**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, 2005
 
 **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. 000-51158**
 
 **BESTWAY
        COACH EXPRESS INC.**
 (Exact
        name of small business issuer as specified in its charter)
  NEW
                  YORK
              13-3961159(State
                  or other jurisdiction of
              (I.R.S.
                  Empl. Ident. No.)incorporation
                  or organization)
 
 2
        Mott
        Street, 7thFloor,
        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 October 19, 2005, are as follows:
  Class
                  of Securities
              Shares
                  OutstandingCommon
                  Stock, $0.001 par value
              13,680,000
  Transitional
        Small Business Disclosure Format (check one): Yes o No
        x
 
 
  **BESTWAY
        COACH EXPRESS INC.**
  INTERIM
        BALANCE SHEETS
  August
                  31,
              
              November
                  30,2005
              
              2004(unaudited)AssetsCurrent
                  assetsCash
                  and cash equivalents
              
              $
              69,807
              
              $
              258,451Trade
                  accounts receivable, net
              
              
              138,337
              
              
              246,985Fuel
                  tax receivable
              
              
              91,095
              
              
              102,376Insurance
                  proceeds receivable
              
              
              -
              
              
              117,605Due
                  from affiliates
              
              
              30,075
              
              
              -Inventories
              
              
              93,341
              
              
              119,046Prepaid
                  expenses
              
              
              228,005
              
              
              99,880Total
                  current assets
              
              
              650,660
              
              
              944,343Property
                  and equipmentTotal
                  property and equipment
              
              
              8,843,953
              
              
              8,447,442Less:
                  accumulated depreciation and amortization
              
              
              (2,445,193
              )
              
              (3,409,868
              )Property
                  and equipment, net
              
              
              6,398,760
              
              
              5,037,574Other
                  assetsDeposits
                  and other assets
              
              
              42,999
              
              
              32,152Total
                  other assets
              
              
              42,999
              
              
              32,152Total
                  assets
              
              $
              7,092,419
              
              $
              6,014,069Liabilities
                  and Stockholders’ (Deficit)Current
                  liabilitiesChecks
                  drawn in excess of bank balance
              
              $
              97,237
              
              $
              9,095Current
                  portion of notes payable - banks
              
              
              422,256
              
              
              59,785Current
                  maturities of capitalized lease obligations
              
              
              534,845
              
              
              1,284,282Notes
                  payable - related parties
              
              
              273,055
              
              
              291,500Notes
                  payable - banks and credit card companies
              
              
              400,847
              
              
              284,774Accounts
                  payable
              
              
              269,503
              
              
              459,721Payroll
                  taxes payable
              
              
              243,523
              
              
              179,534Accrued
                  expenses
              
              
              151,821
              
              
              263,340Customer
                  deposits
              
              
              950
              
              
              39,665Accrued
                  salaries - officers
              
              
              901,500
              
              
              863,728Total
                  current liabilities
              
              
              3,295,537
              
              
              3,735,424Long-term
                  liabilitiesCapitalized
                  lease obligations, net of current maturities
              
              
              980,282
              
              
              2,079,228Notes
                  payable - banks
              
              
              3,866,234
              
              
              257,593Due
                  to stockholder
              
              
              43,917
              
              
              57,495Deferred
                  income taxes
              
              
              105,016
              
              
              535,368Total
                  long-term liabilities
              
              
              4,995,449
              
              
              2,929,684Total
                  liabilities
              
              
              8,290,986
              
              
              6,665,108Stockholders’
                  (deficit)Common
                  stock, $.001 par value, 20,000,000 sharesauthorized,
                  13,700,000 shares issued, 13,680,000 and11,700,000
                  shares outstanding, respectively
              
              
              13,700
              
              
              11,700Additional
                  paid-in-capital
              
              
              625,800
              
              
              527,800Retained
                  (deficit)
              
              
              (1,836,067
              )
              
              (1,190,539
              )Total
                  paid-in capital and retained (deficit)
              
              
              (1,196,567
              )
              
              (651,039
              )Less:
                  Cost of treasury stock (20,000 shares and 0 shares,
                  respectively)
              
              
              (2,000
              )
              
              -Total
                  stockholders' (deficit)
              
              
              (1,198,567
              )
              
              (651,039
              )Total
                  liabilities and stockholders’ (deficit)
              
              $
              7,092,419
              
              $
              6,014,069
   The
        accompanying notes are an integral part of these
        consolidated financial statements.
  2
  **BESTWAY
        COACH EXPRESS INC.**
 
 STATEMENTS
        OF OPERATIONS (UNAUDITED)
 
 For
                  the three months
                ended
                  August 31,
              
              For
                  the nine months
                ended
                  August 31,2005
              
              2004
              
              2005
              
              2004Revenues
              
              $
              1,803,066
              
              $
              1,413,983
              
              $
              4,755,810
              
              $
              3,871,911Operating
                  expenses
              
              
              1,755,359
              
              
              1,179,463
              
              
              4,355,860
              
              
              3,196,400Gross
                  profit
              
              
              47,707
              
              
              234,520
              
              
              399,950
              
              
              675,511General
                  and administrative expenses
              
              
              224,655
              
              
              138,760
              
              
              531,332
              
              
              347,406Income
                  (loss) from operations
              
              
              (176,948
              )
              
              95,760
              
              
              (131,382
              )
              
              328,105Other
                  income (expense)Interest
                  income
              
              
              311
              
              
              -
              
              
              7,975
              
              
              33Other
                  income
              
              
              1,227
              
              
              (411
              )
              
              1,619
              
              
              9,069Interest
                  expense
              
              
              (149,921
              )
              
              (100,893
              )
              
              (372,994
              )
              
              (299,047
              )Loss
                  on trade-in of assets under capitalized leases
              
              
              (467,506
              )
              
              -
              
              
              (581,098
              )
              
              -Totalother income (expense)
              
              
              (615,889
              )
              
              (101,304
              )
              
              (944,498
              )
              
              (289,945
              )Income
                  (loss) before provision for taxes
              
              
              (792,837
              )
              
              (5,544
              )
              
              (1,075,880
              )
              
              38,160Provision
                  for income tax (expense) benefit
              
              
              317,135
              
              
              2,218
              
              
              430,352
              
              
              (15,265
              )Net
                  income (loss)
              
              $
              (475,702
              )
              $
              (3,326
              )
              $
              (645,528
              )
              $
              22,895Income
                  (loss) per share - basic and diluted
              
              $
              (.03
              )
              $
              (.00
              )
              $
              (.05
              )
              $
              .00Weighted
                  average number of shares used to determine loss per share
              
              
              13,680,000
              
              
              11,700,000
              
              
              12,346,667
              
              
              11,700,000




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




3




**BESTWAY
        COACH EXPRESS INC.**
 
 STATEMENTS
        OF CHANGES IN STOCKHOLDERS’ (DEFICIT) (UNAUDITED)
 
 For
        the
        Nine Months Ended August 31, 2005


Additional
              
              
              
              
              
              TotalCommon
                  Stock
              
              Paid-In
              
              Treasury
              
              Retained
              
              Stockholders’Shares
              
              Amount
              
              Capital
              
              Stock
              
              (Deficit)
              
              (Deficit)Balance
                  at November 30, 2004
              
              
              11,700,000
              
              $
              11,700
              
              $
              527,800
              
              $
              -
              
              $
              (1,190,539
              )
              $
              (651,039
              )Treasury
                  stock
              
              
              (20,000
              )
              
              -
              
              
              -
              
              
              (2,000
              )
              
              -
              
              
              (2,000
              )Issuance
                  of common stockfor
                  loan guaranty
              
              
              2,000,000
              
              
              2,000
              
              
              98,000
              
              
              -
              
              
              -
              
              
              100,000Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (645,528
              )
              
              (645,528
              )Balance
                  at August 31, 2005
              
              
              13,680,000
              
              $
              13,700
              
              $
              625,800
              
              $
              (2,000
              )
              $
              (1,836,067
              )
              $
              (1,198,567
              )
  The
        accompanying notes are an integral part of
        these consolidated financial statements.
  4
  **BESTWAY
        COACH EXPRESS INC.**
  STATEMENTS
        OF CASH FLOWS (UNAUDITED)
 
 For
                    the nine months
                  ended
                    August 31,2005
                
                2004*Cash
                    flows from operating activities:*Net
                    income (loss)
                
                $
                (645,528
                )
                $
                22,895Adjustment
                    to reconcile net income (loss) to net cashprovided
                    by operating activities:Depreciation
                    and amortization
                
                
                740,051
                
                
                411,425Deferred
                    income taxes
                
                
                (430,352
                )
                
                15,265Goodwill
                    impairment loss
                
                
                -
                
                
                11,605Loss
                    on trade-in of capitalized leases
                
                
                581,098
                
                
                -Stock
                    based compensation
                
                
                100,000
                
                
                -Changes
                    in operating assets and liabilities:Trade
                    accounts receivable, net
                
                
                108,648
                
                
                13,156Fuel
                    tax receivable
                
                
                11,281
                
                
                (41,896
                )Insurance
                    proceeds receivable
                
                
                117,605
                
                
                -Inventories
                
                
                25,705
                
                
                3,769Prepaid
                    expenses
                
                
                (128,125
                )
                
                (131,961
                )Due
                    from related company
                
                
                (30,075
                )
                
                (13,020
                )Deposits
                    and other assets
                
                
                (10,847
                )
                
                24,637Accounts
                    payable
                
                
                (190,218
                )
                
                74,575Payroll
                    taxes payable
                
                
                63,989
                
                
                113,994Accrued
                    expenses
                
                
                (111,519
                )
                
                94,472Customer
                    deposits
                
                
                (38,715
                )
                
                2,495Accrued
                    salaries - officers
                
                
                37,772
                
                
                4,860Net
                    cash provided by operating activities
                
                
                200,770
                
                
                606,271Cash
                    flows from investing activities:Purchase
                    of property and equipment
                
                
                (38,122
                )
                
                (81,660
                )Net
                    cash used in investing activities
                
                
                (38,122
                )
                
                (81,660
                )Cash
                    flows from financing activities:Checks
                    drawn in excess of bank balance
                
                
                88,142
                
                
                87,404Proceeds
                    from notes payable - banks and credit cards
                
                
                116,073
                
                
                99,630Principle
                    payments on note payable - banks
                
                
                (74,888
                )
                
                (47,559
                )Proceeds
                    from notes payable - related parties
                
                
                145,295
                
                
                -Payment
                    of notes payable - related parties
                
                
                (163,740
                )
                
                (81,860
                )Payment
                    of due to stockholder
                
                
                (13,578
                )
                
                (18,076
                )Purchase
                    of treasury stock
                
                
                (2,000
                )
                
                -Cash
                    and parts credit from trade-in of capitalized leases
                
                
                121,901
                
                
                -Repayment
                    of capitalized lease obligations
                
                
                (568,497
                )
                
                (587,804
                )Net
                    cash used in financing activities
                
                
                (351,292
                )
                
                (548,265
                )*Net
                    increase (decrease) in cash and*cash
                    equivalents
                
                
                (188,644
                )
                
                (23,654
                )Cash
                    and cash equivalents - beginning of year
                
                
                258,451
                
                
                24,906Cash
                    and cash equivalents - end of period
                
                $
                69,807
                
                $
                1,252
  The
          accompanying notes are an integral part of these
          consolidated financial statements.
  5
  Non-cash
                    investing and financing activities:
                  
                  During
                    the nine months ended August 31, 2005, the Company traded 11
                    buses with a
                    net book value of $2,147,885 toward the purchase of 11 new buses.
                    The
                    Company received cancellation of capital lease obligations in
                    the amount
                    of $1,279,886, a trade-in allowance of $165,000, and cash and
                    parts credit
                    of $121,901, resulting in a loss on trade-in of $581,098. The
                    Company used
                    the trade-in allowance and a new loan of $4,046,000 to purchase
                    11 buses
                    valued at $4,211,000.
                  
                  On
                    June 5, 2005, the Company issued 2,000,000 shares of common stock
                    to
                    Wilson Cheng, the CEO, in exchange for his personal guaranty
                    of the
                    $4,046,000 loan. The shares were valued at $.05 per share at
                    June 5, 2005,
                    and the value of the transaction was
                    $100,000.
   The
        accompanying notes are an integral part of these
        consolidated financial statements.
 6
 BESTWAY
          COACH EXPRESS INC.
 (A
          Development Stage Company)
 
 NOTES
          TO
          UNAUDITED INTERIM FINANCIAL STATEMENTS
 
 For
          The
          Quarterly Period Ended August 31, 2005
 GENERAL:
 
 The
        financial statements of Bestway Coach Express Inc. (the Company), 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 which, in the opinion of management, are
        necessary to 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, 2005, are not necessarily indicative
        of the operating results that may be expected for the full year ending November
        30, 2005. These statements should be read in conjunction with the Company’s most
        recent annual financial statements for the year ended November 30, 2004,
        included in Form 10-SB filed with the U.S. Securities and Exchange
        Commission.
 
 2.
              SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
  BUSINESS
        ACTIVITY
 
 Bestway
        Coach Express, Inc. was incorporated on August 4, 1997, in New York State.
        The
        Company provides motorcoach transportation services. The majority of the
        Company’s revenues are derived from contracts with casinos to provide
        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.
 
 7
 2.
                SUMMARY
                    OF SIGNIFICANT ACCOUNTING POLICIES
                    (Continued)
 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. 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.
 
 STOCK
        VALUATION
 
 In
        March
        2002, the Company effected a private placement of 5,000,000 shares at a price
        per share of $0.10, raising an aggregate of $500,000. Upon completion of
        the
        offering, there were 14,000,000 shares outstanding, giving the Company a
        market
        capitalization of $1,400,000. The $0.10 offering price was determined by
        the
        board of directors of the Company at the time based upon the Company’s revenues,
        total assets, and total stockholder’s equity. The Company’s 2001 audited
        financials disclosed that the Company had $3,176,596 in revenues, $7,442,631
        in
        total assets and Stockholder’s Equity of $220,618. In determining the Company’s
        stock price for purposes of the May 2005 issuance of 2 million shares to
        the CEO
        (see Note 5), the board of directors considered the same factors that it
        did in
        March 2002. Based on the Company’s audited financial statements for the fiscal
        year ended November 30, 2004, the Company had revenues of $5,254,666, but
        its
        total assets were only $5,896,464 and the Company had a stockholder’s deficit of
        $618,102. Therefore, based upon these financial indicators the board determined
        that the fair market value of the stock should be $0.05 per share giving
        the
        Company a market capitalization of $685,000.
 
 CONCENTRATION
        OF CREDIT RISK
  The
        Company provides services within 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.
 
 8
 2.
                  SUMMARY
                      OF SIGNIFICANT ACCOUNTING POLICIES
                      (Continued)
 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.
 
 9
 2.
                  SUMMARY
                      OF SIGNIFICANT ACCOUNTING POLICIES
                      (Continued)
 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. On August 31, 2005, 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.
 
 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.
 
 3.
              TRADE
                  RECEIVABLES
 
 Trade
        receivables are carried at original invoice amount. Trade receivables as
        of
        August 31, 2005 and November 30, 2004 were
        $138,337 and $246,985, respectively, and of the total, 95% and 96%,
        respectively, are 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, 2005 and November 30,
        2004,
        the reserve
        for trade receivables was $2,000 and management believes that this reserve
        was
        adequate.
 
 10
 
 4.
              CHANGE
                  IN ESTIMATE
 
 The
        Company determined that a change in the estimated useful lives and salvage
        values of certain tangible assets was appropriate. When these assets, all
        motorcoaches, were originally acquired, management estimated that they would
        be
        held for their full useful life of 15 years, and estimated that the salvage
        value at the end of this period would be negligible. Management has determined
        that a more appropriate estimate would be a 7 to 10 year life, with the
        appropriate salvage value at the end of these periods. Life varies by motorcoach
        and financing methods. The change in estimate resulted in an additional $264,557
        depreciation expense being recognized as part of operating expenses during
        the
        three months ended August 31, 2005.
 
 5.
              ISSUANCE
                  OF COMMON STOCK FOR LOAN GUARANTY
 
 On
        June
        5, 2005, the Company issued to its CEO an additional 2,000, 000 shares
        in connection with his
        agreement to personally guaranty the $4,046,000 in debt incurred by the Company
        to acquire new buses. The board determined, after consultation with its
        attorneys and others, that a guaranty 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 (see Note 1, STOCK VALUATION). The board determined that it would be
        in
        the Company’s best interests to pay the guaranty fee in stock and, therefore,
        issued the 2,000,000 shares.
 
 6.
              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 buses 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 of $809,200 due on June 15, 2012. The loan is secured
        by a personal guaranty by the CEO of the Company.
 
 11
 **ITEM
        2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**
 
 *The
        following discussion should be read in conjunction with our unaudited
        consolidated 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
        bus 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.
        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.
 
 12
 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.
 
 The
        following table sets forth, for the periods presented, data regarding the
        total
        revenue and source of revenue earned by Bestway.
 
 NINE
                  MONTHS ENDEDAugust
                  31, 2005
              
              August
                  31, 2004Amount
              
              Percentage
              
              Amount
              
              PercentageCasinos
              
              $
              4,472,713
              
              
              94
              %
              $
              3,397,030
              
              
              88
              %Tours
              
              
              282,297
              
              
              6
              %
              
              437,398
              
              
              11
              %Charter
              
              
              300
              
              
              <1
              %
              
              4,384
              
              
              <1
              %Other
              
              
              500
              
              
              <1
              %
              
              33,099
              
              
              1
              %Total
              
              $
              4,755,810
              
              
              100
              %
              $
              3,871,911
              
              
              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.
 
 13
 ***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 worker’s compensation insurance
        premiums increased more than 100% over the past few years. We cannot operate
        without insurance. In fiscal year 2004, we paid $475,851 in insurance premiums
        to insure our buses and $75,411 in insurance premiums for worker’s compensation
        insurance. In 2003 we paid $409,360 in insurance premiums to insure our buses
        and $47,947 in worker’s compensation insurance. 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,
        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.
 
 14
 ***Cost
        of Sales***
 
 The
        principal elements of the costs of sales are labor, fuel, parts, vehicle
        insurance, equipment lease expense and rent. Historically, costs of sales
        have
        varied directly in proportion to revenues, and approximately 74% and 72%
        of
        fiscal 2004 and 2003 costs of sales were variable costs consisting of direct
        labor (primarily driver wages and related employment expenses), fuel costs
        and
        maintenance costs. We spent approximately $593,000 and $692,000 on fuel in
        fiscal years 2004 and 2003, respectively.
 
 General
        and administrative expenses include costs associated with our headquarters
        in
        New York City, the Brooklyn terminal where we depot our buses and 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 2005 and 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, 2005 Compared To August 31, 2004
        (Unaudited)***
 
 The
        following table summarizes the results of our operations during the fiscal
        quarter ended August 31, 2005 and 2004 and provides information regarding
        the
        dollar and percentage increase or (decrease) from the third fiscal quarter
        of
        2004 compared to the third fiscal quarter of 2005.
  **Line
                  Item**
              
              **8/31/05**
              
              **8/31/04**
              
              **Increase**
                **(Decrease)**
              
              **Percentage**
                **Increase**
                **(Decrease)**Revenues
              
              
              1,803,066
              
              
              1,413,983
              
              
              389,083
              
              
              28
              %Net
                  income (Loss)
              
              
              (475,702
              )
              
              (3,326
              )
              
              (472,376
              )
              
              (14203
              %)Operating
                  Expenses
              
              
              1,755,359
              
              
              1,179,463
              
              
              575,896
              
              
              49
              %General
                  and Administrative Expense
              
              
              224,655
              
              
              138,760
              
              
              85,895
              
              
              62
              %Interest
                  Expense
              
              
              149,921
              
              
              100,893
              
              
              49,028
              
              
              49
              %Earnings
                  (Loss) per common share
              
              
              (.03
              )
              
              (.00
              )
              
              (.03
              )
              
              N/A
 
 15
 Total
        revenues during the third fiscal quarter of 2005 increased $389,083 or 28%,
        to
        $1,803,066 as compared to the third fiscal quarter of 2004. The increase
        in
        revenues was primarily due to an increase in rates that we charge to the
        casinos
        that we service.
 
 Operating
        expenses increased $575,896 or 49% to $1,755,359 for the third fiscal quarter
        of
        2005 as compared to the same quarter in 2004. The increase in operating expenses
        was primarily due to a change in accounting estimate for depreciation lives
        and
        salvage values of $264,557, which contributed 46% to the overall increase.
        The
        remaining increase is primarily due to increases in the following expenses
        from
        the third fiscal quarter of 2005 compared to 2004:
 
 ·
              increased
                  fuel expenses of $144,650, which contributed 25% to the overall
                  increase;
                  and,
 ·
              increased
                  payroll expenses of $62,092, which contributed 11% to the overall
                  increase.
 
 General
        and administrative expenses in the third fiscal quarter of 2005 increased
        by
        $85,895 or 62%, from $138,760 in the third fiscal quarter of 2004 compared
        to
        $224,655 in the third fiscal quarter of 2005. The increase in general and
        administrative expenses by $70,651 was largely due to additional help required
        to support the additional revenues, and to a new employment agreement entered
        into with the Company’s CEO.
 
 Interest
        expense in the third quarter of 2005 was $149,921 and interest expense in
        the
        same quarter of 2004 was $100,893. Interest expense increased $49,028 in
        the
        third fiscal quarter of 2005 or 49% compared to the same quarter of last
        year
        mainly due to two additional loans in 2005 that did not exist during the
        third
        quarter of 2004.
 
 Net
        loss
        was $475,702 in the third fiscal quarter of 2005 and $3,326 in the same quarter
        of last year. Net loss increased $472,376 or 14203% in the third fiscal quarter
        of 2005 as compared to the same quarter of 2004 due primarily to the combination
        of the above mentioned factors.
 
 **Operating
        Results For The Nine Months Ended August 31, 2005 Compared To August 31,
        2004
        (Unaudited)**
  The
        following table summarizes the results of our operations during the nine
        months
        ended August 31, 2005 (the “2005 Nine Month Period”) and 2004 (the “2004 Nine
        Month Period”) and provides information regarding the dollar and percentage
        increase or (decrease) from the 2004 Nine Month Period compared to the 2005
        Nine
        Month Period.
 
 **Line
                  Item**
              
              **Nine
                  Months Ended**
                **8/31/05**
              
              **Nine
                  Months Ended**
                **8/31/04**
              
              **Increase**
                **(Decrease)**
              
              **Percentage**
                **Increase**
                **(Decrease)**Revenues
              
              
              4,755,810
              
              
              3,871,911
              
              
              883,899
              
              
              23
              %Net
                  income (Loss)
              
              
              (645,528
              )
              
              22,895
              
              
              (668,423
              )
              
              (2920
              )%Operating
                  Expenses
              
              
              4,355,860
              
              
              3,196,400
              
              
              1,159,460
              
              
              36
              %General
                  and Administrative Expense
              
              
              531,332
              
              
              347,406
              
              
              183,926
              
              
              53
              %Interest
                  Expense
              
              
              372,994
              
              
              299,047
              
              
              73,947
              
              
              25
              %Earnings
                  (Loss) per common share
              
              
              (.05
              )
              
              .00
              
              
              (.05
              )
              
              N/A
 
 16
 Total
        revenues during the 2005 Nine Month Period increased $883,899 or 23%, to
        $4,755,810 as compared to the 2004 Nine Month Period. The increase in revenues
        was primarily due to an increase in rates that we charge to the casinos that
        we
        service.
 
 Operating
        expenses increased $1,159,460 or 36% to $4,355,860 for 2005 Nine Month Period
        as
        compared to the 2004 Nine Month Period. The increase in operating expenses
        was
        primarily due to a change in accounting estimate for depreciation lives and
        salvage values of $264,557, which contributed 23% to the overall increase.
        The
        remaining increase is primarily due to increases in the following expenses
        from
        the 2004 Nine Month Period to the 2005 Nine Month Period:
 
 ·
              increased
                  fuel expenses of $317,787, which contributed 27% to the overall
                  increase;
 ·
              increased
                  cost of parts, supplies and roadside service of $178,412, which
                  contributed 15% to the overall
                  increase;
 ·
              increased
                  payroll expenses of $173,042, which contributed 15% to the overall
                  increase; and
 ·
              increased
                  farm out expense of $94,305, which contributed 8% to the overall
                  increase.
 
 General
        and administrative expenses in the 2005 Nine Month Period increased by $183,926
        or 53%, from $347,406 in the 2004 Nine Month Period compared to $531,332
        in the
        2005 Nine Month Period. The increase in general and administrative expenses
        by
        $132,063 from the 2004 Nine Month Period was largely due to increased salaries
        due to additional help required to support the additional revenues, and to
        a new
        employment agreement entered into with the Company’s CEO.
 
 Interest
        expense in the 2005 Nine Month Period was $372,994 and interest expense in
        the
        2004 Nine Month Period was $299,047. Interest expense increased $73,947 in
        the
        2005 Nine Month Period or 25% compared to the same quarter of last year mainly
        due to two additional loans in 2005 that did not exist during the 2004 Nine
        Month Period.
 
 Net
        loss
        was $645,528 in the 2005 Nine Month Period and net income was $22,895 in
        the
        2004 Nine Month Period. Net income (loss) decreased $668,423 or 2920% in
        the
        2005 Nine Month Period as compared to the 2004 Nine Month Period due primarily
        to the combination of the above mentioned factors.
 
 ***Liquidity
        and Capital Resources***
 
 As
        of
        August 31, 2005, we had $69,807 in cash and cash equivalents, total current
        assets of $650,660 and a working capital deficit of $2,644,877. We provided
        $931,442 via operating activities for the year ended November 30, 2004. Our
        current annual operating costs are approximately $4,200,000.
 
 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.
 
 17
 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 equal to 20% of the net purchase
        price or $809,200. 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 guaranteeing 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.
 
 Our
        accounts payable and accrued liabilities at November 30, 2004 included $104,459,
        representing interest and penalties on delinquent motorcoach lease payments.
        As
        of August 31, 2005, $76,163
        of this amount has been repaid .
 
 We
        anticipate that revenues generated through our operations during the 2005
        fiscal
        year 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 buses. 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 is
        approximately the same as the monthly lease payments for the motorcoaches
        that
        they replaced. The monthly interest charges (for the 11 new buses, which
        we own)
        and the monthly lease payments (for the 12 older buses that we lease) equal
        approximately $113,342. Prior to acquiring these new buses our monthly lease
        payments for all 23 buses that were then leased by us were approximately
        $103,868. So, now one-half of our fleet consists of new buses and we are
        still
        paying about the same amount to use our buses that we paid when we had all
        older
        buses. However, our expenses will now be lower because the new buses will
        require less maintenance thereby reducing our maintenance expense. We anticipate
        that we will save approximately $200,000 a year on major repairs.
 
 We
        also
        anticipate that our annual interest expense will be reduced by about $100,000
        a
        year. Interest expense will be reduced because the interest payable for the
        financing of the new motorcoaches is lower than the rate that we had paid
        under
        the lease arrangement relating to the motorcoaches that were
        replaced.
 
 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 bus for one of our major clients. During the
        period
        from January 2004 through October 2005, we raised our rates from $600 to
        $705
        per bus 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
        bus for a third major client.
 
 18
 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.
 
 We
        also
        anticipate that reduced oil prices in the last quarter of our fiscal year
        2005
        will further enhance our liquidity as a result of lower oil
        expenses.
 
 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 anticipate that this reduced
        interest expense will save us about $10,000 a year.
 
 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 $6,600,000 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. For example,
        average prices during first and fourth quarters of 2004 for example were
        $650-$675 per bus. This price increased to an average of $705 to $775 during
        the
        second and third quarters.
 
 Our
        biggest overhead costs are bus payments, insurance, and fuel. When we renewed
        our insurance policy in 2004, we ended up paying about 16% more than we were
        paying in 2003. Although fuel prices went down beginning in October 2005,
        fuel
        prices had increased in the first and second calendar quarters of 2005 compared
        to previous periods.
 
 ***Cash
        Flow Analysis***
 
 **Fiscal
        Quarter ended August 31, 2005 Compared to August 31, 2004
        (Unaudited)**
 
 The
        following table summarizes the statements of cash flows from the financial
        statements:
  Quarter
                  Ended August 31,2005
              
              2004Net
                  Cash Provided By (Used In) Operating Activities
              
              
              143,320
              
              
              167,978Net
                  Cash (Used) Provided By Investing Activities
              
              
              -
              
              
              (22,445
              )Net
                  Cash Provided By (Used In) Financing Activities
              
              
              (133,862
              )
              
              (185,188
              )Net
                  Increase (decrease) in Cash and Cash Equivalents
              
              
              9,458
              
              
              (39,655
              )Cash
                  and Cash Equivalents - Beginning of Period
              
              
              60,349
              
              
              40,907Cash
                  and Cash Equivalents - End of Period
              
              
              69,807
              
              
              1,252
  19
 For
        the
        quarter ended August 31, 2005 and 2004, our operating activities generated
        (used) $143,320 and $167,978) in cash, respectively. This change in cash
        flow
        used in operations is primarily attributable to decreases in accounts payable
        and accrued liabilities.
 
 For
        the
        quarters ended August 31, 2005 and 2004, our investing activities provided
        (used) $0 **-** and
        ($22,445) in cash, respectively. This decrease in cash used in investing
        activities is attributable to several purchases of property and equipment
        in the
        third quarter of 2004 and no purchases of these items in the third quarter
        of
        2005.
 
 For
        the
        quarters ended August 31, 2005 and 2004, our financing activities provided
        (used) ($133,862) and ($185,188) of cash, respectively. The decrease in cash
        flow used in financing is primarily attributable to lower required payments
        on
        the refinanced buses and additional financing from banks and credit cards
        in the
        third quarter of 2005.
 
 **Nine
        Month Period ended August 31, 2005 Compared to August 31, 2004
        (Unaudited)**
 
 The
        following table summarizes the statements of cash flows from the financial
        statements:
  Nine
                  Month Period Ended
                August
                  31,2005
              
              2004Net
                  Cash Provided By (Used In) Operating Activities
              
              
              200,770
              
              
              606,271Net
                  Cash (Used) Provided By Investing Activities
              
              
              (38,122
              )
              
              (81,660
              )Net
                  Cash Provided By (Used In) Financing Activities
              
              
              (351,292
              )
              
              (548,265
              )Net
                  Increase (decrease) in Cash and Cash Equivalents
              
              
              (188,644
              )
              
              (23,654
              )Cash
                  and Cash Equivalents - Beginning of Period
              
              
              258,451
              
              
              24,906Cash
                  and Cash Equivalents - End of Period
              
              
              69,807
              
              
              1,252
  For
        the
        nine month period ended August 31, 2005 and 2004, our operating activities
        generated (used) $200,770 and $606,271 in cash, respectively. This change
        in
        cash flow used in operations is primarily attributable to decreases in accounts
        payable and accrued liabilities.
 
 For
        the
        nine month period ended August 31, 2005 and 2004, our investing activities
        provided (used) ($38,122) and ($81,660) in cash, respectively. This decrease
        in
        cash used in investing activities is attributable to more purchases of property
        and equipment during the 2004 Nine Month Period and fewer purchases of these
        items in the 2005 Nine Month Period.
 
 For
        the
        nine month periods ended August 31, 2005 and 2004, our financing activities
        provided (used) ($351,292) and ($548,265) of cash, respectively. The decrease
        in
        cash flow used in financing is primarily attributable to lower required payments
        on the refinanced buses and additional financing from banks and credit cards
        in
        the 2005 Nine Month Period.
 
 20
 
 ***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.
 
 ·
              *Goodwill*-
                  We adopted the provisions of SFAS No. 142, “Goodwill and Other Intangible
                  Assets” (SFAS 142) effective January 1, 2003. Under SFAS 142, goodwill
                  and
                  indefinite lived intangible assets are no longer amortized but
                  are
                  reviewed annually for impairment or more frequently, if indications
                  of
                  possible impairment exist. We have performed the requisite transitional
                  impairment tests for goodwill as of November 30, 2003. Based on
                  these
                  tests, management has determined that goodwill was not impaired,
                  but due
                  to the sale of the subsidiary during the year ended November 30,
                  2004,
                  goodwill had been eliminated.
 
 ·
              *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.
 
 21
 ***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 registration statement, including our financial statements
        and related notes.*
 
 **FINANCIAL
        RISKS**
 
 ***We
        only have $*** ***650,660
        in current assets of which only $69,807*** **** ***was
        cash and cash equivalents at August 31, 2005. Our total current liabilities
        as
        at such date were $3,295,537. This means we have a working capital deficit
        of
        $2,644,877. We also have long term debt of $4,995,449.***
 
 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.***
 
 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.
 
 22
 
 ***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.***
 
 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.
 
 ***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. We cannot operate without
        insurance.***
 
 In
        fiscal
        year 2004, we paid $475,851 in insurance premiums to insure our buses and
        $75,411 in insurance premiums for worker’s compensation insurance. In 2003 we
        paid $409,360 in insurance premiums to insure our buses and $47,947 in worker’s
        compensation insurance. 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, 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 also 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 the our operations in these states.
 
 23
 
 **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, 64.18% 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.***
 
 Our
        common stock is not listed on any exchange or quoted on any similar quotation
        service, and there is currently no public market for our common stock. We
        have
        not taken any steps to enable our common stock to be quoted on the OTC Bulletin
        Board, and can provide no assurance that our common stock will ever be quoted
        on
        any quotation service or that any market for our common stock will ever develop.
        As a result, stockholders may be unable to liquidate their investments, or
        may
        encounter considerable delay in selling shares of our common stock. A trading
        market may not develop in the future, and if one does develop, it may not
        be
        sustained. If an active trading market does develop, the market price of
        our
        common stock is likely to be highly volatile due to, among other things,
        the low
        revenue nature of our business and because we are a new public company with
        a
        relatively limited operating history. 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.
 
 24
 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.
 
 ***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 outstanding 13,680,000 shares of common stock.
        Accordingly, we have 6,320,000 shares of common stock 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.
 
 25
 ***The
        SEC’s penny stock rules apply to us. These rules may have the effect of
        decreasing the liquidity of our stock and increasing the transaction cost
        for
        transactions in our stock.***
 
 The
        SEC
        has adopted rules that regulate broker-dealer practices in connection with
        transactions in "penny stocks". Penny stocks are generally securities with
        a
        price of less than $5.00 per share (other than securities registered on certain
        national securities exchanges or quoted on the NASDAQ system, provided that
        current price and volume information with respect to transactions in such
        securities is provided by the exchange or system). Under these rules,
        broker-dealers participating in transactions in low priced securities must
        first
        deliver a risk disclosure document which describes the risks associated with
        such stocks, the broker-dealer's duties, the customer's rights and remedies,
        and
        certain market and other information, and make a suitability determination
        approving the customer for low priced stock transactions based on the customer's
        financial situation, investment experience and objectives. Broker-dealers
        must
        also disclose these restrictions in writing to the customer, obtain specific
        written consent of the customers and provide monthly account statements to
        the
        customer. With all these restrictions, the likely effect of designation as
        a low
        priced stock will be to decrease the willingness of broker-dealers to make
        a
        market for the stock, to decrease the liquidity of the stock and to increase
        the
        transaction cost of sales and purchases of such stock compared to other
        securities.
 
 **ITEM
        3. CONTROLS AND PROCEDURES**
 
 Within
        90
        days of the filing of this Form 10-QSB, 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. 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. Based on that evaluation, Mr. Cheng concluded that as of August 31,
        2005,
        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.
 
 26
 
 **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
        May
        2005 we issued Wilson Cheng, our Chairman and CEO, 2,000,000 shares of our
        common stock in exchange for his personal guaranty 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 guaranty the approximately
        $4,000,000 in debt incurred by Bestway so that Bestway could acquire the
        new MCI
        buses. The board determined, after consultation with its consultants and
        other
        advisors that a guaranty 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 guaranty fee in stock and, therefore,
        issued Mr. Cheng 2,000,000 shares.
 
 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 quarter ending
        August
        31, 2005.
 
 **ITEM
        5. 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 court of appropriate
        jurisdiction. We will then be governed by the court’s decision.
 
 27
 **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.
 
  28
  **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: **** December
        14, 2005
 **BESTWAY
                  COACH EXPRESS INC.***By:*
                */s/ Wilson
                  Cheng**Name:**Wilson
                  Cheng**Title:**Chief
                    Executive Officer, Chairman of the Board of**Directors
                    and Treasurer*
  
  **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.