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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549




                                    FORM 10-Q



           (Mark One)

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

                  For the quarterly period ended June 30, 1999

                                       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. Employer Identification No.)


                 One RentWay Place, Erie, Pennsylvania  16505
                   (Address of principal 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  the  number  of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

                        Class                   Outstanding as of July 22, 1999
                  -----------------             -------------------------------
                    Common Stock                         21,631,489



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                                 RENT-WAY, INC.

<TABLE>
<CAPTION>


                                                                                                          Page
Part I            Financial Information
                  Item 1.  Financial Statements

<S>                                                                         <C>                                    <C>
                           Condensed Consolidated Balance Sheets as of June 30, 1999 and
                           September 30, 1998                                                                       3

                           Condensed Consolidated Statements of Operations, Three and
                           Nine Months Ended June 30, 1999 and 1998                                                 4

                           Condensed Consolidated Statements of Cash Flows, Nine Months
                           Ended June 30,1999 and 1998                                                              5

                           Notes to Condensed Consolidated Financial Statements                                     6

                  Item 2.  Management's Discussion and Analysis
                           of Financial Condition and Results of Operations                                        15

Part II           Other Information

                  Item 2.           Changes in Securities and Use of Proceeds                                      23

                  Item 6.           Exhibits and Reports on Form 8-K                                               23

                  Signatures                                                                                       24

</TABLE>




























<TABLE>
<CAPTION>


                                 RENT-WAY, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                           (all dollars in thousands)



                                                                                        June 30,               September 30,
                                                                                          1999                     1998
                                                                                       (unaudited)              (unaudited)

ASSETS

<S>                                                                               <C>                    <C>
Cash                                                                              $           6,914      $            5,326
Prepaid expenses                                                                             12,188                   7,819
Income tax receivable                                                                           443                   1,972
Rental merchandise, net                                                                     189,728                 176,022
Deferred income taxes                                                                         2,325                   2,912
Property and equipment, net                                                                  46,490                  38,519
Goodwill, net                                                                               222,534                 225,354
Deferred financing costs, net                                                                 2,105                   1,575
Non-compete and prepaid consulting fees, net                                                  5,079                   6,950
Other assets                                                                                  7,645                   8,993
                                                                                   ----------------         ---------------
        Total assets                                                               $        495,451         $       475,442
                                                                                   ================         ===============


LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Accounts payable                                                                   $         11,495         $        28,145
Other liabilities                                                                            18,528                  19,831
Income tax payable                                                                            6,971                       -
Debt                                                                                        198,245                 179,603
                                                                                   ----------------         ---------------
        Total liabilities                                                                   235,239                 227,579

Contingencies (see note 7)                                                                        -                       -

Shareholders' equity:
Preferred stock, without par value; 1,000,000 shares authorized;
     no shares issued and outstanding                                                             -                       -

Common stock, without par value; 50,000,000 shares
     authorized; 21,390,582 and 21,060,820 shares issued and
     outstanding, respectively                                                              248,910                 241,749
Retained earnings                                                                            11,302                   6,114
                                                                                   ----------------         ---------------
        Total shareholders' equity                                                          260,212                 247,863
                                                                                   ----------------         ---------------
        Total liabilities and shareholders' equity                                 $        495,451         $       475,442
                                                                                   ================         ===============










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

</TABLE>

<TABLE>
<CAPTION>


                                 RENT-WAY, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (all dollars in thousands, except per share data)

                                                             For the three months ended                For the nine months ended
                                                                      June 30,                                 June 30,
                                                               1999               1998                  1999                1998
                                                               ----               ----                  ----                ----
                                                                     (unaudited)                               (unaudited)
Revenues:
<S>                                                       <C>               <C>                   <C>                 <C>
Rental revenue                                            $      110,070    $      105,064        $      330,368      $     280,095

Other revenue                                                     11,881            13,482                41,293             38,019
                                                          --------------    --------------        --------------      -------------
       Total revenues                                            121,951           118,546               371,661            318,114

Costs and operating expenses:
Depreciation and amortization:
    Rental merchandise                                            29,905            28,999                93,369             79,082

    Property and equipment                                         2,487             1,829                 6,912              5,318

    Amortization of goodwill and other intangibles                 2,300             2,976                 7,249              8,361

Salaries and wages                                                31,956            31,435                97,440             87,618

Advertising                                                        5,346             6,896                19,323             19,163

Occupancy                                                          8,549             8,004                24,829             21,973

Name change expense                                                    -               227                    86              1,377
Business combination costs                                             -                70                16,800             11,185
Other operating expenses                                          23,742            30,716                78,721             80,541
                                                          --------------    --------------        --------------      -------------
        Total costs and operating expenses                       104,285           111,152               344,729            314,618
                                                          --------------    --------------        --------------      -------------
        Operating income                                          17,666             7,394                26,932              3,496

Other income (expense):
Interest expense                                                  (4,007)           (3,183)              (11,791)            (7,564)
Interest income                                                        -                90                    29                236

Other income (expense), net                                         (116)             (868)                 (337)              (817)
                                                          ---------------   ---------------       ---------------     -------------

       Income (loss) before income taxes
        and extraordinary item                                    13,543             3,433                14,833             (4,649)


Income tax expense                                                 5,420             1,758                 9,126              1,766
                                                          --------------    --------------        --------------      -------------


        Income (loss) before extraordinary item                    8,123             1,675                 5,707             (6,415)


Extraordinary item, net of tax benefit                                 -                 -                  (519)                 -
                                                          --------------    --------------        --------------      -------------


Net income (loss)                                         $        8,123    $        1,675        $        5,188      $      (6,415)
                                                          ==============    ==============        ==============      =============


Earnings  (loss) per common  share (Note 3):  Basic  earnings  (loss) per common
share:
     Income (loss) before extraordinary item              $         0.38    $         0.08        $         0.27      $       (0.32)
                                                          ==============    ==============        ==============      =============
     Net income (loss)                                    $         0.38    $         0.08        $         0.24      $       (0.32)
                                                          ==============    ==============        ==============      =============

Diluted earnings (loss) per share:
     Income (loss) before extraordinary item              $         0.36    $         0.08        $         0.27      $       (0.32)
                                                          ==============    ==============        ==============      =============

     Net income (loss)                                    $         0.36    $         0.08        $         0.24      $       (0.32)
                                                          ==============    ==============        ==============      =============

Weighted average common shares outstanding:
     Basic                                                        21,335            20,681                21,222             20,065
                                                          ==============    ==============        ==============      =============

     Diluted                                                      23,378            22,945                21,222             20,065
                                                          ==============    ==============        ==============      =============

                              The  accompanying  notes are an  integral  part of
these financial statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                 RENT-WAY, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (all dollars in thousands)

                                                                                            For the nine months ended
                                                                                                    June 30,
                                                                                          1999                    1998
                                                                                       -----------             ----------
                                                                                       (unaudited)             (unaudited)

Operating activities:
<S>                                                                                 <C>                    <C>
Net income (loss)                                                                   $         5,188        $        (6,415)
Adjustments to reconcile net income (loss)
 to net cash used in operating activities:
    Loss on sale of property and equipment                                                        -                  1,070
    Depreciation and amortization                                                           109,832                105,272
    Deferred income taxes                                                                       587                 (4,299)
    Extraordinary item                                                                          519                      -
    Changes in assets and liabilities:
    Prepaid expenses                                                                         (4,272)                (1,983)
    Rental merchandise                                                                     (105,664)              (122,882)
    Income tax receivable                                                                     1,529                    515
    Other assets                                                                              1,871                 (2,358)
    Accounts payable                                                                        (16,772)                 4,487
    Income taxes payable                                                                      6,971                  1,126
    Other liabilities                                                                        (1,825)                 2,992
                                                                                    ---------------         --------------
                     Net cash used in operating activities                                   (2,036)               (22,475)
                                                                                    ---------------         --------------
Investing activities:
    Purchase of businesses, net of cash acquired                                             (1,054)               (101,808)
    Purchases of property and equipment                                                     (15,503)                (20,653)
    Proceeds from sale of property and equipment                                                  -                    (594)
    Dispositions of stores, net of cash sold                                                      -                   3,032
    Payments received on notes receivable                                                         -                     487
                                                                                    ---------------         ---------------
                    Net cash used in investing activities                                   (16,557)               (119,536)
                                                                                    ---------------         ---------------
Financing activities:
    Book overdraft                                                                                -                   8,294
    Proceeds from borrowings                                                                273,556                 192,767
    Payments on borrowings including early extinguishment                                  (256,322)               (102,348)
    Deferred finance costs                                                                   (1,366)                   (457)
    Proceeds from common stock issuance                                                       4,313                  48,557
                                                                                    ---------------         ---------------
                   Net cash provided by financing activities                                 20,181                 146,813
                                                                                    ---------------         ---------------
                   Increase in cash                                                           1,588                   4,802

Cash at beginning of period                                                                   5,326                   5,608
                                                                                    ---------------         ---------------

Cash at end of period                                                               $         6,914         $        10,410
                                                                                    ===============         ===============

Supplemental  disclosures of cash flow information:
    Cash paid during the period for:
        Interest                                                                    $         9,956         $         7,180
        Income taxes                                                                $         2,270         $         3,312


</TABLE>


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

                                 RENT-WAY, INC.

         Notes to Unaudited Condensed Consolidated Financial Statements
                (all dollars in thousands, except per share data)

1.    Basis of Presentation:

      Rent-Way,  Inc. (the "Company" or  "Rent-Way") is a corporation  organized
      under the laws of the Commonwealth of Pennsylvania. The Company operates a
      chain of rental-purchase  stores that rent durable household products such
      as home entertainment equipment,  furniture,  major appliances and jewelry
      to  consumers on a weekly or monthly  basis.  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  generally  accepted  accounting   principles.   In  the  opinion  of
      management, all adjustments (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 have been made.  Certain amounts in the 1998 financial  statements
      have been  reclassified to conform to the 1999  presentation and have been
      restated to reflect the merger discussed in Note 2 herein.  The results of
      operations for the interim periods are not  necessarily  indicative of the
      results for the full year.

      On January 1, 1999, the Company  formed four new entities:  Rent-Way TTIG,
      L.P., an Indiana limited partnership, Rent-Way of Tomorrow, Inc., Rent-Way
      of  Michigan,   Inc.,  and  Rent-Way  Developments,   Inc.,  all  Delaware
      corporations.

      The Company has no items of other comprehensive income.

      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,
      1998 and its  Current  Report on Form 8-K filed  December  24, 1998 and an
      amendment thereto filed on February 22, 1999.

2.  Merger with Home Choice Holdings, Inc:

      On December 10, 1998,  the Company  completed a merger (the "Merger") with
      Home Choice Holdings,  Inc. ("HMCH").  The Merger, as per the terms of the
      agreement,  was recorded as a pooling of  interests,  in  accordance  with
      Accounting Principles Board ("APB") Opinion No. 16. Under the terms of the
      agreement  the  Company  issued  0.588  shares  of  common  stock for each
      outstanding   share  of  HMCH  common  stock.  The  Merger  increased  the
      outstanding shares of the Company by approximately  10,025,000 shares. The
      corporate   offices  of  the   combined   company  are  located  in  Erie,
      Pennsylvania.  None of HMCH's Board of  Directors  or  executive  officers
      retained a position  with the  combined  company.  Following  the  Merger,
      Gerald A. Ryan remained as Chairman of the Board of the combined  company,
      with William E.  Morgenstern as President and Chief Executive  Officer and
      Jeffrey A. Conway as Chief Financial Officer.

      In  conjunction  with the Merger,  certain costs were incurred  which were
      recorded by the Company during the nine months ended June 30, 1999.  These
      costs  aggregated  $16,800  and  included  (i)  investment  banker fees of
      $6,476,  (ii) proxy  preparation,  printing and other professional fees of
      $1,341, (iii) employee severance and stay-put arrangement costs of $4,516,
      (iv) due diligence  and other costs of $874,  (v) costs related to closing
      or disposing of duplicate corporate headquarters,  equipment and stores in
      overlapping  markets of $2,142 and (vi)  write-off of prepaid assets which
      will not be used of $1,451.

      In addition,  the Company identified a large number of  rental-merchandise
      items which failed to meet the accepted quality standards of the Company's
      operating procedures. Accordingly, resulting from compliance with standard
      operating  procedures,  the Company  experienced  an  excessive  amount of
      inventory deletions during the three month period ended December 31, 1998.
      The amount of inventory write-offs included in other operating expenses in
      the  Condensed  Consolidated  Statement of  Operations  for the nine month
      period ended June 30, 1999 was approximately $1,100.




                                 RENT-WAY, INC.

                              Notes        to Unaudited  Condensed  Consolidated
                                           Financial Statements - continued (all
                                           dollars  in  thousands,   except  per
                                           share data)


2.  Merger with Home Choice Holdings, Inc (continued):


      In conjunction with the Merger,  the Company entered into a new syndicated
      loan facility (see Note 5). As a result of this  refinancing,  the Company
      wrote off the remainder of deferred  financing  costs  associated with its
      and  HMCH's  previous  credit  facilities.  The  amount  of the  remaining
      deferred  financing costs was $865 ($519 net of tax benefit).  This amount
      appears as an extraordinary item on the Company's  Condensed  Consolidated
      Statement of Operations for the nine month period ended June 30, 1999.

          The revenues, extraordinary item and net income (loss) of the separate
companies are as follows:

<TABLE>
<CAPTION>

                                                           Three months ended June 30, 1998
                                               ---------------------------------------------------------
                                                                   Extraordinary         Net Income
                                               Revenues            Item                  (Loss)
                                               ---------------     -----------------     ---------------


<S>                                            <C>                 <C>                   <C>
     Rent-Way                                  $        52,492     $        --           $         3,637


     HMCH                                                                   --
                                                        66,054                                    (1,962)
                                               ===============     =================     ===============

                                    Total      $       118,546     $        --           $         1,675
                                               ===============     =================     ===============
</TABLE>
<TABLE>
<CAPTION>





                                                           Nine months ended June 30, 1999
                                               ---------------------------------------------------------
                                                                   Extraordinary         Net Income
                                               Revenues            Item                  (Loss)
                                               ----------------    -----------------     ---------------
     Rent-Way October 1, 1998 to
<S>            <C> <C>                     <C>                        <C>                  <C>
      November 30, 1998                        $        37,171     $       --            $         2,231

     HMCH October 1, 1998 to
      November 30, 1998                                 44,270             --                       (230)

     Rent-Way and HMCH December
      1, 1998 to June 30, 1999                         290,220           (519)                     3,187
                                               ================    =================     ===============


                                    Total      $       371,661     $     (519)           $         5,188
                                               ================    =================     ===============


                                                            Nine months ended June 30,1998
                                               ---------------------------------------------------------

     Rent-Way                                  $       125,060      $      --             $        8,757


     HMCH                                              193,054             --                    (15,172)
                                               ================    =================     ===============


                                    Total      $       318,114     $       --            $        (6,415)
                                               ================    =================     ===============



</TABLE>











                                 RENT-WAY, INC.

                              Notes        to Unaudited  Condensed  Consolidated
                                           Financial Statements - continued (all
                                           dollars  in  thousands,   except  per
                                           share data)

3.    Earnings (loss)  per Common Share:

      Basic earnings  (loss) per common share is computed using earnings  (loss)
      available to common shareholders divided by the weighted average number of
      common shares  outstanding.  Diluted  earnings  (loss) per common share is
      computed using earnings (loss) available to common  shareholders  adjusted
      for anticipated  interest savings,  net of related taxes, on conversion of
      the Company's convertible subordinated debentures and the weighted average
      number of shares  outstanding  is  adjusted  for the  potential  impact of
      options,  warrants and the convertible  subordinated  debentures where the
      effects are dilutive.  The weighted  average shares  outstanding  prior to
      December 10, 1998 include the historical  weighted average shares of HMCH,
      adjusted for the exchange ratio of 0.588 (see Note 2).  Because  operating
      results  produced a loss for the nine month  period  ended June 30,  1998,
      basic and diluted loss per common share were the same for this period.

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

<TABLE>
<CAPTION>
                                                                       For the three months            For the nine months
                                                                               ended                          ended
                                                                             June 30,                       June 30,
                                                                            (unaudited)                    (unaudited)
             Computation of Earnings (Loss) per share:                 1999           1998            1999          1998
             -----------------------------------------             ------------   ------------    ------------  --------

             Basic
<S>                                                                <C>            <C>             <C>           <C>
             Earnings (loss) applicable to common shares........   $      8,123   $      1,675    $      5,188  $     (6,415)
                                                                   ============   ============    ============  ============

             Weighted average number of common shares
               outstanding during the period....................         21,335         20,681          21,222        20,065
                                                                   ============   ============    ============  ============

             Basic earnings (loss) per common share:
               Earnings (loss) before extraordinary item........   $       0.38   $       0.08    $       0.27  $      (0.32)
                                                                   ============   ============    ============  ============
               Net income (loss)................................   $       0.38   $       0.08    $       0.24  $      (0.32)
                                                                   ============   ============    ============  ============

             Diluted
             Earnings (loss) applicable to common shares........   $      8,123   $      1,675    $      5,188  $     (6,415)

             Interest on 7% convertible debentures (net of tax)(1).         210            210              --            --
                                                                   ------------   ------------    ------------  ------------
             Earnings (loss) applicable for diluted earnings per
             share.............................................    $      8,333   $      1,885    $      5,188  $     (6,415)
                                                                   ============   ============    ============  =============
             Weighted average number of common shares
               outstanding during the period used in basic
             calculation........................................         21,335         20,681          21,222        20,065
             Shares issuable upon exercise of stock options,
               warrants and escrowed shares (1).....................        547            768              --            --

             Shares issued on conversion of 7% convertible
               debentures (1).......................................      1,496          1,496              --            --
                                                                   ------------   ------------    ------------  ------------
             Weighted average number of shares used in
             calculation of diluted earnings (loss)
             per share.............                                      23,378         22,945          21,222        20,065
                                                                   ============   ============    ============  ============

             Earnings (loss) per common share:
               Earnings (loss) before extraordinary item........   $       0.36   $       0.08    $       0.27  $      (0.32)
                                                                   ============   ============    ============  =============
               Net income (loss)................................   $       0.36   $       0.08    $       0.24  $      (0.32)
                                                                   ============   ============    ============  ============
             (1) Including the effects of these items for the nine months ended June 30, 1999 would be anti-dilutive.
                 Therefore, they are excluded from the calculation of diluted earnings per share for that period.
</TABLE>

4.  Acquisitions:

      On June 30,  1999,  the Company  acquired  all the  outstanding  shares of
      America's  Rent-To-Own  Center,  Inc.,  ("America's").  At the time of the
      acquisition,  America's  operated  a chain  of 21  rental-purchase  stores
      located in Arkansas,  Kansas,  Missouri, and Oklahoma with annual revenues
      of approximately  $8,000.  The consideration  paid in exchange for all the
      outstanding  shares  of  America's  consisted  of  231,140  shares  of the
      Company's common stock  (unregistered  shares subject to the provisions of
      Rule 144 of the Securities and Exchange Act). Pursuant to the terms of the
      purchase  agreement  approximately  $800 or 32,454 shares of the Company's
      common stock were placed in escrow  subject to the terms and conditions of
      the escrow agreement to secure seller's representations and warranties and
      any purchase price  adjustments.  The  acquisition was accounted for using
      the purchase method of

                                 RENT-WAY, INC.

                              Notes        to Unaudited  Condensed  Consolidated
                                           Financial Statements - continued (all
                                           dollars  in  thousands,   except  per
                                           share data)

4.  Acquisitions (continued):

     accounting.  America's  assets  and  liabilities  were  recorded  at  their
estimated  fair  value  at  the  date  of the  acquisition.  The  excess  of the
acquisition  costs over the  estimated  fair  values of the net assets  acquired
("goodwill")  of $2,846 is being  amortized  on a  straight  line  basis over 30
years.  The total cost of the net assets  acquired  was $2,849 and  consisted of
assets  of $4,864  less  liabilities  assumed  of  $2,015.  The  acquisition  of
America's was funded with shares of the Company's common stock. On a preliminary
basis,  assets  acquired,  other than  goodwill,  at their  estimated fair value
consisted of rental  merchandise  of $1,269,  receivables  of $593,  prepaid and
other assets of $96 and a non-compete  agreement of $60.  Liabilities assumed at
their estimated fair value consisted of debt of $1,408,  accrued  liabilities of
$485 and trade  accounts  payables  of $122.  The  Company is in the  process of
finalizing the purchase price  allocation.  The acquisition had no impact on the
Condensed  Consolidated  Statements of  Operations  for either the three or nine
month periods ended June 30, 1999.

      In  March,   April,  and  May  1999,  the  Company  purchased  the  rental
      merchandise and rental-purchase  contracts of three rental-purchase stores
      located in Pennsylvania,  North Carolina, and Indiana, respectively,  with
      combined annual revenues of  approximately  $830. The Company paid cash in
      exchange for the assets and each  acquisition  was accounted for using the
      purchase method of accounting.  The acquired assets were recorded at their
      estimated  fair  values at the date of  acquisition.  Goodwill  of $371 is
      being amortized on a straight line basis over 20 years.  The total cost of
      the net assets acquired was $590. The Condensed Consolidated Statements of
      Operations  for the three  and nine  month  periods  ended  June 30,  1999
      include  the  results  of  operations  for these  stores  from the date of
      acquisition.

      On September 10, 1998, the Company  purchased the rental  merchandise  and
      rental contracts of Cari Rentals,  Inc. ("Cari"),  a privately owned chain
      of 23 rental purchase stores located in Iowa, Missouri, Nebraska and South
      Dakota,  with annual  revenues  of  approximately  $7,700 in exchange  for
      consideration  of  $7,325  consisting  of 16,000  shares of the  Company's
      common stock (unregistered shares subject to the provisions of Rule 144 of
      the Securities and Exchange Act) and $6,900 in cash. Pursuant to the terms
      of the  acquisition,  $500 of the  purchase  price  was  placed  in escrow
      subject to the terms and  conditions of the escrow  agreement.  The escrow
      agreement  provides for the release of escrow  pending the completion of a
      financial  audit and  resolution of any purchase  price  adjustments.  The
      acquisition  was  accounted for using the purchase  method of  accounting.
      Cari Rentals'  assets were recorded at their fair values as of the date of
      the acquisition.  Goodwill of $6,099 is being amortized on a straight line
      basis over 30 years.  The total cost of the net assets acquired was $7,325
      ($425 in common  stock and  $6,900  in cash)  and  consisted  of assets of
      $7,557 less  acquisition  costs of $232.  Assets  acquired (at fair value)
      other than goodwill  consisted  primarily of rental  merchandise of $1,400
      and a non-compete agreement of $50. The Condensed Consolidated  Statements
      of  Operations  for the three and nine month  periods  ended June 30, 1999
      include the results of operations of Cari for the entire period.

      On July 21, 1998, the Company acquired all the outstanding  shares of Fast
      Rentals,  Inc. ("Fast  Rentals"),  a privately owned chain of eight rental
      purchase  stores  located in Alabama and Georgia  with annual  revenues of
      approximately  $3,600 in  exchange  for  consideration  of $2,047 in cash.
      Pursuant to the terms of the  acquisition,  $200 of the purchase price was
      placed in escrow,  subject to the terms of the escrow agreement to satisfy
      seller's   representations   and   warranties   and  any  purchase   price
      adjustments.  The  acquisition was accounted for using the purchase method
      of accounting. Fast Rentals' assets and liabilities were recorded at their
      fair values as of the date of the acquisition. Goodwill of $2,321 is being
      amortized  on a straight  line basis over 30 years.  The total cost of the
      net assets  acquired  was $2,047 and  consisted  of assets of $3,061  less
      liabilities assumed of $858 and acquisition costs of $156. Assets acquired
      (at  fair  value)  other  than  goodwill  consisted  primarily  of  rental
      merchandise  of $620,  prepaid  expenses of $33, other assets of $12 and a
      non-compete   agreement  of  $75.  Liabilities  assumed  (at  fair  value)
      consisted  primarily of trade payables of $29, accrued  liabilities of $43
      and debt of $786. The Condensed Consolidated  Statements of Operations for
      the three and nine month  periods  ended June 30, 1999 include the results
      of operations of Fast Rentals for the entire period.

      On February 5, 1998, the Company  acquired all the  outstanding  shares of
      Champion  Rentals,  Inc.  ("Champion").  At the  time of the  acquisition,
      Champion  operated  a  chain  of 145  rental-purchase  stores  located  in
      Alabama, Arkansas, Florida, Georgia, Kentucky,  Louisiana, North Carolina,
      Ohio,  South  Carolina,  Tennessee  and Virginia  with annual  revenues of
      approximately  $75,000.  The  consideration  paid in exchange  for all the
      outstanding shares of Champion was

                                 RENT-WAY, INC.

                              Notes        to Unaudited  Condensed  Consolidated
                                           Financial Statements - continued (all
                                           dollars  in  thousands,   except  per
                                           share data)

4.  Acquisitions (continued):

      $69,050 in cash. Pursuant to terms of the purchase agreement $2,500 of the
      purchase  price was  placed in escrow  subject  to the terms of the escrow
      agreement  to satisfy  sellers'  representations  and  warranties  and any
      purchase price adjustments.  Per the terms of the escrow agreement, $1,500
      of the  escrowed  amount was  released in September  1998,  following  the
      completion of an audit of Champion's closing date financial statements. As
      a result  of this  audit,  $900 of the  released  amount  was given to the
      sellers  with the balance  being  returned to the Company.  The  remaining
      balance  of  $1,000  was  released  February  5, 1999 per the terms of the
      escrow agreement. The sellers received $800 of this amount and the balance
      was returned to the Company.  The  acquisition was accounted for using the
      purchase  method of accounting.  Champion's  assets and  liabilities  were
      recorded at their fair values at the date of the acquisition.  Goodwill of
      $67,550 is being  amortized  on a straight  line basis over 30 years.  The
      total costs of net assets  acquired was $69,050 and consisted of assets of
      $91,030  less  liabilities  assumed of $18,408  and  acquisition  costs of
      $3,572.  The acquisition of Champion was funded with  borrowings  drawn on
      the Company's  existing senior credit  facility.  Assets acquired (at fair
      value),  other than goodwill consisted  primarily of rental merchandise of
      $18,134,  property and equipment of $159, other assets of $3,219,  prepaid
      expenses of $508,  non-compete  agreement of $1,000 and customer contracts
      of $460.  Liabilities assumed (at fair value) consisted primarily of trade
      payables of $3,925, accrued liabilities of $2,356 and debt of $12,127. The
      Condensed  Consolidated  Statements of  Operations  for the three and nine
      month  periods  ended June 30, 1999 include the results of  operations  of
      Champion for the entire period.

      On January 7, 1998,  the  Company  completed  the asset  purchase of South
      Carolina Rentals,  Inc., Paradise Valley Holdings,  Inc., and L & B Rents,
      Inc.,  (collectively,  "Ace Rentals"),  assuming  effective control of the
      results  of  operations  as of  January  1,  1998.  At  the  time  of  the
      acquisition,  Ace Rentals  operated a chain of 50  rental-purchase  stores
      located  in  California  and  South  Carolina  with  annual   revenues  of
      approximately  $22,000.  The consideration paid in exchange for the assets
      of Ace Rentals was $25,348 in cash.  Pursuant to the terms of the purchase
      agreement, $750 of the purchase price was placed in escrow, subject to the
      terms of the escrow  agreement,  to satisfy seller's  representations  and
      warranties and any purchase price  adjustments.  In May 1998,  $375 of the
      $750 escrow was released in  accordance  with the terms and  conditions of
      the escrow agreement with the balance to be released pending resolution of
      certain  issues.  The  acquisition  was  accounted  for using the purchase
      method of accounting.  Ace Rentals'  assets and certain  liabilities  were
      recorded at their fair values at the date of the acquisition.  Goodwill of
      $21,495 is being  amortized  on a straight  line basis over 30 years.  The
      total costs of net assets  acquired was $25,348 and consisted of assets of
      $26,767 less a liability  assumed of $478 and  acquisition  costs of $941.
      The acquisition of Ace Rentals was primarily funded with proceeds received
      in  connection  with the  Company's  public stock  offering on December 2,
      1997, with the balance being drawn on the Company's existing senior credit
      facility.  Assets  acquired (at fair value) other than goodwill  consisted
      primarily of rental merchandise of $4,383, property and equipment of $249,
      non-compete  agreement  of  $500  and  $140  in  customer  contracts.  The
      liability  assumed (at fair value) was $478 of vehicle  related debt.  The
      Condensed  Consolidated  Statements of  Operations  for the three and nine
      month periods ended June 30, 1999 include the results of operations of Ace
      Rentals for the entire period.

      During  calendar year 1998,  the Company also  purchased from six separate
      entities the rental merchandise and contracts of 17 rental-purchase stores
      located in Arizona,  Florida, Texas and Washington.  The Company paid cash
      in exchange for the assets and each  acquisition  was  recorded  using the
      purchase method of accounting.  The acquired assets were recorded at their
      fair  values at the date of the  acquisition.  Goodwill of $3,052 is being
      amoritized on a straight  line basis over 30 years.  The total cost of net
      assets  acquired was $4,903.  The  Condensed  Consolidated  Statements  of
      Operations  for the three  and nine  month  periods  ended  June 30,  1999
      include the results of operations  for these  acquisitions  for the entire
      period.

      The following are pro forma results of operations for the three nine month
      period ended June 30, 1998 assuming the  acquisitions  of Champion and Ace
      Rentals had occurred on October 1, 1997.  The results are not  necessarily
      indicative  of future  operations  or what  would  have  occurred  had the
      acquisitions been consummated as of that date.






                                                                  RENT-WAY, INC.

                              Notes        to Unaudited  Condensed  Consolidated
                                           Financial Statements - continued (all
                                           dollars  in  thousands,   except  per
                                           share data)

4.  Acquisitions (continued):
<TABLE>
<CAPTION>
                                                                         Unaudited Pro Forma Operations
                                                                                Nine months ended
                                                                                  June 30, 1998
                                                                                  -------------


<S>                                                                      <C>
               Revenues..................................                    $              337,974
               Net loss..................................                    $               (4,379)
               Pro forma diluted loss per common                             ======================
               share.....................................                    $                (0.21)
                                                                             ======================

</TABLE>



5.  Debt:

    On December 10, 1998, the Company entered into a new collaterized  term loan
    and revolving  credit facility (the "Facility") due December 10, 2003 with a
    syndicate of banks led by National City Bank of  Pennsylvania,  NationsBank,
    N.A., and Harris Trust and Savings Bank.

    On March 10,  1999,  the Company  made two Credit  Agreement  Joinders  (the
    "Joinders")  to the Facility.  The Joinders were made by PNC Bank,  National
    Association and Bank Austria Creditanstalt Corporate Finance, Inc. (the "New
    Banks").  Each of the New Banks agreed to make a revolving credit commitment
    in the amount of $3,889 and a term loan  commitment in the amount of $4,861.
    The  Joinders  increase  the term  loans  available  under the  Facility  to
    $125,000 and the revolving  loans and letters of credit  available under the
    Facility to $100,000.  Following  the Joinders,  the  syndicate  members and
    their ratable share of the Facility are as follows:

<TABLE>
<CAPTION>

<S>                                                                                    <C>
                         National City Bank of Pennsylvania........................... 15.5556%
                         NationsBank, N.A............................................. 15.5556%
                         Harris Trust and Savings Bank................................ 15.5556%
                         Firstar Bank, N.A............................................ 11.1111%
                         LaSalle National Bank........................................ 10.0000%
                         SunTrust Bank, Central Florida, National
                         Association..................................................  8.8889%
                         Manufacturers and Traders Trust Company......................  8.8889%
                         Mercantile Bank of St. Louis, N.A............................  6.6667%
                         PNC Bank, National Association...............................  3.8889%
                         Bank Austria Creditanstalt Corporate Finance,
                         Inc..........................................................  3.8889%

</TABLE>

    The principal amount of the term loans are payable in quarterly payments due
    on the last day of each September, December, March, and June, beginning with
    the quarter ending September 30, 1999 and are as follows:
<TABLE>
<CAPTION>

                         Quarter (s) Ending on           Percentage of Principal (as of the
                         Following Date or In The        last day of the Syndication Period)
                         Following Period                Due on Each Quarterly Payment Date
<S>                      <C>  <C>        <C>   <C>                 <C>
                         9-30-99 through 12-31-99...................2.8%..............
                         3-31-00 through 12-31-00...................3.6%..............
                         3-31-01 through 12-31-01...................4.4%..............
                         3-31-02 through 12-31-02...................5.2%..............
                         3-31-03 through 9-30-03....................6.0%..............

                         With any additional  balance which remains  outstanding
                         due and payable on December 10, 2003.
</TABLE>


     As of June 30, 1999 total  indebtedness  under the Facility was $176,000 of
which $51,000 was related to the revolving credit portion thereof.

    On January 1, 1999,  the  Company  amended the  Facility to add  Rent-Way of
    TTIG, L.P., an Indiana limited partnership, as a co-borrower.  The amendment
    also causes  Rent-Way of Tomorrow,  Inc.,  Rent-Way of Michigan,  Inc.,  and
    Rent-Way Developments, Inc., new subsidiaries of the Company incorporated in
    Delaware, to become guarantors of the Facility.


                                 RENT-WAY, INC.

                              Notes        to Unaudited  Condensed  Consolidated
                                           Financial Statements - continued (all
                                           dollars  in  thousands,   except  per
                                           share data)

5.   Debt (continued):

    The  Facility  requires  the  Company  to  comply  with  certain  covenants,
    including  financial  covenants.  These  covenants  generally  restrict  the
    Company from incurring additional indebtedness, granting additional liens on
    its assets,  making  dividends or  distributions,  disposing of assets other
    than in the ordinary course,  issuing  additional  stock,  making additional
    acquisitions or making capital expenditures, in each case subject to certain
    exceptions.  Under the Facility,  the Company is restricted  from  incurring
    additional  indebtedness  except additional  purchase money indebtedness not
    exceeding  $100,  subordinated   intercompany   indebtedness,   indebtedness
    incurred  in  connection  with  certain  acquisitions  permitted  under  the
    Facility,  certain  capitalized  leases or  purchases  of fixed  assets with
    payments that do not exceed $10,000 in the aggregate in any fiscal year, and
    any other lease, which is not a capitalized lease, or the rental of any real
    or personal property of another entity with payments that do not (other than
    for leases of retail  store  sites and motor  vehicles)  exceed  $250 in the
    aggregate  in any fiscal year.  The Company is also  required to comply with
    the following  financial  covenants:  maintain a maximum leverage ratio with
    respect to total funded debt of 4.0 to 1.0  (decreasing  periodically  until
    reaching 2.5 to 1.0 by July 1, 2002),  maintain a minimum interest  coverage
    ratio of 3.0 to 1.0  (increasing  periodically  until reaching 5.0 to 1.0 by
    April 1, 2002),  maintain a minimum net worth of $217,000  (increasing  with
    earnings  and  acquisitions)  and maintain a minimum  fixed charge  coverage
    ratio of 1.2 to 1.0. As of June 30, 1999, the Company was in compliance with
    all covenants contained in the Facility.

    As a result  of  entering  into the  Facility,  the  Company  wrote  off the
    remaining balance of deferred financing costs associated with its and HMCH's
    previous credit facilities. The amount of deferred finance costs, $865 ($519
    net of 40% tax) is shown as an extraordinary item on the Company's Condensed
    Consolidated  Statement  of  Operations  for the nine months  ended June 30,
    1999.

6.  Derivative Financial Instruments:

    The Company uses  derivative  financial  instruments to reduce the impact on
    interest  expense  of  fluctuations  in  interest  rates on a portion of the
    Facility  (see Note 5).  Interest  rate expense  under the swap  agreements,
    which  qualify  for  hedge  accounting,  is  recorded  as the net  effective
    interest  rate of the hedged  transactions.  The Company does not enter into
    derivative financial  instruments for trading or speculative purposes. As of
    June 30, 1999,  the Company had in place eight  interest  rate swaps,  under
    which the Company  agreed with  counterparties  to  exchange,  at  quarterly
    intervals,  the interest  payments on a variable pay rate of the three-month
    LIBOR and a fixed pay rate for the notional amount of the interest rate swap
    agreements.  The Company  actively  evaluates  the  creditworthiness  of the
    financial  institutions  which  are  counterparties  to  interest  rate swap
    agreements,  and it does not appear that any counterparty  will fail to meet
    their  obligation.  The following  table  illustrates  the notional  amounts
    outstanding,  maturity dates and the fixed pay and variable receive rates of
    each of the interest rate swap agreements at June 30, 1999:
<TABLE>
<CAPTION>

                                                                                                     Fixed        Variable
                                                                       Notional       Maturity        Pay          Receive
                                                                        Amount          Date          Rate          Rate

<S>                                                                  <C>                  <C>        <C>           <C>
        Interest rate swap, National City Bank....................   $      30,000    May 2003       5.965%        5.000%
        Interest rate swap, Bank of America.......................   $      20,000    May 2003       5.760%        5.000%
        Interest rate swap, Manufacturers and Traders Trust Company  $      10,000    May 2003       5.925%        5.000%
        Interest rate swap, Harris Bank...........................   $      20,000    Dec 2003       5.090%        5.000%
        Interest rate swap, SunTrust Bank.........................   $      10,000    Dec 2003       5.105%        5.000%
        Interest rate swap, LaSalle Bank..........................   $      10,000    Dec 2003       5.095%        5.000%
        Interest rate swap, Bank of America.......................   $      10,000    Dec 2003       5.120%        5.000%
        Interest rate swap, Harris Bank...........................   $      10,000    Dec 2003       5.120%        5.000%

     The fair value of the interest  rate swap  agreements  based on  settlement
cost as estimated by a dealer as of June 30, 1999 are as
    follows:
                                                                           Notional      Fair
                                                                            Amount       Value
        Interest rate swap, National City Bank....................... $     30,000   $     128
        Interest rate swap, Bank of America.......................... $     20,000   $     (91)
        Interest rate swap, Manufacturers and Traders Trust Company.. $     10,000   $      41
        Interest rate swap, Harris Bank.............................. $     20,000   $     834
        Interest rate swap, SunTrust Bank............................ $     10,000   $     429
        Interest rate swap, LaSalle Bank............................. $     10,000   $     418
        Interest rate swap, Bank of America.......................... $     10,000   $     398
        Interest rate swap, Harris Bank.............................. $     10,000   $     405
</TABLE>

                                 RENT-WAY, INC.

                              Notes        to Unaudited  Condensed  Consolidated
                                           Financial Statements - continued (all
                                           dollars  in  thousands,   except  per
                                           share data)

7.      Contingencies:

     The  Company  is subject to legal  proceedings  and claims in the  ordinary
     course of its business that have not been finally  adjudicated.  Certain of
     these cases have resulted in contingent  liabilities ranging from $1,113 to
     $2,841.  The  majority of such  claims  are, in the opinion of  management,
     covered under insurance  policies and therefore  should not have a material
     effect on the  financial  position,  results of operations or cash flows of
     the Company.

     Additional claims exist in the range of $929 to $1,117 for which management
     believes it has  meritorious  defenses,  but for which the likelihood of an
     unfavorable outcome is currently not determinable. In management's opinion,
     each  of  these  claims  will  either  be   indemnified   by  the  previous
     shareholders of prior  acquisitions or covered under insurance policies and
     therefore,  will not have a  material  effect  on the  financial  position,
     results of operations or cash flows of the Company.

8.  New Accounting Standards:

     In June 1997, the Financial  Accounting  Standards  Board  ("FASB")  issued
     Statement of Financial Accounting Standards ("SFAS") No. 131,  "Disclosures
     about  Segments of an  Enterprise  and Related  Information"  effective for
     fiscal years  beginning  after December 15, 1997.  This Statement  requires
     that public business enterprises report certain information about operating
     segments in annual and interim financial statements.  It also requires that
     public business enterprises report certain information about their products
     and services,  the geographic areas in which they operate,  and their major
     customers.  The Company is  currently  evaluating  the  provisions  of this
     Statement.

     In February  1998,  the FASB issued  SFAS No. 132,  "Employers'  Disclosure
     about  Pensions and Other  Postretirement  Benefits"  effective  for fiscal
     years  beginning  after  December 15, 1997. The adoption of SFAS No. 132 is
     not expected to have any impact on the Company's financial statements.

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
     Instruments and Hedging Activities",  as amended,  effective for all fiscal
     quarters of fiscal  years  beginning  after June 15, 2000.  This  Statement
     establishes accounting and reporting standards for derivative  instruments,
     including  certain  derivative  instruments  embedded  in other  contracts,
     (collectively  referred to as derivatives) and for hedging  activities.  It
     requires  that an entity  recognize  all  derivatives  as either  assets or
     liabilities  in the  statement  of  financial  position  and measure  those
     instruments  at  fair  value.  The  Company  is  currently  evaluating  the
     provisions of this Statement.

     The Accounting  Standards  Executive  Committee Statement of Position 98-1,
     "Accounting  for the Costs of Computer  Software  Developed or Obtained for
     Internal Use" ("SOP  98-1"),  issued in March 1998 and effective for fiscal
     years beginning after December 15, 1998 with earlier application permitted,
     provides  guidance  on  accounting  for  the  costs  of  computer  software
     developed or obtained for internal use. The Company is currently evaluating
     the provisions of this Statement.

      The Accounting  Standards  Executive Committee Statement of Position 98-5,
     "Accounting for the Costs of Start-up  Activities" ("SOP 98-5"),  issued in
     April 1998 and effective for fiscal years beginning after December 15, 1998
     with  earlier  application   permitted,   provides  guidance  on  financial
     reporting  of  start  up costs  and  organization  costs.  The  Company  is
     currently evaluating the provisions of this Statement.

  9.    Income Taxes:

     The  effective  tax rate  has  been  adjusted  for  certain  non-deductible
     business  combination  costs, which have been expensed in the quarter ended
     December 31, 1998. As a result,  the impact in the  effective  rate for the
     year has been entirely reflected in the quarter ended December 31, 1998 and
     without these charges would have been approximately 41.5%.






                                 RENT-WAY, INC.

                              Notes        to Unaudited  Condensed  Consolidated
                                           Financial Statements - continued (all
                                           dollars  in  thousands,   except  per
                                           share data)


10.   Stock Options:

     In March  1999,  the Board of  Directors  of the Company  adopted,  and the
     shareholders have approved, the Rent-Way,  Inc. 1999 Stock Option Plan (the
     "1999 Plan")  which  authorizes  the issuance of up to 2,500,000  shares of
     common stock pursuant to stock options granted to officers,  directors, key
     employees,  consultants,  and advisors of the Company.  The option exercise
     price  will be at least  equal to the fair  market  value of the  Company's
     common  stock on the grant  date.  The 1999 Plan will  expire in March 2009
     unless terminated earlier by the Board of Directors.  The authorized number
     of shares,  the exercise  price of outstanding  options,  and the number of
     shares  under  option  are  subject  to  appropriate  adjustment  for stock
     dividends,  stock  splits,  reverse stock  splits,  recapitalizations,  and
     similar  transactions.  The 1999 Plan is  administered  by the Stock Option
     Committee of the Board of Directors  who select the optionees and determine
     the terms and  provisions  of each option grant within the  parameters  set
     forth in the 1999 Plan. As of June 30, 1999, 550,000 options at an exercise
     price of $27.88 were granted under the 1999 Plan.










































                                 RENT-WAY, INC.

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

       General

       During the three and nine month periods ended June 30, 1999,  the Company
       generated record revenues. The Company's total revenues increased by 2.9%
       and 16.8%  compared to the same three and nine month  periods  last year.
       The  increase in revenue is  primarily  due to  acquisitions  made during
       fiscal 1998 and new stores opened in fiscal 1998 and 1999.  Overall,  for
       the three  months  ended June 30, 1999,  the Company  experienced  a 0.8%
       decrease  in same store  revenues  compared to the same period last year.
       For Rent-Way same stores (based on 328 stores),  revenues increased 5.0%,
       and for Home Choice same stores (based on 389 stores), revenues decreased
       5.3%, in each case as compared to the same period in fiscal 1998.

       On June 30, 1999, the Company acquired America's Rent-To-Own Center, Inc.
       ("America's"),  a privately-owned rental purchase chain with 21 locations
       in Arkansas,  Kansas,  Missouri,  and Oklahoma. The transaction value was
       approximately  $7 million and was paid for with a combination  of 231,140
       shares  of  Rent-Way's   common  stock  and  the  assumption  of  certain
       liabilities.   The  America's   stores,   with  annualized   revenues  of
       approximately  $8 million,  increase market  penetration in the Company's
       established areas of operation.

       On May 25,  1999,  the  Company  announced  its new  store  opening  plan
       designed to complement  its  acquisition  strategy.  The Company plans to
       open 40-60 new stores in the next  twelve  months  with 25 new  locations
       open by the end of this calendar year. Since October 1, 1998, the Company
       has opened 6 new  locations  in  Tarboro,  NC,  Cambridge,  MD,  Colorado
       Springs, CO, Milford, DE, Fort Worth, TX, and Houston, TX.

       On March 10, 1999, the Company made two Credit Agreement  Joinders to its
       existing collaterized revolving and term credit facility with a syndicate
       of banks led by National City Bank of  Pennsylvania,  NationsBank,  N.A.,
       and Harris Trust and Savings  Bank (the  "Facility").  The Joinders  were
       made by PNC Bank,  National  Association  and Bank Austria  Creditanstalt
       Corporate  Finance,  Inc.  As a result  of  these  Joinders,  term  loans
       available  under the Facility  increased to $125.0  million and revolving
       loans and letters of credit increased to $100.0 million.

       On January 1, 1999, the Company formed four new entities:  Rent-Way TTIG,
       L.P., an Indiana  limited  partnership,  and Rent-Way of Tomorrow,  Inc.,
       Rent-Way of Michigan, Inc., and Rent-Way Developments, Inc., all Delaware
       corporations. On January 1, 1999, the Company amended the Facility to add
       Rent-Way of TTIG, L.P., as a co-borrower and Rent-Way of Tomorrow,  Inc.,
       Rent-Way  of  Michigan,   Inc.,  and  Rent-Way  Developments,   Inc.,  as
       guarantors.

       On December 10, 1998,  the Company  completed  its merger (the  "Merger")
       with Home Choice  Holdings,  Inc. ("Home Choice" or "HMCH"),  pursuant to
       which HMCH merged with and into the Company,  with the Company  being the
       surviving entity. The Merger was accounted for as a  pooling-of-interests
       under  Accounting  Principles  Board ("APB") Opinion No. 16. The terms of
       the Merger called for each outstanding  share of HMCH common stock at the
       time of the Merger to be  converted  into 0.588  shares of the  Company's
       common stock. As a result,  the Company issued  approximately  10,025,000
       shares of common stock to the stockholders of HMCH.

       Prior to the Merger, the Company operated 405  rental-purchase  stores in
       25 states,  primarily in the northeastern and eastern parts of the United
       States.  HMCH,  at the time of the Merger,  operated 460  rental-purchase
       stores  in 26  states,  primarily  in the  southeastern,  midwestern  and
       southwestern  portions of the United  States.  As a result of the Merger,
       the  Company  became the second  largest  company in the  rental-purchase
       industry, and now operates 865 rental-purchase stores in 35 states.

       The  corporate  offices  of the  combined  company  are  located in Erie,
       Pennsylvania. None of the HMCH's Board of Directors or executive officers
       retained a position with the combined company. Gerald A. Ryan remained as
       Chairman  of  the  Board  for  the  combined   company  with  William  E.
       Morgenstern  as  President  and Chief  Executive  Officer  and Jeffrey A.
       Conway as Chief Financial Officer.

       The Company has  completed  the process of  consolidating  all  corporate
       operations to its current offices in Erie, Pennsylvania. In addition, the
       Company has  completed  converting  all the HMCH  stores to the  Rent-Way
       point of sale computer system.

       On December 10, 1998, the Company entered into the Facility. A portion of
       the Facility was used to refinance the debt of HMCH assumed in the Merger
       and to  refinance  debt under the  Company's  previous  credit  facility.
       Subject to compliance with certain formulas, the remaining portion of the
       Facility is available  to finance  additional  acquisitions.  The Company
       wrote-off  $865,000  ($519,000  net of 40% tax benefit) of deferred  loan
       costs associated with its and HMCH's previous credit facilities.

       On October  8,  1998,  the  Company  began  trading on the New York Stock
       Exchange  under the symbol  "RWY".  The  Company's  common stock had been
       previously  traded on the NASDAQ  National Market System under the symbol
       "RWAY".

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

       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.
<TABLE>
<CAPTION>

                                                          Three Months Ended                           Nine Months Ended
                                                               June 30,                                    June 30,
                                                         1999             1998                       1999             1998
                                                         ---------------------                       ---------------------
         Revenues:
<S>                                                       <C>             <C>                         <C>              <C>
          Rental revenue                                  90.3%           88.6%                       88.9%            88.0%
          Other revenue                                    9.7            11.4                        11.1             12.0
                                                         -----           -----                       -----             -----
          Total revenues                                 100.0%          100.0%                      100.0%           100.0%
         Costs and operating expenses:
          Depreciation and amortization:
          Rental merchandise                              24.5            24.5                        25.1             24.9
          Property and equipment                           2.0             1.5                         1.9              1.7
          Amortization of goodwill and
            other intangibles                              1.9             2.5                         2.0              2.6
                                                         -----           -----                       -----            -----
           Total depreciation and amortization            28.4            28.5                        29.0             29.2
       Salaries and wages                                 26.2            26.5                        26.2             27.6
       Advertising                                         4.4             5.8                         5.2              6.0
        Occupancy                                          7.0             6.8                         6.7              6.9
       Name change expense                                   -             0.2                           -              0.5
       Business combination costs                            -             0.1                         4.5              3.5
       Other operating expenses                           19.5            25.9                        21.2             25.3
                                                         -----           -----                       -----            -----
          Total costs and operating expenses              85.5            93.8                        92.8             98.9
                                                         -----           -----                       -----            -----
            Operating Income                              14.5             6.2                         7.2              1.1
       Interest expense                                   (3.3)           (2.7)                       (3.2)            (2.4)
       Other income                                       (0.1)           (0.6)                          -             (0.2)
                                                         -----           -----                       -----            -----
        Income (loss) before income taxes and
           extraordinary item                             11.1             2.9                         4.0             (1.5)
       Income tax expense                                  4.4             1.5                         2.5              0.5
                                                         -----           -----                       -----            -----
       Income (loss) before extraordinary item             6.7             1.4                         1.5             (2.0)
       Extraordinary item                                    -               -                       ( 0.1)               -
                                                         -----           -----                       -----            -----
       Net income (loss)                                   6.7%            1.4%                        1.4%            (2.0)%
                                                         =====           =====                       =====            =====
</TABLE>

       Comparison of Three Months Ended June 30, 1999 and 1998

       For the three  months  ended June 30, 1999  compared to the three  months
       ended June 30, 1998,  total revenues  increased by $3.5 million (2.9%) to
       $122.0 million from $118.5  million.  The increase was principally due to
       increased  Rent-Way same store  revenues and the inclusion of the results
       for the stores acquired during fiscal 1998. The stores acquired in fiscal
       1998  acquisitions  accounted  for $3.5 million of the  increase,  stores
       opened  in  fiscal  1998  and 1999  accounted  for  $0.8  million  of the
       increase,  stores  opened  and  acquired  by Home  Choice in fiscal  1998
       accounted for $0.9 million of the increase,  and  Rent-Way's  same stores
       accounted  for $1.4  million  of the  increase  offset by a $3.1  million
       decrease in Home Choice same stores revenues.  Other revenue decreased by
       $1.6 million (11.9%) to $11.9 million from $13.5 million  principally due
       to a $2.8 million increase in promotions and coupons to $4.7 million from
       $1.9  million  for the  three  months  ended  June  30,  1999  and  1998,
       respectively.

       For the three  months  ended June 30, 1999  compared to the three  months
       ended June 30,  1998,  total costs and  operating  expenses  decreased to
       $104.3  million  from  $111.2  million,  or to 85.5%  from 93.8% of total
       revenues.  Amortization  of goodwill and other  intangibles  decreased by
       $0.7  million  principally  due to a  decrease  in Home  Choice  goodwill
       amortization.  Home Choice's  amortization expense decreased $0.6 million
       from $1.7  million to $1.1  million.  Amortization  of goodwill and other
       intangibles  was 1.9% and 2.5% of total  revenues  for the  three  months
       ended June 30, 1999 and 1998, respectively. Advertising expense decreased
       $1.6 million to $5.3  million  from $6.9  million and as a percentage  of
       total revenues  decreased 1.4% to 4.4% from 5.8%  principally  due to the
       Company's  ability  to focus  advertising  efforts  in  cluster  markets.
       Occupancy  expense  increased  to $8.5  million  from $8.0  million,  and
       increased 0.2% as a percentage of total revenues to 7.0% from 6.8%.  This
       increase  is  primarily  due to the new stores  opened in fiscal 1998 and
       1999.  These new stores  initially  have a lower  revenue  base to offset
       fixed costs.  Other operating expenses decreased by $7.0 million to $23.7
       million  from  $30.7  million  and  as a  percentage  of  total  revenues
       decreased 6.4% to 19.5% from 25.9%.  This 6.4% decrease  occurred because
       of the  Company's  ability to allocate  corporate  and fixed costs over a
       greater number of stores and increased revenues.

       For the three  months  ended June 30, 1999  compared to the three  months
       ended June 30, 1998, operating income increased by $10.3 million (138.9%)
       to $17.7 million from $7.4  million,  and increased to 14.5% from 6.2% of
       total revenues.  The improvement in operating  income was principally due
       to the factors discussed above.

       For the three  months  ended June 30, 1999  compared to the three  months
       ended June 30,  1998,  interest  expense  increased  $0.8 million to $4.0
       million from $3.2 million  principally  due to the $71.0  million in Home
       Choice indebtedness assumed in connection with the Merger.

       For the three  months  ended June 30, 1999  compared to the three  months
       ended June 30,  1998,  income tax expense  increased to $5.4 million from
       $1.8 million because the Company generated greater taxable income.

       For the three  months  ended June 30, 1999  compared to the three  months
       ended June 30, 1998,  net income  increased  by $6.4 million  (385.0%) to
       $8.1 million  from $1.7 million and  increased to 6.7% from 1.4% of total
       revenues.

       Comparison of Nine Months Ended June 30, 1999 and 1998

       For the nine months ended June 30, 1999 compared to the nine months ended
       June 30,  1998,  total  revenues  increased by $53.6  million  (16.8%) to
       $371.7 million from $318.1  million.  The increase was principally due to
       increased same store revenues and the inclusion of the stores acquired in
       the Ace Rentals  acquisition,  the Champion  acquisition,  and other 1998
       acquisitions  and stores opened in fiscal 1998 and 1999.  Stores acquired
       in the Ace Rentals  acquisition  accounted for $5.0 million (9.3%) of the
       increase, stores acquired in the Champion acquisition accounted for $28.6
       million  (53.4%) of the  increase,  stores  acquired in other fiscal 1998
       acquisitions  accounted for $9.8 million (18.3%) of the increase,  stores
       opened in fiscal 1998 and 1999  accounted for $2.3 million  (4.3%) of the
       increase,  and the  Company's  same  stores  accounted  for $7.9  million
       (14.7%) of the increase.  Other revenue  increased $3.3 million (8.6%) to
       $41.3  million from $38.0  million  principally  due to stores opened and
       acquired in 1998.

       For the nine months ended June 30, 1999 compared to the nine months ended
       June 30, 1998,  total costs and  operating  expenses  increased to $344.7
       million  from  $314.6  million  primarily  as a result  of the  costs and
       operating expenses associated with stores acquired in 1998, but decreased
       to 92.8% from 98.9% of total  revenues.  Depreciation  expense related to
       rental merchandise increased by $14.3 million to $93.4 million from $79.1
       million, or 0.2% as a percentage of total revenues. This 0.2% increase as
       a percentage of total revenues is primarily the result of increased early
       purchase  option ("EPO") sales and the higher  remaining  values on those
       items sold. The remaining  value of EPO sales items,  which is charged to
       depreciation expense,  increased $4.6 million, or 1.1% as a percentage of
       total  revenues,  to $7.5  million  from $2.9  million.  Amortization  of
       goodwill and other  intangibles  decreased by $1.2 million,  or 0.6% as a
       percentage  of  total  revenues  principally  due to a  decrease  in Home
       Choice's  goodwill  amortization.   Home  Choice's  amortization  expense
       decreased  $1.8 million from $5.4 million to $3.6  million.  Salaries and
       wages  increased to $97.4 million from $87.6 million,  but decreased 1.3%
       as a percentage of total  revenues to 26.2% from 27.5%.  The $9.8 million
       increase is  principally  due to the  addition of 251 new  locations  and
       additions to corporate  personnel.  The 1.3%  decrease as a percentage of
       total  revenues  is  primarily  the  result of the  Company's  ability to
       allocate  corporate  and  regional  managers'  payroll  expense  over  an
       increased store revenue base.  Advertising expense increased $0.1 million
       to $19.3  million from $19.2 million but decreased to 5.2% from 6.0% as a
       percentage of total revenues.  This 0.8% decrease is primarily due to the
       Company's ability to focus advertising efforts in cluster markets.  Other
       operating  expenses  decreased  $1.8 million to $78.7  million from $80.5
       million and  decreased  4.1% to 21.2% from 25.3% as a percentage of total
       revenues. This 4.1% decrease is primarily due to the Company's ability to
       allocate  corporate  and fixed costs over a greater  number of stores and
       increased revenues.

        For the nine  months  ended June 30,  1999  compared  to the nine months
        ended  June 30,  1998,  operating  income  increased  by  $23.4  million
        (670.4%) to $26.9  million from $3.5 million and  increased to 7.2% from
        1.1%  of  total  revenues.  The  improvement  in  operating  income  was
        principally due to the stores acquired in 1998 and the factors discussed
        above.  The  results for the nine  months  ended June 30, 1999  included
        $16.8  million of business  combination  charges  related to  Rent-Way's
        merger  with Home  Choice  on  December  10,  1998 and $1.1  million  in
        one-time  inventory  write-offs.  The results for the nine months  ended
        June 30, 1998  included  $11.2 million in business  combination  charges
        related to Home Choice's  predecessor's merger with Alrenco,  Inc. which
        occurred in February 1998.  Excluding these special  charges,  operating
        income  increased by $30.1 million  (205.4%) to $44.8 million from $14.7
        million, and increased to 12.1% from 4.6% of total revenues.

       For the nine months ended June 30, 1999 compared to the nine months ended
       1998,  interest  expense  increased by $4.2 million to $11.8 million from
       $7.6 million due to the $71.0 million in Home Choice indebtedness assumed
       in connection with the Merger.

       For the nine months ended June 30, 1999 compared to the nine months ended
       June 30, 1998,  income tax expense  increased by $7.3 million because the
       Company generated greater taxable income.

       For the nine months ended June 30, 1999 compared to the nine months ended
       June 30, 1998,  net income  increased by $11.6  million  (180.9%) to $5.2
       million  from  ($6.4  million).  The  increase  was  due to  the  factors
       discussed above.  Excluding  special charges related to the mergers,  net
       income  increased by $15.6  million  (419.3%) to $19.3  million from $3.7
       million reported in the same period last year.

       Liquidity and Capital Resources

       On March 10, 1999,  the Company made two Credit  Agreement  Joinders (the
       "Joinders") to the Facility. The Joinders were made by PNC Bank, National
       Association and Bank Austria  Creditanstalt  Corporate Finance, Inc. (the
       "New  Banks").  Each of the New Banks  agreed to make a revolving  credit
       commitment  in the amount of $3.9 million and a term loan  commitment  in
       the  amount  of $4.9  million.  The  Joinders  increase  the  term  loans
       available  under the Facility to $125.0  million and the revolving  loans
       and letters of credit available under the Facility to $100.0 million. The
       syndicate members and their ratable share of the Facility are as follows:
<TABLE>
<CAPTION>

<S>                                                                                    <C>
                         National City Bank of Pennsylvania........................... 15.5556%
                         NationsBank, N.A............................................. 15.5556%
                         Harris Trust and Savings Bank................................ 15.5556%
                         Firstar Bank, N.A............................................ 11.1111%
                         LaSalle National Bank........................................ 10.0000%
                         SunTrust Bank, Central Florida, National
                         Association..................................................  8.8889%
                         Manufacturers and Traders Trust Company......................  8.8889%
                         Mercantile Bank of St. Louis, N.A............................  6.6667%
                         PNC Bank, National Association...............................  3.8889%
                         Bank Austria Creditanstalt Corporate Finance,
                         Inc..........................................................  3.8889%
</TABLE>

     As of June 30,  1999,  total  indebtedness  under the  Facility  was $176.0
million,  of which $51.0 million was related to the revolving  credit portion of
the Facility.

       On December  10,  1998,  the Company  entered the  Facility  which is due
       December 10, 2003. The principal  amount of the term loans are payable in
       quarterly  payments  due on the  last  day of each  September,  December,
       March, and June, beginning with the quarter ending September 30, 1999 and
       are as follows:
<TABLE>
<CAPTION>

                                Quarter (s) Ending on                   Percentage of Principal (as of
                                Following Date or In The                the last day of the Syndication
                                Following Period                        Period)
                                                                        Due on Each Quarterly Payment Date
<S>                             <C>  <C>        <C>   <C>                         <C>
                                9-30-99 through 12-31-99...........................2.8%
                                3-31-00 through 12-31-00...........................3.6%
                                3-31-01 through 12-31-01...........................4.4%
                                3-31-02 through 12-31-02...........................5.2%
                                3-31-03 through 9-30-03............................6.0%

                                With  any   additional   balance  which  remains
                                outstanding  due and  payable  on  December  10,
                                2003.
</TABLE>

       Of  the  approximately  $202.0  million  initially  available  under  the
       Facility,  approximately  $111.0 million was used to refinance previously
       existing senior indebtedness of the Company and $71.0 million was used to
       pay indebtedness of HMCH assumed in connection with the Merger.

       The  Facility  requires  the  Company to comply with  certain  covenants,
       including  financial  covenants.  These covenants  generally restrict the
       Company from incurring additional indebtedness, granting additional liens
       on its assets,  making  dividends or  distributions,  disposing of assets
       other than in the  ordinary  course,  issuing  additional  stock,  making
       additional  acquisitions  or making  capital  expenditures,  in each case
       subject  to  certain  exceptions.  Under the  Facility,  the  Company  is
       restricted  from  incurring  additional  indebtedness  except  additional
       purchase  money   indebtedness  not  exceeding   $100,000,   subordinated
       intercompany  indebtedness,  indebtedness  incurred  in  connection  with
       certain  acquisitions  permitted under the Facility,  certain capitalized
       leases or  purchases  of fixed  assets with  payments  that do not exceed
       $10.0 million in the  aggregate in any fiscal year,  and any other lease,
       which is not a capitalized  lease,  or the rental of any real or personal
       property  of another  entity  with  payments  that do not (other than for
       leases of retail store sites and motor  vehicles)  exceed $250,000 in the
       aggregate in any fiscal year. The Company is also required to comply with
       the following financial covenants: maintain a maximum leverage ratio with
       respect to total funded debt of 4.0 to 1.0 (decreasing periodically until
       reaching  2.5 to 1.0 by  July  1,  2002),  maintain  a  minimum  interest
       coverage ratio of 3.0 to 1.0 (increasing  periodically until reaching 5.0
       to 1.0 by April 1, 2002),  maintain a minimum net worth of $217.0 million
       (increasing with earnings and  acquisitions) and maintain a minimum fixed
       charge coverage ratio of 1.2 to 1.0. As of June 30, 1999, the Company was
       in compliance with all covenants contained in the Facility.

       As a result of entering  into the  Facility,  the  Company  wrote off the
       remaining  balance of deferred  financing  costs  associated with its and
       HMCH's previous credit  facility.  The amount of deferred  finance costs,
       $0.9 million ($0.5  million net of 40% tax) is shown as an  extraordinary
       item on the Company's Condensed  Consolidated Statement of Operations for
       the nine months ended June 30, 1999.



       For the nine months ended June 30, 1999 compared to the nine months ended
       June 30,  1998,  the  Company's  net cash  used in  operating  activities
       decreased  to  $2.0  million  from  $22.5  million.   This  decrease  was
       principally due to a $11.6 million increase in net income, a $4.6 million
       increase  in  non-cash  depreciation  and  amortization,  a $5.9  million
       increase  in income  taxes  payable,  a $4.2  million  decrease  in other
       assets,  a $1.0 million  decrease in income tax  receivable,  and a $17.2
       million  decrease  in  rental  merchandise  purchases.   These  changes
       resulted primarily from the stores acquired and opened in fiscal 1998.

       For the nine months ended June 30, 1999 compared to the nine months ended
       June 30,  1998,  the  Company's  net cash  used in  investing  activities
       decreased by $103.0  million to $16.6 million from $119.5  million.  This
       decrease is principally due to a $100.8 million  decrease in purchases of
       businesses  and a $5.2 million  decrease in the purchases of property and
       equipment.

       For the nine  months  ended June 30,  1999,  compared  to the nine months
       ended  June 30,  1998,  the  Company's  net cash  provided  by  financing
       activities decreased to $20.2 million from $146.8 million.  This decrease
       is mainly due to a $73.2  million  decrease  net  borrowings  compared to
       payments and a $44.2 million decrease in proceeds from common stock.




























       Quantitative and Qualitative Disclosures About Market Risk

       The  Company's  major market risk  exposure is primarily  due to possible
       fluctuations  in  interest  rates.  The  Company's  policy  is to  manage
       interest rate risk by utilizing  interest rate swap agreements to convert
       a portion of the floating interest rate debt to fixed interest rates. The
       Company does not enter into derivative financial  instruments for trading
       or speculative  purposes.  The interest rate swap  agreements are entered
       into with major  financial  institutions  thereby  minimizing the risk of
       credit loss.

       The following  table  presents  information  about the  Company's  market
       sensitive financial instruments.  The table illustrates the principle and
       notional  amounts,  as well as the date of maturity,  actual and weighted
       average  pay  and  receive  rates  for  all  significant   financial  and
       derivative financial instruments in effect as of June 30, 1999:

<TABLE>
<CAPTION>



              Expected Maturity Dates                            1998      1999     2001      2002        2003      Thereafter
                                                                -----     -----     ----      ----     ---------    ----------
              ------------------------------------------------- --------- -------- -------- ---------- ------------ -------------
              Debt:
<S>                                                                                                    <C>
                Revolving credit facility Base rate option                                             $    6,000
               --Actual floating rate.....................                                                  8.750%
                Revolving credit facility Euro-rate option                                             $   45,000
               --Actual floating rate.....................                                                  5.544%
                Term loan Euro-rate option................                                             $  125,000
               --Actual floating rate.....................                                                  5.544%
                Convertible Subordinated Debentures.......                                             $   20,000

               --Actual fixed interest rate...............                                                    7.0%

              Interest rate swap agreements:
                National City Bank, notional amount.......                                             $   30,000
               --Actual fixed interest rate pay rate......                                                  5.965%
                Bank of America, notional amount..........                                             $   20,000
               --Actual fixed interest rate pay rate......                                                  5.760%
                Manufacturers and Traders Trust, notional
              amount......................................                                             $   10,000
               --Actual fixed interest rate pay rate......                                                  5.925%
                Harris Bank, notional amount..............                                             $   20,000
               --Actual fixed interest rate pay rate......                                                  5.090%
                SunTrust Bank, notional amount............                                             $   10,000
               --Actual fixed interest rate pay rate......                                                  5.105%
                LaSalle Bank, notional amount.............                                             $   10,000
               --Actual fixed interest rate pay rate......                                                  5.095%
                Bank of America, notional amount..........                                             $   10,000
               --Actual fixed interest rate pay rate......                                                  5.120%
                Harris Bank, notional amount..............                                             $   10,000
               --Actual fixed interest rate pay rate......                                                  5.120%
</TABLE>




       Inflation

       During  the  three  months  ended  June  30,  1999,  the  cost of  rental
       merchandise,  lease rental  expense and salaries and wages have increased
       modestly.  These  increases  have  not had a  significant  effect  on the
       results  of  operations  because  the  Company  has been  able to  charge
       commensurably  higher rental for its merchandise.  This trend is expected
       to continue in the foreseeable future.

       Other Matters

       In June 1997, the Financial  Accounting  Standards  Board ("FASB") issued
       Statement of Financial Accounting Standard ("SFAS") No. 131, "Disclosures
       about  Segments of an Enterprise and Related  Information"  effective for
       fiscal years beginning  after December 15, 1997. This Statement  requires
       that  public  business   enterprises  report  certain  information  about
       operating  segments in annual and interim financial  statements.  It also
       requires that public  business  enterprises  report  certain  information
       about their  products and services,  the  geographic  areas in which they
       operate,  and their major customers.  The Company is currently evaluating
       the provisions of this Statement.

       In February  1998, the FASB issued SFAS No. 132,  "Employers'  Disclosure
       about Pensions and Other  Postretirement  Benefits"  effective for fiscal
       years  beginning after December 15, 1997. The adoption of SFAS No. 132 is
       not expected to have any impact on the Company's financial statements.

       In June 1998,  the FASB issued SFAS No. 133,  "Accounting  for Derivative
       Instruments and Hedging Activities"  effective for all fiscal quarters of
       fiscal years beginning  after June 15, 2000.  This Statement  establishes
       accounting and reporting standards for derivative instruments,  including
       certain derivative instruments embedded in other contracts, (collectively
       referred to as derivatives) and for hedging activities.  It requires that
       an entity  recognize all  derivatives  as either assets or liabilities in
       the statement of financial position and measure those instruments at fair
       value.  The  Company  is  currently  evaluating  the  provisions  of this
       Statement.

       The Accounting  Standards Executive Committee Statement of Position 98-1,
       "Accounting for the Costs of Computer Software  Developed or Obtained for
       Internal Use" ("SOP 98-1"), issued in March 1998 and effective for fiscal
       years  beginning  after  December  15,  1998  with  earlier   application
       permitted,  provides  guidance  on  accounting  for the costs of computer
       software developed or obtained for internal use. The Company is currently
       evaluating the provisions of this Statement.

        The Accounting Standards Executive Committee Statement of Position 98-5,
       "Accounting for the Costs of Start-up Activities" ("SOP 98-5"), issued in
       April 1998 and effective for fiscal years  beginning  after  December 15,
       1998 with earlier application  permitted,  provides guidance on financial
       reporting  of start up costs  and  organization  costs.  The  Company  is
       currently evaluating the provisions of this Statement.

       Year 2000 Issues

       The  Company  utilizes   management   information  systems  and  software
       technology  that may be  affected  by Year  2000  issues  throughout  its
       operations.  During fiscal 1998, the Company began to implement  plans to
       ensure  those  systems   continue  to  meet  its  internal  and  external
       requirements. All the Company's remote locations operate on an internally
       developed  point of sale  system.  This  system  utilizes a peer to peer,
       Windows 95 local area network.  Communications  between remote  locations
       and the  corporate  office are handled via e-mail  through the  internet.
       After completion of testing,  the Company believes that its point of sale
       system is Year 2000  compliant.  As a result of the Company's  growth,  a
       decision was made to upgrade information systems at the corporate office.
       The installation and  implementation of a Year 2000 compliant  PeopleSoft
       software package was completed in January 1999. This package  encompasses
       all  accounting   functions,   payroll,   human   resources  and  benefit
       administration  requirements.  The  system  will  operate  in  an  n-tier
       environment on a Windows NT platform. The cost of all hardware, software,
       training and  implementation  costs is expected to be approximately  $1.5
       million,  the majority of which was incurred in fiscal 1998.  In addition
       to the  PeopleSoft  package,  the  Company  has  implemented  a Year 2000
       compliant J. Driscoll package for cash management.  This package operates
       on the same platform as the PeopleSoft package.

       The Company has  developed  questionnaires  and  contacted  key suppliers
       regarding  their  Year 2000  compliance  to  determine  any impact on its
       operations.  In  general,  the  suppliers  have  developed  or are in the
       process of developing plans to address Year 2000 issues. The Company will
       continue to monitor and evaluate  the  progress of its  suppliers on this
       critical  matter.  The  Company  is also  reviewing  its  non-information
       technology  systems to  determine  the extent of any changes  that may be
       necessary  and believes that there will be minimal  changes  required for
       compliance.

       Based on the  progress the Company has made in  addressing  its Year 2000
       issues and the  Company's  plan and timeline to complete  its  compliance
       program,  the Company does not foresee  significant risks associated with
       its Year  2000  compliance  at this  time.  As the  Company's  plan is to
       address its significant Year 2000 issues prior to being affected by them,
       it has not developed a comprehensive  contingency plan.  However,  if the
       Company identifies  significant risks related to its Year 2000 compliance
       or its progress deviates from the anticipated timeline,  the Company will
       develop contingency plans as deemed necessary at that time.


       Cautionary Statement



       This Report on Form 10-Q and the foregoing  Management's  Discussion  and
       Analysis  of  Financial  Condition  and  Results of  Operations  contains
       various "forward looking statements" within the meaning of Section 27A of
       the Securities Act of 1933, as amended, and Section 21E of the Securities
       Exchange Act of 1934, as amended.  Forward-looking  statements  represent
       the Company's  expectations  or beliefs  concerning  future  events.  Any
       forward-looking  statements  made  by or on  behalf  of the  Company  are
       subject  to  uncertainties  and other  factors  that could  cause  actual
       results to differ  materially from such statements.  These  uncertainties
       and other factors include, but are not limited to, (i) the ability of the
       Company to acquire additional  rental-purchase stores on favorable terms,
       (ii) the  ability  of the  Company  to improve  the  performance  of such
       acquired  stores and to integrate such acquired stores into the Company's
       operations, (iii) the ability of the Company to integrate the Home Choice
       stores and systems into the Company's operations, (iv) the ability of the
       Company to open additional new stores,  to integrate such stores into its
       operations and to operate such new stores  profitably,  (v) the impact of
       state  and  federal   laws   regulating   or  otherwise   affecting   the
       rental-purchase  transaction,  and (vi) unforeseen issues associated with
       the Year 2000 compliance effort.

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


<PAGE>


                                 RENT-WAY, INC.



       ITEM 2.  Changes in Securities and Use of Proceeds


       c.  Recent Sales of Unregistered Securities

             On June 30, 1999, the Company issued 231,140 shares of Common Stock
       without  registration  in connection  with its  acquisition  of America's
       Rent-to-Own,  Inc. The  transaction  was exempt from  registration  under
       Section 4 (2) of the Securities Act of 1933, as amended.


       ITEM 6.  Exhibits and Reports on Form 8-K


       a.  Exhibits

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

               Exhibit No.                    Description

27  Financial data schedule







































                                                                  SIGNATURES


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




         July 23, 1999                /s/ Jeffrey A. Conway
       ----------------   -----------------------------------------------
             Date          Sr. Vice President and Chief Financial Officer
        (Principal Financial and Accounting Officer and Duly Authorized Officer)