Wave Regains Compliance with Market Cap Rule of NASDAQ Capital Market

Series K Convertible Preferred Stock Converts to Shares of Class A Common Stock

Lee, MA February 9, 2009 — Wave Systems Corp. (NASDAQ:WAVX www.wave.com) announced today that it received notice from the NASDAQ Stock Market confirming that the market value of the company’s Class A common stock has been above $35 million for ten consecutive trading days, in compliance with the rules governing continued listing on the NASDAQ Capital Market.

As previously reported, Wave received a delisting notice from the NASDAQ Stock Market in August for Wave’s failure to comply with the $50 million market value continued-listing requirement of the NASDAQ Global Market. Wave appealed the matter and requested that its listing be transferred to the NASDAQ Capital Market. In December, NASDAQ granted the request and transferred the company’s listing to the NASDAQ Capital Market, requiring Wave to demonstrate compliance with the $35 Million market value rule by February 17, 2009 in order to maintain its listing.

Although Wave will continue to be listed on the NASDAQ Capital Market based on compliance with the $35 million market value rule, Wave remains required to gain compliance with the $1.00 minimum closing bid price listing requirement of the NASDAQ Capital Market. Based on the NASDAQ Stock Market’s suspension of the enforcement of the bid price rule, Wave has until on or about August 14, 2009 to gain compliance with the bid price rule. If Wave does not gain compliance with the bid price rule by the end of the compliance period, Wave may be subject to delisting or may be entitled to an additional 180-day period if Wave meets the other initial listing requirements of the NASDAQ Capital Market at the end of the compliance period.

Wave plans to exercise diligent efforts to maintain the listing of its common stock on the NASDAQ Capital Market, but there is no assurance that it will be successful in doing so.

Series K Preferred Stock Converts to Common Stock

All of the issued and outstanding shares of the company’s 8% Series K convertible preferred stock have been automatically converted into shares of the company’s Class A common stock as of February 5, 2009 (at a rate of 10,000 shares of common stock for each of the 456 shares of Series K preferred stock). The average of the closing bid prices of the company’s Class A common stock for the fifteen-day trading period ending on February 5, 2009 was $0.706, exceeding the bid price target of $0.70 per share set forth in the Series K charter, and resulting in the automatic conversion of the securities into common stock and the elimination of any future dividend obligation on the Series K securities.

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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.