Wave Notified of Failure to Regain Compliance With Nasdaq Minimum Bid Rule

Lee, MA — April 25, 2006 — On October 26, 2005 Wave Systems Corp. (NASDAQ: WAVX) received notification from The Nasdaq Stock Market indicating that for the prior 30 consecutive business days, the bid price of Wave’s common stock had closed below the minimum $1.00 per share requirement for continued inclusion under Marketplace Rule 4450(b)(4) (the "Rule"). In accordance with Marketplace Rule 4450(e)(2), Wave was provided 180 calendar days, until April 24, 2006, to regain compliance by having its shares close above $1.00 for a minimum of 10 consecutive trading days. Wave announced today that on April 25 th it received written notification from The Nasdaq Stock Market indicating that the Company failed to regain compliance with the $1.00 per share minimum bid requirement for continued inclusion on The Nasdaq National Market under Nasdaq Marketplace Rule 4450(b)(4) (the "Rule").

Under the Nasdaq rules, Wave plans to request an appeal hearing before the Listings Qualifications Panel and expects such hearing to be held within four to six weeks. The Company’s shares will continue to be listed on The Nasdaq National Market pending the outcome of the appeal. In the event of an unfavorable determination by the Listing Qualifications Panel, the Company would alternatively apply to have its common stock transferred to The Nasdaq Capital Market, as long as it continues to satisfy the applicable initial listing requirements for such market other than the minimum bid requirement. Wave may also elect to make such application prior to the hearing of the appeal. If such application is approved, Wave will be afforded the remainder of The Nasdaq Capital Market’s 180 calendar day compliance period (i.e. until October 21, 2006) in order to regain compliance with the $1.00 minimum bid requirement. Wave believes that it meets the applicable Nasdaq Capital Market initial listing requirements other than the minimum bid requirement.

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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:

Gerard T. Feeney, CFO
Wave Systems Corp.
413-243-1600
info@wave.com
Wave Investor Relations Contact
David Collins, Richard Land
Catalyst Global LLC
212-924-9800
wavx@catalyst-ir.com

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