alarm
(detect & warn)
Warn
Quantify &/or Identify
Interpret &/or Predict
Automate
Value-Add = Real-Time Decision Support
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Technology & Products
Technology
Pervasive Sensing
(unmanned multiple sensors, mesh network)
Area Monitoring
(manned multiple monitoring products, point-to-point network)
Personal Monitoring
Measurement
(instrument data)
Alarm
(detect & warn)
Technical Complexity
Sensor Technology
Product
Integrated Systems
Wireless
Mesh
Point-to- Point
RAEWatch
AreaRAE
MultiRAE MiniRAE 2000 ppbRAE
ToxiRAE BadgeRAE
Products
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Sensor Technology
World leader in photoionization technology for detection of volatile organic compounds
(e.g. gasoline, benzene)
Speciation
Radiation
Infrared
Solid Polymer
Electro-chemical
Ion Mobility
Corona Discharge
Chemical Detection Tube
Combustible
Photo-Ionization Detection (PID)
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
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Intellectual Property
21 patents focused on chemical sensor technologies
9 years remaining on fundamental PID patents
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Applications
Government
Environmental Agency
First Responders, Military
Enterprise
Pervasive Sensing
(unmanned multiple sensors, mesh network)
Area Monitoring
(manned multiple monitoring products, point-to-point network)
Personal Monitoring
Measurement
(instrument data)
Alarm
(detect & warn)
Hazardous material remediation/clean-up
Perimeter Monitoring
(nuclear plant, hazardous waste dump)
Incident command, venue security
Perimeter Monitoring
(embassy, military base)
Supply Chain
Industrial safety & security
(factory, refinery, confined space, IAQ, HAZMAT)
Perimeter Monitoring
(airport, factory, casino, hotel)
“Smart Building” IAQ
& Security
Supply Chain
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Application Scenarios
Incident Command
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Application Scenarios
Public Venue Security
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Emerging Application Scenarios
Building Air Quality Monitoring
Sensor/RF Node
Network Interrogator
Advanced Lighting & Controls
Flexible, reconfigurable interior structure and services
Wireless, Multi-component, Smart, Air-Quality Sensors
Intelligent Diagnostics and Controls for systems, equipment, and envelop components
Low-cost, reliable, long-lived, wireless sensors
Wireless communications for automated electricity purchasing and multi-facility management
Personalized, Localized, Environment Control
Building-Integrated Photovoltaics
Distributed, Modular Micro-Heat Pumps
Smart Daylighting & Lighting Controls
Smart Structural Materials
Combined Heat, Cooling, and Power
Fuel Cells – Distributed Power Source
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Emerging Application Scenarios
Perimeter Monitoring
Sensor/RF Node
Network Interrogator
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Emerging Application Scenarios
Cargo Container Monitoring
Interior sensors monitor and communicate through the door lock sensor to the Network Access Point and onto the Satellite Communicator
Door lock sensor protects against intrusion and responds to RFID signals to transmit container log to RAE reader at portal on the dock
Sensor/RF Node Door Lock and RFID Network Access Point Satellite Communicator
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Emerging Application Scenarios
Truck/Trailer Theft Prevention
Door Lock
Door Lock
Sensor/RF Node Network Interrogator Satellite Communicator
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Markets & Growth Opportunities
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Market Opportunity
United States Homeland Security Spending
$41.1 Billion
FY2006 budget request 7% Y/Y growth
United States
Chemical Sensor Market Size
$2.8 Billion
8.5% projected growth per year through 2008
China
Growth of Investment in Fixed Assets
(factories, equipment, property & infrastructure)
25.8%
in 2004
U.S. Department of Homeland Security
Freedonia report:
Chemical Sensors to 2008: Liquid, Gas & Biosensors
The Economist 27 Jan 2005
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Market Drivers
Developing countries
Growing industrial infrastructure Increasing focus on human health & safety
Industrialized world
Terrorism & other safety concerns Environmental & industrial regulations
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Competitive Environment
History: North American mining industry
COMPETITIVE
STRENGTHS
Technology
leader in PID &
emerging wireless
systems
Strong brand
Broad product
offering
Cost-efficient
infrastructure in
China
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Emerging Market Potential $10,000
Unit Pricing $500 $0.10
Personal Protection
Area Protection
Information Value
Real-time Decision Support
Pervasive Sensing
Thousands
Millions
Number of Sensors
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Growth Strategy
Expand leadership position in emerging wireless sensor networks Enhance & defend portable product line Increase revenue in Europe & Asia Aggressively pursue rapidly growing safety market in China Selectively pursue strategic acquisitions & partnerships
Gain scale &/or address adjacent products & markets (accretive) Acquire complementary technologies
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Financial Overview
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Company History
Established operations in China
KLH acquisition $1.1M angel funding
Moved to AMEX
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Company founded by Robert I. Chen (current CEO) & Peter Hsi (current CTO)
Sept. 11, 2001
Public via reverse merger $32 M secondary offering
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Revenue Growth
Annual Revenue in $M USD $35 $30 $25 $20 $15 $10
$5
$0
CAGR
30%
9.4
10.8
18.2
19
21.8
31.3
45.8
1998 1999 2000 2001 2002 2003 2004
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Income Statement
FY2004 by Quarter
Revenue
COGS
Gross Profit
Expenses
Sales & Mktg
R&D
G&A
TOTAL
Operating Income EPS
Q1 Q2 Q3 Q4
2004 2004 2004 2004
$ 8.2 M $ 10.4 M $ 12.3 M $ 15.0 M
$ 3.0 M $ 3.9 M $ 4.7 M $ 6.9 M
$ 5.2 M $ 6.5 M $ 7.5 M $ 8.0 M
$ 2.1 M $ 2.6 M $ 2.8 M $ 3.6 M
$ 0.9 M $ 1.0 M $ 1.1 M $ 1.3 M
$ 1.7 M $ 1.8 M $ 2.1 M $ 2.6 M
$ 4.7 M $ 5.3 M $ 5.9 M $ 7.6 M
$ 0.5 M $ 1.2 M $ 1.6 M $ 0.4 M
$0.00/share $0.02/share $0.02/share $0.01/share
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High-Leverage Business Model
Gross Margin 50% - 60%
Pre-Tax
Operating Income 10% - 20% Target
Strong Balance Sheet
Cash $32.8 M
Debt $1.7 M
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Summary
RAE Systems Investment Proposition
Growing worldwide markets
Broad customer base & rapidly emerging applications
Sustainable technical advantages
Proprietary sensor technology
System know-how & domain knowledge
Growing consumables & service revenue
High-margin “annuity” business
Strong brand & worldwide market presence
Globally distributed infrastructure
Localized sales & support / cost-efficient manufacturing in China
Financial strength
Strong balance sheet High-leverage business model Access to capital
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