SpaceDev today reported financial results for the year ended December 31, 2001. Sales increased by over 5% and the gross margins in 2001
were significantly higher than 2000.
In addition, the Company’s working
capital deficit improved by approximately $560,000 in 2001 due to a reduction
in the anticipated loss on the CHIPSat project, reduced payables and
restructured short-term debt.

During the year ended December 31, 2001, the Company had net sales of
$4.1 million as compared to net sales of $3.9 million in 2000.
Sales in 2001
were comprised of $3.2 million from the CHIPSat small satellite project,
$328,000 from a contract for a proprietary development program, $228,000 from
research and development performed for the NRO Office of Space Launch (OSL),
$216,000 from the Boeing Mars Sample Return and Mars Ascent Vehicle projects,
and $164,000 from all other programs.

For the year 2001, the Company had a net loss of $1,856,000, compared to a
net loss of $1,405,000 in 2000. The increase in the net loss was primarily due
to an increase in operating expenses of $1,516,000.
This increase was
primarily attributable to $1,690,000 in non-cash expenses, including
impairment of the unamortized balance of goodwill from the Company’s
acquisition of Integrated Space Systems (ISS) in 1998, stock issued to EMC
Holdings Group in exchange for advisory services, notes payable, and stock
options issued for the acquisition of ExploreSpace.com.

“We continue to focus on building a financially sound business and
increasing our sales and marketing initiatives,” said Jim Benson, chairman and
chief executive officer of SpaceDev.
“Our 2001 increase in net sales,
together with a significant engagement with a new customer and repeat business
from existing customers, indicates that we have made some real progress with
this focus.”

For the year 2001, the Company had cost of sales (direct and allocated
costs associated with individual contracts) of $2.4 million as compared to
$3.2 million in 2000.
The gross margin percentage for the year ended December
31, 2001 was 41% as compared to 17% for the same period in 2000.
This
decrease in cost of sales was primarily due to the reduction of the original
estimated loss on the CHIPSat contract from $861,000 to $463,000, as the
result of a $1.2 million contract increase for add-on work.
As of December
31, 2001, approximately 77% of the total contract costs had been expended and
the remaining loss on the balance sheet at year-end totaled approximately
$102,000.

As of December 31, 2001, the Company’s backlog of funded and non-funded
business was approximately $3.4 million, compared to approximately
$2.9 million as of fiscal year-end 2000.
During 2001, the Company won a
commercial program valued at up to $2.2 million, negotiated increases of
$1.2 million to the CHIPSat program, and added several contracts with Boeing
for NASA-related Mars work.

SpaceDev currently has four outstanding proposals for government programs
submitted during the first three months of 2002, has worked with the US
Congress to identify additional directed funding for its programs, and has
aggressively pursued several significant commercial programs.

“Winning some of these programs will enable SpaceDev to continue to grow
and broaden its business base,” said Charlie Lloyd, chief operating and
financial officer.
“We have already been notified that one government
customer intends to award SpaceDev a new contract related to our orbital
Maneuvering and Transfer Vehicle (MTV), that could ultimately lead to almost
$2 million of new business over the next 18 months.”

For more information regarding the company, please review the company’s
filings on the SEC EDGAR system at www.sec.gov .

About SpaceDev

SpaceDev (OTC Bulletin Board: SPDV) provides affordable and innovative
space products and solutions to government and commercial enterprises.
SpaceDev products and solutions include the design, manufacture, marketing and
operation of sophisticated micro and nano satellites, hybrid rocket-based
orbital maneuvering and orbital transfer vehicles (MTVs) as well as safe
sub-orbital and orbital hybrid rocket-based propulsion systems.
SpaceDev
customers include:
NASA, National Reconnaissance Office (NRO), Boeing, NASA’s
Jet Propulsion Laboratory (JPL), Air Force Research Laboratory (AFRL),
Lockheed Martin, California Space Authority (CSA) and commercial customers.
SpaceDev is developing commercial hybrid rocket motors and small high
performance space vehicles and subsystems. For more information, visit
www.spacedev.com .

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 current expectations are subject to all of the uncertainties and
risks customarily associated with new business ventures including, but not
limited to, the level of sales to key customers; the economic conditions
affecting our industry; actions by competitors; fluctuations in the price of
raw materials; the availability of outside contractors at prices favorable to
the company; our dependence on single-source or a limited number of suppliers;
our ability to protect our proprietary technology; market conditions
influencing prices or pricing; an adverse outcome in litigation, claims and
other actions, and potential litigation, claims and other actions by or
against us, including, but not limited to, the litigation that has been filed
by and against EMC Holdings Corporation; technological changes and
introductions of new competing products; the current recession; terrorist
attacks or acts of war, particularly given the acts of terrorism against the
United States on September 11, 2001 and subsequent military responses by the
United States; ability to retain key personnel; changes in market demand;
exchange rates; productivity; weather; and market and economic conditions in
the areas of the world in which we operate and market are products. The
company’s actual results may differ materially from current expectations.
Readers are cautioned not to put undue reliance on forward-looking statements
and to read it read 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.