<PAGE>





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




                                    FORM 10-Q



           (Mark One)

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

                  For the quarterly period ended March 31, 1998

                                       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)


        Indicate by check mark whether the  registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes        X                 No


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

                     Class              Outstanding as of March 31, 1998
                  Common Stock                  10,884,410


<PAGE>


                                 RENT-WAY, INC.

<TABLE>
<CAPTION>


                                                                                                          Page
Part I            Financial Information
                  Item 1.  Financial Statements:

                           Balance Sheets as of March 31, 1998 and
<S>                                  <C>                                                                 <C>   
                           September 30, 1997                                                             3

                           Statements of Income, Three and Six Months
                           Ended March 31, 1998 and 1997                                                  4

                           Statements of Cash Flows, Six Months Ended
                           March 31,1998 and 1997                                                         5

                           Notes to Financial Statements                                                  6

                  Item 2.  Management's Discussion and Analysis
                           of Financial Condition and Results of Operations                              13

Part II           Other Information

                  Item 4.  Submission of Matters to Vote of Security Holders                             20

                  Item 6.  Exhibits and Reports on Form 8-K                                              21

                  Signatures


</TABLE>

























<PAGE>

<TABLE>
<CAPTION>

                                 RENT-WAY, INC.

                                 BALANCE SHEETS

                                                                                              For the period ended

                                                                                        March 31,              September 30,
                                                                                          1998                     1997
                                                                                    ---------------         -----------
                                                                                       (unaudited)

ASSETS

<S>                                                                                <C>                      <C>            
Cash                                                                               $        492,925         $       598,664
Prepaid expenses                                                                          4,154,663               1,452,265

Rental merchandise, net                                                                  67,946,234              35,132,316
Deferred income taxes                                                                       809,651               1,071,927
Property and equipment, net                                                              13,906,559               8,518,222
Goodwill, net                                                                           127,623,361              43,446,776
Deferred financing costs, net                                                             1,728,078               1,475,088
Non-compete and prepaid consulting fee, net                                               3,810,163               1,743,514
Other assets                                                                              4,011,308               2,849,166
                                                                                   ----------------         ---------------
        Total assets                                                               $    224,482,942         $    96,287,938
                                                                                   ================         ===============

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable                                                                   $      6,286,775         $     3,067,294
Other liabilities                                                                         5,771,777               3,411,605
Income taxes payable                                                                      1,042,681                 695,743
Debt                                                                                    110,855,569              48,156,426
                                                                                   ----------------         ---------------
        Total liabilities                                                               123,956,802              55,331,068

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; 20,000,000 shares
     authorized; 10,884,410 and 7,059,451 shares issued and
     outstanding, respectively                                                           87,208,347              32,759,595
Retained earnings                                                                        13,317,793               8,197,275
                                                                                   ----------------         ---------------
        Total shareholders' equity                                                      100,526,140              40,956,870
                                                                                   ----------------         ---------------
        Total liabilities and shareholders' equity                                 $    224,482,942         $    96,287,938
                                                                                   ================         ===============








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








<PAGE>
<TABLE>
<CAPTION>


                                 RENT-WAY, INC.

                              STATEMENTS OF INCOME

                                                             For the three months ended                For the six months ended
                                                                      March 31,                               March 31,
                                                               1998               1997                  1998                1997
                                                               ----               ----                  ----                ----
                                                                     (unaudited)                              (unaudited)
Revenues:
<S>                                                       <C>               <C>                   <C>                 <C>           
Rental revenue                                          $   40,879,036    $   19,836,214        $   64,394,049      $   33,526,057

Other revenue                                                5,023,393         2,709,167             8,174,523           4,683,222
                                                        --------------    --------------        --------------      --------------
       Total revenues                                       45,902,429        22,545,381            72,568,572          38,209,279

Costs and operating expenses:
Depreciation and amortization:
    Rental merchandise                                      10,175,386         5,197,299            16,435,156           8,897,980

    Property and equipment                                     650,976           317,392             1,216,831             593,517

    Amortization of goodwill                                 1,060,622           467,830             1,651,424             774,042

Salaries and wages                                          11,377,246         5,667,057            18,353,234          10,036,027

Advertising                                                  2,438,799         1,130,224             3,667,083           1,953,598

Occupancy                                                    3,062,599         1,589,709             4,904,035           2,624,693

Other operating expenses                                    10,143,354         4,842,079            15,071,263           7,858,145
                                                        --------------    --------------        --------------      --------------
        Total costs and operating expenses                  38,908,982        19,211,590            61,299,026          32,738,002
                                                        --------------    --------------        --------------      --------------
        Operating income                                     6,993,447         3,333,791            11,269,546           5,471,277

Other income (expense):
Interest expense                                            (1,579,043)         (872,184)           (2,374,452)         (1,247,680)
Interest income                                                  -                   415               109,655                 920

Other income (expense), net                                       (642)          (21,724)               (8,826)            (23,795)
                                                        ---------------   ---------------       ---------------     ---------------

       Income before income taxes
        and extraordinary item                               5,413,762         2,440,298             8,995,923           4,200,722


Income tax expense                                           2,327,911         1,145,017             3,875,405           1,956,050
                                                        --------------    --------------        ---------------     --------------


        Income before extraordinary item                     3,085,851         1,295,281             5,120,518           2,244,672


Extraordinary item                                               -                  -                      -              (269,017)
                                                        --------------    --------------        --------------      --------------


Net income                                                   3,085,851         1,295,281             5,120,518           1,975,655

Net gain on redemption of preferred stock                        -                  -                     -                280,175
                                                        --------------    --------------        --------------      --------------


Earnings applicable to common shares                    $    3,085,851    $    1,295,281        $    5,120,518      $    2,255,830
                                                        ==============    ==============         =============      ==============


Earnings per common share (Note 2):
Basic earnings per share  (adjusted to give effect to the net gain on redemption
of preferred stock):
     Income before extraordinary item                   $         0.29    $         0.20        $         0.53      $         0.38
                                                        ==============    ==============        ==============      ==============
     Net income                                         $         0.29    $         0.20        $         0.53      $         0.34
                                                        ==============    ==============        ==============      ==============

Diluted  earnings  per  share  (adjusted  to  give  effect  to the  net  gain on
redemption of preferred stock):
     Income before extraordinary item                   $         0.26    $         0.18        $         0.47      $         0.35
                                                        ==============    ==============        ==============      ==============

     Net income                                         $         0.26    $         0.18        $         0.47      $         0.32
                                                        ==============    ==============        ==============      ==============

Weighted average common shares outstanding:
     Basic                                                  10,727,843         6,609,853             9,660,775           6,602,048
                                                        ==============    ==============        ==============      ==============

     Diluted                                                12,848,310         8,687,547            11,759,553           8,206,540
                                                        ==============    ==============        ==============      ==============

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


<PAGE>

<TABLE>
<CAPTION>

                                 RENT-WAY, INC.

                            STATEMENTS OF CASH FLOWS


                                                                                            For the six months ended
                                                                                                    March 31,
                                                                                          1998                    1997
                                                                                       (unaudited)             (unaudited)

Operating activities:
<S>                                                                                 <C>                     <C>            
Net income                                                                          $     5,120,518         $     1,975,655

Adjustments   to  reconcile  net  income  to  net  cash  provided  by  operating
activities:
    Depreciation and amortization                                                        19,455,673              10,265,539

    Deferred income taxes                                                                   262,276                 (98,666)

    Extraordinary item                                                                         -                    269,017

Changes in assets and liabilities:
    Prepaid expenses                                                                     (2,297,426)               (405,896)

    Rental merchandise                                                                  (26,758,527)            (13,661,661)

    Non compete and prepaid consulting fees                                                (346,649)                 89,286

    Other assets                                                                           (129,359)               (155,507)

    Accounts payable                                                                      2,219,481                (360,578)

    Income taxes payable                                                                    346,938                 792,383

    Other current liabilities                                                               895,342                 557,102
                                                                                    ---------------         ---------------

                  Net cash used in operating activities                                  (1,231,733)               (733,326)


Investing activities:
    Purchase of businesses, net of cash acquired of $524,838  and
      $827,912 respectively                                                             (96,274,315)            (21,289,455)

    Purchases of property and equipment                                                  (3,741,122)             (1,614,140)
                                                                                    ----------------        ---------------

                  Net cash used in investing activities                                (100,015,437)            (22,903,595)


Financing activities:
    Proceeds from borrowings                                                             94,724,289              38,126,385

    Payments on borrowings including early extinguishment                               (40,626,358)            (10,447,199)
    Redeemable preferred stock dividend                                                        -                    (32,143)

    Redeemable preferred stock redemption                                                      -                   (840,525)

    Deferred finance costs                                                                 (405,252)             (1,356,158)

    Proceeds from common stock issuance                                                  47,448,752                 102,983
                                                                                    ---------------         ---------------

                  Net cash provided by financing activities                             101,141,431              25,553,343
                                                                                    ---------------         ---------------
                  Increase/(decrease) in cash                                              (105,739)              1,916,422

Cash at beginning of period                                                                 598,664                 179,425
                                                                                    ---------------         ---------------

Cash at end of period                                                               $       492,925         $     2,095,847
                                                                                    ===============         ===============


Supplemental  disclosures of cash flow information:  Cash paid during the period
    for:
       Interest                                                                     $     1,489,081         $       989,966

       Income taxes                                                                 $     3,266,492         $     1,163,368





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

<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.

      The  Company  utilizes  derivative  financial  instruments  to reduce  its
      exposure  resulting from  fluctuations in interest  rates.  The derivative
      financial  instruments  in  effect  at March  31,  1998  consist  of three
      interest rate swap agreements.  The interest rate swap agreements are used
      by the Company to convert part of the  Company's  floating  interest  rate
      debt to a fixed  interest  rate.  Interest  rate  expense  under  the swap
      agreements, and the amended facility (the "Facility") that they hedge, are
      recorded at the net  effective  interest rate of hedge  transactions.  The
      Company's   practice  is  not  to  hold  or  issue  derivative   financial
      instruments for trading or speculative purposes.

      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.    Earnings per 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 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 and six month periods
      ended March 31, 1997 has been  restated in  accordance  with  Statement of
      Financial Accounting Standards ("SFAS") No. 128.
<TABLE>
<CAPTION>

                          Reconciliation of Numerators and Denominators of the Basic and Diluted EPS Computation

      Computation of Earnings per Share:                                For the three months ended        For the six months ended
      ---------------------------------
                                                                                 March 31,                        March 31,
                                                                                (unaudited)                     (unaudited)
                                                                          1998               1997          1998          1997
      BASIC

<S>                                                                      <C>                <C>            <C>           <C>       
      Net income                                                     $   3,085,851      $  1,295,281   $ 5,120,518   $  1,975,655
      Redeemable preferred stock net gain on redemption                       -                -               -          280,175
                                                                     -------------      ------------   ------------  ------------

      Earnings applicable to common shares                           $   3,085,851      $  1,295,281   $ 5,120,518   $  2,255,830
                                                                     =============      ============   ===========   ============

      Weighted average number of common shares
         outstanding during the period                                  10,727,843         6,609,853      9,660,775     6,602,048
                                                                     =============      ============   ============     =========

      Basic earnings per common share:
         Income before extraordinary item                            $        0.29      $      0.20    $       0.53  $       0.38
                                                                     =============      ===========    ============  ============
         Net income                                                  $        0.29      $      0.20    $       0.53  $       0.34
                                                                     =============      ===========    ============  ============

</TABLE>


<PAGE>


                                 RENT-WAY, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (unaudited)

2.    Earnings per Share: (Continued)
<TABLE>
<CAPTION>

      DILUTED

<S>                                                                      <C>                <C>            <C>           <C>       
      Earnings applicable to common shares                               $   3,085,851      $  1,295,281   $ 5,120,518   $2,255,830

      Interest on convertible debt (net of tax benefit)                      210,000           245,000        425,000       350,000
                                                                        -------------      ------------   ------------  ------------

      Earnings applicable to diluted earnings per common share          $  3,295,851      $  1,540,281   $ 5,545,518   $  2,605,830
                                                                        =============      ============   ===========   ============

      Weighted average number of common shares used in
         calculating basic earnings per share                             10,727,843         6,609,853     9,660,775      6,602,048

      Add - incremental shares representing:

         Common equivalent shares (determined using the
         "treasury stock" method) representing shares issuable
         upon exercise of stock options and warrants                         624,577           442,693       602,888        439,993
         Shares issuable on conversion of 10% notes                            -               704,225          -           704,225
         Shares issuable on conversion of 7% debentures                    1,495,890           930,776     1,495,890        460,274
                                                                        -------------      ------------   -----------   ------------

      Weighted average number of shares used in
         calculation of diluted earnings per common share                 12,848,310         8,687,547    11,759,553      8,206,540
                                                                        =============        ==========   ===========   ============

      Diluted earnings per common share:
         Income before extraordinary item                              $        0.26      $      0.18    $       0.47  $       0.35
                                                                        =============      ===========    ============  ============
         Net income                                                    $        0.26      $      0.18    $       0.47  $       0.32
                                                                        =============      ===========    ============  ============
</TABLE>


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 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 5) and to fund the
      asset purchase of South Carolina Rentals,  Inc., Paradise Valley Holdings,
      Inc. and L & B Rents, Inc. ("ACE Rentals").

4.     Acquisitions:

       On February 5, 1998, the Company signed a definitive  purchase  agreement
       to  acquire  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  $75.0
       million.  The  consideration  paid in  exchange  for all the  outstanding
       shares of  Champion  was  $69,650,000  in cash.  Pursuant to terms of the
       purchase agreement  $2,500,000 of the purchase price was placed in escrow
       subject  to the  terms  of  the  escrow  agreement  to  satisfy  sellers'
       representations  and warranties and any purchase price  adjustments.  The
       escrow  agreement  provides  for the  release of  $1,500,000  pending the
       completion of an audit of Champion's  financial  statements  and business
       records.  The  balance of  $1,000,000  will be held for a one year period
       from the date of the closing. The acquisition was accounted for using the
       purchase method of accounting.  Champion's  assets and  liabilities  were
       recorded at their
<PAGE>

                                 RENT-WAY, INC.

                   NOTES TO FINANCIAL STATEMENTS, (Continued)
                                   (unaudited)

4.     Acquisitions: (Continued)

       estimated fair values at the time of the  acquisition.  The fair value of
       rental merchandise,  property and equipment,  intangible assets including
       non-compete  agreements and customer lists,  certain  liabilities and the
       final  purchase  price will be determined  based on the completion of the
       financial  statement audit,  valuation  procedures and certain additional
       procedures.  The  estimated  excess  of the  acquisition  cost  over  the
       estimated  fair  value  of  the  net  assets  acquired,  ("goodwill")  of
       $65,765,657  is being  amortized  on a straight  line  basis over  thirty
       years.  The total  estimated costs of net assets acquired was $69,650,000
       and  consisted  of assets of  $88,169,758  less  liabilities  assumed  of
       $17,449,848  and  acquisition  costs of  $1,069,910.  The  acquisition of
       Champion  was funded  with  borrowings  drawn on the  Company's  existing
       senior credit  facility with a syndicate of banks co-led by National City
       Bank of Pennsylvania and  NationsBank,  N.A. (see Note 5). The Statements
       of Income for both the three and six month periods  ending March 31, 1998
       include the result of operations of Champion since February 5, 1998.

       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 fifty rental-purchase stores
       located  in  California  and  South  Carolina  with  annual  revenues  of
       approximately  $22.0 million.  The consideration paid in exchange for the
       assets of ACE  Rentals  was  $25,248,514  in cash and the  assumption  of
       liabilities of $477,851.  Pursuant to the terms of the purchase agreement
       $750,000 of the purchase price was placed in escrow, subject to the terms
       and   conditions   of  the   escrow   agreement   to   satisfy   sellers'
       representations  and warranties and any purchase price  adjustments.  The
       escrow  agreement   provides  for  release  of  the  escrow  pending  the
       completion of an audit of ACE Rentals' financial  statements and business
       records.  The  acquisition was accounted for using the purchase method of
       accounting.  ACE Rentals' assets and certain liabilities were recorded at
       their  estimated  fair  values at the time of the  acquisition.  The fair
       value of rental  merchandise,  property and equipment,  intangible assets
       including non-compete  agreements and customer lists, certain liabilities
       and the final purchase  price will be determined  based on the completion
       of the  financial  statement  audit,  valuation  procedures  and  certain
       additional procedures.  The estimated excess of the acquisition cost over
       the  estimated  fair value of the net assets  acquired,  ("goodwill")  of
       $19,516,482  is being  amortized  on a straight  line  basis over  thirty
       years.  The total  estimated costs of net assets acquired was $25,248,514
       and  consisted  of assets of  $26,411,482  less  liabilities  assumed  of
       $477,851  and  acquisition  costs of  $685,117.  The  acquisition  of ACE
       Rentals was primarily  funded with proceeds  received in connection  with
       the Company's  public stock  offering (see Note 3) with the balance being
       drawn on the Company's  existing  senior credit facility with a syndicate
       of banks,  co-led by National City Bank of Pennsylvania  and NationsBank,
       N.A.  (see Note 5). The  Statements  of Income for both the three and six
       month periods  ending March 31, 1998 include the results of operations of
       ACE Rentals since January 1, 1998.

       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.  The  acquisition  was
       accounted  for using the purchase  method of  accounting.  Rental  King's
       assets and  liabilities  were  recorded at their fair market values as of
       the date of the acquisition.  The excess of the acquisition cost over the
       fair value of the net assets  acquired,  ("goodwill")  of  $17,310,446 is
       being  amortized on a straight  line basis over twenty  years.  The total
       cost of the net assets  acquired was  $17,284,618 and consisted of assets
       of $25,288,162  less  liabilities  assumed of $6,337,325 and  acquisition
       costs of $1,666,219.  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  Statements of Income for
       the three and six months  ended  March 31,  1998  include  the results of
       operations of Rental King for the entire period.

<PAGE>

                                 RENT-WAY, INC.

                   NOTES TO FINANCIAL STATEMENTS, (Continued)
                                   (unaudited)

4.     Acquisitions (Continued):

       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.  The
       acquisition  was accounted for using the purchase  method of  accounting.
       Coleman's assets and liabilities were recorded at their fair values as of
       the acquisition  date. The excess of the  acquisition  cost over the fair
       value of the net assets  acquired,  ("goodwill")  of  $3,763,420 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 $7,696,513 less  liabilities
       assumed of $4,548,836 and acquisition costs of $360,256.  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 $158,152.  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
       Statements  of Income for the three and six months  ended  March 31, 1998
       include 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
       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
       $2,734,511 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 $3,965,126 less acquisition  costs of $155,248.  The Statements
       of Income for the three and six months  ended March 31, 1998  include the
       operating results for these stores for the entire period.

       Following are pro forma  results of  operations  for the six months ended
       March 31, 1998 and 1997  assuming  the  acquisitions  of Champion and ACE
       Rentals had occurred on October 1, 1996. The results are not  necessarily
       indicative  of future  operations  or what  would have  occurred  had the
       acquisitions been consummated as of October 1, 1997.
<TABLE>
<CAPTION>

                                                                   Unaudited Pro Forma Operations
                                                                     Six months ended March 31,

                                                              1998                               1997
                                                          -------------                      -------------
<S>                                                         <C>                                <C>        
       Revenues                                             $98,929,972                        $90,761,211

       Net income                                         $   7,419,729                      $   6,353,285
                                                          =============                      =============

       Diluted earnings per common share (adjusted to give effect to the net gain on redemption of preferred stock):
                                                          $       0.63                       $        0.55

</TABLE>


<PAGE>


                                 RENT-WAY, INC.

                   NOTES TO FINANCIAL STATEMENTS, (Continued)
                                   (unaudited)

5.      Debt:
<TABLE>
<CAPTION>

        On February 5, 1998,  the Company  amended its  existing  senior  credit
        facility  with a  syndicate  of  banks  led by  National  City  Bank  of
        Pennsylvania.   The   Facility,   co-led  by   National   City  Bank  of
        Pennsylvania,  acting  as  syndication  and  administrative  agent,  and
        NationsBank, N.A. as documentation agent, provides for loans and letters
        of credit up to $120.0 million.  The syndicate members and their ratable
        share of the Facility are as follows:

<S>                                                                           <C>      
                  National City Bank of Pennsylvania                          15.0000% 
                  NationsBank, N.A.                                           14.1670%
                  Harris Trust and Savings Bank                               14.1670%
                  LaSalle National Bank                                       14.1670%
                  Sun Trust Bank, Central Florida, National Association        7.0825%
                  Manufacturers and Traders Trust Company                     14.1670%
                  CoreStates Bank, N.A.                                        7.0825%
                  Star Bank, N.A.                                             14.1670%
</TABLE>

        Of the $120.0 million available under the Facility,  approximately  $7.0
        million was  outstanding at the date of the amendment and  approximately
        $81.0 million was used for the acquisition of Champion Rentals,  Inc and
        the  extinguishment  of their  existing  debt (see Note 4). The Facility
        expires on February 5, 2001.

        Under the  Facility,  the  Company  may borrow  funds  under a base rate
        option plan or euro-rate  option  plan.  Under the base rate option plan
        the Company may borrow funds based on a spread of  prime-rate  plus 0.0%
        to 0.5%.  The actual spread is determined  based on the ratio of debt to
        cash flow from operations during the period. Under the euro-rate option,
        the Company may borrow  funds based on a spread of the London  Interbank
        Offer Rate, ("LIBOR") plus 100 to 200 basis points. The actual spread is
        determined  based  on the  ratio  of debt to cash  flow  generated  from
        operations  during the period.  Borrowings  under the  euro-rate  option
        require the Company to select a fixed  interest  period during which the
        euro-rate is applicable  with the borrowed amount not to be repaid prior
        to the last day of the selected interest period. In addition, borrowings
        tranche's  under the  euro-rate  option must be in multiples of $250,000
        and not less than  $1,000,000 in total.  Commitment fees associated with
        the  Facility  are  equal to 0.125%  for each  banks'  commitment  which
        existed  prior to this  amendment  and 0.25% for each banks'  commitment
        starting  with the date of this  amendment.  The  Facility  requires the
        Company to meet certain financial covenants and ratios including maximum
        leverage,  minimum  interest  coverage  and minimum  tangible  net worth
        ratios.  In  addition,  the  company  must meet  requirements  regarding
        monthly,  quarterly and annual  financial  reporting.  The Facility also
        contains  non-financial  covenants which restrict actions of the Company
        with  respect  to  the  payment  of  dividends,  acquisitions,  mergers,
        disposition  of assets or  subsidiaries,  issuance of capital  stock and
        capital  expenditures.  The  Company  may at any time repay  outstanding
        borrowings,  in whole or part,  without premium or penalty,  except with
        respect  to  restrictions   identified  above  in  connection  with  the
        selection of the euro-rate option. As of March 31, 1998, the Company had
        $83.0 million of floating rate debt under the euro-rate  option and $4.3
        million of floating rate debt under the base rate option,  with interest
        rates of 7.625% and 9.0% respectively. As of March 31, 1998, the Company
        was in compliance with all covenants contained in the Facility.

        On October 8, 1997,  the  Company  exercised  its right to convert  $7.0
        million  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.



<PAGE>


                                 RENT-WAY, INC.

                   NOTES TO FINANCIAL STATEMENTS, (Continued)
                                   (unaudited)

6.      Derivative Financial Instrument:

       The Company uses derivative financial instruments to reduce the impact on
       interest  expense of fluctuations in interest rates on the Facility.  The
       Company does not enter into derivative financial  instruments for trading
       or speculative  purposes.  As of March 31, 1998, the Company had in place
       three   interest  rate  swaps,   under  which  the  Company  agreed  with
       counterparties to exchange, at quarterly intervals, the interest payments
       on the  Company's  variable  pay  rate of the  three-month  LIBOR  on the
       Facility and the counterparties 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 pay
       and receive rates of each of the interest  rate swap  agreements at March
       31, 1998:
<TABLE>
<CAPTION>

                                         Notional       Maturity          Pay         Receive
                                          Amount         Date             Rate          Rate

       Interest rate swap,
<S>                                    <C>                  <C>          <C>           <C>   
           National City Bank          $30,000,000      May 2003         5.965%        5.625%

       Interest rate swap,
           NationsBanc                 $20,000,000      May 2003         5.760%        5.625%

        Interest rate swap,
           Manufacturers' and
           Traders Trust Company       $10,000,000      May 2003         5.925%        5.625%
</TABLE>

       Interest expense is recognized based on the counterparties fixed interest
       and 100-200 basis points,  as required by the Facility,  for the notional
       amount  of  the  interest  rate  swap  agreements.  Interest  expense  is
       recognized for  borrowings in excess of the notional  amount based on the
       terms  of the  Facility.  The  fair  value  of  the  interest  rate  swap
       agreements,  based on settlement  cost as estimated by a dealer,  are not
       reflected in the financial  statements since they are effectively used as
       hedging instruments.  The following table summarizes the notional amount,
       carrying  amount and fair values of the interest rate swap  agreements as
       of March 31, 1998:
<TABLE>
<CAPTION>

       Notional                                    Carrying
       Amount                                      Fair Value                 Amount

       Interest rate swap,
<S>                                                 <C>                     <C>              <C>      
           National City Bank                       $30,000,000             ($110,840)       ($ 9,917)

       Interest rate swap,
           NationsBanc                              $20,000,000             ($ 48,665)       ($ 2,750)

       Interest rate swap,
           Manufacturers' and
           Traders Trust Company                    $10,000,000             ($ 14,400)       ($12,667)
</TABLE>

  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
        $600,000 to $2,250,000.  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.




<PAGE>


                                 RENT-WAY, INC.

                   NOTES TO FINANCIAL STATEMENTS, (Continued)
                                   (unaudited)

  7.   Contingencies: (Continued)

       Additional  claims exist in the range of $1,200,000  to  $1,750,000  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 previous  shareholders of prior acquisitions or covered by insurance
       policies and therefore will not have a material effect on the results of
       operations or financial condition of the Company.

  8.   New Accounting Standard:

       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
       will have no impact on the Company's financial statements.

  9.   Subsequent Event:

       On March 23, 1998,the  Company signed an agreement to purchase land and a
       building to be used as a new corporate  headquarters.  The purchase price
       was  $3,650,000,  with  $1,650,000 of the purchase price being  deferred,
       interest free, for a one year period from the date of this agreement. The
       closing of the  purchase  is subject  to normal due  diligence  and other
       contingent items.









<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 March 31, 1998, the Company generated
       record revenues,  operating income,  and net income.  The Company's total
       revenues increased by 103.6% compared to the same three month period last
       year.  Operating  income and net income  increased  by 109.8% and 138.2%,
       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  1998,  improved  same store  operating
       profits,  and a reduction in certain  expenses as a percentage of revenue
       resulting from economies of scale. In addition,  the Company  experienced
       an 8%  increase  in same store  revenue  compared to the same period last
       year.

       On March 23,  1998,  the  Company  signed a  contract  to  purchase a new
       building to be used as a corporate headquarters. The total purchase price
       of the building was  $3,650,000  with  $1,650,000  of the purchase  price
       deferred,  without  interest  charges,  for one year.  The closing of the
       purchase is subject to normal due diligence and other contingent items.

       On February 5, 1998,  the company  amended  its  existing  senior  credit
       facility  with  a  syndicate  of  banks  led by  National  City  Bank  of
       Pennsylvania.  The amended facility (the "Facility"),  co-led by National
       City Bank of  Pennsylvania,  acting  as  syndication  and  administrative
       agent, and NationsBank,  N.A. as documentation agent,  provides for loans
       and letters of credit up to $120.0 million.

       On February 5, 1998,  the Company  completed the  acquisition of Champion
       Rentals, Inc. ("Champion"),  a privately-owned rental purchase chain with
       145  locations  in  the  southeast   United  States.   The  Company  paid
       approximately  $69.7 million in cash plus the assumption of $17.4 million
       in  liabilities.  Pursuant to the terms of the purchase  agreement,  $2.5
       million of the purchase price was placed in an escrow account as a source
       of payment for seller's  breaches of  representations  and warranties and
       final purchase price adjustments.  The acquisition of Champion was funded
       with  borrowings  drawn on the Company's  existing senior credit facility
       (see note 5). The Champion  acquisition  substantially  increases  market
       penetration in several of the Company's  established  areas of operation,
       while opening the door to new markets such as Alabama, Arkansas, Georgia,
       Louisiana, North Carolina and Tennessee. Of Champion Rentals' 145 stores,
       25 were opened in 1997.

       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 the Company.

       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   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 5). The remaining  proceeds have been invested in
       short-term commercial paper and repurchase agreements.

       On  October  8,  1997,  the  Company  exercised  its  option  to  convert
       $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.



<PAGE>

                                 RENT-WAY, INC.

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

       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  Statements  of  Income,  expressed  as a
        percentage of revenues.
<TABLE>
<CAPTION>

                                                          Three Months Ended                           Six Months Ended
                                                               March 31                                    March 31
                                                         1998             1997                       1998             1997
                                                         ----             ----                       ----             ----
       Revenues:
<S>                                                       <C>              <C>                        <C>                  <C> 
         Rental revenue                                   89.1%            88.0%                      88.7           %     87.7
       %
         Other revenue                                    10.9             12.0                       11.3                 12.3
                                                         ------           ------                     ------               ------
         Total revenues                                  100.0%           100.0%                     100.0%               100.0%
       Costs and operating expenses:
         Depreciation and amortization:
         Rental merchandise                               22.2             23.1                       22.6                 23.3
         Property and equipment                            1.4              1.4                        1.6                  1.5
         Amortization of goodwill                          2.3              2.1                        2.3                  2.0
                                                         ------           ------                     ------               ------
              Total depreciation and amortization         25.9             26.6                       26.5                 26.8

       Salaries and wages                                 24.8             25.1                       25.3                 26.3
       Advertising                                         5.3              5.0                        5.1                  5.1
       Occupancy                                           6.7              7.1                        6.8                  6.9
       Other operating expenses                           22.1             21.4                       20.8                 20.6
                                                         ------           ------                     ------               ------
         Total costs and operating expenses               84.8             85.2                       84.5                 85.7
                                                         ------           ------                     ------               ------
       Operating income                                   15.2             14.8                       15.5                 14.3

       Interest expense                                   (3.4)            (3.9)                      (3.3)                (3.3)
       Other income                                         -              (0.1)                       0.2                 -
                                                         ------            ------                     ------              ------

       Income before income taxes and
          extraordinary item                              11.8             10.8                       12.4                 11.0

       Income tax expense                                  5.1              5.1                        5.3                  5.1
                                                         ------           ------                     ------                ------
       Income before extraordinary item                    6.7              5.7                        7.1                  5.9
       Extraordinary item                                  -                -                          -                   (0.7)
                                                       -------            ------                     ------                ------

       Net income                                          6.7%             5.7%                       7.1%                 5.2
                                                       -------            ------                     ------                ------
       %

       Gain on redemption of preferred stock               -                -                          -                    0.7
                                                       -------            ------                     ------                ------

       Earnings applicable to common shares                6.7%             5.7%                       7.1%                 5.9%
                                                       =======            ======                     ======                ======
</TABLE>

       Comparison of Three Months Ended March 31, 1998 and 1997

       For the three  months  ended March 31, 1998  compared to the three months
       ended March 31, 1997, total revenues  increased by $23.4 million (103.6%)
       to $45.9 million from $22.5 million.  The increase was principally due to
       increased  same store  revenues and the  inclusion of the results for the
       stores  acquired  during fiscal 1998. The stores acquired in the Champion
       acquisition  accounted  for $12.3 million  (52.6%) of the  increase,  the
       stores acquired in the ACE acquisition accounted for $5.6 million (23.9%)
       of the increase, the stores acquired in the Rental King
<PAGE>


                                 RENT-WAY, INC.

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

       Comparison of Three Months Ended March 31, 1998 and 1997 (Continued)

       acquisition  accounted  for $2.8  million  (12.0%) of the  increase,  the
       stores  acquired in other  fiscal 1997  acquisitions  accounted  for $1.3
       million (5.5%) of the increase,  and the Company's same stores  accounted
       for $1.4 million (6.0%) of the increase.  Other revenue increased by $2.3
       million  (85.4%) to $5.0  million from $2.7  million  principally  due to
       stores acquired in 1997.

       For the three  months  ended March 31, 1998  compared to the three months
       ended March 31, 1997,  total costs and  operating  expenses  increased to
       $38.9 million from $19.2  million  primarily as a result of the costs and
       operating  expenses  associated  with stores  acquired in fiscal 1997 and
       1998, but decreased to 84.8% from 85.2% of total  revenue.  This decrease
       of 0.4%  resulted  primarily  from a 0.7%  decrease in  depreciation  and
       amortization  as a  percentage  of  total  revenues  a 0.3%  decrease  in
       salaries and wages as a percentage of total revenues, and a 0.4% decrease
       in occupancy  expense as a percentage of total revenues  offset by a 0.7%
       increase in other operating  expenses and a 0.3% increase in advertising.
       Depreciation  expense  related to rental  merchandise  increased  by $5.0
       million to $10.2  million  from $5.2  million,  but  decreased  0.9% as a
       percentage  of total  revenues due to increases in weekly  rental  rates,
       lower purchase costs of rental  merchandise due to increased volume,  and
       improvements in the realization of potential  collectible rental revenue.
       Amortization of goodwill  increased by $0.6 million  primarily because of
       the  increase in goodwill  related to the stores  acquired in fiscal 1997
       and 1998.  Amortization  of goodwill was 2.3% and 2.1% of total  revenues
       for the  three  months  ended  March  31,  1998 and  1997,  respectively.
       Salaries and wages  increased to $11.4  million  from $5.7  million,  but
       decreased 0.3% as a percentage of total revenues to 24.8% from 25.1%. The
       $5.7  million  increase  is  principally  due to the  addition of 198 new
       locations   and  an  overall   strengthening   of  corporate   personnel.
       Advertising  expense  increased  $1.3 million or 0.3% as a percentage  of
       total revenues to $2.4 million from $1.1 million  principally  due to the
       addition  of the  stores  acquired  in fiscal  1997 and  1998.  Occupancy
       expense  increased to $3.1 million from $1.6 million,  but decreased 0.4%
       as a  percentage  of total  revenues to 6.7% from 7.1%.  The $1.5 million
       increase  is  primarily  due to the  addition  of the stores  acquired in
       fiscal 1997 and 1998. Other operating  expenses increased by $5.3 million
       to $10.1  million from $4.8  million,  or 0.7% as a  percentage  of total
       revenues mainly due to the addition of the stores acquired in fiscal 1997
       and 1998.

       For the three  months  ended March 31, 1998  compared to the three months
       ended March 31, 1997, operating income increased by $3.7 million (109.8%)
       to $7.0 million from $3.3  million,  and increased to 15.2% from 14.8% of
       total revenues.  The improvement in operating  income was principally due
       to the stores acquired in 1997 and 1998 and the factors discussed above.

       For the three  months  ended March 31, 1998  compared to the three months
       ended March 31, 1997,  interest  expense  increased  $0.7 million to $1.6
       million  from $0.9  million due to an  increase in debt of $90.8  million
       from $20.1 million to $110.9  million.  This increase is principally  the
       result  of  the  purchase  of  Champion  on  February  5,  1998  and  the
       extinguishment  of its existing debt with $81.0 million in funds drawn on
       the Company's senior credit facility.

       For the three  months  ended March 31, 1998  compared to the three months
       ended March 31, 1997,  income tax expense  increased to $2.3 million from
       $1.1 million because the Company  generated  greater taxable income.  The
       Company's income tax rate of 43.0% 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 March 31, 1998  compared to the three months
       ended March 31, 1997,  net income  increased by $1.8 million  (138.2%) to
       $3.1  million  from $1.3  million.  The  increase  was due to the factors
       discussed above.



<PAGE>


                                 RENT-WAY, INC.

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

       Comparison of Six Months Ended March 31, 1998 and 1997

       For the six months ended March 31, 1997  compared to the six months ended
       March 31, 1996,  total  revenues  increased by $34.4  million  (89.9%) to
       $72.6 million from $38.2  million.  The increase was  principally  due to
       increased same store revenues and the inclusion of the stores acquired in
       fiscal  1997  acquisitions,   the  ACE  acquisition,   and  the  Champion
       acquisition.  Stores  acquired in fiscal 1997 accounted for $14.8 million
       (43.0%) of the increase, stores acquired in the ACE acquisition accounted
       for $5.6 million (16.3%) of the increase, stores acquired in the Champion
       acquisition  accounted for $12.3 million  (35.8%) of the increase and the
       Company's same stores  accounted for $1.7 million (4.9%) of the increase.
       Other revenue  increased  $3.5 million  (74.5%) to $8.2 million from $4.7
       million principally due to stores acquired in 1997 and 1998.

       For the six months ended March 31, 1998  compared to the six months ended
       March 31, 1997,  total costs and  operating  expenses  increased to $61.3
       million  from  $32.7  million  primarily  as a result  of the  costs  and
       operating expenses  associated with stores acquired in 1997 and 1998, but
       decreased to 84.5% from 85.7% of total  revenues.  This  decrease of 1.2%
       resulted  primarily from a 0.3% decrease in depreciation and amortization
       as a percentage of total revenues,  a 1.0% decrease in salaries and wages
       as a  percentage  of total  revenues,  and a 0.1%  decrease in  occupancy
       expense as a percentage of total revenues.  Depreciation  expense related
       to rental  merchandise  increased by $7.5  million to $16.4  million from
       $8.9 million,  but  decreased by 0.7% as a percentage  of total  revenues
       primarily due to increases in weekly rental rates,  lower  purchase costs
       of rental  merchandise due to increasing  volume, and improvements in the
       realization of potential  collectible  rental  revenue.  Amortization  of
       goodwill  increased by $0.9 million  primarily because of the increase in
       goodwill related to stores acquired in 1997 and 1998.  Salaries and wages
       increased to $18.4 million from $10.0  million,  but decreased  1.0% as a
       percentage  of total  revenues  to 25.3%  from  26.3%.  The $8.4  million
       increase is  principally  due to the  addition of 198 new  locations,  up
       grades in the regional manager position,  and an overall strengthening of
       corporate  personnel.  Advertising expense increased $1.7 million to $3.7
       million from $2.0 million  principally  due to the addition of the stores
       acquired in 1997 and 1998.  Advertising  expense as a percentage of total
       revenues  remained  constant at 5.1%.  Occupancy  expense  increased $2.3
       million to $4.9 million  from $2.6 million  mainly due to the addition of
       the stores acquired in 1997 and 1998. Other operating  expenses increased
       $7.2 million to $15.1 million from $7.9 million,  or 0.2% as a percentage
       of total revenues  principally due to the addition of the stores acquired
       in 1997 and 1998.

       For the six months ended March 31, 1998  compared to the six months ended
       March 31, 1997,  operating  income  increased by $5.8 million (106.0%) to
       $11.3  million from $5.5  million,  and  increased to 15.5% from 14.3% of
       total revenues.  The improvement in operating  income was principally due
       to the stores acquired in 1997 and 1998 and the factors discussed above.

       For the six months ended March 31, 1998  compared to the six months ended
       1997,  interest  expense  increased  by $1.2 million to $2.4 million from
       $1.2  million  due to an  increase  in debt of $62.7  million  from $48.2
       million to $110.9 million. This increase is the result of the purchase of
       Champion on February 5, 1998 and the  extinguishment of its existing debt
       with  $81.0  million  in  funds  drawn  on the  Company's  senior  credit
       facility.

       For the six months ended March 31, 1998  compared to the six months ended
       March 31,  1997,  income tax expense  increased to $3.9 million from $2.0
       million because the Company generated greater taxable income. The Company
       is accruing  income tax expense  based on an effective tax rate of 43.0%,
       which is  higher  than the  statutory  tax  rates,  because  amortization
       expense related to goodwill  incurred in connection with its acquisitions
       is not deductible for purposes of computing income tax.

       For the six months ended March 31, 1998  compared to the six months ended
       March 31, 1997,  net income  increased  by $3.1 million  (159.2%) to $5.1
       million from $2.0 million.  The increase was due to the factors discussed
       above.



<PAGE>


                                 RENT-WAY, INC.

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

       Liquidity and Capital Resources

       On February 5, 1998,  the company  amended  its  existing  senior  credit
       facility  with  a  syndicate  of  banks  led by  National  City  Bank  of
       Pennsylvania.  The amended facility (the "Facility"),  co-led by National
       City Bank of  Pennsylvania,  acting  as  syndication  and  administrative
       agent, and NationsBank,  N.A. as documentation agent,  provides for loans
       and letters of credit up to $120.0 million.

       Of the $120.0 million  available under the Facility,  approximately  $7.0
       million was  outstanding  at the date of the amendment and  approximately
       $81.0  million  was  used  for  the   acquisition  of  Champion  and  the
       extinguishment of its existing debt (see Note 4). The Facility expires on
       February 5, 2001.

       On October 8, 1997, the Company exercised its right to convert $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.

       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  $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 5).

       For the six months ended March 31, 1998  compared to the six months ended
       March 31,  1997,  the  Company's  net cash used in  operating  activities
       increased  to  $1.2  million  from  $0.7   million.   This  increase  was
       principally  due  to a  $13.1  million  increase  in  rental  merchandise
       purchases, a $1.9 million increase in prepaid expenses and a $0.4 million
       increase in prepaid  consulting fees offset by a $9.2 million increase in
       non-cash  amortization  and  depreciation,  a $2.6  million  increase  in
       accounts  payable  and a  $3.1  million  increase  in net  income.  These
       increases in resulted primarily from the stores acquired in 1998.

       For the six months ended March 31, 1998  compared to the six months ended
       March 31,  1997,  the  Company's  net cash used in  investing  activities
       increased  by  $77.1  million.  This  increase  is  primarily  due to the
       acquisitions of Champion Rentals and ACE Rentals.

       For the six months ended March 31, 1998, compared to the six months ended
       March 31, 1997,  the Company's net cash provided by financing  activities
       increased to $101.1 million from $25.6 million.  The increase in net cash
       provided by financing  activities was  principally  due to funds received
       from the Company's public stock offering and funds drawn on the Company's
       line of credit in conjunction  with the Champion  acquisition,  (see note
       3).

       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.



<PAGE>


                                 RENT-WAY, INC.

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

       Quantitative and Qualitative Disclosures About Market Risk (Continued)

       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 March 31, 1998:
<TABLE>
<CAPTION>

       Expected Maturity Dates
       (dollars in millions):                               1998        1999       2001        2002        2003         Thereafter
       --------------------------                           ----        ----       ----        ----        ----         ----------

       Debt:
          Existing credit facility
<S>                                                                                <C> 
          Base rate option                                                         $4.3
          -     Actual floating rate, receive rate                                 9.0%
          Euro-rate option                                                         $83.0
          -     Actual floating rate, receive rate                                 5.625%
          Convertible Subordinated
               Debentures                                                                                                  $20.0
          -     Actual fixed interest rate                                                                                 7.0%

          Interest rate swap agreements:
          National City Bank, notional amount                                                               $30.0
          -     Actual fixed interest rate, pay rate                                                       5.965%
          NationsBank, notional amount                                                                      $20.0
          -     Actual fixed interest rate, pay rate                                                       5.760%
          Manufacturers and Traders Trust,                                                                  $10.0
               notional amount
               Actual fixed interest rate, payrate                                                         5.925%

</TABLE>

       Inflation

       During  the  three  months  ended  March  31,  1998,  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 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
       will have no impact on the Company's financial statements.


       Cautionary Statement

       This Report on Form 10-Q and the foregoing  Management's  Discussion  and
       Analysis  of  Financial  Condition  and  Results of  Operations  contains
       various "forward looking statements" within the meaning of Section 27A of
       the Securities Act 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

<PAGE>

                                 RENT-WAY, INC.

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

       Cautionary Statement (Continued)

       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 4.    Submission of Matters to Vote of Security Holders

       The Annual Meeting of  Shareholders  of the Company was held on March 11,
       1998 at the of the  Bel  Aire  Hotel,  2800  West  Eighth  Street,  Erie,
       Pennsylvania  at 10:00 a.m. All  proposals as described in the  Company's
       Proxy Statement dated February 11, 1998 were approved.  Below are details
       of the matters voted on at the meeting:
<TABLE>
<CAPTION>

       Proposal 1 - Election of Directors

       Elections  were held for two (2) Class III directors to serve until the 2001 Annual Meeting of  Shareholders.  The results of
       the votes are as follows:


                                       Votes
       Name                            Class      Votes For   Withheld           Abstain         Against           Non-Vote
       ----                            -----      ---------   --------           -------         -------           --------

<S>                                    <C>         <C>         <C>                 <C>              <C>             <C>      
       William E. Morgenstern           III        8,145,375   165,705             0                0               2,481,796

       Vincent A. Carrino               III        8,146,295   164,785             0                0               2,481,796

</TABLE>

       Proposal 2 - Amendment to the Company's 1995 Stock Option Plan

       The  amendment to the 1995 Stock Option Plan calls for an increase in the
       maximum  number  of shares of  common  stock of the  Company  that may be
       optioned or purchased  under the Plan from  400,000 to 2,000,000  shares.
       The result of the vote on the adoption of the amendment to the 1995 Stock
       Option Plan was 5,156,276 for, 1,861,313 against, 24,099 abstentions, and
       3,751,188 non-votes.









<PAGE>


                                 RENT-WAY, INC.


       ITEM 6.  Exhibits and Reports on Form 8-K

<TABLE>
<CAPTION>

       a.  Exhibits

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

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

       b   Reports on Form 8-K

           (1)    January 8, 1998            Reporting Letter of Intent to acquire Champion Rentals, Inc.
           (2)    January 20, 1998           Reporting consummation of ACE Rentals acquisition
           (3)    February 19, 1998          Reporting consummation of Champion Rentals, Inc. acquisition
           (4)    March 23, 1998             Reporting audited historical financial statements and pro forma financial statements
                                             on the ACE Rentals acquisition

</TABLE>

                                   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                           /s/ Jeffrey A. Conway
                              ----------------------------             
                              Jeffrey A. Conway
                              Vice President and Chief Financial Officer

                    (Principal Financial and Accounting Officer and Duly
                     Authorized Officer)




















<PAGE>
<TABLE>
<CAPTION>


                                 RENT-WAY, INC.

                                   EXHIBIT 11


Computation of Earnings per Share:                                       For the three months ended        For the six months ended
---------------------------------
                                                                                    March 31,                      March 31,
                                                                                    (unaudited)                  (unaudited)
                                                                            1998             1997            1998         1997
BASIC

<S>                                                                      <C>                <C>            <C>           <C>      
Net income                                                            $   3,085,851      $  1,295,281   $ 5,120,518   $  1,975,655
Redeemable preferred stock net gain on redemption                              -                -               -          280,175
                                                                      -------------      ------------   ------------  ------------

Earnings applicable to common shares                                  $   3,085,851      $  1,295,281   $ 5,120,518   $  2,255,830
                                                                      =============      ============   ===========   ============

Weighted average number of common shares
    outstanding during the period                                        10,727,843         6,609,853      9,660,775     6,602,048
                                                                      =============      ============   ============     =========

Basic earnings per common share:
    Income before extraordinary item                                  $        0.29      $      0.20    $       0.53  $       0.38
                                                                      =============      ===========    ============  ============
    Net income                                                        $        0.29      $      0.20    $       0.53  $       0.34
                                                                      =============      ===========    ============  ============

DILUTED

Earnings applicable to common shares                                  $   3,085,851      $  1,295,281    $ 5,120,518   $ 2,255,830

Interest on convertible debt (net of tax benefit)                           210,000           245,000        425,000       350,000
                                                                      -------------      ------------   ------------  ------------

Earnings applicable to diluted earnings per common share              $   3,295,851      $  1,540,281    $ 5,545,518   $ 2,605,830
                                                                      =============      ============   ============   ============

Weighted average number of common shares used in
    calculating basic earnings per share                                 10,727,843         6,609,853     9,660,775      6,602,048

Add - incremental shares representing:

    Common equivalent shares (determined using the
    "treasury stock" method) representing shares issuable
    upon exercise of stock options and warrants                             624,577           442,693       602,888        439,993
    Shares issuable on conversion of 10% notes                                -               704,225          -           704,225
    Shares issuable on conversion of 7% debentures                        1,495,890           930,776     1,495,890        460,274
                                                                      -------------      ------------   -----------   ------------

Weighted average number of shares used in
    calculation of diluted earnings per common share                     12,848,310         8,687,547    11,759,553      8,206,540
                                                                      =============        ==========   ===========   ============

Diluted earnings per common share:
    Income before extraordinary item                                  $        0.26      $      0.18    $       0.47  $       0.35
                                                                      =============      ===========    ============  ============
    Net income                                                        $        0.26      $      0.18    $       0.47  $       0.32
                                                                      =============      ===========    ============  ============

</TABLE>