FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



(Mark One)



[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended:    September 30, 2000

OR



[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from______________ to ________________





Commission file number:   0-11927





Moto Photo, Inc.





(Exact name of registrant as specified in its charter)





Delaware		                            	31-1080650  	(State or other jurisdiction of			(IRS Employer Identification Number)

Incorporation or organization)





4444 Lake Center Dr. Dayton, OH  45426



(Address of principal executive offices with Zip Code)





(937) 854-6686



(Registrant's telephone number, including area code)





No Change



(Former name, former address, and former fiscal year, if changed since last report)











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 such filing requirements for the past 90 days.



Yes   X    No  ____





APPLICABLE ONLY TO ISSUERS IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS.



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court.



Yes______ No______





APPLICABLE ONLY TO CORPORATE ISSUERS



Indicate the number of shares outstanding of each of the issuer's classes of common stock:

As of November 1, 2000:

7,760,654 - Voting Common,   0 - Non - Voting Common

Index



Moto Photo, Inc. and Subsidiaries



Part I.	Financial Information

Item 1.	Financial Statements (Unaudited)



Consolidated Balance Sheets - September 30, 2000 and December 31, 1999

Consolidated Statements of Operations - Three months ended September 30, 2000 and 1999 and nine months ended September 30, 2000 and 1999

Consolidated Statements of Cash Flows - Nine months ended September 30, 2000 and 1999

Notes to Consolidated Financial Statements - September 30, 2000

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Part II.	Other Information



Item 6.	Exhibits and Reports on Form 8-K



Signature

|Part I.      Financial Information |                                                  |                                |                      
|---------------------------------- | ------------------------------------------------ | ------------------------------ | ---------------------
|Item 1.     Financial Statements   |                                                  |                                |                      
|Moto Photo, Inc. and Subsidiaries  |                                                  |                                |                      
|                                   |                                                  |                                |                      
|Consolidated Balance Sheets        |                                                  |                                |                      
|(Unaudited)                        |                                                  |                                |                      
|                                   |                                                  |                                |                      
|                                   |                                                  |                                |                      
|                                   |                                                  |                                |                      
|                                   |                                                  |                                | September 30,        
|                                   |                                                  |                                | 2000                 
|Assets                             |                                                  |                                |                      
|Current Assets:                    |                                                  |                                |                      
|                                   | Cash                                             | $                1,330,013     |                      
|                                   | Accounts receivable, less allowances of $875,000 |                                |                      
|                                   |                                                  | in 2000 and $636,000 in 1999   | 2,889,980            
|                                   | Notes receivable, less allowances of $59,000 in  |                                |                      
|                                   |                                                  | 2000 and $89,000 in 1999       | 216,669              
|                                   | Inventory                                        | 1,940,147                      |                      
|                                   | Income taxes receivable                          | 744,048                        |                      
|                                   | Deferred tax assets                              | 1,063,000                      |                      
|                                   | Prepaid expenses                                 | 198,580                        |                      
|Total current assets               | 8,382,437                                        |                                | 12,361,659           
|                                   |                                                  |                                |                      
|Property and equipment             | 5,333,819                                        |                                | 5,315,573            
|                                   |                                                  |                                |                      
|Other assets:                      |                                                  |                                |                      
|                                   | Notes receivable, less allowances of $1,496,000  |                                |                      
|                                   |                                                  | in 2000 and $1,536,000 in 1999 | 983,523              
|                                   | Cost of franchises and contract acquired         | 94,486                         |                      
|                                   | Goodwill                                         | 3,501,959                      |                      
|                                   | Deferred tax assets                              | 130,000                        |                      
|                                   | Other assets                                     | 936,117                        |                      
|Total assets                       | $             19,362,341                         |                                | $          23,916,814
|                                   |                                                  |                                |                      
|                                   |                                                  |                                |                      
|See accompanying notes.            |                                                  |                                |                      









|Moto Photo, Inc. and Subsidiaries          |                                                 |                                           |                      
|------------------------------------------ | ----------------------------------------------- | ----------------------------------------- | ---------------------
|                                           |                                                 |                                           |                      
|Consolidated Balance Sheets, continued     |                                                 |                                           |                      
|(Unaudited)                                |                                                 |                                           |                      
|                                           |                                                 |                                           |                      
|                                           |                                                 |                                           |                      
|                                           |                                                 |                                           |                      
|                                           |                                                 |                                           | September 30,        
|                                           |                                                 |                                           | 2000                 
|Liabilities and stockholders' equity       |                                                 |                                           |                      
|Current liabilities:                       |                                                 |                                           |                      
|                                           | Accounts payable                                | $              1,775,381                  |                      
|                                           | Accrued payroll and benefits                    | 510,131                                   |                      
|                                           | Accrued expenses                                | 390,511                                   |                      
|                                           | Accrued income taxes                            | 342,828                                   |                      
|                                           | Current portion of long-term obligations        | 1,364,000                                 |                      
|                                           | Other                                           | 146,139                                   |                      
|Total current liabilities                  | 4,528,990                                       |                                           | 8,012,153            
|                                           |                                                 |                                           |                      
|                                           | Long-term debt                                  | 8,304,302                                 |                      
|                                           | Capitalized leases                              | 1,304,536                                 |                      
|                                           | Deferred revenue                                | 110,544                                   |                      
|Total liabilities                          | 14,248,372                                      |                                           | 18,160,022           
|                                           |                                                 |                                           |                      
|Stockholders' equity                       |                                                 |                                           |                      
|                                           | Preferred stock $.01 par value:                 |                                           |                      
|                                           |                                                 | Authorized shares - 2,000,000:            |                      
|                                           |                                                 | Amended Series G (Series G in 1999)       |                      
|                                           |                                                 | cumulative non-voting preferred shares,   |                      
|                                           |                                                 | 1,000,000 shares issued and outstanding   |                      
|                                           |                                                 | with preferences aggregating $10,000,000  | 10,000               
|                                           | Common shares $.01 par value:                   |                                           |                      
|                                           |                                                 | Authorized shares - 30,000,000:           |                      
|                                           |                                                 | Issued and outstanding shares - 7,884,528 |                      
|                                           |                                                 | in  2000 and 1999                         | 78,845               
|                                           | Treasury stock, at par (123,874 shares in  2000 |                                           |                      
|                                           |                                                 | and 151,300 shares in 1999)               | (1,239)              
|                                           | Paid-in capital                                 | 6,613,198                                 |                      
|                                           | (Deficit) retained earnings subsequent to       |                                           |                      
|                                           |                                                 | June 30, 1991                             | (1,586,835)          
|Total stockholders' equity                 | 5,113,969                                       |                                           | 5,756,792            
|Total liabilities and stockholders' equity | $             19,362,341                        |                                           | $          23,916,814
|                                           |                                                 |                                           |                      
|                                           |                                                 |                                           |                      
|See accompanying notes.                    |                                                 |                                           |                      

Moto Photo, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

|                                              |                                      | Three Months Ended |                 | Nine Months Ended
|--------------------------------------------- | ------------------------------------ | ------------------ | --------------- | -----------------
|                                              |                                      | September 30,      |                 | September 30,    
|                                              |                                      | 2000               |                 | 1999             
|                                              |                                      |                    |                 |                  
|Revenue                                       |                                      |                    |                 |                  
|                                              |                                      |                    |                 |                  
|                                              | Sales and other revenue              | $  9,319,439       |                 | $ 9,647,795      
|                                              | Interest income                      | 57,347             |                 | 57,399           
|                                              |                                      | 9,376,786          |                 | 9,705,194        
|                                              |                                      |                    |                 |                  
|Expenses                                      |                                      |                    |                 |                  
|                                              |                                      |                    |                 |                  
|                                              | Cost of sales and operating expenses | 7,017,330          |                 | 7,169,059        
|                                              | Selling, general, and administrative | 1,588,502          |                 | 1,402,454        
|                                              | Advertising                          | 307,105            |                 | 337,675          
|                                              | Depreciation and amortization        | 391,699            |                 | 355,328          
|                                              | Interest expense                     | 170,807            |                 | 114,971          
|                                              |                                      | 9,475,443          |                 | 9,379,487        
|                                              |                                      |                    |                 |                  
|Income (Loss) before income taxes             | (98,657)                             |                    | 325,707         |                  
|                                              |                                      |                    |                 |                  
|Income tax benefit (expense)                  | 34,000                               |                    | 245,000         |                  
|Net income (loss)                             | (64,657)                             |                    | 570,707         |                  
|                                              |                                      |                    |                 |                  
|Dividend requirement on preferred shares      | (185,738)                            |                    | (65,930)        |                  
|Net income (loss) applicable to common shares | $   (250,395)                        |                    | $    504,777    |                  
|                                              |                                      |                    |                 |                  
|Net income (loss) per common share:
Basic     | $          (.03)                     |                    | $           .06 |                  
|Diluted                                       | $          (.03)                     |                    | $           .05 |                  
|                                              |                                      |                    |                 |                  
|Weighted average shares outstanding:
Basic    | 7,754,749                            |                    | 7,827,530       |                  
|Diluted                                       | 7,754,749                            |                    | 16,659,310      |                  



See accompanying notes.

Moto Photo Inc and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

|                                                                    |                                                                | Nine Months Ended September 30,
|------------------------------------------------------------------- | -------------------------------------------------------------- | -------------------------------
|                                                                    |                                                                | 2000                           
|Operating activities                                                |                                                                |                                
|Net income (loss)                                                   | $       (663,964)                                              |                                
|Adjustments to reconcile net cash utilized by operating activities: |                                                                |                                
|                                                                    | Depreciation and amortization                                  | 1,137,433                      
|                                                                    | Provision for losses on inventory and receivables              | 257,726                        
|                                                                    | Notes receivable increases as a result of franchise activities | (37,500)                       
|                                                                    | Loss on disposition of assets                                  | 46,815                         
|                                                                    | Noncash directors' fees expense                                | 40,122                         
|Increase (decrease) resulting from changes in:                      |                                                                |                                
|                                                                    | Income tax receivable                                          | (354,048)                      
|                                                                    | Accounts receivable                                            | 842,0741,133,879               
|                                                                    | Inventory and prepaid expenses                                 | 527,555                        
|                                                                    | Deferred taxes                                                 | -                              
|                                                                    | Other assets                                                   | -                              
|                                                                    | Accounts payable and accrued expenses                          | (2,346,571)                    
|                                                                    | Other liabilities                                              | (97,591)                       
|Net cash provided (utilized) by operating activities                | (647,949356,144)                                               |                                
|                                                                    |                                                                |                                
|Investing activities                                                |                                                                |                                
|                                                                    | Purchases of property and equipment                            | (361,036524839)                
|                                                                    | Payments received on notes receivable                          | 789,624                        
|                                                                    | Proceeds from sale of property and equipment                   | -                              
|                                                                    | Purchases of U.S. Treasury Bond investments                    | -                              
|                                                                    | Proceeds from sale of U.S. Treasury Bond investments           | -                              
|                                                                    | Other assets                                                   | 6,303                          
|Net cash provided (utilized) by investing activities                | 434,893143,088                                                 |                                
|                                                                    |                                                                |                                
|Financing activities                                                |                                                                |                                
|                                                                    | Proceeds from long-term obligations                            | 292,806                        
|                                                                    | Principal payments on  long-term debt and capital              |                                
|                                                                    | lease obligations                                              | (2,684,132)                    
|                                                                    | Payments of preferred dividends                                | -                              
|                                                                    | Purchase of common shares for treasury stock                   | (20,393)                       
|                                                                    | Contributed capital                                            | 1,413                          
|Net cash utilized by financing activities                           | (2,410,306)                                                    |                                
|                                                                    |                                                                |                                
|Decrease in cash                                                    | (2,623,362)                                                    |                                
|Cash at beginning of period                                         | 3,953,375                                                      |                                
|Cash at end of period                                               | $       1,330,013                                              |                                
|See accompanying notes                                              |                                                                |                                



Moto Photo, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2000

"Unaudited"

1. Merger Announcement

On September 20, 2000 Moto Photo, Inc. (the "Company") and PhotoChannel Networks Inc. ("PhotoChannel"), an e-commerce company developing an on-line photo print service for both digital and conventional film photographers, announced the signing of a
non-binding letter of intent relating to the proposed merger of the Company with a subsidiary of PhotoChannel.to merge the two companies and their subsidiaries.  PhotoChannel is a British Columbia company with common shares listed on The Montreal Exchange
in Canada (Symbol: PNI) and quoted on the NASD OTC Bulletin Board in the United States (Symbol: PHCHF).

The proposed merger would value Moto Photo common stock at US $1.75 per share and provide for each Company common share to be converted into shares of common stock of PhotoChannel based upon an exchange ratio equal to US $1.75 divided by the average
closing price of PhotoChannel common stock for the 20 trading days immediately preceding the merger, with a ceiling of US $2.50 per PhotoChannel share and a floor of US $1.00 per PhotoChannel share.  As a result, subject to completion of the merger, the
existing Company common shareholders would own between approximately 5,600,000 to 14,000,000 common shares of PhotoChannel.  The transaction is anticipated to be tax-free to Company shareholders.  The proposed merger is subject to the completion of a US
$25 million financing by PhotoChannel, negotiation and execution of a definitive agreement providing for the merger as well as other requirements and conditions, including Board of Directors and shareholder approvals, regulatory approvals, the filing of a
registration statement with the SEC, and the conversion of Company options into PhotoChannel options, and other conditions.  AThe closing date cannot be determined at this time.is uncertain but not likely to be prior to spring 2001.

Additional information was filed on Form 8-K dated September 21, 2000.

B.	Subsequent Event

The Company announced on October 31, 2000 that it received notification from the Nasdaq Stock Market ("Nasdaq") that the Company's common shares failed to achieve compliance with Nasdaq's minimum bid price requirements for continued inclusion on
the Nasdaq SmallCap Market and were delisted as of the opening of trading on October 31, 2000.  The Company's common shares now trade under the symbol MOTO on the OTC Bulletin Board.

Additional information was filed on Form 8-K dated November 1, 2000.

C.	Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (all of which are of normal
recurring nature) considered necessary for a fair presentation have been included.  Operating results for the nine-month period ended September 30, 2000, are not necessarily indicative of the results that may be expected for the year ended December 31, 2000
 .



The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect amounts reported in the financial statements.  Actual results could differ from those
estimates.



For further information, refer to the consolidated financial statements and footnotes thereto included in Moto Photo, Inc. and Subsidiaries' annual report on Form 10-K for the year ended December 31, 1999.

D.	Reclassification

Certain amounts from the prior period have been reclassified to conform to the current period presentation.

E.	Supplemental Cash Flow Information

Noncash items in the first nine months of 2000 included $684,151645,056 of capital expenditures for the company store segment from entering into capitalized leases and from the trade-in of equipment.  Noncash expense for directors' fees was $40,122
during the first nine months.  Cash paid for interest during the first nine months of 2000 was $569,073 compared to $319,496 for the same period in 1999.  Cash paid for income taxes was $200 for the first nine months of 2000 and $6,350 for the same period
in 1999.

1. Segment Information

Three Months Ended September 30, 2000

|                                                                                                                                            | Development       | Company Stores | Royalties and Advertising | Wholesale   | Total      
|------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | -------------- | ------------------------- | ----------- | -----------
|                                                                                                                                            |                   |                |                           |             |            
|Sales and other revenue                                                                                                                     | $          95,250 | $ 3,851,502    | $     1,263,125           | $ 4,109,562 | $ 9,319,439
|                                                                                                                                            |                   |                |                           |             |            
|Depreciation and amortization                                                                                                               | 505               | 328,705        | 4,130                     | 1,223       | 334,563    
|                                                                                                                                            |                   |                |                           |             |            
|Operating segment contribution prior
       to interest income and expense, 
       income taxes and unallocated 
       corporate expenses | (137,254)         | (541,802)      | 834,967                   | (103,851)   | 52,060     
|                                                                                                                                            |                   |                |                           |             |            
|Capital expenditures                                                                                                                        | -                 | 348,297        | -                         | -           | 348,297    
|                                                                                                                                            |                   |                |                           |             |            



Three Months Ended September 30, 1999

|                                                                                                                                            | Development       | Company Stores | Royalties and Advertising | Wholesale  | Total     
|------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | -------------- | ------------------------- | ---------- | ----------
|                                                                                                                                            |                   |                |                           |            |           
|Sales and other revenue                                                                                                                     | $         128,625 | $3,497,779     | $    1,274,961            | $4,746,430 | $9,647,795
|                                                                                                                                            |                   |                |                           |            |           
|Depreciation and amortization                                                                                                               | 979               | 277,863        | 3,225                     | 2,306      | 284,373   
|                                                                                                                                            |                   |                |                           |            |           
|Operating segment contribution prior
       to interest income and expense, 
       income taxes and unallocated 
       corporate expenses | (53,245)          | (355,226)      | 839,135                   | (78,643)   | 352,021   
|                                                                                                                                            |                   |                |                           |            |           
|Capital expenditures                                                                                                                        | -                 | 586,169        | -                         | -          | 586,169   

F.	Segment Information (continued)

Nine Months Ended September 30, 2000

|                                                                                                                                            | Development     | Company Stores | Royalties and Advertising | Wholesale   | Total      
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------- | -------------- | ------------------------- | ----------- | -----------
|                                                                                                                                            |                 |                |                           |             |            
|Sales and other revenue                                                                                                                     | $       221,046 | $10,745,593    | $    3,554,710            | $11,462,918 | $25,984,267
|                                                                                                                                            |                 |                |                           |             |            
|Depreciation and amortization                                                                                                               | 2,146           | 940,003        | 10,116                    | 3,993       | 956,258    
|                                                                                                                                            |                 |                |                           |             |            
|Operating segment contribution prior
       to interest income and expense, 
       income taxes and unallocated 
       corporate expenses | (464,902)       | (2,047,362)    | 2,293,404                 | (357,661)   | (576,521)  
|                                                                                                                                            |                 |                |                           |             |            
|Identifiable segment assets                                                                                                                 | 66,316          | 10,461,305     | 686,238                   | 2,999,314   | 14,213,173 
|                                                                                                                                            |                 |                |                           |             |            
|Capital expenditures                                                                                                                        | -               | 957,470        | -                         | -           | 957,470    
|                                                                                                                                            |                 |                |                           |             |            
|                                                                                                                                            |                 |                |                           |             |            

Nine Months Ended September 30, 1999

|                                                                                                                                            | Development     | Company Stores | Royalties and Advertising | Wholesale   | Total      
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------- | -------------- | ------------------------- | ----------- | -----------
|                                                                                                                                            |                 |                |                           |             |            
|Sales and other revenue                                                                                                                     | $       277,545 | $ 9,384,039    | $    3,624,231            | $12,645,324 | $25,931,139
|                                                                                                                                            |                 |                |                           |             |            
|Depreciation and amortization                                                                                                               | 2,937           | 684,336        | 9,677                     | 6,918       | 703,868    
|                                                                                                                                            |                 |                |                           |             |            
|Operating segment contribution prior
       to interest income and expense, 
       income taxes and unallocated 
       corporate expenses | (305,468)       | (1,150,750)    | 2,423,449                 | (250,481)   | 716,750    
|                                                                                                                                            |                 |                |                           |             |            
|Identifiable segment assets                                                                                                                 | 76,296          | 9,140,448      | 878,514                   | 4,350,791   | 14,446,049 
|                                                                                                                                            |                 |                |                           |             |            
|Capital expenditures                                                                                                                        | -               | 1,345,076      | -                         | 878         | 1,345,954  
|                                                                                                                                            |                 |                |                           |             |            



|                                                     | Three Months Ended
September 30, |  | Nine Months Ended
September 30,
|---------------------------------------------------- | -------------------------------- |  | -------------------------------
|Revenue                                              | 2000                             |  | 1999                           
|Total sales and other revenue forreportable segments | $  9,319,439                     |  | $  9,647,795                   
|Interest income                                      | 57,347                           |  | 57,399                         
|Total consolidated revenue                           | $  9,376,786                     |  | $  9,705,194                   



1. Segment Information (continued)

|Other Significant Items                                                                                                                                 |         | Segment Totals    | Corporate         | Consolidated Total 
|------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ----------------- | ----------------- | -------------------
|                                                                                                                                                        |         |                   |                   |                    
|Three Months Ended September 30, 2000                                                                                                                   |         |                   |                   |                    
|Depreciation and amortization                                                                                                                           |         | $         334,563 | $          57,136 | $           391,699
|Operating segment contribution prior to                                                                                                                 |         |                   |                   |                    
|interest income and expense,  income 
      taxes and unallocated corporate expenses 
      for segment totals reconciled to income 
      before taxes | 52,060  | (150,717)         | (98,657)         
|Capital expenditures                                                                                                                                    |         | 348,297           | 34,084            | 382,381            
|                                                                                                                                                        |         |                   |                   |                    
|Three Months Ended September 30, 1999                                                                                                                   |         |                   |                   |                    
|Depreciation and amortization                                                                                                                           |         | $        284,373  | $          70,955 | $           355,328
|Operating segment contribution prior to                                                                                                                 |         |                   |                   |                    
|Interest income and expense,  income 
      taxes and unallocated corporate expenses 
      for segment totals reconciled to income 
      before taxes |         | 352,021           | (26,314)          | 325,707            
|Capital expenditures                                                                                                                                    |         | 586,169           | 25,843            | 612,012            
|                                                                                                                                                        |         |                   |                   |                    
|Nine Months Ended September 30, 2000                                                                                                                    |         |                   |                   |                    
|Depreciation and amortization                                                                                                                           |         | $        956,258  | $    181,176      | $         1,137,434
|Operating segment contribution prior to                                                                                                                 |         |                   |                   |                    
|Interest income and expense,  income 
      taxes and unallocated corporate expenses 
      for segment totals reconciled to income 
      before taxes |         | (576,521)         | (444,443)         | (1,020,964)        
|Identifiable segment assets                                                                                                                             |         | 14,213,173        | 5,149,169         | 19,362,342         
|Capital expenditures                                                                                                                                    |         | 957,470           | 87,715            | 1,045,185          
|                                                                                                                                                        |         |                   |                   |                    
|Nine Months Ended September 30, 1999                                                                                                                    |         |                   |                   |                    
|Depreciation and amortization                                                                                                                           |         | $        703,868  | $    212,861      | $         916,729  
|Operating segment contribution prior to                                                                                                                 |         |                   |                   |                    
|interest income and expense,  income 
      taxes and unallocated corporate expenses 
      for segment totals reconciled to income 
      before taxes | 716,750 | (99,377)          | 617,373          
|Identifiable segment assets                                                                                                                             |         | 14,446,049        | 5,943,455         | 20,389,504         
|Capital expenditures                                                                                                                                    |         | 1,345,954         | 75,788            | 1,421,742          
|                                                                                                                                                        |         |                   |                   |                    









G.	Earnings Per Share Data

The following table sets forth the calculation of basic and diluted earnings (loss) per share for the periods indicated.

Three Months Ended		Nine Months Ended

|                                                        | September 30, 2000 |  | September 30, 1999 |  | September 30, 2000 |  | September 30, 1999
|------------------------------------------------------- | ------------------ |  | ------------------ |  | ------------------ |  | ------------------
|                                                        |                    |  |                    |  |                    |  |                   
|Numerator:                                              |                    |  |                    |  |                    |  |                   
|Net income (loss) applicable to common shares - basic   | $ (250,395)        |  | $     504,777      |  | $  (1,205,604)     |  | $      584,488    
|                                                        |                    |  |                    |  |                    |  |                   
|Effect of dilutive securities:                          |                    |  |                    |  |                    |  |                   
|Series G preferred previously accreted dividends        | -                  |  | 325,116            |  | -                  |  | -                 
|Series G preferred dividend requirement                 | -                  |  | 65,930             |  | -                  |  | -                 
|Net income (loss) applicable to common shares - diluted | $ (250,395)        |  | $     895,823      |  | $  (1,205,604)     |  | $      584,488    
|                                                        |                    |  |                    |  |                    |  |                   
|Denominator:                                            |                    |  |                    |  |                    |  |                   
|Weighted average common shares outstanding - basic      | 7,754,749          |  | 7,827,530          |  | 7,740,923          |  | 7,836,967         
|                                                        |                    |  |                    |  |                    |  |                   
|Effect of dilutive securities:                          |                    |  |                    |  |                    |  |                   
|Employee stock options                                  | -                  |  | 12,038             |  | -                  |  | 4,512             
|Convertible Series G preferred                          | -                  |  | 8,819,742          |  | -                  |  | -                 
|Weighted average common shares outstanding - diluted    | 7,754,749          |  | 16,659,310         |  | 7,740,923          |  | 7,841,479         
|                                                        |                    |  |                    |  |                    |  |                   
|Basic earnings (loss) per share                         | $            (.03) |  | $              .06 |  | $          (.16)   |  | $           .07   
|                                                        |                    |  |                    |  |                    |  |                   
|Diluted earnings (loss) per share                       | $            (.03) |  | $              .05 |  | $         (.16)    |  | $           .07   





Item 2.

Management's Discussion and Analysis

of Financial Condition

and Results of Operations

Results of Operations

The Company reported a net loss of  $64,657, or a loss per common share, basic and diluted, of $.03 for the third quarter 2000 compared to net income of $570,707, or basic income per common share of $.06 and diluted income per common
share of $.05 for the third quarter 1999.  For the nine months ended September 30, 2000, the Company recorded a net loss of $663,964, or a loss per common share, basic and diluted, of $.16, compared to a net income of $784,373, or income per common share,
basic and diluted, of $.07 for the same period during 1999.  Per share calculations are made after provision for preferred dividend requirements.  The 2000 dividend requirement is an imputed amount, and no cash payments are required until 2003.  Due to
the Company's common share price during the third quarter of 1999, certain securities became dilutive for the third quarter of 1999.



Development segment revenue decreased by $33,000, or 26%, during the third quarter of 2000 compared to 1999, and also decreased by $56,000, or 20% for the first nine months of 2000 compared to 1999.  These reductions were primarily due
to the Company changing its franchise offering and offering a lower cost franchise fee program for stores that open by December 31, 2000, even though there were eleven  franchisee stores opened in the first nine months of 2000 compared to six opened in
the same period in 1999.



Company store revenue increased by $354,000, or 10%, for the third quarter 2000 compared to 1999 and also increased by $1,362,000, or 15%, for the first nine months of 2000 compared to 1999.  These increases are primarily due to the 17
company stores opened or acquired during the last half of 1999 and the first half of 2000.  Comparable store sales were down 9% in the third quarter and down 7% for the first nine months.  These decreases are partiallyprimarily attributable to increased
discounting on film processing instituted to maintain the Company's share of film processing in markets that are experiencing increased competition from new drug stores that offer on-site processing.  In 2000, comparable store roll processing declined
approximately [34% for the third quarter and approximately 12% for the first nine months.



Wholesale segment revenue decreased in the third quarter by $583,000, or 13%, and in the first nine months by $1,001,000, or 8%, primarily as the result of lower prices in the color paper market, approximately [6% fewer franchise



Revenue from franchisee royalties and advertising



Development segment operating expenses were up $66,000 in the third quarter and $120,000 in the first nine months.  The increase was primarily due to expanded advertising and marketing efforts designed to increase potential franchise
prospects.  Lower payroll costs partially offset these increases in the nine months.



Company store segment operating contribution decreased by $187,000 in the third quarter 2000 compared to the same period in 1999, with $110,000 of this decrease caused by $222,000 of lower sales and margins at stores opened more than
one year, partially offset by $112,000 in reduced expenses in the same stores.  The balance was attributable to the losses generated by new stores in their ramp-up phase.  Of this, $222,000 was from lower sales and margins at stores opened more than one
year, partially offset by $112,000 in reduced expenses in the same stores.  For the first nine months of 2000, Company store segment operating contribution decreased by $897,000 from the same period in 1999.   New stores in their ramp-up phase accounted
for $444,000 of this decrease with the balance primarily caused by lower sales, margins and expenses in stores opened more than one year.



Selling, general and administrative expenses increased $186,000 for the quarter and $330,000 for the first nine months of the year.  In 2000, a concept development team was implemented whose mission is to explore strategies to test,
refine, and implement conceptual enhancements, new technologies and new methods of communicating with customers, franchisees and associatesemployees.  The additional cost associated with this team was approximately $114,000 for the third quarter and
$288,000 for the first nine months.   In addition, the Company recorded a loss on store closings of $474,000 for the quarter and nine months compared to $3,000 in the prior year.



Advertising expense decreased $31,000 in the quarter and increased $185,000 for the first nine months compared to the prior year.  The quarterly decrease was primarily due to reduced grand opening advertising due to timing of store
openings, while the year-to-date increase was attributable to supporting increased company store revenue, including grand openings, and increases in advertising for development activities.



Depreciation and amortization expense increased over 1999 by $36,000 for the quarter and $221,000 for the yearfirst nine months, primarily as a result of the property and equipment in the new company stores.



Interest expense increased $56,000 for the quarter ended September 30, 2000 compared to the same period in 1999 and $250,000 for the nine months ended September 30, 2000 compared to the same period in 1999.  This was primarily due to
increased borrowing to finance Company store asset additions, the expansion discussed above, higher interest rates this year and the effect of converting $2,700,000 of accounts payable to a term note at the end of 1999.  During the first six months of
2000, the Company prepaid substantially all of its long-term obligations which were scheduled to be paid during 2000.



Liquidity and Capital Resources



Net cash utilized by operating activities was $648356,000 for the first nine months in 2000 compared to net cash provided by operating activities of $772,000 for the same period in 1999.  This change was largely due to a net loss for
the year compared to net income last year.  Rreduction of accounts payable due to timing differences and a larger loss, were largely partially offset by reductions in accounts receivable and inventory.



Net cash provided by investing activities was $435143,000 for the first nine months in 2000 compared to net cash utilized by investing activities of $934,000 for the comparable period in 1999.  Increases in collections of notes
receivable and a decrease in cash  purchases of property and equipment were primarily responsible for the differences.



Net cash utilized by financing activities was $2,410,000 for the first nine months in 2000 compared to $1,474,000 for the same period in 1999. The difference was due primarily to prepayments of long-term debt in 2000, partially offset by the
elimination of cash dividend payments of cash dividends on preferred stock this year and higher collections on notes receivableproceeds from new long-term obligations this year.

The Company has an unused $1.5 million line of credit available for use as of September 30, 2000.















Item 3

Quantitative and Qualitative Disclosures About Market Risk

For information concerning market risks relating to changes in interest rates, reference is made to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 and the discussion of market risks under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K.  There have been no material changes in market risk since December 31, 1999.



Forward Looking Statements

This report may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by such words as "anticipates", "believes", "expects",
"intends", "estimates", "planned", "scheduled", "may", "will", "would", "could" or similar expressions.  Such forward-looking statements, which reflect the Company's current views of future events and financial performance, involve known and unknown risks
and uncertainties that may cause the Company's actual results to differ materially from planned or expected results.  Those risks and uncertainties include but are not limited to competitive pressures, technological changes affecting the Company's ability
to compete, the ability to expand the Company's franchising operations, new store development and expansion, consumer acceptance of new programs and services, market prices of key supply items, continuity of management, liquidity of the franchise system,
lender and supply relationships, economic conditions, the effect of severe weather or natural disasters, the continued availability of capital and financing at acceptable interest rates, the ability to finalize the proposed merger with PhotoChannel, and
other risks indicated in the Company's filings with the United States Securities and Exchange Commission.





PART II.	OTHER INFORMATION

Item 6.	Exhibits and Reports on Form 8-K

(a)	The following exhibits are filed with this report:

Exhibit 27	Financial Data Schedule



1. The following  Reports on Form 8-K were filed in the third quarter:

- July 17, 2000, the Company filed a report on Form 8-K, dated July 12, 2000, to report, under Item 4 of Form 8-K, the retention of Arthur Andersen LLP as the Company's independent public accountants for the examination of the financial statements of
the Company for the fiscal year ending December 31, 2000.
- September 21, 2000, the Company filed a report on Form 8-K, dated September 20, 2000, to report its intent to enter into a proposed business combination between the Company and PhotoChannel Networks Inc.

In addition, on November 1, 2000, the Company filed a report on Form 8-K, dated October 31, 2000, to report the commencement of trading of the Company stock (MOTO) on the OTC Bulletin Board and removal from the Nasdaq SmallCap Market, effective October
31, 2000.

SIGNATURE





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



MOTO PHOTO, INC.







---

David A. Mason

Executive Vice President,

Treasurer, and Chief

Financial Officer



Date:		November 9, 2000



Exhibit Index

No.	Description

27	Financial Data Schedule