March Networks, a leading provider of Internet Protocol (IP)-based digital video surveillance solutions, has announced that it has entered into a definitive agreement to acquire the assets of Trax Retail Solutions, Inc. and its affiliated company. Scottsdale, Arizona based Trax is a leading provider of enterprise software for loss prevention, store operations control and profit optimization solutions within the retail sector.

The agreement calls for the payment by March Networks of cash and common shares for a total purchase price of approximately $7.5 million USD plus an earn-out component. Under terms of the agreement, March Networks will pay $5.0 million USD in cash and have the option of paying the remaining amount in cash or common shares. The agreement is subject to customary closing conditions and is expected to close by the end of June 2006.

"This is a strategic acquisition for March Networks. The industry's leading provider of digital video solutions combined with the leader in retail loss prevention, risk management, and business optimisation software will make for an extremely compelling offer for progressive retailers looking to improve their bottom line," said Peter Strom, President and CEO of March Networks. "The acquisition of Trax is an important step towards our goal of becoming the world leader in video-based business optimization solutions."

March Networks plans on maintaining a presence in Scottsdale and retaining many of the approximately 50 Trax employees.

Shrinkage (inventory loss primarily caused by theft) is a significant problem for retailers throughout the world. Market research estimates that $46 billion USD is lost annually in the United States because of shrinkage. In Europe, the estimated annual cost of shrinkage is €24 billion. Through a sophisticated offering of business intelligence software, Trax leads customers to improved in-store practices that help reduce shrinkage and result in better loss prevention and higher profitability.

"Through the integration of March Networks' visual intelligence solutions and Trax SmartStore retail business intelligence platform, March Networks will be offering customers a new paradigm in intelligent management of retail operations to support loss prevention activities, enhanced operational decision making, and greater profitability," said Tony Jenkins, Vice President of Global Marketing at March Networks.

For fiscal year 2007, March Networks expects that the Trax acquisition will contribute less than 5% of the total revenue of the Company and will be slightly dilutive to net earnings, excluding the impact of the amortisation of acquired assets. March Networks management will discuss further details of the transaction on June 8, 2006 during the Company's fourth quarter and fiscal year 2006 financial results conference call.

Solutions from March Networks and Trax were on display during the NRF Loss Prevention Conference and Exhibition (booth #231) in Minneapolis from June 5-7, 2006.

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