<PAGE>   1

                       UNITED STATES
            SECURITIES AND EXCHANGE COMMISSION

                 Washington, D.C.  20549

                         FORM 10-Q

(Mark One)

[ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) 
          OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:         March 31, 1997	
                               ---------------------------------

                           OR

[    ]      	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(D)
      	 	    OF THE SECURITIES EXCHANGE ACT of 1934

	For the transition period from 		            to				
                                -------------   -------------

	Commission File Number 	           0-22026		
                        -------------------------------

                     	RENT-WAY, INC.
	(Exact name of registrant as specified in its charter)

		      Pennsylvania	 		                                   25-1407782		
        ------------                                       ----------
	(State or other jurisdiction                           (I.R.S. EMPLOYER
       of incorporation)                               Identification No.)
	
             		3230 West Lake Road, Erie, Pennsylvania  16505	
               ----------------------------------------------
		                (Address of principal executive offices)	

                               (814) 836-0618	
                               --------------
                      (Registrant's telephone number)
			
          Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the preceding 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
    ---            ---

          Indicate the number of shares outstanding of each of the issuer's 
classes of common stock, as of the latest practicable date.

    Class                                 OUTSTANDING AS OF MARCH 31, 1997
-------------                             --------------------------------
	Common Stock	                                         6,623,612

<PAGE>   2

                               RENT-WAY, INC.
<TABLE>
<CAPTION>                       	     																													Page
                                                                   ----
<S>          <C>                                                  <C>
Part I	      Financial Information
	            Item 1.	Financial Statements:      

                   		Balance Sheets as of March 31, 1997 and 
                   		September 30, 1996	                             3				

                   		Statements of Income, Three and Six Months 
                   		Ended March 31, 1997 and 1996	                  4				

                   		Statements of Cash Flows, Six Months Ended 
                   		March 31,1997 and 1996	                         5				

                   		Notes to Financial Statements	                  6					

           	Item 2.	 Management's Discussion and Analysis
                   		of Financial Condition and Results 
                     of Operations	                                 11					

Part II	    Other Information

            Item 2.  Changes in Securities                          17

           	Item 4.		Submission of Matters to Vote of 
                     Security Holders		                             17

           	Item 6.		Exhibits and Reports on Form 8-K	              18
		
	           Signatures						                                        18

</TABLE>

                                      2

<PAGE>   3

                                RENT-WAY, INC.

                                BALANCE SHEETS

<TABLE>
<CAPTION>                                   	For the period ended

                                     	March 31,	              September 30,
		                                      1997                    		199	
                                   ---------------            -------------
                                     (unaudited)
<S>                              <C>                        <C>
ASSETS

Cash	                              $	    2,095,847	           $    	179,425
Prepaid expenses		                       1,866,249		              1,266,087
Rental merchandise, net		               30,926,101               17,862,420
Deferred income taxes		                  1,572,188                1,473,522
Property and equipment, net		            7,023,346		              4,616,362
Goodwill, net		                         41,335,305		             21,866,806
Deferred financing costs, net		          1,409,618		                377,232
Prepaid consulting fee		                   952,381		              1,041,667
Other assets		                           1,588,461		              1,290,217
                                   ---------------            -------------
     	Total assets	                $	   88,769,496           $ 	49,973,738
                                   ===============            =============

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable	                  $	    3,087,271	           $	  1,746,797
Other liabilities		                      4,416,793		              2,181,899
Income taxes payable		                   1,938,294                1,226,590
Debt		                                  46,281,791		             12,979,075
                                   ---------------            -------------
     	Total liabilities		               55,724,149               18,134,361

Commitments and Contingencies	              -                       	-	
				
Redeemable preferred stock, Series
A, without par value; 11,207 shares 
issued and outstanding at September 
30, 1996 (see Note 6)                       -                    	1,120,700	

Shareholders' equity:
Common stock, without par value 
20,000,000 shares	authorized; 
6,623,612 and 6,659,180 shares issued 
and	outstanding, respectively	          28,258,240               27,907,225
Preferred stock, without par value; 
1,000,000 shares authorized	                -                       	-        
Retained earnings		                      4,787,107		              2,811,452
                                   ---------------             ------------
      Total shareholders' equity		      33,045,347		             30,718,677
                                   ---------------             ------------
	     Total liabilities and 
        shareholders' equity	      $   	88,769,496            $ 	49,973,738
                                   ===============            =============
</TABLE>

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

                                    3

<PAGE>   4

                             RENT-WAY, INC.

                          STATEMENTS OF INCOME
<TABLE>
<CAPTION>                	         For the three months ended        For the six months ended
	                                          March 31,	                        March 31, 
	                                   1997	               1996	         1997		            1996
                                    ----                ----          ----              ----
		                                        (unaudited)                    			(unaudited)	
                                    ------------------------          ----------------------
<S>                           <C>                 <C>            <C>               <C>     
REVENUES:
Rental revenue	                 $	19,836,214	       $	10,631,533	   $	33,526,057	     $	20,816,750	
Other revenue		                    2,709,167		         1,715,236		     4,683,222		       3,344,063	
                                ------------        ------------    ------------      ------------
	     Total revenues	             22,545,381		        12,346,769		    38,209,279		      24,160,813	

COSTS AND OPERATING EXPENSES:
Depreciation and amortization:	
 	Rental merchandise		             5,197,299		         3,381,083		     8,897,980		       6,460,615
 	Property and equipment		           317,392		           187,795         593,517		         354,985	
 	Amortization of goodwill		         467,830	            225,872		       774,042		         419,405
Salaries and wages		               5,667,057		         3,038,864      10,036,027	        5,970,950	
Advertising		                      1,130,224		           492,264		     1,953,598		       1,101,397	
Occupancy		                        1,589,709		           761,055		     2,624,693		       1,558,397	
Other operating expenses		         4,842,079		         2,698,349		     7,858,145		       5,202,629
                                ------------         -----------   -------------      ------------ 
     	Total costs and 
        operating expenses		      19,211,590		        10,785,282		    32,738,002		      21,068,378	
                                ------------         -----------   -------------      ------------
     	Operating income		           3,333,791		         1,561,487		     5,471,277		       3,092,435		

OTHER INCOME (EXPENSE):
Interest expense		                  (872,184)		         (520,997)		   (1,247,680)		     (1,067,109)	
Interest income		                        415		            16,879		           920		          33,649	
Other income (expense), net		        (21,724)		           35,615		       (23,795)		         34,053	
                                ------------         -----------   -------------      ------------
     	Income before income taxes
       and extraordinary item    		2,440,298 	         1,092,984		     4,200,722		       2,093,028	

Income tax expense		               1,145,017  	          503,935		     1,956,050	           963,956
                                ------------         -----------   -------------      ------------
    		Income before 
			     extraordinary item		       1,295,281		           589,049		     2,244,672		       1,129,072		

Extraordinary item		                   -	      	            -	      		  (269,017)		           -	 
                                ------------         -----------   -------------      ------------
Net income				                     1,295,281		           589,049		     1,975,655		       1,129,072

Preferred stock (dividend)/gain
 	on redemption				                    -                 (39,426)		      280,175		         (90,108)
                                ------------         -----------   -------------      ------------
Earnings applicable to common 
 	shares	                       $ 	1,295,281	        $  	549,623	  $  	2,255,830	     $ 	1,038,964	
                                ============         ===========   =============      ============
EARNINGS PER COMMON SHARE 
(NOTE 2):
  Primary earnings per share (adjusted to give effect to any preferred
   stock (dividend)/gain on redemption):
    Income before extraordinary
     item    	                  $      	0.18	        $     	0.11	  $        0.36     $    	   0.21	
                                ============         ===========   =============      ============  
    Net income                  $       0.18         $      0.11   $        0.32      $       0.21
                                ============         ===========   =============      ============

  Fully diluted	earnings per share (adjusted to give effect to any preferred
   stock (dividend)/gain on redemption):
    Income before extraordinary
     item                       $      	0.18	        $     	0.11	  $       	0.35     $        0.21
                                ============         ===========   =============      ============
    Net income                  $       0.18         $      0.11   $        0.32      $       0.21
                                ============         ===========   =============      ============

Weighted average common
shares outstanding:
     	Primary		                    7,052,546		         4,868,325		     7,042,041		       4,852,200	
                                ============         ===========   =============      ============
     	Fully diluted		              8,687,836		         5,004,273		     8,207,427		       4,942,690
                                ============         ===========   =============      ============
</TABLE>

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

                                          4

<PAGE>   5
                                           
                                    RENT-WAY, INC.

                              STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>                                         	For the six months ended
	                                                          March 31,					
                                                 		1997               1996 	
				                                           ------------      ------------
                                                (unaudited)       (unaudited)
<S>                                         <C>               <C>
OPERATING ACTIVITIES:
Net income			                                  $  1,975,655     $ 	1,129,072
Adjustments to reconcile net income												
to net cash provided by operating activities:		
	  Depreciation and amortization				             10,265,539		       7,281,675
  	Deferred income taxes						                      (98,666)          (20,000)
  	Extraordinary item	                          		  269,017
Changes in assets and liabilities:
  	Prepaid expenses				                            (405,896)		       (363,231)
  	Rental merchandise				                       (13,661,661)		     (8,146,284)
  	Prepaid consulting fees				                       89,286		          89,071	
   Other assets				                                (155,507)		       (199,823)
  	Accounts payable				                             360,578 	         (14,757)
  	Income taxes payable				                         792,383		         712,465
  	Other current liabilities				                    557,102	       		(301,775)
                                               ------------      ------------
    		Net cash provided by operating activities		   733,326		         166,413

INVESTING ACTIVITIES:
	  Purchase of businesses, net of cash acquired
    of $827,912 in 1997  				                   (21,289,455)		       (180,937)
  	Purchases of property and equipment				       (1,614,140)		     (1,015,089)
                                               ------------      ------------
    		Net cash used in investing activities	  		(22,903,595) 	     (1,196,026)
	
FINANCING ACTIVITIES:
   Principal payments on capital lease obligation    -                (12,919)
  	Proceeds from borrowings				                  38,126,385 	      12,214,516
  	Payments on borrowings including 
    early extinguishment		                      (10,447,199)		    (24,167,586)
	  Redeemable preferred stock dividend		          		(32,143)        		(88,112)
  	Redeemable preferred stock redemption				       (840,525)       		(497,100)
   Deferred Finance Costs                        (1,356,158)            -
  	Common stock				                                 102,983		      14,440,562
  	Loan to related party	                         			-     	        		(11,450)
                                               ------------      ------------
    		Net cash provided by financing activities	 25,553,343		       1,877,911
                                               ------------      ------------
    		Increase in cash				                        1,916,422		         848,298

Cash at beginning of period				                     179,425		         959,721
                                               ------------      ------------
Cash at end of period			                       $ 	2,095,847	     $ 	1,808,019
                                               ============      ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
	  Cash paid during the period for:
		  Interest			                                $ 	  989,966	     $   	845,476
  		Income taxes			                            $  1,163,368	     $   	270,175

</TABLE>

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

                                      5

<PAGE>   6

                                RENT-WAY, INC.

                        NOTES TO FINANCIAL STATEMENTS
                                 (unaudited)

1.	 BASIS OF PRESENTATION:

   	Rent-Way, Inc., (the "Company" or "Rent-Way") is a corporation organized
    under the laws of the Commonwealth of Pennsylvania.  The Company operates
    a chain of rental-purchase stores that rent durable household products 
    such as home entertainment equipment, furniture, and major appliances and
    jewelry to consumers on a weekly or monthly basis. The accompanying 
    unaudited condensed financial statements have been prepared in accordance
    with the instructions to Form 10-Q, and therefore, do not include all
    information and notes necessary for a fair presentation of financial
    position, results of operations and cash flows in conformity with 
    generally accepted accounting principles.  In the opinion of management,
    all adjustments (consisting solely of normal recurring adjustments),
    which are necessary for a fair statement of the financial position,
    results of operations and cash flows of the Company have been made.  The
    results of operations for the interim periods are not necessarily
    indicative of the results for the full year.

   	Certain amounts in the 1996 financial statements have been reclassified
    to conform to the 1997 presentation. As a result of meeting specified 
    criteria the Company is now filing under Regulation S-X under the
    Securities Act of 1933 (the "Securities Act"), where it had 
    previously been reporting under Regulation S-B under the Scurities Act.

   	These financial statements and the notes thereto should be read in 
    conjunction with the Company's audited financial statements included in 
    its Annual Report on Form 10-KSB for the fiscal year ended September 
    30, 1996.

2.  EARNINGS PER COMMON SHARE:

    Primary and fully diluted earnings per common share are computed based 
    on net income after preferred stock dividend requirements and the 
    redemption of redeemable preferred stock on a discounted basis, if 
    applicable.  The weighted average number of common shares outstanding 
    during each period is adjusted to give effect to stock options and 
    warrants considered to be dilutive common stock equivalents.  
    Additionally, fully diluted weighted average number of shares outstanding
    are adjusted to give effect to convertible debt deemed to be another 
    potentially dilutive security.

    The Company, in recognition of requirements under Statement of Financial
    Accounting Standards ("SFAS") No. 128, has determined the impact of 
    basic and dilutive earnings per common share.  Basic earnings per common
    share is computed using income available to common shareholders divided 
    by the weighted average number of common shares outstanding.  Dilutive 
    earnings per common share is computed using income available to common 
    shareholders and the weighted average number of shares outstanding is
    adjusted to give effect to other dilutive securities. 

                                      6

<PAGE>   7

                                RENT-WAY, INC.

                        NOTES TO FINANCIAL STATEMENTS
                                 (unaudited)

2.  EARNINGS PER COMMON SHARE, Continued:

    The following table discloses the impact of SFAS No. 128 on the 
    Company's earnings per common share for the three and six month periods 
    ended March 31, 1997.

<TABLE>
                                                	For the three months ended	   For the six months ended

                                                      		   March 31,                    March 31,
                                                 -------------------------     -------------------------
<S>                                           <C>            <C>            <C>            <C>
                                                  		1997           1996           1997	          1996
                                                 ----------     ----------     ----------     ----------
    Weighted average common shares outstanding	   6,609,853      4,307,902      6,602,048      4,246,322

    Plus:  shares applicable to:

        Options and warrants                        442,982        696,838        440,880        696,838
        10% Convertible notes                       704,225          -            704,225          -
        7% Convertible debentures                   903,776          -            460,274          -
                                                 ----------     ----------     ----------     ----------
    Adjusted weighted average common 
     shares outstanding                           8,687,836      5,004,273      8,207,427      4,942,690
                                                 ==========     ==========     ==========     ==========

    Net income available to common shareholders
     for Basic EPS                               $1,295,281     $  549,623     $2,255,830     $1,038,964

    Plus:  Impact of assumed conversions:

        Interest on 10% convertible notes
         (net of tax)                               105,000          -            210,000          -
        Interest on 7% covertible debentures
         (net of tax)                               140,000          -            140,000          -
                                                 ----------     ----------     ----------     ----------
    Net income available to common shareholders 
    plus assumed conversions for Diluted EPS     $1,540,281     $  549,623     $2,605,830     $1,038,964
                                                 ==========     ==========     ==========     ==========
    Basic earnings per common share (adjusted to give effect to any preferred
     stock (dividend)/gain on redemption):

        Income before extraordinary item         $     0.20     $     0.13     $     0.38     $     0.24
                                                 ==========     ==========     ==========     ==========
        Net income                               $     0.20     $     0.13     $     0.34     $     0.24
                                                 ==========     ==========     ==========     ==========

    Diluted earnings per common share (adjusted to give effect to any
     preferred stock (dividend)/gain on redemption):
        Income before extraordinary item         $     0.18     $     0.11     $     0.35     $     0.21
                                                 ==========     ==========     ==========     ==========
        Net income                               $     0.18     $     0.11     $     0.32     $     0.21
                                                 ==========     ==========     ==========     ==========
</TABLE>

Following are pro forma results of operations for the six months ended 
March 31, 1997 and 1996 assuming the acquisitions of Diamond Leasing, 
Coleman and Rental King had occurred on Oactober 1, 1996.  The results are 
not necessarily indicative of future operations or what would have occurred 
had the acquisitions been consummated as of October 1, 1996.

<TABLE>
<CAPTION>                                  Unaudited Pro Forma Operations
                                             Six months ended March 31, 
                                         ----------------------------------

                                             1997                   1996
                                         -----------            -----------
<S>                                   <C>                    <C>
Revenues                                 $47,921,402            $47,765,071

Income before extraordinary item         $ 2,527,159            $ 2,242,142

Net income                               $ 1,087,237            $ 2,242,142

Earnings per common share (adjusted to give effect to any preferred stock
 (dividends)/gain on redemption):
     Income before extraordinary item    $      0.32            $      0.31
     Net income                          $      0.31            $      0.31
</TABLE>

3.	 ACQUISITIONS:

  		On January 24, 1997, the Company signed a definitive purchase agreement
    to acquire all the outstanding shares of Perry Electronics, Inc. d/b/a 
    Rental King ("Rental King").  On February 6, 1997, the Company 
    consummated the transaction and acquired all the outstanding shares of 
    Rental King, assuming effective control of the results of operations as
    of February 1, 1997.  At the time of acquisition Rental King operated a
    chain of rental-purchase stores in Colorado, Florida, Indiana, Kentucky,
    Michigan, Ohio and West Virginia with annual revenues of approximately
    $24.0 million.  The consideration paid in exchange for all the outstanding
    shares of Rental King was $18.3 million in cash.  Pursuant to the terms of
    the purchase agreement, $2.0 million of the purchase price was placed in 
    escrow, subject to the terms of the escrow agreement to satisfy sellers
    representations and warranties and any price adjustments.  The escrow 
    agreement provides for release of the entire amount pending the 
    completion of the required financial audits of Rental King.  The
    acquisition was accounted for using the purchase method of accounting.
    Rental King's assets and liabilities were recorded at their estimated fair 
    market values as of the date of the acquisition.  The fair values of 
    rental merchandise, property and equipment, intangible assets certain 
    liabilities and the final purchase price will be

                                       7

<PAGE>   8

                                 RENT-WAY, INC.

                   NOTES TO FINANCIAL STATEMENTS, (Continued)
                                  (unaudited)

3.	 ACQUISITIONS, Continued:

    finalized based on the completion of the financial statement audit
    valuation procedures and certain additional procedures.  The estimated
    excess of the acquisition cost over net assets acquired, ("goodwill")
    of $15.7 million is being amortized on a straight line basis over twenty
    years.  The total costs of the net assets acquired was $17.9 million and
    consisted of assets of $23.9 million less liabilities assumed of $5.5
    million and acquisition costs of $0.4 million.  The acquisition of Rental
    King was primarily funded by the application of the net proceeds received 
    on a private placement of $20.0 million in subordinated convertible 
    debentures (see Note 7).  The balance of the cash paid on closing
    was drawn upon the Company's existing line of of credit.  
    The statement of income for the three and six month periods ended
    March 31, 1997 includes the results of operations of Rental King since 
    February 1, 1997.

    On January 2, 1997, the Company acquired all the outstanding shares of
    Bill Coleman T.V., Inc., ("Coleman") a privately owned chain of
    fifteen rental-purchase stores operating in Michigan with annual
    revenues of approximately $7.5 million in exchange for consideration
    consisting of approximately $3.0 million in cash and an option to
    purchase 25,000 shares of the Company's common stock at an exercise
    price of $8.875.  Pursuant to terms of the acquisition, $350,000 of
    the purchase price was placed in escrow subject to terms of the escrow
    agreement to satisfy sellers representations and warranties and any
    purchase price adjustments.  The escrow agreement provides for release 
    of the escrow on completion of a financial audit of Coleman.  The 
    acquisition was accounted for using the purchase method of accounting.
    Coleman's assets and liabilities were recorded at their estimated fair 
    values as of the acquisition date.  The fair values of rental merchandise,
    property and equipment, intangible assets, certain liabilities and the 
    final purcahse price will be finalized based on the completion of
    the financial statement audit valuation procedures and certain 
    additional procedures.  The estimated excess of the acquisition cost 
    over net assets acquired, ("goodwill") of $4.3 million is being amortized
    on a straight line basis over twenty years.  The total cost of the net 
    assets acquired was $2.8 million and consisted of assets of $7.7 million 
    less liabilities assumed of $4.7 million and acquisition costs of $0.2 
    million. 

    On July 25, 1996 the Company acquired all the outstanding shares of
    Diamond Leasing Corporation ("DLC"); a chain of 11 rental-purchase
    stores operating in Delaware, Maryland and Pennsylvania with annual
    revenues of approximately $7.0 million in exchange for consideration
    consisting of 20,358 (unregistered shares subject to the provisions
    of Rule 144 of the Securities and Exchange Act) shares of the
    Company's common stock and $4,102,296 in cash.  Pursuant to the terms
    of the acquisition, $325,000 of the purcahse price was placed in
    escrow subject to the terms of the escrow agreement.  Per the terms of
    the escrow agreement $175,000 was released upon the completion of the
    financial statement audit with the remaining $150,000 being held for a 
    three year period from the date of closing.  The acquisition was 
    accounted for using the purchase method of accounting.  DLC's assets and
    liabilities were recorded at their fair value as of the acquisition
    date.  The excess of the acquisition costs
    over the fair value of the assets acquired ("goodwill") of $4,494,552
    is being amortized on a straight-line basis over twenty years.  The
    total cost of the net assets acquired was $4,289,796 ($187,500 in common
    stock and $4,102,296 in cash) and consisted of assets of $7,307,456 less
    liabilities assumed of $2,363,136 and acquisition costs of $654,524.
    Assets acquired other than goodwill consisted principally of rental 
    merchandise of $1,359,808, property and equipment of $310,850, 
    non-compete agreements of $300,000 and deferred tax assets of $744,808.
    Liabilities assumed consisted principally of trade accounts payable 
    of $582,693 and bank debt of $1,446,238.


                                    8

<PAGE>   9 

                              RENT-WAY, INC.

                NOTES TO FINANCIAL STATEMENTS, (Continued)
                               (unaudited)

4. 	CONTINGENCIES:

  		The Company is subject to legal proceedings  and claims in the ordinary 
    course of its business that have not been finally adjudicated.  Certain of 
    these cases have resulted in contingent liabilities ranging from $527,500 
    to $2,557,500.  The majority of such claims are, in the opinion of 
    management, covered by insurance policies and therefore should not have 
    a material effect on the results of operations or financial position of 
    the Company.

  		Additional claims exist in the range of $810,475 to $3,440,000 for 
    which management believes it has meritorious defenses but for which the
    likelihood of an unfavorable outcome is currently not determinable.  In
    management's opinion, each of these claims will either be indemnified by
    the former shareholders of MLC, Coleman and Rental King or covered by 
    insurance policies and therefore will not have a material effect on the 
    results of operations or financial condition of the Company.

5.		DEBT:

  		On November 22, 1996, the Company entered into a new collateralized 
    revolving credit facility (the "new facility") with a syndicate of banks 
    led by National City Bank of Pennsylvania, providing for loans or letters of
    credit up to $40.0 million.  The syndicate is composed of four banks, 
    with National City Bank of Pennsylvania, LaSalle National Bank, and Harris
    Trust and Savings Bank committed for an equal ratable share of 27.25%, of
    the new facility and Heller Financial, Inc. committed for an 18.25% ratable 
    share.  The new facility replaces the Company's prior $15.0 million 
    Secured Credit Agreement with First Source Financial LLP.  Of the $40.0 
    million available under the new facility, approximately $7.0 million 
    was used to refinance existing senior indebtedness with the balance 
    available for store acquisitions.  Also in connection with the 
    refinancing, the Company redeemed the remainder of its Series A 
    Redeemable Preferred Stock.  The Company redeemed the preferred stock at
    a 25% discount to face value resulting in a gain of $280,175.  The new 
    facility expires on November 22, 1999.

                                      9		

<PAGE>   10

                                 RENT-WAY, INC.

                    NOTES TO FINANCIAL STATEMENTS, (Continued)
                                  (unaudited)

5.		DEBT, Continued:

  		Under the new facility the Company may borrow funds at either the 
    prime-rate plus 0.5% or the euro-rate plus 2.75%.   Borrowings under the
    euro-rate option require the Company to select a fixed interest period 
    during which the euro-rate is applicable with the borrowed amount not to 
    be repaid prior to the last day of the selected interest period.  In 
    addition, borrowing tranche's under the euro-rate option must be in 
    integral multiples of $250,000 and not less than $1,000,000 in total.  
    Commitment fees associated with the new faciltiy are equal to 0.25%
    per annum on each banks' committed amount.

  		The new credit facility requires the Company to meet certain financial
    covenants and ratios including maximum leverage, minimum interest 
    coverage and minimum tangible net worth ratios.  In addition, the Company
    must meet requirements regarding monthly, quarterly and annual financial
    reporting.  The new facility also contains covenants which restrict the
    actions of the Company with respect to the payment of dividends, 
    acquisitions, mergers, disposition of assets or subsidiaries, issuance of
    capital stock and capital expenditures.  The Company may at any time
    repay outstanding borrowings, in whole or part, without premium or 
    penalty, except with respect to restrictions identified above in 
    connection with the selection of the euro-rate interst option.  As of
    March 31, 1997, the Company was in compliance with the covenants 
    contained in the new facility.

  		As a result of the refinancing the Company incurred an extraordinary 
    charge, net of tax benefit, of $269,017.  The extraordinary charge was 
    composed of a $124,590 ($74,754 net of tax benefit) prepayment penalty 
    for early retirement of debt and a $323,772 ($194,263 net of tax 
    benefit) write-off of deferred financing costs associated with the 
    refinanced debt.

6.		REDEEMABLE PREFERRED STOCK:

  		On November 26, 1996, the Company redeemed the remaining shares of its 
    Series A Redeemable Preferred Stock issued in connection with the 
    acquisition of MLC.  At the time of redemption there were 11,207 
    outstanding shares with a face amount of $100 per share.  These shares
    were redeemed at a twenty-five percent discount for an aggregate 
    purchase price of $840,525 and now have the status of authorized and
    unissued shares undesignated as to series.

7.		PRIVATE PLACEMENT:

		  On February 4, 1997, the Company completed the private placement of $20.0 
    million of its convertible subordinated debentures ("the Debentures").
    The Debentures are due February 1, 2007 and are convertible, at any time 
    after the registration thereof into shares of common stock, without par 
    value, of the Company at a conversion price of $13.37 per share.  The 
    Debentures are subject to redemption at the option of the 
    Company on February 5, 2000 at a price of 103%. The redemption price 
    will decrease at a rate of 1% per year, reaching a price of 100% in the
    year 2003 and remaining fixed until the date of maturity.  The 
    indebtedness evidenced by the Debentures is subordinated and junior 
    in right of payment to all senior indebtedness.  Included in the senior 
    indebtedness is $7.0 million of convertible notes held by Massachusetts 
    Mutual Life Insurance Co. and its affiliates.  The Debentures bear an 
    annual interest rate of 7% with semi-annual payments in August and 
    February, beginning August 1, 1997.  On May 9, 1997, the Company 
    filed a registration statement to register the Debentures and the common 
    stock underlying such Debentures under the Securities Act of 1933.  The 
    net proceeds of the private placement were used in conjunction with the 
    Rental King acquisition (see Note 3).

8.  Shareholders Equity:

    On March 12, 1997, at the Company's Annual Shareholder Meeting, an
    amendment to the articles was accepted to increase the number of
    authorized shares of Common Stock from 10,000,000 to 20,000,000.

                                   10

<PAGE>   11

                              RENT-WAY, INC.

ITEM 2 	 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
	        AND RESULTS OF OPERATIONS

General

For the three and six months ended March 31, 1997 the Company's total 
revenues increased by 82.6% and 58.1%, respectively.  In addition, operating
income increased by 113.5% and 76.9% while income before the effect of an 
extraordinary item increased by 119.9% and 98.8% compared to the three and 
six month periods last year.  The increase in revenue, operating income, and
net income are primarily due to acquisitions made during fiscal 1996 and 
1997, improved same store operating profits, a reduction in certain
expenses resulting from economies of scale, and increased same store 
revenues.  Same store revenues increased by 4.7% as compared to the three 
month period ended last year.

In November 1996, the Company secured a $40.0 million collateralized 
revolving credit facility from a syndicate of banks led by National City 
Bank of Pennsylvania.  Of the total facility, approximately $7.0 million 
was used to refinance existing senior debt with the remainder of such 
facility available for future store acquisitions.  As a result of the 
refinancing, the Company incurred an extraordinary charge, net of tax 
benefit, of $269,017.  The extraordinary item is composed of a pre-payment 
penalty resulting from the early extinguishment of debt and the write-off
of deferred finance costs associated with the refinanced debt.  Also in
connection with the refinancing, the Company redeemed the remainder of its
Series A Redeemable Preferred Stock.  The Company redeemed the preferred
stock at a 25% discount to face value resulting in a gain of $280,175.
As a result of these adjustments, earnings applicable to common shares
increased 117.1% to $3.0 million from $1.0 million for the six month
period ended March 31, 1997 as compared to the same period last year.

On January 2, 1997, the Company acquired all the outstanding common shares of 
Bill Coleman T.V., Inc., ("Coleman") a privately owned chain of fifteen 
rental-purchase stores operating in Michigan with annual revenues of 
approximately $7.5 million in exchange for consideration consisting of 
approximately $3.0 million in cash and an option to purchase 25,000 
shares of the Company's common stock at an exercise price of $8.875.  
Pursuant to terms of the acquisition, $350,000 of the purchase price was 
placed in escrow subject to terms of the escrow agreement.  The escrow
agreement provides for release pending completion of a financial audit 
of Coleman to satisfy seller's representations and warranties and any 
purchase price adjustments.  The acquisition considerably strengthens 
the Company's penetration in Michigan from seven to twenty-two stores, 
and is in line with the Company's strategy to cluster stores in selected 
markets.  As of March 31, 1997 all fifteen stores have been fully 
integrated into the Rent-Way system, with any necessary remodeling under way.

On January 24, 1997, the Company signed a definitive purchase agreement 
to acquire all the outstanding shares of Perry Electronics, Inc. d/b/a 
Rental King ("Rental King").  On February 6, 1997, the Company consummated 
the transaction and acquired all the outstanding shares of Rental King, 
assuming effective control for the results of operations as of February 
1, 1997.  At the time of acquisition Rental King operated a chain of 
rental-purchase stores in Colorado, Florida, Indiana, Kentucky, Michigan, 
Ohio and West Virginia with annual revenues of approximately $24.0 million.
The consideration paid in exchange for all the outstanding shares of 
Rental King was $18.3 million in cash.  Pursuant to the terms of the 
purchase agreement, $2.0 million of the purchase price was placed in escrow,
subject to the terms of the escrow agreement to satisfy sellers
representations and warranties and any purchase price adjustments.  The escrow 
agreement provides for release of the escrow on completion of the required 
financial audits of Rental King.  The Company believes that the Rental 
King acquisition substantially increases market penetration in many of the 
Company's already established areas of operation, while opening the
door to new markets such as Colorado, Kentucky and West Virginia.  As of 
March 31, 1997, all 70 stores have been fully integrated into the 
Rent-Way system.   

In February 1997, the Company sold $20 million of 7% convertible subordinated
debentures due in 2007 at par value.  The debentures, which are non-callable
for three years, are convertible into common stock at a rate of $13.37 per 
share. Proceeds from the sale were used to consummate the purchase of Rental
King.

Management is actively seeking merger and acquisition candidates with 
financial and geographic profiles consistent with the Company's growth 
objectives.

                                       11

<PAGE>   12
RENT-WAY, INC.

ITEM 2 	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
				AND RESULTS OF OPERATIONS, (Continued)

Results of Operations

The following table sets forth, for the periods indicated, certain items 
from the Company's unaudited Statements of Income, expressed as a 
percentage of revenues.

<TABLE>
<CAPTION>                                <C>                    <C>
                                            Three Months Ended     Six Months Ended
                                                 March 31              March 31
<S>                                      <C>            <C>     <C>          <C>
                                            1997           1996    1997         1996
                                            ----           ----    ----         ----
Revenues:
 	Rental revenue		                          88.0%		        86.1%		 87.7%		      86.2%
 	Other revenue		                           12.0			        13.9			 12.3			      13.8	
                                           -----          -----   -----        -----
		       Total revenues		                  100.0%		       100.0%		100.0%		     100.0%	
Costs and operating expenses:
 	Depreciation and amortization:
	  	Rental merchandise		                    23.1			        27.4			 23.3			      26.7
 	Property and equipment		                   1.4			         1.5			  1.5			       1.5	
  		Amortization of goodwill		               2.1			         1.8			  2.0			       1.7	
                                           -----          -----   -----        -----
   			Total depreciation and amortization		 26.6			        30.7			 26.8			      29.9	

Salaries and wages		                        25.1			        24.6			 26.3			      24.7	
Advertising		                                5.0         			4.0			  5.1			       4.6	
Occupancy	                                  	7.1			         6.2			  6.9			       6.5
Other operating expenses		                  21.4			        21.8			 20.6			      21.5	
                                           -----          -----   -----        -----
    Total costs and operating expenses		    85.2			        87.3			 85.7			      87.2
                                           -----          -----   -----        -----		
Operating income		                          14.8			        12.7			 14.3			      12.8	

Interest expense 		                         (3.9)		        (4.2)		 (3.3)		      (4.4)
Other income		                              (0.1)		         0.4			   -        			0.3	
                                           -----          -----   -----        -----
Income before income taxes and 
   extraordinary item		                     10.8			         8.9			 11.0			       8.7	
						
Income tax expense		                         5.1 		         4.1 		  5.1 		       4.0
                                           -----          -----   -----        -----
Income before extraordinary item		           5.7			         4.8			  5.9			       4.7

Extraordinary item		                          -			           -			  (0.7)		        -	
                                           -----          -----   -----        -----
Net income		                                 5.7%		         4.8%		  5.2%		       4.7%
                                           =====          =====   =====        =====
Redeemable preferred stock (dividends)/
 gain on redemption                          	-			         (0.3)		  0.7			      (0.4)
                                           -----          -----   -----        -----
Earnings applicable to common shares		       5.7%		         4.5%		  5.9%		       4.3%
                                           =====          =====   =====        =====
</TABLE>
                                    12

<PAGE>   13

                              RENT-WAY, INC.

ITEM 2 	  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
				      AND RESULTS OF OPERATIONS, (Continued)

Comparison of three months ended March 31, 1997 and 1996 

For the three months ended March 31, 1997 compared to the three months 
ended March 31, 1996, total revenues increased by $10.2 million (82.6%) 
to $22.5 million from $12.3 million.  This increase was principally due 
to increased same store revenues, the inclusion of three month results 
for stores acquired in fiscal 1996 acquisitions, the Coleman acquisition,
and the inclusion of two months results for stores acquired in the Rental 
King acquisition.  Stores acquired in fiscal 1996 accounted for $3.4 million
(33.3%) of the increase, the Coleman acquisition accounted for $2.0 million
(19.6%) of the increase, the Rental King acquisition accounted for $4.3
million (42.2%) of the increase and the Company's same stores accounted for
$0.5 million (4.9%) of the increase.  Other revenue increased by $1.0
million (57.9%) to $2.7 million from $1.7 million principally due to the
stores acquired in fiscal 1996 and 1997.

For the three months ended March 31, 1997 compared to the three months 
ended March 31, 1996, total costs and operating expenses increased to 
$19.2 million from $10.8 million primarily as a result of the costs and 
operating expenses associated with stores acquired in fiscal 1996 and 
1997, but decreased to 85.2% from 87.3% of total revenue.  This decrease 
of 2.1% resulted primarily from a 4.1% decrease in depreciation and 
amortization as a percentage of total revenues and a 0.4% decrease in 
other operating expenses as a percentage of total revenues.  Depreciation
expense related to rental merchandise increased by $1.8 million to $5.2
million from $3.4 million, but decreased 4.3% as a percentage of total
revenues due to increases in weekly rental rates, lower purchase costs of
rental merchandise due to increased volume, and improvements in the 
realization of potential collectible rental revenue.  Amortization of
goodwill increased by $0.2 million primarily because of the increase in
goodwill related to the stores acquired in fiscal 1996 and 1997.
Amortization of goodwill was 2.1% and 1.8% of total revenues for the
three months ended March 31, 1997 and 1996, respectively.  Salaries and
wages increased by $2.7 million to $5.7 million from $3.0 million principally
due to the addition of 111 new locations, an increase in same store
payroll, upgrades in the regional manager position, and an overall
strengthening of corporate personnel.  The 111 locations from recent
acquisitions produced additional payroll cost of approximately $1.9 million
for the three months.  Same store payroll increased $0.3 million as
compared to the same quarter last year.  The upgrade in the regional
manager position and the strengthening of corporate personnel were 
responsible for an increase during the three month period of 
approximately $0.1 and $0.4, respectively.  Salaries and wages were
25.1% and 24.6% of total revenues for the three months ended March 31, 1997
and 1996, respectively.  The Company, in anticipation of future growth, has
strengthened store and regional personnel by upgrading with managers who
have extensive multi-unit experience.  In addition to this upgrade, the 
increase in salaries and wages in relation to total revenues was
primarily due to the increase in staffing levels in the McKenzie stores,
the 111 stores acquired in recent acquisitions having a lower average
revenue base than existing Rent-Way stores, and a fewer number of stores per
regional manager added from recent acquisitions.  Advertising expense
increased $0.6 million or 1.0% as a percentage of total revenues to
$1.1 million from $0.5 million principally due to the addition of the
stores acquired in fiscal 1996 and 1997.  Occupancy expense increased $0.8 
million or 0.9% as a percentage of total revenues to $1.6 million from $0.8
million primarily due to the addition of the stores acquired in fiscal 1996
and 1997.  Other operating expenses increased by $2.1 million to $4.8 million
from $2.7 million, but decreased 0.4% as a percentage of total revenues.  This
0.4% decrease occurred because of the Company's ability to allocate corporate
costs and certain overhead costs over a greater number of stores and 
increased revenues.

For the three months ended March 31, 1997 compared to the three months 
ended March 31, 1996, operating income increased by $1.7 million (113.5%) 
to $3.3 million from $1.6 million, and increased to 14.8% from 12.7% of 
total revenues.  The improvement in operating income was principally due 
to the stores acquired in 1996 and 1997 and the factors discussed above.

For the three months ended March 31, 1997 compared to the three months 
ended March 31, 1996, interest expense increased $0.4 million to $0.9 
million from $0.5 million due to an increase in debt of $39.1 million 
from $7.2 million to $46.3 million.  This increase is principally the 
result of the issuance of $20 million of 7% convertible subordinated 
debentures sold in order to consummate the Rental King acquisition effecitve
on February 1, 1997 and the purchase of Diamond Leasing Corporation on 
July 25, 1996 and Bill Coleman TV on January 2, 1997 with $10.0 million in 
funds drawn on the Company's senior credit facility.

                                    13 

<PAGE>   14

                               RENT-WAY, INC.

ITEM 2 	  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
				      AND RESULTS OF OPERATIONS, (Continued)

Comparison of three months ended March 31, 1997 and 1996, Continued

For the three months ended March 31, 1997 compared to the three months 
ended March 31, 1996, income tax expense increased to $1.1 million from 
$0.5 million because the Company generated greater taxable income.  The 
Company's income tax rate of 46.9% is higher than the statutory tax rates 
because amortization expense related to goodwill incurred in connection 
with its acquisitions is not deductible for purposes of computing income tax.

For the three months ended March 31, 1997 compared to the three months ended
March 31, 1996, net income increased by $0.7 million (119.9%) to $1.3 
million from $0.6 million. The increase was due to the factors discussed 
above.

Comparison of Six Months Ended March 31, 1997 and 1996

For the six months ended March 31, 1997 compared to the six months ended
March 31, 1996, total revenues increased by $14.0 million (58.1%) to
$38.2 million from $24.2 million.  The increase was principally due to
increased same store revenues and the inclusion of the stores acquired in
fiscal 1996 acquisitions, the Coleman acquisition, and the Rental King
acquisition.  Stores acquired in fiscal 1996 accounted for $6.7 million
(47.9%) of the increase, stores acquired in the Coleman acquisition accounted
for $2.0 million (14.3%) of the increase stores acquired in the Rental King
acquisition accounted for $4.3 million (30.7%) of the increase and the 
Company's same stores accounted for $1.0 million (7.1%) of the increase.  
Other revenue increased $1.4 million (40.0%) to $4.7 million from $3.3 
million principally due to stores acquired in 1996 and 1997.

For the six months ended March 31, 1997 compared to the six months ended 
March 31, 1996, total costs and operating expenses increased to $32.7 million
from $21.1 million primarily as a result of the costs and operating
expenses associated with stores acquired in 1996 and 1997, but decreased to
85.7% from 87.2% of total revenues.  This decrease of 1.5% resulted primarily
from a 3.1% decrease in depreciation and amortization as a percentage of
total revenues and a 0.9% decrease in other operating expenses as a
percentage of total revenues.  Depreciation expense related to rental
merchandise increased by $2.4 million to $8.9 million from $6.5 million,
but decreased by 3.4% as a percentage of total revenues primarily due to
increases in weekly rental rates, lower purchase costs of rental merchandise
due to increasing volume, and improvements in the realization of potential
collectible rental revenue.   Amortization of goodwill increased by $0.4
million primarily because of the increase in goodwill related to stores 
acquired in 1996 and 1997.  Salaries and wages increased by $4.0 million to
$10.0 million from $6.0 million principally due to the addition of 111
new locations, an increase in same store payroll, up grades in the regional
manager position, and an overall strengthening of corporate personnel.  The
111 locations from recent acquisitions produced additional payroll cost
of approximately $2.7 million for the six month period.  Same store payroll
increased $0.5 million as compared to the same period last year.  The upgrade
in the regional manager position and the strengthening of corporate personnel
were responsible for an increase during the six month period of
approximately $0.3 million and $0.5 million, respectively.  Salaries and
wages were 26.3% and 24.7% of total revenues for the six months ended March
31, 1997 and 1996, respectively.  The Company, in anticipation of future
growth, has strengthened store and regional personnel by upgrading with
managers who have extensive multi-unit experience.  In addition to this
upgrade, the increase in salaries and wages in relation to total revenues
was primarily due to the increase in staffing levels in the McKenzie stores,
the 111 stores acquired in recent acquisitions having a lower average revenue
base than existing Rent-Way stores, and a fewer number of stores per regional
manager added from recent acquisitions.  Advertising expense increased $0.9
million or 0.5% as a percentage of total revenues to $2.0 million from $1.1
million principally due to the addition of the stores acquired in 1996 
and 1997.  Occupancy expense increased $1.0 million to $2.6 million from
$1.6 million or 0.4% as a percentage of total revenues mainly due to the
addition of the stores acquired in 1996 and 1997.  Other operating expenses
increased $2.7 million to $7.9 million from $5.2 million principally due to
the addition of the stores acquired in 1996 and 1997, but decreased to 20.6%
from 21.5% of total revenues.  This 0.9% decrease occurred because of the 
Company's ability to allocate corporate costs and certain overhead costs
over a greater number of stores and increased revenues.

For the six months ended March 31, 1997 compared to the six months
ended March 31, 1996, operating income increased by $2.4 million (76.9%) to
$5.5 million from $3.1 million, and increased to 14.3% from 12.8% of total
revenues.  The improvement in operating income was principally due to the
stores acquired in 1996 and 1997 and the factors discussed above.

                                  14

<PAGE>   15

                            RENT-WAY, INC.

ITEM 2 	  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
				      AND RESULTS OF OPERATIONS, (Continued)

Comparison of Six Months Ended March 31, 1997 and 1996, Continued

For the six months ended March 31, 1997 compared to the six months ended 
1996, interest expense increased by $0.1 million to $1.2 million from $1.1 
million due to an increase in debt of $39.1 million from $7.2 million to 
$46.3 million.  This increase is the result of the issuance of $20 million 
of 7% convertible subordinated debentures sold in order to consummate the 
Rental King acquisition on February 6, 1997 and the purchase of Diamond 
Leasing Corporation on July 25, 1996 and Coleman on January 2, 1997
with $10.0 million in funds drawn on the Company's senior credit facility.

For the six months ended March 31, 1997 compared to the six months ended 
March 31, 1996, income tax expense increased to $2.0 million from $1.0 
million because the Company generated greater taxable income.  The Company 
is accruing income tax expense based on an effective tax rate of 46.6%, 
which is  higher than the statutory tax rates, because amortization expense 
related to goodwill incurred in connection with its acquisitions is not 
deductible for purposes of computing income tax. 

For the six months ended March 31, 1997 compared to the six months ended 
March 31, 1996, net income increased by $0.9 million (75.0%)  to $2.0 
million from $1.1 million.  The increase was due to the factors discussed 
above. 

Liquidity and Capital Resources

On November 22, 1996, the Company entered into a new collateralized revolving
credit facility (the "new facility") with a syndicate of banks led by 
National City Bank of Pennsylvania, providing for loans or letters of credit
up to $40.0 million.  The syndicate is comprised of four banks, with National
City Bank of Pennsylvania, LaSalle National Bank, and Harris Trust and 
Savings Bank committed for an equal ratable share of 27.25%, and Heller 
Financial, Inc. committed for an 18.25% ratable share.  This agreement
replaces the existing $15.0 million Secured Credit Agreement with
First Source Financial LLP.  Of the $40.0 million, approximately $7.0 million
was used to refinance existing senior indebtedness with the balance available
for store acquisitions.  Also in connection with the refinancing, the Company
redeemed the remainder of its Series A Redeemable Preferred Stock.  The 
Company redeemed the preferred stock at a 25% discount to face value
resulting in a gain of $280,175.  The new facility expires on November 
22, 1999.

On February 4, 1997 the Company completed the private placement of $20.0 
million in convertible subordinated debentures, ("the Debentures").  The 
Debentures are due February 1, 2007 and are convertible, at any time after 
the registration date into shares of common stock, without par value, of 
the Company at a conversion price of $13.37 per share.  The Debentures will 
become subject to redemption at the option of the Company on February 5, 2000
at a price of 103%. The redemption price will decrease at a rate of 1% per
year, reaching a price of 100% in the year 2003 and remaining fixed until
the date of maturity.  The indebtedness evidenced by the Debentures is
subordinated and junior in rights of payment to the extent of payment in full
of all amounts due on all senior indebtedness.  Included in the senior 
indebtedness is $7.0 million of convertible notes held by Massachusetts
Mutual Life Insurance Co.  The Debentures bear an annual interest rate of 7%
with semi-annual payments in August and February, beginning August 1, 1997.
The Company filed a registration statement to register the securities 
underlying the debentures with the Securities and Exchange Commission on 
May 9, 1997.  The funds generated by this  private placement were used in 
conjunction with the Rental King acquisition (see Note 3).

For  the six months ended March 31, 1997  compared to the six months ended 
March 31, 1996, the Company's net cash used in operating activities 
increased to $0.7 million from $0.2 million.  This increase was principally
due to $5.6 million increase in rental merchandise purchases and a $0.3
million decrease in accounts payable offset by a $0.8 million increase
in net income, a $3.0 million increase in non-cash depreciation and
amortization, and a $0.9 increase in other current liabilities.
 The increase in depreciation, amortization, and rental
merchandise purchases resulted primarily from the stores acquired in 1996
and 1997.

For the six months ended March 31, 1997  compared to the six months ended 
March 31, 1996, the Company's net cash used in investing activities increased
$21.7 million to $22.9 million from $1.2 million.  This increase is primarily
due to the purchase of Bill Coleman TV and Rental King.
 
                                  15

<PAGE>   16

RENT-WAY, INC.

ITEM 2 	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
				AND RESULTS OF OPERATIONS, (Continued)

Liquidity and Capital Resources, Continued:

For the six months ended March 31, 1997 compared to the six months ended 
March 31, 1996, the Company's net cash provided by financing activities 
increased  to $25.5 million from $1.9 million.  The increase in net cash 
provided by financing activities was principally due to increased borrowings
on the Company's credit facilities and the sale of $20 million of 7% 
convertible subordinated debentures.  

In April, 1997 the Company purchased an additional building, located
adjacent to its existing corporate headquarters, to accomodate the growth
from recent acquisitions.  The building was purchased for $0.8 million with
funds drawn on the Company's existing credit facility.

Inflation

During the six months ended March 31, 1997, the cost of rental merchandise, 
lease rental expense and salaries and wages have increased modestly.  These 
increases have not had a significant effect on the results of operations 
because the Company has been able to charge commensurably higher rental for 
its merchandise.  This trend is expected to continue in the foreseeable 
future. 

Other Matters

In October 1995, the Financial Accounting Standards Board ("FASB") issued SFAS 
No. 123 - "Accounting for Stock-based Compensation" effective for 
transactions entered into after December 15, 1995.  The Company intends on 
adopting this Standard's disclosure-only provisions in fiscal 1997.  
Management does not believe the adoption of this standard will have a 
significant impact on the financial statements of the Company.

In February 1997, the FASB issued SFAS No. 128 - "Earnings Per Share", effective
for periods ending after December 15, 1997.  The Company has disclosed the
estimated impact of this standad for the three and six month periods ended 
March 31, 1997 (see Note 2 to the financial statements).

Cautionary Statement

This Report on Form 10-Q and the foregoing Management's Discussion and 
Analysis of Financial Condition and Results of Operations contains various 
"forward looking statements" within the meaning of Section 27A of the 
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as 
amended. Forward-looking statements represent the Company's expectations or 
beliefs concerning future events.  Any forward-looking statements made by or 
on behalf of the Company are subject to uncertainties and other factors that 
could cause actual results to differ materially from such statements.  These 
uncertainties and other factors include, but are not limited to, (i) the 
ability of the Company to acquire additional rental-purchase stores on 
favorable terms, (ii) the ability of the Company to improve the performance 
of such acquired stores and to integrate such acquired stores into the 
Company's operations, and (iii) the impact of state and federal laws 
regulating or otherwise affecting the rental-purchase transaction.

Undo reliance should not be placed on any forward-looking statements made 
by or on behalf of the Company as such statements speak only as of the date 
made.  The Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, the 
occurrence of future events or otherwise.

                                   16

<PAGE>   17

                             RENT-WAY, INC.

                      PART II  OTHER INFORMATION

ITEM 2.  Changes in Securities 

On February 6, 1997, the Company sold $20.0 million of its 7% Convertible
Subordinated Debentures due 2007 (the "Debentures") at 100% of the face amount
thereof to various accredited investors through National Westminster Bank PLC,
New York branch ("NatWest"), as placement agent, in a transaction exempt from 
registration under the Securities Act pursuant to Section 4(2) thereof.  The
Company paid NatWest a placement agent fee of $800,000 in connection with the
transaction.  The Debentures are convertible into shares of Common Stock of
the Company at a conversion price of $13.37 per share at any time from and
after the registration of such Debentures and the underlying Common Stock
under the Securities Act.

ITEM 4.  Submission of Matters to Vote of Security Holders

The Annual Meeting of Shareholders of the Company was held on March 12, 1997
at the offices of the Bel Aire Hotel, 2800 West Eighth Street, Erie, 
Pennsylvania at 10:00 a.m.  All proposals as described in the Company's 
Proxy Statement dated February 10, 1997 were approved.  Below are details of 
the matters voted on at the meeting:



Proposal 1 - Election of Directors

Elections were held for two (2) Class II directors to serve until the 2000 
Annual Meeting of Shareholders.  The results of the votes are as follows:

<TABLE>
<S>            <C>         <C>           <C>         <C>       <C>        <C>
          		                                 Votes
Name	             Class	     Votes For	     Withheld	   Abstain	  Against 	  Non-Vote
----              -----      ---------      --------    -------   -------    --------

Marc W. Joseffer	  II	       4,161,176	      24,075	        0	       0	      2,427,228

William Lerner	    II	       4,161,176	      24,075	        0	       0	      2,427,228

</TABLE>


Proposal 2 - Amendment to the Company's Articles of Incorporation

On January 24, 1997 the Board of Directors unanimously adopted a resolution 
amending the Company's Articles of Incorporation (the "Articles"), subject to
the approval of the Company's shareholders at the 1997 Annual Meeting of 
Shareholders.  The amendment to the Articles increased the number of 
authorized shares of Common Stock from 10,000,000 to 20,000,000 shares.  
The purpose of the increase is to provide additional authorized shares of 
Common Stock available for stock splits, dividends, possible future
financings, acquisitions and other general corporate purposes.  The result 
of the vote on the adoption of the amendment to the Articles was 4,141,060 
for, 31,186 against, 13,005 abstentions and 2,427,228 non-votes.

                                  17

<PAGE>   18

                            RENT-WAY, INC.


ITEM 6.  Exhibits and Reports on Form 8-K


a.	  Exhibits

    	The Exhibits filed as part of this report are listed below.

<TABLE>
<S>        <C>                <C>
          				Exhibit No.						   Description
                 	11	             Computation of Net Income per Common Share.
                  27              Financial data schedule
</TABLE>

b.	  Reports on Form 8-K
		
	(1)	   January 7, 1997	          Reporting letter of intent to acquire 
                                  Bill Coleman TV
	(2)	   January 7, 1997	          Reporting acquisition of Bill Coleman TV
	(3)	   January 31, 1997	         Reporting definitive agreement to acquire 
                                  Rental King
	(4)	   February 14, 1997	        Reporting sale of Debentures
	(5)	   February 21, 1997	        Reporting consummation of Rental King
                                  acquisition

                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, 
     the registrant has duly caused this report to be signed on its behalf 
     by the undersigned thereunto duly authorized.



     5/12/97                    /s/  JEFFREY A. CONWAY
			-----------------------					---------------------------------------									
			Date										              Jeffrey A. Conway
														                 Vice President and Chief Financial Officer
                														 (Principal Financial and Accounting Officer 
                               and Duly Authorized Officer)

                                    18

<PAGE>   19

                               RENT-WAY, INC.

                                 EXHIBIT 11

Computation of Net Income Per Common Share
<TABLE>
<CAPTION>                                        	   For the Three Months Ended	   For the Six Months Ended	
	                                                             March 31	                      March 31
	                                                    1997	            1996	        1997               1996
                                                     ----             ----         ----               ----
	                                                            (unaudited)	                   (unaudited)
<S>                                             <C>                <C>          <C>                <C>
PRIMARY 
		
Net income 	                                      $1,295,281         $ 	589,049	  $1,975,655		        $	1,129,072

Preferred stock (dividend)/ gain on redemption   	     -                (39,426)				 280,175              (90,108)
                                                  -----------        ----------   ----------          -----------       
   		Net income for primary earnings per 
       common share	                              $ 1,295,281        $  549,623	  $2,255,830			       $ 1,038,964	
                                                  ===========        ==========   ==========          ===========
Weighted average number of common shares		
	outstanding during the period				                  6,609,853         4,307,902			 6,602,048            4,246,322		

Add - common equivalent shares (determined
	using the "treasury stock" method) representing
	shares issuable upon exercise of stock options
	stock warrants and escrowed shares				               442,693           560,729				  439,993              606,227	
                                                  -----------        ----------   ----------          -----------
Weighted average number of shares used in
	calculation of primary income per share				        7,052,546         4,868,325				7,042,041            4,852,220
                                                  ===========        ==========   ==========          ===========
Earnings per common share (adjusted to give effect to any preferred stock
(dividend)/gain on redemption):
    Income before extraordinary item              $      0.18      		$	    0.11	  $     0.36   		     $      0.21
                                                  ===========        ==========   ==========          ===========
    Net income                                    $      0.18        $     0.11   $     0.32          $      0.21
                                                  ===========        ==========   ==========          ===========
FULLY DILUTED

Net income 	                                      $ 1,295,281      		$	 549,623			 2,255,830          $	1,038,964	

Add - Impact of assumed conversion:
 Interest on 10% convertible notes (net of tax)       105,000             -          210,000               -
 Interest on 7% convertible debentures (net 
 of tax)                                              140,000             -          140,000               -
                                                  -----------        ----------   ----------           -----------
Adjusted net income for fully diluted earnings 
per share                                         $ 1,540,281        $  549,623   $2,605,830          $ 1,038,964
                                                  ===========        ==========   ==========          ===========
Weighted average number of common shares
	outstanding during the period				                  6,609,853         4,307,902				6,602,048            4,246,322

Add - incremental shares representing:
	Shares issuable upon exercise of stock options, 
  stock warrants	and escrowed shares included in 
  primary calculation above				                       442,693           560,729				  439,993              606,227
	Shares issuable upon exercise of stock options, 
  stock warrants and escrowed shares based on year 
  end market prices				                                   289            136,109				     887               90,611	
 Shares issued on conversion of 10% notes             704,225             -          704,225               -
 Shares issued on conversion of 7% debentures         930,776             -          460,274               -
                                                  -----------        -----------  ----------          -----------
Weighted average number of shares used in
	calculation of fully diluted income 
	per share				                                      8,687,836         5,004,273				8,207,427           4,942,690
	                                                 ===========        ==========   ==========         ===========
Earnings per common share (adjusted to give effect to any preferred stock
(dividend)/gain on redemption):
     Income before extraordinary item			          $      0.18        $     0.11			$     0.35         $      0.21
                                                  ===========        ==========   ==========         ===========
     Net income                                   $      0.18        $     0.11   $     0.32         $      0.21
                                                  ===========        ==========   ==========         ===========
</TABLE>

                                           19