================================================================================
                                  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, 1999

                                       OR

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


                         Commission File Number 0-22026

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


         Pennsylvania                                  25-1407782
         ------------                                  ----------           
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation)


                   One RentWay Place, Erie, Pennsylvania 16505
                   -------------------------------------------
                    (Address of principal executive offices)

                                 (814) 455-5378
                                 --------------
                         (Registrant's telephone number)


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

Yes        X                 No             


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

        Class                                   Outstanding as of March 31, 1999
    ------------                                --------------------------------
    Common Stock                                            21,259,229



===============================================================================


                                 RENT-WAY, INC.

<TABLE>
<CAPTION>


                                                                                                          Page
Part I            Financial Information
                  Item 1.  Financial Statements

                           Consolidated Balance Sheets as of March 31, 1999 and
<S>                        <C>                                                                                      <C>
                           September 30, 1998                                                                       3

                           Consolidated Statements of Operations, Three and Six Months
                           Ended March 31, 1999 and 1998                                                            4

                           Consolidated Statements of Cash Flows, Six Months Ended
                           March 31,1999 and 1998                                                                   5

                           Notes to Consolidated Financial Statements                                               6

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

Part II           Other Information

                  Item 4.           Submission of Matters to Vote of Security Holders                              22

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

                  Signatures                                                                                       24

</TABLE>



























<TABLE>
<CAPTION>


                                 RENT-WAY, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (all dollars in thousands, except share data)



                                                                                        March 31,              September 30,
                                                                                          1999                     1998
                                                                                      ------------             -------------    
                                                                                       (unaudited)              (unaudited)

ASSETS

<S>                                                                    <C>                                  <C>               
Cash                                                                               $          2,765         $         5,326
Prepaid expenses                                                                             10,193                   7,819
Income tax receivable                                                                           443                   1,972
Rental merchandise, net                                                                     202,427                 176,022
Deferred income taxes                                                                         2,400                   2,912
Property and equipment, net                                                                  43,856                  38,519
Goodwill, net                                                                               221,682                 225,354
Deferred financing costs, net                                                                 2,183                   1,575
Non-compete and prepaid consulting fees, net                                                  5,602                   6,950
Other assets                                                                                  6,143                   8,993
                                                                                   ----------------         ---------------
        Total assets                                                               $        497,694         $       475,442
                                                                                   ================         ===============


LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Accounts payable                                                                   $         29,156         $        28,145
Other liabilities                                                                            20,508                  19,831
Income tax payable                                                                            3,573                       -
Debt                                                                                        197,826                 179,603
                                                                                   ----------------         ---------------
        Total liabilities                                                                   251,063                 227,579

Contingencies (see note 7)                                                                        -                       -
 -

Shareholders' equity:
Preferred stock, without par value; 1,000,000 shares authorized;
     no shares issued and outstanding                                                             -                       -
Common stock, without par value; 50,000,000 shares
     authorized; 21,259,229 and 21,060,820 shares issued and
     outstanding, respectively                                                              243,451                 241,749
Retained earnings                                                                             3,180                   6,114
                                                                                   ----------------         ---------------
        Total shareholders' equity                                                          246,631                 247,863
                                                                                   ----------------         ---------------
        Total liabilities and shareholders' equity                                 $        497,694         $       475,442
                                                                                   ================         ===============













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

<TABLE>
<CAPTION>


                                 RENT-WAY, INC.

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

                                                             For the three months ended                For the six months ended
                                                                      March 31,                               March 31,
                                                               1999               1998                  1999                1998
                                                               ----               ----                  ----                ----
                                                                     (unaudited)                               (unaudited)
                                                          --------------------------------        ----------------------------------
<S>                                                       <C>               <C>                   <C>                 <C>           
Rental revenue                                            $      110,664    $       98,274        $      220,299      $      175,031

Other revenue                                                     15,086            13,386                29,411              24,537
                                                          --------------    --------------        --------------      --------------
       Total revenues                                            125,750           111,660               249,710            199,568

Costs and operating expenses:
Depreciation and amortization:
    Rental merchandise                                            32,140            28,089                63,464             50,084

    Property and equipment                                         2,240             1,857                 4,425              3,489

    Amortization of goodwill and other intangibles                 2,454             3,000                 4,949              5,385

Salaries and wages                                                32,157            29,376                65,485             56,183

Advertising                                                        6,190             6,336                13,977             12,266

Occupancy                                                          8,133             7,519                16,280             13,969

Name change expense                                                    -               408                    86              1,150
Business combination costs                                           432            11,045                16,800             11,115
Other operating expenses                                          25,651            25,531                54,978             49,825
                                                          --------------    --------------        --------------      --------------
        Total costs and operating expenses                       109,397           113,161               240,444            203,466
                                                          --------------    --------------        --------------      --------------
        Operating income (loss)                                   16,353            (1,501)                9,266             (3,898)

Other income (expense):
Interest expense                                                  (4,172)           (2,676)               (7,785)            (4,381)
Interest income                                                        3                 6                    29                146

Other income (expense), net                                          (29)              102                  (220)                52
                                                          ---------------   --------------        ---------------     --------------

       Income (loss) before income taxes
        and extraordinary item                                    12,155            (4,069)                1,290             (8,081)


Income tax expense                                                 5,040               913                 3,705                  8
                                                          --------------    --------------        --------------      --------------


        Income (loss) before extraordinary item                    7,115            (4,982)               (2,415)            (8,089)


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

Net income (loss)                                         $        7,115    $       (4,982)       $       (2,934)     $      (8,089)
                                                          ===============   ===============       ===============     ==============



Earnings  (loss) per common  share (Note 3):  Basic  earnings  (loss) per common
share:
     Income (loss) before extraordinary item              $         0.34    $        (0.24)       $        (0.11)     $       (0.41)
                                                          ==============    ===============       ===============     ==============
     Net income (loss)                                    $         0.34    $        (0.24)       $        (0.14)     $       (0.41)
                                                          ==============    ===============       ===============     ==============

Diluted earnings (loss) per share:
     Income (loss) before extraordinary item              $         0.32    $        (0.24)       $        (0.11)     $       (0.41)
                                                          ==============    ===============       ===============     ==============

     Net income (loss)                                    $         0.32    $        (0.24)       $        (0.14)     $       (0.41)
                                                          ==============    ===============       ===============     ==============

Weighted average common shares outstanding:
     Basic                                                        21,125            20,701                21,166             19,634
                                                          ==============    ==============        ==============      ==============

     Diluted                                                      23,142            20,701                21,166             19,634
                                                          ==============    ==============        ==============      ==============

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


<PAGE>

<TABLE>
<CAPTION>

                                 RENT-WAY, INC.

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

                                                                                            For the six months ended
                                                                                                    March 31,
                                                                                          1999                    1998
                                                                                       ------------            ------------     
                                                                                       (unaudited)             (unaudited)

Operating activities:
<S>                                                                                 <C>                     <C>             
Net loss                                                                            $        (2,934)        $        (8,089)
Adjustments to reconcile net loss
 to net cash used in operating activities:
    Loss on sale of property and equipment                                                                             -
307
    Depreciation and amortization                                                            73,045                  68,897
Deferred income taxes                                                                           512                  (1,966)
Extraordinary item                                                                              519                       -
Changes in assets and liabilities:
    Prepaid expenses                                                                         (2,351)                 (2,786)

    Rental merchandise                                                                      (89,851)                (86,087)
Non-compete and prepaid consulting fees                                                       1,349                    (347)
                  Income tax receivable                                                       1,529                     515
Other assets                                                                                  2,741                  (2,627)
Accounts payable                                                                              1,011                  18,062
Income taxes payable                                                                          3,573                  (1,224)
Other liabilities                                                                               677                     895
                                                                                       ------------            ------------
                     Net cash used in operating activities                                  (10,180)                (14,450)


Investing activities:
    Purchase of businesses, net of cash acquired                                               (589)                (98,288)
Purchases of property and equipment                                                         (10,383)                (10,928)
    Proceeds from sale of property and equipment                                                  -                    (604)
    Dispositions of stores, net of cash sold                                                      -                   3,031
    Payments received on notes receivable                                                         -                     657
                                                                                    ---------------         ---------------
Net cash used in investing activities                                                       (10,972)               (106,132)

Financing activities:
    Proceeds from borrowings                                                                267,142                 176,268
Payments on borrowings including early extinguishment                                      (248,919)               (101,493)
Deferred finance costs                                                                       (1,334)                   (405)
Proceeds from common stock issuance                                                           1,702                  47,725
                                                                                    ---------------         ---------------
Net cash provided by financing activities                                                    18,591                 122,095
                                                                                    ---------------         ---------------
Increase/(decrease) in cash                                                                  (2,561)                  1,513

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

Cash at end of period                                                               $         2,765         $         7,121
                                                                                    ===============         ===============

Supplemental  disclosures of cash flow information:  
Cash paid during the period for:
       Interest                                                                     $         6,405         $         2,586
       Income taxes                                                                 $           119         $         3,266




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

                                 RENT-WAY, INC.

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

1.    Basis of Presentation:

      Rent-Way,  Inc. (the "Company" or  "Rent-Way") is a corporation  organized
      under the laws of the Commonwealth of Pennsylvania. The Company operates a
      chain of rental-purchase  stores that rent durable household products such
      as home entertainment equipment,  furniture,  major appliances and jewelry
      to  consumers on a weekly or monthly  basis.  The  accompanying  unaudited
      condensed   consolidated   financial  statements  have  been  prepared  in
      accordance  with the  instructions  to Form 10-Q,  and  therefore,  do not
      include all  information  and notes  necessary for a fair  presentation of
      financial  position,  results of  operations  and cash flows in conformity
      with  generally  accepted  accounting   principles.   In  the  opinion  of
      management, all adjustments (which, except as discussed herein, consist of
      normal recurring adjustments), which are necessary for a fair statement of
      the  financial  position,  results  of  operations  and cash  flows of the
      Company have been made.  Certain amounts in the 1998 financial  statements
      have been  reclassified to conform to the 1999  presentation and have been
      restated to reflect the Merger discussed in Note 2 herein.  The results of
      operations for the interim periods are not  necessarily  indicative of the
      results for the full year.

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

      The Company has no items of other comprehensive income.

      These  financial  statements  and  the  notes  thereto  should  be read in
      conjunction with the Company's  audited financial  statements  included in
      its Annual  Report on Form 10-K for the fiscal  year ended  September  30,
      1998 and its Form 8-K dated December 10, 1998.

2.  Merger with Home Choice Holdings, Inc:

      On December 10, 1998,  the Company  completed a merger (the "Merger") with
      Home Choice Holdings,  Inc. ("HMCH").  The Merger, as per the terms of the
      agreement,  was recorded as a pooling of  interests,  in  accordance  with
      Accounting Principles Board ("APB") Opinion No. 16. Under the terms of the
      agreement  the  Company  issued  0.588  shares  of  common  stock for each
      outstanding   share  of  HMCH  common  stock.  The  Merger  increased  the
      outstanding shares of the Company by approximately 10,025,000 shares. On a
      combined basis the Company is the second largest  rental-purchase chain in
      the industry,  with 855 stores in 35 states.  The corporate offices of the
      combined company are located in Erie,  Pennsylvania.  None of HMCH's Board
      of Directors or executive  officers  retained a position with the combined
      company.  Gerald A. Ryan  remains as Chairman of the Board of the combined
      company,  with William E.  Morgenstern  as President  and Chief  Executive
      Officer and Jeffrey A. Conway as Chief Financial Officer.

      In  conjunction  with the Merger,  certain costs were incurred  which were
      recorded by the Company during the six months ended March 31, 1999.  These
      costs  aggregated  $16,800  and  included  (i)  investment  banker fees of
      $6,476,  (ii) proxy  preparation,  printing and other professional fees of
      $1,351, (iii) employee severance and stay-put arrangement costs of $3,764,
      (iv) due diligence  and other costs of $874,  (v) costs related to closing
      or disposing of duplicate corporate headquarters,  equipment and stores in
      overlapping  markets of $2,884 and (vi)  write-off of prepaid assets which
      will not be used of $1,451.  The $432 of costs  recorded  during the three
      month period ended March 31, 1999, consisted primarily of costs associated
      with stay-put agreements.

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




                                 RENT-WAY, INC.

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


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


      In conjunction with the Merger,  the Company entered into a new syndicated
      loan facility (see Note 5). As a result of this  refinancing,  the Company
      wrote off the remainder of deferred  financing  costs  associated with its
      and  HMCH's  previous  credit  facilities.  The  amount  of the  remaining
      deferred  financing costs was $865 ($519 net of tax benefit).  This amount
      appears as an extraordinary item on the Company's  Condensed  Consolidated
      Statement of Operations for the six month period ended March 31, 1999.

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



<TABLE>
<CAPTION>


                                                          Three months ended March 31, 1998
                                               ---------------------------------------------------------
                                                                   Extraordinary         Net Income
                                               Revenues            Item                  (Loss)
                                          ---------------          -----------------     ---------------


<S>                                        <C>                 <C>                      <C>               
     Rent-Way                              $       45,902          $     --              $         3,086
                                                   

     HMCH                                          65,758                --                       (8,068)             
                                           ==============          =================     ===============

                                    Total  $      111,660          $     --              $        (4,982)
                                           ==============          =================     ===============
</TABLE>
<TABLE>
<CAPTION>





                                                           Six months ended March 31, 1999
                                            ------------------------------------------------------------
                                                                   Extraordinary         Net Income
                                               Revenues            Item                  (Loss)
                                            --------------         ----------------      ---------------
     Rent-Way October 1, 1998 to                                                          
<S>            <C> <C>                     <C>                 <C>                      <C>  
      November 30, 1998                     $       37,171         $     --              $        2,231
                                                                                   
     HMCH October 1, 1998 to                                                              
      November 30, 1998                             44,270               --                        (230)
                                                                                   
     Rent-Way and HMCH December                                                           
      1, 1998 to March 31, 1999                    168,269             (519)                     (4,935)
                                            ==============         =================     ===============

                                    Total   $      249,710         $   (519)             $       (2,934)
                                            ==============         =================     ===============
</TABLE>
<TABLE>
<CAPTION>

                                                            Six months ended March 31,1998
                                            ------------------------------------------------------------

<S>                                        <C>                  <C>                     <C>  
     Rent-Way                               $       72,568         $      --             $        5,121
                                                                                      

     HMCH                                          127,000                --                    (13,210)
                                            ==============         =================     ===============

                                    Total   $      199,568         $      --             $       (8,089)
                                            ==============         =================     ===============

</TABLE>








                                 RENT-WAY, INC.

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

3.    Earnings (loss)  per Common Share:

      Basic earnings  (loss) per common share is computed using earnings  (loss)
      available to common shareholders divided by the weighted average number of
      common shares  outstanding.  Diluted  earnings  (loss) per common share is
      computed using earnings (loss) available to common  shareholders  adjusted
      for anticipated  interest savings,  net of related taxes, on conversion of
      the Company's convertible subordinated debentures and the weighted average
      number of shares  outstanding  is  adjusted  for the  potential  impact of
      options,  warrants and the convertible  subordinated  debentures where the
      effects are dilutive.  The weighted  average shares  outstanding  prior to
      December 10, 1998 include the historical  weighted average shares of HMCH,
      adjusted for the exchange ratio of 0.588 (see Note 2).  Because  operating
      results produced a loss for the six month periods ended March 31, 1999 and
      1998 and the three month period  ended March 31,  1998,  basic and diluted
      loss per common share were the same for these periods.

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

<TABLE>
<CAPTION>
                                                                       For the three months          For the six months
                                                                               ended                        ended
                                                                             March 31,                    March 31,
                                                                            (unaudited)                  (unaudited)
                                                                   ---------------------------  --------------------------
             Computation of EARNINGS (LOSS) per share:                 1999           1998          1999          1998
             -----------------------------------------             ------------   ------------  ------------  ------------

             BASIC
<S>                                                                <C>            <C>           <C>           <C>          
             Earnings (loss) applicable to common shares........   $      7,115   $     (4,982) $     (2,934) $     (8,089)
                                                                   ============   ============  ============  ============
                                                                   
             Weighted average number of common shares
               outstanding during the period....................         21,125         20,701        21,166        19,634
                                                                   ============   ============  ============  ============

             Basic earnings (loss) per common share:
               Earnings (loss) before extraordinary item........   $       0.34   $      (0.24) $      (0.11) $      (0.41)
                                                                   ============   ============  ============  ============
               Net income (loss)................................   $       0.34   $      (0.24) $      (0.14) $      (0.41)
                                                                   ============   ============  ============  ============


             Diluted
             Earnings (loss) applicable to common shares........
                                                                   $      7,115   $     (4,982) $     (2,934) $     (8,089)
             Interest on 7% convertible debentures (net of tax).            210             --            --            --
                                                                   ------------   ------------- ------------  ------------         
             Earnings (loss) applicable for diluted earnings per   $      7,325   $     (4,982) $     (2,934) $     (8,089)
                                                                   ============   ============= ============= =============
             share.............................................
             Weighted average number of common shares
               outstanding during the period used in basic               21,125         20,701        21,166        19,634
             calculation........................................
             Shares issuable upon exercise of stock options,
               warrants and escrowed shares.....................            521             --            --            -- 
                                                                                         
             Shares issued on conversion of 7% convertible
               debentures.......................................          1,496             --            --            -- 
                                                                   ------------
                                                                                         
             Weighted average number of shares used in
             calculation                                                 23,142         20,701        21,166        19,634
                                                                   ============   ============  ============  ============
               of diluted earnings (loss) per share.............

             Earnings (loss) per common share:
               Earnings (loss) before extraordinary item........   $       0.32   $      (0.24) $      (0.11) $      (0.41)
                                                                   ============   ============  ============  =============
               Net income (loss)................................   $       0.32   $      (0.24) $      (0.14) $      (0.41)
                                                                   ============   ============  ============  ============
</TABLE>


4.  Acquisitions:

      On March 9, 1999,  the Company  purchased  the rental  contracts  of Weiss
      Brothers  HFP,  Inc.  ("Weiss") a privately  owned  rental-purchase  store
      located in  Pennsylvania,  with annual revenues of  approximately  $180 in
      exchange for  consideration of $115 in cash. The acquisition was accounted
      for using the purchase  method of accounting.  Weiss' assets were recorded
      at their  fair  value at the date of the  acquisition.  The  excess of the
      acquisition cost over the






                                 RENT-WAY, INC.

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

4.  Acquisitions (continued):

      fair  value  of the  net  assets  acquired  ("goodwill")  of $73 is  being
      amortized on a straight  line basis over twenty  years.  The total cost of
      the net assets  acquired  was $115 which is  comprised  of assets (at fair
      value) other than goodwill of rental  merchandise of $18 and a non-compete
      agreement of $24. The Condensed Consolidated  Statements of Operations for
      the three and six month  periods  ended March 31, 1999 include the results
      of operations of Weiss from the date of the acquisition.

      On September 10, 1998, the Company  purchased the rental  merchandise  and
      rental contracts of Cari Rentals,  Inc. ("Cari"),  a privately owned chain
      of 23 rental purchase stores located in Iowa, Missouri, Nebraska and South
      Dakota,  with annual  revenues  of  approximately  $7,700 in exchange  for
      consideration  of  $7,325  consisting  of 16,000  shares of the  Company's
      common stock (unregistered shares subject to the provisions of Rule 144 of
      the Securities and Exchange Act) and $6,900 in cash. Pursuant to the terms
      of the  acquisition,  $500 of the  purchase  price  was  placed  in escrow
      subject to the terms and  conditions of the escrow  agreement.  The escrow
      agreement  provides for the release of escrow  pending the completion of a
      financial  audit and  resolution of any purchase  price  adjustments.  The
      acquisition  was  accounted for using the purchase  method of  accounting.
      Cari Rentals'  assets were recorded at their fair values as of the date of
      the  acquisition.  The excess of the acquisition cost over the fair values
      of the net assets acquired  ("goodwill") of $6,099 is being amortized on a
      straight  line  basis  over 30  years.  The total  cost of the net  assets
      acquired  was  $7,325  ($425 in  common  stock  and  $6,900  in cash)  and
      consisted  of assets  of $7,549  less  acquisition  costs of $224.  Assets
      acquired (at fair value) other than goodwill consisted primarily of rental
      merchandise  of $1,400 and a  non-compete  agreement of $50. The Condensed
      Consolidated  Statements of Operations for the three and six month periods
      ended March 31, 1999  include  the results of  operations  of Cari for the
      entire period.

      On July 21, 1998, the Company acquired all the outstanding  shares of Fast
      Rentals,  Inc. ("Fast  Rentals"),  a privately owned chain of eight rental
      purchase  stores  located in Alabama and Georgia  with annual  revenues of
      approximately  $3,600 in  exchange  for  consideration  of $2,047 in cash.
      Pursuant to the terms of the  acquisition,  $200 of the purchase price was
      placed in escrow,  subject to the terms of the escrow agreement to satisfy
      sellers'   representations   and   warranties   and  any  purchase   price
      adjustments.  The  acquisition was accounted for using the purchase method
      of accounting. Fast Rentals' assets and liabilities were recorded at their
      fair  values  as of  the  date  of  the  acquisition.  The  excess  of the
      acquisition  cost  over  the  fair  values  of  the  net  assets  acquired
      ("goodwill") of $2,321 is being amortized on a straight line basis over 30
      years.  The total cost of the net assets acquired was $2,047 and consisted
      of assets of $3,061 less liabilities assumed of $858 and acquisition costs
      of $156.  Assets  acquired (at fair value) other than  goodwill  consisted
      primarily of rental  merchandise of $620,  prepaid  expenses of $33, other
      assets of $12 and a non-compete  agreement of $75. Liabilities assumed (at
      fair  value)  consisted  primarily  of  trade  payables  of  $29,  accrued
      liabilities of $43 and debt of $786. The Condensed Consolidated Statements
      of  Operations  for the three and six month  periods  ended March 31, 1999
      include the results of operations of Fast Rentals for the entire period.

      On February 5, 1998, the Company  acquired all the  outstanding  shares of
      Champion  Rentals,  Inc.  ("Champion").  At the  time of the  acquisition,
      Champion  operated  a  chain  of 145  rental-purchase  stores  located  in
      Alabama, Arkansas, Florida, Georgia, Kentucky,  Louisiana, North Carolina,
      Ohio,  South  Carolina,  Tennessee  and Virginia  with annual  revenues of
      approximately  $75,000.  The  consideration  paid in exchange  for all the
      outstanding  shares of Champion was $69,050 in cash.  Pursuant to terms of
      the purchase  agreement  $2,500 of the purchase price was placed in escrow
      subject  to  the  terms  of  the  escrow  agreement  to  satisfy  sellers'
      representations and warranties and any purchase price adjustments. Per the
      terms of the escrow agreement,  $1,500 of the escrowed amount was released
      in September  1998,  following  the  completion  of an audit of Champion's
      closing date financial statements.  As a result of this audit, $900 of the
      released  amount was given to the sellers with the balance being  returned
      to the Company.  The remaining  balance of $1,000 was released February 5,
      1999 per the terms of the escrow  agreement.  The sellers received $800 of
      this amount and the balance was returned to the Company.  The  acquisition
      was  accounted  for using the purchase  method of  accounting.  Champion's
      assets and  liabilities  were recorded at their fair values at the date of
      the  acquisition.  The excess of the acquisition cost over the fair values
      of the net assets acquired ("goodwill") of $67,550 is being amortized on a
      straight line basis over 30 years.  The total costs of net assets acquired
      was $69,050 and consisted of assets of $91,030 less liabilities assumed of
      $18,408 and acquisition  costs of $3,572.  The acquisition of Champion was
      funded with  borrowings  drawn on the  Company's  existing  senior  credit
      facility.  Assets acquired (at fair value),  other than goodwill consisted
      primarily of rental merchandise of $18,134, property and


                                 RENT-WAY, INC.

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


4.  Acquisitions (continued):

      equipment  of $159,  other  assets of $3,219,  prepaid  expenses  of $508,
      non-compete   agreement  of  $1,000  and   customer   contracts  of  $460.
      Liabilities  assumed (at fair value) consisted primarily of trade payables
      of  $3,925,  accrued  liabilities  of  $2,356  and  debt of  $12,127.  The
      Condensed  Consolidated  Statements  of  Operations  for the three and six
      month  periods  ended March 31, 1999 include the results of  operations of
      Champion for the entire period.

      On January 7, 1998,  the  Company  completed  the asset  purchase of South
      Carolina Rentals,  Inc., Paradise Valley Holdings,  Inc., and L & B Rents,
      Inc.,  (collectively,  "Ace Rentals"),  assuming  effective control of the
      results  of  operations  as of  January  1,  1998.  At  the  time  of  the
      acquisition,  Ace Rentals  operated a chain of 50  rental-purchase  stores
      located  in  California  and  South  Carolina  with  annual   revenues  of
      approximately  $22,000.  The consideration paid in exchange for the assets
      of Ace Rentals was $25,348 in cash.  Pursuant to the terms of the purchase
      agreement, $750 of the purchase price was placed in escrow, subject to the
      terms of the escrow  agreement,  to satisfy seller's  representations  and
      warranties and any purchase price  adjustments.  In May 1998,  $375 of the
      $750 escrow was released in  accordance  with the terms and  conditions of
      the escrow agreement with the balance to be released pending resolution of
      certain  issues.  The  acquisition  was  accounted  for using the purchase
      method of accounting.  Ace Rentals'  assets and certain  liabilities  were
      recorded at their fair values at the date of the  acquisition.  The excess
      of the  acquisition  cost over the fair values of the net assets  acquired
      ("goodwill")  of $21,495 is being  amortized on a straight line basis over
      30 years. The total costs of net assets acquired was $25,348 and consisted
      of assets of $26,767  less a  liability  assumed  of $478 and  acquisition
      costs of $941. The  acquisition  of Ace Rentals was primarily  funded with
      proceeds  received in connection with the Company's  public stock offering
      on  December  2,  1997,  with the  balance  being  drawn on the  Company's
      existing  senior credit  facility.  Assets  acquired (at fair value) other
      than  goodwill  consisted  primarily  of  rental  merchandise  of  $4,383,
      property and equipment of $249,  non-compete agreement of $500 and $140 in
      customer  contracts.  The  liability  assumed  (at fair value) was $478 of
      vehicle related debt. The Condensed Consolidated  Statements of Operations
      for the three and six month  periods  ended  March 31,  1999  include  the
      results of operations of Ace Rentals for the entire period.

      During  calendar year 1998,  the Company also  purchased from six separate
      entities the rental merchandise and contracts of 17 rental-purchase stores
      located in Arizona,  Florida, Texas and Washington.  The Company paid cash
      in exchange for the assets and each  acquisition  was  recorded  using the
      purchase method of accounting.  The acquired assets were recorded at their
      fair values at the date of the acquisition.  The excess of the acquisition
      price  ("goodwill") of $3,052 is being amoritized on a straight line basis
      over 30 years.  The total  cost of net assets  acquired  was  $4,903.  The
      Condensed  Consolidated  Statements  of  Operations  for the three and six
      month periods  ended March 31, 1999 include the results of operations  for
      these acquisitions for the entire period.

      The following  are pro forma  results of operations  for the three and six
      month periods ended March 31, 1998 assuming the  acquisitions  of Champion
      and Ace  Rentals  had  occurred  on October 1, 1997.  The  results are not
      necessarily  indicative  of future  operations or what would have occurred
      had the acquisitions been consummated as of that date.

<TABLE>
<CAPTION>
                                                                             Unaudited Pro Forma Operations

                                                              Three months ended                     Six months ended
                                                                March 31, 1998                        March 31, 1998

                                                     ------------------------------------- --------------------------------------

<S>                                                    <C>                                  <C>                      
             Revenues..................................$                110,372             $                 219,428
             Net loss..................................$                 (2,593)            $                  (6,054)
                                                       ========================             =========================
             Pro forma diluted loss per common         
             share.....................................$                  (0.12)            $                   (0.31) 
                                                       ========================             ========================= 
                                                     
</TABLE>
                                                     
                                                     
                                                            
                                                     
                                                     
             





                                 RENT-WAY, INC.

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

5.  Debt:

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

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

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


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

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

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


     As of March 31, 1999 total  indebtedness under the Facility was $176,000 of
     which $51,000 was related to the revolving credit portion thereof.

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

    The  Facility  requires  the  Company  to  comply  with  certain  covenants,
    including  financial  covenants.  These  covenants  generally  restrict  the
    Company from incurring additional indebtedness, granting additional liens on
    its assets,  making  dividends or  distributions,  disposing of assets other
    than in the ordinary course,  issuing  additional  stock,  making additional
    acquisitions or making capital expenditures, in each case subject to certain
    exceptions.  Under the Facility,  the Company is restricted  from  incurring
    additional  indebtedness  except additional  purchase money indebtedness not
    exceeding  $100,  subordinated   intercompany   indebtedness,   indebtedness
    incurred  in  connection  with  certain  acquisitions  permitted  under  the
    Facility,  certain  capitalized  leases or  purchases  of fixed  assets with
    payments that do not exceed $10,000 in the aggregate in any fiscal year, and
    any other lease, which is not a capitalized lease, or the rental of any real
    or personal property of another entity with payments that do not (other than
    for leases of retail  store  sites and motor  vehicles)  exceed  $250 in the
    aggregate  in any fiscal year.  The Company is also  required to comply with
    the following  financial  covenants:  maintain a maximum leverage ratio with
    respect to total funded debt of 4.0 to 1.0

                                 RENT-WAY, INC.

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



5.  Debt (continued):

     (decreasing  periodically  until  reaching  2.5 to 1.0 by  July  1,  2002),
    maintain  a  minimum  interest  coverage  ratio  of 3.0  to 1.0  (increasing
    periodically until reaching 5.0 to 1.0 by April 1, 2002), maintain a minimum
    net worth of $217 million  (increasing with earnings and  acquisitions)  and
    maintain a minimum  fixed charge  coverage  ratio of 1.2 to 1.0. As of March
    31, 1999, the Company was in compliance with all covenants  contained in the
    Facility.

    As a result  of  entering  into the  Facility,  the  Company  wrote  off the
    remaining balance of deferred financing costs associated with its and HMCH's
    previous credit facilities. The amount of deferred finance costs, $865 ($519
    net of 40% tax) is shown as an extraordinary item on the Company's Condensed
    Consolidated  Statement  of  Operations  for the six months  ended March 31,
    1999.

6.  Derivative Financial Instruments:

    The Company uses  derivative  financial  instruments to reduce the impact on
    interest  expense  of  fluctuations  in  interest  rates on a portion of the
    Facility  (see Note 5).  Interest  rate expense  under the swap  agreements,
    which  qualify  for  hedge  accounting,  is  recorded  as the net  effective
    interest  rate of the hedged  transactions.  The Company does not enter into
    derivative financial  instruments for trading or speculative purposes. As of
    March 31, 1999,  the Company had in place eight  interest rate swaps,  under
    which the Company  agreed with  counterparties  to  exchange,  at  quarterly
    intervals,  the interest  payments on a variable pay rate of the three-month
    LIBOR and a fixed pay rate for the notional amount of the interest rate swap
    agreements.  The Company  actively  evaluates  the  creditworthiness  of the
    financial  institutions  which  are  counterparties  to  interest  rate swap
    agreements,  and it does not appear that any counterparty  will fail to meet
    their  obligation.  The following  table  illustrates  the notional  amounts
    outstanding,  maturity dates and the fixed pay and variable receive rates of
    each of the interest rate swap agreements at March 31, 1999:
<TABLE>
<CAPTION>


                                                                                                     Fixed        Variable
                                                                       Notional       Maturity        Pay          Receive
                                                                        Amount          Date          Rate          Rate
                                                                       --------       --------       -----        --------
<S>                                                                  <C>                        <C>        <C>           <C>   
        Interest rate swap, National City Bank....................   $  30,000        May 2003       5.965%        5.538%
                                                                     
        Interest rate swap, Bank of America.......................   $  20,000        May 2003       5.760%        5.538%
                                                                     
        Interest rate swap, Manufacturers' and Traders Trust Co...   $  10,000        May 2003       5.095%        5.538%
           
        Interest rate swap, Harris Bank...........................   $  20,000        Dec 2003       5.090%        5.538%
                                                                     
        Interest rate swap, SunTrust Bank.........................   $  10,000        Dec 2003       5.105%        5.538%
                                                                     
        Interest rate swap, LaSalle Bank..........................   $  10,000        Dec 2003       5.095%        5.538%
                                                                     
        Interest rate swap, Bank of America.......................   $  10,000        Dec 2003       5.120%        5.538%
                                                                     
        Interest rate swap, Harris Bank...........................   $  10,000        Dec 2003       5.120%        5.538%
                                                                     
</TABLE>
<TABLE>
<CAPTION>


    The fair value of the interest rate swap agreements based on settlement cost as estimated by a dealer as of March 31, 1999 are 
as follows:

                                                                             Notional         Fair
                                                                              Amount          Value
                                                                           -----------     -----------
<S>                                                                        <C>             <C>         
        Interest rate swap, National City Bank.......................      $  30,000       $      (484)
                                                                           
        Interest rate swap, Bank of America..........................      $  20,000       $      (367)
                                                                           
        Interest rate swap, Manufacturers' and Traders Trust Company.      $  10,000       $       140
                                                                           
        Interest rate swap, Harris Bank..............................      $  20,000       $       454
                                                                           
        Interest rate swap, SunTrust Bank............................      $  10,000       $       209
                                                                           
        Interest rate swap, LaSalle Bank.............................      $  10,000       $       212
                                                                           
        Interest rate swap, Bank of America..........................      $  10,000       $       199
                                                                           
        Interest rate swap, Harris Bank..............................      $  10,000       $       203
                                                                           
</TABLE>









                                 RENT-WAY, INC.


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

  7.    Contingencies:

     The  Company  is subject to legal  proceedings  and claims in the  ordinary
     course of its business that have not been finally  adjudicated.  Certain of
     these cases have resulted in contingent  liabilities ranging from $1,160 to
     $2,950.  The  majority of such  claims  are, in the opinion of  management,
     covered under insurance  policies and therefore  should not have a material
     effect on the  financial  position,  results of operations or cash flows of
     the Company.

     Additional  claims  exist in the  range  of  $1,650  to  $2,800  for  which
     management  believes  it  has  meritorious  defenses,  but  for  which  the
     likelihood  of an  unfavorable  outcome is currently not  determinable.  In
     management's  opinion,  each of these claims will either be  indemnified by
     the previous  shareholders of prior acquisitions or covered under insurance
     policies and  therefore,  will not have a material  effect on the financial
     position, results of operations or cash flows of the Company.

8.  New Accounting Standards:

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

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

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
     Instruments  and Hedging  Activities"  effective for all fiscal quarters of
     fiscal years  beginning  after June 15, 1999.  This  Statement  establishes
     accounting and reporting  standards for derivative  instruments,  including
     certain derivative  instruments embedded in other contracts,  (collectively
     referred to as derivatives) and for hedging activities. It requires that an
     entity  recognize all  derivatives  as either assets or  liabilities in the
     statement  of  financial  position and measure  those  instruments  at fair
     value.  The  Company  is  currently   evaluating  the  provisions  of  this
     Statement.

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

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

  9.    Income Taxes:

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




                                 RENT-WAY, INC.

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




10.   Stock Options:

     In March  1999,  the Board of  Directors  of the Company  adopted,  and the
     shareholders  have approved,  the Rent-Way,  Inc. Stock Option Plan of 1999
     (the "1999 Plan") which  authorizes the issuance of up to 2,500,000  shares
     of common stock pursuant to stock options  granted to officers,  directors,
     key  employees,  consultants,  and  advisors  of the  Company.  The  option
     exercise  price  will be at least  equal to the  fair  market  value of the
     Company's  common  stock on the grant  date.  The 1999 Plan will  expire in
     March  2009  unless  terminated  earlier  by the  Board of  Directors.  The
     authorized number of shares, the exercise price of outstanding options, and
     the number of shares under option are subject to appropriate adjustment for
     stock dividends, stock splits, reverse stock splits, recapitalizations, and
     similar  transactions.  The 1999 Plan is  administered  by the Stock Option
     Committee of the Board of Directors  who select the optionees and determine
     the terms and  provisions  of each option grant within the  parameters  set
     forth in the 1999  Plan.  As of  March  31,  1999,  550,000  options  at an
     exercise price of $27.88 were granted under the 1999 Plan.

11. Subsequent Event:

     On April 1, 1999, the Company  purchased the assets of Albemarle  Ventures,
     Inc.,  d/b/a Rent City, a privately  owned rental purchase store located in
     North Carolina with annual revenues of  approximately  $400 in exchange for
     $375 in cash.  The  acquisition  will be  accounted  for using the purchase
     method of accounting.

































                                 RENT-WAY, INC.

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

       General


       During the three and six month periods ended March 31, 1999,  the Company
       generated  record  revenues.  The Company's  total revenues  increased by
       12.6% and 25.1%  compared  to the same three and six month  periods  last
       year.  The  increase in revenue is  primarily  due to  acquisitions  made
       during fiscal 1998.  Overall,  the Company experienced a 0.4% increase in
       same store  revenues  compared to the same period last year. For Rent-Way
       same stores (based on 196 stores),  revenues increased 6.9%, and for Home
       Choice same stores  (based on 400 stores),  revenues  decreased  2.5%, in
       each case as compared to the same period in fiscal 1998.

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

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

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

       Prior to the Merger, the Company operated 405  rental-purchase  stores in
       25 states,  primarily in the northeastern and eastern parts of the United
       States.  HMCH,  at the time of the Merger,  operated 460  rental-purchase
       stores  in 26  states,  primarily  in the  southeastern,  midwestern  and
       southwestern  portions of the United  States.  As a result of the Merger,
       the  Company  is  the  second  largest  company  in  the  rental-purchase
       industry, operating 855 rental-purchase stores in 35 states.

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

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

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

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

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

       Results of Operations

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

<TABLE>
<CAPTION>
                                                          Three Months Ended                           Six Months Ended
                                                               March 31,                                   March 31,
                                                         1999             1998                       1999             1998
                                                         ---------------------                       ---------------------
       Revenues:
<S>                                                       <C>            <C>                          <C>             <C>        
         Rental revenue                                   88.0%          88.0%                        88.2%           87.7%      
         Other revenue                                    12.0           12.0                         11.8            12.3
                                                         -----          -----                        -----           -----
         Total revenues                                  100.0%         100.0%                       100.0%          100.0%
       Costs and operating expenses:
         Depreciation and amortization:
         Rental merchandise                               25.6           25.1                         25.4            25.1
         Property and equipment                            1.8            1.7                          1.8             1.7
         Amortization of goodwill                          2.0            2.7                          2.0             2.7
                                                         -----          -----                        -----           ----- 
              Total depreciation and amortization         29.4           29.5                         29.2            29.5
       Salaries and wages                                 25.6           26.3                         26.2            28.2
       Advertising                                         4.9            5.7                          5.6             6.1
       Occupancy                                           6.5            6.7                          6.5             7.0
       Name change expense                                   -            0.3                            -             0.6
       Business combination costs                          0.2            9.9                          6.7             5.6
       Other operating expenses                           20.4           22.9                         22.1            25.0
                                                         -----          -----                        -----           -----
         Total costs and operating expenses               87.0          101.3                         96.3           102.0
                                                        ------          -----                        -----           -----
       
       Operating income (loss)                            13.0           (1.3)                         3.7            (2.0)
       Interest expense                                   (3.3)          (2.4)                        (3.1)           (2.2)
       Other income                                          -            0.1                         (0.1)            0.1
                                                         -----          -----                        -----           -----
       Income (loss) before income taxes and
          extraordinary item                               9.7           (3.6)                         0.5            (4.1)
       Income tax expense (benefit)                        4.0            0.8                          1.5               -
                                                         -----          -----                        -----           -----
       Income (loss) before extraordinary item             5.7           (4.4)                        (1.0)           (4.1)
       Extraordinary item                                    -              -                         (0.2)              -
                                                         -----          -----                        -----           -----
       Net income (loss)                                   5.7%          (4.4)%                       (1.2)%          (4.1)%
                                                         =====          =====                        =====           =====
</TABLE>


       Comparison of Three Months Ended March 31, 1999 and 1998

       For the three  months  ended March 31, 1999  compared to the three months
       ended March 31, 1998,  total revenues  increased by $14.1 million (12.6%)
       to $125.8 million from $111.7  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 $8.3  million  (58.9%) of the  increase,  the
       stores  acquired in other  fiscal 1998  acquisitions  accounted  for $3.2
       million  (22.7%) of the increase,  stores opened in fiscal 1998 accounted
       for $0.8 million  (5.6%) of the increase,  and the Company's  same stores
       accounted  for  $1.8  million  (12.8%)  of the  increase.  Other  revenue
       increased by $1.7  million  (12.7%) to $15.1  million from $13.4  million
       principally due to stores acquired in 1998.

       For the three  months  ended March 31, 1999  compared to the three months
       ended March 31, 1998,  total costs and  operating  expenses  decreased to
       $109.4  million  from  $113.2  million,  or to 87.0% from 101.3% of total
       revenues primarily as a result of a $11.0 million decrease in name change
       and business  combination costs.  Depreciation  expense related to rental
       merchandise  increased by $4.0 million or 0.5% of total  revenue to $32.1
       million from $28.1  million.  This 0.5% increase as a percentage of total
       revenues is primarily  the result of increased  sales due to the exercise
       of early  purchase  options  ("EPO") and the higher  remaining  values on
       those items sold.  The  remaining  value of EPO sales items is charged to
       depreciation expense.  Amortization of goodwill decreased by $0.5 million
       principally  due to a  decrease  in Home  Choice  goodwill  amortization.
       Amortization  of  goodwill  was 2.0% and 2.7% of total  revenues  for the
       three  months ended March 31, 1999 and 1998,  respectively.  Salaries and
       wages  increased to $32.2 million from $29.4 million,  but decreased 0.7%
       as a percentage of total  revenues to 25.6% from 26.3%.  The $2.8 million
       increase  is  principally  due to the  addition of 31 new  locations  and
       additions to corporate  personnel.  Advertising  expense  decreased  $0.1
       million  to  $6.2  million  from  $6.3  million  principally  due  to the
       Company's  ability  to focus  advertising  efforts  in  cluster  markets.
       Advertising  expense as a percentage of total revenues  decreased 0.8% to
       4.9% from 5.7%.  Occupancy  expense  increased  to $8.1 million from $7.5
       million,  but decreased  0.2% as a percentage  of total  revenues to 6.5%
       from 6.7%. The $0.6 million  increase is primarily due to the addition of
       the stores acquired and opened in fiscal 1998.  Other operating  expenses
       increased by $0.2 million to $25.7 million from $25.5 million  mainly due
       to the addition of the stores  acquired and opened in fiscal 1998.  Other
       operating  expenses as a percentage of total  revenues  decreased 2.5% to
       20.4% from 22.9%.  This 2.5% decrease  occurred  because of the Company's
       ability to allocate  corporate  and fixed costs over a greater  number of
       stores and increased revenues.

       For the three  months  ended March 31, 1999  compared to the three months
       ended  March  31,  1998,  operating  income  increased  by $17.9  million
       (1189.7%) to $16.4  million from ($1.5  million),  and increased to 13.0%
       from (1.3%) of total revenues.  The  improvement in operating  income was
       principally  due to the $10.6  million  decrease in business  combination
       charges.  The results for the quarter  ended March 31, 1999 included $0.4
       million of business combination charges related to Rent-Way's merger with
       Home Choice on December 10, 1998. The results for the quarter ended March
       31, 1998 included $11.0 million in business  combination  charges related
       to Home Choice's  predecessor's merger with Alrenco, Inc., which occurred
       in February  1998.  Excluding  these special  charges,  operating  income
       increased by $7.3 million (75.9%) to $16.8 million from $9.5 million, and
       increased to 13.4% from 8.6% of total revenues.

       For the three  months  ended March 31, 1999  compared to the three months
       ended March 31, 1998,  interest  expense  increased  $1.5 million to $4.2
       million from $2.7 million  principally  due to the $71.0  million in Home
       Choice indebtedness assumed in connection with the Merger.

       For the three  months  ended March 31, 1999  compared to the three months
       ended March 31, 1998,  income tax expense  increased to $5.0 million from
       $0.9 million because the Company  generated  greater taxable income.  The
       Company's effective tax rate is 41.5%.

       For the three  months  ended March 31, 1999  compared to the three months
       ended March 31, 1998, net income  increased by $12.1 million  (242.8%) to
       $7.1 million from ($5.0  million).  The increase was primarily due to the
       $10.6 million  decrease in business  combination  charges.  Excluding the
       special charges related to mergers,  net income increased by $3.5 million
       (89.8%) to $7.5 million from $4.0 million.

       Comparison of Six Months Ended March 31, 1999 and 1998

       For the six months ended March 31, 1999  compared to the six months ended
       March 31, 1998,  total  revenues  increased by $50.1  million  (25.1%) to
       $249.7 million from $199.6  million.  The increase was principally due to
       increased same store revenues and the inclusion of the stores acquired in
       the Ace Rentals  acquisition,  the Champion  acquisition,  and other 1998
       acquisitions and stores opened in fiscal 1998. Stores acquired in the Ace
       Rentals  acquisition  accounted for $4.9 million  (9.8%) of the increase,
       stores acquired in the Champion  acquisition  accounted for $28.3 million
       (56.5%)  of  the   increase,   stores   acquired  in  other  fiscal  1998
       acquisitions  accounted for $6.3 million (12.6%) of the increase,  stores
       opened in fiscal 1998  accounted for $1.5 million (3.0%) of the increase,
       and the Company's same stores  accounted for $9.1 million  (18.1%) of the
       increase.  Other revenue  increased $4.9 million (19.9%) to $29.4 million
       from $24.5 million principally due to stores acquired in 1998.

       For the six months ended March 31, 1999  compared to the six months ended
       March 31, 1998,  total costs and operating  expenses  increased to $240.4
       million  from  $203.5  million  primarily  as a result  of the  costs and
       operating expenses associated with stores acquired in 1998, but decreased
       to 96.3% from 102.0% of total  revenues.  This  decrease of 5.7% resulted
       primarily  from a 0.3% decrease in  depreciation  and  amortization  as a
       percentage of total revenues,  a 2.0% decrease in salaries and wages as a
       percentage of total revenues, a 0.5% decrease in advertising expense as a
       percentage of total revenues,  a 0.5% decrease in occupancy  expense as a
       percentage  of total  revenues,  and a 2.9%  decrease in other  operating
       expenses as a percentage  of total  revenue  offset by a 1.1% increase in
       business  combination costs a percentage of total revenues.  Depreciation
       expense related to rental merchandise increased by $13.4 million to $63.5
       million from $50.1  million,  or 0.3% as a percentage of total  revenues.
       This 0.3%  increase as a percentage  of total  revenues is primarily  the
       result of increased  EPO sales and the higher  remaining  values on those
       items  sold.  The  remaining  value  of EPO  sales  items is  charged  to
       depreciation expense. Amortization of goodwill decreased by $0.5 million,
       or 0.7% as a percentage of total revenues  principally  due to a decrease
       in Home Choice  goodwill  amortization.  Salaries and wages  increased to
       $65.5 million from $56.2  million,  but decreased 2.0% as a percentage of
       total  revenues  to 26.2%  from  28.2%.  The  $9.3  million  increase  is
       principally  due to the addition of 226 new  locations  and  additions to
       corporate personnel.  Advertising expense increased $1.7 million to $14.0
       million from $12.3 million  principally due to the addition of the stores
       acquired in 1998.  Advertising  expense as a percentage of total revenues
       decreased  0.5% to 5.6%  from  6.1%.  Occupancy  expense  increased  $2.3
       million to $16.3 million from $14.0 million mainly due to the addition of
       the stores  acquired in 1998.  Other  operating  expenses  increased $5.2
       million  to $55.0  million  from  $49.8  million  principally  due to the
       addition of the stores  acquired in 1998.  Other  operating  expense as a
       percentage of total  revenues  decreased  2.9% to 22.1% from 25.0%.  This
       2.9%  decrease  is  primarily  due to the  Company's  ability to allocate
       corporate  and fixed costs over a greater  number of stores and increased
       revenues.

        For the six months ended March 31, 1999 compared to the six months ended
        March 31, 1998,  operating income increased by $13.2 million (337.7%) to
        $9.3  million from ($3.9  million) and  increased to 3.7% from (2.0%) of
        total revenues.  The improvement in operating income was principally due
        to the stores  acquired in 1998 and the  factors  discussed  above.  The
        results for the six months ended March 31, 1999  included  $16.8 million
        of business  combination  charges related to Rent-Way's merger with Home
        Choice on December 10, 1998.  The results for the six months ended March
        31, 1998 included $11.1 million in business  combination charges related
        to Home Choice's  predecessor's merger with Alrenco, Inc. which occurred
        in February 1998.  Excluding  these special  charges,  operating  income
        increased by $20.0 million  (276.4%) to $27.2 million from $7.2 million,
        and increased to 10.9% from 3.6% of total revenues.

       For the six months ended March 31, 1999  compared to the six months ended
       1998,  interest  expense  increased  by $3.4 million to $7.8 million from
       $4.4 million due to the $71.0 million in Home Choice indebtedness assumed
       in connection with the Merger.

       For the six months ended March 31, 1999  compared to the six months ended
       March 31, 1998,  income tax expense increased by $3.7 million because the
       Company generated greater taxable income.

       For the six months ended March 31, 1999  compared to the six months ended
       March 31, 1998,  net income  increased  by $5.2 million  (63.7%) to ($2.9
       million)  from  ($8.1  million).  The  increase  was  due to the  factors
       discussed above.  Excluding  special charges related to the mergers,  net
       income  increased  by $9.5  million  (549.3%) to $11.2  million from $1.7
       million reported in the same period last year.

       Liquidity and Capital Resources

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

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

     As of March 31,  1999,  total  indebtedness  under the  Facility was $176.0
million,  of which $51.0 million was related to the revolving  credit portion of
the Facility.

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

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

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

</TABLE>


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

       The  Facility  requires  the  Company to comply with  certain  covenants,
       including  financial  covenants.  These covenants  generally restrict the
       Company from incurring additional indebtedness, granting additional liens
       on its assets,  making  dividends or  distributions,  disposing of assets
       other than in the  ordinary  course,  issuing  additional  stock,  making
       additional  acquisitions  or making  capital  expenditures,  in each case
       subject  to  certain  exceptions.  Under the  Facility,  the  Company  is
       restricted  from  incurring  additional  indebtedness  except  additional
       purchase  money   indebtedness  not  exceeding   $100,000,   subordinated
       intercompany  indebtedness,  indebtedness  incurred  in  connection  with
       certain  acquisitions  permitted under the Facility,  certain capitalized
       leases or  purchases  of fixed  assets with  payments  that do not exceed
       $10.0 million in the  aggregate in any fiscal year,  and any other lease,
       which is not a capitalized  lease,  or the rental of any real or personal
       property  of another  entity  with  payments  that do not (other than for
       leases of retail store sites and motor  vehicles)  exceed $250,000 in the
       aggregate in any fiscal year. The Company is also required to comply with
       the following financial covenants: maintain a maximum leverage ratio with
       respect to total funded debt of 4.0 to 1.0 (decreasing periodically until
       reaching  2.5 to 1.0 by  July  1,  2002),  maintain  a  minimum  interest
       coverage ratio of 3.0 to 1.0 (increasing  periodically until reaching 5.0
       to 1.0 by April 1, 2002),  maintain a minimum net worth of $217.0 million
       (increasing with earnings and  acquisitions) and maintain a minimum fixed
       charge  coverage  ratio of 1.2 to 1.0. As of March 31, 1999,  the Company
       was in compliance with all covenants contained in the Facility.

       As a result of entering  into the  Facility,  the  Company  wrote off the
       remaining  balance of deferred  financing  costs  associated with its and
       HMCH's previous credit  facility.  The amount of deferred  finance costs,
       $0.9 million ($0.5  million net of 40% tax) is shown as an  extraordinary
       item on the Company's Condensed  Consolidated Statement of Operations for
       the six months ended March 31, 1999.



       For the six months ended March 31, 1999  compared to the six months ended
       March 31,  1998,  the  Company's  net cash used in  operating  activities
       decreased  to  $10.2  million  from  $14.5  million.  This  decrease  was
       principally  due to a $5.2  million  decrease in net loss, a $4.1 million
       increase  in  non-cash  depreciation  and  amortization,  a $4.8  million
       increase  in income  taxes  payable,  a $5.3  million  decrease  in other
       assets,  a $1.6  million  decrease in non compete and prepaid  consulting
       fees, and a $1.0 million  decrease in income tax  receivable  offset by a
       $3.8 million increase in rental  merchandise  purchases.  These increases
       resulted primarily from the stores acquired and opened in fiscal 1998.

       For the six months ended March 31, 1999  compared to the six months ended
       March 31,  1998,  the  Company's  net cash used in  investing  activities
       decreased by $95.1  million to $11.0  million from $106.1  million.  This
       decrease is principally  due to a $97.7 million  decrease in purchases of
       businesses  and a $0.5 million  decrease in the purchases of property and
       equipment.

       For the six months ended March 31, 1999, compared to the six months ended
       March 31, 1998,  the Company's net cash provided by financing  activities
       decreased to $18.6 million from $122.1  million.  This decrease is mainly
       due to a $147.4 million increase in payments on outstanding borrowings.


       Quantitative and Qualitative Disclosures About Market Risk

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

       The following  table  presents  information  about the  Company's  market
       sensitive financial instruments.  The table illustrates the principle and
       notional  amounts,  as well as the date of maturity,  actual and weighted
       average  pay  and  receive  rates  for  all  significant   financial  and
       derivative financial instruments in effect as of March 31, 1999:




<TABLE>
<CAPTION>



              Expected Maturity Dates                            1998      1999     2001      2002        2003      Thereafter
                                                                 ----      ----     ----      ----        ----      ----------
              ----------------------------------------------------------------------------------------------------------------
              Debt:                                                                                                  
<S>                                                                                                    <C>           
                Revolving credit facility Base rate option                                             $    1,000    
               --Actual floating rate.....................                                                  8.750%   
                Revolving credit facility Euro-rate option                                             $   50,000     
               --Actual floating rate.....................                                                  5.544%   
                Term loan Euro-rate option................                                             $  126,000
               --Actual floating rate.....................                                                  5.544%
                Convertible Subordinated Debentures.......                                                            20,000
               --Actual fixed interest rate...............                                                               7.0%

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

</TABLE>



       Inflation

       During  the  three  months  ended  March  31,  1999,  the cost of  rental
       merchandise,  lease rental  expense and salaries and wages have increased
       modestly.  These  increases  have  not had a  significant  effect  on the
       results  of  operations  because  the  Company  has been  able to  charge
       commensurably  higher rental for its merchandise.  This trend is expected
       to continue in the foreseeable future.


       Other Matters

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

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

       In June 1998,  the FASB issued SFAS No. 133,  "Accounting  for Derivative
       Instruments and Hedging Activities"  effective for all fiscal quarters of
       fiscal years beginning  after June 15, 1999.  This Statement  establishes
       accounting and reporting standards for derivative instruments,  including
       certain derivative instruments embedded in other contracts, (collectively
       referred to as derivatives) and for hedging activities.  It requires that
       an entity  recognize all  derivatives  as either assets or liabilities in
       the statement of financial position and measure those instruments at fair
       value.  The  Company  is  currently  evaluating  the  provisions  of this
       Statement.

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

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


       Year 2000 Issues

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

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

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


       Cautionary Statement



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

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


<PAGE>


                                 RENT-WAY, INC.

                            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 10,
       1999 at the  corporate  offices of the  Company  located  at One  RentWay
       Place, Erie, Pennsylvania at 10:00 a.m. All proposals as described in the
       Company's Proxy  Statement  dated February 12, 1999 were approved.  Below
       are details of the matters voted on at the meeting:

       Proposal 1 - Election of Directors

     Elections  were held for two (2) Class I directors  to serve until the 2002
     Annual Meeting of Shareholders. The results of the votes are as follows:

<TABLE>
<CAPTION>

                                                                
                                                                Votes                        Broker
       Name                            Class      Votes For     Against      Abstentions     Non-Votes
       ----                            -----      ---------     -------      -----------     ---------

<S>                                               <C>            <C>           <C>           <C>      
       Gerald A. Ryan                    I        19,236,147     245,228       13,370        1,732,526

       Robert B. Fagenson                I        19,236,147     245,228       13,370        1,732,526

</TABLE>


       Proposal 2 - Approval of the Company's 1999 Stock Option Plan

       The 1999 Stock Option Plan authorizes 2,500,000 shares of common stock of
       the  Company  that may be offered and sold  pursuant  to the  exercise of
       options.  Given the doubling in the number of employees of the Company as
       a result of the Merger and the Company's  practice of making  broad-based
       grants of options to incentivize employees,  additional shares are needed
       for the grant of options.  The result of the vote on the  adoption of the
       1999 Stock  Option  Plan was  11,879,495  votes for,  5,384,991  against,
       13,370 abstentions, and 2,203,519 broker non-votes.









<PAGE>


                                 RENT-WAY, INC.


       ITEM 6.  Exhibits and Reports on Form 8-K


       a.  Exhibits

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

               Exhibit No.                    Description
               -----------                    -----------
                   27                    Financial data schedule

       b.  Reports on Form 8-K

(1)            On February 22, 1999,  the Company filed a Current Report on Form
               8-K/A dated  February  22, 1999  amending the  Company's  Current
               Report  on  Form  8-K  filed  December  24,  1998  reporting  the
               consummation  of the  Merger.  The  Current  Report on Form 8-K/A
               contained audited historical  financial statements of Home Choice
               and its  predecessor as of December 31, 1997 and 1996 and for the
               years  ended  December  31,  1997,   1996  and  1995,   unaudited
               historical   financial   statements   of  Home   Choice  and  its
               predecessor  as of  September  30,  1998 and for the nine  months
               ended  September  30,  1998  and  1997 and  unaudited  pro  forma
               condensed combined financial statements on the Merger.









































                                   SIGNATURES


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




                May 4, 1999                     /s/ Jeffrey A. Conway    
       -----------------------------     --------------------------------------
                  Date                              Jeffrey A. Conway
                                  Sr. Vice President and Chief Financial Officer
                                (Principal Financial and Accounting Officer an
                                         Duly Authorized Officer)