Wave Notified of Non-Compliance With Nasdaq Minimum Bid Rule

Wave has until April 24, 2006 (180 days) to Regain Compliance

Lee, MA — November 2, 2005 — Wave Systems Corp. (NASDAQ:WAVX) announced today that on October 26 th it received notification from The Nasdaq Stock Market indicating that for the last 30 consecutive business days, the bid price of Wave’s common stock has closed below the minimum $1.00 per share requirement for continued inclusion under Nasdaq Marketplace Rule 4450(b)(4) (the "Rule"). Wave filed a Form 8-K with the SEC disclosing this notice on October 31, 2005. In accordance with Nasdaq Marketplace Rule 4450(e)(2), Wave will be provided 180 calendar days, or until April 24, 2006, to regain compliance by having its shares close above $1.00 for a minimum of 10 consecutive trading days.

If Wave has not regained compliance with the Rule by April 24, 2006, Nasdaq will issue a letter notifying Wave that its common stock will be delisted. At that time, Wave may appeal the determination to delist its common stock to a Listings Qualifications Panel. Alternatively, Wave may apply to have its common stock transferred to The NASDAQ Capital Market if it otherwise satisfies the applicable initial listing requirements for such market. If such application is approved, Wave will be afforded the remainder of this market’s second 180 calendar day compliance period in order to regain compliance while on The NASDAQ Capital Market.

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About Wave Systems Corp.

Wave is a pioneer in hardware-based PC security that provides software to help solve critical enterprise PC security challenges such as data protection, strong authentication, network access control and the management of these enterprise functions.  Wave is a founding member of the Trusted Computing Group (TCG), a consortium of more than 100 companies that forged open standards for hardware security.  Wave’s EMBASSY® line of client- and server-side software leverages and manages the security functions of the TCG’s industry standard hardware security chip, the Trusted Platform Module (TPM) as well as hard drives that comply with TCG’s “Opal” self-encrypting drive (SED) standard.  Self-encrypting drives are a growing segment of the data protection market, offering increased security and better performance than most existing software-based encryption solutions.  TPMs are standard equipment on many enterprise-class PCs shipping today and have shipped on an estimated 300 million PCs worldwide.  Using TPMs and/or SEDs and Wave software, enterprises can substantially and cost-effectively strengthen their current security solutions.  Visit http://www.wave.com for more information.

Safe Harbor for Forward Looking Statements

Under the Private Securities Litigation Reform Act of 1995. This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company’s financing plans; (ii) trends affecting the company’s financial condition or results of operations; (iii) the company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words "may," "would," "will," "expect," "estimate," "anticipate," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors.

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For more information please contact:

Wave Media Contact:
Michael Wheeler
Wave Systems Corp.
Wave Investor Relations Contact
David Collins, Richard Land
Catalyst Global LLC

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