Press Release

SpaceDev Reports Third Quarter Net Income

By SpaceRef Editor
November 15, 2005
Filed under , ,
SpaceDev Reports Third Quarter Net Income
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Successful Execution on Current Contracts Leads to Eleventh Consecutive Quarter of Revenue Growth

POWAY, Calif. SpaceDev, Inc. reported its financial results for the third quarter ended September 30, 2005. After eleven successive quarters of increasing net sales and eight quarters of increasing EBITDA*, SpaceDev achieved its third consecutive quarter of net income and maintained a positive cash flow from operations.

Net sales increased approximately 82%, to $2,234,000, for the three-months ended September 30, 2005 compared to $1,230,000 for the same three months in 2004. This increase was primarily due to execution on current contracts, including a second task order with the Missile Defense Agency valued at approximately $8.3 million. This current task order commenced October 2004 and is part of a larger contract with the Missile Defense Agency.

“SpaceDev moved forward some important strategic developments this quarter and continued its efforts to expand significantly our private sector space program,” commented Jim Benson, SpaceDev’s Founding Chairman and Chief Executive Officer. “Our recent merger agreement with Starsys, along with our continued expectation of our business plan, are important steps toward our goal of being a leader in the industry, by providing unique and cost-effective space solutions.”

SpaceDev continued to achieve income from operations for the seventh consecutive quarter. Income from operations was $83,000 for the three months ended September 30, 2005, compared to $49,000 for the same three months in 2004. Also, during the third quarter of 2005, EBITDA increased to $127,000, or 5.7% of net sales, compared to EBITDA of $72,000, or 5.9% of net sales, for the same three-month period in 2004. EBITDA is a non-GAAP financial measure defined as earnings before net interest income (expense), taxes, depreciation and amortization.*

Net income for the three and nine months ending September 30, 2005 was $136,000 and $348,000, or $0.01 and $0.02 per share, respectively, compared to a net loss of $603,000 and $2,332,000, or ($0.03) and ($0.13) per share, for the comparable periods in 2004. The increase in net income was mainly due to our reduction of non-cash loan fees that we incurred in 2004 of over $2.0 million for the nine months ended September 30, 2004. SpaceDev has had no non-cash loan fees attributed to borrowing under the current revolving credit facility in 2005; however, a small non-cash loan fee was expensed when warrants were exercised in the second quarter of 2005 that were originally associated with the establishment of the revolving credit facility.

“SpaceDev is committed to build its business profitably on the growth of the private space industry both through our existing business and acquisitions. Both components of our strategy have taken big steps forward. Our ongoing business profitably executed on large existing contracts for high performance, low cost satellite, spacecraft and propulsion systems. On the acquisition side, we recently entered into a merger agreement with Starsys that we believe will empower us to win larger and more diverse contracts in the future,” commented Richard Slansky, President and Chief Financial Officer of SpaceDev.

Net cash provided by operating activities totaled $313,000 for the nine months ended September 30, 2005, an improvement of $247,000 as compared to $66,000 used in operating activities during the same nine-month period in 2004. The positive trend in our current cash position was mainly due to our ability to generate net income of $136,000 and $348,000 for the three- and nine-month periods ended September 30, 2005, respectively, versus net losses of $603,000 and $2,332,000 for the same three- and nine-month periods in 2004.

Net cash decreased to $4,022,000 at September 30, 2005, a decrease of $57,000 from $4,079,000 at September 30, 2004. The decrease in net cash was due to uses of cash, such as the Starsys bridge loan on September 8, 2005 offset by the issuance of our Series C Preferred Stock in 2004, the exercise of stock options and warrants from October 1, 2004 through September 30, 2005 and advances/conversions under our revolving credit facility in late 2004. The financing, combined with the conversions and exercises, has resulted in a positive stockholders’ equity of $5,408,000 at September 30, 2005 from $3,076,000 at September 30, 2004. This is an improvement in stockholders equity of over $2.3 million.

Mr. Benson concluded, “This quarter reflects our ongoing concerted corporate initiative to continue improving our balance sheet and growing this business profitably. We believe our merger with Starsys will substantially increase our technical capabilities and our revenue run rate post-merger and should provide many benefits to drive growth and create sustainable long term earnings growth for our investors.”

Third Quarter Conference Call Details

SpaceDev will host a conference call later today at 12:00 p.m. EST to discuss the third quarter results. All those interested in hearing management’s discussion may join the call by dialing 877-407-9205. International participants may access the call by dialing 201-689-8054. A replay will be available for one week following the call by dialing 877-660-6853 for domestic participants and 201-612-7415 for international participants and entering passcode 286 and conference ID number 176748 when prompted. Participants may also access a live webcast of the conference call through the investor relations section of SpaceDev’s web site, www.spacedev.com. The replay will be available for 90 days.

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

*Non-GAAP Financial Measures

This release contains disclosure of EBITDA, which is a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The EBITDA presented above, while considered the most common definition used by investors and financial analysts, may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDA, while providing useful information, should not be considered in isolation or as an alternative to other financial measures determined under GAAP, such as net income or loss (as an indicator of operating performance) or cash flow (as measure of liquidity).

The following tables reconciles Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) to net income (loss) for the three and nine months ended September 30, 2005 and 2004, respectively:

For the three months ended                      September   September
                                                 30, 2005    30, 2004
                                               (Unaudited) (Unaudited)
----------------------------------------------------------------------
Net Income (Loss)                                $136,251   $(602,888)
----------------------------------------------------------------------

Interest Income                                   (24,848)     (5,619)
Interest Expense                                      452      23,110
Non-Cash Interest exp. (Debt Discount)                  -           -
Gain on Building Sale                             (29,318)    (29,318)
 Loan Fee - Equity Conversion                           -     663,481
Provision for income taxes                            400           -
Depreciation and Amortization                      44,128      22,749
----------------------------------------------------------------------
EBITDA                                           $127,065   $  71,515
----------------------------------------------------------------------


For the nine-months ending                       September  September
                                                  30, 2005  30, 2004
                                                (Unaudited)(Unaudited)
----------------------------------------------------------------------
Net Income (Loss)                                $348,412 $(2,332,304)
----------------------------------------------------------------------

Interest Income                                   (69,632)     (5,619)
Interest Expense                                    2,283      62,634
Gain on Building Sale                             (87,953)    (87,954)
 Loan Fee - Equity Conversion                      28,875   2,456,794
Provision for income taxes                          1,200           -
Depreciation and Amortization                     108,265      55,236
----------------------------------------------------------------------
EBITDA                                           $331,450 $   148,787
----------------------------------------------------------------------

About SpaceDev

SpaceDev is a high tech space development company that 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. SpaceDev designs and builds safe hybrid rocket motor propulsion systems for sub-orbital and orbital transportation systems, potentially for cargo and human space flight. Upon founding SpaceDev in 1997, Jim Benson started the trend of successful computer entrepreneurs moving into the space development arena. 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. Words and expressions such as “believe,” “expect,” “intend,” “plan,” “will,” “anticipate,” and variations thereof, identify forward-looking statements, but their absence does not mean that a statement is not forward looking. Forward-looking statements are based on the Company’s current expectations, which are subject to all of the risks and uncertainties customarily associated with developing business ventures and include, but are not limited to, the following risks and uncertainties: U.S. government budget cuts or policy changes may result in the cancellation of future phases of existing contracts or the failure to award new contracts; many of our contracts may be terminated by the customer; the demand for our technology and products is uncertain; we have limited operating history and lack of experience in new lines of business; we may face shortages of components, raw materials and suppliers; we may experience problems and costs associated with our proposed merger and integration with Starsys; assuming a successful closing of the merger, we may not experience the anticipated benefits of the merger; we will need additional capital to meet our obligations under the Starsys merger agreement; completion of the merger with Starsys may decrease of our future operating results; many of our competitors have greater resources than we do; and expansion into new lines of business or new product development may divert management’s attention and expose the Company to unbudgeted costs, as well as risks discussed in the Company’s periodic reports filed with the U.S. Securities and Exchange Commission. The Company’s actual results may differ materially from current expectations and forward-looking statements are not guarantees of performance. 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 quarterly report on Form 10-QSB for the period ended September 30, 2005, including the section entitled “Business Risks.” 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.

Copyright © 2005 SpaceDev, Inc. All rights reserved.
                     SpaceDev, Inc. and Subsidiary
                      Consolidated Balance Sheets
                              (Unaudited)

At September 30,                          2005          2004
----------------------------------------------------------------------
Assets

Current Assets
  Cash and cash equivalents            $4,022,243   $4,078,593
  Accounts receivable                   1,096,645      427,358
  Work in progress                         10,412        5,754
  Note reveivable (Note 5)              1,326,453            -
----------------------------------------------------------------------

Total current assets                    6,455,753    4,511,705

Fixed Assets - Net                        822,980      248,066

Other Assets                               64,469       43,042
----------------------------------------------------------------------

                                       $7,343,202   $4,802,813

See Form 10-QSB for selected footnotes and disclosures.


                     SpaceDev, Inc. and Subsidiary
                      Consolidated Balance Sheets
                              (Unaudited)

At September 30,                     2005         2004
---------------------------------------------------------

Liabilities and
 Stockholders' Equity

Current Liabilities
  Current portion of
   notes payable (Note 3(a))        $18,797     $36,239 
  Current portion of
   capitalized lease
   obligations                        2,479       3,943  
  Accounts payable
   and accrued expenses             398,443     161,980 
  Accrued payroll,
   vacation and
   related taxes                    350,145     207,028
  Deferred revenue                  126,453      49,779 
  Employee stock
   purchase plan                      9,974       3,406  
  Other accrued
   liabilities                      168,470     265,547   
---------------------------------------------------------

Total Current Liabilities        $1,074,761     727,922 

Notes Payable, Less Current
 Maturities (Note 3(a))                   -      18,797 

Capitalized Lease Obligations,
 Less Current Maturities                  -       2,479  

Deferred Gain - Assets
 Held For Sale (Note 3(a))          859,996     977,267
---------------------------------------------------------

Total Liabilities                 1,934,757   1,726,465

Commitments and Contingencies

Stockholders' Equity
  Convertible preferred stock,
   $.001 par value, 10,000,000
   shares authorized, 248,460
   and 250,000 shares issued
   and outstanding,
   respectively (Note 4)                248         250
  Common stock, $.0001 par
   value; 50,000,000 shares
   authorized, and 22,319,156
   and 20,026,263 shares
   issued and outstanding,
   respectively (Note 4)              2,231       2,002
  Additional paid-in capital
   (Note 4)                      20,091,408  16,724,176
  Additional paid-in capital
   - stock options                        -     750,000
  Deferred compensation                   -    (250,000)
  Accumulated deficit           (14,685,442)(14,150,080)
---------------------------------------------------------

Total Stockholders' Equity        5,408,445   3,076,348
---------------------------------------------------------

Total Liabilities and
 Stockholders' Equity            $7,343,202  $4,802,813

See Form 10-QSB for selected footnotes and disclosures.


                     SpaceDev, Inc. and Subsidiary
                 Consolidated Statements of Operations
                              (Unaudited)

Three and Nine Months Ended June 30,       Three Months Ended
                                      2005     %       2004       %
----------------------------------------------------------------------

Net Sales                         $2,234,010 100.0% $1,230,126  100.0%

Total Cost of Sales                1,709,077  76.5%    952,944   77.5%

Gross Margin                         524,933  23.5%    277,182   22.5%
----------------------------------------------------------------------

Operating Expenses
  Marketing and sales expense        188,655   8.4%    120,367    9.8%
  General and administrative         253,341  11.3%    108,049    8.8%
----------------------------------------------------------------------

Total Operating Expenses             441,996  19.8%    228,416   18.6%
----------------------------------------------------------------------

Income from Operations                82,937   3.7%     48,766    4.0%
----------------------------------------------------------------------

Non-Operating (Income) Expense
  Interest income                    (24,848) -1.1%     (5,619)  -0.5%
  Interest expense                       452   0.0%     23,110    1.9%
  Gain on building sale (Note
   3(a))                             (29,318) -1.3%    (29,318)  -2.4%
  Non-Cash loan fee - equity
   conversions (Note 3(c))                 -   0.0%    663,481   53.9%
----------------------------------------------------------------------
Total Non-Operating (Income)
 Expense                             (53,714) -2.4%    651,654   53.0%
----------------------------------------------------------------------
Income (Loss) Before Taxes           136,651   6.1%   (602,888) -49.0%

Income tax provision                     400   0.0%          -    0.0%

Net Income (Loss)                 $  136,251   6.1% $ (602,888) -49.0%
----------------------------------------------------------------------

Net Income (Loss) Per Share:
  Net income (loss)               $     0.01            ($0.03)
----------------------------------------------------------------------
  Weighted-Average Shares 
   Outstanding                    22,241,448        19,228,019

Fully Diluted Net Income (Loss)
 Per Share:
  Net income (loss)               $     0.00            ($0.03)
----------------------------------------------------------------------
  Fully Diluted Weighted-Average
   Shares Outstanding             29,362,131        19,228,019

                       
Three and Nine Months Ended June 30,       Nine Months Ended        
                                      2005     %       2004       %
----------------------------------------------------------------------

Net Sales                         $5,942,558 100.0% $3,445,569  100.0%

Total Cost of Sales                4,571,505  76.9%  2,702,583   78.4%

Gross Margin                      1,371,053  23.1%    742,986   21.6%
----------------------------------------------------------------------

Operating Expenses
  Marketing and sales expense        493,344   8.3%    335,652    9.7%
  General and administrative         654,524  11.0%    313,784    9.1%
----------------------------------------------------------------------

Total Operating Expenses           1,147,868  19.3%    649,436   18.8%
----------------------------------------------------------------------

Income from Operations               223,185   3.8%     93,550    2.7%
----------------------------------------------------------------------

Non-Operating (Income) Expense
  Interest income                    (69,632) -1.2%     (5,619)  -0.2%
  Interest expense                     2,283   0.0%     62,633    1.8%
  Gain on building
   sale (Note 3(a))                  (87,953) -1.5%    (87,954)  -2.6%
  Non-Cash loan fee - equity
   conversions (Note 3(c))            28,875   0.5%  2,456,794   71.3%
----------------------------------------------------------------------

Total Non-Operating (Income)
 Expense                            (126,427) -2.1%  2,425,854   70.4%
----------------------------------------------------------------------

Income (Loss) Before Taxes           349,612   5.9% (2,332,304) -67.7%

Income tax provision                   1,200   0.0%          -    0.0%

Net Income (Loss)                 $  348,412   5.9%$(2,332,304) -67.7%
----------------------------------------------------------------------

Net Income (Loss) Per Share:
  Net income (loss)               $     0.02            ($0.13)
----------------------------------------------------------------------
  Weighted-Average Shares
   Outstanding                    21,777,211        18,019,886

Fully Diluted Net Income (Loss)
 Per Share:
  Net income (loss)               $     0.01            ($0.13)
----------------------------------------------------------------------

  Fully Diluted Weighted-Average
   Shares Outstanding             29,719,369        18,019,886


See Form 10-QSB for selected footnotes and disclosures.

Contact:

SpaceDev, Inc.
Richard B. Slansky, 858-375-2030
richard.slansky@spacedev.com
or
The Investor Relations Group

Investor:
John Nesbett/Dian Griesel

Media:
Michael Graff
212-825-3210

SpaceRef staff editor.