ARKADOS SYSTEM-ON-CHIP POWERS DIGITAL AUDIO THROUGHOUT THE CONNECTED HOME

Chipmaker enables HomePlug® audio solutions a breakthrough in the whole-house audio market

LAS VEGAS, NV, January 5, 2006 - Arkados, Inc., a wholly owned subsidiary of Arkados Group Inc. (OTCBB: AKDS) and a provider of technology solutions that enable broadband transmission and entertainment networking over standard electricity lines ("the powerline network"), is using the occasion of the 2006 Consumer Electronics Show in Las Vegas to focus on audio solutions using their AI-1100 series of System-on-chip (SoC) processors.

The Arkados AI-1100 SoC offers unique features that provide a cost-effective engine for
HomePlug-based audio solutions. The highly integrated chip provides audio synchronization features that can enable each speaker in a home to playback audio from portable audio devices (such as MP3 players), Internet radio stations, or any digital or analog source.

"By focusing on providing the building blocks to support higher-level connected-home
applications, Arkados has taken HomePlug solutions one step further," said Oleg Logvinov, Arkados CEO. "Recent announcements have shown great industry support for HomePlug standards, and the Arkados solutions are specifically designed to be the engines driving the components of the digital home ecosystem."

Participating in the exhibit of the HomePlug Powerline Alliance (Booth #26924 in South Hall 2 of the Las Vegas Convention Center), Arkados is demonstrating the use of the AI-1100 chip in whole-house audio applications as an example of the chip's versatility. In the demonstration, Arkados chips connect two powered speakers to a standard HomePlug powerline network, instantly transforming the speakers into endpoints for streaming digital audio from a networked server. The Arkados chip also powers an attached LCD display that scrolls the song's title and artist, and an Infrared interface that allows a user to control playback with a simple remote control.

For further information and a downloadable product brief for the AI-1100 series of processors, please see www.arkados.com.

About Arkados
Arkados Inc. has developed, and plans to manufacture and supply system-on-chip
semiconductors to enable easy-to-use digital connectivity between many consumer entertainment and computing devices. Redefining "plug and play," Arkados solutions are designed to create a virtual, home-wide entertainment and information network enabling 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 semiconductors are designed to facilitate the production of sophisticated, full-featured products at a lower production cost, faster time-to market, and a high degree of programmability. Arkados chips are designed to conform to HomePlug Powerline Alliance standards and can also be used for in-building and to-the-home applications.
Arkados Inc. (OCTBB: AKDS) is based in Piscataway, N.J., is a wholly owned subsidiary of Arkados Group Inc.

This report 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. The information in this news release includes certain forward-looking statements 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 forwardlooking 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.