PhotoChannel Networks Inc.
TSX VENTURE : PNI
OTC Bulletin Board : PHCHF

PhotoChannel Networks Inc.

January 18, 2006 08:00 ET

Katz Group Canada Signs Online Imaging Service Contract with PhotoChannel Networks Inc.

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 18, 2006) - PhotoChannel Networks Inc. (TSX VENTURE:PNI)(OTCBB:PHCHF) -

Leading pharmacy retailer selects PNI Digital Media Platform for Online Photofinishing

PhotoChannel Networks Inc. ("PhotoChannel" or "PNI"), the leading innovator in online media solutions for retailers and Katz Group Canada Ltd. ("Katz"), Canada's largest integrated retail pharmacy network, announced today that they have signed a contract whereby Katz will utilize PhotoChannel's PNI Digital Media Platform to deliver Rexall™ Photo Centre, a full-featured online photo service for their customers. The new service is live and available for ordering from www.rexall.ca.

The Rexall™ Photo Centre is a complete Online Imaging and Media service providing Katz Group Canada corporate banner pharmacies with the ability to compete with other national online photofinishing stores. This new service allows Katz customers to upload photos and order prints from any Rexall™ Drug Store, Pharma Plus, or Herbies for Drug & Food store. Users can use the site to upload images to a personal account, to share with family and friends, archive and print their images. Consumers can also order prints from their images by using a quick flow upload (no account necessary).

"We are very excited to be working with PNI to launch the Rexall™ Photo Centre," says Lisa Serfaty, Category Manager, Katz Group Canada Ltd. "Using PNI's Digital Media Platform will allow us to offer our customers the ease and convenience of online photofinishing and ensure Katz Group Canada remains a leader in this category."

"PhotoChannel's PNI Digital Media Platform is the system of choice for many retailers in the industry," says Peter Fitzgerald, Chairman and CEO of PhotoChannel. "The PNI Digital Media Platform allows retailers to conduct online transactions for digital media, all under their brand and marketing control."

This new partnership with Katz Group demonstrates the industry's continued interest to offer consumers an online photo service, as well as the demand for the PNI Digital Media Platform. "We feel our service allows for our clients to have a comprehensive feature set which will give them built-in up-sell abilities for the high margin gift items," adds Fitzgerald. "We believe that the up-sell features in our new platform are the most advanced in the industry, today."

About PhotoChannel - Founded in 1995, PhotoChannel operates PNI Digital Media to provide services for major retailers, wireless carriers and content providers. The PNI Digital Media Platform connects consumer ordered digital content with retailers that have on demand manufacturing capabilities for the production of merchandise. Currently PNI Digital Media generates transactions for retailers and their thousands of locations across North America. For more information please visit www.pnidigitalmedia.com.

About Katz Group Canada Ltd.

Katz Group Canada Ltd. is the Canadian subsidiary of Edmonton-based Katz Group, which encompasses more than 1,800 corporately owned, franchise and independent pharmacies across North America. Katz Group is a leading drug store company in North America and the largest retail pharmacy network in Canada. Corporate, independent and franchise pharmacy banners in Canada include Rexall™ Drug Stores, Pharma Plus Drugmarts, Rexall™ Pharma Plus, Medicine Shoppe Pharmacy, Guardian, I.D.A., Herbies/Payless and Meditrust Pharmacy-Canada's national mail-order pharmacy. For more information on Katz Group Canada Ltd. pharmacies and the Rexall™ Photo Centre visit www.rexall.ca.

WARNING: PhotoChannel relies upon litigation protection for "forward-looking" statements.

The TSX Venture Exchange has neither approved nor disapproved the information contained in this release.

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