# UNITED STATESSECURITIES AND
EXCHANGE COMMISSIONWASHINGTON, 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 JUNE 30, 2004

OR

|[ | ]
              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 OF THE                 SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------------------------------------

_________________

Commission File Number
0-22026

# RENT-WAY, INC.

(Exact name of
registrant as specified in its charter)

_________________



PENNSYLVANIA                                          25-1407782
(State or other jurisdiction of incorporation)                 (I.R.S. EmployerIdentification No.)

ONE RENTWAY PLACE,
ERIE, PENNSYLVANIA 16505
(Address ofprincipal executive offices)

(814) 455-5378
(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 by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes []   No [X]

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

|             | 
|------------ | 
|Class        | 
|Common Stock | 

---

|RENT-WAY, INC.                                                                           | 
|---------------------------------------------------------------------------------------- | 
|                                                                                         | 
|PART I.          FINANCIAL INFORMATION                                                   | 
|                                                                                         | 
|Item 1. Financial Statements:                                                            | 
|                                                                                         | 
|Condensed Consolidated Balance Sheets as of June 30, 2004 (unaudited) and                | 
|September 30, 2003                                                                       | 
|                                                                                         | 
|Condensed Consolidated Statements of Operations, three- and nine-months ended            | 
|June 30, 2004 and 2003 (unaudited)                                                       | 
|                                                                                         | 
|Condensed Consolidated Statements of Cash Flows, nine-months ended June 30,              | 
|2004 and 2003 (unaudited)                                                                | 
|                                                                                         | 
|Notes to Condensed Consolidated Financial Statements (unaudited)                         | 
|                                                                                         | 
|Item 2. Management's Discussion and Analysis of Financial Condition and                  | 
|Results of Operations                                                                    | 
|                                                                                         | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                       | 
|                                                                                         | 
|Item 4. Controls and Procedures                                                          | 
|                                                                                         | 
|PART II.         OTHER INFORMATION                                                       | 
|                                                                                         | 
|Item 1. Legal Proceedings                                                                | 
|                                                                                         | 
|Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities | 
|                                                                                         | 
|Item 6. Exhibits and Reports on Form 8-K                                                 | 
|                                                                                         | 
|Signatures                                                                               | 

---

# PART I  FINANCIAL
INFORMATION

Item 1. Financial
Statements

# RENT-WAY, INC.

CONDENSED CONSOLIDATED
BALANCE SHEETS

(All amounts in
thousands, except share data)

|                                                               | June 30,
2004 | September 30,
2003
|-------------------------------------------------------------- | ------------- | ------------------
|
|ASSETS                                                         |               |                   
|                                                               |               |                   
|Cash and cash equivalents                                      |               |                   
|Restricted cash                                                |               |                   
|Prepaid expenses                                               |               |                   
|Income tax receivable                                          |               |                   
|Rental merchandise, net                                        |               |                   
|Rental merchandise credits due from vendors                    |               |                   
|Property and equipment, net                                    |               |                   
|Goodwill                                                       |               |                   
|Deferred financing costs, net                                  |               |                   
|Intangible assets, net                                         |               |                   
|Other assets                                                   |               |                   
|                                                               |               |                   
|Total assets                                                   |               |                   
|                                                               |               |                   
|LIABILITIES AND SHAREHOLDERS' EQUITY                           |               |                   
|                                                               |               |                   
|Liabilities:                                                   |               |                   
|Accounts payable                                               |               |                   
|Other liabilities                                              |               |                   
|Deferred tax liability                                         |               |                   
|Debt                                                           |               |                   
|                                                               |               |                   
|Total liabilities                                              |               |                   
|                                                               |               |                   
|Contingencies                                                  |               |                   
|                                                               |               |                   
|Convertible redeemable preferred stock                         |               |                   
|                                                               |               |                   
|Shareholders' equity:                                          |               |                   
|Preferred stock, without par value; 1,000,000 shares           |               |                   
|authorized; 2,000 and 1,500 shares issued and outstanding      |               |                   
|as Series A convertible preferred shares                       |               |                   
|Common stock, without par value; 50,000,000 shares             |               |                   
|authorized; 26,202,776 and 26,022,037 shares issued and        |               |                   
|outstanding, respectively                                      |               |                   
|Common stock warrants; 0 and 100,000 outstanding, respectively |               |                   
|Option to purchase convertible preferred stock                 |               |                   
|Accumulated other comprehensive loss                           |               |                   
|Accumulated deficit                                            |               |                   
|                                                               |               |                   
|Total shareholders' equity                                     |               |                   
|                                                               |               |                   
|Total liabilities and shareholders' equity                     |               |                   
|                                                               |               |                   

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

---

# RENT-WAY, INC.

CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS

(All amounts in
thousands, except per share data)

(Unaudited)

|                                                       | Three-months Ended
June 30, | Nine-months Ended
June 30,
|------------------------------------------------------ | --------------------------- | --------------------------
|
|REVENUES:                                              |                             |                           
|Rental revenue                                         |                             |                           
|Prepaid phone service revenue                          |                             |                           
|Other revenues                                         |                             |                           
|                                                       |                             |                           
|Total revenues                                         |                             |                           
|                                                       |                             |                           
|COSTS AND OPERATING EXPENSES:                          |                             |                           
|Depreciation and amortization:                         |                             |                           
|Rental merchandise                                     |                             |                           
|Property and equipment                                 |                             |                           
|Amortization of intangibles                            |                             |                           
|Cost of prepaid phone service                          |                             |                           
|Salaries and wages                                     |                             |                           
|Advertising, net                                       |                             |                           
|Occupancy                                              |                             |                           
|Restructuring costs                                    |                             |                           
|Other operating expenses                               |                             |                           
|                                                       |                             |                           
|Total costs and operating expenses                     |                             |                           
|                                                       |                             |                           
|Operating income                                       |                             |                           
|                                                       |                             |                           
|OTHER INCOME (EXPENSE):                                |                             |                           
|Settlement of class action lawsuit                     |                             |                           
|Interest expense                                       |                             |                           
|Interest income                                        |                             |                           
|Amortization and write-off of deferred financing costs |                             |                           
|Other income (expense)                                 |                             |                           
|                                                       |                             |                           
|Income (loss) before income taxes and                  |                             |                           
|discontinued operations                                |                             |                           
|Income tax expense                                     |                             |                           
|                                                       |                             |                           
|Income (loss) before discontinued operations           |                             |                           
|Loss from discontinued operations                      |                             |                           
|                                                       |                             |                           
|Net income (loss)                                      |                             |                           
|Dividend and accretion of preferred stock              |                             |                           
|                                                       |                             |                           
|Net income (loss) allocable to common                  |                             |                           
|shareholders                                           |                             |                           
|                                                       |                             |                           
|EARNINGS (LOSS) PER COMMON SHARE (NOTE 4):             |                             |                           
|                                                       |                             |                           
|Basic earnings (loss) per common share:                |                             |                           
|Income (loss) before discontinued operations           |                             |                           
|                                                       |                             |                           
|Net income (loss) allocable to common                  |                             |                           
|shareholders                                           |                             |                           
|                                                       |                             |                           
|Diluted earnings (loss) per common share:              |                             |                           
|Income (loss) before discontinued operations           |                             |                           
|                                                       |                             |                           
|Net income (loss) allocable to common                  |                             |                           
|shareholders                                           |                             |                           
|                                                       |                             |                           
|Weighted average common shares outstanding:            |                             |                           
|Basic                                                  |                             |                           
|                                                       |                             |                           
|Diluted                                                |                             |                           
|                                                       |                             |                           

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

---

# RENT-WAY, INC.

CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS

(All amounts in
thousands)

(Unaudited)

|                                                                   | Nine-months Ended
June 30,
|------------------------------------------------------------------ | --------------------------
|
|OPERATING ACTIVITIES:                                              |                           
|Net income (loss)                                                  |                           
|Adjustments to reconcile net income (loss) to net cash provided by |                           
|(used in) operating activities:                                    |                           
|Loss from discontinued operations                                  |                           
|Depreciation and amortization                                      |                           
|Deferred income taxes                                              |                           
|Write-off of deferred financing costs                              |                           
|Market adjustment for interest rate swap derivative                |                           
|Market adjustment for preferred stock conversion option derivative |                           
|Write-off of property and equipment                                |                           
|Gain on sale of assets                                             |                           
|Changes in assets and liabilities:                                 |                           
|Restricted cash                                                    |                           
|Prepaid expenses                                                   |                           
|Rental merchandise                                                 |                           
|Rental merchandise deposits and credits due from vendors           |                           
|Income tax receivable                                              |                           
|Other assets                                                       |                           
|Accounts payable                                                   |                           
|Other liabilities                                                  |                           
|                                                                   |                           
|Net cash provided by (used in) continuing operations               |                           
|Net cash used in discontinued operations                           |                           
|                                                                   |                           
|Net cash provided by (used in) operating activities                |                           
|                                                                   |                           
|INVESTING ACTIVITIES:                                              |                           
|Purchase of businesses, net of cash acquired                       |                           
|Purchases of property and equipment                                |                           
|Proceeds from sale of stores and other assets                      |                           
|                                                                   |                           
|Net cash (used in) provided by investing activities                |                           
|                                                                   |                           
|FINANCING ACTIVITIES:                                              |                           
|Proceeds from borrowings                                           |                           
|Payments on borrowings                                             |                           
|Payments on note for settlement of class action lawsuit            |                           
|Payments on capital leases                                         |                           
|Book overdraft                                                     |                           
|Issuance of common stock                                           |                           
|Proceeds from convertible preferred stock                          |                           
|Dividends paid on convertible redeemable preferred stock           |                           
|Deferred financing costs                                           |                           
|Interest on loans to directors                                     |                           
|Payment of loans by directors                                      |                           
|                                                                   |                           
|Net cash provided by (used in) financing activities                |                           
|                                                                   |                           
|Increase (decrease) in cash and cash equivalents                   |                           
|                                                                   |                           
|Cash and cash equivalents at beginning of period                   |                           
|                                                                   |                           
|Cash and cash equivalents at end of period                         |                           
|                                                                   |                           

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

---

RENT-WAY, INC.

1.    
          SUMMARY OF CRITICAL ACCOUNTING POLICIES:

BUSINESS AND ORGANIZATION. 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
stores that rent durable household products such as home entertainment
equipment, furniture, major appliances, computers, and jewelry to consumers on a
weekly or monthly basis in thirty-three states. The stores are primarily located in
the Midwestern, Eastern and Southern regions of the United States. The Company also
provides prepaid local phone service to consumers on a monthly basis through its
majority-owned subsidiary, dPi Teleconnect, LLC (DPI).

BASIS OF PRESENTATION. The
accompanying unaudited condensed consolidated 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 accounting principles generally accepted in
the United States of America. In the opinion of management, all adjustments have been
made, which, except as discussed herein, consist of normal recurring adjustments which are
necessary for a fair statement of the financial position, results of operations and cash
flows of the Company. The results of operations for the interim periods are not
necessarily indicative of the results for the full year.

The Company presents an unclassified
balance sheet to conform to practice in the industry in which it operates. The
consolidated financial statements include the accounts of the Company and its wholly
owned and majority owned subsidiaries. All significant inter-company transactions and
balances have been eliminated.

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-K for the fiscal year ended September
30, 2003.

ACCOUNTING ESTIMATES. The preparation
of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the dates of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual results could
differ from those estimates.

RESTRICTED CASH. The Company entered
into an agreement settling its securities class action on April 18, 2003, which was
approved by the court on December 23, 2003. The settlement required the Company to pay
$25,000 to the class. The $25,000 payment consisted of $21,000 in cash and $4,000 in
two-year, unsecured subordinated notes payable bearing interest at 6%. Of the $21,000
payable in cash, $11,000 was funded from available insurance proceeds. The remaining
$10,000, which was previously funded into escrow, was reflected as restricted cash on the
condensed consolidated balance sheet at September 30, 2003 and was subsequently paid in
the first fiscal quarter of fiscal year 2004.

CONVERTIBLE REDEEMABLE PREFERRED
STOCK. On June 2, 2003, the Company sold $15,000 in newly authorized convertible
redeemable preferred stock through a private placement. The proceeds of $14,161, net of
issuance costs of $839, were used to repay the previous senior credit facility. The net
proceeds are classified outside of permanent equity because of the mandatory redemption
date and other redemption provisions, except for an option to purchase convertible
preferred stock included in permanent equity (see Note 9). The carrying value of this
option was $142 at September 30, 2003. The option to purchase an additional $5,000 of
convertible preferred stock was fully exercised as of June 30, 2004.

STATEMENT OF CASH FLOWS INFORMATION.
Cash and cash equivalents consist of cash on hand and on deposit and represent highly
liquid investments with maturities of three-months or less when purchased. Cash
equivalents are stated at cost, which approximates market value. The Company maintains
deposits with several financial institutions. The Federal Deposit Insurance
Corporation does not insure deposits in excess of $100 and mutual funds. Supplemental
disclosures of cash flow information for the nine-months ended June 30, 2004 and 2003 are
as follows:

|                                           | Nine-months ended June 30,
|------------------------------------------ | --------------------------
|
|CASH PAID (RECEIVED) DURING THE YEAR FOR:  |                           
|Interest                                   |                           
|Income taxes (refunds)                     |                           
|NONCASH INVESTING ACTIVITIES:              |                           
|Assets acquired under capital lease        |                           
|Purchase of business, net of cash acquired |                           
|NONCASH FINANCING ACTIVITIES:              |                           
|Dividends                                  |                           
|Settlement of Class Action lawsuit         |                           

At June 30, 2004 and September 30,
2003, book overdrafts of $3,929 and $2,703, respectively, were included in accounts
payable in the accompanying Consolidated Balance Sheets.

REVENUE.    
          Rental merchandise is rented to customers pursuant to rental agreements,
          which provide for either weekly, biweekly, semi-monthly or monthly rental
          payments collected in advance. Revenue is recognized as collected, not over
          the rental term, since at the time of collection the rental merchandise
          has been placed in service and costs of installation and delivery have
          been incurred. This method of revenue recognition does not produce
          materially different results than if rental revenue were recognized over
          the weekly, biweekly, semi-monthly or monthly rental term.

RENTAL MERCHANDISE
DEPRECIATION. The Company uses the units of activity depreciation
method for all rental merchandise except computers and computer game systems. Under the
units of activity method, rental merchandise is depreciated as revenue is collected
or earned during free-rent promotions. Thus, rental merchandise is not
depreciated during periods when it is not on rent and therefore not generating
rental revenue. Personal computers, added to the Companys product line in June
1999, are principally depreciated on the straight-line basis beginning on
acquisition date over 12 months to 24 months, depending on the type of computer.
Write-offs of rental merchandise arising from customers failure to return
merchandise, losses due to excessive wear and tear of merchandise and obsolescence
are recognized using the direct write-off method, which is materially consistent with
the results that would be recognized under the allowance method. The rental merchandise
write-offs approximate 3% of revenue from month to month over the prior 2 fiscal years.
The Company reviews this analysis on a monthly basis.

DEFERRED FINANCING COSTS. Deferred
financing costs consists of bond issuance costs and loan origination costs which were
incurred in connection with the sale of $205,000 of senior secured notes and a new $60,000
revolving credit facility that was closed June 2, 2003. The bond issuance costs of $6,704
are amortized using the effective interest method over the seven-year term of the bonds.
The loan origination costs of $2,062 are amortized on a straight-line basis over the
five-year bank credit agreement. Deferred financing cost amortization and write-offs were
$227 and $1,584 for the three-month period and $748 and $2,720 for the nine-month period
ended June 30, 2004 and 2003, respectively.

COMPANY INSURANCE PROGRAMS. For
fiscal years 2004, 2003, 2002 and 2001, the Company is primarily self-insured for health
insurance, workers compensation, automobile and general liability. The
self-insurance liability for health costs is determined based on funding factors
determined by cost plus rates for a fully insured plan and monthly headcount. The
contracted rate is determined based on experience, prior claims filed and an estimate of
future claims. A retrospective adjustment for over (under) funding of claims is recorded
when determinable and probable.

The self-insurance liability for
workers compensation, automobile and general liability costs are determined
based on claims filed and company experience. Losses in the workers
compensation, automobile and general liability programs are pre-funded based on the
insurance companys loss estimates. Loss estimates will be adjusted for
developed incurred losses at 18 months following policy inception and every 12 months
thereafter. Retrospective adjustments to loss estimates are recorded when
determinable and probable. The Company recorded a receivable for the retrospective
insurance adjustments of $1,600 and $4,600 at June 30, 2004 and 2003, respectively.

For fiscal years 2000 and 1998, the
Company was insured under deductible programs with aggregate stop loss coverage on major
claims. Claims exceeding the insured deductible limits that were less than stop loss
aggregates, were funded as claims developed using AM Best loss development factors. The
fiscal 1999 workers compensation insurance had no aggregate retention and was funded
as claims developed using AM Best loss development factors.

DISCONTINUED OPERATIONS. On February
8, 2003, the Company sold rental merchandise and related contracts of 295 stores to
Rent-A-Center, Inc. Rent-A-Center, Inc. purchased certain fixed assets and assumed related
store leases of 125 of these stores. Accordingly, for financial statement purposes, the
assets, liabilities, results of operations and cash flows of this component have been
segregated from those of continuing operations and are presented in the Companys
financial statements as discontinued operations (see Note 2).

RECLASSIFICATIONS.
          Certain amounts in the condensed consolidated statement of cash flows for the
          nine-months ended June 30, 2003, were reclassified to conform to the June 30,
          2004 presentation.

2.    
          DISCONTINUED OPERATIONS:

On December 17, 2002, the Company
entered into a definitive purchase agreement to sell rental merchandise and related
contracts of 295 stores to Rent-A-Center, Inc. for approximately $101,500. These stores
were all included in the household rental segment. Rent-A-Center, Inc. purchased certain
fixed assets and assumed related store leases of 125 of these stores. The transaction
closed on February 8, 2003. The final purchase price for the stores was approximately
$100,400. As required under the Companys credit agreement, all proceeds of the sale,
net of transaction costs, store closing and similar expenses, were used to pay existing
bank debt. Of the approximate $100,400 purchase price, $10,000 was held back by
Rent-A-Center, Inc. to secure the Companys indemnification obligations, $5,000 for
90 days following closing, which was refunded to the Company in May 2003, and an
additional $5,000 for 18 months following closing. The Company recorded a receivable for
this based upon its ability to fully satisfy the indemnification obligations of the
agreement. The $5,000 held back by Rent-A-Center, Inc. for 18 months was discounted by
$820 and recorded at its present value. The $820 discount will be amortized into income
over the 18-month hold back period. Also, there was a $24,500 escrow held by National City
Bank, which was used to pay transaction costs, store closing and similar expenses. The
balance of this escrow, approximately $3,000, was used to pay down debt at the closing of
the refinancing on June 2, 2003. The assets sold included rental merchandise, vehicles
under capital leases and certain fixed assets. Vehicle lease obligations were paid by the
Company out of the proceeds from the sale.

The asset group was distinguishable
as a component of the Company and classified as held for sale in accordance with Statement
of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the
Impairment on Disposal of Long-Lived Assets. Direct costs to transact the sale were
comprised of, but not limited to, broker commissions, legal and title transfer fees and
closing costs.

In connection with the sale of the
stores, the Company has and will continue to incur additional direct costs related to the
sale and exit costs related to these discontinued operations. Costs associated with an
exit activity include, but are not limited to termination benefits, costs to terminate a
contract that is not a capital lease and costs to consolidate facilities or relocate
employees, in accordance with Statement of Financial Accounting Standards No. 146
(SFAS 146), Accounting for Costs Associated with Exit or Disposal
Activities. There was a transition period as defined in the asset purchase agreement
comprised of a period of thirty days from the date immediately following the closing date.
During this transition period, the Company was liable for certain exit costs attributable
to the operation and transition of the purchased stores, including, but not limited to,
rent, utilities, costs applicable to office equipment, costs associated with vehicles,
employee payroll, health and other employee benefits, workers compensation claims, health
care claims and all other costs related to transition personnel. The Company accrued
employee separation costs as costs were incurred in accordance with SFAS 146. These costs
are included in the results of discontinued operations in accordance with SFAS 144.

Related operating results have been
reported as discontinued operations in accordance with SFAS 144. The Company has
reclassified the results of operations of the component disposed for the prior periods in
accordance with provisions of SFAS 144. There have been no corporate expenses included in
expenses from discontinued operations. Interest on debt that was required to be repaid as
a result of the disposal transaction was allocated to income (loss) from discontinued
operations. The effective interest rate on the outstanding debt of the Company at the time
of the disposal was applied to the $68,643 estimated debt pay-down from the proceeds.
There was no interest reclassified to loss from discontinued operations for the
three-months ended June 30, 2004 and 2003. The amount of interest reclassified to loss
from discontinued operations is $0 and $3,036 for the nine-month period ended June 30,
2004 and 2003, respectively. Revenues and net income (loss) from the discontinued
operations were as follows:

|                                             | Three-months Ended June 30, | Nine-months Ended June 30,
|-------------------------------------------- | --------------------------- | --------------------------
|
|Operating revenues                           |                             |                           
|Operating expenses from discontinued         |                             |                           
|operations (including exit costs) (1)        |                             |                           
|Rental merchandise fair value adjustment     |                             |                           
|Reserve for present value of future          |                             |                           
|minimum lease payments on vacated stores (1) |                             |                           
|Loss on sale of stores                       |                             |                           
|Interest expense                             |                             |                           
|                                             |                             |                           
|Net loss from discontinued operations        |                             |                           
|                                             |                             |                           

|(1) |  | The Company recorded exit costs associated with the operation and transition of
               the stores to Rent-A-Center, Inc. for 30 days after closing, and monthly rent
               and common area maintenance charges until leases are terminated or expired, in
               accordance with SFAS 146. This includes a $1,027 write-off of leasehold
               improvements for the nine-months ended June 30, 2004.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There were no assets or liabilities
held for sale included in the Consolidated Balance Sheet as of June 30, 2004, and
September 30, 2003.

3.    
          BUSINESS RATIONALIZATION:

The Company periodically closes
under-performing stores and takes other actions to maximize its overall profitability. In
connection with the closing of stores and taking other actions, it incurs employee
severance, fixed asset write offs, lease obligation (termination) costs and other direct
exit costs related to these activities. Employee severance costs related to the
closing of under-performing stores were immaterial in each of the periods reported
below. The net amount of these costs were as follows:

|                               | Fixed
Asset
Write Offs | Lease
Obligation
Costs | Total
|------------------------------ | ---------------------- | ---------------------- | -----
|
|Balance at September 30, 2002  |                        |                        | $    
|                               |                        |                        |      
|Fiscal 2003 Provision          |                        |                        |      
|Amount utilized in fiscal 2003 |                        |                        |      
|                               |                        |                        |      
|Balance at September 30, 2003  |                        |                        |      
|                               |                        |                        |      
|Fiscal 2004 Provision          |                        |                        |      
|Amount utilized in Fiscal 2004 |                        |                        |      
|                               |                        |                        |      
|Balance at June 30, 2004       |                        |                        | $    
|                               |                        |                        |      

Lease termination costs will be paid
according to the contract terms.

During the second quarter of fiscal
year 2003, the Company formulated a plan to restructure the corporate office through
reductions in the corporate workforce, to rationalize corporate costs for the remaining
stores and to sublease, assign or terminate operating leases that the Company would no
longer operate as a rent-to-own business activity subsequent to the sale to Rent-A-Center,
Inc. There was $0 and $1,214 of restructuring costs for the three-months ended June 30,
2004 and 2003, respectively. There was $48 and $3,429 of restructuring costs for the
nine-months ended June 30, 2004 and 2003, respectively.

4.    
          EARNINGS (LOSS) PER COMMON SHARE:

Basic earnings (loss) per common
share is computed using income (loss) allocable to common shareholders divided by the
weighted average number of common shares outstanding. Diluted earnings (loss) per common
share is computed using income (loss) allocable to common shareholders and the weighted
average number of shares outstanding adjusted for the potential impact of options,
warrants, conversion of convertible redeemable preferred stock, convertible preferred
stock conversion derivative, dividends on convertible preferred stock and accretion of
convertible preferred stock discount where the effects are dilutive. Because operating
results were a loss for the nine-months ended June 30, 2003, basic and diluted loss per
common share were the same.

The following table discloses the
reconciliation of numerators and denominators of the basic and diluted earnings
(loss) per share computation:

|                                                            | Three-months Ended June 30, | Nine-months Ended June 30,
|----------------------------------------------------------- | --------------------------- | --------------------------
|
|
|Income (loss) before discontinued operations                |                             |                           
|Loss from discontinued operations                           |                             |                           
|                                                            |                             |                           
|Net income(loss)                                            |                             |                           
|Dividend and accretion of preferred stock                   |                             |                           
|                                                            |                             |                           
|Net income (loss) allocable to common shareholders          |                             |                           
|                                                            |                             |                           
|Weighted average common shares outstanding                  |                             |                           
|                                                            |                             |                           
|Earnings (loss) per share:                                  |                             |                           
|Income (loss) before discontinued operations                |                             |                           
|Loss from discontinued operations                           |                             |                           
|Dividend and accretion of preferred stock                   |                             |                           
|                                                            |                             |                           
|Net income(loss)allocable to common shareholders            |                             |                           
|                                                            |                             |                           
|DILUTED                                                     |                             |                           
|Net income(loss)allocable to common shareholders for        |                             |                           
|basic earnings (loss) per share                             |                             |                           
|Plus: Income impact of assumed conversion:                  |                             |                           
|Conversion derivative market value adjustment (1)           |                             |                           
|Dividends on 8% convertible preferred stock (1)             |                             |                           
|Accretion to preferred stock redemption amount (1)          |                             |                           
|                                                            |                             |                           
|Net income (loss) allocable to common shareholders for      |                             |                           
|diluted earnings (loss) per share and assumed conversion    |                             |                           
|                                                            |                             |                           
|Weighted average common shares used in calculating basic    |                             |                           
|earnings (loss) per share                                   |                             |                           
|Add incremental shares representing:                        |                             |                           
|Shares issuable upon exercise of stock options and          |                             |                           
|warrants (2)                                                |                             |                           
|Contingent shares issuable upon the exercise of option      |                             |                           
|to purchase 8% convertible preferred stock (3)              |                             |                           
|Shares issuable upon conversion of 8% convertible preferred |                             |                           
|stock (1)                                                   |                             |                           
|                                                            |                             |                           
|Weighted average number of shares used in calculation of    |                             |                           
|diluted earnings (loss) per share                           |                             |                           
|                                                            |                             |                           
|Earnings (loss) per share:                                  |                             |                           
|Income (loss) before discontinued operations                |                             |                           
|Loss from discontinued operations                           |                             |                           
|Accretion to preferred stock redemption amount              |                             |                           
|                                                            |                             |                           
|Net income (loss) allocable to common shareholders          |                             |                           
|                                                            |                             |                           

|(1) |  | Including the effects of these items for the nine-month period ended June 30,
               2004 would be anti-dilutive. Therefore, 3,252 shares issuable upon conversion of
               8% convertible preferred stock are excluded from consideration in the
               calculation of diluted earnings (loss) per share for the nine-months ended June
               30, 2004. There were conversion derivative market value adjustments of $5,468,
               dividends on convertible preferred stock of $908 and accretion to preferred
               stock redemption in the amount of $303 which were not added back to net income
               allocable to common shareholders for basic earnings per share on the diluted
               earnings per share because including the effects of these items would be
               anti-dilutive for the nine-months ended June 30, 2004.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Including  the
effects of these items for the three and nine-months ended June 30, 2003 would be
anti-dilutive. Therefore, 769 and 256 shares issuable upon conversion of 8% convertible
preferred stock are excluded from consideration in the calculation of diluted earnings
(loss) per share for the three and nine-months ended June 30, 2003. There were conversion
derivative market value adjustments of $233, dividends on convertible preferred stock of
$95 and accretion to preferred stock redemption amount of $29 income impact of assumed
conversion not added to net income (loss) available to common shareholders for basic
earnings (loss) per share in the diluted earnings (loss) per share because including the
effects of these items would be anti-dilutive.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Including the effects of these items for the three-month and nine-month periods
               ended June 30, 2003 would be anti-dilutive. For the three- and nine-month
               periods ended June 30, 2003, the number of stock options that were outstanding
               but not included in the computation of diluted earnings per common share in
               which their exercise price was greater than the average market price of common
               stock was 3,340 and 3,340, respectively. The number of stock options that were
               outstanding but not included in the computation of diluted earnings per common
               share in which their exercise price was less than the average market price of
               common stock was 16 for the three- and nine-months ended June 30, 2003.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Including the effects of these items for the three-month and nine-month periods
               ended June 30, 2003 would be anti-dilutive. Therefore, 752 contingent shares
               issuable upon exercise of option to purchase 8% convertible preferred stock are
               excluded from consideration in the calculation of diluted earnings (loss) per
               share for the three-months and nine-months ended June 30, 2003.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.    
          GOODWILLADOPTION OF STATEMENT 142:

Effective October 1, 2001, the
Company adopted Statement of Financial Accounting Standards No. 142 (SFAS
142), Goodwill and Other Intangible Assets. SFAS 142 requires that
intangible assets not subject to amortization and goodwill be tested for impairment
annually, or more frequently if events or changes in circumstances indicate that the
carrying value may not be recoverable. SFAS 142 prescribes a two-phase process for
impairment testing of goodwill. The first phase screens for impairment while the
second phase, if necessary, measures the impairment. Amortization of goodwill and
intangible assets with indefinite lives, including such assets recorded in past
business combinations, ceased upon adoption. Thus, no amortization for such goodwill
and indefinite lived intangibles was recognized in the accompanying condensed consolidated
statements of operations for the three-and nine-months ended June 30, 2004 and 2003. On an
annual basis and when there is reason to suspect that their values have been diminished or
impaired, these assets must be tested for impairment, and a write down may be necessary.

The Rent-A-Center transaction (see
Note 2) was an event that triggered an impairment assessment under the provisions of SFAS
142. The Company performed an impairment test of the carrying value of goodwill remaining
after allocation of the fair value of goodwill to the assets held for sale as set forth in
the Rent-A-Center purchase agreement as of December 17, 2002, the date of the agreement.
There was no impairment of goodwill as a result of this assessment.

The following table shows the net
carrying value of goodwill for the Companys segments:

|                                  | Household
Rental Segment | Prepaid
Telephone
Service Segment | Total
Segments
|--------------------------------- | ------------------------ | --------------------------------- | --------------
|Goodwill as of June 30, 2004      |                          |                                   | $             
|Goodwill as of September 30, 2003 |                          |                                   |               
|                                  |                          |                                   |               

The following tables reflect the
components of amortizable intangible assets at June 30, 2004 and September 30, 2003:

|Balance at June 30, 2004:      | Purchase
Amount | Cumulative
Amortization | Net
Carrying
Amount
|------------------------------ | --------------- | ----------------------- | -------------------
|                               |                 |                         |                    
|Amortizable intangible assets: |                 |                         |                    
|Non-compete agreements         |                 |                         | $                  
|Customer contracts             |                 |                         |                    
|                               |                 |                         |                    
|                               |                 |                         | $                  
|                               |                 |                         |                    

|Balance at September 30, 2003: | Purchase
Amount | Cumulative
Amortization | Net
Carrying
Amount
|------------------------------ | --------------- | ----------------------- | -------------------
|                               |                 |                         |                    
|Amortizable intangible assets: |                 |                         |                    
|Non-compete agreements         |                 |                         | $                  
|Customer contracts             |                 |                         |                    
|Exclusivity agreement          |                 |                         |                    
|                               |                 |                         |                    
|                               |                 |                         | $                  
|                               |                 |                         |                    

At
June 30, 2004, future aggregate annual amortization of amortizable intangible assets is as
follows:

|Fiscal Year    | Amount
|-------------- | ------
|Remaining 2004 |       
|2005           |       
|2006           |       
|               |       
|               |       
|               |       

Amortization expense was $86 and $262
for the three-months ended June 30, 2004 and 2003; and, $310 and$1,214 for the nine-months
ended June 30, 2004 and 2003, respectively. There were no changes to the amortization
methods and lives of the amortizable intangible assets.

6.    
          OTHER ASSETS:

Other assets consist of the
following:

|                                      | June 30,
2004 | September 30,
2003
|------------------------------------- | ------------- | ------------------
|Receivable from insurance proceeds    |               |                   
|Receivable from sale to Rent-A-Center |               |                   
|Other receivables                     |               |                   
|Deposits                              |               |                   
|Other                                 |               |                   
|                                      |               |                   
|                                      |               |                   
|                                      |               |                   

7.    
          OTHER LIABILITIES:

Other
liabilities consist of the following:

|                                               | June 30,
2004 | September 30,
2003
|---------------------------------------------- | ------------- | ------------------
|Accrual for settlement of class action lawsuit |               |                   
|Accrued salaries, wages, tax and benefits      |               |                   
|Capital lease obligations                      |               |                   
|Accrued preferred dividend and interest        |               |                   
|Vacant facility lease obligations              |               |                   
|Swap liability                                 |               |                   
|Accrued property taxes                         |               |                   
|Accrued vacation                               |               |                   
|Accrued sales and use tax                      |               |                   
|Other                                          |               |                   
|                                               |               |                   
|                                               |               |                   
|                                               |               |                   

8.    
          DEBT:

Debt
consists of the following:

|                                 | June 30,
2004 | September 30,
2003
|-------------------------------- | ------------- | ------------------
|Senior secured notes             |               |                   
|Revolving credit facility        |               |                   
|Notes payable lawsuit settlement |               |                   
|Note payable                     |               |                   
|                                 |               |                   
|                                 |               |                   
|                                 |               |                   

The Companys senior secured
notes have the following material terms. The $205,000 principal amount of senior secured
notes bears interest at 11.875% and are due June 15, 2010. The interest on the secured
notes is payable semiannually on June 15 and December 15. The secured notes are guaranteed
on a senior basis by all existing and future domestic restricted subsidiaries of the
Company other than DPI, which is an unrestricted subsidiary. The Company may redeem the
secured notes, in whole or in part, at any time prior to June 15, 2010, at a redemption
price equal to the greater of:

|a) |  | 100% of the principal amount of the notes to be redeemed; and
|-- |  | -------------------------------------------------------------

|b) |  | the sum of the present values of (i) 100% of the principal amount of the notes
               to be redeemed at June 15, 2010, and (ii) the remaining scheduled payments of
               interest from the redemption date through June 15, 2010, but excluding accrued
               and unpaid interest to the redemption date, discounted to the redemption date at
               the treasury rate plus 175 basis points;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

plus, in either case, accrued and
unpaid interest to the redemption date.

In addition, at any time prior to June
15, 2006, up to 25% of the aggregate principal amount of the secured notes may be redeemed
at the Companys option, within 75 days of certain public equity offerings, at a
redemption price of 111.875% of the principal amount, together with accrued and unpaid
interest. Such redemption can occur provided that after giving effect to any such
redemption, at least 75% of the original aggregate principal amount of the notes issued
(including any notes issued in future permitted issuances) remains outstanding.

The secured notes were offered at a
discount of $3,583, which is being amortized using the effective interest method, over the
term of the secured notes. Amortization of the discount was $90 and $261 for the three-and
nine-month period ending June 30, 2004, respectively, and is recorded as interest expense.
Costs representing underwriting fees and other professional fees of $6,704 are being
amortized over the seven-year term of the bonds using the effective interest method of
amortization. The secured notes rank senior in right to all of the Companys existing
and future subordinated debt, have a lien position ranking second to the bank revolving
credit facility and effectively junior in right of payment to all existing and future debt
and other liabilities of the Companys subsidiaries that are not subsidiary
guarantors. The secured notes contain covenants that will, among other things, limit the
Companys ability to incur additional debt, make restricted payments, incur any
additional liens, sell certain assets, pay dividend distributions from restricted
subsidiaries, transact with affiliates, conduct certain sale and leaseback transactions
and use excess cash flow.

The Company is in compliance with
covenants at June 30, 2004, and expects to comply with covenants based upon its fiscal
2004 projections.

The Companys bank revolving
credit facility has the following material terms. The facility is with Harris Trust and
Savings Bank, acting as administrative agent, and Bank of Montreal as lead arranger, and
provides for National City Bank to act as syndication agent and provides for senior
secured revolving loans of up to $60,000 including a $15,000 sub-limit for standby and
commercial letters of credit and a $5,000 swingline sub-limit. The credit facility will
expire five years from closing (June 2, 2008). The balance outstanding at June 30, 2004
was $18,000 with $37,080 available at June 30, 2004. Deferred financing costs of $2,062
are being amortized over the 5-year term of the bank agreement. The credit facility is
guaranteed by all of the wholly owned domestic subsidiaries and collateralized by first
priority liens on substantially all of the Companys and subsidiary guarantors
assets, including rental contracts and the stock held in domestic subsidiaries. The
Company may elect that each borrowing of revolving loans be either base rate loans or
Eurodollar loans. The Eurodollar loans bear interest at a rate per annum equal to an
applicable margin plus LIBOR adjusted for a reserve percentage. Under the base rate
option, the Company may borrow money based on the greater of (a) the prime interest rate
or (b) the federal funds rate plus 0.50%, plus, in each case, a specified margin. A 0.50%
commitment fee is payable quarterly on the unused amount of the revolving credit facility.
Upon a default, interest will accrue at 2% over the applicable rate. The Company will be
required to make specified mandatory prepayments upon subsequent debt or equity offerings
and asset dispositions.

The Companys note payable for
lawsuit settlement was agreed to in the settlement of the class action lawsuit. The note
payable consists of a $4,000 unsecured subordinated note, which bears interest at 6%
annually and payable in four equal installments over two years on June 30 and December 31.
The first $1,000 was paid on December 31, 2003 and the second $1,000 was paid on June 30,
2004. The remaining balance at June 30, 2004 was $2,000.

9.    
          CONVERTIBLE REDEEMABLE PREFERRED STOCK:

On June 2, 2003, the Company issued
1,500 shares of its Series A convertible preferred stock, for $10,000 per share (the
convertible preferred stock) and granted a one-year option to purchase an
additional 500 shares of convertible preferred stock (the additional preferred
shares). The net proceeds from the sale of the convertible preferred stock were used
to repay the Companys prior senior credit facility. The net proceeds of $14,161 from
the issuance of the convertible preferred stock are net of issuance costs of $839, and are
classified outside of permanent equity because of the redemption date and other redemption
provisions, except the option to purchase additional convertible preferred stock which was
included in permanent equity. During March 2004, an option was exercised for the purchase
of 133 additional shares in the amount of $1,330. The value of the option to purchase
convertible preferred stock was reduced by $38 as a result of the March 2004 exercise.
During April and May 2004, the remaining options to purchase additional shares were
exercised. The value of the option to purchase convertible preferred stock was reduced to
$0 as a result of the April and May 2004 exercises. The convertible preferred stock is
being accreted to its maximum redemption amount possible pursuant to Topic D-98,
Classification and Measurement of Redeemable Securities, using the effective
interest method from the issuance date to the June 2, 2011, redemption date.

The terms of the convertible
preferred stock include a number of conversion and redemption provisions that represent
derivative financial instruments under Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities, (SFAS
133) (See Note 12). Certain features of the convertible preferred stock are
accounted for as embedded derivative financial instruments. The Company has determined
that the option to purchase additional preferred shares was an embedded derivative
financial instrument that qualified for scope exemption under the provisions of EITF
00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Companys Own Stock (EITF 00-19). As such, this
derivative was initially required to be bifurcated and recorded at fair value in the
equity section of the consolidated balance sheet upon issuance but does not require mark
to market accounting. The carrying value of this derivative financial instrument was
reduced to $0 during the quarter ended June 30, 2004 due to the exercise of the remaining
options. The Company also has determined the convertible feature of the convertible
preferred stock is a derivative financial instrument that does not qualify for scope
exemption under EITF 00-19, and, is required to be bifurcated, recorded at fair value, and
marked to market. The market value of this derivative financial instrument is $20,573 at
June 30, 2004, and is recorded in convertible redeemable preferred stock in the
consolidated balance sheet. The fair values of the derivatives were determined with the
assistance of an independent valuation firm.

10.    
          STOCK OPTIONS:

The Company accounts for stock based
compensation issued to its employees and directors in accordance with APB No. 25
Accounting for Stock Issued to Employees, and has elected to adopt the
disclosure only provisions of SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. SFAS 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting for
stock-based employee compensation. In addition, SFAS 148 amends the disclosure
requirements of SFAS 123 to require new prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results.

For SFAS No. 148 purposes, the fair
value of each option granted under the 1992 Plan, the 1995 Plan, and the 1999 Plan is
estimated as of the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions used for options granted in fiscal years 2000
through 2004: expected volatility ranging from 47.41% to 99.61%, risk-free interest rates
between 2.91% and 6.81%, and an expected life of five years.

If the Company had elected to
recognize the compensation cost of its stock option plans based on the fair value of the
awards under those plans in accordance with SFAS No. 148, net income (loss) and income
(loss) per common share would have been increased to the pro-forma amounts below:

|                                                    | For the Nine-Month Period Ended June 30,
|--------------------------------------------------- | ----------------------------------------
|
|Net income (loss) before discontinued operations:   |                                         
|As reported                                         |                                         
|Plus:  Compensation expense                         |                                         
|Less:  Stock-based employee compensation under      |                                         
|fair-value based method for all awards, net of      |                                         
|related tax effects                                 |                                         
|                                                    |                                         
|Pro-forma                                           |                                         
|                                                    |                                         
|Net income (loss) allocable to common shareholders: |                                         
|As reported                                         |                                         
|Plus:  Compensation expense                         |                                         
|Less:  Stock-based employee compensation under      |                                         
|fair-value based method for all awards, net of      |                                         
|related tax effects                                 |                                         
|                                                    |                                         
|Pro-forma                                           |                                         
|                                                    |                                         
|Diluted income (loss) per common share:             |                                         
|Net loss before discontinued operations:            |                                         
|As reported                                         |                                         
|Pro-forma                                           |                                         
|                                                    |                                         
|Net income (loss) allocable to common shareholders: |                                         
|As reported                                         |                                         
|Pro-forma                                           |                                         
|                                                    |                                         

There were 100 options granted during
fiscal year 2004 through June 30, 2004; 45 granted October 1, with a grant price of $5.34,
expiring in 2008, 35 granted October 29, with a grant price of $5.80, expiring in 2009,
and 20 granted June 1, with a grant price of $9.32, expiring in 2010.

11.    
          SHAREHOLDERS EQUITY:

On April 18, 2002, the Company sold
1.0 million restricted common shares and warrants to receive 100,000 common shares to Calm
Waters Partnership and two other investors (the Investors) for $6,000. The
warrants had an exercise price of $9.35 per share, which was reduced to $4.90 per share
pursuant to anti-dilution adjustments. The Company re-measured the value of the warrants
in accordance with the arrangement and reclassified the change to common stock from
warrants. These warrants were exercised in November 2003.

12.    
          DERIVATIVE FINANCIAL INSTRUMENTS:

On June 2, 2003, the Company issued
1,500 shares of convertible redeemable preferred stock (see Note 9). The terms of this
preferred stock include a number of conversion and redemption provisions that represent
derivatives under SFAS No. 133. The Company determined that the option to purchase
additional preferred shares was an embedded derivative financial instrument that qualified
for SFAS 133 scope exemption under the provisions of EITF 00-19. As such this derivative
was initially bifurcated and recorded in shareholders equity. This derivative did
not require mark to market accounting.

The Company also has determined the
conversion feature of the convertible redeemable preferred stock is a derivative financial
instrument that does not qualify for SFAS 133 scope exemption under EITF 00-19. It was
bifurcated and recorded in the temporary equity classification on the balance sheet. The
change in the fair market value of the conversion feature was $(233) and $5,469 for the
three-months and nine-months ended June 30, 2004, respectively.

At June 30, 2004, the Company had
interest rate swaps on a notional debt amount of $50,350 and a fair market value of
($2,127). The variable pay interest rate ranges from 6.73% to 6.97%. The maturity dates
run through August 2005.

The Companys interest rate
swaps do not meet the qualifications for hedge accounting treatment under SFAS No. 133.
The Companys positive change in the fair market value of the interest rate swap
portfolio was $1,111and $3,009 for the three- and nine-months ended June 30, 2004. This
was recorded to other income in the Companys condensed consolidated statements of
operations.

13.    
          COMPREHENSIVE INCOME:

Comprehensive income encompasses net
income and changes in the components of accumulated other comprehensive income not
reflected in the Companys condensed consolidated statements of operations during the
periods presented. Accumulated other comprehensive income consists of the transition asset
recorded at the time of adoption of SFAS No. 133.

|                           | Other Comprehensive
Income (Loss)
For Nine-months
Ended
June 30, 2004 | Other Comprehensive
Income (Loss)
For Nine-months Ended
June 30, 2003
|-------------------------- | --------------------------------------------------------------------- | ---------------------------------------------------------------------
|Net income (loss) for the  |                                                                       |                                                                      
|nine-months                |                                                                       |                                                                      
|Amortization of SFAS 133   |                                                                       |                                                                      
|Transition amount          |                                                                       |                                                                      
|                           |                                                                       |                                                                      
|Other comprehensive income |                                                                       |                                                                      
|(loss)                     |                                                                       |                                                                      
|                           |                                                                       |                                                                      

|                            | Accumulated Other
Comprehensive
Income (Loss)
At June 30, 2004 | Accumulated Other
Comprehensive
Income (Loss)
At September 30, 2003
|--------------------------- | -------------------------------------------------------------- | -------------------------------------------------------------------
|                            |                                                                |                                                                    
|Balance at October 1        |                                                                |                                                                    
|Amortization of SFAS 133    |                                                                |                                                                    
|Transition amount           |                                                                |                                                                    
|                            |                                                                |                                                                    
|Accumulated  other          |                                                                |                                                                    
|comprehensive income (loss) |                                                                |                                                                    
|                            |                                                                |                                                                    

14.    
          CONTINGENCIES:

As previously reported, the Company,
its former independent accountants, and certain of its current and former officers were
named in a consolidated class action complaint filed in the U.S. District Court for the
Western District of Pennsylvania alleging violations of the securities laws and seeking
damages in unspecified amounts purportedly on behalf of a class of shareholders. On April
18, 2003, the Company entered into an agreement settling the class action. The settlement
required the Company to pay the class the sum of $25,000, with $21,000 in cash and $4,000
in 6% unsecured subordinated notes payable in four equal installments over two years
commencing December 31, 2003. Of the $21,000 payable in cash, $11,000 has been funded from
available insurance proceeds; the remaining $10,000 was funded into escrow and was
classified as restricted cash on the consolidated balance sheet at September 30, 2003. The
settlement agreement provided for the release of the Company and all other defendants
except the Companys former controller and the Companys former independent
accountants. The settlement received court approval and became final by virtue of an order
dated December 22, 2003.

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, exclusive of the class action mentioned above, have
resulted in initial claims totaling $6,032. However, all but $241 of such claims are, in
the opinion of management, covered by insurance policies or indemnification agreements, or
create only remote potential of any liability exposure to the Company and therefore should
not have a material effect on the Companys financial position, results of operations
or cash flows. Additionally, threatened claims exist for which management is not yet able
to reasonably estimate a potential loss. In managements opinion, none of these
threatened claims will have a material adverse effect on the Companys financial
position, results of operations or cash flows.

The Company is primarily self-insured
for health insurance. The self-insurance liability for health costs is
determined based on funding factors determined by cost plus rates for a fully insured plan
and monthly headcounts. The contracted rate is determined based on experience, prior
claims filed and an estimate of future claims. A retrospective adjustment for over (under)
funding of claims is recorded when determinable and probable.

For fiscal years 2004, 2003, 2002 and
2001, the self-insurance liability for workers compensation, automobile and
general liability costs are determined based on claims filed and
company experience. Losses in the workers compensation, automobile and
general liability programs are pre-funded based on the insurance companys
loss estimates. Loss estimates will be adjusted for developed incurred losses at
18 months following policy inception and every 12 months thereafter.
Retrospective adjustments to loss estimates are recorded when determinable and
probable. The Company recorded a receivable for the retrospective insurance adjustments of
$1,600 and $4,600 at June 30, 2004 and 2003, respectively.

For fiscal years 2000 and 1998, the
Company was insured under deductible programs with aggregate stop loss coverage on major
claims. Claims exceeding the insured deductible limits that were less than stop loss
aggregates, were funded as claims developed using AM Best loss development factors and not
exceeding policy aggregate. The fiscal 1999 workers compensation insurance had no
aggregate retention and was funded as claims developed using AM Best loss development
factors.

15.    
          INCOME TAXES:

During the first nine-months of
fiscal 2004, the Company recorded income tax expense and a deferred tax liability of
$4,185 because the Company can no longer look to the reversal of the deferred tax
liability associated with tax-deductible goodwill to offset a portion of its deferred tax
asset, following the adoption of SFAS 142. The deferred tax asset, net of liabilities
excluding goodwill, decreased from $73,095 at September 30, 2003 to $69,197 at June 30,
2004. This decrease of $3,898 for the nine-months ended June 30, 2004, is the tax effect
of income before income taxes. A full valuation allowance has been provided against the
net deferred tax asset.

16.    
          SEGMENT INFORMATION:

Rent-Way is a national
rental-purchase chain that provides a variety of services to its customers including
rental of household items and prepaid local telephone service on a week-by-week or a
month-by-month basis. The Company has determined that its reportable segments are those
that are based on the Companys method of internal reporting, which disaggregates its
business by product category. The Companys reportable segments are household rentals
and prepaid telephone service. Its household rental segment rents name brand merchandise
such as furniture, appliances, electronics and computers on a weekly, biweekly,
semimonthly, or monthly basis. Its prepaid telephone service segment provides a local dial
tone on a month-by-month basis.

The financial results of the
Companys segments follow the same accounting policies as described in Summary
of Significant Accounting Policies (see Note 1).

|For the three months ended June 30, 2004 | Household
Rental Segment | Prepaid Telephone
Service Segment | Inter-segment
Activity | Total Segments
|---------------------------------------- | ------------------------ | --------------------------------- | ---------------------- | --------------
|
|Total revenue                            |                          |                                   | $                      | 117,734       
|                                         |                          |                                   |                        |               
|Operating income (loss)                  |                          |                                   | $                      | 11,874        
|                                         |                          |                                   |                        |               
|Net income (loss)                        |                          |                                   | $                      | 4,509         
|                                         |                          |                                   |                        |               
|Total Assets                             |                          |                                   | $                      | 431,504       
|                                         |                          |                                   |                        |               

|For the nine months ended June 30, 2004 | Household
Rental Segment | Prepaid Telephone
Service Segment | Inter-segment
Activity | Total Segments
|--------------------------------------- | ------------------------ | --------------------------------- | ---------------------- | --------------
|
|Total revenue                           |                          |                                   | $                      | 363,719       
|                                        |                          |                                   |                        |               
|Operating income (loss)                 |                          |                                   | $                      | 37,747        
|                                        |                          |                                   |                        |               
|Net income (loss)                       |                          |                                   | $                      | 7,642         
|                                        |                          |                                   |                        |               
|Total Assets                            |                          |                                   | $                      | 431,504       
|                                        |                          |                                   |                        |               

|For the three-months ended June 30, 2003 | Household
Rental
Service | Prepaid
Telephone
Service | Inter-segment
Activity | Total  
|---------------------------------------- | ------------------------ | ------------------------- | ---------------------- | -------
|
|Total revenue                            |                          |                           | $                      | 113,628
|                                         |                          |                           |                        |        
|Operating income (loss)                  |                          |                           | $                      | 14,733 
|                                         |                          |                           |                        |        
|Net income (loss)                        |                          |                           | $                      | 4,077  
|                                         |                          |                           |                        |        
|Total Assets                             |                          |                           | $                      | 452,517
|                                         |                          |                           |                        |        

|For the nine months ended June 30, 2003 | Household
Rental
Service | Prepaid
Telephone
Service | Inter-segment
Activity | Total  
|--------------------------------------- | ------------------------ | ------------------------- | ---------------------- | -------
|
|Total revenue                           |                          |                           | $                      | 345,303
|                                        |                          |                           |                        |        
|Operating income                        |                          |                           | $                      | 26,952 
|                                        |                          |                           |                        |        
|Net loss                                |                          |                           | $                      | (28,863
|                                        |                          |                           |                        |        
|Total Assets                            |                          |                           | $                      | 452,517
|                                        |                          |                           |                        |        

17.    
          RELATED PARTY TRANSACTION

On April 7, 2004, the Company
purchased 100 shares of DPI Holdings, Inc. from the former Chief Operating Officer of DPI
Teleconnect, LLC for $350. DPI Holdings, Inc. owns 16.5% interest in DPI, and the Company
owns 83.5% interest in DPI after the acquisition of shares.

18.    
          GUARANTOR AND NON-GUARANTOR SUBSIDIARIES:

The 11 7/8% senior secured notes
issued by Rent-Way, Inc. (Parent) have been guaranteed by each of its
restricted subsidiaries (Guarantor Subsidiaries). The Guarantor Subsidiaries
are 100% owned subsidiaries of the Parent. The guarantees of the Subsidiary Guarantors are
full, unconditional and joint and several. Separate financial statements of the Parent and
Guarantor Subsidiaries are not presented in accordance with the exception provided by Rule
3-10 of Regulation S-X.

The following schedules set forth the
condensed consolidating balance sheets as of June 30, 2004 and September 30, 2003 and
condensed consolidating statements of operations for the three- and nine-months ended June
30, 2004 and 2003, and condensed consolidating statements of cash flows for the
nine-months ended June 30, 2004 and 2003. In the following schedules, Parent
refers to Rent-Way, Inc., Guarantor Subsidiaries refers to Rent-Ways
wholly owned subsidiaries, and Non-Guarantor Subsidiaries refers to DPI, the
Companys 83.5% owned subsidiary. Eliminations represent the adjustments
necessary to eliminate inter-company investment in subsidiaries.

---

RENT-WAY, INC.

CONDENSED CONSOLIDATING
BALANCE SHEET

JUNE 30, 2004

(All dollars in
thousands)

|                                               | Parent
Issuer | Guarantor
Subsidiaries | Non-Guarantor
Subsidiary | Eliminations | Rent-Way
Consolidated
|---------------------------------------------- | ------------- | ---------------------- | ------------------------ | ------------ | ---------------------
|ASSETS                                         |               |                        |                          |              |                      
|Cash and cash equivalents                      |               |                        | $                        | 3,083        |                      
|Prepaid expenses                               |               |                        |                          | 8,717        |                      
|Income tax receivable                          |               |                        |                          | 17           |                      
|Rental merchandise, net                        |               |                        |                          | 132,288      |                      
|Rental merchandise credits due from vendors    |               |                        |                          | 2,705        |                      
|Property and equipment, net                    |               |                        |                          | 33,051       |                      
|Goodwill                                       |               |                        |                          | 124,807      |                      
|Deferred financing costs, net                  |               |                        |                          | 7,696        |                      
|Intangible assets, net                         |               |                        |                          | 192          |                      
|Other assets                                   |               |                        |                          | 9,100        |                      
|Investment in subsidiaries                     |               |                        |                          | 66,617       |                      
|                                               |               |                        |                          |              |                      
|Total assets                                   |               |                        | $                        | 388,273      |                      
|                                               |               |                        |                          |              |                      
|LIABILITES AND SHAREHOLDERS' EQUITY            |               |                       
|Liabilities:                                   |               |                       
|Accounts payable                               |               |                        | $                        | 9,920        |                      
|Other liabilities                              |               |                        |                          | 35,898       |                      
|Inter-company                                  |               |                        |                          | (26,900      | )                    
|Deferred tax liability                         |               |                        |                          | 9,100        |                      
|Debt                                           |               |                        |                          | 221,838      |                      
|                                               |               |                        |                          |              |                      
|Total liabilities                              |               |                        |                          | 249,856      |                      
|Convertible redeemable preferred stock         |               |                        |                          | 26,904       |                      
|SHAREHOLDERS' EQUITY:                          |               |                       
|Common stock                                   |               |                        |                          | 304,314      |                      
|Option to purchase convertible preferred stock |               |                        |                          | --           |                      
|Accumulated other comprehensive income         |               |                        |                          | (126         | )                    
|Retained earnings (accumulated deficit)        |               |                        |                          | (196,675     | )                    
|                                               |               |                        |                          |              |                      
|Total shareholders' equity                     |               |                        |                          | 111,513      |                      
|                                               |               |                        |                          |              |                      
|Total liabilities and shareholders' equity     |               |                        | $                        | 388,273      |                      
|                                               |               |                        |                          |              |                      

---

RENT-WAY, INC.

CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS

FOR THE THREE-MONTHS
ENDED JUNE 30, 2004

(All dollars in
thousands)

|                                                   | Parent
Issuer | Guarantor
Subsidiaries | Non-Guarantor
Subsidiary | Eliminations | Rent-Way
Consolidated
|-------------------------------------------------- | ------------- | ---------------------- | ------------------------ | ------------ | ---------------------
|REVENUES:                                          |               |                        |                          |              |                      
|Rental revenues                                    |               |                        | $                        | 82,072       |                      
|Prepaid phone service                              |               |                        |                          | --           |                      
|Other revenues                                     |               |                        |                          | 12,229       |                      
|                                                   |               |                        |                          |              |                      
|Total revenues                                     |               |                        |                          | 94,301       |                      
|COSTS AND OPERATING EXPENSES:                      |               |                       
|Depreciation and amortization:                     |               |                       
|Rental merchandise                                 |               |                        |                          | 24,981       |                      
|Property and equipment                             |               |                        |                          | 3,006        |                      
|Amortization of goodwill and other intangibles     |               |                        |                          | 65           |                      
|Cost of prepaid phone service                      |               |                        |                          | --           |                      
|Salaries and wages                                 |               |                        |                          | 26,350       |                      
|Advertising, net                                   |               |                        |                          | 4,635        |                      
|Occupancy                                          |               |                        |                          | 6,765        |                      
|Other operating expenses                           |               |                        |                          | 20,345       |                      
|                                                   |               |                        |                          |              |                      
|Total costs and operating expenses                 |               |                        |                          | 86,147       |                      
|                                                   |               |                        |                          |              |                      
|Operating income (loss)                            |               |                        |                          | 8,154        |                      
|OTHER INCOME (EXPENSE):                            |               |                       
|Interest expense                                   |               |                        |                          | (7,805       | )                    
|Interest income                                    |               |                        |                          | 8            |                      
|Amortization and write-off of deferred financing   |               |                       
|costs                                              |               |                        |                          | (227         | )                    
|Other income (expense), net                        |               |                        |                          | 1,554        |                      
|Equity in net income of subsidiaries               |               |                        |                          | 4,158        |                      
|                                                   |               |                        |                          |              |                      
|Income (loss) before income taxes and discontinued |               |                        |                          | 5,842        |                      
|operations                                         |               |                       
|Income tax expense                                 |               |                        |                          | 1,395        |                      
|                                                   |               |                        |                          |              |                      
|Income (loss) before discontinued operations       |               |                        |                          | 4,447        |                      
|Loss from discontinued operations                  |               |                        |                          | (83          | )                    
|                                                   |               |                        |                          |              |                      
|Net income (loss)                                  |               |                        | $                        | 4,364        |                      
|                                                   |               |                        |                          |              |                      

---

RENT-WAY, INC.

CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS

FOR THE NINE-MONTHS
ENDED JUNE 30, 2004

(All dollars in
thousands)

|                                                              | Parent
Issuer | Guarantor
Subsidiaries | Non-Guarantor
Subsidiary | Eliminations | Rent-Way
Consolidated
|------------------------------------------------------------- | ------------- | ---------------------- | ------------------------ | ------------ | ---------------------
|REVENUES:                                                     |               |                        |                          |              |                      
|Rental revenues                                               |               |                        | $                        | 252,968      |                      
|Prepaid phone service                                         |               |                        |                          | --           |                      
|Other revenues                                                |               |                        |                          | 38,449       |                      
|                                                              |               |                        |                          |              |                      
|Total revenues                                                |               |                        |                          | 291,417      |                      
|COSTS AND OPERATING EXPENSES:                                 |               |                       
|Depreciation and amortization:                                |               |                       
|Rental merchandise                                            |               |                        |                          | 80,807       |                      
|Property and equipment                                        |               |                        |                          | 8,923        |                      
|Amortization of goodwill and other intangibles                |               |                        |                          | 233          |                      
|Cost of prepaid phone service                                 |               |                        |                          | --           |                      
|Salaries and wages                                            |               |                        |                          | 79,187       |                      
|Advertising, net                                              |               |                        |                          | 14,023       |                      
|Occupancy                                                     |               |                        |                          | 19,889       |                      
|Restructuring costs                                           |               |                        |                          | 36           |                      
|Other operating expenses                                      |               |                        |                          | 61,804       |                      
|                                                              |               |                        |                          |              |                      
|Total costs and operating expenses                            |               |                        |                          | 264,903      |                      
|                                                              |               |                        |                          |              |                      
|Operating income (loss)                                       |               |                        |                          | 26,514       |                      
|OTHER INCOME (EXPENSE):                                       |               |                       
|Interest expense                                              |               |                        |                          | (24,008      | )                    
|Interest income                                               |               |                        |                          | 789          |                      
|Amortization and write-off of deferred financing costs        |               |                        |                          | (748         | )                    
|Other income (expense), net                                   |               |                        |                          | (1,633       | )                    
|Equity in net income of subsidiaries                          |               |                        |                          | 9,616        |                      
|                                                              |               |                        |                          |              |                      
|Income (loss) before income taxes and discontinued operations |               |                        |                          | 10,530       |                      
|Income tax expense                                            |               |                        |                          | 4,185        |                      
|                                                              |               |                        |                          |              |                      
|Income (loss) before discontinued operations                  |               |                        |                          | 6,345        |                      
|Loss from discontinued operations                             |               |                        |                          | (1,073       | )                    
|                                                              |               |                        |                          |              |                      
|Net income (loss)                                             |               |                        | $                        | 5,272        |                      
|                                                              |               |                        |                          |              |                      

---

RENT-WAY, INC.

CONDENSED CONSOLIDATING
STATEMENT OF CASH FLOWS

FOR THE NINE-MONTHS
ENDED JUNE 30, 2004

(All dollars in
thousands)

|                                                        | Parent
Issuer | Guarantor
Subsidiaries | Non-Guarantor
Subsidiaries | Eliminations | Rent-Way
Consolidated
|------------------------------------------------------- | ------------- | ---------------------- | -------------------------- | ------------ | ---------------------
|OPERATING ACTIVITIES:                                   |               |                        |                            |              |                      
|Net cash provided by (used in) operating activities     |               |                        | $                          | 4,148        |                      
|INVESTING ACTIVITIES:                                   |               |                       
|Purchases of property and equipment                     |               |                        |                            | (4,675       | )                    
|Investment in subsidiary                                |               |                        |                            | 230          |                      
|                                                        |               |                        |                            |              |                      
|Net cash used in investing activities                   |               |                        |                            | (4,905       | )                    
|FINANCING ACTIVITIES:                                   |               |                       
|Proceeds from borrowings                                |               |                        |                            | 93,000       |                      
|Payments on borrowings                                  |               |                        |                            | (88,014      | )                    
|Payments on note for settlement of class action lawsuit |               |                        |                            | (2,000       | )                    
|Payments on capital leases                              |               |                        |                            | (4,717       | )                    
|Book overdraft                                          |               |                        |                            | (1,226       | )                    
|Deferred financing costs                                |               |                        |                            | (35          | )                    
|Issuance of common stock                                |               |                        |                            | 938          |                      
|Proceeds from convertible preferred stock               |               |                        |                            | 5,000        |                      
|Dividends paid                                          |               |                        |                            | (909         | )                    
|                                                        |               |                        |                            |              |                      
|Net cash provided by (used in) financing activities     |               |                        |                            | 2,037        |                      
|                                                        |               |                        |                            |              |                      
|Increase (decrease) in cash and cash equivalents        |               |                        |                            | 1,280        |                      
|                                                        |               |                        |                            |              |                      
|Cash and cash equivalents at beginning of year          |               |                        |                            | 1,803        |                      
|                                                        |               |                        |                            |              |                      
|Cash and cash equivalents at end of year                |               |                        | $                          | 3,083        |                      
|                                                        |               |                        |                            |              |                      

---

RENT-WAY, INC.

CONDENSED CONSOLIDATING
BALANCE SHEET

SEPTEMBER 30, 2003

(All dollars in
thousands)

|                                               | Parent
Issuer | Guarantor
Subsidiaries | Non-Guarantor
Subsidiary | Eliminations | Rent-Way
Consolidated
|---------------------------------------------- | ------------- | ---------------------- | ------------------------ | ------------ | ---------------------
|ASSETS                                         |               |                        |                          |              |                      
|Cash and cash equivalents                      |               |                        | $                        | 1,803        |                      
|Restricted cash                                |               |                        |                          | 10,000       |                      
|Prepaid expenses                               |               |                        |                          | 6,476        |                      
|Income tax receivable                          |               |                        |                          | 3,461        |                      
|Rental merchandise, net                        |               |                        |                          | 136,797      |                      
|Rental merchandise credits due from vendors    |               |                        |                          | 3,507        |                      
|Property and equipment, net                    |               |                        |                          | 31,053       |                      
|Goodwill                                       |               |                        |                          | 124,457      |                      
|Deferred financing costs, net                  |               |                        |                          | 8,316        |                      
|Intangible assets, net                         |               |                        |                          | 503          |                      
|Other assets                                   |               |                        |                          | 17,970       |                      
|Investment in subsidiaries                     |               |                        |                          | 57,001       |                      
|                                               |               |                        |                          |              |                      
|Total assets                                   |               |                        | $                        | 401,344      |                      
|                                               |               |                        |                          |              |                      
|LIABILITES AND SHAREHOLDERS' EQUITY            |               |                       
|Liabilities:                                   |               |                       
|Accounts payable                               |               |                        | $                        | 23,992       |                      
|Other liabilities                              |               |                        |                          | 69,507       |                      
|Inter-company                                  |               |                        |                          | (33,262      | )                    
|Deferred tax liability                         |               |                        |                          | 3,735        |                      
|Debt                                           |               |                        |                          | 214,592      |                      
|                                               |               |                        |                          |              |                      
|Total liabilities                              |               |                        |                          | 278,564      |                      
|Convertible redeemable preferred stock         |               |                        |                          | 15,991       |                      
|SHAREHOLDERS' EQUITY:                          |               |                       
|Common stock                                   |               |                        |                          | 303,220      |                      
|Common stock warrants                          |               |                        |                          | 156          |                      
|Option to purchase convertible preferred stock |               |                        |                          | 142          |                      
|Accumulated other comprehensive income         |               |                        |                          | (69          | )                    
|Retained earnings (accumulated deficit)        |               |                        |                          | (196,660     | )                    
|                                               |               |                        |                          |              |                      
|Total shareholders' equity                     |               |                        |                          | 106,789      |                      
|                                               |               |                        |                          |              |                      
|Total liabilities and shareholders' equity     |               |                        | $                        | 401,344      |                      
|                                               |               |                        |                          |              |                      

---

RENT-WAY, INC.

CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS

FOR THE THREE-MONTHS
ENDED JUNE 30, 2003

(All dollars in
thousands)

|                                                              | Parent
Issuer | Guarantor
Subsidiaries | Non-Guarantor
Subsidiary | Eliminations | Rent-Way
Consolidated
|------------------------------------------------------------- | ------------- | ---------------------- | ------------------------ | ------------ | ---------------------
|REVENUES:                                                     |               |                        |                          |              |                      
|Rental revenues                                               |               |                        | $                        | 79,134       |                      
|Prepaid phone service                                         |               |                        |                          | --           |                      
|Other revenues                                                |               |                        |                          | 11,600       |                      
|                                                              |               |                        |                          |              |                      
|Total revenues                                                |               |                        |                          | 90,734       |                      
|COSTS AND OPERATING EXPENSES:                                 |               |                       
|Depreciation and amortization:                                |               |                       
|Rental merchandise                                            |               |                        |                          | 23,905       |                      
|Property and equipment                                        |               |                        |                          | 3,478        |                      
|Amortization of intangibles                                   |               |                        |                          | 211          |                      
|Cost of prepaid phone service                                 |               |                        |                          | --           |                      
|Salaries and wages                                            |               |                        |                          | 25,460       |                      
|Advertising, net                                              |               |                        |                          | 3,157        |                      
|Occupancy                                                     |               |                        |                          | 6,035        |                      
|Restructuring costs                                           |               |                        |                          | 1,091        |                      
|Other operating expenses                                      |               |                        |                          | 15,823       |                      
|                                                              |               |                        |                          |              |                      
|Total costs and operating expenses                            |               |                        |                          | 79,160       |                      
|                                                              |               |                        |                          |              |                      
|Operating income                                              |               |                        |                          | 11,574       |                      
|OTHER INCOME (EXPENSE):                                       |               |                       
|Interest expense                                              |               |                        |                          | (8,080       | )                    
|Interest income                                               |               |                        |                          | 21           |                      
|Class action settlement                                       |               |                        |                          | --           |                      
|Amortization and write-off of deferred financial              |               |                       
|costs                                                         |               |                        |                          | (1,584       | )                    
|Equity in losses of subsidiaries                              |               |                        |                          | 3,038        |                      
|Other income, net                                             |               |                        |                          | 1,421        |                      
|                                                              |               |                        |                          |              |                      
|Income (loss) before income taxes and discontinued operations |               |                        |                          | 6,390        |                      
|Income tax expense                                            |               |                        |                          | 1,089        |                      
|                                                              |               |                        |                          |              |                      
|Income (loss) before discontinued operations                  |               |                        |                          | 5,301        |                      
|Loss from discontinued operations                             |               |                        |                          | (818         | )                    
|                                                              |               |                        |                          |              |                      
|Net income (loss)                                             |               |                        | $                        | 4,483        |                      
|                                                              |               |                        |                          |              |                      

---

RENT-WAY, INC.

CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS

FOR THE NINE-MONTHS
ENDED JUNE 30, 2003

(All dollars in
thousands)

|                                                              | Parent
Issuer | Guarantor
Subsidiaries | Non-Guarantor
Subsidiary | Eliminations | Rent-Way
Consolidated
|------------------------------------------------------------- | ------------- | ---------------------- | ------------------------ | ------------ | ---------------------
|REVENUES:                                                     |               |                        |                          |              |                      
|Rental revenues                                               |               |                        | $                        | 224,668      |                      
|Prepaid phone service                                         |               |                        |                          | --           |                      
|Other revenues                                                |               |                        |                          | 33,486       |                      
|                                                              |               |                        |                          |              |                      
|Total revenues                                                |               |                        |                          | 258,154      |                      
|COSTS AND OPERATING EXPENSES:                                 |               |                       
|Depreciation and amortization:                                |               |                       
|Rental merchandise                                            |               |                        |                          | 68,309       |                      
|Property and equipment                                        |               |                        |                          | 12,832       |                      
|Amortization of intangibles                                   |               |                        |                          | 938          |                      
|Cost of prepaid phone service                                 |               |                        |                          | --           |                      
|Salaries and wages                                            |               |                        |                          | 70,594       |                      
|Advertising, net                                              |               |                        |                          | 14,859       |                      
|Occupancy                                                     |               |                        |                          | 15,297       |                      
|Restructuring costs                                           |               |                        |                          | 3,306        |                      
|Other operating expenses                                      |               |                        |                          | 53,843       |                      
|                                                              |               |                        |                          |              |                      
|Total costs and operating expenses                            |               |                        |                          | 239,978      |                      
|                                                              |               |                        |                          |              |                      
|Operating income                                              |               |                        |                          | 18,176       |                      
|OTHER INCOME (EXPENSE):                                       |               |                       
|Interest expense                                              |               |                        |                          | (25,937      | )                    
|Interest income                                               |               |                        |                          | 71           |                      
|Class action settlement                                       |               |                        |                          | (14,000      | )                    
|Amortization and write-off of deferred financial              |               |                       
|costs                                                         |               |                        |                          | (2,720       | )                    
|Equity in losses of subsidiaries                              |               |                        |                          | 3,993        |                      
|Other income, net                                             |               |                        |                          | 4,588        |                      
|                                                              |               |                        |                          |              |                      
|Income (loss) before income taxes and discontinued operations |               |                        |                          | (15,829      | )                    
|Income tax expense                                            |               |                        |                          | 3,190        |                      
|                                                              |               |                        |                          |              |                      
|Income (loss) before discontinued operations                  |               |                        |                          | (19,019      | )                    
|Loss from discontinued operations                             |               |                        |                          | (9,777       | )                    
|                                                              |               |                        |                          |              |                      
|Net income (loss)                                             |               |                        | $                        | (28,796      | )                    
|                                                              |               |                        |                          |              |                      

---

RENT-WAY, INC.

CONDENSED CONSOLIDATING
STATEMENT OF CASH FLOWS

FOR THE NINE-MONTHS
ENDED JUNE 30, 2003

(All dollars in
thousands)

|                                                    | Parent
Issuer | Guarantor
Subsidiaries | Non-Guarantor
Subsidiaries | Eliminations | Rent-Way
Consolidated
|--------------------------------------------------- | ------------- | ---------------------- | -------------------------- | ------------ | ---------------------
|OPERATING ACTIVITIES:                               |               |                        |                            |              |                      
|Net cash provided by (used in) operating activities |               |                        | $                          | (29,371      | )                    
|INVESTING ACTIVITIES:                               |               |                       
|Purchase of businesses, net of cash acquired        |               |                        |                            | (259         | )                    
|Purchases of property and equipment                 |               |                        |                            | (2,908       | )                    
|Proceeds from sale of stores and other assets       |               |                        |                            | 73,304       |                      
|                                                    |               |                        |                            |              |                      
|Net cash used in investing activities               |               |                        |                            | 70,137       |                      
|FINANCING ACTIVITIES:                               |               |                       
|Proceeds from borrowings                            |               |                        |                            | 662,449      |                      
|Payments on borrowings                              |               |                        |                            | (705,140     | )                    
|Payments on capital leases                          |               |                        |                            | (5,009       | )                    
|Book overdraft                                      |               |                        |                            | 436          |                      
|Proceeds from convertible preferred stock           |               |                        |                            | 14,129       |                      
|Deferred financing costs                            |               |                        |                            | (8,718       | )                    
|Issuance of Common Stock                            |               |                        |                            | 506          |                      
|Payment of loans by directors/shareholders          |               |                        |                            | 285          |                      
|Interest on shareholder loans                       |               |                        |                            | (3           | )                    
|                                                    |               |                        |                            |              |                      
|Net cash provided by (used in) financing activities |               |                        |                            | (41,065      | )                    
|                                                    |               |                        |                            |              |                      
|Increase (decrease) in cash and cash equivalents    |               |                        |                            | (299         | )                    
|Cash and cash equivalents at beginning of year      |               |                        |                            | 4,702        |                      
|                                                    |               |                        |                            |              |                      
|Cash and cash equivalents at end of year            |               |                        | $                          | 4,403        |                      
|                                                    |               |                        |                            |              |                      

19.    
          RECENT ACCOUNTING PRONOUNCEMENTS:

In
May 2003, the FASB issued Statement of Financial Accounting Standards No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity (SFAS 150). SFAS 150 establishes standards for
how an issuer classifies and measures certain financial instruments with characteristics
of both liabilities and equity. It requires that an issuer classify a financial instrument
that is within its scope as a liability (or an asset in some circumstances). This
Statement is effective for financial instruments entered into or modified after May 31,
2003, and otherwise effective at the beginning of the first interim period beginning after
June 15, 2003. The Company has adopted the provisions of this Statement. The application
of SFAS 150 did not have a material impact on the financial statements for the Company.
The classification and measurement provisions in paragraphs 9, 10 and 22 of FAS 150 are
deferred for an indefinite period for certain mandatory, redeemable, non-controlling
interests with finite-lived subsidiaries.

On January 15, 2003, the FASB issued
FIN 46, Consolidation of Variable Interest Entities. The objective of this
interpretation is to improve financial reporting by enterprises involved with variable
interest entities. This interpretation is effective for financial statements issued after
March 15, 2004. The application of FIN 46 did not have a material impact on the financial
statements for the Company.

OVERVIEW

Rent-Way currently operates 753
rental-purchase stores located in 33 states. The Company offers quality brand name
home entertainment equipment, furniture, computers, major appliances, and jewelry to
customers under full-service rental-purchase agreements that generally allow the
customer to obtain ownership of the merchandise at the conclusion of an agreed upon
rental period. The Company also provides prepaid local phone service to consumers on
a monthly basis through DPI, a majority owned subsidiary. DPI is a non-facilities based
provider of local phone service.

The Company continues to focus on
improving gross margins, decreasing operating expenses, and reducing debt. To accomplish
these objectives, the Company has significantly upgraded its merchandise mix, implemented
higher rental rates, and closed, combined, or sold under-performing stores. On June 2,
2003, the Company closed a refinancing of its bank credit facility through the issuance of
$205.0 million of senior secured notes, borrowings under a new $60.0 million bank
revolving credit facility and the sale of $15.0 million of convertible preferred stock.

The Company generates revenues from
three categories: rental revenue, prepaid phone service revenue, and other revenue. The
household rental business revenues include both rental revenue and other revenue. Rental
revenue consists of revenues derived from rental-purchase agreements. Prepaid phone
service revenue represents revenues from DPI. Other revenue includes revenues related to
services offered that complement the rental-purchase agreements and the sale of rental
merchandise. These revenues include liability damage waiver premiums, Preferred Customer
Club fees and revenues from the sale of merchandise. The Company considers the
rental-purchase business and prepaid telephone services to be two separate business units.

While there is constant turnover
within the portfolio of rental agreements, the total number of rental agreements in a
store does not change significantly. This stability in the number of rental agreements
facilitates revenue forecasting. The typical store experiences a slight decrease in the
number of agreements during the summer months while, on balance, the rest of the year
demonstrates growth in agreements.

The major components of the
Companys cost structure are the cost of rental merchandise and personnel and, to a
lesser extent, occupancy expenses, sales and marketing expense and general and
administrative costs. Costs associated with rental merchandise are driven by the need to
purchase merchandise to maintain the quality and availability of the product mix.
Compensation, incentives, and employee benefits are the main components of personnel
costs. Occupancy expenses include store operating lease, maintenance and common area
maintenance expenses. Sales and marketing expenses are driven primarily by advertising
costs, business development activities, and the development of new service offerings.
Other operating expenses include general and administrative costs, which primarily include
corporate overhead expenses, costs associated with the information technology
infrastructure, and other store related expenses.

USE OF ESTIMATES IN OUR
FINANCIAL STATEMENTS

The preparation of the consolidated
financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates. On an ongoing basis, management reviews its estimates, including those related
to litigation, liability for self-insurance, impairment of goodwill and other intangibles,
based on currently available information. Changes in facts and circumstances may result in
revised estimates.

CRITICAL ACCOUNTING
POLICIES

Revenue.
          Rental merchandise is rented to customers pursuant to rental agreements,
          which provide for either weekly, biweekly, semi-monthly or monthly rental
          payments collected in advance. Revenue is recognized as collected, not over
          the rental term, since at the time of collection the rental merchandise
          has been placed in service and costs of installation and delivery have
          been incurred. This method of revenue recognition does not produce
          materially different results than if rental revenue were recognized over
          the weekly, biweekly, semi-monthly or monthly rental term.

Rental Merchandise
Depreciation. The Company uses the units of activity depreciation
method for all rental merchandise except computers and computer game systems. Under the
units of activity method, rental merchandise is depreciated as revenue is collected
or earned during free-rent promotions. Thus, rental merchandise is not
depreciated during periods when it is not on rent and therefore not generating
rental revenue. Personal computers are principally depreciated on the straight-line
basis beginning on acquisition date over 24 months. Write-offs of rental
merchandise arising from customers failure to return merchandise, losses due to
excessive wear and tear of merchandise and obsolescence are recognized using the
direct write-off method, which is materially consistent with the results that would be
recognized under the allowance method. The rental merchandise write-offs approximate 3% of
revenue from month to month over the prior 2 fiscal years. The Company reviews this
analysis on a monthly basis.

Prepaid Phone Service. Prepaid
phone service is provided to customers on a prepaid month-to-month basis. Prepaid
phone service revenues are comprised of monthly service revenues and activation
revenues. Monthly service revenues are recognized on a straight-line basis over the
related monthly service period, commencing when the service period begins. The cost
of monthly service is also recognized over the monthly service period and is included
in cost of prepaid phone service in the condensed consolidated statement
of operations. Activation revenues and costs are recognized on a straight-line basis
over the average estimated life of the customer relationship. The Company reviews the
average estimated life of the customer relationship from time to time in making this
determination of average estimated life.

Convertible Redeemable Preferred
Stock. The Companys sale of convertible preferred stock in June 2003 resulted in
proceeds of $14.2 million, net of issuance costs of $0.8 million, which were used to
refinance the previous senior credit facility. The net proceeds are classified outside of
permanent equity because of the redemption date and other redemption provisions of the
preferred stock. The Company has determined that the conversion feature of the convertible
redeemable preferred stock is a derivative financial instrument that was bifurcated and
recorded in temporary equity classification on the balance sheet. This derivative
financial instrument is marked to market through other income (expense) in the
Companys condensed consolidated statements of operations (see Note 9 to the
condensed consolidated financial statements).

Closed Store Reserves. From
time to time, the Company closes or consolidates stores. An estimate is recorded of the
future obligation related to closed stores based upon the present value of the future
lease payments and related lease commitments, net of estimated sublease income. If
the estimates related to sublease income are not correct, the actual liability may be
more or less than the liability recorded, and the Company adjusts the liability
accordingly.

Company Insurance Programs.
For fiscal years 2004, 2003, 2002 and 2001, the Company is primarily self-insured for
health insurance. The self-insurance liability for health costs is determined based on
funding factors determined by cost plus rates for a fully insured plan and monthly
headcount. The contracted rate is determined based on experience, prior claims filed and
an estimate of future claims. A retrospective adjustment for over (under) funding of
claims is recorded when determinable and probable.

The self-insurance liability for
workers compensation, automobile and general liability costs are determined
based on claims filed and company experience. Losses in the workers
compensation, automobile and general liability programs are pre-funded based on the
insurance companys loss estimates. Loss estimates will be adjusted for
developed incurred losses at 18 months following policy inception and every 12 months
thereafter. Retrospective adjustments to loss estimates are recorded when
determinable and probable.

For fiscal years 2000 and 1998, the
Company was insured under deductible programs with aggregate stop loss coverage on major
claims. Claims exceeding the insured deductible limits that were less than stop loss
aggregates, were funded as claims developed using AM Best loss development factors and not
exceeding policy aggregate. The fiscal 1999 workers compensation insurance had no
aggregate retention and was funded as claims developed using AM Best loss development
factors.

Discontinued Operations.On
February 8, 2003, the Company sold rental merchandise and related contracts of 295 stores
to Rent-A-Center, Inc. Rent-A-Center, Inc. purchased certain fixed assets and assumed
related store leases of 125 of these stores. Accordingly, for financial statement
purposes, the assets, liabilities, results of operations and cash flows of this component
have been segregated from those of continuing operations and are presented in the
Companys financial statements as discontinued operations (see Note 2 to the
condensed consolidated financial statements).

Deferred Financing Costs.
Deferred financing costs consists of bond issuance costs and loan origination costs
incurred in connection with the sale of $205.0 million of senior secured notes and a new
$60.0 million revolving credit facility that closed June 2, 2003. The bond issuance costs
of $6.7 million are being amortized using the effective interest method over the
seven-year term of the bonds. The loan origination costs of $2.1 million are being
amortized on a straight-line basis over the five-year bank credit agreement. Deferred
financing costs amortization was $0.2 million and $1.6 million for the three-month periods
and $0.7 million and $2.7 million for the nine-month periods ended June 30, 2004 and 2003,
respectively.

RESULTS OF OPERATIONS

The following table sets forth, for
the periods indicated, certain items from the Companys unaudited condensed
consolidated statements of operations, expressed as a percentage of revenues.

|                                                              | Three-months Ended
June 30, | Nine-months Ended
June 30,
|------------------------------------------------------------- | --------------------------- | --------------------------
|
|REVENUES:                                                     |                             |                           
|Rental revenue                                                |                             |                           
|Prepaid phone service revenue                                 |                             |                           
|Other revenue                                                 |                             |                           
|                                                              |                             |                           
|Total revenues                                                |                             |                           
|COSTS AND OPERATING EXPENSES:                                 |                             |                           
|Depreciation and amortization                                 |                             |                           
|Rental merchandise                                            |                             |                           
|Property and equipment                                        |                             |                           
|Amortization of intangibles                                   |                             |                           
|                                                              |                             |                           
|Total depreciation and amortization                           |                             |                           
|Cost of prepaid phone service                                 |                             |                           
|Salaries and wages                                            |                             |                           
|Advertising                                                   |                             |                           
|Occupancy                                                     |                             |                           
|Restructuring costs                                           |                             |                           
|Other operating expenses                                      |                             |                           
|                                                              |                             |                           
|Total costs and operating expenses                            |                             |                           
|                                                              |                             |                           
|Operating income                                              |                             |                           
|Settlement of class action lawsuit                            |                             |                           
|Interest expense                                              |                             |                           
|Interest income                                               |                             |                           
|Amortization--deferred financing costs                        |                             |                           
|Other income (expense)                                        |                             |                           
|                                                              |                             |                           
|Income (loss) before income taxes and discontinued operations |                             |                           
|Income tax expense                                            |                             |                           
|                                                              |                             |                           
|Income (loss) before discontinued operations                  |                             |                           
|Income (loss) from discontinued operations                    |                             |                           
|                                                              |                             |                           
|Net income (loss)                                             |                             |                           
|                                                              |                             |                           

COMPARISON OF
THREE-MONTHS ENDED JUNE 30, 2004 AND 2003

Total revenues. Total revenues
increased $1.8 million, or 1.4% to $124.1 million from $122.4 million. The increase is
attributable to an increase in revenues of $4.2 million in the household rental segment
offset by a $2.4 million decrease in the prepaid telephone service segment. The $2.4
million decrease in the prepaid telephone service segment is due to a decrease in
customers attributed to an increase in competition. The $4.2 million increase in revenue
in the household rental segment is due a 3.4% increase in same store revenues.

Same store revenues consists of
revenues from stores in the household rental segment that have been operating for more
than 15 months and have had no changes affecting operations during that time,
specifically, mergers, dispositions or acquisitions. The increase in the same store
revenues was due to an increase in same store rental revenues, early purchase option,
sales revenues and fee revenues. Same store rental revenues increased 3.3% as compared to
the same period last year. This increase is primarily attributable to more rental-purchase
agreements in the portfolio. Early purchase options and sales revenues increased 9.9% as
compared to the same period last year. This increase is principally due to changes to the
120 days same as cash promotion which resulted in fewer number of early
purchase options with higher revenues. Fee revenues increased by 1.5% as compared to the
same period last year. This increase is mainly attributable to an increase in customers
and customers choosing liability damage waiver and preferred customer club.

Depreciation Amortization.
Depreciation expense related to rental merchandise increased to 25.2% as a percentage of
total revenues from 24.6%. This increase is primarily due to the Company adding game
systems to the product line. These items are depreciated on a straight-line basis. Also,
the Company ran a promotion on big screen televisions that resulted in a higher percentage
of depreciation expense to revenues for the quarter ended June 30, 2004. In addition, the
Companys computer portfolio contains newer items than in the prior year, which
resulted in greater straight-line depreciation as a percentage of revenues.

Depreciation expense related to
property and equipment decreased to 3.1% as a percentage of total revenues from 3.4%. This
decrease is primarily due to reduced capital spending and assets becoming fully
depreciated.

Amortization of other intangibles
decreased to 0.1% from 0.2% as a percentage of total revenues. This is due to the
expiration of the amortization periods for certain non-compete agreements and customer
contracts. On October 1, 2001, the Company adopted SFAS 142. SFAS 142 requires the
cessation of amortization of goodwill and other indefinite-lived intangibles on the
balance sheet. Goodwill and other indefinite lived intangibles on the balance sheet are
tested for impairment at least annually.

Cost of Prepaid Phone Service.
The cost of prepaid phone service decreased to $4.1 million or 3.3% of total revenues from
$5.5 million, or 4.5% as a percentage of total revenues. This decrease of $1.4 million is
primarily due to the decrease in the number of customers. The cost of prepaid phone
service as a percentage of prepaid phone service revenue increased to 61.7% from 61.6%.

Salaries and Wages. Salaries
and wages increased to $33.1 million from $32.3 million, and increased to 26.7% as a
percentage of total revenues from 26.4% due to annual increases in wages and salaries.

Advertising.
          Advertising expense increased from $3.6 million to $5.0 million. The increase is
          primarily attributable to an increase in circulars and television costs totaling
          $1.0 million, and a $0.3 million increase in local store marketing.

Occupancy.
          Occupancy expense increased to $8.6 million from $8.4 million primarily due to
          general rent increases and an increase in maintenance expense. The increase in
          maintenance expense is the result of a strategic initiative to improve the
          appearance and consistency of the Companys stores.

Restructuring Costs.During
the second quarter of fiscal year 2003, the Company formulated a plan to restructure the
corporate office through reductions in the corporate workforce to rationalize corporate
costs for the stores remaining subsequent to the sale to Rent-A-Center, Inc. As a result
of this plan, the Company recorded total pre-tax restructuring charges of $1.2 million in
the three-month period ended June 30, 2003. The restructuring costs include $0.3 million
of employee severance and termination benefits, $0.4 million of fixed asset write-offs in
the household rental segment and $0.5 million in depreciation expense for leasehold
improvements for vacated stores for which Rent-A-Center, Inc. did not assume the leases
during the sale. These restructuring activities were completed during the fiscal quarter
ended March 31, 2003. There were no restructuring charges for the three-month period ended
June 30, 2004.

Other Operating Expense. Other
operating expense increased by $4.7 million and increased to 21.2% as a percentage of
total revenues from 17.7%. This increase is principally due to a decrease in the
adjustment for income for ultimate and incurred losses on the Companys casualty
insurances, which offsets insurance costs recorded in other operating expense. This
favorable adjustment for income was $1.6 million and $4.6 million for the three-month
periods ended June 30, 2004 and 2003, respectively. This increase is also due to a $1.6
million favorable adjustment to the Companys personal property tax accrual in fiscal
2003 as a result of the receipt of actual tax assessments. This adjustment did not
re-occur in fiscal 2004.

Interest Expense. Interest
expense decreased from 6.6% to 6.0% as a percentage of total revenues. This decrease is
primarily due to the refinancing of debt resulting in lower interest rates.

Other Income (Expense), Net.
Other income was $1.4 million for the three-months ended June 30, 2003, compared to $1.6
million for the three-months ended June 30, 2004. This change is primarily due to the
change in the fair market value of the convertible preferred stock derivative, which
resulted in expense of $0.2 million for the three-months ended June 30, 2003 compared to
income of $0.2 million for the same period ended June 30, 2004.

Income Tax Expense. During the
third quarter of fiscal 2004, the Company recorded income tax expense of $1.4 million due
to the Companys inability to look to the reversal of the deferred tax liability
associated with tax deductible goodwill to offset a portion of its deferred tax asset
following the adoption of SFAS 142. During the third quarter of fiscal 2003, The Company
recorded income tax expense of $1.1 million due the Companys inability to look to
the reversal of the deferred tax liability associated with tax deductible goodwill to
offset a portion of its deferred tax asset following the adoption of SFAS 142.

Loss From Discontinued
Operations. The loss from discontinued operations was insignificant for the
three-months ended June 30, 2004 as compared to $1.4 million for the same period ended
June 30, 2003. On December 17, 2002, the Company entered into a definitive purchase
agreement to sell 295 stores to Rent-A-Center, Inc. for approximately $101.5 million,
which transaction closed on February 8, 2003. These stores were all included in the
household rental segment. Related operating results, in accordance with SFAS 144, have
been reported as discontinued operations (see Note 2 to the condensed consolidated
financial statements).

Net Income (Loss). The Company
generated net income of $4.4 million in the three-month period ended June 30, 2004 as a
result of the factors described above compared to net income of $4.5 million in the same
period last year.

Net Income (Loss) Allocable To
Common Shareholders. On June 2, 2003, the Company issued 1,500 shares of convertible
redeemable preferred stock for $10,000 per share and a one-year option to purchase an
additional 500 shares of convertible redeemable preferred stock. As of June 30, 2004, the
option was fully exercised. The amortization of the dividend and the accretion of
preferred stock totaled $0.5 million and $0.1 million and were charged to the accumulated
deficit, and reduced net income allocable to common shareholders for the period ended June
30, 2004 and 2003, respectively.

COMPARISON OF NINE-MONTHS
ENDED JUNE 30, 2004 AND 2003

Total revenues. Total revenues
increased $10.3 million, or 2.8% to $382.8 million from $372.5 million. The increase is
attributable to an increase in revenues of $18.9 million in the household rental segment
offset by a $8.5 million decrease in the prepaid telephone service segment. The $8.5
million decrease in the prepaid telephone service segment is due to a decrease in
customers attributed to an increase in competition. The $18.9 million increase in revenue
in the household rental segment is due a 5.8% increase in same store revenues.

Same store revenues consists of
revenues from stores in the household rental segment that have been operating for more
than 15 months and have had no changes affecting operations during that time,
specifically, mergers, dispositions or acquisitions. The increase in the same store
revenues was due to an increase in same store rental revenues, early purchase option,
sales revenues and fee revenues. Same store rental revenues increased 5.4% as compared to
the same period last year. This increase is primarily attributable to more rental-purchase
agreements in the portfolio and improved collections in the nine-month period ended June
30, 2004 as compared to the same period last year. Early purchase options and sales
revenues increased 16.8% as compared to the same period last year. This increase is
principally due to changes to the 120 days same as cash promotion which
resulted in fewer number of early purchase options with higher revenues. Fee revenues
increased by 2.4% as compared to the same period last year. This increase is mainly
attributable to an increase in customers, and customers choosing liability damage waiver
and preferred customer club.

Depreciation and Amortization.
Depreciation expense related to rental merchandise increased to 26.5% as a percentage of
total revenues from 24.7%. This increase is primarily due to the Company adding game
systems to its product lines. These items are depreciated on a straight-line basis. Also,
the Company ran a promotion on big screen televisions, which resulted in an increase in
depreciation expense as a percentage of total revenues for the nine-months ended June 30,
2004. In addition, the Companys computer portfolio contains newer items than the
same period in the prior year. This resulted in an increase in straight-line depreciation
in the nine-months ended June 30, 2004 as compared to the same period in the prior year.

Depreciation expense related to
property and equipment decreased to 3.0% as a percentage of total revenues from 4.0%. This
decrease is primarily due to reduced capital spending and assets becoming fully
depreciated.

Amortization of other intangibles
decreased to 0.1% from 0.3% as a percentage of total revenues. This is due to the
expiration of the amortization periods for certain non-compete agreements and customer
contracts. On October 1, 2001, the Company adopted SFAS 142. SFAS 142 requires the
cessation of amortization of goodwill and other indefinite-lived intangibles on the
balance sheet. Goodwill and other indefinite lived intangibles on the balance sheet are
tested for impairment at least annually.

Cost of Prepaid Phone Service.
The cost of prepaid phone service decreased to $13.0 million or 3.4% of total revenues
from $17.3 million, or 4.6% as a percentage of total revenues. This decrease of $4.3
million is primarily due to the decrease in the number of customers. The cost of prepaid
phone service as a percentage of prepaid phone service revenue increased to 66.1% from
61.3%. This increase of 4.8% is primarily due to reduced prepaid phone service revenue as
a result of the decrease in the number of customers.

Salaries and Wages. Salaries
and wages increased to $100.3 million from $98.6 million, and decreased to 26.2% as a
percentage of total revenues from 26.5% due to annual increases in wages and salaries.
Advertising. Advertising expense decreased from $17.1 million to $15.4 million.
This decrease is primarily due to the sale of 295 stores to Rent-A-Center. The Company
continues to run a more balanced and efficient media strategy.

Occupancy.
          Occupancy expense increased to $25.8 million from $24.5 million primarily due to
          general rent increases and an increase in maintenance expense. The increase in
          maintenance expense is the result of a strategic initiative to improve the
          appearance and consistency of the Companys stores.

Restructuring Costs.During
the second quarter of fiscal year 2003, the Company formulated a plan to restructure the
corporate office through reductions in the corporate workforce to rationalize corporate
costs for the stores remaining subsequent to the sale to Rent-A-Center, Inc. As a result
of this plan, the Company recorded total pre-tax restructuring charges of $3.4 million in
the nine-month period ending June 30, 2003. The restructuring costs include $1.0 million
of employee severance and termination benefits, $2.0 million of fixed asset write-offs in
the household rental segment and $0.4 million in depreciation expense for leasehold
improvements for vacated stores for which Rent-A-Center did not assume the leases in the
sale. These restructuring activities were completed during the fiscal quarter ended March
31, 2003. There were insignificant restructuring charges for the same period ended June
30, 2004.

Other Operating Expense. Other
operating expense increased by $3.4 million and increased to 20.8% as a percentage of
total revenues from 20.4%. This increase is principally due to a decrease in the
adjustment for income for ultimate and incurred losses on the Companys property and
casualty insurances, which offsets insurance costs recorded in other operating expense.
This favorable adjustment for income was $1.6 million and $4.6 million for the nine-month
periods ended June 30, 2004 and 2003, respectively. This increase is also due to a $1.6
million favorable adjustment to the Companys personal property tax accrual in fiscal
2003 as a result of the receipt of actual tax assessments. This adjustment did not
re-occur in fiscal 2004. These increases were offset by decreases in legal, professional,
and consulting fees primarily relating to the refinancing of the debt in 2003.

Settlement of Class Action
Lawsuit.The Company reached an agreement to settle the consolidated class action
lawsuit pending against the Company in the U.S. District Court for the Western District of
Pennsylvania. Under the settlement, the Company paid $25.0 million to the class, of which
$11.0 million was funded from available insurance proceeds. The net $14.0 million was
expensed in the second quarter of fiscal 2003.

Interest Expense. Interest
expense decreased from 6.8% to 6.0% as a percentage of total revenues. This decrease is
primarily due to the refinancing of debt resulting in lower interest rates.

Other Income (Expense), Net.
Other income was $4.7 million for the nine-months ended June 30, 2003, compared to $1.5
million in expense for nine-months ended June 30, 2004. This change is primarily due to a
$5.5 million charge to record the convertible option derivative liability for the
convertible preferred stock at its fair market value for the nine-months ended June 30,
2004. Other income (expense) also includes the positive change in the fair market value of
the interest rate swap portfolio, which resulted in income of $3.6 million for the
nine-months ended June 30, 2003 compared to $3.0 million for the same period this year.

Income Tax Expense. During the
first nine-months of fiscal 2004, the Company recorded income tax expense of $4.2 million
due to the Companys inability to look to the reversal of the deferred tax liability
associated with tax deductible goodwill to offset a portion of its deferred tax asset
following the adoption of SFAS 142. During the first nine-months of fiscal 2003, the
Company recorded income tax expense of $4.1 million due to the Companys inability to
look to the reversal of the deferred tax liability associated with tax deductible goodwill
to offset a portion of its deferred tax asset following the adoption of SFAS 142. Also
during the first nine months of fiscal 2003, a tax benefit of $0.9 million was recorded as
a result of carrying back AMT net operating losses. The net expense for the nine-months
was $3.2 million.

Loss From Discontinued Operations.The loss from discontinued operations for the nine-months ended June 30, 2004 was $1.7
million, of which $1.0 million relates to the evaluation and write-off of leasehold
improvements related to the stores sold to Rent-A-Center. The loss from discontinued
operations was $15.6 million in the nine-months ending June 30, 2003 and was mainly due to
a $7.9 million charge for lease obligations related to vacated stores and a $6.1 million
decrease in operating income of the stores due to transition period costs. On February 8,
2003, the Company sold 295 stores to Rent-A-Center for approximately $101.4 million. These
stores are all included in the household rental segment. Related operating results, in
accordance with SFAS 144, have been reported as discontinued operations (see Note 2 to the
condensed consolidated financial statements).

Net Income (Loss). The Company
generated net income of $5.3 million in the nine-month period ended June 30, 2004 as a
result of the factors described above as compared to a net loss of $28.8 million in the
same period last year.

Net Income (Loss) Allocable To
Common Shareholders. The amortization of the dividend and the accretion of the
Companys convertible preferred stock totaled $1.3 million and $0.1 million and are
charged to accumulated deficit, but reduced net income allocable to common stockholders
for the nine-months ended June 30, 2004 and 2003, respectively.

LIQUIDITY AND CAPITAL
RESOURCES

The Companys capital
requirements relate primarily to purchasing additional rental merchandise and replacing
rental merchandise that has been sold or is no longer suitable for rent. The
Companys principal sources of liquidity are cash flows from operations, debt
capacity available under its revolving credit facility and available cash reserves.

For the nine-months ended June 30,
2004, operations provided $5.3 million of cash compared to $46.1 million cash used by
operating activities for the same period one year ago. The increase in cash provided by
operating activities is primarily attributable to the decrease in rental merchandise
purchases, an increase to net income, a decrease in cash used in discontinued operations,
and cash from income tax refunds, offset by a reduction in accounts payable and accrued
liabilities.

Net cash used in investing activities
was $5.9 million for the purchase of property and equipment for the nine-months ended June
30, 2004. Net cash provided by investing activities was $86.8 million primarily from the
sale of stores to Rent-A-Center for the nine-months ended June 30, 2003.

For the nine-months ended June 30,
2004, financing activities provided $0.8 million as compared to net cash used of $42.4
million for the same period in 2003. The Company drew a net $5.0 million from its
revolving credit facility for the nine-months ended June 30, 2004 versus repaying a net
$42.7 million in the same period a year ago. The Company received $5.0 million in proceeds
from the sale of convertible preferred stock, paid $2.0 million on the note issued in
settlement of the class action lawsuit and paid $6.0 million on capital leases for the
nine-months ended June 30, 2004.

The Companys senior secured
notes have the following material terms. The $205.0 million of senior secured notes bear
interest at 11.875%. The interest on the secured notes is payable semiannually on June 15
and December 15. The secured notes are guaranteed on a senior basis by all existing and
future domestic restricted subsidiaries of the Company other than DPI, which is an
unrestricted subsidiary. The Company may redeem the secured notes, in whole or in part, at
any time prior to June 15, 2010, at a redemption price equal to the greater of:

|a) |  | 100% of the principal amount of the notes to be redeemed; and
|-- |  | -------------------------------------------------------------

|b) |  | the sum of the present values of (i) 100% of the principal amount of the notes
               to be redeemed at June 15, 2010, and (ii) the remaining scheduled payments of
               interest from the redemption date through June 15, 2010, but excluding accrued
               and unpaid interest to the redemption date, discounted to the redemption date at
               the treasury rate plus 175 basis points;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

plus, in either case, accrued and
unpaid interest to the redemption date.

The secured notes were offered at a
discount of $3.6 million, which is being amortized using the effective interest method
over the term of the secured notes. Amortization of the discount was $0.7 million for the
nine-months ended June 30, 2004. Costs representing underwriting fees and other
professional fees of $6.7 million are being amortized, using the effective interest
method, over the term of the secured notes. The secured notes rank senior in right to all
of the Companys existing and future subordinated debt, have a lien position ranking
second to the bank revolving credit facility and effectively junior in right of payment to
all existing and future debt and other liabilities of the Companys subsidiaries that
are not subsidiary guarantors. The secured notes contain covenants that will, among other
things, limit the Companys ability to incur additional debt, make restricted
payments, incur any additional liens, sell certain assets, pay dividend distributions from
restricted subsidiaries, transact with affiliates, conduct certain sale and leaseback
transactions and use excess cash flow. The Company is in compliance with all covenants at
June 30, 2004, and expects to be able to comply with covenants based upon its fiscal 2004
projections.

The holders of the Companys
convertible preferred stock had options to acquire an additional $5.0 million of preferred
stock, at an initial conversion price of $6.65 per share. These options were fully
exercised as of June 30, 2004, for $10,000 per share. See Note 9 to the Companys
consolidated financial statements set forth at Part I, Item 1of this report for more
information regarding the convertible preferred stock.

The convertible preferred stock is
classified outside of permanent equity because of the redemption date and other redemption
provisions. The convertible feature of the convertible preferred stock is a derivative
financial instrument that is recorded at fair value and marked to market. The market value
of this derivative was $20.6 million at June 30, 2004 and is recorded in convertible
redeemable preferred stock in the consolidated balance sheet.

OFF-BALANCE SHEET
ARRANGEMENTS

The Company is not subject to any
off-balance sheet arrangements within the meaning of Rule 303(a)(4) of Regulation S-K.

CONTRACTUAL OBLIGATIONS

The following table presents
obligations and commitments to make future payments under contracts and contingent
commitments at June 30, 2004:

|Contractual Cash Obligations           | Total | Due in less
than one year | Due in
1-3 years | Due in
4-5 years | Due after
5 years
|-------------------------------------- | ----- | ------------------------- | ---------------- | ---------------- | -----------------
|Debt (1)                               |       |                           | $                | 219,782          |                  
|Capital lease obligations              |       |                           |                  | 14,783           |                  
|Operating leases                       |       |                           |                  | 105,331          |                  
|Notes payable                          |       |                           |                  | 56               |                  
|Settlement of class action lawsuit (2) |       |                           |                  | 2,000            |                  
|                                       |       |                           |                  |                  |                  
|Total cash obligations                 |       |                           | $                | 341,952          |                  
|                                       |       |                           |                  |                  |                  

(1) Consists of outstanding
revolving loans and senior secured notes, net of discount.     (2) Consists of unsecured,
subordinated note payable to the class of the class action lawsuit.

# Amount of Commitment
Expiration Per Period

|Other Commercial Commitments | Total Amounts
Committed | Less than
One year | 1-3 years | 4-5 years | Over
5 years
|---------------------------- | ----------------------- | ------------------ | --------- | --------- | ------------
|Lines of credit              |                         |                    | $         | --        |             
|Standby letters of credit    |                         |                    |           | 4,920     |             
|Guarantees                   |                         |                    |           | --        |             
|                             |                         |                    |           |           |             
|Total commercial commitments |                         |                    | $         | 4,920     |             
|                             |                         |                    |           |           |             

SEASONALITY AND INFLATION

The Companys operating results
are subject to seasonality. The first quarter typically has a greater number of
rental-purchase agreements entered into because of traditional holiday shopping patterns.
The second quarter has typically a flat to slightly negative change in the number of
rental-purchase agreements and customer accounts and also, fewer deliveries. The third
quarter has typically flat to slightly positive results and the fourth quarter again
experiences a decrease in deliveries. Management plans for these seasonal variances and
takes particular advantage of the first quarter with product promotions and marketing
campaigns. Because many of the Companys expenses do not fluctuate with seasonal
revenue changes, such revenue changes may cause fluctuations in the Companys
quarterly operating income and earnings.

In the event of a prolonged
recession, the Company acknowledges the possibility of a decrease in demand, particularly
for higher-end products.

The costs of rental merchandise
and store lease rental expense have increased modestly. These increases have not
had a significant effect on the Companys results of operations because the
Company has been able to charge commensurately higher rental for its merchandise.
This trend is expected to continue in the foreseeable future.

RECENT ACCOUNTING
PRONOUNCEMENTS

In May 2003, the FASB issued
Statement of Financial Accounting Standards No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity
(SFAS 150). SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). This Statement is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise effective
at the beginning of the first interim period beginning after June 15, 2003. The Company
has adopted the provisions of this Statement. The application of SFAS 150 did not have a
material impact on the financial statements of the Company. The classification and
measurement provisions in paragraphs 9, 10 and 22 of FAS 150 are deferred for an
indefinite period for certain mandatory, redeemable, non-controlling interests with
finite-lived subsidiaries.

On January 15, 2003, the FASB issued
FIN 46, Consolidation of Variable Interest Entities. The objective of this
interpretation is to improve financial reporting by enterprises involved with variable
interest entities. This interpretation is effective for financial statements issued after
March 15, 2004. The application of FIN 46 did not have a material impact on the financial
statements for the Company.

CAUTIONARY STATEMENT

This report includes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. See particularly Item
2, Managements Discussion and Analysis of Financial Condition, among
others. These statements may be identified by terms and phrases such as
anticipate, believe, intend, estimate,
expect, continue, should, could,
may, plan, project, predict,
will and similar expressions and relate to future events and occurrences.
These statements are subject to uncertainties and other factors that could cause actual
results to differ materially from such statements. Factors that could cause actual results
to differ materially from those expressed or implied in such statements include but are
not limited to:

Rent-Ways ability to control
and normalize operating expenses and to continue to realize operating efficiencies.

Rent-Ways ability to service its
high-level of outstanding debt.

Rent-Ways ability to develop,
implement, and maintain reliable and adequate internal accounting systems and controls.

Rent-Ways ability to retain
existing senior management and attract additional management employees.

General economic, business, and
demographic conditions, including demand for Rent-Ways products and services.

General conditions relating to the
rental-purchase industry and the prepaid local phone service industry, including the
impact of state and federal laws regulating or otherwise affecting the rental-purchase
transaction and prepaid local phone service transaction.

Competition in the rental-purchase
industry and prepaid local phone service industry, including competition with traditional
retailers.

Rent-Ways ability to enter into
and to maintain relationships with vendors of its rental merchandise including its ability
to obtain goods and services on favorable credit terms.

Rent-Ways ability to open new
rental-purchase stores and to operate them profitably.

Given these factors, undue reliance should
not be placed on any forward-looking statements and statements regarding Rent-Ways
future prospects and performance. Such statements speak only as of the date made. Rent-Way
undertakes no obligation to update or revise any such statements whether as a result of
new information, the occurrence of future events, or otherwise.

The Companys major market risk
exposure is primarily due to fluctuations in interest rates. The Company manages its
exposure to changes in short-term interest rates, particularly to reduce the impact on
floating-rate borrowings under its revolving credit facility, by entering into interest
rate swap agreements. These swap agreements involve the receipt of amounts by the Company
when floating rates exceed fixed rates and the payment of amounts by the Company to the
counter parties when fixed rates exceed the floating rates in the agreements over their
term. The Company accrues the differential as interest rates change, and recognizes it as
an adjustment to the floating rate interest expense related to the debt. The
counter-parties to these contracts are high credit quality commercial banks, which the
Company believes minimizes the risk of counter party default, to a large extent.

At June 30, 2004, the Company had
swap agreements with total notional principal amounts of $50.4 million, which effectively
fixed the interest rate on obligations in the notional amount of $18.0 million of debt
under the $60.0 million revolving credit facility. The swap agreements lock in a LIBOR
rate ranging from 6.73% to 6.97% and have maturities ranging from 2004 to 2005. Falling
interest rates and/or a flattening of the yield curve will negatively impact the market
value of the interest rate swaps. Changes in the valuation of such swap agreements are
recorded directly to earnings. The face value of interest rate swap agreements was a
liability of approximately $2.1 million at June 30, 2004. A 1% adverse change in the
interest rates on variable rate obligations would affect pre-tax earnings by approximately
$0.3 million.

The Company does not enter into
derivative financial instruments for trading or speculative purposes. Currently, and since
June 2, 2003, the Company is over-hedged because of the refinancing. The existing interest
rate swaps hedged a portion of the previous LIBOR debt. As a result of the refinancing,
the only LIBOR debt the Company has is the $60.0 million revolver credit facility, of
which $18.0 million was outstanding at June 30, 2004. The Company will reduce its interest
rate swap position as they mature through August 2005 because of the current cost to
terminate those agreements.

|A. |  | Disclosure Controls and Procedures. The Company carried out an evaluation,
                    under the supervision and with the participation of the
                    Companys management, including the Companys Chief Executive
                    Officer and Chief Financial Officer, of the effectiveness of the design and
                    operation of the Companys disclosure controls and procedures pursuant
                    to Exchange Act Rule 13a-15. Based upon the evaluation, the Companys
                    Chief Executive Officer and Chief Financial Officer concluded that, as of
                    June 30, 2004, the Companys disclosure controls and procedures are
                    effective to ensure that information required to be disclosed in Company reports
                    filed or submitted under the Exchange Act is made known to them on a timely
                    basis, and that this information is recorded, processed, summarized and
                    reported within the time periods specified in the Securities and Exchange
                    Commissions rules and forms.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|B. |  | Changes in Internal Control over Financial Reporting. There has not been any
                    change in the Companys internal control over financial reporting that
                    occurred during the last fiscal quarter that has materially affected, or is
                    reasonably likely to materially affect, the Companys internal control over
                    financial reporting.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# PART II  OTHER
INFORMATION

The Company is subject to litigation
in the ordinary course of business. The Company believes the ultimate outcome of any
existing litigation would not have a material adverse effect on the financial condition,
results of operation or cash flows of the Company.

During the quarter ended June 30,
2004, the Company sold an aggregate of 367 additional shares of Series A Convertible
Preferred Stock to certain existing holders of its Series A Convertible Preferred Stock
for $3.67 million in cash. These additional Series A preferred shares are convertible
into shares of common stock at a conversion price of $6.65 per share, subject to
anti-dilution adjustments. The issuance of and sale of the Series A preferred shares
described above was exempt from the registration requirements of the Securities Act of
1933, as amended, pursuant to Section 4 (2) thereof.

a.       
          EXHIBITS

See
exhibit index.

b.       
          REPORTS ON FORM 8-K

The
Company filed the following reports on Form 8-K in the quarter ended June 30, 2004:

|(1) |  | On April 20, 2004, the Company filed a Current Report on Form 8-K, which
          reported the issuance and sale of additional shares of its Series A Convertible
          Preferred Stock.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | On April 29, 2004, the company filed a Current Report on Form 8-K, which
          reported the issuance of a news release announcing the financial results for the
          second quarter ended March 31, 2004.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | On May 20, 2004, the Company filed a Current Report on Form 8-K, which reported
          the issuance and sale of additional shares of its Series A Convertible Preferred
          Stock.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | On June 23, 2004, the Company filed a Current Report on Form 8-K, which reported
          the Company changed its certifying Accountant for the 401(k) Retirement Savings
          Plan.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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.

| | Rent-Way,
Inc.                                                               (Registrant)
| | -----------------------------------------------------------------------------------------

August 5, 2004 Date

| | By:
/S/ WILLIAM A. MCDONNELL
                                                                               (Signature)
                                                                William A. McDonnell
                                                                Vice President and Chief
Financial Officer
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

August 5, 2004 Date

| | By:JOHN A. LOMBARDI
           (Signature)     
John A. Lombardi Chief Accounting Officer and Controller
| | --------------------------------------------------------------------------------------------------------

---

EXHIBIT INDEX

|No. |  | Exhibit
Name
|--- |  | ------------

|3.1 |  | Articles
of Incorporation of Rent-Way,  Inc., as amended (incorporated by reference to Exhibit 3.1
                 to the Company's  Annual Report on Form 10-K for the year ended
September 30, 1997, filed November                  6, 1997.)
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Statement
with Respect to Shares of Series A Convertible  Preferred Stock of the Company dated May
                 30,  2003  (incorporated  by  reference  to  exhibit  3.1 to  Amendment
 No.  5 to  the  Company's                  registration statement on Form S-3, No.
333-102525 filed on June 25, 2003).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.3 |  | Bylaws
of Rent-Way,  Inc., as amended  (incorporated  by reference to Exhibit 3.2 to the
Company's                  Annual Report on Form 10-K for the year ended September 30,
2000, filed July 2, 2001.)
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12.1* |  | Ratio
of Earnings to Fixed Charges Calculation
|----- |  | ----------------------------------------------

|31.1* |  | Certification
of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
|----- |  | ----------------------------------------------------------------------------------------------

|31.2* |  | Certification
of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
|----- |  | ----------------------------------------------------------------------------------------------

|32.1* |  | Certification
pursuant to Section 906 of Sarbanes-Oxley Action of 2002
|----- |  | ----------------------------------------------------------------------

_________________

*Filed herewith.