UNITED
        STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON,
        D.C. 20549
 
 **FORM
        10-K**
  x
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                FOR THE FISCAL YEAR ENDED **JANUARY 31,
                  2006**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:Title
                  of each class
              
              Name
                  of each exchange on which
                  registeredCommon
                  Stock, $.001 Par Value
              
              OTC.BBSECURITIES
                  REGISTERED PURSUANT TO SECTION
                  12(g)
                  OF THE EXCHANGE ACT:NONE(Title
                  of class)





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 403 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 of a non-accelerated file (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, 2005 was $3,095,668.





The
      number of shares of Common Stock, $.001 par value, outstanding as of April
      28,
      2006: 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. 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.





**Recent
      Developments**





In
      September 2005, the Company sold property to a third party 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 $9,002 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 and 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.


3





In
      September 2005, the Company sold property to a third party 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 $31,378 was deferred and 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, the Company sold property to a third party 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 $2,735 was
      recognized initially and $21,886 was deferred and 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, 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 an overall
      non-operating 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.


**Subsequent
      Event**





Beginning
      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.





**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.


4





**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. Most of the Company’s travel
      centers offer food and beverages, ranging from drinks and snack foods at some
      locations to full-service restaurants at others. The Company’s food service
      operations at five of the Company’s twelve travel centers operate under the
      Dairy Queen/Brazier or Dairy Queen trade names.





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 locations are ExxonMobil stations and four of
      its locations are CITGO stations. At this time, one of the Company’s locations
      does not offer gasoline.




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 expanding its travel center operations through
                internal development.





§
            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.





§
            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 CITGO gasoline
                brands
                through its travel center outlets.





***Gasoline
      Wholesaling***





The
      Company has been wholesaling gasoline since 1997. Since 1997, revenues from
      wholesaling gasoline have accounted for an average of approximately 6.6% of
      gross revenues. Other than purchasing gas for retail sales through its travel
      centers, during the fiscal year ended January 31, 2006, the Company had only
      two
      wholesale customers. The Company anticipates expanding its current level of
      gasoline wholesaling and is marketing its wholesaling business. See “Business
      Operations - Gasoline Wholesaling.”


5





**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 under the Dairy Queen and Dairy Queen/Brazier brand names.
      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 5.75% of its sales of their products in New
      Mexico and 4.0% for its sales of their products in Arizona.





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. 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 travel centers, and CITGO gasoline at four travel
      centers. At this time one of the Company’s locations does not offer
      gasoline.


6





The
      fact
      that the Company is an authorized ExxonMobil and CITGO distributor has
      significance in the Company’s industry. As licensed distributors for ExxonMobil
      and CITGO, the Company purchases 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
      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 1, 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 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. 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 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 Exxon Mobil, 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 products did not meet the minimum quantities for the first contract
      year ended March 31, 2003, but did meet the minimum quantities for contract
      years ended March 31, 2004 and March 31, 2005. The Company is on target to
      meet
      the required three million gallons for contract year ending October 31, 2006.
      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
      the most recent contract year ended January 31, 2006. 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***
 
 During
        the fiscal year ended January 31, 2006, the Company had two wholesale customers.
        Over the past five years, wholesaling of gasoline has accounted for, on average,
        approximately 7.1% 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.


7





Gasoline
      wholesaling revenues as a percentage of Gross Revenues (unaudited):





**Fiscal
                Year Ended**
              **January
                31,**
            **Gross
                Revenues**
            **Revenue
                from Gasoline**
              **Wholesaling**
            **Percentage
                of Gross**
              **Revenues
                attributable to**
              **Gasoline
                Wholesaling**2002
            $23,540,000
            $2,126,000
            9.03%2003
            $22,503,000
            $1,789,000
            7.95%2004
            $21,848,000
            $1,749,000
            8.00%2005
            $24,090,000
            $1,754,000
            7.28%2006
            $27,901,000
            $1,636,000
            5.86%





The
      Company does not derive a material amount of gross revenue from the wholesaling
      of gasoline. The cost of goods sold as a percentage of gross revenues for
      gasoline wholesaling is approximately 94%.





**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, 2006, the Company had approximately 132 full-time and 33 part-time
      employees; 44 were located in Arizona, 121 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.


8





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 not
      be
      material.





**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 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
                26, 2006





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.


9








**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 not be able to secure additional
      financing.***





The
      Company has been able to secure financing for the purchase of additional assets
      from commercial lenders in amounts up to 100% of the fair market value of the
      acquired assets. 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.


10





***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. While the
      Company believes that it is compliant with environmental laws and regulations,
      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 depends on third party relationships*** .





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.





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. 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.


11





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. Although the Company does not currently
      anticipate having to forego a significant business opportunity in order to
      comply with such agreements, there can be no assurance that adherence to
      existing agreements will not prevent it from pursuing opportunities that
      management would otherwise deem advisable. In addition, 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. Although the Company
      believes it has good relationships with its suppliers, 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 business is seasonal and revenues fluctuate
      quarterly.***





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. 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.


12





***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. The Company believes
      that operations at its twelve travel centers comply with all applicable
      licensing and regulatory requirements. However, 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.





***The
      Company’s current capitalization could delay, defer or prevent a change of
      control.***





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.





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





As
      of
      January 31, 2006, 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-five years, assuming
      exercise by the Company of all renewal options available under certain
      leases.


13





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. The Company owns a central warehouse and distribution
      facility occupying approximately 44,000 square feet in Las Cruces, New Mexico.
      The Company believes that its headquarters and warehouse facilities are adequate
      for its operations for the foreseeable future.




**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 2006.






**PART
      II**





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





As
      of
      April 28, 2006, 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 12, 2006, there were
      approximately 27 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
      2006.





**High**
            ****
            **Low**Fiscal
                Year Ended January 31, 2005Fiscal
                Quarter Ended 4/30
            
            $2.00
            
            $1.65Fiscal
                Quarter Ended 7/31
            
            $1.80
            
            $1.50Fiscal
                Quarter Ended 10/31
            
            $1.90
            
            $1.52Fiscal
                Quarter Ended 1/31
            
            $2.00
            
            $1.73**High**
            ****
            **Low**Fiscal
                Year Ended January 31, 2006Fiscal
                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





14


The
      Company is authorized to issue up to 10,000,000 shares of common stock, par
      value $.001 per share, and up to 1,000,000 shares of preferred stock, par value
      $.001. Holders of shares of common stock are entitled to one vote per share
      on
      all matters to be voted on by stockholders and do not have cumulative voting
      rights. Subject to the rights of holders of outstanding shares of preferred
      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 in its discretion from funds legally available therefore, and upon
      liquidation, dissolution, or winding up are entitled to receive all assets
      available for distribution to the stockholders. The common stock has no
      preemptive or other subscription rights, and there are no conversion rights
      or
      redemption or sinking fund provisions with respect to such shares. All of the
      outstanding shares of common stock are fully paid and nonassessable. Since
      becoming a publicly traded company, Bowlin Travel Centers has not paid
      dividends. Any declaration or payment of dividends by the Company would be
      subject 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 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. See, also, “Risk
      Factors - *Our
      current capitalization could delay, defer or prevent a change of
      control* ”.





**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, 2006. 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.





**SELECTED
                FINANACIAL DATA****YEARS
                ENDED JANUARY 31,****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002****STATEMENT
                OF INCOME DATA:**Net
                sales
            
            $
            27,668,364
            
            $
            23,890,999
            
            $
            21,595,359
            
            $
            22,300,116
            
            $
            23,327,309Net
                income
            
            $
            650,353
            
            $
            438,927
            
            $
            493,894
            
            $
            507,258
            
            $
            173,234Earnings
                per share
            
            $
            0.14
            
            $
            0.10
            
            $
            0.11
            
            $
            0.11
            
            $
            0.04**BALANCE
                SHEET DATA (at end of period):**Total
                assets
            
            $
            19,807,942
            
            $
            20,085,144
            
            $
            17,456,106
            
            $
            16,383,388
            
            $
            16,532,141Long-term
                debt, including current maturities
            
            $
            5,314,209
            
            $
            5,844,366
            
            $
            4,144,619
            
            $
            4,046,640
            
            $
            4,684,334





15





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
      following tables presents 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:





**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
            
            $
            27,904
            
            $
            23,195
            
            $
            4,709Discounts
                on sales
            
            
            235
            
            
            216
            
            
            19Net
                sales
            
            
            27,669
            
            
            22,979
            
            
            4,690Cost
                of goods sold
            
            
            17,980
            
            
            14,584
            
            
            3,396Gross
                profit
            
            
            9,689
            
            
            8,395
            
            
            1,294General
                and administrative expenses
            
            
            (7,833
            )
            
            (6,653
            )
            
            (1,180
            )Depreciation
                and amortization
            
            
            (885
            )
            
            (668
            )
            
            (217
            )Operating
                income (loss)
            
            
            971
            
            
            1,074
            
            
            (103
            )Non-operating
                income (expense):Interest
                income
            
            
            69
            
            
            69
            
            
            —Gain
                on sale of property and equipment
            
            
            197
            
            
            197
            
            
            —Rental
                income
            
            
            184
            
            
            173
            
            
            11Interest
                expense
            
            
            (406
            )
            
            (238
            )
            
            (168
            )Total
                non-operating income (expense)
            
            
            44
            
            
            201
            
            
            (157
            )Income
                (loss) before income taxes
            
            $
            1,015
            
            $
            1,275
            
            $
            (260
            )_______________*
                Excludes both Picacho Peak stores for fiscal year
                2006.





16


**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
            
            $
            24,090
            
            $
            21,097
            
            $
            2,993Discounts
                on sales
            
            
            199
            
            
            185
            
            
            14Net
                sales
            
            
            23,891
            
            
            20,912
            
            
            2,979Cost
                of goods sold
            
            
            15,113
            
            
            12,944
            
            
            2,169Gross
                profit
            
            
            8,778
            
            
            7,968
            
            
            810General
                and administrative expenses
            
            
            (7,365
            )
            
            (6,686
            )
            
            (679
            )Depreciation
                and amortization
            
            
            (703
            )
            
            (652
            )
            
            (51
            )Operating
                income (loss)
            
            
            710
            
            
            630
            
            
            80Non-operating
                income (expense):Interest
                income
            
            
            45
            
            
            45
            
            
            —Gain
                on sale of property and equipment
            
            
            3
            
            
            3
            
            
            —Rental
                income
            
            
            189
            
            
            184
            
            
            5Interest
                expense
            
            
            (203
            )
            
            (192
            )
            
            (11
            )Total
                non-operating income (expense)
            
            
            34
            
            
            40
            
            
            (6
            )Income
                (loss) before income taxes
            
            $
            744
            
            $
            670
            
            $
            74_______________*
                Excludes the Picacho Peak store for fiscal year
                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 and results of operations
      of the Company as of and for the three fiscal years ended January 31, 2006,
      2005
      and 2004. 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.





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.


17





**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 at the Company’s travel centers increased by 9.9% to $23.195 million for
      the twelve months ended January 31, 2006, from $21.097 million for the twelve
      months ended January 31, 2005. Merchandise sales increased 5.6% to $9.085
      million for the twelve months ended January 31, 2006, from $8.604 million for
      the twelve months ended January 31, 2005. The increase is primarily due to
      volume purchasing as well as maintaining mark ups. Gasoline sales increased
      21.2% to $10.079 million for the twelve months ended January 31, 2006, from
      $8.315 million for the same period in 2005. The increase is due to market price
      increases. Restaurant sales 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.





Total
      cost of goods sold increased 12.7% to $14.584 million for the twelve months
      ended January 31, 2006, from $12.944 million for the twelve months ended January
      31, 2005. Merchandise cost of goods increased 2.8% to $3.184 million for the
      twelve months ended January 31, 2006, from $3.096 million for the twelve months
      ended January 31, 2005. The increase is directly related to improved volume
      purchase pricing as well as maintaining mark-ups. Gasoline cost of goods
      increased 22.2% to $9.063 million for the twelve months ended January 31, 2006,
      from $7.415 million for the twelve months ended January 31, 2005. The increase
      corresponds to market price increases. Restaurant cost of goods 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 62.9% for the
      twelve months ended January 31, 2006, as compared to 61.4% for the twelve months
      ended January 31, 2005





Gross
      profit increased 5.4% to $8.395 million for the twelve months ended January
      31,
      2006, from $7.968 million for the twelve months ended January 31, 2005. The
      increase is primarily attributable to increased sales and volume
      purchasing.





General
      and administrative expenses consist of salaries, bonuses and commissions for
      travel center personnel, property costs and repairs and maintenance. General
      and
      administrative expenses decreased 0.5% to $6.653 million for the twelve months
      ended January 31, 2006, from $6.686 million for the twelve months ended January
      31, 2005. The decrease is primarily due to decreases in general insurance,
      sign
      repairs and maintenance as well as legal fees.





Depreciation
      and amortization expense increased 2.5% to $668,000 for the twelve months ended
      January 31, 2006, from $652,000 for the twelve months ended January 31, 2005.





The
      above
      factors contributed to an increase in operating income of 70.5% to $1.074
      million for the twelve months ended January 31, 2006, compared to an operating
      income of $630,000 for the twelve months ended January 31, 2005.


18




**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 34.5% 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 71.3% 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.





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 the new travel centers’ assets.


19





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.





**All
      Stores**





Gross
      sales at the Company’s travel centers increased by 15.8% to $27.904 million for
      the twelve months ended January 31, 2006, from $24.090 million for the twelve
      months ended January 31, 2005. Merchandise sales increased 12.6% to $10.842
      million for the twelve months ended January 31, 2006, from $9.632 million for
      the twelve months ended January 31, 2005. The increase is due to volume
      purchasing, maintaining mark ups and the new Picacho Peak store. Gasoline sales
      increased 26.8% to $13.031 million for the twelve months ended January 31,
      2006,
      from $10.279 million for the same period in 2005. The increase is due to market
      price increases and the new Picacho Peak store. Restaurant sales 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.





Cost
      of
      goods sold increased 19.0% to $17.980 million for the twelve months ended
      January 31, 2006, from $15.113 million for the twelve months ended January
      31,
      2005. Merchandise cost of goods increased 12.2% to $3.962 million for the twelve
      months ended January 31, 2006, from $3.530 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. Gasoline
      cost of goods increased 27.7% to $11.681 million for the twelve months ended
      January 31, 2006, from $9.150 million for the twelve months ended January 31,
      2005. The increase corresponds to market price increases. Restaurant cost of
      goods 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 64.4%
      for the twelve months ended January 31, 2006, as compared to 62.7% for the
      twelve months ended January 31, 2005.





Gross
      profit increased 10.4% to $9.689 million for the twelve months ended January
      31,
      2006, from $8.778 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 as well as the new
      facility.





General
      and administrative expenses 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 6.4% to $7.833 million for the twelve months
      ended January 31, 2006, from $7.365 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, utilities, and bonuses related to the sales
      incentive programs and executive management.





Depreciation
      and amortization expense increased 25.9% to $885,000 for the twelve months
      ended
      January 31, 2006, from $703,000 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 of 36.8% to
      $971,000 for the twelve months ended January 31, 2006, compared to operating
      income of $710,000 for the twelve months ended January 31, 2005.


20





Non-operating
      income (expense) 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 $184,000 for the twelve months ended January 31,
      2006 compared to $189,000 for the twelve months ended January 31, 2005. Interest
      expense increased 100.0% to $406,000 for the twelve months ended January 31,
      2006, from $203,000 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 increased 36.4% to $1.015 million for the twelve months
      ended January 31, 2006, compared to income before income taxes of $744,000
      for
      the twelve months ended January 31, 2005. As a percentage of gross revenues,
      income before income taxes was 3.6% for the twelve months ended January 31,
      2006, compared to 3.1% for the twelve months ended January 31,
      2005.





Income
      tax expense increased 19.7% to $365,000 for the twelve months ended January
      31,
      2006, compared to an income tax expense of $305,000 for the twelve months ended
      January 31, 2005. The increase is primarily due an increase in operating income
      and a non-operating gain from the sale of property and equipment partially
      off
      set by increases in interest expense. The effective tax rate for fiscal 2006
      was
      36.0%, compared to 41.0% for fiscal 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.





**Fiscal
      Year Ended January 31, 2005 (Fiscal 2005) Compared to Fiscal Year Ended January
      31, 2004 (Fiscal 2004)**





Gross
      sales at the Company’s travel centers increased 10.3% to $24.090 million for
      fiscal 2005, from $21.848 million for fiscal 2004. Merchandise sales increased
      3.8% to $9.632 million for fiscal 2005, from $9.283 million for fiscal 2004.
      The
      increase is primarily due to sales incentives, additional supervisory support
      dedicated to the stores as well as an increase of $150,000 at one location
      due
      to additions of billboards advertising that location. Gasoline sales increased
      19.5% to $10.279 million for fiscal 2005, from $8.605 million for fiscal 2004.
      The increase is due to market price increases. Restaurant sales increased 9.6%
      to $2.424 million for fiscal 2005, from $2.211 million for fiscal 2004. The
      increase is primarily due to sales incentive programs, supervisory support
      dedicated to the restaurants as well as an increase of $61,000 at one location
      due to additions of billboards advertising that location. Wholesale gasoline
      sales to independent retailers increased 0.3% to $1.755 million for fiscal
      2005,
      from $1.749 million for fiscal 2004. The increase is due to market price
      increases offset by decreases in volume.





Cost
      of
      goods sold for the travel centers increased 12.4% to $15.113 million for fiscal
      2005, from $13.450 million for fiscal 2004. Merchandise cost of goods decreased
      0.6% to $3.530 million for fiscal 2005, from $3.551 million for fiscal 2004.
      The
      decrease corresponds to continued volume purchasing as well as maintaining
      mark-ups. Gasoline cost of goods increased 21.2% to $9.150 million for fiscal
      2005, from $7.547 million for fiscal 2004. The increase is due to market prices
      increases. Restaurant cost of goods increased 11.8% to $729,000 for fiscal
      2005,
      from $652,000 for fiscal 2004. The increase directly corresponds to the increase
      in restaurant sales as well as an increase in prices. Wholesale gasoline cost
      of
      goods increased 0.2% to $1.704 million in fiscal 2005, from $1.700 million
      for
      fiscal 2004. The increase is primarily due market price increases offset by
      decreases in volume. Cost of goods sold as a percentage of gross revenues
      increased for fiscal 2005 to 62.7%, compared to 61.6% for fiscal
      2004.


21





Gross
      profit for the travel centers increased 7.8% to $8.778 million for fiscal 2005
      from $8.146 million for fiscal 2004. The increase is primarily due attributable
      to improved management of cost of goods due to increases in volume
      purchasing.





General
      and administrative expenses for travel centers consist of salaries, bonuses
      and
      commissions for travel center personnel, property costs and repairs and
      maintenance. General and administrative expenses also include executive and
      administrative compensation and benefits, investor relations and accounting
      and
      legal fees. General and administrative expenses for the travel centers increased
      8.2% to $7.365 million for fiscal 2005, from $6.805 million for fiscal 2004.
      The
      increase is due to bonuses related to the sales incentive programs, additional
      personnel, sign rent related to the additions of billboards advertising one
      location, utilities related to trash removal, normal repair and maintenance
      to
      billboards and credit card fees related to processing credit cards through
      the
      Company’s gasoline distributorships.





Depreciation
      and amortization expenses increased by 2.6% to $703,000 for fiscal 2005, from
      $685,000 for fiscal 2004. The increase is primarily associated with certain
      assets related to capital expenditures.





The
      above
      factors contributed to an increase in travel centers operating income of 8.4%
      to
      $710,000 for fiscal 2005, from $655,000 for fiscal 2004.





Other
      income (expense) includes interest income, gains and losses from the sale of
      assets, rental income and interest expense. Interest income decreased 50.0%
      to
      $45,000 in fiscal 2005, from $90,000 in fiscal 2004. The decrease is primarily
      due to bond interest and mortgages receivable interest earned in the prior
      period not present in the current period. Gains from the sale of property and
      equipment decreased to $3,000 in fiscal 2005 from $54,000 in fiscal 2004. 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. Miscellaneous income decreased 69.2% to $400 in fiscal 2005,
      from
      $1,300 in fiscal 2004. Rental income was $189,000 in fiscal 2005, compared
      to
      $193,000 in fiscal 2004. The Company leases available office space at the
      Company’s corporate headquarters as well as housing to management at the store
      sites. Interest expense increased 9.7% to $203,000 for fiscal 2005, from
      $185,000 for fiscal 2004. The increase is primarily attributable to higher
      interest rates.





Income
      before income taxes decreased 8.0% to $744,000 for fiscal 2005, from $809,000
      for fiscal 2004. The decrease is primarily due the decrease in miscellaneous
      income partially offset by the increase in interest expense. As a percentage
      of
      gross revenues, income before income taxes decreased to 3.1% for fiscal 2005,
      from 3.7% for fiscal 2004.





Income
      taxes decreased to $305,000 for fiscal 2005, compared to $315,000 for fiscal
      2004, as a result of lower pre-tax income partially offset by non-deductible
      expenses added back to income for tax calculations. The effective tax rate
      for
      fiscal 2005 was 41.0%, compared to 38.9% for fiscal 2004.





The
      foregoing factors contributed to the Company’s decrease in net income for fiscal
      2005 to $439,000, compared to $494,000 for fiscal 2004.





**Liquidity
      and Capital Resources**





At
      January 31, 2006, the Company had working capital of $4.394 million compared
      to
      working capital of $3.582 million at January 31, 2005. At January 31, 2006,
      the
      company had a current ratio of 3.0:1 compared to a current ratio of 2.5:1 at
      January 31, 2005 (“current ratio” is the ratio of current assets to current
      liabilities). The increase in working capital is primarily due to increases
      in
      cash of $572,000, an increase in inventory of $99,000, a decrease in accounts
      payable of $222,000, a decrease in short-term borrowing of $210,000, a decrease
      in the current portion of long-term debt of $67,000 partially offset by a
      decrease in prepaid expenses of $88,000, an increase in accrued liabilities
      of
      $68,000, an increase in accrued salaries and benefits of $133,000, and increase
      in the current portion of deferred revenue of $65,000.


22





The
      net
      cash provided by operating activities was $1.188 million at January 31, 2006,
      compared to $1.409 million at January 31, 2005. During fiscal 2006, there were
      decreases in net operating assets and liabilities of $279,000, a decrease in
      the
      provision for deferred income taxes of $149,000, an increase in depreciation
      and
      amortization of $182,000 and an increase in the gain on sales of property and
      equipment of $194,000.





Net
      cash
      provided by investing activities was $131,000 at January 31, 2006, compared
      to
      net cash used by investing activities of $3.450 million at January 31, 2005.
      The
      increase was primarily due to a decrease in purchases of property and equipment
      of $3.080 million of which $2.480 million was for the new travel center in
      Picacho, Arizona, offset by an increase in proceeds from the sale of assets
      of
      $374,000 and payments received from notes receivable of $132,000.





Net
      cash
      used in financing activities was $747,000 at January 31, 2006, compared to
      net
      cash provided by financing activities of $1.845 million at January 31, 2005.
      Payments on long-term debt were $740,000 at January 31, 2006 compared to
      payments on long-term debt of $975,000 at January 31, 2005. There were no
      proceeds from long-term borrowing at January 31, 2006 compared to proceeds
      from
      long-term borrowing of $2.675 million at January 31, 2005. There were no
      proceeds from short-term borrowing at January 31, 2006 compared to proceeds
      from
      short-term borrowing of $200,000 at January 31, 2005. Payments for debt issuance
      costs were $6,000 at January 31, 2006 compared to debt issuance costs of $55,000
      at January 31, 2005.





As
      of
      January 31, 2006, the Company was indebted to various banks and individuals
      in
      an aggregate principal amount of approximately $5.314 million under various
      loans and promissory notes, compared to $5.844 million as of January 31, 2005.
      Land, buildings, equipment and inventories of the Company secure many of the
      loans and promissory notes. The loans and promissory notes mature at dates
      from
      September 2008 to February 2015 and accrue interest at rates ranging from 7.16%
      to 7.50% per annum. The Company’s total monthly payments on outstanding
      long-term debt obligations are approximately $74,000.





Approximately
      $5.249 million of the $5.314 million outstanding as of January 31, 2006 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 and property 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 buildings and equipment.
      The
      Company did not borrow any funds from this open line of credit during fiscal
      year 2006. As of January 31, 2006, $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 7.50% at January 31, 2006.





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. For fiscal year ending January 31, 2006, the Company
      was in compliance with the minimum financial ratios.





The
      Company has forecasted approximately $750,000 for capital commitments for fiscal
      year 2006 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 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.


23





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





As
      of
      January 31, 2006, approximately $5.249 million of the Company’s total
      indebtedness is accruing interest at variable rates tied to LIBOR or the
      respective bank’s prime lending rate. As such, the Company is subject to
      fluctuations in interest rates that could have a negative impact on the net
      income of the Company. In addition, it is likely that future indebtedness
      incurred by the Company will be at variable rates that could impact the
      Company’s ability to finance internal development and growth of the business.
      The Company does not, however, believe that any risk inherent in the variable
      rate nature of its debt is likely to have a material effect on its financial
      position, results of operations or liquidity.





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.


24








**BOWLIN
      TRAVEL CENTERS, INC.**





Financial
      Statements





January
      31, 2006 and 2005






25




**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.  The 2004 statements
        of income, changes in stockholders’ equity and cash flows were also audited by
        Neff + Ricci LLP, and whose report dated March 26, 2004, 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


26


**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, 2005, and the related statements of income, stockholders’ equity and
        cash flows for each of the two years in the period 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 audits.
 
 We
        conducted our audits 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 audits 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 audits 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, 2005, and the results of its operations and its cash flows for
        each of the two years in the period 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
 27


**BOWLIN
                TRAVEL CENTERS, INC.****Balance
                Sheets****January
                31, 2006 and 2005****Assets**
            
            **2006**
            
            **2005**Current
                assets:Cash
                and cash equivalents
            
            $
            2,615,414
            
            
            2,043,203Accounts
                receivable
            
            
            41,464
            
            
            8,755Accounts
                receivable - related parties
            
            
            —
            
            
            43,251Inventories
            
            
            3,606,037
            
            
            3,506,831Prepaid
                expenses
            
            
            275,638
            
            
            363,749Notes
                receivable, current maturities
            
            
            8,928
            
            
            3,368Total
                current assets
            
            
            6,547,481
            
            
            5,969,157Property
                and equipment, net
            
            
            12,541,029
            
            
            13,265,165Intangible
                assets, net
            
            
            190,022
            
            
            225,052Interest
                receivable
            
            
            12,988
            
            
            21,218Investment
                in real estate
            
            
            414,753
            
            
            439,036Notes
                receivable, less current portion
            
            
            101,669
            
            
            165,516Total
                assets
            
            $
            19,807,942
            
            
            20,085,144**Liabilities
                and Stockholders’ Equity**Current
                liabilities:Short-term
                borrowing
            
            $
            —
            
            
            210,250Current
                maturities of long-term debt
            
            
            515,423
            
            
            581,944Accounts
                payable
            
            
            860,686
            
            
            1,083,087Accrued
                salaries and benefits
            
            
            389,549
            
            
            256,565Accrued
                liabilities
            
            
            292,303
            
            
            224,203Deferred
                revenue, current
            
            
            95,554
            
            
            30,835Total
                current liabilities
            
            
            2,153,515
            
            
            2,386,884Deferred
                income taxes
            
            
            812,200
            
            
            877,200Deferred
                revenue, long-term
            
            
            —
            
            
            165,550Long-term
                debt, less current maturities
            
            
            4,798,786
            
            
            5,262,422Total
                liabilities
            
            
            7,764,501
            
            
            8,692,056Commitments
            
            
            —
            
            
            —Stockholders’
                equity:Preferred
                stock, $.001 par value; 1,000,000 shares authorized,none
                issued or outstanding at January 31, 2006 and 2005
            
            
            —
            
            
            —Common
                stock, $.001 par value; 10,000,000 shares authorized,4,583,348
                issued and outstanding at January 31, 2006 and 2005
            
            
            4,583
            
            
            4,583Additional
                paid-in capital
            
            
            9,775,192
            
            
            9,775,192Retained
                earnings
            
            
            2,263,666
            
            
            1,613,313Total
                stockholders’ equity
            
            
            12,043,441
            
            
            11,393,088Total
                liabilities and stockholders’ equity
            
            $
            19,807,942
            
            
            20,085,144See
                accompanying notes to financial statements.


28


**BOWLIN
                TRAVEL CENTERS, INC.****Statements
                of Income****Years
                ended January 31,****2006**
            
            **2005**
            
            **2004**Gross
                sales
            
            $
            27,903,599
            
            
            24,089,536
            
            
            21,848,055Less
                discounts on sales
            
            
            (235,235
            )
            
            (198,537
            )
            
            (252,696
            )Net
                sales
            
            
            27,668,364
            
            
            23,890,999
            
            
            21,595,359Cost
                of goods sold
            
            
            17,979,627
            
            
            15,113,327
            
            
            13,449,655Gross
                profit
            
            
            9,688,737
            
            
            8,777,672
            
            
            8,145,704General
                and administrative expense
            
            
            (7,832,828
            )
            
            (7,364,784
            )
            
            (6,805,245
            )Depreciation
                and amortization
            
            
            (884,561
            )
            
            (703,050
            )
            
            (685,051
            )Operating
                income
            
            
            971,348
            
            
            709,838
            
            
            655,408Other
                income (expense):Interest
                income
            
            
            69,385
            
            
            45,075
            
            
            89,973Gain
                on sale of property and equipment
            
            
            196,593
            
            
            2,997
            
            
            53,615Rental
                income
            
            
            184,330
            
            
            189,413
            
            
            192,864Miscellaneous
            
            
            —
            
            
            370
            
            
            1,347Interest
                expense
            
            
            (406,403
            )
            
            (203,366
            )
            
            (184,513
            )Total
                other income (expense)
            
            
            43,905
            
            
            34,489
            
            
            153,286Income
                before income taxes
            
            
            1,015,253
            
            
            744,327
            
            
            808,694Income
                taxes
            
            
            364,900
            
            
            305,400
            
            
            314,800Net
                income
            
            $
            650,353
            
            
            438,927
            
            
            493,894Earnings
                per share:Weighted
                    average common shares outstanding
            
            
            4,583,348
            
            
            4,583,348
            
            
            4,583,348Basic
                and diluted
            
            $
            0.14
            
            
            0.10
            
            
            0.11See
                accompanying notes to financial
                statements.


29


**BOWLIN
                TRAVEL CENTERS, INC.****Statements
                of Stockholders’ Equity****For
                the Years Ended January 31, 2006, 2005 and 2004****Common**
            
            **Additional****Number**
            
            **stock,**
            
            **paid-in**
            
            **Retained****of
                shares**
            
            **at
                par**
            
            **capital**
            
            **earnings**
            
            **Total**Balance
                at January 31, 2003
            
            
            4,583,348
            
            $
            4,583
            
            
            9,775,192
            
            
            680,492
            
            
            10,460,267Net
                income
            
            
            —
            
            
            —
            
            
            —
            
            
            493,894
            
            
            493,894Balance
                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
            
            
            12,043,441See
                accompanying notes to financial statements.





30




**BOWLIN
                TRAVEL CENTERS, INC.****Statement
                of Cash Flows****Years
                ended January 31,****2006**
            
            **2005**
            
            **2004**Cash
                flows from operating activities:Net
                income
            
            $
            650,353
            
            
            438,927
            
            
            493,894Adjustments
                to reconcile net income tonet
                cash provided by operating activities:Depreciation
                and amortization
            
            
            884,561
            
            
            703,050
            
            
            685,051Amortization
                of loan fee
            
            
            36,963
            
            
            29,453
            
            
            23,922Gain
                on sale of property and equipment
            
            
            (196,593
            )
            
            (2,997
            )
            
            (53,615
            )Provision
                for deferred income taxes
            
            
            (65,000
            )
            
            83,900
            
            
            203,700Changes
                in operating assets and liabilitiesAccounts
                receivable
            
            
            10,542
            
            
            55,307
            
            
            3,212Inventories
            
            
            (99,206
            )
            
            (254,110
            )
            
            (158,785
            )Prepaid
                expenses and other
            
            
            88,111
            
            
            148,788
            
            
            (203,931
            )Accounts
                payable and accrued liabilities
            
            
            (21,317
            )
            
            44,136
            
            
            268,601Deferred
                income
            
            
            (100,831
            )
            
            162,328
            
            
            —Income
                taxes
            
            
            —
            
            
            —
            
            
            (1,706
            )Net
                cash provided by operating activities
            
            
            1,187,583
            
            
            1,408,782
            
            
            1,260,343Cash
                flows from investing activities:Proceeds
                from sale of assets
            
            
            384,309
            
            
            10,635
            
            
            300,461Purchases
                of property and equipment
            
            
            (460,336
            )
            
            (3,540,832
            )
            
            (2,171,328
            )Accrued
                interest receivable
            
            
            8,230
            
            
            924
            
            
            4,794Investment
                in real estate
            
            
            24,283
            
            
            36,091
            
            
            (76
            )Payments
                received from mortgages receivable
            
            
            —
            
            
            —
            
            
            310,129Increase
                in notes receivable
            
            
            —
            
            
            —
            
            
            (10,000
            )Payment
                received from notes receivable
            
            
            174,899
            
            
            42,908
            
            
            33,424Net
                cash provided by (used in) investing activities
            
            
            131,385
            
            
            (3,450,274
            )
            
            (1,532,596
            )Cash
                flows from financing activities:Payments
                on long-term debt
            
            
            (740,407
            )
            
            (975,253
            )
            
            (652,021
            )Payments
                for debt issuance costs
            
            
            (6,350
            )
            
            (54,775
            )
            
            (12,518
            )Proceeds
                from short-term borrowings
            
            
            —
            
            
            200,000
            
            
            10,250Proceeds
                from borrowings
            
            
            —
            
            
            2,675,000
            
            
            750,000Net
                cash used in (provided by) financing activities
            
            
            (746,757
            )
            
            1,844,972
            
            
            95,711Net
                increase (decrease) in cash and cash equivalents
            
            
            572,211
            
            
            (196,520
            )
            
            (176,542
            )Cash
                and cash equivalents at beginning of year
            
            
            2,043,203
            
            
            2,239,723
            
            
            2,416,265Cash
                and cash equivalents at end of year
            
            $
            2,615,414
            
            
            2,043,203
            
            
            2,239,723


**(Continued)**


31




**BOWLIN
                TRAVEL CENTERS, INC.****Statement
                of Cash Flows****Years
                ended January 31,****2006**
            
            **2005**
            
            **2004**Supplemental
                disclosure of cash flow information:Cash
                paid for interest
            
            $
            406,403
            
            
            203,366
            
            
            184,513Cash
                paid for income taxes
            
            $
            370,000
            
            
            217,000
            
            
            112,806Noncash
                investing and financing activities:Like-kind
                exchange of property
            
            $
            —
            
            
            308,500
            
            
            —Real
                estate sold in exchange fornotes
                receivable
            
            $
            116,612
            
            
            —
            
            
            —See
                accompanying notes to financial statements.





32




**BOWLIN
        TRAVEL CENTERS, INC.**
 Notes
        to Financial Statements
 January
        31, 2006


**(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 principal business activities include the operation of
      full-service travel centers and restaurants which 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.





BTC’s
      articles of incorporation authorize 10,000,000 shares of common stock ($.001
      par
      value) and 1,000,000 shares of preferred stock ($.001 par value) which can
      be
      issued at the discretion of the Board of Directors.





***(b)***
            ***Cash
                and Cash Equivalents***




The
      Company considers all liquid investments with a maturity of three months or
      less
      when purchased to be cash equivalents. The Company places its temporary cash
      investments with a local financial institution. Excess collected funds are
      invested in securities repurchase agreements and are collateralized by
      securities with fair market values of 102 percent. The remaining funds at
      year-end were covered by Federal Deposit Insurance Corporation
      insurance.





***(c)***
            ***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.





***(d)***
            ***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.





***(e)***
            ***Intangible
                Assets***




Debt
      issuance costs are deferred and amortized over the terms of the respective
      borrowings on a straight-line basis for the revolving portion and the interest
      method for the term note portion. 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.





***(f)***
            ***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.


33
  **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial Statements
 January
          31, 2006


***(g)***
            ***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.





***(h)***
            ***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.





***(i)***
            ***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.





***(j)***
            ***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 consolidated financial statements in conformity
      with generally accepted accounting principles. Actual results could differ
      from
      those estimates.





***(k)***
            ***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.


34
  **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial Statements
 January
          31, 2006


***(l)***
            ***Reclassifications***




Certain
      2005 and 2004 amounts have been reclassified to conform to 2006 presentation.
      Such reclassifications had no effect on net income.





***(m)***
            ***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.





Management
      believes that all accounts receivable are fully collectable. Therefore, no
      allowance for doubtful accounts is deemed to be required.





***(n)***
            ***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. The long-term
      portion of deferred revenue consists of revenue received in advance for a Brand
      Incentive Program for projected ExxonMobil gallons purchased beginning April
      1,
      2004 and ending March 31, 2006.





**(2)**
            **Notes
                Receivable**




Notes
      receivable as of January 31, 2006 and 2005 consist of the
      following:


**2006**
              
              **2005**$400,000
                      8% note of which $234,074 is deferred, due $37,500 annually
                      through 2005
                      (including interest) with the balance due in 2006
                      (a)
              
              $
              —
              
              
              168,884$100,000
                  8% note of which $85,124 is deferred, due $667 interest only monthly,
                  $4,000 principal due thefirst
                  year and $24,000 annually for the remainingfour
                  years (b)
              
              
              14,876
              
              
              —$80,000
                  8% note of which $21,886 is deferred, due $1,622 monthly (including
                  interest) through 2010 (b)
              
              
              55,725
              
              
              —$75,000
                  8% note of which $31,378 is deferred, due $4,587 quarterly (including
                  interest) through 2010 (b)
              
              
              39,996
              
              
              —110,597
              
              
              168,884Less
                  current portion
              
              
              (8,928
              )
              
              (3,368
              )$
              101,669
              
              
              165,516_______________
                (a)  Collateralized by land and improvements and
                  equipment sold. In the event of default, the property and equipment
                  reverts back to the Company.(b) 
                  Collateralized
                  by the property sold. In the event of default, the property reverts
                  back
                  to the Company.


35
  **BOWLIN
            TRAVEL CENTERS, INC.**
 Notes
            to Financial Statements
 January
            31, 2006


In
      May of
      2005, the Company received a balloon payment of $375,217. The payment was in
      full of a $168,884 not receivable with the remaining balance of $206,333
      considered a gain on the sale of property. The gain was received and recognized
      as non-operating income.





In
      August
      2005, the Company sold property to a third party 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 $9,002 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 and 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
      August
      2005, the Company sold property to a third party 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 $2,735 was
      recognized initially and $21,886 was deferred and 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
      September 2005, the Company sold property to a third party 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 $31,378 was deferred and 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.





Management
      believes that all notes receivable are fully collectable. Therefore, no
      allowance is deemed to be required.


36
  **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial Statements
 January
          31, 2006


**(3)**
            **Property
                and Equipment**




Property
      and equipment consist of the following at January 31:





**Estimated
                life (years)**
            
            **2006**
            
            **2005**Land
            
            
            
            
            $
            2,352,865
            
            
            2,472,104Buildings
                and improvements
            
            
            10
                - 40
            
            
            10,310,803
            
            
            10,254,455Machinery
                and equipment
            
            
            3
                - 10
            
            
            7,798,745
            
            
            7,756,969Autos,
                trucks and mobile homes
            
            
            3
                - 10
            
            
            1,784,827
            
            
            1,759,685Billboards
            
            
            15
                - 20
            
            
            1,582,282
            
            
            1,529,529Construction
                in progress
            
            
            
            
            
            25,710
            
            
            27,164Less
                accumulated depreciation
            
            
            
            
            
            (11,314,203
            )
            
            (10,534,741
            )$
            12,541,029
            
            
            13,265,165





Gains
      and
      losses on sale of property, equipment, early termination of wholesale gasoline
      location and investment in real estate:





**2006**
            
            **2005**Land
            
            $
            233,785
            
            
            3,810Buildings
                and improvements
            
            
            (78,146
            )
            
            —Machinery
                and equipment
            
            
            (22,083
            )
            
            70Autos,
                trucks and mobile homes
            
            
            —
            
            
            (883
            )Wholesale
                gasoline termination
            
            
            52,806
            
            
            —Investment
                in real estate
            
            
            10,231
            
            
            —$
            196,593
            
            
            2,997





In
      August
      2005, the Company sold property to a third party for $20,000 cash and a note
      receivable of $100,000. The property sold had a carrying value of $9,002 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
      and 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
      August
      2005, the Company sold property to a third party for $10,000 cash and a note
      receivable of $80,000. 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 $2,735 was recognized initially and $21,886 was deferred
      and 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.


37
  **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial Statements
 January
          31, 2006


In
      September 2005, the Company sold property to a third party for $10,000 cash
      and
      a note receivable of $75,000. 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 $31,378 was
      deferred and 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
      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.





**(4)**
            **Intangible
                Assets**




Intangible
      assets, at cost, consist of the following at January 31:





**2006**
            
            **2005**Franchise
                fees
            
            $
            132,442
            
            
            132,442Debt
                issuance costs
            
            
            384,915
            
            
            378,565517,357
            
            
            511,007Less
                accumulated amortization
            
            
            (327,335
            )
            
            (285,955
            )$
            190,022
            
            
            225,052





The
      following schedule discloses the estimated amortization expense at January
      31:





2007
            
            $
            30,0802008
            
            
            27,3572009
            
            
            23,5632010
            
            
            22,7402011
            
            
            22,490Thereafter
            
            
            63,792Total
            
            $
            190,022


38
  **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial Statements
 January
          31, 2006


**(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
      2005, the Company renewed a $1,250,000 open line of credit with one of its
      existing lenders. The line-of-credit is secured by building and equipment.
      The
      Company did not borrow any funds during fiscal year 2006. As of January 31,
      2006, $1,250,000 remains on the open line of credit that will mature July 2007
      and requires variable interest (7.50% at January 31, 2006).





**(7)**
            **Long-term
                Debt**




Long-term
      debt consists of the following at January 31:




**2006**
            
            **2005**Due
                bank, maturity September 2008, variable interest (7.16% at January
                31,
                2006), monthly installments of $27,345, secured by buildings and
                equipment
            
            $
            789,030
            
            
            1,060,089Due
                bank, maturity October 2013, variable interest (7.50% at January 31,
                2006), monthly installments of $6,830, secured by land and
                buildings
            
            
            525,019
            
            
            571,779Due
                bank, maturity October 2013, variable interest (7.50% at January 31,
                2006), monthly installments of $4,072, secured by land and
                buildings
            
            
            315,433
            
            
            343,165Due
                bank, maturity September 2014, variable interest (7.50% at
                January 31, 2006), monthly installments of $5,132, secured by
                buildings and equipment
            
            
            436,210
            
            
            468,740Due
                bank, maturity January 2013, interest at 6%, monthly installments
                of $944,
                secured by land
            
            
            64,719
            
            
            71,881Due
                bank, maturity January 2011, variable interest (7.50% at January
                31,
                2006), monthly installments of $10,580, secured by buildings and
                equipment
            
            
            569,518
            
            
            656,991Due
                bank, maturity February 2015, variable interest (7.50% at January
                31,
                2006), monthly installments of $16,225, secured by buildings and
                equipment
            
            
            2,125,679
            
            
            2,175,000Due
                bank, maturity November 2014, variable interest (7.50% at January
                31,
                2006), monthly installments of $3,317, secured by buildings and
                equipment
            
            
            488,601
            
            
            496,7215,314,209
            
            
            5,844,366Less
                current maturities
            
            
            (515,423
            )
            
            (581,944
            )$
            4,798,786
            
            
            5,262,422


39
  **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial Statements
 January
          31, 2006
  Future
        maturities of long-term debt for the years ending January 31 are as
        follows:





2007
            
            $
            515,4232008
            
            
            554,2942009
            
            
            479,0522010
            
            
            293,2752011
            
            
            315,897Thereafter
            
            
            3,156,268Total
            
            $
            5,314,209





**(8)**
            **Income
                Taxes**




Income
      taxes consist of the following for the years ended January 31:





**Current**
            
            **Deferred**
            
            **Total**2006: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
            
            
            305,4002004:U.S.
                Federal
            
            $
            92,600
            
            
            169,700
            
            
            262,300State
            
            
            18,500
            
            
            34,000
            
            
            52,500$
            111,100
            
            
            203,700
            
            
            314,800


40
  **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial Statements
 January
          31, 2006


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:





**2006**
            
            **2005**
            
            **2004**Computed
                “expected” tax
            
            $
            345,186
            
            
            253,071
            
            
            274,956State income taxes, net of
                federal tax benefit
            
            
            44,000
            
            
            33,629
            
            
            34,673Other
            
            
            (24,286
            )
            
            18,700
            
            
            5,171Total
            
            $
            364,900
            
            
            305,400
            
            
            314,800





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:





**2006**
            
            **2005**Deferred
                tax assets:At
                January 31, 2006 deferred revenue principally due to accrual for
                financial
                reporting purposes
            
            $
            37,266
            
            
            76,590At
                January 31, 2006, compensated absences, principally due to accrual
                for
                financial reporting purposes
            
            
            34,722
            
            
            (27,715
            )Total
                gross deferred tax assets
            
            
            71,988
            
            
            48,875Deferred
                tax liabilities:Property
                and equipment, principally due to differences in
                depreciation
            
            
            884,185
            
            
            938,262Other
            
            
            3
            
            
            (12,187
            )Total
                gross deferred liabilities
            
            
            884,188
            
            
            926,075Net
                deferred tax liability
            
            $
            812,200
            
            
            877,200





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.





**(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 $60,020, $64,361 and
      $48,806 in fiscal 2006, 2005 and 2004, respectively.


41
  **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial Statements
 January
          31, 2006


**(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 $255,426, $237,970 and $246,528 for
      the
      years ended January 31, 2006, 2005 and 2004, respectively. The Company also
      leases land where several of its retail billboards are located and rent expense
      for these leases was $191,088, $152,158 and $117,148 for the years ended
      January 31, 2006, 2005 and 2004, respectively.





The
      leasing agreements for the various locations include 5 to 30 year leases with
      remaining lives on those leases ranging from approximately 1 to 27 years at
      January 31, 2006. Contingent rentals are generally based on percentages of
      specified gross receipts. Several leases include terms for computation of rent
      expense as the greater of a percent of gross receipts or a percent of land
      value
      as defined by the lease. 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 31:2007
            
            $
            171,1762008
            
            
            151,0482009
            
            
            137,1012010
            
            
            129,6992011
            
            
            127,189Thereafter
            
            
            1,252,786Total
            
            $
            1,968,999





**(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.


42
  **BOWLIN
          TRAVEL CENTERS, INC.**
 Notes
          to Financial Statements
 January
          31, 2006
  The
        sales
        with the associated cost of goods and gross profit consist of the following
        at
        January:





**2006**
            
            **2005**
            
            **2004**Gross
                sales
            
            $
            1,137,523
            
            
            1,333,324
            
            
            1,399,527Cost
                of goods sold
            
            
            1,109,490
            
            
            1,288,990
            
            
            1,355,553Gross
                profit
            
            $
            28,033
            
            
            44,334
            
            
            43,974





43


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





On
      January 4, 2006, Neff+Ricci LLP (“Neff+Ricci”) notified the “Company” that it
      combined its practice with Moss Adams LLP (“Moss Adams”) and therefore resigned
      as the Company’s registered independent public accounting firm. According to the
      information provided to the Company by Neff+Ricci, all of the partners of
      Neff+Ricci have become partners of Moss Adams. 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.





During
      the Company’s two most recent fiscal years and the subsequent interim period
      preceding the replacement of Neff+Ricci, there were no disagreements with
      Neff+Ricci on any matter of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedure, which disagreements,
      if
      not resolved to the satisfaction of Neff+Ricci, would have caused them to make
      reference to the subject matter of the disagreements in connection with their
      reports; and there were no reportable events as described in Item 304(a)(1)(v)
      of Regulation S-K (“Regulation S-K”) promulgated by the Securities and Exchange
      Commission (the “SEC”) pursuant to the Securities Exchange Act of 1934, as
      amended.





The
      Company requested that Neff+Ricci furnish it with a letter addressed to the
      Commission stating whether or not Neff+Ricci agrees with the statement set
      forth
      above. A copy of that letter, dated January 9, 2006, is filed as Exhibit 16.1
      to
      the Form 8-K filed January 9, 2006.





On
      January 5, 2006, the Company engaged Moss Adams LLP (“Moss Adams”) as its
      registered independent public accounting firm. The Company’s Board of Directors
      recommended and approved the engagement of Moss Adams.





During
      the Registrant’s two most recent fiscal years and through the date of the report
      on the Form 8-K filed January 9, 2006, the Company did not consult Moss Adams
      with respect to the application of accounting principles to a specified
      transaction, either completed or proposed, or the type of audit opinion that
      might be rendered on the Registrant’s financial statements, or any other matters
      or reportable events listed in Item 304(a)(2)(i) or (ii) of Regulation
      S-K.





**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 the Company’s disclosure controls and
      procedures were effective as of the end of the period covered by this report
      but
      also noted certain weaknesses in the control environment. These result from
      the
      lack of an electronic point of sale merchandise tracking system as the Company
      historically counted physical inventory at the end of each fiscal, year,
      resulting in difference each year between estimates used throughout the year
      based on standard markups within defined categories to record cost of goods
      sold
      and the year-end physical count. The Company is dedicating resources to correct
      these issues 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 of cost of goods sold. Other than the above issues, there were no
      changes in the Company’s internal control over financial reporting that occurred
      during the fourth quarter of fiscal 2006 that has materially affected, or is
      reasonably likely to materially affect, the Company’s internal control over
      financial reporting.


44





It
      should
      be noted that any system of controls, however well designed and operated, can
      provide only reasonable, and not absolute, assurance that the objectives of
      the
      system are met. In addition, the design of any control system is based in part
      upon certain assumptions about the likelihood of future events. Because of
      these
      and other inherent limitations of control systems, there can be no assurance
      that any design will succeed in achieving its stated goals under all potential
      future conditions, regardless of how remote.





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





Not
      applicable.






**PART
      III**





**ITEM
              10.**
            **DIRECTORS
                AND EXECUTIVE OFFICERS OF THE
                REGISTRANT**





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
            
            62
            
            Chairman
                of the Board, President and Chief Executive OfficerWilliam
                J. McCabe
            
            56
            
            Senior
                Vice President -ManagementInformation
                Systems, Secretary, Treasurer and DirectorDavid
                B. Raybould
            
            53
            
            DirectorNina
                J. Pratz
            
            54
            
            Chief
                Financial Officer, Senior Vice President and DirectorKim
                D. Stäke
            
            50
            
            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.


45





*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.





*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.





**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 for services rendered to Bowlin Travel Centers,
      Inc. during the fiscal years ended January 31, 2006, 2005 and 2004. 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.


46





**Long
                Term****Compensation****Annual
                Compensation**
            
            **Awards****Name
                and Principal Position**
            
            **Fiscal**
              **Year**
            
            **Salary
                ($)**
              **(1)**
            
            **Bonus**
              **($)**
            
            **Other
                Annual Compensa-**
              **tion
                ($)**
            
            **Securities**
              **Underlying**
              **Options/**
              **SARs
                (#)**
            
            **All
                Other Compensa-**
              **tion
                ($)**Michael
                L. Bowlin
              Chairman
                of the Board,
              President,
                CEO &
              Director
            
            2006
              2005
              2004
            
            97,000
              97,500
              97,500
            
            35,050
              35,050
              35,050
            
            17,526
                (2)
              17,438
                (2)
              16,664
                (2)
            
            —
              —
              —
            
            —
              —
              —_______________


(1)
            Includes
                amounts deferred at the election of the CEO to be contributed to
                his
                401(k) Profit Sharing Plan account.





(2)
            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. Amount for 2004
                includes (i) $1,620 of Bowlin Travel Centers discretionary matching
                contributions allocated to Mr. Bowlin’s 401(k) Profit Sharing Plan
                account; (ii) $8,544 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.





**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 any other compensation for services as directors of the
      Company.





**ITEM
              12.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND****MANAGEMENT**





As
      of
      January 31, 2006, 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.


47




**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%Jonathan
                Brooks (2)
            
            585,550
            
            12.8%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 1999 Avenue of the Stars, Suite 2040, Los Angeles, CA,
                90067.





(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 28, 2006.





(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.





48


**ITEM
              13.**
            **CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS**





**Wholesaling
      to Relative of Officer and Director and Stockholder of Bowlin Travel Centers**





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 an overall
      non-operating 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
      sales
      with the associated cost of goods and gross profit consist of the following
      the
      year ended January 31:





**2006**
            
            **2005**
            
            **2004**Gross
                sales
            
            $
            1,137,523
            
            
            1,333,324
            
            
            1,399,527Cost
                of goods sold
            
            
            1,109,490
            
            
            1,288,990
            
            
            1,355,553Gross
                profit
            
            $
            28,033
            
            
            44,334
            
            
            43,974





**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, 2006 and January 31, 2005, were approximately
      $37,000.





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. See, also, “Item 9: Changes in and disagreements with accountants on
      accounting and financial disclosure”.





**Audit-Related
      Fees**





None.


49




**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,
      2005 were approximately $1,000.





**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, 2005 were approximately $2,100.






**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.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.
 50
  **INDEX
            TO EXHIBITS**
 **(Continued)**
   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.
 10.26(1)
                        
                        Letter
                            of Agreement, dated as of March 1, 1987,
                            between Stuckey’s Corporation and the Registrant confirming franchise
                            of
                            Benson, AZ Stuckey’s Pecan Shoppe.10.27(2)
                        
                        Franchise
                            Agreement, dated as of July 7, 1982,
                            between Stuckey’s, Inc. and the Registrant, together with a related
                            Personal Guaranty and Indemnity.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 Registrant, 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.16.1(7)
                    
                    Letter
                      dated January 9, 2006, announcing changes in the Registrant’s certifying
                      accountant.31.1
                    
                    Certification
                        pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange
                        Act of
                        1934, as amended.31.2
                    
                    Certification
                        pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange
                        Act of
                        1934, as amended.32.1
                    
                    Certification
                        pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                        Section 906 of
                        the Sarbanes-Oxley Act of 2002.32.2
                    
                    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.




51





**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 28,
                2006
              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
                    28, 2006Michael L. Bowlin
                  Chairman of the Board,
                  President, CEO and Director
                  (PrincipalExecutive
                    Officer)
  /s/  NINA J. PRATZ
                
                
                April
                    28, 2006Nina J. Pratz
                  Chief Financial Officer, Senior Vice
                    President,
                  and
                    Director (Principal Accounting Officer)
 /s/  WILLIAM J. McCABE
                  
                  
                  April
                      28, 2006William M. McCabe
                    Senior Vice President, Management
                      Information
                    Systems, Secretary, Treasurer and
                      Director
 /s/
                            KIM D. STÄKE
                          
                          
                          April
                              28, 2006Kim
                              D. Stäke
                            Chief
                                Administrative Officer,
                              Vice
                                President and Director
  /s/
                            DAVID B. RAYBOULD
                          
                          
                          April
                              28, 2006David
                              B. Raybould, Director
 52