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                                   FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

[x]      Annual report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for fiscal year ended July 31, 1996; 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:

                                  DYNAMEX INC.
             (Exact name of registrant as specified in its charter)

                DELAWARE                                86-0712225
               (State of                              (IRS employment
             incorporation)                          identification no.)

          2630 SKYMARK AVENUE                            L4W 5A4
               SUITE 610                               (Zip Code)
         MISSISSAUGA, ONTARIO
(Address of principal executive offices)

             Registrant's telephone number, including area code:
                                (905) 238-6414
                                      
         Securities registered pursuant to Section 12(b) of the Act:
                                     None
                                      
         Securities registered pursuant to section 12(g) of the Act:
                         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 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. [ ]

         The aggregate market value of the voting stock held by non-affiliates
of the registrant on October 17, 1996 was approximately $45,821,158.

         The number of shares of the registrant's common stock, $.01 par value,
outstanding as of October 17, 1996 was 6,691,195 shares.
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ITEM 1.  BUSINESS

GENERAL

         The Company is a leading provider of same-day delivery and logistics
services in the U.S. and Canada. Through internal growth and acquisitions, the
Company has built the only national network of same-day delivery and logistics
systems in Canada and has established operations in 12 U.S. metropolitan areas
from which it intends to build a national network in the U.S. The Company
capitalizes on its routing, dispatch and vehicle management expertise developed
in the ground courier business to provide its customers with a broad range of
value added, same-day distribution and logistics services.

         Through its network of branch offices, the Company provides same-day,
door-to-door delivery services utilizing ground couriers for intra-city
deliveries and third party air transportation providers in conjunction with
ground couriers for inter-city deliveries. The Company's same-day delivery
services include both on-demand and scheduled deliveries. On-demand services
are typically unscheduled deliveries of time-sensitive materials and include
deliveries of inventory made on a just-in-time basis from strategic stocking
locations managed by Company personnel. Scheduled distribution services
encompass recurring, often daily, deliveries provided on a point-to-point basis
or deliveries that require intermediate handling, routing or sorting of items
to be delivered to multiple locations. With its fleet management services, the
Company assumes complete responsibility for providing and managing a fleet of
dedicated vehicles at a customer site. The Company's on-demand delivery
capabilities are available to supplement the scheduled distribution and
dedicated fleets as necessary.

         The Company intends to expand its operations in the U.S. and Canada by
(i) increasing customer utilization of its primary services at each location,
(ii) targeting national and regional accounts, (iii) creating alliances with
strategic partners, and (iv) pursuing acquisitions of high quality same-day
delivery companies.

INDUSTRY OVERVIEW

         The delivery and logistics industry is large, highly fragmented and
growing. The industry is composed primarily of same-day, next-day and second-
day service providers. The Company primarily services the same-day, intra-city
delivery market. Historically, same-day delivery service primarily related to
downtown document deliveries. Over time, technological developments such as
facsimile and electronic mail have increased time sensitivity in a variety of
business transactions, thereby increasing demand for the same-day delivery of
non-faxable items. The category of non-faxable items that require time
sensitive delivery is vast and includes items such as voluminous or
confidential documents, critical manufacturing parts, medical devices and
replacement computer parts.





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         The Company believes that the same-day delivery and logistics industry
offers substantial consolidation opportunities as a result of industry
fragmentation and the benefits of large scale operations. The same-day delivery
and logistics industry in the U.S. and Canada is highly fragmented and
primarily consists of several thousand small, independent businesses serving
local markets and a small number of multi-location regional or national
operators. Relative to smaller companies, the Company believes that national
operators such as the Company benefit from several competitive advantages
including: national brand identity, professional management, the ability to
service national accounts and centralized administrative and management
information systems.

         In an effort to control costs and focus on primary competencies, many
businesses are seeking to reduce their reliance on in-house transportation
departments by turning to third party experts to provide transportation
logistics services. These logistics services include designing and managing
systems created to maximize efficiencies in transporting, warehousing, sorting
and delivering products. Many businesses that outsource their distribution
requirements prefer to purchase such services from one source that can service
multiple cities, thereby decreasing the number of vendors from whom they
purchase services.

COMPANY HISTORY

         The Company was organized under the laws of Delaware in 1992 as
Parcelway Systems Holding Corp.  In May 1995, the Company acquired Dynamex
Express, the ground courier operations of Air Canada, which was led by Richard
K. McClelland, the Company's Chief Executive Officer.  In July 1995, the
Company changed its name to Dynamex Inc.  At the time of its acquisition by the
Company, Dynamex Express had developed a national network of 20 locations
across Canada and offered an array of services on a national, multi-city and
local basis.  In December 1995, the Company acquired the on-demand ground
courier operations of Mayne Nickless Incorporated and Mayne Nickless Canada
Inc. (together "Mayne Nickless") which had operations in eight U.S. cities and
two Canadian cities.  In August 1996, using a portion of the proceeds from the
initial public offering of the Company's Common Stock (the "IPO") and by
issuing additional shares of Common Stock, the Company purchased same-day
delivery businesses in New York, New York; Columbus, Ohio; Chicago, Illinois;
Halifax, Nova Scotia; and Winnipeg, Manitoba (collectively, the "IPO
Acquisitions"). In October 1996, the Company purchased an additional same-day
delivery business in New York, New York, and in San Diego, California (the
"Other Acquisitions).  See "Business--Recent Acquisitions."

THE DYNAMEX EXPRESS BUSINESS MODEL

         The Company seeks to expand its operations by implementing and
expanding upon the business strategy utilized by Dynamex Express.  Prior to
1989, Dynamex Express concentrated on same-day document delivery in the central
business districts of the major metropolitan cities of Canada. Recognizing that
an increasing variety of business transactions were becoming more time
sensitive and in order to offset declining volumes in same-day document
delivery, Dynamex





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Express expanded its customer base to include manufacturing companies,
pharmaceutical companies, auto parts distributors, governmental agencies and
other businesses that require same-day delivery of non-faxable items. Dynamex
Express further responded to shifting market conditions by leveraging its
ability to efficiently provide same-day delivery of small to mid-size items in
metropolitan areas to provide value added services such as fleet management and
strategic stocking.

         Dynamex Express also expanded its business by acquiring other
same-day, intra-city courier companies within Canada. By May 1995, Dynamex
Express had acquired a regional and several single-site courier companies
across Canada and had locations in 20 Canadian cities. Dynamex Express expanded
the service offerings of these acquired companies to include fleet management
and strategic stocking and standardized the operating policies and procedures
at each location. At the time of the Company's acquisition of Dynamex Express
in May 1995, approximately 46% of Dynamex Express revenues were generated from
same- day on-demand delivery, 30% from fleet management and 24% from same-day
scheduled distribution services. Approximately 48% of these revenues were
generated from services provided to customers on a national or multi-city
basis.

BUSINESS STRATEGY

         The Company intends to implement and expand upon the Dynamex Express
business model in the U.S. and Canadian markets in order to capitalize on the
demand of local, regional and national businesses for innovative same-day
distribution solutions. The key elements of the Company's business strategy are
as follows:

                 - FOCUS ON PRIMARY SERVICES. The Company provides three
primary services: (i) same-day on-demand delivery, (ii) same-day scheduled
distribution and (iii) fleet management. To raise the yield per delivery, the
Company will continue to focus its same-day on-demand delivery business on non-
faxable, time sensitive items that are transported throughout major
metropolitan areas and to offer value added on-demand services such as
strategic stocking. By concentrating its logistics services in fleet management
and same-day scheduled distribution, the Company intends to capitalize on the
market trend towards outsourcing transportation requirements. The delivery
transactions in a fleet management, scheduled distribution or strategic
stocking program are recurring in nature, thus creating the potential for long
term customer relationships. Additionally, these services are generally less
vulnerable to price competition than traditional delivery services.

                 - TARGET NATIONAL AND REGIONAL ACCOUNTS. The Company's sales
force focuses on pursuing and maintaining national and regional accounts. The
Company anticipates that its (i) existing multi-city network of locations
combined with new locations to be acquired, (ii) ability to offer value added
services such as strategic stocking and fleet management to complement its
basic same-day delivery services and (iii) experienced management team will
create further opportunities with many of its existing customers and attract
new national and regional accounts.





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                 - CREATE STRATEGIC ALLIANCES. By forming alliances with
strategic partners that offer compatible services or have complex distribution
needs, the Company and its partner can jointly market their services, thereby
accessing one another's customer base and providing such customers with a
broader range of services. Pursuant to its strategic alliance with Purolator
Courier Ltd. ("Purolator"), the largest Canadian overnight courier company, the
Company and Purolator have agreed to provide one another with wholesale courier
services and to market the other partner's delivery services to its customers.
See "Sales and Marketing."

                 - PURSUE ACQUISITIONS. The Company believes that the highly
fragmented nature of the delivery and logistics industry creates significant
opportunities for same-day delivery and logistics companies with national
marketing efforts and operations.  The Company will seek to acquire high
quality same-day delivery businesses in new cities as well as in markets where
it has already established a presence. The Company plans to augment the service
offerings of its acquired companies with additional services such as fleet
management and strategic stocking and to integrate the acquired operations into
the Company's operating environment. Acquisitions in existing markets are
expected to give the Company access to an acquired company's customer base
while creating operating efficiencies within these markets. The Company
believes that its management team's operating and acquisition experience will
allow it to remain competitive in the acquisition market.

SERVICES

         The Company capitalizes on its routing, dispatch and vehicle
management expertise developed in the ground courier business to provide its
customers with a broad range of value added, same-day delivery and logistics
services. By creating innovative applications of its core services, the Company
intends to expand the market for its distribution solutions and increase the
yield per service provided.

  Same-Day On-Demand Delivery

         The Company provides local same-day on-demand delivery services,
whereby Company messengers or drivers respond to a customer's request for
immediate pick-up and delivery. The Company augments its same-day on-demand
services by offering inter-city ground and air transportation and next-flight-
out services provided by third party air transportation operators. The Company
focuses on the delivery of non-faxable, time sensitive items throughout major
metropolitan areas rather than traditional downtown document delivery. By
delivering items of greater weight over longer distances and providing value
added on-demand services such as strategic stocking, the Company expects to
continue to raise the yield per delivery relative to the yield generated from
downtown document deliveries.

         The Company's on-demand services include the delivery of a customer's
inventory on a just-in-time basis from strategic stocking locations managed by
Company personnel. Strategic





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stocking locates the customer's inventory closer to its ultimate destination,
thereby improving the customer's ability to service its own customers. The
Company does not take ownership of or title to the inventory but provides the
warehouse space or utilizes space provided by its customer to establish and
manage a customized, multi-site strategic stocking program. Furthermore, the
Company can bundle services such as same-day ground, same-day air and next-day
air delivery to replenish stocking locations.

         The benefits of strategic stocking to the customer include (i) faster
response time due to broader distribution of inventory locations and emergency
transportation capabilities, (ii) decreased lease and employee costs associated
with warehouse functions resulting from the Company's ability to consolidate
warehouse space and administrative costs for multiple strategic stocking
customers and (iii) improved inventory control through improved information
systems. For example, when a computer parts and services distributor must
quickly replace defective or worn out computer parts, the potential loss to the
distributor's customer increases with the length of time it takes the
distributor to deliver and install the replacement part. By storing computer
parts in the Company's network of strategic stocking locations, the distributor
can contact the Company and have the replacement part delivered to its customer
within hours instead of days. The Company has targeted the computer and
telecommunications industries as primary markets for strategic stocking
services and has established a network of parts banks across Canada to serve
such markets. Additionally, the Company has introduced a service enhancement,
whereby straightforward repairs, such as replacement of a defective keyboard,
are performed by Company drivers, thus eliminating the need to dispatch a
technician.

         While strategic stocking currently comprises only a small portion of
the Company's same-day on-demand business, the Company intends to expand its
strategic stocking program and has recently purchased strategic stocking
software, hardware and certain other related assets from an experienced
strategic stocking operator whom the Company now employs. The Company intends
to expand the network of parts banks and courier alliances established by this
operator by utilizing its own courier network in the U.S. and Canada and
intends to utilize the additional courier alliances to increase its next-
flight-out capability.

         For the year ended July 31, 1996, approximately 62% of the Company's
revenues were generated from on-demand same-day delivery services, including
strategic stocking services.

  Same-Day Scheduled Distribution

         The Company provides same-day scheduled distribution services for
time- sensitive local deliveries that, by their nature, are recurring.
Scheduled distribution services include regularly scheduled deliveries made on
a point- to-point basis or deliveries that require intermediate handling,
routing or sorting of items to be delivered to multiple locations. A bulk
shipment may be received at the Company's warehouse where it is sub-divided
into smaller bundles and sorted for delivery to specified locations. Same-day
scheduled distribution services are provided on both a local and multi-city
basis. The Company's on-demand delivery capabilities are available to





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supplement the scheduled drivers as needed. In the suburban Washington,
D.C./Baltimore area, the Company provides scheduled, as well as on-demand,
delivery services for a group of local hospitals and medical laboratories,
transferring samples between these facilities. In Ontario, Canada, the Company
services the scheduled distribution requirements of a consortium of commercial
banks. These banks require regular pick-up of non-negotiable materials that are
then delivered by the Company on an intra and inter-city basis. For the year
ended July 31, 1996, approximately 17% of the Company's revenues were generated
from same-day scheduled distribution services.

  Fleet Management

         With its fleet management service, the Company provides transportation
services for customers that previously managed such operations in-house. The
Company assumes complete responsibility for providing and managing a fleet of
dedicated vehicles at the customer's site. This service is generally provided
with a fleet of dedicated vehicles that can range from passenger cars to
tractor trailers (or any combination) which may display the customer's logo and
colors. In addition, the Company's on-demand delivery capability may supplement
the dedicated fleet as necessary, thereby allowing a smaller dedicated fleet to
be maintained on average. The Company's fleet management services include
designing and managing systems created to maximize efficiencies in
transporting, sorting and delivering customer's products on a local and multi-
city basis. Because the Company generally does not own vehicles but instead
hires drivers who do, the Company's fleet management solutions are not limited
by the Company's need to utilize its own fleet.

         By outsourcing its fleet management the Company's customer (i) is able
to utilize the Company's distribution and route optimization experience to
deliver its products more efficiently, (ii) gains the flexibility to expand or
contract fleet size as necessary, and (iii) reduces the costs and
administrative burden associated with owning or leasing vehicles and hiring and
managing transportation employees. For example, the Company recently configured
and now manages a distribution fleet for one of the largest distributors to
drug stores in Canada. For the year ended July 31, 1996, approximately 21% of
the Company's revenues were generated from fleet management services.

         While the volume of each service provided and the profitability
thereof varies significantly from branch office to branch office, each of the
Company's branch offices generally offers the same core services. Factors which
impact the business mix per branch include customer base, competition,
geographic characteristics, available labor and general economic environment.
The Company can bundle its various delivery and logistics services to create
customized distribution solutions and to become the single-source for its
customers' distribution needs.





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OPERATIONS

         The Company's operations are divided into two U.S. regions and two
Canadian regions, with each of the Company's 31 branches reporting to a
regional office. Branch operations are locally managed with regional and
national oversight and support provided as necessary. A branch manager is
assigned to each branch office and is accountable for all aspects of branch
operations including profitability. Each branch manager reports to a regional
manager with similar responsibilities for all branches within his or her
region. Certain administrative and marketing functions may be centralized for
multiple branches in a given city or region. Prices for the Company's services
are determined at the branch level based on the distance, weight and time-
sensitivity of a particular delivery.

  Same-Day On-Demand Delivery

         Most locations have operations centers staffed by dispatchers, as well
as customer service representatives and operations personnel. Incoming calls
are received by trained customer service representatives who use PC-based
communications software to instantly provide the customer with a job-specific
price quote and to transmit the order to the appropriate dispatch location.
Certain of the Company's larger clients can access such software through
electronic data interface to enter dispatch requirements, page specific
drivers, make inquiries, and receive billing information. A dispatcher
coordinates shipments for delivery within a specific time frame. Shipments are
routed according to the type and weight of the shipment, the geographic
distance between the origin and destination and the time allotted for the
delivery. Coordination and deployment of delivery personnel for on-demand
deliveries is accomplished either through communications systems linked to the
Company's computers, through pagers or by radio. The Company is in the process
of integrating the software system utilized by Dynamex Express into each of its
branches in order to standardize the reporting, tracking and billing of
transactions. To enhance the Company's 24-hour delivery services at all
locations, the Company is currently implementing a company-wide centralized
answering service to transmit delivery requests made after normal business
hours to the appropriate local operations team.

  Same-Day Scheduled Distribution

         A dispatcher coordinates and assigns scheduled deliveries to the
drivers and manages the delivery flow. In many cases, certain drivers will
handle a designated group of scheduled routes on a recurring basis. Any
intermediate handling required for a scheduled distribution is conducted at the
Company's warehouse or at a third party facility such as the airport.

  Fleet Management

         Fleet management services are coordinated by the Company's logistics
specialists who have experience in designing, implementing and managing
integrated networks for transportation services. Based upon the logistics
specialist's analysis of a customer's fleet and distribution





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requirements, the Company develops a plan to optimize fleet configuration and
route design. The Company provides the vehicles and drivers necessary to
implement the fleet management plan. Such vehicles and drivers are generally
dedicated to a particular customer, and the vehicles may display the customer's
name and logo. The Company can supplement these dedicated vehicles and drivers
with its on-demand capability as necessary.

SALES AND MARKETING

         The Company conducts a comprehensive marketing program involving
direct sales and customer service to maintain and increase its customer base.
Approximately 50 local employee sales representatives target small and mid-
sized businesses while the Company's eight regional and national marketing
executives focus on larger accounts and businesses with multi-city
requirements. The Company's sales force includes product specialists dedicated
to fleet management and strategic stocking, some of whom have developed
expertise in servicing certain industries such as banks and telecommunications
companies. The Company's product specialists seek new applications of the
Company's primary services in an effort to expand the demand for such services.

         The Company's marketing representatives make regular calls on existing
and potential customers to identify such customers' delivery and logistics
needs. Customer service representatives on the local and national levels
regularly communicate with customers to monitor the quality of services and to
quickly respond to customer concerns. Through its telemarketing program, the
Company maintains a database of its customers' service utilization patterns and
satisfaction level. The telemarketing database is used by the sales force to
analyze opportunities and conduct performance audits. The telemarketing group
seeks to contact most of the Company's recurring customers approximately every
90 days.

         Fostering strategic alliances with customers who offer compatible
services or have complex distribution needs is an important component of the
Company's marketing strategy. For example, pursuant to a Marketing and
Transportation Services Agreement, dated November 20, 1995 between the Company
and Purolator, the Company has agreed to provide same-day delivery services to
Purolator customers and Purolator has agreed to provide overnight courier
services to the Company's customers. Pursuant to this agreement, in June 1996,
Purolator began to market and the Company began to offer the following services
to Purolator customers: (i) same-day local ground courier services; (ii) same-
day inter-city ground courier services; and (iii) next-flight-out service
between major cities in Canada and the U.S. When a Purolator customer requests
any of these services, Purolator transfers such request to one of the Company's
customer service representatives. The Company then dispatches the delivery
order and bills Purolator at a discounted rate. Purolator in turn bills the
customer at its own rate.

         The Marketing and Transportation Services Agreement is generally
terminable upon two years notice but may be terminated upon a breach of the
agreement or certain other events of default as set forth therein. The
relationship between the Company and Purolator consists of the





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rights and obligations described in the aforementioned agreement and is not a
joint venture or partnership. The Company also provides Purolator with local
and inter-city same-day ground courier service for misdirected Purolator
shipments. Purolator is the largest overnight courier in Canada with
approximately 9,000 employees who handle approximately 300,000 packages daily.
The Company believes that the increased transaction volume and marketing
efforts contemplated by the Purolator alliance could significantly increase the
Company's business in Canada.

         The Company generally enters into customer contracts for scheduled
distribution, fleet management and strategic stocking services which are
terminable (in selected cases with cancellation penalties) by such customer
upon notice generally ranging from 30 to 90 days. The Company does not
typically enter into contracts with its customers for on-demand delivery
services other than strategic stocking services.

CUSTOMERS

         As of September 30, 1996, the Company had a diversified customer base
of approximately  30,000 active customers across the U.S. and Canada. The
Company's target customer is a business that distributes time-sensitive, non-
faxable items that weigh from one to 70 pounds to multiple locations. The
primary industries served by the Company include financial services,
pharmaceuticals, medical laboratories and hospitals, auto parts, legal services
and Canadian governmental agencies. Management believes that as of September
30, 1996, no single industry accounted for more than 10% of the Company's
annual revenues. A significant number of the Company's customers are located in
Canada. Approximately 73% of the Company's revenues for the year ended July 31,
1996 were generated in Canada. See Note 9 of Notes to the Consolidated
Financial Statements.

COMPETITION

         The market for same-day delivery and logistics services has been and
is expected to remain highly competitive. The Company believes that the
principal competitive factors in the markets in which it competes are
reliability, quality, breadth of service and price. Price competition for basic
delivery services is particularly intense.

         Most of the Company's competitors in the same-day intra-city delivery
market are privately held companies that operate in only one location, with no
one competitor dominating the market. However, there is a trend toward industry
consolidation and companies with greater financial and other resources than the
Company that may not currently operate in the delivery and logistics business
may enter the industry to capitalize on such trend.

         The market for the Company's logistics services is also highly
competitive, and can be expected to become more competitive as additional
companies seek to capitalize on the growth in the industry. The Company's
principal competitors for such services are other delivery companies and in-
house transportation departments. The Company generally competes on the basis
of its





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ability to provide customized service regionally and nationally, which it
believes is an important advantage in this highly fragmented industry, and on
the basis of price.

         The Company competes for acquisition candidates with other companies
in the industry and companies that may not currently operate in the industry
but may acquire and consolidate local courier businesses. Management believes
that its operating experience and its strategy to fully integrate each acquired
company by adding its core services and introducing national marketing will
allow it to remain competitive in the acquisition market.

RECENT ACQUISITIONS

         IPO Acquisitions. In August 1996, the Company consummated the IPO
Acquisitions. The aggregate consideration paid by the Company in the IPO
Acquisitions was approximately $7.2 million in cash and 173,485 shares of
Common Stock and the Company repaid an aggregate of approximately $840,000 of
indebtedness of the acquired companies.

         Other Acquisitions.  In October 1996, the Company purchased all of the
outstanding capital stock of Express It and issued an aggregate of 444,250
shares of common stock to the stockholders of such company as total
consideration therefor.  In June 1996, the Company and Express It entered into
an Agency and Support Agreement, pursuant to which (i) each company agreed to
provide joint marketing services to one another, (ii) each company agreed to
use the other's delivery services outside of such company's service area and
(iii) the Company agreed to act as a consultant to Express It with respect to
the operating, marketing and administrative proceedings of Express It in
exchange for a monthly fee equal based on a percentage of Express It's
operating profits. The Agency and Support Agreement was terminated upon the
consummation of the acquisition of Express It.

         In October 1996, the Company acquired substantially all of the assets
of Dollar Courier and agreed to pay an aggregate of approximately $340,000 in
cash over a period of two years and six months as consideration therefor.

         The Company is currently integrating recently acquired companies into
the Company's operating environment. Each acquired company has been assigned to
the appropriate regional division of the Company. A manager of each acquired
company has agreed to continue to manage such operation after the consummation
of the respective acquisition and has been appointed branch manager at such
operation. Management is training the staff of the acquired companies so that
each branch will be able to provide and market the full range of Company
services. As soon as practicable and where appropriate, the Company will
assimilate each acquired company's accounting, payroll and cash management
functions, standardize its insurance coverage and employee benefits and
supplement or replace the use of the acquired company's tradename with
"Dynamex."





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REGULATION

         As of January 1, 1995, the U.S. Federal Aviation Administration
Authorization Act of 1994 became effective, abolishing all intrastate
regulatory control over prices, routes and services to which the Company had
previously been subject. This legislation has increased the ability of the
Company to expand into new states and to expand its presence in its existing
areas of service. The Company holds nationwide general commodities authority
from the Interstate Commerce Commission and/or the Federal Highway
Administration of the U.S. Department of Transportation to transport certain
property as a motor carrier on an interstate basis within the contiguous 48
states. The Trucking Industry Regulatory Reform Act of 1994 further deregulated
certain aspects of the transportation industry, so that the Company will no
longer be required to file tariffs setting forth its interstate rates. The
Company holds permanent extra-provincial (and where required, intra-provincial)
operating authority in all Canadian provinces where the Company does business.

         In connection with the operation of certain motor vehicles and the
handling of hazardous materials in its courier operations, the Company is
subject to regulation by the United States Department of Transportation and the
states and by the appropriate Canadian federal and provincial regulations. The
Company is also subject to regulation by the Occupational Health and Safety
Administration, provincial occupational health and safety legislation and
federal and provincial employment laws respecting such matters as hours of
work, driver logbooks and workers' compensation. To the extent the Company
holds licenses to operate two-way radios to communicate with its fleet, the
Company is regulated by the Federal Communications Commission. The Company
believes that it is in substantial compliance with all of these regulations.

SAFETY

         From time to time, the Company's drivers are involved in accidents or
other activities that may give rise to liability claims. The Company currently
carries liability insurance with an aggregate limit of $15.0 million, and
independent owner/operators are required to maintain liability insurance of at
least the minimum amounts required by applicable state or provincial law. The
Company also has insurance policies covering property and fiduciary trust
liability, which coverage includes all drivers. The Company reviews prospective
drivers to ensure that they have acceptable driving records. In addition, where
required by applicable law, the Company requires prospective drivers to take a
physical examination and to pass a drug test.

INTELLECTUAL PROPERTY

         The Company has registered "Dynamex" and "Dynamex Express" as federal
trade marks in Canada and has filed applications in the U.S. for federal trade
mark registration of such names. No assurance can be given that any such
registration will be granted or that if granted, such





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registration will be effective to prevent others from using the trade mark
concurrently or preventing the Company from using the trade mark in certain
locations.

EMPLOYEES

         At September 30, 1996, the Company had approximately 1,280 employees,
of which approximately 880 were employed full-time primarily in various
management, supervisory, administrative, and corporate positions, approximately
360 were employed full-time as drivers and approximately 40 were employed part-
time, primarily as drivers. Additionally at September 30, 1996, the Company had
contracts with approximately 2,500 independent owner/operators. Management
believes that the Company's relationship with such employees and independent
owner/operators is good. See "Risk Factors -- Certain Tax Matters Related to
Drivers."

         In Canada, approximately 48% of the Company's drivers are represented
by major international labor unions. Management believes that the Company's
relationship with such unions is good. None of the Company's U.S. employees or
drivers are represented by unions.

RISK FACTORS

         The Company hereby cautions stockholders, prospective investors in the
Company and other readers of this report that the following important factors,
among others, could affect the Company's stock price or cause the Company's
actual results of operations to differ materially from those expressed in any
forward-looking statements, oral or written, made by or on behalf of the
Company.

ACQUISITION STRATEGY; POSSIBLE NEED FOR ADDITIONAL FINANCING

         In order to expand its network of facilities, the Company plans to
acquire local delivery businesses in new geographic regions and in the
metropolitan areas where the Company currently operates. Due to consolidation
within the same-day delivery and logistics industry, there is significant
competition in acquiring such businesses. There can be no assurance that the
Company will be able to acquire or profitably manage additional companies or
successfully integrate their operations into the Company. In addition, there
can be no assurance that companies acquired in the future either will be
beneficial to the successful implementation of the Company's overall strategy
or will ultimately produce returns that justify the investment therein, or that
the Company will be successful in achieving meaningful economies of scale
through the acquisition thereof. See "Business -- Business Strategy" and "--
Recent Acquisitions."

         The Company's acquisition strategy may require the Company to incur
additional debt in the future, may result in potentially dilutive issuances of
securities and may result in increased goodwill, intangible assets and
amortization expense. There can be no assurance that the Company's primary
lender will consent to acquisitions above a certain annual dollar threshold set
forth in the Company's credit facility or that, if additional financing is
necessary, it can be





                                       13
<PAGE>   14
obtained on terms the Company deems acceptable. As a result, the Company might
be unable to successfully implement its acquisition strategy. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

LIMITED COMBINED OPERATING HISTORY; HISTORY OF LOSSES

         Recent acquisitions have greatly expanded the size and scope of the
operations of the Company. The process of integrating acquired businesses often
involves unforeseen difficulties and may require a disproportionate amount of
the Company's financial and other resources, including management time. There
can be no assurance that the Company will be able to profitably manage recently
acquired companies or successfully integrate their operations into the Company.
For the years ended July 31, 1994 and 1995, the Company incurred actual net
losses of approximately $1.1 million and $1.6 million, respectively. For the
year ended July 31, 1996, the Company reported net income of approximately
$876,000. No assurances can be given that the Company will operate profitably
in the future. See "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

COMPETITION

         The market for same-day delivery and logistics services has been and
is expected to remain highly competitive. Competition is often intense,
particularly for basic delivery services. The industry is highly fragmented
with low barriers to entry, and there is a recent trend toward consolidation.
Other companies in the industry compete with the Company not only for provision
of services but also for acquisition candidates. Some of these companies have
longer operating histories and greater financial and other resources than the
Company. Additionally, companies that do not currently operate delivery and
logistics businesses may enter the industry in the future. See "Business --
Competition."

CLAIMS EXPOSURE

         The Company utilizes the services of approximately 2,900 drivers, and
from time to time such drivers are involved in accidents or other activities
that may give rise to liability claims. The Company currently carries liability
insurance with an aggregate limit of $15.0 million, and independent
owner/operators are required to maintain liability insurance of at least the
minimum amounts required by applicable state or provincial law. The Company
also has insurance policies covering property and fiduciary trust liability,
which coverage includes all drivers. There can be no assurance that claims
against the Company, whether under the liability insurance or the surety bonds,
will not exceed the applicable amount of coverage, that the Company's insurer
will be solvent at the time of settlement of an insured claim, or that the
Company will be able to obtain insurance at acceptable levels and costs in the
future. In addition, the Company's increased visibility and financial strength
as a public company may create additional claims exposure. If the Company were
to experience a material increase in the frequency or severity of accidents,
liability claims, workers' compensation claims, or unfavorable resolutions of
claims, the Company's





                                       14
<PAGE>   15
business, financial condition and results of operations could be materially and
adversely affected. In addition, significant increases in insurance costs could
adversely affect the Company's profitability. See "Business -- Safety."

CERTAIN TAX MATTERS RELATED TO DRIVERS

         The Company uses independent owner/operators as drivers in a
significant portion of its operations. As of September 30, 1996, approximately
87% of the Company's drivers were independent owner/operators. From time to
time, taxing authorities in the U.S. and Canada have sought to assert that
independent owner/operators in the transportation industry, including those
utilized by the Company, are employees rather than independent contractors. The
Company believes that the independent owner/operators utilized by the Company
are not employees under existing interpretations of federal (U.S. and
Canadian), state and provincial laws. However, there can be no assurance that
federal, state or provincial authorities will not challenge this position, or
that other laws or regulations, including tax laws, or interpretations thereof,
will not change. If, as a result of any of the foregoing, the Company is
required to pay for and administer added benefits to independent
owner/operators, the Company's operating costs would increase. Additionally, if
the Company is required to pay back-up withholding with respect to amounts
previously paid to such persons, it may be required to pay penalties which
could have a material adverse impact on the Company's financial condition and
results of operations. See "Business -- Services" and "-- Employees."

         In addition, certain of the Company's drivers are employed by the
Company and own and operate the vehicles used during the course of their
employment. The Company reimburses these employees for all or a portion of the
operating costs of those vehicles. The Company believes that these
reimbursement arrangements do not represent additional compensation to those
employees. However, there can be no assurance that federal (U.S. and Canadian),
state or provincial taxing authorities will not seek to recharacterize some or
all of such payments as additional compensation. If such amounts were so
recharacterized, the Company would have to pay additional employment related
taxes on such amounts.

FOREIGN EXCHANGE

         A significant portion of the Company's operations are conducted in
Canada. Exchange rate fluctuations between the U.S. and Canadian dollar result
in fluctuations in the amounts relating to the Canadian operations reported in
the Company's consolidated financial statements. The Company historically has
not entered into hedging transactions with respect to its foreign currency
exposure. There can be no assurance that fluctuations in foreign currency
exchange rates will not have a material adverse effect on the Company's
business, financial condition or results of operations. See Note 9 of Notes to
the Consolidated Financial Statements.





                                       15
<PAGE>   16
PERMITS AND LICENSING

         Although recent legislation has significantly deregulated certain
aspects of the transportation industry, the Company's delivery operations are
still subject to various federal, state, provincial and local laws, ordinances
and regulations that in many instances require certificates, permits and
licenses. Failure by the Company to maintain required certificates, permits or
licenses, or to comply with applicable laws, ordinances or regulations could
result in substantial fines or possible revocation of the Company's authority
to conduct certain of its operations. Delays in obtaining approvals for the
transfer or grant of certificates, permits or licenses, or failure to obtain
same, could impede the implementation of the Company's acquisition program. See
"Business -- Regulation."

DEPENDENCE ON KEY PERSONNEL

         The Company's success is largely dependent on the skills, experience
and performance of certain key members of its management, including
particularly Richard K. McClelland, the Company's Chief Executive Officer. The
loss of the services of any of these key employees could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company has entered into an employment contract with Mr.
McClelland. The Company's future success and plans for growth also depend on
its ability to attract, train and retain skilled personnel in all areas of its
business. There is strong competition for skilled personnel in the same-day
delivery and logistics business. See "Management."

EFFECTIVE CONTROL BY CYPRESS CAPITAL PARTNERS I, L.P. AND AFFILIATES

         Cypress Capital Partners I, L.P., a Dallas-based private investment
partnership ("Cypress"), and certain of its affiliates, including James M.
Hoak, the sole stockholder of the general partner of Cypress, directly and
indirectly own an aggregate of 2,353,752 shares of Common Stock, or
approximately 35% of the total voting power of the Company. Accordingly,
Cypress and its affiliates are in a position to exercise substantial influence
over actions that require consent of stockholders, including decisions relating
to the election of directors of the Company, mergers and consolidations. See
"Principal Stockholders," and "Certain Transactions."

TECHNOLOGY

         Technological advances in the nature of facsimile and electronic mail
have affected the market for on-demand document delivery services. While these
technological developments have not had a significant adverse impact on the
Company's business to date, and although the Company has shifted its focus to
the distribution of non-faxable items and logistics services, there can be no
assurance that these or other technologies will not have a material adverse
effect on the Company's business, financial condition and results of operations
in the future.





                                       16
<PAGE>   17
POSSIBLE VOLATILITY OF STOCK PRICE

         Prices for the Common Stock will be determined in the marketplace and
may be influenced by many factors, including the depth and liquidity of the
market for the Common Stock, investor perception of the Company, and general
economic and market conditions. Variations in the Company's operating results,
general trends in the industry and other factors could cause the market price
of the Common Stock to fluctuate significantly. In addition, general trends and
developments in the industry, government regulation and other factors could
have a significant impact on the price of the Common Stock. The stock market
has, on occasion, experienced extreme price and volume fluctuations that have
often particularly affected market prices for smaller companies and that often
have been unrelated or disproportionate to the operating performance of the
affected companies, and the price of the Common Stock could be affected by such
fluctuations.

ANTI-TAKEOVER PROVISIONS

         Certain provisions of the Company's Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation"), the Company's
Bylaws (the "Bylaws") and the Rights Agreement between the Company and Harris
Trust and Savings Bank (the "Rights Agreement") may delay, defer, discourage or
prevent a merger, proxy contest, tender offer or takeover attempt that a
stockholder might consider to be in such stockholder's best interest, including
attempts that might result in a premium over the market price for the shares
held by stockholders.

         The Bylaws provide that the number of directors shall be fixed, from
time to time, by resolution of the Board of Directors of the Company. Neither
the Bylaws nor the Restated Certificate of Incorporation permit stockholders to
call special meetings or to take actions by written consent in lieu of a
meeting, unless such action and the taking of such action by written consent
have been approved in advance by the Board of Directors. The Restated
Certificate of Incorporation provides that the Board of Directors may amend the
Bylaws, subject to the rights of the stockholders to amend such Bylaws. An
amendment to the provision of the Restated Certificate of Incorporation which
prohibits action by stockholders by written consent in lieu of a meeting
requires the affirmative vote of two-thirds of the Company's capital stock then
outstanding. Pursuant to the Restated Certificate of Incorporation, additional
shares of Common Stock may be issued in the future without further stockholder
approval. Furthermore, the Restated Certificate of Incorporation permits the
Board of Directors to establish by resolution one or more series of preferred
stock ("Preferred Stock") and to establish the powers, designations,
preferences and relative, participating, optional or other special rights of
each series of Preferred Stock. The Preferred Stock could be issued on terms
that are unfavorable to the holders of Common Stock or that could make a
takeover or change in control of the Company more difficult.

         In June 1996, the Board of Directors of the Company approved the
Rights Agreement which is designed to protect stockholders should the Company
become a target of coercive and unfair takeover tactics but may discourage
takeover attempts that are not approved by the Board





                                       17
<PAGE>   18
of Directors. The Rights could cause substantial dilution to a person or group
that attempts to acquire the Company without conditioning the offer on
redemption of the Rights or on substantially all of the Rights also being
acquired. In addition, immediately following the Offering, the Company will be
subject to Section 203 of the Delaware General Corporation Law, which places
restrictions on certain business combinations with certain stockholders that
could render more difficult a change in control of the Company.

NO DIVIDENDS

         The Company has not declared or paid any cash dividends on its Common
Stock since its inception. The Company currently intends to retain all earnings
for the operation and expansion of its business and does not anticipate paying
any dividends in the foreseeable future. In addition, the Company's credit
agreement restricts the payment of dividends. See Note 6 of Notes to the
Consolidated Financial Statements.

ITEM 2.  PROPERTIES

         The Company operates its facilities in 48 locations, all of which are
leased. These facilities are principally used for operations, general and
administrative functions and training. Several of these facilities are
primarily used as storage and warehouse space for strategic stocking. The chart
below summarizes the locations of facilities which the Company leases as of
September 30, 1996:

                                                             NUMBER OF
LOCATION                                                 LEASED PROPERTIES
--------                                                 -----------------
Canada
------

Alberta . . . . . . . . . . . . . . . . . . . . . . .              6
British Columbia  . . . . . . . . . . . . . . . . . .              6 
Manitoba  . . . . . . . . . . . . . . . . . . . . . .              3 
Nova Scotia . . . . . . . . . . . . . . . . . . . . .              1 
Ontario . . . . . . . . . . . . . . . . . . . . . . .             10 
Quebec. . . . . . . . . . . . . . . . . . . . . . . .              3 
Saskatchewan  . . . . . . . . . . . . . . . . . . . .              3
                                                                  --
          Canadian Total. . . . . . . . . . . . . . .             32
                                                                  ==

U.S.  
----
Arizona . . . . . . . . . . . . . . . . . . . . . . .              1 
California  . . . . . . . . . . . . . . . . . . . . .              4 
District of Columbia  . . . . . . . . . . . . . . . .              1 
Illinois  . . . . . . . . . . . . . . . . . . . . . .              2 
Maryland  . . . . . . . . . . . . . . . . . . . . . .              1
Massachusetts . . . . . . . . . . . . . . . . . . . .              1 
New York  . . . . . . . . . . . . . . . . . . . . . .              2 
Ohio  . . . . . . . . . . . . . . . . . . . . . . . .              1 
Pennsylvania  . . . . . . . . . . . . . . . . . . . .              1 
Texas . . . . . . . . . . . . . . . . . . . . . . . .              1 
Washington  . . . . . . . . . . . . . . . . . . . . .              1
                                                                  --
          U.S.Total . . . . . . . . . . . . . . . . .             16
                                                                  ==




                                        18
<PAGE>   19
         The Company believes that its properties are well maintained, in good
condition and adequate for its present needs. The Company anticipates that
suitable additional or replacement space will be available when required. The
Company's facilities rental expense for the fiscal years ended July 31, 1995
and 1996 was approximately $458,000 and $1,177,000, respectively. The Company's
principal executive offices are currently located in Mississauga, Ontario,
although the Company anticipates that it will move such offices to Dallas,
Texas within the next 18 months. See Note 7 of Notes to the Consolidated
Financial Statements.

ITEM 3.  LEGAL PROCEEDINGS

         There are no pending legal proceedings involving the Company other
than routine litigation incidental to the Company's business, including
numerous motor vehicle-related accident claims. In the opinion of the Company's
management, such proceedings should not, individually or in the aggregate, have
a material adverse effect on the Company's business, financial condition or
results of operations.

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

         Not applicable.


                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

         The Company's Common Stock began trading over-the-counter on the
Nasdaq National Market under the symbol "DYMX" on August 13, 1996.  As of
October 17, 1996, the approximate number of holders of record of Common Stock
was 61 and the last reported sales price of the Common Stock on the Nasdaq
National Market was $11.625 per share.

         The Company has not declared or paid any cash dividends on its Common
Stock since its inception.  The Company currently intends to retain all
earnings for the operation and expansion of its business and does not
anticipate paying any cash dividends in the foreseeable future.   In addition,
the Company's Credit Agreement restricts the payment of dividends.  See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

ITEM 6.  SELECTED FINANCIAL DATA

         The following selected historical financial data for the three years
ended July 31, 1996 have been derived from the audited consolidated financial
statements of the Company appearing elsewhere herein. The following selected
historical financial data for the years ended July 31,





                                       19
<PAGE>   20
1992 and 1993 have been derived from the consolidated financial statements of
the Company not appearing elsewhere herein. The selected financial data are
qualified in their entirety, and should be read in conjunction with, the
Company's financial statements, including the notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere herein.


                              YEAR ENDED JULY 31,
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                   1992(1)    1993       1994     1995(2)    1996(2)
                                                                  -------   -------    --------   -------    -------
 <S>                                                              <C>       <C>        <C>        <C>         <C>
 STATEMENT OF OPERATIONS DATA:
   SALES . . . . . . . . . . . . . . . . . . . . . . . . . .      $  219    $   728      $7,023   $21,032      $71,812
   COST OF SALES . . . . . . . . . . . . . . . . . . . . . .         148        419       5,212    14,336       50,018
                                                                  ------   --------    --------   -------     --------
     GROSS PROFIT  . . . . . . . . . . . . . . . . . . . . .          71        309       1,811     6,696       21,794
   SELLING, GENERAL AND ADMINISTRATIVE EXPENSES  . . . . . .         226        752       2,449     7,068       17,545
                                                                  
   DEPRECIATION AND AMORTIZATION . . . . . . . . . . . . . .          25         54         322       690        1,542
                                                                  ------   --------    --------   -------     --------
                                                                  
     OPERATING INCOME (LOSS) . . . . . . . . . . . . . . . .        (180)      (497)       (960)   (1,062)       2,707
   INTEREST EXPENSE  . . . . . . . . . . . . . . . . . . . .          16         25         157       403        1,655
   OTHER (INCOME) EXPENSE  . . . . . . . . . . . . . . . . .          (5)       (14)                               -- 
                                                                  ------   --------    --------   -------     --------
                                                                                            (52)      157
                                                                  ------   --------    --------   -------     --------
     INCOME (LOSS) BEFORE TAXES  . . . . . . . . . . . . . .        (191)      (508)     (1,065)   (1,622)       1,052
   INCOME TAXES  . . . . . . . . . . . . . . . . . . . . . .          --         --          --         3          176
                                                                  ------   --------    --------   -------     --------
     NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . .      $ (191)     $ (508)    $(1,065)  $(1,625)    $    876
                                                                  ======      ======     =======   =======     ======== 
   NET INCOME (LOSS) PER COMMON SHARE(3) . . . . . . . . . .      $(0.12)     $(0.33)    $ (0.63)  $ (0.81)    $   0.23
                                                                  ======      ======     =======   =======     ======== 
 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING . . . . . . . . .      1,556       1,556       1,691     2,018        3,732
                                                                  ======      ======     =======   =======     ======== 
 OTHER DATA:                                                      
   EARNINGS (LOSS) BEFORE INTEREST, TAXES, DEPRECIATION           
     AND AMORTIZATION(4) . . . . . . . . . . . . . . . . . .       $(150)      $(429)      $(586)    $(529)      $4,249
</TABLE>


                                    JULY 31,
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                          1992       1993       1994        1995       1996
                                                          ----       ----       ----        ----       ----
<S>                                                       <C>        <C>       <C>         <C>        <C>
BALANCE SHEET DATA:                      
  WORKING CAPITAL . . . . . . . . . . . . . . . . . .     $380         $36       $638      $1,484     $4,086
  TOTAL ASSETS  . . . . . . . . . . . . . . . . . . .      599       1,286      8,134      17,194     34,999
  LONG-TERM DEBT, EXCLUDING  CURRENT PORTION  . . . .       --       1,037      1,999       5,924     20,036
  SHAREHOLDERS' EQUITY (DEFICIT)  . . . . . . . . . .      410       (106)      3,389       4,650      6,158
</TABLE>

(1) Represents results for the fourteen months ended July 31, 1992. The
    Company's predecessors began operations in June 1991.
(2) The historical statement of operations data for the years ended July 31,
    1995 and 1996 include data for (i) Dynamex Express after May 31, 1995, the
    effective date of its acquisition by the Company and (ii) Mayne Nickless
    after December 28, 1995, the effective date of its acquisition by the
    Company.
(3) See Note 1 of Notes to the Consolidated Financial Statements.
(4) EBITDA is defined as income excluding interest, taxes, depreciation and
    amortization of goodwill and other assets (as presented on the face of the
    income statement). EBITDA is supplementally presented because management
    believes that it is a widely accepted financial indicator of a company's
    ability to service and/or incur indebtedness, maintain current operating
    levels of fixed assets and acquire additional operations and businesses.
    EBITDA should not be considered as a substitute for statement of operations
    or cash flow data from the Company's financial statements, which have been
    prepared in accordance with generally accepted accounting principles. Cash
    flows provided by (used in) operating activities for the three years ended
    July 31, 1996 were ($980), ($944) and $2,380, respectively. Cash flows used
    in investing activities for the three years ended July 31, 1996 were
    $2,251, $7,995 and





                                        20
<PAGE>   21
    $13,192, respectively. Cash flows provided by financing activities for the
    three years ended July 31, 1996 were $3,964, $8,580 and $11,200,
    respectively.

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

          The following discussion should be read in conjunction with the
information contained in the financial statements, including the notes thereto,
and the other financial information appearing elsewhere in this Report.

GENERAL

         The Company had no significant operations prior to the year ended July
31, 1992. Since that date, the Company has completed 17 acquisitions of same-
day courier operations in the U.S. and Canada. Each of these acquisitions has
been accounted for using the purchase method of accounting. Accordingly, the
Company's historical results of operations for the three years ended July 31,
1996, reflect the results of acquired operations as of the date of acquisition.
The most significant of these transactions were (i) the acquisition of Dynamex
Express in May 1995, pursuant to which the Company acquired the majority of its
Canadian operations and employed its Chief Executive Officer and certain other
key employees, and (ii) the acquisition of Mayne Nickless in December 1995. The
operating results attributable to the operations of Dynamex Express are
included in the Company's historical results after May 31, 1995, and the
operations of Mayne Nickless are included in the Company's historical results
after December 28, 1995. Consequently, the year ended July 31, 1995 includes
Dynamex Express operations for two months and does not include any operations
of Mayne Nickless and the year ended July 31, 1996 includes twelve months of
Dynamex Express operations and seven months of Mayne Nickless operations. As a
result, the historical operating results of the Company for a given period are
not necessarily comparable to prior or subsequent periods, and in particular,
the periods prior to the Company's acquisition of Dynamex Express are not
necessarily comparable to the periods subsequent to such acquisition.

         Sales consist primarily of charges to customers for individual
delivery services and weekly or monthly charges for recurring services, such as
fleet management. Sales are recognized when the service is performed. The
amount of yield (revenue per transaction) for a particular service is dependent
upon a number of factors including size and weight of articles transported,
distance transported, special handling requirements, requested delivery time
and local market conditions. Generally, articles of greater weight, transported
over longer distances and those that require special handling produce higher
yields.

         Cost of sales consists of costs relating directly to performance of
services, including driver and messenger costs and third party delivery
charges, if any. The Company almost exclusively utilizes drivers who own their
own vehicles, and approximately 87% of these owner/operators are independent
contractors as opposed to employees of the Company. Drivers and messengers are





                                       21
<PAGE>   22
generally compensated based on a percentage of the charge for a delivery.
Consequently, the Company's costs directly associated with providing these
services are variable in nature. To the extent that the drivers and messengers
are employees of the Company, employee benefit costs related to them, such as
payroll taxes and insurance, are also included in cost of sales.

         Selling, general and administrative expenses include costs incurred at
the branch level related to taking orders, dispatching drivers and messengers,
as well as administrative costs related to such functions. Also included in
selling, general and administrative expenses are regional and corporate level
marketing and administrative costs and occupancy costs related to branch and
corporate locations.

         Generally, the Company's on-demand services provide higher gross
profit margins than do scheduled distribution or fleet management services
because driver compensation for on-demand services is generally lower as a
percentage of sales from such service. However, scheduled distribution and
fleet management services generally have fewer administrative requirements
related to order taking, dispatching drivers and billing. As a result of these
variances, the Company's margins are dependent in part on the mix of business
for a particular period.

         As the Company has no significant investment in transportation
equipment, depreciation and amortization expense relates to depreciation of
office, communication and computer equipment and the amortization of intangible
assets acquired in the Company's various acquisitions, each of which has been
accounted for using the purchase method of accounting. The Company expects to
continue to make acquisitions and anticipates that such acquisitions will be
accounted for using the purchase method of accounting. As a consequence, it is
likely that in the future the Company will incur additional expense from
amortization of acquired intangible assets, including goodwill.

         The Company utilized approximately $4.8 million of the net proceeds
from the IPO to redeem the junior subordinated debentures (the "Bridge Notes")
due June 28, 2001, bearing interest at an annual rate of 12%.  The carrying
value of the Bridge Notes, approximately $4.2 million, is the estimated fair
value of such facility at the date of its issuance plus the amortization of the
difference between such estimated fair value and the principal amount through
July 31, 1996. Consequently, in the first quarter of fiscal year 1997, the
Company will incur an extraordinary loss in the amount of this difference,
approximately $600,000, in connection with the redemption of the Bridge Notes
upon the closing of the IPO.

RESULTS OF OPERATIONS

         The following table sets forth for the periods indicated, certain
items from the Company's consolidated statement of operations, expressed as a
percentage of sales:





                                       22
<PAGE>   23
<TABLE>
<CAPTION>
                                                                            YEAR ENDED JULY 31,
                                                                            -------------------
                                                                    1994           1995           1996
                                                                    ----           ----           ----
 <S>                                                                <C>            <C>            <C>
 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . .        100.0%         100.0%         100.0%
 Cost of sales . . . . . . . . . . . . . . . . . . . . . . .         74.2           68.2           69.7
                                                                   ------         ------         ------
   Gross profit  . . . . . . . . . . . . . . . . . . . . . .         25.8           31.8           30.3

 Selling, general and administrative expenses  . . . . . . .         34.9           33.6           24.4
 Depreciation and amortization . . . . . . . . . . . . . . .          4.6            3.3            2.1
                                                                  -------        -------        -------
   Operating income  . . . . . . . . . . . . . . . . . . . .        (13.7)          (5.1)           3.8
 Interest expense  . . . . . . . . . . . . . . . . . . . . .          2.2            1.9            2.3
 Other (income) expense  . . . . . . . . . . . . . . . . . .         (0.7)           0.7              --   
                                                                  -------        -------           --------

   Income (loss) before taxes  . . . . . . . . . . . . . . .        (15.2)%         (7.7)%          1.5%
                                                                     ====            ===            === 
</TABLE>


YEAR ENDED JULY 31, 1996 COMPARED TO YEAR ENDED JULY 31, 1995

         The year ended July 31, 1996 includes the results of Dynamex Express
which was acquired by the Company on May 31, 1995. In addition, the results for
that period include the results from the operations acquired from Mayne
Nickless on December 29, 1995 for the period January through July 31, 1996. As
a result of the Mayne Nickless acquisition, the Company obtained additional
operations in Los Angeles, San Diego, San Francisco, Seattle, Pittsburgh,
Boston, Washington D.C., Baltimore and Vancouver and Victoria, British
Columbia.

         Sales increased $50.8 million, or 242%, from $21.0 million for the
year ended July 31, 1995 to $71.8 million for the year ended July 31, 1996.
Approximately $37.4 million of this increase is attributable to the acquired
operations of Dynamex Express and approximately $14.6 million is attributable
to the inclusion of the operations of Mayne Nickless. Sales attributable to the
previously existing operations of the Company declined by approximately $1.2
million from the year ended July 31, 1995 to the year ended July 31, 1996
primarily due to a decline in sales in Arizona that was partially offset by
increases in sales in Western Canada. In January and February 1996, severe
winter storms in the Eastern United States resulted in a general disruption of
commerce and therefore a decline in sales for the Company's operations in those
areas.

         Cost of sales increased by $35.7 million, or 249%, from $14.3 million
for the year ended July 31, 1995 to $50.0 million for the year ended July 31,
1996. Approximately $27.2 million of this increase is attributable to the
operations of Dynamex Express and approximately $9.3 million is attributable to
the operations of Mayne Nickless. This increase was partially offset by a
decrease in the cost of sales from the existing operations of the Company. The
Company's gross profit margin declined from 31.8% in the year ended July 31,
1995 to 30.3% in the year ended July 31, 1996. The decrease was primarily
caused by two factors (i) the higher proportion of lower margin scheduled
distribution and fleet management business arising from the inclusion of
Dynamex Express operations in fiscal year 1996 (which decrease was partially
offset by the additional higher margin on-demand business arising from the
inclusion of Mayne Nickless





                                        23
<PAGE>   24
operations during seven months of such period) and (ii) the decline in gross
margin attributable to the Company's operations in Western Canada and Arizona
due to competitive pressures and certain unprofitable business. To a lesser
extent, the increased cost of providing service during the winter storms which
occurred during the year ended July 31, 1996 had a negative impact on the
Company's gross profit margin during such period.

         Selling, general and administrative expenses increased $10.5 million,
or 148%, from $7.1 million for the year ended July 31, 1995 to $17.5 million
for the year ended July 31, 1996, primarily because the 1996 period includes
costs related to Dynamex Express operations and, to a lesser extent, costs
related to Mayne Nickless operations. As a percentage of sales, selling,
general and administrative expenses decreased from 33.6% for the year ended
July 31, 1995 to 24.4% for the year ended July 31, 1996. This decrease resulted
from a larger revenue base which enabled the Company to spread such costs over
more sales, and the absence of certain revisions to accounting estimates made
in the 1995 period. Despite this decrease, the Company has continued to invest
in and to incur significant costs related to its national and regional
marketing program. During the year ended July 31, 1995, the Company also
revised its estimates of uncollectible accounts, accrued insurance costs and
other accrued liabilities. As a result of these revisions, the Company
recognized additional selling, general and administrative expenses of
approximately $715,000.

         Depreciation and amortization expense for the year ended July 31, 1996
increased by $850,000, or 123% from $690,000 for the year ended July 31, 1995
to $1.5 million for the year ended July 31, 1996. Of this increase,
approximately $461,000 relates to depreciation and amortization of assets
related to Dynamex Express and approximately $389,000 relates to depreciation
and amortization of assets related to Mayne Nickless.

         Interest expense increased $1.3 million, or 311%, from $403,000 for
the year ended July 31, 1995 to $1.7 million for the year ended July 31, 1996.
Increased debt of approximately $4.7 million incurred in connection with the
acquisition of Dynamex Express created approximately $471,000 of this increase
while additional debt of $12.3 million incurred in connection with the
acquisition of Mayne Nickless resulted in increased interest expense of
approximately $869,000. These increases were partially offset by lower average
balances of other debt and reduced interest rates on certain debt refinanced at
the time of the Mayne Nickless acquisition.

YEAR ENDED JULY 31, 1995 COMPARED TO YEAR ENDED JULY 31, 1994

         Effective May 31, 1995, the Company acquired Dynamex Express. As a
result, the Company's operating results for the year ended July 31, 1995
include the results of Dynamex Express for the months of June and July. Sales
increased by approximately $14.0 million, or 199%, from $7.0 million for fiscal
year 1994 to $21.0 million for fiscal year 1995. Approximately $5.9 million of
this increase relates to the inclusion of Dynamex Express for two months in
fiscal year 1995. The balance of the increase results primarily from the
inclusion of a full year of results from acquisitions made by the Company
during fiscal year 1994.





                                       24
<PAGE>   25
         Cost of sales for fiscal 1995 increased approximately $9.1 million, or
175%, from $5.2 million in fiscal year 1994 to $14.3 million in fiscal year
1995, as a result of the increase in sales discussed above. Approximately $4.2
million of this increase is attributable to the inclusion of the operations of
Dynamex Express in 1995. The Company's gross profit margin increased to 31.8%
in fiscal 1995 as compared to 25.8% in fiscal 1994. This increase resulted
primarily from the change in business mix resulting from the acquired
businesses, including Dynamex Express. The businesses acquired by the Company
during fiscal 1994 had generally higher gross profit margins than the Company's
previously existing operations due to a higher proportion of on-demand
business, and as a consequence, the Company's average gross profit margin
increased during fiscal 1995. The operations of Dynamex Express historically
had a lower gross profit margin than the businesses acquired by the Company
during 1994, but a higher gross profit margin than the Company's previously
existing operations.

         Selling, general and administrative expenses increased approximately
$4.7 million, or 189%, from $2.4 million in fiscal 1994 to $7.1 million in
fiscal 1995, due in part to the increased administrative activities associated
with the growth in revenues and the additional locations of the businesses
acquired in fiscal 1995 and 1994. As a percentage of sales, selling, general
and administrative expenses decreased in fiscal 1995 to 33.6% compared to 34.9%
in fiscal 1994.

         Depreciation and amortization expense increased by $368,000, or 114%,
from $322,000 in fiscal 1994 to $690,000 in fiscal 1995. Of this increase,
approximately $76,000 relates to depreciation and amortization of assets
related to Dynamex Express with the balance relating to amortization of costs
attributable to acquisitions made during fiscal 1994.

         Interest expense increased by $246,000, or 157%, from $157,000 in
fiscal 1994 to $403,000 in fiscal 1995, as a result of debt incurred or assumed
in connection with these acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's primary capital requirements relate to its acquisition
strategy and, to a lesser extent, working capital and capital expenditures.
Since July 31, 1992, the Company has completed 17 acquisitions of same-day
courier companies with consideration therefor, including transaction costs,
aggregating approximately $42.1 million (of which approximately $26.8 million
was paid in cash). For the years ended July 31, 1996 and 1995, capital
expenditures were approximately $579,000 and $213,000, respectively. As of July
31, 1996, the Company's working capital was approximately $4.1 million. Prior
to the year ended July 31, 1996, the Company's operations did not produce
positive cash flow from operations, and the Company's capital needs during
these periods were supplied from bank borrowings, seller financing and the
private placement of debt and equity securities. In December 1995, the Company
entered into a bank credit facility to provide funds for the acquisition of
Mayne Nickless and to refinance a significant portion of the seller financing
that had been incurred in connection with prior acquisitions.  In August 1996,
the Company amended and restated this credit facility (the "Credit Agreement")
to





                                       25
<PAGE>   26
provide for a $40.0 million revolving credit facility. As of September 30,
1996, approximately $8.3 million was outstanding under the Credit Agreement.

         An integral part of the Company's business strategy is to pursue
acquisitions. Therefore, the Company's need for capital related to acquisitions
is expected to be significant in the future. As a result of increasing sales
arising from new acquisitions as well as internal growth, the Company also
anticipates that it will need additional working capital from time to time to
finance the resulting increase in accounts receivable in relation to accounts
payable. Capital expenditures, other than for acquisitions, are not expected to
increase materially in relation to total capital needs in the foreseeable
future.

         Management expects to fund the capital requirements discussed above
primarily from three sources: (i) the issuance of additional common equity in
connection with future acquisitions; (ii) cash flow from operations; and (iii)
additional borrowings from banks.

         The Company's credit facility under the Credit Agreement consists of a
revolving note of up to $40.0 million with interest payable quarterly at the
prime rate, or certain other rate options based on certain financial ratios of
the Company. Any amounts outstanding under the revolving note on May 31, 1998
will be converted to a term facility which will be repayable in nineteen equal
quarterly installments of principal over a five year period. Interest on the
term facility is payable quarterly at the prime rate, or certain other rate
options based on certain financial ratios of the Company.

         Amounts outstanding under the Credit Agreement are secured by
essentially all of the assets of the Company and its subsidiaries. The Credit
Agreement also contains restrictions on the payment of dividends, incurring
additional debt, capital expenditures and investments by the Company as well as
requiring the Company to maintain certain financial ratios. See Note 6 of Notes
to the Consolidated Financial Statements.

         Management believes that sources of capital discussed above, namely
cash flow from operations and the Company's credit facility will be sufficient
to allow the Company to successfully pursue its business strategy over the next
18 to 24 months. It is anticipated that future acquisitions will be structured
with a combination of cash and the Company's Common Stock being used as
consideration. The amount of capital available for future acquisitions will
depend in part on the willingness of sellers to accept the Company's Common
Stock as partial consideration. This in turn will be dependent in part on the
financial performance and condition of the Company as well as general market
conditions. If unable to utilize its Common Stock to finance such acquisitions,
or if the size and number of acquisitions utilizes its available resources or
exceeds the threshold above which lender approval is required under the Credit
Agreement and such approval is not obtained, the Company may be forced to seek
other sources of capital such as additional debt or equity financing. There can
be no assurance that such additional sources of capital will be available or
that they will be available on terms which are acceptable to the





                                       26
<PAGE>   27
Company. These factors could serve to negatively affect the Company's ability
to implement its business strategy in the manner, or within the time frame,
anticipated by management.

INFLATION

         The Company does not believe that inflation has had a material effect
on the Company's results of operations nor does it believe it will do so in the
foreseeable future.

ACCOUNTING PRONOUNCEMENTS

         In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123). SFAS 123 establishes a fair value based method
of accounting for stock-based employee compensation plans; however, it also
allows companies to continue to measure cost for such plans using the method of
accounting prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25). Companies that elect to
continue with the accounting under APB 25 must provide certain pro forma
disclosures of net income, as if SFAS 123 had been applied. The accounting and
disclosure requirements of SFAS 123 are effective for the Company for
transactions entered into in fiscal 1997. The Company is currently evaluating
its alternatives under SFAS 123, and its impact on operating results, when
adopted by the Company, is not presently known.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Item 14(a).

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

         None.

                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

    The following table sets forth certain information concerning each of the
persons who are (i) executive officers, (ii) key employees or (iii) directors.





                                       27
<PAGE>   28
<TABLE>
<CAPTION>
 NAME                            AGE    POSITION(S)
 ----                            ---    -----------
 <S>                              <C>   <C>
 Richard K. McClelland . . .      44    Chairman  of  the  Board,  President,  Chief
                                        Executive Officer and Director
 Robert P. Capps . . . . . .      42    Vice    President-Finance    and   Corporate
                                        Development,    Treasurer   and    Assistant
                                        Secretary
 Martin A. Piccolo . . . . .      40    Vice President, Controller and Secretary
 James R. Aitken . . . . . .      36    General Manager -- Eastern Canada
 Catherine J. Taylor . . . .      41    General Manager -- Midwestern Canada
 Ralph Embree  . . . . . . .      46    General Manager -- Eastern U.S.
 Thomas R. Stotler . . . . .      55    General Manager -- Western U.S.
 James M. Hoak . . . . . . .      52    Director
 Stephen P. Smiley . . . . .      47    Director(2)
 Wayne Kern  . . . . . . . .      63    Director
 Brian J. Hughes . . . . . .      35    Director(1)(2)
 Kenneth H. Bishop . . . . .      59    Director(1)(2)
 E. T. Whalen  . . . . . . .      63    Director
</TABLE>

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

(1)  Member of the Audit Committee.
(2)  Member of the Compensation Committee.

         Richard K. McClelland became the President and Chief Executive Officer
of the Company in May 1995 upon the closing of the Company's acquisition of
Dynamex Express, where he also served as President since 1988. He was elected
as Chairman of the Board of the Company in February 1996. Prior to joining
Dynamex Express in 1986, Mr. McClelland held a number of advisory and
management positions with the Irving Group, Purolator Courier Ltd. and Sunbury
Transport Ltd., where he was engaged in the domestic and international same-day
air, overnight air, and trucking businesses.

         Robert P. Capps has served as Vice President of Finance and Corporate
Development, Treasurer and Assistant Secretary of the Company since February
1996. Mr. Capps served in various financial management capacities with Hadson
Corporation (an energy company) from February 1986 through June 1995 and was
Executive Vice President and Chief Financial Officer from May 1991 through June
1995. In October 1992, Hadson Corporation filed for protection under Chapter 11
of the Federal Bankruptcy Code. Hadson Corporation's plan of reorganization was
confirmed in November 1992. Mr. Capps is a certified public accountant.

         Martin A. Piccolo became the Controller of the Company in May 1995
upon the closing of the Company's acquisition of Dynamex Express, where he also
served in such capacity. He was elected as Secretary of the Company in
September 1995, served as its Treasurer from September 1995 through January
1996 and was elected as a Vice President of the Company in August 1996. Mr.
Piccolo joined Dynamex Express in January 1989 and has over 15 years experience
in the courier industry.





                                       28
<PAGE>   29
         James R. Aitken has served as the General Manager -- Eastern Canada
since February 1996. He joined the Company in May 1995 in conjunction with the
Company's acquisition of Dynamex Express. Prior to joining the Company, Mr.
Aitken was the Director of Sales and Marketing with Dynamex Express, where he
was employed from 1988 to May 1995. During his employment with Dynamex Express,
Mr. Aitken worked in sales and marketing, regional and branch management and
client development. Mr. Aitken has over 17 years of experience in the courier
industry.

         Catherine J. Taylor has served as the General Manager -- Midwestern
Canada since May 1996. She joined the Company in August 1995 as Sales Manager -
- Eastern Canada. Prior to joining the Company, Mrs. Taylor was employed by The
Swift Transportation Group from 1982 where she held various management and
supervisory positions. Ms. Taylor has over 14 years of experience in the
courier industry.

         Ralph Embree has served as the General Manager -- Eastern U.S. since
February 1996. He joined the Company in December 1995 in conjunction with the
Company's acquisition of Mayne Nickless. Prior to joining the Company, Mr.
Embree held a variety of operations, sales and management positions with Mayne
Nickless where he was employed for seven years. Mr. Embree has over 17 years of
experience in the courier industry.

         Thomas R. Stotler has served as the General Manager -- Western U.S.
since February 1996. He joined the Company in December 1995 in conjunction with
the Company's acquisition of Mayne Nickless. Prior to joining the Company, Mr.
Stotler was employed by Mayne Nickless for over eight years as a branch manager
and regional operations manager. Mr. Stotler has over 18 years of experience in
the courier industry.

         James M. Hoak has served as a director of the Company since February
1996. Mr. Hoak founded Heritage Communications, Inc. (a diversified
communications company) in 1971 and served as its Chief Executive Officer until
1991. From 1991 to 1995, Mr. Hoak served as Chairman and Chief Executive
Officer of Crown Media, Inc. (a cable television company). Mr. Hoak has served
as Chairman of the Board of Heritage Media Corporation (a company engaged in
targeted marketing services and broadcasting) since its inception in 1987. Mr.
Hoak has served as the Chairman of the general partner of Cypress from its
inception in 1992 and as the Chairman of Hoak Capital Corporation (a private
investment company) since its inception in 1991. Since July 1996, Mr. Hoak has
served as the Chairman and a director of Hoak Breedlove Wesneski & Co. (an
investment banker, securities broker-dealer and one of the representatives of
the underwriters in the IPO).  Mr. Hoak is a director of Airgas, Inc.,
MidAmerican Energy Company, Pier 1 Imports, Inc. and Texas Industries, Inc. See
"Certain Transactions."

         Stephen P. Smiley has served as a director of the Company since 1993
and was a Vice President of the Company from December 1995 through February
1996. Mr. Smiley was President of Hoak Capital Corporation from 1991 through
February 1996 and served as President of the general partner of Cypress from
its inception in 1992 through January 1996. Mr. Smiley





                                       29
<PAGE>   30
has been Executive Vice President of Hunt Financial Corp. (a private investment
company) since February 1996. Mr. Smiley is also a director of Sun Coast
Industries, Inc. (a plastics manufacturer).

         Wayne Kern has served as a director of the Company since February
1996.  Mr. Kern has served as Senior Vice President and Secretary of Heritage
Media Corporation since 1987. From 1991 to 1995, Mr. Kern also served as
Executive Vice President of Crown Media, Inc. From 1979 to 1991, Mr. Kern
served as the Executive or Senior Vice President, General Counsel and Secretary
of Heritage Communications, Inc.

         Brian J. Hughes has served as a director of the Company since May
1995.  Mr. Hughes has served as the Vice President -- Investments of both
Preferred Risk Life Insurance Company and Preferred Risk Mutual Insurance
Company since September 1992. Mr. Hughes has been a member of the Advisory
Board of Cypress since March 1993. From 1986 to 1992, Mr. Hughes served as
Assistant Vice President -- Investments at Boatmen's National Bank.

         Kenneth H. Bishop has served as a director of the Company since August
1996. From 1974 to August 1996, Mr. Bishop was President and General Manager of
Zipper Transportation Services, Ltd. and a related company (together "Zipper")
which operated a same-day delivery business in Winnipeg, Manitoba. Zipper was
acquired by the Company in August 1996. See "Business -- Recent Acquisitions."

         E. T. Whalen has served as a director of the Company since August
1996.  Mr. Whalen is currently a consultant to Gateway Freight Services, an
entity providing freight forwarding services to major international airlines.
From 1965 until January 1996, Mr. Whalen was employed by Japan Airlines in
various management positions, including Staff Vice President-Cargo from October
1986.

BOARD OF DIRECTORS

         The Board of Directors of the Company consists of seven members. Each
director will hold office until the annual meeting of the stockholders of the
Company next following his election, and until his successor is elected and
qualified. The holders of a majority of the outstanding shares of Common Stock
present and entitled to vote at a meeting of stockholders are entitled to elect
all of the directors.

         Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company will receive an annual fee of $6,000 as compensation for his or her
services as a member of the Board of Directors. Non-employee directors will
receive an additional fee of $500 for each meeting of the Board of Directors
attended in person by such director and $250 for each telephonic meeting in
which such director participates. Non-employee directors who serve on a
committee of the Board of Directors will receive $500 for each committee
meeting attended in person and $250 for each telephonic





                                       30
<PAGE>   31
committee meeting in which such director participates. All directors of the
Company are reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board of Directors or committees thereof, and for other
expenses incurred in their capacities as directors of the Company.

COMMITTEES OF THE BOARD OF DIRECTORS

         The Board of Directors has established two committees: a Compensation
Committee and an Audit Committee. Each of these committees has two or more
members who serve at the discretion of the Board of Directors. The Compensation
Committee is responsible for reviewing and making recommendations to the Board
of Directors with respect to compensation of executive officers, other
compensation matters and awards under the Company's stock option plan. The
Audit Committee is responsible for reviewing the Company's financial
statements, audit reports, internal financial controls and the services
performed by the Company's independent public accountants, and for making
recommendations with respect to those matters to the Board of Directors.

ITEM 11.         EXECUTIVE COMPENSATION

         The following summary compensation table sets forth the total annual
compensation paid or accrued by the Company to or for the account of the Chief
Executive Officer and the other executive officers of the Company whose total
cash compensation for the fiscal year ended July 31, 1996 exceeded $100,000:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                                 LONG TERM
                                                                                               COMPENSATION
                                                                                                  AWARDS
                                                                                                  ------
                                                                           ANNUAL
                                                                        COMPENSATION            SECURITIES
                                                                                                UNDERLYING
                     NAME AND                         FISCAL        SALARY        BONUS           OPTIONS
                PRINCIPAL POSITION                     YEAR          ($)           ($)              (#)
                ------------------                     ----          ---           ---              ---
 <S>                                                  <C>         <C>            <C>              <C>
 Richard K. McClelland
   President and Chief Executive Officer . . . .      1996        194,467        50,790             --
                                                      1995(1)      22,050         --             103,000
</TABLE>


(1) Mr. McClelland was employed by the Company as of May 31, 1995, the date of
    the Company's acquisition of Dynamex Express. Consequently, Mr.
    McClelland's salary for fiscal year 1995 as set forth above represents only
    two months of his annual salary. Had Mr. McClelland been employed for the
    entire twelve months of fiscal year 1995, his salary for such year would
    have been approximately $132,300.





                                        31
<PAGE>   32
EMPLOYMENT AND CONSULTING AGREEMENTS

         The Company has entered into an employment agreement with Mr.
McClelland. Such agreement provides for the payment of a base salary in the
annual amount of $200,000, participation in an executive bonus plan, an auto
allowance of approximately Cdn $900 per month and participation in other
employee benefit plans. The agreement also provides that upon Mr. McClelland's
exercise of certain stock options to purchase 48,000 shares of Common Stock,
the Company shall pay Mr. McClelland a bonus equal to the exercise price
multiplied by the number of shares to be purchased by virtue of such exercise.
Unless terminated earlier, the employment agreement shall continue until May
31, 2000, upon which date, such agreement will be automatically extended for
successive one-year renewal terms unless the Company gives Mr. McClelland
notice upon the terms provided in such agreement. Additionally, upon a sale or
transfer of substantially all of the assets of the Company or certain other
events that constitute a change of control of the Company, including the
acquisition by a stockholder, other than certain named stockholders, of
securities representing 15% of the votes that may be cast for director
elections, the Company or its successor, as the case may be, shall continue to
pay Mr. McClelland the compensation set forth in such agreement for the greater
of two years from the date of such change of control or the remainder of the
term of the agreement.

STOCK OPTION PLAN

         The Company maintains the Dynamex Inc. 1996 Stock Option Plan (the
"Option Plan") which provides for the grant of options to eligible employees
and directors for the purchase of Common Stock of the Company. The Option Plan
covers, in the aggregate, a maximum of 630,000 shares of Common Stock. The
Option Plan provides for the granting of both incentive stock options (as
defined in Section 422A of the Internal Revenue Code of 1986) and nonqualified
stock options (options which do not meet the requirements of Section 422A). In
addition, the Option Plan provides for the granting of restricted stock, which
may include, without limitation, restrictions on the right to vote such shares
and restrictions on the right to receive dividends on such shares. The grant of
options to purchase such restricted stock may be based upon the attainment of
performance goals prescribed by the Compensation Committee of the Board of
Directors (the "Committee"). Under the Option Plan, the exercise price may not
be less than the fair market value of the Common Stock on the date of the grant
of the option.

         The Committee administers and interprets the Option Plan and is
authorized to grant options thereunder to all eligible employees of the
Company, including officers. The Committee designates the optionees, the number
of shares subject to the options and the terms and conditions of each option.
Options under the Option Plan generally vest over a five year period. Certain
changes in control of the Company will cause the options to vest immediately.
Each option granted under the Option Plan must be exercised, if at all, during
a period established in the grant which may not exceed 10 years from the date
of grant. An optionee may not transfer or assign any option granted and may not
exercise any options after a specified period subsequent to the termination of
the optionee's employment with the Company.





                                       32
<PAGE>   33
         Non-employee members of the Board of Directors will receive annual
grants of options under the Option Plan. The initial grant to such directors
shall consist of options to purchase 2,000 shares of Common Stock at fair
market value and shall be granted upon the later of (i) the closing of the IPO
or (ii) the date such director is initially elected. Thereafter, on the
anniversary of the initial grant, options to purchase 2,000 shares of Common
Stock at the then fair market value will be automatically granted to each
director then serving. Such options will be immediately vested in full. Each
option granted to directors under the Option Plan must be exercised, if at all,
during a period established in the grant, which may not exceed 10 years from
the date of grant. An optionee may not transfer or assign any options granted
and may not exercise any options after a specified period subsequent to the
termination of the optionee's service on the Board of Directors. Any options
granted to an optionee will immediately terminate upon removal of such optionee
from the Board of Directors for cause.

         As of September 30, 1996, options to purchase 471,384 shares were
outstanding and (i) 214,384 of these options have a weighted average exercise
price of $3.84 per share and expire between November 2003 and July 2005 and
(ii) 257,000 of these options (99,000 of which were granted to Mr. McClelland)
have an exercise price of $8.00 per share and will expire in August 2006. A
total of 158,616 shares remained available for future grants under the Option
Plan. The Company did not grant any options to purchase Common Stock under the
Option Plan in fiscal year 1996.

FISCAL YEAR-END OPTION VALUES

         The following table sets forth information with respect to the
unexercised options to purchase shares of the Company's Common Stock granted
under the Option Plan to the executive officers named in the Summary
Compensation Table and held by them at July 31, 1996.

                         FISCAL YEAR-END OPTION VALUES


<TABLE>
<CAPTION>
                                                              AS OF JULY 31, 1996
                                                              -------------------
                                          NUMBER OF SECURITIES
                                         UNDERLYING UNEXERCISED                  VALUE OF UNEXERCISED
                                                 OPTIONS                        IN-THE-MONEY OPTIONS(1)
                                                 -------                        -----------------------
              NAME                    EXERCISABLE        UNEXERCISABLE       EXERCISABLE       UNEXERCISABLE 
              ----                    -----------        -------------       -----------       --------------
 <S>                                     <C>                 <C>             <C>                 <C>
 Richard K. McClelland . . . .           59,000              44,000          $221,250(2)         $165,000
</TABLE>


(1) Based on the IPO price of $8.00 per share less the exercise price payable
    for such shares.

(2) Does not give effect to the Company's agreement to pay a cash bonus to Mr.
    McClelland upon his exercise of his option to purchase all or any of these
    48,000 shares of Common Stock equal to the exercise price multiplied by the
    number of shares to be purchased by virtue of such exercise.





                                        33
<PAGE>   34
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         During fiscal year 1996, the Compensation Committee of the Company's
Board of Directors consisted of two members, Messrs. Smiley and Hughes. Mr.
Smiley was a Vice President of the Company from December 1995 through February
1996, although he received no compensation for the services he rendered to the
Company in such capacity.  Mr. Bishop became a member of the Compensation
Committee concurrently with his election to the Board of Directors in August
1996. No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

         The Company's Restated Certificate of Incorporation limits the
liability of directors of the Company to the Company or its stockholders to the
fullest extent permitted by Delaware General Corporation Law (the "DGCL").
Accordingly, pursuant to the terms of the DGCL presently in effect, the
Company's directors will not be liable to the Company or its stockholders for
monetary damages for breach of the directors' fiduciary duty as a director,
except for liability (i) for any breach of the directors' duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases or (iv) for any transaction from which the director derived an
improper personal benefit. The effect of these provisions will be to eliminate
the rights of the Company and its stockholders (through stockholders'
derivative suits on behalf of the Company) to recover monetary damages against
a director for breach of fiduciary duty as a director (including breaches
resulting from grossly negligent behavior), except in the situations described
above. These provisions will not limit the liability of directors under federal
securities laws. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission.

         The Company's Bylaws provide that the Company shall indemnify each of
its directors and officers, acting in such capacity, so long as such person
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Company. Such indemnification may be
made only upon a determination by the Board of Directors that such
indemnification is proper in the circumstances because the person to be
indemnified has met the applicable standard of conduct to permit
indemnification under the law. The Company is also required to advance to such
persons payment for their expenses incurred in defending a proceeding to which
indemnification might apply, provided the recipient provides an undertaking
agreeing to repay all such advanced amounts if it is ultimately determined that
he is not entitled to be indemnified.

         The Company has also entered into indemnification agreements with each
of its directors and certain of its executive officers. Pursuant to these
agreements, the Company is obligated, to the extent permitted by law, to
indemnify these persons against all expenses, judgments, fines and





                                       34
<PAGE>   35
penalties incurred in connection with the defense or settlement of any actions
brought against them by reason of the fact that they are or were directors or
officers of the Company or that they are or were serving at the request of the
Company as an officer or director of another corporation or enterprise, except
that if the acts of such an indemnitee are found by a court of proper
jurisdiction to be intentional or willful, the Company will not be liable to
indemnify such indemnitee.

         As of this date hereof, there is no pending litigation or proceeding
involving a director, officer, employee or agent of the Company where
indemnification will be required or permitted, and the Company is not aware of
any threatened litigation or proceeding which may result in a claim for such
indemnification.

ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of October 17, 1996 for
(i) each person known by the Company to own beneficially more than 5% of the
Common Stock, (ii) each director and each executive officer of the Company
named in the Summary Compensation Table and (iii) all directors and executive
officers of the Company as a group. Except pursuant to applicable community
property laws and except as otherwise indicated, each stockholder identified in
the table possesses sole voting and investment power with respect to its or his
shares.


<TABLE>
<CAPTION>
                                                                                      SHARES BENEFICIALLY
                                                                                             OWNED
 NAME                                                                               NUMBER(1)       PERCENT
 ----                                                                               ---------       -------
 <S>                                                                                 <C>              <C>
 Directors, Nominees and Executive Officers:
 Richard K. McClelland . . . . . . . . . . . . . . . . . . . . . . . . . . . .          59,000        *
 James M. Hoak(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       2,353,752         35.2 %
 Stephen P. Smiley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           4,160        *
 Wayne Kern  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           4,640        *
 Brian J. Hughes(4)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             -          -
 Kenneth H. Bishop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          58,922        *
 E. T. Whalen  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           2,000        *
 All directors and executive officers as a group (9 individuals) . . . . . . .       2,484,874        36.7
 Other 5% Stockholders:
 Cypress Capital Partners I, L.P.(3) . . . . . . . . . . . . . . . . . . . . .       2,141,752        32.0
   One Galleria Tower,
   Suite 1650, 13355 Noel Road,
   Dallas, Texas 75240
 Preferred Risk Mutual Insurance Company(5)  . . . . . . . . . . . . . . . . .         336,116         5.0
   111 Ashworth Road
   West Des Moines, Iowa 50265
</TABLE>


 *  Indicates less than 1%





                                        35
<PAGE>   36
(1) Includes shares issuable upon the exercise of stock options outstanding and
    fully vested as of December 17, 1996.

(2) Mr. Hoak's address is One Galleria Tower, Suite 1650, 13355 Noel Road,
    Dallas, Texas 75240. Includes 2,141,752 shares owned by Cypress, of which
    Mr. Hoak is the Chairman and sole shareholder of its 5% general partner and
    a 45% limited partner. Excludes 4,800 shares owned by Mr. Hoak's wife, as
    to which shares Mr. Hoak disclaims beneficial ownership.

(3) Includes 2,141,752 shares beneficially owned by James M. Hoak in his
    capacity as the Chairman and sole shareholder of the general partner of
    Cypress.

(4) Excludes 336,116 shares beneficially owned by Preferred Risk Life Insurance
    Company and Preferred Risk Mutual Insurance Company, each of which employs
    Mr. Hughes as Vice President- Investments. Mr. Hughes disclaims beneficial
    ownership of such shares.

(5) Includes 168,056 shares beneficially owned by its affiliate Preferred Risk
    Life Insurance Company.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In December 1995, in connection with the acquisition of Mayne
Nickless, the Company issued $4.5 million of Bridge Notes including (i) $1.0
million to Cypress, (ii) an aggregate of approximately $1.8 million to various
limited partners of Cypress (including Preferred Risk Mutual Insurance Company
and Preferred Risk Life Insurance Company (each a stockholder of the Company
and an employer of Brian J. Hughes, a director of the Company) and Stephen P.
Smiley (a director of the Company)) and certain affiliates of Cypress' general
partner and (iii) an aggregate of approximately $1.8 million to James M. Hoak
and the general partner of Cypress.  James M. Hoak, a director of the Company,
is the Chairman and sole stockholder of the general partner of Cypress and such
general partner owns a 5% partnership interest in Cypress. Additionally, Mr.
Hoak is a limited partner owning a 45% interest in Cypress.  The holders of
Bridge Notes received the Bridge Warrants, which enabled the holders upon
exercise of such warrants to purchase an aggregate of 540,000 shares of Common
Stock at a price of $.025 per share. In August 1996, the Company redeemed the
Bridge Notes and the Bridge Warrants were exercised by the holders thereof. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Principal Stockholders."

         In January 1996, the Company paid HSC Investments Corp. a fee of
$70,000 for investment banking services rendered in connection with the
Company's acquisition of Mayne Nickless and $165,000 for the arrangement of
bank financing related to that acquisition. In August 1996, the Company paid
Hoak Breedlove Wesneski & Co. usual and customary fees related to investment
banking services rendered in such firm's capacity as a co-manager of the IPO.
James M. Hoak is the Chairman and principal shareholder of HSC Investments
Corp., substantially all the assets of which were sold to Hoak Breedlove
Wesneski & Co., one of the underwriters' representatives in the IPO, in July
1996. Mr. Hoak is the Chairman and a director of Hoak Breedlove Wesneski & Co.
In addition, Mr. Hoak is a principal stockholder of Hoak Breedlove Wesneski &
Co.'s parent corporation and Wayne Kern, a director of the Company, is the
Secretary of such corporation.





                                       36
<PAGE>   37
         In August 1996, the Company purchased from Kenneth Bishop, now a
director of the Company, all of the outstanding stock of Zipper for an
aggregate purchase price of approximately Cdn $2.5 million (approximately $1.8
million, as converted using an exchange rate of 0.73 U.S. dollars to 1.00
Canadian dollars) in cash and 56,922 shares of Common Stock. In addition,
simultaneously with the closing of such acquisition, the Company repaid
Zipper's bank indebtedness of approximately Cdn $445,000 (approximately
$325,000, as converted using an exchange rate of 0.73 U.S. dollars to 1.00
Canadian dollars). Mr. Bishop became a director of the Company upon
consummation of such acquisition. See "Business -- Recent Acquisitions."

         The Company believes that all of the transactions set forth above were
made on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties. All future transactions, including loans,
between the Company and its officers, directors, principal stockholders and
affiliates, will be approved by a majority of the Board of Directors, including
a majority of the independent and disinterested outside directors, and have
been and will be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.

                                    PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

            (a)   (1) and (2)  Financial Statements and Schedules

                  Reference is made to the listing on page F-1 of all financial
                  statements and schedules filed as a part of this report.

            (a)   (3)  Exhibits

                  Reference is made to the Exhibit Index on page E-1 for a list
                  of all exhibits filed as a part of this report.

            (b)   Reports on Form 8-K

                  The Company was not required to file any reports on Form 8-K
                  during the fiscal quarter ended July 31, 1996.





                                       37
<PAGE>   38
                                   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.

                              Dynamex Inc.,
                              a Delaware corporation
                                 
                                 
                                 
                              By: /s/ Robert P. Capps      
                                  ----------------------------------------------
                                      Robert P. Capps, Vice President of Finance
                                      and Corporate Development

Dated: October 22, 1996





                                       38
<PAGE>   39
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons of the registrant and in
the capacities indicated on October 22, 1996.

         Name                                           Title
         ----                                           -----
/s/ Richard K. McClelland               Chairman of the Board, Chief Executive 
-----------------------------------     Officer, President and Director
Richard K. McClelland                   (Principal Executive Officer)
                                   
/s/ Robert P. Capps                     Vice President-Finance and
-----------------------------------                               
Robert P. Capps                         Corporate Development
                                        (Principal Financial Officer)
                                   
/s/ Martin A. Piccolo                   Vice President, Controller and Secretary
-----------------------------------                                             
Martin A. Piccolo                       (Principal Accounting Officer)
                                   
                                   
/s/ James M. Hoak                       Director
-----------------------------------             
James M. Hoak                      
                                   
                                   
/s/ Wayne Kern                          Director
-----------------------------------             
Wayne Kern                         
                                   
                                   
/s/ Stephen P. Smiley                   Director
-----------------------------------             
Stephen P. Smiley                  
                                   
                                   
/s/ Brian J. Hughes                     Director
-----------------------------------             
Brian J. Hughes                    
                                   
                                   
                                        Director
-----------------------------------             
Kenneth Bishop                     
                                   
                                   
                                        Director
-----------------------------------             
E. T. Whalen                       





                                        39
<PAGE>   40

                        INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                                 Page 
                                                                                 ---- 
<S>                                                                              <C>  
DYNAMEX INC. AND SUBSIDIARIES                                                          
     Independent Auditors' Report                                                 F-2
     Consolidated Balance Sheets, July 31, 1995 and 1996                          F-3
     Consolidated Statements of Operations for each of the years                       
        in the three-year period ended July 31, 1996                              F-4
     Consolidated Statements of Stockholders' Equity for the three years ended         
        July 31, 1996                                                             F-5
     Consolidated Statements of Cash Flows for each of the years in the                
        three-year period ended July 31, 1996                                     F-6
     Notes to the Consolidated Financial Statements                               F-7
</TABLE>


                                      F-1
<PAGE>   41

INDEPENDENT AUDITORS' REPORT


To the Board of Directors and
   Stockholders of Dynamex Inc.


We have audited the accompanying consolidated balance sheets of Dynamex Inc.
and subsidiaries as of July 31, 1995 and 1996 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
years in the three year period ended July 31, 1996. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Dynamex Inc. and subsidiaries as
of July 31, 1995 and 1996 and the results of their operations and their cash
flows for each of the years in the three year period ended July 31, 1996 in
conformity with generally accepted accounting principles.





Toronto, Canada
September 20, 1996, except for Note 3(b)(ii)
   which is as of October 1, 1996




                                      F-2
<PAGE>   42


DYNAMEX INC. AND SUBSIDIARIES
(FORMERLY PARCELWAY SYSTEMS HOLDING CORP.)
CONSOLIDATED BALANCE SHEETS
JULY 31, 1995 AND 1996
(IN THOUSANDS EXCEPT STOCK DATA)
================================================================================
<TABLE>
<CAPTION>
                                                                        1995        1996
                                                                    --------    --------
<S>                                                                 <C>         <C>     
ASSETS

CURRENT
   Cash and cash equivalents                                        $    506    $    894
   Accounts receivable (net of allowance for doubtful accounts of
      $122 and $281 at July 31, 1995 and 1996, respectively)           7,208      11,141
   Prepaid and other current assets                                      390         856
----------------------------------------------------------------------------------------
                                                                       8,104      12,891

PROPERTY AND EQUIPMENT - net (Note 5)                                  1,519       2,047
INTANGIBLES - net (Note 4)                                             7,194      18,196
DEFERRED OFFERING EXPENSES                                              --           763
OTHER ASSETS                                                             377       1,102
----------------------------------------------------------------------------------------
                                                                    $ 17,194    $ 34,999
========================================================================================

LIABILITIES

CURRENT
   Line of credit                                                   $  2,686    $   --
   Accounts payable trade                                                481       1,088
   Accrued liabilities
      Broker commissions                                                 808       1,348
      Wages                                                              177         667
      Outside transportation                                              85         129
      Other                                                            1,859       3,302
   Current portion of long-term debt (Note 6)                            524       2,271
----------------------------------------------------------------------------------------
                                                                       6,620       8,805

LONG-TERM DEBT (Note 6)                                                5,924      20,036
----------------------------------------------------------------------------------------
                                                                      12,544      28,841
----------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY

      Preferred stock; 10,000,000 shares authorized;
        none outstanding                                                --          --
      Common stock; 50,000,000 shares authorized;
        2,543,460 shares outstanding                                      25          25
      Stock warrants (Note 6)                                           --           624
      Additional paid-in capital                                       8,756       8,756
      Accumulated deficit                                             (4,138)     (3,262)
      Unrealized foreign currency translation adjustment                   7          15
----------------------------------------------------------------------------------------
                                                                       4,650       6,158
----------------------------------------------------------------------------------------
                                                                    $ 17,194    $ 34,999
========================================================================================
</TABLE>



        See accompanying notes to the consolidated financial statements



                                      F-3
<PAGE>   43


DYNAMEX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
================================================================================
<TABLE>
<CAPTION>
                                                    1994        1995        1996
                                                --------    --------    --------

<S>                                             <C>         <C>         <C>     
SALES                                           $  7,023    $ 21,032    $ 71,812

COST OF SALES                                      5,212      14,336      50,018
--------------------------------------------------------------------------------
GROSS PROFIT                                       1,811       6,696      21,794

SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES                         2,449       7,068      17,545

DEPRECIATION AND AMORTIZATION                        322         690       1,542
--------------------------------------------------------------------------------
OPERATING INCOME (LOSS)                             (960)     (1,062)      2,707

INTEREST EXPENSE                                     157         403       1,655

OTHER (INCOME) EXPENSE                               (52)        157        --
--------------------------------------------------------------------------------
INCOME (LOSS) BEFORE TAXES                        (1,065)     (1,622)      1,052

INCOME TAXES                                        --             3         176
--------------------------------------------------------------------------------
NET INCOME (LOSS)                               $ (1,065)   $ (1,625)   $    876
================================================================================

Net income (loss) per common share              $  (0.63)   $  (0.81)   $   0.23
   Weighted average common shares outstanding      1,691       2,018       3,732
================================================================================
</TABLE>



        See accompanying notes to the consolidated financial statements




                                      F-4
<PAGE>   44


DYNAMEX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS)
================================================================================
<TABLE>
<CAPTION>
                                                                   Redeemable                 Additional 
                                                                   Preferred                    Paid-in  
                                           Common Stock              Stock         Warrants    Capital   
                                         -----------------     ------------------  --------  ------------
                                         Shares  Par Value     Shares   Par Value                        
                                         ------  ---------     ------   ---------                        
<S>                                         <C>   <C>          <C>      <C>         <C>        <C>       
BALANCE, AUGUST 1, 1993                     17    $   --           2    $    150    $   --     $   451   
   Stock dividend                          296           3      --          --          --          (3)  
   Purchase of redeemable preferred                                                                      
      stock                               --          --          (2)       (150)       --         (75)  
   Sale of common stock                    345           3      --          --          --       1,114   
   Sale of redeemable preferred stock     --          --         309           3        --       3,815   
   Dividends on convertible                                                                              
      deemable preferred stock            --          --        --          --          --        --     
   Escrow shares surrendered              (142)         (1)     --          --          --           1   
   Net loss                               --          --        --          --          --        --     
-------------------------------------------------------------------------------------------------------
BALANCE, JULY 31, 1994                     516           5       309           3        --       5,453   
   Sale of common stock                    608           6      --          --          --       2,539   
   Conversion of redeemable                                                                              
      preferred stock to common stock    1,236          12      (309)         (3)       --          (9)  
   Dividend on redeemable                                                                                
      preferred stock                     --          --        --          --          --        --     
   Dividend and interest expense                                                                         
      converted to common stock            183           2      --          --          --         773   
   Unrealized foreign currency                                                                           
      translation adjustment              --          --        --          --          --        --     
   Net loss                               --          --        --          --          --        --     
-------------------------------------------------------------------------------------------------------
BALANCE, JULY 31, 1995                   2,543          25      --          --          --       8,756   
   Sale of stock warrants                 --          --        --          --           624      --     
   Unrealized foreign currency                                                                           
      translation adjustment              --          --        --          --          --        --     
   Net income                             --          --        --          --          --        --     
-------------------------------------------------------------------------------------------------------
BALANCE, JULY 31, 1996                   2,543    $     25      --      $   --      $    624   $ 8,756   
=======================================================================================================
<CAPTION>
                                                      Unrealized
                                                        Foreign
                                                       Currency
                                       Accumulated    Translation
                                         Deficit      Adjustment     Total
                                       -----------    -----------   --------

<S>                                      <C>            <C>         <C>     
BALANCE, AUGUST 1, 1993                  $   (708)      $   --      $  (107)
   Stock dividend                            --             --         --   
   Purchase of redeemable preferred                                         
      stock                                  --             --          (75)
   Sale of common stock                      --             --        1,117 
   Sale of redeemable preferred stock        --             --        3,818 
   Dividends on convertible                                                 
      deemable preferred stock               (299)          --         (299)
   Escrow shares surrendered                 --             --         --   
   Net loss                                (1,065)          --       (1,065)
----------------------------------------------------------------------------
BALANCE, JULY 31, 1994                     (2,072)          --        3,389 
   Sale of common stock                      --             --        2,545 
   Conversion of redeemable                                                 
      preferred stock to common stock        --             --         --   
   Dividend on redeemable                                                   
      preferred stock                        (441)          --         (441)
   Dividend and interest expense                                            
      converted to common stock              --             --          775 
   Unrealized foreign currency                                              
      translation adjustment                 --                7          7 
   Net loss                                (1,625)          --       (1,625)
----------------------------------------------------------------------------
BALANCE, JULY 31, 1995                     (4,138)             7      4,650 
   Sale of stock warrants                    --             --          624 
   Unrealized foreign currency                                              
      translation adjustment                 --                8          8 
   Net income                                 876           --          876 
----------------------------------------------------------------------------
BALANCE, JULY 31, 1996                   $ (3,262)      $     15    $ 6,158 
============================================================================
</TABLE>

        See accompanying notes to the consolidated financial statements



                                      F-5
<PAGE>   45


DYNAMEX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS EXCEPT SHARE DATA)
================================================================================
<TABLE>
<CAPTION>
                                                                                    1994        1995        1996
                                                                                --------    --------    --------
<S>                                                                             <C>         <C>         <C>     
OPERATING ACTIVITIES
   Net income (loss)                                                            $ (1,065)   $ (1,625)   $    876
   Adjustment to reconcile net loss to net cash used in operating activities:
        Depreciation and amortization                                                321         678       1,542
        Loss on disposal of property and equipment                                     1          12
        Loss on disposal Tuscon division                                            --            18        --
        Unrealized foreign currency adjustment                                      --             7           8
        Dividend and interest expense converted to common stock                     --            57        --
   Changes in assets and liabilities:
      Cash restricted for acquisition of businesses or payment
        of debt from acquisition of businesses                                        77         (18)       --
      Accounts receivable                                                           (611)         (6)       (627)
      Prepaids and other assets                                                      (89)        172        (341)
      Accounts payable and accrued liabilities                                       386        (239)        922
-----------------------------------------------------------------------------------------------------------------
   Net cash provided by (used in) operating activities                              (980)       (944)      2,380
-----------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
   Payments for acquisitions                                                      (2,185)     (7,794)    (12,613)
   Purchase of property and equipment                                                (66)       (213)       (579)
   Proceeds from sale of property and equipment                                     --            12        --
-----------------------------------------------------------------------------------------------------------------
   Net cash used in investing activities                                          (2,251)     (7,995)    (13,192)
-----------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
   Principal payment on long term debt                                            (1,361)     (1,110)     (5,064)
   Net borrowings under line of credit                                               522       2,797      (2,686)
   Proceeds from issuance of long term debt                                         --         4,709      20,470
   Proceeds from issuance of stock warrants                                         --          --           624
   Purchase of redeemable preferred stock                                            (75)       --          --
   Net proceeds from sale of common stock                                          4,934       2,460        --
   Dividends paid                                                                     (9)        (21)       --
   Other assets, deferred offering expenses and intangibles                          (47)       (255)     (2,144)
-----------------------------------------------------------------------------------------------------------------
   Net cash provided by financing activities                                       3,964       8,580      11,200
-----------------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH                                                      733        (359)        388

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                         132         865         506
-----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR                                          $    865    $    506    $    894
=================================================================================================================

SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
      Cash paid for interest                                                    $    181    $    403    $  1,114
=================================================================================================================

SUPPLEMENTAL SCHEDULE OF NON-CASH
   INVESTING AND FINANCING ACTIVITIES
      Capital lease obligation                                                  $     84    $   --      $     43
-----------------------------------------------------------------------------------------------------------------
      Note issued for sale of 30,912 shares of common stock                     $    100    $   --      $   --
-----------------------------------------------------------------------------------------------------------------
      Inconjunction with the acquisitions described in Note 3, liabilities
        were assumed as follows:
           Fair value of assets acquired                                        $  5,629    $ 10,188    $ 15,243
           Cash paid                                                              (2,184)     (2,920)    (12,613)
-----------------------------------------------------------------------------------------------------------------
      Liabilities assumed and incurred and issuance of notes payable            $  3,445    $  7,268    $  2,630
=================================================================================================================
</TABLE>


        See accompanying notes to the consolidated financial statements



                                      F-6
<PAGE>   46

DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Dynamex Inc. (formerly Parcelway Systems Holding Corp.) (the "Company")
     provides same-day delivery and logistics services in the U.S. and Canada.
     The Company's primary services are (i) same-day, on-demand delivery (ii)
     scheduled distribution and (iii) fleet management. The Company intends to
     continue to expand its business through acquiring or developing businesses
     in additional areas of the U.S. and Canada and in areas of its existing
     operations.

     Principles of consolidation - The consolidated financial statements
     include the accounts of the Company and its wholly-owned subsidiaries:
     Dynamex Operations East, Inc., Dynamex Operations West, Inc., Parcelway
     Courier Systems Canada Ltd., and Action Delivery and Messenger Services
     Limited. All significant intercompany balances and transactions are
     eliminated on consolidation.

     The accounts of Parcelway Courier Systems Canada Ltd. and Action Delivery
     and Messenger Service Limited have been translated into United States
     dollars under the provision of Statement of Financial Accounting Standards
     No. 52 with the Canadian dollar as the functional currency. Translation
     adjustments arising from the translation of Canada's financial statements
     into United States dollars are reported as a separate component of equity.

     Use of estimates - The preparation of financial statements in conformity
     with generally accepted accounting principles requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the
     balance sheet dates and the reported amounts of revenues and expenses for
     the periods presented. Actual results may differ from such estimates.

     Property and equipment are stated at cost and are depreciated using the
     straight-line method over their estimated useful lives or the term of the
     lease, whichever is shorter, as follows:

                Equipment                            5 years
                Furniture                            5 years
                Vehicles                             7-10 years
                Other                                4 years

     Intangibles arise from the acquisition of operations and include the
     excess purchase price over net assets acquired, covenants not-to-compete
     and other intangible costs. The excess purchase price over net assets
     acquired is being amortized over periods from 5 to 25 years. The Company
     reviews the value assigned to the excess purchase price over net assets
     acquired to determine if it has been impaired by adverse conditions
     affecting the Company. Management is of the opinion that there has been no
     diminution in the value assigned to the assigned value Covenants
     not-to-compete, trademarks and other intangibles are being amortized over
     their estimated effective lives, generally, five years. Total amortization
     expense was $252,000, $450,000 and $944,000 for the years ended July 31,
     1994, 1995 and 1996, respectively.

     Other assets consist of financing fees incurred. These costs are being
     amortized on a straight-line basis over the term of the related financing,
     approximately five years.




                                      F-7
<PAGE>   47
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Revenue recognition - Revenue and direct expenses are recognized when
     services are rendered to customers.

     Cash and cash equivalents - The Company considers all highly liquid
     investments with a maturity of three months or less to be cash
     equivalents. Cash equivalents are carried at cost, which approximates
     market value.

     Net income (loss) per common share - Common share equivalents are
     considered in the computation of weighted average number of shares and
     earnings per share for a profitable period, by dividing net income by the
     average number of common shares and common share equivalents that
     represent dilutive effects of the assumed exercise of outstanding stock
     options and warrants using the treasury stock method.

     New accounting standard - In October 1995, the Financial Accounting
     Standards Board issued Statement of Financial Accounting Standards No.
     123, "Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123
     establishes a fair value based method of accounting for stock-based
     employee compensation plans; however, it also allows companies to continue
     to measure cost for such plans using the method of accounting prescribed
     by Accounting Principles Board Opinion No. 25, "Accounting for Stock
     Issued to Employees" (APB 25). Companies that elect to continue with the
     accounting under APB 25 must provide certain pro forma disclosures of net
     income, as if SFAS 123 had been applied. The accounting and disclosure
     requirements of SFAS 123 are effective for the Company for transactions
     entered into in fiscal 1997. The Company is currently evaluating its
     alternatives under SFAS 123, and its impact on operating results, when
     initially adopted by the Company, is not presently known.

     Stock split - On June 3, 1996, the Company declared a 4 for 1 stock split
     (Note 11(a)). The effect of such stock split has been retroactively
     reflected in the accompanying financial statements.

     Reclassifications - Certain reclassifications of prior year amounts have
     been made to conform to the current year financial statement reporting
     format.

2.   INITIAL PUBLIC OFFERING

     On August 16, 1996, the Company completed an initial public offering (the
     "Offering") whereby the Company sold 2,600,000 shares of Common Stock at
     $8.00 per share. On September 10, 1996, the Underwriters exercised their
     over-allotment option to purchase an additional 390,000 shares of Common
     Stock at the Offering price. The net proceeds received by the Company from
     the Offering of approximately $21.4 million where applied as follows: (i)
     approximately $7.8 million to pay the cash portion of the consideration
     payable in connection with the Acquisitions, including repayment of
     assumed debt of approximately $325,000 and the estimated transaction costs
     to effect the transactions of approximately $400,000, (ii) approximately
     $2.4 million to repay the note payable in connection with the acquisition
     of Dynamex Express, (iii) the early retirement of the Junior Subordinated
     Debentures of approximately $4.8 million (will result in an extraordinary
     loss of approximately $558,000), and (iv) the balance to repay a portion
     of the indebtedness under the Bank Credit Agreement.




                                      F-8
<PAGE>   48
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

3.   ACQUISITIONS

     a)   During 1994, the Company acquired certain assets of four on-demand
          courier companies, located in Phoenix, Chicago, Los Angeles and in
          Canada for cash of $2,184,422, notes of $2,588,780, a $300,000 draw
          on the line of credit and the assumption of $555,990 in liabilities.

          On May 31, 1995, the Company acquired certain assets of Dynamex
          Express Inc., the ground courier operations of Air Canada, for cash
          of $2,920,400 (plus expenses of $164,336), a $4,709,145 note and the
          assumption of $2,558,047 in liabilities.

          On December 29, 1995, the Company acquired certain assets of Mayne
          Nickless Courier Systems, Inc., Mayne Nickless Messenger Services,
          Inc. and Mayne Nickless Canada Inc. (collectively "Mayne Nickless"),
          a same-day intracity on demand ground courier service operating in
          various cities in the U.S. and Canada, for cash of $11,868,000 (plus
          expenses of $399,000) and the assumption of $2,058,418 in
          liabilities.

          On June 30, 1996, the Company acquired the shares of Action Delivery
          and Messenger Service Limited, a same-day on demand ground courier
          service operating in Halifax, Nova Scotia, for cash of $147,000 (plus
          expenses of $22,000).

          Each of these acquisitions has been accounted for using the purchase
          method of accounting and the results of operations of these companies
          have been included in these financial statements from the date of
          acquisition. The following unaudited pro forma combined results of
          operations for the year ended July 31, 1995 and 1996 are presented as
          if the acquisitions occurred August 1, 1994.

<TABLE>
<CAPTION>
                                                Year ended July 31
                                               ---------------------
                                                  1995       1996
                                               ---------   ---------
                                               Pro Forma   Pro Forma
                                               ---------   ---------
                                             (in thousands except per
                                                   share data)

<S>                                             <C>        <C>     
Sales                                           $ 81,045   $ 86,899
Net income                                            21      1,135
====================================================================

Per share:
   Net income                                   $   0.01   $   0.30
====================================================================
</TABLE>

          The Company has recorded the assets acquired as shown below (in
          thousands):

<TABLE>
<CAPTION>
                                                     July 31
                                                -------------------
                                                  1995       1996
                                                --------   --------

<S>                                             <C>        <C>     
Accounts receivable                             $  4,883   $  3,413
Property and equipment                               737        546
Other assets                                         976       --
Intangibles                                        3,756     11,292
--------------------------------------------------------------------
Assets acquired                                 $ 10,352   $ 15,251
====================================================================
</TABLE>




                                      F-9
<PAGE>   49
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

3.   ACQUISITIONS (CONTINUED)

     a)   (continued)

          Consideration for these transactions consisted of the following (in
          thousands):

<TABLE>
<CAPTION>
                                                       July 31
                                                -------------------
                                                  1995       1996
                                                --------   --------

<S>                                             <C>        <C>     
Cash                                            $  3,085   $ 12,614
Long-term debt                                     4,709        453
Liabilities assumed                                2,558      2,184
--------------------------------------------------------------------
                                                $ 10,352   $ 15,251
====================================================================
</TABLE>

     b)   ACQUISITIONS SUBSEQUENT TO YEAR END

          i)   Simultaneously with the closing of the Offering, on August 16,
               1996, the Company purchased the same-day delivery businesses of
               (ii) Seidel Enterprises, Inc. and a related company (Columbus,
               Ohio), (ii) Seko Enterprises, Inc. and related companies
               (Chicago, Illinois), (iii) Southbank Courier, Inc. (New York,
               New York), and K.H.B. & Associates Ltd. (Winnipeg, Manitoba). As
               consideration for the stock of the Acquired Companies, the
               stockholders of the Acquired Companies will received an
               aggregate of approximately $7.1 million cash and approximately
               173,845 shares of Common Stock and the Company paid an aggregate
               amount of approximately $325,000 of the Acquired Companies'
               indebtedness.

          ii)  On October 1, 1996, the Company acquired the same-day delivery
               business of Express-It (New York, New York) for 444,250 shares
               of Common Stock.

4.   INTANGIBLES

     Intangibles from the Company's various acquisitions consist of the
     following (in thousands):

<TABLE>
<CAPTION>
                                                            July 31
                                                     -------------------
                                                       1995       1996
                                                     --------   --------

<S>                                                  <C>        <C>     
Excess of purchase price over net assets acquired    $  6,530   $ 17,875
Covenants not to compete                                1,206      1,206
Other                                                     183        602
-------------------------------------------------------------------------
                                                        7,919     19,683
Less accumulated amortization                            (725)    (1,487)
-------------------------------------------------------------------------
Intangibles - net                                    $  7,194   $ 18,196
=========================================================================
</TABLE>





                                     F-10
<PAGE>   50
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

5.   PROPERTY AND EQUIPMENT

     Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                       July 31
                                                -------------------
                                                  1995       1996
                                                --------   --------

<S>                                             <C>        <C>     
Equipment                                       $    506    $  2,024
Furniture                                            540         186
Vehicles                                             254         267
Other                                                517         655
--------------------------------------------------------------------
                                                   1,817       3,132
Less accumulated depreciation                       (298)     (1,085)
--------------------------------------------------------------------
Property and equipment - net                    $  1,519    $  2,047
====================================================================
</TABLE>

     Leased equipment under capital leases, included in property and equipment
     total $76,000 (net of accumulated depreciation of $57,000) as of July 31,
     1996.

6.   LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                       July 31
                                                -------------------
                                                  1995       1996
                                                --------   --------

<S>                                             <C>        <C>     
Bank credit agreement (a)                       $   --     $ 15,012
Junior subordinated debentures (b)                  --        4,212
Note payable (c)                                   4,709      2,378
Seller financing notes and other (d)               1,660        629
Capital lease obligations (Note 6)                    79         76
--------------------------------------------------------------------
                                                   6,448     22,307
Less current portion                                 524      2,271
--------------------------------------------------------------------
                                                $  5,924   $ 20,036
====================================================================
</TABLE>

     a)   Bank Credit Agreement

          In connection with the acquisition of Mayne Nickless (see Note 3) the
          Company entered into a credit agreement with a bank. Proceeds of the
          facility were used to fund the acquisition of Mayne Nickless, to
          refinance certain existing debt, and for working capital. The
          facility consists of a revolving note of up to $2,500,000, a
          $6,000,000 term facility with the Company's Canadian subsidiary, and
          a $8,000,000 term facility with the Company and its U.S.
          subsidiaries. The amount available under the revolving note is
          subject to a borrowing base formula. At July 31, 1996 $2,500,000 was
          available under the revolving note of which $1,943,000 was
          outstanding. Any amounts outstanding under the revolving facility are
          due May 30, 1997 with interest payable quarterly at prime, or certain
          other rate options, plus a premium based on certain financial ratios
          of the Company. At July 31, 1996 such rate was prime plus 1% or
          9.25%.




                                     F-11
<PAGE>   51
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

6.   LONG-TERM DEBT (CONTINUED)

     a)   (continued)

          The U.S. and Canadian term facilities are repayable in quarterly
          installments of $400,000 and $75,000, respectively, with any
          outstanding balances due at December 31, 2000 and March 31, 2001,
          respectively. Interest is payable quarterly based on prime, or
          certain other rate options, plus a premium based on certain financial
          ratios of the Company. At July 31, 1996 such rate was prime plus
          1.25% or 9.50%. By June 28, 1996, or sooner under certain
          circumstances, the Company is required to enter into interest rate
          hedging arrangements so as to effectively fix the rate of interest on
          a portion of the outstanding loans. In addition, the Company is
          required to prepay the term facilities with any "Excess Cash Flow",
          as defined, as well as with certain proceeds of asset sales,
          insurance recoveries and the sale of capital stock.

          Amounts outstanding under the credit agreement are secured by
          essentially all of the assets of the Company and its subsidiaries and
          by the common stock of the Company owned by a major shareholder. The
          agreement also contains restrictions on the payment of dividends,
          incurring additional debt, capital expenditures and investments by
          the Company as well as requiring the Company to maintain certain
          financial ratios.

          Effective August 16, 1996, concurrently with the closing of the
          Company's initial public offering (see Note 2), this credit agreement
          was amended and restated. The revised terms of the agreement provide
          for credit of up to $40 million on a revolving basis through May 31,
          1998. On August 16, 1996, the Company had outstanding approximately
          $11.1 million on the credit agreement (which was reduced to
          approximately $8.2 million upon the exercise of the Underwriters
          over-allotment option (see Note 2)). Any amounts outstanding as of
          May 31, 1998 will be repayable in nineteen equal quarterly
          instalments over a five year period.

     b)   Junior Subordinated Debentures

          In connection with the acquisition of Mayne Nickless the Company
          issued $4,500,000 face value of Junior Subordinated Debentures
          "Debentures" to certain stockholders of the Company. The Debentures
          are subordinated to all other debt for borrowed money and have been
          recorded at their estimated fair value as of the date of issue of
          $3,876,000. Interest is payable semi-annually and accrues at 12%
          through December 28, 1996 and at 18% thereafter. The Company may
          elect to pay interest in additional Debentures through December 31,
          1998. On June 28, 1996, the Company elected to pay $270,000 of
          interest in additional debentures.

          The principal amount of the Debentures is due June 28, 2001. The
          Debentures are redeemable at any time at 100% of face value plus
          accrued and unpaid interest and must be redeemed with the proceeds of
          an initial public offering of the Company's common stock, subject to
          their subordination provisions. The purchasers of the Debentures were
          also issued warrants to purchase an aggregate of 1,080,000 shares of
          the Company's common stock at a price of $0.025 per share; however,
          the number of shares which may be purchased will be reduced to
          540,000 if the Debentures are redeemed by June 30, 1996 or by
          December 31, 1996 if the Company is actively pursuing a public
          offering of its common stock on June 30, 1996. The warrants have been
          recorded at their estimated fair value of as of the date of issue of
          $624,000 and are being amortized over the term of the Debentures.

          The Debentures were redeemed in full on August 16, 1996 with a
          portion of the proceeds from the Company's initial public offering
          (see Note 2).




                                     F-12
<PAGE>   52
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

6.   LONG-TERM DEBT (CONTINUED)

     c)   Note Payable

          In connection with the acquisition of Dynamex Express, the Company
          issued to the seller a note payable in the principal amount of
          $4,709,000 (Cdn $6,450,000). Upon the acquisition of Mayne Nickless
          this note was repaid and replaced with a new note in the principal
          amount of $2,369,000 (Cdn $3,225,000). The new note is subordinated
          to the Company's bank credit agreement above. The note bears interest
          at 10% which is payable quarterly. The principal amount of the note
          is due March 28, 2002. The note contains covenants identical to those
          of the bank credit agreement, subject to amendment under certain
          conditions.

          The note was repaid in full on August 16, 1996 with a portion of the
          proceeds from the Company's initial public offering (see Note 2).

     d)   Seller Financing Notes and Other

          In connection with various acquisitions (see Note 3) the Company
          issued various notes to the sellers of those businesses. These notes
          bore interest at varying rates based primarily on prime. In
          connection with the acquisition of Mayne Nickless these notes were
          repaid.

          Scheduled principal payments in each of the next five years for the
          notes payable are as follows (in thousands):

                             1997                        $    2,271
                             1998                             4,051
                             1999                             1,987
                             2000                             1,942
                             2001                             5,472

7.   COMMITMENTS AND CONTINGENCIES

     The Company leases certain equipment under properties and non-cancellable
     lease agreements which expire at various dates.

     At July 31, 1996, minimum annual lease payments for such leases are as
     follows (in thousands): Capital Operating Leases Leases

<TABLE>
<CAPTION>
     <S>                                                         <C>              <C>   
     1997                                                        $      35        $1,076
     1998                                                               22           875
     1999                                                               18           681
     2000                                                                4           457
     2001                                                                3           226
     THEREAFTER                                                        --            435
     ------------------------------------------------------------------------------------
                                                                        82        $3,750
     LESS AMOUNT REPRESENTING INTEREST                                   6
     -----------------------------------------------------------------------
     NET PRESENT VALUE OF FUTURE MINIMUM LEASE PAYMENTS          $      76
     =======================================================================
</TABLE>

     Rent expense related to the operating leases amounted to approximately
     $168,000, $458,000 and $1,177,000 for the years ended July 31, 1994, 1995
     and 1996, respectively.




                                     F-13
<PAGE>   53
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

8.   INCOME TAXES

     As of August 1, 1992, the Company adopted Statement of Financial
     Accounting Standards No. 109 ("SFAS No. 109"), Accounting for Income
     Taxes, which requires an asset and liability approach for financial
     accounting and reporting for income taxes. SFAS No. 109 allows the income
     tax consequences resulting from utilization of net operating loss
     carryforwards to be recorded. For purposes of reporting the Company's
     deferred tax items under the provisions of SFAS No. 109, the deferred tax
     asset of approximately $640,000 as of July 31, 1996 (1995 - $865,000),
     arising principally from the available net operating loss carryforward,
     has not been reported as an asset due to a valuation allowance.

     The Company has U.S. federal net operating loss carryforwards of
     approximately $1,600,000 as of July 31, 1996. These net operating loss
     carryforwards expire as follows: $216,000 (2008), $665,000 (2009) and
     $719,000 (2010). The Company also has state net operating loss carry
     forwards in certain states. The utilization of the Company's net operating
     loss carryforwards is subject to annual limitations under Internal Revenue
     Code ss.382, due to a previous change in ownership of the Company and a
     change in its year-end in prior years.

     The differences in income tax provided and the amounts determined by
     applying the combined statutory tax rate to income before income taxes
     result from the following (in thousands):

<TABLE>
<CAPTION>
                                               1994      1995      1996
                                              -----     -----     -----

<S>                                           <C>       <C>       <C>  
Canadian federal and provincial tax rate         45%       45%       45%
United States federal and state tax rate         40        40        40
-------------------------------------------------------------------------
Combined statutory tax rate                      42%       44%       44%
=========================================================================

Income tax based on combined statutory rate   $(447)    $(714)    $ 463
Add (deduct) the effect of :
   Benefit of net operating losses             --        (186)     (470)
   Non-deductible expenses and other - net      162       189       183
   Valuation allowance                          285       714      --
-------------------------------------------------------------------------
                                              $--       $   3     $ 176
=========================================================================
</TABLE>

9.   FOREIGN OPERATIONS

     Amounts included in the consolidated financial statements applicable to
     Canada were as follows (in thousands):

<TABLE>
<CAPTION>
                                                            July 31
                                                -------------------------------
                                                  1994       1995        1996
                                                --------   --------    --------

<S>                                             <C>        <C>         <C>     
Revenues                                        $  2,436   $ 15,094    $ 52,249
Operating income (loss)                               24        (78)      7,759
Identifiable assets                                3,528     13,324      17,274
</TABLE>







                                     F-14
<PAGE>   54
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================


10.  RELATED PARTY TRANSACTIONS

     During the year ended July 31, 1995, the Company paid approximately
     $146,000 to a related party for consulting services in connection with
     acquisition of Dynamex Express Inc. and other advisory services.

     During the year ended July 31, 1996 the Company paid a related party
     $70,000 for investment banking services rendered in connection with the
     Company's acquisition of Mayne Nickless and $165,000 for the arrangement
     of bank financing related to that acquisition.

11.  SHARE CAPITAL

     a)   In May 1995, in order to provide financing related to the acquisition
          of Dynamex Express Inc. (Note 3), the Company had the following
          capital stock transactions:

          o    608,228 shares of common stock were issued for a cash
               consideration of $2,545,000;

          o    182,516 shares of common stock were issued as payment for
               interest expense and outstanding dividends; and

          o    1,236,096 shares of common stock were issued upon the conversion
               of 309,204 shares of preferred stock to common stock.

          On December 20, 1995, the Company restated its articles of
          incorporation to change its name from Parcelway Systems Holding Corp.
          to Dynamex Inc. The articles of incorporation were also restated to
          increase the authorized capital stock to 10,000,000 shares of $0.01
          par value common stock and to 3,000,000 shares of $0.01 par value
          preferred stock.

          On June 3, 1996, the Company restated its articles of incorporation
          to increase the authorized capital stock to 50,000,000 shares of
          $0.01 par value common stock and to 10,000,000 shares of $0.01 par
          value preferred stock. The Company then effected a common stock split
          in the form of a dividend where it distributed three shares of common
          stock for every common share outstanding. The effect of the dividend
          was to increase the number of common shares outstanding from 635,865
          to 2,543,460.

     b)   Rights Agreement

          In June 1996, the Board of Directors of the Company approved a Rights
          Agreement which is designed to protect stockholders should the
          Company become the target of coercive and unfair takeover tactics.
          Pursuant to the Rights Agreement, the Board of Directors declared a
          dividend of one preferred stock purchase right (a "Right") for each
          outstanding share of Common Stock on May 31, 1996. Each Right
          entitles the registered holder to purchase from the Company one
          one-hundredth of a share of the Series A Preferred Stock, at a price
          of $45.00 per one one-hundredth of a share of Series A Preferred
          Stock, subject to possible adjustment.




                                     F-15
<PAGE>   55
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

12.  STOCK OPTION PLAN

     Effective June 5, 1996, the Company's stockholders approved the 1996 Stock
     Option Plan (the "Option Plan"). The maximum aggregate amount of Common
     Stock with respect to which options may be granted is 630,000. The Option
     Plan provides for the granting of both incentive stock options and
     nonqualified stock options. In addition, the Option Plan provides for the
     granting of restricted stock, which may include, without limitation,
     restrictions on the right to vote such shares and restrictions on the
     right to receive dividends on such shares. The exercise price of all
     options granted under the Option Plan may not be less than the fair market
     value of the underlying Common Stock on the date of grant option.

     Options to purchase 471,384 shares are outstanding and (i) 214,384 of
     these options have a weighted average exercise price of $3.84 per share
     and expire between November 2003 and July 2005 and (ii) 257,000 of these
     options (which were granted in connection with the Offering and are
     exercisable at $8.00 per share) expire in July 2006. A total of 158,616
     shares remained available for future grants under the Option Plan.

13.  SELLING, GENERAL AND ADMINISTRATIVE

     Included in selling, general and administrative expenses are bad debt
     expenses as follows (in thousands):

     For the year ended July 31, 1994                $ 61
     For the year ended July 31, 1995                 155
     For the year ended July 31, 1996                 462




                                     F-16
<PAGE>   56
                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
------                            -----------
<S>       <C>
2.1(2)    Share Purchase Agreement, by and among Dynamex Inc., Action Delivery
          and Messenger Service Limited, Nancy Smithers, David Nantau, Naturally
          Nova Scotia Health Products Limited and 2306080 Nova Scotia Limited
          dated June 20, 1996.
2.2(2)    Share Purchase Agreement, by and among Dynamex Inc., Zipper
          Transportation Services Ltd., KHB & Associates Ltd, Kenneth Bishop and
          Bruce Bishop, dated June 3, 1996.
2.3(2)    Stock Purchase Agreement, by and among Dynamex Inc., NSK Enterprises,
          Inc., Seko Enterprises, Inc., YS Corporation d/b/a Metro Messenger
          Service Inc., Attention Messenger Service of Illinois, Inc., Dynamex
          Inc., Norman Koppel and Joe Garcia, dated June 3, 1996.
2.4(2)    Stock Purchase Agreement, by and among Dynamex Inc., Express-It
          Acquisition Corp., Express-It Inc., Barry J. Steingard and William
          Castor, dated June 3, 1996.
2.5(2)    Agreement and Plan of Merger, by and among Dynamex Inc., SEI
          Acquisition Corp., NCI Acquisition Corp., Seidel Enterprises, Inc, Now
          Courier, Inc. and Edward F. Seidel, Jr., dated June 3, 1996.
3.1(2)    Restated Certificate of Incorporation of Dynamex Inc.
3.2(2)    Bylaws, as amended and restated, of Dynamex Inc.
4.1(2)    Rights Agreement between Dynamex Inc. and Harris Trust and Savings
          Bank, dated July 5, 1996.
10.1(2)   Employment Agreement of Richard K. McClelland.
10.2(2)   Consulting Agreement of George M. Siegel.
10.3(2)   Dynamex Inc. 1996 Stock Option Plan.
10.4(2)   Marketing and Transportation Services Agreement, between Purolator
          Courier Ltd. and Parcelway Courier Systems Canada Ltd., dated November
          20, 1995.
10.5(2)   Form of Indemnification and Hold Harmless Agreements with Executive
          Officers and Directors.
10.6(2)   Registration Rights Agreement by and among Dynamex Inc., Cypress,
          McFarland Grossman & Co. and George M. Siegel, dated November 16,
          1993, as amended by that Amendment No. 1 to Registration Rights
          Agreement, dated May 31, 1995.
10.7(2)   Registration Rights Agreement, by and among Dynamex Inc., Preferred
          Risk Mutual Insurance Company, Preferred Life Insurance Company and
          Richard K. McClelland, dated May 31, 1995.
10.8(2)   Amended and Restated Credit Agreement by and among the Company and
          NationsBank of Texas, N.A., as agent for the lenders named therein,
          dated July 5, 1996.
10.9(2)   Subordinated Renewal Promissory Note, payable by Dynamex Inc. to Air
          Canada, in the original principal amount of Cdn $3,225,000, dated
          December 28, 1995.
</TABLE>





                                     E-1
<PAGE>   57
<TABLE>
<S>       <C>
10.10(2)  Form of Junior Subordinated Debenture, payable by Dynamex Inc., dated
          December 28, 1995.
10.11(2)  Form of Dynamex Inc. Common Stock Purchase Warrant, dated December 28,
          1995.
10.12(2)  Asset Purchase Agreement by and among Dynamex Operations East, Inc.,
          Dynamex Operations West, Inc., Parcelway Courier Systems Canada Ltd.,
          Mayne Nickless Incorporated, Mayne Nickless Canada Inc., Mayne
          Nickless Courier Systems, Inc., Mayne Nickless Messenger Services,
          Inc. and Mayne Nickless Transport Inc., dated December 29, 1995.
10.13(2)  Asset Purchase Agreement by and among Parcelway Courier Systems Canada
          Ltd. and Air Canada, dated May 31, 1995.
11.1(1)   Statement re computation of earnings per share.
21.1(1)   Subsidiaries of the Registrant.
27.1(1)   Financial Data Schedule.

----------
</TABLE>

(1) Filed herewith

(2) Previously filed as an Exhibit to Form S-1 (File No. 333-05293) and
    incorporated herein by reference.





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