updated 12/28/2010 4:46:57 PM ET 2010-12-28T21:46:57

PISCATAWAY, N.J., Dec. 28, 2010 (GLOBE NEWSWIRE) -- Arkados (OTCBB:AKDS), one of the pioneers of powerline communication technology, co-founding member of HomePlug Powerline Alliance, and a key player in recent establishment of IEEE 1901 powerline communication standard, today announced that it has entered into a definitive asset purchase agreement to sell its semiconductor business to STMicroelectronics, Inc. STMicroelectronics will pay Arkados $11 million under the agreement, out of which it has already made an initial payment of $7 million in exchange for a license from Arkados. A portion of this payment was applied by Arkados to settle approximately $12 million of $20 million of outstanding secured debt. The parties expect to complete this transaction in the first quarter of 2011.

This critical initial step is part of a major balance sheet restructuring plan that will consist of elimination of nearly its entire $30 million of debt – approximately $20 million of secured debt through a cash settlement and elimination of the nearly $10 million of unsecured debt primarily through the conversion into equity of Arkados.

Upon the completion of the transaction Arkados will focus on development, manufacturing, and sales of consumer electronics and Smart Grid products based on powerline communication semiconductors. Arkados will also continue to provide consulting and development services to existing customers and users of powerline communication semiconductors.

Arkados' President and CEO Oleg Logvinov and Senior Vice President of Engineering Michael Macaluso are transitioned to STMicroelectronics as part of this agreement. (Arkados is reducing its future costs as a result of semiconductor-related employees having resigned from Arkados and transitioned to ST.) Grant Ogata, currently the Executive Vice President of Arkados, will serve as Acting CEO of Arkados. Mr. Ogata, a 30 year veteran of the Consumer Electronic Industry was formerly Vice President of Global Sourcing and Product Development of RadioShack Corporation.

Mr. Ogata commented, "We believe this transaction represents an important new chapter for Arkados, allowing the company to move forward without the previous debt burden, and leverage technology and patents developed by Arkados' team over the past ten years. The growth of the market for products that provide multi-room distribution of multi-media content continues to accelerate. We expect Smart Grid markets to grow rapidly, and we will be able to design and sell unique, reliable products to serve these exciting markets. "

About Arkados, Inc.

Arkados, "the HomePlug Applications Company," delivers a universal platform that enables networking of home entertainment and computer devices using standard electricity lines. The company's system-on-chip solutions are uniquely designed to drive a wide variety of powerline-enabled consumer electronics and home computing products, such as stereos, radios, speakers, MP3 players, computers, televisions, gaming consoles, security cameras and cable and DSL modems. Arkados customers can bring numerous sophisticated, full-featured products to market faster at a lower overall development cost using a single platform: the company's versatile and programmable ArkTIC™ platform. Arkados solutions leverage the benefits of HomePlug Powerline Alliance specifications and can also be used for in-building and to-the-home (BPL) applications. Arkados® is a registered trademark and ArkTIC™ and Direct to Speaker™ are trademarks of Arkados Inc., a wholly owned subsidiary of the Arkados Group, Inc. HomePlug® is a registered trademark of the HomePlug Powerline Alliance, of which Arkados is a member. Other names and brands may be claimed as the property of others. More information can be found at http://www.arkados.com .

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, the company's ability to raise necessary financing, ability to attract and retain key personnel, timely delivery of inventory by the company's contract manufacturers, timely product development and acceptance, and the impact of competitive services and pricing and general economic risks and uncertainties.

CONTACT:  Arkados Inc.
          Grant Ogata
          817 337-9084
          gogata@arkados.com

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