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PHOTOCHANNEL ANNOUNCES PhotoChannel to take immediate control of Pixology VANCOUVER, BC - July 3, 2007 - PhotoChannel Networks Inc. (TSX-V: PN and OTCBB: PNWIF) ("PhotoChannel") announces that it has received acceptances from the holders of over 94% of the outstanding Pixology plc ("Pixology") shares, and has determined to complete the acquisition of Pixology under the proposed terms originally announced on April 25, 2007. Funds for the acquisition of the Pixology shares tendered will be delivered to Pixology shareholders within the next fourteen days from existing cash. PhotoChannel will take immediate control of Pixology, and has begun day to day direction of the business, effective July 2, 2007. Commenting on finalizing the acquisition, Peter Fitzgerald, Chairman, President and CEO of PhotoChannel, said: "PhotoChannel is delighted with the acceptance by Pixology's shareholders of our acquisition offer. We will now take control of Pixology and make decisions on a combined company basis. PhotoChannel management has commenced integration plans, which will create a much stronger and diverse global company focused on digital image printing solutions for retailers." The resultant combined company will be stronger on several fronts and the acquisition is expected to yield many positive benefits and synergies: Geographical fit / minimal customer overlap PhotoChannel operates primarily in North America while Pixology has largely focused on the UK where it is provides digital solutions for the UK's largest photofinishing retailers, in addition to one major customer in the USA. Pixology's customers include Tesco, Asda (Wal-Mart UK), Boots, and Jessops in the UK, as well as Costco in the USA. This will broaden the company's overall market presence by adding new customers and geographically expanding relationships with existing customers. PhotoChannel will be well positioned to expand into Europe and other global markets like Asia and Latin America. Comprehensive Solution PhotoChannel has a strong, proven and scalable online platform, as well as capabilities for the mobile imaging print market. With the addition of Pixology's highly complementary in-store kiosk software solution PhotoChannel will bring together these comprehensive technologies to offer retailers a complete and integrated service range. The combined company will be able to cross-sell a wider range of services to existing customers. Retailers will have the ability to capture consumers' digital image printing needs at home (on-line), in-store, and on the go. PhotoChannel expects that this expanded product offering will represent an attractive solution for photofinishing retailers. Addition of Management Talent and IT infrastructure The acquisition brings with it a stable of experienced management talent with industry veterans, particularly in the areas of sales (both in the USA and international markets), and in IT development. The incorporation of Pixology's data center adds redundancy to the company's data network infrastructure and provides an immediate platform for expansion into Europe. Increased Competitiveness The combined entity is larger and better able to service a greater number of customers, with an increased breadth of services, than either company could alone. The combined company will be better positioned to pursue new customer contracts and service existing customer contracts, in an increasingly consolidated competitive environment dominated by only a few significant parties. Financial The combined company will continue to have a strong balance sheet, providing existing and new retail customers with a strong sense of financial comfort. As technologies and staffing complement each other, the combined company expects to achieve significant cost savings and synergies in the near term. The acquisition does not result in any further shareholder dilution. Summarizing, Peter Fitzgerald stated: "With the acquisition, PhotoChannel becomes a complete solutions provider with an offering covering all three digital image printing segments - online, in-store kiosk, and mobile. The company will be in an optimal position to address its retail customers' current and future needs, and capture the market's global potential with new retailers moving forward. We will provide investors with more specific details on the positive impact of this acquisition in the near future."
Caveat 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. For more Information, Contact: |
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