The White Knight airplane has flown, that's the "mothership." The rocket engine has been static tested. It sounds like the SS1 has not flown yet but testing will begin soon. The SS1 is a suborbital vehicle capable of carrying 3 men to above 100 kilometers high on a ballistic trajectory. It won't be even remotely capable of going into orbit.

They're also taking about using the same engine to launch small satellites using an unmanned vehicle dropped from the White Knight. I didn't see any numbers about the payload capacity but remember reading something a couple years ago about 80 pound microsat capacity. That was when Rutan was planning on using the Proteus as his mother ship, so it's possible the payload will be higher for the newer system. The planned cost per orbital mission is $500K.

The cool thing is that Rutan and his team have developed this system all on their own (except for contracting out the rocket engine) in just a few years using their own money. Developing a vehicle capable of carrying people into orbit will be a significantly more difficult challenge, but I certainly wouldn't bet against Burt if he sets his mind to the task.