<PAGE>
BESTWAY, INC.                                                          FORM 10-Q
--------------------------------------------------------------------------------

                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 January 31, 2003


                                       OR
[ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
              For the transition period from _________ to _________

                          Commission file number 0-8568


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


           Delaware                                          81-0332743
-------------------------------                         -------------------
(State of other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                          Identification No.)

7800 Stemmons Freeway, Suite 320                               75247
--------------------------------                        -------------------
(Address of principal executive offices)                    (Zip Code)


                                 (214) 630-6655
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         The number of shares of Common Stock, $.01 par value, outstanding as of
January 31, 2003, was 1,677,572.



<PAGE>

BESTWAY, INC.                                                          FORM 10-Q
--------------------------------------------------------------------------------


           QUARTERLY REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
                              FOR THE QUARTER ENDED
                                January 31, 2003


<Table>
<Caption>
PART I - FINANCIAL INFORMATION                                                                           PAGE NOS.
                                                                                                         ---------

<S>                                                                                                      <C>
     ITEM 1.      Financial Statements

                  a)    Condensed Consolidated Balance Sheets as of
                        January 31, 2003 (unaudited) and July 31, 2002                                     3

                  b)    Condensed Consolidated Statements of Operations
                        for the Three and Six Months Ended January 31, 2003
                        and 2002 (unaudited)                                                               4

                  c)    Condensed Consolidated Statements of Cash Flows
                        for the Six Months Ended January 31, 2003
                        and 2002 (unaudited)                                                               5

                  d)    Condensed Consolidated Statement of Stockholders' Equity
                        for the Six Months Ended January 31, 2003 (unaudited)                              6

                  e)    Notes to the Unaudited Condensed Consolidated Financial Statements                 7

     ITEM 2.      Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                                                    10

     ITEM 4.      Controls and Procedures                                                                  17

PART II - OTHER INFORMATION

     ITEM 6.      Exhibits and Reports on Form 8-K, Signatures                                             18
</Table>





<PAGE>


BESTWAY, INC.                                                          FORM 10-Q

CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------


<Table>
<Caption>
                                                                       (UNAUDITED)
                                                                       JANUARY 31,        JULY 31,
                                                                          2003              2002
                                                                      ------------      ------------
<S>                                                                   <C>               <C>
ASSETS

Cash and cash equivalents                                             $    461,624      $    506,175
Prepaid expenses                                                           229,205           312,925
Taxes receivable                                                            24,172           159,585
Deferred income taxes                                                      600,013           483,075
Other assets                                                                47,674            52,032

Rental merchandise, at cost                                             22,164,986        22,730,226
    less accumulated depreciation                                        8,293,765         9,289,369
                                                                      ------------      ------------

                                                                        13,871,221        13,440,857
                                                                      ------------      ------------

Property and equipment, at cost                                          8,985,409         9,060,208
    less accumulated depreciation                                        5,678,411         5,393,259
                                                                      ------------      ------------

                                                                         3,306,998         3,666,949
                                                                      ------------      ------------

Employee advance                                                           922,222           988,889
Non-competes, net of amortization                                          382,716           468,631
Goodwill, net of amortization                                            1,225,295         1,225,295
                                                                      ------------      ------------

        Total assets                                                  $ 21,071,140      $ 21,304,413
                                                                      ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable                                                      $    977,919      $    671,365
Accrued interest - related parties                                          20,667            20,667
Other accrued liabilities                                                  938,635         1,521,474
Notes payable-related parties                                            3,000,000         3,000,000
Notes payable-other                                                      8,059,439         7,967,192

Commitments and contingencies

Stockholders' equity:
    Preferred stock, $10.00 par value,
      1,000,000 authorized, none issued                                         --                --
    Common stock, $.01 par value, 5,000,000 authorized,
      1,781,917 issued at January 31, 2003 and 1,756,917 issued
      at July 31, 2002                                                      17,819            17,569
    Paid-in capital                                                     16,296,015        16,151,428
    Less treasury stock, at cost, 104,345 at January 31, 2003 and
      July 31, 2002                                                       (563,083)         (563,083)
    Accumulated deficit                                                 (7,676,271)       (7,482,199)
                                                                      ------------      ------------

        Total stockholders' equity                                       8,074,480         8,123,715
                                                                      ------------      ------------

           Total liabilities and stockholders' equity                 $ 21,071,140      $ 21,304,413
                                                                      ============      ============
</Table>



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

                                        3



<PAGE>


BESTWAY, INC.                                                          FORM 10-Q

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------



<Table>
<Caption>
                                                                    (UNAUDITED)
                                               THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                  JANUARY 31,                       JANUARY 31,
                                            2003              2002              2003              2002
                                        ------------      ------------      ------------      ------------

<S>                                     <C>               <C>               <C>               <C>
Revenues:
    Rental and fees                     $  8,502,669      $  8,313,962      $ 16,496,860      $ 16,555,497
    Sales of merchandise                     391,591           179,888           670,362           388,858
                                        ------------      ------------      ------------      ------------

                                           8,894,260         8,493,850        17,167,222        16,944,355
                                        ------------      ------------      ------------      ------------

Cost and operating expenses:
    Depreciation and amortization:
      Rental merchandise                   1,728,322         1,706,358         3,348,869         3,421,720
      Other                                  379,407           464,628           751,944           933,011
    Cost of merchandise sold                 427,584           157,768           779,824           361,821
    Salaries and wages                     2,662,915         2,445,020         5,107,388         4,939,068
    Advertising                              427,932           384,780           812,923           800,531
    Occupancy                                593,122           650,436         1,182,182         1,331,892
    Other operating expenses               2,499,317         2,551,652         5,153,395         5,128,077
    Interest expense                         175,103           199,127           350,268           447,052
    (Gain) loss on sale of property
      and equipment                           (9,347)              962            (8,561)           (4,609)
    (Gain) loss on sale of assets                 --            15,233                --           (55,892)
                                        ------------      ------------      ------------      ------------

                                           8,884,355         8,575,964        17,478,232        17,302,671
                                        ------------      ------------      ------------      ------------

Income (loss) before income taxes              9,905           (82,114)         (311,010)         (358,316)
                                        ------------      ------------      ------------      ------------

    Income tax benefit                       (32,714)           (8,391)         (116,938)          (92,711)
                                        ------------      ------------      ------------      ------------

Net income (loss)                       $     42,619      $    (73,723)     $   (194,072)     $   (265,605)
                                        ------------      ------------      ------------      ------------

Basic net income (loss) per share       $        .03      $       (.04)     $       (.12)     $       (.16)
                                        ============      ============      ============      ============

Diluted net income (loss) per share     $        .02      $       (.04)     $       (.12)     $       (.16)
                                        ============      ============      ============      ============

Weighted average common
    shares outstanding                     1,671,705         1,655,272         1,662,139         1,670,405
                                        ============      ============      ============      ============

Diluted weighted average common
    shares outstanding                     1,752,091         1,655,272         1,662,139         1,670,405
                                        ============      ============      ============      ============
</Table>


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



                                        4

<PAGE>


BESTWAY, INC.                                                          FORM 10-Q

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

<Table>
<Caption>
                                                                              (UNAUDITED)
                                                                            SIX MONTHS ENDED
                                                                      JANUARY 31,       JANUARY 31,
                                                                         2003              2002
                                                                     ------------      ------------
<S>                                                                  <C>               <C>
Cash flows from operating activities:
    Net loss                                                         $   (194,072)     $   (265,605)
    Adjustments to reconcile net loss to net cash
      provided by operating activities:
        Depreciation and amortization                                   4,100,813         4,354,731
        Net book value of rental units retired                          1,814,993         1,488,357
        Gain on sale of property and equipment                             (8,561)           (4,609)
        Gain on sale of assets                                                 --           (55,892)
        Deferred income taxes                                            (116,938)          (92,711)
        Non-cash compensation expense                                      72,154                --
    Changes in operating assets and liabilities other than cash:
        Prepaid expenses                                                   83,720           (63,848)
        Taxes receivable                                                  135,413           (87,110)
        Other assets                                                        4,358             8,671
        Accounts payable                                                  109,453          (238,717)
        Other accrued liabilities                                        (582,839)         (131,668)
                                                                     ------------      ------------

Net cash flows provided by operating activities                         5,418,494         4,911,599
                                                                     ------------      ------------

Cash flows from investing activities:
    Purchase of rental units and equipment                             (5,397,129)       (4,435,773)
    Additions to property and equipment                                  (308,870)         (139,079)
    Proceeds from sale of property and equipment                           11,357            31,253
    Asset purchase net of cash acquired                                        --          (619,911)
    Proceeds from sale of assets                                               --           759,583
                                                                     ------------      ------------

Net cash flows used in investing activities                            (5,694,642)       (4,403,927)
                                                                     ------------      ------------

Cash flows from financing activities:
    Proceeds from notes payable                                           800,000           850,000
    Repayment of notes payable                                           (707,753)       (1,657,106)
    Treasury stock purchase                                                    --          (253,857)
    Stock options exercised                                               139,350                --
                                                                     ------------      ------------

Net cash flows provided by (used) in financing activities                 231,597        (1,060,963)
                                                                     ------------      ------------

Cash and cash equivalents at beginning of period                          506,175         1,118,796
                                                                     ------------      ------------

Cash and cash equivalents at end of period                           $    461,624      $    565,505
                                                                     ============      ============
</Table>



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


                                        5

<PAGE>


BESTWAY, INC.                                                          FORM 10-Q

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

For the six months ended January 31, 2003 (Unaudited)

<Table>
<Caption>
                                   COMMON STOCK                              TREASURY STOCK                            TOTAL
                             --------------------------    PAID-IN     ---------------------------    ACCUMULATED   STOCKHOLDERS'
                                SHARES        AMOUNT       CAPITAL        SHARES         AMOUNT         DEFICIT        EQUITY
                             ------------  ------------  ------------  ------------   ------------   ------------   ------------

<S>                          <C>           <C>           <C>           <C>            <C>            <C>            <C>
Balance at July 31, 2002        1,756,917  $     17,569  $ 16,151,428      (104,345)  $   (563,083)  $ (7,482,199)  $  8,123,715

Stock options exercised            25,000           250       139,100            --             --             --        139,350

Stock option
    compensation expense                                        5,487                                                      5,487

Net loss for the six months
    ended January 31, 2003             --            --            --            --             --       (194,072)      (194,072)
                             ------------  ------------  ------------  ------------   ------------   ------------   ------------

Balance at January 31, 2003     1,781,917  $     17,819  $ 16,296,015      (104,345)  $   (563,083)  $ (7,676,271)  $  8,074,480
                             ============  ============  ============  ============   ============   ============   ============
</Table>






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



                                       6


<PAGE>


BESTWAY, INC.                                                          FORM 10-Q

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.     REFERENCE TO PREVIOUS DISCLOSURES

       The condensed consolidated financial statements included herein have been
       prepared by the Company without audit pursuant to the rules and
       regulations of the Securities and Exchange Commission. Certain
       information and footnote disclosure normally included in financial
       statements prepared in accordance with generally accepted accounting
       principles have been condensed or omitted pursuant to such rules and
       regulations. Management believes that the disclosures are adequate to
       make the information presented not misleading and that all adjustments
       deemed necessary for a fair statement of the results for the interim
       period have been reflected. It is suggested that these unaudited
       consolidated financial statements be read in conjunction with the
       financial statements and the notes thereto included in the Company's 2002
       Form 10-K, particularly with regard to disclosure relating to significant
       accounting policies. The year-end condensed consolidated balance sheet
       data was derived from audited financial statements, but does not include
       all disclosures required by generally accepted accounting principles.

2.     EARNINGS PER COMMON SHARE

       Basic net income per common share is based on the weighted average common
       shares outstanding during the period. Diluted net income per share
       includes common stock equivalents, consisting of stock options, which are
       dilutive to net income per share. For the six months ended January 31,
       2003 and for the three and six months ended January 31, 2002, 265,595 and
       235,193 shares of common stock options were excluded from the calculation
       of diluted income per share because their effect would be antidilutive.

3.     RENTAL MERCHANDISE

       Rental merchandise rented to customers, or available for rent, is
       recorded at cost, net of accumulated depreciation. Merchandise rented to
       customers is depreciated on the income-forecast basis over the term of
       the rental agreement, generally ranging from 12 to 36 months. Under the
       income-forecast basis, merchandise held for rent is not depreciated.

       Rental merchandise which is damaged and inoperable, deemed obsolete, or
       not returned by the customer after becoming delinquent on payments, is
       written-off as such impairment is incurred. For the six months ended
       January 31, 2003 and 2002, $887,347 and $941,306, respectively, of such
       impairments were incurred and are included in other operating expenses in
       the accompanying condensed consolidated statements of operations.

4.     NOTES PAYABLE

       On October 31, 2002, the Company amended and restated its Revolving
       Credit Loan Agreement with its lender. In the amendment, the lender
       extended the maturity date from October 1, 2003 to May 31, 2004 and
       modified the interest rate, minimum tangible net worth provision, and
       minimum interest coverage ratio. The amendment adds a minimum year to
       date profitability requirement. At August 31, 2002 and September 30, 2002
       the Company was in violation of the minimum tangible net worth provision
       of the Agreement. The Company obtained a waiver of such violations from
       the lender and has been in compliance thereafter.



                                        7

<PAGE>




BESTWAY, INC.                                                          FORM 10-Q

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

       On December 13, 2002, the Company and the lender amended the subordinated
       note payable to a limited partnership and stockholder dated August 18,
       1999. The amendment extended the maturity date from November 1, 2003 to
       May 31, 2004.

5.     NEW ACCOUNTING STANDARDS

       Effective August 1, 2002, the Company adopted Statement of Financial
       Accounting Standards No. 142, "Goodwill and Other Intangibles" ("SFAS
       142"). SFAS 142 addresses financial accounting and reporting for
       intangible assets acquired individually or with a group of other assets
       (but not those acquired in a business combination) at acquisition and for
       goodwill and other intangible assets subsequent to their acquisition. The
       Company's consolidated balance sheet included goodwill, net of
       accumulated amortization, totaling $1,225,295, which is related to
       various store acquisitions. Bestway applied the provisions of SFAS 142 on
       August 1, 2002 and discontinued amortization of goodwill.

       In accordance with SFAS 142, goodwill is subject to an annual impairment
       test. Based on the initial impairment test conducted as of August 1,
       2002, the Company does not believe goodwill is impaired.

       The Company's adoption of SFAS 142 had no effect on the Company's
       acquired identifiable intangible assets that are subject to amortization.
       During the three and six months ended January 31, 2003, the Company
       recorded total amortization expense of $42,960 and $85,919, respectively.

       The following pro forma financial information compares the Company's net
       income (loss) for the three and six months ended January 31, 2003 and
       2002 had the provisions of SFAS 142 been applied on August 1, 2001:

<Table>
<Caption>
                                              THREE MONTHS ENDED               SIX MONTHS ENDED
                                         ----------------------------     -----------------------------
                                                  JANUARY 31,                     JANUARY 31,
                                             2003            2002             2003             2002
                                         ------------    ------------     ------------     ------------

<S>                                      <C>             <C>              <C>              <C>
Reported net income (loss)               $     42,619    $    (73,723)    $   (194,072)    $   (265,605)
Goodwill amortization                              --          63,087               --          126,175
                                         ------------    ------------     ------------     ------------

   Adjusted net income (loss)                  42,619         (10,636)        (194,072)        (139,430)

Basic and diluted earnings per share:
   Reported net income (loss)                     .03            (.04)            (.12)            (.16)
   Goodwill amortization                           --             .03               --              .08
                                         ------------    ------------     ------------     ------------

     Adjusted net income (loss)          $        .03    $       (.01)    $       (.12)    $       (.08)

   Weighted average common shares
     outstanding                            1,671,705       1,655,272        1,662,139        1,670,405
                                         ============    ============     ============     ============

   Diluted weighted average common
     shares outstanding                     1,752,091       1,655,272        1,662,139        1,670,405
                                         ============    ============     ============     ============
</Table>


                                       8

<PAGE>



BESTWAY, INC.                                                          FORM 10-Q

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


       In June 2002, the FASB issued Statement of Financial Accounting Standards
       No. 146, Accounting for Costs Associated with Exit or Disposal Activities
       ("SFAS 146"). SFAS 146 addresses significant issues relating to the
       recognition, measurement, and reporting of costs associated with exit and
       disposal activities, including restructuring activities, and nullifies
       the guidance in Emerging Issues Task Force Issue No. 94-3 ("EITF 94-3"),
       Liability Recognition for Certain Employee Termination Benefits and Other
       Costs to Exit an Activity (including Certain Costs Incurred in a
       Restructuring). The provisions of this statement are effective for exit
       and disposal activities that are initiated after December 31, 2002, with
       early application encouraged. The Company does not expect SFAS 146 to
       have a material impact on the Company's results of operations or its
       financial position.

       In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's
       Accounting and Disclosure Requirements for Guarantees, Including Indirect
       Guarantees of Indebtedness of Others ("FIN 45"). FIN 45 addresses the
       disclosures to be made by a guarantor in its interim and annual financial
       statements about its obligations under guarantees and also clarifies the
       requirements related to the recognition of a liability by a guarantor at
       the inception of a guarantee for the obligations the guarantor has
       undertaken in issuing that guarantee. The initial recognition and initial
       measurement provisions of FIN 45 are applicable on a prospective basis to
       guarantees issued or modified after December 31, 2002. The disclosure
       requirements in FIN 45 are effective for financial statements of interim
       or annual periods ending after December 15, 2002. The Company does not
       expect FIN 45 to have a material impact on its consolidated financial
       statements.

       In December 2002, the FASB issued Statement of Financial Accounting
       Standard No. 148, Accounting for Stock Based Compensation - Transition
       and Disclosure - an amendment of FASB Statement No. 123" ("SFAS 148").
       This statement amends SFAS No. 123, Accounting for Stock Based
       Compensation ("SFAS 123") to provide alternative methods of voluntarily
       transitioning to the fair value based method of accounting for
       stock-based employee compensation. SFAS 148 also amends the disclosure
       requirements of SFAS 123 to require disclosure of the method used to
       account for stock based employee compensation and the effect of the
       method on reported results in both year-end and interim financial
       statements. The annual disclosure provisions will be effective for fiscal
       years ending after December 15, 2002. The interim disclosure provisions
       are effective for financials reports containing financial statements for
       interim periods beginning after December 15, 2002. The Company intends to
       adopt the disclosure-only provisions of SFAS 148 for the interim period
       ending April 30, 2003. At the present time the Company does not intend to
       adopt the fair value based method.



                                        9


<PAGE>


BESTWAY, INC.                                                          FORM 10-Q

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

       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 open or acquire additional rental-purchase stores on favorable
       terms, (ii) the ability of the Company to improve the performance of such
       opened or acquired stores and to integrate such acquired stores into the
       Company's operations, and (iii) the impact of state and federal laws
       regulating or otherwise affecting rental-purchase transactions, (iv) the
       impact of general economic conditions in the United States and (v) the
       impact of terrorist activity, threats or terrorist activity and responses
       thereto on the economy in general and the rental-purchase industry in
       particular. 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.



                                       10
<PAGE>


BESTWAY, INC.                                                          FORM 10-Q

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

       RESULTS OF OPERATIONS

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

<Table>
<Caption>
                                                   THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                      JANUARY 31,                        JANUARY 31,
                                            ------------------------------      ------------------------------
                                                2003              2002              2003              2002
                                            ------------      ------------      ------------      ------------

<S>                                         <C>               <C>               <C>               <C>
Revenues:
     Rental and fees                                95.6%             97.9%             96.1%             97.7%
     Sales of merchandise                            4.4               2.1               3.9               2.3
                                            ------------      ------------      ------------      ------------

       Total revenues                              100.0             100.0             100.0             100.0
                                            ------------      ------------      ------------      ------------

Cost and operating expenses:
     Depreciation and amortization:
       Rental merchandise                           19.4              20.1              19.5              20.2
       Other                                         4.3               5.5               4.4               5.5
     Cost of merchandise sold                        4.8               1.9               4.5               2.1
     Salaries and wages                             29.9              28.8              29.8              29.1
     Advertising                                     4.8               4.5               4.7               4.7
     Occupancy                                       6.7               7.7               6.9               7.9
     Other operating expenses                       28.1              30.0              30.0              30.3
     Interest expense                                2.0               2.3               2.0               2.6
     (Gain) loss on sale of property
       and equipment                                (0.1)               --                --                --
     (Gain) loss on sale of assets                    --               0.2                --              (0.3)
                                            ------------      ------------      ------------      ------------

       Total cost and operating expenses            99.9             101.0             101.8             102.1
                                            ------------      ------------      ------------      ------------

Income (loss) before income taxes                    0.1              (1.0)             (1.8)             (2.1)
                                            ------------      ------------      ------------      ------------

     Income tax benefit                             (0.4)             (0.1)             (0.7)             (0.5)
                                            ------------      ------------      ------------      ------------

       Net income (loss)                             0.5%             (0.9)%            (1.1)%            (1.6)%
                                            ============      ============      ============      ============
</Table>



                                       11

<PAGE>



BESTWAY, INC.                                                          FORM 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CON'T.)

       On July 8, 2002, the Company announced the appointment of a new President
       and Chief Executive Officer who, among other things, implemented a change
       in the Company's operating philosophy to eliminate lower margin product
       lines, focus on higher revenue merchandise, and increase the Company's
       investment in store personnel and advertising. As a result, the Company
       experienced increased same store revenues and improved product margins in
       the quarter and six-month period.

       COMPARISON OF THREE MONTHS ENDED JANUARY 31, 2003 AND 2002

       For the three months ended January 31, 2003 compared to the three months
       ended January 31, 2002, total revenue increased $400,410, or 4.7% to
       $8,894,260 from $8,493,850. The increase in total revenue was due to
       increased revenues in same stores, offset by the consolidation or sale of
       fourteen store locations in fiscal year 2002. Revenue from same stores
       increased $1,170,142 or 15.1% and accounted for 292.2% of the change in
       revenue. Same store revenues represent those revenues earned in stores
       that were operated by the Company for the entire three months ended
       January 31, 2003 and 2002. The improvement was primarily attributable to
       an increase in the number of customers served, the number of agreements
       on rent, as well as revenue earned per agreement on rent. Revenue
       decreased $769,732, or 192.2% due to the consolidation or sale of stores
       in fiscal year 2002.

       Total costs and operating expenses increased $308,391, or 3.6% to
       $8,884,355 from $8,575,964 and decreased 1.1% as a percentage of total
       revenue to 99.9% from 101.0%. In fiscal year 2002, the Company sold or
       consolidated fourteen under-performing stores. In addition, the Company
       has implemented strategies to improve profitability, including reviewing
       the Company's product offerings and price value relationships.

       Depreciation of rental merchandise increased $21,964, or 1.3% to
       $1,728,322 for the three months ended January 31, 2003 from $1,706,358 in
       2002. Depreciation of rental merchandise expressed as a percentage of
       rental income excluding fees decreased .7% to 24.6% from 25.3% in 2002.
       This decrease is primarily attributable to improved product margins due
       to enhanced rental rates and turns. Other depreciation and amortization
       decreased $85,221, or 18.3% to $379,407 from $464,628 and decreased 1.2%
       as a percentage of total revenue to 4.3% from 5.5%. Under SFAS 142,
       amortization of goodwill ceased effective August 1, 2002.

       Cost of merchandise sold increased $269,816, or 171.0% to $427,584 from
       $157,768 and increased 2.9% as a percentage of total revenue to 4.8% from
       1.9%. The increase was a result of an increase in the number of items
       sold in the quarter ending January 31, 2003 compared to the quarter
       ending January 31, 2002. The Company undertook a merchandise reduction
       sales initiative to dispose of lower margin merchandise. During the
       quarter ending January 31, 2003, the Company recorded merchandise sales
       of $391,591 with a remaining value of $427,584, or a loss of $35,993.
       During the quarter ending January 31, 2002, the Company recorded
       merchandise sales of $179,888 with a remaining value of $157,768, or a
       margin of $22,120.

       Salaries and wages increased $217,895, or 8.9% to $2,662,915 from
       $2,445,020 and increased 1.1% as a percentage of total revenue to 29.9%
       from 28.8%. The increase was primarily attributable to increased same
       store level labor costs of approximately $377,000, offset by salaries and
       wages associated with the consolidation or sale of fourteen stores in
       fiscal year 2002.


                                       12
<PAGE>

BESTWAY, INC.                                                          FORM 10-Q


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CON'T.)

       Advertising expense increased $43,152, or 11.2% to $427,932 from $384,780
       and as a percentage of total revenue increased .3% to 4.8% from 4.5%. The
       increase is primarily attributable to increased same store level
       advertising costs of approximately $122,000, offset by the consolidation
       or sale of fourteen stores in fiscal year 2002.

       Occupancy expense decreased $57,314, or 8.8% to $593,122 from $650,436.
       The decrease is primarily due to occupancy expense associated with the
       consolidation or sale of fourteen stores in fiscal year 2002. Occupancy
       expense as a percentage of total revenue decreased 1.0% to 6.7% from 7.7%
       primarily due to the increase in same store revenue.

       Other operating expenses decreased $52,335, or 2.1% to $2,499,317 from
       $2,551,652 and as a percentage of total revenue decreased 1.9% to 28.1%
       from 30.0%. The decrease was primarily attributable to other operating
       expenses associated with the consolidation or sale of fourteen stores in
       fiscal year 2002, offset by increased same store other operating expenses
       of approximately $232,000.

       Interest expense decreased $24,024, or 12.1% to $175,103 from $199,127
       and as a percentage of total revenue decreased .3% to 2.0% from 2.3%. The
       decrease in interest is primarily attributable to decreased indebtedness
       and a lower effective interest rate.

       Income before income taxes increased by $92,019, or 112.1% to income of
       $9,905 for the three months ended January 31, 2003 compared to a loss of
       $82,114 in 2002. Income before income taxes as a percentage of total
       revenue increased to .1% for the three months ended January 31, 2003,
       from a loss of 1.0% in 2002. This increase is attributable to the
       increase in same store revenues in 2003 as compared to 2002 coupled with
       the realization of our margin enhancement initiatives, and the reduction
       of intangible amortization expense as discussed above.

       COMPARISON OF SIX MONTH ENDED JANUARY 31, 2003 AND 2002

       For the six months ended January 31, 2003 compared to the six months
       ended January 31, 2002, total revenue increased $222,867, or 1.3% to
       $17,167,222 from $16,944,355. The increase in total revenue was due to
       increased revenues in same stores, offset by the consolidation or sale of
       fourteen store locations in fiscal year 2002. Revenue from same stores
       increased $1,931,734 or 12.7% and accounted for 866.7% of the change in
       revenue. Same store revenues represent those revenues earned in stores
       that were operated by the Company for the entire six months ended January
       31, 2003 and 2002. The improvement was primarily attributable to an
       increase in the number of customers served, the number of agreements on
       rent, as well as revenue earned per agreement on rent. Revenue decreased
       $1,708,867, or 766.7% due to the consolidation or sale of stores in
       fiscal year 2002.

       Total costs and operating expenses increased $175,561, or 1.0% to
       $17,478,232 from $17,302,671 and decreased .3% as a percentage of total
       revenue to 101.8% from 102.1%. In fiscal year 2002, the Company sold or
       consolidated fourteen under-performing stores. In addition, the Company
       has implemented strategies to improve profitability, including reviewing
       the Company's product offerings and price value relationships.



                                       13
<PAGE>

BESTWAY, INC.                                                          FORM 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CON'T.)

       Depreciation of rental merchandise decreased $72,851, or 2.1% to
       $3,348,869 for the six months ended January 31, 2003 from $3,431,720 in
       2002. Depreciation of rental merchandise expressed as a percentage of
       rental income excluding fees decreased .6% to 24.7% from 25.3% in 2002.
       This decrease is primarily attributable to improved product margins due
       to enhanced rental rates and turns. Other depreciation and amortization
       decreased $181,067, or 19.4% to $751,944 from $933,011 and decreased 1.1%
       as a percentage of total revenue to 4.4% from 5.5%. Under SFAS 142,
       amortization of goodwill ceased effective August 1, 2002.

       Cost of merchandise sold increased $418,003, or 115.5% to $779,824 from
       $361,821 and increased 2.4% as a percentage of total revenue to 4.5% from
       2.1%. The increase was a result of an increase in the number of items
       sold in the six months ending January 31, 2003 compared to the six months
       ending January 31, 2002. The Company undertook a merchandise reduction
       sales initiative to dispose of lower margin merchandise. During the six
       months ending January 31, 2003, the Company recorded merchandise sales of
       $670,362 with a remaining value of $779,824, or a loss of $109,462.
       During the six months ending January 31, 2002, the Company recorded
       merchandise sales of $388,858 with a remaining value of $361,821, or a
       margin of $27,037.

       Salaries and wages increased $168,320, or 3.4% to $5,107,388 from
       $4,939,068 and increased .7% as a percentage of total revenue to 29.8%
       from 29.1%. The increase was primarily attributable to increased same
       store level labor costs of approximately $619,000, offset by salaries and
       wages associated with the consolidation or sale of fourteen stores in
       fiscal year 2002.

       Advertising expense increased $12,392, or 1.5% to $812,923 from $800,531
       and as a percentage of total revenue remained constant at 4.7%. The
       increase is primarily attributable to increased same store level
       advertising costs of approximately $183,000, offset by the consolidation
       or sale of fourteen stores in fiscal year 2002.

       Occupancy expense decreased $149,710, or 11.2% to $1,182,182 from
       $1,331,892. The decrease is primarily due to occupancy expense associated
       with the consolidation or sale of fourteen stores in fiscal year 2002.
       Occupancy expense as a percentage of total revenue decreased 1.0% to 6.9%
       from 7.9% primarily due to the increase in same store revenue.

       Other operating expenses increased $25,318, or .5% to $5,153,395 from
       $5,128,077 and as a percentage of total revenue decreased .3% to 30.0%
       from 30.3%. Other operating expenses increased approximately $693,000 due
       to increased other operating expenses in same stores, offset by the
       consolidation or sale of fourteen store locations in fiscal year 2002.

       Interest expense decreased $96,784, or 21.6% to $350,268 from $447,052
       and as a percentage of total revenue decreased .6% to 2.0% from 2.6%. The
       decrease in interest is primarily attributable to decreased indebtedness
       and a lower effective interest rate.




                                       14
<PAGE>

BESTWAY, INC.                                                          FORM 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CON'T.)

       Loss before income taxes decreased by $47,306 to a loss of $311,010 for
       the six months ended January 31, 2003 compared to loss of $358,316 in
       2002. Loss before income taxes as a percentage of total revenue decreased
       to 1.8% for the six months ended January 31, 2003, from a loss of 2.1% in
       2002. This decrease is attributable to the increase in same store
       revenues in 2003 as compared to 2002 coupled with the realization of our
       margin enhancement initiatives, and reduction of intangible amortization
       expense as discussed above.

       FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

       For the six months ending January 31, 2003, the Company's net cash flows
       from operating activities was $5,418,494 as compared to $4,911,599 for
       the six months ending January 31, 2002. The increase in cash provided by
       operations was primarily due to increased revenues and decreased outflow
       for working capital commitments.

       For the six months ending January 31, 2003, the Company's net cash flows
       used in investing activities was $5,694,642 as compared to $4,403,927 for
       the six months ending January 31, 2002. The Company's investing
       activities reflects a $961,356 increase in the purchase of rental units
       and a $169,791 increase in purchases of property and equipment. The
       increase in the amount of rental merchandise purchased during the six
       months ending January 31, 2003 is a result of strong consumer demand. The
       increase in property and equipment purchased during the six months ending
       January 31, 2003 is a result of purchasing laser printers and copy
       machines in all stores, remodeling two stores, and relocating one store.

       For the six months ending January 31, 2003, the Company's net cash flow
       provided by financing activities was $231,597 as compared to net cash
       flows used in financing activities of $1,060,963 for the six months
       ending January 31, 2002. The decrease in financing activities principally
       reflects decreased repayments of the Company's debt.

       On October 31, 2002, the Company amended and restated its Revolving
       Credit Loan Agreement with its lender. In the amendment, the lender
       extended the maturity date from October 1, 2003 to May 31, 2004 and
       modified the interest rate, minimum tangible net worth provision, and
       minimum interest coverage ratio. The amendment adds a minimum year to
       date profitability requirement. At August 31, 2002 and September 30, 2002
       the Company was in violation of the minimum tangible net worth provision
       of the Agreement. The Company obtained a waiver of such violations from
       the lender and has been in compliance thereafter.

       On December 13, 2002, the Company and the lender amended the subordinated
       note payable to a limited partnership and stockholder dated August 18,
       1999. The amendment extended the maturity date from November 1, 2003 to
       May 31, 2004.

       The Company's capital requirements relate primarily to purchasing rental
       merchandise and working capital requirements for new and existing stores.
       The Company's primary source of liquidity and capital are from operations
       and borrowings. For the six months ending January 31, 2003, the Company
       has generated sufficient cash flows from operations to meet its operating
       and investing needs. Management believes that operating cash flows
       combined with available credit of $3,500,000 under the Revolving Credit
       Loan Agreement provide adequate resources to meet the Company's future
       cash obligations.




                                       15
<PAGE>

BESTWAY, INC.                                                          FORM 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CON'T.)

       INFLATION

       Although the Company cannot precisely determine the effects of inflation
       on its business, it is management's belief that the effects on revenues
       and operating results have not been significant.

       RECENTLY ISSUED ACCOUNTING PRINCIPLES

       In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
       Associated with Exit or Disposal Activities ("SFAS 146"). SFAS 146
       addresses significant issues relating to the recognition, measurement,
       and reporting of costs associated with exit and disposal activities,
       including restructuring activities, and nullifies the guidance in
       Emerging Issues Task Force Issue No. 94-3 ("EITF 94-3"), Liability
       Recognition for Certain Employee Termination Benefits and Other Costs to
       Exit an Activity (including Certain Costs Incurred in a Restructuring).
       The provisions of this statement are effective for exit and disposal
       activities that are initiated after December 31, 2002, with early
       application encouraged. The Company does not expect SFAS 146 to have a
       material impact on the Company's results of operations or its financial
       position.

       In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's
       Accounting and Disclosure Requirements for Guarantees, Including Indirect
       Guarantees of Indebtedness of Others ("FIN 45"). FIN 45 addresses the
       disclosures to be made by a guarantor in its interim and annual financial
       statements about its obligations under guarantees and also clarifies the
       requirements related to the recognition of a liability by a guarantor at
       the inception of a guarantee for the obligations the guarantor has
       undertaken in issuing that guarantee. The initial recognition and initial
       measurement provisions of FIN 45 are applicable on a prospective basis to
       guarantees issued or modified after December 31, 2002. The disclosure
       requirements in FIN 45 are effective for financial statements of interim
       or annual periods ending after December 15, 2002. The Company does not
       expect FIN 45 to have a material impact on its consolidated financial
       statements.

       In December 2002, the FASB issued Statement of Financial Accounting
       Standard No. 148, Accounting for Stock Based Compensation - Transition
       and Disclosure - an amendment of FASB Statement No. 123" ("SFAS 148").
       This statement amends SFAS No. 123, Accounting for Stock Based
       Compensation ("SFAS 123") to provide alternative methods of voluntarily
       transitioning to the fair value based method of accounting for
       stock-based employee compensation. SFAS 148 also amends the disclosure
       requirements of SFAS 123 to require disclosure of the method used to
       account for stock based employee compensation and the effect of the
       method on reported results in both annual and interim financial
       statements. The annual disclosure provisions will be effective for fiscal
       years ending after December 15, 2002. The interim disclosure provisions
       are effective for financial reports containing financial statements for
       interim periods beginning after December 15, 2002. The Company intends to
       adopt the disclosure-only provisions of SFAS 148 for the interim period
       ending April 30, 2003. The Company does not believe that SFAS 148 will
       have a material impact on its consolidated financial statements.




                                       16
<PAGE>

BESTWAY, INC.                                                          FORM 10-Q

ITEM 4. CONTROLS AND PROCEDURES

       Within the 90-day period to the filing of this report, an evaluation was
       carried out under the supervision and with the participation of the
       Company's management, including our Chief Executive Officer and Chief
       Financial Officer, of the effectiveness of the design and operation of
       our disclosure controls and procedures (as defined in Rule 13a-14(c)
       under the Securities Exchange Act of 1934). Based upon that evaluation,
       our Chief Executive Officer and Chief Financial Officer concluded that
       the design and operation of these disclosure controls and procedures were
       effective.

       No significant changes were made in our internal controls or in other
       factors that could significantly affect these controls subsequent to the
       date of their evaluation.






                                       17
<PAGE>


BESTWAY, INC.                                                          FORM 10-Q


PART II OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K, SIGNATURES

         (a)      Exhibits required by Item 601 of Regulation S-K

                  99.1*    Certification of Chief Executive Officer pursuant to
                           Section 906 of the Sarbanes-Oxley Act of 2002.

                  99.2*    Certification of Chief Financial Officer pursuant to
                           Section 906 of the Sarbanes-Oxley Act of 2002.

                           ------------
                           *Filed herewith

         (b)      Report on Form 8-K

                  The Company did not file any reports on Form 8-K during the
                  quarter ended January 31, 2003.


                                   SIGNATURES


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

                                  BESTWAY, INC.




March 17, 2003


                              /s/ Beth A. Durrett
                                 Beth A. Durrett
                             Chief Financial Officer
                (Principal Financial Officer and duly authorized
                      to sign on behalf of the Registrant)




                                       18
<PAGE>

BESTWAY, INC.                                                          FORM 10-Q


                                  CERTIFICATION

I, David A. Kraemer, Chief Executive Officer of Bestway, Inc., certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Bestway, Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of Bestway, Inc. as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

         c)       presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.




Date:  March 17, 2003                By:   /s/ David A. Kraemer
                                        --------------------------------------
                                           Name:  David A. Kraemer
                                           Title:  Chief Executive Officer



                                       19
<PAGE>

BESTWAY, INC.                                                          FORM 10-Q


                                  CERTIFICATION

I, Beth A. Durrett, Chief Financial Officer of Bestway, Inc., certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Bestway, Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of Bestway, Inc. as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

         c)       presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

         a)       significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.




Date:  March 17, 2003           By:   /s/ Beth A. Durrett
                                   -------------------------------------------
                                      Name:  Beth A. Durrett
                                      Title:  Chief Financial Officer




                                       20
<PAGE>



                                INDEX TO EXHIBITS

<Table>
<Caption>
         EXHIBIT
         NUMBER                         DESCRIPTION
         -------                        -----------


<S>               <C>
         99.1*    Certification of Chief Executive Officer pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002.

         99.2*    Certification of Chief Financial Officer pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002.
</Table>

------------
*Filed herewith