<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-K

                                   ----------

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

                     FOR THE FISCAL YEAR ENDED JULY 31, 2002

                                       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 Identification No.)
   incorporation or organization)

                        7800 STEMMONS FREEWAY, SUITE 320
                               DALLAS, TEXAS 75247
          (Address of principal executive offices, including zip code)

                                   ----------

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

                                   ----------

        Securities registered pursuant to Section 12(b) of the Act: None
           Securities registered pursuant to Section 12(g) of the Act:


                                (TITLE OF CLASS)
                          Common Stock, $.01 par value

         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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-K. [X]

         The aggregate market value of voting common stock held by
non-affiliates of the registrant as of October 17, 2002 was approximately
$4,153,078.

         The number of shares of Common Stock, $.01 par value, outstanding as of
October 17, 2002 was 1,652,572.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Certain information called for by Part III is incorporated by reference
to the definitive proxy statement for the annual meeting of the stockholders of
Bestway, Inc., which will be filed with the Securities and Exchange Commission
not later than 120 days after July 31, 2002.


<PAGE>


BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                            PAGE(S)
                                                                            -------
<S>         <C>                                                             <C>

PART I

   Item 1.  Business                                                          3
   Item 2.  Properties                                                        5
   Item 3.  Legal Proceedings                                                 6
   Item 4.  Submission of Matters to a Vote of Security Holders               6


PART II

   Item 5.  Market for Registrant's Common Stock and Related
              Security Holder Matters                                         6
   Item 6.  Selected Financial Data                                           7
   Item 7.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                             7
   Item 7a. Quantitative and Qualitative Disclosures About Market Risk       16
   Item 8.  Financial Statements and Supplementary Data                      16
   Item 9.  Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure                            16


PART III

   Item 10. Directors and Executive Officers of the Registrant               16
   Item 11. Executive Compensation                                           16
   Item 12. Security Ownership of Certain Beneficial Owners and Management   16
   Item 13. Certain Relationships and Related Transactions                   16


PART IV

   Item 14. Exhibits and Reports on Form 8-K                                 17


SIGNATURES                                                                   19
</Table>


                                       2
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------

                                     PART I

ITEM 1. BUSINESS

         GENERAL

         Bestway, Inc. and its consolidated subsidiaries ("Bestway" or the
"Company") have been engaged in the rental-purchase industry since 1987. The
Company owns and operates a total of sixty-nine stores located in the states of
Alabama, Arkansas, Georgia, Mississippi, North Carolina, South Carolina and
Tennessee. The stores' operations are controlled and monitored through the
Company's management information system networked with its home office in
Dallas, Texas. The Company is a Delaware corporation and its principal executive
offices are located at 7800 Stemmons Freeway, Suite 320, Dallas, Texas 75247.

         The Company's rental-purchase program offers high quality, durable
products such as electronics, appliances, computers, furniture and accessories
under flexible rental-purchase agreements that typically allow the customer to
obtain ownership of the merchandise at the conclusion of an agreed upon rental
period. These products are furnished to customers under full-service rental
agreements which require that the charge for each rental period be paid in
advance, but no additional advance payment or security deposit is required. At
the end of each rental period, the customer has the option of retaining the
product for an additional rental period or returning the product without further
obligation. If the product is returned, it is serviced and then offered for rent
to another customer. The rental agreements contain options under which customers
may own the merchandise under specified terms. The Company's rental agreements
typically have a 12 to 24 month term with weekly or monthly payment options. The
most distinguishing factor of this form of retailing is the cancelability of the
rental agreement at any time without further obligation by returning the product
to the dealer. The industry primarily serves customers in the low to middle
income sector who may have a need for a product, but do not wish or are unable
to purchase it for cash or on credit.

         RECENT DEVELOPMENTS

         On July 8, 2002, the Company announced the appointment of David A.
Kraemer as President and Chief Executive Officer. Mr. Kraemer has 19 years
experience in the rent-to-own industry, where he most recently served as
Executive Vice President of Rent-A-Center. He had been with
Rent-A-Center/Renters Choice since 1995 where as Executive Vice-President he was
responsible for the operations of over 1000 stores.

         On the same date, the Company announced the termination of Teresa A.
Sheffield, the Company's President and Chief Operating Officer, after the
transition of Mr. Kraemer. Ms. Sheffield's termination was effective July 22,
2002. The Company also announced that R. Brooks Reed, the Company's Chairman and
Chief Executive Officer, would remain as Chairman.


                                       3
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


         PRODUCTS

         The Company generally purchases products directly from the
manufacturers and local distributors. Products offered by the Company include a
wide variety of brands, styles and models of, among other things, televisions,
DVD players, home entertainment centers, stereos, videocassette recorders,
computers, washers and dryers, refrigerators, freezers, and furniture. Although
the Company presently expects to continue relationships with its existing
suppliers, there are numerous sources of products, and the Company does not
believe its operations are dependent on any one or more of its present
suppliers.

         ADVERTISING

         The Company markets its products and services by selecting prominent
store locations in retail shopping areas on main traffic thoroughfares near
targeted customers' residences or job locations. We promote the products and
services in our stores primarily through direct mail advertising. Our
advertisements emphasize such features as product and brand-name selection,
prompt delivery, and the absence of credit investigations or long-term
obligations. The Company also has programs which reward existing customers with
rental discounts or cash payments for the referral of new customers.

         COMPETITION

         The rental-purchase industry is highly competitive. Competition is
based primarily on store location, product selection and availability, customer
service and rental rates and terms. Several of the Company's competitors are
national or regional companies and some have significantly greater financial and
operating resources and name recognition than the Company. In addition, the
Company faces competition from sources outside the rental-purchase industry,
such as department stores, discount stores and retail outlets. These competitors
may offer an installment sales program or may compete with the Company simply on
the basis of product and price. There is no assurance that the Company will be
able to compete successfully against these competitors. Because capital and
other requirements for entry into the rental-purchase industry are relatively
low, competition may arise from new sources not currently competing with the
Company. Increased competition could have a material adverse effect on the
Company's sales and profitability.

         PERSONNEL

         At July 31, 2002, the Company employed approximately 323 full-time
employees, of which 11 are located at the corporate office in Dallas, Texas. The
Company has various incentive programs for all personnel. None of the Company's
employees are represented by a labor union. The Company considers its relations
with its employees to be satisfactory.


                                       4
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


         COMPANY STORES

         The number of stores operated by the Company has decreased from 83 as
of July 31, 2001 to 69 as of July 31, 2002. The following table shows the number
of stores opened, consolidated and sold during such time period:

<Table>
<Caption>
                                                        NUMBER OF
                                                         STORES
                                                      -------------
<S>                                                   <C>

Open at July 31, 2001                                            83
Opened                                                            0
Consolidated                                                      1
Sold                                                             13
                                                      -------------

Open at July 31, 2002                                            69
                                                      =============
</Table>

         REGULATION

         Federal Regulation - No comprehensive federal legislation has been
enacted regulating or otherwise impacting rental-purchase transactions. The
Company does comply with the Federal Trade Commission recommendations for
disclosure in rental-purchase transactions. From time to time, legislation has
been introduced in Congress that would regulate rental-purchase transactions,
including legislation that would subject rental-purchase transactions to
interest rates, finance charges and fee limitations, as well as the Federal
Truth in Lending Act. Any adverse federal legislation, if enacted, could have a
material adverse effect on the Company.

         State Regulation - Currently 47 states and Puerto Rico have legislation
regulating rental-purchase transactions. The Company currently operates its
stores in states that have enacted laws specifically regulating rental-purchase
transactions. The Company's policy is to operate only in states where there is
an absence, in management's opinion, of unfavorable legislation regarding
rental-purchase transactions. There can be no assurance against the enactment of
new or revised rental-purchase laws that would have a material adverse effect on
the Company.

         SERVICE MARK

         The Company owns the federally registered service mark "Bestway
Rental". The Company believes the Bestway Rental mark has acquired significant
market recognition and goodwill in communities in which its stores are located.

ITEM 2. PROPERTIES

         All store locations, with the exception of one, and the home office
facility in Dallas, Texas are leased. Store facilities typically are showroom
locations of approximately 4,100 square feet in retail centers on heavy traffic
thoroughfares near customers' residences or work places. Almost all available
rental merchandise is kept in the showroom area which comprises the majority of
the available square footage. Store location is considered critical to the
success of the store.


                                       5
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


         The Company's store locations by state, at July 31, 2002, are as
follows:

<Table>
<Caption>
                                                       NUMBER OF
     STATE                                              STORES
------------------                                   ------------
<S>                                                  <C>

Alabama                                                        22
Arkansas                                                        6
Georgia                                                         3
Mississippi                                                    11
North Carolina                                                 12
South Carolina                                                  2
Tennessee                                                      13
                                                     ------------

Open at July 31, 2002                                          69
                                                     ============
</Table>

ITEM 3. LEGAL PROCEEDINGS

         In December 2001, the Company settled a lawsuit brought by
approximately fifteen plaintiffs who have asserted claims against a number of
defendants, including the Company, who were involved in the production of oil
and gas or who owned oil and gas facilities in Montana. Plaintiffs alleged that
the Company is the successor in interest to Amarco Resources Corporation,
which, in the past, owned interests in two wells in the oil field. One of these
wells is an alleged source of contamination of groundwater. The settlement was
for approximately $130,000, including attorney's fees.

         There are no other legal proceedings other than ordinary routine
litigation incidental to the Company's business to which the Company or any of
its subsidiaries is a party or to which any of its property is subject. To the
Company's knowledge, no litigation has been threatened against the Company or
any of its subsidiaries other than routine actions and administrative
proceedings, which in the aggregate, are not expected to have a material adverse
effect on the business or financial condition of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report. PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

         The Company's Common Stock is publicly traded on the Nasdaq Small-Cap
Market under the symbol "BSTW".

         The following table sets forth, for the periods indicated, the high and
low sales price per share of the Common Stock as reported on the Nasdaq
Small-Cap Market.

<Table>
<Caption>
                         YEAR ENDED JULY 31, 2002     YEAR ENDED JULY 31, 2001
                       ---------------------------   ---------------------------
                           HIGH            LOW           HIGH            LOW
                       ------------   ------------   ------------   ------------
<S>                    <C>            <C>            <C>            <C>

First Quarter          $       5.55   $       4.30   $       5.72   $       3.50
Second Quarter         $       4.56   $       3.99   $       5.00   $       3.88
Third Quarter          $       4.50   $       4.00   $       5.00   $       3.75
Fourth Quarter         $       7.00   $       3.80   $       7.13   $       4.00
</Table>

         At July 31, 2002, there were 408 stockholders of record of the
Company's Common Stock.


                                       6
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


         The Company has not paid cash dividends on its Common Stock since its
inception and intends to retain earnings for operations. The Company is a party
to a loan agreement which prohibits the payment of cash dividends on its Common
Stock.

ITEM 6. SELECTED FINANCIAL DATA

<Table>
<Caption>
                                                                  FISCAL YEAR ENDED JULY 31,
                                         --------------------------------------------------------------------------
                                             2002            2001            2000           1999           1998
                                         ------------    ------------    ------------   ------------   ------------
<S>                                      <C>             <C>             <C>            <C>            <C>

Revenues                                 $ 33,533,928    $ 35,913,046    $ 34,909,758   $ 29,365,753   $ 25,875,934
Income (loss) before income taxes            (965,012)        (28,297)      1,068,199      1,107,509      1,381,813
Current income tax expense (benefit)         (116,109)             --         180,845         94,713        155,064
Deferred income tax
  expense (benefit)                          (106,824)         97,488         397,413        397,912        433,012
Net income (loss)                            (742,079)       (125,785)        489,941        614,884        793,737
Basic and diluted net income (loss)
  per share                                     (0.45)          (0.07)           0.28           0.35           0.45
Cash flows provided by
  operations                               10,210,071      11,661,342      12,759,621     11,320,309      9,478,714
Total assets                               21,304,413      24,312,260      25,617,543     21,218,412     18,673,950
Notes payable                              10,967,192      13,081,731      13,294,945      9,244,012      8,230,043
Stockholders' equity                        8,123,715       8,973,601       9,174,511      8,971,630      8,396,362
</Table>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         The following discussion and analysis should be read in conjunction
with the information set forth under Item 6, "Selected Financial Data," and the
financial statements of the Company and the accompanying notes thereto included
elsewhere in this report.

         The Company currently operates 69 rental-purchase stores located in
seven states. The number of stores operated by the Company has increased from 35
as of July 31, 1995 to a high of 83 as of July 31, 2001 to 69 as of July 31,
2002. During the year ended July 31, 2002, the Company consolidated one store
location, and sold thirteen stores.


                                       7
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


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

<Table>
<Caption>
                                                     YEAR ENDED JULY 31,
                                                -----------------------------
                                                    2002             2001
                                                ------------     ------------
<S>                                             <C>              <C>

Revenues:
    Rental income                                       97.4%            98.8%
    Sales of merchandise                                 2.6              1.2
                                                ------------     ------------

        Total revenues                                 100.0            100.0

Cost and operating expenses:
    Depreciation and amortization:
      Rental merchandise                                19.9             21.5
      Other                                              5.5              5.5
    Cost of merchandise sold                             2.4              1.1
    Salaries and wages                                  29.4             28.8
    Advertising                                          3.4              4.0
    Occupancy                                            7.5              7.4
    Other operating expenses                            32.2             28.3
    Interest expense                                     2.4              3.7
    Gain on sale of property and equipment                .1               --
    Loss (gain) on sale of assets                         .1             (0.2)
                                                ------------     ------------

        Total cost and operating expenses              102.9            100.1
                                                ------------     ------------

Loss before income tax provision                        (2.9)            (0.1)
                                                ------------     ------------

    Current income tax expense                          (0.4)              --
    Deferred income tax expense (benefit)               (0.3)             0.3
                                                ------------     ------------

        Net loss                                        (2.2)%           (0.4)%
                                                ============     ============
</Table>


                                       8
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED JULY 31, 2002 COMPARED TO THE
FISCAL YEAR ENDED JULY 31, 2001

         For the fiscal year ended July 31, 2002 compared to the fiscal year
ended July 31, 2001, total revenue decreased $2,379,118, or 6.6%, to $33,533,928
from $35,913,046. The decrease in total revenue was primarily attributable to
the consolidation or sale of fourteen store locations in fiscal year 2002 and
the full year's impact from selling three store locations in fiscal year 2001.
The decrease was offset by the inclusion of a full year's results for the stores
opened in fiscal 2001, and modestly increased revenues in same stores. Revenue
decreased $3,625,150, or 152.4% due to the consolidation or sale of store
locations in fiscal years 2002 and 2001. Revenue from stores opened in fiscal
year 2001 increased $1,091,666, or 45.9%. Revenue from same stores increased
$154,366 or .5% and accounted for 6.5% of the change in revenue. Same store
revenues represent those revenues earned in stores that were operated by the
Company for the entire twelve months ended July 31, 2002 and 2001.

         The Company receives rental revenue from various products including
televisions, DVD players, videocassette recorders, household appliances, as well
as computers and furniture. In fiscal year 2002, approximately 16% of the
Company's rental revenue was derived from appliances, 25% from furniture, 29%
from electronics, 8% from computers, 4% from various other products and 18% from
various services and charges to rental customers including reinstatement fees,
club fees and liability waiver fees.

         Total costs and operating expenses decreased $1,442,403, or 4.0% to
$34,498,940 from $35,941,343 and increased 2.8% as a percentage of total revenue
to 102.9% from 100.1%. In fiscal year 2001, the Company developed its
administrative and management organization to accommodate an anticipated growth
in revenue. However, the Company experienced operating losses with new store
openings in 2001 and a lack of revenue growth in same stores. In fiscal year
2002, the Company sold, or consolidated fourteen under-performing stores and
implemented a program to reduce operating expenses at the store and corporate
level. In addition, in connection with the transition of the Company's new
President and Chief Executive Officer, the Company has implemented strategies to
improve profitability, including reviewing the Company's product offerings and
price value relationships.

         Depreciation of rental merchandise decreased $1,062,932, or 13.7% to
$6,671,484 from $7,734,416 and decreased 1.6% as a percentage of total revenue
to 19.9% from 21.5%. The decrease as a percentage of revenues was primarily due
to an increase in average revenue earned per item. Other depreciation and
amortization decreased $140,173, or 7.1% to $1,831,646 from $1,971,819 and did
not change as a percentage of total revenue.

         Cost of merchandise sold increased $413,090, or 102.9% to $814,433 from
$401,343 and increased 1.3% as a percentage of total revenue to 2.4% from 1.1%.
The increase was a result of an increase in the number of items sold in 2002
compared to 2001. During 2002, the Company undertook a merchandise reduction
sales initiative to dispose of lower margin merchandise. In 2002, the Company
recorded merchandise sales of $869,908 with a remaining value of $814,433, or a
margin of $55,475. In fiscal year 2001, the Company recorded merchandise sales
of $424,211 with a remaining value of $401,343, or a margin of $22,868.

         Salaries and wages decreased $485,180, or 4.7% to $9,857,770 from
$10,342,950 and as a percentage of total revenue increased 0.6% to 29.4% from
28.8%. The decrease was primarily attributable to salaries and wages associated
with reduction in corporate staffing levels and the consolidation or sale of
fourteen under-performing stores in fiscal year 2002, offset by increased
salaries and wages of $400,850 paid pursuant to a separation agreement related
to the Company's former President and Chief Operating Officer.


                                       9
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


         Advertising expense decreased $312,744, or 21.7% to $1,130,535 from
$1,443,279 and as a percentage of total revenue decreased 0.6% to 3.4% from
4.0%. The decrease is primarily attributable to advertising expense associated
with the consolidation or sale of fourteen under-performing stores in fiscal
year 2002.

         Occupancy expense decreased $113,281, or 4.3% to $2,536,071 from
$2,649,352 and as a percentage of total revenue increased 0.1% to 7.5% from
7.4%. The decrease is primarily attributable to occupancy expense associated
with the consolidation or sale of fourteen under-performing stores in fiscal
year 2002, offset by the addition of the stores opened in fiscal year 2001.

         Other operating expenses increased $636,494, or 6.3% to $10,788,044
from $10,151,550 and as a percentage of total revenue increased 3.9% to 32.2%
from 28.3%. Other operating expenses increased approximately $739,000 due to
write-offs of rental merchandise, including approximately $315,000 associated
with the Company's decision to discontinue carrying jewelry in its product
selection. Other operating expenses increased approximately $130,000 in
connection with a legal settlement. The increases were offset by the
consolidation or sale of fourteen under-performing stores in fiscal year 2002.

         Interest expense decreased $522,262, or 39.7% to $794,433 from
$1,316,695 and as a percentage of total revenue decreased 1.3% to 2.4% from
3.7%. The decrease in interest is primarily attributable to decreased
indebtedness and a lower effective interest rate.

         The Company entered into several transactions to sell thirteen
under-performing stores during fiscal year 2002. The Company recognized a net
loss of $50,122 on these store sale transactions.

         For the fiscal year ended July 31, 2002 compared to the fiscal year
ended July 31, 2001, loss before income taxes increased $936,715, or 3,310.0% to
a loss of $965,012 compared to a loss of $28,297. Loss from operations before
income taxes as a percentage of total revenue increased 2.8% to 2.9% compared to
..1% primarily as a result of costs associated with changes in our executive
management team, write-offs of rental merchandise and the discontinuation of
certain product offerings.


                                       10
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED JULY 31, 2001 COMPARED TO THE
FISCAL YEAR ENDED JULY 31, 2000

         For the fiscal year ended July 31, 2001 compared to the fiscal year
ended July 31, 2000, total revenue increased $1,003,288, or 2.9%, to $35,913,046
from $34,909,758. The increase in total revenue was primarily attributable to
the inclusion of nine new store openings in fiscal 2001 and improved same store
revenue, which was offset by decreased revenues due to the sale of three stores
in fiscal year 2001. Revenue from the nine new store openings in fiscal year
2001 accounted for $1,954,744, or 194.8% of the increase. Revenue from same
stores increased $712,297, or 2.2% and accounted for 71.0% of the increase in
revenue. Same store revenues represent those revenues earned in stores that were
operated by the Company for the entire twelve months ended July 31, 2001 and
2000. Revenue decreased $1,663,753, or 165% due to selling three locations in
fiscal year 2001.

         The Company receives rental revenue from various products including
televisions, DVD players and videocassette recorders, household appliances,
computers, furniture and jewelry. In fiscal year 2001, approximately 16% of the
Company's rental revenue was derived from appliances, 27% from furniture, 32%
from electronics, 7% from various other products including jewelry and 18% from
various services and charges to rental customers including reinstatement fees,
club program and liability waiver fee.

         Total costs and operating expenses increased $2,099,784 or 6.2%, to
$35,941,343, from $33,841,559 and increased 3.1% as a percentage of total
revenues to 100.1% from 97.0%. The increase was primarily the result of expenses
associated with the nine new stores opened in fiscal year 2001.

         Depreciation of rental merchandise increased $91,527, or 1.2% to
$7,734,416 from $7,642,889. Depreciation of rental merchandise expressed as a
percent of total revenue decreased .4% to 21.5% from 21.9%. The decrease as a
percentage of revenues was primarily due to an increase in average revenue
earned per item. Other depreciation and amortization expense increased $353,653,
or 21.9% to 1,971,819 from $1,618,166 and as a percentage of total revenue
increased .9% to 5.5% from 4.6%. The increase was primarily due to increased
property and equipment.

         Salaries and wages increased $683,806, or 7.1%, to $10,342,950 from
$9,659,144 and as a percentage of total revenue increased 1.1% to 28.8% from
27.7%. Additional personnel for the nine new stores increased salaries and wages
by $730,757 or 106.9% of the total increase. Advertising expense decreased
$343,082, or 19.2% and as a percentage of total revenue decreased 1.1% to 4.0%
from 5.1%. Occupancy expense increased $451,105, or 20.5% to 2,649,352 from
$2,198,247 and as a percentage of total revenue increased 1.1% to 7.4% from 6.3%
primarily due to the nine new store openings in fiscal year 2001. Other
operating expenses increased $722,035, or 7.7% to $10,151,550 from $9,429,515
and as a percentage of total revenue increased 1.3% to 28.3% from 27.0%. The
increase was primarily attributable to the nine new stores opened in fiscal year
2001, increased write-offs of rental merchandise and increased insurance costs.
Interest expense increased $205,316, or 18.5% to $1,316,695 from $1,111,379. The
increase in interest expense is primarily attributed to the additional
indebtedness related to the new stores opened in fiscal year 2001.


                                       11
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


       For the fiscal year ended July 31, 2001 compared to the fiscal year ended
July 31, 2000, income before income tax provision decreased $1,096,496, or
102.6%, to a loss of $28,297 compared to income of $1,068,199. Income from
operations before income tax provision as a percentage of total revenues
decreased 3.1% to a negative .1% from 3.0%. The loss is primarily the result of
expenses associated with the nine store openings in fiscal year 2001 and
marginal revenue growth in same stores after the Company's administrative and
management organization had been developed to accommodate an anticipated higher
growth in revenue. The Company experienced operating losses of $407,173 from the
nine new stores opened in fiscal year 2001. The new stores operated at lower
average revenue per store as compared to the Company's existing stores and,
therefore, had higher salaries and wages and occupancy expenses as a percentage
of revenues. The Company has implemented a program to reduce operating expenses
at the store and corporate level to increase profitability.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

         For the fiscal year ended July 31, 2002, the Company's net cash flows
provided by operating activities were $10,210,071 as compared to $11,661,342 for
the fiscal year ended July 31, 2001. The decline in cash provided by operations
was primarily due to a $1,000,000 cash advance to the Company's President and
Chief Executive Officer and increased outflow for working capital commitments.

         For the fiscal year ended July 31, 2002, the Company's net cash flow
used in investing activities were $8,600,346 as compared to $11,233,249 for the
year ended July 31, 2001. The Company's investing activities reflects a $260,982
decrease in the purchase of rental units and a $1,469,441 decrease in purchases
of property and equipment due to no new store openings in fiscal year 2002 as
compared to three new stores opened in fiscal year 2001. For the fiscal year
ended July 31, 2002, cash used for acquisitions was $984,007 offset by sale
proceeds from thirteen store sales of $2,208,625.

         For the fiscal year ended July 31, 2002, the Company's net cash flow
used in financing activities was $2,222,346 as compared to $288,339 for the year
ended July 31, 2001. The decrease in financing activities principally reflects
increased repayments of the Company's debt.

         On October 26, 2001, the Company and its lender amended the
subordinated note payable to a limited partnership and stockholder dated August
18, 1999. The amendment extended the maturity date from February 28, 2002 to
November 1, 2003.

         On October 26, 2001, the Company amended its Revolving Credit Loan
Agreement (the "Agreement") with its lender. In the amendment, the lender
extended the maturity date from February 28, 2002 to September 1, 2002, waived
all violations of the interest coverage provision of the Agreement through
September 30, 2001 and waived compliance with the interest coverage provision of
the Agreement at October 31, 2001.

         On December 1, 2001, and March 14, 2002, the Company further amended
the Agreement. In the amendments, the lender decreased the maximum amount of
revolving credit under the Agreement from $17,500,000 to $11,500,000, extended
the maturity date from September 1, 2002 to October 1, 2003 and modified the
required minimum tangible net worth provision and the interest ratio coverage
calculation.


                                       12
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


         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 fiscal year ended July 31, 2002, 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
$2,988,026 under the Agreement provide adequate resources to meet the Company's
future cash obligations.

CRITICAL ACCOUNTING POLICIES

       The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company to make estimates
and assumptions relating to the reporting of assets and liabilities, the
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses. The Company bases its estimates on historical experience
and on various other assumptions or conditions that are believed to be
reasonable under the circumstances. Actual results could differ from those
estimates under different assumptions or conditions.

       Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties and may result in materially different
results under different assumptions and conditions. The Company believes that
the following critical accounting policies involve significant judgments and
estimates used in the preparation of our consolidated financial statements.

Rental merchandise, related rental revenue and depreciation

       Rental merchandise is rented to customers pursuant to rental agreements
which provide for either weekly or monthly rental terms with nonrefundable
rental payments for the first week or month collected in advance. Rental revenue
is recognized as collected since at the time of collection the rental
merchandise has been placed in service and costs of installation and delivery
have been incurred. Rental agreements generally cover a period of 12 to 24
months with a majority of rental agreements specifying 18 months. At the end of
each rental period, the customer can renew the rental agreement, return the
merchandise with no obligation, or purchase the merchandise by exercising their
early purchase option. Amounts received from such sales are included in revenue
when received. Past due or stolen merchandise is expensed generally within three
months from the due date. The Company receives rental revenue from various
products including televisions, DVD players, videocassette recorders, household
appliances, as well as computers and furniture.

       Merchandise rented to customers, or available for rent, is recorded at
cost net of accumulated depreciation, which equals the carrying amount, and is
classified in the consolidated balance sheets as rental merchandise. Merchandise
rented to customers is depreciated on the income-forecast basis over the term of
the rental agreement ranging from 12 to 24 months. When not on rent, merchandise
is not depreciated.

Intangible assets

       The Company continually evaluates the propriety of the carrying amount of
goodwill and other intangibles based on the estimated future undiscounted cash
flows of the related investment, as well as the amortization period to determine
whether current events and circumstances warrant adjustments to carrying value
and/or revised estimates of useful lives. At this time, the Company believes no
impairment of the goodwill and other intangibles has occurred and that no
reduction of the estimated useful lives is warranted.


                                       13
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


RECENTLY ISSUED ACCOUNTING PRINCIPLES

         In June 2001, the Financial Accounting Standards Board (FASB or the
"Board") issued Statement of Financial Accounting Standards No. 141 ("SFAS
141"), Business Combinations, and No. 142 ("SFAS 142"), Goodwill and Other
Intangible Assets, collectively referred to as the "Standards". SFAS 141
supersedes Accounting Principles Board Opinion (APB) No. 16, Business
Combination. The provisions of SFAS 141 (1) require that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001,
(2) provide specific criteria for the initial recognition and measurement of
intangible assets apart from goodwill, and (3) require that unamortized negative
goodwill be written off immediately as an extraordinary gain instead of being
deferred and amortized. SFAS 141 also requires that upon adoption of SFAS 142
the Company reclassify the carrying amounts of certain intangible assets into or
out of goodwill, based on certain criteria. SFAS 142 supersedes APB 17,
Intangible Assets, and is effective for fiscal years beginning after December
15, 2001. SFAS 142 primarily addresses the accounting for goodwill and
intangible assets subsequent to their initial recognition. The provisions of
SFAS 142 (1) prohibit the amortization of goodwill and indefinite-lived
intangible assets, (2) require that goodwill and indefinite-lived intangibles
assets be tested annually for impairment (and in interim periods if certain
events occur indicating that the carrying value of goodwill and/or
indefinite-lived intangible assets may be impaired), (3) require that reporting
units be identified for the purpose of assessing potential future impairments of
goodwill, and (4) remove the forty-year limitation on the amortization period of
intangible assets that have finite lives.

         The Company will adopt the provisions of SFAS 142 in its first quarter
ended October 31, 2002. The Company is in the process of preparing for its
adoption of SFAS 142 and is making the determinations as to what its reporting
units are and what amounts of goodwill, intangible assets, other assets, and
liabilities should be allocated to those reporting units. In connection with the
adoption of SFAS 142, the Company expects that is will no longer record
approximately $250,000 of amortization relating to its existing goodwill.

         SFAS 142 requires that goodwill be tested annually for impairment using
a two-step process. The first step is to identify a potential impairment and, in
transition, this step must be measured as of the beginning of the fiscal year.
However, a company has six months from the date of adoption to complete the
first step. The Company expects to complete that first step of the goodwill
impairment test during the first quarter of fiscal year 2003. The second step of
the goodwill impairment test measures the amount of the impairment loss
(measured as of the beginning of the year of adoption), if any, and must be
completed by the end of the Company's fiscal year. Intangible assets deemed to
have an indefinite life will be tested for impairment using a one-step process
which compares the fair value to the carrying amount of the asset as of the
beginning of the fiscal year, and pursuant to the requirements of SFAS 142 will
be completed during the first quarter of fiscal year 2003. Any impairment loss
resulting from the transitional impairment tests will be reflected as the
cumulative effect of a change in accounting principle in the first quarter of
fiscal year 2003. The Company does not expect that the results of these
impairment tests will have a material impact on the Company's results of
operations and financial position.

         In July 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets which is effective for fiscal years
beginning after December 15, 2001. SFAS 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and establishes a
single accounting model, based on the framework established in SFAS 121, for
long lived assets to be disposed of by sale. The Company does not expect the
adoption of this statement to have a material impact on the Company's results of
operations or its financial position.


                                       14
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------

         In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. Among other things, SFAS 145 rescinds both SFAS No. 4, Reporting
Gains and Losses from Extinguishment of Debt, and the amendment to SFAS 4, SFAS
64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. Through
this rescission, SFAS 145 eliminates the requirement (in both SFAS 4 and SFAS
64) that gains and losses from the extinguishment of debt be aggregated and, if
material, classified as an extraordinary item, net of the related income tax
effect. Generally, SFAS 145 is effective for transactions occurring after May
15, 2002. The Company does not expect SFAS 145 to have a material impact on the
Company's results of operations or its financial position.

         In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. 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.

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.

CAUTIONARY STATEMENT

         This Report on Form 10-K 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. The Company's Annual Report to Shareholders, any Report on Form 10-Q
or Form 8-K or any other written or oral statements made by or on behalf of the
Company may include forward-looking statements. 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 acquired stores and to integrate such
opened or acquired stores into the Company's operations, (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 of terrorist activity
and responses thereto on the economy in general and the rental-purchase industry
in particular. Undo reliance should not be placed on any forward-looking
statements made by or on behalf of the Company as such statements speak only as
of the date made. The Company undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new information,
the occurrence of future events or otherwise.


                                       15
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company has exposure to market risk associated with the floating
rate portion of the interest charged on its Revolving Credit Loan Agreement. At
July 31, 2002, the Company had $7,900,000 outstanding on its Revolving Credit
Loan Agreement at an interest rate of prime plus .75% and the fair value of the
obligation outstanding approximates its related carrying value because the
obligation bears interest at the current market rate.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Reference is hereby made to the Consolidated Financial Statements and
notes thereto appearing at pages F-1 to F-19 hereof.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required will be contained in the Company's Proxy
Statement for the Annual Meeting of Shareholders for 2002, and is incorporated
herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         The information required will be contained in the Company's Proxy
Statement for the Annual Meeting of Shareholders for 2002, and is incorporated
herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required will be contained in the Company's Proxy
Statement for the Annual Meeting of Shareholders for 2002, and is incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required will be contained in the Company's Proxy
Statement for the Annual Meeting of Shareholders for 2002, and is incorporated
herein by reference.


                                       16
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


                                     PART IV

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K

         (a) The following are filed as Exhibits to this Annual Report filed as
Form 10-K for the year ended July 31, 2002.

         (b) Exhibits

<Table>
<Caption>
EXHIBIT
NUMBER                                    DOCUMENT
-------         ----------------------------------------------------------------
<S>             <C>

  3.1           Amended and Restated Certificate of Incorporation of Bestway,
                incorporated by reference to Bestway's Current Report on Form
                8-K, filed September 2, 1993.

  3.2           Amended and Restated Bylaws of Bestway, incorporated by
                reference to Bestway's Annual Report on Form 10-K, for the year
                ended December 31, 1984.

  4.1           Specimen stock certificate representing shares of Bestway's
                common stock, incorporated by reference to Bestway's
                Registration Statement on Form S-8, filed June 22, 1995.

  10.1          Incentive Stock Option Plan of Bestway, incorporated by
                reference to Bestway's Registration Statement on Form S-8, filed
                June 22, 1995.

  10.2          Form of Incentive Stock Option Agreement pursuant to Incentive
                Stock Option Plan, incorporated by reference to Bestway's
                Registration Statement on Form S-8, filed June 22, 1995.

  10.3          First Amendment to the First Amended and Restated Revolving
                Credit Loan, dated March 15, 1995, by and between Bestway and
                Comerica Bank-Texas, incorporated by reference to Bestway's
                Quarterly Report on Form 10-Q for the year ended April 30, 1995.

  10.4          Second Amendment to the First Amended and Restated Revolving
                Credit Loan, dated March 15, 1995, by and between Bestway and
                Comerica Bank-Texas, incorporated by reference to Bestway's
                Current Report on Form 8-K, filed April 25, 1996.

  10.5          Third Amendment to the First Amended and Restated Revolving
                Credit Loan, dated March 15, 1995, by and between Bestway and
                Comerica Bank-Texas, incorporated by reference to Bestway's
                Current Report on Form 8-K, filed December 1, 1997.

  10.6          Fifth Amendment to the First Amended and Restated Revolving
                Credit Loan, dated March 15, 1995, by and between Bestway and
                Comerica Bank-Texas, incorporated by reference to Bestway's
                Current Report on Form 8-K, filed January 13, 2000.

  10.7          First Amended and Restated Promissory Note, dated August 19,
                1997, by Bestway in favor of O'Donnell & Masur, L.P. and
                Bestway, incorporated by reference to Bestway's Annual Report on
                Form 10-K, for the year ended July 31, 1997.

  10.8          Extension Agreement for the First Amended and Restated
                Promissory Note, dated August 19, 1997, between O'Donnell &
                Masur, L.P. and Bestway, incorporated by reference to Bestway's
                Annual Report on Form 10-K for the year ended July 31, 1999.

  10.9          Modification Letter dated October 19, 2000 modifying certain
                covenants of the Loan Agreement between Comerica Bank-Texas and
                Bestway, incorporated by reference to Bestway's Annual Report on
                Form 10-K for the year ended July 31, 2000.

 10.10          Amendment Number One to Bestway Incentive Stock Option Plan,
                dated December 4, 2000, incorporated by reference to Bestway's
                Annual Report on Form 10-K for the year ended July 31, 2001.

 10.11*         Employment Agreement, dated July 8, 2002, between Bestway and
                David A. Kraemer.

 10.12*         Severance Agreement, dated July 22, 2002, between Bestway and
                Teresa A. Sheffield.

 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>


                                       17
<PAGE>


<Table>
<S>             <C>
  21*           Subsidiaries

  23*           Consent of PricewaterhouseCoopers LLP
</Table>

----------

*Filed herewith

         (c) Reports on Form 8-K for the quarter ended July 31, 2002:

         The Company filed a current report of Form 8-K on July 10, 2002 to
report the appointment of a new President and Chief Executive Officer.


                                       18
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------

                                   SIGNATURES

         Pursuant to the requirements of section 13 or 15(d) 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.


October 24, 2002                          /s/ David A. Kraemer
                                          -------------------------------------
                                          President and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated on the 24th day of October 2002.

<Table>
<Caption>
              SIGNATURE                                  TITLE
-------------------------------------    --------------------------------------
<S>                                      <C>

         /s/ R. Brooks Reed              Chairman of the Board of Directors
-------------------------------------
           R. BROOKS REED

          /s/ Jack E. Meyer              Director
-------------------------------------
            JACK E. MEYER


       /s/ James A. O'Donnell            Director
-------------------------------------
         JAMES A. O'DONNELL


      /s/ Bernard J. Hinterlong          Director
-------------------------------------
        BERNARD J. HINTERLONG


        /s/ David A. Kraemer             President and Chief Executive Officer
-------------------------------------
          DAVID A. KRAEMER


         /s/ Beth A. Durrett             Chief Financial Officer
-------------------------------------
           BETH A. DURRETT
</Table>


                                       19
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------

                                  CERTIFICATION

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

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

        2.      Based on my knowledge, this annual 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 annual
                report; and

        3.      Based on my knowledge, the financial statements and other
                financial information included in this annual 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 annual report.


Date: October 24, 2002                     By: /s/ DAVID A. KRAEMER
                                               --------------------------------
                                               Name:  David A. Kraemer
                                               Title: Chief Executive Officer



                                       20
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------


                                  CERTIFICATION

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

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

        2.      Based on my knowledge, this annual 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 annual
                report; and

        3.      Based on my knowledge, the financial statements and other
                financial information included in this annual 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 annual report.


Date: October 24, 2002                   By: /s/ BETH A. DURRETT
                                            -----------------------------------
                                            Name:  Beth A. Durrett
                                            Title: Chief Financial Officer




                                       21
<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------

<Table>
<Caption>
                                                                       PAGE(S)
<S>                                                                   <C>

Report of Independent Accountants                                        F-1

Financial Statements:

       Consolidated Balance Sheets as of July 31, 2002 and 2001          F-2

       Consolidated Statements of Operations for the years ended
         July 31, 2002, 2001 and 2000                                    F-3

       Consolidated Statements of Cash Flows for the years ended
         July 31, 2002, 2001 and 2000                                    F-4

       Consolidated Statements of Stockholders' Equity for the years
         ended July 31, 2002, 2001 and 2000                              F-5

       Notes to Consolidated Financial Statements                        F-6
</Table>




<PAGE>

BESTWAY, INC.                                                          FORM 10-K
--------------------------------------------------------------------------------



                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of
Bestway, Inc.


In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, cash flows and stockholders' equity
present fairly, in all material respects, the financial position of Bestway,
Inc. and its subsidiaries at July 31, 2002 and 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
July 31, 2002, in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.


/s/ PRICEWATERHOUSECOOPERS LLP


October 14, 2002
Dallas, Texas


                                      F-1

<PAGE>

BESTWAY, INC.                                                          FORM 10-K

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

<Table>
<Caption>
                                                               JULY 31,
                                                     ----------------------------
                                                         2002            2001
                                                     ------------    ------------
<S>                                                  <C>             <C>

ASSETS

Cash and cash equivalents                            $    506,175    $  1,118,796
Prepaid expenses                                          312,925         198,605
Taxes receivable                                          159,585         133,350
Deferred income taxes                                     483,075         376,251
Other assets                                               52,032          47,635


Rental merchandise, at cost                            22,730,226      25,005,000
    less accumulated depreciation                       9,289,369       9,832,300
                                                     ------------    ------------

                                                       13,440,857      15,172,700
                                                     ------------    ------------

Property and equipment, at cost                         9,060,208      10,314,472
    less accumulated depreciation                       5,393,259       5,047,414
                                                     ------------    ------------

                                                        3,666,949       5,267,058
                                                     ------------    ------------

Employee advance                                          988,889              --
Non-competes, net of amortization                         468,631         274,671
Goodwill, net of amortization                           1,225,295       1,723,194
                                                     ------------    ------------

           Total assets                              $ 21,304,413    $ 24,312,260
                                                     ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable                                     $    671,365    $    735,461
Accrued interest - related parties                         20,667          20,000
Other accrued liabilities                               1,521,474       1,501,467
Notes payable-related parties                           3,000,000       3,000,000
Notes payable-other                                     7,967,192      10,081,731

Commitments and contingencies (Notes 7 and 10)

Stockholders' equity:
    Preferred stock, $10.00 par value,
      1,000,000 authorized, none issued                        --              --
    Common stock, $.01 par value, 5,000,000
      authorized, 1,756,917 issued at
      July 31, 2002 and July 31, 2001                      17,569          17,569
    Paid-in capital                                    16,151,428      16,124,578
    Less treasury stock, at cost, 104,345 at
      July 31, 2002 and 71,045 at July 31, 2001          (563,083)       (428,426)
    Accumulated deficit                                (7,482,199)     (6,740,120)
                                                     ------------    ------------

      Total stockholders' equity                        8,123,715       8,973,601
                                                     ------------    ------------

        Total liabilities and stockholders' equity   $ 21,304,413    $ 24,312,260
                                                     ============    ============
</Table>

          See accompanying notes to consolidated financial statements.

                                      F-2
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

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

<Table>
<Caption>
                                                              FISCAL YEARS ENDED JULY 31,
                                                     --------------------------------------------
                                                         2002            2001            2000
                                                     ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>

Revenues:
    Rental income                                    $ 32,664,020    $ 35,488,835    $ 34,473,255
    Sales of merchandise                                  869,908         424,211         436,503
                                                     ------------    ------------    ------------

                                                       33,533,928      35,913,046      34,909,758
                                                     ------------    ------------    ------------

Cost and operating expenses:
    Depreciation and amortization:
      Rental merchandise                                6,671,484       7,734,416       7,642,889
      Other                                             1,831,646       1,971,819       1,618,166
    Cost of merchandise sold                              814,433         401,343         424,096
    Salaries and wages                                  9,857,770      10,342,950       9,659,144
    Advertising                                         1,130,535       1,443,279       1,786,361
    Occupancy                                           2,536,071       2,649,352       2,198,247
    Other operating expenses                           10,788,044      10,151,550       9,429,515
    Interest expense                                      794,433       1,316,695       1,111,379
    Loss (gain) on sale of property and equipment          24,402           3,048         (16,961)
    Loss (gain) on sale of assets                          50,122         (73,109)        (11,277)
                                                     ------------    ------------    ------------

                                                       34,498,940      35,941,343      33,841,559
                                                     ------------    ------------    ------------

Income (loss) before income taxes:                       (965,012)        (28,297)      1,068,199
                                                     ------------    ------------    ------------

    Current income tax expense (benefit)                 (116,109)             --         180,845
    Deferred income tax expense (benefit)                (106,824)         97,488         397,413
                                                     ------------    ------------    ------------

Net income (loss)                                    $   (742,079)   $   (125,785)   $    489,941
                                                     ============    ============    ============

Basic and diluted net income (loss) per share        $      (0.45)   $      (0.07)   $       0.28
                                                     ============    ============    ============

Weighted average common shares outstanding              1,648,322       1,692,972       1,723,030
                                                     ============    ============    ============

Diluted weighted average common shares outstanding      1,648,322       1,692,972       1,740,828
                                                     ============    ============    ============
</Table>

          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>


BESTWAY, INC.                                                          FORM 10-K

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

<Table>
<Caption>
                                                                        FISCAL YEARS ENDED JULY 31,
                                                               --------------------------------------------
                                                                   2002            2001            2000
                                                               ------------    ------------    ------------
<S>                                                            <C>             <C>             <C>
Cash flows from operating activities:
    Net income (loss)                                          $   (742,079)   $   (125,785)   $    489,941
    Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
        Depreciation and amortization                             8,503,129       9,706,235       9,261,055
        Net book value of rental units retired                    3,780,825       2,868,499       2,381,370
        (Gain) loss on sale of property and equipment                24,402           3,048         (16,961)
        (Gain) loss on sale of assets                                50,122         (73,109)        (11,277)
        Deferred income taxes                                      (106,824)         97,488         397,413
        Changes in operating assets and liabilities other than cash:
           Prepaid expenses                                        (114,320)        (21,772)         (4,607)
           Taxes receivable                                         (26,235)       (133,350)             --
           Employee advance                                        (988,889)             --              --
           Other assets                                              (4,397)         70,266         (54,699)
           Accounts payable                                         (79,337)       (557,450)        241,265
           Income taxes payable                                          --        (135,796)         79,390
           Other accrued liabilities                                (86,326)        (36,932)         (3,269)
                                                               ------------    ------------    ------------

             Net cash flows provided by operating activities     10,210,071      11,661,342      12,759,621
                                                               ------------    ------------    ------------

Cash flows from investing activities:
    Purchase of rental units and equipment                       (9,593,006)     (9,853,988)    (13,643,485)
    Additions to property and equipment                            (287,261)     (1,756,702)     (2,693,510)
    Proceeds from sale of property and equipment                     55,303          79,526          59,942
    Asset purchases net of cash acquired                           (984,007)        (99,295)       (549,047)
    Proceeds from sale of assets                                  2,208,625         397,210         469,469
                                                               ------------    ------------    ------------

             Net cash flows used in investing activities         (8,600,346)    (11,233,249)    (16,356,631)
                                                               ------------    ------------    ------------

Cash flows from financing activities:
    Proceeds of notes payable                                     2,050,000       3,700,000       4,412,999
    Repayment of notes payable                                   (4,164,539)     (3,913,214)       (362,066)
    Treasury stock purchase                                        (277,857)        (75,125)       (287,060)
    Treasury stock issuance                                         170,050              --              --
                                                               ------------    ------------    ------------

             Net cash flows provided by (used in)
             financing activities                                (2,222,346)       (288,339)      3,763,873
                                                               ------------    ------------    ------------

Cash and cash equivalents at the beginning of year                1,118,796         979,042         812,179
                                                               ------------    ------------    ------------

Cash and cash equivalents at the end of the year               $    506,175    $  1,118,796    $    979,042
                                                               ============    ============    ============
</Table>


          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>
BESTWAY, INC.                                                          FORM 10-K

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

<Table>
<Caption>
                                                         FOR THE YEARS ENDED JULY 31, 2002, 2001 AND 2000
                                    -----------------------------------------------------------------------------------------------
                                          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, 1999             1,756,917   $   17,569   $16,124,578     (11,200)   $  (66,241)   $ (7,104,276)   $  8,971,630
                                    ----------   ----------   -----------  ----------    ----------    ------------    ------------

    Treasury stock purchases                --           --            --     (44,745)     (287,060)             --        (287,060)
    Net income for the year ended
    July 31, 2000                           --           --            --          --            --         489,941         489,941
                                    ----------   ----------   -----------  ----------    ----------    ------------    ------------

Balance at July 31, 2000             1,756,917       17,569    16,124,578     (55,945)     (353,301)     (6,614,335)      9,174,511
                                    ----------   ----------   -----------  ----------    ----------    ------------    ------------

    Treasury stock purchases                --           --            --     (15,100)      (75,125)             --         (75,125)
    Net loss for the year ended
    July 31, 2001                           --           --            --          --            --        (125,785)       (125,785)
                                    ----------   ----------   -----------  ----------    ----------    ------------    ------------

Balance at July 31, 2001             1,756,917       17,569    16,124,578     (71,045)     (428,426)     (6,740,120)      8,973,601
                                    ----------   ----------   -----------  ----------    ----------    ------------    ------------

    Treasury stock purchases                --           --            --     (69,100)     (277,857)             --        (277,857)
    Treasury stock issued                                          26,850      35,800       143,200              --         170,050
    Net loss for the year ended
    July 31, 2002                           --           --            --          --            --        (742,079)       (742,079)
                                    ----------   ----------   -----------  ----------    ----------    ------------    ------------

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


          See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>



BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.      BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
        POLICIES

        BUSINESS AND BASIS OF PRESENTATION

        The consolidated financial statements of Bestway, Inc. (the "Company"),
        include the Company's wholly-owned operating subsidiaries, Bestway
        Rental, Inc. which operates under the registered trade name "Bestway
        Rent-To-Own", U.S. Credit-Service Corporation and Westdale Data Service,
        Inc. Intercompany balances and transactions have been eliminated in
        consolidation.

        The Company owns and operates a total of sixty-nine stores located in
        various states. The store operations are controlled and monitored
        through the Company's management information system networked with its
        home office in Dallas, Texas. The Company's store locations by state as
        of July 31, 2002, are as follows:

<Table>
<Caption>
                                                              NUMBER OF
      STATE                                                    STORES
-------------------                                           ---------
<S>                                                           <C>

Alabama                                                             22
Arkansas                                                             6
Georgia                                                              3
Mississippi                                                         11
North Carolina                                                      12
South Carolina                                                       2
Tennessee                                                           13
                                                              --------
                                                                    69
                                                              ========
</Table>


        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Rental merchandise, related rental revenue and depreciation

        Rental merchandise is rented to customers pursuant to rental agreements
        which provide for either weekly or monthly rental terms with
        nonrefundable rental payments for the first week or month collected in
        advance. Rental revenue is recognized as collected since at the time of
        collection the rental merchandise has been placed in service and costs
        of installation and delivery have been incurred. Rental agreements
        generally cover a period of 12 to 24 months with a majority of rental
        agreements specifying 18 months. At the end of each rental period, the
        customer can renew the rental agreement, return the merchandise with no
        obligation, or purchase the merchandise by exercising their early
        purchase option. Amounts received from such sales are included in
        revenue when received. Past due or stolen merchandise is expensed
        generally within three months from the due date. The Company receives
        rental revenue from various products including televisions, DVD players,
        videocassette recorders, household appliances, as well as computers and
        furniture. In fiscal year 2002, approximately 16% of the Company's
        rental revenue was derived from appliances, 25% from furniture, 29% from
        electronics, 8% from computers, 4% from various other products and 18%
        from various services and charges to rental customers including
        reinstatement fees, club fees and liability waiver fees. In fiscal year
        2001, approximately 16% of


                                      F-6
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

        the Company's rental revenue was derived from appliances, 27% from
        furniture, 32% from electronics, 7% from various other products and 18%
        from various services and charges to rental customers including
        reinstatement fees and liability wavier fees. In fiscal year 2000,
        approximately 17% of the Company's rental revenue was derived from
        appliances, 25% from furniture, 28% from electronics, 11% from various
        other products and 19% from various services and charges to rental
        customers, including reinstatement fees and liability waiver fees.

        Merchandise rented to customers, or available for rent, is recorded at
        cost net of accumulated depreciation, which equals the carrying amount,
        and is classified in the consolidated balance sheets as rental
        merchandise. Merchandise rented to customers is depreciated on the
        income-forecast basis over the term of the rental agreement ranging from
        12 to 24 months. When not on rent, merchandise 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 fiscal years ended
        July 31, 2002, 2001 and 2000, $2,018,208, $1,782,795 and $1,747,354,
        respectively, of such impairments were incurred and are included in
        other operating expenses in the accompanying consolidated statements of
        operations. Included in the amount for 2002 is approximately $315,000
        related to the Company's decision to discontinue carrying jewelry in its
        product selection.

        Sales of merchandise

        Sales of merchandise includes revenue from cash sales of primarily used
        merchandise.

        Property and equipment

        Property and equipment are recorded at cost. Major improvements to
        property and equipment are capitalized. Maintenance and repair
        expenditures are charged to expense as incurred. As fixed assets are
        sold or retired, the applicable cost and accumulated depreciation are
        eliminated from the accounts and any gain or loss is recorded.

        Depreciation of property and equipment is provided over the estimated
        useful lives, on the straight-line basis as defined below. Leasehold
        improvements are amortized over the shorter of the useful life of the
        asset or the term of the lease and renewal period, if applicable.

<Table>
<Caption>
                                                              LIVES (YEARS)
                                                              -------------
<S>                                                           <C>
Building                                                           40
Furniture and fixtures                                              7
Vehicles                                                            5
Computer equipment                                                  3
</Table>


                                      F-7
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

        Cash and cash equivalents

        Cash and cash equivalents consist of cash on hand and on deposit, and
        highly liquid instruments with maturities of three months or less when
        purchased. The carrying amount of cash and cash equivalents is the
        estimated fair value at July 31, 2002 and 2001.

        Intangible assets

        Goodwill represents the cost in excess of the fair value of net tangible
        assets of acquired businesses and is being amortized on a straight-line
        basis over 15 to 20 years. Accumulated amortization of goodwill was
        $3,418,233 and $2,785,621 at July 31, 2002 and 2001, respectively.

        The non-competes are being amortized on a straight-line basis over
        periods from 2 to 5 years. Accumulated amortization of the non-competes
        was $1,874,283 and $1,707,559 at July 31, 2002 and 2001, respectively.

        The Company continually evaluates the propriety of the carrying amount
        of goodwill and other intangibles based on the estimated future
        undiscounted cash flows of the related investment, as well as the
        amortization period to determine whether current events and
        circumstances warrant adjustments to carrying value and/or revised
        estimates of useful lives. At this time, the Company believes no
        impairment of the goodwill and other intangibles has occurred and that
        no reduction of the estimated useful lives is warranted.

        Income taxes

        Deferred income taxes are recognized for the tax consequences in the
        future years of differences between the tax basis of assets and
        liabilities and their financial reporting amounts at each year based on
        enacted tax laws and statutory tax rates applicable to the periods in
        which the differences are expected to affect taxable earnings. Valuation
        allowances are established when necessary to reduce deferred tax assets
        to the amounts more likely than not to be realized. Income tax expense
        is the total of tax payable for the period and the change during the
        period in deferred tax assets and liabilities which impacted operations.

        Investment tax credits are accounted for on the "flow-through" method.

        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 fiscal years ended
        July 31, 2002 and July 31, 2001, 88,872 and 218,390, respectively,
        shares of common stock options were excluded from the calculation of
        diluted income per share because their effect would be antidilutive.

        Advertising costs

        Advertising costs are expensed as incurred.


                                      F-8
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

        Estimates

        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates and
        assumptions that affect the reported amount of assets, particularly
        deferred tax assets, and liabilities, disclosure of contingent assets
        and liabilities and reported amounts of revenues and expenses. Actual
        results could differ significantly from those estimates.

        Recently Issued Accounting Principles

        In June 2001, the Financial Accounting Standards Board (FASB or the
        "Board") issued Statement of Financial Accounting Standards No. 141
        ("SFAS 141"), Business Combinations, and No. 142 ("SFAS 142"), Goodwill
        and Other Intangible Assets, collectively referred to as the
        "Standards". SFAS 141 supersedes Accounting Principles Board Opinion
        (APB) No. 16, Business Combination. The provisions of SFAS 141 (1)
        require that the purchase method of accounting be used for all business
        combinations initiated after June 30, 2001, (2) provide specific
        criteria for the initial recognition and measurement of intangible
        assets apart from goodwill, and (3) require that unamortized negative
        goodwill be written off immediately as an extraordinary gain instead of
        being deferred and amortized. SFAS 141 also requires that upon adoption
        of SFAS 142 the Company reclassify the carrying amounts of certain
        intangible assets into or out of goodwill, based on certain criteria.
        SFAS 142 supersedes APB 17, Intangible Assets, and is effective for
        fiscal years beginning after December 15, 2001. SFAS 142 primarily
        addresses the accounting for goodwill and intangible assets subsequent
        to their initial recognition. The provisions of SFAS 142 (1) prohibit
        the amortization of goodwill and indefinite-lived intangible assets, (2)
        require that goodwill and indefinite-lived intangibles assets be tested
        annually for impairment (and in interim periods if certain events occur
        indicating that the carrying value of goodwill and/or indefinite-lived
        intangible assets may be impaired), (3) require that reporting units be
        identified for the purpose of assessing potential future impairments of
        goodwill, and (4) remove the forty-year limitation on the amortization
        period of intangible assets that have finite lives.

        The Company will adopt the provisions of SFAS 142 in its first quarter
        ended October 31, 2002. The Company is in the process of preparing for
        its adoption of SFAS 142 and is making the determinations as to what its
        reporting units are and what amounts of goodwill, intangible assets,
        other assets, and liabilities should be allocated to those reporting
        units. In connection with the adoption of SFAS 142, the Company expects
        that is will no longer record approximately $250,000 of amortization
        relating to its existing goodwill.

        SFAS 142 requires that goodwill be tested annually for impairment using
        a two-step process. The first step is to identify a potential impairment
        and, in transition, this step must be measured as of the beginning of
        the fiscal year. However, a company has six months from the date of
        adoption to complete the first step. The Company expects to complete
        that first step of the goodwill impairment test during the first quarter
        of fiscal year 2003. The second step of the goodwill impairment test
        measures the amount of the impairment loss (measured as of the beginning
        of the year of adoption), if any, and must be completed by the end of
        the Company's fiscal year. Intangible assets deemed to have an
        indefinite life will be tested for impairment using a one-step process
        which compares the fair value to the carrying amount of the asset as of
        the beginning of the fiscal year, and pursuant to the requirements of
        SFAS 142 will be completed during the first



                                      F-9
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


        quarter of fiscal year 2003. Any impairment loss resulting from the
        transitional impairment tests will be reflected as the cumulative effect
        of a change in accounting principle in the first quarter of fiscal year
        2003. The Company does not expect that the results of these impairment
        tests will have a material impact on the Company's results of operations
        and financial position.

        In July 2001, the FASB issued SFAS No. 144, Accounting for the
        Impairment or Disposal of Long-Lived Assets which is effective for
        fiscal years beginning after December 15, 2001. SFAS 144 addresses
        financial accounting and reporting for the impairment or disposal of
        long-lived assets and establishes a single accounting model, based on
        the framework established in SFAS 121, for long lived assets to be
        disposed of by sale. The Company does not expect the adoption of this
        statement to have a material impact on the Company's results of
        operations or its financial position.

        In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
        Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
        Technical Corrections. Among other things, SFAS 145 rescinds both SFAS
        No. 4, Reporting Gains and Losses from Extinguishment of Debt, and the
        amendment to SFAS 4, SFAS 64, Extinguishments of Debt Made to Satisfy
        Sinking-Fund Requirements. Through this rescission, SFAS 145 eliminates
        the requirement (in both SFAS 4 and SFAS 64) that gains and losses from
        the extinguishment of debt be aggregated and, if material, classified as
        an extraordinary item, net of the related income tax effect. Generally,
        SFAS 145 is effective for transactions occurring after May 15, 2002. The
        Company does not expect SFAS 145 to have a material impact on the
        Company's results of operations or its financial position.

        In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
        Associated with Exit or Disposal Activities. 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.

2.      ACQUISITIONS AND DISPOSITIONS

        On March 20, 2001, the Company signed an asset purchase agreement with
        Paradise Valley Holdings, Inc. to acquire all rental contracts
        associated with a single store located in Tennessee for approximately
        $499,000.

        On September 11, 2001, the Company entered into an asset purchase
        agreement with Instant Rentals to acquire all the rental contracts with
        a single store located in Tennessee for approximately $148,000.

        On October 22, 2001, the Company entered into an asset purchase
        agreement with Zajac's Electronics Service Center, Inc. to acquire all
        rental contracts associated with a single store located in Alabama for
        approximately $296,000.


                                      F-10
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

        On January 10, 2002, the Company entered into an asset purchase
        agreement with Rent-A-Center, Inc. to acquire all rental contracts
        associated with a single store located in Mississippi for approximately
        $176,000.

        On April 25, 2002, the Company entered into an asset purchase agreement
        with Showcase TV and Appliance Rental to acquire all the rental
        contracts with a single store located in Alabama for approximately
        $188,000.

        On May 30, 2002, the Company entered into an asset purchase agreement
        with Affordable Rent to Own, Inc. to acquire all the rental contracts
        with a single store located in Mississippi for approximately $176,000.
        Additionally, the Company obtained the store location by assuming the
        lease agreement.

        The acquisitions have been accounted for under the purchase method and,
        accordingly, the operating results from the acquired stores are included
        in the accompanying consolidated statements of operations from the date
        of acquisition.

        On February 20, 2001, the Company entered into an asset purchase
        agreement with Rent-A-Center, Inc. to sell all the assets of one store
        location in South Carolina. The Company received $122,374 in cash for
        all the assets involved in the daily operation of the store including
        all rental inventory being rented by customers. Idle inventory was
        transferred to the Company's existing store locations. The Company
        recognized a loss of $2,029 on the sale.

        On March 20, 2001, the Company entered into an asset purchase agreement
        with Paradise Valley Holdings, Inc. to sell all the assets of one store
        in Tennessee. The Company received $124,836 in cash for all the assets
        involved in the daily operation of the store including all rental
        inventory being rented by customers. Idle inventory was transferred to
        the Company's existing store locations. The Company recognized a gain of
        $12,236 on the sale.

        On April 4, 2001, the Company entered into an asset purchase agreement
        with Griffin Acceptance Corporation, Inc. to sell all the assets of one
        store in Mississippi. The Company received $150,000 in cash for all the
        assets involved in the daily operation of the store including all rental
        inventory being rented by customers. Idle inventory was transferred to
        the Company's existing store locations. The Company recognized a gain of
        $62,902 on the sale.

        On September 5, 2001, the Company entered into an asset purchase
        agreement with Rent-A-Center, Inc. to sell all the assets of one store
        in North Carolina. The Company received approximately $114,000 in cash
        for all the assets involved in the daily operation of the store
        including all rental inventory being rented by customers. Idle inventory
        was transferred to the Company's existing store locations. The Company
        recognized a loss of $10,898 on the sale.

        On October 5, 2001, the Company entered into an asset purchase agreement
        with Value Rental, LLC to sell all the assets of one store in Tennessee.
        The Company received approximately $217,000 in cash for all the assets
        involved in the daily operation of the store including all rental
        inventory being rented by customers, idle inventory, furniture and
        fixtures and vehicles. The Company recognized a gain of $82,022 on the
        sale.


                                      F-11
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


        On December 11, 2001, the Company entered into an asset purchase
        agreement with Rent-A-Center, Inc. to sell all the assets of one store
        in South Carolina. The Company received approximately $187,000 in cash
        for all the assets involved in the daily operation of the store
        including all rental inventory being rented by customers and
        approximately $25,000 of idle inventory. Remaining idle inventory was
        transferred to the Company's existing store locations. Additionally,
        Rent-A-Center obtained the Company's store location by assuming the
        lease agreement. The Company recognized a gain of $12,554 on the sale.

        On January 10, 2002, the Company entered into an asset purchase
        agreement with Rent-A-Center, Inc. to sell all the assets of one store
        in Tennessee. The Company received approximately $126,000 in cash for
        all the assets involved in the daily operation of the store including
        all rental inventory being rented by customers. Idle inventory was
        transferred to the Company's existing store locations. The Company
        recognized a loss of $28,036 on the sale.

        On January 10, 2002, the Company entered into an asset purchase
        agreement with Aaron Rents, Inc. to sell all the assets of one store in
        Alabama. The Company received approximately $117,000 in cash for all the
        assets involved in the daily operation of the store including all rental
        inventory being rented by customers. Idle inventory was transferred to
        the Company's existing store locations. The Company recognized a loss of
        $10,683 on the sale.

        On February 8, 2002, the Company entered into an asset purchase
        agreement with Aaron Rents, Inc. to sell all the assets of one store in
        North Carolina. The Company received approximately $133,000 in cash for
        all the assets involved in the daily operation of the store including
        all rental inventory being rented by customers. Idle inventory was
        transferred to the Company's existing store locations. The Company
        recognized a gain of $4,812 on the sale.

        On February 12, 2002, the Company entered into an asset purchase
        agreement with Rent-A-Center, Inc. to sell all the assets of five stores
        in South Carolina and one store location in Georgia. The Company
        received approximately $1,137,000 in cash for all the assets involved in
        the daily operation of the stores including all rental inventory being
        rented by customers and approximately $28,000 of idle inventory.
        Additionally, Rent-A-Center obtained two of the Company's store
        locations by assuming the lease agreement. The Company recognized a loss
        of $137,058 on the sale.

        On March 25, 2002, the Company entered into an asset purchase agreement
        with Aaron Rents, Inc. to sell all the assets of one store in Tennessee.
        The Company received approximately $175,000 in cash for all the assets
        involved in the daily operation of the store including all rental
        inventory being rented by customers. Idle inventory was transferred to
        the Company's existing store locations. The Company recognized a gain of
        $15,797 on the sale.



                                      F-12
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

3.      PROPERTY AND EQUIPMENT

        Property and equipment consisted of the following:

<Table>
<Caption>
                                         JULY 31,
                               ----------------------------
                                   2002            2001
                               ------------    ------------
<S>                            <C>             <C>

Building and leaseholds        $  3,849,666    $  4,389,927
Vehicles                          3,510,662       3,794,570
Furniture and fixtures            1,069,302       1,382,586
Computer equipment                  630,578         747,389
                               ------------    ------------

                                  9,060,208      10,314,472
Accumulated depreciation         (5,393,259)     (5,047,414)
                               ------------    ------------

                               $  3,666,949    $  5,267,058
                               ============    ============
</Table>

        Depreciation expense for property and equipment was $1,417,979,
        $1,566,788 and $1,254,334 for 2002, 2001 and 2000.

4.      NOTES PAYABLE

        Notes payable consists of the following:

<Table>
<Caption>
                                                       YEARS ENDED JULY 31,
                                                    ---------------------------
                                                        2002           2001
                                                    ------------   ------------
<S>                                                 <C>            <C>
Senior collateralized debt

Revolving Credit Loan Agreement dated August 19,
1993, amended March 14, 2002, borrowing limit is
$11,500,000, interest payable monthly at prime
plus .75%, note matures on October 1, 2003; not
collateralized by substantially all the Company's
assets                                              $  7,900,000   $ 10,000,000

Subordinated debt

Note payable to limited partnership and
stockholder dated July 19, 1993, amended October
26, 2001, interest paid quarterly at 8% beginning
October 1, 1993; note, as amended, matures on
November 1, 2003                                       3,000,000      3,000,000

Other notes payable

Note payable to bank dated April 11, 1994,
principal payable monthly; interest payable at 9%
per annum; note matures on April 15, 2006; note
collateralized by associated real estate                  67,192         81,731
                                                    ------------   ------------
                                                    $ 10,967,192   $ 13,081,731
                                                    ============   ============
</Table>

        At July 31, 2002 and 2001 the prime rate was 5.5% and 7.5%,
        respectively.


                                      F-13
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


        On October 26, 2001, the Company and its lender amended the subordinated
        note payable to a limited partnership and stockholder dated August 18,
        1999. The amendment extended the maturity date from February 28, 2002 to
        November 1, 2003.

        On October 26, 2001, the Company amended its Revolving Credit Loan
        Agreement (the "Agreement") with its lender. In the amendment, the
        lender extended the maturity date from February 28, 2002 to September 1,
        2002, waived all violations of the interest coverage provision of the
        Agreement through September 30, 2001 and waived compliance with the
        interest coverage provision of the Agreement at October 31, 2001.

        On December 1, 2001, and March 14, 2002, the Company further amended the
        Agreement. In the amendments, the lender decreased the maximum amount of
        revolving credit under the Agreement from $17,500,000 to $11,500,000,
        extended the maturity date from September 1, 2002 to October 1, 2003 and
        modified the required minimum tangible net worth provision and the
        interest ratio coverage calculation.

        The Agreement also contains certain financial covenants, including an
        interest coverage ratio, debt ratio, maximum idle inventory requirements
        and a minimum tangible net worth provision. At July 31, 2002 the Company
        was in default of the minimum tangible net worth provision. The Company
        is retroactively in compliance after receiving a waiver on September 27,
        2002.

        At July 31, 2002, the carrying value of the Company's senior
        collateralized debt and other notes payable approximated fair value,
        estimated primarily based on the borrowing rates available to the
        Company for debt with similar terms and average maturities. It is not
        practicable to estimate the fair value of the Company's subordinated
        debt because it is with a related party.

        Following is a summary of maturities of notes payable for each of the
        periods ending July 31:

<Table>
<S>                         <C>
2003                        $     15,765
2004                          10,917,242
2005                              18,860
2006                              15,325
2007                                  --
Thereafter                            --
                            ------------
                            $ 10,967,192
                            ============
</Table>



                                      F-14
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

5.      INCOME TAXES

        The provisions for income tax consists of the following for the years
        ended July 31:

<Table>
<Caption>
                                   2002            2001           2000
                               ------------    ------------   ------------
<S>                            <C>             <C>            <C>
Current:
    Federal                    $   (116,109)   $         --   $     96,327
    State                                --              --         84,518
                               ------------    ------------   ------------

                                   (116,109)             --        180,845
                               ------------    ------------   ------------
Deferred:
    Federal                        (102,139)         79,564        342,372
    State                            (4,685)         17,924         55,041
                               ------------    ------------   ------------

                                   (106,824)         97,488        397,413
                               ------------    ------------   ------------

Total income tax provision     $   (222,933)   $     97,488   $    578,258
                               ============    ============   ============
</Table>

        Significant components of the Company's deferred income tax assets at
        July 31, 2002 and 2001, respectively, are as follows:

<Table>
<Caption>
                                                 2002            2001
                                             ------------    ------------
<S>                                          <C>             <C>

Net operating loss carryforward              $  1,106,485    $  1,040,589
Investment tax credit carryforward                  2,688           2,688
Minimum tax credit carryover                      208,833         325,586
Property and equipment                            548,122         259,533
Intangible assets                                 378,568         381,968
Accrued expenses                                  383,102         154,700
                                             ------------    ------------

      Total deferred tax assets                 2,627,798       2,165,064

Rental merchandise                             (2,142,035)     (1,786,125)
                                             ------------    ------------

      Total deferred tax liabilities           (2,142,035)     (1,786,125)
                                             ------------    ------------

Valuation allowance                                (2,688)         (2,688)
                                             ------------    ------------

      Net deferred tax asset                 $    483,075    $    376,251
                                             ============    ============
</Table>

        Deferred tax assets are reduced by a valuation allowance if, based on
        available evidence, it is more likely than not that some portion of all
        of the deferred tax assets will not be realized.


                                      F-15
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

        The following is the reconciliation of the U.S. statutory tax rate to
        the Company's effective tax rate for the years ended July 31:

<Table>
<Caption>
                                                           2002            2001            2000
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>

Federal income tax expense (benefit) at
    statutory rate of 34%                              $   (280,270)   $     (9,621)   $    363,188
Goodwill amortization                                        58,117          71,192          58,117
State income tax                                             (3,092)         33,202         129,498
Other                                                         2,312           2,715          27,455
                                                       ------------    ------------    ------------

      Provision for income tax expense (benefit)       $   (222,933)   $     97,488    $    578,258
                                                       ============    ============    ============
</Table>


        During 2002, the net operating loss carryforwards were decreased by
        $106,238 and during 2001, the net operating loss carryforwards were
        decreased by $1,070,271. At July 31, 2002, the Company has a Federal net
        operating loss carryforward of approximately $3,252,228 expiring from
        2006 to 2021. The Company has a State net operating loss carryforward of
        $20,055 which expires from 2004 to 2021. The Company has investment tax
        credit carryforwards of approximately $2,688 which expire in fiscal year
        2003.

6.      RELATED PARTY TRANSACTIONS

        Interest expense relating to notes payable to affiliates amounted to
        $242,668 for the years ended July 31, 2002, $243,334 for the year ended
        July 31, 2001 and $244,667 for year ended July 31, 2000.

        As of July 31, 2002, the Company had advanced $1,000,000 to the
        President and Chief Executive Officer in the form of a promissory note
        (the "Note"). The Note matures on January 1, 2008 and bears interest at
        the lesser of i) the Applicable Federal Rate or ii) the maximum
        nonusurious rate as defined in the Note. Per the terms of the Note, the
        Company will forgive one-fifth of the principal and all related accrued
        interest on December 31 of each year beginning in 2003 through 2007. If
        the President and Chief Executive Officer's employment is terminated
        with cause by the Company or without good reason by the President and
        Chief Executive Officer all outstanding unearned principal and accrued
        interest must be repaid. As of July 31, 2002, $988,889 of the Note
        remained outstanding.

        Effective July 22, 2002, the Company terminated its President and Chief
        Operating Officer. In connection with the separation agreement, the
        Company recorded an approximate $400,850 charge which is reflected in
        salaries and wages in the accompanying statement of operations for the
        year ended July 31, 2002.


                                      F-16
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


7.      LEASES

        The Company leases all store facilities, with the exception of one,
        under operating leases with terms ranging from one to ten years. Many
        leases contain escalation clauses. Future minimum lease obligations
        under noncancelable operating leases for the Company at July 31, 2002
        are as follows:

<Table>
<S>                                                       <C>
2002                                                       $ 2,179,010
2003                                                         2,002,902
2004                                                         1,754,272
2005                                                         1,403,808
2006                                                           861,858
Thereafter                                                     987,702
                                                           -----------
                                                           $ 9,189,552
                                                           ===========
</Table>

8.      SUPPLEMENTAL DATA TO STATEMENT OF CASH FLOWS

        Cash interest payments for the years ended July 31, 2002, 2001 and 2000
        are $793,766, $1,317,362 and $1,111,380, respectively. Cash tax payments
        for the years ended July 31, 2002, 2001 and 2000 are $89,874,
        $478,643 and $101,455, respectively.

9.      INCENTIVE PLANS

        STOCK OPTION PLAN

        The Company has a stock option plan (the "Plan") for officers and
        employees of the Company or its affiliates, under which the maximum
        number of shares, which may be granted in the aggregate, is 285,000 of
        the Company's Common Stock. The Plan, which became effective June 30,
        1995, provides for the options to be granted, become exercisable, and
        terminate upon terms established by the Board of Directors (the
        "Committee"). Shares become exercisable from time to time (but not
        sooner than six months after the date of grant) over such period and
        upon such terms as the Committee may determine, but such exercise can
        not at any time be less than 25 shares unless the remaining shares that
        have become so purchasable are less than 25 shares.

        All options granted to the employees have an exercise price no less than
        the fair market value of the stock at grant date. The options vest under
        one of the following conditions: (i) one-third each year, beginning on
        the first anniversary of the date of grant, (ii) one-half each year,
        beginning on the first anniversary of the date of grant, or (iii)
        one-fourth each year, beginning on the first anniversary of the date of
        grant.

        The Company applies APB Opinion 25 and related Interpretations in
        accounting for the Plan. In 1995, the Financial Accounting Standards
        Board ("FASB") issued FASB Statement No. 123, "Accounting for
        Stock-Based Compensation," ("SFAS No. 123") which, if fully adopted by
        the Company, would change the methods the Company applies in recognizing
        the cost of the Plan. Adoption of the cost recognition provisions of
        SFAS No. 123 is optional and the Company has decided not to elect the
        provisions of SFAS 123. However, pro forma disclosures as if the


                                      F-17
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

        Company adopted the cost recognition provisions of SFAS 123 are required
        by SFAS 123 and are presented below.

        In accordance with APB 25, the Company has not recognized any
        compensation cost for the stock options granted.

        A summary of the status of the Company's stock options as of July 31,
        2002, 2001 and 2000 and the changes during the year ended on those dates
        is presented below:

<Table>
<Caption>
                                                                   STOCK OPTIONS
                                     ---------------------------------------------------------------------------
                                              2002                      2001                       2000
                                     -----------------------   -----------------------   -----------------------
                                                   WEIGHTED                  WEIGHTED                  WEIGHTED
                                      # SHARES      AVERAGE      # SHARES     AVERAGE     # SHARES      AVERAGE
                                     UNDERLYING    EXERCISE    UNDERLYING    EXERCISE    UNDERLYING    EXERCISE
                                      OPTIONS       PRICES      OPTIONS       PRICES      OPTIONS       PRICES
                                     ----------   ----------   ----------   ----------   ----------   ----------
<S>                                  <C>          <C>          <C>          <C>          <C>          <C>

Outstanding at beginning of year        191,890   $     5.47      194,360   $     5.79      193,035   $     5.69
    Granted                             106,000   $     4.02       24,030   $     4.06       17,500   $     6.75
    Exercised                                --          N/A           --   $     6.24           --          N/A
    Forfeited                            97,300   $     5.48       26,500   $       --       16,175   $     5.94
    Expired                                  --          N/A           --          N/A           --          N/A
Outstanding at end of year              200,590   $     4.70      191,890   $     5.45      194,360   $     5.79
Exercisable at end of year               90,115   $     5.36      158,018   $     5.38      146,228   $     5.41
Available for grant at end of year       75,210                    83,910                    21,440
Weighted average fair value of
  options granted                                 $     1.85                $     1.82                $     3.34
</Table>

        The fair value of each stock option granted is estimated on the date of
        grant using the Black-Scholes option-pricing model with the following
        weighted-average assumptions: dividend yield of 0.00%; risk-free
        interest rate of 4.12%, 6.06% and 5.48% for 2002, 2001, and 2000,
        respectively; the expected life of options is 5 years; and a volatility
        of 46.84%, 43.03%, and 41.39% for options granted in 2002, 2001 and
        2000, respectively.

        At July 31, 2002, exercise prices for all options outstanding ranged
        from $4.00 to $7.00 and the weighted-average remaining contractual life
        for options outstanding was 5.9 years.

        PRO FORMA NET INCOME AND NET INCOME PER COMMON SHARE

        Had the compensation cost for the Company's stock-based compensation
        plan been determined consistent with SFAS No. 123, the Company's net
        income (loss) and net income (loss) per common share for 2002, 2001 and
        2000 would approximate the pro forma amounts below:

<Table>
<Caption>
                              AS REPORTED      PRO FORMA      AS REPORTED      PRO FORMA      AS REPORTED     PRO FORMA
                                7/31/02         7/31/02         7/31/01         7/31/01         7/31/00        7/31/00
                             ------------    ------------    ------------    ------------    ------------   ------------
<S>                          <C>             <C>             <C>             <C>             <C>            <C>

Net income (loss)            $   (742,079)   $   (771,424)   $   (125,785)   $   (148,177)   $    489,941   $    489,922
Basic net income (loss)
    per common share         $      (0.45)   $      (0.47)   $       (.07)   $       (.08)   $       0.28   $       0.28
</Table>


                                      F-18
<PAGE>

BESTWAY, INC.                                                          FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


        The effects of applying SFAS No. 123 in this pro forma disclosure are
        not indicative of future amounts. SFAS No. 123 does not apply to awards
        granted prior to the 1996 fiscal year.

        401(k) PLAN

        The Company established a Retirement Savings Plan (the "Savings Plan"),
        effective as of September 1, 1994, which is intended to qualify under
        Section 401(k) of the Internal Revenue Code "the Code". Employees who
        have been employed with the Company for one year or more are eligible
        for participation in the Savings Plan. Employees may elect to reduce up
        to 15% of their annual compensation (subject to certain limitations
        under the Code) by having such amounts contributed to the Savings Plan.
        The Board intends to conduct a review at the end of each fiscal year to
        determine whether the Company will make any additional or matching
        contribution to the Savings Plan. For the year ended July 31, 2002, the
        Company contributed approximately $105,000 to the Savings Plan. For the
        years ended July 31, 2001 and 2000, the Company made matching
        contributions of approximately $145,000, to the Savings Plan. All assets
        of the Savings Plan are held in trust.

10.     LEGAL CONTINGENCIES


        In December 2001, the Company settled a lawsuit brought by approximately
        fifteen plaintiffs who have asserted claims against a number of
        defendants, including the Company, who were involved in the production
        of oil and gas or who owned oil and gas facilities in Montana.
        Plaintiffs alleged that the Company is the successor in interest to
        Amarco Resources Corporation, which, in the past, owned interests in two
        wells in the oil field. One of these wells is an alleged source of
        contamination of groundwater. The settlement was for approximately
        $130,000, including attorney's fees.

        The Company is subject to various other legal proceedings and claims
        that arise in the ordinary course of business. Management believes that
        the final outcome of such matters will not have a material adverse
        effect on the financial position, results of operations or liquidity of
        the Company.


                                      F-19
<PAGE>

                               INDEX TO EXHIBITS

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

  3.1           Amended and Restated Certificate of Incorporation of Bestway,
                incorporated by reference to Bestway's Current Report on Form
                8-K, filed September 2, 1993.

  3.2           Amended and Restated Bylaws of Bestway, incorporated by
                reference to Bestway's Annual Report on Form 10-K, for the year
                ended December 31, 1984.

  4.1           Specimen stock certificate representing shares of Bestway's
                common stock, incorporated by reference to Bestway's
                Registration Statement on Form S-8, filed June 22, 1995.

  10.1          Incentive Stock Option Plan of Bestway, incorporated by
                reference to Bestway's Registration Statement on Form S-8, filed
                June 22, 1995.

  10.2          Form of Incentive Stock Option Agreement pursuant to Incentive
                Stock Option Plan, incorporated by reference to Bestway's
                Registration Statement on Form S-8, filed June 22, 1995.

  10.3          First Amendment to the First Amended and Restated Revolving
                Credit Loan, dated March 15, 1995, by and between Bestway and
                Comerica Bank-Texas, incorporated by reference to Bestway's
                Quarterly Report on Form 10-Q for the year ended April 30, 1995.

  10.4          Second Amendment to the First Amended and Restated Revolving
                Credit Loan, dated March 15, 1995, by and between Bestway and
                Comerica Bank-Texas, incorporated by reference to Bestway's
                Current Report on Form 8-K, filed April 25, 1996.

  10.5          Third Amendment to the First Amended and Restated Revolving
                Credit Loan, dated March 15, 1995, by and between Bestway and
                Comerica Bank-Texas, incorporated by reference to Bestway's
                Current Report on Form 8-K, filed December 1, 1997.

  10.6          Fifth Amendment to the First Amended and Restated Revolving
                Credit Loan, dated March 15, 1995, by and between Bestway and
                Comerica Bank-Texas, incorporated by reference to Bestway's
                Current Report on Form 8-K, filed January 13, 2000.

  10.7          First Amended and Restated Promissory Note, dated August 19,
                1997, by Bestway in favor of O'Donnell & Masur, L.P. and
                Bestway, incorporated by reference to Bestway's Annual Report on
                Form 10-K, for the year ended July 31, 1997.

  10.8          Extension Agreement for the First Amended and Restated
                Promissory Note, dated August 19, 1997, between O'Donnell &
                Masur, L.P. and Bestway, incorporated by reference to Bestway's
                Annual Report on Form 10-K for the year ended July 31, 1999.

  10.9          Modification Letter dated October 19, 2000 modifying certain
                covenants of the Loan Agreement between Comerica Bank-Texas and
                Bestway, incorporated by reference to Bestway's Annual Report on
                Form 10-K for the year ended July 31, 2000.

 10.10          Amendment Number One to Bestway Incentive Stock Option Plan,
                dated December 4, 2000, incorporated by reference to Bestway's
                Annual Report on Form 10-K for the year ended July 31, 2001.

 10.11*         Employment Agreement, dated July 8, 2002, between Bestway and
                David A. Kraemer.

 10.12*         Severance Agreement, dated July 22, 2002, between Bestway and
                Teresa A. Sheffield.

 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.

  21*           Subsidiaries

  23*           Consent of PricewaterhouseCoopers LLP
</Table>

----------

*Filed herewith