UNITED
        STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON,
        D.C. 20549
 
 **FORM
        10-K**
  ý
              ANNUAL
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
                FOR
                  THE FISCAL YEAR ENDED **JANUARY 31, 2007**ORo
              TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934
                FOR
                  THE TRANSITION PERIOD FROM _______________ TO
                  _______________
  COMMISSION
        FILE NO. **000-31701**
 
 **Bowlin
        Travel Centers, Inc.**
 (Name
        of
        the registrant as specified in its charter)
  **NEVADA**
              **85-047****3277**(State
                  or other jurisdiction of
                incorporation
                  or organization)
              (I.R.S.
                  Employer Identification No.)**150
                  LOUISIANA NE, ALBUQUERQUE, NM**
              **87108**(Address
                  of principal executive offices)
              (Zip
                  Code)
 **** ****
 Registrant’s
        telephone number, including area code:
**505-266-5985**
  SECURITIES
                  REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE
                  ACT:NONE(Title
                  of class)
 SECURITIES
                    REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE
                    ACT:Title
                    of each class
                
                Name
                    of each exchange on which registeredCommon
                    Stock, $.001 Par Value
                
                OTC.BB


Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.    Yes  oNo ý




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.    Yes  oNo ý










Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 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  ýNo
o





Indicate
      by check mark if disclosure of delinquent filers in response to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K    ý





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
      Exchange Act):


Large
                  accelerated filer    o
                Accelerated
                  filer    o
                Non-accelerated
                  filer    ý





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act).    Yes  oNo ý




The
          aggregate market value of the voting and non-voting common stock held by
          non-affiliates of the registrant at July 31, 2006 was $2,929,405.
 
 The
          number of shares of Common Stock, $.001 par value, outstanding as of April
          27,
          2007: 4,583,348
 2


**Forward-Looking
        Statements**
 
 Certain
        statements in this Annual Report on Form 10-K constitute forward-looking
        statements within the meaning of Section 21E of the Securities Exchange Act
        of
        1934, as amended, and should be read in conjunction with the Financial
        Statements of Bowlin Travel Centers, Inc., a Nevada corporation (the “Company”
or “Bowlin Travel Centers”). Such forward-looking statements involve known and
        unknown risks, uncertainties and other factors that could cause the Company’s
        actual results to differ materially from those contained in these
        forward-looking statements, including those set forth under the heading “RISK
        FACTORS” under ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS and the risks and other factors described
        elsewhere. The cautionary factors, risks and other factors presented should
        not
        be construed as exhaustive. The Company assumes no obligation to update these
        forward-looking statements to reflect actual results, changes in assumptions
        or
        changes in other factors affecting such forward-looking
        statements.




**PART
      I**





**ITEM
              1.**
            **BUSINESS**





**Company
      Overview**


The
        Company operates travel centers dedicated to serving the traveling public
        in
        rural and smaller metropolitan areas of the Southwestern United States. The
        Company’s tradition of serving the public dates back to 1912, when the founder,
        Claude M. Bowlin, started trading goods and services with Native Americans
        in
        New Mexico. Bowlin Travel Centers currently operates twelve full-service
        travel
        centers along interstate highways in Arizona and New Mexico. Two of the
        Company’s travel centers are held for sale; one of the Company’s travel centers
        has a letter of intent with the Pueblo of Laguna and is scheduled to close
        on
        April 30, 2007 (see “Recent Developments” and “Subsequent Events” for further
        information). The Company advertises its travel centers through a network
        of
        approximately 300 outdoor advertising display faces. The Company’s travel
        centers offer brand name food, gasoline and a variety of unique Southwestern
        merchandise to the traveling public.
 
 The
        Company was formed on August 8, 2000, as a wholly owned subsidiary of Bowlin
        Outdoor Advertising and Travel Centers Incorporated (“Bowlin Outdoor”). Pursuant
        to a Contribution Agreement, dated as of November 1, 2000, Bowlin Outdoor
        contributed substantially all of the assets and liabilities directly related
        to
        its travel centers business to Bowlin Travel Centers.
 
 Prior
        to
        August 8, 2000, the Company’s travel centers were owned and operated as a
        business segment of Bowlin Outdoor. Bowlin Outdoor operated two business
        segments: travel centers and outdoor advertising. Bowlin Outdoor’s common stock
        was traded on the American Stock Exchange and was a public reporting company.
        On
        January 30, 2001, the Company became an independent company through a spin-off
        transaction whereby shares of the Company’s common stock were distributed to the
        shareholders of Bowlin Outdoor.
 
 3
  **Recent
        Developments**
 
 On
        February 1, 2006, the Company began wholesaling gasoline to three new
        independent wholesale locations. Two of the independent wholesalers will
        sell
        ExxonMobil petroleum products. The other independent wholesaler will sell
        CITGO
        petroleum products. All three contracts with these sholesalers have a five-year
        term beginning February 1, 2006. All of the contracts can terminate subject
        to
        the occurrence of certain events including bankruptcy or breach of the
        agreement, or termination by ExxonMobil or CITGO of their petroleum marketing
        activities in the Company’s distribution area or with a 30 day notification to
        the Company. The terms of the contracts require the three independent
        wholesalers to purchase a maximum gallon quantity of 105% of the preceding
        calendar year’s gallons purchased. There are no minimum gallon quantity
        requirements for any of the three contracts. The Company has entered into
        a
        retail supply agreement with Arizona Fuel Distributors which will replace
        CITGO.
        See “Subsequent Events” for further information.
 
 At
        the
        beginning of the Company’s third quarter, the independent CITGO wholesaler
        de-branded; therefore, the Company no longer wholesales to this location.
        The
        potential loss of income to the Company for fiscal year ending January 31,
        2007
        is approximately $3,000.
 
 On
        August
        15, 2006, the Company entered into promissory note with C. C. Bess in the
        amount
        of $53,000. The promissory note has a stated rate of interest of 8.5% and
        is
        payable in monthly installments of $680 for five years.
 
 On
        August
        15, 2006, the Company sold vacant land located south of Las Cruces, New Mexico
        to Larjon, LLC for $26,500 cash and a note receivable of $108,500. The note
        receivable has a stated rate of interest of 9.0% and is payable in quarterly
        installments of $6,797 for five years. The property sold had a carrying value
        of
        $104,000 and the costs incurred to sell the land were $630. The gain on the
        sale
        of the land was $30,370 of which $5,961 was recognized initially and $24,409
        was
        deferred. In accordance with FAS 66, the gain was deferred because the minimum
        initial investment by the buyer was less than the required 20% initial
        investment expressed as a percentage of the sales value (FAS 66, paragraph
        54).
        Therefore, the gain will be recognized into income using the installment
        method
        as payments are received. The deferred gain is reflected as a reduction to
        the
        note receivable in the accompanying balance sheet.
 
 On
        August
        15, 2006, the Company sold two lots of vacant land located south of Las Cruces,
        New Mexico to Teak, LLC for $26,500 cash and two notes receivable of $54,250
        each. Both notes receivable have a stated rate of interest of 9.0% and both
        are
        payable in quarterly installments of $3,398 for five years. The property
        sold
        had a carrying value of $96,530 and the costs incurred to sell the land were
        $844. The gain on the sale of the land was $37,626 of which $7,386 was
        recognized initially and $30,240 was deferred. In accordance with FAS 66,
        the
        gain was deferred because the minimum initial investment by the buyer was
        less
        than the required 20% initial investment expressed as a percentage of the
        sales
        value (FAS 66, paragraph 54). Therefore, the gain will be recognized into
        income
        using the installment method as payments are received. The deferred gain
        is
        reflected as a reduction to the note receivable in the accompanying balance
        sheet.
  On
        September 29, 2006, the Company changed the terms of its agreements with
        its
        primary lender, Bank of the West. The agreements modified the Company’s
        $4,870,101 debt with Bank of the West from a variable rate of interest to
        a
        variable rate of interest subject to annual adjustment every five years,
        currently set at 7.26% for the next five years. In accordance with EITF Issue
        No. 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt
        Instruments,” the present value of the cash flows under the terms of the
        modified debt was less than 10% from the present value of the remaining cash
        flows under the terms of the original debt. Therefore, the modification of
        terms
        was not considered substantially different and there was no debt
        extinguishment.
 
 4
 On
        October 10, 2006, the Company entered into a second addendum to a lease by
        and
        between the Company and Michele Prince, Successor Trustee of the Janet H.
        Prince
        Revocable Trust U/T/A dated May 5, 1994 (the “Owner”). The original term of the
        lease was twenty-six (26) years, commencing on August 1, 1986 and ending
        on July
        31, 2012. On December 1, 2002, there was an addendum to the lease granting
        the
        Company an exclusive, irrevocable option and right of purchase of the leased
        premises for $100,000 paid to the Owner immediately and purchase price of
        $700,000. The option and right of purchase of the leased premises expires
        on or
        before April 30, 2012. The second addendum specifies that the Owner may exercise
        the option at any time prior to the expiration of the option term. In addition,
        the Company paid the Owner $100,000 and the Owner agreed to reduce the purchase
        price to $600,000 and advance the Company’s option date to April 30,
        2011.
 
 On
        November 1, 2006, the Company entered into a retail supply agreement with
        Jackson Oil, a division of Jacksons Food Stores, Inc. to purchase ChevronTexaco
        brand fuels for the Company’s three Arizona retail locations. The agreement was
        terminated January 10, 2007. The Company has entered into a retail supply
        agreement with Arizona Fuel Distributors which will replace Jackson Oil.
        See
“Subsequent Events” for further information.
 
 During
        the fourth quarter of the Company’s fiscal year 2007, property, fixtures and
        equipment located 4 miles north of Alamogordo were listed for sale and
        therefore have been identified as a component as defined in FAS Statement
        No.
        144 - Accounting for Impairment or Disposal of Long-Lived Assets (as amended).
        The carrying value of the property, fixtures and equipment of approximately
        $667,000 and $677,000 have been reclassified as assets held for sale in the
        January 31, 2007 and January 31, 2006 balance sheets, respectively. The results
        of operations of ($28,517), ($17,128) and ($31,072) for the twelve months
        ended
        January 31, 2007, 2006 and 2005, respectively, have been reclassified to
        loss
        from discontinued operations of a component, net of the related income tax
        benefit.
 
 **Subsequent
        Events**
 
 On
        November 27, 2006, the Company entered into a purchase agreement with Maxwell
        & Associates Real Estate Holdings, LLC to sell property, fixtures and
        equipment located in Edgewood, New Mexico. The contract sales price is
        $1,300,000 including a $25,000 earnest deposit. Closing was scheduled on
        or
        before January 30, 2007. Closing was extended until February 20, 2007. The
        extension date expired and the $25,000 earnest deposit was advanced to the
        Company. The property, fixtures and equipment remain for sale and therefore
        has
        been identified as a component as defined in FAS Statement No. 144 - Accounting
        for Impairment or Disposal of Long-Lived Assets (as amended). The carrying
        value
        of the property, fixtures and equipment of approximately $499,000 and $521,000
        have been reclassified as assets held for sale in the January 31, 2007 and
        January 31, 2006 balance sheets, respectively. The results of operations
        of
        ($119,148), ($89,596) and ($80,882) for the twelve months ended January 31,
        2007, 2006 and 2005, respectively, have been reclassified to loss from
        discontinued operations of a component, net of the related income tax
        benefit.
 
 5
 On
        November 27, 2006, the Company entered into a letter of intent with the Pueblo
        of Laguna to sell property, fixtures and equipment located 17 miles west
        of
        Albuquerque, New Mexico at the Rio Puerco exit. The letter of intent sales
        price
        is $2,500,000 including a $100,000 earnest deposit. Closing was scheduled
        on or
        before January 30, 2007. Closing has been extended to April 30, 2007. The
        Company expects a gain on the sale of approximately $900,000. The carrying
        value
        of the property, fixtures and equipment of approximately $1,393,000 and the
        related debt, $549,000 and $1,466,000 and the related debt, $602,000 have
        been
        reclassified as assets held for sale in the January 31, 2007 and January
        31,
        2006 balance sheets, respectively. The estimated cost of the sale is
        approximately $207,000. The operations of this location have been identified
        as
        a component as defined in FAS Statement No. 144 - Accounting for the Impairment
        of Disposal of Long-Lived Assets (as amended). Accordingly, the results of
        operations ($56,226), ($82,439) and ($108,691) for the twelve months ended
        January 31, 2007, 2006 and 2005, respectively, have been reclassified to
        loss
        from discontinued operations of a component, net the related income tax
        benefit .
 
 The
        Company entered into a retail supply agreement with Arizona Fuel Distributors,
        L.L.C. to purchase Mobil and Shell brand fuels for the Company’s three Arizona
        retail locations. The retail supply agreement for Mobil brand fuels is for
        a
        period of ten years beginning on March 20, 2007 and shall continue on a month
        to
        month basis until terminated by the Company. The Company may terminate the
        agreement after the term has expiried by giving thirty days advance written
        notice to Arizona Fuel Distributors, L.L.C. The retail agreement for Shell
        brand
        fuels is for a period of ten years beginning on March 20, 2007 and shall
        continue on a month to month basis until a new agreement is executed or Arizona
        Fuel Distributors, L.L.C. terminates or does not renew the agreement in
        accordance with applicable law. There are no minimum or maximum gallons purchase
        requirements for the Company. The Company’s CITGO distribution agreement that
        the three Arizona retail locations operate under ends March 31, 2007 as CITGO
        terminated its petroleum marketing activities in the Company’s distribution
        area.
 
 On
        March
        31, 2007 the distribution franchise agreement with CITGO was mutually cancelled
        in compliance with the provisions of the Petroleum Marketing Practices Act.
        CITGO terminated its petroleum marketing activities in the Company’s
        distribution area.
 
 **Industry
        Overview**
 
 The
        travel services industry in which the Company competes includes convenience
        stores that may or may not offer gasoline, and fast food and full-service
        restaurants located along rural interstate highways. The Company believes
        that
        the current trend in the travel services industry is toward strategic pairings
        at a single location of complementary products that are noncompetitive, such
        as
        brand name gasoline and brand name fast food restaurants. This concept, known
        as
“co-branding,” has recently seen greater acceptance by both traditional
        operators and larger petroleum companies. The travel services industry has
        also
        been characterized in recent periods by consolidation or closure of smaller
        operators. The convenience store industry includes both traditional operators
        that focus primarily on the sale of food and beverages but also offer gasoline,
        and large petroleum companies that offer food and beverages primarily to
        attract
        gasoline customers.
 
 The
        restaurant segment of the travel services industry is highly competitive,
        most
        notably in the areas of consistency of quality, variety, price, location,
        speed
        of service and effectiveness of marketing. The major chains are aggressively
        increasing market penetration by opening new restaurants, including restaurants
        at “special sites” such as retail centers, travel centers and gasoline outlets.
        Smaller quick-service restaurant chains and franchise operations are focusing
        on
        brand and image enhancement and co-branding strategies.
 
 6
 **Business
        Strategy**
 
 The
        Company’s business strategy is to capture a greater market share of the
        interstate traveler market in Arizona and New Mexico by offering name brand
        recognized food service operations and gasoline, and unique Southwestern
        souvenirs and gifts, at a single location and at competitive prices delivered
        with a high standard of service.
 The
          Company’s travel centers are strategically located along well-traveled
          interstate highways in Arizona and New Mexico where there are generally
          few gas
          stations, convenience stores or restaurants. The Company operates five
          full-service restaurants which are less than half of the Company’s twelve travel
          centers, under the Dairy Queen/Brazier or Dairy Queen trade names. All
          of the
          Company’s twelve travel centers sell convenience store food such as chips, nuts,
          cookies and prepackaged sandwiches along with a variety of bottled and
          canned
          drinks.
  The
        Company’s travel centers offer brand name gasoline such as ExxonMobil and CITGO.
        The Company is an authorized distributor of ExxonMobil and CITGO petroleum
        products. Seven of the Company’s New Mexico locations are ExxonMobil stations,
        one of the Company’s New Mexico locations is a CITGO station and three of its
        Arizona locations are CITGO stations. At this time, one of the Company’s New
        Mexico locations does not offer gasoline. The Company’s CITGO distribution
        agreement for the four retail locations ends March 31, 2007 as CITGO terminated
        its petroleum marketing activities in the Company’s distribution area. As of
        March 20, 2007, one of the Arizona stores has been re-branded Mobil and two
        of
        the Arizona stores have re-branded Shell as a result of the Company entering
        into a retail supply agreement with Arizona Fuel Distributors, L.L.C. As
        of
        January 31, 2007, the New Mexico CITGO location discontinued gasoline
        sales.
  The
        Company’s billboard advertising for its travel centers emphasizes the wide range
        of unique Southwestern souvenirs and gifts available at the travel centers,
        as
        well as the availability of gasoline and food. Merchandise at each of the
        Company’s stores is offered at prices intended to suit the budgets and tastes of
        a diverse traveling population. The merchandise ranges from inexpensive
        Southwestern gifts and souvenirs to unique handcrafted jewelry, rugs, pottery,
        and other gifts.
 
 **Growth
        Strategy**
 
 ***Travel
        Centers***
 
 The
        Company is committed to developing its travel center operations by evaluating
        the performance of each location. Locations that consistently under perform
        are
        identified and strategies are prepared to appropriately deal with poor
        performing travel centers. In addition, the Company intends to explore the
        possibilities of acquiring or building additional travel centers.
 
 The
        Company believes that the co-branding concept implemented at its travel centers
        has resulted in increased revenues, and intends to pursue opportunities to
        acquire rights to additional brand name products, primarily brand name
        food.
 
 The
        Company intends to continue to offer high quality brand name food and products
        in a clean, safe environment designed to appeal to travelers on interstate
        highways.
 
 The
        Company intends to continue to increase sales at existing locations through
        ongoing renovation and upgrading of facilities, including gasoline sales
        by
        focusing on the marketing of ExxonMobil and Shell gasoline brands through
        its
        travel center outlets.
  7
 
  ***Gasoline
          Wholesaling***
 
 The
        Company has been wholesaling gasoline since 1997. Since 1997, revenues from
        wholesaling gasoline have accounted for an average of approximately 8.9%
        of
        gross revenues. Other than purchasing gas for retail sales through its travel
        centers, during the fiscal year ended January 31, 2007, the Company had three
        independent ExxonMobil wholesale customers and one independent CITGO wholesale
        customer. At the beginning of the Company’s third quarter, the independent CITGO
        wholesale customer debranded; therefore the Company no longer wholesales
        to this
        location. The Company anticipates expanding its current level of gasoline
        wholesaling and is marketing its wholesaling business. See “Business Operations
        - Gasoline Wholesaling”.
  **Business
        Operations**
 
 The
        Company sells food, gasoline and merchandise through its twelve travel centers
        located along two interstate highways (I-10 and I-40) in Arizona and New
        Mexico.
        These are key highways for travel to numerous tourist and recreational
        destinations as well as arteries for regional traffic among major Southwestern
        cities. All of the Company’s travel centers are open every day of the year
        except Christmas.
 
 Each
        of
        the Company’s travel centers maintains a distinct, theme-oriented atmosphere. In
        addition to the Southwestern merchandise it purchases from Native American
        tribes, the Company also imports approximately 650 items from Mexico, including
        handmade blankets, earthen pottery and wood items. Additional goods, novelties
        and imprinted merchandise are imported from several Pacific Rim countries.
        The
        Company has long-standing relationships with many of its vendors and suppliers.
        While the Company has no formal agreements with any of its vendors and suppliers
        of Southwestern merchandise and items from Mexico, the Company believes that
        there are adequate resources outside of those that are regularly used so
        that
        the Company could continue to provide these items even if it were unable
        to use
        its regular sources.
 
 The
        Company sells food at five of its twelve travel centers under the Dairy Queen
        and Dairy Queen/Brazier brand names. All of the Company’s twelve travel centers
        sell convenience store food such as chips, nuts, cookies and prepackaged
        sandwiches along with a variety of bottled and canned drinks.
 
 The
        Company’s terms of its agreements with Dairy Queen obligate the Company to pay a
        franchise royalty and in some instances a promotion fee, each equal to a
        percentage of gross sales revenues from products sold, as well as comply
        with
        certain provisions governing the operation of the franchised stores. The
        Company
        is obligated to pay Dairy Queen franchise fees of 4.0% and advertising fees
        of
        2.25% of its sales of their products in New Mexico. In Arizona, the Company
        is
        obligated to pay Dairy Queen franchise fees of 4.0% of its sales of their
        products and advertising fees of 2.25% of its sales products not to exceed
        the
        maximum of $15,000.
  8
 
 The
        Company currently operates five Dairy Queens at its travel centers. It has
        individual franchise agreements for each Dairy Queen operated at the travel
        centers. None of these agreements are exclusive nor do they prevent the Company
        from entering into agreements with other food franchisors. Several of the
        agreements have different termination provisions and are effective for different
        terms. Under three of the Dairy Queen agreements, the term continues until
        the
        Company elects to terminate it with 60 days prior written notice, or if the
        Company or Dairy Queen elect to terminate the agreement because the other
        has
        breached the agreement and has not cured that breach within 14 days of notice
        of
        the breach. The other two Dairy Queen agreements are for specific terms.
        One of
        those Dairy Queen agreements, entered into February 1, 1984, is for a term
        of 25
        years and the other, entered into on November 18, 1986, is for a term of
        20
        years plus an additional 5 years per an extension agreement dated June 29,
        1987.
        The Company may not terminate either of these agreements unless it gives
        notice
        to Dairy Queen that it is in breach of the agreement and Dairy Queen has
        not
        cured that breach within thirty days of our notice. Dairy Queen may terminate
        either of these agreements if it delivers notice to the Company that it is
        in
        breach of the agreement and it does not cure that breach within 14 days of
        that
        notice.
 
 The
        Company continuously monitors and upgrades its travel center facilities to
        maintain a high level of comfort, quality and appearance. Periodic improvements
        typically include new awnings and facings, new signage and enhanced lighting,
        furnishings, buildings and parking lot improvements .
 
 The
        Company is an authorized ExxonMobil and CITGO distributor. The Company sells
        ExxonMobil gasoline at seven of its New Mexico travel centers, and CITGO
        gasoline at three of its Arizona travel centers and one New Mexico location.
        One
        of the Company’s New Mexico locations does not offer gasoline. The Company’s
        CITGO distribution agreement for the three Arizona retail locations ends
        March
        31, 2007, as CITGO terminated its petroleum marketing activities in the
        Company’s distribution area. As of March 20, 2007, one of the Arizona stores has
        re-branded Mobil and two of the Arizona stores have re-branded Shell as a
        result
        of the Company entering into a retail supply agreement with Arizona Fuel
        Distributors, L.L.C. As of January 31, 2007, the New Mexico CITGO location
        discontinued gasoline sales.
 
 The
        fact
        that the Company is an authorized ExxonMobil, and was an authorized CITGO
        distributor through March 31, 2007, has significance in the Company’s industry.
        The Company’s CITGO distribution agreement ends March 31, 2007 as CITGO
        terminated its petroleum marketing activities in the Company’s distribution
        area. As licensed distributors for ExxonMobil and CITGO during the past fiscal
        year, the Company purchased gasoline directly from ExxonMobil and CITGO as
        direct marketers at the lowest wholesale prices they offer. Prior to becoming
        a
        licensed distributor, the Company purchased gasoline through other distributors,
        paying a distributor’s markup price. This required the Company to negotiate and
        enter into agreements with other distributors to try to purchase gasoline
        at the
        lowest possible price. The ExxonMobil and CITGO distribution agreement allows
        the Company to streamline its gasoline supply arrangements and take advantage
        of
        volume-driven pricing by consolidating purchases from these suppliers. The
        Company has entered into a retail supply agreement to replace the CITGO brand
        with Arizona Fuel Distributors, L.L.C. and as a result of purchasing gasoline,
        will pay a distributor’s markup price of $0.015 cents per gallon
        purchased.
 
 The
        ExxonMobil distribution agreement had a five-year term beginning September
        1,
        2005, and expiring October 31, 2010. The CITGO distribution agreement has
        an
        initial three-year term beginning February 1, 2001 and expiring January 31,
        2004, and automatically renewed for a three-year term through 2007. ExxonMobil’s
        and CITGO’s ability to terminate or refuse to renew the agreement is subject to
        the occurrence of certain events set forth in the Petroleum Marketing Practices
        Act, which includes bankruptcy, or breach of the agreement, or termination
        by
        ExxonMobil or CITGO of its petroleum marketing activities in the Company’s
        distribution area. CITGO has terminated its petroleum marketing activities
        in
        the Company’s distribution area effective March 31, 2007. ExxonMobil and CITGO
        may terminate or refuse to renew these agreements only if it terminates or
        refuses to renew the agreement in compliance with the Petroleum Marketing
        Practices Act.
  9
 
 The
        Company’s agreements with ExxonMobil, and CITGO through March 31, 2007, do not
        prohibit it from entering into similar arrangements with other petroleum
        companies. The terms of the distribution agreements require the Company to
        purchase certain monthly minimum quantities of gasoline during the term of
        the
        agreement, which includes gasoline purchased for sale at its travel centers.
        For
        fiscal year ending January 31, 2007, the amount of required CITGO gasoline
        purchases ranged from a low of 126,000 gallons to a high of 280,500 gallons
        per
        month. The amount of required ExxonMobil gasoline purchases is a minimum
        of
        three million gallons per year. For ExxonMobil, the maximum monthly volume
        for
        the current month is the greater of actual volume in the prior month or the
        actual volume in the current month of the prior year. The Company determines
        the
        amount of gasoline it will purchase under the agreements based on what it
        believes its needs will be for gasoline, including seasonal demands. These
        determinations are based on historical sales and internal forecasts. During
        the
        term of the prior of the ExxonMobil distribution agreement, purchases of
        ExxonMobil met the minimum quantities for contract years ended March 31,
        2004
        and March 31, 2005. The ExxonMobil agreement was renewed for a term beginning
        on
        September 1, 2005 and ending on August 31, 2010. During the term of the current
        ExxonMobil distribution agreement, purchases met the minimum quantities.
        The
        Company is on target to meet its required three million gallons for the contract
        year ending August 31, 2007. Since the effective date of the CITGO agreement,
        purchases did not meet the minimum quantities for the first three years,
        met the
        minimum quantities for contract year ended January 31, 2005, but have not
        met
        the minimum quantities for contract years ended January 31, 2006 and January
        31,
        2007. There are no penalties associated with not meeting the minimum quantities
        for ExxonMobil or CITGO.  Additionally,
        the minimum quantities can be increased or decreased, as applicable, to
        accommodate additional travel centers, or losses of travel centers.
 
 In
        addition to the requirement to purchase minimum amounts under the ExxonMobil
        and
        CITGO distribution agreements, the Company is also required to pay a processing
        fee of approximately 3% of the value of the sale for purchases of gasoline
        made
        by customers using a credit card.
 
 ***Gasoline
        Wholesaling***
 
 On
        February 1, 2006, the Company began wholesaling gasoline to three new
        independent wholesale locations. Two of the independent wholesalers will
        sell
        ExxonMobil petroleum products. The other independent wholesaler will sell
        CITGO
        petroleum products. All three contracts have a five-year term beginning February
        1, 2006. All of the contracts with the wholesalers can terminate subject
        to the
        occurrence of certain events including bankruptcy or breach of the agreement,
        or
        termination by ExxonMobil or CITGO of its peteroleum marketing activities
        in the
        Company’s distribution area or with a 30 day notification to the Company. The
        terms of the contracts require the three independent wholesalers to purchase
        a
        maximum gallon quantity of 105% of the preceding calendar year gallons
        purchased. There are no minimum gallon quantity requirements for any of the
        three contracts.
 
 At
        the
        beginning of the Company’s third quarter, the independent CITGO wholesale
        customer debranded; therefore the Company no longer wholesales to this location.
 
 The
        Company has an existing independent ExxonMobil wholesale location.
 
 Over
        the
        past five years, wholesaling of gasoline has accounted for, on average,
        approximately 11.6% of overall revenues. The Company anticipates expanding
        its
        current level of gasoline wholesaling and is marketing its wholesaling business.
        Below is a table that shows the revenues generated from gasoline wholesaling,
        total revenues for the periods reflected, and the percentage total of overall
        revenues attributable to gasoline wholesaling.
 
 10
 Gasoline
        wholesaling revenues as a percentage of Gross Revenues from continuintg
        operatons (unaudited):
 **Fiscal
                    Year Ended**
                  **January
                    31,**
                **Gross
                    Revenues from**
                  **Continuing**
                  **Operations**
                **Revenue
                    from**
                  **Gasoline**
                  **Wholesaling**
                **Percentage
                    of Gross**
                  **Revenues
                    attributable to**
                  **Gasoline
                    Wholesaling**2003
                $18,859,000
                $2,126,000
                11.27%2004
                $19,337,000
                $1,789,000
                9.25%2005
                $20,336,000
                $1,754,000
                8.63%2006
                $23,442,000
                $1,636,000
                6.98%2007
                $27,973,000
                $6,049,000
                21.6%
  The
        increase in the percentage of gross revenues attributable to gasoline
        wholesaling is attributable to the three new independent wholesale locations
        with one of the independent wholesale locations debranding at the beginning
        of
        the Company’s third quarter (see “Recent Developments” and “Gasoline
        Wholesaling” for further information).
 
 The
        cost
        of goods sold as a percentage of gross revenues for gasoline wholesaling
        is
        approximately 99.6%.
 
 **Competition**
 
 The
        Company faces competition at its travel centers from quick-service and
        full-service restaurants, convenience stores, gift shops and, to some extent,
        from truck stops located along interstate highways in Arizona and New Mexico.
        Large petroleum companies operate some of the travel centers that the Company
        competes with, while many others are small independently owned operations
        that
        do not offer brand name food service or gasoline. Giant Industries, Inc.,
        a
        refiner and marketer of petroleum products, operates two travel centers,
        one in
        Arizona and one in New Mexico, which are high volume diesel fueling and large
        truck repair facilities that also include small shopping malls, full-service
        restaurants, convenience stores, fast food restaurants and gift shops. The
        Company’s principal competition from truck stops includes Love’s Country Stores,
        Inc., Petro Corporation and Flying J. Many convenience stores are operated
        by
        large, national chains that are substantially larger, better capitalized
        and
        have greater name recognition and access to greater financial and other
        resources than the Company. Although the Company faces substantial competition,
        the Company believes that few of its competitors offer the same breadth of
        products and services dedicated to the traveling public that the Company
        offers.
 
 **Employees**
 
 As
        of
        January 31, 2007, the Company had approximately 134 full-time and 20 part-time
        employees; 42 were located in Arizona, 112 were located in New Mexico. None
        of
        the Company’s employees are covered by a collective bargaining agreement and the
        Company believes that relations with its employees are good.
 
 **Regulation**
 
 The
        Company’s operations are subject to regulation for dispensing gasoline,
        maintaining mobile homes, dispensing food, sales of fireworks, sales of cactus,
        operating outdoor advertising signs, waste disposal and air quality control.
        The
        Company also must maintain registration of company vehicles, general business
        licenses and corporate licenses.
 
 11
 The
        Company is subject to federal, state and local laws and regulations governing
        the use, storage, handling, and disposal of petroleum products. The  risk
        of
        accidental contamination to the environment or injury cannot be eliminated.
        In
        the event of such an accident, the Company could be held liable for any damages
        that result and any such liability could exceed available resources. The
        Company
        could be required to incur significant costs to comply with environmental
        laws
        and regulations that may be enacted in the future.
 
 Each
        food
        service operation is subject to licensing and regulation by a number of
        governmental authorities relating to health, safety, cleanliness and food
        handling. The Company’s food service operations are also subject to federal and
        state laws governing such matters as working conditions, overtime, tip credits
        and minimum wages. The Company believes that operations at its travel centers
        comply in all material respects with applicable licensing and regulatory
        requirements; however, future changes in existing regulations or the adoption
        of
        additional regulations could result in material increases in operating
        costs.
 
 Travel
        center operations are also subject to extensive laws and regulations governing
        the sale of tobacco, and in New Mexico travel centers, the sale of fireworks.
        Such regulations include certain mandatory licensing procedures and ongoing
        compliance measures, as well as special sales tax measures. These regulations
        are subject to change and future modifications may result in decreased revenues
        or profit margins at the Company’s travel centers as a result of such
        changes.
 
 Nearly
        all licenses and registrations are subject to renewal each year. The Company
        is
        not aware of any reason it would be unable to renew any of its licenses and
        registrations. The Company estimates that the total cost spent on an annual
        basis for all licenses and registrations is less than $15,000.
 
 The
        Company anticipates that in the next twelve months the regulating agencies
        will
        develop regulations for above ground storage of fuel and anticipate that
        because
        of its expenditures and compliance, ongoing costs for compliance should be
        approximately $3,000.
 
 **Trademarks**
 
 The
        Company operates its travel centers under a number of its own trademarks
        such as
        The Thing, Butterfield Station and Bowlin’s Running Indian, as well as certain
        trademarks owned by third parties and licensed to the Company, such as the
        Dairy
        Queen, Dairy Queen/Brazier, ExxonMobil and CITGO trademarks. The Company’s right
        to use the trademarks Dairy Queen, Dairy Queen/Brazier, ExxonMobil and CITGO
        are
        derived from the agreements entered into with these companies, and these
        rights
        expire when those agreements expire or are terminated. The Company’s CITGO
        distribution agreement ends March 31, 2007, as CITGO terminated its petroleum
        marketing activities in the Company’s distribution area. The Company has a
        Federal trademark for “BOWLIN” that is effective through 2008. All other rights
        to trade names that the Company uses in its operations are protected through
        common law or state rights granted through a registration process. The Company
        believes that its trademark rights will not materially limit competition
        with
        its travel centers. The Company also believes that, other than its Federal
        trademark for “BOWLIN”, none of the trademarks owned are material to overall
        business; however, the loss of one or more of our licensed trademarks could
        have
        an adverse effect.
 **Trademark
                    / Trade Name**
                **Where
                    Registered**
                **Expiration
                    of Registration**BOWLIN
                United
                    States Patent and
                  Trademark
                    Office
                October
                    27, 2008Bowlin’s
                    Running Indian
                New
                    Mexico
                March
                    30, 2014Bowlin
                    Travel Centers
                Arizona
                April
                    24, 2011
  12
 In
        May
        2005, the Company copyrighted various artworks with the US Copyright Office.
        The
        copyrights remain in effect for 95 years from the publication date or 120
        years
        from the date of creation whichever is shorter. The copyrights have varying
        dates of creation and publication.


**ITEM
              1A.**
            **RISK
                FACTORS**




The
        Company does not provide forecasts of potential future financial performance.
        While management is optimistic about long-term prospects, the following issues
        and uncertainties, among others, should be considered in evaluating our growth
        outlook.
  This
        Form
        10-K contains forward-looking statements that involve risks and uncertainties.
        You should not rely on these forward-looking statements. The Company uses
        words
        such as “anticipate,” “believe,” “plan,” “expect,” “future,” “intend” and
        similar expressions to identify such forward-looking statements. This Form
        10-K
        also contains forward-looking statements attributed to certain third parties
        relating to their estimates regarding the travel center industry, among other
        things. You should not place undue reliance on those forward-looking statements.
        Actual results could differ materially from those anticipated in the
        forward-looking statements for many reasons, including the risks faced described
        below and elsewhere in this Form 10-K.
 
 ***The
        Company’s shares of common stock are traded on the OTC Bulletin Board and will
        likely be subject to significant price volatility and an illiquid
        market*** ***.***
 
 The
        Company’s shares trade on the OTC Bulletin Board. In order to purchase and sell
        shares of the Company’s common stock on the OTC Bulletin Board, you must use one
        of the market makers then making a market in the stock. Because of the wide
        variance in the BID and ASK spreads, there is significant risk that an investor
        that sold shares on the OTC Bulletin Board would sell them for a price that
        was
        significantly lower than the price at which the shares could be purchased,
        and
        vice versa. The number of shares traded to date indicates that the market
        for
        the Company’s shares of common stock is illiquid which could make it difficult
        to purchase or sell shares.
 ***The
          Company might be subject to financial and other restrictive covenants upon
          operations if unable to secure additional financing.***
 There
        can
        be no assurance that any additional financing will be available in the future
        on
        terms acceptable to the Company. The Company anticipates that any financing
        secured could impose certain financial and other restrictive covenants upon
        operations.
  ***There
        is no assurance that the Company will be able to successfully expand
        business.***
 
 The
        Company intends to continue to explore the possibilities of acquiring or
        building additional travel centers. Although existing operations are based
        primarily in the Southwest, current expansion plans include consideration
        of
        acquisition opportunities in both the Southwest and other geographic regions
        of
        the United States. However, there can be no assurance that suitable acquisitions
        can be identified, and the Company will likely face competition from other
        companies for available acquisition opportunities. Any such acquisition would
        be
        subject to negotiation of definitive agreements, appropriate financing
        arrangements and performance of due diligence. There can be no assurance
        that
        the Company will be able to complete such acquisitions, obtain acceptable
        financing, or any required consent of our bank lenders, or that such
        acquisitions, if completed, can be integrated successfully into existing
        operations. The success of an expansion program will depend on a number of
        factors, including the availability of sufficient capital, the identification
        of
        appropriate expansion opportunities, the Company’s ability to attract and retain
        qualified employees and management, and the continuing profitability of existing
        operations. There can be no assurance that the Company will achieve its planned
        expansion or that any expansion will be profitable.
 
 13
  ***The
        Company’s use of petroleum products subjects it to various laws and regulations,
        and exposes it to substantial risks.***
  The
        Company is subject to federal, state and local laws and regulations governing
        the use, storage, handling, and disposal of petroleum products. The  risk
        of
        accidental contamination to the environment or injury cannot be eliminated.
        In
        the event of such an accident, the Company could be held liable for any damages
        that result and any such liability could exceed available resources. The
        Company
        could be required to incur significant costs to comply with environmental
        laws
        and regulations that may be enacted in the future.
 
 ***Because
        all of the Company’s travel centers are located in Arizona and New Mexico, a
        downturn in the economic conditions in the Southwestern United States could
        adversely affect business operations and financial
        conditions.***
 
 The
        Company’s travel centers are located only in Arizona and New Mexico. The Company
        relies on the business generated from travelers and patrons within these
        two
        states, and those traveling through these states. Risks from economic downturns
        are not diversified or spread out across several regions. Because of the
        geographic concentration of the Company’s travel centers, business may be
        adversely affected in the event of a downturn in general economic conditions
        in
        the Southwestern United States generally, or in Arizona or New Mexico.
  ***The
        Company’s distribution and franchise agreements may prevent the Company from
        pursuing alternate business opportunities, which could limit the Company’s sales
        and growth potential.***
 
 The
        Company is dependent on a number of third party relationships under which
        it
        offers brand name and other products at its travel centers. These brand name
        relationships include distributorship relationships with ExxonMobil and CITGO
        and existing franchise agreements with Dairy Queen/Brazier. The Company’s
        existing operations and plans for future growth anticipate the continued
        existence of such relationships.
 
 The
        ExxonMobil distribution agreement has a five-year term beginning September
        1,
        2005 and expiring October 31, 2010. The CITGO distribution agreement has
        an
        initial three-year term beginning February 2, 2001 and expiring January 31,
        2004, and automatically renews for a three-year term through 2007. ExxonMobil’s
        and CITGO’s ability to terminate or refuse to renew the agreement with the
        Company is subject to the occurrence of certain events set forth in the
        Petroleum Marketing Practices Act, which includes bankruptcy, or breach of
        the
        agreement by the Company, or termination by ExxonMobil or CITGO of its petroleum
        marketing activities in the Company’s distribution area. ExxonMobil and CITGO
        may terminate or refuse to renew these agreements only if it terminates or
        refuses to renew the agreement in compliance with the Petroleum Marketing
        Practices Act. The Company’s CITGO distribution agreement ends March 31, 2007,
        as CITGO terminated its petroleum marketing activities in the Company’s
        distribution area.
 
 14
 Under
        three of the Company’s Dairy Queen agreements, the term continues until the
        Company elects to terminate it with 60 days prior written notice, or if the
        Company or Dairy Queen elect to terminate the agreement because the other
        has
        breached the agreement and has not cured that breach within 14 days of notice
        of
        the breach. The other two Dairy Queen agreements are for specific terms.
        One of
        those Dairy Queen agreements, entered into February 1, 1984, is for a term
        of 25
        years and the other, entered into on November 18, 1986, is for a term of
        20
        years plus an additional 5 years per an extension agreement dated June 29,
        1987.
        The Company may not terminate either of these agreements unless it gives
        notice
        to Dairy Queen that they are in breach of the agreement and Dairy Queen has
        not
        cured that breach within thirty days of notice. Dairy Queen may terminate
        either
        of these agreements if they deliver notice to the Company that it is in breach
        of the agreement and does not cure that breach within 14 days of that
        notice.
  There
        can
        be no assurance that the agreements that govern these relationships will
        not be
        terminated (for greater detail regarding the terms of these agreements, see
        “Item I. Business Operations”). Several
        of these agreements contain provisions that prohibit the Company from offering
        additional products or services that are competitive to those of its suppliers. There can be
        no assurance that adherence to existing agreements will not prevent the
        Company from
        pursuing opportunities that management would otherwise deem advisable. These
        agreements may limit the Company’s ability to seek additional sales or growth
        opportunities. In
        a ddition,
        there are no material early termination provisions under any of the franchise
        or
        petroleum distribution agreements.
  The
        Company also relies upon several at-will relationships with various third
        parties for much of its souvenir and gift merchandise. There  can
        be no
        assurance that the Company will be able to maintain relationships with suppliers
        of suitable merchandise at appropriate prices and in sufficient quantities.
 
 ***If
        the Company is not able to successfully compete in its industry it could
        have an
        adverse impact on business operations or financial
        condition.***
 
 The
        Company’s travel centers face competition from:
 
 major
            and independent oil companies;
        independent
            service station operators;
        national
            and independent operators of restaurants, diners and other eating
            establishments; and
        national
            and independent operators of convenience stores and other retail
            outlets. Some
        of
        the Company’s competitors, including major oil companies and convenience store
        operators, are substantially larger, better capitalized, and have greater
        name
        recognition and access to greater resources than the Company does. There
        can be
        no assurance that the Company’s travel centers will be able to compete
        successfully in their respective markets in the future.
  ***The
        Company’s*** ***operating
        results may fluctuate, which makes results difficult to predict and could
        have
        an adverse effect on the Company’s results from period to
        period*** ***.***
  The
        Company’s travel center operations are subject to seasonal fluctuations, and
        revenues may be affected by many factors, including weather, holidays and
        the
        price of alternative travel modes.
 
 15
 The
        Company’s travel center operations are subject to seasonal fluctuations. The
        first quarter of the Company’s fiscal year is typically the weakest. The second
        quarter is normally the Company’s strongest due to the summer being the
        Company’s peak season. The third quarter is not as strong due to the end of
        summer. The fourth quarter is generally weak but is partially offset by Holiday
        sales. Therefore, throughout the Company’s fiscal year, revenues and
        earnings may experience substantial fluctuations from quarter to quarter.
        These
        fluctuations could result in periods of decreased cash flow that might cause
        the
        Company to use its lending sources, or to secure additional financing, in
        order
        to cover expenses during those periods. This could increase the interest
        expense
        of the Company’s operations and decrease net income and have a material adverse
        effect on business and results of operations.
 
 ***The
        Company is subject to numerous governmental regulations, including those
        related
        to food handling, fireworks sales, tobacco sales, and underground storage
        tanks.***
 
 Each
        of
        the Company’s food service operations is subject to licensing and regulation by
        a number of governmental authorities, including regulations relating to health,
        safety, cleanliness and food handling, as well as federal and state laws
        governing such matters as working conditions, overtime, tip credits and minimum
        wages. The Company’s travel center operations are also subject to extensive laws
        and regulations governing the sale of tobacco and fireworks in New Mexico
        travel
        centers. In addition, the Company has incurred ongoing costs to comply with
        federal, state and local environmental laws and regulations, primarily relating
        to underground storage tanks. These costs include assessment, compliance,
        and
        remediation costs, as well as certain ongoing capital expenditures relating
        to
        gasoline dispensing operations.
  Such
        regulations include certain mandatory licensing procedures and the ongoing
        compliance measures, as well as special sales tax measures. Any  failure
        to comply with applicable regulations, or the adoption of additional regulations
        or changes in existing regulations could impose additional compliance costs,
        require a cessation of certain activities or otherwise have a material adverse
        effect on business and results of operations.
  ***Nevada
        law, the Company’s charter documents and the*** ***Company’s current capitalization*** ****** ***may
        impede or discourage a takeover, which could affect the price of our stock.***
 
 In
        the
        Company’s Articles of Incorporation, pursuant to Nevada Revised Statues Section
        78.378, the Company elected not to be governed by the provisions of Nevada
        Revised Statutes Section 78.378 to 78.3793, inclusive. Pursuant to Nevada
        Revised Statutes Section 78.434, the Company also elected not to be governed
        by
        the provisions of Nevada Revised Statutes Sections 78.411 to 78.444, inclusive.
        These statutes are sometimes referred to as “interested stockholder” statutes
        and their purpose is to limit the way in which a stockholder may effect a
        business combination with the corporation without board or stockholder approval.
        Because the Company has elected not to be governed by these statutes, a person
        or entity could attempt a takeover, or attempt to acquire a controlling interest
        of, and effect a business combination with, Bowlin Travel Centers without
        the
        restrictions of these Nevada Revised Statutes provisions.
 
 However,
        the Company’s Board of Directors has the authority to issue up to ten million
        (10,000,000) shares of common stock, $.001 par value, and up to one million
        (1,000,000) shares of preferred stock, $.001 par value, in one or more series,
        and to determine the price, rights, preferences and privileges of the shares
        of
        each such series without any further vote or action by the stockholders.
        The
        rights of the holders of common stock will be subject to, and may be adversely
        affected by, the rights of the holders of any shares of preferred stock that
        may
        be issued in the future. The issuance of preferred stock could have the effect
        of making it more difficult for a third party to acquire a majority of the
        outstanding voting stock of the Company, thereby delaying, deferring or
        preventing a change of control of the Company.


**ITEM
              1B.**
            **UNRESOLVED
                STAFF COMMENTS**





Not
      applicable.





16


**ITEM
              2.**
            **PROPERTIES**




As
      of
      January 31, 2007, the Company operated twelve travel centers, nine of which
      are
      in New Mexico and three of which are in Arizona. The Company owns the real
      estate and improvements where seven of its travel centers are located, all
      of
      which are subject to mortgages. Five of the Company’s existing travel centers
      are located on real estate that the Company leases from various third parties.
      These leases have terms ranging from five to thirty-one years, assuming exercise
      by the Company of all renewal options available under certain
      leases.




The
      Company’s principal executive offices occupy approximately 20,000 square feet of
      space owned by the Company in Albuquerque, New Mexico. The Company owns its
      principal office space which is subject to a mortgage. The Company owns a
      central warehouse and distribution facility occupying approximately 44,000
      square feet in Las Cruces, New Mexico which is subject to a mortgage. The
      Company believes that its headquarters and warehouse facilities are adequate
      for
      its operations for the foreseeable future.




The
      following table lists the locations of the Company’s facilities as of the date
      of this report, the size of such facilities and whether they are leased or
      owned.


**Retail
                    Location****,
                    Continuing Operations**
                
                **Size
                    of Property**
                
                **Own/
                    Lease**Akela
                    Flats Trading Post
                
                6,100
                    sq. ft.
                
                Own20
                    miles east of Deming NM on I-10Bluewater
                    DQ Travel Center
                
                6,500
                    sq. ft.
                
                Own10
                    miles west of Grants NM on I-40Butterfield
                    Station DQ Travel Center
                
                10,400
                    sq. ft.
                
                Own20
                    miles west of Deming NM on I-10Continental
                    Divide Trading Post
                
                8,000
                    sq. ft.
                
                Lease20
                    miles east of Lordsburg NM on I-10Flying
                    C Ranch DQ Travel Center
                
                10,400
                    sq. ft.
                
                Own40
                    miles west of Santa Rosa NM on I-10Old
                    West Trading Post
                
                8,200
                    sq. ft.
                
                Lease15
                    miles west of Las Cruces NM on I-10Picacho
                    Peak DQ Travel Center
                
                6,300
                    sq. ft.
                
                Lease45
                    miles west of Tucson AZ on I-10Picacho
                    Peak Plaza
                
                10,800
                    sq. ft.
                
                Lease45
                    miles west of Tucson AZ on I-10The
                    Thing DQ Travel Center
                
                9,400
                    sq. ft.
                
                Lease17
                    miles east of Benson AZ on I-10




17
 
 **Retail
                      Location, Discontinued Operations**
                  
                  **Size
                      of Property**
                  
                  **Own/
                      Lease**Alamogordo
                      Running Indian Trading Post
                  
                  3,800
                      sq. ft.
                  
                  Own4
                      miles north of Alamogordo NM on US70Rio
                      Puerco Outpost
                  
                  5,000
                      sq. ft.
                  
                  Own17
                      miles west of Albuquerque NM on I-40Edgewood
                      Travel Center
                  
                  2,800
                      sq. ft.
                  
                  OwnI-40
                      at Edgewood NM Interchange


**ITEM
              3.**
            **LEGAL
                PROCEEDINGS**


The
        Company from time to time may be involved in litigation in the ordinary course
        of business, including disputes involving employment claims and construction
        matters. The Company is not currently a party to any lawsuit or proceeding
        which, in the opinion of management, is likely to have a material adverse
        effect
        on the Company’s business operations or financial condition.


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


The
        Company did not submit any matters to a vote of security holders in the fourth
        quarter of fiscal 2007.






**PART
      II**





**ITEM
              5.**
            **MARKET
                FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER
                PURCHASES OF EQUITY
                SECURITIES**




As
      of
      April 27, 2007, there were 4,583,348 shares of common stock of Bowlin Travel
      Centers, Inc. outstanding. There are no outstanding options or warrants to
      purchase, or securities convertible into shares of common stock of Bowlin Travel
      Centers, Inc. Shares of the common stock of the Company are traded on the OTC
      Bulletin Board under the symbol “BWTL”. On April 24, 2007, there were
      approximately 26 holders of record of the Company’s common stock. The following
      table sets forth the high and low sales prices for the Company’s common stock
      for each quarter during the past two fiscal years. These over-the-counter market
      quotations reflect inter-dealer prices, without retail mark-up, mark-down or
      commission, and may not necessarily represent actual transactions. The Company
      made no purchases of its equity securities in the fourth quarter of fiscal
      2007.


**Fiscal
                  Year Ended January 31, 2006**
              
              **High**
              
              **Low**Fiscal
                  Quarter Ended 4/30
              
              $1.93
              
              $1.85Fiscal
                  Quarter Ended 7/31
              
              $2.00
              
              $1.90Fiscal
                  Quarter Ended 10/31
              
              $2.00
              
              $1.50Fiscal
                  Quarter Ended 1/31
              
              $1.95
              
              $1.50
 18
 
 **Fiscal
                        Year Ended January 31, 2007**
                    ****
                    **High**
                    ****
                    **Low**Fiscal
                        Quarter Ended 4/30
                    
                    $1.85
                    
                    $1.51Fiscal
                        Quarter Ended 7/31
                    
                    $2.25
                    
                    $1.60Fiscal
                        Quarter Ended 10/31
                    
                    $2.00
                    
                    $1.59Fiscal
                        Quarter Ended 1/31
                    
                    $2.80
                    
                    $1.60


The
      Company is authorized to issue up to 10,000,000 shares of common stock, par
      value $.001per
      share, and up to 1,000,000 shares of preferred stock, par value $.001. Holders
      of shares ofcommon
      stock are entitled to one vote per share on all matters to be voted on by
      stockholders anddo
      not
      have cumulative voting rights. Subject to the rights of holders of outstanding
      shares ofpreferred
      stock, if any, the holders of common stock are entitled to receive such
      dividends, if any,as
      may be
      declared from time to time by the Board of Directors at its discretion from
      fundslegally
      available therefore, and upon liquidation, dissolution, or winding up are
      entitled toreceive
      all assets available for distribution to the stockholders. The common stock
      has
      nopreemptive
      or other subscription rights, and there are no conversion rights or redemption
      orsinking
      fund provisions with respect to such shares. All of the outstanding shares
      of
      commonstock
      are
      fully paid and nonassessable. Since becoming a publicly traded company, the
      Companyhas
      not
      paid dividends. Any declaration or payment of dividends by the Company would
      besubject
      to the discretion of the Board of Directors.




In
      the
      Company’s Articles of Incorporation, pursuant to Nevada Revised Statues Section
      78.378,the
      Company elected not to be governed by the provisions of Nevada Revised Statutes
      Section78.378
      to
      78.3793, inclusive. Pursuant to Nevada Revised Statutes Section 78.434, the
      Companyalso
      elected not to be governed by the provisions of Nevada Revised Statutes Sections
      78.411 to78.444,
      inclusive. These statutes are sometimes referred to as “interested stockholder”
statutesand
      their
      purpose is to limit the way in which a stockholder may effect a business
      combinationwith
      the
      corporation without board or stockholder approval. Because the Company has
      electednot
      to be
      governed by these statutes, a person or entity could attempt a takeover, or
      attempt toacquire
      a
      controlling interest of, and effect a business combination with, Bowlin Travel
      Centerswithout
      the restrictions of these Nevada Revised Statutes provisions. See, also, “Risk
      Factors -Nevada
      law, the Company’s charter documents and the Company’s current capitalization
      mayimpede
      or
      discourage a takeover, which could affect the price of our
      stock”.




**Stock
      Performance Graph**




The
      line
      graph below compares the cumulative total return of the Company’s common stock
      withthe
      cumulative total return of the Russell 2000 and a Company defined peer group
      for
      the periodfrom
      February 1, 2001 through January 31, 2006 (including the reinvestment of
      dividends, ifany).
      The
      following graph assumes a $100 investment on February 1, 2001, the date theCompany’s
      stock began trading on the OTC Bulletin Board. Price data for the Company’scommon
      stock is based on the closing bid price for the relevant measurement dates
      as
      reported bythe
      OTC
      bulletin board (which quotation represent prices between dealers and do not
      includeretail
      markup, markdown or commissions and may not reflect actual
      transitions).


19


The
      performance graph below shall not be deemed incorporated by reference into
      any
      filing under,
      and shall not otherwise be deemed filed under, either the Securities Act of
      1933
      or the Securities
      Exchange Act of 1934, except to the extent that the Company specifically
      incorporates this
      information by reference.


**02/01/01**
                ****
                **01/31/02**
                ****
                **01/31/03**
                ****
                **01/31/04**
                ****
                **1/31/05**
                ****
                **1/31/06**Bowlin
                    Travel Centers, Inc.
                
                Return%
                
                
                
                12.00
                
                4.29
                
                23.29
                
                5.56
                
                -15.79Cum
                    $
                
                $
                    100.00
                
                $
                    112.00
                
                $
                    116.80
                
                $
                    144.01
                
                $
                    152.02
                
                $128.01Russell
                    2000 Index
                
                Return%
                
                
                
                -3.52
                
                -21.87
                
                58.03
                
                8.67
                
                18.90Cum
                    $
                
                $
                    100.00
                
                $
                    96.48
                
                $
                    75.38
                
                $
                    119.12
                
                $
                    129.45
                
                $153.92Peer
                    Group Only
                
                Return%
                
                
                
                34.25
                
                4.41
                
                21.32
                
                14.37
                
                31.70Cum
                    $
                
                $
                    100.00
                
                $
                    134.25
                
                $
                    140.16
                
                $
                    170.05
                
                $
                    194.48
                
                $256.13


**ITEM
              6.**
            **SELECTED
                FINANCIAL DATA**




The
        selected financial data presented below are derived from the audited financial
        statements of the Company for the five years ended January 31, 2007. The
        data
        presented below should be read in conjunction with the audited financial
        statements, related notes and Management’s Discussion and Analysis of Financial
        Condition and Results of Operations included herein.
 
 20
 
  **SELECTED
                      FINANACIAL DATA****YEARS
                      ENDED JANUARY 31,****2007**
                  
                  **2006**
                  
                  **2005**
                  
                  **2004**
                  
                  **2003****STATEMENT
                      OF INCOME DATA:**Net
                      sales from continuing operations
                  
                  
                  27,973,253
                  
                  
                  23,442,062
                  
                  
                  20,336,205
                  
                  
                  17,873,359
                  
                  
                  17,115,255Net
                      sales from discontinued operations
                  
                  $
                  3,727,505
                  
                  $
                  4,416,108
                  
                  $
                  3,740,258
                  
                  $
                  3,722,000
                  
                  $
                  5,184,861Total
                      net sales
                  
                  $
                  31,700,758
                  
                  $
                  27,858,170
                  
                  $
                  24,076,463
                  
                  $
                  21,595,359
                  
                  $
                  22,300,116Net
                      income from continuing operations
                  
                  $
                  808,079
                  
                  $
                  839,516
                  
                  $
                  659,572
                  
                  $
                  679,289
                  
                  $
                  585,412Net
                      loss from discontinued operations
                  
                  
                  (203,891
                  )
                  
                  (189,163
                  )
                  
                  (220,645
                  )
                  
                  (185,395
                  )
                  
                  (78,154
                  )Total
                      net income
                  
                  $
                  604,188
                  
                  $
                  650,353
                  
                  $
                  438,927
                  
                  $
                  493,894
                  
                  $
                  507,258**EARNINGS
                      (LOSS) PER SHARE:**Continuing
                      operations
                  
                  $
                  0.17
                  
                  $
                  0.18
                  
                  $
                  0.14
                  
                  $
                  0.15
                  
                  $
                  0.13Discontinued
                      operations
                  
                  
                  (0.04
                  )
                  
                  (0.04
                  )
                  
                  (0.04
                  )
                  
                  (0.04
                  )
                  
                  (0.02
                  )Total
                      operations
                  
                  $
                  0.13
                  
                  $
                  0.14
                  
                  $
                  0.10
                  
                  $
                  0.11
                  
                  $
                  0.11**BALANCE
                      SHEET DATA (at end of period):**Assets
                      of continuing operations
                  
                  $
                  17,447,621
                  
                  $
                  17,143,814
                  
                  $
                  17,278,802
                  
                  $
                  14,599,078
                  
                  $
                  13,653,363Assets
                      of discontinued operations
                  
                  
                  2,558,747
                  
                  
                  2,664,128
                  
                  
                  2,806,342
                  
                  
                  2,857,028
                  
                  
                  2,730,025Total
                      assets
                  
                  $
                  20,006,368
                  
                  $
                  19,807,942
                  
                  $
                  20,085,144
                  
                  $
                  17,456,106
                  
                  $
                  16,383,388Long-term
                      debt, including current
                    maturities,
                      continuing operations
                  
                  $
                  4,378,504
                  
                  $
                  4,724,471
                  
                  $
                  5,200,706
                  
                  $
                  3,415,006
                  
                  $
                  3,216,487Long-term
                      debt, including current
                    maturities,
                      discontinued operations
                  
                  
                  548,654
                  
                  
                  589,738
                  
                  
                  643,660
                  
                  
                  729,613
                  
                  
                  830,153Total
                      long-term debt, including current maturities
                  
                  $
                  4,927,158
                  
                  $
                  5,314,209
                  
                  $
                  5,844,366
                  
                  $
                  4,144,619
                  
                  $
                  4,046,640
  On
          January 18, 2005, the Company opened a new state-of-the-art travel center
          in
          Picacho, Arizona. Strategically located on I-10 between metropolitan Phoenix
          and
          Tucson, the new facility has 10,000 square feet of retail space, a convenience
          department for gourmet coffee and snacks with a large screen plasma TV
          with
          satellite news plus a state-of-the-art super-pumper gasoline facility offering
          CITGO brand gasoline.
  21
 The
        Company’s new state-of-the art travel center in Picacho, Arizona operated its
        first fiscal year for the twelve months ended January 31, 2006. Therefore,
        the
        following tables present additional financial information of income and expense
        items derived from the Statements of Operations for twelve months ended January
        31, 2006 and 2005 for comparison of all stores, same stores and Picahco
        stores.
  Same
        store financial data excludes the Company’s newly opened location, Picacho Peak
        Plaza as well as the existing Picacho Peak but does not include restaurant
        sales, as the new facility does not have a restaurant operation. For the
        twelve
        months ended January 31, 2006, the sales of the new facility impacted the
        existing facility, with a negative impact on overall operating income. A
        discussion of the new and existing Picacho Peak facilities follow the same
        store
        discussion.
  **Twelve
                  Months Ended January 31, 2006****All
                  Stores****
              
              **Same
                  Store***
              
              **Picacho**
                **Stores****Selected
                  Statement of Operations
                  Data:****(in
                    thousands, except per share data)**Gross
                  sales
              
              $
              23,442,062
              
              $
              18,732,836
              
              $
              4,709,226Discounts
                  on sales
              
              
              (189,806
              )
              
              (171,191
              )
              
              (18,615
              )Net
                  sales
              
              
              23,252,256
              
              
              18,561,645
              
              
              4,690,611Cost
                  of goods sold
              
              
              14,394,561
              
              
              10,998,212
              
              
              3,396,349Gross
                  profit
              
              
              8,857,695
              
              
              7,563,433
              
              
              1,294,262General
                  and administrative expenses
              
              
              (6,923,694
              )
              
              (5,743,645
              )
              
              (1,180,049
              )Depreciation
                  and amortization
              
              
              (740,839
              )
              
              (524,063
              )
              
              (216,776
              )Operating
                  income (loss)
              
              
              1,193,162
              
              
              1,295,725
              
              
              (102,563
              )Non-operating
                  income (expense):Interest
                  income
              
              
              69,385
              
              
              69,385
              
              
              —Gain
                  on sale of property and equipment
              
              
              196,593
              
              
              196,593
              
              
              —Rental
                  income
              
              
              173,546
              
              
              162,546
              
              
              11,000Interest
                  expense
              
              
              (322,134
              )
              
              (153,423
              )
              
              (168,711
              )Total
                  non-operating income (expense)
              
              
              117,390
              
              
              275,101
              
              
              (157,711
              )Income
                  (loss) before income taxes
              
              $
              1,310,552
              
              $
              1,570,826
              
              $
              (260,274
              )____________*
                  Excludes both Picacho Peak stores for fiscal year
                  2006.




22
 
  **Twelve
                    Months Ended January 31, 2005****All
                    Stores****
                
                **Same
                    Store***
                
                **Picacho**
                  **Store****Selected
                    Statement of Operations Data:****(in
                    thousands, except per share data)**Gross
                    sales
                
                $
                20,336,205
                
                $
                17,343,731
                
                $
                2,992,474Discounts
                    on sales
                
                
                (185,464
                )
                
                (172,253
                )
                
                (13,211
                )Net
                    sales
                
                
                20,150,741
                
                
                17,171,478
                
                
                2,979,263Cost
                    of goods sold
                
                
                12,160,035
                
                
                9,990,611
                
                
                2,169,424Gross
                    profit
                
                
                7,990,706
                
                
                7,180,867
                
                
                809,839General
                    and administrative expenses
                
                
                (6,396,465
                )
                
                (5,717,583
                )
                
                (678,882
                )Depreciation
                    and amortization
                
                
                (567,802
                )
                
                (517,000
                )
                
                (50,802
                )Operating
                    income (loss)
                
                
                1,026,439
                
                
                946,284
                
                
                80,155Non-operating
                    income (expense):Interest
                    income
                
                
                45,075
                
                
                45,075
                
                
                —Gain
                    on sale of property and equipment
                
                
                2,997
                
                
                2,997
                
                
                —Rental
                    income
                
                
                176,225
                
                
                170,760
                
                
                5,465Miscellaneous
                
                
                370
                
                
                370
                
                
                —Interest
                    expense
                
                
                (132,611
                )
                
                (121,174
                )
                
                (11,437
                )Total
                    non-operating income (expense)
                
                
                92,056
                
                
                98,028
                
                
                (5,972
                )Income
                    (loss) before income taxes
                
                $
                1,118,495
                
                $
                1,044,312
                
                $
                74,183____________*
                    Excludes the Picacho Peak store for fiscal year 2005.**
                    Excludes discontinued operations for fiscal years 2006 and
                    2005.


**ITEM
              7.**
            **MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS**




**Overview**
 
 The
        following is a discussion of the financial condition as of January 31, 2007
        and
        2006 and results of operations of the Company as of and for the three fiscal
        years ended January 31, 2007, 2006 and 2005. This discussion should be read
        in
        conjunction with the Financial Statements of the Company and the related
        notes
        included elsewhere in this Form 10-K. References to specific years refer
        to the
        Company’s fiscal year ending January 31 of such year.
 23
 The
        forward-looking statements included in Management’s Discussion and Analysis of
        Financial Condition and Results of Operations reflect management’s best
        judgement based on factors currently known and 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.
 
 The
        Company’s gross retail sales include merchandise, retail gasoline sales,
        restaurant sales and wholesale gasoline sales. Each of the Company’s travel
        center locations retail a variety of unique Southwestern souvenirs and gifts.
        Eleven of the twelve retail operations retail gasoline. Five of the Company’s
        twelve locations have full-service restaurants that operate under the Dairy
        Queen/Brazier or Dairy Queen brand names. The merchandise, gasoline and
        restaurant retail sales are all a part of the Company’s ongoing retail business
        and have been aggregated.
 
 The
        Company wholesales gasoline to four independent third party locations. Three
        of
        the independent third party wholesale locations sell ExxonMobil gasoline
        and one
        independent third party location sells CITGO gasoline. At the beginning of
        the
        Company’s third quarter, the independent CITGO wholesale customer debranded;
        therefore the Company no longer wholesales to this location. The wholesale
        gasoline does not meet the operating segment definition criteria of paragraph
        10(b) of FAS 131, as the Company does not review wholesale gasoline operating
        results for decision making about resource allocation. Therefore, wholesale
        gasoline sales have been aggregated with the Company’s business
        activities.
 
 **Fiscal
        Year Ended January 31, 2007 (Fiscal 2007) Compared to Fiscal Year Ended January
        31, 2006 (Fiscal 2006)**
  Gross
        sales from continuing operations at the Company’s travel centers increased by
        19.3% to $27.973 million for the twelve months ended January 31, 2007, from
        $23.442 million for the twelve months ended January 31, 2006. Merchandise
        sales
        from continuing operations decreased 2.6% to $9.426 million for the twelve
        months ended January 31, 2007, from $9.680 million for the twelve months
        ended
        January 31, 2006. The decrease is due to a decrease in general merchandise
        sales, a decrease in fireworks sales as a result of bans in New Mexico due
        to
        summertime drought conditions, a decrease in cigarette sales due to a voluntary
        Company ban on cigarettes during summertime drought conditions, partially
        offset
        by an increase in t-shirt and convenience store sales. In addition, gas prices
        continue to impact travel. During the last quarter of the fiscal year 2007,
        severe snowstorms on Interstate 40 where four of the Company’s New Mexico
        locations are positioned impacted sales. Retail gasoline sales from continuing
        operations increased 3.8% to $10.101 million for the twelve months ended
        January
        31, 2007, from $9.731 million for the same period in 2006. The increase is
        due
        to market price increases as the average gallon of gasoline retailed for
        $2.80
        for the twelve months ended January 31, 2007, compared to $2.52 for the twelve
        months ended January 31, 2006, partially offset by a decrease in gallons
        sold of
        approximately 254,000 gallons. Restaurant sales from continuing operations
        increased 0.1% to $2.397 million for the twelve months ended January 31,
        2007,
        from $2.395 million for the twelve months ended January 31, 2006. The increase
        is primarily due to an increase in retail prices partially offset by decreases
        in sales at two of the Company’s Dairy Queen locations. Wholesale gasoline sales
        to independent retailers increased 269.7% to $6.049 million for the twelve
        months ended January 31, 2007, from $1.636 million for the twelve months
        ended
        January 31, 2006. The increase is primarily due to the addition of four
        independent wholesale locations for the twelve months ended January 31, 2007,
        with one independent wholesale location de-branding during the Company’s third
        quarter.
 24
 Cost
        of
        goods sold from continuing operations increased 31.4% to $18.910 million
        for the
        twelve months ended January 31, 2007, from $14.395 million for the twelve
        months
        ended January 31, 2006. Merchandise cost of goods from continuing operations
        decreased 6.2% to $3.196 million for the twelve months ended January 31,
        2007,
        from $3.407 million for the twelve months ended January 31, 2006. This decrease
        is related to the decrease in sales as well as realizing better markups as
        a
        result of volume purchasing. Retail gasoline cost of goods from continuing
        operations increased 4.2% to $9.018 million for the twelve months ended January
        31, 2007, from $8.651 million for the twelve months ended January 31, 2006.
        The
        increase corresponds to market price increases and is partially offset by
        a
        decrease in gallons sold. Restaurant cost of goods from continuing operations
        decreased 8.6% to $673,000 for the twelve months ended January 31, 2007,
        from
        $736,000 for the twelve months ended January 31, 2006. The decrease is primarily
        due to better inventory control. Wholesale gasoline cost of goods increased
        276.2% to $6.023 million for the twelve months ended January 31, 2007, from
        $1.601 million for the twelve months ended January 31, 2006. The increase
        is
        primarily due to the addition of four independent wholesale locations for
        the
        twelve months ended January 31, 2007, with one independent wholesale location
        de-branding during the Company’s third quarter. In addition, the increase in
        wholesale gasoline cost of goods exceeds the increase in sales due to one
        wholesale location that had better markups in the prior period that is not
        present in the current period. Cost of goods sold from continuing operations
        as
        a percentage of gross revenues increased to 67.6% for the twelve months ended
        January 31, 2007, as compared to 61.4% for the twelve months ended January
        31,
        2006.
 
 Gross
        profit from continuing operations decreased 0.2% to $8.841 million for the
        twelve months ended January 31, 2007, from $8.858 million for the twelve
        months
        ended January 31, 2006. The decrease is primarily attributable to a decrease
        in
        merchandise sales and increases in customer discounts.
 
 General
        and administrative expenses for continuing operations consist of salaries,
        bonuses and commissions for travel center personnel, property costs and repairs
        and maintenance. General and administrative expenses for continuing operations
        also include executive and administrative compensation and benefits, accounting,
        legal and investor relations fees. General and administrative expenses from
        continuing operations increased 2.7% to $7.110 million for the twelve months
        ended January 31, 2007, from $6.924 million for the twelve months ended January
        31, 2006. The increase is primarily due to sign repairs and maintenance,
        general
        repair and maintenance, repair and maintenance related to excessive summertime
        rain that caused excessive weeds and unusually heavy wintertime snow needing
        to
        be removed. The increase in general and administrative expenses is partially
        offset by decreases in personnel related costs, health insurance and freight
        as
        a result of volume purchasing.
 
 Depreciation
        and amortization expense from continuing operations increased 2.3% to $758,000
        for the twelve months ended January 31, 2007, from $741,000 for the twelve
        months ended January 31, 2006. The increase is associated with certain asset
        additions for the twelve months ended January 31, 2007 offset by some assets
        becoming fully depreciated.
 
 The
        above
        factors contributed to an overall decrease in income from continuing operations
        of 18.5% to $972,000 for the twelve months ended January 31, 2007, compared
        to
        operating income of $1.193 million for the twelve months ended January 31,
        2006.
 25
 Non-operating
        income (expense) related to continuing operations includes interest income,
        rental income and interest expense. Interest income increased 36.2% to $94,000
        for the twelve months ended January 31, 2007, from $69,000 for the twelve
        months
        ended January 31, 2006. The increase is primarily due to higher interest
        rates
        in the current period as well as interest earned on the additional notes
        receivable in the current period that were not present in the prior period.
        Gains from the sale of property and equipment decreased to $113,000 for the
        twelve months ended January 31, 2007 from $197,000 for the twelve months
        ended
        January 31, 2006. The gain of $113,000 was primarily due to payments received
        related to the notes receivable that include deferred gains, the sale of
        two
        vehicles and various equipment as well as the sale of fill dirt to a
        construction company working in southern New Mexico for $24,000 and the sale
        of
        an easement for $50,000. The gain of $197,000 for the twelve months ended
        January 31, 2006 is primarily due to a balloon payment received related to
        a
        note receivable that included a deferred gain, the sale of land and the early
        termination of one independent wholesale contract resulting in a penalty
        payment. Rental income was $176,000 for the twelve months ended January 31,
        2007
        compared to $174,000 for the twelve months ended January 31, 2006. Interest
        expense increased 4.3% to $336,000 for the twelve months ended January 31,
        2007,
        from $322,000 for the twelve months ended January 31, 2006. The increase
        is
        primarily due to interest rate increases which are partially offset by
        modifications in the Company’s agreements with its primary lender in September
        2006 to a variable rate of interest subject to adjustment every five years
        rather than a variable rate of interest subject to annual
        adjustment.
 
 Income
        from continuing operations before income taxes decreased 22.2% to $1.020
        million
        for the twelve months ended January 31, 2007, compared to income from continuing
        operations before income taxes of $1.311 million for the twelve months ended
        January 31, 2006. As a percentage of gross revenues, income from continuing
        operations before income taxes was 3.6% for the twelve months ended January
        31,
        2007, compared to 5.6% for the twelve months ended January 31,
        2006.
 
 Income
        tax expense from continuing operations decreased 12.3% to $413,000 for the
        twelve months ended January 31, 2007, compared to an income tax expense of
        $471,000 for the twelve months ended January 31, 2006. The decrease is primarily
        due to the decrease in operating income from continuing operations as well
        as a
        decrease in non-operating gains from the sale of property and equipment
        partially offset by the increase in interest expense. The effective tax rate
        for
        fiscal 2007 was 40.5%, compared to 35.9% for fiscal 2006. The effective tax
        rate
        increased by 4.6% from fiscal 2006 to fiscal 2007 as a result of permanent
        and timing differences related to federal and state income taxes as a result
        of
        deferred tax assets and liabilities recognized for future tax consequences
        attributable to differences between financial statement carrying amounts
        of
        existing current assets and liabilities.
 
 Discontinued
        operations is property held for sale and is classified as a component separate
        from continuing operations in the income statement as defined in FAS Statement
        No. 144 - Accounting for Impairment or Disposal of Long-lived Assets (as
        amended). Discontinued operations consist of three of the Company’s retail
        locations. Two of the three retail locations are for sale and one of the
        retail
        locations has a letter of intent to sell the property, fixtures and equipment.
        The loss from discontinued operations for the twelve months ended January
        31,
        2007 is $343,000 compared to a loss from discontinued operations for the
        twelve
        months ended January 31, 2006 of $295,000. The income tax benefit for
        discontinued operations for the twelve months ended January 31, 2007 is $139,000
        compared to an income tax benefit of $106,000 for the twelve months ended
        January 31, 2006.
 26
 At
        January 31, 2007, an unusual item was recorded as a result of reversing entries
        originally recorded at January 31, 2001. The Company recorded a tax payable
        to
        Lamar Advertising Company (“Lamar”) (as successor to Bowlin Outdoor Advertising
        and Travel Centers Incorporated (“Outdoor”) at January 31, 2001. Prior to that
        date, the Company and Outdoor were part of a consolidated group for tax
        purposes, and effective January 30, 2001, Outdoor spun off the stock of the
        Company in a tax free distribution to Outdoor’s shareholders. Immediately
        thereafter, Outdoor merged with and into Lamar.
 
 In
        anticipation of the spin-off, the Company and Outdoor entered into a Tax
        Sharing
        and Disaffiliation Agreement, pursuant to which Outdoor and the Company each
        agreed to indemnify the other against taxes attributable to their respective
        operations, both before and after the spin-off. The Tax Sharing and
        Disaffiliation Agreement specifically provided that, in determining taxes
        due
        attributable to the income of Outdoor and the Company for periods prior to
        the
        spin-off, any net losses of either Outdoor or the Company would offset the
        income of the other. Thus, if the net losses for Outdoor were in excess of
        the
        income of the Company for a tax year, the Company would not have any payment
        obligation to Outdoor under the Tax Sharing and Disaffiliation Agreement
        for
        such tax year.
 
 Outdoor’s
        net losses for the tax year 2000 (fiscal year ending January 31, 2001) exceeded
        the income of the Company for such year. Accordingly, the Company had no
        obligation to Outdoor for any payment under the Tax Sharing and Disaffiliation
        Agreement. Management believes the Company had no obligation to Outdoor for
        any
        such payment under the Tax Sharing and Disaffiliation Agreement. As a result,
        the liability of $201,200 has been removed from the Company’s books and recorded
        as an unusual item in the 2007 statement of income.
 
 The
        foregoing factors contributed to net income for the twelve months ended January
        31, 2007 of $604,000 compared to a net income of $650,000 for the twelve
        months
        ended January 31, 2006.
  **Fiscal
        Year Ended January 31, 2006 (Fiscal 2006) Compared to Fiscal Year Ended January
        31, 2005 (Fiscal 2005)**
 
 **Same
        Store**
 
 Same
        store financial data excludes the Company’s newly opened location, Picacho Peak
        Plaza as well as the existing Picacho Peak but does not include restaurant
        sales, as the new facility does not have a restaurant operation. For the
        twelve
        months ended January 31, 2006, the sales of the new facility impacted the
        existing facility, with a negative impact on overall operating income. A
        discussion of the new and existing Picacho Peak facilities follow the same
        store
        discussion.
 
 Gross
        sales from same store continuing operations at the Company’s travel centers
        increased by 8.0% to $18.733 million for the twelve months ended January
        31,
        2006, from $17.343 million for the twelve months ended January 31, 2005.
        Merchandise sales from same store continuing operations increased 6.0% to
        $7.923
        million for the twelve months ended January 31, 2006, from $7.472 million
        for
        the twelve months ended January 31, 2005. The increase is primarily due to
        increases in general merchandise sales, handmade and gold jewelry sales,
        fireworks sales and convenience store sales. Retail gasoline sales from same
        store continuing operations increased 19.1% to $6.779 million for the twelve
        months ended January 31, 2006, from $5.693 million for the same period in
        2005.
        The increase is due to market price increases as the average gallon of gasoline
        retailed for $2.51 for the twelve months ended January 31, 2006, compared
        to
        $1.96 for the twelve months ended January 31, 2005 and is partially offset
        by a
        decrease in gallons sold of approximately 429,000 gallons. Restaurant sales
        from
        same store continuing operations decreased 1.2% to $2.395 million for the
        twelve
        months ended January 31, 2006, from $2.424 million for the twelve months
        ended
        January 31, 2005. The decrease is due to personnel issues at one of the
        restaurant locations, cost increases not reflected in retail prices and
        increases in convenience store food sales at the new Picacho Peak Plaza
        facility. Wholesale gasoline sales to independent retailers decreased 6.7%
        to
        $1.636 million for the twelve months ended January 31, 2006, from $1.754
        million
        for the twelve months ended January 31, 2005. The decrease is primarily due
        to
        the termination of one of the Company’s independent wholesale locations in the
        third quarter of fiscal year 2006.
 27
 Total
        cost of goods sold from same store continuing operations increased 10.1%
        to
        $10.998 million for the twelve months ended January 31, 2006, from $9.990
        million for the twelve months ended January 31, 2005. Merchandise cost of
        goods
        from same store continuing operations increased 3.8% to $2.629 million for
        the
        twelve months ended January 31, 2006, from $2.533 million for the twelve
        months
        ended January 31, 2005. The increase is directly related to improved volume
        purchase pricing, maintaining mark-ups as well as the increase in merchandise
        sales. Retail gasoline cost of goods from same store continuing operations
        increased 20.1% to $6.032 million for the twelve months ended January 31,
        2006,
        from $5.024 million for the twelve months ended January 31, 2005. The increase
        corresponds to market price increases and is partially offset by a decrease
        in
        gallons sold. Restaurant cost of goods from same store continuing operations
        increased 1.0% to $736,000 for the twelve months ended January 31, 2006,
        from
        $729,000 for the twelve months ended January 31, 2005. The increase is primarily
        due to cost increases not reflected in retail prices. Wholesale gasoline
        cost of
        goods decreased 6.0% to $1.601 million for the twelve months ended January
        31,
        2006, from $1.704 million for the twelve months ended January 31, 2005. The
        increase is due to market price increases partially offset by decreases in
        volume. Cost of goods sold as a percentage of gross revenues increased to
        58.7%
        for the twelve months ended January 31, 2006, as compared to 57.6% for the
        twelve months ended January 31, 2005
 
 Gross
        profit from same store continuing operations increased 5.3% to $7.563 million
        for the twelve months ended January 31, 2006, from $7.181 million for the
        twelve
        months ended January 31, 2005. The increase is primarily attributable to
        increased sales and volume purchasing.
 
 General
        and administrative expenses for same store continuing operations consist
        of
        salaries, bonuses and commissions for travel center personnel, property costs
        and repairs and maintenance. General and administrative expenses also include
        executive and administrative compensations and benefits, accounting, legal
        and
        investor relations fees. General and administrative expenses increased 0.5%
        to
        $5.744 million for the twelve months ended January 31, 2006, from $5.718
        million
        for the twelve months ended January 31, 2005. The increase is primarily due
        to
        increases in general repairs, utilities and bank card fees.
 
 Depreciation
        and amortization expense for same store continuing operations increased 1.4%
        to
        $524,000 for the twelve months ended January 31, 2006, from $517,000 for
        the
        twelve months ended January 31, 2005. The increase is associated with certain
        asset additions for the twelve months ended January 31, 2006 offset by some
        assets becoming fully depreciated.
 
 The
        above
        factors contributed to an increase in operating income from same store
        continuing operations of 37.0% to $1.296 million for the twelve months ended
        January 31, 2006, compared to an operating income of $946,000 for the twelve
        months ended January 31, 2005.
 
 Non-operating
        income (expense) from same store continuing operations includes interest
        income,
        rental income and interest expense. Interest income increased 53.3% to $69,000
        for the twelve months ended January 31, 2006, from $45,000 for the twelve
        months
        ended January 31, 2005. The increase is primarily due higher interest rates.
        Gains from the sale of property and equipment increased to $197,000 for the
        twelve months ended January 31, 2006 from $3,000 for the twelve months ended
        January 31, 2005. The gain of $197,000 for the twelve months ended January
        31,
        2006 is primarily due to a balloon payment received related to a note receivable
        that included a deferred gain, the sale of land and the early termination
        of one
        independent wholesale contract resulting in a penalty payment. The gain of
        $3,000 for the twelve months ended January 31, 2005 is primarily due to an
        installment payment received related to a note receivable that included a
        deferred gain. There was no miscellaneous income for fiscal year 2006 compared
        to miscellaneous income of $400 in fiscal year 2005. Rental income was $163,000
        for the twelve months ended January 31, 2006 compared to $171,000 for the
        twelve
        months ended January 31, 2005. Interest expense increased 142.1% to $322,000
        for
        the twelve months ended January 31, 2006, from $133,000 for the twelve months
        ended January 31, 2005. The increase is primarily due to increases in long-term
        debt balances primarily related to the new travel center as well as higher
        interest rates.
 28
 Income
        before income taxes from same store continuing operations increased 50.5%
        to
        $1.571 million for the twelve months ended January 31, 2006, compared to
        income
        before income taxes of $1.044 million for the twelve months ended January
        31,
        2005. As a percentage of gross revenues, income before income taxes was 8.4%
        for
        the twelve months ended January 31, 2006, compared to 6.0% for the twelve
        months
        ended January 31, 2005.
 
 **New
        and existing Picacho Peak facilities**
 
 On
        January 18, 2005, the Company opened a new state-of-the-art travel center
        near
        the existing travel center in Picacho, Arizona. For the twelve months ended
        January 31, 2006, the sales of the new facility impacted the existing facility,
        with a negative impact on overall operating income. The following discussion
        does not include restaurant sales, as the new travel center does not have
        a
        restaurant operation.
  Gross
        sales at the new travel center were $2.943 million for the twelve months
        ended
        January 31, 2006. Merchandise sales were $1.087 million and gasoline sales
        were
        $1.856 million.
 
 Gross
        sales at the existing travel center decreased by 41.0% to $1.766 million
        for the
        twelve months ended January 31, 2006, from $2.993 million for the twelve
        months
        ended January 31, 2005. Merchandise sales decreased 34.8% to $670,000 for
        the
        twelve months ended January 31, 2006, from $1.028 million for the twelve
        months
        ended January 31, 2005. The decrease is due to the impact of the new facility.
        Gasoline sales decreased 44.2% to $1.096 million for the twelve months ended
        January 31, 2006, from $1.965 million for the same period in 2005. The decrease
        is due to the impact of the new facility.
 
 Cost
        of
        goods sold for the new travel center were $2.137 million for the twelve months
        ended January 31, 2006. Merchandise cost of goods were $494,000 and gasoline
        cost of goods were $1.643 million. Cost of goods as a percentage of gross
        revenues was 72.6% for the twelve months ended January 31, 2006.
 
 Cost
        of
        goods for the existing travel center decreased 42.0% to $1.259 million for
        the
        twelve months ended January 31, 2006, from $2.169 million for the twelve
        months
        ended January 31, 2005. Merchandise cost of goods decreased 34.6% to $284,000
        for the twelve months ended January 31, 2006, from $434,000 for the twelve
        months ended January 31, 2005. The decrease directly corresponds to the decrease
        in sales, which is due to the impact of the new facility. Gasoline cost of
        goods
        decreased 43.8% to $975,000 for the twelve months ended January 31, 2006,
        from
        $1.735 million for the same period in 2005. The decrease directly corresponds
        to
        the decrease in sales, which is due to the impact of the new facility. In
        the
        aggregate, cost of goods sold as a percentage of gross revenues decreased
        for
        the twelve months ended January 31, 2006 to 72.1% compared to 72.5% for the
        twelve months ended January 31, 2005.
  Gross
        profit at the new travel center was $798,000 for the twelve months ended
        January
        31, 2006.
 
 Gross
        profit for the existing travel center decreased 38.8% to $496,000 for the
        twelve
        months ended January 31, 2006, from $810,000 for the twelve months ended
        January
        31, 2005. The decrease is attributable to the impact of the new
        facility.
 29
 General
        and administrative expenses consist of salaries, bonuses and commissions
        for
        travel center personnel, property costs and repairs and maintenance. General
        and
        administrative expenses at the new store were $675,000. General and
        administrative expenses at the existing store decreased 25.6% to $505,000
        for
        the twelve months ended January 31, 2006, from $679,000 for the twelve months
        ended January 31, 2005 primarily as a result of a decrease in payroll related
        expenses. In the aggregate, general and administrative expenses increased
        73.8%
        to $1.180 million for the twelve months ended January 31, 2006, from $679,000
        for the twelve months ended January 31, 2005. The increase is primarily due
        to
        the total cost of operating the new facility.
 
 Depreciation
        and amortization expense at both the new and existing travel centers increased
        325.5% to $217,000 for the twelve months ended January 31, 2006, from $51,000
        for the twelve months ended January 31, 2005. The increase is primarily
        associated with depreciation expense of the new travel centers’ assets of
        $163,000.
 
 The
        above
        factors for both the new and existing travel centers contributed to an overall
        decrease in operating income of 228.8% to a loss of $103,000 for the twelve
        months ended January 31, 2006, compared to operating income of $80,000 for
        the
        twelve months ended January 31, 2005.
 
 Non-operating
        income (expense) for the new and existing Picacho Peak facilities includes
        rental income and interest expense. Rental income was $11,000 for the twelve
        months ended January 31, 2006 compared to $5,000 for the twelve months ended
        January 31, 2005. Interest expense increased 1436.4% to $169,000 for the
        twelve
        months ended January 31, 2006, from $11,000 for the twelve months ended January
        31, 2005. The increase is primarily due to increases in long-term debt balances
        primarily related to the new travel center as well as higher interest
        rates.
 
 Income
        before income taxes from the new and existing Picacho Peak facilities decreased
        451.4% to a loss of $260,000 for the twelve months ended January 31, 2006,
        compared to income before income taxes of $74,000 for the twelve months ended
        January 31, 2005. As a percentage of gross revenues, the loss before income
        taxes was 5.5% for the twelve months ended January 31, 2006, compared to
        2.5%
        for the twelve months ended January 31, 2005.
 
 **All
        Stores**
 
 Gross
        sales from continuing operations at the Company’s travel centers increased by
        15.3% to $23.442 million for the twelve months ended January 31, 2006, from
        $20.336 million for the twelve months ended January 31, 2005. Merchandise
        sales
        from continuing operations increased 13.9% to $9.680 million for the twelve
        months ended January 31, 2006, from $8.500 million for the twelve months
        ended
        January 31, 2005. The increase is primarily due to increases in general
        merchandise sales, handmade and gold jewelry sales, fireworks sales and
        convenience store sales. The increase is also attributable to volume purchasing,
        maintaining mark ups and the new Picacho Peak store. Retail gasoline sales
        from
        continuing operations increased 27.1% to $9.731 million for the twelve months
        ended January 31, 2006, from $7.657 million for the same period in 2005.
        The
        increase is due to market price increases as the average gallon of gasoline
        retailed for $2.51 for the twelve months ended January 31, 2006, compared
        to
        $1.96 for the twelve months ended January 31, 2005 and the new Picacho Peak
        store partially offset by a decrease in gallons sold of approximately 354,000.
        Restaurant sales from continuing operations decreased 1.2% to $2.395 million
        for
        the twelve months ended January 31, 2006, from $2.424 million for the twelve
        months ended January 31, 2005. The decrease is due to personnel issues at
        one of
        the restaurant locations, cost increases not reflected in retail prices and
        increases in convenience store food sales at the new Picacho Peak Plaza
        facility. Wholesale gasoline sales to independent retailers decreased 6.8%
        to
        $1.636 million for the twelve months ended January 31, 2006, from $1.755
        million
        for the twelve months ended January 31, 2005. The decrease is primarily due
        to
        the termination of one of the Company’s independent wholesale locations in the
        third quarter of fiscal year 2006.
 30
 Cost
        of
        goods sold from continuing operations increased 18.4% to $14.395 million
        for the
        twelve months ended January 31, 2006, from $12.160 million for the twelve
        months
        ended January 31, 2005. Merchandise cost of goods from continuing operations
        increased 14.8% to $3.407 million for the twelve months ended January 31,
        2006,
        from $2.967 million for the twelve months ended January 31, 2005. This increase
        directly relates to the increase in sales partially offset by volume purchasing
        as well as maintaining mark-ups. Retail gasoline cost of goods from continuing
        operations increased 28.0% to $8.651 million for the twelve months ended
        January
        31, 2006, from $6.760 million for the twelve months ended January 31, 2005.
        The
        increase corresponds to market price increases and is partially offset by
        a
        decrease in gallons sold. Restaurant cost of goods from continuing operations
        increased 1.0% to $736,000 for the twelve months ended January 31, 2006,
        from
        $729,000 for the twelve months ended January 31, 2005. The increase is primarily
        due to cost increases not reflected in retail prices. Wholesale gasoline
        cost of
        goods decreased 6.0% to $1.601 million for the twelve months ended January
        31,
        2006, from $1.704 million for the twelve months ended January 31, 2005. The
        decrease is primarily due to the termination of one of the Company’s independent
        wholesale locations in the third quarter of fiscal year 2006. Cost of goods
        sold
        as a percentage of gross revenues increased to 61.4% for the twelve months
        ended
        January 31, 2006, as compared to 59.8% for the twelve months ended January
        31,
        2005.
 
 Gross
        profit from continuing operations increased 10.8% to $8.858 million for the
        twelve months ended January 31, 2006, from $7.991 million for the twelve
        months
        ended January 31, 2005. The increase is primarily attributable to continued
        improvement of management of costs of goods due to increases in volume
        purchasing, increases in sales as well as the new facility.
 
 General
        and administrative expenses from continuing operations consist of salaries,
        bonuses and commissions for travel center personnel, property costs and repairs
        and maintenance. General and administrative expenses also include executive
        and
        administrative compensation and benefits, accounting, legal and investor
        relations fees. General and administrative expenses increased 8.3% to $6.924
        million for the twelve months ended January 31, 2006, from $6.396 million
        for
        the twelve months ended January 31, 2005. The increase is primarily due to
        the
        total cost of operating the new facility as well as bankcard fees, general
        repairs and maintenance and utilities.
 
 Depreciation
        and amortization expense from continuing operations increased 30.5% to $741,000
        for the twelve months ended January 31, 2006, from $568,000 for the twelve
        months ended January 31, 2005. The increase is primarily associated with
        the new
        travel centers’ property and equipment.
 
 The
        above
        factors contributed to an overall increase in operating income from continuing
        operations of 16.3% to $1.193 million for the twelve months ended January
        31,
        2006, compared to operating income of $1.026 million for the twelve months
        ended
        January 31, 2005.
 
 Non-operating
        income (expense) from continuing operations includes interest income, rental
        income and interest expense. Interest income increased 53.3% to $69,000 for
        the
        twelve months ended January 31, 2006, from $45,000 for the twelve months
        ended
        January 31, 2005. The increase is primarily due to higher interest rates.
        Gains
        from the sale of property and equipment increased to $197,000 for the twelve
        months ended January 31, 2006 from $3,000 for the twelve months ended January
        31, 2005. The gain of $197,000 for the twelve months ended January 31, 2006
        is
        primarily due to a balloon payment received related to a note receivable
        that
        included a deferred gain, the sale of land and the early termination of one
        independent wholesale contract resulting in a penalty payment. The gain of
        $3,000 for the twelve months ended January 31, 2005 is primarily due to an
        installment payment received related to a note receivable that included a
        deferred gain. There was no miscellaneous income for fiscal year 2006 compared
        to miscellaneous income of $400 in fiscal year 2005. Rental income was $174,000
        for the twelve months ended January 31, 2006 compared to $176,000 for the
        twelve
        months ended January 31, 2005. Interest expense increased 142.1% to $322,000
        for
        the twelve months ended January 31, 2006, from $133,000 for the twelve months
        ended January 31, 2005. The increase is primarily due to increases in long-term
        debt balances primarily related to the new travel center as well as higher
        interest rates.
 31
 Income
        before income taxes from continuing operations increased 17.3% to $1.311
        million
        for the twelve months ended January 31, 2006, compared to income before income
        taxes of $1.118 million for the twelve months ended January 31, 2005. As
        a
        percentage of gross revenues, income before income taxes was 5.6% for the
        twelve
        months ended January 31, 2006, compared to 5.5% for the twelve months ended
        January 31, 2005.
 
 Income
        tax expense for continuing operations decreased 2.6% to $471,000 for the
        twelve
        months ended January 31, 2006, compared to an income tax expense of $459,000
        for
        the twelve months ended January 31, 2005. The decrease is primarily due to
        the
        decrease in operating income. The effective tax rate for fiscal 2006 was
        35.9%,
        compared to 41.1% for fiscal 2005.
 
 Discontinued
        operations are property held for sale and is classified as a component separate
        from continuing operations in the income statement. as defined in FAS Statement
        No. 144 - Accounting for Impairment or Disposal of Long-lived Assets (as
        amended). Discontinued operations consist of three of the Company’s retail
        locations. Two of the retail locations are for sale and one of the retail
        locations has a letter of intent to purchase the property, fixtures and
        equipment. The loss from discontinued operations for the twelve months ended
        January 31, 2006 is $295,000 compared to a loss from discontinued operations
        for
        the twelve months ended January 31, 2005 of $374,000. The income tax benefit
        for
        discontinued operations for the twelve months ended January 31, 2006 is $106,000
        compared to an income tax benefit of $154,000 for the twelve months ended
        January 31, 2005.
 
 The
        foregoing factors contributed to net income for the twelve months ended January
        31, 2006 of $650,000 compared to a net income of $439,000 for the twelve
        months
        ended January 31, 2005.
 
 **Liquidity
        and Capital Resources**
  At
        January 31, 2007, the Company had working capital of $5.051 million compared
        to
        working capital of $4.407 million at January 31, 2006  (“working
        capital” is the excess of total current assets over total current
        liabilities). At
        January 31, 2007, the Company had a
        current ratio of 3.7: 1
        compared to a current ratio of 3.0:1 at
        January 31, 2006 (“current ratio” is the ratio of current assets to current
        liabilities). The increase in working capital is due
        to an
        increase in cash
        of $414,000, an increase in inventory of $49,000, an increase in the deferred
        income tax asset of $123,000, an increase in the current portion of notes
        receivable of $46,000, a decrease in the current portion of long-term debt
        of
        $307,000 and a decrease in deferred revenue of $53,000 partially offset by
        a
        decrease in marketable securities of $268,000, and an increase in accounts
        payable of $90,000. The
        increase in cash is due to higher cash balances at the end of January 31,
        2007
        as a result of sales increases that contributed to net income, and cash received
        related to the Company’s wholesale gasoline sales. The increase in inventory is
        due to increases at the Company’s central warehouse partially offset by lower
        gasoline inventory as a result of lower tank balances at January 31, 2007.
        The
        increase in income taxes is primarily due to decreases in federal and state
        income taxes as a result of deferred tax assets and liabilities recognized
        for
        future tax consequences attributable to differences between financial statement
        carrying amounts of existing current assets and liabilities and their respective
        tax bases. The increase in the current portion of notes receivable is due
        to the
        additional notes in the current period. The decrease in the current portion
        of
        long-term borrowing is normal scheduled payments that have decreased due
        to
        changes in terms agreements with the Company’s primary lender, Bank of the West
        for the next five years. The change in terms modified the Company’s interest
        rates from a variable rate of interest subject to annual adjustment to a
        variable rate of interest subject to adjustment every five years, currently
        set
        at 7.26%. The decrease in deferred revenue is a result of the end of a two-year
        brand incentive program for four locations branded ExxonMobil that began
        in
        fiscal year 2004 partially offset by outdoor advertising billboard revenue
        as
        the Company had several annual contracts that did not begin until August
        1,
        2006. The decrease
        in marketable securities is due to the renewal of certificates of deposit
        with
        three month rather than six or nine month maturities. The increase in accounts
        payable is primarily due to timing of electronic fund transfers related to
        the
        Company’s wholesale gasoline sales partially offset by the elimination of an
        uncertain tax provision that was recorded by the Company as a part of a spin-off
        transaction.
 32
 The
        Company’s travel center operations are subject to seasonal fluctuations. The
        first quarter of the Company’s fiscal year is typically the weakest. The second
        quarter is normally the Company’s strongest due to the summer being the
        Company’s peak season. The third quarter is not as strong due to the end of
        summer. The fourth quarter is generally weak but is partially offset by Holiday
        sales. Therefore, through out the Company’s fiscal year, revenues and earnings
        may experience substantial fluctuations from quarter to quarter. These
        fluctuations could result in periods of increased or decreased cash flow
        as well
        as increased or decreased net income.
 
 The
        net
        cash provided by operating activities was $1.208 million at January 31, 2007,
        compared to $1.188 million at January 31, 2006. During fiscal 2007, there
        was a
        decrease in the gain on sale of property and equipment of $83,000 and a decrease
        in the provision for deferred income taxes of $12,000 partially offset by
        a
        decrease in net income of $46,000, a decrease in loan fee amortization of
        $11,000 and a decrease in net operating assets and liabilities of
        $20,000.
 
 Net
        cash
        used in investing activities was $402,000 at January 31, 2007, compared to
        net
        cash provided by investing activities of $210,000 at January 31, 2006. The
        decrease was primarily due to a decrease in proceeds from the sale of asset
        of
        $326,000, an increase in purchases of property and equipment of $249,000,
        a
        decrease in the investment in real estate of $25,000, an increase in notes
        receivable of $53,000 and a decrease in payments received from notes receivable
        of $136,000, partially offset by an increase in marketable securities of
        $189,000.
 
 Net
        cash
        used in financing activities was $393,000 at January 31, 2007, compared to
        net
        cash used in financing activities of $747,000 at January 31, 2006. Payments
        on
        long-term debt were $387,000 and payments for debt issuance costs were $6,200
        at
        January 31, 2007 compared to payments on long-term debt of $740,000 and debt
        issuance costs of $6,000 at January 31, 2006. There were no proceeds from
        long-term borrowing at January 31, 2007 or January 31, 2006. There were no
        proceeds from short-term borrowing at January 31, 2007 or January 31,
        2006.
 
 As
        of
        January 31, 2007, the Company was indebted to various banks and individuals
        in
        an aggregate principal amount of approximately $4.927 million under various
        loans and promissory notes, compared to $5.314 million as of January 31,
        2006.
        The loans and promissory notes mature at dates from September 2008 to February
        2015 and accrue interest at fixed interest rates ranging from 6.0% to 7.26%
        per
        annum. The Company’s total monthly payments on outstanding long-term debt
        obligations are approximately $47,000.
 
 Approximately
        $4.870 million of the $4.927 million outstanding as of January 31, 2007 was
        borrowed under the Master Loan Agreement with Bank of the West. Under this
        master loan agreement, the Company grants a security interest in substantially
        all of its assets as security interests against its obligations under the
        agreement.
 
 In
        July
        2006, the Company renewed a $1,250,000 open line of credit with one of its
        existing lenders. The line of credit is secured by all assets. The Company
        paid
        the bank $6,250 to renew the open line of credit. The Company did not borrow
        any
        funds from this open line of credit during fiscal year 2007. As of January
        31,
        2007, $1,250,000 remains on the open line of credit which will mature July
        2007
        and requires variable interest at the bank’s prime rate. The rate was 8.25% at
        January 31, 2007.
 33
 Under
        the
        Master Loan Agreement, the Company must maintain minimum financial ratios,
        calculated quarterly from fiscal quarter reviewed statements with income
        and
        expense items annualized. There are other certain restrictions and limitations,
        including the restrictions on payment of dividends by the Company, limitation
        on
        the issuance of additional debt, the redemption of capital stock and the
        sale or
        transfer of assets. For fiscal year ending January 31, 2007, the Company
        was not
        aware of any non-compliance with the minimum financial ratios.
 
 The
        Company has forecasted approximately $1,000,000 for capital commitments for
        fiscal year 2007 consisting of renovation and upgrading of facilities. The
        Company expects to use current working capital and cash flows from operations
        to
        fund these commitments as well as debt sources for these
        commitments.
  The
        Company’s business and cash flow from operations rely on revenues generated from
        the sale of gasoline. During the fiscal year ended January 31, 2007, retail
        gasoline sales from continuing operations accounted for approximately 36.1%
        of
        the Company’s gross sales. To the extent that the availability of gasoline was
        restricted for any reasons, including due to storms, political issues, pipeline
        disruption, war, act or threats of terrorism in the United States or abroad,
        the
        Company’s gross sales would be affected, thereby reducing the amount of net cash
        that would be provided by operating activities. It is impossible to foresee
        or
        predict the exact economic effect on cash flows that any such restriction
        would
        have.
 
 The
        Company is unaware of any trends or demands, commitments or uncertainties
        that
        will result or are reasonably likely to result in liquidity increasing or
        decreasing in any material way over the next twelve months. The Company believes
        that its working capital and the cash flow generated from current operations
        will be sufficient to fund operations over the next twelve months without
        borrowing any additional funds under the credit facility. The Company is
        not
        currently a party to any agreements to acquire any additional travel centers.
        But if the Company were to additional travel centers it would likely have
        to
        obtain additional financing to do so, either under the current credit facility
        or through other means. The Company cannot predict with any certainty what
        the
        terms of such financing might be.
 
 The
        following table represents our future minimum commitments under contractual
        obligations as of January 31, 2007:
  **Total**
              
              **Current**
                **maturities**
              
              **2-3
                  years**
              
              **4-5
                  years**
              
              **More
                  than**
                **5
                  years**Long-Term
                  Debt Obligations,
                  continuing
                  operations
              
              $
              4,378,504
              
              $
              180,621
              
              $
              914,275
              
              $
              779,644
              
              $
              2,503,964Long-Term
                  Debt Obligations,discontinued
                  operations
              
              
              548,654
              
              
              28,006
              
              
              62,134
              
              
              71,304
              
              
              387,210Operating
                  Lease Obligations
              
              
              1,382,503
              
              
              187,455
              
              
              304,053
              
              
              173,553
              
              
              717,442Total
              
              $
              6,309,661
              
              $
              396,082
              
              $
              1,280,462
              
              $
              1,024,501
              
              $
              3,608,616
 34
 As
        of
        January 31, 2007, the Company was indebted to various banks and individuals
        in
        an aggregate principal amount of approximately $4.927 million under various
        loans and promissory notes, compared to $5.314 million as of January 31,
        2006.
        Under this master loan agreement, the Company grants a security interest
        in
        substantially all of its assets and property as security interests against
        its
        obligations under the agreement. The loans and promissory notes mature at
        dates
        from September 2008 to February 2015 and accrue interest at fixed interest
        rates
        ranging from 6.0% to 7.26%.
  Approximately
        $4.870 million of the $4.927 million outstanding as of January 31, 2007 was
        borrowed under the Master Loan Agreement with Bank of the West. Under this
        master loan agreement, the Company grants a security interest in substantially
        all of its assets as security interests against its obligations under the
        agreement.
  Under
        the
        Master Loan Agreement, the Company must maintain minimum financial ratios,
        calculated quarterly from fiscal quarter reviewed statements with income
        and
        expense items annualized. There
        are
        other certain restrictions and limitations, including the restrictions on
        payment of dividends by the Company, limitation on the issuance of additional
        debt, the redemption of capital stock and the sale or transfer of assets. For
        fiscal year ending January 31, 2007, the Company was not aware of any
        non-compliance with the minimum financial ratios.
  The
        Company leases land at several of its retail operating locations. The
        leasing agreements for the various locations include 5 to 35 year leases
        with
        remaining lives on those leases ranging from approximately 5 to 31 years
        at
        January 31, 2007. One of the contingent rentals has a fixed annual payment
        of
        $20,000 adjusted annually according to the consumer price index (CPI) plus
        2.5%
        of merchandise and Dairy Queen sales plus $0.0025 of gasoline gallons sold.
        One
        of the contingent rentals has a fixed annual payment of $10,806 adjusted
        annually by 3%. One of the contingent leases is based on 3% of merchandise
        sold
        plus 3% of gasoline gallons sold up to 360,000 gallons; the percentage changes
        to 1% of gasoline gallons sold above the 360,000 gallons. One of the contingent
        leases has a fixed annual payment of $21,684 adjusted every five years according
        to the consumer price index (CPI) plus 2.5% of merchandise sales and $0.0025
        of
        gasoline gallons sold. One of the contingent leases has a fixed monthly amount
        of $4,267 plus 10% of merchandise sales up to $250,000; the percentage changes
        to 5% in excess of $250,000 plus 5% of Dairy Queen sales up to $140,000;
        the
        percentage changes to 3% in excess of $140,000 plus $0.005 per gallon sold
        with
        a base of $100.00 per month. In most cases, the Company is responsible for
        certain repairs and maintenance, insurance, property taxes or property tax
        increases, and utilities.
 
 **Critical
        Accounting Policies and Estimates**
 
 The
        Company prepares its financial statements in conformity with accounting
        principles generally accepted in the United States of America. The preparation
        of these financial statements requires the Company to make estimates and
        assumptions that 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 those estimates.
 35
 Critical
        accounting policies are those that the Company believes are both most important
        to the portrayal of the Company’s financial condition and operating results and
        require managements’ most difficult, subjective or complex judgments, often as a
        result of the need to make estimates about the effect of matters that are
        inherently uncertain. Judgments and uncertainties affecting the application
        of
        those policies may result in materially different amounts being reported
        under
        different conditions or using different assumptions. The Company considers
        the
        following policies to be most critical in understanding the judgments that
        are
        involved in preparing its financial statements.
 
 *Revenue
        and Cost Recognition.* Revenues
        from the Company’s two primary product categories, gasoline and merchandise, are
        recognized at the point of sale. The associated costs of the merchandise
        are
        included in the cost of sales and are based on estimates throughout the year
        based on standard markups within defined categories, however, at the end
        of each
        fiscal year the Company records actual cost based on year end inventories.
        In
        addition, the Company records actual cost based on periodic physical
        inventories.
 
 *Inventory.* Inventories, which consist primarily of gasoline and merchandise for resale,
        are
        stated at the lower of cost or market value, with cost being determined using
        the first-in, first-out (FIFO) method. The Company receives vendor discounts
        on
        the basis of volume purchasing that vary by product and are recognized as
        reductions of cost of sales.
 
 *Long-lived
        Assets.* The
        Company reviews its long-lived assets and certain identifiable intangibles
        for
        impairment whenever events or changes in circumstances indicate that the
        carrying amount of an asset may not be recoverable. Recoverability of assets
        to
        be held and used is measured by a comparison of the carrying amount of an
        asset
        to undiscounted future net cash flows expected to be generated by the assets.
        If
        such assets are considered to be impaired, the impairment to be recognized
        is
        measured by the amount by which the carrying amount of the assets exceeds
        the
        fair value of the assets. Assets to be disposed of are reported at the lower
        of
        the carrying amount of fair value less costs to sell. Judgments and estimates
        made by the Company related to the expected useful lives of long-lived assets
        are affected by such changes in economic conditions and changes in operating
        performance. The accuracy of such provisions can vary materially from original
        estimates and the Company regularly monitors the adequacy of the provision
        until
        final disposition occurs.





**ITEM
              7A.**
            **QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK**


On
        September 29, 2006, the Company changed its terms agreements with its primary
        lender, Bank of the West. The change in terms agreements modified the Company’s
        $4.870 million debt with Bank of the West at January 31, 2007 from a variable
        rate of interest subject to annual adjustment to a variable rate of interest
        subject to adjustment every five years, currently set at 7.26% for the next
        five
        years therefore eliminating the Company’s risk to rising interest rates for the
        next five years. In accordance with EITF Issue No. 96-19, “Debtor’s Accounting
        for a Modification or Exchange of Debt Instruments,” the present value of the
        cash flows under the terms of the modified debt was less than 10% from the
        present value of the remaining cash flows under the terms of the original
        debt.
        Therefore, the modification of terms was not considered substantially different
        and there was no debt extinguishment.
 36
 The
        Company has not entered into any market risk sensitive instruments for trading
        purposes. Further, the Company does not currently have any derivative
        instruments outstanding and has no plans to use any form of derivative
        instruments to manage its business in the foreseeable future.
 
 Profit
        margins on gasoline sales can be adversely affected by factors beyond the
        control of the Company, including supply and demand in the retail gasoline
        market, price volatility and price competition from other gasoline marketers.
        The availability and price of gas could have an adverse impact on general
        highway traffic. The Company has not entered into any long-term fixed-price
        supply agreements for gasoline. Any substantial decrease in profit margins
        on
        gasoline sales or number of gallons sold could have a material adverse effect
        on
        the Company’s gross margins and operating income.


**ITEM
              8.**
            **FINANCIAL
                STATEMENTS AND SUPPLEMENTARY
                DATA**





Following
      on next page.




37


**BOWLIN
        TRAVEL CENTERS, INC.**
 
 Financial
        Statements
 
 January
        31, 2007 and 2006
 
 
 38
  **Report
          of Independent Registered**
 **Public
          Accounting Firm**
 April
          24,
          2007
 
 
 To
          the
          Board of directors and Stockholders
 of
          Bowlin
          Travel Centers, Inc.
 
 We
          have
          audited the accompanying balance sheet of Bowlin Travel Centers, Inc. as
          of
          January 31, 2007, and the related statements of income, stockholders’ equity and
          cash flows for the year ended January 31, 2007. These financial statements
          are
          the responsibility of the Company’s management. Our responsibility is to express
          an opinion on these financial statements based on our audit. The financial
          statements of Bowlin Travel Centers, Inc. as of January 31, 2006 were audited
          by
          Moss Adams, LLP, whose report dated April 28, 2006, expressed an unqualified
          opinion on those statements. The statements of income, changes in stockholders’
equity and cash flows of Bowlin Travel Centers, Inc. for the year ended
          January
          31, 2005 were audited by Neff + Ricci LLP who combined with Moss Adams,
          LLP as
          of January 1, 2006, and whose report dated April 6, 2005, expressed an
          unqualified opinion on those statements.
 
 We
          conducted our audit in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          financial
          statements are free of material misstatement. The Company is not required
          to
          have, nor were we engaged to perform, an audit of its internal control
          over
          financial reporting. Our audit included consideration of internal control
          over
          financial reporting as a basis for designing audit procedures that are
          appropriate in the circumstances, but not for the purpose of expressing
          an
          opinion on the effectiveness of the Company's internal control over financial
          reporting. Accordingly, we express no such opinion. An audit includes examining,
          on a test basis, evidence supporting the amounts and disclosures in the
          financial statements. An audit also includes assessing the accounting principles
          used and significant estimates made by management, as well as evaluating
          the
          overall financial statement presentation. We believe our audit provide
          a
          reasonable basis for our opinion.
 
 In
          our
          opinion, the financial statements referred to above present fairly, in
          all
          material respects, the financial position of Bowlin Travel Centers, Inc.
          as of
          January 31, 2007, and the results of its operations and its cash flows
          for the
          year ended January 31, 2007, in conformity with accounting principles generally
          accepted in the United States of America.
 
 /s/
*Accounting
                  & Consulting Group, LLP*Accounting & Consulting Group,
                  LLP Carlsbad,
          New Mexico
 April
          24,
          2007
  39
  **Report
        of Independent Registered**
 **Public
        Accounting Firm**
 
 
 
 The
        Board
        of Directors
 Bowlin
        Travel Centers, Inc.
 Albuquerque,
        New Mexico
 
 We
        have
        audited the accompanying balance sheet of Bowlin Travel Centers, Inc. as
        of
        January 31, 2006, and the related statements of income, stockholders’ equity and
        cash flows for the year ended January 31, 2006. These financial statements
        are
        the responsibility of the Company’s management. Our responsibility is to express
        an opinion on these financial statements based on our audit. The 2005 statements
        of Bowlin Travel Centers, Inc. were audited by Neff + Ricci LLP who combined
        with Moss Adams LLP as of January 1, 2006, and whose report dated April 6,
        2005,
        expressed an unqualified opinion on those statements.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. The Company is not required
        to
        have, nor were we engaged to perform, an audit of its internal control over
        financial reporting. Our audit included consideration of internal control
        over
        financial reporting as a basis for designing audit procedures that are
        appropriate in the circumstances, but not for the purpose of expressing an
        opinion on the effectiveness of the Company's internal control over financial
        reporting. Accordingly, we express no such opinion. An audit includes examining,
        on a test basis, evidence supporting the amounts and disclosures in the
        financial statements. An audit also includes assessing the accounting principles
        used and significant estimates made by management, as well as evaluating
        the
        overall financial statement presentation. We believe our audit provide a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Bowlin Travel Centers, Inc.
        at
        January 31, 2006, and the results of its operations and its cash flows for
        the year ended January 31, 2006, in conformity with accounting principles
        generally accepted in the United States of America.
 
 /s/
        Moss
        Adams LLP
 
 Albuquerque,
        New Mexico
 April
        28,
        2006
 
 40
  **Report
        of Independent Registered**
 **Public
        Accounting Firm**
 
 
 
 The
        Board
        of Directors
 Bowlin
        Travel Centers, Inc.
 Albuquerque,
        New Mexico
 
 We
        have
        audited the accompanying statements of income, stockholders’ equity and cash
        flows for the year ended January 31, 2005. These financial statements are
        the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these financial statements based on our audit.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        financial statements are free of material misstatement. The Company is not
        required to have, nor were we engaged to perform, an audit of its internal
        control over financial reporting. Our audit included consideration of internal
        control over financial reporting as a basis for designing audit procedures
        that
        are appropriate in the circumstances, but not for the purpose of expressing
        an
        opinion on the effectiveness of the Company's internal control over financial
        reporting. Accordingly, we express no such opinion. An audit includes examining,
        on a test basis, evidence supporting the amounts and disclosures in the
        financial statements. An audit also includes assessing the accounting principles
        used and significant estimates made by management, as well as evaluating
        the
        overall financial statement presentation. We believe our audit provides a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the results of its operations and its cash flows of Bowlin
        Travel Centers, Inc. for the year ended January 31, 2005, in conformity with
        accounting principles generally accepted in the United States of
        America.
 
 /s/
        Neff
        + Ricci LLP
 
 Albuquerque,
        New Mexico
 April
        6,
        2005
 
 41
  **BOWLIN
                    TRAVEL CENTERS, INC.****Balance
                    Sheets****January
                    31, 2007 and 2006****Assets**
                
                **2007**
                
                **2006**Current
                    assets:Cash
                    and cash equivalents
                
                $
                2,307,996
                
                
                1,894,414Marketable
                    securities
                
                
                453,000
                
                
                721,000Accounts
                    receivable
                
                
                43,103
                
                
                41,464Inventories
                
                
                3,654,883
                
                
                3,606,037Prepaid
                    income taxes
                
                
                192,794
                
                
                70,094Interest
                    receivable
                
                
                16,040
                
                
                12,988Prepaid
                    expenses
                
                
                209,080
                
                
                205,544Notes
                    receivable, current maturities
                
                
                55,285
                
                
                8,928Total
                    current assets
                
                
                6,932,181
                
                
                6,560,469Property
                    and equipment, net
                
                
                9,706,171
                
                
                9,876,901Assets
                    held for sale, net
                
                
                2,558,747
                
                
                2,664,128Intangible
                    assets, net of $361,905 and $327,335 accumulated
                    amortization
                
                
                161,702
                
                
                190,022Investment
                    in real estate
                
                
                415,404
                
                
                414,753Notes
                    receivable, less current portion
                
                
                232,163
                
                
                101,669Total
                    assets
                
                $
                20,006,368
                
                
                19,807,942**Liabilities
                    and Stockholders’ Equity**Current
                    liabilities:Current
                    maturities of long-term debt
                
                $
                180,621
                
                
                463,696Current
                    maturities of long-term debt of assets held for sale
                
                
                28,006
                
                
                51,727Accounts
                    payable
                
                
                950,578
                
                
                860,686Accrued
                    salaries and benefits
                
                
                406,773
                
                
                389,549Accrued
                    liabilities
                
                
                272,104
                
                
                292,303Deferred
                    revenue, current
                
                
                42,826
                
                
                95,554Total
                    current liabilities
                
                
                1,880,908
                
                
                2,153,515Deferred
                    income taxes
                
                
                759,300
                
                
                812,200Long-term
                    debt, less current maturities
                
                
                4,197,883
                
                
                4,260,775Long-term
                    debt, less current maturities of assets held for sale
                
                
                520,648
                
                
                538,011Total
                    liabilities
                
                
                7,358,739
                
                
                7,764,501Commitments
                    and contingencies
                
                
                —
                
                
                —Stockholders’
                    equity:Preferred
                    stock, $.001 par value; 1,000,000 shares authorized,none
                    issued or outstanding at January 31, 2007 and 2006
                
                
                —
                
                
                —Common
                    stock, $.001 par value; 10,000,000 shares authorized,4,583,348
                    issued and outstanding at January 31, 2007 and 2006
                
                
                4,583
                
                
                4,583Additional
                    paid-in capital
                
                
                9,775,192
                
                
                9,775,192Retained
                    earnings
                
                
                2,867,854
                
                
                2,263,666Total
                    stockholders’ equity
                
                
                12,647,629
                
                
                12,043,441Total
                    liabilities and stockholders’ equity
                
                $
                20,006,368
                
                
                19,807,942See
                    accompanying notes to financial statements.
 42
  **BOWLIN
                    TRAVEL CENTERS, INC.****Statements
                    of Income****Years
                    ended January 31,****2007**
                
                **2006**
                
                **2005**Gross
                    sales
                
                $
                27,973,253
                
                
                23,442,062
                
                
                20,336,205Less
                    discounts on sales
                
                
                (222,678
                )
                
                (189,806
                )
                
                (185,464
                )Net
                    sales
                
                
                27,750,575
                
                
                23,252,256
                
                
                20,150,741Cost
                    of goods sold
                
                
                18,909,999
                
                
                14,394,561
                
                
                12,160,035Gross
                    profit
                
                
                8,840,576
                
                
                8,857,695
                
                
                7,990,706General
                    and administrative expense
                
                
                (7,109,860
                )
                
                (6,923,694
                )
                
                (6,396,465
                )Depreciation
                    and amortization
                
                
                (758,452
                )
                
                (740,839
                )
                
                (567,802
                )Operating
                    income
                
                
                972,264
                
                
                1,193,162
                
                
                1,026,439Other
                    non-operating income (expense):Interest
                    income
                
                
                94,322
                
                
                69,385
                
                
                45,075Gain
                    on sale of property and equipment
                
                
                113,456
                
                
                196,593
                
                
                2,997Rental
                    income
                
                
                175,586
                
                
                173,546
                
                
                176,225Miscellaneous
                
                
                —
                
                
                —
                
                
                370Interest
                    expense
                
                
                (335,517
                )
                
                (322,134
                )
                
                (132,611
                )Total
                    other non-operating income
                
                
                47,847
                
                
                117,390
                
                
                92,056Income
                    from continuing operationsbefore
                    income tax expense
                
                
                1,020,111
                
                
                1,310,552
                
                
                1,118,495Income
                    tax expense
                
                
                (413,232
                )
                
                (471,036
                )
                
                (458,923
                )Income
                    from continuing operations
                
                
                606,879
                
                
                839,516
                
                
                659,572Unusual
                    item
                
                
                201,200
                
                
                —
                
                
                —Discontinued
                    operationsLoss
                    from operations of discontinuedcomponent
                    before income tax benefit
                
                
                (342,723
                )
                
                (295,299
                )
                
                (374,168
                )Income
                    tax benefit
                
                
                138,832
                
                
                106,136
                
                
                153,523(203,891
                )
                
                (189,163
                )
                
                (220,645
                )Net
                    income
                
                $
                604,188
                
                
                650,353
                
                
                438,927Earnings
                    (loss) per share:Basic
                    and diluted, continuing operations
                
                $
                0.17
                
                
                0.18
                
                
                0.14Basic
                    and diluted, discontinued operations
                
                $
                (0.04
                )
                
                (0.04
                )
                
                (0.04
                )Basic
                    and diluted, net income
                
                $
                0.13
                
                
                0.14
                
                
                0.10Weighted
                    average common sharesoutstanding
                
                
                4,583,348
                
                
                4,583,348
                
                
                4,583,348See
                    accompanying notes to financial
                    statements.
  43
 **BOWLIN
                  TRAVEL CENTERS, INC.****Statements
                  of Stockholders’ Equity****For
                  the Years Ended January 31, 2007, 2006 and 2005****Common**
              
              **Additional****Number**
              
              **stock,**
              
              **paid-in**
              
              **Retained****of
                  shares**
              
              **at
                  par**
              
              **capital**
              
              **earnings**
              
              **Total**Balance
                  at January 31, 2004
              
              
              4,583,348
              
              $
              4,583
              
              
              9,775,192
              
              
              1,174,386
              
              
              10,954,161Net
                  income
              
              
              —
              
              
              —
              
              
              —
              
              
              438,927
              
              
              438,927Balance
                  at January 31, 2005
              
              
              4,583,348
              
              
              4,583
              
              
              9,775,192
              
              
              1,613,313
              
              
              11,393,088Net
                  income
              
              
              —
              
              
              —
              
              
              —
              
              
              650,353
              
              
              650,353Balance
                  at January 31, 2006
              
              
              4,583,348
              
              
              4,583
              
              
              9,775,192
              
              
              2,263,666
              
              
              12,043,441Net
                  income
              
              
              —
              
              
              —
              
              
              —
              
              
              604,188
              
              
              604,188Balance
                  at January 31, 2007
              
              
              4,583,348
              
              $
              4,583
              
              
              9,775,192
              
              
              2,867,854
              
              
              12,647,629See
                  accompanying notes to financial statements.
 
 44
  **BOWLIN
                  TRAVEL CENTERS, INC.****Statement
                  of Cash Flows****Years
                  ended January 31,****2007**
              
              **2006**
              
              **2005**Cash
                  flows from operating activities:Net
                  income
              
              $
              604,188
              
              
              650,353
              
              
              438,927Adjustments
                  to reconcile net income tonet
                  cash provided by operating activities:Depreciation
                  and amortization
              
              
              887,597
              
              
              884,561
              
              
              703,050Amortization
                  of loan fee
              
              
              25,504
              
              
              36,963
              
              
              29,453Gain
                  on sale of property and equipment
              
              
              (113,456
              )
              
              (196,593
              )
              
              (2,997
              )Provision
                  for deferred income taxes
              
              
              (52,900
              )
              
              (65,000
              )
              
              83,900Changes
                  in operating assets and liabilitiesAccounts
                  receivable
              
              
              (1,639
              )
              
              10,542
              
              
              55,307Inventories
              
              
              (48,846
              )
              
              (99,206
              )
              
              (254,110
              )Prepaid
                  expenses and other
              
              
              (126,236
              )
              
              88,111
              
              
              148,788Accounts
                  payable and accrued liabilities
              
              
              86,917
              
              
              (21,317
              )
              
              44,136Deferred
                  revenue
              
              
              (52,728
              )
              
              (100,831
              )
              
              162,328Net
                  cash provided by operating activities
              
              
              1,208,401
              
              
              1,187,583
              
              
              1,408,782Cash
                  flows from investing activities:Proceeds
                  from sale of assets
              
              
              58,317
              
              
              384,309
              
              
              10,635Purchases
                  of property and equipment
              
              
              (709,632
              )
              
              (460,336
              )
              
              (3,540,832
              )Accrued
                  interest receivable
              
              
              (3,052
              )
              
              8,230
              
              
              924Investment
                  in real estate
              
              
              (651
              )
              
              24,283
              
              
              36,091Marketable
                  securities
              
              
              268,000
              
              
              79,000
              
              
              20,000Increase
                  in notes receivable
              
              
              (53,000
              )
              
              —
              
              
              —Payment
                  received from notes receivable
              
              
              38,500
              
              
              174,899
              
              
              42,908Net
                  cash used in (provided by) investing activities
              
              
              (401,518
              )
              
              210,385
              
              
              (3,430,274
              )Cash
                  flows from financing activities:Payments
                  on long-term debt
              
              
              (387,051
              )
              
              (740,407
              )
              
              (975,253
              )Payments
                  for debt issuance costs
              
              
              (6,250
              )
              
              (6,350
              )
              
              (54,775
              )Proceeds
                  from short-term borrowings
              
              
              —
              
              
              —
              
              
              200,000Proceeds
                  from borrowings
              
              
              —
              
              
              —
              
              
              2,675,000Net
                  cash used in (provided by) financing activities
              
              
              (393,301
              )
              
              (746,757
              )
              
              1,844,972Net
                  increase (decrease) in cash and cash equivalents
              
              
              413,582
              
              
              651,211
              
              
              (176,520
              )Cash
                  and cash equivalents at beginning of year
              
              
              1,894,414
              
              
              1,243,203
              
              
              1,419,723Cash
                  and cash equivalents at end of year
              
              $
              2,307,996
              
              
              1,894,414
              
              
              1,243,203
  **(Continued)**
 45
  **BOWLIN
                  TRAVEL CENTERS, INC.****Statement
                  of Cash Flows****(Continued)****Years
                  ended January 31,****2007**
              
              **2006**
              
              **2005**Supplemental
                  disclosure of cash flow information:Cash
                  paid for interest
              
              $
              421,950
              
              
              406,403
              
              
              203,366Cash
                  paid for income taxes
              
              $
              450,000
              
              
              370,000
              
              
              217,000Noncash
                  investing and financing activities:Like-kind
                  exchange of property
              
              $
              —
              
              
              —
              
              
              308,500Real
                  estate sold in exchange fornotes
                  receivable
              
              $
              162,351
              
              
              116,612
              
              
              —See
                  accompanying notes to financial statements.
 
 46
 
 **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial
          Statements
 January
          31, 2007
 
 
 **(1)**
              **Summary
                  of Significant Accounting
                  Policies**
  ***(a)***
              ******Description
                  of
                  Business******
  Bowlin
        Travel Centers, Inc. (BTC or the Company) is located in Albuquerque, New
        Mexico.
        The Company’s tradition of serving the public dates back to 1912, when the
        founder, Claude M. Bowlin, started trading goods and services with Native
        Americans in New Mexico. The Company’s principal business activities include the
        operation of twelve full-service travel centers and five restaurants
        strategically located along well-traveled interstate highways in Arizona
        and New
        Mexico where there are generally few gas stations, convenience stores or
        restaurants. The Company’s travel centers offer brand-name food and gasoline,
        and a unique variety of Southwestern merchandise to the traveling public
        in the
        Southwestern United States, primarily New Mexico. The
        Company operates five full-service restaurants  under
        the
        Dairy Queen/Brazier or Dairy Queen trade names .
        All of
        the Company’s twelve travel centers sell convenience store food such as chips,
        nuts, cookies and prepackaged sandwiches along with a variety of bottled
        and
        canned drinks .
 
 The
        Company has a wholly owned subsidiary BMI, Inc. which is a dormant shell
        corporation with no assets. BMI, Inc. will dissolve in fiscal year ending
        2008.
 ***(b)***
                  ******Cash
                      and Cash
                      Equivalents******
 The
        Company considers all liquid investments with an original maturity of one
        year
        now with a maturity of three months to be cash equivalents. The Company places
        its temporary cash investments with a local financial institution. All funds
        at
        year-end were covered by Federal Deposit Insurance Corporation
        insurance.
 ***(c)***
                  ***Marketable
                        Securities***
  Marketable
        securities consist of certificates of deposit with maturities greater than
        three
        months. All certificates of deposit have one year maturity dates and are
        $100,000 and insured by Federal Deposit Insurance Corporation insurance.
 ***(d)***
                    ***Inventories***
 Inventories
            consist primarily of merchandise and gasoline for resale and are stated
            at the
            lower of cost or market value, with cost being determined using the first-in,
            first-out (FIFO) method. The Company is subject to the uniform capitalization
            rules and capitalized $104,967 and $106,266 of direct and indirect costs
            incurred during pre-sale periods to inventory at January 31, 2007 and
            January
            31, 2006 respectively.
 ***(e)***
                        ***Property
                              and
                              Equipment***
 Property
        and equipment are carried at cost. Maintenance and repairs, including the
        replacement of minor items, are expensed as incurred, and major additions
        to
        property and equipment are capitalized. Depreciation is provided by the Company
        using primarily straight-line as well as accelerated methods.
 47
 
 **BOWLIN
                      TRAVEL CENTERS, INC.**
 Notes
                      to Financial
                      Statements
 January
                      31, 2007
 ***(f)***
                        ***Intangible
                              Assets***
  Debt
                issuance costs are deferred and amortized over the terms of the respective
                borrowings on a straight-line basis. Franchise fees are amortized
                on a
                straight-line basis over the shorter of the life of the related franchise
                agreements or the periods estimated to be benefited, ranging from
                fifteen to
                twenty-five years.
 ***(g)***
                        ***Sales
                              and Cost
                              Recognition***
  Sales
                of
                merchandise are recognized at the time of sale and the associated
                costs of the
                merchandise are included in cost of sales.
 ***(h)***
                        ***Income
                              Taxes***
  Income
                taxes are accounted for under the asset and liability method. Deferred
                tax
                assets and liabilities are recognized for the future tax consequences
                attributable to differences between the financial statement carrying
                amounts of
                existing assets and liabilities and their respective tax bases and
                operating
                loss and tax credit carryforwards. Deferred tax assets and liabilities
                are
                measured using enacted tax rates expected to apply to taxable income
                in the
                years in which those temporary differences are expected to be recovered
                or
                settled. The effect on deferred tax assets and liabilities of a change
                in tax
                rates is recognized in income in the period that includes the enactment
                date.
 ***(i)***
                        ***Excise
                              and Gross Receipts
                              Taxes***
  The
                Company collects and remits various federal and state excise taxes
                on petroleum
                products. Gasoline sales and cost of goods sold included excise taxes
                of
                approximately $1,683,673, $1,629,913 and $1,396,507 for fiscal years
                ended
                January 31, 2007, 2006 and 2005,
                respectively.
 
 The
        Company also collects and remits gross receipts taxes on sales. Gross receipts
        taxes of approximately $746,303, $760,139 and $695,323 were collected and
        remitted for fiscal years ended January 31, 2007, 2006 and 2005, respectively.
        Sales and cost of sales are presented net of gross receipts taxes.
 ***(j)***
                        ***Impairment
                              of Long-lived Assets and Long-lived Assets to Be Disposed
                              Of***
  The
                Company reviews its long-lived assets and certain identifiable intangibles
                for
                impairment whenever events or changes in circumstances indicate that
                the
                carrying amount of an asset may not be recoverable. Recoverability
                of assets to
                be held and used is measured by a comparison of the carrying amount
                of an asset
                to future net cash flows expected to be generated by the asset. If
                such assets
                are considered to be impaired, the impairment to be recognized is
                measured by
                the amount by which the carrying amount of the assets exceeds the
                fair value of
                the assets. Assets to be disposed of are reported at the lower of
                the carrying
                amount of fair value less costs to sell.
 48
 
 **BOWLIN
                  TRAVEL CENTERS, INC.**
 Notes
                  to Financial
                  Statements
 January
                  31, 2007
 ***(k)***
                    ***Financial
                          Instruments***
 The
        Company’s financial instruments are cash and cash equivalents, accounts
        receivable, notes receivable, accounts payable, accrued liabilities and
        long-term debt. The carrying amounts of cash and cash equivalents, accounts
        receivable, notes receivable, accounts payable, accrued liabilities and
        long-term debt approximate fair value.
 ***(l)***
                    ***Use
                          of
                          Estimates***
  Management
            of the Company has made a number of estimates and assumptions relating
            to the
            reporting of assets and liabilities and the disclosure of contingent
            assets and
            liabilities to prepare these financial statements in conformity with
            generally
            accepted accounting principles. The Company has identified the estimated
            useful
            lives of its fixed assets and the valuation for deferred taxes as its
            significant estimates. Actual results could differ from all estimates
            made.
 ***(m)***
                    ***Earnings
                          Per Share***
  Earnings
            per share of common stock, both basic and diluted, are computed by dividing
            net
            income by the weighted average common shares outstanding, assuming the
            shares
            distributed on January 30, 2001 were outstanding for all periods presented.
            Diluted earnings per share is calculated in the same manner as basic
            earnings
            per share as there were no potential dilutive securities outstanding
            for all
            periods presented. There was no issuance or acquisition of the Company’s
            outstanding common shares for fiscal years ended January 31, 2007, 2006
            and
            2005, respectively.
 ***(n)***
                    ***Reclassifications***
 Certain
        2006 and 2005 amounts have been reclassified to conform to 2007 presentation.
        Such reclassifications had no effect on net income. Property and equipment
        held
        for sale is reclassified as a component separate from continuing operations
        in
        the income statement in accordance with SFAS No. 144, paragraph 43. Management’s
        intent is to sell three of the Company’s retail locations in the ensuing fiscal
        year.
 
 Marketable
        securities consist of certificates of deposit with maturities greater than
        three
        months and the sum of these certificates of deposit were reclassified from
        cash
        to marketable securities.
 ***(o)***
                    ***Accounts
                          Receivable***
 Accounts
        receivable are carried at original invoice amount less an estimate made for
        doubtful receivables based on a review of all outstanding amounts on a monthly
        basis. Management determines the allowance for doubtful accounts by identifying
        troubled accounts and by using historical experience applied to an aging
        of
        accounts. Accounts receivable are written off when deemed uncollectible.
        Recoveries of accounts receivable previously written off are recorded when
        received.
 49
 
 **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
 Management
        believes that all accounts receivable are fully collectable. Therefore, no
        allowance for doubtful accounts is deemed to be required.
 ***(p)***
                    ***Notes
                          Receivable***
  Notes
        receivable are accounted for using the installment method of accounting as
        well
        as original note value. In accordance with FAS 66, “Accounting for Sales of Real
        Estate”, gains were deferred on loans not meeting the minimum initial 20%
        investment by the buyer expressed as a percentage of the sales
        value.
 
 Management
        believes that all notes accounts are fully collectable. Therefore, no allowance
        for doubtful accounts is deemed to be required.
 ***(q)***
                    ***Deferred
                          Revenue***
 The
        current portion of deferred revenue consists of advertising revenue received
        in
        advance for billboards that the Company rents. This revenue is recognized
        in
        income as services are provided over the term of the contract.
 ***(r)***
                    ***Advertising
                          Costs***
 Advertising
        costs are expensed as incurred. Advertising expense was approximately $38,977,
        $38,352 and $32,736 for fiscal years ended January 31, 2007, 2006 and 2005
        respectively.
 ***(s)***
                    ***Freight
                          Costs***
 General
        and administrative expense includes inbound freight costs incurred to acquire
        inventory for sale. Inbound freight costs are expensed as incurred. Freight
        expense was approximately $210,085, $230,301 and $225,106 for fiscal years
        ended
        January 31, 2007, 2006 and 2005, respectively.
 ***(t)***
                    ***Concentration
                          in
                          Suppliers***
 The
        Company is an authorized ExxonMobil and CITGO distributor. The Company sells
        ExxonMobil gasoline at seven travel centers, and CITGO gasoline at four travel
        centers. The ExxonMobil and CITGO distribution agreement allows the Company
        to
        streamline its gasoline supply arrangements and take advantage of volume-driven
        pricing by consolidating purchases from these suppliers. The Company’s
        agreements with ExxonMobil and CITGO do not prohibit it from entering into
        similar arrangements with other petroleum companies. The terms of the
        distribution agreements require the Company to purchase certain monthly minimum
        quantities of gasoline during the term of the agreement, which includes gasoline
        purchased for sale at its travel centers. The amount of required CITGO gasoline
        purchases ranges from a low of 126,000 gallons to a high of 280,500 gallons
        per
        month. The amount of required ExxonMobil gasoline purchases is a minimum
        of
        three million gallons per year. For ExxonMobil, the maximum monthly volume
        for
        the current month is the greater of actual volume in the prior month or the
        actual volume in the current month of the prior year. The Company determines
        the
        amount of gasoline it will purchase under the agreements based on what it
        believes its needs will be for gasoline, including seasonal demands. These
        determinations are based on historical sales and internal forecasts.
 50
 
 **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
 **(2)**
              **Notes
                  Receivable**
  Notes
        receivable as of January 31, 2007 and 2006 consist of the
        following:
 **2007**
                
                **2006**$100,000
                    8% note of which $85,124 was deferred, due$667
                    interest only monthly, $4,000 principal due the first year and
                    $24,000
                    annually for the remaining four years (a)
                
                $
                14,281
                
                
                14,876$80,000
                    8% note of which $21,886 was deferred, due $1,622 monthly (including
                    interest) through 2010 (a)
                
                
                45,681
                
                
                55,725$75,000
                    8% note of which $31,378 was deferred, due $4,587 quarterly (including
                    interest) through 2010 (a)
                
                
                20,196
                
                
                39,996$53,000
                    8.5% note, due $680 monthly (including interest) through 2011
                    (b)
                
                
                51,455
                
                
                —$108,500
                    9% note, of which $24,409 was deferred, due $6,797 quarterly
                    (including
                    interest) through 2011 (a)
                
                
                80,607
                
                
                —$67,500
                    9% note, of which $15,120 was deferred, due $3,398 quarterly
                    (including
                    interest) through 2001 (a)
                
                
                37,614
                
                
                —$67,500
                    9% note, of which $15,120 was deferred, due $3,398 quarterly
                    (including
                    interest) through 2001 (a)
                
                
                37,614
                
                
                —287,448
                
                
                110,597Less
                    current portion
                
                
                (55,285
                )
                
                (8,928
                )$
                232,163
                
                
                101,669___________(a)  
Collateralized
                  by the property sold. In the event of default, the property reverts
                  back
                  to the Company.(b)  
No
                  collateral.
  The
          Company uses the accrual method to recognize interest
          income.
  On
        September 1, 2005, the Company sold vacant land located in Alamogordo, New
        Mexico to Lost River Estates, LLC for $20,000 cash and a note receivable
        of
        $100,000. The note receivable has a stated rate of interest of 8%. Interest
        is
        payable monthly with principal payable in annual installments of $4,000 for
        the
        first year and $24,000 for the following four years. The property sold had
        a
        carrying value of $9,020 and the costs incurred to sell the land were $8,831.
        The gain on the sale of the land was $102,149 of which $17,025 was recognized
        initially and $85,124 was deferred. In accordance with FAS 66, “Accounting for
        Sales of Real Estate”, the gain was deferred because the minimum initial
        investment by the buyer was less than the required 20% initial investment
        expressed as a percentage of the sales value (FAS 66, “Accounting for Sales of
        Real Estate”, paragraph 54). Therefore the gain will be recognized into income
        using the installment method as payments are received. The current deferred
        gain
        of $14,281 is reflected as a reduction to the note receivable in the
        accompanying balance sheet.
 51
 
 **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
 On
        October 12, 2005, the Company sold vacant land located in Benson, Arizona
        to D.
        Fenn Enterprises, Inc. for $10,000 cash and a note receivable of $80,000.
        The
        note receivable has a stated rate of interest of 8% and is payable in monthly
        installments of $1,622 for five years. The property sold had a carrying value
        of
        $64,167 and the costs incurred to sell the land were $1,211. The gain on
        the
        sale of the land was $24,622 of which $2,736 was recognized initially and
        $21,886 was deferred. In accordance with FAS 66, “Accounting for Sales of Real
        Estate”, the gain was deferred because the minimum initial investment by the
        buyer was less than the required 20% initial investment expressed as a
        percentage of the sales value (FAS 66, “Accounting for Sales of Real Estate”,
        paragraph 54). Therefore the gain will be recognized into income using the
        installment method as payments are received. The current deferred gain of
        $45,681 is reflected as a reduction to the note receivable in the accompanying
        balance sheet.
 
 On
        September 20, 2005, the Company sold vacant land located in Luna County,
        New
        Mexico to Lazy L, LLC for $10,000 cash and a note receivable of $75,000.
        The
        note receivable has a stated rate of interest of 8% and is payable in quarterly
        installments of $4,587 for five years. The property sold had a carrying value
        of
        $47,675 and the costs incurred to sell the land were $1,764. The gain on
        the
        sale of the land was $35,561 of which $4,184 was recognized initially and
        $31,377 was deferred. In accordance with FAS 66, “Accounting for Sales of Real
        Estate”, the gain was deferred because the minimum initial investment by the
        buyer was less than the required 20% initial investment expressed as a
        percentage of the sales value (FAS 66, “Accounting for Sales of Real Estate”,
        paragraph 54). Therefore the gain will be recognized into income using the
        installment method as payments are received. The current deferred gain of
        $20,196 is reflected as a reduction to the note receivable in the accompanying
        balance sheet.
 
 On
        January 18, 2005, the Company opened a new state-of-the-art travel center
        in
        Picacho, Arizona. Strategically located on I-10 between metropolitan Phoenix
        and
        Tucson, The new facility has 10,000 square feet of retail space, a convenience
        department for gourmet coffee and snacks with a large screen plasma TV with
        satellite news plus a state-of-the-art super-pumper gasoline facility offering
        CITGO brand gasoline. The total cost of the project was approximately
        $2,480.000.
 
 On
        August
        15, 2006, the Company entered into promissory note with C. C. Bess in the
        amount
        of $53,000. The promissory note has a stated rate of interest of 8.5% and
        is
        payable in monthly installments of $680 for five years.
 
 On
        August
        15, 2006, the Company sold vacant land located south of Las Cruces, New Mexico
        to Larjon, LLC for $26,500 cash and a note receivable of $108,500. The note
        receivable has a stated rate of interest of 9.0% and is payable in quarterly
        installments of $6,797 for five years. The property sold had a carrying value
        of
        $104,000 and the costs incurred to sell the land were $630. The gain on the
        sale
        of the land was $30,370 of which $5,961 was recognized initially and $24,409
        was
        deferred. In accordance with FAS 66, “Accounting for Sales of Real Estate”, the
        gain was deferred because the minimum initial investment by the buyer was
        less
        than the required 20% initial investment expressed as a percentage of the
        sales
        value (FAS 66, “Accounting for Sales of Real Estate”, paragraph 54). Therefore
        the gain will be recognized into income using the installment method as payments
        are received. The current deferred gain of $80,607 is reflected as a reduction
        to the note receivable in the accompanying balance sheet.
  52
 
 **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
 
 On
          August
          15, 2006, the Company sold two lots of vacant land located south of Las
          Cruces,
          New Mexico to Teak, LLC for $26,500 cash and two notes receivable of $54,250
          each. Both notes receivable have a stated rate of interest of 9.0% and
          both are
          payable in quarterly installments of $3,398 for five years. The property
          sold
          had a carrying value of $96,530 and the costs incurred to sell the land
          were
          $844. The gain on the sale of the land was $37,626 of which $7,386 was
          recognized initially and $30,240 was deferred. In accordance with FAS 66,
          “Accounting for Sales of Real Estate”, the gain was deferred because the minimum
          initial investment by the buyer was less than the required 20% initial
          investment expressed as a percentage of the sales value (FAS 66, “Accounting for
          Sales of Real Estate”, paragraph 54). Therefore the gain will be recognized into
          income using the installment method as payments are received. The current
          deferred gain of $75,229 is reflected as a reduction to the note receivable
          in
          the accompanying balance sheet.
 
 Management
        believes that all notes receivable are fully collectable. Therefore, no
        allowance is deemed to be required.
 
 **(3)**
              **Property
                  and Equipment**
  Property
        and equipment consist of the following at January 31:
 
 **Estimated
                  life (years)**
              
              **2007**
              
              **2006**Land
              
              
              
              
              $
              939,211
              
              
              1,122,422Buildings
                  and improvements
              
              
              10
                  - 40
              
              
              8,872,142
              
              
              8,720,105Machinery
                  and equipment
              
              
              3
                  - 10
              
              
              6,886,677
              
              
              6,695,912Autos,
                  trucks and mobile homes
              
              
              3
                  - 10
              
              
              1,714,567
              
              
              1,660,692Billboards
              
              
              15
                  - 20
              
              
              1,715,073
              
              
              1,446,962Construction
                  in progress
              
              
              
              
              
              58,428
              
              
              25,71020,186,098
              
              
              19,671,803Less
                  accumulated depreciation
              
              
              
              
              
              (10,479,927
              )
              
              (9,794,902
              )Property
                  and equipment, net
              
              
              
              
              $
              9,706,171
              
              
              9,876,901Assets
                  held for sale
              
              
              
              
              
              4,205,410
              
              
              4,183,429Less
                  accumulated depreciation
              
              
              
              
              
              (1,646,663
              )
              
              (1,519,301
              )Assets
                  held for sale, net
              
              
              
              
              $
              2,558,747
              
              
              2,664,128Depreciation
                  expense:
              
              
              
              
              $
              751,169
              
              
              736,550Continuing
                  operations
              
              
              
              
              
              127,362
              
              
              143,594Discontinued
                operations
              
              
              
              
              $
              878,531
              
              
              880,144
  53
 
 **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
 Depreciation
        expense was $878,531 and $880,144 for fiscal years ending January 31, 2007
        and
        2006, respectively, and was charged to operations.
 
 Gains
        and
        losses on sale of property, equipment, early termination of wholesale gasoline
        location and investment in real estate at January 31:
  **2007**
              
              **2006**Land
              
              $
              36,962
              
              
              233,785Buildings
                  and improvements
              
              
              —
              
              
              (78,146
              )Machinery
                  and equipment
              
              
              2,638
              
              
              30,723Autos,
                  trucks and mobile homes
              
              
              (25
              )
              
              —Investment
                  in real estate
              
              
              —
              
              
              10,231Fill
                  dirt
              
              
              23,881
              
              
              —Sign
                  easement
              
              
              50,000
              
              
              —$
              113,456
              
              
              196,593
 
 Construction
        in progress consists of various supply inventories the Company has on hand
        to
        repair and maintain its billboards as well as for the occasional building
        of
        billboards.
 
 On
        September 1, 2005, the Company sold vacant land located in Alamogordo, New
        Mexico to Lost River Estates, LLC for $20,000 cash and a note receivable
        of
        $100,000. The note receivable has a stated rate of interest of 8%. Interest
        is
        payable monthly with principal payable in annual installments of $4,000 for
        the
        first year and $24,000 for the following four years. The property sold had
        a
        carrying value of $9,020 and the costs incurred to sell the land were $8,831.
        The gain on the sale of the land was $102,149 of which $17,025 was recognized
        initially and $85,124 was deferred. In accordance with FAS 66, “Accounting for
        Sales of Real Estate”, the gain was deferred because the minimum initial
        investment by the buyer was less than the required 20% initial investment
        expressed as a percentage of the sales value (FAS 66, “Accounting for Sales of
        Real Estate”, paragraph 54). Therefore the gain will be recognized into income
        using the installment method as payments are received. The deferred gain
        is
        reflected as a reduction to the note receivable in the accompanying balance
        sheet.
 
 54
 On
        October 12, 2005, the Company sold vacant land located in Benson, Arizona
        to D.
        Fenn Enterprises, Inc. for $10,000 cash and a note receivable of $80,000.
        The
        note receivable has a stated rate of interest of 8% and is payable in monthly
        installments of $1,622 for five years. The property sold had a carrying value
        of
        $64,167 and the costs incurred to sell the land were $1,211. The gain on
        the
        sale of the land was $24,622 of which $2,736 was recognized initially and
        $21,886 was deferred. In accordance with FAS 66, “Accounting for Sales of Real
        Estate”, the gain was deferred because the minimum initial investment by the
        buyer was less than the required 20% initial investment expressed as a
        percentage of the sales value (FAS 66, “Accounting for Sales of Real Estate”,
        paragraph 54). Therefore the gain will be recognized into income using the
        installment method as payments are received. The deferred gain is reflected
        as a
        reduction to the note receivable in the accompanying balance sheet.
  On
        September 20, 2005, the Company sold vacant land located in Luna County,
        New
        Mexico to Lazy L, LLC for $10,000 cash and a note receivable of $75,000.
        The
        note receivable has a stated rate of interest of 8% and is payable in quarterly
        installments of $4,587 for five years. The property sold had a carrying value
        of
        $47,675 and the costs incurred to sell the land were $1,764. The gain on
        the
        sale of the land was $35,561 of which $4,184 was recognized initially and
        $31,377 was deferred. In accordance with FAS 66, “Accounting for Sales of Real
        Estate”, the gain was deferred because the minimum initial investment by the
        buyer was less than the required 20% initial investment expressed as a
        percentage of the sales value (FAS 66, “Accounting for Sales of Real Estate”,
        paragraph 54). Therefore the gain will be recognized into income using the
        installment method as payments are received. The deferred gain is reflected
        as a
        reduction to the note receivable in the accompanying balance sheet.
 
 In
        October 2005, one wholesale gasoline location elected early termination of
        their
        wholesale agreement. The agreement was terminated within the original ten
        year
        term which resulted in a termination penalty of $100,000 as well as the gross
        margin the Company would have received from gasoline sales had the agreement
        continued for the remainder of the term. The $100,000 was offset by the disposal
        of equipment of approximately $47,194 resulting in an overall non-operating
        gain
        of approximately $52,806.
 
 On
        August
        15, 2006, the Company sold vacant land located south of Las Cruces, New Mexico
        to Larjon, LLC for $26,500 cash and a note receivable of $108,500. The note
        receivable has a stated rate of interest of 9.0% and is payable in quarterly
        installments of $6,797 for five years. The property sold had a carrying value
        of
        $104,000 and the costs incurred to sell the land were $630. The gain on the
        sale
        of the land was $30,370 of which $5,961 was recognized initially and $24,409
        was
        deferred. In accordance with FAS 66, “Accounting for Sales of Real Estate”, the
        gain was deferred because the minimum initial investment by the buyer was
        less
        than the required 20% initial investment expressed as a percentage of the
        sales
        value (FAS 66, “Accounting for Sales of Real Estate”, paragraph 54). Therefore
        the gain will be recognized into income using the installment method as payments
        are received. The deferred gain is reflected as a reduction to the note
        receivable in the accompanying balance sheet.
 
 On
        August
        15, 2006, the Company sold two lots of vacant land located south of Las Cruces,
        New Mexico to Teak, LLC for $26,500 cash and two notes receivable of $54,250
        each. Both notes receivable have a stated rate of interest of 9.0% and both
        are
        payable in quarterly installments of $3,398 for five years. The property
        sold
        had a carrying value of $96,530 and the costs incurred to sell the land were
        $844. The gain on the sale of the land was $37,626 of which $7,386 was
        recognized initially and $30,240 was deferred. In accordance with FAS 66,
        “Accounting for Sales of Real Estate”, the gain was deferred because the minimum
        initial investment by the buyer was less than the required 20% initial
        investment expressed as a percentage of the sales value (FAS 66, “Accounting for
        Sales of Real Estate”, paragraph 54). Therefore the gain will be recognized into
        income using the installment method as payments are received. The deferred
        gain
        is reflected as a reduction to the note receivable in the accompanying balance
        sheet.
 55
 On
          November 27, 2006, the Company entered into a purchase agreement with Maxwell
          & Associates Real Estate Holdings, LLC to sell property, fixtures and
          equipment located in Edgewood, New Mexico. The contract sales price is
          $1,300,000 including a $25,000 earnest deposit. Closing was scheduled on
          or
          before January 30, 2007. Closing was extended until February 20, 2007.
          The
          closing date expired and the $25,000 earnest deposit was advanced to the
          Company. The property, fixtures and equipment remain for sale and therefore
          have
          been identified as a component as defended in FAS Statement No. 144 - Accounting
          for Impairment or Disposal of Long-Lived Assets (as amended). The carrying
          value
          of the property, fixtures and equipment of approximately $499,000 and $521,000
          has been reclassified as assets held for sale in the January 31, 2007 and
          January 31, 2006 balance sheets, respectively. The results of operations
          of
          ($119,312), ($89,596) and ($80,882) for the twelve months ended January
          31,
          2007, 2006 and 2005, respectively, have been reclassified to loss from
          discontinued operations of a component, net of the related income tax
          benefit.
 
 On
        November 27, 2006, the Company entered into a letter of intent with the Pueblo
        of Laguna to sell property, fixtures and equipment located 17 miles west
        of
        Albuquerque, New Mexico at the Rio Puerco exit. The letter of intent sales
        price
        is $2,500,000 including a $100,000 earnest deposit. Closing was scheduled
        on or
        before January 30, 2007. Closing has been extended to April 30, 2007. The
        Company expects a gain on the sale of approximately $900,000. The carrying
        value
        of the property, fixtures and equipment of approximately $1,393,000 and the
        related debt, $549,000 and $1,466,000 and the related debt, $602,000 has
        been
        reclassified as assets held for sale in the January 31, 2007 and January
        31,
        2006 balance sheets, respectively. The estimated cost of the sale is
        approximately $207,000. The operations of this location have been identified
        as
        a component as defined in FAS Statement No. 144 - Accounting for the Impairment
        of Disposal of Long-Lived Assets (as amended). Accordingly, the results of
        operations ($56,303), ($82,439) and ($108,691) for the twelve months ended
        January 31, 2007, 2006 and 2005, respectively, have been reclassified to
        loss
        from discontinued operations of a component, net the related income tax
        benefit.
 
 During
        the fourth quarter of the Company’s fiscal year 2007, the Company’s property,
        fixtures and equipment located 4 miles north of Alamogordo have been listed
        for
        sale and therefore has been identified as a component as defined in FAS
        Statement No. 144 - Accounting for Impairment or Disposal of Long-Lived Assets
        (as amended). The carrying value of the property, fixtures and equipment
        of
        approximately $667,000 and $677,000 has been reclassified as assets held
        for
        sale in the January 31, 2007 and January 31, 2006 balance sheets, respectively.
        The results of operations of ($28,556), ($17,128) and ($31,072) for the twelve
        months ended January 31, 2007, 2006 and 2005, respectively, have been
        reclassified to loss from discontinued operations of a component, net of
        the
        related income tax benefit.
 56
 
 **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
 **(4)**
              **Intangible
                  Assets**
  Intangible
        assets, at cost, consist of the following at January 31:
 
 **2007**
              
              **2006**Franchise
                  fees
              
              $
              132,442
              
              
              132,442Debt
                  issuance costs
              
              
              391,165
              
              
              384,915523,607
              
              
              517,357Less
                  accumulated amortization
              
              
              (361,905
              )
              
              (327,335
              )$
              161,702
              
              
              190,022
 
 The
        following schedule discloses the estimated amortization expense at January
        31:
 
 2008
              
              $
              29,1902009
              
              
              23,4902010
              
              
              22,7402011
              
              
              22,4902012
              
              
              20,702Thereafter
              
              
              43,090Total
              
              $
              161,702
 
 **(5)**
              **Investment
                  in Real Estate**
  Approximately
        twelve acres of previously undeveloped land in Alamogordo, New Mexico was
        sub-divided into thirty-five approximately quarter-acre residential lots.
        The
        subdivision includes paved roads, fencing, water, sewer and electricity.
        Two
        manufactured homes were purchased and installed. One lot and manufactured
        home
        was sold in December 2003. In December 2005, two lots were sold. The other
        manufactured home was moved for the Company’s use at the new facility in
        Picacho, Arizona. The thirty-two lots that remain are for sale.
 
 **(6)**
              **Short-term
                  Borrowing**
  In
        July
        2006, the Company renewed a $1,250,000 open line of credit with one of its
        existing lenders. The Company incurred $6,250 of debt issuance costs for
        the
        renewal which will be amortized over the life of the loan. The line-of-credit
        is
        secured by all assets. The Company did not borrow any funds during fiscal
        year
        2007. As of January 31, 2007, $1,250,000 remains on the open line of credit
        that
        will mature July 2008 and requires variable interest (8.25% at January 31,
        2007). The Company can borrow from the open line of credit at any
        time.
  57


**BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
 **(7)**
              **Long-term
                  Debt**
  Long-term
        debt consists of the following at January 31:
  **2007**
              
              **2006**Due
                  bank, maturity September 2008, interest at 7.26%, monthly installments
                  of
                  $5,787, secured by all assets
              
              $
              598,238
              
              
              789,030Due
                  bank, maturity October 2013, interest at 7.26%, monthly installments
                  of
                  $2,752, secured by all assets
              
              
              295,606
              
              
              315,433Due
                  bank, maturity September 2014, interest at 7.26%, monthly installments
                  of
                  $3,844, secured by all assets
              
              
              412,862
              
              
              436,210Due
                  bank, maturity January 2011, interest at 7.26%, monthly installments
                  of
                  $4,790, secured by buildings and equipment
              
              
              507,305
              
              
              569,518Due
                  bank, maturity February 2015, interest at 7.26%, monthly installments
                  of
                  $19,390, secured by all assets
              
              
              2,082,756
              
              
              2,125,679Due
                  bank, maturity November 2014, interest at 7.26%, monthly installments
                  of
                  $4,485, secured by all assets
              
              
              481,737
              
              
              488,601Long-term
                  debt of continuing operations
              
              
              4,378,504
              
              
              4,724,471Less
                  current maturities of continuing operations
              
              
              (180,621
              )
              
              (463,696
              )Long-term
                  debt, less current maturities of continuing operations
              
              $
              4,197,883
              
              
              4,260,775Due
                  bank, maturity October 2013, interest at 7.26%, monthly installments
                  of
                  $4,577, secured by all assets
              
              
              491,597
              
              
              525,019Due
                  bank, maturity January 2013, interest at 6%, monthly installments
                  of $944,
                  secured by land
              
              
              57,057
              
              
              64,719Long-term
                  debt of discontinued operations
              
              
              548,654
              
              
              589,738Less
                  current maturities of discontinued operations
              
              
              (28,006
              )
              
              (51,727
              )Long-term
                  debt, less current maturities of discontinued operations
              
              $
              520,648
              
              
              538,011
  58
   **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
  Future
        maturities of long-term debt for the years ending January 31 are as
        follows:
 
 **Continuing
                  operations**
              
              **Discontinued
                  operations**2008
              
              $
              180,621
              
              
              28,0062009
              
              
              194,180
              
              
              29,9992010
              
              
              720,095
              
              
              32,1352011
              
              
              191,006
              
              
              34,4252012
              
              
              588,638
              
              
              36,879Thereafter
              
              
              2,503,964
              
              
              387,210Total
              
              $
              4,378,504
              
              
              548,654
 
 The
        Company uses the direct identification method for allocating interest to
        its
        discontinued operations.
  On
        September 29, 2006, the Company changed its terms agreements with its primary
        lender, Bank of the West. The agreements modified the Company’s $4,870,101 debt
        with Bank of the West from a variable rate of interest to a fixed rate of
        interest of 7.26% for the next five years. In accordance with EITF Issue
        No.
        96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments,”
the present value of the cash flows under the terms of the modified debt
        was
        less than 10% from the present value of the remaining clash flows under the
        terms of the original debt. Therefore, the modification of terms was not
        considered substantially different and there was no debt
        extinguishment.
 
 Under
        the
        Master Loan Agreement, the Company must maintain minimum financial ratios,
        calculated quarterly from fiscal quarter reviewed statements with income
        and
        expense items annualized. There are other certain restrictions and limitations,
        including the restrictions on payment of dividends by The Company, limitation
        on
        the issuance of additional debt, the redemption of capital stock and the
        sale or
        transfer of assets. For fiscal year ending January 31, 2007, the Company
        was not
        aware of any non-compliance with the minimum financial ratios.
 
 **(8)**
              **Income
                  Taxes**
  Income
        taxes consist of the following for the years ended January 31:
 59
  **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
  **Current**
              
              **Deferred**
              
              **Total**2007:U.S.
                  Federal
              
              $
              272,700
              
              
              (44,100
              )
              
              228,600State
              
              
              54,600
              
              
              (8,800
              )
              
              45,800$
              327,300
              
              
              (52,900
              )
              
              274,4002006:U.S.
                  Federal
              
              $
              358,200
              
              
              (54,200
              )
              
              304,000State
              
              
              71,700
              
              
              (10,800
              )
              
              60,900$
              429,900
              
              
              (65,000
              )
              
              364,9002005:U.S.
                  Federal
              
              $
              184,500
              
              
              69,900
              
              
              254,400State
              
              
              37,000
              
              
              14,000
              
              
              51,000$
              221,500
              
              
              83,900
              
              
              305,400
 
 Income
        tax expense differed from the amounts computed by applying the U.S. federal
        income tax rate of 34 percent to pre-tax income as a result of the following
        for
        the years ended January 31:
 60
  **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial
            Statements
 January
            31, 2007
 **2007**
              
              **2006**
              
              **2005**Computed
                  “expected” tax expense, continuing operations
              
              $
              346,838
              
              
              445,588
              
              
              380,288Computed
                  “expected” tax benefit, discontinued operations
              
              
              (116,526
              )
              
              (100,402
              )
              
              (127,217
              )State income tax
                  expense, net of federal tax benefit, continuing
                  operations
              
              
              45,501
              
              
              56,798
              
              
              50,534State income tax
                  benefit, net of federal tax benefit, discontinued
                  operations
              
              
              (15,287
              )
              
              (12,798
              )
              
              (16,905
              )Other,
                  continuing operations
              
              
              20,894
              
              
              (31,350
              )
              
              28,100Other,
                  discontinued operations
              
              
              (7,020
              )
              
              7,064
              
              
              (9,400
              )Total
              
              $
              274,400
              
              
              364,900
              
              
              305,400


The
      tax
      effects of temporary differences that give rise to significant portions of
      the
      deferred tax assets and deferred tax liabilities are as follows at January
      31:


**2007**
              
              **2006**Deferred
                  tax assets -At
                  January 31, 2007 deferred revenue principally due to accrual for
                  financial
                  reporting purposes
              
              $
              16,702
              
              
              37,266At
                  January 31, 2007, compensated absences, principally due to accrual
                  for
                  financial reporting purposes
              
              
              35,708
              
              
              34,724Other
              
              
              (110
              )
              
              10Total
                  gross deferred tax assets
              
              
              52,300
              
              
              72,000Deferred
                  tax liabilities:Property
                  and equipment, principally due to differences in
                  depreciation
              
              
              810,528
              
              
              884,185Other
              
              
              1,072
              
              
              15Total
                  gross deferred liabilities
              
              
              811,600
              
              
              884,200Net
                  deferred tax liability
              
              $
              759,300
              
              
              812,200
  There
        was
        no valuation allowance for deferred tax assets as of January 31, 2006, 2005
        or
        2004. Based upon the level of historical taxable income and projections for
        future taxable income over the periods in which the deferred tax assets are
        deductible, management believes it is more likely than not that the Company
        will
        realize the benefits of these deductible differences.
 61
 **BOWLIN
                    TRAVEL CENTERS, INC.**
 Notes
                    to Financial
                    Statements
 January
                    31, 2007
 At
        January 31, 2001 the Company recorded a tax payable to Lamar Advertising
        Company
        (“Lamar”) (as successor to Bowlin Outdoor Advertising and Travel Centers
        Incorporated (“Outdoor”). Prior to that date, the Company and Outdoor were part
        of a consolidated group for tax purposes, and effective January 30, 2001,
        Outdoor spun off the stock of the Company in a tax free distribution to
        Outdoor’s shareholders. Immediately thereafter, Outdoor merged with and into
        Lamar.
 
 In
        anticipation of the spin-off, the Company and Outdoor entered into a Tax
        Sharing
        and Disaffiliation Agreement, pursuant to which Outdoor and the Company each
        agreed to indemnify the other against taxes attributable to their respective
        operations, both before and after the spin-off. The Tax Sharing and
        Disaffiliation Agreement specifically provided that, in determining taxes
        attributable to Outdoor and the Company for periods prior to the spin-off,
        any
        net losses of either Outdoor of the Company would offset the income of the
        other. Thus, if the net losses for Outdoor were in excess of the income of
        the
        Company for a tax year, the Company would not have any payment obligation
        to
        Outdoor under the Tax Sharing and Disaffiliation Agreement for such tax
        year.
 
 Outdoor’s
        net losses for the tax year 2000 (fiscal year ending January 31, 2001) exceeded
        the income of the Company for such year. As a result, the Company had no
        obligation to Outdoor for any payment under the Tax Sharing and Disaffiliation
        Agreement. Management believes that the Company had no obligation to Outdoor
        for
        any such payment under the Tax Sharing and Disaffiliation Agreement. As a
        result, the liability of $201,200 has been removed from the Company’s books and
        recorded as an unusual item in the income statement.
 
 **(9)**
              **Profit-Sharing
                  Plan**
  The
        Company maintains a qualified defined contribution profit-sharing plan that
        covers substantially all employees. The plan year end is December 31. The
        elected salary reduction is subject to limits as defined by the Internal
        Revenue
        Code. The Company provides a matching contribution and additional discretionary
        contributions as determined by resolution of the board of directors. Legal
        and
        accounting expenses related to the plan are absorbed by the Company. The
        Company’s contributions to the profit-sharing plan were $61,926, $60,020 and
        $64,361 in fiscal 2007, 2006 and 2005, respectively.
 
 **(10)**
              **Commitments**
  The
        Company leases land at several of its retail operating locations. Included
        in
        general and administrative expenses in the accompanying statements of income
        is
        rental expense for these land leases of $240,215, $255,426 and $237,970 for
        the
        years ended January 31, 2007, 2006 and 2005, respectively. The Company also
        leases land where several of its retail billboards are located and rent expense
        for these leases was $187,552, $191,088 and $152,158 for the years ended
        January 31, 2007, 2006 and 2005, respectively.
 62
 **BOWLIN
                    TRAVEL CENTERS, INC.**
 Notes
                    to Financial
                    Statements
 January
                    31, 2007
 The
        leasing agreements for the various locations include 5 to 35 year leases
        with
        remaining lives on those leases ranging from approximately 5 to 31 years
        at
        January 31, 2007. One of the contingent rentals has a fixed annual payment
        of
        $20,000 adjusted annually according to the consumer price index (CPI) plus
        2.5%
        of merchandise and Dairy Queen sales plus $0.0025 of gasoline gallons sold.
        One
        of the contingent rentals has a fixed annual payment of 10,806 adjusted annually
        by 3%. One of the contingent leases is based on 3% of merchandise sold plus
        3%
        of gasoline gallons sold up to 360,000 gallons; the percentage changes to
        1% of
        gasoline gallons sold above the 360,000 gallons. One of the contingent leases
        has a fixed annual payment of $21,684 adjusted every five years according
        to the
        consumer price index (CPI) plus 2.5% of merchandise sales and $0.0025 of
        gasoline gallons sold. One of the contingent leases has a fixed monthly amount
        of $4,267 plus 10% of merchandise sales up to $250,000; the percentage changes
        to 5% in excess of $250,00 plus 5% of Dairy Queen sales up to $140,000; the
        percentage changes to 3% in excess of $140,000 plus $0.005 per gallon sold
        with
        a base of $100.00. In most cases, the Company is responsible for certain
        repairs
        and maintenance, insurance, property taxes or property tax increases, and
        utilities.
 
 Future
        minimum rental payments under these leases are as follows:
 
 Year
                  ending January 31:2008
              
              $
              187,4552009
              
              
              155,3272010
              
              
              148,7262011
              
              
              122,7472012
              
              
              50,806Thereafter
              
              
              717,442Total
              
              $
              1,382,503
 
 **(11)**
              **Related
                  Party Transactions**
  Wholesale
        gasoline distribution sales were sold to a Stuckey’s franchise travel center not
        owned by the Company. The travel center is owned by the niece of Michael
        L.
        Bowlin.
 
 In
        October 2005, this wholesale gasoline location elected early termination
        of
        their wholesale agreement. The agreement was terminated within the original
        ten
        year term which resulted in a termination penalty of $100,000 that was offset
        by
        the disposal of equipment of approximately $47,194 resulting in gain of
        approximately $52,806 as well as gross margin of $12,098 the Company would
        have
        received from gasoline sales had the agreement continued for the remainder
        of
        the term. The $52,806 gain is reflected in the gain on sale of property and
        equipment in the Company’s statements of income.
  63
 
 **BOWLIN
              TRAVEL CENTERS, INC.**
 Notes
              to Financial
              Statements
 January
              31, 2007
 The
        sales
        with the associated cost of goods and gross profit consist of the following
        at
        January:
 
 **2007**
              
              **2006**
              
              **2005**Gross
                  sales
              
              $
              —
              
              
              1,137,523
              
              
              1,333,324Cost
                  of goods sold
              
              
              —
              
              
              1,109,490
              
              
              1,288,990Gross
                  profit
              
              $
              —
              
              
              28,033
              
              
              44,334


64




**ITEM
              9.**
            **CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE**




Not
      applicable.


**ITEM
              9A.**
            **CONTROLS
                AND PROCEDURES**




The
      Company’s management evaluated, with the participation of the Chief Executive
      Officer and Chief Financial Officer, the effectiveness of the Company’s
      disclosure controls and procedures as of the end of the period covered by this
      report. Based on that evaluation, the Chief Executive Officer and Chief
      Financial Officer have concluded that there
      was
      a material weakness  in
      the
      control environment related
      to general merchandise inventory at the Company’s twelve retail locations and
      the related disclosure controls and procedures are
      ineffective. The Company used estimates throughout the year based on standard markups within defined categories to
      record cost of goods sold . The
      Company historically counts physical inventory at each location at the end
      of
      each fiscal year. During the third quarter ended October 31, 2006, the Company
      took interim physical inventories at its retail locations and variances between
      the estimates used and physical counts were accounted for at the end of the
      third quarter. At January 31, 2007, the Company took physical inventories at
      its
      retail locations. Variances between the estimates used and physical counts
      were
      accounted for at year end .


The
        general merchandise inventory at the Company’s twelve retail locations was
        approximately $1.540 million or 42.1% of the Company’s total inventory.
        Inventory at the Company’s warehouse was maintained on a perpetual inventory
        system where purchases and issues are recorded directly into the inventory
        account as they occur. Therefore, the balance in the warehouse inventory
        account
        represents the ending inventory amount and there is no weakness related to
        the
        warehouse inventory. The warehouse inventory at the end of the Company’s fiscal
        year was approximately $1.214 million or 33.2% of the Company’s total inventory.
        Other key inventories including gasoline, Dairy Queen food and jewelry were
        taken monthly and the physical was reconciled to the book; therefore there
        are
        no weaknesses related to these inventories. Gasoline, Dairy Queen food, and
        jewelry inventories were approximately $775,000 or 21.2% of the Company’s total
        inventory.
  The
        Company is dedicating resources to correct this
        issue and is
        in the process of implementing a plan to use an electronic point of sale
        merchandise tracking system that will provide the Company with the ability
        to
        conduct more periodic physical inventories as well as more accurately monitor
        cost of goods sold. Other than the above issue ,
        there
        were no changes in the Company’s internal control over financial reporting that
        occurred during the fourth quarter of fiscal 2007 that has materially affected,
        or is reasonably likely to materially affect, the Company’s internal control
        over financial reporting. The first phase of the plan, which was completed
        in
        March 2007, is to have all items in the Company’s central warehouse bar-coded.
        The second phase of the plan, which is to bar code the merchandise at the
        Company’s twelve retail locations, is in process.


**ITEM
                9A(T).**
              **CONTROLS
                  AND PROCEDURES**
 
 Not
        applicable.


**ITEM
              9B.**
            **OTHER
                INFORMATION**





Not
      applicable.




65




**PART
      III**





**ITEM
              10.**
            **DIRECTORS,
                  AND EXECUTIVE OFFICERS AND CORPORATE
                  GOVERNANCE**




The
        following table sets forth information regarding the officers and directors
        of
        Bowlin Travel Centers. **** A
        summary of the background and experience of each of these individuals is
        set
        forth after the table.
 
 **Name**
              
              **Age**
              
              **Position**Michael
                  L. Bowlin
              
              63
              
              Chairman
                  of the Board, President and Chief Executive OfficerWilliam
                  J. McCabe
              
              57
              
              Senior
                  Vice President -Management
                Information
                  Systems, Secretary, Treasurer and DirectorDavid
                  B. Raybould
              
              54
              
              DirectorNina
                  J. Pratz
              
              55
              
              Chief
                  Financial Officer, Senior Vice President and DirectorKim
                  D. Stäke
              
              51
              
              Chief
                  Administrative Officer, Vice President and Director
  *Michael
        L. Bowlin.* Mr.
        Bowlin has served as Chairman of the Board and Chief Executive Officer,
        President and as a Director of the Company since August of 2000. Mr. Bowlin
        served as Chairman of the Board and Chief Executive Officer of Bowlin Outdoor
        from 1991 through January of 2001, and as President from 1983 through 1991.
        Mr.
        Bowlin had been employed by Bowlin Outdoor since 1968. Mr. Bowlin holds a
        Bachelor’s degree in Business Administration from Arizona State
        University.
 
 *William
        J. McCabe.* Mr.
        McCabe has served as Senior Vice President, Management Information Systems,
        Secretary, Treasurer and as a Director of the Company since August of 2000.
        Mr.
        McCabe served as a member of the Board of Directors of Bowlin Outdoor from
        1983
        until August 1996. Prior to 1997, Mr. McCabe served as Senior Vice President
        -
        Advertising Services from 1993 to 1996, Vice President of Outdoor Operations
        from 1988 to 1992 and as Vice President of Accounting from 1984 to 1987.
        Mr.
        McCabe has been employed by the Company since 1976 in such additional capacities
        as a Staff Accountant and Controller. Mr. McCabe holds a Bachelor’s degree in
        Business Administration from New Mexico State University.
 
 *David
        B. Raybould.* Mr.
        Raybould has been employed as a sales professional by Xpedx, a division of
        International Paper Company from 1995 until June 2002. During his employment
        with Xpedx, Mr. Raybould was a consultant to small, independent business
        firms
        as well as many Fortune 500 companies. Mr. Raybould holds a Bachelor’s degree in
        Business Administration from the University of New Mexico.
 66
 *Nina
        J. Pratz.* Ms.
        Pratz has served as the Company’s Senior Vice President and Chief Financial
        Officer since April of 2001. Ms. Pratz has served as a member of the Bowlin
        Outdoor’s Board of Directors from 1976 until January 2001. Prior to 1997, Ms.
        Pratz served as Chief Administrative Officer of Bowlin Outdoor since 1988.
        Ms.
        Pratz holds a Bachelor’s degree in Business Administration from New Mexico State
        University.
 
 *Kim
        D. Stäke.* Ms.
        Stäke has served as Vice President and Chief Administrative Officer since April
        of 2002. Ms. Stäke has been employed with the Company since December 1997. Ms.
        Stäke also serves in such capacities as Controller and SEC compliance. Prior
        to
        December 1997, Ms. Stäke was employed in public accounting. Ms. Stäke holds a
        Bachelor’s degree in Business Administration from the University of New
        Mexico.
 
 In
        lieu
        of an Audit Committee, the Company’s Board of Directors is responsible for
        reviewing and making recommendations concerning the selection of outside
        auditors, reviewing the scope, results and effectiveness of the annual audit
        of
        the Company's financial statements and other services provided by the Company’s
        independent public accountants. The Board of Directors also reviews the
        Company's internal accounting controls, practices and policies. The Board
        of
        Directors has determined that Kim D. Stäke qualifies as an audit committee
        financial expert as defined in Item 401(h)(2)-(3) of Regulation
        S-K.
 
 The
        Company promotes accountability for adherence to honest and ethical conduct;
        endeavors to provide full, fair, accurate, timely and understandable disclosure
        in reports and documents that the Company files with the Commission and in
        other
        public communications made by the Company; strive to be compliant with
        applicable governmental laws, rules and regulations; and promotes prompt
        internal reporting of violations of the code of ethics to an appropriate
        person
        or persons. The Company has not formally adopted a written code of business
        conduct and ethics that governs to the Company’s employees, officers and
        directors as the Company is not required to do so.
 
 Section
        16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
        requires the Company’s officers and directors and persons who own more than ten
        percent (10%) of the Company’s commons stock to file reports of ownership and
        changes in ownership with the Securities and Exchange Commissions. Officers,
        directors and greater than ten percent (10%) owners are also required by
        the
        Securities and Exchange Commission regulations to furnish the Company with
        copies of all Section 16(a) forms they file.
 
 Based
        solely on the Company’s review of the copies of such forms received by it, the
        Company believes that, during the fiscal year ended January 31, 2007, all
        filing
        requirements under Section 16(a) of the Exchange Act applicable to its officers,
        directors and greater than ten percent (10%) owners were complied
        with.
 
 **SHAREHOLDER
        NOMINATIONS**
 
 The
        Company’s entire Board of Directors performs the functions similar to those of a
        nominating committee. The Board of Directors believes that given the size
        of the
        Company and its operations, it is more efficient for the entire Board to
        perform
        this function, rather than delegating this to a committee. The full Board,
        including the Company’s President and Chief Executive Officer, identifies
        director nominees. The Company’s Chief Executive Officer, Mr. Bowlin, owns
        approximately 61.5% of the Company’s common stock and approved the nomination of
        the members of the Board identified herein. The Company’s existing directors and
        officers own a majority of the Company’s common stock, and, as a result, this
        group’s affirmative vote is sufficient to elect director nominees. Consequently,
        the Board has not established a procedure for shareholders to nominate potential
        candidates for director nominees.
 67
 The
        Board
        will consider, but is not required to approve, nominations for directors
        by
        shareholders for any annual meeting of the Company, provided a written
        recommendation is received by the Company no later than the date shareholder
        proposals must be submitted for consideration prior to such annual
        meeting.
 
 The
        Company has not granted any plan-based awards to any officers and there were
        no
        outstanding equity awards, exercise of stock options, SARs and similar
        instruments, or vesting of stock, including restricted stock, restricted
        stock
        units or similar instruments, at year end.
 
 The
        Company has no pension plans or nonqualified defined contribution or other
        nonqualified deferred compensation plans.





**ITEM
              11.**
            **EXECUTIVE
                COMPENSATION**




No
        employee or officer of Bowlin Travel Centers has entered into an employment
        agreement with Bowlin Travel Centers, nor do we anticipate entering into
        any
        employment agreements in the future.
 
 The
        following table summarizes all compensation paid by Bowlin Travel Centers,
        Inc.
        to its Chief Executive Officer and Chief Financial Officer for services rendered
        to Bowlin Travel Centers, Inc. during the fiscal years ended January 31,
        2007,
        2006 and 2005. The Company has no other executive officer whose total annual
        salary and bonus paid to them by Bowlin Travel Centers, Inc. exceeded $100,000
        for the most recent fiscal year. All information set forth in this table
        reflects compensation earned by these individuals for services with Bowlin
        Travel Centers.
 
 **Annual
                  Compensation****Name
                  and Principal Position**
              
              **Fiscal**
                **Year**
              
              **Salary
                  ($) (1)**
              
              **Bonus
                  ($)**
              
              **All
                  Other Compensa-tion ($) (#)**
              
              **Total
                  ($)**Michael
                  L. Bowlin
                Chairman
                  of the Board,
                President,
                  CEO &
                Director
              
              2007
                2006
                2005
              
              97,500
                97,500
                97,500
              
              85,050
                35,050
                35,050
              
              15,912
                  (2)
                17,526
                  (2)
                17,438
                  (2)
              
              198,462
                150,076
                149,988Nina
                  J. Pratz
                CFO,
                  Senior Vice-
                President,
                  & Director
              
              2007
                2006
                2005
              
              78,000
                78,000
                78,000
              
              21,375
                10,075
                10,075
              
              6,639
                3,389
                9,875
              
              106,014
                91,464
                97,950
 
 (1)
            Includes
                amounts deferred at the election of the CEO and the CFO to be contributed
                to their 401(k) Profit Sharing Plan
                account. 
 (2)
            Amount
                for 2007 includes (i) $1,620 of Bowlin Travel Centers discretionary
                matching contributions allocated to Mr. Bowlin’s 401(k) Profit Sharing
                Plan account; (ii) $7,792 for premiums on term life, auto and disability
                insurance policies of which Mr. Bowlin or his wife is the owner;
                and (iii)
                $6,500 for Mr. Bowlin’s car allowance. Amount for 2006 includes (i) $1,620
                discretionary matching contributions allocated to Mr. Bowlin’s 401(k)
                Profit Sharing Plan account; (ii) $9,406 for premiums on term life,
                auto
                and disability insurance policies of which Mr. Bowlin or his wife
                is the
                owner, and (iii) $6,500 for Mr. Bowlin’s car allowance. Amount for 2005
                includes (i) $1,620 of Bowlin Travel Centers discretionary matching
                contributions allocated to Mr. Bowlin’s 401(k) Profit Sharing Plan
                account; (ii) $9,318 for premiums on term life, auto and disability
                insurance policies of which Mr. Bowlin or his wife is the owner;
                and (iii)
                $6,500 for Mr. Bowlin’s car allowance. 
 68
 (3)
            Amount
                for 2007 includes (i) $3,639 of Bowlin Travel Centers discretionary
                matching contributions allocated to Ms. Pratz’s 401(k) account and (ii)
                $3,000 for vacation pay-out. Amount for 2006 includes $3,389 of Bowlin
                Travel Centers discretionary matching contributions allocated to
                Ms.
                Pratz’s 401(k) account. Amount for 2005 includes (i) $3,875 of Bowlin
                Travel Centers discretionary matching contributions allocated to
                Ms.
                Pratz’s 401(k) account and (ii) $6,000 for vacation
                pay-out. 
 **COMPENSATION
        OF DIRECTORS**
 
 Directors
        who are not employees of the Company are entitled to receive $500 per each
        meeting of the Board of Directors, or any committee thereof, attended. Directors
        do not receive stock or option awards, benefits or any other compensation
        for
        services as directors of the Company.
 
 COMPENSATION
        DISCUSSION AND ANALYSIS
 
 The
        Board
        of Directors has responsibility for, among other things, establishing, reviewing
        and monitoring compensation of the Company’s officers. Our named executive
        officers are: Michael L. Bowlin, President and Chief Executive Officer and
        Nina
        J. Pratz, Chief Financial Officer and Senior Vice President. The Company
        does
        not have a compensation committee. Instead, the entire Board of Directors
        functions with the same responsibilities typically given a compensation
        committee.
 
 COMPENSATION
        PHILOSOPHY AND OBJECTIVES
 
 In
        general the Board of Directors compensation philosophies are based upon the
        following subjective principles :
 
 —
              Compensation
                  programs should reflect and promote the Company’s goals and reward
                  individuals for contributions to the Company’s success in achieving its
                  goals.
 
 —
              Compensation
                  should be related to the value created for the Company and its
                  stockholders.
 
 —
              Compensation
                  programs should integrate both the long and short term strategies
                  of the
                  Company.
 
 —
              Compensation
                  programs should be designed to attract and retain key executives
                  critical
                  to the long-term success of the Company.
 
 Total
        compensation for senior management is set at levels that the Board of Directors
        believes are competitive in relation to companies of similar type and size;
        however the Board of Directors has conducted no independent investigation
        of
        such levels. Components of executive compensation include base salary and
        a
        discretionary bonus program. Executive officers who are also directors have
        not
        participated in deliberations or decisions involving their own
        compensation.
 69
  **RESPONSIBILITY
        FOR COMPENSATION DECISIONS**
 
 The
        Board
        of Directors makes all decisions regarding the compensation of Mr. Bowlin
        and
        Ms. Pratz. Their performance is reviewed annually by the Board. The Board
        has
        not proposed an increase in Mr. Bowlin’s or Ms. Pratz’s salary for several
        years, although the Board does use bonuses to compensate Mr. Bowlin and Ms.
        Pratz (see “Elements of Executive Compensation, *Bonus
        Compensation* ”
for
        further information). The Board does not expect that their base salaries
        will
        materially change in the next year.
 
 The
        Board
        does not use a written policy for compensation but has operated under an
        informal policy that the market value of the Company’s stock will not be
        considered in the compensation of any executive officer.
 
 While
        the
        Board has general knowledge of its industry, it does not use compensation
        consultants or surveys of competitor or industry compensation to set
        compensation for its named executive officers.
 
 **ELEMENTS
        OF EXECUTIVE COMPENSATION**
 
 We
        rely
        on a mix of base salary, bonuses, benefits and limited perquisites to attract,
        retain and motivate our named executive officers. The Company does not offer
        any
        equity-based compensation to our employees, including our named executive
        officers. To date, we have elected not to provide any form of long-term
        incentive compensation to our named executive officers. The Board regularly
        considers the nature of our compensation program, including the various
        compensation elements that should be part of our overall compensation program
        for officers.
 
 ***Base
        Salaries***
 
 The
        Board
        of Directors establishes base salaries for the Company’s named executive
        officers at levels considered appropriate in light of the duties and scope
        of
        responsibilities of each officer’s positions. In this regard, the Board
        considers the compensation practices and corporate financial performance
        of
        similarly situated companies. The Board of Directors takes into account a
        number
        of factors, including, but not limited to, management’s efforts to improve
        levels of sales and profitability and to expand markets into which the Company’s
        products are distributed and sold. The Board also considers management’s
        consistent commitment to the long-term success of the Company through developing
        and implementing strategic business acquisition opportunities.
 
 Based
        upon its evaluation of these factors, the Board of Directors believes that
        senior management is dedicated to achieving long-term financial improvements,
        and that the compensation policies, plans and programs administered by the
        Board
        contribute to management’s commitment. The Board of Directors attempts to
        assimilate all of the foregoing factors when it renders its compensation
        decision; however, the Board recognizes that its decisions are subjective
        in
        nature due to the subjective criteria on which such decision are based. The
        Board of Directors does not assign any specified weight to the criteria it
        considers .
 70
 ***Bonus
        Compensation***
 
 Bonus
        compensation is paid at the discretion of the Board of Directors. Determination
        of the Board of Directors with regard to the award of bonus compensation
        are
        generally based upon the Board’s evaluation of the same factors previously
        described above under “Base Salaries” and other subjective criteria. Bonus
        compensation is also based on the Company’s overall performance.
 
 ***Other
        Compensation***
 
 Mr.
        Bowlin and Ms. Pratz do participate in other benefits such as matching
        contributions to 401(k), term life, auto and disability insurance policies
        and a
        car allowance. The Company’s Board of Directors determines the amount of the
        Company’s 401(k) match. The Board believes that such benefits are appropriate to
        compensate Mr. Bowlin and Ms. Pratz in lieu of paying them higher
        salaries .
 
 **SEVERANCE
        BENEFITS**
 
 All
        of
        our named executive officers are employed on an at-will basis. No employment
        agreement or contract of any kind exists between us and any of our named
        executive officers. We do not have any severance or change of control payments
        arrangements in place with any named executive officer.
 
 **BOARD
        COMPENSATION REPORT**
 
 The
        Board
        has reviewed and discussed with management the Compensation Discussion and
        Analysis found in this report. Based on our review and discussions, we
        recommended that the Compensation Discussion and Analysis be included in
        the
        Company’s Annual Report on Form 10-K.
  Submitted
                  by
                  Bowlin Travel Centers, Inc. Board of DirectorsMichael
                    L. Bowlin
                  William
                    J. McCabe
                  Nina
                    J. Pratz
                  David
                    B. Raybould
                  Kim
                    D. Stäke


**ITEM
                12.**
              **SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND****MANAGEMENT**
  As
        of
        January 31, 2007, there were 4,583,348 shares of Bowlin Travel Centers common
        stock outstanding. The following table sets forth the number of shares of
        common
        stock beneficially owned by (i) all persons known by the Company to be the
        beneficial owners of more than five percent of the outstanding shares of
        common
        stock; (ii) each Director of the Company; (iii) the executive officers of
        the
        Company; and (iv) all Directors and executive officers of the Company as
        a
        group. This
        security ownership disclosure includes shares that may be received in 60
        days as
        required by Exchange Act Rule 13d-3.
 71
 **Name
                  of Beneficial Owner**
              ****
              **Amount
                  and Nature of**
                **Beneficial
                  Ownership(3)**
              ****
              **Percent
                  of**
                **Class(4)**Michael
                  L. Bowlin (5)(1)
              
              2,818,536
              
              61.5%William
                  J. McCabe (1)
              
              64,548
              
              1.4%Nina
                  J. Pratz (1)
              
              116,802
              
              2.5%Kim
                  D. Stäke (1)
              
              *
              
              *David
                  B. Raybould (1)
              
              —
              
              —Monica
                  A. Bowlin (6)(1)
              
              2,818,536
              
              61.5%Yorktown
                  Avenue Capital, LLC (2)
              
              514,680
              
              11.2%All
                  directors and executive officers as a group (5 persons)
              
              2,999,886
              
              65.4%
 *
              Less
                  than 1.0%
 (1)
            Address
                is c/o Bowlin Travel Centers, Inc., 150 Louisiana NE, Albuquerque,
                NM,
                87108.  (2)
              Address
                    is 415 South Boston, 9thFloor, Tulsa, Oklahoma 74103.
  (3)
            Unless
                otherwise noted and subject to community property laws, where applicable,
                the persons named in the table above have sole voting and investment
                power
                with respect to all shares of Common Stock as shown beneficially
                owned by
                them. 
 (4)
            The
                shares and percentages shown include the shares of common stock actually
                owned as of April 27, 2007. 
 (5)
            Includes
                425,687 shares held by Mr. Bowlin’s wife and 171,332 shares held by each
                of three daughters. Mr. Bowlin disclaims beneficial ownership of
                an
                aggregate of 513,996 of such shares, which are held by three of his
                daughters. 
 (6)
            Includes
                1,878,853 shares held by Mrs. Bowlin’s husband and 171,332 shares held by
                each of her three daughters. Mrs. Bowlin disclaims beneficial ownership
                of
                an aggregate of 513,996 of such shares, which are held by three of
                her
                daughters.  The
        Company has no compensation plans under which equity securities of the Company
        are authorized for issuance.




**ITEM
              13.**
            **CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE**




The
        Company’s entire Board of Directors reviews any potential related party
        transaction. The Board does not have a written policy with respect to such
        transactions but would normally consider factors such as: fairness of the
        transaction, benefit to the Company, benefit to the officer or director,
        and
        impact on the Company in general.
 72
 The
        Board
        has determined that only one of the Company’s directors, David B. Raybould, is
“independent” within the meaning of Item 407 of Regulation S-K under the rules
        of the Securities and Exchange Commission.


**ITEM
              14.**
            **PRINCIPAL
                ACCOUNTING FEES AND
                SERVICES**




The
        Board
        of Directors approves the fees and other significant compensation to be paid
        to
        the independent auditors for the purpose of preparing or issuing an audit
        report
        or related work. The Company provides appropriate funding, as determined
        by the
        Board of Directors, for payment of fees and other significant compensation
        to
        the independent auditor. The Board of Directors also preapproves all auditing
        services and permitted non-audit services (including the fees and terms thereof)
        to be performed for the Company by its independent auditors, subject to the
        de
        minimis exceptions for non-audit services described in the Securities Exchange
        Act of 1934.
 
 **Audit
        Fees**
 
 The
        aggregate fees billed by Neff+Ricci LLP for professional services rendered
        for
        the audit of the Company’s annual financial statements for the fiscal years
        ended January 31, 2006 and January 31, 2005, and for the review of the financial
        statements included in the Company’s quarterly Reports on Form 10-Q for the
        fiscal years ended January 31, 2007 and January 31, 2006, were approximately
        $58,500 and $37,000 respectively.
 
 On
        January 4, 2006, Neff+Ricci LLP combined its practice with Moss Adams and
        therefore resigned as the Company’s registered independent public accounting
        firm. Neff+Ricci’s audit reports on the Company’s financial statements for the
        past two years did not contain any adverse opinion or disclaimer of opinion,
        nor
        were they qualified or modified as to uncertainty, audit scope or accounting
        principles.
 
 On
        November 10, 2006, Moss Adams LLP (“Moss Adams”) resigned as Bowlin Travel
        Centers, Inc. (the “Company”), registered independent public accounting firm. Moss
        Adams audit reports on the Company’s financial statements for the past two years
        did not contain any adverse opinion or disclaimer of opinion, nor were they
        qualified or modified as to uncertainty, audit scope or accounting principles.
 
 On
        November 9, 2006, the Company engaged the firm of Accounting & Consulting
        Group, LLP (“The Group”) as its registered independent public accounting firm
        for the 2007 fiscal year. The Company’s Board of Directors recommended and
        approved the decision to change accountants and the engagement of The Group.
        The
        Company has no audit or similar committee.
 
 **Audit-Related
        Fees**
 
 None.
 73
 **Tax
        Fee**
 
 The
        fees
        billed by Greg DuBrock, CPA for professional services rendered for the
        preparation of the Company’s tax return for the fiscal year ended January 31,
        2007 and January 31, 2006 were approximately $1,000 for both fiscal
        years.
  **All
        Other Fees**
 
 The
        fees
        billed by Greg DuBrock, CPA for professional services rendered for the
        preparation of the Company’s annual return/report of employee benefit plan for
        the fiscal year ended January 31, 2007 and January 31, 2005 were approximately
        $2,100 for both fiscal years.


**PART
      IV**





**ITEM
      15.**  **EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES**





(a)
            See
                Item 8





(b)
            Exhibits


The
                exhibits as indexed below are included as part of this Form
                10-K.





**INDEX
        TO EXHIBITS**
 3.1(1)
                Form
                    of Certificate of Incorporation of Bowlin Travel Centers,
                    Inc.3.2(1)
                Bylaws
                    of Bowlin Travel Centers, Inc.10.1(1)
                Management
                    Services Agreement, between Bowlin Outdoor Advertising and Travel
                    Centers
                    Incorporated and Bowlin Travel Centers, dated August 1,
                    2000.10.2(1)
                Distributor
                    Franchise Agreement, dated as of July 19, 1995, between the Registrant
                    and
                    CITGO Petroleum Corporation.10.3(1)
                Distributor
                    Sales Agreement, dated as of April 1, 1999, between the Registrant
                    and
                    ExxonMobil Company, U.S.A. (a division of ExxonMobil
                    Corporation).10.8(1)
                Lease,
                    dated as of January 12, 1987, between Janet Prince and the
                    Registrant.10.9(1)
                Commercial
                    Lease, dated as of September 21, 1996, between the State of Arizona
                    and
                    the Registrant, as amended.10.10(1)
                Commercial
                    Lease, dated as of March 16, 2000, between the New Mexico Commissioner
                    of
                    Public Lands and the Registrant, as amended.10.12(1)
                Lease
                    Agreement, dated as of June 23, 1989, between the Registrant
                    and Rex Kipp,
                    Jr., as amended.10.13(1)
                Lease,
                    dated as of September 29, 1983, between J.T. and Ida M. Turner
                    and the
                    Registrant.10.14(1)
                Business
                    Lease, dated as of October 1, 1996, between the Registrant and
                    the New
                    Mexico Commission of Public Lands.10.15(1)
                Commercial
                    Lease, dated as of September 21, 1996, between the Registrant
                    and the
                    State of Arizona, as amended.10.19(1)
                “Dairy
                    Queen” Operating Agreement, dated as of March 10, 1983, between Interstate
                    Dairy Queen Corporation and the Registrant d/b/a DQ/B of Edgewood,
                    NM,
                    together with amendments and ancillary agreements related
                    thereto.10.20(1)
                “Dairy
                    Queen” Operating Agreement, dated as of May 1, 1982, between Interstate
                    Dairy Queen Corporation and the Registrant d/b/a DQ/B of Flying
                    C, New
                    Mexico, together with amendments and ancillary agreements related
                    thereto.
  74
 **INDEX
          TO EXHIBITS**
 (Continued)
 
 10.21(1)
                “Dairy
                    Queen” Store Operating Agreement, dated as of November 18, 1986, between
                    Dairy Queen of Southern Arizona, Inc. and the Registrant, together
                    with
                    amendments and ancillary agreements related thereto.10.22(1)
                “Dairy
                    Queen” Operating Agreement, dated as of September 1, 1982, between
                    Interstate Dairy Queen Corporation and the Registrant d/b/a DQ
                    of
                    Bluewater, New Mexico, together with amendments and ancillary
                    agreements
                    related thereto.10.23(1)
                “Dairy
                    Queen” Store Operating Agreement, dated as of February 1, 1984, between
                    Dairy Queen of Arizona, Inc. and the Registrant, together with
                    amendments
                    and ancillary agreements related thereto.10.25(1)
                “Dairy
                    Queen” Operating Agreement, dated as of June 7, 1989, between Interstate
                    Dairy Queen Corporation and the Registrant d/b/a “DQ” at Butterfield
                    Station, together with amendments and ancillary agreements related
                    thereto.10.28(2)
                Amended
                    and Restated Master Loan Agreement with First Security Bank,
                    dated as of
                    November 10, 2000, by and among the Registrant, Bowlin Outdoor
                    Advertising
                    and Travel Centers Incorporated, and First Security
                    Bank.10.29(1)
                Lease
                    Agreement between Bowlin Outdoor Advertising and Travel Centers
                    Incorporated and the Registrant, dated August 1, 2000.10.30(2)
                Contribution
                    Agreement, dated as of November 1, 2000, by and between the Registrant
                    and
                    Bowlin Outdoor Advertising and Travel Centers
                    Incorporated.10.31(2)
                Tax
                    Sharing and Disaffiliation Agreement, dated as of November 1,
                    2000, by and
                    between the Registrant and Bowlin Outdoor Advertising and Travel
                    Centers
                    Incorporated.10.32(3)
                Loan
                    Agreement with Bank of the West, dated July 10, 2003, by and
                    amoung the
                    Registrants, Bowlin Travel Centers, Inc., and Bank of the
                    West.10.35(6)
                Purchase
                    and Sale agreement, dated September 1, 2005 by and between Bowlin
                    Travel
                    Centers, Inc. and Lost River Estates, LLC for a tract of land
                    known as La
                    Luz Gate Road/Highway 54/70 in Alamogordo, New Mexico.10.36(6)
                Purchase
                    and Sale agreement dated September 1, 2005 by and between Bowlin
                    Travel
                    Centers, Inc. and Lazy L, LLC for three tracts of land known
                    as Sec.32,
                    T.23S, R.9W., N.M.P.M., in Luna County, New Mexico.10.37(6)
                Purchase
                    and Sale agreement, dated October 12, 2005 by and between Bowlin
                    Travel
                    Centers, Inc. and Devin Fenn dba D. Fenn Enterprises, Inc. for
                    vacant land
                    known as lots 15 through 26, inclusive, and lot 29, P.I.C. Benson
                    Acres,
                    according to tiled Map No. 615. records of Cochise County in
                    Benson,
                    Arizona.10.38(8)
                Purchase
                    and Sale Agreements, dated August 15, 2006 by and between Bowlin
                    Travel
                    Centers, Inc. and Teak, LLC for a tract of land known as Lot
                    1 Bowlin
                    Tracts in the County of Dona Ana, New Mexico.10.39(8)
                Purchase
                    and Sale Agreements, dated August 15, 2006 by and between Bowlin
                    Travel
                    Centers, Inc. and Teak, LLC for a tract of land known as Lot
                    2 Bowlin
                    Tracts in the County of Dona Ana, New Mexico.10.40(8)
                Purchase
                    and Sale Agreements, dated August 15, 2006 by and between Bowlin
                    Travel
                    Centers, Inc. and Larjon, LLC for a tract of land known as part
                    of Lot 53,
                    Subdivision of Lots 4 and 5 of the Brazito Tract.10.41(8)
                Promissory
                    Note, dated August 15, 2006 by and between Bowlin Travel Centers
                    Inc. and
                    C. C. Bess.


75
 **INDEX
          TO EXHIBITS**
 (Continued)
 
 10.42(9)
                Change
                    in terms agreements with Bank of the West, dated September 29,
                    2006, by
                    and between Bowlin Travel Centers, Inc., and Bank of the
                    West.10.44(9)
                Purchase
                    agreement, dated November 27, 2006, by and between Bowlin Travel
                    Centers,
                    Inc. and Maxwell & Associates Real Estate Holdings, LLC for property,
                    fixtures and equipment located in Edgewood, New Mexico.10.45(9)
                Letter
                    of intent, dated November 27, 2006, by and between Bowlin Travel
                    Centers,
                    Inc. and the Pueblo of Laguna to purchase property, fixtures
                    and equipment
                    located 17 miles west of Albuquerque, New Mexico at the Rio Puerco
                    exit.10.46(10)
                Retailer
                    Product Sales Agreement, dated January 15, 2007, by and between
                    Arizona
                    Fuel Distributors and Bowlin Travel Centers, Inc. for the purchase
                    of
                    Shell brand fuel at Bowlin’s “The Thing” Travel Center and DQ near Benson,
                    AZ, together with addendum.10.47(10)
                Retailer
                    Product Sales Agreement, dated January 15, 2007, by and between
                    Arizona
                    Fuel Distributors and Bowlin Travel Centers, Inc. for the purchase
                    of
                    Shell brand fuel at Bowlin’s Picacho Peak Plaza in Picahco, AZ, together
                    with addendum.10.48(10)
                Retail
                    Sales Agreement, dated January 15, 2007, by and between Arizona
                    Fuel
                    Distributors and Bowlin Travel Centers, Inc. for the purchase
                    of Mobil
                    brand fuel at Bowlin’s Picacho Peak DQ Travel Center in Picacho, AZ,
                    together with addendum.10.49(10)
                Amendment
                    dated February 22, 2007 extending the closing date of the Letter
                    of Intent
                    dated November 27, 2006, by and between Bowlin Travel Centers,
                    Inc. and
                    the Pueblo of Laguna to purchase property, fixtures and equipment
                    until
                    March 15, 2007 and Second Amendment dated March 14, 2007 extending
                    the
                    closing date until April 30, 2007.31.1.1
                Certification
                    pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange
                    Act of
                    1934, as amended.31.1.2
                Certification
                    pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange
                    Act of
                    1934, as amended.32.1.1
                Certification
                    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                    906 of
                    the Sarbanes-Oxley Act of 2002.32.1.2
                Certification
                    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                    906 of
                    the Sarbanes-Oxley Act of
                    2002.
  (1)
                Incorporated
                    by reference to the correspondingly numbered Exhibits in the
                    Registrant’s
                    Form 10, filed November 10, 2000.(2)
                Incorporated
                    by reference to the correspondingly numbered Exhibits in the
                    Registrant’s
                    Amendment No. 1 to the Form 10, filed December 8, 2000.(3)
                Incorporated
                    by reference to the correspondingly numbered Exhibits in the
                    Registrants
                    Form 10-Q, filed September 10, 2004.(4)
                Incorporated
                    by reference to the correspondingly numbered Exhibits in the
                    Registrants
                    Form 10-Q, filed December 10, 2004.(5)
                Incorporated
                    by reference to the correspondingly numbered Exhibits in the
                    Registrants
                    Form 10-K filed April 15, 2004.(6)
                Incorporated
                    by reference to the correspondingly numbered Exhibits in the
                    Registrants
                    Form 10-Q filed December 12, 2005.(7)
                Incorporated
                    by reference to the Registrants Form 8-K filed January 9,
                    2006.(8)
                Incorporated
                    by reference to the correspondingly numbered Exhibits in the
                    Registrants
                    Form 10 Q filed September 13, 2006.(9)
                Incorporated
                    by reference to the correspondingly numbered Exhibits in the
                    Registrants
                    Form 10 Q filed December 14, 2006.(10)
                Filed
                    herewith.
  76


**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.


**Bowlin
                  Travel Centers, Inc.**Date:  April 27,
                  2007
                By:
                /s/ 
MICHAEL
                  L.
                  BOWLINMichael
                    L. Bowlin,
                    Chairman of the Board,
                  President
                    and Chief Executive
                    Officer




In
      accordance with the Securities Exchange Act of 1934, this report has been signed
      by the following persons on behalf of the Company and in the capacities and
      on
      the dates indicated:


**Signature**
                
                
                **Date**/s/  MICHAEL L. BOWLIN
                
                
                April
                    27, 2007Michael L. Bowlin
                  Chairman of the Board,
                  President, CEO and Director
                  (PrincipalExecutive
                    Officer)
  /s/  NINA J. PRATZ
                
                
                April
                    27, 2007Nina J. Pratz
                  Chief Financial Officer, Senior Vice
                    President,
                  and
                    Director (Principal Accounting Officer)
 /s/  WILLIAM J. McCABE
                  
                  
                  April
                      27, 2007William M. McCabe
                    Senior Vice President, Management
                      Information
                    Systems, Secretary, Treasurer and
                      Director
 /s/
                            KIM D. STÄKE
                          
                          
                          April
                              27, 2007Kim
                              D. Stäke
                            Chief
                                Administrative Officer,
                              Vice
                                President and Director
  /s/
                            DAVID B. RAYBOULD
                          
                          
                          April
                              27, 2007David
                              B. Raybould, Director
  77