Johnson Engineering Subsidiary Completes Mock-up Development Project for Japan

SPACEHAB, Inc.,
a leading provider of commercial space services, today announced that it has
concluded negotiations with the National Aeronautics and Space Administration
(NASA) for an equitable adjustment on the STS-107 mission dedicated to
microgravity and life sciences research.

NASA had previously contracted with SPACEHAB, through the Research and
Logistics Mission Support (ReALMS) contract, for the use of the Company’s new
Research Double Module (RDM) on this critical research mission. Due to launch
delays, NASA has awarded $12.75 million to compensate for additional services
provided through January 31, 2003.

The RDM, a state-of-the-art research facility able to carry 9,000 pounds
of experiments and equipment, is installed in the Columbia Space Shuttle that
is undergoing repairs in preparation for the STS-107 launch currently
scheduled for lift-off on January 16, 2003. The astronauts have access to the
pressurized module, which flies in the Shuttle’s cargo bay, through a
versatile, segmented tunnel from the Shuttle middeck.

NASA has recently concluded contract negotiations with SPACEHAB to provide
sustaining engineering of all government-owned access tunnel segments and
other Government-owned equipment used on SPACEHAB module missions, awarding an
additional $374,000 to SPACEHAB for services through December 2003.

In other news, SPACEHAB subsidiary, Johnson Engineering, has completed
development of a unique, full-scale replica of the U.S. Laboratory Module
Destiny. Commissioned for the International Space Station Museum in Japan,
this custom-built module is the first product outlined in a contract that
could provide opportunities for Johnson Engineering to build multiple exhibit
units that when combined would offer an entire Space Station tourist
attraction.

Designed to exact measurements of NASA’s space research facility,
currently orbiting 220 miles above the Earth, the Johnson Engineering-
developed Destiny mock-up is of similar fidelity to the trainers used by the
astronaut crew when preparing for space missions. Representatives from Japan
are visiting company facilities this week, attending an acceptance review and
dedication.

With more than $100 million in annual revenue, SPACEHAB, Inc. is a leading
provider of commercial space services. The Company develops, owns, and
operates habitat and laboratory modules and cargo carriers aboard NASA’s Space
Shuttles. Its Johnson Engineering subsidiary provides orbiter crew compartment
integration, ISS stowage and configuration management, supports astronaut
training, and builds space-flight mockup trainers at NASA’s Johnson Space
Center in Houston. SPACEHAB’s Astrotech subsidiary provides commercial
satellite processing services at facilities in California and Florida.
Additionally, through The Space Store, Space Media provides space merchandise
to the public and space enthusiasts worldwide (http://www.thespacestore.com ).

This release contains forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected in such statements. Such risks and
uncertainties include, but are not limited to, whether the company will fully
realize the economic benefits under its NASA and other customer contracts, the
timing and mix of Space Shuttle missions, the successful development and
commercialization of new space assets, technological difficulties, product
demand, timing of new contracts, launches and business, market acceptance
risks, the effect of economic conditions, uncertainty in government funding,
the impact of competition, and other risks detailed in the Company’s
Securities and Exchange Commission filings.