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 December 31, 1997

                                       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.)


                  3230 West Lake Road, Erie, Pennsylvania 16505
                    (Address of principal executive offices)

                                 (814) 836-0618
              (Registrant's telephone number, including area code)




     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 No


        The total  number of shares  of each  class of the  registrant's  Common
Stock, outstanding as of December 31, 1997:
              Class                                            Outstanding
           Common Stock                                         10,740,975

<PAGE>

                                 RENT-WAY, INC.


<TABLE>

                                                                                                          Page
Part I            Financial Information
                  Item 1.  Financial Statements:

                         <S>                                                                             <C>     
                           Balance Sheets as of December 31, 1997 and                                     3
                           September 30, 1997

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

                           Statements of Cash Flows, Three Months Ended                                   5
                           December 31,1997 and 1996

                           Notes to Financial Statements                                                  6


                  Item 2.  Management's Discussion and Analysis                                           9
                           of Financial Condition and Results of Operations

Part II           Other Information
                  Item 6.  Exhibits and Reports on Form 8-K                                              14

                  Signatures                                                                             14

</TABLE>






























<PAGE>


                                 RENT-WAY, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                                      December 31,             September 30,
                                                                                          1997                     1997
                                                                                       (unaudited)


ASSETS

<S>                                                                                 <C>                     <C>            
Cash and cash equivalents                                                           $    19,810,498         $       598,664
Prepaid expenses                                                                          3,133,187               1,452,265
Rental merchandise, net                                                                  40,819,639              35,132,316
Deferred income taxes                                                                     1,129,133               1,071,927
Property and equipment, net                                                               9,063,397               8,518,222
Goodwill, net                                                                            43,369,291              43,446,776
Deferred financing costs, net                                                             1,327,872               1,475,088
Prepaid consulting fee                                                                    1,832,384               1,743,514
Other assets                                                                              3,160,442               2,849,166
                                                                                    ---------------         ---------------
                                                                                    $   123,645,843         $    96,287,938
                                                                                    ---------------         ===============

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable                                                                    $     2,009,969         $     3,067,294
Other liabilities                                                                         2,923,559               3,411,605
Income taxes payable                                                                      1,330,951                 695,743
Debt                                                                                     20,132,835              48,156,426
                                                                                    ---------------         ---------------
                                                                                         26,397,314              55,331,068

Commitments and Contingencies (Note 5)                                                        --                     --


Shareholders' equity:
Preferred stock, without par value; 1,000,000 shares authorized;
     no shares issued and outstanding                                                     --                         --
Common stock, without par value; 20,000,000 shares
     authorized; 10,740,975 and 7,059,451 shares issued and
     outstanding, respectively                                                           87,016,587              32,759,595
Retained earnings                                                                        10,231,942               8,197,275
                                                                                    ----------------        ---------------
        Total shareholders' equity                                                       97,248,529              40,956,870
                                                                                    ----------------        ---------------
                                                                                    $   123,645,843         $    96,287,938
                                                                                    ===============         ===============






</TABLE>


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








<PAGE>



                                 RENT-WAY, INC.
                              STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                                                           For the three months ended
                                                                                                  December 31,
                                                                                        1997                      1996
                                                                                       (unaudited)             (unaudited)
Revenues:
<S>                                                                                 <C>                     <C>            
Rental revenue                                                                      $    23,515,013         $    13,689,843
Other revenue                                                                             3,151,130               1,974,055
                                                                                    ---------------         ---------------
       Total revenues                                                                    26,666,143              15,663,898

Costs and operating expenses:
Depreciation and amortization:
    Rental merchandise                                                                    6,259,770               3,700,681
    Property and equipment                                                                  565,855                 276,125
    Amortization of goodwill                                                                590,802                 306,212
Salaries and wages                                                                        6,975,988               4,368,970
Advertising                                                                               1,228,284                 823,374
Occupancy                                                                                 1,841,436               1,034,984
Other operating expenses                                                                  4,927,909               3,016,066
                                                                                    ---------------         ---------------
        Total costs and operating expenses                                               22,390,044              13,526,412
                                                                                    ---------------         ---------------

        Operating income                                                                  4,276,099               2,137,486

Other income (expense):
Interest expense                                                                           (795,409)               (375,496)
Interest income                                                                             109,655                     505
Other expense, net                                                                           (8,184)                 (2,071)
                                                                                    ----------------        ---------------
       Income before income taxes and extraordinary item                                  3,582,161               1,760,424

Income tax expense                                                                        1,547,494                 811,033
                                                                                    ---------------         ---------------

       Income before extraordinary item                                                   2,034,667                 949,391

Extraordinary item                                                                           --                    (269,017)
                                                                                    ---------------         ----------------
Net income                                                                                2,034,667                 680,374

Redeemable preferred stock net gain on redemption                                            --                     280,175
                                                                                    ---------------         ---------------

Earnings applicable to common shares                                                $     2,034,667         $       960,549
                                                                                    ===============         ===============

Earnings per common share (Note 2):
     Basic earnings per share adjusted to give effect to the net preferred stock
     gain on redemption:
       Income before extraordinary item                                             $         0.24          $          0.19
                                                                                    ===============         ===============
        Net income                                                                  $         0.24          $          0.15
                                                                                    ===============         ===============
     Diluted  earnings  per share  adjusted to give effect to the net  preferred
     stock gain on redemption:
       Income before extraordinary item                                             $         0.21          $          0.17
                                                                                    ===============         ===============
        Net income                                                                  $         0.21          $          0.14
                                                                                    ===============         ===============

Weighted average number of shares outstanding:
       Basic                                                                              8,535,945               6,593,876
                                                                                    ===============         ===============

       Diluted                                                                           10,790,233               7,026,327
                                                                                    ===============         ===============
</TABLE>

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

                                 RENT-WAY, INC.
                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                                           For the three months ended
                                                                                                  December 31,

                                                                                              1997                 1996        
                                                                                          (unaudited)          (unaudited)
Operating activities:
<S>                                                                                 <C>                     <C>            
Net income                                                                          $     2,034,667         $       680,374
Adjustments to reconcile net income
to net cash used in operating activities:
    Depreciation and amortization                                                         7,499,289               4,283,018
    Deferred income taxes                                                                   (57,206)                     --
    Extraordinary item                                                                       --                     269,017
Changes in assets and liabilities:
    Prepaid expenses                                                                     (1,680,922)               (402,461)
    Rental merchandise                                                                  (11,947,093)             (6,929,733)
    Prepaid consulting fees                                                                 (88,870)                 44,643
    Other assets                                                                           (573,190)               (221,687)
    Accounts payable                                                                     (1,057,325)               (331,903)
    Income taxes payable                                                                    635,208                 214,747
    Other current liabilities                                                              (628,389)               (503,167)
                                                                                    ----------------        ---------------
                  Net cash used in operating activities                                  (5,863,831)             (2,897,152)

Investing activities:
    Purchase of businesses                                                                 (111,060)               (213,703)
    Purchases of property and equipment                                                  (1,111,030)               (550,073)
                                                                                    ----------------        ---------------
                  Net cash used in investing activities                                  (1,222,090)               (763,776)

Financing activities:
    Proceeds from borrowings                                                              2,000,000              13,177,032
    Payments on borrowings including early extinguishment                               (23,023,591)             (8,067,607)
    Deferred finance costs                                                                   64,354                (536,866)
    Redeemable preferred stock dividend                                                      --                     (32,143)
    Redeemable preferred stock redemption                                                    --                    (840,525)
    Issuance of common stock                                                             47,256,992                  --
                                                                                     ---------------        ---------------
                  Net cash provided by financing activities                              26,297,755               3,699,891
                                                                                    ----------------        ---------------
                  Increase in cash and cash equivalents                                  19,211,834                  38,963

Cash and cash equivalents at beginning of period                                            598,664                 179,425
                                                                                    ---------------         ---------------

Cash and cash equivalents at end of period                                          $    19,810,498         $       218,388
                                                                                    ===============         ===============

Supplemental  disclosures of cash flow information:  Cash paid during the period
    for:
       Interest                                                                     $       712,546         $       302,007
       Income taxes                                                                 $       969,492         $     -



</TABLE>

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


<PAGE>


                                 RENT-WAY, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (unaudited)

1.    Basis of Presentation:

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

      Cash  equivalents - Includes  short term  investments  made by the Company
      with funds  received from a public stock offering (See Note 3) in December
      1997.  These funds are  invested  in  commercial  paper  having a maturity
      period equal to or less than thirty-five days.

      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,
      1997.

2.    New Accounting Standards:

      In March  1997,  the FASB  issued  SFAS No.  128,  "Earnings  per  Share",
      effective  for periods  ending after  December 15, 1997.  The Company,  in
      recognition of requirements  SFAS No. 128, has presented basic and diluted
      earnings per common share in the statements of income.  Basic earnings per
      common  share is computed  using income  available to common  shareholders
      divided  by the  weighted  average  number of common  shares  outstanding.
      Diluted  earnings per common share is computed  using income  available to
      common  shareholders  adjusted for anticipated  interest  savings,  net of
      related taxes,  for convertible  subordinated  debentures and the weighted
      average number of shares  outstanding is adjusted for the potential impact
      of options, warrants and convertible subordinated debentures. Earnings per
      common share for the three month  period ended  December 31, 1996 has been
      restated in accordance with SFAS No. 128.

      In  March  1997,  the  FASB  also  issued  SFAS No.  129,  "Disclosure  of
      Information about Capital Structure"  effective for fiscal years beginning
      after  December  15, 1997.  The Company  adopted SFAS No. 129 which had no
      impact on the financial statements.

3.    Public Stock Offering:

      On  December  2, 1997,  the  Company  completed  a public  stock  offering
      consisting of 2,500,000  shares of common stock offered by the Company and
      87,250 shares of common stock offered by certain selling shareholders.  In
      addition, on December 30, 1997, the underwriters exercised a 30 day option
      to purchase up to 388,088 shares of common stock to cover over-allotments.

      The  shares  were  offered at a price of $17.25  per  share.  The  Company
      received net proceeds (less underwriters discount and selling expenses) of
      $46,982,586  including  the  underwriters  exercise of the  over-allotment
      option. The Company used these proceeds to repay outstanding borrowings of
      $23,022,110 under the Company's credit agreement with a syndicate of banks
      led by  National  City Bank of  Pennsylvania  (See Note 6). The  remaining
      proceeds have been invested in short-term commercial paper.


<PAGE>


                                 RENT-WAY, INC.

                   NOTES TO FINANCIAL STATEMENTS, (Continued)
                                   (unaudited)

4.    Acquisitions:

      On January 24, 1997, the Company signed a definitive purchase agreement to
      acquire all the outstanding shares of Perry Electronics, Inc. d/b/a Rental
      King ("Rental  King").  On February 6, 1997, the Company  consummated  the
      transaction  and  acquired  all the  outstanding  shares of  Rental  King,
      assuming  effective control of the results of operations as of February 1,
      1997. At the time of acquisition,  Rental King operated a chain of seventy
      rental-purchase stores in Colorado, Florida, Indiana, Kentucky,  Michigan,
      Ohio and  West  Virginia  with  annual  revenues  of  approximately  $24.0
      million. The consideration paid in exchange for all the outstanding shares
      of  Rental  King was  $17,284,618  in cash.  Pursuant  to the terms of the
      purchase  agreement,  $2.0  million  of the  purchase  price was placed in
      escrow,  subject to the terms of the escrow  agreement to satisfy sellers'
      representations and warranties and any purchase price adjustments. In June
      1997,  the full amount of the escrow  account was released to the sellers.
      The acquisition was accounted for using the purchase method of accounting.
      Rental King's assets and liabilities were recorded at their estimated fair
      market  values  as of the  date  of the  acquisition.  The  excess  of the
      acquisition  cost  over  the  estimated  fair  values  of the  net  assets
      acquired,  ("goodwill")  of $17,322,875  is being  amortized on a straight
      line basis over twenty years.  The total costs of the net assets  acquired
      was  $17,284,618 and consisted of assets of $25,300,591  less  liabilities
      assumed of $6,337,325 and acquisition costs of $1,678,648. The acquisition
      of Rental  King was  primarily  funded by the net  proceeds  received on a
      private placement of $20.0 million in subordinated convertible debentures.
      The  balance  of the cash paid on  closing  was drawn  upon the  Company's
      existing line of credit. Assets acquired (at fair market value) other than
      goodwill consist primarily of rental  merchandise of $6,386,000,  property
      and  equipment  of  $744,615,  other  assets of $347,101  and  non-compete
      agreements of $500,000. Liabilities assumed (at fair market value) consist
      primarily  of  trade   payables  of  $488,561,   accrued   liabilities  of
      $2,085,270,  bank debt of $2,939,494  and notes  payable of $824,000.  The
      statement of income for the three months ended  December 31, 1997 includes
      the results of operations of Rental King for the entire period.

      On January 2, 1997,  the Company  acquired all the  outstanding  shares of
      Bill Coleman TV,  Inc.,  ("Coleman"),  a privately  owned chain of fifteen
      rental-purchase  stores  operating  in Michigan  with  annual  revenues of
      approximately  $7.5 million,  in exchange for consideration  consisting of
      $2,679,921  in  cash  and an  option  to  purchase  25,000  shares  of the
      Company's  common  stock at an  exercise  price of $8.875 per share with a
      fair  market  value  of  $107,500.  The  25,000  stock  options  are  100%
      exercisable and expire five years from the date of the grant.  Pursuant to
      terms of the  acquisition,  $350,000 of the  purchase  price was placed in
      escrow  subject  to terms of the  escrow  agreement  to  satisfy  sellers'
      representations  and warranties and any purchase  price  adjustments.  The
      escrow  agreement  provides for release of the escrow on  completion  of a
      financial  audit of Coleman and final  resolution  of any  purchase  price
      adjustments.  In December 1997, the full amount of the escrow was released
      with $231,843  returned to the Company.  The acquisition was accounted for
      using the purchase method of accounting.  Coleman's assets and liabilities
      were recorded at their estimated fair values as of the  acquisition  date.
      The excess of the  acquisition  cost over the estimated fair values of the
      net assets  acquired,  ("goodwill")  of $3,750,291 is being amortized on a
      straight  line basis over twenty  years.  The total cost of the net assets
      acquired was $2,787,421 ($2,679,921 in cash and $107,500 in stock options)
      and  consisted  of  assets  of  $7,683,383  less  liabilities  assumed  of
      $4,548,836 and  acquisition  costs of $347,126.  Assets  acquired (at fair
      market  value)  other  than  goodwill,   consisted   primarily  of  rental
      merchandise of $2,401,000, property and equipment of $42,000, deferred tax
      assets of $787,487, a note receivable of $244,454, a non-compete agreement
      of $300,000  and other assets of  $158,151.  Liabilities  assumed (at fair
      market value) consisted primarily of trade accounts payable of $1,838,190,
      debt of $2,474,155  and note payable of $236,491.  The Statement of Income
      for the three months ended  December 31, 1997  includes the  operations of
      Coleman for the entire period.

      In July and September 1997, the Company  purchased the rental  merchandise
      and rental-purchase  contracts of seven rental-purchase  stores located in
      Pennsylvania,  Maryland,  and Virginia,  with combined  annual revenues of
      approximately  $4.3  million.  The Company  paid cash in exchange  for the
      assets and each  acquisition  was recorded  using the  purchase  method of
      


<PAGE>


                                 RENT-WAY, INC.

                   NOTES TO FINANCIAL STATEMENTS, (Continued)
                                   (unaudited)

     accounting.  The  acquired  assets were  recorded at their  estimated  fair
     values at the date of acquisition.  The excess of the acquisition cost over
     the  estimated  fair  values  of  the  assets  acquired,   ("goodwill")  of
     $2,734,031  is being  amortized on a straight line basis over twenty years.
     The total cost of the net assets  acquired was  $3,809,878 and consisted of
     assets of $3,964,646 less acquisition  costs of $154,768.  The Statement of
     Income for the three months ended  December 31, 1997 includes the operating
     results for these stores for the entire period.

5.    Commitments and 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 $600,000
      to  $2,300,000.  The  majority  of such  claims  are,  in the  opinion  of
      management,  covered by insurance policies and therefore should not have a
      material effect on the results of operations or financial  position of the
      Company.

      Additional  claims exist in the range of $700,000 to $1,300,000  for which
      management  believes  it  has  meritorious  defenses  but  for  which  the
      likelihood of an  unfavorable  outcome is currently not  determinable.  In
      management's  opinion,  each of these claims will either be indemnified by
      the  former  shareholders  of  companies  it has  acquired  or  covered by
      insurance  policies and therefore  will not have a material  effect on the
      results of operations or financial condition of the Company.

6.    Debt:

      As  of  December  31,  1997,  the  Company  had  no   outstanding   senior
      indebtedness  under its  collateralized  revolving credit facility,  ("the
      Facility"),  with a  syndicate  of  banks,  led by  National  City Bank of
      Pennsylvania.  The Facility was paid off , without  penalties,  with funds
      received  from the  Company's  public stock  offering  (see Note 3). As of
      December  31,  1997,  the Company  was in  compliance  with all  covenants
      contained in the facility.

      On October 8, 1997, the Company  exercised its right to redeem  $7,000,000
      in subordinated  convertible  notes,  ("the Notes") held by  Massachusetts
      Mutual Life Insurance Company. The Company was able to exercise this right
      when the market price of the Company's  common stock remained above $16.50
      per share for a twenty  consecutive  day period.  The Notes converted into
      704,223  shares of the Company's  common stock,  at a conversion  price of
      $9.94 per share.

7.    Subsequent Events:

      On January 7, 1998,  the Company  signed an asset  purchase  agreement and
      acquired   Ace  TV   Rentals,   ("ACE"),   a   privately-owned   50  store
      rental-purchase chain with locations in South Carolina and California with
      annualized  revenues  of  approximately  $22  million.  The  Company  paid
      approximately $25.2 million in cash and assumed liabilities, with $750,000
      placed  in  an  escrow   account   to   satisfy   sellers'   breaches   of
      representations and warranties and any final purchase price adjustments.

      On January 6, 1998,  the Company  signed a letter of intent to acquire the
      stock of Champion Rentals,  Inc. ("Champion  Rentals"),  a privately-owned
      rental-purchase chain for approximately $70 million plus the assumption of
      liabilities. Champion Rentals, with 145 stores, has annualized revenues of
      approximately  $80 million.  Consummation of the acquisition is subject to
      completion of due diligence, execution of a definitive purchase agreement,
      financing,  and other customary closing conditions.  The purchase price is
      subject to adjustment  at closing.  Rent-Way is currently  evaluating  the
      financing of the  acquisition.  Of Champion  Rentals' 145 stores,  located
      primarily in the  Southeast  United  States,  25 locations  were opened in
      1997.





<PAGE>


                                 RENT-WAY, INC.

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

General

During the three month period ended  December  31, 1997,  the Company  generated
record revenues,  operating income, and net income. The Company's total revenues
increased by 70.2% compared to the same three month period last year.  Operating
income  and net  income  increased  by 100.1%  and  199.1%,  respectively,  when
compared to the same three  month  period  last year.  The  increase in revenue,
operating  income and net income are primarily due to  acquisitions  made during
fiscal 1997,  improved same store operating profits,  and a reduction in certain
expenses resulting from economies of scale.

On October 8, 1997,  the Company  exercised  its option to force  redemption  of
$7,000,000   in   subordinated   convertible   notes,   ("the  Notes")  held  by
Massachusetts  Mutual Life Insurance  Company.  The Company was able to exercise
this option when the market price of the Company's  common stock  remained above
$16.50 per share for a twenty  consecutive date period. The Notes converted into
704,223 shares of the Company's common stock, at a conversion price of $9.94 per
share.

On December 2, 1997,  the Company  completed  a public  offering  consisting  of
2,500,000  shares of common  stock  offered by the Company and 87,250  shares of
common stock offered by certain selling  shareholders.  In addition, on December
30, 1997, the  underwriters  exercised a 30 day option to purchase up to 388,088
shares of common  stock to cover  over-allotments.  The shares were offered at a
price of $17.25 per share. The Company received net proceeds (less  underwriters
discount  and  selling  expenses)  of  $46,982,586  including  the  underwriters
exercise of the over-allotment  option. The Company used these proceeds to repay
outstanding  borrowings of $23.0 million  under the Company's  credit  agreement
with a syndicate of banks led by National  City Bank of  Pennsylvania  (See Note
6). The remaining proceeds have been invested in short-term commercial paper and
repurchase agreements.

On January 6, 1998,  the Company  signed a letter of intent to acquire the stock
of  Champion  Rentals,   Inc.,  a  privately-owned   rental-purchase  chain  for
approximately $70 million plus assumption of liabilities. Champion Rentals, with
145 stores, has annualized  revenues of approximately $80 million.  Consummation
of the  acquisition is subject to completion of due diligence,  preparation of a
definitive   purchase   agreement,   financing,   and  other  customary  closing
conditions.  The purchase price is subject to adjustment at closing. Rent-Way is
currently evaluating several proposals from institutional  lenders regarding the
financing of the acquisition. Of Champion Rentals' 145 stores, located primarily
in the Southeast  United States,  25 were opened in 1997.  Rent-Way expects that
the acquisition, if consummated, will have the effect of increasing earnings per
share. Upon the closing of the recently  announced  50-store  acquisition of Ace
T.V.  Rentals  and  the  completion  of the  acquisition  of  Champion  Rentals,
Rent-Way's total stores will increase to 382.

On January 7, 1998, the Company signed an asset purchase  agreement and acquired
Ace TV Rentals,  ("ACE"), a privately-owned 50 store  rental-purchase chain with
locations in South Carolina and California. The Company paid approximately $25.2
million in cash plus the assumption of certain liabilities, with $750,000 placed
in  an  escrow  account  as  a  source  of  payment  for  seller's  breaches  of
representations  and warranties and final purchase price adjustments.  Ace, with
annualized  revenues of approximately  $22 million,  operates 46 stores in South
Carolina and four stores in California, two new markets for Rent-Way.

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












<PAGE>


                                 RENT-WAY, INC.

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

Results of Operations

The following table sets forth,  for the periods  indicated,  certain items from
the  Company's  unaudited  Statements  of Income,  expressed as a percentage  of
revenues.
<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                            December 31,



                                                                                        1997            1996
                                                                                        ----            ----
Revenues:
<S>                                                                                       <C>             <C>  
  Rental revenue                                                                          88.2%           87.4%
  Other revenue                                                                           11.8            12.6
                                                                                       -------          ------
     Total revenues                                                                      100.0           100.0

Costs and operating expenses:
  Depreciation and amortization:
     Rental merchandise                                                                   23.5            23.6
     Property and equipment                                                                2.1             1.8
     Amortization of goodwill                                                              2.2             2.0
                                                                                       -------          ------
         Total depreciation and amortization                                              27.8            27.4

  Salaries and wages                                                                      26.2            27.9
  Advertising                                                                              4.6             5.3
  Occupancy                                                                                6.9             6.6
  Other operating expenses                                                                18.5            19.2
                                                                                       -------          ------
         Total costs and operating expenses                                               84.0            86.4

   Operating income                                                                       16.0            13.6

   Interest expense                                                                       (3.0)           (2.4)
   Other Income                                                                            0.4          -
                                                                                       -------          ------

   Income before income taxes and extraordinary item                                      13.4            11.2

   Income tax expense                                                                     (5.8)           (5.2)
                                                                                       --------         ------

   Income before extraordinary item                                                        7.6             6.0

   Extraordinary item                                                                     --              (1.7)
                                                                                       -------          ------

   Net income                                                                              7.6             4.3

   Gain on redemption of preferred stock                                                  --               1.8
                                                                                       -------          ------

   Earnings applicable to common shares                                                    7.6%            6.1%
                                                                                       =======          ======
</TABLE>

Comparison of Three Months Ended December 31, 1997 and 1996

For the three months ended  December 31, 1997 compared to the three months ended
December 31, 1996,  total revenues  increased by $11.0 million  (70.2%) to $26.7
million from $15.7 million. The increase was principally due to the inclusion of
the results for the stores  acquired  during fiscal 1997. The stores acquired in
the Rental King Acquisition  accounted for $6.6 million (60.0%) of the increase,
the stores  acquired  in the  Coleman  Acquisition  accounted  for $2.3  million
(20.9%) of the increase,  the stores acquired in other fiscal 1997  acquisitions
accounted  for $1.2 million  (10.9%) of the  increase,  and the  Company's  same
stores  accounted  for  $0.9  million  (8.2%)  of the  increase.  Other  revenue
increased by $1.2 million (59.6%) to $3.2 million from $2.0 million  principally
due to stores acquired in 1997.

<PAGE>

                                 RENT-WAY, INC.

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

Comparison of Three Months Ended December 31, 1997 and 1996, Continued

     For the three months ended  December 31, 1997  compared to the three months
ended December 31, 1996, total costs and operating  expenses  increased to $22.4
million  from $13.5  million  primarily  as a result of the costs and  operating
expenses  associated  with stores  acquired in 1997, but decreased to 84.0% from
86.4% of total  revenues.  This decrease of 2.4% resulted  primarily from a 1.7%
decrease  in  salaries  and  wages as a  percentage  of total  revenues,  a 0.7%
decrease in advertising as a percentage of total  revenues,  and a 0.7% decrease
in other  operating  expenses as a percentage  of total  revenues.  Depreciation
expense related to rental merchandise  increased by $2.6 million to $6.3 million
from $3.7 million, but only decreased by 0.1% as a percentage of total revenues.
Amortization  of goodwill  increased  by $0.3 million  primarily  because of the
increase in goodwill  related to stores  acquired  in 1997.  Salaries  and wages
increased to $7.0 million from $4.4 million,  but decreased 1.7% as a percentage
of total revenues to 26.2% from 27.9%.  The $2.6 million increase is principally
due to the  addition of  eighty-two  new  locations,  upgrades  in the  regional
manager  position,   and  an  overall   strengthening  of  corporate  personnel.
Advertising  expense  increased  $0.4  million to $1.2 million from $0.8 million
principally due to the addition of the stores acquired in 1997, but decreased to
4.6% from 5.3% of total revenues. The decrease was due to increased efficiencies
attained by focusing  advertising efforts on cluster markets.  Occupancy expense
increased $0.8 million or 0.3% as a percentage of total revenues to $1.8 million
from $1.0  million  principally  due to the  addition of the stores  acquired in
1997.  The increase  resulted  primarily  from the Rental King stores which were
operating on a lower average revenue base per store.  Other  operating  expenses
increased $1.9 million to $4.9 million from $3.0 million  principally due to the
addition of the stores  acquired in 1997,  but  decreased to 18.5% from 19.2% of
total revenues.  This 0.7% decrease occurred because of the Company's ability to
allocate  corporate  costs and certain  overhead  costs over a greater number of
stores and increased revenues.

For the three months ended  December 31, 1997 compared to the three months ended
December 31, 1996,  operating  income increased by $2.2 million (100.1%) to $4.3
million from $2.1 million and  increased to 16.0% from 13.6% of total  revenues.
The  improvement in operating  income was principally due to the stores acquired
in 1997 and the factors discussed above.

For the three months ended  December 31, 1997 compared to the three months ended
1996,  interest  expense  increased  by $0.4  million to $0.8  million from $0.4
million  principally  due to an  increase  in debt of $1.9  million  from  $18.2
million to $20.1  million.  This increase was primarily due to borrowings on the
Company's  credit facility in connection with the seven  rental-purchase  stores
acquired in July and September  1997 and a higher  volume of rental  merchandise
purchases for the fall season.  These borrowings were subsequently  extinguished
using proceeds from the Company's public stock offering (see Note 3).

For the three months ended  December 31, 1997 compared to the three months ended
December  31,  1996,  income tax expense  increased  to $1.5  million  from $0.8
million because the Company  generated  greater  taxable income.  The Company is
accruing  income tax expense based on an effective  tax rate of 43.2%,  which is
higher than the statutory tax rates,  because  amortization  expense  related to
goodwill incurred in connection with certain  acquisitions is not deductible for
purposes of computing income tax.

For the three months ended  December 31, 1997 compared to the three months ended
December 31, 1996, net income increased by $1.3 million (199.1%) to $2.0 million
from $0.7 million. The increase was due to the factors discussed above.

Liquidity and Capital Resources

As of December  31, 1997,  the Company had no  outstanding  senior  indebtedness
under its  collateralized  revolving credit facility,  ("the Facility"),  with a
syndicate of banks, led by National City Bank of Pennsylvania.  The Facility was
paid down,  with funds  received from the Company's  public stock  offering (see
Note 3). As of  December  31,  1997,  the  Company  was in  compliance  with all
covenants contained in the facility. The agreement expires on November 22, 1999.
As of  December  31,  1997,  the  Company  had  approximately  $35.0  million of
availability under its working capital loan commitment.



<PAGE>


                                 RENT-WAY, INC.

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

Liquidity and Capital Resources (Continued)

On December 2, 1997, the Company completed a public offering of 2,587,250 shares
of Common Stock.  Of the  2,587,250  shares of Common Stock  offered,  2,500,000
shares were  offered by the Company and 87,250 were  offered by certain  selling
shareholders. The Company also granted the underwriters an option to purchase an
additional 388,088 shares of Common Stock to cover over-allotments.  On December
30, 1997, the Underwriters  exercised this option.  The shares were offered at a
price of $17.25 per share. The Company received net proceeds (less  underwriters
discount  and  selling  expenses)  of  $47,104,715  including  the  underwriters
exercise of the over-allotment  option. The Company used these proceeds to repay
outstanding  borrowings of $23.0 million  under the Company's  credit  agreement
with a syndicate of banks led by National  City Bank of  Pennsylvania  (See Note
6). The remaining balance was invested in short-term commercial paper.

On October 8, 1997,  the Company  exercised  its right to redeem  $7,000,000  in
subordinated  convertible notes, ("the Notes") held by Massachusetts Mutual Life
Insurance  Company.  The indebture  allowed the Company to force conversion when
the market price of the Company's  common stock exceeded  $16.50 per share for a
twenty  consecutive  day period.  The Notes converted into 704,223 shares of the
Company's common stock, at a conversion price of $9.94 per share.

For the three months ended  December 31, 1997 compared to the three months ended
December 31, 1996, the Company's net cash used in operating activities increased
to $5.9 million from $2.9 million.  This increase was  principally due to a $5.0
million  increase in rental  merchandise  purchases,  a $1.3 million increase in
prepaid assets and a $0.1 million increase in other current liabilities,  offset
by a $3.2  million  increase  in non-cash  amortization  and  depreciation.  The
increase  in  depreciation,   amortization,  and  rental  merchandise  purchases
resulted primarily from the stores acquired in 1997.

For the three months ended  December 31, 1997 compared to the three months ended
December 31, 1996, the Company's net cash used in investing activities increased
by $0.4 million.

For the three months ended  December 31, 1997 compared to the three months ended
December 31,  1996,  the  Company's  net cash  provided by financing  activities
increased to $26.3 million from $3.7 million.  The increase in net cash provided
by financing activities was principally due to funds received from the Company's
public stock offering, (See Note 3).

Inflation

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

Other Matters

In March 1997, the FASB issued SFAS No. 128, "Earnings per Share", effective for
periods  ending  after  December  15,  1997.  The  Company,  in  recognition  of
requirements  SFAS No.  128,  has  determined  the  impact of basic and  diluted
earnings per common  share.  Basic  earnings per common share is computed  using
income available to common  shareholders  divided by the weighted average number
of common  shares  outstanding.  Diluted  earnings  per common share is computed
using income available to common shareholders  adjusted for anticipated interest
savings, net of related taxes, for convertible subordinated notes and debentures
and the  weighted  average  number of shares  outstanding  is  adjusted  for the
potential  impact of options,  warrants and convertible  subordinated  notes and
debentures.  Earnings  per  common  share for the  three  month  periods  ending
December 31, 1997 and 1996 has been calculated in accordance with SFAS No. 128.

In March 1997,  the FASB also issued SFAS No. 129,  "Disclosure  of  Information
about Capital Structure" effective for fiscal years beginning after December 15,
1997.  The  Company  adopted  SFAS No. 129 which had no impact on the  financial
statements.


<PAGE>


                                 RENT-WAY, INC.

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

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,  and
(iii) the impact of state and federal laws regulating or otherwise affecting the
rental-purchase transaction.

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







<PAGE>


                                 RENT-WAY, INC.


                            PART II OTHER INFORMATION


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
                 11               Computation of Net Income per Common Share.

b.  Reports on Form 8-K

              None

                                   SIGNATURES


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





           Date             Jeffrey A. Conway
                            Vice President and Chief Financial Officer
                            (Principal Financial and Accounting Officer and Duly
                             Authorized Officer)



















<PAGE>


                                 RENT-WAY, INC.

                                   EXHIBIT 11
<TABLE>
<CAPTION>


Computation of Earnings Per Common Share
                                                                                     For the three months ended
                                                                                          December 31,
                                                                                              (unaudited)

                                                                                     1997                1996
                                                                                     ----                ----
BASIC

<S>                                                                             <C>                <C>          
Net income                                                                      $  2,034,667       $     680,374
Redeemable preferred stock net gain on redemption                                    --                  280,175
                                                                                ------------       -------------
Earnings applicable to common shares                                            $  2,034,667       $     960,549
                                                                                ============       =============

Weighted average number of common shares
    outstanding during the period                                                  8,535,945           6,593,876
                                                                                ============       =============

Basic earnings per common share:
    Income before extraordinary item                                            $      0.24        $        0.19
                                                                                ===========        =============
    Net income                                                                  $      0.24        $        0.15
                                                                                ===========        =============

DILUTED

Earnings applicable to common shares                                            $  2,034,667       $     960,549

Interest on convertible debt (net of tax benefit)                                    210,000              --
                                                                                ------------       -------------

Earnings applicable to diluted earnings per common share                        $  2,244,667       $     960,549
                                                                                ============       =============

Weighted average number of common shares used in
    calculating basic earnings per share                                           8,535,945           6,593,876

Add - incremental shares representing:

    Common  equivalent  shares  (determined  using the "treasury  stock" method)
    representing  shares  issuable upon exercise of stock options,  warrants and
    escrowed
    shares                                                                           758,398             432,451
    Shares issuable on conversion of convertible debentures                        1,495,890              --
                                                                                ------------        ------------

Weighted average number of shares used in
      calculation of fully diluted earnings per common share                      10,790,233           7,026,327
                                                                                ============        ============

Diluted earnings per common share:
    Income before extraordinary item                                            $      0.21         $       0.17
                                                                                ===========         ============
    Net income                                                                  $      0.21         $       0.14
                                                                                ===========         ============
</TABLE>