PhotoChannel 4th Quarter EBITDA Positive

Record Transaction Growth continues

Vancouver, BC - December 4, 2006- PhotoChannel Networks Inc. (TSX-V: PN and OTCBB: PNWIF) (“PhotoChannel” or “PNI”) the leading innovator of online digital media solutions for retailers, reports that its fourth quarter (July to September 2006) was EBITDA positive for the first time in Company history.

“PhotoChannel is extremely pleased to announce such a milestone in the Company’s history” stated Peter Fitzgerald, President and CEO of PhotoChannel. “We believe that this is an enormous step in our goal to achieve profitability and further build shareholder value. The Company is now well positioned to continue helping its retail customers grow their online business with money in the bank and positive cash flow. The Company, through its retail customers, is experiencing record growth this holiday season, which is traditionally the best quarter for photofinishing. We are confident that this growth will continue through 2007.”
Business Highlights

The Company reports that:

  • During the fourth quarter of fiscal 2006 it recorded a net loss from operations of $168,774 and a positive EBITDA of $43,039
  • The retail dollar value of orders processed through its network increased by 216% and the number of orders processed by 219% in its 2006 fiscal 4th quarter over the corresponding quarter of fiscal 2005
  • The retail dollar value of orders and number of orders processed through its network during the recently completed two month period (October and November, 2006) increased by 264% and 210%, respectively, over the corresponding period of last year
  • It signed a preferred partnership agreement with Qualex Inc, Kodak’s wholly owned photofinishing division
  • It launched a totally new, gifting friendly, website for CVS/pharmacy on November 2, 2006, in anticipation of the holiday season
  • Iit has in excess of $3,000,000 cash on hand.

References in this news release to EBITDA refer to earnings before interest, taxes, depreciation, amortization and compensation expense. We calculate EBITDA by taking our net loss from operations (prior to interest and taxes) and adding back non-cash related expenses (depreciation, amortization and compensation expenses related to option grants). We believe that, in addition to earnings, EBITDA is a useful complementary measure for a small company which has yet to generate earnings, as a positive EBITDA indicates that cash generated from operations has exceeded cash required to run operations. However, EBITDA is not a recognized measurement under Canadian GAAP and does not have a standardized meaning prescribed by Canadian GAAP. Readers are cautioned that EBITDA should not be construed as an alternative to earnings determined in accordance with Canadian GAAP as an indicator of performance, or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. Our method of calculating EBITDA may differ from the methods used by other entities and accordingly may not be directly comparable to similarly titled measures used by other entities.

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.photochannel.com.

For more information:
Robert Chisholm, CFO
604 893 8955 Ext 224
rchisholm@photochannel.com

Investor Information: (800) 261 - 6796

The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties. PhotoChannel’s actual results could differ materially for those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, changes in technology, employee retention, inability to deliver on contracts, failure of customers to continue marketing the online solution, competition, general economic conditions, foreign exchange and other risks detailed in the Company’s annual report and other filings. Additional information related to the Company can be found on SEDAR at www.sedar.com

 

 
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