**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10−QSB**


(Mark
      One)


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





For
      the
      quarterly period ended: August 31, 2006





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





For
      the
      transition period from ____________ to _____________





**Commission
      File No. 0-51437**





**BESTWAY
      COACH EXPRESS INC.**


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





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





2
      Mott
      Street, 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 September 30, 2006, are as follows:




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





Transitional
      Small Business Disclosure Format (check one): Yes oNox





**BESTWAY
      COACH EXPRESS INC.**


**BALANCE
      SHEET**


**As
      of** **August
      31,** **2006**


**(UNAUDITED)**




AssetsCurrent
                assetsCash
                and cash equivalents
            
            $
            5,714Trade
                accounts receivable, net
            
            
            159,575Fuel
                tax receivable
            
            
            100,840Inventories
            
            
            142,786Prepaid
                expenses
            
            
            85,893Total
                current assets
            
            
            494,808Property
                and equipmentTotal
                property and equipment
            
            
            8,892,113Less:
                accumulated depreciation and amortization
            
            
            (3,009,777
            )Property
                and equipment, net
            
            
            5,882,336Other
                assetsDeferred
                income taxes
            
            
            243,263Deposits
                and other assets
            
            
            9,418Total
                other assets
            
            
            252,681Total
                assets
            
            $
            6,629,825Liabilities
                and Stockholders’ DeficitCurrent
                liabilitiesChecks
                drawn in excess of bank balance
            
            $
            130,267Current
                portion of notes payable - banks
            
            
            75,845Current
                portion - motorcoach financing
            
            
            427,047Current
                maturities of capitalized lease obligations
            
            
            753,483Notes
                payable - related parties
            
            
            472,235Notes
                payable - banks and credit card companies
            
            
            471,939Accounts
                payable
            
            
            250,969Payroll
                taxes payable
            
            
            624,688Accrued
                expenses
            
            
            203,185Customer
                deposits
            
            
            11,900Accrued
                salaries - officers
            
            
            1,034,750Total
                current liabilities
            
            
            4,456,308Long-term
                liabilitiesCapitalized
                  lease obligations, net of current maturities & deferred refinance
                  costs
            
            
            393,745Notes
                payable - banks
            
            
            225,720Motorcoach
                financing, net ofcurrent
                maturities & deferred guarantee costs
            
            
            3,199,027Due
                to stockholder
            
            
            77,094Total
                long-term liabilities
            
            
            3,895,586Total
                liabilities
            
            
            8,351,894Stockholders’
                deficitCommon
                  stock, $.001 par value, 20,000,000 shares authorized, 13,700,000
                  shares
                  issued, 13,680,000 shares outstanding
            
            
            13,700Additional
                paid-in-capital
            
            
            625,800Retained
                deficit
            
            
            (2,359,569
            )Total
                paid-in capital and retained deficit
            
            
            (1,720,069
            )Less:
                Cost of treasury stock (20,000 shares)
            
            
            (2,000
            )Total
                stockholders' deficit
            
            
            (1,722,069
            )Total
                liabilities and stockholders’ deficit
            
            $
            6,629,825




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


2


**BESTWAY
      COACH EXPRESS INC.**


**STATEMENTS
      OF OPERATIONS**


**(UNAUDITED)**


For
                      the three months ended
                    August
                      31,
                  
                  For
                      the nine months ended August 31,2006
                  
                  2005
                  
                  2006
                  
                  2005Revenues
                  
                  $
                  1,656,512
                  
                  $
                  1,803,066
                  
                  $
                  4,783,279
                  
                  
                  4,755,810Operating
                      expenses
                  
                  
                  1,538,562
                  
                  
                  1,755,359
                  
                  
                  4,387,840
                  
                  
                  4,355,860Gross
                      profit
                  
                  
                  117,950
                  
                  
                  47,707
                  
                  
                  395,439
                  
                  
                  399,950General
                      and administrative expenses
                  
                  
                  267,224
                  
                  
                  224,655
                  
                  
                  783,350
                  
                  
                  531,332Income
                      (loss) from operations
                  
                  
                  (149,274
                  )
                  
                  (176,948
                  )
                  
                  (387,911
                  )
                  
                  (131,382
                  )Other
                      income (expense)Interest
                      income
                  
                  
                  0
                  
                  
                  311
                  
                  
                  28
                  
                  
                  7,975Other
                      income
                  
                  
                  0
                  
                  
                  1,227
                  
                  
                  10,320
                  
                  
                  1,619Interest
                      expense
                  
                  
                  (154,799
                  )
                  
                  (149,921
                  )
                  
                  (432,212
                  )
                  
                  (372,994
                  )Loss
                      on trade-in of capitalized leases
                  
                  
                  
                  
                  
                  (467,506
                  )
                  
                  0
                  
                  
                  (581,098
                  )Totalother income (expense)
                  
                  
                  (154,799
                  )
                  
                  (615,889
                  )
                  
                  (421,864
                  )
                  
                  (944,498
                  )Loss
                      before provision for taxes
                  
                  
                  (304,073
                  )
                  
                  (792,
                      837
                  )
                  
                  (809,775
                  )
                  
                  (1,075,880
                  )Provision
                      for income tax benefit
                  
                  
                  121,000
                  
                  
                  317,135
                  
                  
                  319,700
                  
                  
                  430,352Net
                      loss
                  
                  $
                  (183,073
                  )
                  $
                  (475,702
                  )
                  $
                  (490,075
                  )
                  $
                  (645,528
                  )Loss
                      per share - basic and diluted
                  
                  $
                  (.01
                  )
                  $
                  (.03
                  )
                  $
                  (.04
                  )
                  $
                  (.05
                  )Weighted
                      average number of shares used to determine loss per share
                  
                  
                  13,680,000
                  
                  
                  13,680,000
                  
                  
                  13,680,000
                  
                  
                  12,346,667




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


3





**BESTWAY
      COACH EXPRESS INC.**


**STATEMENTS
      OF CASH FLOWS**


**(UNAUDITED)**


For
                  the nine months
                ended
                  August 31,2006
              
              2005Cash
                  flows from operating activities:Net
                  income (loss)
              
              $
              (490,075
              )
              $
              (645,528
              )Adjustment
                  to reconcile net income (loss) to net cash provided by (used in)
                  operating
                  activities:Depreciation
                  and amortization - fixed assets
              
              
              406,397
              
              
              740,051Amortization
                  of deferred guarantee and refinance costs
              
              
              26,817Deferred
                  income taxes
              
              
              (319,700
              )
              
              (430,352
              )Loss
                  on trade-in of capitalized leases
              
              
              -
              
              
              581,098Stock
                  based compensation
              
              
              -
              
              
              100,000Changes
                  in operating assets and liabilities:Trade
                  accounts receivable, net
              
              
              17,878
              
              
              108,648Fuel
                  tax receivable
              
              
              (20,682
              )
              
              11,281Insurance
                  proceeds receivable
              
              
              -
              
              
              117,605Inventories
              
              
              (20,706
              )
              
              25,705Prepaid
                  expenses
              
              
              15,577
              
              
              (128,125
              )Due
                  from related company
              
              
              -
              
              
              (30,075
              )Deposits
                  and other assets
              
              
              (1,460
              )
              
              (10,847
              )Accounts
                  payable
              
              
              14,144
              
              
              (190,218
              )Payable
                  to banks and credit card companies
              
              
              177,193
              
              
              116,073Payroll
                  taxes payable
              
              
              311,858
              
              
              63,989Accrued
                  expenses
              
              
              (13,896
              )
              
              (111,519
              )Customer
                  deposits
              
              
              10,050
              
              
              (38,715
              )Accrued
                  salaries - officers
              
              
              102,750
              
              
              37,772Net
                  cash provided by operating activities
              
              
              216,145
              
              
              316,843Cash
                  flows from investing activities:Purchase
                  of property and equipment
              
              
              (43,376
              )
              
              (38,122
              )Net
                  cash used in investing activities
              
              
              (43,376
              )
              
              (38,122
              )Cash
                  flows from financing activities:Checks
                  drawn in excess of bank balance
              
              
              94,468
              
              
              88,142Principle
                  payments on note payable - banks
              
              
              (51,347
              )
              
              (74,888
              )Proceeds
                  from notes payable - related parties
              
              
              981,201
              
              
              145,295Payment
                  of notes payable - related parties
              
              
              (716,978
              )
              
              (163,740
              )Proceeds
                  from due to stockholder
              
              
              467,451
              
              
              -Payment
                  of due to stockholder
              
              
              (436,189
              )
              
              (13,578
              )Principal
                  payments on motorcoach financing
              
              
              (231,658
              )
              
              -Purchase
                  of treasury stock
              
              
              -
              
              
              (2,000
              )Cash
                  and parts credit from trade-in of capitalized leases
              
              
              -
              
              
              121,901Repayment
                  of capitalized lease obligations
              
              
              (281,709
              )
              
              (568,497
              )Net
                  cash used in financing activities
              
              
              (174,761
              )
              
              (467,365
              )Net
                  decrease in cash and cash equivalents
              
              
              (1,992
              )
              
              (188,644
              )Cash
                  and cash equivalents - beginning of period
              
              
              7,706
              
              
              258,451Cash
                  and cash equivalents - end of period
              
              $
              5,714
              
              $
              69,807**Supplemental
                  Information:**Cash
                  paid for interest
              
              $
              408,196
              
              $
              448,624Cash
                  paid for income taxes
              
              $
              -
              
              $
              -


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


4


**BESTWAY
      COACH EXPRESS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


**NINE
      MONTHS ENDED August 31, 2006 AND 2005**


**(UNAUDITED)**




GENERAL:





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





1.     CONDENSED
      INTERIM FINANCIAL STATEMENTS





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





2.    
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





BUSINESS
      ACTIVITY




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




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





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


5





**BESTWAY
      COACH EXPRESS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


**NINE
      MONTHS ENDED August 31, 2006 AND 2005**


**(UNAUDITED)**





2.  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





BUSINESS
      ACTIVITY (Continued)




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




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




CASH
      AND
      CASH EQUIVALENTS





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





INVENTORIES





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





PROPERTY
      AND EQUIPMENT





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


6





**BESTWAY
      COACH EXPRESS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


**NINE
      MONTHS ENDED August 31, 2006 AND 2005**


**(UNAUDITED)**




2.    
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





CONCENTRATION
      OF CREDIT RISK





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





REVENUE
      RECOGNITION





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





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





INCOME
      TAXES





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





EARNINGS
      (LOSS) PER SHARE





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





INSURANCE
      COVERAGE





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




7





**BESTWAY
      COACH EXPRESS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


**NINE
      MONTHS ENDED August 31, 2006 AND 2005**


**(UNAUDITED)**







2.    
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





CHANGES
      IN PRESENTATION OF COMPARATIVE STATEMENTS





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





ENVIRONMENTAL
      RESERVES





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





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





USE
      OF
      ESTIMATES





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





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





ADVERTISING
      COSTS





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




8





**BESTWAY
      COACH EXPRESS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


**NINE
      MONTHS ENDED August 31, 2006 AND 2005**


**(UNAUDITED)**





3.
            TRADE
                RECEIVABLES





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





4.    
      NOTES PAYABLE





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


9


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





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





***Forward-Looking
      Statements***





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





***Overview***





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





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





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





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


10




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





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





NINE
                MONTHS ENDEDAugust
                31, 2006
            
            August
                31, 2005Amount
            
            Percentage
            
            Amount
            
            PercentageCasinos
            
            $
            4,186,659
            
            
            87
            %
            $
            4,472,713
            
            
            94
            %Tours
            
            
            172,539
            
            
            4
            %
            
            282,297
            
            
            6
            %Charter
            
            
            -
            
            
            -
            
            
            300
            
            
            <1
            %Philadelphia
                Run
            
            
            423,470
            
            
            9
            %
            
            500
            
            
            <1
            %Other
            
            
            611
            
            
            <1
            %
            
            -
            
            
            -Total
            
            $
            4,783,279
            
            
            100
            %
            $
            4,755,810
            
            
            100
            %





***Economic
      and Industry Wide Factors Relevant to Bestway***





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





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





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





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





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





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





***Material
      Risks, Trends and Uncertainties Affecting Bestway’s
      Business***





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




11





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





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




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





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





***Cost
      of Sales (Operating Expenses)***





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





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




12





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





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





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





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





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





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




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





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





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





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





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





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





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




13


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





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





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





**Nine
                Months Ended August 31,****Line
                Item**
            
            **2006**
            
            **2005**
            
            **Dollar**
              **increase
                (decrease)**
            
            **Percentage
                increase (decrease)**Revenues
            
            
            4,783,279
            
            
            4,755,810
            
            
            27,469
            
            
            <1
            %Net
                loss
            
            
            (490,075
            )
            
            (645,528
            )
            
            (155,453
            )
            
            (24
            )%Operating
                Expenses
            
            
            4,387,840
            
            
            4,355,860
            
            
            31,980
            
            
            <1
            %General
                and Administrative Expense
            
            
            783,350
            
            
            531,332
            
            
            252,018
            
            
            47
            %Interest
                Expense
            
            
            432,212
            
            
            372,994
            
            
            59,218
            
            
            16
            %Loss
                per common share
            
            
            (.04
            )
            
            (.05
            )
            
            (.01
            )
            
            N/A





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





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





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




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





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





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





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





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





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




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




14




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





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





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





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





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





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




***Liquidity
      and Capital Resources***





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





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





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





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





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





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




15





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





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





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





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





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





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




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





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





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





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





***Off
      Balance Sheet Arrangements***





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




16





***Seasonality***





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





***Inflation***





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





***Critical
      Accounting Policies***





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





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





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





***Risk
      Factors***





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





**FINANCIAL
      RISKS**





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





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





17




**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.





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





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





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





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





**CONCENTRATED
      CONTROL RISKS**





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




18





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





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





**MARKET
      RISKS**





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





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





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





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





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





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




19





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





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





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





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





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





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





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





**ITEM
      3. CONTROLS AND PROCEDURES**





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





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




20





**PART
      II - OTHER INFORMATION**





**ITEM
      1.**  **LEGAL
      PROCEEDINGS**





There
      is
      no pending litigation by or against us.





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





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





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





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





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





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





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





**ITEM
      5. OTHER INFORMATION**





***Indemnification
      Of Directors And Officers.***





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




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




21





**ITEM
      6.**   **EXHIBITS**





EXHIBITS.


31
              
              Certification
                  of Principal Executive Officer and Principal Financial Officer
                  filed
                  pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002.32
              
              Certification
                  of Principal Executive Officer and Principal Financial Officer
                  furnished
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of
                  2002.





**SIGNATURES**





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





DATED: **** October
      16, 2006




**BESTWAY
              COACH EXPRESS INC.**By:
            */s/
              Wilson Cheng**Name:**Wilson
              Cheng**Title:**Chief
                Executive Officer and Chief Financial
                Officer*




22




**EXHIBIT
      INDEX**




Exhibit
                Number
              
              Description31
              
              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.


23