Rockets Away! - The Expanding Infrastructure of Space

Today's interview is with Richard Slansky, President of SpaceDev, a small but sophisticated, publicly- traded company which has played the key role in the development of SpaceShipOne's hybrid rocket propulsion system. He is interviewed by Dave Gieber, co- founder of Rocket's Away, who has logged fourteen years as a Design Engineer in the solid propulsion rocket motor industry, both for Thiokol (now ATK) and Aerojet. Dave's program involvement included numerous military and commercial (including NASA's ASRM program) launch vehicle platforms.

Dave Gieber Richard, could you please give us some idea of your background prior to your involvement with SpaceDev?

Richard Slansky I have spent more than 20 years growing high technology and biotechnology companies, most of the time here in San Diego. I have assisted entrepreneurial founders develop and execute business plans, as well as, implement financial controls, strategize and fund the growth. Some of my more challenging companies were turnaround situations and most have been (or became) small public companies. I joined SpaceDev in February 2003 as Chief Financial Officer and Director and Corporate Secretary and was appointed President in November of 2004. I am also currently serving on the Board of Directors of two privately held high technology companies, one closely held, private real estate company and Imperial Counties, and was recently appointed to the Board of Directors of the Girl Scouts of San Diego. I earned a bachelor's degree in economics and science from the University of Pennsylvania's Wharton School of Business and a master's degree in business administration in finance and accounting from the University of Arizona.

Dave Gieber Were you always interested in spaceflight? Or was this something new?

Richard Slansky I have been interested in and fascinated by space, space travel and space flight since I was a boy; however, it has only been the opportunity to work with Jim Benson, founding chairman and CEO of SpaceDev, that translated this hobby interest and fascination into an occupation.

Dave Gieber How did you become involved with SpaceDev?

Richard Slansky I was introduced to SpaceDev and Jim Benson by a mutual friend. SpaceDev (and Jim Benson) were looking for some financial guidance and I was introduced to them with the possible intent of providing some consulting support. I met with Jim at his home in Poway (I also live in Poway!) and was enthralled with his vision, passion and energy to create a private space company. But what was really unique about Jim was his philosophy, "If we want to go to space to stay, space has to pay!" I knew I wanted to be involved in this exciting venture by the end of our first visit!

Dave Gieber What do you think are the chances for the commercial spaceflight industry really taking off?

Richard Slansky SpaceDev may lead and/or help to create a private space industry; however, we are taking practical steps as envisioned by the philosophy stated above. SpaceDev is currently focused on two primary business units: hybrid propulsion technology and spacecraft design & development (mainly high performance microsatellites and nanosatellites). We are seeing that manned commercial suborbital spaceflight is near at hand with the success of Paul Allen's SpaceShipOne and the more recent related involvement of Richard Branson. We hope to be the hybrid rocket motor provider for his and other commercial space ventures. Our motors could be the "pick and shovels" to the "miners", like Branson, who will forge new frontiers of commercial space flight. We are also utilizing the same hybrid propulsion technology to develop a family of small launch vehicles called SpaceDev Streaker(TM)! Both our spacecraft and small launch vehicles are payload agnostic, i.e., we can customize our standard subsystems to accommodate any payload.

Dave Gieber There appears to be a new infrastructure for the development of the commercial spacecraft industry. This centers around SpaceShipOne and the upcoming developments of the Virgin Galactic fleet. Looking at the industry in a broad way, what other developments, would you say, encompass the infrastructure for private, manned space programs? How is SpaceDev involved in these developments?

Richard Slansky Once people start going to space, we believe that they will want to stay there for longer and longer periods of time, enjoying the view, the peacefulness and the weightlessness. The suborbital flights do create private sector astronauts; however, the flights are relatively short. We believe the next steps will be the creation of an orbital vehicle, possibly a private sector Shuttle replacement, for trips to the space station, low Earth orbits and beyond. Branson and others have already begun discussing possibilities for a space hotel, etc. To this end, SpaceDev is already in the early stages of developing its SpaceDev Dream Chaser(TM), a six passenger orbital vehicle with ground launch capability. We are working with NASA and others to make this dream a reality someday!

Dave Gieber Please describe the key, unique elements in the propulsion system designed by SpaceDev for SpaceShipOne.

Richard Slansky SpaceDev acquired the base hybrid propulsion technology from AMROC (American Rocket Company), which spent tens of millions of dollars trying to develop it in the 1980's. The concept of hybrid propulsion is not new; however, SpaceDev is the first company to successfully develop the technology into a motor that is both safe and powerful enough for commercial use. SpaceDev has initiated the era of the non-exploding rocket motor - creating a level of safety unmatched by conventional solid or liquid motors. Hybrids, as opposed to solids or liquids, are not rated in tons of TNT equivalent. Hybrids are not carcinogenic. Hybrids are stable, storable, throttleable and restartable, a vast difference from their solid or liquid counterparts. Essentially, we are burning a proprietary combination of synthetic rubber and laughing gas.

Dave Gieber Describe how and why SpaceDev was founded as a company. Is there a Master Vision?

Richard Slansky SpaceDev was founded in 1997 by Jim Benson. Upon founding SpaceDev in 1997, Jim Benson started the trend of successful computer entrepreneurs moving into the space development arena. With the long-term vision of building private sector exploration and profitable economic development of space, he has brought to this challenge the fast-moving entrepreneurial development style, which characterized the microcomputer revolution. 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.

Prior to founding SpaceDev, Jim founded Compusearch Corporation (later renamed Compusearch Software Systems), in McLean, Virginia. The company was based on the first development of software algorithms and applications for personal computers and networked servers to create full text indexes of massive government procurement regulations and to provide instant full text searches for any word or phrase; the first instance of large scale, commercial implementation of PC-based full text searching, which later grew to encompass such systems as worldwide web search engines. Seeing related opportunities in document and image management, Jim started the award- winning ImageFast Software Systems in 1989, which later merged with Compusearch. In 1995, Jim sold Compusearch and ImageFast, and retired at age fifty. After months of research, Jim started SpaceDev, Inc., a Nevada corporation, which was acquired by us in October 1997. Jim holds a Bachelor of Science degree in Geology from the University of Missouri. He also founded the non-profit Space Development Institute, and introduced the $5,000 Benson Prize for Amateur Discovery of Near Earth Objects. He is a Board member of the California Space Authority, Vice-Chairman and private sector representative on NASA's national Space Grant Review Panel, and is a member of the American Society of Civil Engineers subcommittee on Near Earth Object Impact Prevention and Mitigation.

Dave Gieber Could you describe, in detail, the unique contributions of SpaceDev to SpaceShipOne? Is it fair to say that SpaceDev developed the specific hybrid motor used in the first three flights to space? Will this propulsion system be used and/or further developed for the Virgin Galactic Fleet?

Richard Slansky SpaceDev's proprietary hybrid rocket motor technology successfully powered SpaceShipOne on all of its powered flights, including its three important and history - making flights to space. We were proud to be a part of the Paul Allen/Scaled Composites team in the development of the first private manned space capability. During the development of Scaled's SpaceShipOne, SpaceDev competed for and won the contract that included SpaceDev's hybrid rocket technology and the development and production of critical motor components. Also, we developed the system for casting our proprietary rubber fuel into Scaled's composite motor case. Burt Rutan is quoted as having said that "The SpaceDev rocket technology and motor components met our specifications and allowed us to meet our goals at the event that demonstrated the emergence of privately-developed manned space flight capability." Our two companies, working together, have developed the first man-rated spacecraft rocket motor to emerge in decades. This was critical to the goal of developing a safe space vehicle at the minimum possible flight operating cost. We look forward to furthering our participation in similar endeavors that will lead to a new industry of affordable space tourism.

Dave Gieber How would you describe the opportunities available for private investment in the commercial spacecraft industry? How does SpaceDev reach out to prospective investors in the industry?

Richard Slansky One of the altruistic reasons that Jim Benson created SpaceDev as a public company was to allow people, who share his vision and excitement for the future of space exploration to hold a piece of it via common stock ownership in SpaceDev (OTCBB: SPDV). Our stock has experienced a general upward trend since I joined the company with some extreme peaks. Those peaks seem to occur due to external forces - for example SpaceShipOne flights and the announcement of our $43 million contract with the Missile Defense Agency - and for the intrinsic reason that SpaceDev is really one of the few public stocks that is a "pure space play." For example, one of our peaks and one of our highest trading volume days occurred when President Bush announced that our nation is going back to the moon and Mars. While it had no direct link to SpaceDev, the market went looking for a pure space company and we reaped the benefits of public interest and excitement. In addition to these event- driven opportunities, SpaceDev is proactive in its on- going investor relations strategy - hosting quarterly conference calls for investors and prospective investors in addition to its annual meeting at SpaceDev headquarters in Poway, CA and the extensive Investor Relations section it maintains as a part of its corporate website (www.SpaceDev.com). Additionally, SpaceDev has engaged the Investor Relations Group from NYC to represent it from public relations and investor relations to assist us, as a small-cap company, in achieving greater recognition in the financial and media communities within the US.

SpaceDev Stock

Dave Gieber What key products of SpaceDev will impact on the future development of commercial spacecraft?

Richard Slansky SpaceDev is primarily a project-oriented company today. Our products and solutions are sold, mainly on a project-basis, directly to these customers and include sophisticated micro- and nano- satellites, hybrid rocket-based launch vehicles, Maneuvering and orbital Transfer Vehicles as well as safe sub-orbital and orbital hybrid rocket- based propulsion systems. Although we believe there will be a commercial market for our micro-satellite and nano- satellite products and services in the long- term, the early adopters of this technology appear to be the military and our "products" are considered to be the outcome of specific projects. We currently have two primary lines of space products and services on which we believe a sound foundation and profitable, cash generating business can be built. Our Spacecraft Products and Services - Microsatellites & Nanosatellites, BD-II Spacecraft Buses, and Maneuvering and orbital Transfer Vehicles; and, Our Propulsion Products and Services - Hybrid Propulsion and Launch Vehicle Systems. These products and services are being marketed and sold directly into primarily domestic government, university, military and commercial markets. We consider ourselves a project company rather than a product company today, although products are generated from projects. Our long term goal and vision is to migrate from a project company to a product company. Our business is not seasonal to any significant extent; however, our business follows normal industry trends such as increased demand during bullish economic periods, or slow-downs in demand during periods of recession.