<HTML>
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<META NAME="Generator" CONTENT="Microsoft Word 97">
<TITLE>FORM 10-Q</TITLE>
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<BODY>

<B><P ALIGN="CENTER"> </P>
<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>June 30, 1999</U> </P>
<P ALIGN="CENTER"></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>
<P ALIGN="CENTER">Moto Photo Inc.</P>
<P ALIGN="CENTER"><HR WIDTH="55%" SIZE=1></P>
<P ALIGN="CENTER">(Exact name of registrant as specified in its charter)</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P><DIR>
<DIR>
<DIR>
<DIR>

<P><HR ALIGN="LEFT" WIDTH="33%" SIZE=1><HR ALIGN="RIGHT" WIDTH="41%" SIZE=1>   Delaware					        31-1080650</P>
</DIR>
</DIR>
</DIR>
</DIR>

<P>	(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">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   X     No  </P>
<P ALIGN="CENTER"><HR WIDTH="5%" SIZE=1><HR WIDTH="6%" SIZE=1></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 August 10, 1999: </P>
<P ALIGN="CENTER">7,835,478 - 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 - June 30, 1999 and December 31, 1998</P>

<P>Consolidated statements of operations - Three months ended June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998.</P>

<P>Consolidated statements of cash flows - Six months ended June 30, 1999 and 1998</P>

<P>Notes to consolidated financial statements - June 30, 1999</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>
<DIR>
<DIR>

<P>Item 1.	Submission of matters to a vote of security holders. </P>

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

<P>Signatures</P>
<B></DIR>
</DIR>
</DIR>

<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></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=633>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">June 30,</B></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">December 31,</B></FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">1998</B></FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Assets</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Current assets:</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Cash </DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$    1,623,012</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$    2,918,396</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Accounts receivable, less allowances of $925,000 in 1999</DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>and $1,092,000 in 1998</DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,798,588</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">4,188,807</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Notes receivable, less allowances of $172,000 in 1999 </DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>and in 1998</DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">324,669</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">437,669</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Inventory </DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,339,292</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,457,950</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Deferred tax assets </DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,213,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,213,000</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Prepaid expenses</DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">155,740</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">116,081</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Total current assets</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,454,301</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">11,331,903</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Property and equipment, net </FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,983,306</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,712,064</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Other assets:</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Notes receivable, less allowances of $1,250,000 in 1999 </DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>and $1,228,000 in 1998</DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,970,050</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,897,755</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Cost of franchises and contracts acquired </DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">137,183</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">155,688</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Goodwill </DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,651,750</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,728,816</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Deferred tax assets</DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">57,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">57,000</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Other assets </DIR>
</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,010,717</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,050,567</FONT></TD>
</TR>
<TR><TD WIDTH="68%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Total assets</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$    20,264,307</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$    21,933,793</FONT></TD>
</TR>
</TABLE>

<I><FONT SIZE=3>
<P>See accompanying notes.</P>
</I>
<B><P>Moto Photo, Inc. and Subsidiaries</P>
</B>
<B><P>Consolidated Balance Sheets, continued</P>
<P>(Unaudited)</P>
</B></FONT>
<TABLE BORDER CELLSPACING=1 WIDTH=604>
<TR><TD WIDTH="63%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">June 30,</B></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">December 31,</B></FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">1998</B></FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<B><FONT SIZE=3><P>Liabilities and stockholders' equity</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<FONT SIZE=3><P>Current liabilities:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Accounts payable</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$       3,069,387</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$       4,251,043</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Accrued payroll and benefits</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">548,135</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">560,901</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Accrued income taxes</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">462,049</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">384,049</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Accrued expenses</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">671,393</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">808,919</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Current portion of long-term obligations</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,533,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,534,000</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Other</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">333,976</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">310,540</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<FONT SIZE=3><P>Total current liabilities</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT"></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT"></FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<FONT SIZE=3><P>Long-term obligations</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">8,730,056</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">9,064,001</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<FONT SIZE=3><P>Deferred revenue</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">99,434</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">99,434</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<FONT SIZE=3><P>Total liabilities</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">15,447,430</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">17,012,887</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<B><FONT SIZE=3><P>Stockholders' equity</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<FONT SIZE=3><P>Preferred stock $.01 par value:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Authorized shares - 2,000,000:</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Series G cumulative nonvoting preferred shares, 1,000,000 shares issued and outstanding with preferences aggregating $10,000,000</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">10,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">10,000</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Common shares $.01 par value:</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Authorized shares - 30,000,000</P>
<P>Issued and outstanding shares - 7,859,928 in 1999 and 7,833,573 in 1998</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">78,599</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">78,336</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<FONT SIZE=3><P>Paid in capital</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6,220,729</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6,404,734</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<FONT SIZE=3><P>(Deficit) retained earnings subsequent to June 30, 1991</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(1,492,451)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(1,572,164)</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP"><DIR>

<FONT SIZE=3><P>Total stockholders' equity</DIR>
</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4,816,877</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4,920,906</FONT></TD>
</TR>
<TR><TD WIDTH="63%" VALIGN="TOP">
<FONT SIZE=3><P>Total liabilities and stockholders' equity</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$     20,264,307</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$     21,933,793</FONT></TD>
</TR>
</TABLE>

<I><FONT SIZE=3>
<P>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></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=672>
<TR><TD WIDTH="43%" VALIGN="TOP"> </TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months Ended </P>
<P ALIGN="CENTER">June 30, 1999</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months Ended </P>
<P ALIGN="CENTER">June 30, 1998</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months Ended </P>
<P ALIGN="CENTER">June 30, 1999</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months Ended </P>
<P ALIGN="CENTER">June 30, 1998</B></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Revenue</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Sales and other revenue</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$      9,338,847</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$      9,433,849</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$     16,313,830</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$     16,430,823</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Interest income</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">59,485</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">98,490</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">139,019</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">192,957</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Other income</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,203</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=2><P>                        - </FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6,529</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=2><P>                        - </FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,400,535</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,532,339</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">16,459,378</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">16,623,780</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Expenses</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Cost of sales and operating expenses</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6,709,211</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6,764,622</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">12,061,514</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">12,215,640</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Selling, general, and administrative costs</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,448,755</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,593,967</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,803,299</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,943,834</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Advertising</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">315,502</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">324,816</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">536,974</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">575,510</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Depreciation and amortization</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">280,194</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">224,227</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">561,401</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">434,987</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><DIR>

<FONT SIZE=3><P>Interest expense</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">97,000</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">112,859</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">204,525</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">210,599</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">8,850,662</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,020,491</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">16,167,712</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">16,380,570</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Income before income taxes</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">549,873</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">511,848</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">291,666</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">243,210</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Income tax expense </FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(143,000)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(116,000)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(78,000)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(49,000)</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income </FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">406,873</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">395,848</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">213,666</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">194,210</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Preferred stock dividend requirements</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(66,630)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(68,904)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(133,954)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(138,328)</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income applicable to common stock</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$         340,243</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$         326,944</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$           79,712</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$           55,882</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income per common share</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$              0.04</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$              0.04</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$              0.01</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$              0.01</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average shares outstanding - Basic</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,845,072</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,809,581</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,842,434</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,807,074</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"> </FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
</TABLE>

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

</I><B><P> </P>
<P>Moto Photo Inc and Subsidiaries</P>

<P>Consolidated Statements of Cash Flows</P>
<P>(Unaudited)</P>
</B></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=614>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=9><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=9>
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months</P>
<P ALIGN="CENTER">Ended</P>
<P ALIGN="CENTER">June 30, 1999</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=9>
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months</P>
<P ALIGN="CENTER">Ended</P>
<P ALIGN="CENTER">June 30, 1998</B></FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<B><FONT SIZE=3><P>Operating Activities</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Net Income</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">$                213,666</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">$              194,210</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>

<FONT SIZE=3><P>Adjustments to reconcile net income to net cash </P>
<P>provided by operating activities:</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>

<FONT SIZE=3><P>Depreciation and amortization</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">561,401</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">434,987</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>

<FONT SIZE=3><P>Provision for losses on inventory and receivables</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">249,012</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">249,680</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>

<FONT SIZE=3><P>Loss on disposition of assets</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">30,025</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">65,672</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>

<FONT SIZE=3><P>Write off of assets due to store closings</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">32,257</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>

<FONT SIZE=3><P>Issuance of stock for directors fees</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">32,304</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">23,413</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>

<FONT SIZE=3><P>Increase (decrease) resulting from changes in:</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>
<DIR>

<FONT SIZE=3><P>Accounts receivable</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">71,767</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">466,247</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>
<DIR>

<FONT SIZE=3><P>Inventory and prepaid expenses</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">65,062</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(544,062)</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>
<DIR>

<FONT SIZE=3><P>Other assets</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(7,200)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(462,563)</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>
<DIR>

<FONT SIZE=3><P>Accounts payable and accrued expenses</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(1,253,948)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(2,131,737)</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><DIR>
<DIR>

<FONT SIZE=3><P>Deferred revenues and other liabilities</DIR>
</DIR>
</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">23,437</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">115,095</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Net cash used in operating activities</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(14,474)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(1,556,801)</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<B><FONT SIZE=3><P>Investing Activities</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Purchases of equipment and leaseholds</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(754,597)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(247,491)</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Payments received on notes receivable</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">158,632</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">256,269</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Net cash (used in) provided by investing activities</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(595,965)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT"></FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<B><FONT SIZE=3><P>Financing Activities</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=9>
<FONT SIZE=3><P>Principal payments on long-term debt and capital lease </P>
<P>Obligations</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=9>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">(334,945)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=9>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">(389,791)</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Payments of preferred dividends</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(350,000)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(300,000)</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Net cash used in financing activities</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(684,945)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(689,791)</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Decrease in cash</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(1,295,384)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">(2,237,814)</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Cash at beginning of period</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">2,918,396</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">3,139,252</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P>Cash at end of period</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">$             1,623,012</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=3><P ALIGN="RIGHT">$                901,438  </FONT></TD>
</TR>
</TABLE>

<I><FONT SIZE=3>
<P>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">June 30, 1999</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 considered necessary for a fair
presenta
<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. July 3 vs. June 30 for the second quarter 1999), 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 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, 1998.</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>
</FONT><P ALIGN="JUSTIFY"></P>
<B><FONT SIZE=3><P> </P>
<P>C.	Segment Information</P>
</B>
<P> </P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=657>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="64%" VALIGN="TOP" COLSPAN=5 HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months Ended June 30, 1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Development</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Company</P>
<P ALIGN="CENTER">Stores</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Royalties </P>
<P ALIGN="CENTER">and</P>
<P ALIGN="CENTER">Advertising</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Wholesale</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Total</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Sales and other revenue</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$          60,500</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   3,215,950</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   1,315,230</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   4,747,167</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   9,338,847</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">980</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">202,730</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">3,226</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">2,306</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">209,242</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Operating segment contribution </P><DIR>

<P>prior to interest expense, interest income, income taxes and unallocated corporate expenses</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(133,538)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(265,490)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">904,775</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">92,635</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">598,382</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">328,841</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">328,841</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P> </P>
<P> </P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=657>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="64%" VALIGN="TOP" COLSPAN=5 HEIGHT=6>
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months Ended June 30, 1998</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Development</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Company</P>
<P ALIGN="CENTER">Stores</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Royalties</P>
<P ALIGN="CENTER">and</P>
<P ALIGN="CENTER">Advertising</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Wholesale</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Total</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Sales and other revenue</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$          36,750</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   3,448,616</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   1,318,605</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   4,629,878</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   9,433,849</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">881</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">146,637</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">3,122</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">19,341</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">169,981</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Operating segment contribution </P><DIR>

<P>prior to interest expense, interest income, income taxes and unallocated corporate expenses</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(159,478)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(172,683)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">922,879</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(82,038)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">508,680</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">118,785</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">118,785</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P> </P>
</FONT><B><FONT SIZE=3><P>C.	Segment Information (continued)</P>
</B>
</FONT><FONT SIZE=3><P> </P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=657>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="64%" VALIGN="TOP" COLSPAN=5 HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months Ended June 30, 1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Development</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Company</P>
<P ALIGN="CENTER">Stores</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Royalties </P>
<P ALIGN="CENTER">and</P>
<P ALIGN="CENTER">Advertising</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Wholesale</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Total</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Sales and other revenue</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$        148,920</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   5,886,260</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   2,349,269</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   7,929,381</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$ 16,313,830</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">1,959</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">406,472</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">6,452</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">4,612</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">419,495</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Operating segment contribution </P><DIR>

<P>prior to interest expense, interest income, income taxes and unallocated corporate expenses</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(252,223)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(795,524)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">1,584,314</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(171,838)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">364,729</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Identifiable segment assets</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">79,859</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">8,865,516</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">1,214,347</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">4,109,867</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">14,269,589</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">668,952</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">878</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">669,830</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P> </P>
<P> </P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=657>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="64%" VALIGN="TOP" COLSPAN=5 HEIGHT=6>
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months Ended June 30, 1998</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Development</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Company</P>
<P ALIGN="CENTER">Stores</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Royalties</P>
<P ALIGN="CENTER">and</P>
<P ALIGN="CENTER">Advertising</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Wholesale</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Total</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Sales and other revenue</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$           59,000</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   6,184,197</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   2,351,862</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$   7,835,764</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$  16,430,823</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">1,764</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">278,979</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">6,244</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">38,680</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">325,667</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Operating segment contribution </P><DIR>

<P>prior to interest expense, interest income, income taxes and unallocated corporate expenses</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(301,240)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(708,986)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">1,605,620</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(378,204)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">217,190</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Identifiable segment assets</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">25,441</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">8,266,946</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">1,164,691</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">3,774,610</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">13,231,688</FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">165,409</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">2,635</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">168,044</FONT></TD>
</TR>
</TABLE>

<B><FONT SIZE=3>
</B><P> </P>
<B><P>C.	Segment Information (continued)</P>
</B>
<P> </P></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=652>
<TR><TD WIDTH="37%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="31%" VALIGN="TOP" COLSPAN=3 HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months Ended June 30,</B></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="31%" VALIGN="TOP" COLSPAN=3 HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months Ended June 30,</B></FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P>Revenue</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">1998</B></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">1998</B></FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Total sales and other revenue for </P><DIR>

<P>reportable segments</DIR>
</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">$9,338,847</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">$9,433,849</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">$16,313,830</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">$16,430,823</FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Interest income</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">59,485</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">98,490</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">139,019</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">192,957</FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Other income</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">2,203</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">6,529</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Total consolidated revenues</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$9,400,535</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$9,532,339</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$16,459,378</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$16,623,780</FONT></TD>
</TR>
</TABLE>

<B><FONT SIZE=3>
<P> </P></B></FONT>
<TABLE BORDER CELLSPACING=1 CELLPADDING=2 WIDTH=624>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P> </P>
<B><P>Other Significant items</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Segment </P>
<P ALIGN="CENTER">Total</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Corporate</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Consolidated Total</B></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months Ended June 30, 1999</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$     209,242</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$       70,952</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$      280,194</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Operating segment contribution prior to interest expense,</P>
<P>interest income, income taxes and unallocated corporate expenses for segment totals reconciled to income before taxes</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">598,382</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(48,509)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">549,873</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">328,841</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">43,832</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">372,673</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months Ended June 30, 1998</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$     169,981</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$       54,246</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$      224,227</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Operating segment contribution prior to interest expense,</P>
<P>interest income, income taxes and unallocated corporate expenses for segment totals reconciled to income before taxes</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">508,680</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">3,168</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">511,848</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">118,785</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">23,864</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">142,649</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months Ended June 30, 1999</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$     419,495</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$     141,906</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$      561,401</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Operating segment contribution prior to interest expense,</P>
<P>interest income, income taxes and unallocated corporate expenses for segment totals reconciled to income before taxes</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">364,729</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">(73,063)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">291,666</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">14,269,589</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">5,994,718</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">20,264,307</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">669,830</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">84,767</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">754,597</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months Ended June 30, 1998</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$     325,667</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$     109,320</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT">$     434,987</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P>Operating segment contribution prior to interest expense,</P>
<P>interest income, income taxes and unallocated corporate expenses for segment totals reconciled to income before taxes</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">217,190</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">26,020</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=12>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT"> </P>
<P ALIGN="RIGHT">243,210</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">13,231,688</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">5,294,270</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">18,525,958</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">168,044</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">79,447</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=3><P ALIGN="RIGHT">247,491</FONT></TD>
</TR>
</TABLE>

<B><FONT SIZE=3>
<P>D.	Earnings Per Share Data</P>
</B>
<P> </P>
<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=683>
<TR><TD WIDTH="41%" VALIGN="TOP"> </TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months </P>
<P ALIGN="CENTER">Ended</P>
<P ALIGN="CENTER">June 30, 1999</B></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP"> </TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Three Months </P>
<P ALIGN="CENTER">Ended </P>
<P ALIGN="CENTER">June 30, 1998</B></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP"> </TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months </P>
<P ALIGN="CENTER">Ended </P>
<P ALIGN="CENTER">June 30, 1999</B></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP"> </TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Six Months </P>
<P ALIGN="CENTER">Ended </P>
<P ALIGN="CENTER">June 30, 1998</B></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income applicable to common shares</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$        340,243</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$       326,944</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$         79,712</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$         55,882</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Reconciliation of shares:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average common share outstanding</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,845,072</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,809,581</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,842,434</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,807,074</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Effect of dilutive stock options and other </P><DIR>

<P>common stock equivalent</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">122,939</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">749</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">188,405</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average common shares assuming </P><DIR>

<P>Dilution</DIR>
</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">7,845,072</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">7,932,520</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">7,843,183</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">7,995,479</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Basic earnings per share</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$              0.04</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$              0.04</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$             0.01</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$             0.01</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Diluted earnings per share</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$              0.04</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$              0.04</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$             0.01</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$             0.01</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P> </P>
<P ALIGN="JUSTIFY">In the first six months of 1999, $350,000 of dividends were paid on the Series G preferred shares.  Of this amount $216,046 was for previously reported and accreted dividends.</P>

<B><P>Item 2.</P>
</B></FONT><P ALIGN="CENTER"></P>
<B><FONT SIZE=3><P ALIGN="CENTER">Management 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 </P>
</B>
<P ALIGN="JUSTIFY">The Company reported a net income of $406,873, or earnings per common share, basic and diluted, of $0.04 for the second quarter 1999 compared to a net income of $395,848, or earnings per common share, basic and diluted of $0.04 for the
second quarter of 1998.  For the six months ended June 30, 1999, the Company recorded a net income of $213,666 and basic and diluted earnings per common share of $0.01, compared to a net income of $194,210 and basic and diluted earnings per common share of
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Development segment revenue increased approximately $90,000, or 153% for the six months this year, compared to the same period a year ago primarily due to four store openings in 1999 compared to one in 1998.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Wholesale operating segment contribution increased approximately $175,000, on a sales increase of $117,000 for the second quarter 1999 and approximately $206,000, on a sales increase of $94,000 for the six months ended June 30, 1999
compared to the same periods a year ago.  During 1999, the Company was able to regain sales lost in the first half of 1998 due to competitive pricing on certain products, primarily photographic paper and film.  In 1998 wholesale revenue included $143,000
for t
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Depreciation and amortization expenses increased by approximately $56,000, or 25% for the second quarter 1999 and approximately $126,000, or 29% for the six months ended June 30, 1999, compared to the same periods a year ago primarily
as a result of depreciation on additions to property and equipment in Company stores from June 30, 1998 until June 30, 1999.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Interest income, which is primarily interest income from notes receivable and temporary investments of cash, decreased primarily due to collections of interest income in 1998 on certain notes which income interest was not being accrued
due to the past due status of these notes.</P>
<P ALIGN="JUSTIFY"></P>
<B><P ALIGN="JUSTIFY">Liquidity and Capital Resources</P>
</B><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Cash used in operating activities decreased by $1,542,000 in 1999 as compared to 1998.  Other assets decreased approximately $400,000 due to certain equipment deposits made in 1998, and during the first six months of 1998, made a
special purchase of approximately $500,000 of film.  Accrued compensation expenses decreased approximately $800,000 more in 1998 than 1999 due to timing of payroll accruals and payments of accrued bonuses.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Increased purchases of property and equipment in 1999 accounted for approximately $507,000 of the $596,000 change in net cash utilized by investing activities as compared to net cash provided by investing activities of $9,000 in 1998.</P>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At June 30, 1999 the Company's Board of Directors authorized a common stock repurchase program.  The timing of the program and the amount of stock repurchased will be dictated by the overall financial and market conditions.  The Board
authorized management to spend up to $500,000 to make purchases until December 31, 2000.  At recent market prices, that is approximately 400,000 shares, or about five percent of the 7,843,238 common shares outstanding.</P>
<P ALIGN="JUSTIFY"></P>
<B><P ALIGN="JUSTIFY"><A NAME="_Toc443124371"><A NAME="_Toc445892851"><A NAME="_Toc447092115">Year 2000</A></A></A></P>
</B><P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The year 2000 issue, or Y2K, refers to computer programs or computer embedded chips which use two digits rather than four digits to define the applicable year.  Any of the Company's computer software, hardware or other equipment having
date sensitive software or embedded chips could recognize a "00" date as year 1900 rather than year 2000.  If this happened, it could result in miscalculations or system failures which could be disruptive to normal business activities.  The Company has a pl
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Company's plan for resolving Y2K issues has the following phases: assessment, remediation, testing, and implementation.  The Company has completed assessment of its internal software and computer hardware that could be significantly
affected by the year 2000 issue.  The Company believes that it is currently Y2K compliant on all critical internal systems with the exception of certain computer hardware used in some Company store point of sale systems, as discussed below.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Company is still in the process of gathering information about the Y2K compliance status of key third party suppliers.  The Company has received written notification from most of its key suppliers that they plan to be Y2K compliant
by October 1, 1999. The Company has been informed by its primary bank and its depository banks that they believe they are Y2K compliant. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Company is in the implementation phase on certain of the older computer hardware used in its approved point of sale systems in both franchise and Company stores.  A software modification is currently available, at no cost, to
achieve Y2K compliance for this hardware.  It will be implemented in Company stores by October 30, 1999, and will be installed in all franchise stores as they request it. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">There are several versions of the Company sponsored point of sale software in use in franchise stores, all of which are believed to be Y2K compliant except for certain operating systems which are no longer supported by their provider.
Accordingly, the provider will not certify as to its Y2K compliance.  However, the Company has tested the software and believes that it will operate without any critical failures after December 31, 1999.  The Company will continue its testing and will attem
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Company believes that all significant non-information systems are either Y2K compliant or has received notification that the vendors will make them Y2K compliant by October 1, 1999.  The Company plans to continue testing its
operating equipment and other equipment to ensure that it is operable in 2000 and beyond.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Company has notified its franchisees of the steps they should take to ensure that there are no disruptions to their operations as a result of the Y2K issue.  The Company cannot guarantee that each franchisee will follow through on
the necessary steps, and accordingly, some short-term interruptions could occur in certain franchise stores.  The Company does not believe that this disruption will have a material impact on the Company's results of operations, financial condition or cash f
l
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Company has spent no significant incremental funds to date to achieve Y2K compliance and does not anticipate doing so in the future. All expenses paid to date as well as in the future will be funded through existing cash resources
and future operating cash flows.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">While the Company believes it has an effective plan to resolve the Y2K issue in a timely manner, lack of historical experience and the forward-looking nature of the issues involved make it difficult to predict with certainty what will
happen on January 1, 2000 and thereafter.  It is possible that there will be disruption and unexpected business problems during the early months of 2000.  The Company intends to make contingency plans if any critical systems or suppliers are identified as r
e
nt risk of Y2K failure. Unfortunately, despite the Company's efforts, unanticipated third party failures may occur, particularly in general public infrastructures.  If this were to occur, it could have a material adverse impact on the Company's results of
operations, financial condition or cash flows.  The amount of potential loss cannot be reasonably estimated at this time.</P>
<P ALIGN="JUSTIFY"></P>
<B><P><A NAME="_Toc447092119">Market Risk</P>

</B><P>There have been no significant changes in market risk since December 31, 1998.</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 o

<P><A NAME="WexPlaceHolder"></A>PART II.	OTHER INFORMATION</P>

<P> </P>
<P>Item 4.	Submission of Matters to a Vote of Security Holders.</P>

<OL TYPE="a">

<OL TYPE="a">

<LI>On June 30, 1999, the Company held its annual meeting of shareholders.</LI>

<LI>At the meeting the shareholders voted on the election of directors.  The voting tabulation for each director is set next to his name.</LI></OL>
</OL>


<P> </P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=480>
<TR><TD WIDTH="40%" VALIGN="TOP"> </TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Votes For</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Votes Withheld</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP"> </TD>
<TD WIDTH="30%" VALIGN="TOP"> </TD>
<TD WIDTH="30%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>Michael F. Adler</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">6,859,551</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">321,612</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>Frank W. Benson</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">7,073,856</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">98,307</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>D. Lee Carpenter</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">7,073,856</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">98,307</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>Leslie Charm</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">7,0073,856</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">98,307</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>Dexter B. Dawes</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">7,073,856</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">98,307</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>Harry D. Loyle</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">7,073,706</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">98,457</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>David A. Mason</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">7,072,906</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">99,257</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>James F. Robeson</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">7,073,856</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">98,307</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P> </P>
<P>Item 6.	Exhibits and Reports on Form 8-K.</P>

<OL TYPE="a">

<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 June 30, 1999.</LI>
<LI></LI></OL>
</OL>

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

<P>Date:	August 13, 1999</P>

<P> </P>
<P> </P>
<P> </P>
<P> </P>
<P> </P>
<P> </P>
<P> </P>
<P> </P>
<P> </P>
<P> </P>
<P> </P>
</FONT><B><FONT SIZE=4><P ALIGN="CENTER">EXHIBITS TO</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">FORM 10-Q</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">for the quarter ended</P>
</B><P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">June 30, 1999</P>
</B></FONT><FONT SIZE=3>
<P> </P>
<P> </P>
<P>Copies of the following documents are filed as exhibits to this report:</P>

<P> </P>
<U><P>No</U>.		<U>Description</P>
</U>
<P>10.1		Lease dated as of May 7, 1999 by and between Sycamore Partnership and Moto Photo, Inc. 	</P>

<P>27.0		Financial Data Schedule</P></FONT></BODY>
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