August 8, 2005
By facsimile to (212) 608-9169 and U.S. Mail
Mr. Wilson Cheng
Chairman, Chief Executive Officer, President, and Treasurer
Bestway Coach Express Inc.
2 Mott Street, 7th Floor
New York, NY 10013
Re: Bestway Coach Express Inc.
Registration Statement on Form 10-SB
Filed July 15, 2005
File Nos. 0-51437
Dear Mr. Wilson:
We reviewed the filing and have the comments below. Where
indicated, we think that you should revise the document in
response
to the comments. If you disagree, we will consider your
explanation
why a comment is inapplicable or a revision is unnecessary. Be as
detailed as necessary in your explanation. To understand better
your
disclosure, we may ask you in some comments to provide us
supplemental information. We may raise additional comments after
reviewing this information.
Our review`s purpose is to assist you in your compliance with
applicable disclosure requirements and to enhance the overall
disclosure in your document. We look forward to working with you
to
achieve these objectives. We welcome any questions that you may
have
about comments or any other aspect of our review. You may call us
at
the telephone numbers listed at the end of this letter.
1. Update your filing to include interim financial statements as
of
and for the six months ended May 31, 2005. See Item 310(g) of
Regulation S-B.
Background, page 3
2. Identify the casino locations in Connecticut to which Bestway
Coach Express provides motorcoach service.
3. Provide consistent disclosure for your revenue percentages here
and in the table on page 13.
Equipment, page 5
4. We note that in about May/June 2005 Bestway Coach Express
acquired
11 new MCI motorcoaches and traded in an equal number of older Van
Hool motorcoaches. Tell us the carrying amount at the date of
trade
of the 11 older coaches, the trade-in amount, and how Bestway
Coach
Express accounted for the purchase/trade-in transactions. We
assume
that the 11 MCI motorcoaches acquired are new, 2005 model year.
5. We note the disclosure on page F-7 and elsewhere that Bestway
Coach Express leases all of its motorcoaches from various
financing
companies. Revise the disclosure here to clarify whether the 12
Van
Hool motorcoaches are leased. If the 12 Van Hool motorcoaches are
leased, file the lease agreements as exhibits to the Form 10-SB.
6. Update the status of your plan to replace the remaining 12 Van
Hool motorcoaches, and disclose the costs for their replacement.
Business Risks, page 9
7. State the deductible amount under each insurance policy.
Concentrated Control Risks, page 10
8. Disclosure in the last paragraph on page 10 that Bestway Coach
Express has no employment agreement with Mr. Wilson Cheng is
inconsistent with disclosure on page 15 and elsewhere that Bestway
Coach Express entered into an employment agreement with Mr. Cheng
on
June 5, 2005. Please revise.
Market Risks, page 11
9. Disclosure in the second paragraph on page 12 that Bestway
Coach
Express has 11.7 million shares of common stock outstanding is
inconsistent with disclosure on page 24 and elsewhere that Bestway
Coach Express has 13,680,000 shares of common stock outstanding as
of
July 14, 2005. Please revise.
Management`s Discussion and Analysis, page 12
10. Add disclosure about the frequency of your bus services, such
as
on a weekly or daily basis, and the typical utilization of your
buses, thus allowing the readers of your financial statements to
understand your passenger potential that could affect your ability
to
generate revenue.
Operating Results for Fiscal Year 2004 Compared to 2003, page 15
11. Quantify in more detail to the extent possible your results of
operations to help readers better understand changes from one year
to
the next. For example, quantify the material components that
impacted the change in sales and operating expenses year over
year.
See Release No. 33-8350.
12. We note that fuel costs are a significant component of your
operating costs. Describe Bestway Coach Express` strategy and any
actions that it has taken to deal with rising fuel costs. Also
discuss Bestway Coach Express` ability or inability to pass
increased
costs to customers.
Liquidity and Capital Resources, page 17
13. Your analysis of your liquidity and capital resources,
particularly your cash flow analysis, should not be recitation of
changes and other information evident to readers from your
financial
statements. Rather, your analysis should provide your readers
with
information that will allow them to assess your prospects for the
future. Expand this section in your filing to address the items
discussed in section IV of Release No. 33-8350.
Description of Property, page 20
14. We note the disclosure that Bestway Coach Express leases an
administrative office and a garage depot. Since the facilities
appear to be material to Bestway Coach Express` business, advise
what
consideration you have given to filing the lease agreements as
exhibits to the Form 10-SB.
15. We note your disclosure that the lease on your Brooklyn garage
increases from $9,000 to $9,500 per month beginning on February 1,
2007. Confirm to us that you are recognizing your rent expense on
this lease on a straight line basis over the life of the lease in
accordance with FASB Technical Bulletin 85-3.
Security Ownership of Certain Beneficial Owners and Management,
page
21
16. Disclosure on page 24 indicates that two million shares were
issued to Mr. Wilson Cheng in May 2005. Add a subsequent event
footnote that discloses all material equity transactions occurring
after the date of the latest interim financial statements
presented.
Also, your disclosure on page 12 on the number of shares
outstanding
is out of date. It states that 11,700,000 common shares are
outstanding.
17. Provide us your analysis to determine the fair value of the
two
million shares issued to Mr. Wilson Cheng and how this transaction
was recorded.
18. Revise your disclosure to correct the discrepancy between your
beneficial ownership table on page 21 and the discussion of
concentrated control risks on page 10. For example, you disclose
on
page 21 that Mr. Wilson Cheng owns 61.4% of your outstanding
shares,
but you state on page 10 that he owns 54.7%.
Description of Securities, page 24
19. This section`s second paragraph`s first sentence is unclear.
Inclusion of the words "as and to receive dividends when" appears
inadvertent. Please revise.
Common Stock, page 24
20. We note that Bestway Coach Express issued on May 24, 2005 two
million shares of common stock to Mr. Wilson Cheng for his
personal
guarantee of a financing agreement with Caterpillar Financial
Services. Tell us the value attributed to the two million shares
issued and how Bestway Coach Express determined that value. Also
tell us how Bestway Coach Express is accounting for the guarantee.
Recent Sales of Unregistered Securities, page 27
21. Disclosure that Bestway Coach Express has not sold any of its
securities in a private placement or otherwise during the past
three
years is inconsistent with disclosure on page 24 and elsewhere
that
Bestway Coach Express agreed to issue Mr. Wilson Cheng two million
shares of common stock in exchange for his personal guarantee of
$4,046,000 of debt that Bestway Coach Express used to acquire 11
new
motorcoaches in May 2005. Revise this section`s disclosure to
comply
with the requirements of Item 701 of Regulation S-B.
Report of Independent Registered Public Accounting Firm, page F-2
22. We note your disclosure on page 9 that "the audit report of
our
independent auditor for the fiscal year ended November 30, 2004
and
2003 indicates that we have a net capital deficiency that raises
substantial doubt about our ability to continue as a going
concern."
However, the audit report on page F-2 does not contain a going
concern paragraph. Explain to us this discrepancy. We assume that
the statement made on page 9 is correct. Further, if your
accountant has determined that there is substantial doubt about
your
ability to continue as a going concern, expand the disclosures to
provide robust disclosures on the substantial doubt about your
ability to continue as a going concern. Specifically, revise your
disclosure to include:
* The possible effects of these conditions and events.
* Your evaluation of the significance of the conditions and events
and the mitigating factors.
* Detailed description of your plans for dealing with the adverse
effects of the conditions and events.
* A discussion of the recoverability or classification of assets
and
liabilities.
Refer to AU Section 341.10 for additional guidance.
23. Provide detailed disclosure in your MD&A of the demands and
sources of your cash covering at least a 12 month period from the
latest balance sheet date. See Financial Reporting Codification
501.03.a.
24. We note that your independent public accountant is licensed in
the state of Utah while your principal operations are in the state
of
New York. Confirm to us that Child, Sullivan and Company is in
compliance with the New York State licensing requirements for its
audit of your financial statements. If there is noncompliance
with
New York State requirements, you should consider the need for
additional disclosure, your independent public accountant should
consider registering with the state of New York, or you should
consider obtaining audit services from a different independent
public
accountant.
25. We have note the reference to restated financial statements in
the audit report. Within your MD&A and in the footnotes to the
financial statements, provide disclosure that explains the nature
of
this restatement. Include a tabular reconciliation of the
previously
reported amounts to the restated amounts. We assume that the
restatement does not refer to the change in par value as discussed
in
note 19.
Capitalized Lease Obligation, page F-3
26. We note that at November 30, 2004 accounts payable and accrued
liabilities included $104,459 representing interest and penalties
on
delinquent lease payments. Tell us whether any delinquencies
exist
at the current date. If so, tell us the amount and describe the
situation in MD&A.
27. We note that at February 28, 2005 and November 30, 2004
current
maturities of capitalized lease obligations are reflected as
$1,284,282 at both dates. Confirm that the amounts are correct.
Revenue Recognition, page F-9
28. We note your disclosure on page 3 that in your per seat
operations you are paid by each individual customer. However, you
state in your trade receivables policy on page F-11 that 96% of
your
balance as of November 30, 2004 is due from one casino customer.
Expand your revenue recognition policy to differentiate between
contracted and per seat basis. Also address the criteria in SAB
Topic 13 to recognize revenue in your policy.
29. We note your disclosure that a liability for receipts from
services sold but not yet earned is recorded as unredeemed
services.
Disclose this amount, if material. We understand that the amount
is
included in the caption, accounts payable and accrued liabilities.
The amount of accounts payable should be stated separately. Any
material component of accrued liabilities should be stated
separately.
Note 6. Property and Equipment, page F-11
30. We note your disclosure on page F-7 that your 23 motorcoaches
are
leased "generally under long-term capitalized leases for a term of
seven years." Further, you have disclosed in note 7 on page F-12
that during the year ended November 30, 2004 you "exercised the
purchase options associated with these leases, which had the
effect
of extending the leases on these buses generally over three (3)
more
years." However, you disclose in note 6 on page F-11 that your
motorcoach capitalized leases have an estimated useful live of 15
years. We note your disclosure on page F-7 that your entire fleet
of
23 motorcoaches is leased. In consideration of paragraph 11 of
SFAS
No. 13, explain to us why you are amortizing your capitalized
leases
for motorcoaches over a life greater than the life of the leases.
Note 9. Major Customers, page F-14
31. Disclose separately in your footnotes the revenue applicable
to
each customer that is 10% or more of your total revenue. See
paragraph 39 of SFAS 131.
Note 14. Acquisition of Subsidiary, page F-18
32. We reviewed the Form 10-KSB for AMCO Transport Holdings, Inc.
for
the fiscal year ended December 31, 2002 and note that assets were
a
zero balance at December 31, 2002 and 2001 and there was zero
revenue
for the years ended December 31, 2002 and 2001. In consideration
of
these facts, explain to us how you determined that there was not
goodwill impairment upon the completion of this acquisition. See
paragraphs 18-29 of SFAS 142.
Trade Accounts Receivable, net, page F-2 (interim)
33. We note that the balance of trade accounts receivable
increased
from $246,985 at November 30, 2004 to $391,266 at February 28,
2005.
Tell us whether the trade receivables at February 28, 2005 have
been
fully collected. Continue to disclose any concentration in trade
receivables at both year end and interim dates. We note that at
November 30, 2004 trade receivables were concentrated in one
casino
customer.
Inventories, page F-2 (interim)
34. Explain to us why your inventory balance of $119,046 remained
unchanged from November 30, 2004 to February 28, 2005. Tell us if
a
physical inventory was conducted at or for your interim balance
sheet
date of February 28, 2005. Further, explain to us why your fuel
component of inventory remained unchanged from November 30, 2003
to
November 30, 2004.
Exhibit Index
35. You omitted exhibit 12, code of ethics, from the exhibit
index.
See Item 1(b) of part III of Form 10-SB, and revise.
Closing
File an amendment to the Form 10-SB in response to these
comments. To expedite our review, you may wish to provide us
three
marked courtesy copies of the filing. Include with the filings a
cover letter tagged as correspondence that keys the responses to
the
comments and any supplemental information requested. If you think
that compliance with any of the comments is inappropriate, provide
the basis in the letter. We may have additional comments after
review of the filing, the responses to the comments, and any
supplemental information.
We urge all persons responsible for the accuracy and adequacy
of
the disclosures in the filings reviewed by us to make certain that
they have provided all information that investors require for an
informed decision. Since Bestway Coach Express and its management
are in possession of all facts relating to the disclosures in the
filings, they are responsible for the adequacy and accuracy of the
disclosures that they have made.
When responding to our comments, provide a written statement
from Bestway Coach Express acknowledging that:
* Bestway Coach Express is responsible for the adequacy and
accuracy
of the disclosures in the filings.
* Our comments or changes to disclosures in response to our
comments
do not foreclose the Commission from taking any action on the
filings.
* Bestway Coach Express may not assert our comments as a defense
in
any proceedings initiated by the Commission or any person under
the
United States` federal securities laws.
The Commission`s Division of Enforcement has access to all
information that you provide us in our review of the filings or in
response to our comments on the filings.
You may direct questions on accounting comments to Ryan E.
Rohn, Staff Accountant, at (202) 551-3739 and Nathan N. Cheney,
Assistant Chief Accountant, at (202) 551-3760. You
may direct questions on other comments and disclosure issues to
Edward M. Kelly, Senior Counsel, at (202) 551-3728 or Christopher
B.
Edwards, Special Counsel, at (202) 551-3742.
Very truly yours,
Pamela A. Long
Assistant Director
Mr. Wilson Cheng
August 8, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE