PhotoChannel Customers Driving Usage of Online Photo Services to Record Levels

VANCOUVER, BC – February 7, 2005 – PhotoChannel Networks Inc. (TSX-V: PNI and OTCBB: PHCHF) (“PhotoChannel” or “Company”), the global leader in digital imaging network technology, with over 8,000 photo retail locations worldwide, today reports the following:

Network Usage
The use of the PhotoChannel Network by PhotoChannel s retailer and wireless carrier customers resulted in orders in January 2005, being the Company s second best month in its history and slightly below its record month of December 2004.

In-Store Deployment
The Company continues to install its in-store solution to its photofinishing retailers. Presently the Company has deployed more than 50 Wal-Mart locations in Canada with in-store printing and continues to add new locations.

 I am extremely pleased with the progress that the Company has made since my arrival in September, 2004 stated Bart Copeland, President and CEO of PhotoChannel.  Network Usage continued to be very strong during January, during a month that is typically very slow in the photofinishing industry.

Customer Highlights
As reported on January 11, 2004, the Company has delivered the Online Photo Services for a number of major US and Canadian retailers and wireless customers and is now working with these company s marketing departments to initiate launching. The Company expects to have these sites accepting digital orders shortly.

Warrants Exercised The Company also reports that its has received $200,000 from the exercise of 2 million common share purchase warrants, which had an expiry date of January 22, 2005.Investor Information: (866) 345-0115

WARNING: The TSX Venture Exchange has neither approved nor disapproved the information contained in this release. The Company relies upon litigation protection for "forward-looking" statements.