ARKADOS DESIGN FOR INTERNET RADIO EARNS CERTIFICATION FROM HOMEPLUG POWERLINE ALLIANCE

Incorporating the Arkados AI-1100 chip, the internet radio application streams music direct-to-speaker with no computer required

PISCATAWAY, N.J., August 15, 2006 - At the most recent "plugfest" held by the HomePlug® Powerline Alliance, Arkados Inc., a wholly owned subsidiary of Arkados Group, Inc. (OTCBB:AKDS), presented a design for an Internet radio which passed the alliance's 266-point audit, and earned HomePlug certification. Powered by the Arkados AI-1100 system-on-chip (SoC), the reference design demonstrated that the Arkados implementation of the powerline communications technology complies with the HomePlug specification.

The Arkados Direct-to-Speaker Internet Radio Reference Design (AI1100-DTS-INTR) demonstrates the capabilities of the AI-1100 chip and its associated firmware by offering a method to stream music from Internet Radio stations without needing a personal computer. By incorporating HomePlug technology, the device uses a HomePlug network to connect to the internet through the electrical wiring that is already built into the walls of a home.

Product briefs on both the AI-1100 system-on-chip and the AI1100-DTS-INTR are available at http://www.arkados.com/productbriefs.html.

The Direct-to-Speaker reference design improves the user experience by providing robust HomePlug connectivity and ease of use in one package. One side of the device connects to a stereo receiver or powered speakers, while the other side sends and receives data through the HomePlug powerline network. In practice, consumers will be able listen to Internet Radio without using a computer or even running new wires.

"Besides being a great digital home product, this Internet radio reference design demonstrates to our customers that Arkados offers both board design and firmware that are ready for productization," said Oleg Logvinov, president and CEO of Arkados. "By simply changing firmware loads, our customers may design a single board that is at the core of dozens of products which have features that range from basic to extravagant. This approach helps our customers shorten their time to market without sacrificing the quality of their products."

"Having worked with the Arkados team within the HomePlug alliance, I know they are dedicated to developing new and exciting applications for the connected home," said Pete Griffin, director of corporate technology at RadioShack Corporation, who also serves as chairman of the HomePlug alliance. "By engaging in the HomePlug certification process, Arkados ensures that their semiconductors will maintain the highest levels of performance, which will in turn create a very rewarding consumer experience."

More information about Arkados is available at http://www.arkados.com.

About Arkados, Inc.

Arkados Inc. is a developer, manufacturer and supplier of system-on-chip semiconductors that are designed to create easy-to-use digital connectivity between entertainment and computing devices used by consumers. Arkados solutions will create a virtual, home-wide entertainment and information network that can enable digital data to be shared between stereos, radios, computers, speakers, mp3 players, televisions, cable and DSL modems, and a host of other devices. The company's chips are designed to permit its OEM customers to produce sophisticated, full-featured products with a lower production cost, faster time-to-market, and a high degree of programmability. Arkados is a major contributor to the new HomePlug AV specification and their chips conform to HomePlug Powerline Alliance standards. Arkados chips can be used for applications in the in-home network ("In-Home Network"), through the "last mile" Powerline distribution network ("Broadband Powerline"), and throughout residential and corporate buildings ("In-building Network").

This release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements as to the future performance of the company and the risks and uncertainties detailed from time to time in reports filed by the company with the Securities and Exchange Commission. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development acceptance, and the impact of competitive services and pricing and general economic risks and uncertainties.