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, 2001

[ ] 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.)


10324 South Dolfield Drive, Owings Mills, MD                        21117
  (Address of Principal Executive Offices)                        (Zip Code)


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

     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:  4,385,496 shares as of July
25, 2001.

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

                           FORM 10-QSB - JUNE 30, 2001

                                      INDEX

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

         Consolidated Balance Sheets as of March 31, 2001
         and June 30, 2001 (Unaudited)                                       2-3

         Consolidated Statements of Earnings for the Three
         Months ended June 30, 2000 and 2001 (Unaudited)                       4

         Consolidated Statements of Cash Flows for the
         Three Months ended June 30, 2000 and 2001 (Unaudited)                 5

         Notes to Consolidated Financial Statements (Unaudited)              6-9

Item 2.  Management's Discussion and Analysis or Plan of Operation         10-13

Part II. Other Information

Item 2.  Changes in Securities and Use of Proceeds                            14

Item 3.  Defaults Upon Senior Securities                                      14

Item 4.  Submission of Matters to a Vote of Security Holders                  14

Item 5.  Other Information                                                    14

Item 6.  Exhibits and Reports on Form 8-K                                     14

         Signatures                                                           15

                                        1
<PAGE>
                 RENT-A-WRECK OF AMERICA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                     March 31,          June 30,
                                                                       2001              2001
                                                                   -----------        -----------
                                                                                      (Unaudited)
<S>                                                                <C>                <C>
CURRENT ASSETS:
  Cash and Cash Equivalents ....................................   $   554,181        $ 1,009,720
  Restricted Cash ..............................................       892,061            864,494
  Accounts Receivable, net of allowance for doubtful
   accounts of $854,423 and $899,299 at March 31, 2001
   and June 30, 2001, respectively:
    Continuing License Fees and Advertising Fees ...............       417,513            397,221
    Current Portion of Notes Receivable ........................       415,829            562,744
    Current Portion of Direct Financing
      Leases ...................................................        15,321              5,525
      Insurance Premiums Receivable ............................         5,384             14,126
      Other ....................................................        83,330            346,017
  Prepaid Expenses and Other ...................................       165,811            175,883
  Prepaid Income Tax Expense ...................................       524,155            265,721
  Deferred Tax .................................................       341,983            359,314
                                                                   -----------        -----------

    TOTAL CURRENT ASSETS .......................................     3,415,568          4,000,765
                                                                   -----------        -----------
PROPERTY AND EQUIPMENT:
  Furniture ....................................................        95,837             95,837
  Computer Hardware and Software ...............................       470,153            509,672
  Machinery and Equipment ......................................        65,644             69,943
  Leasehold Improvements .......................................        23,767             23,767
  Vehicles .....................................................       398,111            701,692
                                                                   -----------        -----------
                                                                     1,053,512          1,400,911
  Less: Accumulated Depreciation and Amortization ..............      (363,075)          (403,153)
                                                                   -----------        -----------

    NET PROPERTY AND EQUIPMENT .................................       690,437            997,758
                                                                   -----------        -----------
OTHER ASSETS:
  Intangible Assets, net of accumulated amortization of
   $152,770 and $158,575 at March 31, 2001 and June 30, 2001,
   respectively ................................................       194,192            188,595
  Long-term Portion of Notes and Direct Financing Lease
   Receivables .................................................        73,536             65,131
                                                                   -----------        -----------

                                                                       267,728            253,726
                                                                   -----------        -----------

    TOTAL ASSETS ...............................................   $ 4,373,733        $ 5,252,249
                                                                   ===========        ===========
</TABLE>
   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,         June 30,
                                                                                  2001              2001
                                                                               ----------        ----------
                                                                                                 (Unaudited)
<S>                                                                            <C>               <C>
CURRENT LIABILITIES:
  Accounts Payable and Accrued Expenses ....................................   $  942,965        $1,028,031
  Dividends Payable ........................................................       22,100            22,100
  Insurance Financing Payable ..............................................           --           439,181
  Insurance Loss Reserves ..................................................      510,327           487,743
                                                                               ----------        ----------

    TOTAL CURRENT LIABILITIES ..............................................    1,475,392         1,977,055
                                                                               ----------        ----------
LONG-TERM LIABILITIES:
  Deferred Tax Liability ...................................................       35,514            35,514
                                                                               ----------        ----------

    TOTAL LONG-TERM LIABILITIES ............................................       35,514            35,514
                                                                               ----------        ----------

    TOTAL LIABILITIES ......................................................    1,510,906         2,012,569
                                                                               ----------        ----------

COMMITMENTS AND CONTINGENCIES                                                          --                --

SHAREHOLDERS' EQUITY:
  Convertible Cumulative Series A Preferred Stock, $.01 par value;
   authorized 10,000,000 shares; issued and outstanding 1,105,000
   shares at March 31, 2001 and at June 30, 2001 (aggregate
   liquidation preference $884,000 at March 31, 2001 and June 30, 2001) ....      11,050            11,050
  Common Stock, $.01 par value; authorized 25,000,000 shares; issued
   and outstanding 4,385,496 shares at March 31, 2001 and June 30, 2001 ....       43,855            43,855
  Additional Paid-In Capital ...............................................    2,267,709         2,267,709
  Retained Earnings ........................................................      540,213           917,066
                                                                               ----------        ----------

    TOTAL SHAREHOLDERS' EQUITY .............................................    2,862,827         3,239,680
                                                                               ----------        ----------

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .............................   $4,373,733        $5,252,249
                                                                               ==========        ==========
</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 Ended June 30,
                                                                              ----------------------------
                                                                                 2000             2001
                                                                              -----------      -----------
<S>                                                                           <C>              <C>
REVENUES:
  Initial License Fees ....................................................   $   368,500      $   504,501
  Continuing License Fees .................................................       815,394          879,535
  Advertising Fees ........................................................       241,478          235,699
  Insurance Premiums ......................................................       257,369          350,092
  Vehicle Rental Operations ...............................................        11,952           52,730
  Other ...................................................................        34,984           25,328
                                                                              -----------      -----------
                                                                                1,729,677        2,047,885
                                                                              -----------      -----------
EXPENSES:
  Salaries, Consulting Fees and Employee Benefits .........................       254,465          240,057
  Advertising and Promotion ...............................................       366,158          385,486
  Sales and Marketing .....................................................        94,059          198,489
  Insurance Underwriting Expenses .........................................       286,090          237,075
  General and Administrative Expenses .....................................       260,302          318,828
  Depreciation & Amortization .............................................        28,326           45,987
                                                                              -----------      -----------
                                                                                1,289,400        1,425,922
                                                                              -----------      -----------

      OPERATING INCOME ....................................................       440,277          621,963

OTHER INCOME (EXPENSE)
  Interest Income .........................................................        42,632           33,995
  Interest Expense ........................................................        (6,927)          (6,197)
                                                                              -----------      -----------
                                                                                   35,705           27,798
                                                                              -----------      -----------

      INCOME BEFORE INCOME TAX EXPENSE ....................................       475,982          649,761
                                                                              -----------      -----------

INCOME TAX EXPENSE ........................................................       183,250          250,808
                                                                              -----------      -----------

      NET INCOME ..........................................................   $   292,732      $   398,953

DIVIDENDS ON CONVERTIBLE CUMULATIVE PREFERRED STOCK .......................        22,100           22,100
                                                                              -----------      -----------
NET INCOME APPLICABLE TO COMMON AND COMMON EQUIVALENT SHARES ..............   $   270,632      $   376,853
                                                                              -----------      -----------
EARNINGS PER COMMON SHARE
  Basic ...................................................................   $       .08      $       .09
                                                                              -----------      -----------
Weighted average common shares ............................................     3,568,217        4,385,496
                                                                              ===========      ===========
  Diluted .................................................................   $       .05      $       .07
                                                                              -----------      -----------
Weighted average common shares plus options
 and warrants .............................................................     5,420,523        5,490,496
                                                                              ===========      ===========
</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)

<TABLE>
<CAPTION>
                                                                         Three Months Ended June 30,
                                                                         ----------------------------
                                                                            2000             2001
                                                                         -----------      -----------
<S>                                                                      <C>              <C>
Increase (decrease) in cash and cash equivalents

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income ..........................................................  $   292,732      $   398,953
  Adjustments to reconcile net income to net cash
   (used in) provided by operating activities:
    Depreciation and amortization .....................................       28,326           45,987
    Deferred income taxes .............................................      241,000          (17,331)
    Gain on disposal of property and equipment ........................       (8,208)             (95)
    Provision for doubtful accounts ...................................      (13,004)          44,876
  Changes in assets and liabilities:
    Accounts and notes receivable .....................................      230,109         (424,727)
    Prepaid expenses and other ........................................        6,598          (10,072)
    Prepaid income tax ................................................           --          258,434
    Income taxes recoverable ..........................................     (170,079)              --
    Accounts payable and accrued expenses .............................     (532,328)          85,066
    Income taxes payable ..............................................     (338,550)              --
    Insurance loss reserves ...........................................       28,502          (22,584)
                                                                         -----------      -----------
          Net cash (used in) provided by operating activities .........     (234,902)         358,507
                                                                         -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Increase (decrease) in restricted cash ..............................      (27,391)          27,567
  Proceeds from sale of property and equipment ........................       32,500            6,200
  Acquisition of property and equipment and intangible assets .........      (76,476)        (353,816)
                                                                         -----------      -----------
          Net cash used in investing activities .......................      (71,367)        (320,049)
                                                                         -----------      -----------
CASH FLOW FROM FINANCING ACTIVITIES:
  Increase in insurance financing payable .............................      436,425          439,181
  Preferred dividends paid ............................................      (22,100)         (22,100)
                                                                         -----------      -----------
          Net cash provided by financing activities ...................      414,325          417,081
                                                                         -----------      -----------

          Net increase in cash and cash equivalents ...................      108,056          455,539

Cash and cash equivalents at beginning of period ......................      701,808          554,181
                                                                         -----------      -----------

Cash and cash equivalents at end of period ............................  $   809,864      $ 1,009,720
                                                                         ===========      ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid .......................................................  $     6,927      $     6,197
  Taxes paid ..........................................................  $   449,996      $     9,705
</TABLE>

   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
                                  JUNE 30, 2001


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").

     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 June 30, 2001, and the  consolidated
statements of earnings and cash flows for the three-month periods ended June 30,
2000 and 2001 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  accounting  principles  generally  accepted in the United States have been
condensed or omitted.  These  statements  should be read in conjunction with the
financial  statements and notes thereto included in the Company's March 31, 2001
Form 10-KSB  filed with the  Securities  and  Exchange  Commission.  The interim
results of  operations  for the three month periods ended June 30, 2000 and 2001
are not  necessarily  indicative  of the  operating  results for the full fiscal
year.

2.   RECENT ACCOUNTING PRONOUNCEMENTS

     On July 20, 2001, the Financial  Accounting  Standards  Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) 141, Business  Combinations,
and SFAS 142,  Goodwill and  Intangible  Assets.  SFAS 141 is effective  for all
business  combinations  completed after June 30, 2001. SFAS 142 is effective for
fiscal years beginning after December 15, 2001;  however,  certain provisions of
this Statement apply to goodwill and other  intangible  assets acquired  between
July 1, 2001 and the  effective  date of SFAS  142.  Major  provisions  of these
Statements and their effective dates for the Company are as follows:

     All  business  combinations  initiated  after  June 30,  2001  must use the
purchase  method of accounting.  The pooling of interest method of accounting is
prohibited except for transactions initiated before July 1, 2001.

     Intangible  assets  acquired  in a business  combination  must be  recorded
separately from goodwill if they arise from contractual or other legal rights or
are separable from the acquired entity and can be sold,  transferred,  licensed,
rented or exchanged, either individually or as part of a related contract, asset
or liability.

     Goodwill,  as well as intangible  assets with  indefinite  lives,  acquired
after  June 30,  2001,  will not be  amortized.  Effective  April 1,  2002,  all
previously  recognized goodwill and intangible assets with indefinite lives will
no longer be subject to amortization.

     Effective  January 1, 2002,  goodwill and intangible assets with indefinite
lives will be tested for impairment annually and whenever there is an impairment
indicator.

                                        6
<PAGE>
     All acquired  goodwill must be assigned to reporting  units for purposes of
impairment testing and segment reporting.

     Although  it  is  still  reviewing  the  provisions  of  these  Statements,
management's  preliminary  assessment is that these  Statements  will not have a
material impact on the Company's financial position or results of operations.

3.   PREFERRED STOCK

     During the three month period ended June 30,  2001,  the Company  declared
dividends on the Preferred Stock totaling  $22,100 which are expected to be paid
during the second quarter of the Company's 2002 fiscal year.

4.   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, 2000 and 2001 is as follows:

                                                       2000              2001
                                                    ----------        ----------
BASIC EPS COMPUTATION
Numerator:
 Net income applicable to common shares             $  270,632        $  376,853

Denominator:
 Weighted average common shares                      3,568,217         4,385,496
                                                    ----------        ----------

Basic EPS                                           $      .08        $      .09
                                                    ==========        ==========

DILUTED EPS COMPUTATION
Numerator:
 Net income applicable to common shares             $  270,632        $  376,853
 Dividends on convertible preferred stock               22,100            22,100
                                                    ----------        ----------
                                                       292,732           398,953
                                                    ----------        ----------
Denominator
 Weighted average common shares                      3,568,217         4,385,496
 Weighted average convertible preferred stock        1,105,000         1,105,000
 Weighted average options and warrants                 747,306                --
                                                    ----------        ----------
                                                     5,420,523         5,490,496

Diluted EPS                                         $      .05        $      .07
                                                    ==========        ==========

For the three month  period  ended June 30,  2001,  options for the  purchase of
35,000 shares of common stock were excluded from the  calculation of diluted EPS
as their effect would have been antidilutive.

GEOGRAPHIC AND INDUSTRY SEGMENTS

     The Company currently  operates in two principal  segments:  Vehicle Rental
Franchise Programs and Insurance  Coverage for its franchisees.  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 includes  revenues based upon
customer locations and assets based on physical locations.

                                        7
<PAGE>
     The Company's foreign  operations are presently  conducted by CAR Insurance
in Bermuda.

     Information by geographic area and industry segment is as follows:

                                                         Three Months Ended
                                                              June 30,
                                                     --------------------------
                                                        2000           2001
                                                     -----------    -----------
Net revenues from external customers
  Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)      $ 1,334,024    $ 1,397,399
  Vehicle Rental Franchises-Pricele$$-(U.S.)             134,065        306,465
  Corporate-(U.S.)                                         1,500             --
  Insurance-(U.S.)                                       260,088        344,021
  Insurance-(Bermuda)                                         --             --
                                                     -----------    -----------
                                                     $ 1,729,677    $ 2,047,885
                                                     -----------    -----------
Segment operating income
  Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)      $   516,753    $   510,576
  Vehicle Rental Franchises-Pricele$$-(U.S.)              21,814         37,573
  Corporate-(U.S.)                                       (19,101)       (15,607)
  Insurance-(U.S.)                                       (79,189)        89,421
  Insurance-(Bermuda)                                         --             --
                                                     -----------    -----------
                                                     $   440,277    $   621,963
                                                     ===========    ===========
Segment assets
  Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)      $ 1,676,745    $ 2,187,294
  Vehicle Rental Franchises-Pricele$$-(U.S.)             347,160      1,071,267
  Corporate-(U.S.)                                       449,651        529,923
  Insurance-(U.S.)                                     1,363,351      1,455,523
  Insurance-(Bermuda)                                      7,899          8,242
                                                     -----------    -----------
                                                     $ 3,844,806    $ 5,252,249
                                                     ===========    ===========
Expenditures for segment assets
  Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)      $        --    $        --
  Vehicle Rental Franchises-Pricele$$-(U.S.)                 750        303,581
  Corporate-(U.S.)                                        75,726         50,235
  Insurance-(U.S.)                                            --             --
  Insurance-(Bermuda)                                         --             --
                                                     -----------    -----------
                                                     $    76,476    $   353,816
                                                     ===========    ===========
Depreciation and amortization
  Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)      $     4,472    $     4,528
  Vehicle Rental Franchises-Pricele$$-(U.S.)                 468         20,618
  Corporate-(U.S.)                                        23,386         20,841
  Insurance-(U.S.)                                            --             --
  Insurance-(Bermuda)                                         --             --
                                                     -----------    -----------
                                                     $    28,326    $    45,987
                                                     ===========    ===========
Interest income
  Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)      $    20,925    $    19,555
  Vehicle Rental Franchises-Pricele$$-(U.S.)               1,871          1,890
  Corporate-(U.S.)                                         1,942          1,534
  Insurance-(U.S.)                                        17,894         11,016
  Insurance-(Bermuda)                                         --             --
                                                     -----------    -----------
                                                     $    42,632    $    33,995
                                                     ===========    ===========

                                        8
<PAGE>
                                                        Three Months Ended
                                                              June 30,
                                                     --------------------------
                                                        2000           2001
                                                     -----------    -----------
Interest expense
  Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)      $        --    $        --
  Vehicle Rental Franchises-Pricele$$-(U.S.)                   6             --
  Corporate-(U.S.)                                            --             --
  Insurance-(U.S.)                                         6,921          6,197
  Insurance- (Bermuda)                                        --             --
                                                     -----------    -----------
                                                     $     6,927    $     6,197
                                                     ===========    ===========

Income taxes
  Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)      $   183,250    $   231,958
  Vehicle Rental Franchises-Pricele$$-(U.S.)                  --             --
  Corporate-(U.S.)                                            --             --
  Insurance-(U.S.)                                            --         18,850
  Insurance-(Bermuda)                                         --             --
                                                     -----------    -----------
                                                     $   183,250    $   250,808
                                                     ===========    ===========

5.   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 December 2000, the Company and certain employees were named in a lawsuit
seeking declaratory and injunctive relief,  rescission,  and monetary damages in
the sum of $5 million. This lawsuit alleges similar claims to a lawsuit that was
previously  dismissed,  and the Company  believes the claims are without  merit.
They will be vigorously defended.

6.   SUBSEQUENT EVENTS

     The Company is in the process of finalizing a line of credit for $1,500,000
with Merrill Lynch. The purpose of this line of credit is to provide  additional
funds for  purchasing  vehicles in connection  with the Company's  store and the
wheelchair  van program,  and also to issue a letter of credit as a security for
the  reinsurance  arrangement  with AIG.  This letter of credit will replace the
existing letter of credit with Bank of America.

                                       9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO JUNE 30, 2000

     The Company  operates in two principal  segments:  Vehicle Rental Franchise
Programs (franchising) and Insurance Coverage (insurance).  Franchising consists
of operations under the  Rent-A-Wreck  and Pricele$$ lines of business.  For the
quarter  ended  June  30,  2001,   franchising   operations   comprised  83%  of
consolidated net revenues (85% in 2000) and 88% of consolidated operating income
(122% in 2000).

     For the quarter  ended June 30,  2001,  initial  license  fees,  continuing
license fees and advertising fees,  increased by $194,363 (14%). Initial license
fees increased by $136,001 (37%),  continuing  license fees increased by $64,141
(8%),  and  advertising  fees  decreased by $5,779 (2%). The increase in initial
license fees and continuing license fees resulted primarily from the addition of
new franchises and fleet growth at existing  franchises.  The timing of closings
of new  franchise  sales,  each of which is for a  relatively  large  amount  of
revenue,  varies over the year,  contributing to periodic increases or decreases
in reported results. Management does not believe these short-term variations are
indicative of longer term trends.

     Revenues from insurance  premiums  increased by $92,723 (36%) due to higher
participation  by the  Company's  franchisees  in the  Company's  CAR  Insurance
program.

     Total  operating  expenses for both  segments  increased by $136,522  (11%)
compared to the prior  period.  Salary  expense for both  segments  decreased by
$14,408  (6%).  Advertising  and promotion  expenses  increased by $19,328 (5%),
which  resulted  primarily from an increase in national  advertising  expense to
promote the Company.  Sales and marketing expenses increased by $104,430 (111%),
which resulted  primarily from expenses  associated with the Company's store and
an increase in bad debt expense.  Insurance  underwriting  expenses decreased by
$49,015  (17%) due to a decrease in paid losses and loss  reserves for unsettled
claims.  General and  administrative  expenses  for both  segments  increased by
$58,526 (22%), which resulted primarily from increases in legal expense.

     The  Company  realized  operating  income  of  $621,963,  before  taxes and
interest,  for the three-month  period ended June 30, 2001 compared to operating
income of $440,277 for the same period in the prior year, reflecting an increase
of  $181,686  (41%).  This  increase  resulted  primarily  from an  increase  in
insurance premiums as well as a decrease in underwriting expenses.

     Net interest income decreased by $7,907 (22%).  This decrease was primarily
due to lower interest  earned on the cash  deposits,  which are held in interest
bearing accounts.

     Income tax expense for the quarter ended June 30, 2001 increased by $67,558
(37%)  compared  to the  three-month  period  ended June 30,  2000 due to higher
pre-tax earnings.

                                       10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 2001, the Company had working capital of $2,023,710 compared to
$1,940,176 at March 31, 2001. This increase of $83,534  resulted  primarily from
the net profit earned during the three-month period ended June 30, 2001.

     In March 2000, the Company obtained a $1,000,000 letter of credit from Bank
of America in  connection  with the  Company's  CAR  Insurance  subsidiary,  and
replaced  its  letters of credit with The Chase  Manhattan  Bank and the Bank of
Butterfield.  This letter of credit is part of the agreement between the Company
and Bank of America as  security  for the  letter of credit  issued to  American
International Group ("AIG") by Bank of America. This letter of credit is secured
by a certificate  of deposit of $600,000 held by Bank of America plus 50% of all
the Company's  eligible accounts  receivable.  Funds drawn against the letter of
credit bear  interest at Bank of America's  prime  commercial  lending rate plus
1.5% (which prime rate was 6.75% on July 25,  2001).  For the quarter ended June
30, 2001, AIG has not drawn any funds from the letter of credit.

     The Company  rents its office  facilities  under the terms of an  operating
lease with a related party.  The monthly office  facilities lease commitment was
$9,722 at June 30, 2001.

     Property and equipment  increased by $347,399  (33%) from March 31, 2001 to
June 30,  2001.  This  increase  occurred  primarily  due to the  purchase of 26
vehicles in connection with the Company's  store, one vehicle in connection with
the wheelchair van program and  additional  investment in computer  software and
hardware.

     Cash provided by operations was $358,507,  resulting from net income before
depreciation  plus the  decrease  in  prepaid  income  tax and the  increase  in
accounts  payable  and accrued  expenses,  partially  offset by the  increase in
accounts and notes receivable and prepaid expenses and the decrease in insurance
loss  reserves.  Prepaid  income tax decreased due to the income tax expense for
the three  months  ended June 30, 2001.  Accounts  payable and accrued  expenses
increased  primarily from accrued  national  advertising  expense.  Accounts and
notes receivable increased primarily due to the timing differences between funds
paid to and  received  from  AIG in  connection  with the  reinsurance  program.
Prepaid  expenses  increased  primarily  due to the  interest  paid on insurance
financing in connection  with the reinsurance  program.  Insurance loss reserves
decreased  primarily  due to a  decrease  in paid  losses and  unsettled  claims
associated with the CAR Insurance program.

     Cash used in  investing  activities  of $320,049  related  primarily to the
acquisition of vehicles, computer software and hardware, offset by a decrease in
restricted  cash due to additional  national  advertising  expenses and proceeds
from the sale of one vehicle.

     Cash provided by financing  activities during the same period was $417,081,
resulting from an increase in insurance financing payable in connection with the
CAR insurance program, offset by the payment of preferred dividends.

     The  Company  believes  it has  sufficient  working  capital to support its
business plan through fiscal 2002.

RECLASSIFICATION

     Certain prior year amounts have been reclassified to conform to the current
year presentation.

                                       11
<PAGE>
FORWARD LOOKING STATEMENTS

     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  on 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, 2001.
All forward-looking  statements should be considered in light of these risks and
uncertainties.

                                       12
<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,  2001 and 2000 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.

                                                  Three Months ended June 30,
                                                  ---------------------------
                                                   2000                2001
                                                  -------             -------
                                                (in thousands except per share
                                               amounts and number of franchises)
                                                          (Unaudited)
FRANCHISEES' RESULTS
  Franchisees' revenue (1)                        $13,590             $14,659
  Number of franchised locations                      663                 677

RESULTS OF OPERATIONS
  Total revenue                                   $ 1,730             $ 2,048
  Total expense                                     1,298               1,426
  Income before income taxes                          476                 650
  Net income                                          293                 399

Earnings per common share
  Basic                                           $   .08             $   .09
  Weighted average common shares                    3,568               4,385

  Diluted                                         $   .05             $   .07
  Weighted average common shares plus
   convertible preferred stock, and
   options and warrants                             5,421               5,490

EBITDA (2)                                            511                 702

BALANCE SHEET DATA
  Working capital                                 $ 1,492             $ 2,024
  Total assets                                    $ 3,845             $ 5,252
  Shareholders' Equity                            $ 2,106             $ 3,240

----------
(1)  The  franchisees'  revenue data have been derived  from  unaudited  reports
     provided by franchisees in paying license fees.

(2)  "EBITDA" is earnings before interest expense,  depreciation,  amortization,
     taxes and  repurchase  of options.  EBITDA should not be  interpreted  as a
     measure of operating results, cash flow provided by operating activities, a
     measure  of  liquidity,  or as an  alternative  to any  generally  accepted
     accounting  principle  measure of  performance.  The  Company is  reporting
     EBITDA  because it is a widely  used  financial  measure  of the  potential
     capacity of a company to incur and service  debt.  Rent-A-Wreck's  reported
     EBITDA may not be  comparable  to similarly  titled  measures used by other
     companies.

SUBSEQUENT EVENTS

     The Company is in the process of finalizing a line of credit for $1,500,000
with Merrill Lynch. The purpose of this line of credit is to provide  additional
funds for  purchasing  vehicles in connection  with the Company's  store and the
wheelchair  van program,  and also to issue a letter of credit as a security for
the  reinsurance  arrangement  with AIG.  This letter of credit will replace the
existing letter of credit with Bank of America.

                                       13
<PAGE>
                           PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.

ITEM 5. OTHER INFORMATION

     None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     None.

                                       14
<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                      August 10, 2001
    -------------------------------             ---------------
    Mitra Ghahramanlou
    Chief Accounting Officer


    /s/ Kenneth L. Blum, Sr.                    August 10, 2001
    -------------------------------             ---------------
    Kenneth L. Blum, Sr.
    CEO and Chairman of
    the Board

                                       15