successfully completed its full duration hybrid
rocket motor test for SpaceShipOne, the final test under the current phase of
SpaceDev’s contract with Scaled Composites in Mojave, CA. SpaceDev is
competing to be the provider of rocket motors for SpaceShipOne.

SpaceDev has developed small and large hybrid rocket motors under
contracts with government agencies and private companies. Hybrid rocket
motors are non-explosive and inexpensive, using a solid hydrocarbon fuel, and
a liquid oxidizer to make the fuel burn. SpaceDev uses rubber or plastic for
fuel, and nitrous oxide for the oxidizer.

Under a separate contract, SpaceDev is designing a cluster of three
microsatellites to fly in formation and communicate over a wireless LAN in
space. SpaceDev was recently awarded a Department of Defense (DoD) contract
to begin designing a small, inexpensive, hybrid-based launch vehicle for
microsatellites. Under another DoD contract, SpaceDev is building a hybrid-
based small and agile orbital transfer and maneuvering vehicle for moving
small payloads from one orbit to another.

About SpaceDev

SpaceDev creates and sells 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. For
more information, visit .

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 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.