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 September 30, 1999

[ ]  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: 3,953,217 shares as of October
27, 1999.

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

                        FORM 10-QSB - SEPTEMBER 30, 1999

                                      INDEX


Part I.  Financial Information                                              Page
                                                                            ----
Item 1.  Financial Statements

         Consolidated Balance Sheets as of
           March 31, 1999 and September 30, 1999 (Unaudited)                 2-3

         Consolidated Statements of Earnings for
           the Three Months and Six Months ended
           September 30, 1998 and 1999 (Unaudited)                             4

         Consolidated Statements of Cash Flows for
           the Three Months and Six Months ended
           September 30, 1998 and 1999 (Unaudited)                             5

         Notes to Consolidated Financial Statements
           (Unaudited)                                                       6-9

Item 2.  Management's Discussion and Analysis or Plan of Operation          9-15

Part II. Other Information

Item 2.  Changes in Securities and Use of Proceeds                            16

Item 3.  Defaults Upon Senior Securities                                      16

Item 4.  Submission of Matters to a Vote of Security Holders                  16

Item 5.  Other Information                                                    16

Item 6.  Exhibits and Reports on Form 8-K                                     16

Signatures                                                                    17
<PAGE>
Part I - Financial Information

Item 1 - Financial Statements

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

                                     ASSETS

                                                       March 31,   September 30,
                                                        1999           1999
                                                     -----------    -----------
                                                                    (Unaudited)
CURRENT ASSETS:
  Cash and Cash Equivalents .......................  $   861,794    $ 1,544,758
  Restricted Cash .................................      718,543        799,385
  Accounts Receivable, net of allowance
   for doubtful accounts of $655,418 and $757,059
   at March 31, 1999 and September 30, 1999,
   respectively:
      Continuing License Fees and
        Advertising Fees ..........................      336,242        456,615
      Current Portion of Notes Receivable .........      388,812        485,790
      Current Portion of Direct Financing
        Leases ....................................        7,850            325
      Insurance Premiums Receivable ...............      635,532             --
      Other .......................................       61,081         70,471
  Prepaid Expenses ................................      166,421        157,141
  Deferred Tax Assets .............................      199,028        252,875
                                                     -----------    -----------
    TOTAL CURRENT ASSETS ..........................    3,375,303      3,767,360
                                                     -----------    -----------
PROPERTY AND EQUIPMENT:
  Furniture .......................................       93,505         95,074
  Computer Hardware and Software ..................      370,012        382,824
  Machinery and Equipment .........................       82,650         83,761
  Leasehold Improvements ..........................       37,896         37,896
  Vehicles ........................................       90,507        132,952
                                                     -----------    -----------
                                                         674,570        732,507
  Less:  Accumulated Depreciation and
         Amortization .............................     (388,887)      (443,812)
                                                     -----------    -----------
NET PROPERTY AND EQUIPMENT ........................      285,683        288,695
                                                     -----------    -----------
OTHER ASSETS:
  Intangible Assets, net of accumulated
    amortization of $126,192 and $136,383
    at March 31, 1999 and September 30, 1999,
    respectively ..................................      192,872        192,669
  Long-term Portion of Notes and Direct
    Financing Lease Receivables ...................       32,088         55,342
                                                     -----------    -----------
                                                         224,960        248,011
                                                     -----------    -----------
    TOTAL ASSETS ..................................  $ 3,885,946    $ 4,304,066
                                                     ===========    ===========

The accompanying notes are an integral part of these financial statements.

                                        2
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                             March 31,    September 30,
                                                               1999           1999
                                                            -----------    -----------
                                                                           (Unaudited)
<S>                                                         <C>            <C>
CURRENT LIABILITIES:
  Accounts Payable and Accrued Expenses .................   $   709,506    $   783,723
  Dividends Payable .....................................        22,782         22,400
  Insurance Financing Payable ...........................       564,684        294,150
  Insurance Loss Reserves ...............................       366,022        447,606
  Income Taxes Payable ..................................       181,662        241,314
                                                            -----------    -----------
    TOTAL CURRENT LIABILITIES ...........................     1,844,656      1,789,193
                                                            -----------    -----------
    TOTAL LIABILITIES ...................................     1,844,656      1,789,193
                                                            -----------    -----------

COMMITMENTS AND CONTINGENCIES ...........................            --             --

SHAREHOLDERS' EQUITY:

  Convertible Cumulative Series A Preferred Stock,
   $.01 par value; authorized 10,000,000 shares;
   issued and outstanding 1,139,125 and 1,120,000
   shares at March 31, 1999 and at September 30, 1999
   (aggregate  liquidation  preference $911,300 at
   March 31, 1999 and $896,000 at September 30, 1999) ...        11,391         11,200
  Common Stock, $.01 par value; authorized
   25,000,000 shares; issued and outstanding
   3,934,092 shares at March 31, 1999 and
   3,953,217 shares at September 30, 1999 ...............        39,340         39,532
  Additional Paid-In Capital ............................     2,209,182      2,209,182
  (Accumulated Deficit) Retained Earnings ...............      (218,623)       254,959
                                                            -----------    -----------
    TOTAL SHAREHOLDERS' EQUITY ..........................     2,041,290      2,514,873
                                                            -----------    -----------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..........   $ 3,885,946    $ 4,304,066
                                                            ===========    ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                        3
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                Three Months                  Six Months
                                             Ended September 30,          Ended September 30,
                                         --------------------------    --------------------------
                                            1998           1999           1998           1999
                                         -----------    -----------    -----------    -----------
<S>                                      <C>            <C>            <C>            <C>
REVENUES:
  Initial License Fees ...............   $   367,051    $   362,000    $   679,051    $   724,001
  Continuing License Fees ............       791,488        929,852      1,374,066      1,609,157
  Advertising Fees ...................       259,285        291,855        450,740        512,639
  Insurance premiums .................       200,974        227,402        363,017        403,251
  Other ..............................        47,466         54,932         84,999         96,154
                                         -----------    -----------    -----------    -----------
                                           1,666,264      1,866,041      2,951,873      3,345,202
                                         -----------    -----------    -----------    -----------
EXPENSES:
  Salaries, Consulting Fees and
    Employee Benefits ................       220,806        238,245        424,993        484,682
  Sales and Marketing Expenses .......       147,754        135,273        368,961        313,637
  Advertising and Promotion ..........       410,684        391,746        644,478        713,765
  Underwriting Expenses ..............       152,986        180,124        290,046        325,078
  General and Administrative Expenses        209,520        245,155        454,976        479,516
  Depreciation & Amortization ........        36,115         32,980         70,134         65,115
                                         -----------    -----------    -----------    -----------
                                           1,177,865      1,223,523      2,253,588      2,381,793
                                         -----------    -----------    -----------    -----------
      OPERATING INCOME ...............       488,399        642,518        698,285        963,409

OTHER INCOME (EXPENSE)
  Interest Income ....................        20,052         27,506         43,337         51,899
  Interest Expense ...................        (4,143)        (6,694)       (11,308)       (13,308)
                                         -----------    -----------    -----------    -----------
                                              15,909         20,812         32,029         38,591
                                         -----------    -----------    -----------    -----------

      INCOME BEFORE INCOME TAX EXPENSE       504,308        663,330        730,314      1,002,000
                                         -----------    -----------    -----------    -----------
INCOME TAX EXPENSE ...................       169,460        230,863        228,802        336,502
                                         -----------    -----------    -----------    -----------
      NET INCOME .....................   $   334,848    $   432,467    $   501,512    $   665,498

DIVIDENDS ON CONVERTIBLE CUMULATIVE
  PREFERRED STOCK ....................        27,320         22,400         54,640         45,000
                                         -----------    -----------    -----------    -----------
NET INCOME APPLICABLE TO COMMON
  AND COMMON EQUIVALENT SHARES .......   $   307,528    $   410,067    $   446,872    $   620,498
                                         -----------    -----------    -----------    -----------
EARNINGS PER COMMON SHARE
  Basic ..............................   $       .08    $       .11    $       .11    $       .16
                                         -----------    -----------    -----------    -----------
Weighted average common shares .......     4,097,596      3,943,543      4,130,064      3,941,985
                                         ===========    ===========    ===========    ===========
  Diluted ............................   $       .06    $       .07    $       .09    $       .11
                                         -----------    -----------    -----------    -----------
Weighted average common shares
 plus options and warrants ...........     5,466,630      6,106,494      5,535,090      5,999,891
                                         ===========    ===========    ===========    ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                        4
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                          Six Months Ended
                                                            September 30,
                                                     --------------------------
                                                         1998           1999
                                                     -----------    -----------
Increase (decrease) in cash and cash equivalents

Cash flows from operating activities:
  Net income .....................................   $   501,512    $   665,498
  Adjustments to reconcile net income
    to net cash provided by operating activities:
      Depreciation and amortization ..............        70,134         65,115
      Gain on disposal of property and equipment .          (390)            --
      Deferred income taxes ......................            --        (53,847)
      Provision for doubtful accounts ............        58,933        101,641
  Changes in assets and liabilities:
      Accounts and notes receivable ..............       267,469        291,421
      Prepaid expenses ...........................       (21,009)         9,280
      Accounts payable and accrued
        expenses .................................        (3,109)        73,835
      Income taxes payable .......................       (70,085)        59,652
      Insurance loss reserves ....................           815         81,584
                                                     -----------    -----------
      Net cash provided by operating activities ..       804,270      1,294,179
                                                     -----------    -----------
Cash flows from investing activities:
  (Increase) decrease in restricted cash .........      (392,562)       (80,842)
  Proceeds from sale of property and equipment ...        34,550             --
  Acquisition of property and equipment ..........      (157,507)       (57,554)
  Additions to intangible assets .................        (6,447)        (9,988)
                                                     -----------    -----------
      Net cash used in investing activities ......      (521,966)      (148,384)
                                                     -----------    -----------
Cash flow from financing activities:
  Decrease in insurance financing payable ........      (252,545)      (270,534)
  Issuance of common stock .......................        16,000             --
  Retirement of common stock .....................      (126,561)            --
  Preferred dividends paid .......................       (98,942)      (192,297)
                                                     -----------    -----------
      Net cash used in financing activities ......      (462,048)      (462,831)
                                                     -----------    -----------
      Net increase (decrease) in cash and cash
         equivalents .............................      (179,744)       682,964

Cash and cash equivalents at beginning of period .     1,215,615        861,794
                                                     -----------    -----------
Cash and cash equivalents at end of period .......   $ 1,035,871    $ 1,544,758
                                                     -----------    -----------
Supplemental disclosure of cash flow information:
  Interest paid ..................................   $    11,308         13,308
  Taxes paid .....................................   $   309,282    $   337,755

   The accompanying notes are an integral part of these financial statements.

                                        5
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

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 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")
and Priceless Rent-A-Car,  Inc.  ("PRICELESS") which was formed on September 30,
1999.

     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 in the  consolidated  financial
statements.

     The  consolidated   balance  sheet  as  of  September  30,  1999,  and  the
consolidated  statements  of earnings and cash flows for the three and six-month
periods  ended  September  30,  1998 and 1999 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, 1999 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

     On May 7, 1999,  the Company  paid 100% of  remaining  dividend  arrearages
($146,915) on the Company's  Convertible  Cumulative Series A Preferred Stock. A
quarterly preferred dividend of $22,600 was declared for the first quarter ended
June  30,  1999  and it was paid on  August  11,  1999.  For the  quarter  ended
September 30, 1999, the Company declared  preferred  dividends  totaling $22,400
which are expected to be paid during the third quarter of the  Company's  fiscal
year.

                                        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  and
six-month periods ended September 30, 1998 and 1999 is as follows:

                                    Three Months               Six Months
                                 Ended September 30,       Ended September 30,
                               -----------------------   -----------------------
                                  1998         1999         1998         1999
                               ----------   ----------   ----------   ----------
BASIC EPS COMPUTATION

Net income applicable to
  common and common
    equivalent shares ......   $  307,528   $  410,067   $  446,872   $  620,498

Weighted average common
  shares ...................    4,097,596    3,943,543    4,130,064    3,941,985
                               ----------   ----------   ----------   ----------
Basic EPS ..................   $      .08   $      .11   $      .11   $      .16
                               ==========   ==========   ==========   ==========

DILUTED EPS COMPUTATION

Net income applicable to
  common and common
    equivalent shares ......   $  307,528   $  410,067   $  446,872   $  620,498
Dividends on convertible
  preferred stock ..........       27,320       22,400       54,640       45,000
                               ----------   ----------   ----------   ----------
                                  334,848      432,467      501,512      665,498
                               ----------   ----------   ----------   ----------
Weighted average common
  shares ...................    4,097,596    3,943,543    4,130,064    3,941,985
Weighted average
  convertible preferred
    stock ..................    1,366,000    1,129,674    1,366,000    1,131,232
Weighted average options
  and warrants .............        3,034    1,033,277       39,026      926,674
                               ----------   ----------   ----------   ----------
                                5,466,630    6,106,494    5,535,090    5,999,891
                               ----------   ----------   ----------   ----------
Diluted EPS ................   $      .06          .07   $      .09          .11
                               ==========   ==========   ==========   ==========

                                        7
<PAGE>
GEOGRAPHIC AND INDUSTRY SEGMENTS

     The Company currently  operates in two principal  segments:  Vehicle Rental
Franchise Programs and Insurance Coverage. Corporate costs are allocated to each
segment's operations and are included in the measure of each segment's profit or
loss. The  geographic  data include  revenues based upon customer  locations and
assets based on physical locations.

     The Company's foreign  operations are presently  conducted by CAR Insurance
in Bermuda.

     Information by geographic area and industry segment is as follows:

                                                              Six Months
                                                          Ended September 30,
                                                       -------------------------
                                                          1998           1999
                                                       ----------     ----------
Net revenues from external customers
  Vehicle Rental Franchises-United States ........     $2,588,856     $2,941,951
  Insurance-United States ........................        363,017        403,251
  Insurance-Bermuda ..............................             --             --
                                                       ----------     ----------
                                                       $2,951,873     $3,345,202
                                                       ==========     ==========
Segment income before taxes
  Vehicle Rental Franchises-United States ........     $  683,952     $  945,483
  Insurance-United States ........................         34,714         41,226
  Insurance-Bermuda ..............................         11,648         15,291
                                                       ----------     ----------
                                                       $  730,314     $1,002,000
                                                       ==========     ==========
Segment assets
  Vehicle Rental Franchises-United States ........     $2,793,107     $3,103,983
  Insurance-United States ........................        193,818        540,827
  Insurance-Bermuda ..............................        644,273        659,256
                                                       ----------     ----------
                                                       $3,631,198     $4,304,066
                                                       ==========     ==========
Expenditures for segment assets
  Vehicle Rental Franchises-United States ........     $  157,507     $   57,554
  Insurance-United States ........................             --             --
  Insurance-Bermuda ..............................             --             --
                                                       ----------     ----------
                                                       $  157,507     $   57,554
                                                       ==========     ==========
Depreciation and amortization
  Vehicle Rental Franchises-United States ........     $   70,134     $   65,115
  Insurance-United States ........................             --             --
  Insurance-Bermuda ..............................             --             --
                                                       ----------     ----------
                                                       $   70,134     $   65,115
                                                       ==========     ==========
Interest income
  Vehicle Rental Franchises-United States ........     $   28,251     $   30,954
  Insurance-United States ........................          3,438          5,654
  Insurance-Bermuda ..............................         11,648         15,291
                                                       ----------     ----------
                                                       $   43,337     $   51,899
                                                       ==========     ==========

                                        8
<PAGE>
GEOGRAPHIC AND INDUSTRY SEGMENTS-CONTINUED

                                                              Six Months
                                                          Ended September 30,
                                                       -------------------------
                                                          1998           1999
                                                       ----------     ----------
Interest expense
  Vehicle Rental Franchises-United States ........     $       42     $      378
  Insurance-United States ........................         11,266         12,930
  Insurance-Bermuda ..............................             --             --
                                                       ----------     ----------
                                                       $   11,308     $   13,308
                                                       ==========     ==========
Income taxes
  Vehicle Rental Franchises-United States ........     $  228,802     $  336,502
  Insurance-United States ........................             --             --
  Insurance-Bermuda ..............................             --             --
                                                       ----------     ----------
                                                       $  228,802     $  336,502
                                                       ==========     ==========

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.

     In August  1999,  the Company  settled a pending  lawsuit  against a former
franchisee.  As a result of the settlement  agreement,  the Company  anticipates
receiving  $100,000  in release of its claims  which will  result in $100,000 of
additional  income.  To date  the  Company  has  not  recorded  any  gain as the
settlement is being finalized.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO SEPTEMBER 30, 1998

     Revenue from franchising  operations,  which includes initial license fees,
continuing  license fees and  advertising  fees,  increased  by $165,883  (12%).
Continuing  license  fees  increased by $138,364  (17%),  and  advertising  fees
increased by $32,570 (13%). These increases resulted primarily from fleet growth
at existing franchises.

                                        9
<PAGE>
     Revenues from insurance  premiums  increased by $26,428 (13%) due to higher
participation  by the  Company's  franchisees  in the  Company's  CAR  Insurance
program.

     Other  revenue  increased by $7,466 (16%) due primarily to an increase in a
wheelchair van rental program which is being tested in the immediate area of the
Company's headquarters in Maryland.

     Total  operating  expenses  increased by $45,658 (4%) compared to the prior
period. Salary expense increased by $17,439 (8%) primarily as a result of hiring
additional  employees  in  response  to the  growth  of the  Company.  Sales and
marketing  expenses decreased by $12,481 (8%), which resulted primarily from the
repurchase  of a territory  from an existing  franchisee.  In the quarter  ended
September 30, 1998, the cost of which was charged to sales and marketing expense
because the Company was able to resell the territory to a new  franchisee  for a
greater amount.  Advertising and promotion  expenses  decreased by $18,938 (5%),
which  resulted  primarily  from a decrease  in  national  advertising  expense.
Insurance underwriting expenses increased by $27,138 (18%) due to an increase in
paid  losses and loss  reserves  for future  claims in  connection  with  higher
participation of the Company's franchisees in its CAR Insurance program. General
and administrative expenses increased by $35,635 (17%), which resulted primarily
from an increase in the management fee earned by K.A.B.,  an affiliate,  payment
of monthly consulting fees to Richter & Co., Inc., an affiliate, and an increase
in legal and other  professional  fees.  Depreciation and  amortization  expense
decreased by $3,135 (9%) due to the disposal of assets and older assets becoming
fully  depreciated  offset by  additional  investment  in computer  software and
hardware.

     The  Company  realized  operating  income  of  $642,518,  before  taxes and
interest,  for the  three-month  period  ended  September  30, 1999  compared to
operating  income of $488,399 for the same period in the prior year,  reflecting
an  increase  of $154,119  (32%).  This  increase  resulted  primarily  from the
increase in continuing  license fees due to the addition of new  franchises  and
fleet growth at existing franchises.

     Net interest income increased $4,903 (31%). This increase was primarily due
to interest  earned on the increased  cash  deposits  which are held in interest
bearing accounts.

     Income tax expense for the  three-month  period  ended  September  30, 1999
increased by $61,403 (36%) compared to the  three-month  period ended  September
30, 1998 due to higher pre-tax earnings,  partially offset by a reduction in the
deferred tax asset valuation allowance. The valuation allowance has been reduced
in light of favorable  earnings and expected  future earnings and is re-assessed
quarterly.

YEAR TO DATE RESULTS OF OPERATIONS COMPARED TO SAME PERIOD IN PRIOR YEAR

     Net revenues  increased by $393,329  (13%) for the  six-month  period ended
September  30,  1999 as  compared  to the same  period in the prior  year.  This

                                       10
<PAGE>
increase  occurred due to a $44,950  (7%)  increase in initial  license  fees, a
$235,091(17%)  increase in continuing  license fees, a $61,899  (14%)increase in
advertising fees, and a $40,234 (11%) increase in premium income associated with
the new reinsurance  program.  These increases  occurred for the same reasons as
those for the three-month period documented above.

     Total operating expenses increased by $128,205 (6%) in this period compared
to the same period in the prior year.  Salary expense increased by $59,689 (14%)
primarily as a result of  additional  employees in response to the growth of the
Company. Sales and marketing expenses decreased by $55,324 (15%), which resulted
primarily from the repurchase of a territory from an existing franchisee. In the
quarter  ended  September  30, 1998,  the cost of which was charged to sales and
marketing  expense because the Company was able to resell the territory to a new
franchisee for a greater amount. Advertising and promotion expenses increased by
$69,287 (11%), which resulted primarily from an increase in national advertising
expense to promote the Company. Underwriting expenses increased by $35,032 (12%)
due to an  increase  in paid  losses  and loss  reserves  for  future  claims in
connection with higher participation by the Company's  franchisees.  General and
administrative expenses increased by $24,540 (5%), which resulted primarily from
an increase in the management fee earned by K.A.B, an affiliate,  and payment of
monthly  consulting fees to Richter & Co., Inc., an affiliate.  Depreciation and
amortization  expense  decreased  by $5,019  (7%) due to  disposal of assets and
older assets  becoming  fully  depreciated  offset by  additional  investment in
property and equipment.

     The  Company  realized  operating  income  of  $963,409,  before  taxes and
interest,  for the  six-month  period  ended  September  30, 1999 as compared to
operating income of $698,285 for 1998, reflecting an increase of $265,124 (38%).
This  increase  resulted  primarily  from the increase in initial  license fees,
continuing license fees and insurance premiums.

     Income tax  expense  for the  six-month  period  ended  September  30, 1999
increased by $107,700 (47%) compared to the six-month period ended September 30,
1998 due to higher pre-tax earnings.

LIQUIDITY AND CAPITAL RESOURCES

     At  September  30,  1999,  the Company had  working  capital of  $1,978,167
compared to  $1,530,647 at March 31, 1999.  This  increase of $447,520  resulted
primarily from the net profit earned during the six-month period ended September
30, 1999,  reduced by the payoff of all  dividend  arrearages  on the  Company's
Preferred Stock.

     The Company  has  finalized  a  $1,000,000  letter of credit with The Chase
Manhattan  Bank  ("Chase")  in  connection  with  the  Company's  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 8.25% on October 27,  1999).  For the quarter
ended September 30, 1999, AIG has not drawn any funds from the letter of credit.
This letter of credit is secured by a pledge of all of the Company's assets.

                                       11
<PAGE>
     The Company  rents its office  facilities  under the terms of an  operating
lease. The monthly office facilities lease commitments were $5,449 and $5,670 at
September 30, 1998 and 1999, respectively.

     Property  and  equipment  increased  by $57,937 (9%) from March 31, 1999 to
September 30, 1999. This increase occurred  primarily due to the purchase of one
vehicle for the wheelchair van program and an additional  investment in computer
software and hardware.

     Cash provided by operations was  $1,294,179,  resulting  primarily from net
income before  depreciation  plus the decrease in accounts and notes  receivable
and prepaid  expenses  and the  increase in insurance  loss  reserves,  accounts
payable  and accrued  expenses  and income  taxes  payable.  Accounts  and notes
receivable decreased primarily due to funds received from AIG in connection with
the  reinsurance  program.  Accounts  payable  and  accrued  expenses  increased
primarily due to the Company's  additional liability to the national advertising
fund. Income taxes payable  increased  primarily due to higher pre-tax earnings,
offset by estimated income taxes paid for the year ended March 31, 1999.

     Cash used in  investing  activities  of $148,384  related  primarily to the
acquisition  of  computer  software,  hardware,  annual  costs  associated  with
renewing  trademarks  and an increase in  restricted  cash due to the  Company's
additional liability to the national advertising fund.

     Cash used in  financing  activities  during the same  period was  $462,831,
resulting  from a decrease  in  insurance  financing  payable and the payment of
preferred dividends.

     The  Company  believes  it has  sufficient  working  capital to support its
business plan through fiscal 2000.

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

                                       12
<PAGE>
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, 1999.
All forward-looking  statements should be considered in light of these risks and
uncertainties.

YEAR 2000 ISSUE

     The Year 2000 issue is a result of computer  programs  being  written using
two  digits  rather  than four to define  the  applicable  year.  The  Company's
computer equipment,  software and devices with embedded technology that are time
sensitive  may  recognize  the date using "00" as the year 1900  rather than the
year 2000.  This could  result in a system  failure or  miscalculations  causing
disruption of operations,  including,  among other things, a temporary inability
to process transactions or engage in ordinary business activities.

     The Company has undertaken various initiatives  intended to ensure that its
computer  equipment and software will function properly with respect to the year
2000  and  thereafter.  For  this  purpose,  the term  "computer  equipment  and
software"   includes  systems  that  are  commonly  thought  of  as  information
technology systems,  including  accounting,  data processing,  telephone and PBX
systems as well as alarm systems, fax machines and other miscellaneous  systems.
Both information  technology and non-information  technology systems may contain
embedded technology which complicates the year 2000 identification,  assessment,
remediation and testing efforts.

     Using both internal and external resources to identify the needed Year 2000
remediation,  the Company currently believes that its Year 2000  identification,
assessment,  remediation  and testing  efforts which began in 1998 are completed
and any additional  equipment  purchased  hereafter will be Year 2000 compliant.
Consequently,  and based upon independent  experts' review, the Company believes
that it is Year 2000 compliant.

     Most of the information  the Company  receives in the ordinary course is in
written form and entered by the Company into its computer records.  For example,
reports  from  franchisees  and others  are  prepared  in  written  form and not
received electronically.  The Company has orally confirmed with key vendors that
they either have addressed or expect to address all significant Year 2000 issues
on a timely basis.

     The  Company  believes  that  the  cost of its  Year  2000  identification,
assessment,  remediation  and  testing  efforts  as well as  those  current  and
anticipated costs to be incurred by the Company with respect to Year 2000 issues
of third parties will not exceed $5,000,  which expenditures will be funded from
operating cash flows.  The Company  presently  believes that the Year 2000 issue
will not pose significant operational problems for the Company;  however, if all
Year 2000 issues are not properly  identified or if assessment,  remediation and
testing are not effected  timely,  there can be no assurances that the Year 2000
issue will not materially  adversely affect the Company's  results of operations
or  adversely  affect the  Company's  relationship  with  customers,  vendors or
others.  Additionally,  there can be no assurances  that the Year 2000 issues of
other entities will not have a material adverse effect on the Company's  systems
or results of operations.

                                       13
<PAGE>
     Because the Company believes that all items have been resolved, the Company
has not begun or  completed  an analysis of the  operational  problems and costs
(including  lost  revenues)  that would be  reasonably  likely to result  from a
failure of the Company and certain third parties to complete  efforts to achieve
Year  2000  compliance  on a  timely  basis,  nor has a  contingency  plan  been
developed for dealing with the most reasonably likely worst-case  scenario,  and
such  scenario  has not been  clearly  identified.  The Company does not plan to
complete  analysis  and  contingency  plans  because it believes it is Year 2000
compliant.

     During early 1998, the Company  engaged an  independent  expert to evaluate
its Year 2000 identification,  assessment,  remediation and testing efforts, and
such fees have been included above.

     The above  information  is based upon  management's  best estimates and was
derived  using  numerous  assumptions  regarding  future  events,  including the
continued availability of third party remediation plans and other factors. There
can be no assurances that these estimates will prove to be accurate,  and actual
results  could differ  materially  from those  currently  anticipated.  Specific
factors that could cause such material  differences include, but are not limited
to,  availability and cost of personnel trained in Year 2000 issues, the ability
to  identify,  assess and  remediate  and test all relevant  computer  codes and
imbedded technology and similar uncertainties.

                                       14
<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  September  30,  1998 and 1999 and with  respect  to the
balance sheets thereof at September 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.

                                        Three Months             Six Months
                                     Ended September 30,     Ended September 30,
                                     -------------------     -------------------
                                      1998        1999        1998        1999
                                     -------     -------     -------     -------
                                     (in thousands except per share and number
                                                  of franchises)
                                                    (Unaudited)
FRANCHISEES' RESULTS (UNAUDITED)

Franchisees' Revenue (1) .........   $13,191     $15,498     $22,901     $26,819
Number of Franchises .............       588         671         588         671

RESULTS OF OPERATIONS

Total Revenue ....................   $ 1,666     $ 1,866     $ 2,952     $ 3,345
Costs and expenses and Other .....     1,178       1,224       2,254       2,382
Income before income taxes .......       504         663         730       1,002
Net income .......................       335         432         502         665
Earnings per share

 Basic ...........................   $   .08     $   .11     $   .11     $   .16

Weighted average common shares ...     4,098       3,944       4,130       3,942

 Diluted .........................   $   .06     $   .07     $   .09     $   .11

Weighted average common shares ...     5,467       6,106       5,535       6,000

                                                               September 30,
                                                              ----------------
                                                               1998      1999
                                                              ------    ------
                                                                 (Unaudited)
BALANCE SHEET DATA

Working capital                                               $1,759    $1,978
Total assets                                                  $3,631    $4,304
Shareholders' equity                                          $2,320    $2,515

(1) The  franchisees'  revenue  data have been derived  from  unaudited  reports
provided by franchisees  submitted when paying license fees and advertising fees
to the Company.

                                       15
<PAGE>
PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     On April 29, 1999, a shareholder  converted 9,125 shares of preferred stock
to common stock. On September 28, 1999, a shareholder converted 10,000 shares of
preferred stock to common stock. See also Item 5 below.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.

ITEM 5. OTHER INFORMATION

     During the quarter  ended June 30,  1999,  a  shareholder  converted  9,125
shares of preferred stock to common stock reducing total  outstanding  preferred
shares from  1,139,125 to 1,130,000  and  increasing  total  outstanding  common
shares from 3,934,092 to 3,943,217. During the quarter ended September 30, 1999,
a  shareholder  converted  10,000  shares of  preferred  stock to  common  stock
reducing  total  outstanding  preferred  shares from  1,130,000 to 1,120,000 and
increasing total outstanding common shares from 3,943,217 to 3,953,217.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) See Exhibit Index following the Signatures  page, which is incorporated
herein by reference.

     (b) No  reports on Form 8-K were filed  during the  quarter  for which this
report is filed.

                                       16
<PAGE>
                                   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                  November 8, 1999
-----------------------------
Mitra Ghahramanlou
Chief Accounting Officer



/s/ Kenneth L. Blum, Sr.                November 8, 1999
-----------------------------
Kenneth L. Blum, Sr.
CEO and Chairman of
the Board

                                       17
<PAGE>
                                  EXHIBIT INDEX
                                       TO
                          RENT-A-WRECK of AMERICA, INC.
              FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1999

EXHIBIT NO.         DESCRIPTION
-----------         -----------
    27              Financial Data Schedule                      Filed herewith.