Filed Pursuant to Rule 424(b)(3)
Registration File No. 333-130244
SPACEDEV STARSYS RESEARCH
JOINT PROXY STATEMENT/PROSPECTUS SUPPLEMENT NO. 2
(To joint proxy statement/prospectus dated December 29, 2005 and
joint proxy statement/prospectus supplement no. 1 dated January 23, 2006)
12,357,143 SHARES
SPACEDEV, INC.
COMMON STOCK, PAR VALUE $0.001 PER SHARE
This joint proxy statement/prospectus supplement no. 2, which we refer to
as this supplement, updates and supplements our joint proxy statement/prospectus
dated December 29, 2005 and joint proxy statement/prospectus supplement no. 1
dated January 23, 2006, which we refer to together as the joint proxy
statement/prospectus and which form part of our Registration Statement on Form
S-4 (Registration File No. 333-130244). The joint proxy statement/prospectus
relates to the special meetings of the shareholders of SpaceDev, Inc. and
Starsys Research Corporation and the proposed merger of Starsys with and into a
wholly-owned subsidiary of SpaceDev, which we refer to as the merger, including
the issuance of shares of SpaceDev common stock to Starsys shareholders pursuant
to the related agreement and plan of merger and reorganization. This supplement
is being sent to shareholders of Starsys to advise them of an increase in the
working capital adjustment that would decrease the consideration we expect
Starsys shareholders to receive if the merger is approved and consummated.
You should read this supplement in conjunction with the joint proxy
statement/prospectus identified above. This supplement is qualified by reference
to the joint proxy statement/prospectus, except to the extent that the
information in this supplement updates or supersedes the information contained
in the joint proxy statement/prospectus.
The proposed merger involves risks. WE ENCOURAGE YOU TO READ THE ENTIRE
JOINT PROXY STATEMENT/PROSPECTUS AND THIS SUPPLEMENT CAREFULLY AND WE ESPECIALLY
ENCOURAGE YOU TO READ THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 13
OF THE JOINT PROXY STATEMENT/PROSPECTUS AND THE SUPPLEMENTAL SECTION ENTITLED
"SUPPLEMENTAL RISK FACTORS" BEGINNING ON PAGE 2 OF THE JOINT PROXY
STATEMENT/PROSPECTUS SUPPLEMENT NO. 1.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SPACEDEV COMMON STOCK TO BE ISSUED
PURSUANT TO THE MERGER OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE JOINT
PROXY STATEMENT/PROSPECTUS OR THIS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Board of Directors of Starsys continues to enthusiastically support
this reorganization, and recommend that you vote FOR the merger and the other
proposals.
This joint proxy statement/prospectus supplement no. 2 is dated January 29,
2006.
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EXPLANATORY NOTE
Based on the Balance Sheet of Starsys dated January 26, 2006, the amount of
consideration to be received by the Starsys shareholders in the merger will be
decreased by a working capital adjustment of approximately $2,100,000 rather
than the approximate $1,100,000 working capital adjustment described in the
joint proxy statement/prospectus. This supplement describes the effect of these
changes. The sections and subsections below update selected sections and
subsections from the joint proxy statement/prospectus.
Please note that Starsys intends to call the special meeting of Starsys
shareholders to order at 10:00 a.m. Mountain Standard Time on January 30, 2006,
and then adjourn the meeting for approximately one hour to count final proxies.
If you have sent in a proxy to the exchange agent and you wish to change your
vote, please contact Starsys at the telephone number indicated on the last page
of this supplement prior to 11:00 a.m. Mountain Standard Time.
SUMMARY
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THE MERGER
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Q: WHAT WILL STARSYS SHAREHOLDERS RECEIVE IN THE MERGER?
A: Starsys shareholders will be entitled to receive the following
consideration at the effective time of the merger, subject to adjustment as
provided in the merger agreement:
- cash in the aggregate amount of up to $1,500,000, which is expected by
Starsys' management to be reduced by approximately $845,000 in transaction
costs and to be further reduced by approximately $351,000 working capital
adjustments, or approximately $304,000 after reductions; and,
- an aggregate number of shares of SpaceDev common stock equal to the
quotient of (A) $7,500,000, which is expected by Starsys' management to be
reduced by approximately $365,000 in transaction costs and to be further
reduced by approximately $1,758,000 in working capital adjustments, or
approximately $5,377,000 after reductions, divided by (B) the volume
weighted average price of SpaceDev common stock for the twenty trading days
preceding the merger, which, based on current information and assuming the
merger closes on January 31, 2006, is estimated to be between approximately
$1.43 and $1.47.
The amounts presented as transaction costs and working capital adjustments
are only estimates and may increase prior to closing. Based on the formula and
estimates described above, at the closing of the merger, Starsys shareholders
are expected to receive merger consideration having a value of approximately
$10.86 per share of Starsys common stock, consisting of approximately $0.58 per
share in cash and approximately $10.28 per share in shares of SpaceDev common
stock (based on 523,008 shares of Starsys common stock outstanding as of January
26, 2006 and on the estimated volume weighted average price of SpaceDev common
stock as described above).
Fifty percent (50%) of the number of shares of SpaceDev common stock issued
at closing (without taking into account any shares of SpaceDev common stock
deliverable to the shareholder agent at the closing for the satisfaction of
certain transaction expenses incurred by Starsys related to the sale of the
company) will be deposited in escrow as security for the payment of
indemnification claims under the merger agreement and to pay certain expenses of
the shareholder agent, which escrow will continue until ten (10) days following
the date of audited financial statements prepared for the surviving corporation
for the fiscal year ending 2006 (i.e., approximately April 2007), subject to
extension in the event claims are outstanding on that date.
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Following the merger, Starsys shareholders may also be entitled to receive,
based on the achievement by the Starsys business of certain performance criteria
for each of the fiscal years ending December 31, 2005, December 31, 2006 and
December 31, 2007, additional performance-based consideration consisting of up
to:
- For the fiscal year ended December 31, 2005, $350,000 in cash and an
aggregate number of shares of SpaceDev common stock equal to the quotient
of (A) up to $3,000,000 divided by (B) the volume weighted average price of
SpaceDev common stock for the twenty trading days preceding the date of the
audit opinion for Starsys' fiscal year ended December 31, 2005, but not
less than $2.00;
- For the fiscal year ended December 31, 2006, $350,000 in cash and an
aggregate number of shares of SpaceDev common stock equal to the quotient
of (A) up to $7,500,000 divided by (B) the volume weighted average price of
SpaceDev common stock for the twenty trading days preceding the date of the
audit opinion for Starsys' fiscal year ended December 31, 2006, but not
less than $2.50; and
- For the fiscal year ended December 31, 2007, $350,000 in cash and an
aggregate number of shares of SpaceDev common stock equal to the quotient
of (A) up to $7,500,000 divided by (B) the volume weighted average price of
SpaceDev common stock for the twenty trading days preceding the date of the
audit opinion for Starsys' fiscal year ended December 31, 2007, but not
less than $3.00.
Starsys believes it is unlikely that it will achieve one of the performance
criteria for the fiscal year ending December 31, 2005. This performance
criteria is subject to adjustment following the year end pursuant to its audit
of its financial records. If Starsys does not meet this performance criteria,
the Starsys shareholders will not receive any performance consideration for
2005.
If any shares of SpaceDev common stock are payable as performance
consideration for the fiscal year ending December 31, 2005, fifty percent (50%)
of those shares will be deposited in the escrow described above. In addition, 1%
of any shares of SpaceDev common stock payable as performance consideration will
be paid as transaction expenses to Robert Vacek, the president of Starsys.
In addition, Starsys shareholders will be entitled to receive the maximum
amount of performance consideration for a particular fiscal year if SpaceDev
materially breaches specific covenants of the merger agreement and is unable to
cure the breach within the cure period set forth in the merger agreement.
For more information, see "The Merger - The Merger Agreement - Merger
Consideration" beginning on page 3 of this supplement.
COMPARATIVE PER SHARE MARKET VALUE
The common stock of SpaceDev is traded on the OTC Bulletin Board, or OTCBB,
under the symbol "SPDV.OB". On October 25, 2005, the last full trading day
prior to the public announcement of the proposed merger, the last reported sale
price of SpaceDev's common stock on the OTCBB was $1.49 per share. On January
27, 2006, the last reported sale price of SpaceDev's common stock on the OTCBB
was $1.44 per share. The volume weighted average price of SpaceDev common stock
for the twenty trading days preceding January 31, 2006 is currently estimated to
be approximately $1.43 to $1.47 per share. Starsys is a privately-held company
and there is currently no established market for its securities.
Assuming the merger closes on January 31, 2006, at the closing of the
merger, Starsys shareholders are expected to receive merger consideration having
a value of approximately $10.86 per share of Starsys common stock, consisting of
approximately $0.58 per share in cash and approximately $10.28 per share (based
on the estimated volume weighted average price of SpaceDev common stock as
described above) in shares of SpaceDev common stock. The estimated merger
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consideration per share is based on 523,008 shares of Starsys common stock
outstanding as of January 26, 2006, and assumes that an aggregate of
approximately $304,000 in cash, after estimated adjustments, and an aggregate of
approximately $5,377,000 in shares of SpaceDev common stock (based on the
estimated volume weighted average price of SpaceDev common stock, as described
above), after estimated adjustments, will be paid to the Starsys shareholders at
the closing of the merger. Starsys shareholders may also be entitled to receive
additional performance-based consideration following the closing of the merger
payable in cash and shares of SpaceDev common stock. For more information on the
merger consideration to be received by the Starsys shareholders pursuant to the
merger agreement, see "The Merger - Merger Agreement - Merger Consideration"
below.
THE MERGER AGREEMENT
MERGER CONSIDERATION
Shareholder Consideration
Closing Consideration. SpaceDev will pay and issue up to the following
total maximum consideration to the Starsys shareholders at the effective time of
the merger on a pro rata basis:
- cash in the aggregate amount of $1,500,000; and,
- a number of shares of SpaceDev common stock equal to $7,500,000 divided
by the volume-weighted average price of SpaceDev common stock for the
preceding 20 trading days (estimated to be approximately $1.43 to $1.47 per
share, assuming the merger closes on January 31, 2006).
These amounts are subject to reduction for the payment of some Starsys
transaction expenses and for any excess working capital deficit about the time
of the merger, as described under the subcaptions "- Starsys Transaction
Expenses" in the joint proxy statement/prospectus and "-Working Capital
Adjustment" below. Starsys management anticipates that, after the payment of
these expenses and the application of these adjustments, $304,000 in cash and up
to $5,377,000 in shares of SpaceDev common stock (based on the estimated volume
weighted average price of SpaceDev common stock as described above) will be
available for distribution to Starsys shareholders. In addition, 50% of the
shares issued at the time of the merger will be placed in an escrow account and
in an expense fund, as described under the caption "Escrow" in the joint proxy
statement/prospectus.
Working Capital Adjustment
The amount of cash and shares of SpaceDev common stock to be delivered by
SpaceDev at the closing of the merger may be adjusted based on the Starsys
adjusted working capital deficit calculated as of January 26, 2006. The
adjustment is based on the amount by which the Starsys business working capital
deficit, after payment of the Starsys transaction expenses and repayment of the
Starsys loans (as described under the subcaptions "- Loan Repayments" below and
"- Starsys Transaction Expenses" in the joint proxy statement/prospectus),
exceeds $1.68 million. If this amount is a positive value, the cash to be paid
by SpaceDev at the closing will be reduced by one-sixth of that amount, and the
$7.5 million amount used to calculate the number of shares of SpaceDev common
stock to be delivered at the closing will be reduced by five-sixths of that
amount. Starsys management has calculated the working capital adjustment to be
approximately $2,100,000 as of January 26, 2006.
Loan Repayments
At the closing of the merger, SpaceDev will: (i) subject to a $4.6 million
limit on loan repayments, repay the remaining principal and interest of all
loans to Starsys from Vectra Bank Colorado, which we refer to as Vectra,
together with any other costs, expenses and liabilities incurred in connection
with those loans, which we refer to as the Vectra loans; (ii) cancel and
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terminate the secured loan of $1.2 million and all accrued interest and fees,
from SpaceDev to Starsys, which we refer to as the SpaceDev loan; and, (iii)
repay subordinated loans in the aggregate principal amount of approximately
$880,000 owed by Starsys to certain Starsys shareholders plus interest.
SpaceDev will not be obligated to pay off more than $4,600,000 in the aggregate
(excluding the amount of the SpaceDev loan) for all of these loans and related
costs. Any amounts over $4,600,000 will be deducted from shareholder
consideration through the working capital adjustment. The aggregate principal
and interest on all these loans is expected on January 31, 2006 to be
approximately $52,000 over $4,600,000.
Estimated Merger Consideration Per Share at Closing
Assuming the merger closes on January 31, 2006, at the closing of the
merger, Starsys shareholders are expected to receive merger consideration having
a value of approximately $10.86 per share of Starsys common stock, consisting of
approximately $0.58 per share in cash and approximately $10.28 per share (based
on the estimated volume weighted average price of SpaceDev common stock as
described under "The Merger Agreement - Merger Consideration - Shareholder
Consideration" above) in shares of SpaceDev common stock. The estimated merger
consideration per share is based on 523,008 shares of Starsys common stock
outstanding as of January 26, 2006, and assumes that an aggregate of
approximately $304,000 in cash, after estimated adjustments, and an aggregate of
approximately $5,377,000 in shares of SpaceDev common stock (based on the
estimated volume weighted average price of SpaceDev common stock), after
estimated adjustments, will be paid to the Starsys shareholders at the closing
of the merger.
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WHERE YOU CAN FIND MORE INFORMATION
SpaceDev has filed with the SEC a Form S-4 registration statement under the
Securities Act of 1933 with respect to the common stock offered by the joint
proxy statement/prospectus. The joint proxy statement/prospectus and this
supplement, which together constitute part of the registration statement, do not
contain all of the information set forth in the registration statement and its
exhibits and schedules, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. For further information regarding
SpaceDev's common stock and SpaceDev, please review the registration statement,
including exhibits, schedules and reports filed as a part of the registration
statement. The registration statement, including the exhibits and schedules,
may be inspected without charge at the principal office of the public reference
facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549.
Copies of this material can also be obtained at prescribed rates by writing to
the Public Reference Section of the SEC at its principal office at 100 F Street,
N.E., Washington, D.C. 20549. You may obtain information on the operation of
the public reference facilities by calling the SEC at 1-800-SEC-0330. The SEC
maintains a Web site (http://www.sec.gov/) that contains reports, proxy
statements and other information regarding registrants that file electronically
with the SEC, including SpaceDev. Additional information about SpaceDev can be
obtained from its Internet website at http://www.spacedev.com/. The content of
this website does not constitute part of the joint proxy statement/prospectus or
this supplement.
If you have any questions about the merger, the non merger-related
proposals of SpaceDev or the meeting of SpaceDev, including the procedures for
voting your shares, or if you need additional copies of the joint proxy
statement/prospectus, this supplement or the proxies or transmittal letters
enclosed with the joint proxy statement/prospectus, please contact:
FOR STARSYS SHAREHOLDERS:
Starsys Research Corporation
4909 Nautilus Court North
Boulder, Colorado 80301
Attention: Chief Executive Officer
(303) 583-1400
Additional copies of the joint proxy statement/prospectus and this
supplement may also be obtained from Exchange Agent at the following office:
Continental Stock Transfer and Trust Company
17 Battery Place
New York, NY 10004
Attention: Reorganization Department
(212) 509-4000
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