PISCATAWAY, New Jersey, October 12 /PRNewswire/ --

- Significant Industry Milestone Employs the Visionary Usage of Broadband
Powerline Communications Technology by Combining Smart-Grid Applications With
Consumer Electronic Devices in the Home.

Arkados (OTC BB: AKDS), known as "the HomePlug(R) Applications
Company," and MainNet Communications, Ltd., a leader in the broadband over
powerline (BPL) communications market, have entered into a strategic
collaboration to create commercial hardware and software solutions for
Smart-Grid applications. The two companies plan to jointly develop
applications to improve the reliability and efficiency of electrical grids,
connect consumer electronic devices over power lines, enable energy-saving
initiatives, and deliver Broadband content to homes and offices.

The details of the collaboration include a financial arrangement
that gives MainNet incentives to purchase 600,000 Arkados 200 Mb/s chipsets
(HomePlug AV) over the next three years. Subject to the terms of the
agreement and the completion of certain milestones, MainNet is expected to
pre-pay up to $500k for the delivery of Arkados solutions in calendar year
2008.

Combining MainNet's unique layer 2 system with Arkados' core
technology, the planed applications will offer easy and seamless access to
Internet-based services for the consumer over the existing electrical grid,
while also acting as a window into energy savings by offering Command and
Control energy applications. These applications help to save operational
costs through energy conservation, and could contribute to a greener
environment.

This collaboration represents an evolutionary step in an approach
that provides utility companies with Advanced Metering Infrastructure (AMI)
solutions, and consumers with access to broadband communication services.
Thus, it meets with the US national policy to support the modernization of
the electricity transmission and distribution system to incorporate digital
information and control technology, and to share real-time pricing
information with electricity customers to achieve Advanced Smart-Grid and
continual environmental improvement in the production and distribution of
electricity (Smart-Grid Facilitation Act of 2007).

"MainNet found in Arkados a strong technology partner with the
same vision of what powerline communications technology can achieve," said
Joe Marsilii, CEO of MainNet. "Using Arkados' HomePlug chips with our BPL
smart repetition mechanism, utility companies will get a future proof, easy
to install, cost effective and secured Smart-Grid system. Concurrently, this
scenario enables easy ways for consumers to access on-demand broadband
services, which will help to further realize the vision of the connected
home."

"Arkados is very impressed with the rich collection of functions
that MainNet's Smart-Grid systems enable," said Oleg Logvinov, president and
CEO of Arkados. "Not only do they have an extraordinary portfolio of
solutions that detect, measure, and report on energy use, but they have added
the additional valuable component of interaction with the consumer. Their
solutions enable consumer to be actively involved in energy saving, while
using that same broadband communication channel for traffic updates, weather
reports, stock quotes, and entertainment options. By bridging connected
devices with connected services, Arkados and MainNet are moving toward
implementing the vision that our companies share."

Broadband powerline communications technology enables an Advanced
Metering Infrastructure (AMI) for improved Smart-Grid applications, including
demand response and demand-side management for more efficient use of energy
resources, detecting power outages, tampering and theft, load balancing, and
the integration of "smart" appliances and consumer devices. All are designed
to achieve intelligent grid and maximized revenues for utility companies
worldwide.

For more information on the types of entertainment and information
products that can help to proliferate Smart-Grid applications into the home,
please see http://www.arkados.com/products.html.

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(TM) 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(R) is a registered
trademark and ArkTIC(TM) and Direct to Speaker(TM) are trademarks of Arkados
Inc., a wholly owned subsidiary of the Arkados Group, Inc. HomePlug(R) 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.

About MainNet Communications Ltd.

MainNet Communications Ltd. is the leading turn-key solution
and service provider of Broadband Powerline Communications (BPL), enabling
fast return on investment in operating Smart-Grid applications, security and
surveillance as well as broadband communication access over any electric
network. Founded in 1999, the company owns BPL -related intellectual
properties (IP) and is backed by strong equity investors. With the largest
commercial BPL deployments worldwide, MainNet is well positioned for bringing
the vision of Smart-Grids into reality. http://www.mainnet-plc.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.

Jim Reeber, Arkados Inc.
    Email: jreeber@arkados.com
    Phone: +1-732-465-9300,

    Liora Bar, MainNet Communications
    Email: liorab@mainnet-plc.com
    Phone: +972-(9)-741-5518