UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-K/A

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended SEPTEMBER 25, 2004

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from ______ to ______

                           Commission file No. 0-15338

                                PHOTOWORKS, INC.
             (Exact name of registrant as specified in its charter)

      Washington                                       91-0964899
(State or other jurisdiction             (IRS Employer Identification No.)
of incorporation or organization)

     1260 16th Avenue West, Seattle,  WA                        98119
  (Address of principal executive offices)                    (Zip Code)

       Registrant's telephone number, including area code: (206) 281-1390

Securities registered pursuant to Section 12(b) of the Act:       None

Securities  registered  pursuant to Section 12(g) of the Act: Common Stock,  par
value $.01 per share and related preferred share purchase rights.

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such  reports),  and (2) has been subject to the
filing requirements for the past 90 days. Yes: [ ] No: [ X ]

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

         Indicate by check mark whether the  registrant is an accelerated filer
(as defined in Rule 12b-2 of the  Exchange  Act).
Yes:  [   ]   No:  [ X ]

         As of March 27, 2004 the  aggregate  market  value of the  Registrant's
Common Stock held by  non-affiliates  of the Registrant was $4,534,935  based on
the last sale price of the Registrant's Common Stock as reported by the Over the
Counter Bulletin Board Market.

         As of December 23, 2004,  there were issued and outstanding  18,228,875
shares of Common Stock, par value $.01 per share.


                                       1
<PAGE>

                                    PART III

ITEM 10.  Directors and Executive Officers of the Registrant.

Information  on the  Company's  executive  officers  can be  found  in  Part  I,
"Business", of the Form 10-K.

The Board of  Directors  of the Company  currently  consists  of five  directors
classified  into three classes.  The table below sets forth the name, age, class
and expiration of the term of the current Board of Directors.
<TABLE>
<S>                                      <C>               <C>              <C>

--------------------------------------- ----------------- ---------------- --------------------------------------
                 Name                         Age              Class                Expiration of Term
--------------------------------------- ----------------- ---------------- --------------------------------------
--------------------------------------- ----------------- ---------------- --------------------------------------
Paul B. Goodrich                               59                I                         2007
--------------------------------------- ----------------- ---------------- --------------------------------------
--------------------------------------- ----------------- ---------------- --------------------------------------
Ross K. Chapin                                 52                I                         2007
--------------------------------------- ----------------- ---------------- --------------------------------------
--------------------------------------- ----------------- ---------------- --------------------------------------
Philippe Sanchez                               41                I                         2007
--------------------------------------- ----------------- ---------------- --------------------------------------
--------------------------------------- ----------------- ---------------- --------------------------------------
Mark Kalow                                     49               II                         2005
--------------------------------------- ----------------- ---------------- --------------------------------------
--------------------------------------- ----------------- ---------------- --------------------------------------
Matthew A. Kursh                               40               III                        2006
--------------------------------------- ----------------- ---------------- --------------------------------------
</TABLE>

Philippe  Sanchez  has been the  President  and Chief  Operating  Officer  since
October  2003.  From 2001 to 2003,  Mr.  Sanchez  was senior Vice  President  of
Marketing at Getty Images, a leading imagery company, where he managed worldwide
strategic  brand  initiatives.  From 1995 to 2001,  Mr. Sanchez worked for Nike,
Inc. serving in various general management,  product marketing and merchandising
roles in Europe, Asia and the Americas. From 1993 to 1995, Mr. Sanchez served as
a licensing manager for Disney's Consumer Products Europe and Middle East out of
the company's European headquarters in Paris.

Ross K. Chapin  became a director in February  2000.  Mr.  Chapin is a principal
with Orca Bay  Partners,  a private  equity  investment  firm  headquartered  in
Seattle,  Washington,  which he co-founded in 1998.  Prior to Orca Bay, he was a
founder of Capstan Partners, a Seattle-based management buyout firm. In addition
to being a principal investor,  he has experience with Ragen MacKenzie and Paine
Webber as an investment  banker.  Mr. Chapin is currently serving as Chairman of
1838  Investment  Advisors  and  sits on the  boards  of Flow  Solutions,  Inc.,
Skeletech, Inc., Parametric Portfolio Associates L.L.C., EnvestNetPMC, Inc., and
Andover Acquisition Co., L.L.C.

Paul B. Goodrich  became a director in February 2000. Mr. Goodrich is a Managing
Director of Madrona Venture Group,  L.L.C., an early-stage  venture capital firm
focused on the Internet economy in the Northwest.  Mr. Goodrich was formerly the
Seattle  Partner for a  Chicago-based  venture  capital  firm and a Partner with
Perkins Coie, a Seattle law firm. He is a director of Sharebuilder Corporation.

Matthew A. Kursh  became a director  of the  Company in April  2000.  Mr.  Kursh
started his career as president and co-founder of Clearview  Software,  which he
sold to Apple Computer in 1989.  Mr. Kursh then  co-founded and was CEO of eShop
Corporation,  one of the first  companies  to offer  platforms  and services for
online  shopping.  eShop's  customers  included such leading  companies as AT&T,
Tower  Records,  Spiegel,  1-800-Flowers  and  Good  Guys.  eShop  was  later
acquired by Microsoft where Mr. Kursh ran Sidewalk, HomeAdvisor and MSN.com. Mr.
Kursh  left  Microsoft  in 1999 to  focus on  creative  projects  and work  with
start-up companies.


                                       2
<PAGE>


Mark L. Kalow became a director of the Company in May 2004. Mr. Kalow co-founded
and  served as COO and CFO at Live  Picture,  Inc.  in 1993.  He also  served as
Interim CEO to sell Live  Picture to MGI  Software  (transaction  closed in June
1999). More recently,  Mr. Kalow co-managed the U.S. venture capital  activities
of a major Japanese strategic software and services investor,  Trans Cosmos USA.
His experience also includes management positions in finance, product management
and marketing at IBM, and as vice president of telecommunications  for two years
at Chase  Manhattan Bank. Mr. Kalow also serves on the board and Audit Committee
of ACD Systems, a publicly traded company on the Toronto Stock Exchange.

Section 16(a) Beneficial Ownership Reporting Compliance

Section  16(a) of the  Exchange  Act requires  directors,  certain  officers and
greater-than-10%   shareholders   ("Reporting  Persons")  of  all  publicly-held
companies  to file  certain  reports  ("Section  16  Reports")  with  respect to
beneficial  ownership of such companies' equity securities.  Based solely on its
review of the  Section  16 Reports  furnished  to the  Company by its  Reporting
Persons and, where applicable, any written representation by them that no Form 5
was required, all Section 16(a) filing requirements  applicable to the Company's
Reporting Persons during and with respect to fiscal 2004 have been complied with
on a timely basis,  except that Mr.  Sanchez was one day late in filing a Report
on Form 4 relating to a stock option grant on October 17, 2003.

Code of Ethics

We have adopted the PhotoWorks Finance Code of Professional Conduct (the code of
ethics for senior  financial  officers),  a code of ethics  that  applies to our
Chief Executive Officer, Chief Accounting Officer and Controller.  A copy of the
Code of Professional  Conduct may be obtained without charge from the Company by
request to Linda Clay at the Company's offices.

Information Regarding the Company's Audit Committee

The Board of Directors has an Audit Committee  which consists of Messrs.  Chapin
and Kalow.  As defined by the rules of the Nasdaq Stock Market,  Mr. Kalow is an
independent  director.  Mr. Chapin is not  independent  due to his position with
Orca Bay Partners,  L.L.C., an affiliate of the Company.  The Board of Directors
has determined that Mr. Kalow is an audit committee  financial expert as defined
by the rules of the Securities and Exchange Commission.

ITEM 11.  Executive Compensation.

The following table sets forth certain  information  concerning the compensation
paid by the Company for services  rendered  during  fiscal years 2004,  2003 and
2002 to any person who served as Chief Executive Officer during fiscal 2004, and
executive officers of the Company whose total salary and bonus exceeded $100,000
in fiscal 2004 (the "Named Executive Officers"):







                                       3
<PAGE>

                                        Summary Compensation Table
<TABLE>

<S>                              <C>           <C>           <C>                <C>                   <C>
                                                    Annual                      Long-term
                                                  Compensation                  Compensation
                                                                                  Awards
                                             ------------------------    ----------------------
                                             ----------- ------------    ----------------------
Name and                        Fiscal         Salary       Bonus             Securities             All Other
Principal Position                Year                                    Underlying Options      Compensation(1)
------------------------------- --------- -- ----------- ------------ -- ---------------------- --------------------
Philippe Sanchez (2)              2004         $209,540         $  0           1,000,000                 $2,029
   President/CEO, and Director

Gary R. Christophersen (3)        2004         $153,748         $  0              11,250                  $ 270
                                  2003          175,099       43,470              45,000                  9,693
                                  2002          150,630       56,182             125,000                  7,499

Michael F. Lass                   2004         $162,310         $  0                   0                 $1,622
   Vice President- Operations     2003          175,362       36,450              45,000                  7,123
                                  2002          175,304       62,637             125,000                  6,646

Loran Cashmore Bond               2004         $118,742         $  0                   0                 $1,200
   Vice                           2003          126,621       21,060              35,000                  7,622
   President-Administration       2002          125,239       31,675              75,000                  6,511
   Secretary/Treasurer
___________________________
</TABLE>
(1) These amounts represent Company  contributions to the PhotoWorks 401(k) Plan
and payments for term life insurance, short and long-term disability insurance.
(2) Mr. Sanchez was appointed President/CEO and Director on October 20, 2003.
(3) Mr. Christophersen resigned as President/CEO in October 2003.


Employment Agreements

The Company and Mr.  Philippe  Sanchez  are parties to an  employment  agreement
dated  October 3, 2003 (the  "agreement").  Under  terms of the  agreement,  Mr.
Sanchez will receive a base annual salary of $225,000.  Upon certain conditions,
Mr.  Sanchez's  salary will increase to $300,000 per year. Mr. Sanchez will also
participate  in a  performance  bonus  program of up to 60% of base salary.  The
performance  bonus plan  provides  financial  incentives  based on the Company's
results compared to financial and other metrics  established by the Compensation
Committee and approved by the Board of Directors.

As a hiring  incentive,  Mr.  Sanchez  received a stock  option grant of 750,000
shares of Common  Stock at an exercise  price equal to the fair market  value of
the shares on the date the option was  granted  with a vesting  period  equal to
four years. In addition,  Mr. Sanchez  received a stock option grant for 250,000
shares of Common Stock at an exercise  price of $0.01.  These  shares  vested in
full at the one-year anniversary of the grant date. Vesting of the stock options
is subject to continued  employment with  PhotoWorks.  Vesting may accelerate in
certain instances.

Option Grants in Last Fiscal Year

The Company has stock option plans pursuant to which options to purchase  Common
Stock are granted to officers and key  employees of the Company.  The  following
tables show stock option grants

                                       4
<PAGE>

and exercises  pertaining to the named Executive  Officers of the Company during
fiscal  2004,  and  the  year-end  potential   realizable  value  of  all  their
outstanding options. The vesting of options may be accelerated at the discretion
of the administrator of the option plans.

<TABLE>
<S>                            <C>          <C>          <C>        <C>               <C>           <C>

                                               Individual Options Granted
                                         -------------------------------------------    Potential Realizable
                           Number of       % of Total                                   Value at Assumed
                           Securities      Options                                      Annual Rates of Stock
                           Underlying      Granted to                                   Price Appreciation For
                           Options         Employees in   Exercise      Expiration      Exercise Expiration (3)
                           Granted (1)     Fiscal Year    Price (2)     Date          __________________________
                                                                                          5%            10%
-----------------------------------------------------------------------------------------------------------------
Philippe Sanchez              750,000         $40.54       $.55        10/17/2010      $167,929    $391,346
                              250,000         $13.51       $.01        10/28/2010      $243,743    $338,525
Gary R. Christophersen         11,250          $ .61       $.41        05/12/2005      $    231    $    461
Michael F. Lass                    0
Loran Cashmore Bond                0
____________________________
</TABLE>
     (1)  The Company's stock option plans are  administered by the Compensation
          Committee of the Board of Directors,  which determines to whom options
          are granted,  the number of shares subject to each option, the vesting
          schedule and the exercise  price.  The 750,000  options granted to Mr.
          Sanchez in fiscal  year 2004 vest in equal  annual  installments  over
          four years. The 250,000 options granted to Mr. Sanchez vest in full at
          the one-year  anniversary  of the grant date.  Options  granted to Mr.
          Christophersen  for his services as a Director vested on September 25,
          2004. Options granted to officers or directors of the Company from the
          Company's 1999 Stock Incentive  Compensation Plan may be exercised for
          a period of three months following termination of employment.

     (2)  Options are generally granted with an exercise price equal to the fair
          market value of the Company's  Common Stock on the date of grant.  The
          exercise  price may be paid by delivery of shares already owned by the
          option  holder  with a market  value equal to the  aggregate  exercise
          price. With the permission of the Compensation Committee, the exercise
          price may also be paid by withholding  shares that would  otherwise be
          received by the option holder.

     (3)  Potential  realizable  value is based on the assumption that the stock
          price  of the  Common  Stock  appreciates  at the  annual  rate  shown
          (compounded annually) from the date of grant until the end of the five
          year option term. These values are calculated based upon  requirements
          of the  Securities  and  Exchange  Commission  and do not  reflect the
          Company's  estimate or projection  of future stock price  performance.
          The actual value  realized may be greater or less than the  realizable
          value set forth in this table.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

The  following  table sets forth certain  information  as of September 25, 2004,
regarding  options to purchase  Common Stock held as of September  25, 2004,  by
each of the Named  Executive  Officers,  as well as the exercise of such options
during the fiscal year ended  September  25, 2004.  In addition,  the  following
table reports the values for  in-the-money  options,  which values represent the
positive  spread  between the exercise price of such options and the fair market
value of the Company's Common Stock as of September 25, 2004.

                                       5
<PAGE>

<TABLE>
<S>                              <C>          <C>           <C>             <C>                 <C>             <C>

                                 Shares                     Number of Securities
                                Acquired    Value          Underlying Unexercised                Value of Unexercised
                                  Upon      Realized      Options at September 25,             In-the-Money Options at
                                Exercise       (1)                2004 (2)                      September 25, 2004 (3)
------------------------------ ------------ ----------- ------------------------------      -------------------------------
                                                         Exercisable    Unexercisable        Exercisable    Unexercisable
------------------------------ ------------ ----------- -------------- ---------------- --- -------------- ----------------
Philippe Sanchez                    0           $0               0        1,000,000            $    0          $95,000
Gary R. Christophersen              0           $0         168,333           82,917            $26,325         $18,900
Michael F. Lass                     0           $0         258,020           91,980            $26,325         $18,900
Loran Cashmore Bond                 0           $0         136,667           53,333            $16,475         $12,700
____________________________
</TABLE>
     (1) Value realized is calculated by  subtracting  the exercise price of the
         option from the market value of a share of the  Company's  Common Stock
         on the date of exercise and multiplying  the difference  thereof by the
         number of shares purchased.

     (2) Future  exercisability  is  subject to  vesting  and the option  holder
         remaining employed by the Company.

     (3) Value is calculated  by  subtracting  the exercise  price of the option
         from  the  market  value of a share of the  Company's  Common  Stock as
         reported on the Over The Counter  Bulletin  Board  (OTCBB) on September
         24,  2004 and  multiplying  the  difference  thereof  by the  number of
         shares.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended  September  25, 2004,  the  Compensation  Committee
consisted of Messrs. Goodrich, Kursh and Swerland. None of these individuals has
served at any time as an officer or employee  of the Company or is an  executive
officer at any company where an executive  officer of the Company  serves on the
Compensation  Committee.  Mr.  Swerland  resigned from the Board on November 18,
2004.

ITEM 12.  Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

The following table sets forth information, as of January 28, 2005, with respect
to all  shareholders  known by the Company who  beneficially  own more than five
percent (5%) of the Company's  Common Stock and of the Series A Preferred Stock.
Except as noted  below,  each  person or entity has sole  voting and  investment
power with respect to the shares shown.
<TABLE>
<S>                                                             <C>                             <C>

                                                               Amount and Nature               Percent of
                    Name and Address                        of Beneficial Ownership               Class


  Common Stock
      Robert A. Simms (1)                                           1,137,144                     6.8%
      55 Railroad Avenue
      Greenwhich, CT 06830

      Gary R. Christophersen (2)                                    1,644,053                     8.9%
      1260 16th Avenue West
      Seattle, WA   98119


                                       6
<PAGE>
                                                               Amount and Nature               Percent of
                    Name and Address                        of Beneficial Ownership               Class

      Matinicus LP (3)                                              3,373,533                     17.1%
      225 West 34th Street, Suite 910
      New York, NY 10122

      Series A Preferred Stock

      The Tahoma Fund, L.L.C. (4)                                      10,000                      67%
      Orca Bay Capital Corporation
      Orca Bay Partners, L.L.C.
      Tim Carver and Alexa Carver
      Stanley McCammon
      John E. McCaw, Jr.
      Ross Chapin
      P.O. Box 21749 Seattle, WA 98111
      Madrona Venture Fund I-A, L.P. (5)                                5,000                      33%
      Madrona Venture Fund I-B, L.P.
      Madrona Managing Director Fund L.L.C.
      Madrona Investment Partners L.L.C.
      Paul Goodrich
      1000 2nd Avenue - Suite 3700
      Seattle, WA 98104
</TABLE>

(1)      The holding shown is as reported by Robert A. Simms ("Simms") in a
         Schedule 13D filed January 16, 2002 by Simms pursuant to Rule 13d-1
         under the Exchange Act.

(2)      Includes  options to purchase  151,250  shares of Common Stock  granted
         under the Company's stock option plans which are currently  exercisable
         or exercisable within 60 days of January 28, 2005.

(3)      Includes  Subordinated  Convertible  Debentures that are convertible to
         3,002,533  shares of Series B Preferred  Stock,  $0.01 par value with a
         stated value of $75 per share  ("Series B Preferred  Stock").  Series B
         Preferred  Stock is  convertible  into  common  stock,  $0.01 par value
         ("Common  Stock") at a current  conversion  price of $.736 per share of
         Common Stock, subject to anti-dilution protection.

(4)      The holding shown is as reported by Orca Bay Partners,  L.L.C.,  ("Orca
         Bay") in a  Schedule  13G  filed  February  24,  2000.  Orca Bay is the
         Manager  of The  Tahoma  Fund,  L.L.C.,  ("Tahoma").  Orca Bay  Capital
         Corporation ("OBCC"), Tim and Alexa Carver ("Carver"), Stanley McCammon
         ("McCammon"),  John E. McCaw, Jr. ("McCaw"), and Ross Chapin ("Chapin")
         are all  affiliates  of Orca Bay. The schedule 13G relates to shares of
         Series A Preferred  Stock.  Each share of Series A  Preferred  Stock is
         convertible  into  shares of Common


                                       7
<PAGE>

         Stock of the Company at an initial conversion  price of  $210.526  per
         share of Common  Stock,  subject to
         anti-dilution  protection.  The  total  Common  Stock  covered  by  the
         Schedule 13G, when converted, equals 2,105,261 shares, or 10.3% of the
         Common Stock,  based on 18,236,875 shares outstanding as of January 28,
         2005.

(5)      The  holding  shown is as  reported  by  Madrona  Investment  Partners,
         L.L.C.,  ("Madrona") in a Schedule 13G filed February 24, 2000. Madrona
         is the Manager of the Madrona  Venture  Fund I-A,  L.P.  ("Fund  I-A"),
         Madrona Venture Fund I-B, L.P. ("Fund I-B"),  Madrona Managing Director
         Fund,  L.L.C.  ("Director  LLC"), and Paul Goodrich  ("Goodrich").  The
         schedule 13G relates to shares of Series A Preferred Stock.  Each share
         of Series A Preferred Stock is convertible  into shares of Common Stock
         of the Company at an initial  conversion price of $210.526 per share of
         Common Stock,  subject to  anti-dilution  protection.  The total Common
         Stock  covered by the Schedule 13G, when  converted,  equals  1,052,631
         shares,  or  5.8% of the  Common  Stock,  based  on  18,236,875  shares
         outstanding as of January 28, 2005.


The following  chart indicates  ownership of the Company's  Common Stock by each
director  of the  Company,  each  executive  officer  named in the  compensation
tables,  and by all  directors  and  executive  officers  as a group,  all as of
January 28, 2005.
<TABLE>
<S>                                                              <C>            <C>                 <C>

                                                                             Amount and Nature
                                                                               of Beneficial       Percent of
    Directors:                                                     Age           Ownership            Class
    Philippe Sanchez(1)                                            41             484,375              2.6
    Ross K. Chapin (2)                                             52              128,750              *
    Paul B. Goodrich (3)                                           59              128,750              *
    Matthew A. Kursh (4)                                           40              367,500             2.0
    Mark L. Kalow                                                   49                    0              *

    Additional Named Executives:
    Michael F. Lass (5)                                            50             647,073              3.5
    Loran Cashmore Bond (6)                                        48             245,257              1.3
    All current  directors and named executive  officers as a
    group (7 persons) (7)                                                        2,001,705            10.1
____________________________
</TABLE>

   * Percent of class is less than 1%

(1)      Includes options to purchase 484,375 shares of Common Stock which are
          currently  exercisable or exercisable  within 60 days
          of January 28, 2005.

                                       8
<PAGE>

(2)       Includes  options to purchase 128,750 shares of Common Stock which are
          currently  exercisable  or  exercisable  within 60 days of January 28,
          2005. Does not include 2,105,261 common stock  equivalents  related to
          preferred  stock owned by The Tahoma Fund  L.L.C.  listed  above under
          "Voting  Securities and Principal  Holders",  for which Mr. Chapin has
          shared  beneficial  ownership  as an  affiliate  of the manager of the
          Fund.
(3)       Includes  options to purchase 128,750 shares of Common Stock which are
          currently  exercisable  or  exercisable  within 60 days of January 28,
          2005. Does not include 1,052,631 common stock  equivalents  related to
          preferred stock owned by Madrona Investment  Partners,  L.L.C.  listed
          above under "Voting Securities and Principal  Holders",  for which Mr.
          Goodrich  has  shared  beneficial  ownership  as an  affiliate  of the
          manager of the Limited Liability Company.
(4)      Includes options to purchase 367,500 shares of Common Stock which are
        currently  exercisable or exercisable  within 60 days
          of January 28, 2005.
(5)       Includes options to purchase 320,000 shares of Common Stock which are
         currently  exercisable or exercisable within 60 days
          of January 28, 2005.
(6)      Includes options to purchase 158,333 shares of Common Stock which are
        currently  exercisable or exercisable  within 60 days
          of January 28, 2005.
(7)      Includes options to purchase 1,587,708 shares of Common Stock which are
        currently  exercisable or exercisable  within 60
          days of January 28, 2005.

Equity Compensation Plan Information (at September 25, 2004)
<TABLE>
<S>                          <C>                        <C>                     <C>

In millions (except
per share amounts)
                              Number of securities to     Weighted-average           Number of securities
                                   be issued upon          exercise price           remaining available for
                              exercise of outstanding      of outstanding           future issuance under
                                 options, warrants            options,                equity compensation
           Plan category              and rights            warrants and           plans (excluding securities
                                                              rights                reflected in column (a))
                             ---------------------------      ---------      -------------------------------
                             (a)                             (b)                (c)
Equity compensation plans
approved by security
holders                              2,722,867                  $1.29                   541,639

Equity compensation plans
not approved by security
holders                              1,377,098                   $.77                   140,813
                             ---------------------------      ---------      -------------------------------
Total                                4,099,965                  1.12                    682,452
                             ===========================                     ===============================
</TABLE>

1999  Employee  Stock Option  Plan.  In October  1999,  the  Company's  board of
directors  adopted the 1999 Employee  Stock Option Plan, or 1999 Employee  Plan,
which  provides  for  discretionary  grants of  non-qualified  stock  options to
non-officer employees and other service providers.  A total of 800,000 shares of
common stock have been reserved for issuance under the 1999 Employee Plan. As of
September 25, 2004 there were options to purchase 627,098 shares outstanding and
140,813 shares available for awards under the 1999 Employee Plan.

                                       9
<PAGE>

For fiscal 2004,  all options under the 1999  Employee Plan expire  between five
and seven years from the grant date and each option has an exercise price of not
less than the fair market value of the Company's stock on the date the option is
granted.  The options  granted under the 1999 Employee Plan  generally vest over
three to four years.  In the event of  termination  of an optionee's  employment
with the  Company,  vesting of options  will stop and the  optionee may exercise
vested  options  for a  specified  period of time  after the  termination.  Upon
certain changes in control of the Company, options may vest as determined by the
Plan  Administrator,  or unless the  acquiring  company  assumes  the options or
substitutes with comparable options.

Option  Grant-Philippe  Sanchez.  On October 17, 2003,  the  Company's  board of
directors  granted  750,000 options as a one-time grant to recruit the Company's
President and Chief Executive  Officer.  The options granted to Mr. Sanchez vest
over four years and expire  seven years from the grant  date.  The option has an
exercise price of $.55 which was the fair market value of the Company's stock on
the date the option was granted.  In the event of  termination  of an optionee's
employment  with the Company,  vesting of options will stop and the optionee may
exercise  vested options for a specified  period of time after the  termination.
Upon certain  changes in control of the Company,  options may vest as determined
by the Plan Administrator.

ITEM 13.  Certain Relationships and Related Transactions.

The Company and Mr. Lass and Ms.  Cashmore  Bond have  entered  into a change of
control agreement to ensure that the Company will have the continued  dedication
of the executive,  notwithstanding  the  possibility,  threat or occurrence of a
Change of Control. In the event of the termination of the executive's employment
following a change in control for a reason  other than cause or the  executive's
resignation  for good  reason,  the  executive  shall be entitled  to  severance
payment  equal to one half (50%) of the  executive's  annual base salary for the
fiscal year in which the termination occurs.

In  addition,  the Company and Mr. Lass and Ms.  Cashmore  Bond  entered into an
employment  and  severance  agreement to ensure that the Company  would have the
continued  dedication of the executive  subsequent to the hiring of Mr. Philippe
Sanchez as President and CEO. In the event of the termination of the executive's
employment for a reason other than cause or the executive's resignation for good
reason, the executive would be entitled to a severance payment equal to one half
(50%) of the executive's base salary as of October 2003. These agreement expired
on October 20, 2004.

The Company and Mr.  Sanchez have entered into an  employment  agreement as more
fully described under "Employment Agreements".

ITEM 14.  Principal Accountant Fees and Services

The following table presents the fees for services rendered by Ernst & Young LLP
during fiscal 2004.
     Audit fees...................................................$168,000
     Audit-related fees...........................................$  2,500
     Tax fees.....................................................$ 76,630
     All other fees...............................................$      0

The Audit Committee did consider whether the provision of non-audit  services is
compatible with the principal  accountants'  independence and concluded that the
provision of other non-audit  services has been compatible with  maintaining the
independence of the Company's external auditors.  All services provided by Ernst
& Young LLP to the Company  must be  pre-approved  by the Audit  Committee  or a
designated member of the Audit Committee.

                                       10
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                PHOTOWORKS, INC.
                                                 (REGISTRANT)

DATED: March 2, 2005                          By: /s/ Philippe Sanchez
                                                  Philippe Sanchez
                                          President and Chief Executive Officer
                                             (Principal Executive Officer)



                                       11
<PAGE>

                                  EXHIBIT 31.1
                                  CERTIFICATION

         I, Philippe Sanchez, certify that:

1.            I have reviewed  this annual  report on Form 10K/A of  PhotoWorks,
              Inc.;

2.            Based on my  knowledge,  this  report  does not contain any untrue
              statement  of a  material  fact or omit to state a  material  fact
              necessary  to  make  the   statements   made,   in  light  of  the
              circumstances   under  which  such   statements   were  made,  not
              misleading with respect to the period covered by this report;

3.            Based  on  my  knowledge,  the  financial  statements,  and  other
              financial  information included in this report,  fairly present in
              all  material  respects  the  financial   condition,   results  of
              operations  and cash flows of the  registrant  as of, and for, the
              periods presented in this report;

4.            The registrant's  other  certifying  officer and I are responsible
              for   establishing   and  maintaining   disclosure   controls  and
              procedures  (as  defined  in  Exchange  Act  Rules  13a-15(e)  and
              15d-15(e)) for the registrant and have:

a)            Designed such disclosure  controls and procedures,  or caused such
              disclosure  controls  and  procedures  to be  designed  under  our
              supervision,  to ensure that material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

b)            Designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial  statements  for external  purposes in  accordance  with
              generally accepted accounting principles;

         c)   Evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

         d)   Disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's most recent fiscal quarter (the  registrant's  fourth
              fiscal  quarter  in  the  case  of  an  annual  report)  that  has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

5.       The  registrant's  other  certifying  officer(s) and I have  disclosed,
         based on our most recent  evaluation of internal control over financial
         reporting,  to the registrant's auditors and the audit committee of the
         registrant's  board of directors (or persons  performing the equivalent
         functions):

         a)       all significant  deficiencies  and material  weaknesses in the
                  design  or  operation  of  internal   control  over  financial
                  reporting which are reasonably  likely to adversely affect the
                  registrant's ability to record, process,  summarize and report
                  financial information; and

         b)       any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal control over financial reporting.



Date: March 2, 2005
/s/ PHILIPPE SANCHEZ
Philippe Sanchez
Chief Executive Officer and President


                                       12
<PAGE>

                                  EXHIBIT 31.2
                                  CERTIFICATION

         I, Loran Cashmore Bond, certify that:

1.            I have reviewed  this annual  report on Form 10K/A of  PhotoWorks,
              Inc.;

2.            Based on my  knowledge,  this  report  does not contain any untrue
              statement  of a  material  fact or omit to state a  material  fact
              necessary  to  make  the   statements   made,   in  light  of  the
              circumstances   under  which  such   statements   were  made,  not
              misleading with respect to the period covered by this report;

3.            Based  on  my  knowledge,  the  financial  statements,  and  other
              financial  information included in this report,  fairly present in
              all  material  respects  the  financial   condition,   results  of
              operations  and cash flows of the  registrant  as of, and for, the
              periods presented in this report;

4.            The registrant's  other  certifying  officer and I are responsible
              for   establishing   and  maintaining   disclosure   controls  and
              procedures  (as  defined  in  Exchange  Act  Rules  13a-15(e)  and
              15d-15(e)) for the registrant and have:

a)            Designed such disclosure  controls and procedures,  or caused such
              disclosure  controls  and  procedures  to be  designed  under  our
              supervision,  to ensure that material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

b)            Designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial  statements  for external  purposes in  accordance  with
              generally accepted accounting principles;

         c)   Evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

         d)   Disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's most recent fiscal quarter (the  registrant's  fourth
              fiscal  quarter  in  the  case  of  an  annual  report)  that  has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

5.       The  registrant's  other  certifying  officer(s) and I have  disclosed,
         based on our most recent  evaluation of internal control over financial
         reporting,  to the registrant's auditors and the audit committee of the
         registrant's  board of directors (or persons  performing the equivalent
         functions):

         a)       all significant  deficiencies  and material  weaknesses in the
                  design  or  operation  of  internal   control  over  financial
                  reporting which are reasonably  likely to adversely affect the
                  registrant's ability to record, process,  summarize and report
                  financial information; and

         b)       any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal control over financial reporting.



Date:  March 2, 2005

/s/ Loran Cashmore Bond
Loran Cashmore Bond
Chief Accounting Officer


                                       13
<PAGE>

                                   EXHIBIT 32


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of PhotoWorks, Inc. (the "Company") on Form
10-K/A for the period ending  September  25, 2004, as filed with the  Securities
and Exchange Commission on the date hereof (the "Report"),  I, Philippe Sanchez,
Chief  Executive  Officer  of  the  Company,  and  Loran  Cashmore  Bond,  Chief
Accounting Officer certify,  pursuant to 18 U.S.C. ss. 1350, as adopted pursuant
to ss. 906 of the  Sarbanes-Oxley  Act of 2002, that, as of the date hereof,  to
the best of our knowledge and belief:


          (1) The Report fully complies with the  requirements  of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and


          (2) The information  contained in the Report fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company for the stated periods.




Signature:  /s/ Philippe Sanchez            Signature: /s/ Loran Cashmore Bond
            Philippe Sanchez                           Loran Cashmore Bond
            Chief Executive Officer                    Chief Accounting Officer

Dated:  March 2, 2005                       Dated:  March 2, 2005