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 December 31, 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

   4,230,296 shares of common stock were outstanding as of February 1, 2002.

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

                         FORM 10-QSB - DECEMBER 31, 2001

                                      INDEX


Part I. Financial Information                                               Page
-----------------------------                                               ----

Item 1. Financial Statements

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

        Consolidated Statements of Earnings for the Three and
          Nine Month periods ended December 31, 2000 and 2001
          (Unaudited)                                                          4

        Consolidated Statements of Cash Flows for the Nine Months
          ended December 31, 2000 and 2001 (Unaudited)                         5

        Notes to Consolidated Financial Statements (Unaudited)              6-12

Item 2. Management's Discussion and Analysis or Plan of Operation          13-17

Part II. Other Information
--------------------------

Selected Financial Data                                                    18-19

Item 5. Other Information                                                     20

Item 6. Exhibits and Reports on Form 8-K                                      20

Signatures                                                                    21

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


                                     ASSETS

                                                      March 31,     December 31,
                                                        2001            2001
                                                     -----------    -----------
                                                                     (Unaudited)
CURRENT ASSETS:
  Cash and Cash Equivalents ........................ $   554,181    $   791,369
  Restricted Cash ..................................     892,061        664,803
  Accounts Receivable, net of allowance
    for doubtful accounts of $854,423 and $965,125
      at March 31, 2001 and December 31, 2001,
       respectively:
        Continuing License Fees and
          Advertising Fees .........................     417,513        473,426
        Current Portion of Notes Receivable ........     415,829        464,740
        Current Portion of Direct Financing
          Leases ...................................      15,321         15,738
        Insurance Premiums Receivable ..............       5,384         26,172
        Vehicle Rental Operation ...................       1,971        101,657
        Other ......................................      81,359        327,782
  Prepaid Expenses and Other .......................     165,811        214,799
  Prepaid Income Tax Expense .......................     524,155        193,823
  Deferred Tax .....................................     341,983        359,314
                                                     -----------    -----------

    TOTAL CURRENT ASSETS ...........................   3,415,568      3,633,623
                                                     -----------    -----------

PROPERTY AND EQUIPMENT:
  Furniture ........................................      95,837         98,860
  Computer Hardware and Software ...................     470,153        547,391
  Machinery and Equipment ..........................      65,644         71,289
  Leasehold Improvements ...........................      23,767         28,417
  Vehicles .........................................     398,111      1,335,869
                                                     -----------    -----------
                                                       1,053,512      2,081,826
  Less:  Accumulated Depreciation and
         Amortization ..............................    (363,075)      (514,270)
                                                     -----------    -----------

    NET PROPERTY AND EQUIPMENT .....................     690,437      1,567,556
                                                     -----------    -----------

OTHER ASSETS:
  Intangible Assets, net of accumulated
    amortization of $152,770 and $169,865 at
    March 31, 2001 and December 31, 2001,
     respectively ..................................     194,192        181,695
  Long-term Portion of Notes and Direct Financing
    Lease Receivables, net of allowance of $0 and
      $169,259 at March 31, 2001 and December 31,
        2001, respectively .........................      73,536        162,548
                                                     -----------    -----------
                                                         267,728        344,243
                                                     -----------    -----------

    TOTAL ASSETS ................................... $ 4,373,733    $ 5,545,422
                                                     ===========    ===========

   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

                                                        March 31,   December 31,
                                                          2001          2001
                                                       ----------   -----------
                                                                    (Unaudited)
CURRENT LIABILITIES:
  Accounts Payable and Accrued Expenses .............  $  942,965   $  891,149
  Dividends Payable .................................      22,100       22,100
  Insurance Financing Payable .......................          --      109,542
  Vehicle Financing Payable .........................          --      100,008
  Insurance Loss Reserves ...........................     510,327      624,397
                                                       ----------   ----------

    TOTAL CURRENT LIABILITIES .......................   1,475,392    1,747,196
                                                       ----------   ----------

LONG-TERM LIABILITIES:

  Vehicle Financing Payable .........................          --      380,562
  Deferred Tax Liability ............................      35,514       35,514
                                                       ----------   ----------

    TOTAL LONG-TERM LIABILITIES .....................      35,514      416,076
                                                       ----------   ----------

    TOTAL LIABILITIES ...............................   1,510,906    2,163,272
                                                       ----------   ----------

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 December 31, 2001
    (aggregate liquidation preference $884,000
    at March 31, 2001 and December 31, 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 4,230,296
    at December 31, 2001 ............................      43,855       42,303
  Additional Paid-In Capital ........................   2,267,709    1,984,309
  Retained Earnings .................................     540,213    1,344,488
                                                       ----------   ----------

    TOTAL SHAREHOLDERS' EQUITY ......................   2,862,827    3,382,150
                                                       ----------   ----------
    TOTAL LIABILITIES AND SHAREHOLDERS'
      EQUITY ........................................  $4,373,733   $5,545,422
                                                       ==========   ==========

   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                   Nine Months
                                                   Ended December 31,            Ended December 31,
                                               --------------------------    --------------------------
                                                  2000           2001           2000           2001
                                               -----------    -----------    -----------    -----------
<S>                                            <C>            <C>            <C>            <C>
REVENUES:
  Initial License Fees .....................   $   154,500    $   201,456    $   945,952    $   925,457
  Continuing License Fees ..................       756,747        824,008      2,581,166      2,778,417
  Advertising Fees .........................       229,936        230,010        776,059        806,041
  Insurance premiums .......................       301,598        291,537        881,847        962,262
  Vehicle Rental Operations ................        20,285        147,953         41,028        276,138
  Other ....................................        42,089         29,547        113,770        103,883
                                               -----------    -----------    -----------    -----------
                                                 1,505,155      1,724,511      5,339,822      5,852,198
                                               -----------    -----------    -----------    -----------
EXPENSES:
  Salaries, Consulting Fees and
    Employee Benefits ......................       227,142        344,243        712,785        917,472
  Advertising and Promotion ................       325,556        334,013      1,078,232      1,151,473
  Sales and Marketing Expenses .............        91,896        148,065        271,503        500,694
  Direct Expenses - Rental Operations ......         4,305         46,538          5,385         80,289
  General and Administrative Expenses ......       310,259        337,625        877,560        991,642
  Repurchase of Options ....................            --             --      1,234,560             --
  Underwriting Expenses ....................       236,162        286,711        825,906        745,406
  Depreciation & Amortization ..............        44,475         64,311        124,561        175,369
                                               -----------    -----------    -----------    -----------
                                                 1,239,795      1,561,506      5,130,492      4,562,345
                                               -----------    -----------    -----------    -----------

      OPERATING INCOME .....................       265,360        163,005        209,330      1,289,853

OTHER INCOME (EXPENSE)
  Interest Income ..........................        27,471         42,880        109,408        151,070
  Interest Expense .........................        (6,936)       (11,208)       (20,790)       (23,049)
                                               -----------    -----------    -----------    -----------
                                                    20,535         31,672         88,618        128,021
                                               -----------    -----------    -----------    -----------
      INCOME BEFORE INCOME TAX EXPENSE .....       285,895        194,677        297,948      1,417,874
                                               -----------    -----------    -----------    -----------

INCOME TAX (EXPENSE) BENEFIT ...............      (110,354)       (75,145)        34,823       (547,299)
                                               -----------    -----------    -----------    -----------

      NET INCOME ...........................   $   175,541    $   119,532    $   332,771    $   870,575

DIVIDENDS ON CONVERTIBLE CUMULATIVE
  PREFERRED STOCK ..........................        22,100         22,100         66,300         66,300
                                               -----------    -----------    -----------    -----------
NET INCOME APPLICABLE TO COMMON
  AND COMMON EQUIVALENT SHARES .............   $   153,441    $    97,432    $   266,471    $   804,275
                                               -----------    -----------    -----------    -----------
EARNINGS PER COMMON SHARE

  Basic ....................................   $       .03    $       .02    $       .07    $       .19
                                               -----------    -----------    -----------    -----------

Weighted average common shares .............     4,486,366      4,268,418      3,961,013      4,336,564
                                               ===========    ===========    ===========    ===========

  Diluted ..................................   $       .03    $       .02    $       .06    $       .16
                                               -----------    -----------    -----------    -----------
Weighted average common shares plus
 convertible preferred stock, options
 and warrants ..............................     5,593,517      5,375,175      5,473,250      5,442,464
                                               ===========    ===========    ===========    ===========
</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>
                                                             Nine Months Ended December 31,
                                                             ------------------------------
                                                                   2000           2001
                                                               -----------    -----------
<S>                                                            <C>            <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
  Net income ...............................................   $   332,771    $   870,575
  Adjustments to reconcile net income
    to net cash provided by operating activities:
      Depreciation and amortization ........................       124,561        175,369
      Deferred income taxes ................................       226,081        (17,331)
      Gain on disposal of property and equipment ...........        (8,090)         4,648
      Provision for doubtful accounts ......................        36,601        279,961
  Changes in assets and liabilities:
      Accounts and notes receivable ........................        21,037       (841,111)
      Prepaid expenses .....................................        (8,607)       (48,988)
      Income taxes recoverable .............................      (594,630)       330,332
      Accounts payable and accrued
        expenses ...........................................      (391,623)       (51,816)
      Income taxes payable .................................      (338,550)            --
      Insurance loss reserves ..............................       111,838        114,070
                                                               -----------    -----------

      Net cash (used in) provided by operating activities ..      (488,611)       815,709
                                                               -----------    -----------
Cash flows from investing activities:
  (Increase) decrease in restricted cash ...................      (186,507)       227,258
  Proceeds from sale of property and equipment .............        32,620         11,400
  Acquisition of property and equipment ....................      (339,340)    (1,051,439)
  Additions to intangible assets ...........................       (15,173)        (4,598)
                                                               -----------    -----------

      Net cash used in investing activities ................      (508,400)      (817,379)
                                                               -----------    -----------
Cash flow from financing activities:
  Increase in insurance financing payable ..................       119,574        109,542
  Increase in vehicle financing payable ....................            --        480,570
  Net proceeds from exercise of stock options and warrants .       896,866             --
  Retirement of common stock ...............................      (100,222)      (284,954)
  Preferred dividends paid .................................       (66,300)       (66,300)
                                                               -----------    -----------

      Net cash provided by financing activities ............       849,918        238,858
                                                               -----------    -----------
      Net (decrease) increase in cash and cash
         equivalents .......................................      (147,093)       237,188

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

Cash and cash equivalents at end of period .................   $   554,715    $   791,369
                                                               -----------    -----------
Supplemental disclosure of cash flow information:
  Interest paid ............................................   $    20,790    $    23,049
  Taxes paid ...............................................   $   670,993    $   275,889
</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
                                DECEMBER 31, 2001

1.   CONSOLIDATED FINANCIAL STATEMENTS

     The consolidated financial statements presented herein include the accounts
of  Rent-A-Wreck  of  America,   Inc.  (the  "Company")  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"),  and  Priceless's  subsidiary,
Priceless Rent-A-Car of Maryland, Inc. ("Rental Operations").

     All  intercompany   accounts  and  transactions  have  been  eliminated  in
consolidation.   In  the  opinion  of  the  Company's  management,  the  interim
consolidated  financial  statements include all adjustments,  consisting of only
normal recurring  adjustments,  necessary for a fair presentation of the results
for the interim periods.  Certain information and footnote  disclosures normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles  in the United  States of America have been  condensed or
omitted.  The  interim  consolidated  financial  statements  should  be  read in
conjunction with the Company's March 31, 2001 audited financial statements filed
with  the  Securities  and  Exchange  Commission  on Form  10-KSB.  The  interim
operating  results are not necessarily  indicative of the operating  results for
the full fiscal year.

2.   VEHICLE FINANCING PAYABLE

     The Company recently opened two stores under its trademark,  Priceless,  in
conjunction with its Rental Operations segment.  These stores are located in the
state of Maryland. In October 2001, the Company obtained a line of credit in the
amount of $500,000,  which is part of the $1,500,000 line of credit with Merrill
Lynch, to purchase vehicles.  This line of credit is secured by a certificate of
deposit of $600,000 held by Merrill Lynch, and in addition,  Merrill Lynch has a
first lien on all of the Company's  assets.  For the quarter ended  December 31,
2001, the Company borrowed  $480,570 from this line of credit,  which is payable
in a 5-year term in equal monthly principal  payments of $8,334 starting January
2002. In addition,  this line of credit bears an interest rate of 2.90% plus the
30-day Dealer Commercial Paper Rate published in the Wall Street Journal,  based
upon actual days elapsed over a 360-day year. The effective rate at December 31,
2001 was 4.68%.

                                       6
<PAGE>
3.   RECENT ACCOUNTING PRONOUNCEMENTS

     On July 20, 2001, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards No. 142 (SFAS 142),  "Goodwill and
Other Intangible Assets". 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.  This  Statement,  when  adopted,  requires  that
goodwill,  as well as intangible  assets with indefinite  lives,  acquired after
June 30,  2001,  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  April 1, 2002,  goodwill and intangible
assets with indefinite lives will be tested for impairment annually and whenever
there is an  impairment  indicator.  All acquired  goodwill  must be assigned to
reporting  units for  purposes of  impairment  testing  and  segment  reporting.
Although  the  Company is still  reviewing  the  provisions  of this  Statement,
management's  preliminary  assessment  is that  this  Statement  will not have a
material impact on the Company's financial position or results of operations.

     In July, 2001, the FASB issued Statement of Financial  Accounting Standards
(SFAS) No. 143,  "Accounting for Asset Retirement  Obligations".  This Statement
addresses financial accounting and reporting for obligations associated with the
retirement of tangible  long-lived  assets and the associated  asset  retirement
costs. This Statement  applies to all entities.  It applies to legal obligations
associated  with the  retirement  of  long-lived  assets  that  result  from the
acquisition,  construction,  development  and (or)  the  normal  operation  of a
long-lived asset, except for certain  obligations of lessees.  This Statement is
effective for financial  statements issued for fiscal years beginning after June
15, 2002.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived Assets." This Statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
supersedes FASB Statement No. 121,  "Accounting for the Impairment of Long-lived
Assets and for  Long-lived  Assets to be Disposed  Of".  The  provisions  of the
Statement  are  effective  for  financial  statements  issued for  fiscal  years
beginning after December 15, 2001.

     The Company is evaluating the impact of the adoption of these standards and
has not yet  determined  the effect of adoption on its  financial  position  and
results  of  operations,  but in any  event,  does not  expect  any impact to be
material.

                                       7
<PAGE>
4.   STOCKHOLDERS EQUITY

     PREFERRED STOCK

     During the nine months ended  December  31, 2001,  the Company has declared
dividends on preferred stock totaling $66,300, of which $44,200 has been paid.


     COMMON STOCK

     During the nine months ended December 31, 2001, the Company repurchased and
retired  155,200  shares  of its  common  stock  for a total  purchase  price of
$284,954.

                                       8
<PAGE>
5.   EARNINGS PER SHARE

     A  reconciliation  of  the  numerators  and  denominators  utilized  in the
computation of basic and diluted earnings per share for the three and nine month
periods ended December 31, 2000 and 2001 is as follows:

                                     Three Months              Nine Months
                                  Ended December 31,        Ended December 31,
                               -----------------------   -----------------------
                                  2000         2001         2000         2001
                               ----------   ----------   ----------   ----------
BASIC EPS COMPUTATION

 Net income applicable
  to common and common
  equivalent shares            $  153,441   $   97,432   $  266,471   $  804,275

 Weighted average common
  shares - Basic                4,486,366    4,268,418    3,961,013    4,336,564
                               ----------   ----------   ----------   ----------

Basic EPS                      $      .03   $      .02   $      .07   $      .19
                               ==========   ==========   ==========   ==========

DILUTED EPS COMPUTATION

 Net income applicable
  to common and common
  equivalent shares            $  153,441   $   97,432   $  266,471   $  804,275
 Dividends on convertible
  preferred stock                  22,100       22,100       66,300       66,300
                               ----------   ----------   ----------   ----------
                                  175,541      119,532      332,771      870,575
                               ----------   ----------   ----------   ----------

 Weighted average common
  shares - Basic                4,486,366    4,268,418    3,961,013    4,336,564
 Weighted average convertible
  preferred stock               1,105,000    1,105,000    1,105,000    1,105,000
 Weighted average options
  and warrants                      2,151        1,757      407,237          900
                               ----------   ----------   ----------   ----------
 Weighted average common
  shares - Diluted              5,593,517    5,375,175    5,473,250    5,442,464
                               ----------   ----------   ----------   ----------
Diluted EPS                    $      .03          .02   $      .06          .16
                               ==========   ==========   ==========   ==========

                                       9
<PAGE>
6.   GEOGRAPHIC AND INDUSTRY SEGMENTS

     The Company currently operates in three principal segments:  Vehicle Rental
Franchise Programs,  Insurance Coverage for its franchisees,  and Vehicle Rental
Operations.  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.

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

     Information by geographic area and industry segment is as follows:

                                                          Nine Months Ended
                                                             December 31,
                                                     --------------------------
                                                        2000           2001
                                                     -----------    -----------
Net revenues from external customers
 Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)       $ 4,047,424    $ 4,055,957
 Vehicle Rental Franchises-Pricele$$-(U.S.)              367,973        556,341
 Vehicle Rental Operations-(U.S.)                         41,028        276,138
 Corporate-(U.S.)                                          1,550          1,500
 Insurance-(U.S.)                                        881,847        962,262
 Insurance-(Bermuda)                                          --             --
                                                     -----------    -----------
                                                     $ 5,339,822    $ 5,852,198
                                                     -----------    -----------
Segment operating income
 Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)       $   668,679    $ 1,472,261
 Vehicle Rental Franchises-Pricele$$-(U.S.)              (59,202)       (84,896)
 Vehicle Rental Operations-(U.S.)                            689       (155,338)
 Corporate-(U.S.)                                        (47,204)       (52,409)
 Insurance-(U.S.)                                       (353,632)       110,235
 Insurance-(Bermuda)                                          --             --
                                                     -----------    -----------
                                                     $   209,330    $ 1,289,853
                                                     ===========    ===========
Expenditures for segment assets
 Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)       $        --    $        --
 Vehicle Rental Franchises-Pricele$$-(U.S.)                   --             --
 Vehicle Rental Operations-(U.S.)                        108,383        936,080
 Corporate-(U.S.)                                        230,957        115,359
 Insurance-(U.S.)                                             --             --
 Insurance-(Bermuda)                                          --             --
                                                     -----------    -----------
                                                     $   339,340    $ 1,051,439
                                                     ===========    ===========
Depreciation and amortization
 Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)       $    13,469    $    12,083
 Vehicle Rental Franchises-Pricele$$-(U.S.)                1,957          3,502
 Vehicle Rental Operations-(U.S.)                         26,261         99,539
 Corporate-(U.S.)                                         82,874         60,245
 Insurance-(U.S.)                                             --             --
 Insurance-(Bermuda)                                          --             --
                                                     -----------    -----------
                                                     $   124,561    $   175,369
                                                     ===========    ===========

                                       10
<PAGE>
                                                           Nine Months Ended
                                                              December 31,
                                                        ----------------------
                                                           2000         2001
                                                        ---------    ---------
Interest income
 Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)          $  45,817    $ 109,812
 Vehicle Rental Franchises-Pricele$$-(U.S.)                 5,243       16,645
 Vehicle Rental Operations-(U.S.)                              --           --
 Corporate-(U.S.)                                           7,078        3,066
 Insurance-(U.S.)                                          51,000       21,537
 Insurance-(Bermuda)                                          270           10
                                                        ---------    ---------
                                                        $ 109,408    $ 151,070
                                                        =========    =========
Interest expense
 Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)          $      15    $      --
 Vehicle Rental Franchises-Pricele$$-(U.S.)                    12           --
 Vehicle Rental Operations-(U.S.)                              --        5,287
 Corporate-(U.S.)                                              --           --
 Insurance-(U.S.)                                          20,763       17,762
 Insurance- (Bermuda)                                          --           --
                                                        ---------    ---------
                                                        $  20,790    $  23,049
                                                        =========    =========
Income tax benefit (expense)
 Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)          $  34,823    $(508,822)
 Vehicle Rental Franchises-Pricele$$-(U.S.)                    --       (3,189)
 Vehicle Rental Operations-(U.S.)                              --           --
 Corporate-(U.S.)                                              --           --
 Insurance-(U.S.)                                              --      (35,288)
 Insurance-(Bermuda)                                           --           --
                                                        ---------    ---------
                                                        $  34,823    $(547,299)
                                                        =========    =========

                                                         March 31,  December 31,
                                                           2001         2001
                                                        ----------  -----------
Segment assets
 Vehicle Rental Franchises-Rent-A-Wreck-(U.S.)          $2,351,100   $1,997,276
 Vehicle Rental Franchises-Pricele$$-(U.S.)                268,587      453,749
 Vehicle Rental Operations-(U.S.)                          305,786    1,430,967
 Corporate-(U.S.)                                          384,141      472,820
 Insurance-(U.S.)                                        1,055,877    1,182,276
 Insurance-(Bermuda)                                         8,242        8,334
                                                        ----------   ----------
                                                        $4,373,733   $5,545,422
                                                        ==========   ==========

                                       11
<PAGE>
7.   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 have a material  adverse  affect on 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. The
Company intends to vigorously defend such suit.

                                       12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2001 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 2000

     The Company operates in three principal segments:  Vehicle Rental Franchise
Programs  (Franchising),  Insurance  Coverage  (Insurance)  and  Vehicle  Rental
Operations (Rental Operations).

     For the quarter ended December 31, 2001,  initial license fees,  continuing
license fees and advertising  fees increased by $114,291 (10%).  Initial license
fees  increased by $46,956  (30%),  and  continuing  license  fees  increased by
$67,261 (9%). The increase in initial  license fees resulted  primarily from the
addition of new franchises.  The timing of closings of new franchise sales, each
of which is for a  relatively  large  amount of  revenue  which  contributes  to
periodic  increases or decreases in reported results  throughout the year. While
there  can be no  assurances,  management  does  not  believe  these  short-term
variations  are  indicative  of longer term trends.  The increase in  continuing
license fees and advertising fees resulted entirely from confessions of judgment
from 6 franchisees  for past due fees which had not previously  been recorded as
revenues since the Company did not believe  collectability  was probable at that
time. For the quarter ended December 31, 2001, the Company  executed  additional
confessions of judgment totaling $160,050, resulting in a total balance due from
confessions  of judgment of  $363,398.  If the  confessions  of judgment had not
impacted the continuing license fees and advertising fees, the result would have
been decreases of $50,169 (7%) and $28,832 (12%), respectively.

     Revenues from insurance  premiums  decreased by $10,061 (3%) due to a lower
number of vehicles in the Company's CAR Insurance program.  This lower number is
a direct consequence of the Company's new underwriting  standards policy,  which
has more stringent qualifying criteria.

     Revenues from vehicle rental operations increased by $127,668 (629%) due to
more Company-owned cars being added to the Rental Operations fleet.

     The operating expenses for all segments increased by $321,711 (26%) for the
three-month  period ended  December 31,  2001.  Salary  expense for all segments
increased by $117,101  (52%),  which resulted  primarily from hiring  additional
employees in the Company's  Rental  Operations  segment and hiring a subrogation
expert in  connection  with the  Insurance  segment.  Advertising  and promotion
expenses  increased by $8,457 (3%), which resulted primarily from an increase in
national  advertising  expense to promote the  Company and its brand.  Sales and
marketing  expenses increased by $56,169 (61%), which resulted primarily from an
increase in reserves  for bad debt  expense due to the  confessions  of judgment
referred to above. Direct expenses for the Company's Rental Operations increased
by $42,233  (981%),  due to the  opening of the  Company's  stores.  General and
administrative  expenses for all three segments increased by $27,366 (9%), which
resulted primarily from an increase in professional fees.

                                       13
<PAGE>
     Insurance  underwriting  expenses  increased  by  $50,549  (21%)  due to an
increase in loss reserves for unsettled claims.

     Depreciation and amortization expense increased by $19,836 (45%), which was
primarily  due to  additional  depreciation  associated  with  the  purchase  of
vehicles  in the  Company's  Rental  Operations  and  additional  investment  in
computer software and hardware.

     The  Company  realized  operating  income  of  $163,005,  before  taxes and
interest,  for the  three-month  period ended  December  31,  2001,  compared to
$265,360  for the  three-month  period ended  December  31,  2000,  reflecting a
decrease of $102,355 (39%),  which resulted primarily from an increase in Rental
Operations expenses.

     Net interest income increased by $11,137 (54%). This increase was primarily
due to recording  some interest  income in connection  with the  confessions  of
judgment referred to above.

     Income tax expense for the quarter  ended  December  31, 2001  decreased by
$35,209 (32%) compared to the three-month  period ended December 31, 2000 due to
lower pre-tax earnings.

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

     The Company operates in three principal segments:  Vehicle Rental Franchise
Programs  (Franchising),  Insurance  Coverage  (Insurance)  and  Vehicle  Rental
Operations  (Rental  Operations).  For the nine months ended  December 31, 2001,
franchising  operations comprised 79% of consolidated net revenues (83% in 2000)
and 108% of consolidated operating income (291% in 2000).

     Net revenues  increased by $512,376 (10%) for the  nine-month  period ended
December 31, 2001  compared to the same period in the prior year.  This increase
occurred due to a  $197,251(8%)  increase in continuing  license fees, a $29,982
(4%) increase in  advertising  fees, a $80,415 (9%)  increase in premium  income
associated with the Insurance segment,  and a $235,110 (573%) increase in Rental
Operations,  offset  by  a  $20,495  (2%)  decrease  in  initial  license  fees.
Generally,  the  increases  in  continuing  license  fees and  advertising  fees
occurred for the same reasons as those for the three-month  period stated above.
The  decrease in initial  license  fees  resulted  primarily  from the timing of
closings of new franchise sales,  each of which is for a relatively large amount
of revenue  which  contributes  to periodic  increases  or decreases in reported
results  throughout the year. The increase in insurance  premiums  resulted from
higher participation by the Company's franchisees in the Company's CAR Insurance
program.   The  increase  in  vehicle  rental  operations   resulted  from  more
Company-owned  cars being added to the Rental  Operations fleet. The increase in
continuing  license fees and advertising fees resulted entirely from confessions
of judgment from 16 franchisees  for past due fees which had not previously been
recorded as  revenues  since the  Company  did not  believe  collectability  was
probable at that time.  For the  nine-month  period ended December 31, 2001, the
Company executed confessions of judgment totaling $421,197, resulting in a total
balance due from  confessions  of judgment of $363,398.  If the  confessions  of
judgment had not impacted the continuing  license fees and advertising fees, the
result  would  have  been   decreases  of  $126,633   (5%)  and  $52,793   (7%),
respectively.

                                       14
<PAGE>
     If the repurchase of options had not impacted the consolidated statement of
operations for the nine months ended December 31, 2000, operating expenses would
have been $3,895,932 instead of $5,130,492.

     Excluding  the  repurchase  of options in 2000,  total  operating  expenses
increased  by $666,413  (17%) in this period  compared to the same period in the
prior year. Salary expense increased by $204,687 (29%), which resulted primarily
from  additional  hiring for the  Company's  Rental  Operations  and hiring of a
subrogation   expert  in  connection  with  the  Company's   insurance  segment.
Advertising  and promotion  expenses  increased by $73,241 (7%),  which resulted
primarily  from an  increase  in  national  advertising  expenses to promote the
Company.  Sales and  marketing  expenses  increased  by  $229,191  (84%),  which
resulted  primarily from an increase in reserves for bad debt expense due to the
confessions  of judgment  referred to above.  Direct  expenses for the Company's
Rental  Operations  increased  by  $74,904  (140%),  due to the  opening  of the
Company's  stores.  General and  administrative  expenses  increased by $114,082
(13%),   which  resulted  primarily  from  an  increase  in  professional  fees.
Underwriting  expenses  decreased  by  $80,500  (11%)  in paid  losses  and loss
reserves for unsettled  claims due to the Company's  improved  underwriting  and
subrogation efforts.

     Depreciation and amortization  expense increased by $50,808 (41%) which was
primarily  due to  additional  depreciation  associated  with  the  purchase  of
vehicles for the  Company's  Rental  Operations  and  additional  investment  in
computer software and hardware.

     If the repurchase of options had not impacted the Consolidated Statement of
Earnings  for the nine  months  ended  December  31, 2000 (in which case it also
would have  produced no partially  offsetting  reduction in income tax expense),
operating  income would have been $1,443,890 in 2000 instead of operating income
of $209,330.  Net income  would have been  $982,819  instead of $332,771,  basic
earnings  per share would have been $.25 instead of $.07,  and diluted  earnings
per share would have been $.18 instead of $.03.

     Excluding the repurchase of options,  the Company realized operating income
of  $1,443,890,  before  taxes and  interest,  for the  nine-month  period ended
December 31, 2000 as compared to  operating  income of  $1,289,853  for the nine
month period ended December 31, 2001,  reflecting a decrease of $154,037  (11%).
This  decrease  resulted  primarily  from an  increase in the  Company's  Rental
Operations  expenses,  partially offset by an increase in insurance  premiums as
well as a decrease in underwriting expenses.

     Net income  was  $870,575  for the nine  months  ended  December  31,  2001
compared to net income of $982,819,  excluding the repurchase of options for the
same period in the prior year, reflecting a decrease of $112,244 (11%).

     Income tax expense for the nine-month period ended December 31, 2000 was an
income tax benefit of $34,823 due to the income tax benefit  associated with the
Company's repurchase of 957,721 options and the exercise of warrants and options
for 927,279  shares of common stock.  Excluding the repurchase of these options,
the income  tax  expense  would have been  $549,689  for the nine  months  ended
December 31, 2000  compared to $547,299  for the nine months ended  December 31,
2001.

                                       15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

     At  December  31,  2001,  the Company  had  working  capital of  $1,886,427
compared to  $1,940,176  at March 31, 2001.  This decrease of $53,749 in working
capital stems from an increase in financing and reserve  accruals related to the
insurance  operations  coupled with the borrowings to finance the acquisition of
the Company store vehicles and payments made for income taxes  partially  offset
by an increase in receivables and prepaid expenses.

     In October 2001, the Company finalized 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  Rental  Operations
($500,000),  and to provide  security for the reinsurance  arrangement with AIG.
This  letter of credit has  replaced  the letter of credit with Bank of America.
This letter of credit is part of the  agreement  between the Company and Merrill
Lynch as  security  for the letter of credit  issued to  American  International
Group ("AIG") by Merrill Lynch.  In addition,  Merrill Lynch has a first lien on
all of the Company's  assets.  This letter of credit is secured by a certificate
of  deposit of  $600,000  held by  Merrill  Lynch plus 50% of all the  Company's
eligible  accounts  receivable.  In the quarter  ended  December 31,  2001,  the
Company  borrowed  $480,570  from its line of credit for  purchasing  additional
vehicles for its Rental Operations.

     Property and equipment increased by $1,028,314 (98%) from March 31, 2001 to
December 31, 2001.  This increase  occurred  primarily due to the purchase of 75
vehicles in  connection  with the Company's  Rental  Operations  and  additional
investment in computer software and hardware.

     Cash provided by operations was $815,709,  resulting from net income before
depreciation plus the decrease in prepaid income tax expense and the increase in
insurance loss reserves,  partially offset by the increase in accounts and notes
receivable and prepaid expenses and the decrease in accounts payable and accrued
expenses.  Prepaid  income tax  decreased  due to the income tax expense for the
nine months ended  December 31, 2001.  Accounts and notes  receivable  increased
primarily due to the  confessions of judgment from 16  franchisees  for past due
fees.  Prepaid  expenses  increased  primarily  due  to  additional  promotional
materials.  Insurance  loss reserves  increased  primarily due to an increase in
unsettled claims associated with the CAR Insurance program. Accounts payable and
accrued  expenses  decreased  primarily  due to a decrease  in accrued  national
advertising expenses.

     Cash used in  investing  activities  of $817,379  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 three vehicles.

     Cash  provided by financing  activities  was  $238,858,  resulting  from an
increase in insurance  financing  payable in  connection  with the CAR insurance
program,  an  increase  in  vehicle  financing  payable in  connection  with the
Company's Vehicle Rental  Operations,  offset by the buyback of common stock and
the payment of preferred dividends.

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



                                       16
<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.

                                       17
<PAGE>
                             SELECTED FINANCIAL DATA

     Set  forth  below  are  selected   financial   data  with  respect  to  the
consolidated  statements of operations of the Company and its  subsidiaries  for
the nine month periods ended  December 31, 2000 and 2001 and with respect to the
balance sheets at December 31, 2000 and 2001.

     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.

<TABLE>
<CAPTION>
                                              Three Months                  Nine Months
                                           Ended December 31,            Ended December 31,
                                         ---------------------         ---------------------
                                           2000         2001             2000         2001
                                         --------     --------         --------     --------
                                      (in thousands except per share and number of franchises)
                                                             (Unaudited)
<S>                                      <C>          <C>              <C>          <C>
FRANCHISEES' RESULTS (UNAUDITED)

Franchisees' Revenue (1)                 $ 12,612     $ 13,733         $ 43,019     $ 46,307

Number of Franchised locations                677          659              677          659

COMPANY'S RESULTS OF OPERATIONS

Total Revenue                            $  1,505     $  1,724         $  5,340     $  5,852

Operating expenses                          1,240        1,561            5,130        4,562

Income before income taxes               $    286     $    195         $    298     $  1,418

Net income                                    176          119              333          871

Earnings per common share

Basic                                    $    .03     $    .02         $    .07     $    .19
Weighted average common shares              4,486        4,268            3,961        4,337

Diluted                                  $    .03     $    .02         $    .06     $    .16
Weighted average common
 shares plus convertible
 preferred stock, options
 and warrants                               5,593        5,375            5,473        5,442

EBITDA (2)                                    337          270            1,688        1,616

                                                                            December 31,
                                                                       ---------------------
                                                                         2000         2001
                                                                       --------     --------
                                                                             (Unaudited)
BALANCE SHEET DATA

Working capital                                                        $  2,107     $  1,886
Total assets                                                           $  4,544     $  5,545
Shareholders' equity                                                   $  2,899     $  3,382
</TABLE>

                                       18
<PAGE>
     (1) The franchisees'  revenue data has 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.

                                       19
<PAGE>
PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

     During the quarter ended September 30, 2001, the Company bought back 75,000
shares of its common  stock.  During the quarter  ended  December 31, 2001,  the
Company bought back 80,200 shares of its common stock reducing total outstanding
common shares from 4,385,496 to 4,230,296.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits.

     None.

(b)  Reports on Form 8-K:

     No reports on Form 8-K were filed  during the  quarter in which this report
     was filed.

                                       20
<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                        February 12, 2002
-----------------------------                 -----------------
Mitra Ghahramanlou
Chief Accounting Officer


/s/ Kenneth L. Blum, Sr.                      February 12, 2002
-----------------------------                 -----------------
Kenneth L. Blum, Sr.
CEO and Chairman of
the Board

                                       21