Wave to Seek Shareholder Approval of Reverse Stock Split with the Objective of Achieving Compliance with Nasdaq National Market Listing Requirements

Lee, MA — June 16, 2006 — Wave Systems Corp. (NASDAQ: WAVX — www.wave.com) announced that it has filed a preliminary proxy statement with the SEC for a special meeting to be held on July 24, 2006 seeking stockholder approval permitting the board to implement a reverse stock split of Wave’s common stock at a ratio of either 1:2, 1:3 or 1:4. As part of its appeal to a Nasdaq Listings Qualifications Panel to remain listed on the Nasdaq National Market, Wave has submitted a plan to implement this reverse stock split for purposes of regaining compliance with that market’s $1 minimum closing bid price continued listing requirement.

Wave’s board has determined that a reverse stock split represents the most direct action that Wave can take to address its goal of maintaining its listing on the Nasdaq National Market and has recommended that Wave’s stockholders vote in favor of the proposal. The board and management believe that continued listing on the Nasdaq National Market is in the best interests of the Company and its stockholders and puts Wave in the best position to implement its business plan. If a reverse stock split is approved by the shareholders at the meeting, Wave’s board of directors will determine whether a reverse stock split remains in the best interests of the company and, if so, the ratio at which the reverse stock split will be effected (either 1:2, 1:3 or 1:4). If the reverse stock split is approved by stockholders, and Wave receives a favorable ruling from the Nasdaq Listing Qualifications Panel, Wave believes that a reverse stock split would enable Wave to regain compliance with the minimum bid rule. However, there can be no assurance that this result will be achieved or that Wave will maintain the listing of its common stock on the Nasdaq National Market. Wave is currently in compliance with all other continued listing criteria for the Nasdaq National Market, and Wave’s shares will remain listed on the Nasdaq National Market pending the outcome of the appeal.

If Wave’s stockholders do not approve the reverse stock split and the trading price of the Company’s common stock does not increase to and remain greater than $1.00 per share, it is likely that Wave’s common stock will be delisted from the Nasdaq National Market. Should Nasdaq decline to accept Wave’s plan to preserve its Nasdaq National Market listing status, Wave would 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. 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 currently 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.
Wave Investor Relations Contact
David Collins, Richard Land
Catalyst Global LLC

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