Level 5 specifications guarantee a level of online security that is among the highest in the world, enabling secure electronic transaction (SET) protocols and other forms of secure financial services transactions. The new Level 5 readers will be powered by Wave's EMBASSY® Personal E-Commerce Technology for distribution to global markets. The EMBASSY platform delivers secure, flexible application and financial transaction capability for both consumer and enterprise use, while at the same time providing client side (end user) benefits in application protection, privacy, digital goods management and secure Internet access.

Integrating EMBASSY® technology, SCM will develop and manufacture the hardware for the readers, leveraging the company's multi-year experience with highly secure smart card reader technology, certification to EMV, PC/SC and other security standards, and cost efficient manufacturing capabilities. Under the agreement, SCM will manufacture highly secure devices for distribution to customers in the second half of this year.

"SCM is committed to providing a full range of highly secure devices, and we look for the right partners to help deliver our solutions to the marketplace," said Mladen Filipan, executive vice president of SCM's PC Security Division. ``Wave's EMBASSY Trusted Client platform, digital services capability and Trust Assurance Network will deliver an additional level of trust, privacy and security to our customers. The combined expertise that SCM and Wave bring to our Level 5 readers will make smart card use for secure internet transactions and services more appealing to consumers and create more demand for smart card deployment by financial services and other service providers."

"As the reader technology partner for European financial organizations such as FINREAD and Giesecke & Devrient, SCM is the acknowledged market leader in high-end security smart card readers for sensitive and critical online transactions," said Dennis Sears, vice president, financial services, Wave Systems. "Combining the open programmable architecture of Wave's EMBASSY platform with SCM's hardware platform will enable our Level 5 readers to dynamically meet, on demand, the differing requirements of multiple security network and transaction systems, and allow for the devices to be easily upgraded in the field to meet evolving security standards or to provide new services."

The Level 5 readers will support a continually high level of security by providing a connection to a Trust Assurance Network for secure distribution of applets to the devices that protect consumers and enterprises through strong, hardware level authentication. In addition, the readers will allow financial services providers, PC OEMs and other distributors of these devices to provide secure services and digital goods services, and protection to both consumers and enterprises.

About SCM Microsystems
SCM Microsystems is a leading supplier of solutions that open the Digital World by enabling people to conveniently access digital content and services. SCM's advanced silicon, hardware and software solutions enable secure exchange of electronic information for digital applications from e-commerce to broadband content delivery by providing controlled access points to platforms such as PCs, digital cameras and digital television set-top boxes. Known as a premier supplier to OEM companies around the world, SCM also serves the retail market through its Dazzle, Microtech and FAST product brands. Global headquarters are in Fremont, Calif., with European headquarters in Pfaffenhofen, Germany. For additional information, visit the SCM Microsystems website at www.scmmicro.com.

About Wave Systems
Wave Systems, with partners and allies, envisions a worldwide network of users based on trusted electronic relationships. Trust @ the Edge defines a new architectural model for the Internet, which embeds trust and security in every user device. Wave Systems, Lee, MA, is developing, deploying, and licensing its EMBASSY Trusted Client technology for the mass adoption of this revolutionary model. Wave is integrating industry standard functions from a wide range of partners that enable reliable, secure digital exchange and commerce. Wave Systems and third parties are building the services that will take advantage of this open model. For more information, visit www.wave.com.

Safe Harbor for Forward-Looking Statements
Except for the statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to fund operations, the ability to forge partnerships required for adoption and deployment, changes in consumer and corporate buying habits, chip development and production, the rapid pace of change in the technology industry and other factors over which Wave Systems Corp. has little or no control. Wave Systems assumes no obligation to publicly update or revise any forward-looking statements.

Contact:
Wave Systems, Lee
Media, Analysts
John Callahan, 413/243-7029
jcallahan@wavesys.com

or

(Investor Relations)
Jaffoni & Collins, New York
David Collins, Richard Land
212/835-8500
wavx@jcir.com

or

SCM Microsystems, Fremont
Darby Dye, 510/360-2302
ddye@scmmicro.com