SpaceDev Reports Increase in Sales for Third Quarter; New Wins Increase Backlog of Firm Business

SpaceDev Inc., the world’s first publicly traded commercial space
exploration and development company, today announced its financial results for
the third quarter of 2001.
For the quarter, sales increased 24% over the
second quarter of 2001.

Sales for the third quarter 2001 totaled $1.2 million versus $941,000 for
the second quarter 2001 and $537,000 for the first quarter of 2001.
The
continuing increase in sales represents higher activity on the CHIPSat program
and several projects with Boeing.
Sales for the third quarter of last year
were $1.1 million.

Sales in the first nine months of $2.6 million were comprised of
$2.1 million from the CHIPSat program, $228,000 from the NRO Office of Space
Launch (OSL), $203,000 from Boeing projects and $95,000 from all other
programs.
In 2000, there was $1.6 million of sales from CHIPSat, $573,000
from the OSL, and $900,000 from all other programs.

“As we said at the end of the second quarter, the company is now
allocating more time and resources in generating new business,” stated Jim
Benson, Chairman and CEO.
“The recently announced win of a contract for a
proprietary research program that could grow to a total value of $2.2 million
leads me to believe we should continue to see favorable near term results in
the new business area from these efforts.”

As of September 30, 2001, the company’s backlog of business was
approximately $3.1 million and $4.6 as of September 2000.
To date in 2001,
the company has added about $2.7 million in new business including
$1.6 million related to the recent contract win, an increase of $600,000 in
the CHIPSat small satellite project, almost $200,000 in additional California
grant funds and $250,000 from the Boeing Mars Sample Return program.
The
company is in negotiations for an additional increase in the CHIPSat
microsatellite project.

“We continued to make significant progress during the past three months in
establishing stronger financial health for SpaceDev.
As promised, we
increased our sales and marketing team, which is important at this particular
time,” stated Charlie Lloyd, Chief Operating and Financial Officer.
“We are
building this structure to drive growth and future returns.
In the short
term, our management team is working to focus and grow the business, thus
setting the stage to generate quality earnings.”

For the third quarter 2001, losses before depreciation, amortization and
interest were $275,000 compared to losses in the second quarter 2001 of
$130,000 and losses of $345,000 in the first quarter 2001 — for total losses
for the nine months of $750,000.

The company incurred significant non-cash stock-based expense of $475,000
and $651,000 in the third quarter and the first nine months of 2001,
respectively.

The company had a net loss in the third quarter of $565,000, compared to a
net loss of $429,000 for the second quarter and a net loss of $659,000 for the
first quarter.

The company reported a net decrease in cash during the three months ended
September 30, 2001, of $11,000, compared to a net decrease of $180,000 for the
first six months of 2001.
Net cash for the year to date is down $191,000 from
December 31, 2000.
Net cash used by operating activities totaled $113,501 for
the nine months ended September 30, 2001 while net cash used in financing
activities is $27,000 for the year to date.
The company has raised $120,000
in new equity in 2001

Outlook for 2002

Benson said that based on the results of the last two quarters and the
increased sales effort, management is optimistic about 2002, and has
established the goal of reaching positive earnings performance.
“With the
operating improvements we have implemented, and the innovative new space
products we have created, the revenues we generate should carry higher
margins,” he noted.

“Our key customers are now beginning to realize the potential of smaller,
lower-cost, commercial space missions, satellites and deep-space spacecraft.
SpaceDev’s innovative and affordable approach to space launch vehicles,
leading-edge propulsion products, and space services are becoming established
in the industry.
As a result, current and prospective customers are
discussing their projects and needs with us.”

Benson concluded: “Our focus in the fourth quarter and for 2002 is on
performing well on current contracts, cultivating existing relationships, and
generating significant new business.
The company has begun to execute
marketing and business strategies to drive increased new revenue growth.
We
are looking forward to testing these strategies over the next 12 to 18 months.
As we saw this quarter, we believe SpaceDev will experience increased demand
for our affordable space products, translating into increased revenues.”

Founded in 1997, SpaceDev is the world’s first publicly traded commercial
space exploration and development company.
SpaceDev designs, assembles, tests
and markets affordable micro space systems including sophisticated
micro-satellites, low-power high performance flight computers, miniature
S-Band satellite transceivers, hybrid rocket-based orbital maneuvering and
orbital transfer vehicles (MTVs), and safe hybrid rocket motors for
sub-orbital and other space applications.
SpaceDev is working with Sea Launch
to explore offering a reliable source of lower-cost launches for secondary
payloads, and has been working with the Air Force to develop orbital
maneuvering vehicle and kick motor products for micro-satellites.

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

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, market conditions, successful product
development and acceptance, competition and overall economic conditions, as
well as the risk of adverse regulatory actions.
The company’s actual results
may differ materially from current expectations.
Readers are cautioned not to
put undue reliance on forward-looking statements.
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.

For further information, please contact Jim Benson at (858) 375-2020 or
Charlie Lloyd at (858) 375- 2030.