A United States Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          For the quarterly period ended October 31, 1998

[ ]       TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE
          EXCHANGE ACT 
          For the transition period from [        ] to [        ]

                         Commission File Number 0-21451

            BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS INCORPORATED
             (Exact name of registrant as specified in its charter)


               NEVADA                                      85-0113644        
    (State or other jurisdiction               (IRS Employer Identification No.)
  of incorporation or organization)

   150 LOUISIANA NE, ALBUQUERQUE, NM                         87108
(Address of principal executive offices)                  (Zip Code)


                     Issuer's telephone number: 505-266-5985


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[ ]

As of December 14,  1998,  4,384,848  shares of the  issuer's  common stock were
outstanding.


<PAGE>

                                     BOWLIN
                      OUTDOOR ADVERTISING & TRAVEL CENTERS
                          INCORPORATED AND SUBSIDIARIES


                                      INDEX


                          PART I. FINANCIAL INFORMATION

                                                                        Page No.
                                                                        --------
Item 1.           Consolidated Financial Statements

                  Consolidated Balance Sheets as of
                  October  31, 1998 and January 31, 1998....................2

                  Consolidated Statements of Income for the
                  Three Months Ended and Nine Months Ended
                  October 31, 1998 and 1997.................................4

                  Consolidated Statements of Stockholders'
                  Equity for the Nine months ended October 31, 1998.........5

                  Consolidated Statements of Cash Flows for the
                  Nine Months Ended October 31, 1998 and 1997...............6

                  Notes to the Consolidated Financial Statements............8

Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations......................10

Item 3.           Quantitative and Qualitative Disclosures About
                  Market Risk..............................................17

                           PART II. OTHER INFORMATION

Item 1.           Legal Proceedings........................................17

Item 2.           Changes in Securities and Use of Proceeds................17

Item 3.           Defaults Upon Senior Securities..........................17

Item 4.           Submission of Matters to a Vote of Security Holders......17

Item 5.           Other Information........................................17

Item 6.           Exhibits and Reports on Form 8-K ........................17

                  Signatures ..............................................18

                                       1
<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS


                                     BOWLIN
                      OUTDOOR ADVERTISING & TRAVEL CENTERS
                          INCORPORATED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

                                               OCTOBER 31,      JANUARY 31,
                                                  1998              1998        
                                               (UNAUDITED)      (UNAUDITED)     
                                               -----------      -----------     
Current assets:                                                            
  Cash and cash equivalents                    $     1,701      $     4,054     
  Accounts receivable, net                             762              579
  Notes receivable, related                                                 
    parties - current maturities                        11               30     
  Inventories                                        4,197            3,623     
  Prepaid expenses                                     558              448     
  Income taxes                                         106               90     
  Other current assets                                  34               11     
                                               -----------      -----------     
  Total current assets                               7,369            8,835     
                                                                            
                                                                            
Notes receivable, related parties,                                         
  less current maturities                                3               20     
                                                                           
Property & equipment, net                           21,186           15,728     
                                                                            
Intangible assets, net                               1,230            1,200     
                                                                            
Other assets                                            71               76     
                                               -----------      -----------     
  Total assets                                 $    29,859      $    25,859     
                                               ===========      ===========     
                                              



                                                                     (Continued)

                                       2

<PAGE>

                                     BOWLIN
                      OUTDOOR ADVERTISING & TRAVEL CENTERS
                          INCORPORATED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)


                                               OCTOBER 31,      JANUARY 31,
                                                  1998              1998
                                               (UNAUDITED)      (UNAUDITED)
                                               -----------      -----------
Current liabilities:
  Short-term borrowing, bank                   $       689      $       745     
  Accounts payable                                   1,176            1,351
  Long-term debt, current maturities                 1,345              779
  Accrued liabilities                                  340              456
                                               -----------      -----------
  Total current liabilities                          3,550            3,331

Deferred income taxes                                  236              177
Long-term debt, less current maturities             11,018            8,124
                                               -----------      -----------
  Total liabilities                                 14,804           11,632

Stockholders' equity
  Common stock, $.001 par value; authorized
    100,000,000 shares; issued and outstand-
    ing 4,384,848 shares                                 4                4
  Additional paid-in capital                        11,604           11,604
  Retained earnings                                  3,447            2,619
                                               -----------      -----------
  Total stockholders' equity                        15,055           14,227

                                               -----------      -----------
  Total liabilities and stockholders' equity   $    29,859           25,859
                                               ===========      ===========


          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                                     BOWLIN
                      OUTDOOR ADVERTISING & TRAVEL CENTERS
                          INCORPORATED AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<S>                                               <C>                <C>                         <C>               <C>           

                                                        THREE MONTHS ENDED                             NINE MONTHS ENDED
                                                  ------------------------------                 -----------------------------
                                                  OCTOBER 31,        OCTOBER 31,                 OCTOBER 31,       OCTOBER 31,
                                                     1998               1997                        1998              1997
                                                  (UNAUDITED)        (UNAUDITED)                 (UNAUDITED)       (UNAUDITED)
                                                  -----------        -----------                 -----------       -----------
Gross sales                                       $     7,897        $     6,702                 $    23,648       $    21,276
Less discounts on sales                                    73                 66                         208               221
                                                  -----------        -----------                 -----------       -----------
  Net sales                                             7,824              6,636                      23,440            21,055

Cost of goods sold                                      4,819              4,230                      14,636            13,720
                                                  -----------        -----------                 -----------       -----------
  Gross profit                                          3,005              2,406                       8,804             7,335

General and administrative expenses                    (1,885)            (1,590)                     (5,462)           (4,902)  
Other income                                                3                  8                           6                78      
Depreciation and amortization                            (493)              (305)                     (1,354)             (833)     
                                                  -----------        -----------                 -----------       -----------
  Operating income                                        630                519                       1,994             1,678      

Other non-operating income (expense):
  Interest income                                          23                 71                          84               216
  Gain on sale of property and                                 
    equipment                                               8                 --                          12               189
  Interest expense                                       (255)              (186)                       (729)             (534)     
                                                  -----------        -----------                 -----------       -----------
  Total other non-operating                            
    income (expense), net                                (224)              (115)                       (633)             (129)     
                                                  -----------        -----------                 -----------       -----------
Income before taxes                                       406                404                       1,361             1,549      
Income taxes                                              163                146                         533               604
                                                  -----------        -----------                 -----------       -----------
Net Income                                        $       243        $       258                 $       828       $       945
                                                  ===========        ===========                 ===========       ===========

Weighted average common shares                      4,384,848          4,384,848                   4,384,848         4,384,848

Weighted average common and potential
  dilutive common shares                            4,384,848          4,384,848                   4,388,166         4,384,848

Earnings per share
    Basic                                         $      0.06        $      0.06                 $      0.19       $      0.22
                                                  ===========        ===========                 ===========       ===========
    Diluted                                       $      0.06        $      0.06                 $      0.19       $      0.22
                                                  ===========        ===========                 ===========       ===========      

</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                                     BOWLIN
                      OUTDOOR ADVERTISING & TRAVEL CENTERS
                          INCORPORATED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)



<TABLE>
<S>                                   <C>               <C>          <C>               <C>              <C>

                                                              FOR THE NINE MONTHS ENDED
                                                                      UNAUDITED
                                                                      ---------


                                                        COMMON       ADDITIONAL
                                        NUMBER          STOCK,         PAID-IN         RETAINED
                                      OF SHARES         AT PAR         CAPITAL         EARNINGS           TOTAL
                                      --------------------------------------------------------------------------
Balance at January 31, 1998           4,384,848         $    4       $   11,604        $  2,619         $ 14,227
Net income                                                                                  828              828
                                      --------------------------------------------------------------------------
Balance at October 31, 1998           4,384,848         $    4       $   11,604        $  3,447         $ 15,055
                                      ==========================================================================


</TABLE>























          See accompanying notes to consolidated financial statements.

                                       5

<PAGE>

                                     BOWLIN
                      OUTDOOR ADVERTISING & TRAVEL CENTERS
                          INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<S>                                                                  <C>                 <C>

                                                                        FOR THE NINE MONTHS ENDED           
                                                                     -------------------------------  
                                                                     OCTOBER 31,         OCTOBER 31,     
                                                                        1998                1997        
                                                                     (UNAUDITED)         (UNAUDITED)     
                                                                     -----------         -----------  
Cash flows from operating activities:                                                                                       
  Net income                                                         $       828         $       945
  Adjustments to reconcile net income to net cash  provided
    by  operating activities:
      Depreciation and amortization                                        1,354                 833
      Gain on sales of property and equipment                                (12)               (189)   
      Deferred income taxes                                                   59                  50   
      Imputed interest                                                        24                  --
      Changes in operating assets and                                        
        liabilities                                                       (1,127)               (764)
                                                                     -----------         -----------  
        Net cash provided by operating activities                          1,126                 875  
                                                                                                                            
Cash flows from investing activities:                                                                                       
  Proceeds from sale of assets                                                16                 423   
  Business acquisitions (note 2)                                          (2,047)             (4,865)   
  Purchases of property and equipment, net                                (3,084)             (2,110)
  Proceeds (disbursements) on notes receivable, net                           36                   4  
                                                                     -----------         -----------  
        Net cash used in investing activities                             (5,079)             (6,548)
                                                                                                        
Cash flows from financing activities:                                                                   
  Borrowings on short-term debt                                              689               3,532   
  Borrowings on long-term debt                                             2,341                  --   
  Payments on short-term debt                                               (745)               (621)   
  Payments on long-term debt                                                (685)                 --   
                                                                     -----------         -----------  
        Net cash provided by financing activities                          1,600               2,911
                                                                                                        
Net decrease in cash and cash equivalents                                 (2,353)             (2,762)    
Cash and cash equivalents at beginning of period                           4,054               7,519   
                                                                     -----------         -----------  
Cash and cash equivalents at end of period                           $     1,701         $     4,757
                                                                     ===========         ===========  

</TABLE>


                                                                     (Continued)
                                       6

<PAGE>


                                     BOWLIN
                      OUTDOOR ADVERTISING & TRAVEL CENTERS
                          INCORPORATED AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                                 (IN THOUSANDS)


                                                  OCTOBER 31,      OCTOBER 31,  
                                                     1998             1997      
                                                  (UNAUDITED)      (UNAUDITED)  
                                                  -----------      -----------  
                                                                               
Supplemental disclosure of cash flow                                           
  information:                                                                 
                                                                               
  Noncash investing and financing activities:                                  
    Acquisition of outdoor advertising                                         
      assets in exchange for long-term debt       $     1,650      $     2,775  
                                                  ===========      ===========  
    Acquisition of covenants not-to-compete                                    
      in exchange for long-term debt              $       130      $        --  
                                                  ===========      ===========  
    Exchange of property and equipment and                                     
      note payable on sale of partnership                                      
      investment                                  $        --      $     1,284  
                                                  ===========      ===========  
  Acquisitions:                                                                
    Fair value of assets acquired and                                          
      liabilities assumed at the date of                                       
      the acquisitions were as follows:                                        
        Accounts receivable                       $        34      $        74  
        Prepaid expenses                                   31               15  
        Billboards                                      1,927            3,865  
        Vehicles and equipment                             55               63  
        Goodwill                                           --              863  
        Accounts payable                                   --              (15) 
                                                  ===========      ===========  
                                                                   













          See accompanying notes to consolidated financial statements.

                                       7

<PAGE>

                                     BOWLIN
                      OUTDOOR ADVERTISING & TRAVEL CENTERS
                          INCORPORATED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.   The consolidated financial statements for the nine months ended October 31,
     1998 and  October  31,  1997 are  unaudited  and  reflect  all  adjustments
     (consisting only of normal recurring adjustments) which are, in the opinion
     of management,  necessary for a fair presentation of the financial position
     and operating results for the interim periods.  The consolidated  financial
     statements  should be read in conjunction with the  consolidated  financial
     statements and notes, together with management's discussion and analysis of
     financial  condition and results of operations,  contained in the Company's
     annual  report on Form 10-KSB for the fiscal year ended  January 31,  1998.
     Results of operations for interim periods are not necessarily indicative of
     results  that may be expected for the year as a whole.  Certain  amounts in
     the January 31, 1998 financial statements have been reclassified to conform
     with the October 31, 1998 presentation.

2.   Earnings  per  Share.  The  following  table  is a  reconciliation  of  the
     numerators and denominators of the basic and diluted per share computations
     for income from continuing operations.


<TABLE>
<S>                            <C>          <C>            <C>          <C>           <C>            <C>                            

                                                       Three months ended October 31,
                               -------------------------------------------------------------------------------
                                               1998                                      1997
                               -------------------------------------    --------------------------------------
                                 Income        Shares      Per Share       Income        Shares      Per Share
                               (Numerator)  (Denominator)   Amount      (Numerator)   (Denominator)    Amount

Basic EPS                      $   243,000      4,384,848  $    0.06    $   258,000       4,384,848  $    0.06
                                                           ---------                                 ---------
Income available to
  common stockholders
Effect if Dilutive Securities:
Stock options
                               -----------  -------------               -----------   -------------
Diluted EPS
Income available to common
  stockholders plus assumed
  conversions                  $   243,000      4,384,848  $    0.06    $   258,000       4,384,848  $    0.06
                               -----------  -------------  ---------    -----------   -------------  ---------



                                                        Nine months ended October 31,
                               -------------------------------------------------------------------------------
                                               1998                                      1997
                               -------------------------------------    --------------------------------------
                                 Income        Shares      Per Share       Income        Shares      Per Share
                               (Numerator)  (Denominator)    Amount     (Numerator)   (Denominator)    Amount

Basic EPS                      $   828,000      4,384,848  $    0.19    $   945,000       4,384,848  $    0.22
                                                           ---------                                 ---------
Income available to
  common stockholders
Effect if Dilutive Securities:
Stock options                                       3,318                                          
                               -----------  -------------               -----------   -------------
Diluted EPS
Income available to common
  stockholders plus assumed
  conversions                  $   828,000      4,388,166  $    0.19    $   945,000       4,384,848  $    0.22
                               -----------  -------------  ---------    -----------   -------------  ---------

</TABLE>




                                       8
<PAGE>


3.   Acquisitions.  On  February  1, 1998,  the  Company  acquired  the  outdoor
     advertising assets of Big-Tex Outdoor Advertising (Big-Tex) for $1,559,000.
     The Company paid $559,000 from the proceeds of the initial public  offering
     and  financed  $1,000,000  with  bank  debt.  Big-Tex  owned  and  operated
     approximately  285 poster and painted faces in the  Brownwood,  Texas metro
     area. The Company also entered into a non-compete agreement with the former
     principals  of  Big-Tex  for a  period  of ten  years  from the date of the
     acquisition,  payable in ten annual  installments  of $10,000  beginning in
     February 1999. The acquisition was accounted for as a purchase. The results
     of Big-Tex's  operations  have been combined  with the Company's  since the
     date of  acquisition.  The  purchase  price  was  allocated  to the  assets
     acquired based on their  estimated fair values and no goodwill was recorded
     in connection with the purchase.

     On March 3, 1998, the Company  acquired the outdoor  advertising  assets of
     Norwood Outdoor,  Inc. (Norwood) for $1,006,000.  The Company paid $350,000
     from the proceeds of the initial public offering,  $6,000 cash and financed
     $650,000  with bank debt.  Norwood  owned and  operated  approximately  140
     poster and painted  bulletin  faces in the Brady,  Texas  metro  area.  The
     acquisition  was  accounted  for as a purchase.  The  results of  Norwood's
     operations  have  been  combined  with  the  Company's  since  the  date of
     acquisition.  The purchase price was allocated to the assets acquired based
     on their  estimated  fair values and no goodwill was recorded in connection
     with the purchase.

     On May 1, 1998 the  Company  purchased  the outdoor  advertising  assets of
     Edgar Outdoor  Advertising  Co. for $900,000.  The Company paid $900,000 at
     closing from the proceeds of the initial public  offering.  Edgar owned and
     operated  approximately  62 painted  bulletin faces in central  Texas.  The
     acquisition  was  accounted  for as a  purchase.  The  results  of  Edgar's
     operations  have  been  combined  with  the  Company's  since  the  date of
     acquisition.  The purchase price was allocated to the assets acquired based
     on their  estimated  fair values and no goodwill was recorded in connection
     with the purchase.

     On June 1, 1998 the Company purchased the outdoor advertising assets of J &
     J Sign  Company,  located in Silver  City,  New Mexico.  The  Company  paid
     $332,000 from the proceeds of the initial public offering.  J & J owned and
     operated  approximately  40  painted  bulletin  faces in  Southwestern  New
     Mexico. The acquisition was accounted for as a purchase. The purchase price
     was allocated to the assets  acquired based on their  estimated fair values
     and no goodwill was recorded in connection with the purchase.

     On August 14, 1998 the Company purchased the outdoor  advertising assets of
     T & C Outdoor for $160,000 cash. T & C owned and operated  approximately 20
     faces in central Texas.  The  acquisition  was accounted for as a purchase.
     The  purchase  price was  allocated to the assets  acquired  based on their
     estimated  fair values and no goodwill was recorded in connection  with the
     purchase.

     The following  unaudited proforma  consolidated  results of operations have
     been prepared as if the acquisitions of Big-Tex, Norwood and Edgar occurred
     on February 1, 1998 and 1997.  The effect of the Company's  acquisitions of
     the assets of J & J and T & C are not material to the  combined  results of
     operations of the Company.

                                       9
<PAGE>

                     (in thousands except per share amounts)

                                       Nine Months Ended October 31
                                                (unaudited)

                                        1998                 1997
                                        ----                 ----

     Gross sales                     $   23,745          $    22,218

     Net income                             848                1,041

     Earnings per basic and
       diluted share                 $      .19          $       .24
                                     ==========          ===========



     The proforma  information is presented for informational  purposes only and
     is not  necessarily  indicative of the results of operations  that actually
     would have been achieved had the  acquisition  been  consummated as of that
     time, nor is it intended to be a projection of future results.

4.   Subsequent  Events: On November 10, 1998, the Company entered into a credit
     agreement with one of its existing lenders for the following: 1) a new term
     note,  in  the  amount  of  $12,000,000,   created  to  refinance  existing
     borrowings  and to  provide  funds for  working  capital;  2) a new line of
     credit, which is a multiple advance line, in the amount of $10,000,000,  to
     fund purchases of existing  outdoor  advertising  business and/or billboard
     properties; 3) an increase in the existing $500,000 working capital line to
     $2,000,000;  4) the existing  facility line to fund the acquisition  and/or
     construction  of  travel  centers  is  reduced  to  $6,000,000;  and 5) the
     existing  leasing line of $2,000,000  was  terminated.  Each note will bear
     interest  based on the  LIBOR 90 day rate  index  for the first 90 day rate
     period.  At the end of each rate period the Company will have the option to
     choose a different rate period or remain at the 90 day index if no election
     is  made.  The  Matrix  rate  will be based on the  Company's  earnings  as
     reported in the Company's most recently available 10Q.

     On November 16, 1998 the Company purchased the outdoor  advertising  assets
     of Faris Outdoor  Advertising,  Inc. for $2,500,000 which was financed with
     bank debt.  Faris owned and  operated  approximately  132 painted  bulletin
     faces in central Texas.


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

OVERVIEW

The  following is a  discussion  of the  consolidated  financial  condition  and
results of operations of the Company as of and for the two fiscal  periods ended
October 31, 1998 and 1997.  This discussion  should be read in conjunction  with
the  Consolidated  Financial  Statements  of the Company  and the related  notes
included in the  Company's  Form  10-KSB for the fiscal  year ended  January 31,
1998.

The  Company  operates  in two  industry  segments,  travel  centers and outdoor
advertising.  In order to  perform  a  meaningful  evaluation  of the  Company's
performance  in  each of its  operating  segments,  the  Company  has  presented
selected  operating data which  separately sets forth the revenue,  expenses and
operating  income  attributable to each segment,  and also separately sets forth

                                       10
<PAGE>

the corporate expenses of the Company which are not properly allocable to either
of the Company's segments for purposes of determining their respective operating
income.  The  discussion  of results of operations  which follows  compares such
selected  operating  data and  corporate  expense  data for the interim  periods
presented.

The forward-looking  statements included in Management's Discussion and Analysis
of Financial  Condition and Results of  Operations,  which reflect  management's
best judgment based on factors currently known, involve risks and uncertainties.
Actual  results  could  differ   materially  from  those  anticipated  in  these
forward-looking statements as a result of a number of factors, including but not
limited to those discussed.

























                                       11

<PAGE>

RESULTS OF OPERATIONS

The following  table presents  certain income and expense items derived from the
Consolidated  Statements  of  Income  for  the  nine  months  ended  October  31
(unaudited and amounts in thousands):

                                                                     % INCR/
                                             1998         1997        (DECR)
                                             ----         ----       -------
TRAVEL CENTERS:                                       
  Gross sales                               18,617       17,749         4.9%
  Discounts on sales                           208          221        (5.9%)
                                            ------       ------
  Net sales                                 18,409       17,528         5.0%
  Cost of sales                             12,394       11,814         4.9%
                                            ------       ------
                                             6,015        5,714         5.3%
  General and administrative                          
    expenses                                 4,369        4,006         9.1%
  Depreciation and                                    
    amortization                               450          318        41.5%
                                            ------       ------
  Operating income                           1,196        1,390       (14.0%)
                                                      
OUTDOOR ADVERTISING:                                  
  Gross sales                                5,031        3,527        42.6%
  Direct operating expenses                  2,242        1,906        17.6%
                                            ------       ------
                                             2,789        1,621        72.1%
  General and administrative expenses          741          538        37.7%
  Depreciation and amortization                820          419        95.7%
                                            ------       ------
  Operating income                           1,228          664        84.9%
                                                      
CORPORATE AND OTHER:                                  
  General and administrative expenses         (352)        (358)       (1.7%)
  Depreciation and amortization                (84)         (96)      (12.5%)
  Interest expense                            (729)        (534)       36.5%
  Other income, net                            102          483       (78.9%)
                                            ------       ------
                                                      
INCOME BEFORE TAXES                          1,361        1,549       (12.1%)
                                                      
INCOME TAXES                                   533          604       (11.8%)
                                            ------       ------
NET INCOME                                     828          945       (12.4%)
  
                                                    
                                       12
<PAGE>

COMPARISON OF THE NINE MONTHS ENDED OCTOBER 31, 1998 AND OCTOBER 31, 1997

TRAVEL CENTERS. Gross sales at the Company's Travel Centers increased by 4.9% to
$18.617  million for the nine months ended October 31, 1998 from $17.749 million
for the  nine  months  ended  October  31,  1997.  This  increase  is  primarily
attributable to a 11.3% increase in merchandise  sales which were $6.183 million
for the nine months ended October  31,1998  compared with $5.556 million for the
nine months ended  October  31,1997.  Gasoline  sales  increased  2.0% to $9.242
million for the nine months ended  October 31, 1998 from $9.058  million for the
same period in 1997.  Wholesale  gasoline sales  increased 42.6% to $967,000 for
the nine months  ended  October 31,  1998,  as compared to $678,000 for the nine
months ended  October 31,  1997.  Restaurant  sales  decreased by 9.4% to $2.225
million for the nine months ended  October 31, 1998 compared with $2.457 for the
nine months ended  October 31, 1997.  Cost of goods sold for the travel  centers
increased  4.9% to $12.394  million for the nine months  ended  October 31, 1998
from $11.814 million for the nine months ended October 31, 1997,  primarily as a
result of an increase in merchandise sales.

General and  administrative  expenses  for travel  centers  consist of salaries,
bonuses and commissions for travel center personnel,  property costs and repairs
and  maintenance.  General and  administrative  expenses for the travel  centers
increased  to $4.369  million  for the nine  months  ended  October 31 1998 from
$4.006 million for the nine months ended October 31, 1997.

Depreciation  and  amortization  expense  increased by 41.5% to $450,000 for the
nine months  ended  October 31, 1998 as compared to $318,000 for the nine months
ended October 31, 1997. The increase is attributable to additions of depreciable
assets during the current period.

The above factors  contributed to an overall decrease in travel center operating
income of 14.0% to $1.196 million for the nine months ended October 31,1998 from
$1.390  million for the nine months  ended  October 31, 1997.  This  decrease is
primarily   attributable   to   increases  in   depreciation   and  general  and
administrative expenses.

OUTDOOR  ADVERTISING.   Gross  sales  from  the  Company's  Outdoor  Advertising
increased  42.6% to $5.031  million for the nine months  ended  October 31, 1998
from $3.527 million for the nine months ended October 31, 1997. The increase was
primarily   attributable   to  the  continual   assimilation  of  the  Company's
acquisitions,  increased  usage of available  sign  inventory,  and increases in
rates.

Direct  operating  expenses  related  to outdoor  advertising  consist of rental
payments to property  owners for the use of land on which  advertising  displays
are located,  production  expenses  and selling  expenses.  Production  expenses
include  salaries  for  operations  personnel  and real estate  representatives,
property taxes,  materials and repairs and maintenance of advertising  displays.
Selling expenses consist  primarily of salaries and commissions for salespersons
and travel related to sales.  Direct  operating  costs increased 17.6% to $2.242
million for the nine months ended  October 31, 1998 from $1.906  million for the
nine months  ended  October  31,  1997,  principally  due to  additional  direct
operating costs associated with the acquisitions.

General and administrative  expenses for outdoor advertising consist of salaries
and wages for administrative personnel,  insurance, legal fees, association dues
and  subscriptions   and  other  indirect   operating   expenses.   General  and
administrative  expenses  increased  37.7% to $741,000 for the nine months ended
October 31, 1998 from $538,000 for the nine months ended October 31, 1997.

                                       13
<PAGE>

Depreciation and amortization  expense  increased 95.7% to $820,000 for the nine
months ended  October 31, 1998 from  $419,000 for the nine months ended  October
31, 1997. The increase is attributable to scheduled  depreciation of advertising
display  structures  and  machinery  and  equipment  primarily  associated  with
acquisitions as well as the amortization of goodwill and non-compete  covenants.

The above factors contributed to the increase in outdoor  advertising  operating
income of 84.9% to $1.228  million  for the nine months  ended  October 31, 1998
from $664,000 for the nine months ended October 31, 1997. In addition,  earnings
before  interest,  taxes,  depreciation  and  amortization  (EBITDA) for outdoor
advertising  increased 89.1% to $2.048 million for the nine months ended October
31, 1998 from $1.083  million for the nine months ended  October 31,  1997.  The
EBITDA  margin for outdoor  advertising  increased  to 40.7% for the nine months
ended  October 31, 1998 as compared to 30.7% for the nine months  ended  October
31, 1997.

CORPORATE AND OTHER. General and administrative expenses for corporate and other
operations  of the Company  consist  primarily of executive  and  administrative
compensation  and  benefits,  accounting,  legal and  investor  relations  fees.
General and administrative  expenses decreased slightly to $352,000 for the nine
months ended  October 31, 1998 as compared to $358,000 for the nine months ended
October 31, 1997.

Depreciation  and  amortization  expenses for the Company's  corporate and other
operations consist of depreciation  associated with the corporate  headquarters,
furniture  and fixtures and vehicles.  Depreciation  and  amortization  expenses
decreased to $84,000 for the nine months  ended  October 31, 1998 as compared to
$96,000 for the nine months ended October 31, 1997.

Interest  expense  increased  by 36.5% to  $729,000  for the nine  months  ended
October 31, 1998 as compared to $534,000 for the nine months  ended  October 31,
1997. The increase is primarily  attributable to the increase in debt associated
with the Company's acquisitions.

Other  income,  net,  primarily  includes  operating  rental  revenues  from the
Company's former  subsidiary,  gains and/or losses from the sales of assets, and
interest  income.  Other income,  net,  decreased 78.9% to $102,000 for the nine
months ended  October 31, 1998 as compared to $483,000 for the nine months ended
October 31, 1997. The decrease is due to certain non-operating gains in 1997 not
present in 1998 and a decrease in interest income due to use of IPO proceeds for
acquisitions.

Income before taxes  decreased 12.1% to $1.361 million for the nine months ended
October 31, 1998 as compared to $1.549 million for the nine months ended October
31, 1997. As a percentage of gross  revenues,  income before taxes  decreased to
5.8% for the nine months ended October 31, 1998 as compared to 7.3% for the nine
months ended October 31, 1997.

Income  taxes were  $533,000  for the nine  months  ended  October  31,  1998 as
compared to $604,000 for the nine months ended  October 31, 1997,  as the result
of lower pretax income.

The foregoing factors  contributed to a decrease in the Company's net income for
the nine months  ended  October 31, 1998 to $828,000 as compared to $945,000 for
the nine months ended October 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

At October  31,1998,  the Company had  working  capital of $3.819  million and a
current  ratio of 2.1:1,  compared  to working  capital of $5.504  million and a
current  ratio of 2.7:1 at January  31,  1998.  Working  capital and the current
ratio  decreased  for the nine months ended  October 31, 1998 as a result of IPO
proceeds used in the current period but present at January 31, 1998.

                                       14
<PAGE>

Net cash provided by operating activities was $1.126 million for the nine months
ended October 31, 1998 as compared to net cash provided by operating  activities
of $875,000 for the nine months ended October 31, 1997. Net cash provided in the
current  period  is  primarily   attributable  to  increased   depreciation  and
amortization  from  acquisitions and decreases in gains on sales of property and
equipment  as well as an  increase  in cash used to fund  operating  assets  and
liabilities.  Net cash used for investing  activities  for the nine months ended
October 31, 1998 was $5.079  million,  of which  $2.047  million was used in the
purchase of the outdoor advertising assets of Big-Tex, Norwood, Edgar, J & J and
T & C, and $3.084 million was used for purchases of property and equipment.  For
the nine months ended October 31, 1997,  net cash used for investing  activities
was $6.548 million, of which $4.865 million was used for acquisitions.

Net cash provided by financing  activities for the nine months ended October 31,
1998 was $1.600  million as compared to $2.911 million for the nine months ended
October  31,  1997.  At October 31, 1998 and 1997  financing  activities  were a
result of borrowings and payments on debt.

On February 1, 1998,  the Company  acquired  the outdoor  advertising  assets of
Big-Tex Outdoor Advertising (Big-Tex) for $1,559,000.  The Company paid $559,000
from the proceeds of the initial public  offering and financed  $1,000,000  with
bank debt. Big-Tex owned and operated approximately 285 poster and painted faces
in the Brownwood,  Texas metro area. The Company also entered into a non-compete
agreement  with the former  principals of Big-Tex for a period of ten years from
the date of the  acquisition,  payable  in ten  annual  installments  of $10,000
beginning in February 1999. The acquisition was accounted for as a purchase. The
results of Big-Tex's  operations have been combined with the Company's since the
date of  acquisition.  The purchase  price was allocated to the assets  acquired
based on their  estimated fair values and no goodwill was recorded in connection
with the purchase.

On March 3, 1998, the Company acquired the outdoor advertising assets of Norwood
Outdoor,  Inc.  (Norwood)  for  $1,006,000.  The Company paid  $350,000 from the
proceeds of the initial public offering,  $6000 cash and financed  $650,000 with
bank debt.  Norwood  owned and  operated  approximately  140 poster and  painted
bulletin faces in the Brady, Texas metro area. The acquisition was accounted for
as a purchase.  The results of Norwood's  operations have been combined with the
Company's since the date of acquisition. The purchase price was allocated to the
assets  acquired  based on their  estimated  fair  values  and no  goodwill  was
recorded in connection with the purchase.

On May 1, 1998 the Company  purchased  the outdoor  advertising  assets of Edgar
Outdoor  Advertising  Co. for $900,000  with the proceeds of the initial  public
offering.  Edgar owned and operated  approximately  62 painted bulletin faces in
central Texas.  The acquisition was accounted for as a purchase.  The results of
Edgar's  operations  have been  combined  with the  Company's  since the date of
acquisition.  The purchase  price was allocated to the assets  acquired based on
their  estimated fair values and no goodwill was recorded in connection with the
purchase.

On June 1, 1998 the Company  purchased the outdoor  advertising  assets of J & J
Sign Company, located in Silver City, New Mexico. The Company paid $332,000 from
the  proceeds  of  the  initial  public  offering.  J &  J  owned  and  operated
approximately  40  painted  bulletin  faces  in  Southwestern  New  Mexico.  The
acquisition was accounted for as a purchase. The purchase price was allocated to
the assets  acquired  based on their  estimated  fair values and no goodwill was
recorded in connection with the purchase.


On August 14, 1998 the Company purchased the outdoor advertising assets of T & C
Outdoor for $160,000  cash. T & C owned and operated  approximately  20 faces in
central Texas.  The  acquisition  was accounted for as a purchase.  The purchase
price was allocated to the assets  acquired based on their estimated fair values
and no goodwill was recorded in connection with the purchase.

On November 10, 1998,  the Company  entered into a credit  agreement with one of
its existing  lenders for the  following:  1) a new term note,  in the amount of
$12,000,000,  created to refinance existing  borrowings and to provide funds for
working capital;  2) a new line of credit,  which is a multiple advance line, in
the amount of  $10,000,000,  to fund purchases of existing  outdoor  advertising
business and/or billboard  properties,  3) an increase in the existing  $500,000
working  capital line to $2,000,000;  4) the existing  facility line to fund the
acquisition and/or construction of travel centers is reduced to $6,000,000;  and
5) the existing  leasing line of $2,000,000 was terminated.  Each note will bear
interest  based on the LIBOR 90 day rate index for the first 90 day rate period.
At the end of each rate  period  the  Company  will have the  option to choose a
different  rate period or remain at the 90 day index if no election is made. The
Matrix rate will be based on the Company's earnings as reported in the Company's
most recently available 10Q.

On November 16, 1998 the Company  purchased  the outdoor  advertising  assets of
Faris  Outdoor  Advertising,  Inc. for  $2,500,000  which was financed with bank
debt.  Faris owned and  operated  approximately  132 painted  bulletin  faces in
central Texas.

The  construction of a new travel center located  approximately 20 miles west of
Albuquerque,  New Mexico,  on  Interstate  40 is scheduled to open by the end of
December. Renovation and upgrades of existing facilities continues.

                                       15
<PAGE>

Although the Company does not have any  agreements  in place,  it will  continue
discussions  with  acquisition  candidates  throughout the  Southwestern  United
States.  The  Company  has not  executed a letter of intent or other  agreement,
binding or non-binding, to make such acquisitions. Any such acquisition would be
subject to the negotiation and execution of definitive  agreements,  appropriate
financing arrangements,  performance of due diligence, approval of the Company's
Board of Directors,  and the satisfaction of other customary closing conditions.
The Company would likely  finance any such  acquisitions  with cash,  additional
indebtedness or a combination of the two. Any commercial  financing obtained for
purposes of acquiring  additional  assets is likely to impose certain  financial
and other  restrictive  covenants  upon the Company and increase  the  Company's
interest expense.

YEAR 2000

The Year 2000 Issue is the result of computer  programs  that were written using
two digits rather than four to define the applicable  year. As a result,  any of
the Company's computer programs that have date-sensitive  software may recognize
a date using "00" as the year 1900 rather than the year 2000.  This could result
in a system failure or miscalculations  which could result in disruptions in the
operations of the Company and its suppliers and customers.

STATE OF  READINESS.  The Company has  conducted a  comprehensive  review of its
computer  systems to identify  those portions that could be affected by the Year
2000 Issue.  The  evaluation  revealed that the Company's  network  hardware and
operating system, voice mail system,  e-mail system, and accounting software are
the major resources that do have Year 2000 compliance issues.  Fortunately,  the
identified  systems  are  "off-the-shelf"  products  with  Year  2000  compliant
versions now available.

The  Company  has not yet  completed  its survey of its  significant  suppliers,
vendors, and pertinent institutions to determine the extent to which the Company
is  vulnerable  to those third  parties'  failure to  remediate  their Year 2000
issues.  The Company will complete its survey by the end of the first quarter of
1999. There can be no guarantee that the systems of other companies on which the
Company's business relies will be timely converted or that failure to convert by
another  company,  or a  conversion  that is  incompatible  with  the  Company's
systems,  would  not have a  material  adverse  effect  on the  Company  and its
operations.

COSTS TO ADDRESS YEAR 2000 ISSUES.  The Company  estimates  over the next twelve
months that the costs  associated with the  implementation  plan will not exceed
$50,000.

RISKS  ASSOCIATED WITH YEAR 2000 ISSUES.  The Company's  failure to resolve Year
2000  Issues  on  or  before   December   31,   1999  could   result  in  system
miscalculations causing disruption in operations, including, among other things,
a temporary inability to process transactions, send invoices, determine payments
due,  send  and/or  receive  e-mail,   or  engage  in  similar  normal  business
activities.  Additionally,  failure  of third  parties  upon whom the  Company's
business  relies to timely  remediate  their Year 2000  Issues  could  result in
disruptions  in the Company's  supply of parts and  materials,  late,  missed or
unapplied payments,  temporary disruptions in order processing and other general
problems  related to the  Company's  daily  operations.  The  Company  presently
believes that, with  modifications  to existing  software and conversions to new
software,  the Year 2000 problem will not pose significant  operational problems
for  the  Company.   Until  the  Company  receives  responses  from  significant
suppliers, vendors and pertinent institutions, the overall risks associated with
the Year 2000 Issue remain  difficult to accurately  describe and quantify,  and
there can be no  guarantee  that the Year 2000  Issue  will not have a  material
adverse effect on the Company and its operations.

CONTINGENCY  PLAN.  The Company has not  determined  the specific risks that may
need to be addressed by a contingency plan. It is the Company's goal to have the
internal major Year 2000 Issues resolved and external effects  determined by the
end of the second quarter of 1999.

                                       16
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  
         Not required.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS. None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.

ITEM 5. OTHER INFORMATION. None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     (a). Exhibit No.    Exhibit Name
          -----------    ------------
             2.7         Purchase Agreement dated November 16, 1998 between the 
                         Registrant and Faris Outdoor Advertising, Inc.

            10.46        Credit Agreement with First Security Bank, dated as of 
                         November 10, 1998 granting the Registrant funds in the 
                         aggregate principal amount of $30,000,000

            27           Financial Data Schedule

     (b). No reports were filed on Form 8-K during the nine months ended 
          October 31, 1998.





                                       17
<PAGE>

SIGNATURES

In accordance with the requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

Date:     December 14, 1998
                                    BOWLIN Outdoor Advertising & 
                                    Travel Centers Incorporated

                                    /s/ Michael L. Bowlin
                                    --------------------------------------------
                                    Michael L. Bowlin, Chairman of the Board,
                                    President and Chief Executive Officer


                                    /s/ Nina J. Pratz
                                    --------------------------------------------
                                    Nina J. Pratz, Chief Financial Officer
                                    (Principal Financial and Accounting Officer)





                                       18