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.
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2
EXHIBIT INDEX
Page
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Press Release of Photochannel Networks Inc. and Moto Photo, Inc. 3
Powerpoint Slides shown at the Photochannel Networks Inc. Franchisee Meeting 6
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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."
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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.
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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
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PHOTOCHANNEL'S
PRESENTATION TO
MOTOPHOTO
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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
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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;
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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.
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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.
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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.
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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)
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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
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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
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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.
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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!"
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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.
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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.
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MOTOCONCEPT 2000
Exploding into the New Millennium
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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
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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.