FORM 10-QSB

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20429


(Mark  One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended March 31, 2003

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF
     THE  SECURITIES  EXCHANGE  ACT  OF  1934

     For the transition period from ______________ to _______________

     Commission File Number 000-28947.
                            ---------

                                 SPACEDEV, INC.
             (Exact name of registrant as specified in its charter)


         Colorado                               84-1374613

   (State or other jurisdiction of             (IRS Employer
   incorporation or organization)           Identification No.)


                   13855 Stowe Drive, Poway, California 92064

                    (Address of principal executive offices)

(Issuer's  telephone  number)  (858) 375-2030.
                               ---------------


    (Former name, former address and former fiscal year, if changed since last
                                     report)

Checkmark  whether  the issuer (1) has filed all reports required to be filed by
Sections  13  or  15(d)  of  the  Securities  Exchange  Act  of  1934 during the
preceding  12  months  (or  for  such  shorter  period  that the  registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.   Yes    X       No
                                              ----

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  15,338,907 shares of Issuer's voting
common  stock  were  outstanding  on  April  30,  2003.

<PAGE>
                                 SPACEDEV, INC.
                                  FORM 10-QSB
                      FOR THE QUARTER ENDED MARCH 31, 2003

<TABLE>
<CAPTION>

INDEX                                                                       PAGE
-----                                                                       ----


PART I   FINANCIAL INFORMATION

<S>                                                                           <C>
ITEM 1.   Financial Statements (Unaudited) . . . . . . . . . . . . . . . . .   1
Condensed Consolidated Balance Sheets at March 31, 2003 and 2002 . . . . . .   1
Condensed Consolidated Statements of Operations for March 31, 2003 and 2002.   3
Condensed Consolidated Statements of Cash Flows for March 31, 2003 and 2002.   4
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . .   6

ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . .  11

PART II   OTHER INFORMATION

ITEM 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . .  20
ITEM 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . . . .  20
ITEM 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . . .  20
ITEM 4. Submission of Matters to Vote of Security Holders. . . . . . . . . .  21
ITEM 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . .  21
ITEM 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . .  21

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22

</TABLE>



<PAGE>

------
ITEM  1.   FINANCIAL  STATEMENTS
--------------------------------


                         SPACEDEV, INC. AND SUBSIDIARIES
                         -------------------------------
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      -------------------------------------

<TABLE>
<CAPTION>
March 31,                                                            2003       2002
-----------------------------------------------------------------  --------  ----------
<S>                                                                <C>       <C>
 ASSETS
<S>                                                                <C>         <C>
 CURRENT ASSETS
      Cash                                                         $210,856  $  310,269
      Accounts receivable                                           220,841      33,980
      Costs in excess of billings and estimated earnings (Note 2)   253,819           -

 Total current assets                                               685,516     344,249

 FIXED ASSETS - NET                                                 131,475   2,151,025

 CAPITALIZED SOFTWARE  COSTS                                         69,005     207,016
OTHER ASSETS                                                         31,536     104,517

                                                                   $917,532  $2,806,807


</TABLE>



The  accompanying  notes  are  an  integral part of these condensed consolidated
financial  statements.



<PAGE>


                         SPACEDEV, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)


<TABLE>
<CAPTION>




 March 31,                                                                     2003           2002
-------------------------------------------------------------------------  -------------  -------------
<S>                                                                        <C>            <C>
 LIABILITIES AND STOCKHOLDERSDEFICIT

 CURRENT LIABILITIES
      Current portion of notes payable                                     $     55,392   $     69,256
      Current portion of capitalized lease obligations                           28,382         32,134
      Notes payable - related party                                              80,000         80,000
      Convertible debt notes payable (Note Note 5)                              229,955              -
      Accounts payable and accrued expenses                                     321,911        284,973
      Accrued payroll, vacation and related taxes                               111,489        116,999
      Customer deposits and deferred revenue                                    124,765        294,422
      Billing in excess of costs incurred and estimated earnings (Note 2)             -        231,864
      Provision for anticipated loss (Note 2)                                     5,173         69,487
      Income taxes payable                                                       40,000              -
      Other accrued liabilities (Note 3)                                              -        150,000

 Total current liabilities                                                      997,067      1,329,135

 NOTES PAYABLE, LESS CURRENT MATURITIES (NOTE 4)                                 76,552      2,372,381

 CAPITALIZED LEASE OBLIGATIONS, LESS CURRENT MATURITIES                           3,979         21,550

 NOTES PAYABLE - RELATED PARTY, LESS CURRENT MATURITIES                         528,364        577,298

 DEFERRED GAIN - ASSETS HELD FOR SALE                                         1,153,175              -

 DEFERRED REVENUE                                                                 5,000          5,000


 Total liabilities                                                            2,764,137      4,305,364

 COMMITMENTS AND CONTINGENCIES

 STOCKHOLDERSDEFICIT
      Convertible preferred stock, $.0001 par value, 10,000,000 shares
           authorized no shares issued or outstanding                                 -              -
      Common stock, $.0001 par value; 25,000,000 shares authorized, and
           15,338,907 and 14,858,396 shares issued and outstanding,
           respectively                                                           1,533          1,485
      Additional paid-in capital (Note 6)                                     8,728,659      8,224,827
      Additional paid-in capital - stock options                                750,000        750,000
      Deferred compensation                                                    (250,000)      (250,000)
      Accumulated deficit                                                   (11,076,797)   (10,224,869)

 Total stockholdersdeficit                                                   (1,846,605)    (1,498,557)

                                                                           $    917,532   $  2,806,807


</TABLE>


The  accompanying  notes  are  an  integral part of these condensed consolidated
financial  statements.




<PAGE>

                         SPACEDEV, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>


 Three Months Ended March 31,                         2003        %      2002         %
-------------------------------------------------  ------------        ------------
<S>                                                <C>           <C>   <C>           <C>
 NET SALES                                         $   532,840   100%  $   949,770   100%


 TOTAL COST OF SALES                                   461,610    87%      711,963    75%

 GROSS MARGIN                                           71,230    13%      237,807    25%
-------------------------------------------------  ------------  ----  ------------  ----

 OPERATING EXPENSES
    Marketing and sales expense                         65,042    12%       26,245     3%
    General and administrative                         369,916    69%      185,722    20%
                                                                                     ----

 TOTAL OPERATING EXPENSES                              434,958    82%      211,967    22%
-------------------------------------------------  ------------  ----  ------------  ----

 LOSS FROM OPERATIONS                                 (363,728)  -68%       25,840     3%
                                                                                     ----

 OTHER EXPENSE
 Interest expense                                      (20,449)   -4%      (55,160)   -6%
 Non-Cash Interest Expense Debt Discount (Note 5)     (100,455)  -19%            -     0%
 Gain on Building Sale (Note 4(a))                      19,545     4%            -     0%
                                                                                     ----

 TOTAL OTHER EXPENSE                                  (101,359)  -19%      (55,160)   -6%

 LOSS BEFORE TAXES                                 $  (465,087)  -87%  $   (29,320)   -3%

 INCOME TAX PROVISION                              $    40,000     8%  $         -     0%

 NET LOSS                                          $  (505,087)  -95%  $   (29,320)   -3%
-------------------------------------------------  ------------  ----  ------------  ----



 NET LOSS PER SHARE:
      Net loss                                     $     (0.03)        $      0.00
-------------------------------------------------  ------------        ------------

      Weighted-Average Shares Outstanding           15,092,489          14,825,377


</TABLE>


The  accompanying  notes  are  an  integral part of these condensed consolidated
financial  statements.




<PAGE>

                                 SPACEDEV, INC.
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>


 Three Months Ended March 31,                                        2003        2002
---------------------------------------------------------------  ------------  ---------
<S>                                                              <C>           <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
      Net loss                                                   $  (505,088)  $(29,320)
      Adjustments to reconcile net loss to net cash
           provided by (used in) operating activities:
           Depreciation and amortization                              57,696     48,465
           Contributed assets                                              -    (16,251)
           (Gain) loss on disposal of assets                         (19,545)     7,410
           Non-cash interest expense - convertible debt program      100,455          -
           Change in operating assets and liabilities:              (364,572)    95,435

 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                (731,054)   105,739



CASH FLOWS FROM INVESTING ACTIVITIES
      Sale of assets                                               3,150,124          -
      Purchases of fixed assets                                       (3,100)         -
---------------------------------------------------------------  ------------  ---------
      Cash acquired in purchase (disposal) of subsidiaries                 -          -
---------------------------------------------------------------  ------------  ---------

NET CASH PROVIDED BY INVESTING ACTIVITIES                          3,147,024          -



 CASH FLOWS FROM FINANCING ACTIVITIES
      Principle payments on notes payable                         (2,509,853)    (1,715)
      Principal payments on capitalized lease obligations             (8,853)    (5,392)
      Payments on notes payable - related party                     (139,998)   (20,000)
      Proceeds from issuance of common stock                         425,942     20,000
                                                                           -          -
                                                                 ------------  ---------

 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES              (2,232,762)    (7,107)



 Net increase in cash                                                183,208     98,632



 CASH AT BEGINNING OF PERIOD                                          27,648    211,637
---------------------------------------------------------------  ------------  ---------

 CASH AT END OF PERIOD                                           $   210,856   $310,269


</TABLE>
The  accompanying  notes  are  an  integral part of these condensed consolidated
financial  statements.

<PAGE>

                         SPACEDEV, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT'D.
                                   (UNAUDITED)


<TABLE>
<CAPTION>


 Three Months Ended March 31,                         2003    2002
---------------------------------------------------  ------  -------
<S>                                                  <C>     <C>
 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
           Interest                                  $8,157  $43,094

 NONCASH INVESTING AND FINANCING ACTIVITIES:





</TABLE>

The  accompanying  notes  are  an  integral part of these condensed consolidated
financial  statements.

<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       BASIS  OF  PRESENTATION

The  accompanying  condensed consolidated financial statements of SpaceDev, Inc.
("the  Company")  include  the  accounts  of  the  Company  and  its  inactive
subsidiaries,  Integrated  Space  Systems  Inc.  (ISS),  SpaceDev Australia, and
SpaceDev  Oklahoma.  In  the  opinion  of management, the condensed consolidated
financial  statements  reflect  all  normal and recurring adjustments, which are
necessary  for  a fair presentation of the Company's financial position, results
of  operations  and  cash  flows as of the dates and for the periods, presented.
The condensed consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Consequently,  these statements do not include all disclosures normally required
by  generally accepted accounting principles of the United States of America for
annual  financial statements nor those normally made in an Annual Report on Form
10-KSB.  Accordingly,  reference  should  be  made  to the Company's Form 10-KSB
filed  on  March  28,  2003  and  other  reports the Company filed with the U.S.
Securities  and  Exchange  Commission  for  additional  disclosures, including a
summary of the Company's accounting policies, which have not materially changed.
The consolidated results of operations for the three months ended March 31, 2003
are  not  necessarily  indicative of results that may be expected for the fiscal
year  ending  December  31,  2003 or any future period, and the Company makes no
representations  related  thereto.

The  accompanying  condensed  consolidated  financial statements as of March 31,
2003  and  2002 have been prepared assuming the Company will continue as a going
concern.  Even  though  the Company reduced its working capital deficit with the
sale and leaseback of its facility, the Company had a working capital deficit of
approximately  $300,000  as  of  March  31,  2003,  and  incurred  a net loss of
approximately  $465,000 for the three months then ended.  These conditions raise
substantial  doubt  about  the Company's ability to continue as a going concern.
During  the first quarter 2003, management raised approximately $426,000 through
a  private equity placement and concluded a transaction to sell its facility and
lease it back for a ten (10) year period.   Subsequent to March 2003, management
intends to obtain new commercial and government contracts and to seek additional
financing through a combination of public and private debt or equity placements,
commercial  project  financing and government programs to fund future operations
and commitments.  There is no assurance that new contracts or additional debt or
equity  financing  needed  to  fund  operations will be available or obtained in
sufficient  amounts  necessary  to  meet  the  Company's  needs.

The  accompanying condensed consolidated financial statements do not include any
adjustments  to  reflect  the  possible future effects on the recoverability and
classification  of  assets or the amounts and classification of liabilities that
may  result  from  the  possible inability of the Company to continue as a going
concern.

The  preparation  of  financial statements in conformity with generally accepted
 accounting  principles  requires  management  to  make  certain  estimates  and
assumptions  that  affect  the  reported  amounts  of  assets  and  liabilities,
disclosures  of  contingent assets and liabilities and the results of operations
during  the  reporting period. Actual results could differ materially from those
estimates.

 Certain  reclassifications  have  been  made  to  the  prior  period  financial
        statements  to  conform  to  the  current  period  presentation.  These
 reclassifications  had  no  effect  on  reported  total  assets  or  net  loss.

Beginning  in second quarter 2002, capitalized software costs are amortized over
their  estimated  useful lives using the straight-line method.  Periodically and
at  least  annually,  management  performs a review for impairment in accordance
with  SFAS  No.  144.

<PAGE>
2.       REVENUE  RECOGNITION

In  November  1999, SpaceDev was awarded a $4.9 million turnkey mission contract
by  the  Space Sciences Laboratory ("SSL") at University of California, Berkeley
("UCB").  SpaceDev  was  competitively  selected  by  UCB/SSL  to design, build,
integrate,  test  and  operate  for  one year a small scientific, Earth-orbiting
spacecraft called CHIPSat.  In 2000, the Company reviewed the contract status at
year-end and determined that the total estimated costs at the end of the program
would  exceed  the  likely  revenue.  As a result, the Company accrued a loss of
approximately  $860,000 based on the expected contract modification of $600,000,
which  was  approved  on  June  15,  2001.  Pursuant  to  a series of subsequent
modifications,  the  total  value  of  the  CHIPSat  project  was  increased  to
approximately  $7.2  million.  The  total  expected  loss  on  the  contract  is
approximately  $514,000.  As  of  March 31, 2003, approximately 99% of the total
contract  costs  were  expended  and  the remaining loss on the balance sheet at
March  31, 2003 totaled approximately $5,200.  There are also costs in excess of
billings  totaling  approximately  $81,000  as  of  March 31, 2003.  The CHIPSat
contract  is  expected  to  conclude  in  January  2004.

In  September  2001,  the  Company  was  awarded  a  contract  for a proprietary
propulsion research program valued in excess of $1.0 million.  As a part of that
program,  the  Company  is  competing  with  another  party  to  design  a space
propulsion  system.  The  entire  contract, which will be awarded based upon the
submitted  designs,  is  valued  at  approximately  $2.2  million.  Work on this
project  generated approximately $1.2 million in revenues during 2002.  To date,
the  Company  has  recognized  approximately  $23,000  of  gross  margin on this
contract  and  as  of  March  31,  2003  there  were costs in excess of billings
totaling  approximately  $173,000.  The  Company reviewed the contract status in
the  fourth quarter of 2002, to evaluate changes to the total estimated costs to
complete  the  contract  due  to  schedule delays, as a result the overall gross
margin on this contract was reduced from approximately $388,000 to approximately
$28,000  of  which  approximately  $22,000  has  been placed in deferred revenue
pending  further  reviews  on this program.  This adjustment was recorded in the
fourth  quarter  of  2002.

3.     OTHER  ACCRUED  LIABILITIES

In June 2001, the Company accrued a $150,000 contingent liability related to its
guarantee  on a performance bond on behalf of Space Innovations Limited ("SIL"),
which  was  then a subsidiary of the Company.  In 1999, the Company was required
to  guarantee  a performance bond on behalf of SIL in connection with a contract
to build a satellite bus for an Australian domestic spacecraft project.  SIL was
unable  to  perform  on  the contract and subsequently declared bankruptcy.  The
Company  paid  this  debt in January 2003 with the proceeds from the sale of the
building.  (See  Note  4(a))

4.     NOTES  PAYABLE

a.  Building  and  Settlement  Notes

In  December  2002, the Company entered an agreement to sell its interest in its
facility.  The  transaction  closed  in  January  2003.  The  escrow transaction
included  the  sale  of the land and building.  Net fixed assets were reduced by
approximately $1.9 million and notes payable were reduced by approximately  $2.4
million  while  a  deferred  gain  was  recorded.  The Company's Chief Executive
Officer provided a guarantee for the leaseback.In conjunction with the sale, the
Company  entered  into  a  lease  agreement  with  the  buyer  to  leaseback its
facilities.  The  gain on the sale of the facility was deferred and amortized in
proportion to the gross rental charged to expense over the lease term.  Deferred
gain  of  $1,172,720 is being amortized at the rate of $117,272 per year for ten
(10)  years ending in January 2013.  As of March 31, 2003, the deferred gain was
1,153,175.  This  amortization  will  be included in the Company's occupancy and
facility  expense  and  totaled  $19,545  as  of  March  31,  2003.

<PAGE>
Deferred  Gain  consisted  of  the  following:

               Period  Ended  March  31,  2003

                 Deferred  Gain                           $1,172,720
                 Less  Amortization  to  date                (19,545)
                 ----------------------------          --------------

                                                           $1,153,175

In  2001, the Company entered into three settlement loan agreements with various
vendors.  The  total  of $171,402 for all three loans called for payment between
24  and  50  months with interest that ranges from 0% to 8%.  At March 31, 2003,
the  outstanding  balances  on  these  notes  were $131,944 with future interest
expense  of  $5,195.

Future  minimum  principal  payments  on  notes payable, building and settlement
notes  are  as  follows:

                    Period  Ended  March  31,

                    2003                        $  55,392
                    2004                           40,770
                    2005                           35,782

                    Total  Settlement  Notes     $131,944


     b)      Related  Parties

The  Company  had  notes  payable  to  the CEO.  At March 31, 2003 and 2002, the
balances were $608,364 and $657,298, respectively, with accrued interest of 10%.
The  note  was amended on March 20, 2000 to call for annual payments of not less
than  $80,000  per  year  with  interest  at  10%.

Future  minimum  principal  payments  on  notes  payable, related parties are as
follows:

                   Period  Ended  March  31,

                    2004              80,000
                    2005              80,000
                    2006              80,000
                    2007              80,000
                    Thereafter       208,364

                                 $   608,364

Interest  expense  on  these  notes  was $9,866 and $12,066 for the three months
ended  March  31,  2003  and  2002,  respectively.

5.     CONVERTIBLE  DEBT  NOTES  PAYABLE

From  October  14, 2002 through November 14, 2002, the Company sold an aggregate
of  $475,000  of 2.03% convertible debentures to various director's and officers
of  the  Company.  The  total  funding  was  completed  on

<PAGE>

November 14, 2002.  The convertible debentures entitle the holder to convert the
principal  and  unpaid accrued interest into the Company's common stock when the
note matures.  The maturity on the notes was six (6) months from issue date.  On
March 25, 2003, an amendment was executed which extend these notes an additional
six (6) months.  The convertible debentures are exercisable into a number of the
Company's common shares at a conversion price that equals the 20-day average ask
price  less 10%, which was, established when the note was issued, or the initial
conversion  price.

Concurrent  with  the issuance of the convertible debentures, the Company issued
warrants  to  purchase  up  to  1,229,705  shares  of  our  common  stock to the
subscribers.  These  warrants  are exercisable for three (3) years from the date
of  issuance  at the initial exercise price which is equal to the 20-day average
ask  price  less  10%  which  was  established  when the note was issued, or the
initial  conversion price of the notes.  Upon issuance, the issued warrants were
valued using the Black-Scholes pricing model based on the expected fair value at
issuance  and  the  estimated  fair  value  was  recorded  as  debt  discount.

As  a  result  of  the  change to the maturity date of the convertible debt, the
amortization  period  for  the debt discounts was also extended during the first
quarter  in  2003.

All  debt  discounts are to be amortized as additional interest expense over the
term  of  the  convertible  debenture.  As  of March 31, 2003, $475,000 has been
reflected  as debt discount of which $100,455 was amortized to non-cash interest
expense  for  the  first  three  months  ended  March  31,  2003.


Convertible  debentures                                $  475,000
Accrued  interest                                           4,500
Less  debt  discount
                           Total     475,000
  Amount  amortized  to  expense    (225,455)            (249,545)
                                     --------            ---------
Net  convertible  debt  payable  at  March  31,  2003  $  229,955


6.     STOCKHOLDERS'  EQUITY  -  COMMON  STOCK  AND  WARRANTS

On  November 5, 2000, the Company commenced a private placement offering ("PPO")
for  a  maximum  of  1,000,000  shares of the Company's $0.0001 par value common
stock and warrants to purchase an addition 1,000,000 shares of common stock (the
"Units").  The  offering  price of the Units was the five-day average of the bid
and  ask  prices  for the Company's common stock on the date of issuance, with a
minimum  per  Unit  price  of $1.00.  The warrants allowed the holder to acquire
additional  shares  at $0.50 above the offering price of the shares. The Company
sold  to  one  related-party  investor  under  these  terms.

On  March 2, 2001, the PPO offering price was amended to the average of the high
bid  prices on the date of issuance and four preceding days, with no minimum per
share  price,  and  the  warrants  were  amended  to allow the holder to acquire
additional  shares  at  the  Unit  price.

The  Company  sold 153,060 Units under the PPO during 2002. The Company received
$75,000  for  the  Units  sold  under  the  PPO  during  2002.

On  January 16, 2003 and February 14, 2003, pursuant to an extension of the PPO,
the Company sold 665,188 and 196,079 Units.   The Company received approximately
$326,000  and $100,000 for the Units sold under the PPO during the first quarter
2003.

The  Company has elected to account for its stock-based compensation plans under
APB  25.  However,  the Company has computed, for pro forma disclosure purposes,
the  value  of  all  options granted during the period ending March 31, 2003 and
2002  using  the  minimum  value  method  as prescribed by SFAS 123.  Under this
method,  the  Company  used

<PAGE>

the  risk-free  interest rate at the date of grant, the expected volatility, the
expected  dividend  yield  and the expected life of the options to determine the
fair value of options granted.  The risk-free interest rates ranged from 6.0% to
6.5%,  expected  volatility  of  was  117%, the dividend yield was assumed to be
zero, and the expected life of the options was assumed to be three to five years
based  on  the  average  vesting  period  of  options  granted.

If  the Company had accounted for these options in accordance with SFAS 123, the
total  value of options granted during the period ending March 31, 2003 and 2002
would  be amortized on a pro forma basis over the vesting period of the options.
Thus,  the  Company's  consolidated  net  loss  would  have  been  as  follows:

<TABLE>
<CAPTION>


Period Ended March 31,     2003       2002
                        ----------  ---------
<S>                     <C>         <C>
Net loss:
 As reported            $(505,087)  $(29,320)
 Pro forma              $(578,932)  $(93,190)
Loss per Share:
----------------------
 As reported            $    (.03)  $   (.00)
 Pro forma              $    (.04)  $   (.01)

</TABLE>


7.     NEW  ACCOUNTING  PRONOUNCEMENTS

There  were  no  recent Accounting Pronouncements that effect the Company during
the  first  quarter  2003.  For  past  pronouncements please refer the company's
10KSB  filed  on  March  28,  2003.



8.     SUBSEQUENT  EVENTS

The Sarbanes-Oxley Act of 2002 ("Act") established the Public Company Accounting
Oversight  Board  ("PCAOB") and charged it with the responsibility of overseeing
the  audits of public companies that are subject to the federal securities laws.
Under  the  Act,  the PCAOB's duties include the establishment of a registration
system  for  public  accounting  firms.  The  PCAOB  has  proposed rules for the
registration  process,  which  will  require  approval  of  the  U.S. Securities
Commission ("SEC") prior to enforcement. Within 180 days after SEC approval, all
public accounting firms will be required to register with the PCAOB if they wish
to  prepare  or  issue  audit  reports  on  U.S.  public companies, or to play a
 substantial  role  in  the  preparation  or  issuance  of  such  reports.  Once
registered,  public  accounting  firms will be required to file periodic reports
with the PCAOB. At this time, the cost of compliance with these new rules cannot
be  determined,  and,  as  a  result  of  the  recent  legislation,  the cost of
professional  liability  insurance  for public accounting firms has dramatically
increased. We have been informed by our independent auditor, Nation Smith Hermes
&  Diamond  ("Nation Smith"), that it will not register with the PCAOB and, as a
result,  will not be able to continue to act as our independent auditor once the
rules  are in effect. Although we anticipate that Nation Smith will be available
to review our financial statements for the second quarter of 2003, we have begun
interviewing  with other accounting firms to review our second and third quarter
financials  and prepare the audit report for the fiscal year ending December 31,
2003.



<PAGE>
ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

The  following  discussion  should  be  read  in  conjunction with the Company's
condensed  consolidated financial statements and the notes thereto and the other
financial  information  appearing  elsewhere in this document.  Readers are also
urged  to carefully review and consider the various disclosures made by us which
attempt  to  advise interested parties of the factors which affect our business,
 including  without  limitation  our  General  Registration  Statement  on  Form
10SB12G/A  filed  January  28,  2000  and  our Form 10-KSB filed March 28, 2003.

In  addition to historical information, the following discussion and other parts
of this document may contain forward-looking statements. These statements relate
to  future  events  or  our future financial performance. In some cases, you can
identify  forward-looking  statements  by  terminology  such  as  "may," "will,"
"should,"  "expect,"  "plan,"  "anticipate,"  "believe,"  "estimate," "predict,"
"potential,"  or  "continue,"  the  negative  of  such terms or other comparable
terminology.  These  statements  are only predictions.  Although we believe that
the  expectations reflected in the forward-looking statements are reasonable, we
cannot  guarantee  future  results,  levels  of  activity,  performance  or
achievements.  Moreover,  neither we nor any other person assumes responsibility
for  the  accuracy  and  completeness  of  the  forward-looking  statements.  We
undertake no obligation to publicly update any of the forward-looking statements
after the date of this report to conform such statements to actual results or to
changes  in  our  expectations.

Actual  results  could  differ  materially  from  those  anticipated  by  such
forward-looking  statements.  Factors  that  could  cause  or contribute to such
differences  include,  but  are  not  limited  to,  the  level  of  sales to key
customers;  the  economic  conditions  affecting  our  industry;  actions  by
competitors;  fluctuations  in  the  price of raw materials; the availability of
outside  contractors  at  prices  favorable  to  the  Company; our dependence on
single-source  or  a  limited  number  of  suppliers; our ability to protect our
proprietary  technology;  market  conditions  influencing  prices or pricing; an
adverse  outcome in potential litigation, claims and other actions by or against
us,  technological  changes  and  introductions  of  new competing products; the
current recession; terrorist attacks or acts of war, particularly given the acts
of  terrorism  against  the  United  States on September 11, 2001 and subsequent
military  responses by the United States and coalition forces; mission disasters
such  as  the  loss of the space shuttle Columbia on February 1, 2003 during its
re-entry  into  earth's  atmosphere; ability to retain key personnel; changes in
market  demand;  exchange  rates; productivity; weather; and market and economic
conditions  in  the  areas  of  the  world  in  which  we operate and market our
products.  These  are  factors  that  we think could cause our actual results to
differ  materially  from  expected  and  historical  events.

Overview

We  are engaged in the conception, design, development, manufacture, integration
and  operations  of  space  technology  systems,  products and services.  We are
currently  focused  on  the  commercial development of low-cost microsatellites,
nanosatellites  and  related subsystems, hybrid rocket propulsion as well as the
associated  engineering  technical  services  to government, aerospace and other
commercial  enterprises.  Our  products and solutions are sold directly to these
customers  and  include  sophisticated  micro-  and  nanosatellites,  hybrid
rocket-based  orbital Maneuvering and orbital Transfer Vehicles ("MTVs") as well
as  safe sub-orbital and orbital hybrid rocket-based propulsion systems.  We are
also developing commercial hybrid rocket motors and small high performance space
vehicles  and  subsystems.

We  were  incorporated  under  the laws of the State of Colorado on December 23,
1996 as Pegasus Development Group, Inc. (PDGI) and subsequently changed our name
to  "SpaceDev."  We  became  a  publicly  traded company in October 1997 and are
trading  on  the  Over-the-Counter  Bulletin Board ("OTCBB") under the symbol of
"SPDV."

In  February  1998,  our  operations  were  expanded  with  the  acquisition  of
Integrated Space Systems, Inc. ("ISS"), a California corporation founded for the
purpose  of  providing engineering and technical services related to space-based
systems.  The ISS employee base, acquired upon acquisition, largely consisted of
former  General  Dynamics  personnel

<PAGE>
and  enlarged our then current employee base to 20 employees.  ISS was purchased
for  approximately  $3.6  million,  paid in Rule 144 restricted common shares of
SpaceDev.  Goodwill  of approximately $3.5 million was capitalized and was to be
amortized  over a period of 60 months, based on the purchase price exceeding the
net asset value of approximately $164,000.  As a result of a change in corporate
focus,  on  November  15,  2001,  we  determined that the unamortized balance of
goodwill  from ISS, which was approximately $923,000, had become impaired and it
was  written  off.  While  the  ISS  segment did provide small hybrid propulsion
space  systems  and  engineering  services  on  separate  contracts (mainly with
government  agencies),  the  engineering  service  contracts  had  expired  and,
therefore,  would  not  be  producing  revenue  or  cash  flow to support future
operations.  We  determined  that  all  future business, contracts and proposals
would  be sought after only in the SpaceDev name, making it a more efficient way
for  us  to  manage  and  track  multiple  contracts  and work on many different
business  ventures  at  the  same  time  within  the  same  operating  segment.

In  November  1999,  we won a $4.9 million turnkey mission contract by the Space
Sciences  Laboratory  ("SSL") at University of California, Berkeley ("UCB").  We
were  competitively  selected  by  UCB/SSL to design, build, integrate, test and
operate  for  one  year  a  small  scientific,  Earth-orbiting spacecraft called
CHIPSat.  In  2000,  we  reviewed the contract status at year-end and determined
that the total estimated costs at the end of the program would exceed the likely
revenue.  As  a result, we accrued a loss of approximately $860,000 based on the
expected contract modification of $600,000, which was approved on June 15, 2001.
Pursuant  to  a  series of subsequent contract modifications, the total value of
the  CHIPSat  project  was  increased  to  approximately $7.2 million. The total
expected  loss on the contract is approximately $514,000.  As of March 31, 2003,
approximately  99%  of  the total contract costs were expended and the remaining
loss on the balance sheet at year-end totaled approximately $5,200.  The program
also  incurred costs in excess of billings of approximately  $81,000 as of March
31,  2003.  The  CHIPSat  contract  is  expected  to  conclude  in January 2004.
Revenues  for  2002  were  approximately  $1.7  million  and  are expected to be
approximately  $200,000 in 2003,.approximately $112,000 was recorded during the
first quarter of 2003.  We are currently receiving monthly payments on the
contract.

In  September  2001, we were awarded the first phase of a proprietary propulsion
project  valued  in  excess  of $1.0 million.  As a part of that program, we are
competing  with  another  party to design a space propulsion system.  The entire
contract,  which  will be awarded based upon the submitted designs, is valued at
approximately  $2.2 million. We expect this contract to generate revenue in 2003
of  approximately  $500,000.  Work  on  this  project  generated  approximately
$214,000  and  $365,000 in revenues during the three months ended March 31, 2003
and  2002, respectively.  To date, we have approximately $22,000 of gross margin
on  this contract in deferred revenue and as of March 31, 2003, there were costs
in excess of billings totaling approximately $173,000.  We reviewed the contract
status  in  the fourth quarter of 2002 and plan to review it again in the second
quarter  of  2003,  to evaluate changes to the total estimated costs to complete
the  contract  due  to slips in the customer's schedule, as a result the overall
gross  margin  on  this  contract  was  reduced  from  approximately $388,000 to
approximately  $28,000  of  which  $22,417  has  been placed in deferred revenue
pending  further  reviews  on this program.  This adjustment was recorded in the
fourth  quarter  of  2002.

On  April  30,  2002,  we  were  awarded  Phase  I  of  a  contract to develop a
Shuttle-compatible  propulsion  module  for the Air Force Research Lab ("AFRL").
We  received  an  award for Phase II of the contract on March 28, 2003, and will
use  the  project  to  further expand our product line to satisfy commercial and
government  space  transportation  requirements.  The  first  two  phases of the
contract  (including  an additional add-on option) are worth up to approximately
$2.5  million, of which $100,000 was awarded for Phase I, and approximately $1.4
million  was  awarded  for Phase II.  AFRL Phase II is a cost-plus contract.  In
addition  to  the  Phase  I  and  Phase  II  awards,  there  is  an option worth
approximately  $1  million.  Congress  has  already  appropriated  money to this
project.  However,  our  success  in winning this next phase of the program will
depend  on  our  ability to meet the AFRL's objectives and their approval of our
submitted  proposal.

On  June  18,  2001,  we entered into a relationship with two individuals (doing
business as EMC Holdings Corporation ("EMC")) whereby EMC was to provide certain
consulting  and  advisory services to us.  EMC received the first installment of
500,000  shares  of  our  common  stock on June 26, 2001.  Total expense for the
initial  stock  issuance

<PAGE>
through September 30, 2001 was approximately $455,000.  Pursuant to a demand for
arbitration  filed  by  us on November 7, 2001, we sought the return of all or a
portion  of  the shares issued to EMC.  Following a three-day arbitration in May
and  June  2002,  on  July  17, 2002, an interim award was issued in favor of us
against  EMC,  ordering  the  return  of  the initial installment of our 500,000
shares  and  denying  EMC's  own  claim  for  $118,000.  On  October 22, 2002, a
tentative  final  award  was  issued  in  our  favor  including  an  award  of
approximately  $83,000  in  attorney  and arbitration fees to us.  The tentative
final ruling became effective on October 29, 2002, and has been submitted to the
Superior  Court  of  California,  Orange County, for entry of judgment.  Because
collection  of  the  attorney  and  arbitration  fees  award  is not assured, we
expensed  all of our fees related to this matter.  Any recovery of the fees will
be  recorded  as  income  in  the  period  they are received.  The return of our
500,000  shares,  as  provided in the interim award issued on July 17, 2002, was
recorded  in  the  third  quarter  of 2002 as a reversal of the original expense
recorded.  Because  the  original  expense  was not recorded as an extraordinary
item,  the  reversal  of  the  expense did not qualify as an extraordinary item.

Results  of  Operations

Please  refer  to  the  condensed consolidated financial statements, which are a
part  of  this  report,  for  further  information  regarding  the  results  of
operations.

Three  Months  Ended  March  31,  2003  -vs.-  Three Months Ended March 31, 2002

During  the  three  months ended March 31, 2003, we had net sales of $532,840 as
compared  to  net  sales of $949,770 for the same period in 2002.  Sales in 2003
were  comprised  of  approximately  $237,000  from  the  proprietary  propulsion
contract,  $157,000  from  the  MDA  project, $112,000 from the CHIPSat program,
$20,000 from Phase I of the AFRL project and approximately $7,000 from all other
programs.  In  the  first quarter of 2002, sales were comprised of approximately
$481,000  from  the  CHIPSat  program,  $365,000 from the proprietary propulsion
contract  and  $104,000  from  all  other  programs.

For  the  three  months  ended March 31, 2003, we had costs of sales (direct and
allocated costs associated with individual contracts) of approximately $462,000,
87%  of  net  sales,  as  compared to approximately $712,000 , 75% of net sales,
during  the  same period in 2002.  This decrease was primarily due to an overall
reduction  of  direct  costs  on  current  projects  and to delays on additional
projects.  The gross margin percentage for the three months ended March 31, 2003
declined  to  13.4%  as compared to 25% for the same three-month period in 2002,
mainly  due  to  continued  delays  and  customer  schedule  slips  on  existing
contracts.

We  experienced  an  increase in operating expenses from approximately $212,000,
22%  of  net  sales,  in  the three months ended March 31, 2002 to approximately
$435,000,  82%  of  net  sales,  for  the  three  months  ended  March 31, 2003.
Operating  expenses  include  general  and  administrative  expenses  (G&A), and
marketing  and  sales  expenses.  Marketing  and  sales  expenses increased from
approximately  $26,000,  3%  of  net sales, to approximately $65,000, 12% of net
sales,  during  the  same  period  in  2002,  due  to our decision to expand our
marketing  department,  including  the addition of a Vice President of Marketing
and  Product  Development.  G&A  expenses  consisted  primarily  of salaries for
administrative  personnel,  fees  for  outside consultants, insurance, legal and
accounting  fees  and  other  overhead  expenses.  The increase of approximately
$184,000  in  G&A  was  due  certain  new expenses including rent of $53,000 and
amortization expense of the capitalized software costs of $34,500, which did not
begin  until  the  second  quarter  of  2002,  and in part to an increase in G&A
personnel,  including  our  vice president of operations and our chief financial
officer  and increases in general overhead expenses of approximately $18,000 and
$78,500  in  other  expenses  for  the  three  months  ended  March  31,  2003.

Interest  expense  for  the  three  months  ended  March  31,  2003 and 2002 was
approximately  $20,000,  4  %  of  net  sales,  and  $55,000,  6%  of net sales,
respectively.  The  decrease  was  due to the building sale on January 31, 2003,
which  reduced  overall  interest on the notes associated with the building.  We
continue to pay interest expense on certain capital leases and settlement notes.
In  addition,  we accrued interest expense related to our related party note and

<PAGE>
convertible  debentures.  In the three months ended March 31, 2003 and 2002, the
accrued interest on our related party note was $9,866 and $12,066, respectively.
We  also  accrued  approximately $2,400 of interest on our convertible notes for
the  three months ended March 31, 2003.  In conjunction to our convertible notes
there  is  an  existing  convertible  debt  discount  related  to  warrants that
accompanied  the  convertible  debt  issue in 2002 of approximately $475,000, of
which  approximately  $100,000  was expensed during the three months ended March
31,  2003. The remainder will be amortized over the remaining life of the notes.
We reorganized approximately $20,000.of the deferred gain on the sale of the
building during the. First quarter of 2003 and we will continue to amortize the
remaining deferred gain of $1,153,175 into income over the remainder of the
lease.

During  the  three  months  ended  March  31,  2003,  we  incurred a net loss of
approximately  $533,000,  95%  of  net  sales,  compared  to  a  net  loss  of
approximately $29,000, 3% or net sales, for the same three months ended in 2002.
The  increase  in  the  net  loss was due to our reduction in revenues and to an
increase  in  operating  expenses,  as  discussed  above.

Liquidity  and  Capital  Resources

Cash  Position  For  Three  Months Ended March 31, 2003 -vs.- Three Months Ended
March  31,  2002

Net  increase  in  cash  during  the  three  months  ended  March  31,  2003 was
approximately $183,000, compared to a net increase of $99,000 for the same three
months  in  2002.  Net  cash  used in operating activities totaled approximately
($731,000)  for  the  three  months  ended  March  31,  2003,  a  decrease  of
approximately  $837,000  as  compared  to  approximately  $106,000  provided  by
operating  activities during the same three months in 2002. This is attributable
in part to the increased costs on the CHIPSat project as well as the proprietary
propulsion  project,  both  of which, at March 31, 2003, had costs that exceeded
their  billings  for  the  ongoing  work  toward completion of these programs of
approximately  $254,000.  The  increase  can  also be contributed to the overall
increase  in  G&A  expenses  for the Company, the reduction of revenues, and the
increase  in accounts payable for the three months ended March 31, 2003 compared
to  those  positions  during  the  same  period  in  2002.

Net  cash  provided by investing activities totaled approximately $3,147,000 for
the  three  months ended March 31, 2003, compared to no cash used in or provided
by investing activities during the same period in 2002.  The increase in cash is
attributable  to  the  sale  of  the  building  on  January  31,  2003.

Net  cash  used in financing activities totaled approximately $2,233,000 for the
three  months  ended March 31, 2003, which showed an decrease of $2,226,000 from
the  approximately  $7,000  used  in  financing activities during the same three
month  period  2002.  This is primarily attributable to paying off notes payable
associated  with  the  building  sale.

At March 31, 2003, our cash, which includes cash reserves and cash available for
investment,  was approximately $211,000 as compared to approximately $310,000 at
March  31,  2002,  a  decrease  of approximately $99,000. At March 31, 2003, our
working  capital  ratio  improved  to  0.69  compared to 0.25 at March 31, 2002.

As  of  March  31,  2003,  our  backlog  of  funded  and non-funded business was
approximately $3.2 million, as opposed to approximately $2.5 million as of March
31,  2002.  During  the  three months ended March 31, 2003, we won AFRL Phase II
worth  approximately  $1.4  million,  negotiated increases of approximately $1.0
million to the AFRL Phase II Contract as a deferred option still open, continued
the  proprietary  propulsion project, and were completing significant milestones
on  our  CHIPSat  and  MDA  projects.

Deferred  income  taxes  are  provided  for temporary differences in recognizing
certain  income and expense items for financial and tax reporting purposes.  The
deferred  tax  asset  of approximately $1.1 million,  consisted primarily of the
income  tax  benefits  from  net  operating  loss carryforwards, amortization of
goodwill  and  research  and  development credit carryforwards.  The federal and
state  tax  loss  carry  forwards  will  expire  through  2022 unless previously
utilized.  The  State  of  California  has  suspended  the  utilization  of  net
operating  losses  for  2003.  A  valuation

<PAGE>
allowance has been recorded to fully offset the deferred tax asset as it is more
likely  than  not that the assets will not be utilized.  The valuation allowance
decreased  approximately $300,000 during quarter ended March 31, 2003, from $1.4
million at December 31, 2002 to $1.1 million at March 31, 2003.  Please refer to
our  consolidated  financial  statements,  which  are  a part of this report for
further  information  regarding  our  liquidity  and  capital  resources.

Cash  Position  and  Going  Concern

Our  auditors  expressed  an  opinion  at  December  31, 2002 that our financial
position  raises  substantial  doubt  about  our  ability to continue as a going
concern.  Management  believes  that  this  condition remains at March 31, 2003.
Our ability to continue as a going concern depends upon our ability to implement
our  plans  to  continue  reducing  the  working  capital  deficit, consummating
additional  funding  and obtaining profitable new business.  The funding as well
as  new business can come from a variety of sources, including public or private
equity  markets, state and federal grants and government and commercial customer
program  funding.  However,  there  can  be no assurance that we will be able to
obtain  such  funding  as  needed  or, if such funding is available, that we can
obtain it on terms favorable to the Company.  The likelihood of our success must
be  considered  in  light  of  the  expenses, difficulties and delays frequently
encountered  in  connection  with  the developing businesses, those historically
encountered  by us, and the competitive environment in which we operate.  We are
pursing  discussions  to obtain a line of credit on our signed contracts as well
as  explore  contingency  cost  reduction  plans  in the event funding cannot be
obtained  in  a  timely  manner.

On  January  31,  2003,  we  closed escrow on the sale of our facility in Poway,
California and entered into a ten-year lease for the same facility.  The selling
price  of  the  facility  was  $3.2  million.  The total debt repayment from the
transaction  was approximately $2.4 million.  The approximate net proceeds to us
for  working  capital  purposes  was  approximately  $636,000.  However,  due to
continuing  delays and customer schedule slips on existing contracts and further
delays  in  obtaining new contract business, we remain in a tight cash position.

At  the  end  of  2002,  we  raised  $475,000  from certain of our directors and
officers  by  issuing  2.03% convertible debentures.  The convertible debentures
entitle the holder to convert the principal and unpaid accrued interest into our
common  stock when the note matures.  The original maturity on the notes was six
(6)  months  from  issue  date; however, on March 19, 2003 the maturity date was
extended  to twelve (12) months from issue date.  The convertible debentures are
exercisable  into  common  shares  at  a conversion price that equals the 20-day
average  asking  price less 10%, which was established when the note was issued,
or the initial conversion price. Concurrent with the issuance of the convertible
debentures,  we issued warrants to purchase up to 1,229,705 shares of our common
stock  to  the  subscribers.  These warrants are exercisable for three (3) years
from  the  date  of  issuance  at the initial exercise price which equals to the
20-day  average  asking  price  less 10% which was established when the note was
issued, or the initial conversion price on the notes.  There can be no assurance
that  additional  funds  will be raised or, if raised, will be under the same or
more  favorable  terms  than  the  convertible  debentures.

During  the  first quarter 2003, we raised approximately $426,000 from qualified
investors by selling 861,267 units of our common stock and common stock purchase
warrants  under  in  a private placement offering made under Section 4(2) of the
Securities Act of 1933, and Rule 506, to accredited investors only ("PPO")  (See
note  6  of  the  Condensed  Consolidated  Financial  Statements).

We have sustained ourselves over the last few years with a mixture of government
and  commercial  contracts.  We received an award for AFRL Phase II on March 28,
2003.  AFRL  Phase  II  is  a cost-plus contract, which will require us to incur
certain  costs  in  advance  of  regular  contract  reimbursements  from  AFRL.
Although  we  will need a certain amount of cash to fund advance payments on the
contract, we will be entitled, as a small business concern, to recover our costs
on  a  weekly  basis.

We  can  continue  to  grow  and  execute  certain parts of our strategy without
additional equity funding by identifying, bidding and winning new commercial and
government  funded  programs.  We  are  focusing  our  sales  efforts  to  bring

<PAGE>
in  new  business  opportunities.  We  expect  to  obtain  new  commercial  and
government  contracts;  however,  depending on the timing of those contracts, we
may  need  to  seek  additional  and  possibly  immediate  financing  through  a
combination  of public and private debt or equity placements, commercial project
financing and government programs to fund future operations and commitments or a
contract line of credit.  There is no assurance that new contracts or additional
debt or equity financing needed to fund operations will be available or obtained
in  sufficient  amounts necessary to meet our needs or on terms favorable to the
Company.  The  likelihood  of  our  success  must  be considered in light of the
expenses,  difficulties  and  delays  frequently  encountered in connection with
developing businesses, those historically encountered by us, and the competitive
environment  in  which  we  operate.

Forward-Looking  Statements  and  Risk  Analysis

During the first quarter of 2003, we submitted six bids for government programs,
worked  with  the  US Congress to identify directed funding for our programs and
are actively working to win several significant commercial programs.  We believe
that  we  will  win some of these programs, which would enable us to continue to
grow  and  broaden  our  business  base, although there can be no assurance that
these  contracts  will  be  awarded  to  us.

To  date,  we  have  maintained  a mix of government and commercial business. In
2001,  we  had about 80% government or government-related work.  In 2002, we had
about  60% government and government-related work.  In 2003, we expect the ratio
to be 80% or more of government or government-related work.  We will continue to
do  both government and commercial business and anticipate the mix of government
revenues  to  continue to be above 60% for the next several years as we increase
our  government and commercial marketing efforts for both of our micro-satellite
and  propulsion  products.  Currently,  we  are  focusing  on  the domestic U.S.
government  market,  which  we  believe  is  only  about  one-half of the global
government  market for our products and services.  Although we are interested in
exploring international revenue and contract opportunities, we are restricted by
export  control  regulations,  e.g.,  International  Traffic in Arms Regulations
("ITAR"),  which  may  limit our ability to develop market opportunities outside
the  United  States.

We expect most of our near term revenue to come from government sales, which are
military  contract related.  We are beginning to develop commercial products and
aggressively  market  our  products  to  the  government and commercial markets,
particularly  with respect to micro- and nano-satellites and applications of our
propulsion  technology  and  products.  We  anticipate winning contracts in both
market  segments,  although there can be no assurance that the contracts will be
awarded  to  us.  If  they  are  not  awarded to us, based on current trends and
proposals, we believe that we can offset fluctuations in one market segment with
contracts from the other; however, our inability to win business in both markets
would  have a negative effect on our business operations and financial condition
and  cause  us  to  explore  cost  reduction  scenarios.

We  are  forecasting a modest growth in sales for 2003.  At this time, about 80%
of  the forecasted sales are under contract or near to contract award, but there
is  no  guarantee  that  we will win enough new business to achieve our targeted
growth  projection  or  to  achieve  a  positive  cash flow position.  We do not
believe  that  significant capital expenditures will be required to achieve this
modest  increase  in  sales.  We do believe that significant sales opportunities
exist  for our products in 2004 and beyond.  With the implementation of stronger
internal  cost  and  project  controls  and our focus on developing new business
contracts,  we believe that our cash problems are a near term "gap" that must be
resolved for us to reach profitability and positive cash flow by the end of this
year.

As  it  relates to the CHIPSat program, we will receive total fixed compensation
on  the  CHIPSat  project  in  an amount of approximately $7.2 million, of which
about  $3.1  million  was  generated  in 2001, and $1.2 million was generated in
2002.  The  contract  calls  for  payments of approximately $535,000 in 2003, of
which we received $240,000 in the first quarter of 2003 and expect approximately
$265,000  in  the  second  quarter  of  2003. As outlined above, we reviewed the
contract  again  in  late  2002 and the total loss was adjusted from $463,000 to
approximately  $514,000.  As  the  project  is completed, the loss is reduced as
costs  become  realized.  At  this  time, we do not expect any additional losses
from  or  increases  to the contract.  The launch of CHIPSat occurred in January
2003.

<PAGE>
We  expect  payments  of  about $240,000 in 2003 from the proprietary propulsion
contract  to  complete  phase  II  of  the agreement.  If we are selected as the
vendor  of  choice for the proprietary propulsion system, the contract calls for
additional  payments of approximately $600,000 for phase III.  This effort could
lead  to follow-on contracts and/or product orders  later this year, but at this
time  we  cannot  assess the probability of winning the contract or the value of
the  contract.

Our  broad,  overall,  higher  growth  business  strategy,  requires significant
development  and  capital  expenditures.  We will incur a substantial portion of
these  expenditures before we generate significantly higher sales. Combined with
operating  expenses,  these  capital expenditures will result in a negative cash
flow  until  we  can establish an adequate revenue-generating customer base.  We
expect  losses through the first part of 2003 and expect to begin generating net
positive  cash  flow  from  operations  sufficient  to  fund both operations and
capital  expenditures  toward  the end of 2003.  There is no assurance, however,
that  we  will  achieve  or  sustain  any  positive  cash  flow or profitability
thereafter.

To  execute our strategy of small, capable, low-cost micro- and nano-satellites,
hybrid  propulsion  products  and  new  commercial  revenue  sources, we require
significant  funding  and/or  the  win  of  either  significant  government  or
commercial  programs  or  a  combination  of  both.  If  we  do not obtain those
contracts,  we  believe investor funding of $1 to $5 million will be required to
support our growth and expansion, which could come from a combination of private
and/or  public equity placements.   At this time, we have agreed to use our best
efforts  to  register  the  common  stock  underlying the warrants issued in our
recent  private  placement  offering,  which  might  induce  those  investors to
exercise  their warrants; however, there can be no assurance that by registering
the  common stock underlying the warrants that the holders will thereby exercise
them.

As  stated  above,  we  need  to  raise  additional  capital  or win significant
government  or  commercial  programs.  The amount of capital we need to raise is
dependent  upon many factors.  For example, the need for additional capital will
be  greater  if  (i)  our  net  operating  deficit  increases  because  we incur
significant  unanticipated  expenses;  or  (ii)  we  incur additional costs from
modifying  our  satellite  products  or  our proposed propulsion systems to meet
changed or unanticipated market, regulatory, or technical requirements. If these
or  other  events  occur,  there  is no assurance that we could raise additional
capital  on  favorable terms, on a timely basis or at all. If additional capital
is  not  raised,  it  could  have  a significant negative effect on our business
operations  and  financial condition, possibly causing us to take immediate cost
reduction  or  other  more  serious  actions.

Our  ability  to  execute  a  secondary  offering  or otherwise obtain public or
private  funds  is  subject  to  numerous factors beyond our control, including,
without  limitation,  a receptive securities market and appropriate governmental
clearances.  No  assurances can be given that we will be profitable, or that any
secondary  public  offering  will occur, that we will be successful in obtaining
additional  funds from any source or be successful in implementing an acceptable
exit  strategy  on  behalf  of  our  investors.  Moreover,  additional funds, if
obtainable  at  all,  may  not  be available on terms acceptable to us when such
funds  are  needed  or  may  be  on terms which are significantly adverse to our
current  shareholders.  The  unavailability  of  funds  when needed would have a
material  adverse  effect  on  us.

Critical  Accounting  Standards

Our revenues are derived primarily from fixed price contracts and are recognized
using  the  percentage-of-completion  method of contract accounting based on the
ratio of total costs incurred to total estimated costs.  Losses on contracts are
recognized  when  they  become  known and reasonably estimable (see Notes to the
Condensed  Consolidated  Financial Statements).  Actual results of contracts may
differ from management's estimates and such differences could be material to the
condensed  consolidated  financial  statements.  Professional fees are billed to
customers  on  a  time  and  materials  basis,  a  fixed  price  basis  or  a
per-transaction  basis.  Time  and materials revenues are recognized as services
are  performed.  Billings  in  excess  of  costs incurred and estimated earnings
represent  the  excess  of  amounts

<PAGE>
billed  in  accordance  with  the  contractual  billing terms.  Deferred revenue
represents  amounts  collected  from  customers for services to be provided at a
future  date.

In  October  1995,  the  FASB  issued  SFAS No. 123, "Accounting for Stock-Based
Compensation."  We  adopted  SFAS  123  in  1997.  We  have  elected  to measure
compensation  expense  for our stock-based employee compensation plans using the
intrinsic  value  method  prescribed  by  APB  Opinion 25, "Accounting for Stock
Issued  to  Employees,"  and  provide pro forma disclosures as if the fair value
based  method  prescribed  by  SFAS  123  has been utilized.  We have valued our
stock,  stock  options  and  warrants  issued  to non-employees at fair value in
accordance with the accounting prescribed in SFAS No. 123, which states that all
transactions  in which goods or services are received for the issuance of equity
instruments  shall be accounted for based on the fair value of the consideration
received  or  the fair value of the equity instruments issued, whichever is more
reliably  measurable.

Fixed  assets are depreciated over their estimated useful lives of three-to-five
years  using the straight-line method of accounting in accordance with Statement
of Financial Accounting Standards No. 144.  Goodwill and other intangible assets
were  created  upon  the acquisition of our subsidiaries.  Intangible assets are
amortized  over  their  assets' estimated future useful lives on a straight-line
basis over three to five years.  Goodwill and other intangibles are periodically
reviewed  for  impairment  based on an assessment of future operations to ensure
they  are  appropriately  valued  in  accordance  with  Statement  of  Financial
Accounting  Standards  No.  142.   Effective  November  2001,  there was no more
amortization  of  goodwill  due  to  an impairment loss of unamortized goodwill.

Recent  Accounting  Pronouncements

In  December  2002,  the  FASB  issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition  and Disclosure-an amendment of SFAS No. 123."  SFAS No.
148  provides  alternative  methods  of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation.  In
addition,  this  Statement  amends  the  disclosures  in both annual and interim
financial  statements  about  the  method of accounting for stock-based employee
compensation  and the effect of the method used on reported results.  Management
is  evaluating  the  adoption  of  this  statement.


ITEM  3.  CONTROLS  AND  PROCEDURES

Within  90  days  prior  to  the  filing  date of this report, we carried out an
evaluation,  under the supervision and with the participation of our management,
including  our  Chief  Executive  Officer  and  Chief  Financial Officer, of the
effectiveness  of  the  design  and  operation  of  our  disclosure controls and
procedures.  Based  upon  that evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures are
effective  to  ensure  that  information  required  to be disclosed by us in the
reports  that  we file under the Exchange Act is accumulated and communicated to
management,  including  our Chief Executive Officer and Chief Financial Officer,
as  appropriate  to allow timely decisions regarding required disclosure.  There
have  been  no  significant changes in our internal controls or in other factors
that  could significantly affect internal controls subsequent to the date of our
evaluation,  including  any  significant actions regarding any deficiencies.  We
intend  to  review  our controls and procedure regularly with our management and
Board  of  Directors.



<PAGE>
                            PART II OTHER INFORMATION


ITEM  1.  LEGAL  PROCEEDINGS

On  June  18,  2001,  we entered into a relationship with two individuals (doing
business  as  EMC  Holdings  Corporation  ("EMC")),  whereby  EMC was to provide
certain consulting and advisory services to us in exchange for our common stock.
EMC received the first installment of 500,000 shares of our common stock on June
26,  2001.  Total  expense  for the initial stock issuance through September 30,
2001 was valued at approximately $455,000.  Pursuant to a demand for arbitration
filed by us on November 7, 2001, we sought the return of all or a portion of the
shares  issued  to EMC.  EMC filed a its own claim with the American Arbitration
Association  on  November  13, 2001, alleging that we owed EMC $118,000 in fees,
plus  damages.

A  three-day  arbitration  hearing was held in May and June 2002 with respect to
claims arising out of consulting and advisory service agreements between EMC and
us.  On  July  17, 2002, an interim award was issued in favor of us against EMC,
ordering  the  return  of  the initial installment of 500,000 shares and denying
EMC's claim for $118,000.  On October 22, 2002, a status conference was held and
a  tentative  final award was issued again in the favor of us.  Included in this
tentative  final  ruling  was  an award of approximately $83,000 in attorney and
arbitration  fees to us.  The tentative final ruling became effective on October
29,  2002, and was submitted to the Superior Court of California, Orange County,
for  entry  of  judgment.

Because collection of the attorney and arbitration fees award is not assured, we
expensed  all  of our fees related to this matter.  Any recovery of fees will be
recorded  as  income in the period they are received.  The return of the 500,000
shares,  as  provided in the interim award issued on July 17, 2002, was recorded
in  the  third  quarter  of 2002 as a reversal of the original expense recorded.
There  were  no  further  developments  during  the  first  quarter  of  2003.

ITEM  2.    CHANGES  IN  SECURITIES

On February 14, 2003, we entered into an "at will" employment agreement with our
Chief Financial Officer, pursuant to which he received options to purchase up to
375,000  shares  of  common  stock  at  a  purchase  price  of  $0.51 per share.

Pursuant  to  its  independent  director  compensation plan, adopted January 16,
2000,  the  Company  granted  options  to  purchase 10,000 shares each to Robert
Walker,  Howell M. Estes, III,  Scott McClendon and Wesley T. Huntress and 5,000
shares to Curt Dean Blake for their attendance and participation at the Board of
Directors  meeting  held on January 17, 2003.  These options were issued with an
exercise  price of $0.436 per share (based on the five-day average closing price
of  the  Company's  common  stock  on  the date of grant) and will expire on the
five-year  anniversary  date  of  the  date  of  grant.

ITEM  3.    DEFAULTS  UPON  SENIOR  SECURITIES

     None.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     None.

ITEM  5.    OTHER  INFORMATION

The Sarbanes-Oxley Act of 2002 ("Act") established the Public Company Accounting
Oversight  Board  ("PCAOB") and charged it with the responsibility of overseeing
the  audits of public companies that are subject to the federal securities laws.
Under  the  Act,  the PCAOB's duties include the establishment of a registration
system  for  public

<PAGE>
accounting  firms.  The  PCAOB  has proposed rules for the registration process,
which  will  require approval of the U.S. Securities Commission ("SEC") prior to
enforcement.  Within  180  days  after SEC approval, all public accounting firms
will  be  required  to  register with the PCAOB if they wish to prepare or issue
audit  reports  on  U.S.  public companies, or to play a substantial role in the
preparation  or  issuance  of  such reports.  Once registered, public accounting
firms  will  be  required to file periodic reports with the PCAOB. At this time,
the  cost  of  compliance  with  these new rules cannot be determined, and, as a
result  of  the recent legislation, the cost of professional liability insurance
for public accounting firms has dramatically increased. We have been informed by
our independent auditor, Nation Smith Hermes & Diamond ("Nation Smith"), that it
will  not register with the PCAOB and, as a result, will not be able to continue
to  act  as  our  independent  auditor once the rules are in effect. Although we
anticipate  that  Nation  Smith  will  be  available  to  review  our  financial
statements for the second quarter of 2003, we have begun interviewing with other
accounting  firms  to review our second and third quarter financials and prepare
the  audit  report  for  the  fiscal  year  ending  December  31,  2003.

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)     Exhibits
<TABLE>
<CAPTION>

<S>                                                                                             <C>
Certificate of James W. Benson Pursuant to Section 1350 of Chapter 63 of Title 18 U.S. Code     99.1
Certificate of Richard B. Slansky Pursuant to Section 1350 of Chapter 63 of Title 18 U.S. Code  99.2

</TABLE>

(b)     Reports  on  Form  8-K

     None.

<PAGE>


                                   SIGNATURES

     Pursuant  to  the  requirements of the Securities Exchange Act of 1934, the
Registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.

                                          SPACEDEV,  INC.
Registrant




Dated:  May __, 2003                      -----------------------
                                          James W. Benson
                                          Chief Executive Officer



Dated: May __, 2003                       -----------------------
                                          Richard B. Slansky
                                          Chief Financial Officer



<PAGE>
                                 SPACEDEV, INC.
                             a Colorado corporation
                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

                            Section 302 Certification

I,  James  W.  Benson,  certify  that:

     1.     I  have  reviewed  this quarterly report on Form 10-QSB of SpaceDev,
Inc.,  a  Colorado  corporation  (the  "registrant");

     2.     Based  on  my  knowledge, this quarterly report does not contain any
untrue  statement  of a material fact or omit to state a material fact necessary
in  order to make the statements made, in light of the circumstances under which
such  statements were made, not misleading with respect to the period covered by
this  quarterly  report;

     3.     Based on my knowledge, the financial statements, and other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;

     4.     The registrant's other certifying officers and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

     a)     designed  such  disclosure  controls  and  procedures to ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  quarterly  report  is  being  prepared;

     b)     evaluated  the effectiveness of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and

     c)     presented  in  this  quarterly  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;

     5.     The  registrant's  other  certifying  officers and I have disclosed,
based  on our most recent evaluation, to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent  function):

     a)     all  significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

     b)     any  fraud,  whether  or  not  material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls;  and

<PAGE>


     6.     The  registrant's  other certifying officers and I have indicated in
this  quarterly report whether or not there were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.


Date:  May  ___,  2003

     By:  /s/  James  W.  Benson
-------------------------------
James  W.  Benson
Chief  Executive  Officer


<PAGE>
                                 SPACEDEV, INC.
                             a Colorado corporation
                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

                            Section 302 Certification

I,  Richard  B.  Slansky,  certify  that:

     1.     I  have  reviewed  this quarterly report on Form 10-QSB of SpaceDev,
Inc.,  a  Colorado  corporation  (the  "registrant");

     2.     Based  on  my  knowledge, this quarterly report does not contain any
untrue  statement  of a material fact or omit to state a material fact necessary
in  order to make the statements made, in light of the circumstances under which
such  statements were made, not misleading with respect to the period covered by
this  quarterly  report;

     3.     Based on my knowledge, the financial statements, and other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;

     4.     The registrant's other certifying officers and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

     a)     designed  such  disclosure  controls  and  procedures to ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  quarterly  report  is  being  prepared;

     b)     evaluated  the effectiveness of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and

     c)     presented  in  this  quarterly  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;

     5.     The  registrant's  other  certifying  officers and I have disclosed,
based  on our most recent evaluation, to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent  function):

     a)     all  significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

     b)     any  fraud,  whether  or  not  material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls;  and

<PAGE>


     6.     The  registrant's  other certifying officers and I have indicated in
this  quarterly report whether or not there were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.


Date:  May  ___,  2003

     By:  /s/  Richard  B.  Slansky
----------------------------
Richard  B.  Slansky
Chief  Financial  Officer



<PAGE>