Houston, Texas, September 6, 2005 – SPACEHAB, Incorporated (NASDAQ/NMS: SPAB), a leading provider of commercial space services, today announced financial results for its 2005 fiscal year and fourth quarter ended June 30, 2005.

Fourth Quarter Results
SPACEHAB posted a fourth quarter fiscal 2005 net income of $0.1 million, or $0.01 per share, on revenue of $19.0 million compared with a fourth quarter fiscal year 2004 net loss of $2.3 million, or ($0.19) per share, on revenue of $11.1 million. Included in the current quarter is a charge of $0.5 million for the settlement of litigation with Lloyd's of London.

"Although improved, our fourth quarter results were impacted due to additional slips in NASA's launch of the space shuttle," stated Michael E. Kearney, SPACEHAB President and Chief Executive Officer. "Following the quarter, we were delighted to be a part of the successful launch and subsequent landing of Discovery and her crew with the provision of our Integrated Cargo Carrier which now serves as a permanent spare parts warehouse on the International Space Station."

Year End Results
SPACEHAB's net income for fiscal 2005 ended June 30, 2005 was $5.2 million, or $0.37 per share, on revenue of $59.4 million compared to net income of $2.1 million, or $0.15 per share, on revenue of $77.6 million for the prior fiscal year.

"We are on the right path of accomplishing our financial objectives and returning the Company to profitability," stated Brian K. Harrington, SPACEHAB Senior Vice President and Chief Financial Officer. "We have strengthened our balance sheet, continued to reduce costs, and we enter fiscal year 2006 with a contract backlog of $65.7 million."

Liquidity
SPACEHAB's cash and short-term investments were approximately $8.3 million as of June 30, 2005. In February 2005 the Company entered into a new revolving credit facility providing additional liquidity of up to $5.0 million secured by accounts receivable. This new bank facility replaced the previous revolving line of credit which was secured by pledged cash and invested cash assets. As of June 30, 2005 SPACEHAB had no advances outstanding against this facility.

Deferred revenue as of June 30, 2005 was reduced to $1.8 million compared to $7.2 million at June 30, 2004. The decrease is primarily due to the successful execution of a commercial contract, JETIS, with the Japan Aerospace Exploration Agency where SPACEHAB provided for the delivery of a thermal incubator system to the International Space Station via the Russian Progress.

Current liabilities decreased to $20.0 million at June 30, 2005 compared to $22.3 million at June 30, 2004 due to reductions in current deferred revenue, accounts payable, and repayment of the revolving loan payable outstanding at the end of the prior fiscal year. As of June 30, 2005 SPACEHAB carried a contract backlog of $65.7 million. Total backlog consists of all contract values over the entire life of each contract, excluding any portions previously recognized as revenues, but including unexercised contract options, anticipated award fees, expected task orders under existing contracts, and authorized orders not yet fully negotiated.

As announced in May 2005 the Company closed on a sale-leaseback transaction for the SPACEHAB Payload Processing Facility in Cape Canaveral, Florida as well as for the Houston, Texas Headquarters office. These transactions generated cash to further improve liquidity while providing attractive lease arrangements.

Update of Ongoing Operations
"In each of our business units, we continue to provide high-value services to our existing customers while developing new commercial solutions for doing business in space," said Kearney. "In addition to supporting NASA on its objective to assemble and outfit the International Space Station, we are building upon our core capabilities to develop new services for the Agency as it prepares to return to the moon and beyond."

The recent decision to launch the next shuttle mission no earlier than March 2006 is expected to have some impact on overall revenue within the SPACEHAB Flight Services business unit. However, SPACEHAB is compensated via a monthly asset maintenance agreement for any slips in missions under contract. Currently, SPACEHAB is contracted to provide assets and support for three upcoming shuttle missions : STS-121, STS-116, and STS-118, in order of scheduled launch dates.

Even with planned facility maintenance temporarily limiting payload processing support activities, SPACEHAB's Astrotech subsidiary saw the successful launch of two spacecraft in the fourth quarter, both processed at Company operated facilities at the Sea Launch Home Port in California. A slip in the launch of the Boeing Satellite Systems' GOES-N spacecraft impacted fiscal 2005 revenues that, upon launch, will be recognized in 2006.

SPACEHAB Government Services continues to provide configuration and data management services within the Program Integration and Control contract supporting the International Space Station program. This is a five-year initiative of which approximately three and a half years remain on the contract. NASA has the option to issue two one-year contract options that could expand the overall contract to seven years.

Conference Call
SPACEHAB will host a conference call at 10:00 a.m. Central time on September 6, 2005. During the call, management will discuss the Company's year end and fourth quarter financial results as well as other recent and potential future developments relating to SPACEHAB. To participate on the call, please dial 866.613.5217 (domestic calls) or 678.460.1862 (international calls) and when prompted, enter the pin code 4182202 followed by the pound (#) key. A taped replay will be available following the conference call until 11:59 p.m. Eastern time on September 7, 2005 at 866.453.6660 (domestic calls) or 678.460.1866 (international calls) via access code 203395. To hear a replay of the call via the Internet, visit the Investor Information section of the SPACEHAB website at www.spacehab.com . This audio archived webcast of the conference call is available on the Company website for approximately one year.

About SPACEHAB, Inc.
SPACEHAB, Incorporated (www.spacehab.com) is a leading provider of commercial and government space services with three primary business units. The Flight Services business unit develops, owns, and operates habitat and laboratory modules and cargo carriers aboard NASA's Space Shuttles for Space Station resupply and research purposes. SPACEHAB's Astrotech subsidiary provides payload processing support services for both commercial and government customers at company-owned facilities in Florida and California. The Company's Government Services business unit supports NASA's Johnson Space Center providing configuration management, product engineering, and support services for both the Space Station and Space Shuttle programs. Additionally, through The Space Store, Space Media provides space merchandise to the public and space enthusiasts worldwide (www.thespacestore.com).

The statements in this document may contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, trends, and uncertainties that could cause actual results to be materially different from the forward-looking statement. These factors include, but are not limited to, continued government support and funding for key space programs, product performance and market acceptance of products and services, as well as other risk factors and business considerations described in the company's Securities & Exchange Commission filings including the annual report on Form 10-K. Any forward-looking statements in this document should be evaluated in light of these important risk factors. The Company assumes no obligation to update these forward-looking statements.

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Tables follow

SPACEHAB, INCORPORATED AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations Three Months Ended June 30, Twelve Months Ended June 30,   (in thousands, except share data) 2005 2004 2005 2004 Revenue $ 18,958 $ 11,140 $ 59,401 $ 77,606 Costs of revenue 14,566 9,506 47,158 45,678 Gross profit 4,392 1,634 12,243 31,928           Operating expenses      Selling, general and administrative 2,827 2,028 9,383 10,908      Research and development 40 214 77 223      Nonrecurring charge,loss of Research Double Module 500 - (7,744) -      Goodwill impairment - - - 8,274      Impairment of investment in Guigne - - - 1,800        Total operating expenses 3,367 2,242 1,716 21,205        Income from operations   1,025   (608)   10,527   10,723 Interest expense (1,417) (1,461) (5,716) (8,237) Interest and other income (expense), net 171 (2) 292 95 Income (loss) before income taxes (221) (2,071) 5,103 2,581 Income tax (expense) benefit 301 (255) 146 (506)      Net income (loss) $ 80 $ (2,326) $ 5,249 $ 2,075 Income (loss) per share                 Net income (loss) per share - basic $ 0.01 $ (0.19) $ 0.42 $ 0.17 Shares used in computing net income (loss) per share - basic   12,644,358 12,563,072   12,613,491 12,450,320   Net income (loss) per share - diluted $ 0.01 $ (0.19) $ 0.37 $ 0.15 Shares used in computing net income (loss) per share - diluted 14,163,713 12,563,072 14,190,281 14,141,949

Unaudited Condensed Consolidated Balance Sheets (In thousands)     June 30, 2005   June 30, 2004 ASSETS Cash, restricted cash and investments $ 8,297 $ 7,577 Accounts receivable, net   16,906   7,878 Property, plant, and equipment, net   73,647   79,600 Other assets, net   3,101   4,870      Total assets $ 101,951 $ 99,925       LIABILITIES AND STOCKHOLDERS' EQUITY         Current liabilities $ 20,031 $ 22,301 Long-term liabilities   67,123   68,214 Stockholders’ equity   14,797   9,410      Total liabilities and stockholders’ equity $ 101,951 $ 99,925