SpaceDev (OTCBB: SPDV) has begun designing a reuseable, piloted, sub-orbital space ship
that could be scaled up to safely and economically transport
passengers to and from low earth orbit, including the International
Space Station. The name of the vehicle is the “SpaceDev Dream
Chaser(TM).”

SpaceDev’s founding chairman and CEO, Jim Benson, recently signed
a Space Act Memorandum of Understanding (MOU) with NASA Ames Research
Center director, Dr. Scott Hubbard. This non-binding MOU confirms the
intention of the two parties to explore novel, hybrid propulsion based
hypersonic test beds for routine human space access. The parties will
explore collaborative partnerships to investigate the potential of
using SpaceDev’s proven hybrid propulsion and other technologies, and
a low cost, private space program development approach, to establish
and design new piloted small launch vehicles and flight test platforms
to enable near-term, low-cost routine space access for NASA and the
United States. One possibility for collaboration is the SpaceDev Dream
Chaser(TM) project, which is currently being discussed with NASA Ames.

Unlike the more complex SpaceShipOne, for which SpaceDev provides
critical proprietary hybrid rocket motor propulsion technologies, the
SpaceDev Dream Chaser(TM) would be crewed and take-off vertically,
like most launch vehicles, and will glide back for a normal horizontal
runway landing.

“This project is one small step for SpaceDev, but could evolve
into one giant leap for affordable, commercial human space flight,”
said Jim Benson. “I have been waiting for almost fifty years for
commercial space flight, and have concluded that SpaceDev, through our
unbroken string of successful space technology developments, now has
the technical capability and know-how, along with our partners, and
when fully funded, to quickly develop a safe and affordable human
space flight program, beginning with sub-orbital flights in the near
future, and building up to reliable orbital public space
transportation hopefully by the end of this decade.”

“I am delighted that we will be working with SpaceDev to help meet
the goals of The Vision for Space Exploration,” said G. Scott Hubbard,
director of NASA Ames Research Center, located in California’s Silicon
Valley. “Near-term, low-cost, crewed and uncrewed routine space access
is a key for realizing the nation’s Exploration Vision. I look forward
to a long and fruitful partnership with SpaceDev to explore the
technologies for a new class of exciting launch vehicles for future
space exploration.”

The sub-orbital SpaceDev Dream Chaser(TM) is derived from an
existing X-Plane concept and will have an altitude goal of
approximately 160 km (about 100 miles) and will be powered by a
single, high performance hybrid rocket motor, under parallel
development by SpaceDev for the SpaceDev Streaker(TM), a family of
small, expendable launch vehicles, designed to affordably deliver
small satellites to low earth orbit. The SpaceDev Dream Chaser(TM)
will use motor technology being developed for the SpaceDev
Streaker(TM) booster stage, the most powerful motor in the Streaker
family. The SpaceDev Dream Chaser(TM) motor will produce approximately
100,000 pounds of thrust, about six times the thrust of the
SpaceShipOne motor, but less than one-half the thrust of the 250,000
pounds of thrust produced by hybrid rocket motors developed several
years ago by the American Rocket Company (AMROC).

SpaceDev’s non-explosive hybrid rocket motors use synthetic rubber
as the fuel, and nitrous oxide for the oxidizer to make the rubber
burn. Traditional rocket motors use two liquids, or a solid propellant
that combines the fuel and oxidizer, but both types of rocket motors
are explosive, and all solid motors produce copious quantities of
toxic exhaust. SpaceDev’s hybrid rocket motors are non-toxic and do
not detonate like solid or liquid rocket motors.

About SpaceDev

SpaceDev (OTCBB: SPDV) creates and sells affordable and innovative
space products and solutions to government and commercial enterprises.
SpaceDev’s innovations include the design, manufacture, marketing and
operation of sophisticated micro- and nano- satellites, hybrid
rocket-based orbital Maneuvering and orbital Transfer Vehicles as well
as sub-orbital and orbital hybrid rocket-based propulsion systems for
safe human space flight. Upon founding SpaceDev in 1997, Jim Benson
started the trend of successful computer entrepreneurs moving into the
space development arena. For more information, visit www.spacedev.com.

About NASA/Ames

Ames Research Center, one of ten field installations of the
National Aeronautics and Space Administration, is located in the heart
of California’s Silicon Valley at the core of the research cluster of
high-tech companies, universities and laboratories that define the
region’s character. Ames plays a critical role in virtually all NASA
missions in support of America’s space and aeronautics programs. Ames
conducts critical R&D and develops enabling technologies that make
NASA missions possible. In addition, Ames works collaboratively with
the FAA, conducting research in air traffic management to make safer,
cheaper and more efficient air travel a reality. Ames engages in
information and education outreach, forms collaborative partnerships,
and fosters commercial application of NASA technologies.

This news release may contain forward-looking statements
concerning the Company’s business and future prospects and other
similar statements that do not concern matters of historical fact.
Forward-looking statements relating to product development, business
prospects and development of a commercial market for technological
advances are based on the Company’s current expectations. The
Company’s references to non-explosive motors directly relate to the
zero TNT equivalent rating of its hybrid rocket motors and that they
do not detonate notwithstanding the fact that any pressure vessel may
rupture but not “explode” like a solid or liquid rocket motor. The
Company’s current expectations are subject to all of the uncertainties
and risks customarily associated with developing business ventures
including, but not limited to, risks associated with new product
development and availability of raw resources and suppliers, risks to
marketed products and availability of financing and other sources of
income, as well as risks discussed in the Company’s periodic reports
filed with the U.S. Securities & Exchange Commission. The Company’s
actual results may differ materially from current expectations.
Readers are cautioned not to put undue reliance on forward-looking
statements contained in this release and to read it in conjunction
with the Company’s annual report on Form 10-KSB, including the
consolidated financial statements filed therewith. The Company
disclaims any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information,
future events or for any other reason.

Contact:

The Investor Relations Group

Investor Contact:

Kathryn McNeil/Dian Griesel

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Media Contact:

Mike Graff/Stephanie Schroeder 212-825-3210