XCOR Newsletter, Vol. I No. 2. April 13, 2009

XCOR CEO Jeff Greason Speaks at Space Access 2009

Talking to an audience of space enthusiasts, entrepreneurs and government officials at the 2009 Space Access conference in Phoenix, Arizona, our CEO Jeff Greason emphasized that down-to-Earth economics matter, even if your ultimate goal is to get to outer space.

“I’m an ex-Intel guy, and we knew that in emerging technology markets, you need margins of 50-60 percent early in the product sales cycle,” Greason said, referring to his work in developing the technology used on Intel’s successful Pentium line of computer chips.  “You need to have that kind of revenue potential to compensate investors for the high risk they are assuming.”

Greason told the conference attendees that this realization was a major factor in XCOR’s determination to build systems with operating costs that are as low as possible.  It also led the firm to begin work on a suborbital system.  “When we founded the company in 1999, we looked around and decided that a suborbital system could generate good revenue and profits, provided your cost per flight was low.”

“We wanted to go to orbit, and still do, but we needed to take some intermediate steps, and we wanted those steps to add revenue as soon as possible,” he said.

Greason said XCOR has “made a surprising amount of revenue over the years” developing different types of space-related technology for clients.  This technology includes new type of pumps, composite materials, and reaction control systems.  The contracts are evenly split between government and private sector clients, he said.  “This way, we help defray some of the cost of research and development.”

Greason said the three main sources of revenue for suborbital flights are people, payloads and nanosatellites (nanosatellites typically weigh under 20 kg or about 44 pounds).  “At first, nobody was very sure how big this market would be but we had faith it would be dynamic and large,” Greason said.  “Several things have happened to make this market more interesting…technology continues to improve and makes it possible to give even very small satellites more capability.”
 
Carrying space tourists will be an important part of the market he said.  “An advantage to having a small vehicle that is very low cost to operate is that you can always find enough people to keep a small vehicle full.  If you have low operating costs, each and every flight can generate positive revenue.  And the way to maximize that revenue is to fly a lot.  This is one of the reasons we designed the Lynx for a rapid turnaround.  It will easily be able to make four flights per day.”  And if the markets are larger, XCOR can always build more...a good problem to have.

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This newsletter contains information believed to be accurate, however, XCOR Aerospace, nor any of our employees, makes any warranty, express or implied, including the warranties of merchantability and fitness for a particular purpose, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Further, this newsletter contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, statements as to future operating results and plans that involve risks and uncertainties. We use words such as  "expects", "anticipates", "believes", "estimates", the negative of these terms and similar expressions to identify forward looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason.

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