U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   FORM 10-QSB

(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, 1998

         [ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                         EXCHANGE ACT
         For the transition period from ____________ to ____________
                  Commission File Number 0-14819

                          RENT-A-WRECK OF AMERICA, INC.              
     ---------------------------------------------------------------------
                    (Exact name of small business issuer as
                            specified in its Charter)

           Delaware                                              95-3926056
---------------------------------                            -------------------
(State or other jurisdiction                                 (I.R.S. Employer
of incorporation or organization)                            Identification No.)

11460 Cronridge Drive, Suite 120, Owings Mills, MD                 21117
--------------------------------------------------                 -----
(Address of Principal Executive Offices)                        (Zip Code)

Issuer's telephone number: (410) 581-5755

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

         Check whether the issuer (1) has filed all reports required to be filed
by  Section  13 or 15(d) of the  Exchange  Act during the past 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 CORPORATE ISSUERS

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 4,088,792 shares as of July
28, 1998.

         Transitional Small Business Disclosure Format (Check One):
Yes [ ]   No [X]
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES

                           FORM 10-QSB - JUNE 30, 1998


                                      INDEX


Part I.   Financial Information                                            Page
-------------------------------                                            ----
                                                                           
Item   1. Financial Statements                                             
                                                                           
          Consolidated Balance Sheets as of                                
            March 31, 1998 and                                             
            June 30, 1998 (Unaudited)                                       2-3
                                                                           
          Consolidated Statements of Earnings for                          
            the Three Months ended                                         
            June 30, 1997 and 1998 (Unaudited)                                4
                                                                           
          Consolidated Statements of Cash Flows for                        
            the Three Months ended June 30, 1997 and                       
            1998 (Unaudited)                                                  5
                                                                           
          Notes to Consolidated Financial Statements                       
            (Unaudited)                                                     6-8
                                                                           
Item   2. Management's Discussion and Analysis or                          
            Plan of Operations                                             8-10
                                                                           
Part II.  Other Information                                                
---------------------------                                                
                                                                           
                                                                           
                                                                           
Item   1. Legal proceedings                                                  12
                                                                           
Item   2. Changes in Securities and Use of Proceeds                          12
                                                                           
Item   3. Defaults Upon Senior Securities                                    12
                                                                           
Item   4. Submission of Matters to a Vote of Security                      
          Holders                                                            12
                                                                           
Item   5. Other Information                                                  12
                                                                           
Item   6. Exhibits and Reports on Form 8-K                                   12
                                                                           
          Signatures                                                         13

<PAGE>
Part I - Financial Information

Item 1 - Financial Statements


                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                     ASSETS

                                                         March 31,    June 30,
                                                           1998         1998
                                                        -----------  ----------
                                                                     (Unaudited)
CURRENT ASSETS:
Cash and Cash Equivalents.............................  $1,215,615   $  898,768
Restricted Cash.......................................     394,021      748,970
Accounts Receivable, net of allowance
  for doubtful accounts of $682,631 and $726,722 at
    March 31, 1998 and June 30, 1998, respectively:
    Continuing License Fees and
      Advertising Fees.................................    302,367      328,527
    Current Portion of Notes Receivable................    342,765      385,664
    Current Portion of Direct Financing
      Leases...........................................     37,653       22,578
    Insurance Premiums Receivable......................    560,219       48,432
    Other..............................................    176,166      163,742
Prepaid Expenses.......................................    133,856      138,609
                                                        -----------  ----------

    TOTAL CURRENT ASSETS...............................  3,162,662    2,735,290
                                                        -----------  ----------
PROPERTY AND EQUIPMENT:
  Furniture............................................     71,655       76,638
  Computer Hardware and Software.......................    314,657      327,628
  Machinery and Equipment..............................    101,868      102,311
  Leasehold Improvements...............................     37,896       37,896
  Vehicles.............................................     23,347       60,722
                                                        -----------  ----------
                                                           549,423      605,195
  Less:  Accumulated Depreciation and
         Amortization..................................   (265,476)    (294,499)
                                                        -----------  -----------

NET PROPERTY AND EQUIPMENT.............................    283,947      310,696
                                                        -----------  ----------
OTHER ASSETS:
  Trademarks and other Intangible Assets, net of
    accumulated amortization of $105,951 and $110,946 at
    March 31, 1998 and June 30, 1998, respectively.....    203,129      200,138
  Long-term Portion of Notes and Direct Financing Lease
    Receivables, net of allowance of $0
    at March 31, 1998 and June 30, 1998, respectively..     14,374       12,178
                                                        -----------  ----------

                                                           217,503      212,316
                                                        -----------  ----------

    TOTAL ASSETS....................................... $3,664,112   $3,258,302
                                                        ===========  ==========

The accompanying notes are an integral part of this financial statement.
                                        2
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                                        March 31,     June 30,
                                                           1998         1997
                                                        ----------  -----------
                                                                    (Unaudited)
CURRENT LIABILITIES:
  Accounts Payable and Accrued Expenses................ $  873,690   $  521,040
  Dividends Payable....................................     27,320       27,320
  Insurance Premiums Payable...........................    488,397      465,141
  Insurance Fees, Claims, and Loss Reserves............    244,815      188,411
  Other................................................      1,506        1,506
                                                        -----------  ----------

    TOTAL CURRENT LIABILITIES..........................  1,635,728    1,203,418
                                                        -----------  ----------

    TOTAL LIABILITIES..................................  1,635,728    1,203,418
                                                        -----------  ----------

COMMITMENTS AND CONTINGENCIES                                 -            -

SHAREHOLDERS' EQUITY:

  Convertible Cumulative Series A Preferred Stock,
    $.01 par value; authorized 10,000,000 shares; 
    issued and outstanding 1,366,000 shares at March
    31, 1998 and at June 30, 1998 (aggregate liquidation
    preference $1,151,300 at March 31, 1998 and at June
    30, 1998)..........................................     13,660       13,660
  Common Stock, $.01 par value; authorized  
    25,000,000 shares; issued and
    outstanding 4,189,692 shares at March 31, 1998 and
    4,128,792 shares at June 30, 1998..................     41,896       41,288
  Additional Paid-In Capital...........................  2,900,382    2,832,448
  Accumulated Deficit..................................   (927,554)    (832,512)
                                                        -----------  -----------

    TOTAL SHAREHOLDERS' EQUITY.........................  2,028,384    2,054,884
                                                        -----------  ----------

    TOTAL LIABILITIES AND SHAREHOLDERS'
      EQUITY........................................... $3,664,112   $3,258,302
                                                        ===========  ==========

The accompanying notes are an integral part of this financial statement.
                                       3
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)

                                                     Three Months Ended June 30,
                                                     ---------------------------
                                                        1997             1998
                                                     ----------       ----------
REVENUES:
  Initial License Fees.............................  $  270,500       $  312,000
  Advertising Fees.................................     176,845          191,455
  Continuing License Fees..........................     548,725          582,578
  Insurance Premiums...............................      87,567          162,043
  Vehicle Rental Operations........................       2,728            3,475
  Direct Financing Leases to Franchisees...........         375             -
  Other............................................      40,591           34,058
                                                     -----------      ----------

                                                      1,127,331        1,285,609
                                                     -----------      ----------
EXPENSES:
  Salaries, Consulting Fees and
    Employee Benefits..............................     195,215          204,187
  Advertising and Promotion........................     221,064          233,794
  Insurance Underwriting Expenses..................      61,098          137,060
  Sales and Marketing..............................     221,312          221,207
  General and Administrative.......................     231,055          245,456
  Depreciation and Amortization....................      30,544           34,019
                                                     -----------      ----------

                                                        960,288        1,075,723
                                                     -----------      ----------

      OPERATING INCOME.............................     167,043          209,886

INTEREST INCOME, NET...............................      18,091           16,120
                                                     -----------      ----------

      INCOME BEFORE INCOME TAX EXPENSE.............     185,134          226,006
                                                     -----------      ----------

INCOME TAX EXPENSE.................................      52,500           59,342
                                                     -----------      ----------

      NET INCOME...................................  $  132,634       $  166,664

DIVIDENDS ON CONVERTIBLE CUMULATIVE
  PREFERRED STOCK..................................      28,645           27,320
                                                     -----------      ----------
NET INCOME AFTER DIVIDENDS ON
  CONVERTIBLE CUMULATIVE PREFERRED STOCK...........  $  103,989       $  139,344
                                                     -----------      ----------
EARNINGS PER COMMON SHARE

  Basic                                              $      .02       $      .03
                                                     -----------      ----------

Weighted average common shares.....................   4,244,499        4,162,888
                                                     ===========      ==========

  Diluted                                            $      .02       $      .03
                                                     -----------      ----------
Weighted average common shares
 plus options and warrants.........................   6,390,030        5,631,968
                                                     ===========      ==========

The accompanying notes are an integral part of these consolidated statements.
                                        4
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            Three Months Ended June 30,
                                                            ---------------------------
                                                                1997           1998
                                                             ----------     ---------
<S>                                                         <C>             <C>      
Increase (decrease) in cash and cash
equivalents

Cash flows from operating activities:
  Net income .............................................. $  132,634      $ 166,664
  Adjustments to reconcile net income
    to net cash provided by operating activities:
      Depreciation and amortization........................     30,544         34,019
      Provision for doubtful accounts......................     53,127         44,091
  Changes in assets and liabilities:
      Accounts and notes receivable........................    (95,936)       428,332
      Prepaid expenses.....................................    (82,230)        (4,753)
      Accounts payable and accrued
        expenses...........................................   (103,550)      (352,650)
      Insurance fees, claims, and
        loss reserves......................................     43,544        (56,404)
                                                             ----------     ----------

      Net cash (used in) provided by operating activities..    (21,867)       259,299
                                                             ----------     ---------
Cash flows from investing activities:
  (Increase) decrease in restricted cash...................     13,914       (354,949)
  Acquisition of property and equipment....................    (28,347)       (55,771)
  Additions to trademarks and other........................     (1,066)        (2,005)
                                                             ----------     ----------

      Net cash used in investing activities................    (15,499)      (412,725)
                                                             ----------     ----------
Cash flow from financing activities:
  Increase (decrease) in insurance premiums payable........    140,255        (23,256)
  Issuance of common stock.................................     12,500         16,000
  Repayments of long-term debt.............................     (2,021)          -
  Retirement of common stock...............................       -           (84,543)
  Preferred dividends paid.................................    (69,909)       (71,622)
                                                             ----------     ----------

      Net cash provided by (used in) financing activities..     80,825       (163,421)
                                                             ----------     ----------

      Net increase (decrease) in cash and cash
         equivalents.......................................     43,459       (316,847)

Cash and cash equivalents at beginning of period...........    858,427      1,215,615
                                                             ----------    ----------

Cash and cash equivalents at end of period.................  $ 901,886     $  898,768
                                                             ==========    ==========
Supplemental disclosure of cash flow information:
  Interest paid............................................  $   1,480           -
  Taxes paid...............................................  $  43,986     $  307,100
</TABLE>

The accompanying notes are an integral part of these consolidated statements.
                                        5
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998

1.       CONSOLIDATED FINANCIAL STATEMENTS

         The  consolidated  financial  statements  presented  herein include the
accounts of Rent-A-Wreck of America,  Inc.  ("RAWA,  Inc.") and its wholly owned
subsidiaries,  Rent-A-Wreck Operations,  Inc. ("RAW OPS"), Rent-A-Wreck One Way,
Inc. ("RAW One Way"),  Consolidated American Rental Insurance Company, LTD ("CAR
Insurance") and Bundy American Corporation ("Bundy"),  and Bundy's subsidiaries,
Rent-A-Wreck Leasing, Inc. ("RAW Leasing"),  URM Corporation ("URM") and Central
Life and Casualty Company, Limited ("CLC").

         All of the above entities are collectively referred to as the "Company"
unless the context  provides or requires  otherwise.  All material  intercompany
balances and transactions have been eliminated.

         The  consolidated  balance sheet as of June 30, 1998, the  consolidated
statements of earnings and cash flows for the three-month periods ended June 30,
1997 and 1998 have been prepared by the Company without audit. In the opinion of
management,  all adjustments  which are necessary to present a fair statement of
the results of operations  for the interim  periods have been made, and all such
adjustments are of a normal recurring nature.  Certain  information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles have been condensed or omitted.
These  financial  statements  should be read in  conjunction  with the financial
statements  and notes thereto  included in the Company's  March 31, 1998 audited
financial statements.  The results of operations for the interim periods are not
necessarily indicative of the results for a full year.

2.       PREFERRED STOCK

         As of March 31, 1998, preferred dividend arrearages were $221,511.  The
Company paid $44,302 of these arrearages during the quarter ended June 30, 1998.
For the quarter ended June 30, 1998,  the Company  declared  dividends  totaling
$27,320 which are expected to be paid during the second quarter of the Company's
fiscal year. As of June 30, 1998, preferred dividend arrearages were $177,209.
                                        6
<PAGE>
3.       EARNINGS PER SHARE

         A  reconciliation  of the numerators and  denominators  utilized in the
computation of basic and diluted earnings per share for the three-month  periods
ended June 30, 1997 and 1998 is as follows:

                                              1997             1998
                                            --------         ------
BASIC EPS COMPUTATION                      
                                           
Numerator:                                 
 Net income applicable to                  
  common shares                            $  103,989       $   139,344
                                           
Denominator:                               
 Weighted average common                   
  shares                                    4,244,499         4,162,888
                                           ----------        ----------
                                           
Basic EPS                                  $      .02        $      .03
                                           ==========        ==========
DILUTED EPS COMPUTATION                    
                                           
Numerator:                                 
 Net income applicable to                  
  common shares                            $  103,989        $  139,344
 Dividends on convertible                  
  preferred stock                              28,645            27,320
                                           ----------        ----------
                                              132,634           166,664
                                           ----------        ----------
Denominator                                
 Weighted average common                   
  shares                                    4,244,499         4,162,888
 Convertible preferred                     
  stock                                     1,432,250         1,366,000
 Weighted average options                  
  and warrants                                713,281           103,080
                                           ----------        ----------
                                            6,390,030         5,631,968
                                           ----------        ----------
                                           
Diluted EPS                                $      .02        $      .03
                                           ==========        ==========
                                           
                                        7
<PAGE>
4.       LITIGATION

         The Company is party to legal  proceedings  incidental  to its business
from time to time.  Certain claims,  suits and complaints  arise in the ordinary
course of  business  and may be filed  against the  Company.  Based on facts now
known to the  Company,  management  believes  all such  matters  are  adequately
provided  for,  covered by insurance  or, if not so covered or provided for, are
without  merit,  or involve  such amounts  that would not  materially  adversely
affect the  consolidated  results of  operations  or  financial  position of the
Company.

Item 2.Management's Discussion and Analysis or
----------------------------------------------
          Plan of Operations
          ------------------

RESULTS OF OPERATIONS-THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO JUNE 30, 1997

         Revenue from  franchising  operations  which includes  initial  license
fees,  continuing  license fees,  advertising  fees and direct  financing leases
increased by $89,588 (9%).  Initial  license fees increased by $41,500 (15%) due
to the addition of new franchises.  Continuing license fees increased by $33,853
(6%) and advertising  fees increased by $14,610 (8%).  These increases  resulted
primarily  from the  fleet  growth  at  existing  franchises  and the  Company's
dedication  of  additional  resources to the  collection  effort.  Revenues from
insurance premiums increased by $74,476 (85%) due to higher participation by the
Company's  franchisees in the CAR Insurance  program that started in March 1997,
partially  offset by a $13,292 (100%) reduction in the physical damage insurance
program ("CLC") due to its termination and replacement by CAR Insurance.

         Total  operating  expenses  increased by $115,435  (12%) in this period
compared to the same  period in the prior  year.  Salary  expense  increased  by
$8,972 (4%)  primarily  as a result of hiring  additional  employees in order to
manage the growth of the Company.  Advertising and promotion  expenses increased
by  $12,730  (6%),  which  resulted  primarily  from  an  increase  in  national
advertising  expense to promote the  Company.  Insurance  underwriting  expenses
increased by $75,962  (124%) due to an increase in paid losses and loss reserves
for future  claims in  connection  with higher  participation  of the  Company's
franchisees.  General and  administrative  expenses  increased by $14,401  (6%),
which  resulted  primarily  from  additional   expenses  related  to  legal  and
accounting fees.

         Depreciation and amortization expense increased by $3,475 (11%) in this
period  compared  to the same  period  in the  prior  year.  This  increase  was
primarily due to the additional investment in computer software and hardware.
                                        8
<PAGE>
         Net interest income decreased $1,971 (11%). This decrease was primarily
due to interest paid to A.I.Credit  Corporation ("AICCO") on the funds which CAR
Insurance  Company  borrowed from AICCO to meet the capital  requirements of the
Bermuda Government in conjunction with the reinsurance program.

         The Company  realized  operating  income of $209,886,  before taxes and
interest,  for the three-month  period ended June 30, 1998 compared to operating
income of $167,043 for the same period in the prior year, reflecting an increase
of $42,843 (26%). This increase resulted  primarily from the increase in initial
license fees and  continuing  license fees due to the addition of new franchises
and the Company's collection efforts.

         Income tax  expense  for the  three-month  period  ended June 30,  1998
increased by $6,842 (13%) compared to the three-month period ended June 30, 1997
due to higher pre-tax earnings.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30,  1998,  the  Company  had  working  capital  of  $1,531,872
compared to  $1,526,934  at March 31,  1998.  This  increase of $4,938  resulted
primarily  from the net profit earned during the  three-month  period ended June
30, 1998.

         The Company has finalized a $1,000,000  letter of credit with The Chase
Manhattan  Bank  ("Chase") in  connection  with the  Company's new CAR Insurance
subsidiary.  This  letter of credit is part of the  reinsurance  agreement  with
American  International  Group ("AIG") to secure payment of claims.  Funds drawn
against the letter of credit bear interest at 3% plus Chase's  prime  commercial
lending rate (which prime rate was 8.5% on June 30, 1998). For the quarter ended
June 30,  1998,  AIG has not drawn any funds  from the  letter of  credit.  This
letter of credit is secured by all of the Company's assets.

         The Company was committed  under capital lease  agreements  for various
equipment,  and it rents its office  facilities  under the terms of an operating
lease.  The capital lease  obligations  were $36,646 and $0 at June 30, 1997 and
June 30, 1998, respectively. The Company has utilized its working capital to pay
for these obligations.

         Furniture,  equipment and leasehold  improvements  increased by $18,397
(3%) from March 31, 1998 to June 30, 1998. This increase occurred  primarily due
to additional  investment in computer software and hardware.  Vehicles increased
by $37,375  (160%) from March 31, 1998 to June 30, 1998 due to the purchase of a
vehicle for the Company.

         Cash provided by operations was $259,299,  resulting primarily from net
income before  depreciation  plus the decrease in accounts and notes receivable,
offset by the increase in the Company's prepaid  expenses,  decrease in accounts
payable and accrued  expenses,  and insurance  fees,  claims and loss  reserves.
Accounts and notes receivable  decreased  primarily from funds received from AIG
in connection with the reinsurance program.
                                        9
<PAGE>
Prepaid  expenses  increased   primarily  due  to  the  purchase  of  additional
promotional  items.  Accounts payable and accrued expenses  decreased  primarily
from income taxes paid for the year ended March 31, 1998. Cash used in investing
activities  of  $412,725  related  primarily  to  the  acquisition  of  computer
software,  hardware, a Company vehicle and annual costs associated with renewing
trademarks.  Cash  used in  financing  activities  during  the same  period  was
$163,421,  resulting  from a decrease  in  insurance  premiums  payable  and the
payment  of  preferred  dividends  and  buyback  of common  stock  offset by the
issuance of common stock in connection with warrants which were exercised.

         On April 23,  1998,  the Company  approved the  repurchase  of up to an
additional  500,000  shares of the  Company's  outstanding  common or  preferred
stock.  For the quarter ended June 30, 1998, the Company bought back and retired
80,900 shares of its common stock.

         The Company  believes it has sufficient  working capital to support its
business plan through fiscal 1999.

IMPACT OF INFLATION

         Inflation has had no material  impact on the  operations  and financial
condition of the Company.

         The statements regarding  anticipated future performance of the Company
contained in this report are forward-looking  statements which are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These  forward-looking  statements  involve risks and  uncertainties  that
could  cause  the  Company's  actual  results  to  differ  materially  from  the
forward-looking  statements.  Factors  which could cause or  contribute  to such
differences include, but are not limited to, the Company's limited experience in
the reinsurance  business and the potential for negative claims experience,  the
effects of  government  regulation  of the  Company's  franchise  and  insurance
programs  including  maintaining  properly  registered  franchise  documents and
making any required  alterations  in the Company's  franchise  program to comply
with changes in the laws,  competitive pressures from other motor vehicle rental
companies which have greater marketing and financial resources than the Company,
protection  of the  Company's  trademarks,  and the  dependence on the Company's
relationships with its franchisees. These risks and uncertainties are more fully
described under the caption,  "Item 6 - Management's  Discussion and Analysis of
Financial  Condition  and  Results of  Operations  -  Important  Factors" in the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 1998.
All forward-looking  statements should be considered in light of these risks and
uncertainties.
                                       10
<PAGE>
                  Selected Financial Data
                  -----------------------

         Set forth  below  are  selected  financial  data  with  respect  to the
consolidated  statements of earnings of the Company and its subsidiaries for the
fiscal  quarters  ended June 30,  1997 and 1998 and with  respect to the balance
sheets thereof at June 30 in each of those years.

         The  selected  financial  data have  been  derived  from the  Company's
unaudited  consolidated  financial  statements and should be read in conjunction
with the financial  statements  and related  notes  thereto and other  financial
information appearing elsewhere herein.
                                             Quarters ended June 30,
                                        ---------------------------------
                                                1997        1998
                                        ---------------------------------
                                         (in thousands except per share
                                        amounts and number of franchises)
                                                  (Unaudited)
Franchisees' Results

Franchisees' revenue (1)                      $9,145           $9,710
Number of franchises                             468              568

Results of Operations

Total revenue                                 $1,127           $1,286
Total expense                                    960            1,076
Income before income
  taxes                                          185              226
Net income                                       133              167
Earnings per common share

 Basic                                        $  .02           $  .03
 Weighted average common
  shares                                       4,244            4,163

 Diluted                                      $  .02           $  .03
 Weighted average common
  shares plus options and
   warrants                                    6,390            5,632

Balance Sheet Data

Working capital                               $1,261           $1,532
Total assets                                  $2,748           $3,258
Long-term obligations                         $   28           $ --
Shareholders' Equity                          $1,831           $2,055

         (1) The  franchisees'  revenue data have been  derived  from  unaudited
reports provided by franchisees in paying license fees.
                                       11
<PAGE>
Part II.  Other Information

ITEM 1.   LEGAL PROCEEDINGS
-------   -----------------

         The Company is party to legal  proceedings  incidental  to its business
from time to time.  Certain claims,  suits and complaints  arise in the ordinary
course of  business  and may be filed  against the  Company.  Based on facts now
known to the  Company,  management  believes  all such  matters  are  adequately
provided  for,  covered by insurance  or, if not so covered or provided for, are
without  merit,  or involve  such amounts  that would not  materially  adversely
affect the  consolidated  results of  operations  or  financial  position of the
Company.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
-------  -----------------------------------------

         On June 30, 1998,  the Company issued 20,000 shares of its common stock
in connection with the exercise of warrants. See also Item 5 below.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
-------  -------------------------------

         The  information  disclosed in footnote 2 to the  financial  statements
provided in Part I Item 1 of this Report on Form 10-QSB is  incorporated  herein
by this reference.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------  ---------------------------------------------------

         On April  23,  1998,  approximately  96% of the  outstanding  shares of
Series A Preferred Stock  consented to the  corporation's  authorization  of the
repurchase of up to 500,000 shares of the Company's Common Stock or its Series A
Preferred Stock.

ITEM 5.  OTHER INFORMATION
-------  -----------------

         During the quarter  ended June 30,  1998,  the Company  bought back and
retired  80,900 shares of its common stock,  reducing total  outstanding  common
shares from 4,189,692 to 4,128,792.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-------  --------------------------------

                  (a) See Exhibit Index following the Signatures  page, which is
incorporated herein by reference.
                                       12
<PAGE>
                  (b) No reports on Form 8-K were filed  during the  quarter for
which this report is filed.


                                   Signatures

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

         Rent-A-Wreck of America, Inc.
         -----------------------------
         (Registrant)

By:                                       Date:



/s/Mitra Ghahramanlou                        August 11, 1998
-----------------------                    -------------------
Mitra Ghahramanlou
Chief Accounting Officer



/s/Kenneth L. Blum, Sr.                      August 11, 1998
-----------------------                    -------------------
Kenneth L. Blum, Sr.
CEO and Chairman of
the Board
                                       13
<PAGE>
                                  EXHIBIT INDEX
                                       TO
                          RENT-A-WRECK of AMERICA, INC.
                 FORM 10-QSB FOR THE QUARTER ENDED JUNE 30, 1998




EXHIBIT NO.                DESCRIPTION
-----------                -----------


   27.1                Financial Data Schedule            Filed herewith.
   27.2                Financial Data Schedule            Filed herewith.

                                       14