has been awarded a contract to develop micro- and
nano-satellite bus and subsystem designs. This Air Force Research Laboratory
(AFRL) Small Business Innovation Research (SBIR) contract will enable SpaceDev
to explore the further miniaturization of its unique and innovative microsat
subsystems. It will also enable SpaceDev to explore ways to reduce the time
and cost to build small satellites through further standardization in order to
help define de facto standards for payload hardware and software interfaces.

SpaceDev began defining de facto standards when it designed and built the
highly successful CHIPSat, which launched in January 2003. SpaceDev designed
and built such miniature and modular systems as a 300 MIPS flight computer,
modular power conditioning and distribution system, space qualified its S-band
transmitter and receiver, and programmed a modular general purpose microsat
operating system and complimentary Internet-based mission control and
operations system. All of these proven, innovative SpaceDev subsystems will
be analyzed for increases in performance while further reducing their size,
weight and power requirements.

“SpaceDev is excited to receive this contract and expand its close
collaboration with the Air Force,” said Jim Benson, founding chairman and
chief executive of SpaceDev. “This project will help us continue building a
track record of successes in the development of smaller, innovative space
systems and hybrid rocket motor technology.”

About SpaceDev

SpaceDev provides affordable and innovative
space products and solutions, including 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.