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, 1999
                                       OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 FOR THE TRANSITION PERIOD____________ FROM TO________________

                          COMMISSION FILE NO. 0-21451

            BOWLIN Outdoor Advertising & Travel Centers Incorporated
              (Name of the registrant as specified in its charter)

          NEVADA                                   85-0113644

 (State or other jurisdiction of             (I.R.S. Employer Identification
 incorporation or organization)               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 registered
Common Stock , $.001 Par Value                         AMEX


      SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:
                                      NONE

                                (Title of class)

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 X No ___

Indicate by check mark if disclosure  of  delinquent  filers in response to Item
405 of Regulation S-K is not contained in 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. X

The  aggregate  market value of the voting and  non-voting  common stock held by
non-affiliates of the registrant at April 14, 1999 was $12,553,704.

The number of shares of Common Stock,  $.001 par value,  outstanding as of April
30, 1999: 4,384,848

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the  Registrant's  definitive  proxy statement  relating to the 1999
Annual Meeting of Stockholders are incorporated herein by reference.


<PAGE>
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
Consolidated Financial Statements of BOWLIN Outdoor Advertising & Travel Centers
Incorporated,   a  Nevada   Corporation   (the  "Company"  or  "BOWLIN").   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 is a regional  leader in the  operation  of travel  centers and
outdoor advertising  displays 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 Company's  founder,
Claude M. Bowlin,  started  trading goods and services with Native  Americans in
New Mexico. BOWLIN currently operates fourteen full-service travel centers along
interstate highways in Arizona and New Mexico. The Company advertises its travel
centers  through a network of over 350 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.

     In  addition  to its  travel  centers,  the  Company  operates  over  3,700
revenue-generating  outdoor  advertising display faces for third party customers
such as hotels and motels,  restaurants  and consumer  products.  These  display
faces are strategically situated primarily along interstate highways in Arizona,
New Mexico,  and Texas and, to a lesser  extent,  in Colorado and Oklahoma.  The
Company provides a comprehensive  range of outdoor  advertising  services to its
clients, including customized design and production services.

Recent Developments

     The Company made a number of acquisitions of outdoor  advertising assets in
fiscal year 1999. Each of the acquisitions  was accounted for as a purchase.  In
each case,  the purchase  price was  allocated to the assets  acquired  based on
their estimated fair values and no goodwill was recorded.

     On February 1, 1998, the Company acquired the outdoor advertising assets of
Big-Tex Outdoor Advertising  (Big-Tex) in Brownwood,  Texas for $1,575,283.  The
Company paid $575,283 in cash and financed  $1,000,000  with bank debt.  Big-Tex
owned and operated  approximately  284 poster and painted faces in the Brownwood
metro area.  The Company  also  entered into a  non-compete  agreement  with the
former  principals  of  Big-Tex  for a period of ten years  from the date of the
acquisition, payable in ten annual installments of $10,000 beginning in February
1999.

     On March 3, 1998, the Company  acquired the outdoor  advertising  assets of
Norwood  Outdoor,  Inc.  (Norwood) for $1,020,768.  The Company paid $370,768 in
cash  and  financed  $650,000  with  bank  debt.   Norwood  owned  and  operated
approximately  145 poster and painted  bulletin faces in the Brady,  Texas metro
area.

                                       2
<PAGE>
     On May 1, 1998 the  Company  purchased  the outdoor  advertising  assets of
Edgar Outdoor  Advertising Co. for $933,661.  The Company paid $933,661 in cash.
Edgar owned and  operated  approximately  62 painted  bulletin  faces in central
Texas. The acquisition was accounted for as a purchase.

     On June 1, 1998 the Company purchased the outdoor advertising assets of J &
J Sign Company,  located in Silver City,  New Mexico for $347,947 in cash. J & J
owned and operated  approximately  40 painted bulletin faces in Southwestern New
Mexico.

     On August 14, 1998 the Company purchased the outdoor  advertising assets of
T & C Outdoor Advertising,  located in Crowley, Texas. The Company paid $171,614
in cash.  T & C owned and  operated  approximately  15 display  faces in central
Texas.

     On November 16, 1998 the Company purchased the outdoor  advertising  assets
of Faris Outdoor Advertising,  Inc., located in Ft. Worth, Texas for $2,563,408.
The Company  financed  $2,500,000 with bank debt and paid $63,408 in cash. Faris
owned and operated approximately 132 painted bulletin faces in central Texas.

     On January 4, 1999 the Company purchased the outdoor  advertising assets of
Big-Tex Outdoor Advertising, located in Granbury, TX for $1,549,507. The Company
financed  $1,500,000  with bank debt and paid $49,507 cash.  Granbury  owned and
operated approximately 83 display faces in central Texas.

     On November 10, 1998, the Company entered into a credit  agreement with one
of its existing lenders for the following:  1) a new term note, in the amount of
$12,000,000,  created to refinance existing  borrowings and to provide funds for
working capital;  2) a new line of credit,  which is a multiple advance line, in
the amount of  $10,000,000,  to fund purchases of existing  outdoor  advertising
businesses and/or billboard properties;  3) an increase in the existing $500,000
working capital line to $2,000,000;  4) reduction of the existing  facility line
to fund the acquisition and/or construction of travel centers to $6,000,000; and
5)  termination of an existing  leasing line of $2,000,000.  Each note will bear
interest based on the LIBOR 90-day rate index.

Subsequent Events

     On March 1, 1999 the Company  purchased the outdoor  advertising  assets of
GDM Outdoor  Advertising,  located in Tyler,  Texas for $1,353,376.  The Company
financed  $1,350,000  with  bank  debt and paid  $3,376  in cash.  GDM owned and
operated   approximately  86  painted  bulletin  faces  in  central  Texas.  The
acquisition was accounted for as a purchase. The purchase price was allocated to
the assets  acquired  based on their  estimated  fair values and no goodwill was
recorded in connection with the purchase.

     On February  15,  1999,  the  Company  opened a new travel  center  located
approximately  20 miles west of  Albuquerque,  New Mexico on Interstate  40. The
6,000  square foot store  features a state of the art  convenience  store and an
"old-time" trading post. This location features EXXON branded gasoline.

                                       3
<PAGE>
Industry Overview

     Travel Services Industry. 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
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.

     Outdoor Advertising Industry.  According to recent estimates by the Outdoor
Advertising Association of America ("OAAA"), outdoor advertising generated total
billboard revenues of approximately  $2.33 billion in 1998,  representing growth
of approximately  9.1% over 1997.  Outdoor  advertising offers repetitive impact
and a  relatively  low  cost-per-thousand  impressions  as compared to broadcast
media, newspapers,  magazines and direct mail marketing, making it attractive to
both local businesses targeting a specific geographic area or set of demographic
characteristics and national  advertisers  seeking mass market support.  Because
outdoor  advertising  reaches  potential  customers close to the  point-of-sale,
restaurants,  motels,  service  stations  and similar  businesses  find  outdoor
advertising  particularly  effective.  Repeated  viewing by people traveling the
same route on a daily basis makes outdoor  advertising  especially  suitable for
companies such as banks, insurance companies,  and soft drink manufacturers that
sell their  products  by  promoting  a  particular  image.  Outdoor  advertising
services have recently  expanded beyond  billboards to include a wide variety of
out-of-home  advertising  media,  including  advertising  displays  in  shopping
centers, malls, airports, stadiums, movie theaters and supermarkets,  as well as
on taxis,  trains,  buses and subways.  Recent  estimates  published by the OAAA
report  that  total  out-of-home  advertising  revenues,  including  traditional
billboard advertising, was approximately $4.413 billion in 1998.

     The outdoor advertising  industry uses three standardized  display formats:
traditional  bulletin-style  painted  billboards (with a typical face size of 14
feet by 48 feet),  30-sheet  posters  (with a typical face size of 12 feet by 25
feet) and junior or 8-sheet  posters  (with a typical  face size of 6 feet by 12
feet).  The physical  advertising  structure  is generally  owned by the outdoor
advertising  company  and is built on  locations  either  owned or leased by the
operator  or  on  which  it  has a  permanent  easement.  Traditionally  outdoor
advertising  displays  are leased to  advertisers  on a unit basis.  Advertising
rates for outdoor advertising media are based on such factors as the size of the
advertising display,  visibility, cost of leasing,  construction and maintenance
and the  number  of  people  who have  the  opportunity  to see the  advertising
message.

     The outdoor advertising market is highly fragmented but is dominated in the
large  designated  market  areas by a few  sizable  firms,  several of which are
subsidiaries  of  diversified  companies.  In  addition  to  the  large  outdoor
advertising firms, there are many smaller regional and local companies operating
a limited number of displays in a single or a few local markets.  There has been
a trend toward consolidation in the outdoor advertising industry in recent years
and the Company expects this trend to continue.

                                       4
<PAGE>


Business Strategy

     Travel  Services  Business  Strategy.  The Company  opened its first travel
center in 1953 and has since expanded to fourteen travel centers.  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 ice cream and snack foods at some locations to
full-service  restaurants at others.  The Company's  food service  operations at
seven  of  the  Company's  fourteen  travel  centers  operate  under  the  Dairy
Queen/Brazier  or Dairy Queen trade names.  Four of the Company's travel centers
operate  under the Stuckey's  brand name.  The  Stuckey's  specialty  stores are
family oriented shops that feature the Stuckey's line of pecan  confectioneries.
Stuckey's is well known among travelers as a place to shop for souvenirs,  gifts
and toys and travel games for children.

The  Company's  travel  centers  also offer brand name  gasoline  such as CITGO,
EXXON,  Chevron,  and  Diamond  Shamrock.  The  Company  has been an  authorized
distributor of CITGO Petroleum Corporation since October 1, 1995. Effective July
15, 1998,  the Company also became an authorized  distributor  of EXXON Company,
USA.  The  Company  has  converted  one of its  existing  locations  to an EXXON
station. The travel center opened by the Company on February 15, 1999 is also an
EXXON  station.  The Company has  converted  eight of its existing  locations to
CITGO  "superpumper"  stations.  The Company also intends to continue  marketing
CITGO and EXXON products to other retailers in Arizona and New Mexico.

     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  hand-crafted  jewelry,
rugs, pottery,  kachina dolls and other gifts crafted especially for the Company
by several Native American tribes.

     Outdoor  Advertising  Business  Strategy.  The Company  operates over 3,700
revenue-generating  advertising display faces,  primarily in Arizona, New Mexico
and Texas and, to a lesser extent,  in Colorado and Oklahoma.  Approximately 65%
of these  display  faces are  traditional  bulletin  style and 35% are  assorted
poster styles.  The Company's  bulletin style displays are located  primarily on
interstate highways,  while the smaller poster sizes are typically used in local
settings by advertisers who prefer to change the display message regularly.  The
Company's outdoor  advertising  displays are strategically  located in rural and
smaller  metropolitan  areas  throughout the Southwest,  where the dispersion of
population,  outdoor lifestyles, and leading tourist destinations have created a
strong dependence on highway travel.

     The Company began its outdoor advertising  operations in 1980 and has grown
into a regional leader in small to medium-sized outdoor advertising markets. The
Company offers its outdoor advertising  customers a complete full-service source
for  graphic  design and  painting  for the outdoor  billboards  operated by the
Company.  As a result,  the  Company  is able to attract  advertisers  that have
historically relied on other media in marketing their products and services. The
Company believes it is one of the largest outdoor advertising companies in rural
interstate markets in the Southwest.

                                       5
<PAGE>
Growth Strategy

     Travel  Centers.  The Company is committed to expanding  its travel  center
operations through internal development. The Company plans to further expand its
travel center operations in popular tourist destinations, along heavily traveled
interstate  corridors and in smaller  metropolitan  areas.  The Company believes
that the  co-branding  concept  it has  implemented  at its travel  centers  has
resulted in increased revenues,  and the Company intends to pursue opportunities
to acquire rights to additional brand name products.
                                  
     The  following are the primary  components  of the  Company's  strategy for
expanding its travel center operations:

     Continuing  to offer high quality  brand name food and products in a clean,
     safe environment designed to appeal to travelers on interstate highways.

     Continuing  to  increase  sales  at  existing   locations  through  ongoing
     renovation and upgrading of facilities and the addition of new products and
     services.

     Pursuing  complementary  national food and/or merchandise brands to further
     implement the Company's co-branding concept.

     Expanding  the  Company's   travel  center   operations   through  internal
     development and strategic  acquisitions in key tourist destinations,  along
     heavily traveled interstate highways and in smaller metropolitan areas.

     Gasoline  Wholesaling.  The  Company  is  an  authorized  CITGO  and  EXXON
distributor.  CITGO and EXXON are among the top five petroleum  producers in the
United States. The CITGO distribution agreement allows the Company to streamline
its gasoline supply arrangements and take advantage of volume-driven  pricing by
consolidating  purchases  from CITGO.  The CITGO  distribution  agreement had an
initial  three-year  term that expired  September  30, 1998,  and  automatically
renewed for a three-year term through 2001. The EXXON distribution agreement has
a three-year  term that expires  July 14, 2001.  CITGO's and EXXON'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 events  currently  include  bankruptcy,  or breach of the agreement by the
Company, or termination by CITGO or EXXON of its petroleum marketing  activities
in the Company's  distribution  area. The terms of the  distribution  agreements
require the Company to purchase  certain  minimum  quantities of gasoline during
the term of the  agreement,  which includes  gasoline  purchased for sale at the
Company's  travel  centers.  Since the effective date of the CITGO  distribution
agreement, the Company's purchases of CITGO products have substantially exceeded
the required minimum quantities. Since the effective date of the EXXON agreement
the Company has not  determined  if certain  minimum  quantities  have been met,
however, the Company believes it will exceed the required minimum quantities.

     The Company  intends to continue to grow gasoline  sales by focusing on the
marketing  of the  CITGO and  EXXON  lines of  petroleum  products  through  the
Company's  own travel  centers,  and as a wholesale  provider to other  gasoline
retailers in the Southwest.

     Outdoor Advertising.  The Company plans to increase its outdoor advertising
operations  through  internal  development as well as  acquisition.  The Company
increased its inventory of billboard faces by 951 in fiscal year 1999 and 979 in
fiscal year 1998. The Company  anticipates that it will be adding  approximately
200 new billboard faces per year to its operations through internal development,
subject to the  availability  of  necessary  working  capital and the  Company's
ability to comply with applicable regulations.

     In addition to internal development, the Company plans to continue to focus
on the  expansion  of its  outdoor  advertising  operations  through  aggressive
acquisitions  at prices that reflect  prudent cash flow  multiples.  The Company
routinely  engages  in  discussions  with  third  parties  regarding   potential
acquisitions.  Any such  acquisitions  would be subject to the  negotiation  and
execution  of  definitive   agreements,   appropriate  financing   arrangements,
performance of due diligence,  approval of the Company's Board of Directors, and
the satisfaction of other customary closing conditions, including the receipt of
third party consents.

                                       6
<PAGE>
     Consistent with its past practices, the Company intends to pursue expansion
into markets that are not included in the 50 largest  designated  market  areas.
The Company  believes that expansion  along  interstate  highways and in smaller
metropolitan areas permits the Company to operate in areas where competition for
site  acquisitions  is less intense,  purchase  prices are more  favorable,  and
government regulations are generally less onerous.

     The Company's  advertising  customers consist largely of local and regional
advertisers,  resulting  in a  diverse  client  base and  limiting  reliance  on
national advertising clients.  Unlike many of its competitors,  the Company does
not rely to a significant extent upon tobacco advertisers,  which are subject to
increasing  regulation.  The  following  table  sets  forth  the  categories  of
industries from which the Company  derived its outdoor  advertising net revenues
for the year ended January 31, 1999, and the respective  percentages of such net
revenues.  The top three business categories  accounted for approximately 62% of
the Company's  total outdoor  advertising  net  revenues.  No single  advertiser
accounted for more than 2.4% of the  Company's  total  outdoor  advertising  net
revenues in such period.

                                Percentage of Net
                        Advertising Revenues by Category

                    Hotels and Motels                  26%
                          Restaurants                  21
               Travel & Entertainment                  15
             Retail/Consumer Products                  13
                           Government                   9
                             Services                   7
                           Automotive                   4
                              Alcohol                   *
                              Tobacco                   *
                                Other                   5
                                                      ----
                                TOTAL                 100%
                                                      ==== 
                         *Less than 1%




     The Company plans to expand its outdoor  advertising  operations  primarily
by:

     Continuing to develop the Company's  presence along interstate  highways in
     its existing markets throughout the Southwest.

     Increasing revenues from existing billboards by implementing  programs that
     maximize advertising rates and occupancy levels.

     Expanding  its  operations  within  current  markets  through new billboard
     construction.

     Making  strategic  acquisitions of existing outdoor  advertising  assets of
     small to medium-sized outdoor advertising  operations in the less populated
     areas of the United States.

Business Operations

     Travel Center Operations.  The Company sells food, gasoline and merchandise
through its fourteen 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 some 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.

                                       7
<PAGE>
     The Company sells food under the Dairy Queen and Dairy  Queen/Brazier brand
names and sells snacks and souvenir  merchandise under the Stuckey's brand name.
The terms of its agreements  with Stuckey's and Dairy Queen obligate the company
to pay these  franchisers 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 continuously monitors and upgrades its travel center facilities
to  maintain a high  level of  comfort,  quality  and  appearance.  Improvements
include  new  awnings  and  facings,  new  signage  and  enhanced  lighting  and
furnishings.

     Outdoor Advertising  Operations.  The outdoor advertising operations of the
Company include leasing of sites,  construction of display structures,  sales of
advertising  space,  and production  and design of display faces.  The Company's
leasing  department has the  responsibility  for  coordinating  land leases with
owners for the right to  construct  and  maintain  billboard  structures  on the
landowner's  property.  The  leasing  department  also  monitors  the  Company's
compliance with all government regulations regarding lease rights,  construction
and sales of outdoor  structures.  The Company's  construction  division  erects
billboard  structures on sites  acquired by the Company  without a  pre-existing
structure,  with  the goal of  maximizing  the  amount  of  leaseable  area on a
particular site.

     The Company's sales department, through its account representatives,  sells
advertising  space to the Company's  clients from its inventory of approximately
3,700  display  faces.  The  account  representatives  work  with the  Company's
clients,  their advertising agencies, and the Company's production department to
provide  clients  with high  quality  design and artwork  for their  billboards.
Although the Company's consistent expansion of its outdoor advertising inventory
results  in an  advertising  occupancy  rate  of less  than  100%,  the  Company
generally has approximately 70% of its inventory under advertising agreements at
any time.

     The Company's production staff performs a full range of activities required
to create and install outdoor advertising. Production work includes creating the
advertising  copy design and layout,  painting  the design or  coordinating  its
printing, and installing the design displays.  Billboards have historically been
composed of several  painted  plywood  sheets,  but  recently  vinyl  facing has
replaced plywood in the majority of advertising  produced.  The increased use of
vinyl  and  pre-printed  advertising  copy  furnished  to  the  Company  by  the
advertiser or its agency results in less  labor-intensive  production  work. The
Company believes that this trend may reduce future operating expenses associated
with the Company's production activities.

Competition

     Travel Services  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.  Some of the travel centers that the Company
competes with are operated by large petroleum  companies,  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  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.

                                       8
<PAGE>
     Outdoor Advertising Competition. The Company competes in all of its markets
with other outdoor  advertisers as well as other media,  including broadcast and
cable television,  radio, newspaper,  and direct mail marketers. The Company has
little  competition  in its rural  markets from other outdoor  advertisers,  but
encounters direct  competition in its smaller  metropolitan  markets from larger
outdoor media companies, including Outdoor Systems, Chancellor Media Corporation
and Donrey Outdoor  Advertising,  each of which have large national networks and
greater  resources than the Company.  The Company believes that by concentrating
on interstate and tourist oriented advertising in markets other than the largest
50 designated market areas it will be able to compete more  effectively.  As the
Company expands geographically,  however, it may encounter increased competition
from other outdoor advertising firms, some of whom are substantially  larger and
have greater name recognition and access to substantially greater resources than
the Company.

Employees

     As of January 31, 1999, the Company had  approximately 215 full-time and 68
part-time employees;  49 were located in Arizona, 226 were located in New Mexico
and 8 were located in Texas.  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

     Travel Centers. Each of the Company's food service operations 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 fourteen  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 the Company's costs.

     Historically,  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
the Company's  gasoline  dispensing  operations.  Under recently enacted federal
regulations,  the Company was obligated to upgrade or replace all  non-complying
underground  storage tanks it owns or operates to meet corrosion  protection and
overfill/spill  containment  standards by December 22, 1998. In response to such
programs, the Company has, wherever possible,  adopted a policy of replacing its
underground storage tanks with above-ground  storage tanks to minimize the costs
associated  with leak detection and compliance with other  regulatory  programs.
Non-complying  tanks have been  upgraded  or  replaced  at all of the  Company's
travel centers.

     The Company's  travel center  operations are also subject to extensive laws
and regulations  governing the sale of alcohol and tobacco, and fireworks in its
New Mexico travel centers.  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.

                                       9
<PAGE>
     Outdoor  Advertising.  The  outdoor  advertising  industry  is  subject  to
governmental  regulation at the federal,  state and local  levels.  Federal law,
principally   the  Highway   Beautification   Act  of  1965,   as  amended  (the
"Beautification  Act"),  encourages states, by the threat of withholding federal
appropriations  for the  construction  and  improvement of highways  within such
states, to implement  legislation to regulate billboards located within 660 feet
of, or visible from,  interstate  and primary  highways  except in commercial or
industrial  areas.  All of the states have  implemented  regulations at least as
restrictive  as  the  Beautification  Act,  including  some  prohibition  on the
construction  of new  billboards  adjacent  to  federally  aided  highways.  The
Beautification Act, and the various state statutes implementing it, requires the
payment of just compensation whenever  governmental  authorities require legally
erected and maintained billboards to be removed from federally-aided highways.

     The states and local  jurisdictions  have, in some cases, passed additional
and more restrictive regulations on the construction, repair, upgrading, height,
size, and location of, and, in some instances, content of advertising copy being
displayed on outdoor advertising structures adjacent to federally-aided highways
and  other  thoroughfares.  Such  regulations,  often in the  form of  municipal
building,  sign or zoning ordinances,  specify minimum standards for the height,
size  and  location  of  billboards.  In some  cases,  the  construction  of new
billboards   or  relocation  of  existing   billboards   is   prohibited.   Some
jurisdictions  also have  restricted the ability to enlarge or upgrade  existing
billboards,  such as converting  from wood to steel or from  non-illuminated  to
illuminated  structures.  From time to time  governmental  authorities order the
removal of billboards by the exercise of eminent  domain.  Thus far, the Company
has been  able to obtain  satisfactory  compensation  for any of its  structures
removed at the  direction  of  governmental  authorities,  although  there is no
assurance that it will be able to continue to do so in the future.

     In  recent  years,   there  have  been  movements  to  restrict   billboard
advertising of tobacco  products.  It is likely that  additional  legislation of
this type will be enacted on the  national or on a local level in the  Company's
markets.  Revenues  from tobacco  advertisers  accounted for less than 1% of the
Company's total advertising revenues in fiscal 1999.

     Amortization  of  billboards  has also been  adopted  in  varying  forms in
certain  jurisdictions.  Amortization permits the billboard owner to operate its
billboard as a  non-conforming  use for a specified  period of time until it has
recouped its  investment,  after which it must remove or  otherwise  conform its
billboard to the applicable  regulations without any compensation.  Amortization
and other regulations  requiring the removal of billboards without  compensation
have been subject to vigorous  litigation in state and federal  courts and cases
have  reached  differing  conclusions  as  to  the  constitutionality  of  these
regulations.  To date,  amortization  and  other  regulations  in the  Company's
markets have not materially adversely affected its operations.

Trademarks

     The  Company  operates  its  travel  centers  under  a  number  of its  own
trademarks, as well as certain trademarks owned by third parties and licensed to
the Company, such as the Dairy Queen, Dairy Queen/Brazier,  Stuckey's, CITGO and
EXXON  trademarks.  The  Company  believes  that its  trademark  rights will not
materially limit competition with its travel centers.  The Company also believes
that  none of the  trademarks  it  owns is  material  to the  Company's  overall
business;  however, the loss of one or more of the Company's licensed trademarks
could have an adverse effect on the Company.

                                       10
<PAGE>

ITEM 2. PROPERTIES

     As of January 31, 1999, the Company operated  fourteen travel centers.  The
Company owns the real estate and  improvements  where five of its travel centers
are  located,  as well as real  estate  and  improvements  at  three  additional
locations, one of which the Company is currently developing into a travel center
and two of which are leased to third party restaurant operators.  The properties
at which  three of the travel  centers  owned by the Company  are  operated  are
subject to mortgages. Nine of the Company's existing travel centers and a travel
center  location  planned  for  development  are located on real estate that the
Company leases from various third parties.  These leases have terms ranging from
five to forty  years,  assuming  exercise by the Company of all renewal  options
available under certain leases.

     As of January 31, 1999, the Company operated over 3,700 revenue  generating
outdoor display faces throughout the Southwest.  The Company  typically owns the
billboard and related assets and enters into operating leases with the owners of
the real property upon which the billboards are located.  These leases typically
have a term of 5 to 10 years and provide for minimum annual rents. As of January
31, 1999, the Company also owned and operated 55 and 295 non-revenue  generating
display  faces in Arizona and New Mexico,  respectively,  which are  exclusively
dedicated to the advertisement of its fourteen travel centers.  Listed below are
the locations of the Company's  inventory of revenue generating display faces as
of January 31, 1999. 
<TABLE>
<S>                           <C>                 <C>                 <C>                 <C>
                          Billboards        30-sheet Posters    8-sheet Posters          Total
           Arizona            138                   --                   --                 138
          Colorado             14                   --                   --                  14
        New Mexico          1,717                  180                  765               2,662
          Oklahoma              4                   --                   --                   4
             Texas            545                  320                   35                 900
                              ---                  ---                   --                 ---
             TOTAL          2,418                  500                  800               3,718
                            =====                  ===                  ===               =====
</TABLE>

     The Company's  principal  executive  offices  occupy  approximately  20,000
square  feet of space  owned by the  Company in  Albuquerque,  New  Mexico.  The
Company's  principal  office  space is subject to a mortgage,  which  matures on
January 31, 2005,  and the principal  balance of which  interest  accrues at the
bank's  prime  rate  (7.75% at January  31,  1999).  The  Company  owns  outdoor
advertising   production   plant  and   warehouse   facilities   consisting   of
approximately  10,000  square  feet in  Albuquerque,  New  Mexico  and a central
warehouse and distribution  facility occupying 27,000 square feet in Las Cruces,
New Mexico.  The Las Cruces  property is subject to a mortgage  that  matures on
June 13, 2013 and accrues interest on the unpaid principal  balance at a rate of
8.9% per  annum.  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 is involved in  litigation  in the  ordinary
course of business,  including disputes involving  advertising  contracts,  site
leases,  employment  claims,  and  construction  matters.  The  Company  is also
involved in routine  administrative and judicial proceedings regarding billboard
permits, fees, and compensation for condemnations. The Company is not a party to
any lawsuit or proceeding which, in the opinion of management, is likely to have
a material adverse effect on the Company.

                                       11
<PAGE>


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 1999.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's  Common Stock is quoted on the American  Stock Exchange under
the symbol  "BWN." On April 14,  1999,  there were  approximately  30 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.

<TABLE>

<S>                                                    <C>            <C>
Fiscal Year Ended                                 
January 31, 1998                                     High              Low
----------------                                     ----              ---
Fiscal Quarter Ended 4/30                          $ 8.0000         $ 5.0000
Fiscal Quarter Ended 7/31                          $ 6.1250         $ 3.3750
Fiscal Quarter Ended 10/31                         $ 6.1250         $ 3.7500
Fiscal Quarter Ended 1/31                          $ 5.1250         $ 3.7500


Fiscal Year Ended
January 31, 1999                                     High              Low
----------------                                     ----              ---
Fiscal Quarter Ended 4/30                          $10.8750         $ 4.7500
Fiscal Quarter Ended 7/31                          $ 9.9375         $ 7.5000
Fiscal Quarter Ended 10/31                         $ 7.7500         $ 3.5000
Fiscal Quarter Ended 1/31                          $ 6.6250         $ 4.7500

</TABLE>
                                       12
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

     The selected  consolidated  financial data presented below are derived from
the audited consolidated  financial statements of the Company for the five years
ended January 31, 1999. The data  presented  below should be read in conjunction
with  the  audited  consolidated   financial   statements,   related  notes  and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations included herein.

<TABLE>
                                                   <C>            <C>         <C>            <C>          <C>
                                                                     YEAR ENDING JANUARY 31,
                                                 ----------------------------------------------------------------------
                                                    1999          1998         1997            1996          1995
<S>                                              ----------------------------------------------------------------------
STATEMENT OF INCOME DATA:

Net sales                                      $  30,294,751 $  7,159,455   $ 24,847,931  $ 22,944,684  $ 21,953,932


Cost of goods sold                               (18,848,146) (17,531,203)   (16,340,375)  (15,002,736)  (14,255,221)
                                                 ------------ ------------   ------------  ------------  ------------

   Gross profit                                   11,446,605    9,628,252     8,507,556     7,941,948      7,698,711

General and administrative expenses               (7,479,568)  (6,567,940)   (6,115,350)   (6,407,736)    (5,988,485)

Depreciation and amortization                     (1,895,035)  (1,149,694)     (779,571)     (856,608)      (821,164)

Other operating income                                 7,345       89,732       379,228       489,653        420,256
                                                 ------------ ------------   ------------  ------------  ------------

   Income from operations                          2,079,347    2,000,350     1,991,863     1,167,257      1,309,318

Interest expense                                  (1,108,263)    (722,117)     (677,746)     (611,590)      (536,025)

Other income (loss), net                             139,026      469,155       194,564        80,769         (9,618)
                                                 ------------ ------------   ------------  ------------  ------------

   Income before taxes                             1,110,110    1,747,388     1,508,681       636,436        763,675

Income taxes                                         437,500      678,200       603,472       252,817        294,719
                                                 ------------ ------------   ------------  ------------  ------------
Net income                                       $   672,610  $ 1,069,188   $   905,209   $   383,619    $   468,956
                                                 ============ ============   ============  ============  ============

Basic and diluted earnings per share             $      0.15  $      0.24   $      0.26   $      0.11    $      0.14
                                                 ============ ============   ============  ============  ============               



BALANCE SHEET DATA (at end of period)

Property & equipment                             $26,424,741    $16,197,471  $ 9,970,546   $ 8,910,470    $ 6,727,205
                                                 ===========    ===========  ===========   ===========    ===========
Total assets                                     $37,489,356    $25,859,316  $21,842,717   $13,597,846    $10,856,837
                                                 ===========    ===========  ===========   ===========    ===========
Long-term debt, including current                $20,252,124    $ 8,902,915  $ 6,694,592   $ 6,577,432    $ 4,991,452
   installments                                  ===========    ===========  ===========   ===========    ===========


</TABLE>
                                       13
<PAGE>

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

Overview

     The following is a discussion of the consolidated  financial  condition and
results of  operations of the Company as of and for the three fiscal years ended
January  31,  1999.  This  discussion  should  be read in  conjunction  with the
Consolidated  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 Company operates in two industry  segments,  travel centers and outdoor
advertising.  In  order to  permit  a  meaningful  evaluation  of the  Company's
performance  in  each of its  operating  segments,  the  Company  has  presented
selected  operating data attributable to each segment,  and also separately sets
forth the corporate  expenses of the Company which are not properly allocable to
either of the Company's  segments for purposes of determining  their  respective
operating income.

<TABLE>
<S>                                                          <C>                 <C>            <C>
                                                                        YEAR ENDING JANUARY 31,
                                                           ---------------------------------------------------
                                                                 1999             1998             1997
                                                           ---------------------------------------------------
                                                                              IN THOUSANDS

          Travel Centers
                Gross sales                                   $   23,803       $   22,584       $   21,692
                Discounts on sales                                   283              280              303
                                                              ----------       ----------       ----------
                Net sales                                         23,520           22,304           21,389
                Cost of goods                                     15,802           15,042           14,235
                                                              ----------       ----------       ----------
                                                                   7,718            7,262            7,154
                General & administrative expenses                  5,937            5,307            5,281
                Depreciation and amortization                        611              369              363
                                                              ----------       ----------       ----------

                Operating income                                   1,170            1,586            1,510


          Outdoor Advertising
               Gross sales                                         6,775            4,856            3,459
               Direct operating expenses                           3,046            2,489            2,105
                                                              ----------       ----------       ----------
                                                                   3,729            2,367            1,354
               General & administrative expenses                   1,056              781              369
               Depreciation and amortization                       1,178              660              282
                                                              ----------       ----------       ----------
               Operating income                                    1,495              926              703


         Corporate and Other
               General & administrative expenses                    (487)            (480)            (465)
               Depreciation and amortization                        (106)            (121)            (135)
               Interest expense                                   (1,108)            (722)            (678)
               Other income, net                                     146              558              574
                                                              ----------       ----------       -----------

        Income before taxes                                        1,110            1,747            1,509

        Income taxes                                                 437              678              604
                                                              ----------       ----------       ----------

        Net income                                            $      673       $    1,069       $      905
                                                              ==========       ==========       ==========


 </TABLE>
                                       14
<PAGE>

Fiscal 1999 Compared to Fiscal 1998

     Travel Centers.  Gross sales at the Company's travel centers increased 5.3%
to $23.8  million for fiscal 1999 from $22.6  million for fiscal 1998.  Gasoline
sales  increased  0.9% to $11.7  million for fiscal year 1999 from $11.6 million
for fiscal year 1998.  Merchandise sales increased 12.7% to $8.0 million for the
fiscal year ended  January 31, 1999 from $7.1  million for the fiscal year ended
January 31, 1998.  Restaurant  sales  decreased  6.7% to $2.8 million for fiscal
1999 from $3.0 million for fiscal 1998. The Company's  wholesale  CITGO gasoline
products  relationship produced gross sales of $1.2 million for fiscal year 1999
as compared to $917,000 for fiscal year 1998.  Increases in depreciation  due to
capital  expenditures as well as increases in general and  administration due to
additional  middle  management  for fiscal  year 1999 as compared to fiscal year
1998 impacted  operating  income.  In addition,  travel center  revenues for the
fourth quarter of the current fiscal year were negatively impacted by the lowest
gasoline prices in a decade and a corresponding reduction in gross margin.

     Cost of goods sold for the travel  centers  increased 5.3% to $15.8 million
for fiscal 1999 from $15.0  million for fiscal 1998.  As a  percentage  of gross
sales,  cost of goods  sold  decreased  slightly  to 66.4%  from  66.6%  for the
respective fiscal periods.

     General and administrative expenses for travel centers consist of salaries,
bonuses and commissions for travel center personnel,  property costs and repairs
and  maintenance.  General and  administrative  expenses for the travel  centers
increased  11.3% to $5.9 million for the fiscal year ended January 31, 1999 from
$5.3 for fiscal  year  ended  January  31,  1998.  The  increase  was  primarily
attributable to increases in middle management personnel.

     Depreciation and amortization  expenses  increased by 65.6% to $611,000 for
the fiscal year ended  January 31, 1999 from  $369,000 for the fiscal year ended
January 31, 1998. The increase is primarily attributable to capital expenditures
for gasoline tanks and equipment for federal  mandates as well as image upgrades
for branded fuel.

     The above factors  contributed  to a decrease in travel  centers  operating
income of 25.2% to $1.2  million for the fiscal  year ended  January 31, 1999 as
compared to $1.6 million for the fiscal year ended January 31, 1998.

     Outdoor  Advertising.  Gross sales from the Company's  outdoor  advertising
increased  38.8% to $6.8  million  for fiscal  1999 from $4.9  million in fiscal
1998.  The increase  was  primarily  attributable  to certain  acquired  assets,
including  the  outdoor  advertising  assets  of Big  Tex  Outdoor  Advertising,
(Brownwood),  Norwood  Outdoor  Advertising,  Edgar Outdoor  Advertising,  J & J
Outdoor Advertising, T & C Outdoor Advertising,  Faris Outdoor Advertising,  and
Big Tex Outdoor Advertising (Granbury), as well as overall rate increases.

     Direct operating expenses related to outdoor  advertising consist of direct
advertising  expenses,  which include rental payments to property owners for the
use of land on which advertising  displays are located,  production expenses and
selling expenses.  Production expenses include salaries for operations personnel
and real estate representatives,  property taxes, and repairs and maintenance of
advertising  displays.  Selling  expenses  consist  primarily  of  salaries  and
commissions  for  salespersons  and travel  related to sales.  Direct  operating
expenses  increased  20.0% to $3.0 million for the fiscal year ended January 31,
1999 from $2.5  million for the same period in fiscal 1998,  principally  due to
the  addition  of sales and  production  personnel,  sign rent and  repairs  and
maintenance of advertising displays from acquisitions.

                                       15
<PAGE>
     General and  administrative  expenses  for outdoor  advertising  consist of
salaries  and  wages  for  administrative  personnel,   insurance,  legal  fees,
association  dues and  subscriptions  and other indirect  expenses.  General and
administrative  expenses  increased  40.8% to $1.1  million  for the fiscal year
ended January 31, 1999 from $781,000 for fiscal 1998. The increase was primarily
attributable to increases in  administrative  personnel and insurance due to the
acquisitions.

     Depreciation and amortization  expenses increased 81.8% to $1.2 million for
the fiscal year ended  January  31,  1999 from  $660,000  for fiscal  1998.  The
increase was  primarily  attributable  to  acquisitions  of outdoor  advertising
assets throughout the current and prior fiscal years.

     The above  factors  contributed  to the  increase  in  outdoor  advertising
operating  income of 62.0% to $1.5 million for the fiscal year ended January 31,
1999 as compared to $926,000 for the fiscal year ended January 31, 1998.

     Corporate and Other. General and administrative  expenses for corporate and
other   operations   of  the  Company   consist   primarily  of  executive   and
administrative compensation and benefits, investor relations, and accounting and
legal fees. General and  administrative  expenses increased 1.5% to $487,000 for
the fiscal year ended  January 31, 1999 from  $480,000 for the fiscal year ended
January 31, 1998.

     For the fiscal year ended January 31, 1999, the Company's President and its
Chief  Operating  Officer elected to accept annual base salaries of $145,000 and
$90,000,  respectively,  which are less than the $195,000 and $145,000  salaries
provided for in their respective  employment  agreements  effective  February 1,
1997.  Each of the agreements has a perpetual  five-year  term, such that on any
given date, each agreement has a five-year remaining term.

     Depreciation  and  amortization  expenses for the  Company's  corporate and
other  operations   consist  of  depreciation   associated  with  the  corporate
headquarters  and  furniture  and fixtures  related  thereto.  Depreciation  and
amortization decreased 12.4% to $106,000 for fiscal 1999 as compared to $121,000
for fiscal 1998.

     Interest expense  increased 52.3% to $1.1 million for the fiscal year ended
January 31, 1999 from $722,000 for the fiscal year ended  January 31, 1998.  The
increase is a result of borrowings to fund outdoor advertising expansion and the
continued conversion of travel centers to CITGO and EXXON branding.

     Other  income  decreased  to $146,000 in fiscal year 1999 from  $558,000 or
73.8%.  This  decrease  was due to  one-time  gains on the sale of assets  and a
subsidiary in fiscal year 1998 not present in 1999.

     Income  before  taxes  decreased  35.2% to $1.1 million for the fiscal year
ended  January 31, 1999 from $1.7 million for the fiscal year ended  January 31,
1998. As a percentage of gross  revenues,  income before taxes decreased to 3.6%
for the fiscal year ended 1999 from 6.4% for the same fiscal period 1998.

     Income taxes were  $437,000  for the fiscal year ended  January 31, 1999 as
compared to $678,000 for the fiscal year ended  January 31, 1998, as a result of
lower pre-tax  income.  The effective tax rate for fiscal year 1999 was 39.5% as
compared to 38.8% for fiscal year 1998.

     The foregoing factors  contributed to the Company's  decrease in net income
for the fiscal  year ended  January  31,  1999 to  $673,000  as compared to $1.1
million for the fiscal year ended January 31, 1998.

                                       16
<PAGE>
Fiscal 1998 Compared to Fiscal 1997

     Travel Centers.  Gross sales at the Company's travel centers increased 4.1%
to $22.6  million for fiscal 1998 from $21.7  million for fiscal 1997.  Gasoline
sales  were  even at  $11.6  million  for  both  fiscal  years  1998  and  1997.
Merchandise  sales  increased  1.5% to $7.0  million  for the fiscal  year ended
January 31, 1998 from $6.9  million for the fiscal year ended  January 31, 1997.
Restaurant  sales  decreased  6.5% to $3.0  million  for  fiscal  1998 from $3.2
million  for fiscal  1997.  The  Company's  wholesale  CITGO  gasoline  products
relationship  commencing  in February  1997  produced  gross sales of  $917,000.
Travel  center  operations  were  affected in the fourth  quarter of the current
fiscal  year by the  reduction  in fuel  prices  and  margins as well as adverse
weather caused by El Nino which impacted the Western United States.

     Merchandise  sales were  negatively  impacted  by the  Company's  warehouse
computer  conversion  to a  perpetual  inventory  system  including  purchasing,
receiving and transfer of goods, and all other general  inventory  controls from
the  corporate  office  and  the  distribution  facility  to the  travel  center
locations.  The  conversion  progressed  slower than  anticipated  and  affected
shipment of goods to the stores during the fourth  quarter.  Construction of new
canopies and above ground tank storage  facilities  to meet  federally  mandated
regulations for 1998 has been completed at all but one location.

     Cost of goods sold for the travel  centers  increased 5.6% to $15.0 million
for fiscal 1998 from $14.2  million for fiscal 1997.  As a  percentage  of gross
sales,  cost of goods  sold  increased  slightly  to 66.6% from  65.6%,  for the
respective fiscal periods.

     General and administrative expenses for travel centers consist of salaries,
bonuses and commissions for travel center personnel,  property costs and repairs
and maintenance. General and administrative expenses for the travel centers were
unchanged at $5.3 million for the fiscal years ended  January 31, 1998 and 1997.
Depreciation  and  amortization  expenses  increased by 1.6% to $369,000 for the
fiscal  year ended  January  31,  1998 from  $363,000  for the fiscal year ended
January 31, 1997.

     The above factors  contributed  to an increase in travel  center  operating
income of 6.6% to $1.6  million  for the fiscal  year ended  January 31, 1998 as
compared to $1.5 million for the fiscal year ended January 31, 1997.

     Outdoor  Advertising.  Gross sales from the Company's  outdoor  advertising
increased  40.0% to $4.9  million  for fiscal  1998 from $3.5  million in fiscal
1997.  The increase  was  primarily  attributable  to certain  acquired  assets,
including the outdoor  advertising assets of The McCarty Company (formally known
as Pony Panels),  General Outdoor  Advertising,  Mesa Outdoor  Advertising,  and
Sweezy Outdoor Advertising Inc., as well as overall rate increases.

     Direct operating expenses related to outdoor  advertising consist of direct
advertising  expenses,  which include rental payments to property owners for the
use of land on which advertising  displays are located,  production expenses and
selling expenses.  Production expenses include salaries for operations personnel
and real estate representatives,  property taxes, and repairs and maintenance of
advertising  displays.  Selling  expenses  consist  primarily  of  salaries  and
commissions  for  salespersons  and travel  related to sales.  Direct  operating
expenses  increased  19.0% to $2.5 million for the fiscal year ended January 31,
1998 from $2.1  million for the same period in fiscal 1997,  principally  due to
the  addition  of sales and  production  personnel,  sign rent and  repairs  and
maintenance of advertising displays.

                                       17
<PAGE>

     General and  administrative  expenses  for outdoor  advertising  consist of
salaries  and  wages  for  administrative  personnel,   insurance,  legal  fees,
association  dues and  subscriptions  and other indirect  expenses.  General and
administrative  expenses  increased 111.7% to $781,000 for the fiscal year ended
January 31, 1998 from  $369,000  for fiscal 1997.  The  increase  was  primarily
attributable to increases in administrative personnel,  insurance and legal fees
due to the acquisition of the assets of The McCarty  Company  (formally known as
Pony Panels) and Sweezy Outdoor Advertising, Inc.

     Depreciation and amortization expenses increased 134.1% to $660,000 for the
fiscal year ended January 31, 1998 from  $282,000 for fiscal 1997.  The increase
was primarily  attributable to acquisitions of outdoor the advertising assets of
The McCarty Company (Pony Panels) on April 1, 1997, General Outdoor  Advertising
on April 26, 1997, Mesa Outdoor Advertising on April 29, 1997 and Sweezy Outdoor
Advertising, Inc. on December 9, 1997.

     The above  factors  contributed  to the  increase  in  outdoor  advertising
operating income of 31.7% to $926,000 for the fiscal year ended January 31, 1998
as compared to $703,000 for the fiscal year ended January 31, 1997.

     Corporate and Other. General and administrative  expenses for corporate and
other   operations   of  the  Company   consist   primarily  of  executive   and
administrative compensation and benefits, investor relations, and accounting and
legal fees. General and  administrative  expenses increased 3.2% to $480,000 for
the fiscal year ended  January 31, 1998 from  $465,000 for the fiscal year ended
January 31, 1997.

     For the fiscal year ended January 31, 1998, the Company's President and its
Chief  Operating  Officer elected to accept annual base salaries of $136,000 and
$90,000,  respectively,  which are less than the $195,000 and $145,000  salaries
provided for in their respective  employment  agreements  effective  February 1,
1997.  Each of the agreements has a perpetual  five-year  term, such that on any
given date, each agreement has a five-year remaining term.

     Depreciation  and  amortization  expenses for the  Company's  corporate and
other  operations   consist  of  depreciation   associated  with  the  corporate
headquarters  and  furniture  and fixtures  related  thereto.  Depreciation  and
amortization decreased 10.4% to $121,000 for fiscal 1998 as compared to $135,000
for fiscal 1997.

     Interest  expense  increased  6.5% to  $722,000  for the fiscal  year ended
January 31, 1998 from  $678,000 for the fiscal year ended January 31, 1997, as a
result of  borrowings  to fund outdoor  advertising  expansion and the continued
conversion of travel centers to CITGO branding.

     Income  before  taxes  increased  13.3% to $1.7 million for the fiscal year
ended  January 31, 1998 from $1.5 million for the fiscal year ended  January 31,
1997. As a percentage of gross  revenues,  income before taxes increased to 6.2%
for the fiscal year ended 1998 from 6.0% for the same fiscal period 1997.

     Income taxes were  $678,000  for the fiscal year ended  January 31, 1998 as
compared to $604,000 for the fiscal year ended  January 31, 1997, as a result of
higher pre-tax income.  The effective tax rate for fiscal year 1998 was 38.8% as
compared to 40.0% for fiscal year 1997

     The foregoing factors  contributed to the Company's  increase in net income
for the fiscal  year ended  January  31,  1998 to $1.1  million as  compared  to
$905,000 for the fiscal year ended January 31, 1997.

                                       18
<PAGE>
Liquidity and Capital Resources

     At January 31,  1999,  the Company had working  capital of $5.5  million as
compared to working  capital of $5.0 million at January 31, 1998. At January 31,
1999,  the Company had a current  ratio of 2.74:1 as compared to a current ratio
of 2.51:1 at January 31, 1998.  The increase in working  capital and the current
ratio is  primarily  attributable  to an  increase  in  accounts  receivable  of
approximately $516,000 due to a reclass of fire assets and credit cards. The net
cash  provided by  operating  activities  was $930,000 for the fiscal year ended
January 31, 1999 as compared to $1.4 million for fiscal year ended 1998.  During
fiscal year 1999,  there were  increases in  depreciation  and  amortization  of
$745,000,  deferred  income  taxes of $115,000,  and changes in other  operating
assets and  liabilities  of $1.4 million,  net.  Accounts  receivable  increased
primarily due to growth from  acquisitions  totaling  approximately  $300,000 as
well as amounts due from insurance  proceeds at fiscal year end. The increase in
depreciation  and  amortization  in fiscal 1999 was  primarily due to additional
display structures associated with the acquisitions as well as structures built,
and buildings,  machinery and equipment  some of which are  associated  with the
renovations at several travel centers. Deferred income taxes increased primarily
as a result of book-tax timing differences.

     Net cash used in investing  activities  decreased to $6.6 million in fiscal
1999 from $7.3  million in fiscal 1998.  The decrease is due  primarily to asset
acquisitions  totaling  $2.3  million in fiscal  year ended  January 31, 1999 as
compared to $5.8 million in fiscal year ended January 31, 1998.  There were also
purchases  of  property  and  equipment  of $4.4  million in fiscal year 1999 as
compared to $2.2  million in 1998.  Increases  in property  and  equipment  were
offset by a decrease in proceeds  from the sale of certain  assets of $21,000 in
fiscal year 1999 as compared to $703,000 in fiscal year 1998.

     Net cash  provided by  financing  activities  increased  to $3.8 million in
fiscal 1999 from $2.5 million in fiscal 1998.  The increase is due  primarily to
an increase in net  borrowings  of $2.3  million in fiscal year 1999 as compared
fiscal  year 1998  offset  by  payments  for debt  acquisitions  costs  totaling
$942,000  in fiscal  year 1999.  These  amounts  are net of the  effects of $5.6
million in  borrowings  in  exchange  for  acquisitions  reflected  as  non-cash
transactions  in the  Company's  cash  flows  statements.  The  increase  in the
Company's  debt is a  result  of  continued  expansion  of  outdoor  advertising
operations through development and acquisition as well as continued  renovations
and upgrades at the Company's travel centers.

     As of January  31,  1999,  the Company  was  indebted to various  banks and
individuals  in an aggregate  principal  amount of  approximately  $20.3 million
under various loans and promissory notes. Land, buildings, equipment, billboards
and  inventories of the Company  secure many of the loans and promissory  notes.
The loans and promissory notes mature at dates from March 1, 1999 to October 15,
2013 and accrue  interest  at rates  ranging  from 7.1 % to 8.9% per  annum.  On
November 10, 1998,  the Company  entered into a $30.0 million  credit  agreement
with one of its existing  lenders.  At January 31, 1999,  borrowing against this
credit agreement was approximately $15.8 million.

     The Company made capital  expenditures  of  approximately  $4.4 million and
$2.8 million during the fiscal years ended 1999 and 1998, respectively.  For the
fiscal  year  ended  1999,  these  expenditures  were  made  primarily  for  the
construction of a new travel center,  upgrades to existing  travel centers,  and
for the construction and acquisition of additional billboard structures. For the
fiscal year ended 1998,  these  expenditures  were primarily for upgrades to the
Company's  travel  centers,  including the new warehouse  facility,  and for the
construction and acquisition of additional billboard structures. During the next
twelve  months,  the  Company  anticipates  incurring  capital  expenditures  of
approximately   $825,000   related   to  travel   center   operation   including
approximately  $775,000 for upgrades and  improvements  to existing  facilities.
With regard to outdoor  advertising  operations,  the Company has plans to build
approximately  200 new billboard faces during the fiscal year ending January 31,
2000, at a cost of approximately $1.5 million.

                                       19
<PAGE>

     As of January 31, 1999,  approximately $19.0 million of the Company's total
indebtedness  accrued  interest at variable rates tied to 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  which  could  impact the  Company's  ability to  consummate
significant acquisitions in the future.

Impact of the Year 2000

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

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

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

     Costs to Address  Year 2000  Issues.  The Company  estimates  over the next
twelve months that the costs  associated with the  implementation  plan will not
exceed $50,000.

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

     Contingency  Plan.  The Company has not  determined the specific risks that
may need to be addressed by a contingency plan. Therefore,  the Company has not,
to date,  implemented a Year 2000 contingency  plan. It is the Company's goal to
have  its  internal  major  Year  2000  Issues  resolved  and  external  effects
determined  by the end of the second  quarter of fiscal  year 2000.  The Company
will develop and  implement a  contingency  plan by the end the third quarter of
fiscal  year 2000,  in the event the  Company's  Year 2000  project  should fall
behind schedule.

                                       20
<PAGE>
Risk Factors

     The Company  does not  provide  forecasts  of  potential  future  financial
performance.  While the Company's  management is optimistic  about the Company's
long-term prospects, the following issues and uncertainties, among others should
be considered in evaluating its growth outlook.

     No  Assurance  of  Successful  Expansion.  The Company  intends to open new
travel  centers,  expand  its  outdoor  advertising  operations,  and  implement
gasoline wholesaling activities.  Although the Company's existing operations are
based primarily in the Southwest,  the Company's 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  is likely to 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 its bank lenders,  or
that such  acquisitions  that are completed can be integrated  successfully into
the  Company's  existing  operations.  The  success of the  Company's  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,  train,  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. See "BUSINESS -Growth Strategy."

     Need for  Additional  Financing.  In order to  successfully  implement  the
Company's  growth  strategy,  the Company may need to seek additional  financing
from  external  sources.  The Company has been able to secure  financing for the
acquisition of additional  assets from commercial  lenders in amounts up to 100%
of the fair  market  value of the  acquired  assets.  However,  there  can be no
assurance that such  additional  financing  will be available in the future,  or
that if available,  it will be on terms  acceptable to the Company.  The Company
anticipates that any financing which it does secure may impose certain financial
and other restrictive  covenants upon the Company and its operations.  There can
be no assurance  that the Company  will be able to  successfully  integrate  any
acquired companies or assets into its existing operations,  which could increase
the Company's  operating expenses in the short-term and materially and adversely
affect the Company's  results of operations.  Any acquisition by the Company may
result in  potentially  dilutive  issuances  of equity or debt  securities,  the
incurrence of additional  debt, and amortization of expenses related to goodwill
and  intangible  assets,  all of which  could  adversely  affect  the  Company's
profitability. Acquisitions involve numerous risks, such as the diversion of the
attention of the Company's management from other business concerns, the entrance
of the Company into  markets in which it has had no or only limited  experience,
and the potential  loss of key employees of the acquired  company,  all of which
could  have a  material  adverse  effect on the  Company's  business,  financial
condition, and results of operations.

                                       21
<PAGE>
     Dependence  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 the
Company's  distributorship  relationships  with CITGO and EXXON and its existing
franchise  agreements  with Dairy  Queen/Brazier  and  Stuckey's.  The Company's
existing  operations  and plans  for  future  growth  anticipate  the  continued
existence of such  relationships.  There can be no assurance that the agreements
that  govern  these  relationships  will  not be  terminated.  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 the Company
from pursuing opportunities that management would otherwise deem advisable.  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.  See
"BUSINESS - Business Operations."

     Possible  Adverse Impact of Competition.  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.  In  its  outdoor  advertising
operations,  the Company faces  competition for advertising  revenues from other
outdoor  advertising  companies,  as well as from  other  media  such as  radio,
television,  print media and direct mail  marketing.  The Company also  competes
with a wide  variety  of other  out-of-home  advertising  media,  the  range and
diversity of which has  increased  substantially  over the past  several  years,
including  advertising  displays  in  shopping  centers  and  malls,   airports,
stadiums,  movie theaters and supermarkets.  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. There can be no assurance that the Company's
travel  centers  and  outdoor  advertising  operations  will be able to  compete
successfully  in  their  respective   markets  in  the  future.   See  "BUSINESS
Competition."

     Seasonality and Other Factors;  Quarterly  Fluctuations.  The travel center
portion of the  Company's  business is somewhat  seasonal,  and  revenues may be
affected  by  many  factors,  including  weather,  holidays  and  the  price  of
alternative  travel modes.  The Company's  revenues and earnings may  experience
substantial fluctuations from quarter to quarter.

     Potential Adverse Effects of Government  Regulation of Travel Centers. 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 its New Mexico
travel centers.  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 fourteen  travel  centers  comply with all
applicable  licensing and  regulatory  requirements.  Any failure to comply with
applicable regulations,  or the adoption of additional regulations or changes in
existing  regulations could impose  additional  compliance costs on the Company,
require a cessation of certain  activities or otherwise have a material  adverse
effect on the  Company's  business  and  results of  operations.  See  "BUSINESS
Regulation."

                                       22
<PAGE>
     Environmental Risks. The Company is subject to federal, state and municipal
laws and regulations governing the use, storage,  handling,  and disposal of its
petroleum  products.  Specifically,  the  federal  government  has  issued  more
stringent regulations governing the storage of petroleum products with which the
Company was required to comply by December 1998.  Although the Company  believes
that its activities comply with the current standards  prescribed by law and the
Company has already completed  certain  renovations of its facilities to satisfy
the  federal   government's   enacted   regulations,   the  risk  of  accidental
contamination  to the environment or injury can not 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  the  available  resources  of the
Company. The Company could be required to incur significant costs to comply with
environmental  laws and  regulations  that may be  enacted  in the  future.  See
"BUSINESS - Regulation."
 
     Potential Adverse Effects of Government  Regulation of Outdoor Advertising.
Outdoor  advertising  displays are subject to regulation by federal,  state, and
local governmental agencies. These regulations, in some cases, limit the height,
size,  and location of billboards  and, in limited  circumstances,  regulate the
content of the advertising copy displayed on the billboards,  particularly  with
respect to tobacco  advertising.  Some  governmental  regulations  prohibit  the
construction of new billboards or the replacement,  relocation,  enlargement, or
upgrading  of  existing  structures.   Some  cities  have  adopted  amortization
ordinances  under which,  after the  expiration  of a specified  period of time,
billboards  must be removed at the  owner's  expense  and without the payment of
compensation.  Due to the location of its billboard  structures  outside smaller
metropolitan  and rural areas,  the Company has not been materially  affected by
such ordinances to date.  However,  there can be no assurance that the Company's
billboard  structures  will not  become  subject to  similar  ordinances  in the
future.  Ordinances  requiring the removal of a billboard without  compensation,
whether through amortization or otherwise, are being challenged in various state
and federal courts with conflicting results.  Although, to date, the Company has
been adequately  compensated for any of its structures  removed at the direction
of  governmental  authorities,  future  changes in such  regulations  as well as
others applicable to the Company's outdoor advertising operations,  could have a
material adverse effect on the Company's business and results of operations. See
"BUSINESS - Regulation."

Other Uncertainties

     Other operating, financial or legal risks or uncertainties are discussed in
this Form 10-K in specific  context and the Company is subject to the  financial
or legal  risks or  uncertainties  discussed  in  other  documents  filed by the
Company with the Securities and Exchange  Commission.  In addition,  the Company
is, of course,  also  subject to general  economic  risks,  and other  risks and
uncertainties.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The principal  market risks to which the Company is exposed to are interest
rates on the Company's debt. The Company's  interest  sensitive  liabilities are
its debt instruments. Variable interest on short-term debt equals LIBOR plus the
applicable  margin.  Long-term  debt bears  interest  at  variable  rates  based
primarily  on the prime rate.  Because  the prime rate or LIBOR may  increase or
decrease  at any time,  the Company is exposed to market risk as a result of the
impact that changes in these base rates may have on the interest rate applicable
to  borrowings.  Increases  (decreases)  in the  interest  rates  applicable  to
borrowings  would  result  in  increased  (decreased)  interest  expense  and  a
reduction  (increase)  in the  Company's  net  income  and after tax cash  flow.
Management  does not,  however,  believe that any risk  inherent in the variable
rate  nature of its debt is likely to have a  material  effect on the  Company's
financial position or results of operations.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Following on next page.


                                       23
<PAGE>





















                           BOWLIN OUTDOOR ADVERTISING
                          & TRAVEL CENTERS INCORPORATED
                                AND SUBSIDIARIES

                        Consolidated Financial Statements

                            January 31, 1999 and 1998

                   (With Independent Auditors' Report Thereon)

















                                       24
<PAGE>










                           BOWLIN OUTDOOR ADVERTISING
                          & TRAVEL CENTERS INCORPORATED
                                AND SUBSIDIARIES

                                Table Of Contents





                                                                            Page

Independent Auditors' Report                                                  26

Financial Statements:

      Consolidated Balance Sheets                                             27
      Consolidated Statements of Income                                       28
      Consolidated Statements of Stockholders' Equity                         29
      Consolidated Statements of Cash Flows                              30 - 31

Notes to Consolidated Financial Statements                               32 - 48
















                                       25
<PAGE>










                          Independent Auditors' Report




The Board of Directors
BOWLIN Outdoor Advertising
    & Travel Centers Incorporated:


We have audited the accompanying  consolidated  balance sheets of BOWLIN Outdoor
Advertising & Travel Centers  Incorporated  and  subsidiaries  as of January 31,
1999 and 1998, and the related consolidated statements of income,  stockholders'
equity,  and cash  flows for each of the years in the  three-year  period  ended
January 31, 1999. These consolidated financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  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 that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of BOWLIN  Outdoor
Advertising & Travel Centers  Incorporated  and  subsidiaries  as of January 31,
1999 and 1998,  and the results of its operations and its cash flows for each of
the years in the  three-year  period ended January 31, 1999, in conformity  with
generally accepted accounting principles.


                                    KPMG LLP
Albuquerque, New Mexico
April 3, 1999







                                       26
<PAGE>


                           BOWLIN OUTDOOR ADVERTISING
                          & TRAVEL CENTERS INCORPORATED
                                AND SUBSIDIARIES

                           Consolidated Balance Sheets

                            January 31, 1999 and 1998
<TABLE>
<S>                                                                                  <C>                 <C>

                                  Assets                                            1999                1998
                                                                              -----------------   ------------------

Current assets:
    Cash and cash equivalents                                              $         2,198,520            4,053,330
    Accounts receivable, net                                                         1,510,157              579,216
    Notes receivable - related parties, current maturities (note 2)                                          30,029
                                                                                        12,637
    Inventories                                                                      3,688,992            3,153,688
    Prepaid expenses                                                                   703,321              448,172
    Income taxes                                                                       530,796               89,993
    Other current assets                                                                 9,051               10,958
                                                                              -----------------   ------------------

               Total current assets                                                  8,653,474            8,365,386
                                                                              -----------------   ------------------

Notes receivable - related parties, less current maturities (note 2)                       875               20,016
Property and equipment, net (notes 3, 5, 6 and 7)                                   26,424,741           16,197,471
Intangibles, net (note 4)                                                            2,338,229            1,200,302
Other assets                                                                            72,037               76,141
                                                                              -----------------   ------------------

               Total assets                                                $        37,489,356           25,859,316
                                                                              =================   ==================

                   Liabilities and Stockholders' Equity

Current liabilities:
    Short-term borrowing, bank (note 6)                                    $                 -              745,000
    Accounts payable                                                                 1,393,100            1,350,626
    Long-term debt, current maturities (note 7)                                      1,248,078              779,179
    Accrued salaries                                                                   176,588              134,001
    Accrued liabilities                                                                340,310              321,850
                                                                              -----------------   ------------------

               Total current liabilities                                             3,158,076            3,330,656
Deferred income taxes (note 10)                                                        427,000              177,300
Long-term debt, less current maturities (note 7)                                    19,004,046            8,123,736
                                                                              -----------------   ------------------

               Total liabilities                                                    22,589,122           11,631,692
                                                                              -----------------   ------------------
Stockholders' equity:
    Common stock, $.001 par value; authorized 100,000,000
       shares; outstanding 4,384,848 (note 8)                                            4,385                4,385
    Additional paid-in capital                                                      11,604,303           11,604,303
    Retained earnings                                                                3,291,546            2,618,936
                                                                              -----------------   ------------------

               Total stockholders' equity                                           14,900,234           14,227,624
Commitments and contingencies (notes 11 and 12)
                                                                              -----------------   ------------------

               Total liabilities and stockholders' equity                  $        37,489,356           25,859,316
                                                                              =================   ==================

See accompanying notes to consolidated financial statements.

</TABLE>



                                       27
<PAGE>


                           BOWLIN OUTDOOR ADVERTISING
                          & TRAVEL CENTERS INCORPORATED
                                AND SUBSIDIARIES

                        Consolidated Statements of Income

<TABLE>
<S>                                                         <C>                 <C>                      <C>
                                                                        Year ending January 31,
                                                     --------------------------------------------------------------
                                                            1999                 1998                  1997
                                                     -------------------   ------------------   -------------------

Gross sales                                       $          30,578,015           27,439,398            25,150,931
Less discounts on sales                                         283,264              279,943               303,000

                                                     -------------------   ------------------   -------------------

           Net sales                                         30,294,751           27,159,455            24,847,931
Cost of goods sold                                           18,848,146           17,531,203            16,340,375
                                                     -------------------   ------------------   -------------------

                Gross profit                                 11,446,605            9,628,252             8,507,556

General and administrative expense                           (7,479,568)          (6,567,940)           (6,115,350)
Other operating income                                            7,345               89,732               379,228
Depreciation and amortization                                (1,895,035)          (1,149,694)             (779,571)
                                                     -------------------   ------------------   -------------------

                Operating income                              2,079,347            2,000,350             1,991,863

Other income (expense):
    Interest income                                             128,446             268,555                138,885
    Gain on sale of property and equipment                       10,580             200,600                 55,679
    Interest expense                                         (1,108,263)           (722,117)              (677,746)
                                                    -------------------   ------------------   -------------------

                Total other income (expense)                  (969,237)            (252,962)              (483,182)
                                                    -------------------   ------------------   -------------------

                Income before income taxes                    1,110,110           1,747,388              1,508,681

Income taxes (note 10)                                          437,500             678,200                603,472
                                                     -------------------   ------------------   -------------------

Net income                                        $             672,610           1,069,188                905,209
                                                     ===================   ==================   ===================

Basic and diluted earnings per share              $                0.15                0.24                   0.26
                                                     ===================   ==================   ===================


See accompanying notes to consolidated financial statements.
</TABLE>




                                       28

<PAGE>


                           BOWLIN OUTDOOR ADVERTISING
                          & TRAVEL CENTERS INCORPORATED
                                AND SUBSIDIARIES

                 Consolidated Statements of Stockholders' Equity

<TABLE>
<S>                                          <C>            <C>            <C>            <C>            <C>
                                             Number         Common       Additional
                                               of           stock,        paid-in       Retained
                                             shares         at par        capital       earnings        Total
                                           -----------   -------------  -------------  ------------   -----------

Balance at January 31, 1996                  3,050,427    $      3,051    3,806,220       993,912      4,803,183
Net income                                           -               -            -       905,209        905,209
Cash dividends on common
    stock, $.02 per share                            -               -            -       (50,600)       (50,600)
Stock dividends issued on common stock
    and sale of fractional shares              191,799              192     301,596      (298,773)         3,015
Issuance of common stock                       141,159              141     221,967              -       222,108
Redemption of previously issued
    shares (note 8)                            (98,537)             (99)   (154,945)             -      (155,044)
Contributed services                                 -                -     155,044              -       155,044
Initial public offering of common stock,
    net of expenses                          1,100,000            1,100   7,274,421              -     7,275,521
                                            -----------    ------------ -------------  ------------   -----------
                                                                                             
Balance at January 31, 1997                  4,384,848            4,385  11,604,303       1,549,748   13,158,436
Net income                                           -                -           -       1,069,188    1,069,188
                                            -----------    ------------ -------------  ------------   -----------

Balance at January 31, 1998                  4,384,848            4,385  11,604,303      2,618,936    14,227,624
Net income                                           -                -           -        672,610       672,610
                                            -----------    ------------ -------------  ------------  ------------
                                                                                                      
Balance at January 31, 1999                  4,384,848     $      4,385  11,604,303      3,291,546    14,900,234
                                            ===========    ============ ============   ============  ============



See accompanying notes to consolidated financial statements
</TABLE>
                                       29
<PAGE>


                           BOWLIN OUTDOOR ADVERTISING
                          & TRAVEL CENTERS INCORPORATED
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
<TABLE>
<S>                                                              <C>            <C>                 <C>
                                                                            Year ending January 31,
                                                              ----------------------------------------------------
                                                                   1999              1998               1997
                                                              ----------------  ----------------   ---------------

Cash flows from operating activities:
    Net income                                               $         672,610         1,069,188           905,209
    Adjustments to reconcile net income to
      net cash provided by operating activities:
        Depreciation and amortization                                1,895,035         1,149,694           779,571
        Income from partnership investment                              (3,025)                -            (9,504)
        Gain on sale of assets                                         (10,580)         (200,600)          (55,679)
        Deferred income taxes                                          249,700           134,700            42,600
        Imputed interest                                                27,049                 -                 -
        Minority interest                                                    -          (205,366)          (21,225)
        Changes in operating assets and liabilities,
          net of effects from acquisitions:
             Accounts receivable                                      (874,690)         (139,851)         (171,442)
             Inventories                                              (535,304)         (397,098)         (605,584)
             Prepaid expenses and other current assets                (153,711)           28,230          (130,658)
             Accounts payable and accrued liabilities                  103,521           194,328          (244,989)
             Income taxes                                             (440,803)         (235,065)          145,072
                                                               ----------------  ----------------   ---------------

                Net cash provided by operating activities              929,802         1,398,160           633,371
                                                               ----------------  ----------------   ---------------
Cash flows from investing activities:
    Capital received from (contributed to) partnership                       -           (4,205)            13,000
    Proceeds from sale/condemnation of assets                           20,813           703,201           376,973
    Business acquisitions                                           (2,312,232)       (5,845,000)                -
    Purchases of property and equipment                             (4,366,462)       (2,208,435)       (2,343,058)
    Franchise fee payments                                             (25,000)                -                 -
    Disbursements on notes receivable                                        -                 -          (195,813)
    Collections on notes receivable                                     43,196             6,168            99,258
                                                               ----------------  ----------------   ---------------

                Net cash used in investing activities               (6,639,685)       (7,348,271)       (2,049,640)
                                                               ----------------  ----------------   ---------------
Cash flows from financing activities:
    Short-term borrowings, net                                        (745,000)          745,000          (149,000)
    Payments on long-term debt                                        (665,720)       (1,015,530)       (4,660,892)
    Payments for debt issuance costs                                  (941,649)                -           (84,794)  
    Proceeds from borrowings                                         6,207,442         2,755,000         4,778,052
    Proceeds from issuance of common stock                                   -                 -           222,108  
    Redemption of previously issued shares                                   -                 -          (155,044)
    Proceeds from sale of fractional
      shares of common stock sold in conjunction
      with stock dividend                                                    -                 -             3,015
    Dividends paid                                                           -                 -           (50,600)
    Proceeds from initial public offering of common stock                    -                 -         8,800,000
    Payment of registration costs associated with
      initial public offering of common stock                                -                 -        (1,369,435)
                                                              ----------------  ----------------   ---------------

                Net cash provided by financing activities            3,855,073         2,484,470         7,333,410
                                                              ----------------  ----------------   ---------------
                                                                                                                  
                                                                                                       (continued)             

</TABLE>


                                       30
<PAGE>



                           BOWLIN OUTDOOR ADVERTISING
                          & TRAVEL CENTERS INCORPORATED
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

<TABLE>
<S>                                                              <C>                 <C>                 <C>
                                                                            Year ending January 31,
                                                              ----------------------------------------------------
                                                                   1999              1998               1997
                                                              ----------------  ----------------   ---------------

Net (decrease) increase in cash and cash equivalents        $     (1,854,810)       (3,465,641)         5,917,141            
Cash and cash equivalents at beginning of period                   4,053,330         7,518,971          1,601,830
                                                              ----------------  ----------------   ---------------

Cash and cash equivalents at end of period                  $      2,198,520         4,053,330          7,518,971
                                                              ================  ================   ===============
Supplemental disclosure of cash flow information:
    Interest paid                                           $      1,040,446           722,986            678,694
                                                              ================  ================   ===============
    Income taxes paid                                       $        628,603           778,565            415,800
                                                              ================  ================   ===============
    Noncash investing and financing activities:
      Acquisition of land and outdoor advertising assets in
        exchange for long-term debt                         $      5,570,000         1,275,000         1,189,000
                                                              ================  ================   ===============
      Disposition of land and buildings in exchange for
        assumption of long-term debt of subsidiary          $              -        (1,090,910)                -           -
                                                              ================  ================   ===============
      Acquisition of covenant not-to-complete in exchange
        for long-term debt                                  $        210,438           284,763                 -
                                                              ================  ================   ===============
      Stock dividend issued to shareholders                 $              -                 -           298,733
                                                              ================  ================   ===============
      Acquisitions - fair value of assets  acquired and
        liabilities  assumed at the date of the
        acquisitions were as follows:
           Accounts receivable                              $          56,251            73,941                -
           Prepaid expenses                                            99,065            15,057                -
           Billboards                                               2,051,916         4,735,000                -
           Machinery and equipment                                     55,000           163,500                -
           Excess of cost over fair value of
               assets acquired                                              -           863,000                -
           Covenants not-to-compete                                    50,000            10,000                -
           Accounts payable                                                 -           (15,498)               -
                                                              ================  ================   ===============


See accompanying notes to consolidated financial statements.

</TABLE>



                                       31
<PAGE>


                           BOWLIN OUTDOOR ADVERTISING
                          & TRAVEL CENTERS INCORPORATED
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements




(1)  Summary of Significant Accounting Policies
     (a)  Description of Business

          BOWLIN  Outdoor   Advertising  &  Travel  Centers   Incorporated   and
          subsidiaries (the Company) are located in Albuquerque,  New Mexico. On
          August 28, 1996,  BOWLIN Outdoor  Advertising & Travel  Centers,  Inc.
          (BOATC) was  incorporated in the state of Nevada.  BOATC's articles of
          incorporation  authorize  10,000,000  shares of preferred stock ($.001
          par  value)  which  can be issued  at the  discretion  of the board of
          directors.  Pursuant  to an  agreement  and plan of  merger  effective
          September 27, 1996, BOWLIN'S, Inc. (BI), which was incorporated in the
          state of New Mexico on  February  20,  1953,  was merged with and into
          BOATC. Under the terms of the agreement,  BI shareholders received 211
          of the Company's  shares for each BI share.  Accordingly,  the Company
          issued  approximately  3.4 million  shares of its common stock for all
          the outstanding shares of BI stock and all references to the number of
          shares of common stock have been retroactively restated to reflect the
          exchange for all periods presented.  The transaction was accounted for
          in a manner similar to a pooling of interests.

          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. In addition to
          the travel centers, the Company operates outdoor billboard advertising
          displays which are situated on interstate  highways,  primarily in the
          Southwestern United States.

          Dragoon Water Company,  Inc.  (Dragoon),  a majority owned subsidiary,
          was acquired by the Company in 1986.  On October 1, 1996,  the Company
          sold Dragoon to an unrelated third party. The sale agreement  provides
          for  the  continued  provision  of  adequate  water  utilities  to the
          Company.

          The  Company  acquired  all  of  the  outstanding   stock  of  another
          subsidiary,   BMI  Inc.  (BMI),  in  November  1993.   BMI's  business
          activities  have  historically  been the  acquisition  of inventory in
          Mexico which has been sold to the Company for the purpose of resale in
          the United States. BMI has a January 31 fiscal year end.

          Neither  Dragoon  nor  BMI  is  considered  material  to  the  overall
          operations of the Company.

          The Company also held a majority general  partnership  interest in the
          Los Cuatros Apartments Limited Partnership (Los Cuatros) together with
          a limited  partnership  interest.  The partnership  owns and leases an
          apartment  complex in Las Cruces,  New  Mexico.  The  partnership  was
          formed in January  1991 and has a December 31 fiscal year end. On June
          16, 1997, the Company sold Los Cuatros to an unrelated third party.



                                       32
<PAGE>


     (b)  Principles of Consolidation

          The  accompanying   consolidated   financial  statements  include  the
          accounts  of the  Company,  its wholly  owned  subsidiary  BMI and its
          majority owned subsidiaries,  Dragoon and Los Cuatros. Dragoon and Los
          Cuatros are included from  February 1, 1996 through  their  respective
          dates  sold.  All  material   intercompany   transactions   have  been
          eliminated  or disclosure  has been made of the effect of  intervening
          events  from  December  31 to  January  31,  if  any,  related  to the
          differing fiscal year ends for Dragoon and Los Cuatros.

     (c)  Cash and Cash Equivalents

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

     (d)  Accounts Receivable and Allowance for Doubtful Accounts

          Trade receivables are stated at face amount less the related allowance
          for doubtful accounts.

     (e)  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.

     (f)  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.

     (g)  Intangible Assets

          Goodwill,  which  represents  the excess of  purchase  price over fair
          value of net assets  acquired,  is amortized on a straight-line  basis
          over the expected  periods to be  benefited,  generally 5 to 15 years.
          The Company  assesses the  recoverability  of this intangible asset by
          determining  whether the amortization of the goodwill balance over its
          remaining life can be recovered through  undiscounted future operating
          cash  flows  of  the  acquired  operation.   The  amount  of  goodwill
          impairment,  if any, is measured based on projected  discounted future
          operating  cash flows using a discount rate  reflecting  the Company's
          average  cost  of  funds.  The  assessment  of the  recoverability  of
          goodwill will be impacted if estimated future operating cash flows are
          not achieved.

          Covenants not-to-compete are amortized over the life of the respective
          covenants  using the  straight-line  method,  ranging  from one to ten
          years.


                                       33
<PAGE>


          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.

     (h)  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.
          Revenues from rental of billboard space are accounted for as operating
          leases  with  rental   assets   recorded  at  cost  less   accumulated
          depreciation  and rental  income is recorded  ratably over the life of
          the lease contract.

     (i)  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.

     (j)  Stock-based Compensation

          Effective  February  1,  1996,  the  Company  adopted  the  disclosure
          provisions of SFAS No. 123, "Accounting for Stock-Based Compensation,"
          which  requires  pro forma  disclosure  of net income and earnings per
          share as if the SFAS No. 123 fair value method had been  applied.  The
          Company  continues to apply the  provisions of  Accounting  Principles
          Board  (APB)  Opinion  No.  25,   "Accounting   for  Stock  Issued  to
          Employees,"  for the preparation of its basic  consolidated  financial
          statements.

     (k)  Impairment of Long-lived  Assets and Long-lived  Assets to Be Disposed
          Of

          Long-lived  assets and certain  identifiable  intangibles are reviewed
          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.


                                       34
<PAGE>


     (l)  Financial Instruments

          The Company's  financial  instruments  are cash and cash  equivalents,
          accounts receivable,  notes receivable,  accounts payable,  short-term
          borrowings,  and long-term debt. The carrying amounts of cash and cash
          equivalents,  accounts receivable, notes receivable, accounts payable,
          accrued  liabilities,   short-term  borrowings,   and  long-term  debt
          approximate fair value.

     (m)  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.

     (n)  Reclassification

          Certain  reclassifications  have been made to the prior year financial
          statements to conform to the current year presentation.

     (o)  Earnings Per Share

          Basic  earnings  per share of common stock is computed by dividing net
          income by the  weighted-average  number of common  shares  outstanding
          during the period.  Diluted  earnings per share is  calculated  in the
          same manner as basic earnings per share except that the denominator is
          increased to include the number of additional common shares that would
          have been  outstanding,  assuming the  exercise of all employee  stock
          options that would have had a dilutive effect on earnings per share. A
          reconciliation  of the  number of shares  used in the  calculation  of
          basic and diluted  earnings per share for the years ended  January 31,
          1999, 1998 and 1997 follows:

<TABLE>
<S>                                                              <C>                      <C>                 <C>
                                                                                      1999
                                                            ---------------------------------------------------------
                                                                 Income                Shares            Per share
                                                               (numerator)          (denominator)         amount
                                                            ------------------    ------------------   --------------

           Basic EPS - net income                       $            672,610             4,384,848  $       .15
                                                                                                       ==============
           Effect of dilutive securities
           Stock options                                                   -                 2,488
                                                            ==================    ==================

           Diluted EPS - net income                     $            672,610             4,387,336  $       .15
                                                            ==================    ==================   ==============

</TABLE>
        

                               35
<PAGE>

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

                                                                                      1998
                                                            ---------------------------------------------------------
                                                                 Income                Shares            Per share
                                                               (numerator)          (denominator)         amount
                                                            ------------------    ------------------   --------------

           Basic EPS - net income                       $          1,069,188             4,384,848  $       .24
                                                                                                       ==============
           Effect of dilutive securities
           Stock options                                                   -                     -
                                                            ==================    ==================

           Diluted EPS - net income                     $          1,069,188             4,384,848  $       .24
                                                            ==================    ==================   ==============

                                                                                      1997
                                                            ---------------------------------------------------------
                                                                 Income                Shares            Per share
                                                               (numerator)          (denominator)         amount
                                                            ------------------    ------------------   --------------

           Basic EPS - net income                       $            905,209             3,440,557  $       .26
                                                                                                       ==============
           Effect of dilutive securities
           Stock options                                                   -                     -
                                                            ==================    ==================

           Diluted EPS - net income                     $            905,209             3,440,557  $       .26
                                                            ==================    ==================   ==============
</TABLE>
          Options to purchase  259,000,  301,500  and  338,000  shares of common
          stock were  outstanding  during the years  ended  January 31, 1999 and
          1998  and  the  last  month  of  the  year  ended  January  31,  1997,
          respectively,  but were not included in the computation of diluted EPS
          because  the  options'  exercise  price was  greater  than the average
          market price of the common shares. The options,  which expire December
          2006, were still  outstanding at the end of the year ended January 31,
          1999.

(2)  Notes Receivable - Related Parties

     Notes receivable - related parties consist of the following at January 31:
<TABLE>
<S>                                                                        <C>                      <C>                 ,
                                                                              1999                 1998
                                                                      --------------------- --------------------
            Stockholder,  due April 1997, plus interest at 7%,
              unsecured                                           $               10,012              10,012
            Employees,   receivable  in  annual   installments
              totaling $875 plus interest at 10%, unsecured                        3,500              40,033
                                                                      --------------------- --------------------

                  Subtotal                                                        13,512              50,045
            Less current maturities                                               12,637              30,029
                                                                      ===================== ====================

                                                                  $                  875              20,016
                                                                      ===================== ====================

</TABLE>
                           


                                       36
<PAGE>


(3)  Property and Equipment

     Property and equipment consist of the following at January 31:

<TABLE>
<S>                                                         <C>                           <C>            <C>                       
                                                      Estimated life (years)
                                                                                       1999                 1998
                                                      -----------------------    ------------------  -------------------

      Land                                                       -            $         2,371,490           2,208,459
      Buildings and improvements                              10 - 40                   6,502,420           5,851,210
      Machinery and equipment                                  3 - 10                   5,901,088           5,390,278
      Autos, trucks and mobile homes                           3 - 10                   2,047,988           1,739,926
      Billboards on operating leases                          15 - 20                  19,886,104          10,835,449
      Billboards                                              15 - 20                     817,819             817,819
                                                      =======================    ------------------  -------------------

                Subtotal, at cost                                                      37,526,909          26,843,141
      Less accumulated depreciation                                                   (13,119,953)        (11,476,469)
      Construction in progress                                                          2,017,785             830,799
                                                                                 ==================  ===================

                                                                              $        26,424,741          16,197,471
                                                                                 ==================  ===================
</TABLE>

     During the year ended January 31, 1998,  the Company  determined the actual
     lives for approximately  $214,100 of billboard  expenditures were generally
     longer  than  the  estimated  useful  lives   previously   established  for
     depreciation purposes.  Therefore,  effective February 1, 1997, the Company
     extended the  estimated  useful  lives of those  assets up to 7 years.  The
     effect of this  change  in  accounting  estimate  increased  net  income by
     $105,400 ($.02 per basic and diluted share).

     During the year ended January 31, 1997,  the Company  determined the actual
     lives for  approximately  $467,000 of equipment were generally  longer than
     the  estimated  useful  lives   previously   established  for  depreciation
     purposes.  Therefore,  effective February 1, 1996, the Company extended the
     estimated  useful lives of those assets,  which are  depreciated  using the
     straight-line  method,  from 5 years to 15 years. The effect of this change
     in accounting  estimate increased net income by $34,200 ($.01 per basic and
     diluted share) for the year ended January 31, 1997.

     Additionally,  depreciation  of all property and equipment  acquired during
     the year ended January 31, 1997 has been computed  using the  straight-line
     method.  Depreciation of property and equipment acquired in prior years was
     computed  primarily using  accelerated  methods.  The effect of this change
     increased net income by $67,300 ($.02 per basic and diluted  share) for the
     year ended January 31, 1997.



                                       37

<PAGE>


(4)  Intangible Assets

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

<TABLE>
<S>                                                                             <C>                 <C>                 
                                                                              1999                 1998
                                                                      --------------------- --------------------
        Excess of purchase price over fair value of assets
            acquired                                              $              863,000             863,000
        Covenants not-to-compete                                                 555,201             294,763
        Franchise fees                                                           234,500             209,500
        Loan commitment fees                                                     941,649                   -
                                                                      --------------------- --------------------

                                                                               2,594,350           1,367,263
        Less accumulated amortization                                           (256,121)           (166,961)
                                                                      ===================== ====================

        Intangible assets, net                                    $            2,338,229           1,200,302
                                                                      ===================== ====================
</TABLE>

     During the year ended  January 31, 1999,  the Company paid $941,949 in loan
     commitment fees in connection with a new credit agreement entered into with
     the  Company's  bank.  These fees will be  amortized  over the terms of the
     respective borrowings on the straight-line method for the revolving portion
     and  the  effective  interest  method  for the  term  note  portion  of the
     agreement.

(5)  Billboard Rental Income

     Included in property and equipment in the  consolidated  balance  sheets of
     the Company are billboards on operating leases. The billboards are owned by
     the  Company  and the  advertising  space is leased to others.  See note 12
     regarding land leased from others by the Company for billboard use.

     Minimum future rental income on  non-cancelable  billboard leases in effect
     as of January 31, 1999 are as follows:

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

                                          Year ending January 31,
                              -------------------------------------------------

                                                    2000                      $        4,448,493
                                                    2001                               1,138,121
                                                    2002                                 145,161
                                                    2003                                  25,464
                                                    2004                                   3,551
                                                                                  -----------------

                                                    Total                     $        5,760,790
                                                                                  =================

</TABLE>



                                       38
<PAGE>
(6)  Short-term Borrowing, Bank

     In November 1998, the Company  entered into a credit  agreement with one of
     its  existing  lenders  including  a  line  of  credit  in  the  amount  of
     $10,000,000  to fund  purchases of existing  outdoor  advertising  business
     and/or billboard properties and a working capital line of $2,000,000.  Each
     note will bear interest based on the LIBOR 90 day rate index. As of January
     31, 1999, there were no amounts drawn on this credit agreement.

     The Company had an available financing agreement with a bank that permitted
     the  Company  to  borrow  up to $10.5  million  at terms  established  upon
     execution of the agreement.  As of January 31, 1998,  there were no amounts
     drawn on this financing agreement.

     The Company had an  available  billboard  construction  bank line of credit
     arrangement totaling $1,000,000 which matured in May 1998 and interest was
     payable  monthly at the prime rate plus 1 percent.  The  Company  had drawn
     $745,000 as of January 31, 1998.  Borrowings under this line of credit were
     limited to six times the trailing  cash flow from existing  billboards  not
     financed by this facility less the balance  outstanding  on another note to
     the bank. The line was secured by billboards and inventory.

(7)  Long-term Debt

     Long-term debt is as follows:
<TABLE>
<S>                                                                                       <C>                 <C>
                                                                                         1999               1998
                                                                                -----------------  -----------------

     Due bank,  maturity  November 2005,  variable interest (7.50% at January                      
         31, 1999), monthly  installments of $143,114,  secured by buildings,
         equipment, and billboards                                              $      11,858,362                  -  
     Due bank,  maturity  November 2005,  variable interest (7.07% at January                                         
         31, 1999),  interest only through November 1999 monthly installments                                         
         of $15,000, secured by billboards                                              2,500,000                  - 
     Due bank,  maturity  January 2006,  variable  interest (7.15% at January                                         
         31, 1999),  interest only through January 2000, monthly installments                                         
         of $8,300, secured by billboards                                               1,500,000                  - 
     Due bank,  maturity  October 2013,  variable  interest (7.75% at January                                         
         31,  1999),  monthly  installments  of  $9,860,  secured by land and                                         
         buildings                                                                        978,428                  - 
     Due bank,  maturity  October 2013,  variable  interest (7.75% at January                                        
         31,  1999),  monthly  installments  of  $6,329,  secured by land and                                         
         buildings                                                                        629,740                  - 
     Due bank,  maturity April 2007,  variable interest,  secured by mortgage                                         
         and deed of trust                                                                      -          2,363,929             
     Due bank, maturity January 2006, variable interest,  secured by mortgage                              
         and deed of trust                                                                      -          1,463,808            
     Due bank, maturity May 2005, variable interest, secured by billboards                      -          1,000,000  
     Due  bank,  maturity  February  2003,  variable  interest,   secured  by                                         
         billboards                                                                             -            784,327 
     Due bank,  maturity January 2005, variable interest at index rate (7.75%                               
         at January 31,  1999),  monthly  installments  of $6,883  secured by                                         
         buildings and equipment                                                          694,792            717,876 
     Due bank,  maturity  May 2005,  variable  interest at index rate plus .5                                         
         (8.25%  at  January 31,   1999),  monthly  installments  of  $8,614,                                         
         secured by buildings and equipment                                               774,006            810,571 
                                                                                                                      
                                                                                                                      
                                                                                                   
                                       39
<PAGE>


                                                                                         1999               1998
                                                                                   -----------------  -----------------

     Due banks and other  financing  companies,  with maturity  dates ranging
         from 1999 to 2013.  Most bear interest at  adjustable  rate of 7.75%                
         with  certain  fixed rate notes at 8.9%  Monthly  payments  totaling
         $19,188.  Secured by land, buildings, equipment, and inventories       $            933,811            592,156 
     Due individuals,  various payment schedules with maturity dates in 2003,                        
         including  interest  ranging from 8.00% to 10.00%.  Monthly payments
         totaling $3,818.  Secured by land and buildings                                     168,234            925,485 
     Due individuals,  maturity dates in 2008,  including imputed interest at
         8.50%, annual payments totaling $60,000; unsecured                                  214,751            244,763
                                                                                   -----------------  -----------------

                                                                                          20,252,124          8,902,915
     Less current maturities                                                               1,248,078            779,179
                                                                                   -----------------  -----------------

                                                                                $         19,004,046          8,123,736
                                                                                   =================  =================
</TABLE>

     Future maturities of long-term debt are as follows:
<TABLE>
<S>                                          <C>                                          <C>                 
                                            2000                              $        1,248,078
                                            2001                                       1,594,895
                                            2002                                       1,708,718
                                            2003                                       1,796,995
                                            2004                                       1,831,270
                                            Thereafter                                12,072,168
                                                                                  -----------------

                                                         Total                $       20,252,124
                                                                                  =================
</TABLE>

     On November 10, 1998, the Company entered into a credit  agreement with one
     of its  existing  lenders for a new term note in the amount of  $12,000,000
     which was used to refinance approximately $8,500,000 of existing borrowings
     and to provide funds for working capital.

(8)  Stockholders' Equity

     In December  1996,  the Company  completed  an initial  public  offering of
     1,100,000  shares of common  stock at $8.00 per  share.  Proceeds  from the
     offering,  net of underwriter  discounts and commissions and other offering
     expenses,  totaled approximately $7,300,000. The Company utilized a portion
     of the net  proceeds  of the  initial  public  offering  to  repay  certain
     indebtedness of the Company and plans to utilize the remaining  balance for
     general  corporate  purposes,  including the  acquisition or development of
     additional travel centers and outdoor advertising operations.

     Concurrent  with the closing of the initial  public  offering,  the Company
     issued a five-year non-redeemable option to purchase up to 93,500 shares of
     common  stock at an exercise  price  equal to 120  percent of the  offering
     price, or $9.60 per share to the underwriter. The option became exercisable
     in  December  1997.  As of  January  31,  1999,  the  option  has not  been
     exercised.

  

                                     40
<PAGE>

     On November 12, 1996, the Company entered into an agreement with an outside
     consultant  whereby 98,537 shares of outstanding common stock were returned
     to the  Company  without  consideration,  and the stock  certificates  were
     canceled.  The  shares  had been  issued in April  1996,  in  exchange  for
     services rendered in connection with the initial public offering.

(9)  Stock Option Plan

     On September 27, 1996, the Company  adopted the 1996 Stock Option Plan (the
     Plan)  pursuant to which the  Company's  board of directors may grant stock
     options  to  officers  and key  employees.  The Plan  authorizes  grants of
     options to purchase shares of authorized but unissued common stock up to an
     amount  equal to ten  percent  of issued and  outstanding  shares of common
     stock  (438,485  shares as of January 31, 1999).  Stock options are granted
     with an exercise  price equal to the stock's  fair market value at the date
     of grant.  All stock options expire in ten years and vest, and become fully
     exercisable as determined by the board at time of grant.

     On  September  27,  1996,  the board of  directors  of the Company  granted
     options to purchase an  aggregate  of 338,000  shares of common stock to 62
     employees  and officers,  and 6,000 shares to each of its four  nonemployee
     directors,  effective as of the closing of the initial public offering. All
     of the options granted provide for a three-year  vesting period and have an
     exercise  price equal to or at 110 percent of the initial  public  offering
     price of $8.00 (weighted average exercise price of $8.22).

     At January 31, 1999,  there were 179,485  additional  shares  available for
     grant under the Plan.  The per share  weighted-average  fair value of stock
     options  granted during 1997 was $3.03 on the date of grant using the Black
     Scholes   option-pricing   model   with  the   following   weighted-average
     assumptions: expected dividend yield 0.0 percent, expected volatility of 30
     percent, risk-free interest rate of 6.15 percent, and an expected life of 5
     years.

     The Company  applies APB  Opinion  No. 25 in  accounting  for its Plan and,
     accordingly, no compensation cost has been recognized for its stock options
     in the  consolidated  financial  statements.  Had  the  Company  determined
     compensation  cost  based on the fair value at the grant date for its stock
     options  under SFAS No.  123,  the  Company's  net  income  would have been
     reduced  to the pro forma  amounts  indicated  below  for the  years  ended
     January 31, 1999, 1998 and 1997:

<TABLE>
<S>                                                              <C>                 <C>                 <C>
                                                                1999                 1998                 1997
                                                          ------------------  -------------------  -------------------

      Net income                      As reported        $           672,610           1,069,188              905,209
                                       Pro forma                     410,971             764,626              707,557

      Earnings  per  basic  and
          diluted share               As reported                        .15                 .24                  .26
                                       Pro forma                         .09                 .17                  .21
                                                          ==================  ===================  ===================
</TABLE>

     Pro forma net  income  reflects  only  options  granted  in the year  ended
     January 31, 1997.

     During the years ended  January 31, 1999 and 1998, no options were granted,
     exercised or expired,  however,  42,500 and 60,500 options were  forfeited,
     respectively. Thus, 259,000 options are outstanding as of January 31, 1999.
     During  the year  ended  January  31,  1997,  no  options  were  exercised,
     forfeited or expired.

     At January  31,  1999,  the range of exercise  prices and  weighted-average
     remaining  contractual  life of  outstanding  options was $8.00 - $8.80 and
     7.88 years, respectively.

     At January 31, 1999, 16,000 of the options granted are exercisable.



                                       41
<PAGE>

(10) Income Taxes

     Income taxes consist of the following for the years ended January 31:
<TABLE>
<S>                                                    <C>                      <C>                 <C>

                                                      Current               Deferred                Total
                                                 ------------------    --------------------   -------------------

           1999:
               U.S. Federal                  $            156,500               208,000                364,500
               State and local                             31,300                41,700                 73,000
                                                 ==================    ====================   ===================

                                             $            187,800               249,700                437,500
                                                 ==================    ====================   ===================

           1998:
               U.S. Federal                  $            452,800               112,200                565,000
               State and local                             90,700                22,500                113,200
                                                 ==================    ====================   ===================

                                             $            543,500               134,700                678,200
                                                 ==================    ====================   ===================

           1997:
               U.S. Federal                  $            472,072                35,500                507,572
               State and local                             88,800                 7,100                 95,900
                                                 ==================    ====================   ===================

                                             $            560,872                42,600                603,472
                                                 ==================    ====================   ===================
</TABLE>

     Income tax expense  differed from the amounts computed by applying the U.S.
     federal  income tax rate of 34 percent to pretax  income as a result of the
     following factors:
<TABLE>
<S>                                                    <C>                 <C>                      <C>
                                                                     Year ending January 31,
                                                 ----------------------------------------------------------------
                                                       1999                   1998                   1997
                                                 ------------------    --------------------   -------------------

           Computed "expected" tax           $            377,437               594,112                512,915
           State income taxes, net of
               federal tax benefit                         48,175                74,682                 64,446
           Other                                           11,888                 9,406                 26,075
                                                 ==================    ====================   ===================

                     Total                   $            437,500               678,200                603,472
                                                 ==================    ====================   ===================
</TABLE>






                                       42
<PAGE>


     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:
<TABLE>
<S>                                                                             <C>                 <C>
                                                                              1999                 1998
                                                                      --------------------- --------------------

        Deferred tax assets:
            Compensated absences, principally due to accrual for
              financial reporting purposes                            $           18,540              24,824
            Other                                                                 15,600              11,700
                                                                      --------------------- --------------------

                  Total gross deferred tax assets                                 34,140              36,524
        Less valuation allowance                                                       -                   -
                                                                      --------------------- --------------------

                  Net deferred tax assets                             $           34,140              36,524
                                                                      --------------------- --------------------

        Deferred tax liabilities:
            Property and equipment, principally due to
              differences in depreciation                             $         (456,040)           (211,824)
            Other                                                                 (5,100)             (2,000)
                                                                      --------------------- --------------------

                  Total gross deferred liabilities                    $         (461,140)           (213,824)
                                                                      ===================== ====================

                  Net deferred tax liability                          $         (427,000)           (177,300)
                                                                      ===================== ====================
</TABLE>

     There was no valuation  allowance for deferred tax assets as of February 1,
     1998, 1997 or 1996.  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 the  Company  will  realize  the  benefits  of  these  deductible
     differences.

(11) 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  $54,419,  $56,974  and  $49,520 in fiscal  1999,  1998 and 1997,
     respectively.

(12) Commitments and Contingencies

     As of January 31, 1999,  approximately  $425,000 of costs  representing the
     net  carrying  value  of  assets  destroyed  by a  fire  at  the  Company's
     headquarters  during November 1998 and certain  replacement  costs incurred
     through January 31, 1999 are included in accounts receivable. The estimated
     total proceeds from insurance  coverage are expected to exceed the carrying
     value of the assets  destroyed and will be recorded when the amount becomes
     reasonably estimable.


                                       43
<PAGE>


     The  Company  leases  land at several of its  retail  operating  locations.
     Included  in  general  and  administrative  expenses  in  the  accompanying
     consolidated  statements of income is rental  expense for these land leases
     of $370,761,  $306,283  and $286,752 for the years ended  January 31, 1999,
     1998 and 1997, respectively.

     The leasing  agreements for the various  locations include 5-35 year leases
     with remaining lives on those leases ranging from  approximately 5-25 years
     at  January  31,  1999.  Renewal  options  vary,  with the  most  extensive
     including three 5-year renewal  options.  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:

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

                                          Year ending January 31,
                              -------------------------------------------------

                                                2000                          $          169,758
                                                2001                                     138,258
                                                2002                                     118,258
                                                2003                                     118,258
                                                2004                                     118,258
                                                Thereafter                               586,116
                                                                                  -----------------

                                                              Total           $        1,248,906
                                                                                  =================
</TABLE>

     The Company has entered into various land  operating  leases for  billboard
     space.  These leases require minimum annual rentals and range from terms of
     1-5 years.  Rent expense was $872,946,  $753,926 and $519,314 for the years
     ended January 31, 1999,  1998 and 1997,  respectively.  At January 31, 1999
     and 1998,  the  Company  had  prepaid  on these  leases in the  amounts  of
     $426,128  and  $347,612,  respectively.  See  note  5  regarding  billboard
     advertising space leased to others by the Company.

     Minimum future rental payments under these leases are as follows:

<TABLE>
<S>                                      <C>                                     <C>
                                          Year ending January 31,
                              -------------------------------------------------

                                                2000                          $        1,100,566
                                                2001                                     776,187
                                                2002                                     704,096
                                                2003                                     621,144
                                                2004                                     557,990
                                                Thereafter                               489,068
                                                                                  -----------------

                                                              Total           $        4,249,051
                                                                                  =================
</TABLE>

                                       44

<PAGE>


(13) Related Party Transactions (See note 2)

     An individual  who is an officer and  stockholder in the Company is also an
     officer and stockholder in Stuckey's Corporation  (Stuckey's).  The Company
     paid  Stuckey's  franchise  fees for four  stores in the amount of $36,356,
     $35,690 and $33,468 for  January  31,  1999,  1998 and 1997,  respectively.
     Franchise fees are included in general and  administrative  expenses in the
     accompanying consolidated statements of income.

     During  the years  ended  January  31,  1999 and 1998,  wholesale  gasoline
     distribution  sales  totaling  $1,227,681  and  $916,733  were  sold  to  a
     Stuckey's  franchise  travel  center not owned by the  Company.  The travel
     center is owned by the daughter of an individual  who is a  stockholder  in
     the Company.

(14) Segment Information

     Travel center  operations,  which represents 78 percent of net sales of the
     Company, and outdoor advertising operations, which represents 22 percent of
     net sales,  are the  Company's  reportable  segments  under  SFAS No.  131,
     Disclosure  about Segments of an Enterprise and Related  Information  (SFAS
     131).  The  travel  center   segment   provides  for  the  retail  sale  of
     merchandise,  food and gasoline to the  traveling  public while the outdoor
     advertising  segment  operates  billboard  advertising  displays  which are
     situated on  interstate  highways,  primarily  in the  Southwestern  United
     States.  No  single  customer  accounted  for  as  much  as 10  percent  of
     consolidated revenue in any year.

     Summarized  financial  information   concerning  the  Company's  reportable
     segments  for the  respective  years  ended  January  31,  is  shown in the
     following table.  Prior period  information has been restated to conform to
     the segments described above, which are based on the structure and internal
     organization of the Company as of January 31, 1999.

<TABLE>
<S>                                                    <C>            <C>                 <C>                 <C>
                                                     Travel           Outdoor                   
                                                     Center         Advertising         Corporate  
                (in thousands)                     Operations        Operations       and other (1)           Total
                                                 ---------------   ---------------    ---------------    ---------------

                Net sales (2)

                                         1999    $    23,520             6,775                  -             30,295               
                                         1998         22,303             4,856                  -             27,159
                                         1997         21,389             3,459                  -             24,848

               Segment operating
                income (3)

                                         1999    $     1,170             1,495               (586)             2,079               
                                         1998          1,586               926               (512)             2,000
                                         1997          1,510               703               (221)             1,992

     

                                  45
<PAGE>



                                                     Travel           Outdoor                   
                                                     Center         Advertising         Corporate  
                (in thousands)                     Operations        Operations       and other (1)           Total
                                                 ---------------   ---------------    ---------------    ---------------

                Depreciation and
                    amortization

                                        1999  $          611             1,178                106              1,895
                                        1998             369               660                121              1,150
                                        1997             363               282                135                780

                Segment assets

                                        1999  $       14,578            17,670              5,241             37,489
                                        1998          11,023             9,525              5,311             25,859
                                        1997           8,277             3,966              9,600             21,843

                Expenditures for
                 segment assets
                 (4)
                    
                                        1999  $        2,546             9,217                280             12,043
                                        1998           1,760             6,526                 96              8,382
                                        1997           1,015               987                147              2,149
</TABLE>

          (1)  Corporate   functions   include   certain  members  of  executive
               management,  the corporate  accounting  and finance  function and
               other typical administrative functions.

          (2)  There were no inter-segment sales during the years ended January
               31, 1999, 1998 or 1997.

          (3)  Management does not allocate interest  expense,  interest income,
               other  non-operating  income  and  expense  amounts or income tax
               expense in the determination of the operating  performance of the
               reportable  segments.  Therefore,  the  total  segment  operating
               income reported agrees to consolidated  operating  income for the
               Company.

          (4)  Expenditures  for  segment  assets  include  assets  acquired  in
               exchange  for  long-term  debt  which are  reported  as  non-cash
               investing and financing activities in the consolidated statements
               of cash flows.

(15) Acquisitions

     The Company  completed the  acquisitions  described  below during the years
     ended  January  31,  1999  and  1998.  All of the  acquisitions  have  been
     accounted  for as  purchases  whereby  the  results  of  operations  of the
     acquired  company have been combined with the Company's  operating  results
     since the dates of


                                       46
<PAGE>
     acquisition.  The purchase price has been allocated to the assets  acquired
     based on their  estimated fair values with goodwill,  if any,  representing
     the excess of cost over the purchase price as indicated below.

     On April 1, 1997,  the Company  acquired all of the tangible and intangible
     assets and certain liabilities of the outdoor  advertising  division of The
     McCarty Company  (McCarty) known as Pony Panels for $4.2 million.  A member
     of the  Company's  Board of Directors is the  majority  shareholder  of the
     McCarty  Company.  The Company paid $1.7 million in cash and financed  $2.5
     million  with bank debt.  Pony Panels owns and operates  approximately  750
     8-sheet  poster  panels in the  Albuquerque,  New Mexico  metro  area.  The
     Company  also  entered  into  a  non-compete   agreement  with  the  former
     principals  of  McCarty  for a period  of five  years  from the date of the
     acquisition.  The excess of the purchase price over the net assets acquired
     (goodwill)  of $863,000  recorded in  connection  with the purchase will be
     amortized over the estimated benefit period of 15 years.

     On April 26, 1997, the Company purchased the outdoor  advertising assets of
     General Outdoor  Advertising  (General) for $240,000 in cash.  General owns
     and operates approximately 56 painted bulletin faces in the Alamogordo, New
     Mexico market. No goodwill was recorded in connection with the purchase.

     On April 29, 1997, the Company purchased the outdoor  advertising assets of
     Mesa Outdoor  Advertising (Mesa) for $150,000 in cash and a note payable to
     the former  owner in the amount of  $275,000.  The cash was  provided  from
     proceeds of the Company's  initial public  offering in December 1996.  Mesa
     owns and operates approximately 57 30-sheet poster faces in the Farmington,
     New  Mexico  market.  No  goodwill  was  recorded  in  connection  with the
     purchase.

     On December 9, 1997, the Company  acquired certain assets of Sweezy Outdoor
     Advertising (Sweezy) for $1,245,000.  The Company paid $245,000 in cash and
     financed $1 million with bank debt. Sweezy owns and operates  approximately
     68  painted  bulletin  faces in the  Killeen/Fort  Hood area of  Texas.  No
     goodwill was recorded in connection with the purchase.  In conjunction with
     the Sweezy  acquisition,  the Company entered into  non-compete  agreements
     with the former principals of Sweezy. One of the principals entered into an
     agreement  for a period of ten years,  payable by the Company in ten annual
     installments  of $40,000  beginning  in  January  1998.  The note  payable,
     discounted for imputed interest costs computed at 8.5 percent,  is included
     in long-term  debt in the  accompanying  consolidated  balance  sheet.  Two
     principals were paid $5,000 each for a non-compete  period of one year from
     the date of acquisition.

     On February 1, 1998, the Company acquired the outdoor advertising assets of
     Big-Tex  Outdoor  Advertising  (Big-Tex) for  $1,575,283.  The Company paid
     $575,283 in cash and financed  $1,000,000 with bank debt. Big-Tex owned and
     operated approximately 285 poster and painted faces in the Brownwood, Texas
     metro area. The Company also entered into a non-compete  agreement with the
     former principals of Big-Tex for a period of ten years from the date of the
     acquisition,  payable in ten annual  installments  of $10,000  beginning in
     February  1999.  The note payable,  discounted  for imputed  interest costs
     computed at 8.5 percent,  is included in long-term debt in the accompanying
     consolidated balance sheet. No goodwill was recorded in connection with the
     purchase.
  
                                     47
<PAGE>
     On March 3, 1998, the Company  acquired the outdoor  advertising  assets of
     Norwood Outdoor,  Inc. (Norwood) for $1,020,768.  The Company paid $370,768
     in cash and financed  $650,000  with bank debt.  Norwood owned and operated
     approximately  140 poster and painted  bulletin  faces in the Brady,  Texas
     metro area. No goodwill was recorded in connection with the purchase.

     On May 1, 1998,  the Company  purchased the outdoor  advertising  assets of
     Edgar Outdoor Advertising Co. (Edgar) for $933,661,  which was paid in cash
     at closing.  Edgar owned and  operated  approximately  62 painted  bulletin
     faces in  central  Texas.  The  Company  also  entered  into a  non-compete
     agreement  with the  former  principals  of Edgar for a period of ten years
     from the date of the  acquisition.  No goodwill was recorded in  connection
     with the purchase.

     On June 1, 1998, the Company purchased the outdoor  advertising assets of J
     & J Sign Company (J & J), located in Silver City,  New Mexico.  The Company
     paid $347,947 in cash at closing. J & J owned and operated approximately 40
     painted bulletin faces in Southwestern New Mexico. No goodwill was recorded
     in connection with the purchase.

     On August 14, 1998, the Company purchased the outdoor advertising assets of
     T & C Outdoor (T & C) in Crowley,  Texas for  $171,614 in cash. T & C owned
     and  operated  approximately  20 faces in central  Texas.  No goodwill  was
     recorded in connection with the purchase.

     On November 16, 1998, the Company purchased the outdoor  advertising assets
     of Faris  Outdoor  Advertising  (Faris) for  $2,563,408.  The Company  paid
     $63,408 in cash and  financed  $2,500,000  with bank debt.  Faris owned and
     operated  approximately 132 painted bulletin faces in Fort Worth, Texas. No
     goodwill was recorded in connection with the purchase.

     On January 4, 1999, the Company purchased the outdoor advertising assets of
     Big-Tex  Outdoor  Advertising  (Big-Tex  Granbury) in  Granbury,  Texas for
     $1,549,507.  The Company paid $49,507 in cash and financed  $1,500,000 with
     bank debt.  Big-Tex  Granbury owned and operated  approximately  83 painted
     bulletin faces in the Granbury, Texas area. The Company also entered into a
     non-compete  agreement with the former principals of Big-Tex Granbury for a
     period of 10 years from the date of the purchase.  No goodwill was recorded
     in connection with the purchase.

     The following unaudited pro forma information presents the combined results
     of operations  for the years ended January 31, 1999 and 1998, as though the
     acquisitions of Pony Panels,  Sweezy,  Big-Tex,  Norwood,  Edgar, Faris and
     Big-Tex  Granbury had occurred on February 1, 1998 and 1997.  The unaudited
     pro forma  results  do not  purport  to be  indicative  of what  would have
     occurred  had the  acquisitions  actually  been  made as of such date or of
     results which may occur in the future.
     

                                  48
<PAGE>

<TABLE>
<S>                                                                        <C>                      <C>            
                                                                              1999                 1998
                                                                      --------------------- --------------------

        Dollars in thousands, except per share amounts                               (unaudited)

        Net sales                                                 $               31,204              29,926
                                                                      ===================== ====================
                                                                 
        Net income                                                                   535               1,018
                                                                      ===================== ====================

        Earnings per basic and diluted share                                         .12                 .23
                                                                      ===================== ====================
</TABLE>

     Adjustments  made  in  arriving  at the  pro  forma  unaudited  results  of
     operations   include  increased   interest  expense  on  acquisition  debt,
     depreciation on fixed assets acquired, amortization of goodwill and related
     tax adjustments.

     The effects of the Company's acquisitions of General, Mesa, J & J and T & C
     are not material to the combined  results of  operations of the Company for
     the years ended January 31, 1999 and 1998.

(16) Subsequent Events

     On February  15,  1999,  the  Company  opened a new travel  center  located
     approximately 20 miles west of Albuquerque, New Mexico on Interstate 40.

     On March 1, 1999 the Company  purchased the outdoor  advertising  assets of
     GDM Outdoor  Advertising (GDM) in Tyler, Texas for $1,353,376.  The Company
     paid $3,376 in cash and financed  $1,350,000  with bank debt. GDM owned and
     operated  approximately 86 painted bulletin faces in the Tyler, Texas area.
     The Company  also  entered  into a  non-compete  agreement  with the former
     principals of GDM for a period of 10 years from the date of purchase.

     The  acquisition  will be  accounted  for as a purchase  in the year ending
     January 31, 2000. The purchase  price will be allocated to assets  acquired
     based on their estimated fair values. The excess of the purchase price over
     the net assets  acquired,  if any,  will be  amortized  over the  estimated
     period of benefit.  The purchase price allocation will be determined during
     the year  ending  January 31, 2000 when  appraisals  and other  information
     become available.



                                       49
<PAGE>


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

     None.

                                    PART III

     Certain  information  required by Part III is  incorporated by reference to
the Company's  defnitive  Proxy  statement  pursuant to  Regulation  14A ("Proxy
Statement") relating to the 1999 Annual Meeting of Stockholders.


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  information  required by this item is incorporated by reference to the
Company's  definitive Proxy Statement under the section entitled  "Directors and
Executive Officers."

ITEM 11. EXECUTIVE COMPENSATION

     The  information  required by this item is incorporated by reference to the
Company's definitive Proxy Statement under the section entitled "Compensation of
Executive officers."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  information  required by this item is incorporated by reference to the
corresponding section of the Company's definitive Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Michael L. Bowlin is the President and Chairman of the Board, and a 25%
stockholder in, Stuckey's Corporation ("Stuckey's"), a franchiser of restaurants
and  specialty  stores,  including  specialty  stores  located  at  four  of the
Company's  travel centers.  In fiscal year 1999,  aggregate  franchise and other
related fees paid by the company to Stuckey's equaled approximately $36,356.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  Exhibits

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

(b)  Reports on Form 8-K

     No reports were filed on Form 8-K during the three months ended January 31,
1999.


                                       50
<PAGE>

                                INDEX TO EXHIBITS
<TABLE>
<S>     <C>                                <C>                                               <C>  
    Exhibit                            Description                                          Method
    Number                                                                                 of Filing


      2.3         Purchase Agreement dated February 1, 1998                     (Incorporated by reference;
                  between the Registrant and Big-Tex Outdoor                    previously filed as Exhibit
                  Advertising, Inc.                                             2.3 to the Registrant's Report on
                                                                                Form 10-KSB dated April 26, 1998)

     2.4          Purchase Agreement dated March 2, 1998                        (Incorporated by reference;
                  between the Registrant and Norwood                            previously filed as Exhibit
                  Outdoor, Inc.                                                 2.4 to the Registrant's Report
                                                                                on Form 10-KSB dated
                                                                                April 26, 1998)

     2.5          Purchase Agreement dated May 1, 1998                          (Incorporated by reference;
                  between the Registrant and                                    previously filed as Exhibit
                  Edgar Outdoor Advertising Co.                                 2.5 to the Registrant's Report
                                                                                on Form 10-Q dated June 12,
                                                                                1998)

     2.6         Purchase Agreement dated June 1, 1998                          (Incorporated by reference;
                 between the Registrant and J & J Signs.                        previously filed as Exhibit
                                                                                2.6 to the Registrant's Report
                                                                                on Form 10-Q dated
                                                                                September 11,1998)

     2.7         Purchase Agreement dated November 16,                          (Incorporated by reference;
                 1998 between the Registrant and Faris                          previously filed as Exhibit
                 Outdoor Advertising, Inc.                                      2.7 to the Registrant's Report
                                                                                on Form 10-Q dated December 14, 1998)   
                                                            

     2.8         Purchase agreement dated January 4, 1999                       Filed herewith
                 between the Registrant and Big-Tex Outdoor
                 Advertising Inc. of Granbury, Texas.

     2.9         Purchase  agreement dated March 4, 1999                        Filed  herewith between
                 the Registrant and GDM Outdoor Advertising, Inc.

    10.45        Promissory Note dated as of May 1, 1998,                       (Incorporated by reference;
                 payable by the Registrant to Norwest Bank                      previously filed as Exhibit
                 in the aggregate amount of $3,650.000.                         10.45 to the Registrant's
                                                                                Report on Form 10-Q dated
                                                                                June 12, 1998)

   10.46         Credit Agreement with First Security Bank,                     (Incorporated by reference;
                 dated as of November 10, 1998 granting                         previously filed as Exhibit
                 the Registrant funds in the aggregate                          10.46 to the Registrant's
                 principal amount of $30,000,000                                Report on Form 10-Q dated
                                                                                December 14, 1998)

    27           Financial Data Schedule                                        Filed herewith

</TABLE>
     
                                  51
<PAGE>

                                   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 Outdoor Advertising
                                                  & Travel Centers Incorporated


                                                  By: /s/ MICHAEL L. BOWLIN
                                                  Michael L. Bowlin, Chairman of
                                                  the Board, President and Chief
                                                  Executive Officer

Date:    April 30, 1999

     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

By: /s/ MICHAEL L. BOWLIN                                     April 30, 1999
    -------------------------------------------------
     Michael L. Bowlin, Chairman of the Board,
     President, CEO and Director (Principal
     Executive Officer)



By: /s/ C. CHRISTOPHER BESS                                   April 30, 1999
    -------------------------------------------------
     C. Christopher Bess, Executive Vice President,
     Chief Operating Officer, and Director

By: /s/ NINA J. PRATZ                                         April 30, 1999
    -------------------------------------------------
     Nina J. Pratz, Senior Vice President, Chief
     Financial Officer, Treasurer and Secretary,
     and Director

By: /s/ ROBERT L. BECKETT                                     April 30, 1999
    -------------------------------------------------
     Robert L. Beckett, Director

By: /s/ JAMES A. CLARK                                        April 30, 1999
  ---------------------------------------------------
     James A. Clark, Director

By: /s/ BRIAN MCCARTY                                         April 30, 1999
    -------------------------------------------------
     Brian McCarty, Director

By: /s/ HAROLD VAN TONGEREN                                   April 30, 1999
    -------------------------------------------------
     Harold Van Tongeren, Director


     
                                       52
<PAGE>