Public confidence in commercial space ventures has been shaky, setting back the company's fundraising schedule, according to Chief Financial Officer Chuck McBride.

"We had to slow our production down, the last year's been tough," he said. "Public money has dried up a bit."

Kistler is competing with a host of other entrepreneurial firms with single stage rocketship designs. These include the rotary-powered Roton rocket, which uses two astronaut pilots; Kelly Space, which features a winged rocket towed behind an aircraft; the Pioneer Rocketplane, which uses a airborne refueling design, and the Proteus, which carries a rocket-powered winged vehicle atop a winged aircraft serving as a booster. Of all of the current launch start-up designs, Kistler's most resembles existing rocket boosters.

Kitsler's proposed space transportation business is one of the few start-ups to feature a two-stage vehicle stacked with one rocket stage atop the other in a more or less traditional design. Kistler engineers chose that direction after its initial vehicle design, a radical single stage rocket that resembled a wagon wheel, was considered too expensive and difficult to develop, industry sources say.

The K1 vehicle uses a two-stage design, with both stages returning to earth with parachutes and landing on air bags, similar in design to that used to land the Mars Pathfinder in 1997.

"If we pull this off, we'll be the first fully reusable launch vehicle ever," McBride said.

The Asian financial crisis has hobbled the company's fund raising, McBride said, but Kistler is making progress. Testing of the engines and tanks is nearly complete, and the vehicle's frame is under construction.

"To have raised half a billion and to come where we've come is quite a lot."