(Mark One)

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

For the quarterly period ended: June 30, 2000

OR

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

For the transition period from______________ to ________________

Commission file number: 0-11927

(Exact name of registrant as specified in its charter)

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

Incorporation or organization)

(Address of principal executive offices with Zip Code)

(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No ____

APPLICABLE ONLY TO ISSUERS IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS.

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

Yes______ No______

APPLICABLE ONLY TO CORPORATE ISSUERS

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

As of August 1, 2000:

7,741,290 - Voting Common, 0 - Non - Voting Common

Part I. Financial Information

Part II. Other Information

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

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

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

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

Noncash items in the first half of 2000 included $400,129 of capital expenditures for the company store segment from entering into capitalized leases and trade-in of equipment. Cash paid for interest during the first six months of 2000 was $398,266 compared to $204,525 for the same period in 1999. Cash paid for income taxes was $200 for the first six months of 2000 and $6,350 for the same period in 1999.

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

The Company reported a net loss of $53,066, or a loss per common share, basic and diluted, of $.03 for the second quarter 2000 compared to net income of $406,873, or income per common share, basic and diluted, of $.04 for the second quarter 1999. For the six months ended June 30, 2000, the Company recorded a net loss of $599,307, or a loss per common share, basic and diluted, of $.12, compared to a net income of $213,666, or net income per common share, basic and diluted, of $.01 for the six months ended June 30, 1999. Per share calculations are made after provision for preferred dividend requirements. The 2000 dividend requirement is an imputed amount, and no cash payments are required until 2003. Due to the Company's common share price of approximately $.56, certain securities could become dilutive and have a significant impact on diluted earnings per share in subsequent periods.

Company store revenue was up by $604,000, or 19%, for the second quarter 2000 compared to 1999 and was up by $1,008,000, or 17%, for the first six months of 2000 compared to 1999. These increases are primarily due to the 17 company stores opened or acquired during the last half of 1999 and the first half of 2000. Comparable store sales were down 7% in the second quarter and down 6% for the first six months. These decreases are primarily attributable to increased discounting on film processing instituted to maintain the Company's share of film processing in markets that are experiencing increased competition from new drug stores that offer on-site processing. Comparable store roll processing declined 3% for the second quarter of 2000 and 1% for the first six months of 2000.

Wholesale segment revenue decreased during the second quarter by $418,000, or 9%, and during the first six months by $546,000, or 7%, primarily as the result of lower prices in the color paper market, approximately 6% fewer franchise stores in the system compared to last year and disruption in supplies from the Company's primary manufacturer.

Development segment operating expenses were up $22,000 for the second quarter and $53,000 for the first six months, primarily due to expanded advertising and marketing efforts designed to increase potential franchise prospects, and partially offset by lower compensation expenses.

Company store segment operating contribution decreased by $283,000 in the second quarter 2000 compared to the same period in 1999. Of this, $158,000 was from losses incurred during the ramp-up phase of the new stores, and $125,000 was from lower sales and margins at stores opened more than one year. For the first six months of 2000, Company store segment operating contribution decreased by $710,000 from the same period in 1999. New stores in their ramp-up phase accounted for $459,000 of this decrease with the balance primarily caused by lower sales and margins in stores opened more than one year as discussed above.

Advertising expense increased $107,000 in the quarter and $215,000 for the year primarily due to supporting increased company store revenue and increases in advertising for development activities.

Depreciation and amortization expense increased over 1999 by $95,000 for the quarter and $184,000 for the year, primarily as a result of the property and equipment in the new company stores.

Interest expense increased $90,000 for the quarter ended June 30, 2000 compared to the same period in 1999 and $194,000 for the six months ended June 30, 2000 compared to the same period in 1999. This was due to increased borrowings to support Company store asset additions, the expansion discussed above, higher interest rates this year and the effect of converting $2,700,000 of accounts payable to a term note at the end of 1999. Interest income, which is from notes receivable and temporary investments of cash, decreased in 2000 in both the quarter and six months due to lower balances of cash and notes receivable. During the first six months of 2000, the Company prepaid substantially all of its long-term obligations which were scheduled to be paid during 2000. This will lower both interest expense and interest income below what would otherwise occur during the last six months of 2000, but interest expense for the last six months of 2000 is still expected to be greater than 1999, due to higher interest-bearing obligations and higher interest rates.

Net cash utilized by operating activities was $1,354,000 for the first six months in 2000 compared to $14,000 for the same period in 1999. This change was largely due to a reduction of accounts payable due to timing differences and a larger loss, partially offset by reductions in accounts receivable and inventory.

Net cash provided by investing activities was $433,000 for the first six months in 2000 compared to net cash utilized by investing activities of $596,000 for the comparable period in 1999. Increases in collections of notes receivable and a decrease in cash purchases of property and equipment were primarily responsible for the differences.

Net cash utilized by financing activities was $2,354,000 for the first six months in 2000 compared to $685,000 for the same period in 1999, due primarily to prepayments of long-term debt in 2000.

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

(a) On June 29, 2000, the Company convened its annual meeting of shareholders. Because of a lack of quorum, the meeting was adjourned to June 30, at which time a quorum was present.

(c) At the meeting the shareholders voted on the election of directors. The voting tabulation for each director is set next to his name.

Votes For Votes Withheld

Michael F. Adler 3,735,931 138,790

Frank W. Benson 3,541,526 333,195

D. Lee Carpenter 3,543,026 331,695

Leslie Charm 3,543,026 331,695

Dexter B. Dawes 3,544,026 330,695

Harry D. Loyle 3,737,131 137,590

David A. Mason 3,544,026 330,695

James F. Robeson 3,737,281 137,440

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

(b) Reports on Form 8-K. During the quarter ended June 30, 2000, the Company filed a report, dated May 25, 2000, to report, under Item 4 of Form 8-K, the resignation of Ernst & Young LLP as the Company's independent accountant. In addition, on July 17, 2000, the Company filed a report on Form 8-K, dated July 12, 2000, to report, under Item 4 of Form 8-K, the retention of Arthur Andersen LLP as the Company's independent public accountants for the examination of the financial statements of the Company for the fiscal year ending December 31, 2000.

SIGNATURE

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

MOTO PHOTO, INC.

By /s/ David A. Mason

David A. Mason

Executive Vice President,

Treasurer, and Chief

Financial Officer

Date: August 11, 2000

No. Description

27 Financial Data Schedule