1 SUBJECT COMPANY Moto Photo, Inc. 4444 Lake Center Drive Dayton, Ohio 45426 (937) 854-6686 Commission File No. 0-11927 FILED BY Photochannel Networks Inc. 800-900 West Hastings St. Vancouver, British Columbia V6C 1E5 Canada (604) 893-8955 Commission File No. 0-30148 UNITED STATES SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, N.W. Washington, D.C. 20549 FORM 425 FILING OF CERTAIN PROSPECTUSES AND COMMUNICATIONS IN CONNECTION WITH BUSINESS COMBINATION TRANSACTIONS Filed by Photochannel Networks Inc. (Commission No. 0-30148) pursuant to Rule 425 under the Securities Act of 1933 and deemed Filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934. Photochannel Networks Inc. is publicaly announcing a proposed business combination with Moto Photo, Inc. (Commission File No. 0-11927). On page 2 of this filing is an exhibit list. Following that are a joint press release issued by the two companies and copies of powerpoint slides shown at the Moto Photo, Inc. franchisee meeting held on September 20, 2000. This document totals 22 pages. 1 2 EXHIBIT INDEX Page ---- Press Release of Photochannel Networks Inc. and Moto Photo, Inc. 3 Powerpoint Slides shown at the Photochannel Networks Inc. Franchisee Meeting 6 2 3 [PHOTOCHANNEL GRAPHIC] MOTOPHOTO NEWS RELEASE PHOTOCHANNEL ANNOUNCES INTENT TO MERGE WITH MOTO PHOTO, THIRD LARGEST SPECIALTY PHOTO RETAILER IN NORTH AMERICA COMBINED FORCE OF TRADITIONAL BRICKS AND MORTAR AND ONLINE LEADER CREATES IMAGING POWERHOUSE VANCOUVER, BC, CANADA AND DAYTON, OHIO - SEPTEMBER 20, 2000 - PHOTOCHANNEL NETWORKS INC. (ME: PNI, OTC BB: PHCHF), an e-commerce company developing an online photo print service for both digital and conventional film photographers at its online photography community located at http://www.photochannel.com, today announced that it has entered into a letter of intent for one of its subsidiaries to merge with MOTO PHOTO, INC. (NASDAQ:MOTO), the largest franchisor of retail imaging stores and the third largest specialty retailer of imaging services in North America. Moto Photo reported revenues of US $36.8 million for 1999 and a net income of US $1.65 million. The proposed merger would value Moto Photo common stock at US$1.75 per share and provide for each common share of Moto Photo to be converted into shares of common stock of PhotoChannel based upon an exchange ratio equal to US $1.75 divided by the average closing price of PhotoChannel common stock for the 20 trading days immediately preceding the merger, with a ceiling of US $2.50 per PhotoChannel share and a floor of US $1.00 per PhotoChannel share. As a result, subject to completion of the merger, the existing Moto Photo common shareholders would own between approximately 5,600,000 to 14,000,000 common shares of PhotoChannel. The transaction is anticipated to be tax-free to Moto Photo shareholders. The proposed merger is subject to a definitive agreement containing customary terms and conditions for similar transactions including Boards of Directors and shareholder approvals; regulatory approvals; the filing of a registration statement with the SEC; the conversion of Moto Photo options into PhotoChannel options; the completion of a US $25 million financing by PhotoChannel; and, may be subject to the consent of the holders of Moto Photo's Amended Series G Cumulative Non-Voting Preferred stock. For estate planning purposes, 2 major shareholders of Moto Photo may elect to enter into an agreement with an unaffiliated third party to monetize at closing up to 50% of the PhotoChannel shares they receive in the merger at US $1.75 per share. The closing date is targeted for the first quarter of 2001. "We are eager to access Moto Photo's unrecognized asset value represented by it's 2 million upscale customers who process 9 million rolls of film a year and generate one-quarter of a billion images," said Geoffrey G. Briant, CEO and Chairman of PhotoChannel. "Bricks and mortar retailers like Moto Photo will have an increasingly prominent role to play in the imaging world of the dot-com economy. Moto Photo's 419 locations will be a valuable link to PhotoChannel's digital world by providing us a widely distributed network for immediate film delivery and print pick-up. In the 1999 Annual Report for Moto Photo, Michael Adler, Moto Photo's Chairman & CEO commented, "One dot-com company hails itself as one of the leading websites with 6 million images now being stored on its servers. That is equivalent to just 9 days volume for Moto Photo. This remark emphasizes for us the combined potential of PhotoChannel and Moto Photo." 3 4 PHOTOCHANNEL NETWORKS INC. September 20, 2000 Page 2 Moto Photo and it's franchisees have installed 100 digital workstations that enable its stores to print images from negatives and scan prints to digital images that could then be uploaded to the PhotoChannel web site. The Moto Photo system has also installed over 25 Fuji Frontier Digital Minilab systems that employ state-of the-art solid state laser exposure technology. These systems produce the highest quality prints from both film and digital media and can be configured to enable each store to upload to that store's private labeled version of the PhotoChannel site or to download images from the PhotoChannel site for print fulfillment and pick-up at that store. Moto Photo, combined with PhotoChannel, will have a larger installed-base of these state-of-the art digital minilab systems from Fuji than all of the all other photo-related dot-com companies in the world. "With this merger our shareholders, franchisees and associates will benefit from fully embracing digital photography. The combined superior management teams at Moto Photo and PhotoChannel, coupled with yesterday's announcement of PhotoChannel's new financial and strategic advisors at Salomon Smith Barney, gives us the foundation to build a new economy company" said Michael Adler, Chairman & CEO of Moto Photo. "I personally look forward to, and I am fully committed to, working with the merged entity. It is inevitable that imaging Internet companies will join forces with major retailers. I am excited that we are the first two companies to implement this strategy and I anticipate that others will want to join this newest imaging powerhouse." ABOUT MOTO PHOTO, INC. Moto Photo, Inc., and its subsidiaries, of Dayton, Ohio are engaged in franchising and ownership of stores offering one hour photo processing services, portraiture and related imaging services and merchandise under the tradenames and service marks "ONE HOUR MOTOPHOTO" and "ONE HOUR MOTOPHOTO AND PORTRAIT STUDIO." This system had 1999 revenues of US $ 140 million and operated 422 stores, including 47 affiliates in Norway, in 27 US states and 2 foreign countries at December 31,1999. ABOUT PHOTOCHANNEL NETWORKS INC. PhotoChannel is an e-commerce company with an online photo community at www.photochannel.com featuring online photo print services for both conventional film and digital photographers. The online photo print phase of the Company's development will launch on October 1, 2000 and feature "Preview and edit...THEN order prints" at www.photochannel.com This release contains statements concerning trends and other forward-looking information affecting or relating to PhotoChannel and Moto Photo and their respective industries that are intended to qualify for the protections afforded "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. In particular, statements regarding the proposed transaction described in this release are based on management's current expectations or beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: (1) the risk that PhotoChannel and Moto Photo businesses will not be integrated successfully; (2) unanticipated delays in achieving or inability to achieve cost reduction and employee productivity goals; (3) cost related to the proposed transaction; (4) inability to obtain, or meeting conditions imposed for, governmental approvals and other conditions for the merger; and (5) failure of the PhotoChannel or Moto Photo stockholders to approve the proposed transaction. 4 5 PHOTOCHANNEL NETWORKS INC. September 20, 2000 Page 3 In connection with the business combination transaction, PhotoChannel and Moto Photo expect to file a joint proxy statement/prospectus and other documents with the Securities and Exchange Commission. PhotoChannel and Moto Photo expect to send the joint proxy statement/prospectus to their respective stockholders seeking their approval of the proposed business combination transaction. We urge investors and stockholders to read the joint proxy statement/prospectus carefully when it is available. The joint proxy statement/prospectus will contain important information about the resulting company, PhotoChannel, Moto Photo, the proposed business combination transaction, and related matters. Investors and stockholders will be able to obtain free copies of the joint proxy statements/prospectus and these documents, once available, as well as other filings made by PhotoChannel and Moto Photo with the Commission through the website maintained by the Commission at http://www.sec.gov. Free copies of the joint proxy statement/prospectus and these other documents, once available, may also be obtained by PhotoChannel stockholder by directing a request to PhotoChannel at Suite 800-900 West Hastings Street, Vancouver, British Columbia V6C 1E5, Canada, and by Moto Photo stockholders by directing a request to Moto Photo at 4444 Lake Center Drive, Dayton, Ohio 45426. Moto Photo and its directors, executive officers, and certain other members of management and employees may be soliciting proxies from Moto Photo stockholders in favor of the transaction. Information concerning the participants in the solicitation is set forth in the Form 8-K filed by Moto Photo with the SEC on September 20, 2000. PhotoChannel and its directors, executive officers, and certain other members of management and employees may be soliciting proxies from PhotoChannel stockholders in favor of the transaction. Information concerning the participants in the solicitation is set forth in the Form 6-K filed by PhotoChannel with the SEC on September 20, 2000. PhotoChannel Networks Inc. Moto Photo , Inc. On behalf of its Board of Directors, On behalf of its Board of Directors, Geoffrey G. Briant Michael Adler Chairman & CEO Chairman & CEO CORPORATE INFORMATION INVESTOR INFORMATION MEDIA RELATIONS Moto Photo, Inc. The Investor Relations Group Thomas PR David A. Mason, Exec. VP & CFO Tel: 1-800-444-9214 Karen Thomas/Gina Prescia Tel: 937- 837-7911 Ext. 246 photochannel@invrel.com Tel: 631-549-7575 dmason@motophoto.com www.irgnews.com kthomas@thomas-pr.com www.motophoto.com gprescia@thomas-pr.com PhotoChannel Networks Inc. Frank Gigliotti, VP, Corp. Communications Tel: 604-893-8955 fgigliotti@photochannel.com www.photochannel.com 5 6 PHOTOCHANNEL'S PRESENTATION TO MOTOPHOTO 7 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO? o Provide the premier dot com strategy for MotoPhoto stores o Provide a first-to-market network strategy for MotoPhoto stores o Provide an enhanced store expansion strategy by repositioning MotoPhoto as embracing digital photography o Provide an in-store product diversification strategy o Provide the financing for, and implementation of, these strategies 2 8 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO? DOT COM STRATEGY FOR STORES - - Use the PhotoChannel site as a template of the premier online photo site for building customized photo websites for each MotoPhoto store featuring: o "Preview & edit... THEN order prints" - Online PREVIEW AND EDITING of pictures - Online ORDERING of prints in stores or at home - For digital & film photographers - In-store PICK UP at any MotoPhoto store nationwide o An ONLINE MOTOPHOTO camera store featuring in-store pick-up (and return) of online purchases at MotoPhoto; 3 9 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO? DOT COM STRATEGY FOR STORES(CONT'D) - - PERSONAL photo web sites for customers where albums and/or slide shows are posted for sharing with family and friends; - - Online photography NEWS, tips and techniques; - - Digital camera, film camera & digital imaging SOFTWARE REVIEWS; - - Weekly email of photography NEWSLETTER; and, - - Online COMMUNITY of peers sharing common photo interests including manufacturers' reps. 4 10 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO? NETWORK STRATEGY FOR STORES - - Each store enjoys a FIRST-TO-MARKET advantage as a PRINT FULFILLMENT MEMBER of The PhotoChannel Network - - Membership results in INCREMENTAL REVENUE from printing for geographically dispersed print origination members seeking a distributed printing solution for their customers - - Membership in The PhotoChannel Network enables each MotoPhoto store to offer IN-STORE PICK-UP AT MOTOPHOTO STORES NATIONWIDE. 5 11 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO? NETWORK STRATEGY FOR STORES (CONT'D) - - By networking Fuji Frontier digital minilabs and having each store become a member of The PhotoChannel Network, each store becomes a PRINT FULFILLMENT MEMBER of THE PHOTOCHANNEL NETWORK; - - As members, each store receives online orders for prints from MotoPhoto customers as well as from their family and friends nationwide. ORDERS FROM PHOTOCHANNEL'S PRINT ORDER ORIGINATION MEMBERS are also received. These will include the online photo communities such as Zing, Photopoint, MyFamily.com, and MSN Communities; - - As a network member, each store's value is enhanced. 6 12 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO? PRODUCT DIVERSIFICATION STRATEGY FOR STORES - - Like Gateway Country stores, MotoPhoto stores could become demo centers for in-store ordering and next day pick-up of: o Top selling digital and traditional film cameras (and accessories); o Digital cellular phones; o Personal digital assistants including Palm, Handspring, PocketPC Compatible devices and Blackberry; and, o Digital Frames (with or without Internet access) 7 13 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO? FINANCE & IMPLEMENTATION STRATEGIES FOR STORES - - $15,000 - $20,000 in network hardware and software delivered by PhotoChannel to MotoPhoto stores with Fuji Frontier digital minilabs installed - - Preferential Fuji Frontier digital minilab delivery to be obtained by PhotoChannel - - Preferential Fuji Frontier digital minilab financing to be provided by PhotoChannel - - Sublicense of the exclusive right to use the MCL online photo print fulfillment solution utilizing Fuji Frontier digital minilabs to be provided by PhotoChannel 8 14 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO? FINANCE & IMPLEMENTATION STRATEGIES FOR STORES (CONT'D) - - Customizable online photo site template provided to MotoPhoto stores by PhotoChannel - - Online camera store product fulfillment solution provided by PhotoChannel - - All content and community features of the PhotoChannel site provided by PhotoChannel - - Online image storage and retrieval solution provided by PhotoChannel - - Lifetime archiving guarantee from Fuji provided by PhotoChannel 9 15 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO FRANCHISEES? o Provide, finance and implement a comprehensive STRATEGY to embrace digital photography o Provide each store a WEBSITE and all related storage featuring "Preview & Edit...THEN order prints!"; o Provide MEMBERSHIP in The PhotoChannel Network o Create stores as demo centers for the online camera store featuring CAMERA, CELLULAR PHONE and PDA SALES; and, o Increase in-store TRAFFIC with: o "Preview & edit...THEN order prints!" available online in stores o In-store pick up of prints ordered online from existing customers, new customers and from photo communities o In-store pick-up (and return) for online camera store sales. 10 16 WHAT CAN PHOTOCHANNEL DO FOR MOTOPHOTO CUSTOMERS? ESTABLISH EACH MOTOPHOTO STORE AS A NEIGHBORHOOD DIGITAL IMAGING CENTER FEATURING: - - "Preview & edit...THEN order prints!" - - In-store online access available at each store - - In-store pick-up of pictures previewed and edited online - - A selection of the latest digital cameras and accessories - - In-store pick up (and return) of online camera sales - - Topical newsletter emailed weekly as the authority on photography news, tips, hints and techniques highlighting each store's "Specials This Week!" 11 17 SUMMARY OF OPPORTUNITY o PHOTOCHANNEL OFFERS MOTOPHOTO the opportunity to differentiate, innovate and reposition the Company and its stores: - Membership in The PhotoChannel Network DIFFERENTIATES MotoPhoto from other specialty photography retailers; - Membership in The PhotoChannel Network positions MotoPhoto as an INNOVATIVE retailer with a First-to-Market advantage; and, - Membership in The PhotoChannel Network REPOSITIONS MotoPhoto as a specialty photo retailer dedicated to embracing digital photography. 12 18 These slides contain statements concerning trends and other forward-looking information affecting or relating to PhotoChannel and Moto Photo and their respective industries that are intended to qualify for the protections afforded "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. In particular, statements regarding the proposed transaction described in these slides are based on management's current expectations or beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: (1) the risk that PhotoChannel and Moto Photo businesses will not be integrated successfully; (2) unanticipated delays in achieving or inability to achieve cost reduction and employee productivity goals; (3) cost related to the proposed transaction; (4) inability to obtain, or meeting conditions imposed for, governmental approvals and other conditions for the merger; and (5) failure of the PhotoChannel or Moto Photo stockholders to approve the proposed transaction. In connection with the business combination transaction, PhotoChannel and Moto Photo expect to file a joint proxy statement/prospectus and other documents with the Securities and Exchange Commission. PhotoChannel and Moto Photo expect to send the joint proxy statement/prospectus to their respective stockholders seeking their approval of the proposed business combination transaction. We urge investors and stockholders to read the joint proxy statement/prospectus carefully when it is available. The joint proxy statement/prospectus will contain important information about the resulting company, PhotoChannel, Moto Photo, the proposed business combination transaction, and related matters. Investors and stockholders will be able to obtain free copies of the joint proxy statements/prospectus and these documents, once available, as well as other filings made by PhotoChannel and Moto Photo with the Commission through the website maintained by the Commission at http://www.sec.gov. Free copies of the joint proxy statement/prospectus and these other documents, once available, may also be obtained by PhotoChannel stockholder by directing a request to PhotoChannel at Suite 800-900 West Hastings Street, Vancouver, British Columbia V6C 1E5, Canada, and by Moto Photo stockholders by directing a request to Moto Photo at 4444 Lake Center Drive, Dayton, Ohio 45426. Moto Photo and its directors, executive officers, and certain other members of management and employees may be soliciting proxies from Moto Photo stockholders in favor of the transaction. Information concerning the participants in the solicitation is set forth in the FORM 8-K FILED BY MOTO PHOTO WITH THE SEC ON SEPTEMBER 20, 2000. PhotoChannel and its directors, executive officers, and certain other members of management and employees may be soliciting proxies from PhotoChannel stockholders in favor of the transaction. Information concerning the participants in the solicitation is set forth in the FORM 6-K FILED BY PHOTOCHANNEL WITH THE SEC ON SEPTEMBER 20, 2000. 19 MOTOCONCEPT 2000 Exploding into the New Millennium 20 PHOTOCHANNEL BENEFITS TO MOTO STAKEHOLDERS FRANCHISEES FINANCIAL - --------- o Major Zee Financial Assistance o Internet Solutions o Increased Consumer Visibility o Increased Marketing o Higher Sales & Profits STRATEGIC - --------- o Fully Embracing Digital o Owner in World Wide Internet Provider o Increases Moto's Net Worth o Currency (Stock) For Acquisitions o Expanded System o Talent o Strategic o Financial o Networking o Strengthens Franchise System o Bigger Player 21 PHOTOCHANNEL BENEFITS TO MOTO STAKEHOLDERS SHAREHOLDERS FINANCIAL - --------- o Triple Stock Price o Market Liquidity o Upside Stock Potential o Increases Moto's Net Worth STRATEGIC - --------- o Fully Embracing Digital o Owner In World Wide Internet Provider o Currency (Stock) For Acquisitions o Talent o Strategic o Financial o Networking o Strengthens Franchise System o Bigger Player 22 These slides contain statements concerning trends and other forward-looking information affecting or relating to PhotoChannel and Moto Photo and their respective industries that are intended to qualify for the protections afforded "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. In particular, statements regarding the proposed transaction described in these slides are based on management's current expectations or beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: (1) the risk that PhotoChannel and Moto Photo businesses will not be integrated successfully; (2) unanticipated delays in achieving or inability to achieve cost reduction and employee productivity goals; (3) cost related to the proposed transaction; (4) inability to obtain, or meeting conditions imposed for, governmental approvals and other conditions for the merger; and (5) failure of the PhotoChannel or Moto Photo stockholders to approve the proposed transaction. In connection with the business combination transaction, PhotoChannel and Moto Photo expect to file a joint proxy statement/prospectus and other documents with the Securities and Exchange Commission. PhotoChannel and Moto Photo expect to send the joint proxy statement/prospectus to their respective stockholders seeking their approval of the proposed business combination transaction. We urge investors and stockholders to read the joint proxy statement/prospectus carefully when it is available. The joint proxy statement/prospectus will contain important information about the resulting company, PhotoChannel, Moto Photo, the proposed business combination transaction, and related matters. Investors and stockholders will be able to obtain free copies of the joint proxy statements/prospectus and these documents, once available, as well as other filings made by PhotoChannel and Moto Photo with the Commission through the website maintained by the Commission at http://www.sec.gov. Free copies of the joint proxy statement/prospectus and these other documents, once available, may also be obtained by PhotoChannel stockholder by directing a request to PhotoChannel at Suite 800-900 West Hastings Street, Vancouver, British Columbia V6C 1E5, Canada, and by Moto Photo stockholders by directing a request to Moto Photo at 4444 Lake Center Drive, Dayton, Ohio 45426. Moto Photo and its directors, executive officers, and certain other members of management and employees may be soliciting proxies from Moto Photo stockholders in favor of the transaction. Information concerning the participants in the solicitation is set forth in the FORM 8-K FILED BY MOTO PHOTO WITH THE SEC ON SEPTEMBER 20, 2000. PhotoChannel and its directors, executive officers, and certain other members of management and employees may be soliciting proxies from PhotoChannel stockholders in favor of the transaction. Information concerning the participants in the solicitation is set forth in the FORM 6-K FILED BY PHOTOCHANNEL WITH THE SEC ON SEPTEMBER 20, 2000.