Starsys, Inc., a SpaceDev Company recently delivered two major subsystems — the Spacecraft-to-Spacecraft Separation System and the Orbital Express Capture System — for the Defense Advanced Research Projects Agency (DARPA) Orbital Express program, under contract with The Boeing Company.

The goal of the Orbital Express program is to validate the feasibility of the robotic, autonomous on-orbit refueling and reconfiguration of satellites. DARPA foresees that Orbital Express-derived satellites will usher-in a revolution in space operations enabling maneuverable and up-gradable satellites supporting critical national security missions, as well as new and enhanced capabilities for civil and commercial space activities. SpaceDev’s Starsys subsystems provide two functions critical to the mission: shock-less separation of the two Orbital Express spacecraft after launch, and capture and docking of the spacecraft prior to servicing.

“The delivery of this mission-enabling technology is a significant technical achievement for SpaceDev and a major milestone in the development of Orbital Express,” said Robert Vacek, President of Starsys, Inc., a subsidiary of SpaceDev, Inc. “This program is another example of our ability to provide extraordinary results in complex spacecraft mechanism design and development.”

Orbital Express is being developed by DARPA and is scheduled to launch October 2006. A successful Orbital Express demonstration will provide the foundation for developing an operational system that can provide routine on-orbit servicing of existing satellites as well as future space assets.

Additional partners on this team include the National Aeronautics and Space Administration (NASA), Ball Aerospace, Northrop Grumman Space Technology, the Missile Defense Agency, and the Charles Stark Draper Laboratory Inc.

About SpaceDev

SpaceDev 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. In addition, Starsys Research Corporation was acquired by SpaceDev on January 31, 2006, renamed Starsys, Inc., and is now a wholly-owned subsidiary of SpaceDev. Starsys is engaged in the design and manufacture of mechanical and electromechanical subsystems and components for spacecraft. Starsys’ subsystems enable critical spacecraft functions such as pointing solar arrays and communication antennas, and restraining, deploying and actuating of moving spacecraft components. For more information, visit www.spacedev.com.

Forward-Looking Statements

Except for the factual statements made herein, the information contained in this news release consists of forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Words and expressions reflecting optimism and satisfaction with current prospects, as well as words such as “believe,” “intends,” “expects,” “plans,” “anticipates” and variations thereof, identify forward-looking statements, although their absence does not mean that a statement is not forward looking. Forward-looking statements are based on the Company’s current expectations. Such forward-looking statements are not guarantees of performance, and the Company’s actual results could differ materially from the Company’s current expectations based on many factors that are directly or indirectly related to the items discussed above. Factors directly related to the subject of this release that could cause or contribute to such differences include risks and uncertainties associated with (i) the Company’s ability to effectively perform under its contract with DARPA and Boeing, (ii) any rescheduling or cancellation of the customer order, (iii) the uncertainties in the government budgeting process, (iv) the Company’s ability to control costs and expenses, and (vi) the need for additional financing to support the business. Reference is also made to other factors set forth in the Company’s periodic reports filed with the Securities and Exchange Commission, including “Management’s Discussion and Analysis” and other sections of the Company’s most current Annual Report on Form 10-KSB and subsequent Quarterly Reports on Form 10-QSB. These forward-looking statements speak only as of the date of this release, and the Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release.

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