Wave Q1 '09 Revenues Rose 137% to $4.0 Million on Increased Software License and Services Activity

LEE, MA, May 11 (MARKET WIRE) --
Wave Systems Corp. (NASDAQ: WAVX) (www.wave.com) today reported results
for the first quarter (Q1) ended March 31, 2009 and reviewed recent
corporate progress and developments. Wave's Q1 2009 net revenues rose
137% to $4.0 million, compared with Q1 2008 net revenues of $1.7 million
and Q4 2008 net revenues of $3.3 million, principally reflecting
increased bundled software royalties as well as higher services revenue
related to a contract with the U.S. government.

Reflecting the Company's ongoing efforts to reduce its overhead expenses
and quarterly cash burn, Q1 2009 selling, general and administrative
expense declined 21% to $3.4 million as compared to $4.3 million in Q1
2008, and declined 11% versus the Q4 2008 level. Wave was able to reduce
its R&D expenses by 44% to $1.8 million in Q1 2009 as compared to $3.3
million in Q1 2008, also achieving a decrease of 14% versus Q4 2008. For
Q1 2009, total billings grew 127% to $4.0 million, compared to Q1 2008
total billings of $1.8 million.

Reflecting the benefit of higher revenues and lower overhead expenses,
Wave's Q1 2009 net loss was reduced to $1.5 million, or $0.02 per basic
and diluted share, compared with a Q1 2008 net loss of $6.0 million, or
$0.12 per basic and diluted share. Wave's Q4 2008 net loss attributable to
common stockholders was $4.0 million, or $0.07 per basic and diluted
share. Per-share figures are based on a weighted average number of basic
shares outstanding in the first quarters of 2009 and 2008 of 61.9 million
and 50.9 million, respectively, and on 58.7 million basic shares
outstanding at December 31, 2008.

As of March 31, 2009, Wave had total current assets of $2 million, which
did not reflect the proceeds of a $1 million equity financing completed in
early April 2009. Wave's deferred revenue was slightly lower at $1.5
million at March 31, 2009, as compared to year-end 2008.

Steven Sprague, president and CEO of Wave Systems commented, "In spite of
economic challenges facing companies in the technology sector, our first
quarter results reflect significant progress in our business and a
continued reduction of our net loss and cash burn. We grew our base of
bundled software shipments during Q1 2009 and, as of the end of April,
surpassed a cumulative total of 50 million units shipped. Beyond these
important milestones, there were significant developments in the market
for self-encrypting drive technology that we believe have been beneficial
to Wave.

"In January, the Trusted Computing Group announced its Opal storage
specification, which provided hard drive vendors with a standard design
'blueprint.' Its passage helped demonstrate that hardware encryption is
more than a niche offering and makes it easier for organizations to
implement large-scale adoption of SED drives across all their platforms.

"Q1 also saw Wave continue to collaborate with the leading self-encrypting
drive vendors -- Fujitsu, Toshiba, Seagate and Samsung. Samsung recently
made headlines with the first solid state self-encrypting drives that will
soon ship through Dell. We believe that solid state drives, or SSDs, will
be the next generation of hard drives, and Wave applauds Samsung's
decision to make encryption standard on all its SSDs.

"We were honored to have Samsung and all of our drive partners join us at
our booth at this year's RSA Conference in San Francisco, showcasing
interoperability and how Wave's software manages all the major
self-encrypting drives on the market -- or in development -- today. RSA
was also a key venue as we were able to highlight our other partnerships
with Dell and HID, a developer of contactless smart cards, in interactive
presentations before the show."

"Based on our Q1 progress and the growing market for hardware-based PC
security, we are encouraged about our opportunities in the months ahead,"
Sprague said.

Summary of Recent Progress/Developments:

-- Samsung Electronics Self-Encrypting Solid State Drives Feature Wave
Management Software: In April, Wave and Samsung announced their
collaboration in offering mobile professionals significant hard drive
security and speed with Samsung's self-encrypting 256-, 128- and 64-
gigabyte solid state (SSD) drives bundled with Wave's management software.
SSDs offer advantages over traditional platter hard drives, boasting two-
to five-times faster overall performance and longer battery life in
notebook PCs. SSDs are also far less prone to reliability issues and
excessive heat generation.

-- Dell Introduced Broad Suite of Mobile Data Security Solutions for its
Latitude Laptop Line: In April, Dell announced that it would be one of the
first in the industry to offer encrypted solid state drives from Samsung.
Dell also showcased its innovative approach to a solution-based security
framework that includes: Dell ControlPoint Security Manager for simplifying
access to mobile security features; DellControlVault, a security engine to
protect end-users' security credentials; and contactless smart card
authentication with HID(R) Global iCLASS(R) technology. Wave collaborated
on the development of DellControlPoint Security Manager for the deployment,
management and enablement of pre-boot security, ControlVault, biometrics,
smart cards, Trusted Platform Modules and self-encrypting drives. Wave's
EMBASSY(R) software provides customers with multi-factor authentication,
single sign-on and password management.

-- The Adoption of Electronic Mortgages is the Central Theme at the MBA
National Technology in Mortgage Banking Conference and Expo: In March,
representatives from Wave's eSignSystems division demonstrated the advanced
functionality of their eSign Transaction Management Suite, which enables
lenders to securely deliver, track, sign, purchase, refinance and modify
loan documents electronically.

About Wave Systems Corp.

Wave provides software to help solve critical enterprise PC security
challenges such as strong authentication, data protection, network access
control and the management of these enterprise functions. Wave is a
pioneer in hardware-based PC security and a founding member of the Trusted
Computing Group (TCG), a consortium of nearly 140 PC industry leaders that
forged open standards for hardware security. Wave's EMBASSY(R) 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). TPMs are included on an estimated 300
million PCs and are standard equipment on many enterprise-class PCs
shipping today. Using TPMs and Wave software, enterprises can
substantially and cost-effectively strengthen their current security
solutions. For more information about Wave and its solutions, visit
http://www.wave.com.

Safe Harbor for Forward-Looking Statements

This press release may contain forward-looking information within the
meaning of the Private Securities Litigation Reform Act of 1995 and
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. Wave assumes no duty to and does not undertake to update
forward-looking statements. All brands are the property of their
respective owners.

WAVE SYSTEMS CORP. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)

Three Months Ended
March 31,
2009 2008
----------- -----------
Net revenues:
Licensing 3,730,896 1,675,505
Services 303,285 23,574
----------- -----------
Total net revenues $ 4,034,181 $ 1,699,079
----------- -----------
Operating expenses:
Cost of sales - licensing 165,672 159,161
Cost of sales - services 182,388 18,314
Selling, general, and administrative 3,378,522 4,297,090
Research and development 1,825,124 3,253,479
----------- -----------
Total operating expenses 5,551,706 7,728,044
----------- -----------
Operating loss (1,517,525) (6,028,965)
Net interest income (expense) (5,708) 18,917
----------- -----------
Net loss (1,523,233) (6,010,048)
Loss per common share - basic and diluted ($ 0.02) ($ 0.12)
=========== ===========
Weighted average number of common shares
outstanding during the period 61,868,589 50,898,515

WAVE SYSTEMS CORP. AND SUBSIDIARIES
Consolidated Supplemental Schedule
(Unaudited)

Three Months Ended
March 31,
2009 2008
----------- ------------
Total net revenues $ 4,034,181 $ 1,699,079
Increase (decrease) in deferred revenue (31,549) 66,907
----------- ------------

Total billings (Non-GAAP) $ 4,002,632 $ 1,765,987
=========== ============

Non-GAAP Financial Measures:
As supplemental information, we provide a non-GAAP performance measure
that we refer to as total billings. This measure is provided in
addition to, but not as a substitute for, GAAP total net revenues.
Total billings means the sum of total net revenues determined in
accordance with GAAP, plus the increase or minus the decrease in
deferred revenue. We consider total billings an important measure of
our financial performance, as we believe it best represents the
continued increase in demand for our software license upgrades.
Total billings is not a measure of financial performance under GAAP
and, as calculated by us, may not be consistent with computations of
total billings by other companies.

WAVE SYSTEMS CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)

March 31, December 31,
2009 2008
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 275,316 $ 951,563
Accounts receivable, net of allowance for
doubtful accounts of $16,364
March 31, 2009 and December 31, 2008 1,452,734 1,701,829
Prepaid expenses 231,647 227,967
------------ ------------
Total current assets 1,959,697 2,881,359
Property and equipment, net 361,519 408,440
Other assets 129,640 139,975
------------ ------------
Total Assets 2,450,856 3,429,774
============ ============

Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses 7,492,496 7,655,834
Current portion of capital lease payable 62,006 63,537
Deferred revenue 1,452,495 1,484,044
------------ ------------
Total current liabilities 9,006,997 9,203,415
Long-term portion of capital lease payable 230,338 245,362
------------ ------------
Total liabilities 9,237,335 9,448,777
------------ ------------

Stockholders' Equity (Deficit):
8% Series I Convertible Preferred stock, $.01
par value. 220 shares issued and outstanding
(liquidation preference of $968,000) in 2009
and 2008 2 2
Series J Convertible Preferred stock, $.01 par
value. 91 shares issued and outstanding
(liquidation preference of $364,000) in 2009
and 2008 1 1
8% Series K Convertible Preferred stock, $.01
par value. 456 shares issued and -0-
outstanding (liquidation preference of $-0-)
in 2009 and 456 shares issued and outstanding
(liquidation preference of $1,276,800) in
2008 - 5
Common stock, $.01 par value. Authorized
150,000,000 shares as Class A; 64,222,968
shares issued and outstanding in 2009 and
58,877,968 in 2008 642,230 588,780
Common stock, $.01 par value. Authorized
13,000,000 shares as Class B; 38,232 shares
issued and outstanding in 2009 and 2008 382 382
Capital in excess of par value 338,784,003 338,081,691
Accumulated deficit (346,213,097) (344,689,864)
------------ ------------
Total Stockholders' Equity (Deficit) (6,786,479) (6,019,003)
------------ ------------
Total Liabilities and Stockholders' Equity
(Deficit) $ 2,450,856 $ 3,429,774
============ ============

Conference call: Today, May 11, 2009 at 4:30 P.M. EDT
Webcast / Replay URL: www.wave.com/news/webcasts
Dial-in numbers: 212-231-2900 or 415-226-5360

Contact:
Gerard T. Feeney
CFO
Wave Systems Corp.
413-243-1600
Email Contact

Copyright 2009, Market Wire, All rights reserved.

-0-