Moto Photo, Inc. Files Form 8-K Announcing Sale of Assets and Filing For Relief Under Chapter 11

Moto Photo, Inc. (the "Company") announced that it filed a Form 8-K with the Securities and Exchange Commission. The filing states that the Company has entered into an asset purchase agreement to sell substantially all of the assets of the Company to MOTO Franchise Corporation.

It is contemplated that the proposed sale would be consummated under the provisions of Section 363 of the Bankruptcy Code. The Company today filed a petition under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for The Southern District of Ohio, Western Division in Dayton, Ohio. The sale is subject to Bankruptcy Court approval and to higher and better offers.

MOTO franchise Corporation was formed by Harry Loyle and five of the Company's current area developers. Mr. Loyle is a former director of the Company, owns approximately 9% o the Company's common shares, and is currently principal shareholder in and President and CEO of an entity that is an area developer for the Company.

The Company is asking the Bankruptcy Court for approval to assume all of its franchise and related agreements and for approval of an agreement with Provident Bank for use of cash collateral while the bankruptcy proceeding is pending. The Company anticipates that its activities, including franchisee and customer service levels, will continue uninterrupted while the bankruptcy proceeding is pending.

Upon completion of the sale, which is contemplated to occur by January 31, 2003, the franchise and related activities will be conducted by MOTO Franchise Corporation with Harry Loyle as President and CEO. Afterward, Moto Photo, Inc will cease Company store operations and other activities.

MOTO Franchise Corp. is planning on maintaining the Company's corporate headquarters in the Dayton suburb of Trotwood, Ohio.