ARCTUS Advanced Research and Conventional Technology Utilization Spacecraft

SPACEHAB Incorporated, (NASDAQ: SPAB) is a commercial leader and entrepreneurial force in the space industry providing a full spectrum of products and services to both the government and private sectors. The Company offers space access and payload integration services, production of valuable commercial products in space, spacecraft pre-launch processing facilities and services, development and extension of space-based products to the consumer market, and program and engineering support ranging from development and manufacturing of flight hardware to large scale government project management.

The Advanced Research and Conventional Technology Utilization Spacecraft (ARCTUS) Program will support NASA's requirement to fill the International Space Station (ISS) cargo supply gap between the space shuttle's planned retirement in 2010 and the replacement Orion program scheduled to be operational in 2015. ARCTUS mid air retrieval will also provide SPACEHAB with an additional means of space access in support of the Company's previously announced SPACEHAB Microgravity Sciences initiatives which include returning to Earth valuable and often fragile biotech products that require the soft landing afforded by the mid air capture retrieval technique. The SPACEHAB Orbital Transportation (SOT) business is focused on the design, manufacturing and launch of the ARCTUS vehicle. ARCTUS is being developed primarily from off-the-shelf, proven hardware and utilizes existing reliable launch vehicles to provide the least-cost, least-risk solution for NASA. Additionally, with the planned increase in crew size expanding from the current three astronauts to a crew of six, coupled with the planned shuttle retirement in 2010, SOT expects to be a primary revenue source for the Company through the delivery of complex cargo and research to the ISS.

On November 29, 2007 SPACEHAB announced that the Company has submitted a formal proposal response to NASA's Commercial Orbital Transportation Services (COTS) Phase 1 Demonstrations Request for Proposal (RFP) based on the Advanced Research and Conventional Technology Utilization Spacecraft (ARCTUS) design. SPACEHAB, together with its aerospace affiliates Lockheed Martin, United Launch Alliance, Cimarron and Odyssey Space Research, is developing a commercial cargo transportation capability to serve both NASA's needs for cargo services to the International Space Station (ISS) as well as other commercial needs, including SPACEHAB's recently announced Microgravity Processing activities.

SPACEHAB's COTS solution draws heavily from existing components and infrastructure providing a reliable, low-cost, and low-risk solution. The ARCTUS design philosophy has been to utilize flight proven systems, hardware and assets to the greatest extent possible. This approach ensures availability, reduces flight risks, and minimizes cost while meeting all NASA requirements for this much needed service. Spacecraft structural and avionics components will be obtained from Lockheed Martin and are derived from the Centaur and XSS-11 programs. Launch services will be procured through United Launch Alliance utilizing the successful Evolved Expendable Launch Vehicles (EELV) Atlas V or Delta IV. Cimarron will provide mission control center development and integration while Odyssey Space Research will perform trajectory analysis and provide associated integration services.

On December 10, 2007 SPACEHAB announced an initiative to align the corporate structure and personnel toward its strategic direction of winning the NASA Commercial Orbital Transportation Services (COTS) funded Space Act Agreement, due to be awarded February 2008, and to process and manufacture products in microgravity on the International Space Station (ISS).

On February 22, 2008 SPACEHAB issued a statement from SPACEHAB Chairman and Chief Executive Officer, Thomas B. Pickens, III, regarding NASA's Commercial Orbital Transportation Services (COTS) announcement on February 19, 2008. "While we are disappointed that SPACEHAB was not selected as a winner of the COTS competition, we want to be certain to convey to our stockholders that the Company has been aggressively pursuing other valuable opportunities including growing our profitable Astrotech subsidiary, primarily through our expanded long term relationship with the U.S. Government Office of Space Launch and our announced end-to-end ALLSAT satellite service system. Also, by design, most of the costs and advanced engineering that were invested in the COTS ARCTUS Program are also being applied to advance our ALLSAT satellite system.

"Additionally, SPACEHAB is committed to commercializing the valuable discoveries that we have uncovered in previous and in-progress microgravity studies that could soon translate into tangible vaccines and drug treatments. And finally, the Company is developing various space technology spin off products including the Mini Mass Spectrometer, expected to be a robust solution for the security applications market in the detection of a variety of explosives, illegal narcotics, and biochemical contaminants.

"I continue to remain very excited about SPACEHAB's many opportunities and equally proud of the past year's significant successes - including restructuring both the balance sheet and the corporate operations - while strategically pursuing lucrative market opportunities. I see a promising future for SPACEHAB and look forward to leading this Company and our people toward the creation of value for our shareholders."