SPACEHAB, Inc., a leading
provider of commercial space services, today announced a reorganization of its
Space Media, Inc. (SMI) subsidiary to further concentrate on the development
and implementation of its core business initiatives.

Space Media was formed in 2000 to develop space-related media and
edutainment opportunities for its Enterprise(TM) commercial module, planned
for the space station. Over the past year, the SMI management team undertook
an aggressive campaign to establish itself in this emerging market, focusing
on the excitement of space. In light of changing market trends in the media
and e-commerce industries, as well as delays in the International Space
Station (ISS) and shuttle research schedules, SMI has refocused its short-term
strategy on key revenue generating opportunities.

“Adjusting to changes in the market and economy, Space Media, Inc. will
focus on its three core business competencies; education, online sales, and
content development,” said Dr. Shelley A. Harrison, Chairman and Chief
Executive Officer of both SPACEHAB and SMI. “Larger projects involving in-
space media productions and broadband TV/Internet space channels will be
initiated upon successful external partnering and financing as we approach the
one-year mark prior to Enterprise’s 2003 launch to the ISS,” said Harrison. He
added, “The Russian Space Agency, Rosaviakosmos, has now fully endorsed the
commercial Enterprise project.”

The three core competencies are described as follows:

* The STARS education program ( ) is an
online, interactive cultural and scientific exchange program for
students aged 8-18. STARS enables young people to achieve a better
understanding of the connections between science and art; advance their
technological skills; and gain an appreciation of one’s culture,
history, and tradition while being actively involved in research that
makes the world a better place.

* Space Media’s e-commerce web site ( ) is
the world’s largest space-related retail site, offering over 500
quality products. Since SMI acquired the business in July 2000, sales
and visitor hits have almost doubled.

* Content development comprises the acquisition, development, and use of
space-related content for marketing and media initiatives
( ).

Unreleased footage from Russian space
archives and new footage developed on the ISS are representative of the
possibilities. Space Media has several business deals underway to
provide product placement and advertising opportunities onboard the

Founded in 1984, with more than $100 million in annual revenue, SPACEHAB,
Inc., is a leading provider of commercial space services. The company is the
first to develop, own, and operate habitat modules and cargo carriers
providing laboratory facilities and resupply capabilities aboard NASA’s Space
Shuttles. It also supports astronaut training at NASA’s Johnson Space Center
in Houston and builds space-flight trainers and mockups. SPACEHAB’s Astrotech
subsidiary provides commercial satellite processing services at facilities in
Florida and California in support of a range of expendable launch vehicles,
including Lockheed Martin’s Atlas and Boeing’s Delta and Sea Launch rockets.
SPACEHAB’s Space Media, Inc. subsidiary, will bring space into homes and
classrooms worldwide with television and Internet broadcasting from the
International Space Station.

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.