**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
        10−QSB/A**


(Mark
      One)


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





For
      the
      quarterly period ended: May 31, 2006





**oTRANSITION
      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 July 19, 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 o No
      x








**BESTWAY
      COACH EXPRESS INC.**


**BALANCE
      SHEET**


**As
                of****May
                31,****2006**
              **(UNAUDITED)**
              
              AssetsCurrent
                assetsCash
                and cash equivalents
            
            $
            3,090Trade
                accounts receivable, net
            
            
            157,688Fuel
                tax receivable
            
            
            101,824Inventories
            
            
            125,901Prepaid
                expenses
            
            
            88,052Total
                current assets
            
            
            476,555Property
                and equipmentTotal
                property and equipment
            
            
            8,855,098Less:
                accumulated depreciation and amortization
            
            
            (2,875,041
            )Property
                and equipment, net
            
            
            5,980,057Other
                assetsDeferred
                income taxes
            
            
            122,263Deposits
                and other assets
            
            
            9,418Total
                other assets
            
            
            131,681Total
                assets
            
            $
            6,588,293Liabilities
                and Stockholders’ DeficitCurrent
                liabilitiesChecks
                drawn in excess of bank balance
            
            $
            141,975Current
                portion of notes payable - banks
            
            
            74,279Current
                portion - motorcoach financing
            
            
            409,849Current
                maturities of capital lease obligations
            
            
            764,235Notes
                payable - related parties
            
            
            243,844Notes
                payable - banks and credit card companies
            
            
            485,352Accounts
                payable
            
            
            221,072Payroll
                taxes payable
            
            
            507,516Accrued
                expenses
            
            
            183,626Customer
                deposits
            
            
            27,860Accrued
                salaries - officers
            
            
            1,000,500Total
                current liabilities
            
            
            4,060,108Long-term
                liabilitiesCapital
                lease obligations, net ofcurrent
                maturities & deferred refinance costs
            
            
            494,711Notes
                payable - banks, less current portion
            
            
            244,661Motorcoach
                financing, net ofcurrent
                maturities & deferred guarantee costs
            
            
            3,297,338Due
                to stockholder
            
            
            30,470Total
                long-term liabilities
            
            
            4,067,180Total
                liabilities
            
            
            8,127,288Stockholders’
                deficitCommon
                  stock, $.001 par value, 20,000,000 sharesauthorized,
                  13,700,000 shares issued, 13,680,000shares
                  outstanding
            
            
            13,700Additional
                paid-in-capital
            
            
            625,800Retained
                deficit
            
            
            (2,176,495
            )Total
                paid-in capital and retained deficit
            
            
            (1,536,995
            )Less:
                Cost of treasury stock (20,000 shares)
            
            
            (2,000
            )Total
                stockholders' deficit
            
            
            (1,538,995
            )Total
                liabilities and stockholders’ deficit
            
            $
            6,588,293




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
            
            For
                the six months endedMay
                31,
            
            May
                31,2006
            
            2005
            
            2006
            
            2005Revenues
            
            $
            1,613,220
            
            $
            1,645,474
            
            $
            3,126,767
            
            $
            2,952,744Operating
                expenses
            
            
            1,514,943
            
            
            1,430,961
            
            
            2,849,273
            
            
            2,600,501Gross
                profit
            
            
            98,277
            
            
            214,513
            
            
            277,494
            
            
            352,243General
                and administrative expenses
            
            
            255,860
            
            
            187,483
            
            
            516,193
            
            
            306,677Income
                (loss) from operations
            
            
            (157,583
            )
            
            27,030
            
            
            (238,699
            )
            
            45,566Other
                income (expense)Interest
                income
            
            
            -
            
            
            -
            
            
            28
            
            
            7,664Other
                income
            
            
            10,320
            
            
            -
            
            
            10,320
            
            
            392Interest
                expense
            
            
            (156,316
            )
            
            (108,521
            )
            
            (277,350
            )
            
            (223,073
            )Loss
                on trade-in of assets under capital lease
            
            
            -
            
            
            (113,592
            )
            
            -
            
            
            (113,592
            )Total
                other income (expense)
            
            
            (145,996
            )
            
            (222,113
            )
            
            (267,002
            )
            
            (328,609
            )Loss
                before provision for taxes
            
            
            (303,579
            )
            
            (195,083
            )
            
            (505,701
            )
            
            (283,043
            )Provision
                for income tax benefit
            
            
            120,000
            
            
            78,033
            
            
            198,700
            
            
            113,217Net
                loss
            
            $
            (183,579
            )
            $
            (117,050
            )
            $
            (307,001
            )
            $
            (169,826
            )Loss
                per share - basic and diluted
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.01
            )Weighted
                average number of shares used to determine loss per share
            
            
            13,680,000
            
            
            11,680,000
            
            
            13,680,000
            
            
            11,680,000




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


3




**BESTWAY
      COACH EXPRESS INC.**


**STATEMENTS
      OF CASH FLOWS**


**(UNAUDITED)**


For
                the six months
              ended
                May 31,2006
            
            2005Cash
                flows from operating activities:Net
                income (loss)
            
            $
            (307,001
            )
            $
            (169,826
            )Adjustment
                to reconcile net income (loss) to net cashprovided
                by (used in) operating activities:Depreciation
                and amortization - fixed assets
            
            
            271,661
            
            
            276,163Amortization
                of deferred guarantee and refinance costs
            
            
            17,878
            
            
            -Deferred
                income taxes
            
            
            (198,700
            )
            
            (113,217
            )Loss
                on trade-in of capitalized leases
            
            
            -
            
            
            113,592Changes
                in operating assets and liabilities:Trade
                accounts receivable, net
            
            
            19,765
            
            
            (27,702
            )Fuel
                tax receivable
            
            
            (21,666
            )
            
            26,281Insurance
                proceeds receivable
            
            
            -
            
            
            111,905Inventories
            
            
            (3,821
            )
            
            34,405Prepaid
                expenses
            
            
            13,418
            
            
            4,462Deposits
                and other assets
            
            
            (1,460
            )
            
            (7,847
            )Accounts
                payable
            
            
            (15,753
            )
            
            (174,093
            )Payable
                to banks and credit card companies
            
            
            190,606
            
            
            112,113Payroll
                taxes payable
            
            
            194,686
            
            
            89,382Accrued
                expenses
            
            
            (33,455
            )
            
            (79,477
            )Customer
                deposits
            
            
            26,010
            
            
            2,150Accrued
                salaries - officers
            
            
            68,500
            
            
            (28,728
            )Net
                cash provided by (used in) operating activities
            
            
            220,668
            
            
            169,563Cash
                flows from investing activities:Purchase
                of property and equipment
            
            
            (6,361
            )
            
            (38,122
            )Net
                cash used in investing activities
            
            
            (6,361
            )
            
            (38,122
            )Cash
                flows from financing activities:Checks
                drawn in excess of bank balance
            
            
            106,176
            
            
            9,983Principle
                payments on note payable - banks
            
            
            (33,972
            )
            
            (29,792
            )Proceeds
                from notes payable - related parties
            
            
            85,618
            
            
            99,695Payment
                of notes payable - related parties
            
            
            (49,786
            )
            
            (36,200
            )Proceeds
                received from due to stockholder
            
            
            34,800
            
            
            -Payment
                of due to stockholder
            
            
            (50,162
            )
            
            (3,868
            )Principal
                payments on motorcoach financing
            
            
            (146,974
            )
            
            -Purchase
                of treasury stock
            
            
            -
            
            
            (2,000
            )Repayment
                of capitalized lease obligations
            
            
            (164,623
            )
            
            (367,361
            )Net
                cash used in financing activities
            
            
            (218,923
            )
            
            (329,543
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            (4,616
            )
            
            (198,102
            )Cash
                and cash equivalents - beginning of period
            
            
            7,706
            
            
            258,451Cash
                and cash equivalents - end of period
            
            $
            3,090
            
            $
            60,349**Supplemental
                Information:**Cash
                paid for interest
            
            $
            112,157
            
            $Cash
                paid for income taxes
            
            $
            -
            
            $
            -




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


4


**BESTWAY
      COACH EXPRESS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


**SIX
      MONTHS ENDED** **May
      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 May 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**


**SIX
      MONTHS ENDED May 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 $3,583,553 at May
          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 May 31, 2006, the new interstate commuter services generated approximately
      $180,000 in revenues and incurred approximately $280,000 in expenses. The
      Company expects the revenues from the interstate commuter services to increase
      and the expenses to decrease until the service is normalized. The Company
      estimates that its average monthly revenues and expenses from this service
      during fiscal year 2006 will be $190,000 and $142,000, respectively.




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**


**SIX
      MONTHS ENDED May 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**


**SIX
      MONTHS ENDED May 31, 2006 AND 2005**


**(UNAUDITED)**





2. SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





CHANGES
      IN PRESENTATION OF COMPARATIVE STATEMENTS





Certain
      accounts were reclassified for the six months ended May 31, 2005 to conform
      to
      the six months ended May 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 May 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 $38,000 and $950 for
      the
      six months ended May 31, 2006 and 2005, respectively, and have been included
      in
      general and administrative expenses on the statements of operations





8




**BESTWAY
      COACH EXPRESS, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


**THREE
      MONTHS ENDED May 31, 2006 AND 2005**


**(UNAUDITED)**





3.
            TRADE
                RECEIVABLES





Trade
                receivables are carried at original invoice amount. Trade receivables
                as
                of May 31, 2006 were$157,688 (net of allowance), of which $125,010 (79%) was from one
                casino
                customer. Management determines the allowance for doubtful accounts
                after
                reviewing individual customer accounts as well as considering bothhistorical
                and expected credit loss experience. At May 31, 2006 thereserve 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.




10




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 May 31,
          2006,
          the new interstate commuter services generated approximately $180,000 in
          revenues and incurred approximately $280,000 in expenses. We expect the
          revenues
          from the interstate commuter services to increase and the expenses to decrease
          until the service is normalized. We estimate that our average monthly revenues
          and expenses from this service during fiscal year 2006 will be $190,000
          and
          $142,000, respectively.
 
 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.***





SIX
                MONTHS ENDEDMay
                31, 2006
            
            May
                31, 2005Amount
            
            Percentage
            
            Amount
            
            PercentageCasinos
            
            $
            2,805,387
            
            
            90
            %
            $
            2,811,915
            
            
            95
            %Tours
            
            
            139,129
            
            
            4
            %
            
            140,029
            
            
            5
            %Other
            
            
            182,251
            
            
            6
            %
            
            800
            
            
            <1
            %Total
            
            $
            3,126,767
            
            
            100
            %
            $
            2,952,744
            
            
            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.




11




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





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





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





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





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





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





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





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





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




Insurance
      costs in the motorcoach industry have increased significantly over the last
      few
      years and it has become increasingly difficult for us to find insurance at
      commercially reasonable rates. Annual rates of $21,000 per motorcoach are
      commonplace. During the past few years, insurers have been abandoning the New
      York market. Our current liability insurance and workers’ compensation insurance
      premiums increased more than 100% over the past few years. We cannot operate
      without insurance. In fiscal year 2005, we paid $720,347 in insurance premiums
      to insure our motorcoaches ($95,650 of which was for policies prepaid through
      various dates in 2006) and $79,052 in insurance premiums for workers’
compensation insurance. In 2004 we paid $475,851 in insurance premiums to insure
      our motorcoaches ($95,043 of which was for policies prepaid through various
      dates in 2005) and $75,411 in worker’s compensation insurance. At May 31, 2006
      we also owed $ 44,614 for
      various insurance and worker’s compensation policies. 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.




12




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 May 31,
      2006
      and 2005, cost of sales approximated 94 %
      and 87 %
      of
      revenues, respectively. We spent approximately $ 329,160 and
      $ 250,942 on
      fuel
      in the quarters ending May 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 2005 and 2006. We anticipate that the increased general and administrative
      costs will be slightly offset if and when our business grows further and if
      we
      are able to effectively realize economies of scale by (i) spreading the cost
      of
      the administrative staff and facilities over a larger revenue base; and (ii)
      capturing savings in expenses such as vehicle insurance and vehicle parts and
      services.





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





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




13




**Line
                Item**
            **5/31/06**
            **5/31/05**
            **increase
                (decrease)**
            **Percentage
                increase (decrease)**Revenues
            1,613,220
            1,645,474
            (32,254)
            (1.9%)Net
                income (loss)
            (183,579)
            (117,050)
            66,529
            56.8%Operating
                Expenses
            1,514,943
            1,430,961
            83,982
            5.8
                %General
                and Administrative Expense
            255,860
            187,483
            68,377
            36.5%Interest
                Expense
            (156,316)
            (108,521)
            47,795
            44%Earnings
                (Loss) per common share
            (0.01)
            (0.01)
            0
            N/A





Total
          revenues during the second fiscal quarter of 2006 decreased $ 32,254 or 1.9 %,
          to
          $ 1,613,220 as
          compared to the second fiscal quarter of 2005. The decrease in revenues
          was
          primarily due to redirecting four of our motorcoaches from our line runs
          and
          chartered routes (which were operating at full or nearly-full capacity)
          to
          launch the new Philadelphia interstate commuter route that commenced in
          February
          2006. We anticipate an increase in revenues as the Philadelphia motorcoaches
          reach their full operating capacities.


Operating
      expenses experienced a net increase of $83,982, or 5.8%, to $1,514,943 for
      the
      second fiscal quarter of 2006 as compared to the same quarter in 2005. The
      increase is primarily due to increases in the following expenses from the second
      fiscal quarter of 2006 compared to 2005:




·
              Fuel
                  expense increased by $78,217, due to a rise in the cost of
                  fuel;
 ·
              Bus
                  insurance increased by $53,385, due to a rise in insurance
                  costs;
 ·
              Ticket
                  sellers’ payroll increased by $32,034, due to our new Philadelphia run,
                  which requires the utilization of additional ticket sellers; and
 ·
              Parts
                  and supplies decreased by $77,692, due to the acquisition of new
                  motorcoaches in May 2005. These motorcoaches required much less
                  repairs
                  and maintenance.
 ·
                Commissions
                    increased by $20,937, due to the Company’s implementation of a commissions
                    program to stimulate ticket sales for the new Philadelphia
                    route.
 ·
                Workers’
                    compensation expense decreased by $37,464, due to our use of
                    a less
                    expensive carrier.
 ·
                Tolls
                    increased by $42,850, due to our new commuter route between New
                    York and
                    Philadelphia.
 ·
                Farm-outs
                    decreased by $33,189, due to a decrease in charter routes and
                    focus on new
                    commuter route. In times of excess demand for our services, we
                    will
                    ‘farm-out’ our customers to other motorcoach charter
                    companies.




General
      and administrative expenses in the second fiscal quarter of 2006 increased
      by
      $68,377, or 36.5%, from $187,483 in the second fiscal quarter of 2005 compared
      to $255,860 in the second fiscal quarter of 2006. The increase is primarily
      due
      to increases in the following expenses from the second fiscal quarter of 2006
      compared to 2005:




·
              Advertising
                  expense increased by $15,663, due to promotion of our new Philadelphia
                  run;
 ·
              Bank
                  charges and credit card fees increased by $14,421, due to credit
                  card fees
                  borne by the Company for Philadelphia route tickets purchased with
                  credit
                  cards by customers.
 ·
                Rent
                    and utilities increased by $12,526, due to new offices that were
                    setup in
                    Philadelphia and New York to maintain new commuter
                    line.
 ·
                Computer
                    expense increased by $5,985, due to our purchase and setup of
                    new commuter
                    route systems.




Interest
      expense in the second quarter of 2006 was $156,316 and interest expense in
      the
      same quarter of 2005 was $108,521. Interest expense increased $47,795 in the
      second fiscal quarter of 2006 or 44% compared to the same quarter of last year
      mainly due to the amortization of a deferred guarantee cost incurred with the
      motorcoach purchase in June 2005, an increase in interest expense on 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 Six Months Ended May 31, 2006 compared to May 31,
          2005***
 
 The
        following table summarizes the results of our operations from the financial
        statements:
 
 Six
                    Months Ended May 31,**Line
                    Item**
                
                **2006**
                
                **2005**
                
                **increase
                    (decrease)**
                
                **Percentage
                    increase (decrease)**Revenues
                
                
                3,126,767
                
                
                2,952,744
                
                
                174,023
                
                
                5.9
                %Net
                    income (loss)
                
                
                (307,001
                )
                
                (169,826
                )
                
                137,175
                
                
                80.8
                %Operating
                    Expenses
                
                
                2,849,273
                
                
                2,600,501
                
                
                248,772
                
                
                9.6
                %General
                    and Administrative Expense
                
                
                516,193
                
                
                306,677
                
                
                209,516
                
                
                68.3
                %Interest
                    Expense
                
                
                (277,350
                )
                
                (223,073
                )
                
                54,277
                
                
                24.3
                %Earnings
                    (Loss) per common share
                
                
                (0.02
                )
                
                (0.01
                )
                
                .01
                
                
                N/A
 
 For
          the
          six months ended May 31, 2006 and 2005, our operating activities generated
          $ 3,126,767 and
          $ 2,952,744 in
          revenue, respectively. The increase in revenues was primarily due to an
          increase
          in our line runs during the three major holidays: Christmas, New Years
          and
          Chinese New Year.


14


For
          the
          six months ended May 31, 2006 and 2005, we incurred $ 2,849,273 and
          $ 2,600,501 ,
          respectively, in operating expenses activities. This net increase in operating
          expenses of $248,772 is primarily attributable to:
 
 ·
                Fuel
                    expense increased by $190,964,
                    due to a rise in the cost of
                    fuel;
 ·
                Drivers
                    Payroll increased by $99,590 due to increased line runs to
                    casinos.
 ·
                Ticket
                    sellers’ payroll increased by $61,458,
                    due to our new Philadelphia run, which requires the utilization
                    of
                    additional ticket sellers; and
 ·
                Parts
                    and supplies decreased by $80,812,
                    due to the acquisition of new motorcoaches in May 2005. These
                    motorcoaches
                    required much less repairs and
                    maintenance.
 ·
                Tires
                    decreased by $17,450, due to the acquisition of new motorcoaches
                    in May
                    2005, which do not require new tires for a period of ten to fourteen
                    months.
 
 
 For
          the
          six months ended May 31, 2006 and 2005, our general and administrative
          expenses
          were $ 516,193 and
          $ 306,677 ,
          respectively. The net increase in general and administrative expenses of
          $209,516 is primarily attributable increases in the following
          expenses:
  ·
                Advertising
                    expense increased by $26,611,
                    due to promotion of our new Philadelphia
                    run;
 ·
                Bank
                    charges and credit card fees increased by $25,186,
                    due to credit card fees borne by the Company for Philadelphia
                    route
                    tickets purchased with credit cards by
                    customers.
 ·
                Office
                    salaries increased by $52,459 to sustain the new commuter line
                    setup. In
                    total, six new full time and four new part time employees were
                    hired to
                    assist;
 ·
                Professional
                    fees increased by $50,897 due to the
                    following:
 Legal
          fees for new leases set up in Philadelphia office
 Legal
          fees for permit parking for Philadelphia and New York
 Legal
          and
          accounting fees for SEC work for registration statements;
 **·**
                Rent
                    & Utilities increased by $22,459 due to new offices that were setup
                    in
                    Philadelphia and New York to maintain new commuter
                    line.
  For
          the
          six months ended May 31, 2006 and 2005, interest was $ 277,350 and
          $ 223,073 ,
          respectively **.** Interest
          expense increased $54,277 in the second fiscal quarter of 2006 or 44% compared
          to the same quarter of last year mainly due to the amortization of a deferred
          guarantee cost incurred with the motorcoach purchase in June 2005, an increase
          in interest expense on 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 May
      31, 2006, we had $3,090 in cash and cash equivalents, total current assets
      of
      $476,555 and a working capital deficit of $3,583,553. We generated $220,668
      and
      $169,563 in cash flows from operating activities for the six months ended May
      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.





15





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





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





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





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





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





***Cash
      Flow Analysis***


***Cash
          Flow For Fiscal Quarter Ended May 31, 2006 Compared To May 31, 2005***
 
 The
          following table summarizes our cash flows during the fiscal quarter ended
          May
          31, 2006 and 2005 and provides information regarding the dollar and percentage
          increase or (decrease) for the second fiscal quarter of 2006 compared to
          the
          second fiscal quarter of 2005.
 
 **Line
                    Item**
                
                **5/31/06**
                
                **5/31/05**Net
                    Cash Provided By (Used In) Operating Activities
                
                
                133,636
                
                
                232,804Net
                    Cash (Used) Provided By Investing Activities
                
                
                (6,361
                )
                
                (31,909
                )Net
                    Cash Provided By (Used In) Financing Activities
                
                
                (126,664
                )
                
                (142,521
                )Net
                    increase (decrease) in Cash and Cash Equivalents
                
                
                611
                
                
                58,374Cash
                    and Cash Equivalents - Beginning of Period
                
                
                2,479
                
                
                1,975Cash
                    and Cash Equivalents - End of Period
                
                
                3,090
                
                
                60,349
 
 Cash
          flows from our operating activities during the second fiscal quarter of
          2006
          decreased **** $99,168  as
          compared to the second fiscal quarter of 2005. The decrease in cash flows
          was
          primarily due to a decrease in revenues due to the launch of the new
          Philadelphia commuter run and an increase in operating expenses, such as
          fuel
          and insurance costs, as explained in the results of operations above
 
 For
          the
          quarters ended May 31, 2006 and 2005, we used $6,361 and $31,909, respectively,
          in our investing activities. This decrease in cash used in investing activities
          is attributable to the acquisition of more fixed assets during the quarter
          ended
          May 31, 2005 than 2006.
 
 For
          the
          quarters ended May 31, 2006 and 2005, we used $126,664 and $142,521,
          respectively, in our financing activities The decrease in cash used in
          financing
          is primarily attributable to the trade-in of 11 older model leased motorcoaches
          in June 2005, and the simultaneous purchase of 11 new model motorcoaches.
          The
          principal payments on the new motorcoach loan are less than the lease payments,
          which resulted in the overall reduction of cash outlays for financing
          activities.
 
 ***Cash
          Flow for Six months ended May 31, 2006 compared to May 31, 2005
          (Unaudited)***




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




Six
                Months Ended May 31,2006
            
            2005Net
                Cash Provided By (Used In) Operating Activities
            
            
            220,668
            
            
            169,563Net
                Cash (Used) Provided By Investing Activities
            
            
            (6,361
            )
            
            (38,122
            )Net
                Cash Provided By (Used In) Financing Activities
            
            
            (218,923
            )
            
            (329,543
            )Net
                increase (decrease) in Cash and Cash Equivalents
            
            
            (4,616
            )
            
            (198,102
            )Cash
                and Cash Equivalents - Beginning of Period
            
            
            7,706
            
            
            258,451Cash
                and Cash Equivalents - End of Period
            
            
            3,090
            
            
            60,349


For
        the
        six months ended May 31, 2006 and 2005, our operating activities generated
        $220,668 and $169,563 in cash, respectively. This increase in cash flows
        from
        operations is primarily attributable to an increase in credit card debt.
        Fuel
        and tolls are an integral part of our operations and are typically paid for
        with
        credit cards due to convenience. Accordingly, the increase in fuel and toll
        costs during the six months ended May 31, 2006 produced an increased credit
        card
        liability, which resulted in a reduction in cash outlays for operations,
        thereby
        increasing cash flows from operations.




16




For
      the
      six months ended May 31, 2006 and 2005, we used $6,361 and $38,122,
      respectively, in investing activities. This decrease in cash used in investing
      activities is attributable to a decrease in the amount of fixed assets purchased
      during the six months ended May 31, 2006.





For
      the
      six months ended May 31, 2006 and 2005, we used $218,923 and $329,543,
      respectively, in financing activities. The decrease in cash flow used in
      financing is primarily attributable to lower required principal payments on
      the
      refinanced motorcoaches.





***Off
      Balance Sheet Arrangements***





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





***Seasonality***





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





***Inflation***





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





***Critical
      Accounting Policies***





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





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




17




·
            *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 $*** ***476,555*** ***in current assets of which only $*** ***3,090***  ***was
      cash and cash equivalents at May 31, 2006. Our total current liabilities at
      May
      31, 2006 were $4,060,108*** ***,
      resulting in*** ***a working capital deficit of $3,583,553. We also have long-term debt of
      $*** ***4,067,180*** ***.***





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





**BUSINESS
      RISKS**





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





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




18




***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. At May 31, 2006, we also owed $ 44,614 for
      various insurance and workers’ compensation policies. 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.




19




**CONCENTRATED
      CONTROL RISKS**





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





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





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





**MARKET
      RISKS**





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





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. Unless and until our
      common shares are quoted on the NASDAQ system or listed on a national securities
      exchange, it is likely that the common shares will be defined as “penny stocks”
under the Exchange Act and SEC rules thereunder.




20




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





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





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





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





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





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




21




***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**





Within
      90
      days of the filing of this Form 10-QSB, an evaluation was carried out under
      the
      supervision and with the participation of our management, including Wilson
      Cheng, our Chairman, CEO and Treasurer, of the effectiveness of our disclosure
      controls and procedures. Disclosure controls and procedures are procedures
      that
      are designed with the objective of ensuring that information required to be
      disclosed in our reports filed under the Securities Exchange Act of 1934, such
      as this Form 10-QSB, is recorded, processed, summarized and reported within
      the
      time period specified in the Securities and Exchange Commission’s rules and
      forms. Based on that evaluation, Mr. Cheng concluded that as of May 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.




22




**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 quarter ending May
      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 court of appropriate
      jurisdiction. We will then be governed by the court’s decision.




23




**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.





24




**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: **** July 26 ,
        2006





**BESTWAY
      COACH EXPRESS INC.**





*By:
                /s/ Wilson Cheng*
              *-------------------------------------*
              *Name:**Wilson
                Cheng*
              *Title:**Chief
                Executive Officer, Chairman of the Board of**Directors
                and Treasurer*








**EXHIBIT
      INDEX**




Exhibit
              NumberDescription





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.