Bestway Coach Express 10QSB 2006 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10−QSB

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: August 31, 2006

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission File No. 0-51437

BESTWAY COACH EXPRESS INC.

(Exact name of small business issuer as specified in its charter)

NEW YORK	13-3961159
(State or other jurisdiction of incorporation or organization)	(I.R.S. Empl. Ident. No.)

2 Mott Street, 7^th Floor, New York, New York 10013

(Address of Principal Executive Offices)

(212) 608-8988

(Registrant’s Telephone Number, Including Area Code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The numbers of shares outstanding of each of the issuer’s classes of common equity, as of September 30, 2006, are as follows:

Class of Securities	Shares Outstanding
Common Stock, $0.001 par value	13,680,000

Transitional Small Business Disclosure Format (check one): Yes o No x

BESTWAY COACH EXPRESS INC.

BALANCE SHEET

As of August 31, 2006

(UNAUDITED)

Assets
Current assets
Cash and cash equivalents	$	5,714
Trade accounts receivable, net		159,575
Fuel tax receivable		100,840
Inventories		142,786
Prepaid expenses		85,893
Total current assets		494,808
Property and equipment
Total property and equipment		8,892,113
Less: accumulated depreciation and amortization		(3,009,777	)
Property and equipment, net		5,882,336
Other assets
Deferred income taxes		243,263
Deposits and other assets		9,418
Total other assets		252,681

Total assets	$	6,629,825

Liabilities and Stockholders’ Deficit
Current liabilities
Checks drawn in excess of bank balance	$	130,267
Current portion of notes payable - banks		75,845
Current portion - motorcoach financing		427,047
Current maturities of capitalized lease obligations		753,483
Notes payable - related parties		472,235
Notes payable - banks and credit card companies		471,939
Accounts payable		250,969
Payroll taxes payable		624,688
Accrued expenses		203,185
Customer deposits		11,900
Accrued salaries - officers		1,034,750
Total current liabilities		4,456,308
Long-term liabilities
Capitalized lease obligations, net of current maturities & deferred refinance costs		393,745
Notes payable - banks		225,720
Motorcoach financing, net of
current maturities & deferred guarantee costs		3,199,027
Due to stockholder		77,094
Total long-term liabilities		3,895,586

Total liabilities		8,351,894

Stockholders’ deficit
Common stock, $.001 par value, 20,000,000 shares authorized, 13,700,000 shares issued, 13,680,000 shares outstanding		13,700
Additional paid-in-capital		625,800
Retained deficit		(2,359,569	)
Total paid-in capital and retained deficit		(1,720,069	)
Less: Cost of treasury stock (20,000 shares)		(2,000	)
Total stockholders' deficit		(1,722,069	)
Total liabilities and stockholders’ deficit	$	6,629,825

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

BESTWAY COACH EXPRESS INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three months ended August 31,						For the nine months ended August 31,
	2006			2005			2006			2005
Revenues	$	1,656,512		$	1,803,066		$	4,783,279			4,755,810

Operating expenses		1,538,562			1,755,359			4,387,840			4,355,860

Gross profit		117,950			47,707			395,439			399,950

General and administrative expenses		267,224			224,655			783,350			531,332

Income (loss) from operations		(149,274	)		(176,948	)		(387,911	)		(131,382	)

Other income (expense)
Interest income		0			311			28			7,975
Other income		0			1,227			10,320			1,619
Interest expense		(154,799	)		(149,921	)		(432,212	)		(372,994	)
Loss on trade-in of capitalized leases					(467,506	)		0			(581,098	)

Total other income (expense)		(154,799	)		(615,889	)		(421,864	)		(944,498	)

Loss before provision for taxes		(304,073	)		(792, 837	)		(809,775	)		(1,075,880	)

Provision for income tax benefit		121,000			317,135			319,700			430,352

Net loss	$	(183,073	)	$	(475,702	)	$	(490,075	)	$	(645,528	)

Loss per share - basic and diluted	$	(.01	)	$	(.03	)	$	(.04	)	$	(.05	)

Weighted average number of shares used to determine loss per share		13,680,000			13,680,000			13,680,000			12,346,667

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

BESTWAY COACH EXPRESS INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the nine months ended August 31,
	2006			2005
Cash flows from operating activities:
Net income (loss)	$	(490,075	)	$	(645,528	)
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization - fixed assets		406,397			740,051
Amortization of deferred guarantee and refinance costs		26,817
Deferred income taxes		(319,700	)		(430,352	)
Loss on trade-in of capitalized leases		-			581,098
Stock based compensation		-			100,000
Changes in operating assets and liabilities:
Trade accounts receivable, net		17,878			108,648
Fuel tax receivable		(20,682	)		11,281
Insurance proceeds receivable		-			117,605
Inventories		(20,706	)		25,705
Prepaid expenses		15,577			(128,125	)
Due from related company		-			(30,075	)
Deposits and other assets		(1,460	)		(10,847	)
Accounts payable		14,144			(190,218	)
Payable to banks and credit card companies		177,193			116,073
Payroll taxes payable		311,858			63,989
Accrued expenses		(13,896	)		(111,519	)
Customer deposits		10,050			(38,715	)
Accrued salaries - officers		102,750			37,772
Net cash provided by operating activities		216,145			316,843

Cash flows from investing activities:
Purchase of property and equipment		(43,376	)		(38,122	)
Net cash used in investing activities		(43,376	)		(38,122	)

Cash flows from financing activities:
Checks drawn in excess of bank balance		94,468			88,142
Principle payments on note payable - banks		(51,347	)		(74,888	)
Proceeds from notes payable - related parties		981,201			145,295
Payment of notes payable - related parties		(716,978	)		(163,740	)
Proceeds from due to stockholder		467,451			-
Payment of due to stockholder		(436,189	)		(13,578	)
Principal payments on motorcoach financing		(231,658	)		-
Purchase of treasury stock		-			(2,000	)
Cash and parts credit from trade-in of capitalized leases		-			121,901
Repayment of capitalized lease obligations		(281,709	)		(568,497	)
Net cash used in financing activities		(174,761	)		(467,365	)

Net decrease in cash and cash equivalents		(1,992	)		(188,644	)
Cash and cash equivalents - beginning of period		7,706			258,451

Cash and cash equivalents - end of period	$	5,714		$	69,807

Supplemental Information:

Cash paid for interest	$	408,196		$	448,624
Cash paid for income taxes	$	-		$	-

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

BESTWAY COACH EXPRESS, INC.

NOTES TO FINANCIAL STATEMENTS

NINE MONTHS ENDED August 31, 2006 AND 2005

(UNAUDITED)

GENERAL:

The financial statements of Bestway Coach Express, Inc. included herein, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States of America.

1. CONDENSED INTERIM FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by Bestway Coach Express, Inc. without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These financial statements include all of the adjustments that, in the opinion of management, are necessary for a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. The results of operations presented in the accompanying condensed financial statements for the period ended August 31, 2006, are not necessarily indicative of the operating results that may be expected for the full year ending November 30, 2006. These statements should be read in conjunction with the Company’s most recent annual financial statements for the year ended November 30, 2005, included in Form 10-KSB filed with the U.S. Securities and Exchange Commission.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS ACTIVITY

Bestway Coach Express, Inc. (the “Company”) was incorporated on August 4, 1997, in New York State. The Company provides motorcoach transportation services. The majority of the Company’s revenues is derived from casinos to which the Company provides transportation services between Atlantic City, New Jersey, Connecticut, and New York City. The Company also provides charter services that are arranged by various tour agencies and via direct mail marketing campaigns directed at local schools, churches and civic associations.

The Company’s operations include a leased terminal and maintenance facility in Brooklyn, NY, a leased terminal in Long Island, NY, and a leased administrative office in New York City. The Company is subject to regulation by the Department of Transportation (the “DOT”) and certain state regulations. The Surface Transportation Board and the Federal Highway Administration (the “FHWA”) can impose civil penalties upon companies for violations of applicable regulatory requirements. The FHWA may suspend, amend or revoke a company’s motorcoach operator’s registration for an operator’s substantial failure to comply with applicable regulations. Management believes that it has conducted its operations in substantial compliance with applicable regulations and does not believe that ongoing compliance with such regulations will require the Company to make substantial capital expenditures.

Of the Company’s fleet of 23 motorcoaches, 12 are financed via long-term capital leases for a term of seven years. The Company considers a motorcoach to be a “late model vehicle” during its first seven years of operations. During 2005, the Company purchased 11 new motorcoaches, which are financed via a note payable with a term of seven years.

BESTWAY COACH EXPRESS, INC.

NOTES TO FINANCIAL STATEMENTS

NINE MONTHS ENDED August 31, 2006 AND 2005

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

BUSINESS ACTIVITY (Continued)

The Company’s current liabilities exceeded its current assets by $3,961,500 at August 31, 2006. Continuing losses could endanger the Company’s viability as a going concern. However, management anticipates that revenues generated in 2006 will provide enough working capital to fund all operations for 2006. In addition to increasing rates charged to customers, the Company has also launched a new service that is expected to increase revenues. The Company does not expect to incur the same non-cash losses in 2006 as it did in 2005, and may defer payment of officers’ salaries and other related party liabilities in order to achieve cash flows from operations that will sustain the Company through 2006. Repairs and interest costs are also expected to decrease as a result of obtaining new motorcoaches.

In February 2006, the Company launched a new interstate commuter service. The Company now provides scheduled motorcoach service from a midtown location in New York City near Penn Station to a location in Philadelphia. During the quarter ended August 31, 2006, the new interstate commuter services generated approximately $240,000 in revenues and incurred approximately $245,000 in expenses. The Company expects the revenues from the interstate commuter services to increase and the expenses to decrease until the service is normalized.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity date of three months or less when purchased to be cash equivalents.

INVENTORIES

Inventories consist of motorcoach replacement parts and diesel fuel. Inventory cost is stated at the lower of cost or market with costs determined using the average cost method.

PROPERTY AND EQUIPMENT

Property and equipment, including capitalized leases, are recorded at cost. Depreciation is recorded over the estimated useful lives of five (5) to ten (10) years. The Company principally uses the straight-line method of depreciation for financial reporting purposes and accelerated methods and useful lives for tax reporting purposes. Maintenance costs are expensed as incurred, and renewals and betterments are capitalized. The Company’s management continually evaluates whether circumstances have occurred that indicate that the remaining estimated useful lives of property and equipment may warrant revision or that the remaining balance may no longer be recoverable. Currently, management believes no impairment losses need to be recorded based on this evaluation.

BESTWAY COACH EXPRESS, INC.

NOTES TO FINANCIAL STATEMENTS

NINE MONTHS ENDED August 31, 2006 AND 2005

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CONCENTRATION OF CREDIT RISK

The Company provides services within the New York City, New Jersey and Connecticut metropolitan areas. The Company’s accounts receivable consist primarily of receivables from casinos and various tour agencies. Management performs ongoing credit evaluations on customers and provides allowances for bad debts when considered necessary.

REVENUE RECOGNITION

Motorcoach revenues are derived from fees charged under contracts and other arrangements for motorcoach services. Services are provided both on a contracted and per seat basis. For contracted services, a rate is assessed that is generally on a daily or per mile basis, not dependent on passenger load factors. Fares for per-seat services are usually determined by the Company and payment is received from individual passengers or through an independent commissioned agent. Currently, most of the Company’s revenues are derived through contracted services.

The financial statements are prepared based on the accrual method of accounting. The Company recognizes revenue when the service is provided. A liability for receipts from services sold but not yet earned is recorded as unredeemed services and included under the caption “Customer deposits” on the balance sheet.

INCOME TAXES

Income taxes are provided for under the liability method considering the tax effects of transactions reported in the financial statements, which are different from the tax return. Deferred income tax assets and liabilities represent the future tax consequences of those differences, which will be either taxable or deductible when the underlying assets or liabilities are recovered or settled.

EARNINGS (LOSS) PER SHARE

Basic income (loss) per common share (“EPS”) (“LPS”) is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares and common share equivalents during the periods presented, as long as such equivalents are not antidilutive. There were no common share equivalents during the periods presented.

INSURANCE COVERAGE

The Company maintains comprehensive vehicle liability, general liability, workers’ compensation and property insurance to insure its assets and operations, with some claims subject to certain deductibles and no deductibles for other claims. The Company’s management continually evaluates the adequacy of its insurance and whether a reserve for outstanding claims, not covered by the Company’s present insurance coverage and when certain insurance deductibles are not met, is warranted.

BESTWAY COACH EXPRESS, INC.

NOTES TO FINANCIAL STATEMENTS

NINE MONTHS ENDED August 31, 2006 AND 2005

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CHANGES IN PRESENTATION OF COMPARATIVE STATEMENTS

Certain accounts were reclassified for the nine months ended August 31, 2005 to conform to the nine months ended August 31, 2006, presentation.

ENVIRONMENTAL RESERVES

The Company’s operations are subject to various federal, state and local environmental laws and regulations governing vehicle emissions, above ground fuel tanks and the storage, use and disposal of hazardous materials and hazardous waste in connection with its in-house maintenance operations. These laws include the Water Pollution Control Act, the Clean Air Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and various state and local laws. The Company maintains a 6,000-gallon above-ground storage tank at its Brooklyn garage depot. The resulting waste from this tank, as well as any from their motor coaches, must be disposed of in accordance with regulatory requirements. In the event of a spill, the Company would be responsible for the cost of the clean up, which could be significant.

The Company’s management continually evaluates whether circumstances have occurred that indicate that its maintenance facility could be identified for potential clean up and/or remediation work. As of August 31, 2006, management determined that there were no existing or pending environmental liabilities.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Several areas require significant management estimates relating to uncertainties for which it is reasonably possible that there will be a material change in the near term. The more significant areas requiring the use of management estimates are related to the valuation of liability reserves and the useful lives for amortization and depreciation, as well as the realization of the tax benefits of net operating losses.

ADVERTISING COSTS

All costs associated with advertising and promoting the Company are expensed in the quarter incurred. Advertising expense was approximately $52,000 and $6,400 for the nine months ended August 31, 2006 and 2005, respectively, and has been included in general and administrative expenses on the statements of operations

BESTWAY COACH EXPRESS, INC.

NOTES TO FINANCIAL STATEMENTS

NINE MONTHS ENDED August 31, 2006 AND 2005

(UNAUDITED)

3.	TRADE RECEIVABLES

Trade receivables are carried at original invoice amount. Trade receivables as of August 31, 2006 were $159,575 (net of allowance), of which $151,620 (95%) was from one casino customer. Management determines the allowance for doubtful accounts after reviewing individual customer accounts as well as considering both historical and expected credit loss experience. At August 31, 2006 the reserve for trade receivables was $2,000 and management believes that this reserve was adequate.

4. NOTES PAYABLE

On June 15, 2005, the Company purchased eleven motorcoaches for $4,211,000 from Motor Coach Industries. The purchase was financed with $165,000 trade-in allowance from eleven older motorcoaches previously traded in and a new loan of $4,046,000. The note has an interest rate of 8.25% per annum, and principal and interest payments of $56,417 are due monthly. Payments on the loan continue for 84 months to a 20% balloon payment due on June 15, 2012. The loan is secured by a personal guarantee by the CEO of the Company.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion should be read in conjunction with our unaudited financial statements and the notes thereto.

Forward-Looking Statements

This quarterly report contains forward-looking statements relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words "believe," "anticipate," "expect," "estimate," “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements appear in a number of places in this report and include statements regarding our intent, belief or current expectations and those of our directors or officers with respect to, among other things: (i) trends affecting our financial condition or results of operations, (ii) our business and growth strategies, and (iii) our financing plans. You are cautioned that any forward-looking statements are not guarantees of future performance and involve significant risks, uncertainties and assumptions, including among many others: a general economic downturn; a downturn in the securities markets; federal or state laws or regulations having an adverse effect on proposed transactions that we desire to effect; and other risks and uncertainties. Other factors that could adversely affect actual results and performance include, among others, the effect of tourism levels on our business, the rising price of insurance, government regulation, technological change and competition. The accompanying information contained in this registration statement, including, without limitation, the information set forth under the heading “Management’s Discussion and Analysis or Plan of Operation -- Risk Factors" identifies important additional factors that could materially adversely affect actual results and performance. You are urged to carefully consider these factors. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement.

Overview

We were incorporated in New York on August 4, 1997. Our primary activity is to provide motorcoach services on both a contracted and per seat basis. Most of our revenues are derived through the provision of specialized destination route service, which is comprised of daily scheduled service to and from casinos in Connecticut and Atlantic City, and specified locations in Manhattan, Queens and Brooklyn, New York. Tickets are sold through independent agents retained by the casinos and at specified locations. Customers are taken on an "open-door" basis or by reservation. From Monday through Thursday of each week, we have 17 roundtrip schedules to and from the Mohegan Sun Casino & Resort in Connecticut and destinations around New York City. On Friday through Sunday, we increase the number of our roundtrip schedules to the Mohegan Sun to 19. We provide 5 roundtrip schedules from Monday through Thursday from New York City to the following Atlantic City Casinos: Tropicana, Taj Majal, Claridge and Trump Marina. We increase the number of roundtrip schedules to these Atlantic City, New Jersey casinos to 7 Friday through Sunday.

We also provide charter services at a fixed daily rate, based on mileage and hours of operation. We have informal arrangements with tour agencies to provide various levels of service and equipment for agent-sponsored and organized tours. Under these arrangements, we provide the motorcoach and driver at a fixed daily rate. On average, we charter about one motorcoach per day to third parties during the week and about 2-3 motorcoaches during the weekend.

For the most part, our special destination services and our charter services are provided on a contracted basis and not a per seat basis. Therefore, customer load factors generally do not materially affect our ability to generate revenues.

In February 2006, we launched a new interstate commuter service. We now provide scheduled motorcoach service from a midtown location in New York City near Penn Station to a location in Philadelphia. During the quarter ended August 31, 2006, the new interstate commuter services generated approximately $240,000 in revenues and incurred approximately $245,000 in expenses. We expect the revenues from the interstate commuter services to increase and the expenses to decrease until the service is normalized.

As of June 28, 2006, our common stock has been quoted under the symbol “BWCX.OB” on the NASD over-the-counter electronic bulletin board maintained by the National Association of Securities Dealers, Inc. So far the common stock has not experienced any trading.

The following table sets forth, for the periods presented, data regarding the total revenue and source of revenue earned by Bestway.

	NINE MONTHS ENDED
	August 31, 2006					August 31, 2005
	Amount		Percentage			Amount		Percentage

Casinos	$	4,186,659		87	%	$	4,472,713		94	%

Tours		172,539		4	%		282,297		6	%

Charter		-		-			300		<1	%

Philadelphia Run		423,470		9	%		500		<1	%

Other		611		<1	%		-		-

Total	$	4,783,279		100	%	$	4,755,810		100	%

Economic and Industry Wide Factors Relevant to Bestway

Our business is seasonal in nature and generally follows the travel industry as a whole, with peaks during the summer months and the Thanksgiving and Christmas holiday periods. As a result, our operating cash flows are also seasonal with a disproportionate amount of our annual operating cash flows being generated during the peak travel periods. The day of the week on which certain holidays occur, the length of certain holiday periods, and the date on which certain holidays occur within the fiscal quarter, may also affect our quarterly results of operations.

One industry wide factor that is relevant to our business is that all of our customers, including our major customers, are “at will” customers. This means that customers can terminate our services at any time and without penalty. We have no written contracts with any customer.

In order to retain customers, therefore, we must provide reliable and professional service. Management believes that customer retention is due to the following factors:

·	Reputation for passenger safety and providing efficient, on-time service;

·	Maintaining long-standing relationships with the casinos and independent ticket agents that we serve;

·	The preference of casino ticket agencies to maintain continuity of service with their current proven contractor rather than risk the uncertainty associated with a replacement.

Material Risks, Trends and Uncertainties Affecting Bestway’s Business

One of the material risks and uncertainties that faces our business is that some of the material costs of running our business are not fixed costs. The major costs that are not fixed costs are fuel expense and insurance costs.

Fuel is one of our most significant operating expenses. Fuel costs are subject to significant fluctuations due to economic factors. Fluctuations in the cost of fuel can have a significant impact on our operations and results of operations. Any sustained increase in fuel prices could adversely affect our results of operations.

In order to mitigate the rising cost of fuel, since January 2004 we have used a strategy of purchasing fuel whenever possible from those states in which we operate (Connecticut and New Jersey) where fuel costs are less than our operating base (NY). We have not employed any hedging strategies to assist us in mitigating the rising fuel costs and we have no current intention to do so. We are often able to pass on increased fuel expenses to our customers by increasing our rates. For example, we increased the rates that we charge to one of the casinos that we provide services to by 8% during the period from January 2004 to present and we raised the rates that we charge to two other casinos during the same period by 15 to 28%. However, the market is very competitive and we are not certain that we will continue to be able to recoup increased fuel costs by passing them on to our customers.

Insurance costs in the motorcoach industry have increased significantly over the last few years and it has become increasingly difficult for us to find insurance at commercially reasonable rates. Annual rates of $21,000 per motorcoach are commonplace. During the past few years, insurers have been abandoning the New York market. Our current liability insurance and workers’ compensation insurance premiums increased more than 100% over the past few years. We cannot operate without insurance. In fiscal year 2005, we paid $720,347 in insurance premiums to insure our motorcoaches ($95,650 of which was for policies prepaid through various dates in 2006) and $79,052 in insurance premiums for workers’ compensation insurance. In 2004 we paid $475,851 in insurance premiums to insure our motorcoaches ($95,043 of which was for policies prepaid through various dates in 2005) and $75,411 in worker’s compensation insurance. During the nine months ended August 31, 2006 and 2005, we incurred $524,992 and $505,469, respectively, in insurance and workmen’s compensation expense. Insurance costs continue to increase each year. The increase in insurance costs has negatively affected our cash flows. Furthermore, although we were able to obtain insurance for 2005 and 2006, the process for obtaining insurance was prolonged and we were rejected by some of the insurance companies that we applied to for insurance before being able to ultimately secure insurance.

Another trend or uncertainty affecting our business is the current state of the nation’s security. The U.S. Department of Homeland Security has implemented the Homeland Security Advisory System, which is designed to target our country’s protective measures when specific information to a specific sector or geographic region is received. The system combines threat information with vulnerability assessments and provides communications to public safety officials and the public. A color-coded threat level system was implemented to communicate with public safety officials and the public at-large. Changes or increases in the threat condition has economic, physical, and psychological effects on the nation and can significantly affect our operations. We have noticed that our business will slow down when a higher alert status is issued by the Department of Homeland Security. We have also experienced cancellation of booked tours or other engagements as a result of an increase in the alert status issued by the Department of Homeland Security after a tour or other engagement was booked, but before the services were provided.

Cost of Sales (Operating Expenses)

The principal elements of the costs of sales are labor, fuel, parts, vehicle insurance, equipment lease expense and rent. For the quarters ended August 31, 2006 and 2005, cost of sales approximated 93% and 97% of revenues,respectively. We spent approximately $349,225 and $301,182 on fuel in the quarters ending August 31, 2006 and 2005, respectively.

General and administrative expenses include costs associated with our headquarters in New York City, the Brooklyn terminal where we depot our motorcoaches, and our managerial salaries. In fiscal year 2003 we increased the size of our staff in our corporate headquarters to accommodate growth. Management believes that it currently has sufficient staff to support anticipated revenue levels for fiscal year 2006. We anticipate that the increased general and administrative costs will be slightly offset if and when our business grows further and if we are able to effectively realize economies of scale by (i) spreading the cost of the administrative staff and facilities over a larger revenue base; and (ii) capturing savings in expenses such as vehicle insurance and vehicle parts and services.

Operating Results For Fiscal Quarter Ended August 31, 2006 Compared To August 31, 2005

The following table summarizes the results of our operations during the fiscal quarter ended August 31, 2006 and 2005 and provides information regarding the dollar and percentage increase or (decrease) for the third fiscal quarter of 2006 compared to the third fiscal quarter of 2005.

	Three Months Ended
Line Item	8/31/06			8/31/05			Dollar increase (decrease)			Percentage increase (decrease)
Revenues		1,656,512			1,803,066			(146,554	)		(8	)%
Net loss		(183,073	)		(475,702	)		(292,629	)		(61.5	)%
Operating Expenses		1,538,562			1,755,359			(216,797	)		(12	)%
General and Administrative Expense		267,224			224,655			42,569			19	%
Interest Expense		154,799			149,921			4,878			3	%
Loss per common share		(.01	)		(.03	)		.(02	)		N/A

Total revenues during the third fiscal quarter of 2006 decreased 146,554, or 8%, to $1,656,512 as compared to the third fiscal quarter of 2005. The decrease in revenues was primarily due to the discontinuance of our line runs to two casinos to focus on the growth of our new Philadelphia line run. Although we generated approximately $240,000 in revenues from our Philadelphia line run during the quarter, our line run and tour income decreased by approximately $388,000, resulting in the net decrease.

Operating expenses experienced a net decrease of $216,797, or 12%, to $1,538,562 for the third fiscal quarter of 2006 as compared to the same quarter in 2005. The decrease is primarily due to changes in the following expenses from the third fiscal quarter of 2006 compared to 2005:

·	Parts and supplies decreased by $22,368, or 26%, due to our acquisition of new motorcoaches in May 2005. Since these motorcoaches are new and did not have any previous use prior to our acquisition, they require less part replacement.

·	Depreciation and amortization decreased by $329,154, or 71%,due to the complete depreciation of several of our motorcoaches during the period since the third quarter of 2005..

·	Fuel expense increased by $48,044, or 16%, due to the continuous rise in the cost of fuel.

·	Salary and commissions expense increased by $27,752, or 21%, due primarily to the hiring of ticket sellers for the new Philadelphia run.

·	Motorcoach insurance increased by $21,598, or 16%, due to the continuous rise in insurance premiums.

General and administrative expenses in the third fiscal quarter of 2006 increased by $42,569, or 19%, from $224,655 in the third fiscal quarter of 2005 compared to $267,224 in the third fiscal quarter of 2006. The increase is primarily due to increases in the following expenses from the third fiscal quarter of 2006 compared to 2005:

·	Advertising expenses increased an additional $19,286 due to the promotion of our new Philadelphia run.

·	Bank charges and credit card fees increased by $18,579 due to credit card fees borne by the Company for Philadelphia route tickets purchased with credit cards by customers.

Interest expense in the third quarter of 2006 was $154,799, compared to interest expense in the same quarter of 2005 of $149,921. The 3% increase is due to the amortization of a deferred guarantee cost incurred with the motorcoach purchase in June 2005, an increase in credit card debt (attributable to an increase in overall credit card balances), and interest expense incurred on a new SBA loan entered into in August 2005.

Operating Results For the Nine Months Ended August 31, 2006 compared to August 31, 2005

The following table summarizes the results of our operations from the financial statements:

	Nine Months Ended August 31,
Line Item	2006			2005			Dollar increase (decrease)			Percentage increase (decrease)

Revenues		4,783,279			4,755,810			27,469			<1	%
Net loss		(490,075	)		(645,528	)		(155,453	)		(24	)%
Operating Expenses		4,387,840			4,355,860			31,980			<1	%
General and Administrative Expense		783,350			531,332			252,018			47	%
Interest Expense		432,212			372,994			59,218			16	%
Loss per common share		(.04	)		(.05	)		(.01	)		N/A

For the nine months ended August 31, 2006 and 2005, our operating activities generated $4,783,279 and $4,755,810 in revenue, respectively. The increase of $27,469 in revenues was primarily due to the new Philadelphia commuter line addition. Although line run and tour income decreased by approximately $395,000 during the period, our Philadelphia run has generated approximately $420,000 revenues since its inception in February 2006, resulting in the net increase in revenues.

For the nine months ended August 31, 2006 and 2005, we incurred $4,387,840 and $4,355,860 respectively, in operating expenses activities. This net increase in operating expenses of $31,980 is primarily attributable to changes in the following expenses:

·	Parts and supplies decreased by $103,188, or 31%, due to our acquisition of new motorcoaches in May 2005. Since these motorcoaches are so new, they require less part replacement.

·	Depreciation and amortization decreased by $329,154, or 45%, due to the complete depreciation of several of our motorcoaches during the period since the third quarter of 2005..

·	Fuel expense increased by $239,007, or 32%, due to the continuous rise in the cost of fuel.

·	Salary and commissions expense increased by $95,509, or 19%, due to cost of living increases in wages, and primarily to the hiring of ticket sellers for the new Philadelphia run.

·	Motorcoach insurance increased by $59,030, or 15%, due to the continuous rise in insurance premiums.

·	Toll expense increased by $62,673, or 37%, due to our new commuter run to Philadelphia.

For the nine months ended August 31, 2006 and 2005, our general and administrative expenses were $783,350 and $531,332 respectively. The net increase in general and administrative expenses of $252,018 is primarily attributable to increases in the following expenses:

·	Advertising increased by $45,896, or 717%, due to promotion of our new Philadephia run.

·	Bank charges and credit card fees increased by $43,766, or 250%, due to credit card fees borne by the Company for Philadelphia route tickets purchased with credit cards by customers.

·	Professional fees increased by $56,079, or 370%, due to legal and consulting fees incurred for the set-up of the new Philadelphia run, and an increase in SEC legal and accounting fees incurred to maintain the Company’s status as a public reporting company.

·	Salary expense increased by $25,903, or 9%, due to cost of living increases in wages.

·	Rent expense increased by $16,758, or 48%, due to offices leased for the new Philadelphia run.

·	Bad debt expense increased by $13,744, or 724%, due to incidents related to the discontinuance of one of our casino runs.

Interest expense incurred during the nine month ended August 31, 2006 was $432,212 compared to interest expense in the same period of 2005 of $372,994. The 16% increase is due to the amortization of a deferred guarantee cost incurred with the motorcoach purchase in June 2005, an increase in credit card debt (attributable to an increase in overall credit card balances), and interest expense incurred on a new SBA loan entered into in August 2005.

Liquidity and Capital Resources

As of August 31, 2006, we had $5,714 in cash and cash equivalents, total current assets of $494,808 and a working capital deficit of $3,961,500. We generated $216,145 and $316,843 in cash flows from operating activities for the nine months ended August 31, 2006 and 2005, respectively.

We acquired 11 new MCI motorcoaches pursuant to a purchase agreement with MCI (Motor Coach Industries) that we entered into on May 24, 2005. Pursuant to the agreement we are required to pay an aggregate purchase price of $4,211,000. We obtained financing for the purchase of these new motorcoaches through Caterpillar Financial Services Corporation. Under the terms of the financing arrangement, we paid an aggregate down payment of $165,000 and we financed the remaining $4,046,000. Under the terms of the financing arrangement, we are required to make a total of 84 monthly payments. The payments are in the approximate amount of $56,416 and we are required to make a final balloon payment. The interest rate is 8.25% per annum.

The financing provided by Caterpillar Financial Services Corporation is secured by a first priority lien on the motorcoaches and is personally guaranteed by Wilson Cheng, our Chairman, Chief Executive Officer and controlling stockholder. In consideration for personally guarantee-ing the financing for the acquisition of the motorcoaches, on June 5, 2005, we issued to Mr. Cheng 2,000,000 shares of our Common Stock.

We anticipate that revenues generated through our operations during the 2005 and 2006 fiscal years will be sufficient for the next 12 months of our operations even if we do not raise any additional capital through the private placement of our securities, loans from our principal stockholders or otherwise.

In order to improve our liquidity, we are seeking to reduce our expenses. One way that we have sought to reduce our expenses is to acquire a new fleet of motorcoaches. As noted above, in May 2005, we acquired 11 new MCI motorcoaches. The monthly principal and interest charges relating to the financing of these new coaches are approximately the same as the monthly lease payments for the motorcoaches that they replaced. The monthly interest charges (for the 11 new motorcoaches, which we own) and the monthly lease payments (for the 12 older motorcoaches that we lease) equal approximately $113,342. Prior to acquiring these new motorcoaches our monthly lease payments for all 23 motorcoaches that were then leased by us were approximately $103,868. So, now one-half of our fleet consists of new motorcoaches and we are still paying about the same amount to use our motorcoaches that we paid when we had all older motorcoaches. However, our expenses will now be lower because the new motorcoaches will require less maintenance thereby reducing our maintenance expense. We anticipate that we will save approximately $200,000 a year on major repairs.

In addition, in order to further increase our cash flows, we raised the daily rate payable with respect to our special destination services (i.e., casino line runs). During the period from January 2004 through June 2005, we raised our rates from $650 to $750 per motorcoach for one of our major clients. During the period from January 2004 through October 2005, we raised our rates from $600 to $705 per motorcoach for another one of our major clients. Finally, during the period from January 2004 through November 2005, we raised our rates from $520 to $635 per motorcoach for a third major client.

We have also adopted a strategy of using any available cash resulting from our increased rates and lower expenses to pay down our long-term debt to reduce our interest expense and enhance our balance sheet.

In October 2005, we refinanced $100,000 of credit card debt. We were paying interest at rates ranging from 11.5% to 29.5% on the credit card debt and we are now paying interest at a fixed rate of 6%.

We estimate that in order to breakeven (i.e., have sufficient revenues to cover all of our expenses) in a given month we need to generate approximately $550,000 in revenues on average or have revenues of approximately $8,000,000 per year.

Our business is seasonal. During the first and fourth quarters of our fiscal year we will usually break even or suffer a loss. We believe that business is slower in these months mostly because of colder weather and lower tourism during this period. During our second and third quarters, we usually are more profitable. Charter prices increase during this period due to greater demand.

Cash Flow for Nine Months ended August 31, 2006 compared to August 31, 2005 (Unaudited)

The following table summarizes the statements of cash flows from the financial statements:

	Nine Months Ended August 31,
	2006			2005
Net Cash Provided By Operating Activities		216,145			316,843
Net Cash Used in Investing Activities		(43,376	)		(38,122	)
Net Cash Used In Financing Activities		(174,761	)		(467,365	)
Net increase (decrease) in Cash and Cash Equivalents		(1,992	)		(188,644	)
Cash and Cash Equivalents - Beginning of Period		7,706			258,451
Cash and Cash Equivalents - End of Period		5,714			69,807

For the nine months ended August 31, 2006 and 2005, our operating activities generated $216,145 and $316,843 in cash, respectively. This decrease is primarily attributable an increase in operating, general and administrative expenses of $283,998, or 6%, while our revenues only increased by $27,469, or <1% as compared to the nine months ended August 31, 2005.

For the nine months ended August 31, 2006 and 2005, we used $43,376 and $38,122, respectively, in investing activities. This nominal increase of $5,254, or 14%, during the nine months ended August 31, 2006 is due to the Company purchasing equipment for its new Philadelphia run offices.

For the nine months ended August 31, 2006 and 2005, we used $174,761 and $467,365, respectively, in financing activities. The decrease in cash flow used in financing is primarily attributable to a net increase in proceeds received from related parties of $264,223 during the nine months ended August 31, 2006, compared to net payments of $18,445 made during the same period of 2005- an increase of $282,668. In addition, the Company made total principal payments on its motorcoach leases and purchases of $513,367 during the nine months ended August 31, 2006 due to the motorcoach refinance, as compared to $568,497 in principal payments made during the same period in 2005- a decrease of $55,130.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.

Seasonality

The motorcoach business is subject to seasonal variations in operations. During the winter months, operating costs are higher due to the cold weather and demand for motorcoach services is lower, particularly because of a decline in tourism. As a result, our revenues and results of operations are lower in winter months.

Inflation

Our business, revenues and operating results are not affected in any material way by inflation.

Critical Accounting Policies

The Securities and Exchange Commission issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the following significant policies as critical to the understanding of our financial statements.

Insurance Coverage - We maintain comprehensive vehicle liability, general liability, workers’ compensation and property insurance to insure its assets and operations, with some claims subject to certain deductibles and no deductibles for other claims. Our management continually evaluates the adequacy of our insurance and whether a reserve for outstanding claims, not covered by our present insurance coverage and when certain insurance deductibles are not met, is warranted.

Significant Estimates - Several areas require significant management estimates relating to uncertainties for which it is reasonably possible that there will be a material change in the near term. The more significant areas requiring the use of management estimates are related to the valuation of liability reserves and the useful lives for amortization and depreciation, as well as the realization of the tax benefits of net operating losses.

Risk Factors

You should carefully consider the risks described below, which constitute all of the material risks facing us. If any of the following risks actually occur, our business could be harmed. You should also refer to the other information about us contained in this Form 10-QSB, including our financial statements and related notes.

FINANCIAL RISKS

We have $494,808 in current assets of which only $5,714 was cash and cash equivalents at August 31, 2006. Our total current liabilities at August 31, 2006 were $4,456,308, resulting in a working capital deficit of $3,916,500. We also have long-term debt of $3,895,586.

In order to effectively run our business we will require additional working capital. We may seek to satisfy our future funding requirements through revenues generated through our operations, the proceeds of public or private offerings of our securities, or through loans from financial institutions or our controlling stockholders. We do not have any immediate plans to effect a private placement or public offering of our securities nor do we have any written or verbal commitments from any other source of financing. Additional financing may not be available when needed or on terms acceptable to us. Unavailability of financing may result in delays in making capital expenditures that management believes are necessary to effectively operate our business and compete in our market. To the extent we raise additional capital by issuing equity securities, your ownership interest would be diluted.

BUSINESS RISKS

Our business is subject to seasonal fluctuations, which makes our revenues and results of operations vary from season to season.

Fuel is one of our most significant operating expenses. Fuel prices are subject to sudden increases as a result of variations in supply levels and demand. Any sustained increase in fuel prices could adversely affect our results of operations. From time to time, there are efforts at the Federal or state level to increase fuel or highway use taxes, which, if enacted, also could adversely affect our results of operations.

In fiscal year 2005, we paid $720,347 in insurance premiums to insure our motorcoaches ($95,650 of which was for policies prepaid through various dates in 2006) and $79,052 in insurance premiums for workers’ compensation insurance. In 2004 we paid $475,851 in insurance premiums to insure our motorcoaches ($95,043 of which was for policies prepaid through various dates in 2005) and $75,411 in workers’ compensation insurance. During the nine months ended August 31, 2006 and 2005, we incurred $524,992 and $505,469, respectively, in insurance and workmen’s compensation expense. Insurance costs continue to increase each year. The increase in insurance costs has negatively affected our cash flows. Furthermore, although we were able to obtain insurance for 2005 and 2006, the process for obtaining insurance was prolonged and we were rejected by some of the insurance companies that we applied to for insurance before being able to ultimately secure insurance.

We are self-insured for the deductible amounts under our insurance policies, which deductible amount is $25,000 per vehicle, per occurrence. If we were to experience a significant increase in the number of claims for which we are self-insured or claims in excess of its insurance limits, our results of operations and financial condition would be adversely affected.

As a provider of motorcoach services, we are subject to significant regulations. Compliance with these regulations requires us to incur operating costs, which affect our bottom line.

Motorcoach operators are subject to extensive safety requirements and requirements imposed by environmental laws, workplace safety and anti-discrimination laws, including the Americans with Disabilities Act. Safety, environmental and vehicle accessibility requirements for motorcoach operators have increased in recent years, and this trend could continue. The FHWA and state regulatory agencies have broad power to suspend, amend or revoke our operating authorizations for failure to comply with statutory requirements, including safety and insurance requirements. Many states require motorcoach operators to obtain authority to operate over certain specified intrastate routes, and, in some instances, such authority cannot be obtained if another operator already has obtained authority to operate on that route. As a result, there may be regulatory constraints on the expansion of our operations in these states.

CONCENTRATED CONTROL RISKS

The management team voting together has the power to make all major decisions regarding the Company without the need to get consent from any stockholder or other person. Wilson Cheng, our Chief Executive Officer and President, is also the only person knowledgeable about our business, affairs and history and the loss of his services would likely result in the indefinite cessation of our operations and the complete failure of our current business plan.

Our management team owns, in the aggregate, 64.17% of our outstanding common stock. Mr. Cheng, our Chief Executive Officer, owns 61.4% of the outstanding common stock; Vivian Cheng, Mr. Cheng’s sister, a director and the Secretary of Bestway, owns 1.46% of our outstanding common stock; Kelvin Chan, our Chief Operating Officer, owns 0.73% of our outstanding common stock; and Jovi Chen, our VP of Sales and Marketing, owns 0.58% of our outstanding common stock. Our current management team, acting together has the power to make all major decisions regarding our affairs, including decisions regarding whether or not to issue stock and for what consideration, whether or not to sell all or substantially all of our assets and for what consideration and whether or not to authorize more stock for issuance or otherwise amend our charter or bylaws. Our management team is in a position to elect all of our directors and to dictate all of our policies. Currently, none of our directors are independent. All of our directors are members of our management team.

Furthermore, since Mr. Cheng is our founder and currently our Chief Executive Officer, no other person affiliated with, or employed by, us has his in depth knowledge of our day to day operations or institutional knowledge regarding our history and past affairs. The loss or inability of Mr. Cheng to perform his duties would likely result in the indefinite cessation of our operations and the complete failure of our current business plan. We have no key man insurance on the life of Mr. Cheng. We anticipate the hiring of new employees in connection with the planned expansion of our business. Our future success will depend in significant part on our ability to hire and retain key technical sales and senior management personnel. Competition for such personnel is intense and there can be no assurance that we will be successful in attracting and retaining such personnel.

MARKET RISKS

There is no public market for our common stock, and even if a market develops, it will likely be thin and subject to manipulation.

Effective June 28, 2006, our common stock commenced quotation on the NASD Over-the-Counter Bulletin Board under the symbol BWCX.OB. We are optimistic that a market for our common stock will develop, however, there currently is no public market for our common stock, and no assurance can be given that a market will develop or that a shareholder ever will be able to liquidate his investment without considerable delay, if at all. If a market should develop, the price may be highly volatile. Further, even if a public market develops, the volume of trading in our common stock will presumably be limited and likely be dominated by a few individual stockholders. The limited volume, if any, will make the price of our common stock subject to manipulation by one or more stockholders and will significantly limit the number of shares that one can purchase or sell in a short period of time.

The equity markets have, on occasion, experienced significant price and volume fluctuations that have affected the market prices for many companies’ securities and that have often been unrelated to the operating performance of these companies. Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.

Our stock is a penny stock and there are significant risks related to buying and owning penny stocks.

Rule 15g-9 under the Securities Exchange Act of 1934 imposes additional sales practice requirements on broker-dealers that sell non-NASDAQ listed securities except in transactions exempted by the rule, including transactions meeting the requirements of Rule 506 of Regulation D under the Securities Act and transactions in which the purchaser is an institutional accredited investor (as defined) or an established customer (as defined) of the broker or dealer. For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. Consequently, this rule may adversely affect the ability of broker-dealers to sell our securities and may adversely affect your ability to sell any of the securities you own.

The Securities and Exchange Commission regulations define a "penny stock" to be any non-NASDAQ equity security that has a market price (as defined in the regulations) of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to some exceptions. For any transaction by a broker-dealer involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Our market liquidity could be severely adversely affected by these rules on penny stocks.

Obtaining additional capital through the future sale of common stock and derivative securities will result in dilution of stockholder interests.

We will likely raise additional funds in the future by issuing additional shares of common stock or securities such as convertible notes, options, warrants or preferred stock that are convertible into common stock. Any such sale of common stock or other securities will lead to further dilution of the equity ownership of existing holders of our common stock.

We do not intend to pay dividends to our stockholders, so you will not receive any return on your investment in our company prior to selling your interest in Bestway.

We have never paid any dividends to our stockholders. We currently intend to retain any future earnings for funding growth and, therefore, do not expect to pay any dividends in the foreseeable future. If we determine that we will pay dividends to the holders of our common stock, we cannot assure that such dividends will be paid on a timely basis. As a result, you will not receive any return on your investment prior to selling your shares in our company and, for the other reasons discussed in this “Risk Factors” section, you may not receive any return on your investment even when you sell your shares in our company.

A significant number of our shares will be eligible for sale and their sale or potential sale may depress the market price of our common stock.

Sales of a significant number of shares of our common stock in the public market could harm the market price of our common stock. We have authorized 20,000,000 shares of common stock. We have issued 13,700,000 shares of common stock, and currently have 13,680,000 shares outstanding, all of which are available for future sale.

As additional shares of our common stock become available for resale in the public market, the supply of our common stock will increase, which could decrease its price. Some or all of the shares of common stock may be offered from time to time in the open market under Rule 144, and these sales may have a depressive effect on the market for our shares of common stock. In general, a person who has held restricted shares for a period of one year may, on filing with the SEC a notification on Form 144, sell into the market common stock in an amount equal to 1% of the outstanding shares for Bulletin Board Companies. Such sales may be repeated once each three months, and any of the restricted shares may be sold by a non-affiliate after they have been held two years.

ITEM 3. CONTROLS AND PROCEDURES

An evaluation was carried out under the supervision and with the participation of our management, including Wilson Cheng, our Chairman, CEO and Treasurer, of the effectiveness of our disclosure controls and procedures, as of the end of the period covered by this report on Form 10-QSB. Disclosure controls and procedures are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-QSB, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and is communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of August 31, 2006, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective to satisfy the objectives for which they are intended.

There were no changes in our internal control over financial reporting identified in connection with the evaluation performed that occurred during the fiscal quarter covered by this report that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There is no pending litigation by or against us.

ITEM 2. UNREGISTERED SHARES OF EQUITY SECURITIES AND USE OF PROCEEDS

Except as specified below, we have not sold any of our securities in a private placement transaction or otherwise during the past three years.

In June 2005 we issued Wilson Cheng, our Chairman and CEO, 2,000,000 shares of our common stock in exchange for his personal guarantee of $4,046,000 in financing that we received from Caterpillar Financial Services Corporation that we utilized to acquire 11 new MCI motorcoaches.

The board of directors met in order to discuss a fair consideration to provide Mr. Cheng in connection with his agreement to personally guarantee the approximately $4,000,000 in debt incurred by Bestway so that Bestway could acquire the new MCI motorcoaches and determined that a guarantee fee of 2.5% or $100,000 was reasonable. The board then evaluated the financial condition and prospects of Bestway and determined that each share of Bestway common stock has a fair market value of $0.05. Since Bestway has very limited cash on hand, the Board determined that it would be in the Company’s best interests to pay the guarantee fee in stock and, therefore, issued Mr. Cheng 2,000,000 shares. Other than the foregoing analysis performed by the Board, no valuation report or outside appraiser or consultant was used to determine the fair market value of our common stock at the date that the shares were issued to the CEO.

Bestway relied on the exemption provided by Section 4(2) of the Securities Act in issuing the shares to Mr. Cheng without registration.

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

No matters were submitted to our security holders during the fiscal quarter ending August 31, 2006.

ITEM 5. OTHER INFORMATION

Indemnification Of Directors And Officers.

Article Seventh of the Certificate of Incorporation of Bestway provides that Bestway may, to the fullest extent permitted by Section 721 and 726 of the Business Corporation Law of New York, indemnify any and all directors and officers whom Bestway shall have power to indemnify under those sections of the Business Corporation law from and against any and all of the expenses, liabilities or other matters referred to in or covered by those sections, and the indemnification provided by Article Seventh is not exclusive.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.

ITEM 6. EXHIBITS

EXHIBITS.

31		Certification of Principal Executive Officer and Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of Principal Executive Officer and Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DATED: October 16, 2006


	BESTWAY COACH EXPRESS INC.

	By:	/s/ Wilson Cheng
		Name: Wilson Cheng
		Title: Chief Executive Officer and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number		Description

31		Certification of Principal Executive Officer and Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of Principal Executive Officer and Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Bestway Coach Express (BWCX) Inactive 10QSB2006 Q3 Quarterly report (small business)