<HTML>
<HEAD>
<TITLE>FORM 10-Q</TITLE>
</HEAD>
<BODY>

<B><P ALIGN="CENTER">FORM 10-Q</P>
<FONT SIZE=3><P ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION</P>
<P ALIGN="CENTER">Washington, D.C. 20549</P>
</B><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">(Mark One)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">For the quarterly period ended:    <U>March 31, 2000</U><BR>
</P>
<P ALIGN="CENTER">OR </P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">For the transition period from______________ to ________________</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Commission file number:   <U> 0-11927</P>
</U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<U><P ALIGN="CENTER">Moto Photo, Inc.</P>
</U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">(Exact name of registrant as specified in its charter)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<U><P ALIGN="CENTER">      Delaware	</U>	                            	<U>         31-1080650	 <BR>
</U>  	(State or other jurisdiction of			(IRS Employer Identification Number)</P>
<P>                Incorporation or organization)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<U><P ALIGN="CENTER">4444 Lake Center Dr. Dayton, OH  45426</P>
</U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">(Address of principal executive offices with Zip Code)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<U><P ALIGN="CENTER">		(937) 854-6686			</P>
</U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">(Registrant's telephone number, including area code)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<U><P ALIGN="CENTER">			No Change			</P>
</U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">(Former name, former address, and former fiscal year, if changed since last report)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">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.</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Yes   <U>X </U>    No  ____</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">APPLICABLE ONLY TO ISSUERS IN BANKRUPTCY </P>
<P ALIGN="CENTER">PROCEEDINGS DURING THE PRECEDING FIVE YEARS.</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">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.</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Yes______ No______</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">APPLICABLE ONLY TO CORPORATE ISSUERS</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Indicate the number of shares outstanding of each of the issuer's classes of common stock:</P>
<P ALIGN="CENTER">As of  May  8, 2000: </P>
<P ALIGN="CENTER">7,738,521 - Voting Common,   0 - Non - Voting Common</P>
<B><P ALIGN="CENTER">Index</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Moto Photo, Inc. and Subsidiaries</P>

<P> </P>
</B><P>Part I.	Financial Information</P>
<DIR>

<P>Item 1.	Financial Statements (Unaudited)</P>
<P ALIGN="JUSTIFY"></P><DIR>
<DIR>

<P>Consolidated balance sheets - March 31, 2000 and December 31, 1999</P>

<P>Consolidated statements of operations - Three months ended March 31, 2000 and 1999</P>

<P>Consolidated statements of cash flows - Three months ended March 31, 2000 and 1999</P>

<P>Notes to consolidated financial statements - March 31, 2000</P>

<P>Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations</P>
</DIR>
</DIR>
</DIR>

<P>Part II.	Other Information</P>
<DIR>

<P>Item 6.	Exhibits and Reports on Form 8-K</P>
<DIR>
<DIR>

<P>Signature</P></DIR>
</DIR>
</DIR>

<B><P>Part I.	Financial Information</P>
<P>Item 1.	Financial Statements </P>
<P>Moto Photo, Inc. and Subsidiaries</P>
</B>
<B><P>Consolidated Balance Sheets</P>
<P>(Unaudited)</P>
</B><P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=3 WIDTH=598>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">March 31,<BR>
2000</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">December 31, <BR>
1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P>Assets</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P> Current Assets:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Cash</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $882,326 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $3,953,375 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=40><DIR>
<DIR>

<FONT SIZE=3><P> Accounts receivable, less allowances of $558,000 in<BR>
 2000 and $636,000 in 1999</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
 3,146,149 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
 4,015,690 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=40><DIR>
<DIR>

<FONT SIZE=3><P> Notes receivable, less allowances of  $79,000 in <BR>
 2000 and $89,000 in 1999</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
 268,669 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
 281,669 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Inventory</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 2,325,133 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 2,381,148 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Income taxes receivable</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 681,048 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 390,000 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Deferred tax assets</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 1,063,000 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 1,063,000 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Prepaid expenses</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 266,121 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 276,777 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P> Total current assets</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 8,632,446 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 12,361,659 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Property and equipment</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 5,335,534 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 5,315,573 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P>Other assets:</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=33><DIR>
<DIR>

<FONT SIZE=3><P> Notes receivable, less allowances of  $1,657,000  in <BR>
     2000 and  $1,536,000 in 1999</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=33>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
 953,892 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=33>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
 1,393,440 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Cost of franchises and contract acquired</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 111,663 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 120,293 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Goodwill</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 3,599,055 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 3,635,596 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Deferred tax assets</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 130,000 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 130,000 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Other assets </DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 942,708 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 960,253 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P>Total assets</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $19,705,298 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $23,916,814 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=21><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=21><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=21><P></P></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P> </P>
<P> </P></P>
<I><P>See accompanying notes.</P>

</I><P>M<B>oto Photo, Inc. and Subsidiaries</P>
</B>
<B><P>Consolidated Balance Sheets, continued</P>
<P>(Unaudited)</P>
</B><P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=3 WIDTH=597>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">March 31,<BR>
2000</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">December 31,<BR>
1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP"> </TD>
<TD WIDTH="19%" VALIGN="TOP"> </TD>
<TD WIDTH="20%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P>Liabilities and stockholders' equity</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P> Current liabilities:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Accounts payable</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $1,215,218 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $3,725,527 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Accrued payroll and benefits</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 542,981 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 736,771 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Accrued expenses</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 321,655 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 560,297 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Accrued income taxes</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 342,828 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 342,828 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Current portion of long-term obligations</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 1,528,000 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 2,403,000 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Other</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 177,856 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 243,730 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>  Total current liabilities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 4,128,538 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 8,012,153 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Long-term debt</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">9,319,674</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 9,498,069 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Capitalized leases</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">924,742</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 539,256 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Deferred revenue</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 110,544 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 110,544 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Total liabilities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 14,483,498 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 18,160,022 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P>Stockholders' equity</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P> Preferred stock $.01 par value:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Authorized shares - 2,000,000:</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=80><DIR>
<DIR>

<FONT SIZE=3><P> Series G (Amended Series G in 1999)<BR>
 cumulative nonvoting preferred shares,<BR>
 1,000,000 shares issued and outstanding <BR>
 with preferences aggregating $10,000,000</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=80>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> 10,000 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=80>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> 10,000 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P> Common shares $.01 par value:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P> Authorized shares - 30,000,000</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=40><DIR>
<DIR>

<FONT SIZE=3><P> Issued and outstanding shares - 7,884,528<BR>
  in  2000 and 7,884,528 in 1999</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">78,845</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> 78,845 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P> Treasury stock (146,007 shares at par in  2000<BR>
          and 151,300 shares as of Dec. 1999)</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> (1,460)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> (1,513)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P> Paid-in capital</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">6,226,791</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 6,030,523 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P> (Deficit) retained earnings subsequent to <BR>
          June 30, 1991</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">( 1,092,376)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> (361,063)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Total stockholders' equity</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 5,221,800 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 5,756,792 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P>Total liabilities and stockholders' equity</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $19,705,298 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $23,916,814 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=21><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=21><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=21><P></P></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P> </P><I> See accompanying notes.</P>
</I><P> </P>
<B><P>Moto Photo, Inc. and Subsidiaries</P>
<P>Consolidated Statements of Operations</P>
<P>(Unaudited)</P>
</B><P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=3 WIDTH=597>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">3 months</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">3 months</B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">Ended</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">Ended</B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">March 31, 2000</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">March 31, 1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP"> </TD>
<TD WIDTH="19%" VALIGN="TOP"> </TD>
<TD WIDTH="20%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P>Revenue</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Sales and other revenue</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $7,232,437 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $6,974,983 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Interest income</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 71,864 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 79,534 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 7,304,301 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">7,054,517</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P>Expenses</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Cost of sales and operating expenses</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 5,814,982 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">5,352.302</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Selling, general, and administrative expenses</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 1,418,369 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">1,350,218</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Advertising</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 329,834 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">221,472</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Depreciation and amortization</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 370,476 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 281,207 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Interest expense</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 210,881 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 107,525 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 8,144,542 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 7,312,724 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Loss before income taxes</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (840,241)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (258,207)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Income tax benefit </FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 294,000 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 65,000 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Net Loss</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (546,241)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (193,207)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Dividend requirements:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>   Preferred shares</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (175,404)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (67,324)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P>Net loss applicable to common shares</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $(721,645)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $(260,531)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Net loss per common shares - basic</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $(0.09)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $(0.03)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P>Net loss per common share - diluted</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $(0.09)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $(0.03)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=21><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=21><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=21><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Weighted Average Shares outstanding - Basic</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 7,734,203 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 7,838,298 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Weighted Average Shares outstanding - Diluted</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 7,734,203 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 7,838,298 </FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3></P>
<I><P>See accompanying notes.</P>
</I><B>
<P>Moto Photo Inc and Subsidiaries</P>

<P>Consolidated Statement of Cash Flows</P>
<P>(Unaudited)</B></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=3 WIDTH=597>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">3 months</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">3 months</B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">Ended</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">Ended</B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">March 31, 2000</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P ALIGN="CENTER">March 31, 1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP"> </TD>
<TD WIDTH="19%" VALIGN="TOP"> </TD>
<TD WIDTH="20%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P>Operating activities</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Net loss</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $      (546,241)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> $     (193,207)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Adjustments to reconcile net cash utilized by operating activities:</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>
<DIR>

<FONT SIZE=3><P>Depreciation and amortization</DIR>
</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 370,476 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 281,207 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>
<DIR>

<FONT SIZE=3><P>Provision for losses on inventory and receivables</DIR>
</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 44,918 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 105,693 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>
<DIR>

<FONT SIZE=3><P>Notes receivable increases as a result of franchise activities</DIR>
</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> (15,000)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>
<DIR>

<FONT SIZE=3><P>Issuance of stock for directors fees</DIR>
</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 19,608 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 14,563 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>
<DIR>

<FONT SIZE=3><P>Increase (decrease) resulting from changes in:</DIR>
</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>
<DIR>

<FONT SIZE=3><P>Income tax receivable</DIR>
</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">291,048</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>
<DIR>

<FONT SIZE=3><P>Accounts receivable</DIR>
</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">406,323</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 889,817 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Inventory and prepaid expenses</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 71,308 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (121,948)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Other assets</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> - </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 2,400 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Accounts payable and accrued expenses</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (2,942,739)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (1,440,089)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Other liabilities</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (65,874)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (65,981)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Net cash utilized by operating activities</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">(2,366,173)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (527,545)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P>Investing activities</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Purchases of property and equipment</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">(146,660)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (384,002)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Payments received on notes receivable</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 491,472 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 71,559 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Other assets</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 11,293</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> - </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Net cash provided (utilized) by investing activities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">356,105</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (312,443)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<B><FONT SIZE=3><P>Financing activities</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Proceeds from long-term borrowing and capital leases</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">365,892</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> - </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=40><DIR>
<DIR>

<FONT SIZE=3><P>Principal payments on  long-term debt and capital <BR>
lease obligations</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> (1,418,514)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=40>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> (254,960)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Payments of preferred dividends</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> - </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (175,000)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Purchase of common shares for treasury stock</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (9,772)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> - </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Contributed Capital </DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 1,413 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> - </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><DIR>
<DIR>

<FONT SIZE=3><P>Net cash utilized by financing activities</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT">(1,060,981)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (429,960)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Decrease in cash</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (3,071,049)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> (1,269,948)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P>Cash at beginning of period</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 3,953,375 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=20>
<FONT SIZE=3><P ALIGN="RIGHT"> 2,918,396 </FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P>Cash at end of period</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $        882,326 </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=21>
<FONT SIZE=3><P ALIGN="RIGHT"> $    1,648,448 </FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3><I>See accompanying notes.</P>
</I><P ALIGN="CENTER"> </P>
<B><P ALIGN="CENTER">Moto Photo, Inc. and Subsidiaries</P>
<P ALIGN="CENTER">Notes to Consolidated Financial Statements</P>
<P ALIGN="CENTER">March 31, 2000</P>
<P ALIGN="CENTER">"Unaudited"</P>
</B>
<P> </P>
<B><P>A.	Basis of Presentation</P>
</B>
<P ALIGN="JUSTIFY">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 three-month period ended March 31, 2000, are not necessarily indicative of the results that may be expected for the year ended December 31, 2000.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The internal accounting for the Company is on a fiscal calendar quarter basis.  The fiscal quarter dates may vary from the calendar quarter dates, (i.e., April 1 vs. March 31 for the first quarter 2000), except for the fourth quarter
which ends on December 31.  The differences in ending dates are immaterial.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The financial statements at March 31, 2000, have been derived from the unaudited accounting records at that date and do not include all of the information and footnotes required by generally accepted accounting principles for complete
financial statements.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">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.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">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.</P>

<B><P>B.	Reclassification</P>
</B>
<P ALIGN="JUSTIFY">Certain amounts from the prior period have been reclassified to conform to the current period presentation.</P>
<B>
<P>C.	Supplemental Cash Flow Information</P>
</B>
<P>Noncash items in the first quarter of  2000 included $220,144 of capital expenditures for the company store segment from entering into capitalized leases and trade-in of equipment.</P>
<B>
<P>D.	Segment Information</P>
</FONT><P>						Three Months Ended March 31, 2000</P>
</B>
<TABLE BORDER CELLSPACING=1 CELLPADDING=3 WIDTH=615>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P> </P>
<P> </B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Development</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Company Stores</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Royalties and Advertising</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Wholesale</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Total</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>Sales and other revenue</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">  $50,750  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"> $3,073,908  </FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">  $1,053,003  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"> $3,054,776  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"> $7,232,437  </FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>Depreciation</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">879</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">2,993</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">300,999</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,497</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT"></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=68>
<FONT SIZE=2><P>Operating segment contribution prior<BR>
       to interest income and expense, <BR>
       income taxes and unallocated <BR>
       corporate expenses</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=68>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(165,675)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=68>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(956,900)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=68>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">656,513  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=68>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(228,174)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=68>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">  $(694,236)</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>Identifiable segment assets</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">47,067</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">10,431,959</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">714,472</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,546,171</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT"></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>Capital expenditures</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">0  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">356,255  </FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">0  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">0  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">356,255  </FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
</TABLE>

<FONT SIZE=3>
</FONT><B><P>						Three Months Ended March 31, 1999</P>
</B><FONT SIZE=3></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=3 WIDTH=615>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=34><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Development</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Company Stores</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Royalties and Advertising</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Wholesale</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=34>
<B><FONT SIZE=2><P ALIGN="CENTER">Total</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>Sales and other revenue</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">  $88,420  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"> $2,670,298  </FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">  $1,034,039  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"> $3,182,226  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT"> $6,974,983  </FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>Depreciation</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">979  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">203,742  </FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,226  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">2,306  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">210,253  </FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=70>
<FONT SIZE=2><P>Operating segment contribution prior<BR>
       to interest income and expense, <BR>
       income taxes and unallocated <BR>
       corporate expenses</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=70>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(118,685)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=70>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(530,048)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=70>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">679,539  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=70>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(264,471)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=70>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">  $(233,665)</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>Identifiable segment assets</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">92,105  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">8,696,618  </FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">1,238,612  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">3,725,830  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">13,753,165  </FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>Capital expenditures</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">0  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">340,111  </FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">0  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">878  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">340,989  </FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
</TABLE>

<FONT SIZE=3></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=3 WIDTH=615>
<TR><TD WIDTH="36%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended March 31, 2000</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended March 31, 1999</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<B><FONT SIZE=2><P>REVENUE</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=34>
<FONT SIZE=2><P>Total sales and other revenue for<BR>
     reportable segments</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=34>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">  $7,232,437  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=34><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=34>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">  $6,974,983  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=34><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=34><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP">
<FONT SIZE=2><P>Interest Income</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">  71,864  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="RIGHT">  79,534  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">  $7,304,301  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">  $7,054,517  </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=18><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=18><P></P></TD>
</TR>
</TABLE>


<P> </P>
<P> </P>
<P> </P>
<OL START=4 TYPE="A">

<B><FONT SIZE=3><LI>Segment Information (continued)<BR>
</LI></OL>
</B></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=566>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=37>
<B><FONT SIZE=3><P>Other Significant Items</B></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=37><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=37>
<B><FONT SIZE=3><P ALIGN="CENTER">Segment Totals</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=37>
<B><FONT SIZE=3><P ALIGN="CENTER">Corporate</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=37>
<B><FONT SIZE=3><P ALIGN="CENTER">Consolidated Total</B></FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=19><P></P></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=19>
<B><FONT SIZE=3><P>Three Months Ended March 31, 2000<BR>
</B></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=19><P></P></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $        306,368 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $    64,108 </FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $         370,476 </FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P>Operating segment contribution prior to</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="49%" VALIGN="TOP" COLSPAN=2 HEIGHT=66>
<FONT SIZE=2><P>      interest income and expense,  income <BR>
      taxes and unallocated corporate expenses <BR>
      for segment totals reconciled to income <BR>
      before taxes</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=66>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(694,236)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=66>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(146,005)</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=66>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">           (840,241)</FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P>Identifiable segment assets</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">14,739,669 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">4,965,629 </FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">       19,705,298 </FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P>Capital expenditures</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">           356,255 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">       10,549 </FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            366,804 </FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=19><P></P></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=19>
<B><FONT SIZE=3><P>Three Months Ended March 31, 1999</B></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=19>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=19><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=19><P></P></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $        210,253 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $    70,954 </FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT"> $         281,207 </FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P>Operating segment contribution prior to</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="49%" VALIGN="TOP" COLSPAN=2 HEIGHT=66>
<FONT SIZE=2><P>      interest income and expense,  income <BR>
      taxes and unallocated corporate expenses <BR>
      for segment totals reconciled to income <BR>
      before taxes</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=66>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(233,665)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=66>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(24,542)</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=66>
<FONT SIZE=2><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">           (258,207)</FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P>Identifiable segment assets</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">13,753,165 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">6,065,955 </FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">       19,819,120 </FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P>Capital expenditures</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">340,989 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">43,013 </FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=2><P ALIGN="RIGHT">            384,002 </FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
</TABLE>

<FONT SIZE=3><P>
</P>
<B><P> </P>
<P> </P>
</B><P>
</P>
<P> </P>
<P> </P>
<P> </P>
<B><P>E.	Earnings Per Share Data</P>
</B>
<P ALIGN="JUSTIFY">The following table sets forth the calculation of basic and diluted earnings per share for the periods indicated.</P>
</FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=576>
<TR><TD WIDTH="58%" VALIGN="TOP"> </TD>
<TD WIDTH="22%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months </P>
<P ALIGN="CENTER">Ended</P>
<P ALIGN="CENTER">March 31, 2000</B></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months </P>
<P ALIGN="CENTER">Ended </P>
<P ALIGN="CENTER">March 31, 1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net loss applicable to common shares</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$     ( 721,645)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$      (260,531)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Reconciliation of shares:</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average common share outstanding</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,734,203</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">  7,838,298 </FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Effect of dilutive stock options and other common </P><DIR>

<P>stock equivalent</DIR>
</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"><FONT FACE="Symbol">-</FONT>
</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"><FONT FACE="Symbol">-</FONT>
</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average common shares assuming dilution</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,734,203</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">        7,838,298 </FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Basic earnings per share</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$           (0.09)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$            (0.03)</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Diluted earnings per share</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$           (0.09)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$            (0.03)</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P> </P>
<P> </P>
<B><P>Item 2.</P>
</B></FONT><P ALIGN="CENTER"></P>
<B><FONT SIZE=3><P ALIGN="CENTER">Management's Discussion and Analysis</P>
<P ALIGN="CENTER">of Financial Condition</P>
<P ALIGN="CENTER">and Results of Operations</P>
</B>
<P> </P>
<B><P>Results of Operations First Quarter 2000 Vs First Quarter 1999</P>
</B>
<P ALIGN="JUSTIFY">The Company reported a net loss of  $546,241, or a loss per common share, basic and diluted, of $.09 for the first quarter 2000 compared to a net loss of  $193,207, or a loss per common share, basic and diluted, of $.03 for the first
quarter 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.  Due to the Company's common share price of approximately $1.00,
certain securities could become dilutive and have a significant impact on diluted earnings per share in subsequent periods.  </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Development segment revenue decreased by $37,000, or 42%, in 2000 compared to 1999 due to the  Company changing its franchise offering and having a lower cost franchise fee program for stores that open by December 31, 2000. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Company store revenue was up $403,000, or 15%, in 2000 compared to 1999 primarily due to the 16 company stores opened or acquired during the last half of 1999 and the first quarter 2000.</P>
</FONT><FONT SIZE=3 COLOR="#0000ff"><P ALIGN="JUSTIFY"> </P>
</FONT><FONT SIZE=3><P ALIGN="JUSTIFY">Company store segment operating contribution decreased by $427,000 in 2000 compared to 1999. Of <BR>
this,  $300,000 was from losses incurred during the ramp-up phase of the new stores, $28,000 from the cyclical weak first quarter of the acquired stores, and $99,000 from stores opened more than one year, primarily as a result of 4.6% lower revenues. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Company implemented in 2000 a Discovery Team whose mission is to explore strategies to test, refine, and implement conceptual enhancements, new technologies and new ways of communicating with customers, franchisees and employees.
This activity increased selling general and administrative expenses by approximately $50,000.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Depreciation and amortization expenses increased by $89,000, or 32%, in 2000 compared to 1999 primarily as a result of depreciation on the property and equipment in the new company stores.</P>
<P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">Interest expense increased $103,000, or 96%, in 2000 compared to 1999 due to increased borrowings to support Company store asset additions, the expansion discussed above, higher interest rates during the quarter and the effect of
converting $2,700,000 of accounts payable to a term note.  Interest income, which is primarily interest income from notes receivable and temporary investments of cash, decreased in 2000 due to lower notes receivable and cash balances. </P>
<P ALIGN="JUSTIFY"></P>
<B><P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">Liquidity and Capital Resources</P>
<P ALIGN="JUSTIFY"></P>
</B><P ALIGN="JUSTIFY">Cash used in operating activities decreased by $1,800,000 in 2000 compared to 1999, largely due to a reduction of accounts payable of  $1,500,000 due to timing differences, and a $350,000 larger loss.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In 2000, net cash provided by investing activities was $356,000 as compared to net cash utilized by investing activities of  $312,000 in 1999.  Increases in collections of note receivable of $420,000 and a decrease of  $209,000 in cash
purchases of property and equipment were primarily responsible for the differences</P>
<P ALIGN="JUSTIFY"> </P>
<B><P><A NAME="_Toc447092119"></P>
<P>Financing Activities</P>

</B><P>Net cash utilized in financing activities increased by $631,000 in 2000 compared to 1999 primarily due to principal payments exceeding proceeds from borrowings by $800,000.</P>
<B>
<P>Market Risk</P>

</B><P>There have been no significant changes in market risk since December 31, 1999.</P>
<B>
<P>Forward Looking Statements</A></P>
</B>
<P ALIGN="JUSTIFY">All statements, other than statements of historical fact included in this report, which address activities, events or developments which the Company expects or anticipates will or may occur in the future constitute "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements are based on certain assumptions and analyses made by the Company in light of
its experience and its perception of historical trends, current conditions, and expected future developments, as well as other factors it believes are appropriate in the circumstances.  These forward looking statements are subject to all the risks and
uncertainties incident to the Company's business, including, without limitation, competition in the photo processing industry, possible development of new technology affecting the Company's ability to compete, uncertainties with respect to the ability of
the Company to expand its business through franchising, new store development, the level of consumer acceptance of the Company's programs and services, continued stability in market prices of key supply items, decline in demand for the products and
services offered, continuity of management, liquidity of the franchise system, the ability of the Company to locate and obtain favorable store sites at acceptable lease terms, management's ability to manage its franchisee, lender and supply relationships,
economic conditions, the effect of severe weather or natural disasters, and competitive pressure from other retailers.  For all of the foregoing reasons, actual results may vary materially from the forward looking statements.  The Company assumes no
obligation to update any forward looking statements.</P>
<P ALIGN="JUSTIFY"></P>
<P> </P>
<P>PART II.	OTHER INFORMATION</P>

<P> </P>
<P>Item 6.	Exhibits and Reports on Form 8-K.</P>

<OL TYPE="a">

<LI>Exhibits:  See Exhibit Index immediately preceding exhibits.</LI>

<LI>Reports on Form 8-K.  The Company filed no reports on Form 8-K during the quarter ended March 31, 2000.</LI></OL>


<P> </P>
<P> </P>
<P> </P>
<P ALIGN="CENTER">SIGNATURE</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P>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.</P>

<P> </P><DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>

<P>MOTO PHOTO, INC.</P>

<P> </P>
<P> </P>
<P>By  <U>/s/ David A. Mason		</P>
</U><P>      David A. Mason</P>
<P>      Executive Vice President,</P>
<P>      Treasurer, and Chief</P>
<P>      Financial Officer</P>

<P> </P></DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>

<P>Date:	May 10, 2000</P>
</FONT><FONT SIZE=5>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
</FONT><FONT SIZE=6><P ALIGN="CENTER">EXHIBITS TO</P>

<P ALIGN="CENTER">FORM 10-Q</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">for the quarter ended</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">March 31, 2000</P>
</FONT><FONT SIZE=3>
<P>Copies of the following documents are filed as exhibits to this report:</P>

<P> </P>
<U><P>No</U>.		<U>Description</U>							</P>

<P>*10.1		Cancellation and Release Agreement, dated as of March 21, 2000,  with Lloyd F. Noland </P>

<P>  27.0		Financial Data Schedule</P>

<P> </P>
<U><P>						</P>
</U>
<P>* Indicates compensatory plan</P>
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