Index

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended July 31, 2006
		For the quarterly period ended April 30, 2007
o		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from __________ to __________

Commission file number: 000-31701

BOWLIN TRAVEL CENTERS, INC.

(Exact name of registrant as specified in its charter)

NEVADA		85-0473277
(State or other jurisdiction of		(IRS Employer Identification No.)
incorporation or organization)


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

505-266-5985

(Registrant’s telephone number, including area code)

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 ý No o

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


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

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No ý

As of ~~September~~June 13, ~~2006~~2007, 4,583,348 shares of the issuer’s common stock were outstanding.

Index

BOWLIN TRAVEL CENTERS, INC.

	INDEX
PART I. FINANCIAL INFORMATION		Page No.
Item 1.	Financial Statements
	Condensed Balance Sheets as of July 31, 2006 and January 31, 2006	3
	Condensed Balance Sheets as of April 30, 2007 and January 31, 2007	3
	Condensed Statements of Income for the Three and Six Months Ended July 31, 2006 and 2005	4
	Condensed Statements of Income for the Three Months Ended April 30, 2007 and 2006	4
	Condensed Statements of Cash Flows for the Six Months Ended July 31, 2006 and 2005	5
	Condensed Statements of Cash Flows for the Three Months Ended April 30, 2007 and 2006	5
	Notes to the Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	78
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1213
Item 4.	Controls and Procedures	1214
Item 4T.	Controls and Procedures	14
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	1315
Item 1A.	Risk Factors	1315
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1315
Item 3.	Defaults Upon Senior Securities	1315
Item 4.	Submission of Matters to a Vote of Security Holders	1315
Item 5.	Other Information	1315
Item 6.	Exhibits	1315
	Signatures	1416

Index

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

BOWLIN TRAVEL CENTERS, INC.

Condensed Balance Sheets

(in thousands, except share data)

	July 31,		January 31,
	April 30,		January 31,
	2006		2006
	2007		2007
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	21,~~943~~901	$	2,~~615~~308
Accounts receivable		41		41
Marketable securities		781		453
Deferred income taxes		42		72
Accounts receivable		87		43
Inventories		43,~~040~~916		3,~~606~~655
Prepaid expenses		~~302~~156		~~276~~209
Income taxes		23		—
Interest receivable		11		16
Notes receivable, current maturities		19		9
Income taxes		114		193
Total current assets		7,410		6,619
Notes receivable, current maturities		56		55
Property and equipment, net		12,461		12,541
Total current assets		7,022		6,932
Intangible assets, net		174		190
Property and equipment, net		9,672		9,706
Interest receivable		8		13
Assets held for sale		2,541		2,559
Investment in real estate		415		415
Intangible assets, net		153		162
Notes receivable, less current maturities		83		102
Investment in real estate		416		415
Total assets	$	20,551	$	19,880
Notes receivable, less current maturities		219		232
Total assets	$	20,023	$	20,006
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,~~568~~287	$	~~861~~950
Current installments of long-term debt		~~494~~184		~~515~~181
Accrued liabilities		639		682
Current installments of long-term debt of assets held for sale		28		28
Deferred revenue		—		96
Accrued liabilities		489		678
Income taxes		6		—
Deferred revenue		25		43
Total current liabilities		2,~~707~~013		21,~~154~~880
Deferred income taxes		~~846~~690		~~884~~759
Long-term debt, less current installments		4,~~575~~179		4,~~799~~198
Total liabilities		8,128		7,837
Long-term debt of assets held for sale, less current installments		485		521
Total liabilities		7,367		7,358
Stockholders’ equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized, none issued or outstanding at July 31, 2006 and January 31, 2006		—		—
Preferred stock, $0.001 par value; 1,000,000 shares authorized, none issued or outstanding at April 30, 2007 and January 31, 2007		—		—
Common stock, $0.001 par value; 10,000,000 shares authorized, 4,583,348 issued and outstanding at July 31, 2006 and January 31, 2006		5		5
Common stock, $0.001 par value; 10,000,000 shares authorized, 4,583,348 issued and outstanding at April 30, 2007 and January 31, 2007		5		5
Additional paid in capital		9,775		9,775
Retained earnings		2,~~643~~876		2,~~263~~868
Total stockholders’ equity		12,~~423~~656		12,~~043~~648
Total liabilities and stockholders’ equity	$	20,~~551~~023	$	1920,~~880~~006

See accompanying notes to condensed financial statements.

Index

BOWLIN TRAVEL CENTERS, INC.

Condensed Statements of Income

(in thousands, except share and per share data)

	Three Months Ended						~~Six Months Ended~~
	July 31,			July 31,			July 31,			July 31,
	April 30,			April 30,
	2006			2005			2006			2005
	2007			2006
	(Unaudited)			(Unaudited)			~~(Unaudited)~~			~~(Unaudited)~~
Gross sales	$	96,~~231~~726		$	86,~~374~~685		$	~~16,870~~		$	~~14,568~~
Less discounts on sales		9249			6250			~~179~~			~~106~~
Net sales		96,~~139~~677			86,~~312~~635			~~16,691~~			~~14,462~~
Cost of goods sold		64,~~232~~586			54,~~347~~513			~~11,517~~			~~9,406~~
Gross profit		2,~~907~~091			2,~~965~~122			~~5,174~~			~~5,056~~
General and administrative expenses		(21,~~142~~815	)		(21,~~187~~725	)		~~(4,058~~	)		~~(4,007~~	)
Depreciation and amortization		(~~220~~194	)		(~~218~~185	)		~~(437~~	)		~~(444~~	)
Operating income		~~545~~82			~~560~~212			~~679~~			~~605~~
Non-operating income (expense):
Interest income		2027			1117			37			28
Gain on sale of property and equipment		228			~~206~~3			5			~~206~~
Interest expense		(~~110~~76	)		(9982	)		~~(214~~	)		~~(191~~	)
Miscellaneous income		—2			—24			24			—
Rental income		47			4543			93			90
Total non-operating loss (income)		~~(41~~28	)		~~163~~5			~~(55~~	)		~~133~~
Income before income taxes		504			723			624			738
Income from continuing operations before income taxes		110			217
Income tax expense		~~196~~(57	)		~~278~~(87	)		~~245~~			~~287~~
Net income	$	308		$	445		$	379		$	451
Income from continuing operations		53			130
Earnings per share:
Discontinued operations
Basic and diluted	$	0.07		$	0.10		$	0.08		$	0.10
Loss from operations of discontinued component		(93	)		(97	)
Weighted average common shares outstanding		4,583,348			4,583,348			4,583,348			4,583,348
Income tax benefit		48			39
		(45	)		(58	)
Net income (loss)	$	8		$	72
Earnings (loss) per share:
Basic and diluted, continuing operations	$	0.012		$	0.028
Basic and diluted, discontinued operations	$	(0.010	)	$	(0.012	)
Basic and diluted, net income	$	0.002		$	0.016
Weighted average common shares outstanding		4,583,348			4,583,348

See accompanying notes to condensed financial statements.

Index

BOWLIN TRAVEL CENTERS, INC.

Condensed Statements of Cash Flows

(in thousands)

	For the Six Months Ended
	For the Three Months Ended
	July 31,			July 31,
	April 30,			April 30,
	2006			2005
	2007			2006
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	~~379~~8		$	~~451~~72
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		~~437~~206			~~444~~217
Amortization of loan fee		127			195
Deferred income taxes, net		(869	)		~~(18~~2	)
Gain on sale of assets		(528	)		(~~206~~3	)
Changes in operating assets and liabilities, net		91(44	)		~~602~~296
Net cash provided by operating activities		~~906~~80			~~1,292~~589
Cash flows from investing activities:
Proceeds from sale of assets		3			206
Marketable securities		(328	)		221
Purchases of property and equipment, net		(355	)		(297	)
Proceeds from sale of assets		28			1
Accrued interest receivable		5			21
Purchases of property and equipment, net		(157	)		(179	)
Investment in real estate		—			(2	)
Accrued interest receivable		5			9
Notes receivable, net		1317			~~169~~5
Net cash used in (provided by) investing activities		(~~334~~435	)		9757
Cash flows from financing activities:
Payments on long-term debt		(~~244~~52	)		(~~273~~125	)
Net cash used in financing activities		(~~244~~52	)		(~~273~~125	)
Net increase in cash and cash equivalents		328			1,116
Net decrease (increase) in cash and cash equivalents		(407	)		521
Cash and cash equivalents at beginning of period		2,~~615~~308			21,~~043~~894
Cash and cash equivalents at end of period	$	21,~~943~~901		$	32,~~159~~415

See accompanying notes to condensed financial statements.

Index

BOWLIN TRAVEL CENTERS, INC.

Notes to Condensed Financial Statements (Unaudited)

1. The condensed financial statements of Bowlin Travel Centers, Inc. (the “Company”) as of and for the three months ~~and six months~~ ended ~~July~~April 3130, ~~2006~~2007 and ~~2005~~2006 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position, ~~and~~ operating results and cash flows for the interim periods. The interim financial statements should be read in conjunction with the financial statements and notes, together with management’s discussion and analysis of financial condition and results of operations, contained in the Company’s annual report on Form 10-K for the fiscal year ended January 31, ~~2006~~2007. Results of operations for interim periods are not necessarily indicative of results that may be expected for the year as a whole.

2. ~~Beginning~~The ~~February 1, 2006, the~~ Company ~~began~~continues ~~wholesaling gasoline~~ to ~~three~~list ~~new~~for ~~independent~~sale ~~wholesale~~two retail locations. ~~Two~~located ofin ~~the~~Alamogordo, ~~independent~~New ~~wholesalers~~Mexico ~~sell~~and ~~ExxonMobil~~Edgewood, ~~petroleum~~New ~~products~~Mexico. ~~The other independent wholesaler sells CITGO petroleum products.~~

3.The property, ~~Subsequent~~fixtures ~~event.~~and Inequipment ~~August~~located ~~2006,~~4 ~~the~~miles ~~Company~~north ~~sold~~of ~~property~~Alamogordo listed tofor sale ~~two~~have ~~third~~been ~~parties~~identified ~~for~~as ~~notes~~a ~~receivable~~component ofas ~~$54,250,~~defined ~~$54,250~~in ~~and~~FAS ~~$108,500~~Statement No. ~~The~~144 ~~note~~- Accounting ~~receivable~~for ofImpairment ~~$54,250~~or ~~has~~Disposal ~~a stated rate~~ of ~~interest~~Long-Lived ofAssets 8(as amended).5 The carrying %value ~~and~~of isthe ~~payable~~property, infixtures ~~monthly~~and ~~installments~~equipment of approximately $~~680~~663,000 and ~~for~~$667,000 ~~five~~have ~~years~~been atreclassified ~~which~~as ~~time~~assets ~~the~~held ~~entire~~for ~~remaining~~sale ~~principal~~in ~~balance~~the April ~~together~~30, 2007 ~~with~~and ~~accrued~~January ~~interest~~31, is2007 ~~due.~~balance ~~The $54~~sheets,~~250~~ ~~note~~respectively. ~~receivable~~The ~~has a stated rate~~ results of operations ~~interest~~ of 9%approximately ($10,000) and ~~is payable in quarterly installments of~~ ($39,~~398~~000) for ~~five~~the ~~years.~~three ~~The~~months ended April ~~note~~30, ~~receivable~~2007 ofand ~~$108~~2006,~~500~~ ~~has~~respectively, ahave ~~stated~~been ~~interest~~reclassified ~~rate~~to ofloss from discontinued ~~interest~~operations of 9%a ~~and~~component, isnet ~~payable in quarterly installments~~ of ~~$6,797~~the ~~for~~related ~~five~~income ~~years~~tax benefit.

The property, fixtures and equipment located in Edgewood listed for sale have been identified as a component as defined in FAS Statement No. 144 - Accounting for Impairment or Disposal of Long-Lived Assets (as amended). The carrying value of the property, fixtures and equipment of approximately $489,000 and $499,000 have been reclassified as assets held for sale in the April 30, 2007 and January 31, 2007 balance sheets, respectively. The results of operations of approximately ($27,000) and ($28,000) for the three months ended April 30, 2007 and 2006, respectively, have been reclassified to loss from discontinued operations of a component, net of the related income tax benefit.

Subsequent Event. On May 24, 2007, the Company sold property, fixtures and equipment located 17 miles west of Albuquerque, New Mexico at the Rio Puerco exit to the Pueblo of Laguna for $2,500,000 cash proceeds. The property, fixtures and equipment sold had a carrying value of approximately $1,389,000 and the costs incurred to sell the land are approximately $215,000. The gain on the sale of the property, fixtures and equipment of approximately $896,000 will be recognized into income. The Company expects to use the net proceeds from the sale for capital expenditures at other retail locations and may possibly pay off bank debt.

At April 30, 2007, the property, fixtures and equipment located in New Mexico at the Rio Puerco exit were identified as a component as defined in FAS Statement No. 144 - Accounting for Impairment or Disposal of Long-Lived Assets (as amended). The carrying value of the property, fixtures and equipment of approximately $1,389,000 and $1,393,000 have been reclassified as assets held for sale in the April 30, 2007 and January 31, 2007 balance sheets, respectively. The results of operations of approximately ($8,000) and ($21,000) for the three months ended April 30, 2007 and 2006, respectively, have been reclassified to loss from discontinued operations of a component, net of the related income tax benefit.

Index

BOWLIN TRAVEL CENTERS, INC.

Subsequent Pronouncements. FASB Statement No 157 - Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurement. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years and the Company plans to adopt the statement prospectively as indicated in the statement. The statement is not expected to have a significant effect on the financial statements of the Company.

FASB Statement No. 159 - The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and the Company plans to adopt the statement prospectively as indicated in the statement. The statement is not expected to have a significant effect on the financial statements of the Company.

PCAOB Auditing Standard No. 5, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements. The Public Company Accounting Oversight Board adopted Auditing Standard No. 5, An Audit of Internal Control Over Financial Reporting on May 24, 2007 that is integrated with An Audit of Financial Statements, to replace its previous internal control auditing standard, Auditing Standard No. 2. The Board also adopted the related Rule 3525, Audit Committee Pre-Approval of Non-Audit Services Related to Internal Control Over Financial Reporting, and conforming amendments to certain of the Board’s other auditing standards. The final standard may be used by auditors immediately following SEC approval, and it, along with Rule 3525, and the conforming amendments, would be required for all audits of internal control for fiscal years ending on or after November 15, 2007. The compliance date for Sarbanes-Oxley remains the 2007 year-end for non-accelerated filers, accordingly, the Company has plans to be in full compliance by the due date. The Company expects to incur significant costs related to the compliance requirements of Sarbanes-Oxley.

Index

BOWLIN TRAVEL CENTERS, INC.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Certain statements contained herein with respect to factors which may affect future earnings, including management’s beliefs and assumptions based on information currently available, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements that are not historical facts involve risks and uncertainties, and results could vary materially from the descriptions contained herein.

Overview

The following is a discussion of the financial condition as of April 30, 2007 and January 31, 2007 and results of operations of the Company as of and for the periods ended ~~July~~April 3130, ~~2006~~2007 and ~~2005~~2006. This discussion should be read in conjunction with the Financial Statements of the Company and the related notes included in the Company’s annual report on Form 10-K for fiscal year ended January 31, ~~2006~~2007.

The Company’s principal business activities include the operation of full-service travel centers and restaurants that offer brand name food and gasoline, and a unique variety of Southwestern merchandise to the traveling public in New Mexico and Arizona.

The Company’s gross retail sales include merchandise, retail gasoline sales, restaurant sales and wholesale gasoline sales. Each of the Company’s travel center locations retail a variety of unique Southwestern souvenirs and gifts. Ten of the twelve retail operations retail gasoline. Five of the Company’s twelve locations have full-service restaurants that operate under the Dairy Queen/Brazier or Dairy Queen brand names. The merchandise, gasoline and restaurant retail sales are all a part of the Company’s ongoing retail business and have been aggregated.

The Company wholesales gasoline to three independent third party locations. The wholesale gasoline does not meet the operating segment definition criteria of paragraph 10(b) of FAS 131, Disclosures about Segments of an Enterprise and Related Information, as the Company does not review wholesale gasoline operating results for decision making about resource allocation. Therefore, wholesale gasoline sales have been aggregated with the Company’s business activities.

The discussion of results of operations, which follows, compares such selected operating data for the interim periods presented.

Results of Operations

The following table presents certain income and expense items derived ~~from~~ from the Statements of Operations for the three months ~~and~~ended ~~six~~April ~~months ended~~30, ~~July~~ 2007 ~~31,~~and 2006 ~~and 2005~~ (unaudited and amounts in thousands, except for earnings per share):

	Three Months Ended				Six Months Ended
	2006		2005		2006		2005
Selected Statement of Operations Data:
(in thousands, except per share data)
Gross sales	$	9,231	$	8,374	$	16,870	$	14,568
Net income	$	308	$	445	$	379	$	451
Earnings per share	$	0.07	$	0.10	$	0.08	$	0.10

Index

BOWLIN TRAVEL CENTERS, INC.

Comparison of the Three Months Ended July 31, 2006 and July 31, 2005

Gross sales at the Company’s travel centers increased by 10.2% to $9.231 million for the three months ended July 31, 2006, from $8.374 million for the three months ended July 31, 2005. Merchandise sales decreased 7.2% to $3.308 million for the three months ended July 31, 2006, from $3.563 million for the three months ended July 31, 2005. The decrease is primarily due to decreases in fireworks sales of $157,000 as a result of bans in New Mexico due to drought conditions, general merchandise and cigarette sales. Retail gasoline sales increased 4.4% to $3.704 million for the three months ended July 31, 2006, from $3.548 million for the same period in 2005. The increase is due to market price increases as the average gallon of gasoline retailed for $3.18 for the three months ended July 31, 2006, compared to $2.40 for the three months ended July 31, 2005. The increase in retail gasoline sales is partially offset by a decrease in gasoline gallons sold of 314,000 gallons during the three months ended July 31, 2006. Restaurant sales increased 2.8% to $738,000 for the three months ended July 31, 2006, from $718,000 for the three months ended July 31, 2005. The increase is primarily due to adjustments of retail prices in relationship to costs. Wholesale gasoline sales to independent retailers increased 171.7% to $1.481 million for the three months ended July 31, 2006, from $545,000 for the three months ended July 31, 2005. The increase is primarily due to the addition of three independent wholesale locations during the three months ended July 31, 2006.

Cost of goods sold increased 16.6% to $6.232 million for the three months ended July 31, 2006, from $5.347 million for the three months ended July 31, 2005. Merchandise cost of goods decreased 13.7% to $1.215 million for the three months ended July 31, 2006, from $1.408 million for the three months ended July 31, 2005. The decrease is related to the decrease in sales as well as adjustments of standard markups within certain product categories that the Company gets as a result of volume purchasing. Retail gasoline cost of goods increased 5.0% to $3.337 million for the three months ended July 31, 2006, from $3.178 million for the three months ended July 31, 2005. The increase corresponds to market price increases, which is partially offset by decreases in gallons sold. Restaurant cost of goods decreased 10.1% to $204,000 for the three months ended July 31, 2006, from $227,000 for the three months ended July 31, 2005. The decrease is primarily due to retail prices that increased higher than cost increases as well as better inventory control. Wholesale gasoline cost of goods increased 176.9% to $1.476 million for the three months ended July 31, 2006, from $533,000 for the three months ended July 31, 2005. The increase is primarily due to the addition of three independent wholesale locations during the three months ended July 31, 2006. In addition, the increase in wholesale gasoline cost of goods exceeds the increase in sales due to one wholesale location that had better mark-ups in the prior period that were not present in the current period. Cost of goods sold as a percentage of gross revenues increased to 67.5% for the three months ended July 31, 2006, as compared to 63.9% for the three months ended July 31, 2005.

Gross profit decreased 2.0% to $2.907 million for the three months ended July 31, 2006, from $2.965 million for the three months ended July 31, 2005. The decrease is primarily due to better markups of one wholesale location not present in the current period as well as increases of discounts at one of the Company’s retail locations.

General and administrative expenses consist of salaries, bonuses and commissions for travel center personnel, property costs and repairs and maintenance. General and administrative expenses also include executive and administrative compensation and benefits, accounting, legal and investor relations fees. General and administrative expenses decreased 2.1% to $2.142 million for the three months ended July 31, 2006, from $2.187 million for the three months ended July 31, 2005. The decrease is due to lower freight costs as a result of volume purchasing, decreases in health insurance and decreases in contract labor.

Depreciation and amortization expense increased 0.9% to $220,000 for the three months ended July 31, 2006, from $218,000 for the three months ended July 31, 2005. The increase is associated with certain asset additions in the third quarter offset by some assets becoming fully depreciated.

Index

BOWLIN TRAVEL CENTERS, INC.

The above factors contributed to an overall decrease in operating income of 2.7% to $545,000 for the three months ended July 31, 2006, compared to operating income of $560,000 for the three months ended July 31, 2005.

	2007			2006
Selected Statement of Operations Data:
(in thousands, except per share data)

Gross sales from continuing operations	$	6,726		$	6,685

Income from continuing operations	$	53		$	130

Loss from discontinued operations	$	(45	)	$	(58	)

Net income	$	8		$	72

Earnings per share, continuing operations	$	0.012		$	0.028

Loss per share, discontinued operations	$	(0.010	)	$	(0.012	)

Earnings per share, net income	$	0.002		$	0.016

~~Non-operating~~Comparison income (expense) includes interest income, gains and losses from the sale of ~~assets,~~ rental income and interest expense. Interest income increased 81.8% to $20,000 for the ~~three months~~Three ~~ended~~Months ~~July~~Ended ~~31, 2006,~~April ~~compared to interest income of $11~~30,~~000~~ ~~for~~2007 ~~the~~and ~~three months~~April ~~ended July 31~~30, 2005. The increase is due to better interest rates in the current period as well as interest earned on notes receivable in the current period that were not present in the prior period. Gains from the sale of assets decreased to $2,000 for the three months ended July 31, 2006 from $206,000 for the three months ended July 31, 2005. The gain of $2,000 for the three months ended July 31, 2006 is due to the sale of a vehicle as well as installment payments received related to notes receivable that include deferred gains. The gain of $206,000 for the three months ended July 31, 2005 is primarily due to a balloon payment related to a note receivable that included a deferred gain. Rental income was $47,000 for the three months ended July 31, 2006 compared to $45,000 for the three months ended July 31, 2005. Interest expense increased 11.1% to $110,000 for the three months ended July 31, 2006, from $99,000 for the three months ended July 31, 2005. The increase is primarily due to increases in interest rates.

~~Income~~Gross ~~before~~ sales ~~income~~from ~~taxes~~continuing ~~decreased~~operations 30at the Company’s travel centers increased by 0.36% to $~~504~~6.726 million for the three months ended April 30,~~000~~ 2007, from $6.685 million for the three months ended ~~July 31~~April 30, 2006,. ~~compared~~Merchandise sales from continuing operations decreased 2.1% to ~~income~~$2.187 ~~before~~million ~~income~~for the ~~taxes~~three months of ended ~~$723~~April 30,~~000~~ 2007, from $2.235 million for the three ~~months~~ months ended ~~July~~April 3130, 2006. ~~2005~~The decrease is primarily due to weather related conditions that slowed overall highway traffic during the first quarter causing a loss in sales. AsThere was a ~~percentage~~decrease ofin general merchandise sales, a decrease in ~~gross~~ t-shirt ~~revenues~~sales partially offset by an increase in firework sales, ~~income~~convenience store ~~before~~sales, ~~income~~ moccasin ~~taxes~~and ~~was~~sandal 5sales.5 Retail gasoline sales from continuing operations increased 0.04% to $2.443 million for the three months ended ~~July~~ April 3130, 2007, from $2.442 million for the same period in 2006. The slight increase is due an increase in the average retail price per gallon of $0.05 partially offset by a decrease in gallons sold of approximately 14,000 gallons and decreased highway traffic due to weather conditions. The average gallon of gasoline retailed for $2.79 for the three months ended April 30, 2007 compared to $2.74 for the three months ended April 30, 2006. Restaurant sales from continuing operations decreased 1.8% to $607,000 for the three months ended April 30, 2007, from $618,000 for the three months ended April 30, 2006.6 The decrease is primarily due weather related conditions that slowed overall highway traffic as well as increases in cost not reflected in retail prices until mid-way through the first quarter. Wholesale gasoline sales to independent retailers increased 7.1% to $1.489 million for the three months ended ~~July~~April 3130, ~~2005~~2007, from $1.390 million for the three months ended April 30, 2006. The increase is primarily due to market price increases that were partially offset by one independent location in the prior period not present in the current period as a result of de-branding.

Income tax expense decreased 29.5% to $196,000 for the three months ended July 31, 2006, compared to an income tax expense of $278,000 for the three months ended July 31, 2005. The decrease is a result of lower income before income taxes.

The foregoing factors contributed to net income for the three months ended July 31, 2006 of $308,000 compared to a net income of $445,000 for the three months ended July 31, 2005.

Comparison of the Six Months Ended July 31, 2006 and July 31, 2005

Gross sales at the Company’s travel centers increased by 15.8% to $16.870 million for the six months ended July 31, 2006, from $14.568 million for the six months ended July 31, 2005. Merchandise sales decreased 2.0% to $5.822 million for the six months ended July 31, 2006, from $5.942 million for the six months ended July 31, 2005. The decrease is primarily due to decreases in fireworks sales of $138,000 as a result of bans in New Mexico due to drought conditions, general merchandise and cigarette sales partially offset by increases in t-shirt sales. Retail gasoline sales increased 8.3% to $6.821 million for the six months ended July 31, 2006, from $6.300 million for the same period in 2005. The increase is due to market price increases as the average gallon of gasoline retailed for $2.95 for the six months ended July 31, 2006, compared to $2.32 for the six months ended July 31, 2005. The increase in retail gasoline sales is partially offset by a decrease in gasoline gallons sold of 406,000 gallons during the six months ended July 31, 2006. Restaurant sales increased 2.7% to $1.355 million for the six months ended July 31, 2006, from $1.319 million for the six months ended July 31, 2005. The increase is primarily due to adjustments of retail prices in relationship to costs. Wholesale gasoline sales to independent retailers increased 185.2% to $2.872 million for the six months ended July 31, 2006, from $1.007 million for the six months ended July 31, 2005. The increase is primarily due to the addition of three independent wholesale locations during the six months ended July 31, 2006.

Index

BOWLIN TRAVEL CENTERS, INC.

Cost of goods sold for continuing operations increased 221.46% to $114.~~517~~ 586 million for the three ~~six~~ months ended ~~July~~April 3130, ~~2006~~ 2007, from $94.~~406~~513 million for the ~~six~~three months ~~ended~~ ~~July~~ ended 31April 30, ~~2005~~2006. Merchandise cost of goods from continuing operations decreased 74.52% to $~~2.183~~770,000 ~~million~~ for the ~~six~~three months ended ~~July 31,~~April ~~2006~~ 30, ~~from~~2007, from $~~2.360~~804,000 ~~million~~ for the ~~six~~three months ended ~~July~~ 31April 30, ~~2005~~2006. The decrease is primarily related to the decrease in sales due to the weather related conditions that slowed overall highway traffic as well as adjustments of decreasing standard ~~markups~~markup ~~within~~ estimates ~~certain product categories~~ that the Company ~~gets~~ asuses ato ~~result~~record cost of ~~volume purchasing~~goods. Retail gasoline cost of goods from continuing operations increased 8 0.35% to $62.~~119~~164 million ~~for~~ for the ~~six~~ three months ended ~~July~~April 3130, ~~2006~~2007, from $52.~~650~~ 154 million for the ~~six~~ three months ended ~~July~~ April 3130, ~~2005~~2006. The increase corresponds to increases in overall market prices ~~price~~ during ~~increases,~~the period and is partially offset by ~~decreases~~a indecrease in gallons sold and decreased highway traffic due to weather conditions. Restaurant cost of goods from continuing operations decreased 80.36% to $~~376~~170,000 for the three ~~six~~ months ended April ~~July 31~~30, ~~2006~~2007, from $~~410~~171,000 for the ~~six~~ three months ended ~~July 31~~April 30, ~~2005~~2006. The decrease is ~~primarily due~~directly related to athe ~~retail~~decrease ~~prices that~~in ~~increased~~sales ~~higher~~caused by ~~than~~weather ~~cost~~related conditions ~~increases~~that asslowed ~~well as~~overall ~~better~~highway ~~inventory control~~traffic. Wholesale gasoline cost of goods increased ~~187~~7.91% to $21.~~839~~482 million for the ~~six~~ three months ended April ~~July 31~~30, ~~2006~~2007, from $~~986,000~~1.384 million for the ~~six~~ three months ended ~~July~~April 3130, ~~2005~~ 2006. The increase is primarily due to ~~the~~market ~~addition of~~price ~~thee~~increases ~~independent wholesale~~that ~~locations~~were ~~during the six months ended~~partially ~~July~~ offset ~~31,~~by ~~2006. In addition, the~~one ~~increase~~ independent ~~in wholesale gasoline cost of goods exceeds the increase in sales due to one wholesale~~ location ~~that had better mark-ups~~ in the prior period ~~that were~~ not present in the current period as a result of de-branding. Cost of goods sold as a percentage of ~~gross~~ ~~revenues~~ net revenues increased to 68.37% for the ~~six~~three months ended ~~July~~April 3130, ~~2006~~2007, as compared to 64to 68.60% for the ~~six~~three months ended ~~July~~April 3130, ~~2005~~2006. The increase is primarily due to due to the increase in wholesale gasoline cost of goods.

Gross profit ~~increased~~from 2continuing operations decreased 1.35% to $52.~~174~~ 091 million for the ~~six~~ three months ended ~~July~~April 3130, ~~2006~~2007, from $52.~~056~~122 million for the ~~six~~ three months ended ~~July~~ 31 April 30, ~~2005~~2006. The ~~increase corresponds~~decrease tois ~~adjustments~~related ofto ~~standard~~the ~~markups~~decrease in ~~within~~ merchandise ~~certain product categories~~sales ~~that~~ from ~~the~~continuing ~~Company~~operations ~~gets~~due asto arelated ~~result~~to ofweather ~~volume purchasing~~conditions ~~offset~~ that ~~by an increase in~~slowed ~~discounts~~ overall athighway ~~one location~~traffic.

General and administrative expenses for continuing operations consist primarily of salaries, bonuses and commissions for travel center personnel, property costs and repairs and maintenance. General and administrative expenses also include ~~executive~~ executive and administrative compensation and benefits, accounting, legal and investor relations fees. General and administrative expenses increased 15.32% to $41.~~058~~ 815 million for the ~~six~~three months ended ~~July~~April 3130, ~~2006~~2007, from $41.~~007~~725 million for the ~~six~~ three months ended ~~July~~April 3130, ~~2005~~2006. The increase is due to ~~sign~~increases ~~repairs~~in personnel related costs, general repair and maintenance that includes repair and maintenance ~~increased~~related ~~credit~~to ~~card~~overall weather conditions such as snow ~~fees~~ removal and wind damage as well as an increase in weed and trash clean up at the retail locations, utilities also related to ~~processing~~the ~~credit~~unusual ~~cards~~winter ~~through~~weather, and costs associated with the Company’s ~~gasoline~~inventory bar-coding project partially offset by ~~distributorships~~ decreases in sign repair and maintenance as a result of the winter weather limiting the Company’s ability to travel to billboard locations and the loss of one of the Company’s sign repair contractor vendors, freight as a result of volume purchasing and decreases in overall insurance.

Depreciation and amortization expense ~~decreased~~for 1continuing operations increased 4.69% to $~~437~~194,000 for the ~~six~~three months ended ~~July~~ 31April 30, ~~2006~~2007, from $~~444~~185,000 for the ~~six~~three months ended ~~July~~April 3130, ~~2005~~2006. The ~~decrease~~ increase is associated with certain asset additions in the first quarter offset by some assets becoming fully depreciated.

The above factors contributed to an overall ~~increase~~decrease in operating income from continuing operations of 1261.23% to $~~679~~82,000 for the ~~six~~three months ended ~~July 31~~April 30, ~~2006~~2007, compared to operating income from continuing operations of $~~605~~212,000 for the three ~~six~~ months ended ~~July~~April 3130, ~~2005~~2006.

Non-operating income (expense) includes interest income, gains and losses from the sale of assets, rental income and interest expense. Interest income increased 33.1% to $37,000 for the six months ended July 31, 2006, compared to interest income of $28,000 for the six months ended July 31, 2005. The increase is due to better interest rates in the current period as well as interest earned on notes receivable in the current period that were not present in the prior period. Gains from the sale of assets decreased to $5,000 for the six months ended July 31, 2006 from $206,000 for the six months ended July 31, 2005. The gain of $5,000 for the six months ended July 31, 2006 is primarily due to the sale of vehicles and equipment as well as installment payments received related to notes receivable that include deferred gains. The gain of $206,000 for the six months ended July 31, 2005 is primarily due to a balloon payment related to a note receivable that included a deferred gain. Miscellaneous income of $24,000 for the three months ended July 31, 2006 compared to no miscellaneous income for the three months ended July 31, 2005. Rental income was $93,000 for the six months ended July 31, 2006 compared to $90,000 for the six months ended July 31, 2005. Interest expense increased 12.0% to $214,000 for the six months ended July 31, 2006, from $191,000 for the six months ended July 31, 2005. The increase is primarily due to increases in interest rates.

Index

BOWLIN TRAVEL CENTERS, INC.

~~Income~~Non-operating ~~before~~ income (expense) includes interest income, ~~taxes~~gains ~~decreased~~and 15losses from the sale of assets, rental income and interest expense.4 Interest income increased 58.8% to $~~624~~27,000 for the ~~six~~three months ended ~~July 31~~April 30, ~~2006~~2007, compared to ~~income~~interest ~~before~~ income ~~taxes~~ of $~~738~~17,000 for the ~~six~~three months ended ~~July~~April 3130, ~~2005~~2006. AsThe aincrease is ~~percentage~~due to better interest rates in the current period as well as interest earned on additional notes receivable in the current period that were not present in the prior period. Gains from the sale of assets increased to $28,000 ~~gross~~ for ~~revenues~~the three months ended April 30, ~~income~~2007 ~~before~~from ~~income~~$3,000 for the three months ~~taxes~~ ended ~~was~~April 330, 2006.7% The gain of $28,000 for the ~~six~~three months ended April ~~July~~ 30, 312007 is due to installment payments received related to notes receivable that include deferred gains of approximately $4,900, an earnest deposit of $25,000 that was forfeited due to a purchase agreement closing date expiring, partially offset by a loss of approximately $1,700 on the sale of equipment. The gain of $3,000 for the three months ended April 30, 2006 is due to the sale of equipment and installment payments received related to notes receivable that include deferred gains. Rental income was $47,000 for the three months ended April 30, 2007 compared to $43,000 5for the three months ended April 30, 2006.1 Interest expense decreased 7.3% to $76,000 for the three months ended April 30, 2007, ~~six~~ from $82,000 for the three months ended ~~July~~April 3130, ~~2005~~2006. The decrease is primarily due to the Company’s change in terms agreements on September 29, 2006 with its primary lender that resulted in a lower interest rate.

Income ~~tax~~ from ~~expense~~continuing operations before income taxes decreased 1449.63% to $~~245~~110,000 for ~~the~~ ~~six~~ the three months ended ~~July~~April 3130, ~~2006~~2007, compared to anincome before income ~~tax~~taxes ~~expense~~ of $~~287~~217,000 for the ~~six~~three months ended ~~July~~April 3130, ~~2005~~ 2006. ~~The~~As ~~decrease is~~ a ~~result~~ percentage of ~~lower~~net revenues, income before income taxes was 1.6% for the three months ended April 30, 2007, compared to 3.3% for the three months ended April 30, 2006.

~~The~~Income ~~foregoing~~ tax ~~factors~~expense ~~contributed~~for tocontinuing ~~net~~operations ~~income~~decreased ~~for~~34.5% to $57,000 for the ~~six~~ three months ended ~~July~~April 3130, ~~2006~~ ~~of $379~~2007,~~000~~ compared to aincome ~~net~~tax ~~income~~expense for continuing operations of $~~451~~87,000 for the ~~six~~three months ended April 30, ~~July~~ 2006. 31The decrease is a result of lower income from continuing operations before income taxes. In addition, ~~2005~~income tax expense in the current period was impacted by permanent tax deductions that increased income tax expense in relation to income from continuing operations.

~~Liquidity~~The ~~and~~ foregoing ~~Capital~~factors ~~Resources~~contributed to income from continuing operations of $53,000 for the three months ended April 30, 2007, compared to net income from continuing operations of $130,000 for the three months ended April 30, 2006.

AtDiscontinued ~~July 31,~~ operations ~~2006,~~include the ~~Company~~property, ~~had~~fixtures ~~working~~and ~~capital~~equipment offor ~~$4.703~~ the ~~million~~two ~~compared to working~~retail ~~capital~~ locations ofthat ~~$4.465~~the ~~million~~Company athas ~~January~~listed ~~31,~~for ~~2006 (“working~~sale ~~capital”~~as iswell ~~the~~as ~~excess~~the of retail ~~total current assets over total current liabilities).~~location At sold ~~July~~subsequent ~~31,~~to ~~2006,~~ the ~~Company~~ ~~had~~quarter aending ~~current~~April ~~ratio~~30, ~~of 2~~2007.~~7:1,~~ ~~compared~~There to was a ~~current~~loss ~~ratio~~ of ~~3.1:1 as of~~ ~~January 31~~ $93,000 ~~2006~~for ~~(“current~~discontinued ~~ratio”~~operations isfor the ~~ratio~~three ofmonths ~~current assets to current~~ended ~~liabilities).~~ April ~~The~~30, ~~increase in working capital~~2007 is compared ~~due~~ to ana ~~increase~~loss ~~in cash~~ of ~~$328,000,~~ ~~an increase in inventory of~~ $~~434~~97,000~~, a~~ ~~decrease~~for in the ~~current portion~~three ofmonths ~~long-term~~ended ~~debt of $43,000, a decrease~~April ~~in accrued liabilities of $43~~ 30,~~000,~~ a2006. ~~decrease in deferred revenue of $96,000~~There ~~offset~~ is by an ~~increase~~income ~~in accounts~~tax ~~payable~~benefit of $~~707~~48,000. ~~The~~for ~~increases in cash, inventory and accounts payable is due to~~ the ~~summer~~three being the peak season of the Company’s travel center operations, as higher traffic typically occurs during the summer months~~. The~~ ~~decrease in accrued liabilities since January~~ended ~~31,~~ April ~~2006 is due to decreases in salaries and wages~~30, ~~as discretionary bonuses~~2007 ~~were~~ compared ~~accrued through January 2006~~ to ~~be paid the following fiscal year, and a decrease fuel in tax payable. This was partially offset by~~ an ~~increase~~income ~~in sales~~ tax ~~liability~~benefit ~~due~~of to$39,000 ~~peak season~~for ~~sales~~the ~~and an increase in property taxes~~three ~~that~~ months ~~were~~ended ~~paid in December 2005~~April ~~and~~ 30, ~~have been accruing since that time~~2006. The ~~decrease in~~net ~~deferred~~loss ~~revenue~~from isdiscontinued ~~a result~~operations offor the ~~end of a two-year brand incentive~~ ~~program~~ three ~~for~~months ~~four locations~~ended ~~branded~~ April ~~ExxonMobil~~30, in2007 ~~fiscal~~is ~~year~~$45,000 ~~2004~~compared asto ~~well as~~ a ~~decrease~~net inloss ~~outdoor advertising~~from ~~billboard revenue as the Company~~discontinued ~~had several annual contracts that~~ operations ~~did~~ for ~~not~~the ~~begin~~three ~~until~~months ~~August~~ended 1April 30, 2006. ~~The decrease in the current portion~~ of ~~long-term~~ ~~debt is normal scheduled payments~~$58,000.

The ~~Company’s~~ foregoing ~~travel~~factors ~~center~~contributed ~~operations are subject~~ to ~~seasonal fluctuations.~~net ~~The second~~income ~~quarter~~for of the ~~fiscal~~three ~~year is typically~~months ~~the~~ ended ~~Company’s~~April ~~peak season.~~30, ~~Through~~ 2007 ~~out~~of ~~the Company’s fiscal year~~$8,000 ~~revenues~~compared ~~and earnings may experience substantial fluctuations from quarter~~ to ~~quarter. These~~net ~~fluctuations~~income ~~could result in period~~ of ~~increased~~$72,000 orfor ~~decreased~~the ~~cash~~three ~~flow~~ months ~~as well as increased or~~ended ~~decreased~~ April ~~net~~30, ~~income~~2006.

Net cash provided by operating activities was $906,000 for the six months ended July 31, 2006, compared to $1.292 million for the six months ended July 31, 2005. Net cash provided by operating activities for the six months ended July 31, 2006 is primarily attributable to net income of $379,000 adjusted for depreciation and amortization expense of $437,000 and changes in operating assets and liabilities of $91,000. Net cash provided by operating activities for the six months ended July 31, 2005 was primarily attributable to net income of $451,000 adjusted for depreciation and amortization expense of $444,000 and changes in operating assets and liabilities of $602,000 offset by the gain on sales of assets of $206,000.

Index

BOWLIN TRAVEL CENTERS, INC.

~~Net~~Liquidity cash used in investing activities for the six months ended July 31, 2006 was $334,000 primarily consisting of $355,000 which was used for purchases of property and ~~equipment,~~ ~~offset~~Capital by accrued interest receivable of $5,000, notes receivable of $13,000 and proceeds from the sale of property and equipment of $3,000. Net cash used in investing activities for the six months ended July 31, 2005 was $97,000 primarily consisting of proceeds of $206,000 from the sale of assets and proceeds of $169,000 from notes receivable partially offset by $297,000 used for purchases of property and equipment.Resources

~~Net~~At ~~cash~~ April ~~used~~ 30, by2007, ~~financing~~the ~~activities~~Company ~~for~~had working capital of $5.009 million compared to working capital of $5.052 million at January 31, 2007 (“working capital” is the ~~six~~excess ~~months~~ of ~~ended~~total ~~July~~current assets over total current liabilities). At April 30, 2007, the Company had a current ratio of 3.5:1; compared to a current ratio of 3.7:1 as of January 31, ~~2006~~2007 ~~was~~(“current ratio” is the ratio of current assets to current liabilities). The decrease in working capital is due to a decrease in cash of $~~224~~407,000, ~~which~~an ~~consisted~~increase in accounts payable of ~~payments~~$337,000, ona decrease ~~long-term~~ in ~~debt.~~income taxes ~~For~~of ~~the~~$79,000, ~~six~~and ~~months~~a decrease in prepaid expenses of $53,000, ~~ended~~ offset ~~July~~by 31an increase in marketable securities of $328,000, ~~2005~~an increase accounts receivable of $44,000, ~~net~~an ~~cash~~increase ~~used~~in inventory of $261,000 a decrease in ~~financing~~accrued ~~activities~~ liabilities ~~was~~of $~~273~~189,000, and a decrease in deferred revenue of $18,000. The decrease in cash is due to lower cash balances at the end of April 30, 2007 as a result of purchasing merchandise in preparation for the Company’s summer peak season that typically begins in the second quarter and capital expenditures as well as a decrease in net income. The decrease in net income is primarily due to weather conditions during the first quarter that decreased highway traffic causing a decrease in sales. The increase in accounts payable is primarily due to merchandise purchasing as the Company prepares for summertime sales as well as timing of electronic fund transfers related to the Company’s wholesale gasoline sales. The decrease in income taxes is a result of deferred tax assets and liabilities recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing current assets and liabilities and their respective tax bases. The decrease in prepaid expenses is due to a decrease in prepaid insurance as it nears the June 1, 2007 renewal date and prepaid rent. The increase in marketable securities, which consist of twelve month certificates of deposit, is due to more certificates with maturity dates greater than three months in the current period. The increase in accounts receivable is due to timing of electronic fund transfers related to the Company’s wholesale gasoline sales. The increase in inventory is due to merchandise increases at the Company’s central warehouse and retail locations as the Company prepares for summertime sales which typically occurs in the second quarter, an increase in handmade jewelry purchases received in the Company’s central vault as of April 30, 2007 also in preparation for summertime sales, that have not yet been transferred to the retail locations and an increase in gasoline inventory as a result of higher physical balances and higher market prices. The decrease in accrued liabilities is due to decreases in accrued salaries and wages plus the related payroll taxes, as discretionary bonuses were ~~payments~~accrued through onJanuary ~~long-term~~31, 2007 ~~debt~~to be paid the following fiscal year partially offset by an increase in property taxes that were paid in December 2006 and have been accruing since that time. The decrease in deferred revenue is a result of outdoor advertising billboard revenue as the Company had several annual contracts that did not begin until August 1, 2006.

The Company’s ~~business~~travel ~~and~~center ~~cash flow from~~ operations ~~rely~~ onare ~~revenues~~subject ~~generated~~to ~~from~~seasonal fluctuations. ~~the~~ The first ~~sale~~quarter of ~~gasoline. During~~ the ~~quarter ended~~fiscal ~~July~~year ~~31, 2006, retail gasoline~~is ~~sales~~ typically ~~accounted~~the ~~for approximately 40~~weakest.1% of Throughout the Company’s ~~gross~~fiscal ~~sales.~~year, Torevenues ~~the extent~~and ~~that~~earnings ~~the~~may ~~availability of gasoline~~experience ~~was~~ substantial ~~restricted~~fluctuations ~~for~~from ~~any~~quarter ~~reasons, including due~~ to ~~storms,~~quarter. ~~political~~These ~~issues,~~fluctuations ~~pipeline disruption, war, act or~~ could ~~threats~~ result ~~of terrorism~~ in ~~the~~periods ~~United~~of ~~States~~ increased or ~~abroad,~~decreased ~~the Company’s gross sales would be affected, thereby reducing the amount of net~~ cash ~~that~~flow ~~would~~as bewell ~~provided~~ as byincreased ~~operating activities. It is impossible to foresee~~ or ~~predict the~~ ~~exact~~ decreased ~~economic~~net ~~effect on cash flows that any such restriction would have~~income.

Net cash provided by operating activities was $80,000 for the three months ended April 30, 2007, compared to $589,000 for the three months ended April 30, 2006. Net cash provided by operating activities for the three months ended April 30, 2007 is primarily attributable to depreciation and amortization expense of $206,000 offset by changes in operating assets and liabilities, net of $44,000, a decrease in deferred income taxes of $69,000 and the gain on sale of assets of $28,000. Net cash provided by operating activities for the three months ended April 30, 2006 was primarily attributable to net income of $72,000 adjusted for depreciation and amortization expense of $217,000 and changes in operating assets and liabilities of $296,000 partially offset the gain on sales of assets of $3,000.

Index

BOWLIN TRAVEL CENTERS, INC.

Net cash used in investing activities for the three months ended April 30, 2007 was $435,000 primarily consisting of an increase in marketable securities of $328,000, $157,000 used for purchases of property and equipment partially offset by the proceeds from the sale of property and equipment of $28,000 and payments from notes receivable of $17,000. Net cash provided by investing activities for the three months ended April 30, 2006 was $57,000, primarily consisting of a decrease in marketable securities of $221,000 partially offset by $179,000 used for purchases of property and equipment.

Net cash used by financing activities for the three months ended April 30, 2007 was $52,000, which consisted of payments on long-term debt. For the three months ended April 30, 2006, net cash used in financing activities was $125,000 which consisted of payments on long-term debt.

The Company’s business and cash flow from operations rely on revenues generated from the sale of gasoline. During the quarter ended April 30, 2007, retail gasoline sales from continuing operations accounted for approximately 36.3% of the Company’s gross sales. To the extent that the availability of gasoline was restricted for any reasons, including due to storms, political issues, pipeline disruption, war, act or threats of terrorism in the United States or abroad, the Company’s gross sales would be affected, thereby reducing the amount of net cash that would be provided by operating activities. It is impossible to foresee or predict the exact economic effect on cash flows that any such restriction would have.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

The ~~principal market risk to which the~~ Company ischanged ~~exposed to~~its isterms ~~interest~~in ~~rates~~agreements onwith ~~the~~ its ~~Company’s~~primary ~~debt.~~lender ~~The~~Bank ~~Company’s~~of ~~interest sensitive liabilities are its debt~~the ~~instruments~~ West. ~~Variable~~The ~~interest~~change onin ~~the~~terms ~~majority~~agreements ofmodified the Company’s ~~debt~~$4.821 ~~equals~~million ~~the~~debt ~~prime~~ with ~~rate.~~Bank ~~Because~~of ~~rates~~the ~~may~~West ~~increase~~from ora ~~decrease~~variable rate at of ~~any~~interest ~~time,~~subject ~~the~~to ~~Company is~~annual ~~exposed~~ adjustment to ~~market risk as~~ a ~~result~~variable rate of ~~the impact~~interest ~~that~~ subject ~~changes~~to inadjustment ~~these~~every ~~base~~five ~~rates~~ years. ~~may~~The ~~have~~rate onis ~~the~~currently ~~interest~~set ~~rate~~at ~~applicable to Company borrowings~~7. ~~Management~~26% ~~does~~ for ~~not,~~the ~~however,~~next ~~believe~~five ~~that~~years ~~any risk inherent~~therefore in eliminating the ~~variable~~Company’s ~~rate~~risk ~~nature of its debt is likely~~ to ~~have~~rising ainterest ~~material~~rates ~~effect~~for on the ~~Company’s~~ ~~financial~~next ~~position, results of operations or liquidity~~ five years.

Based upon the Company’s variable rate debt at July 31, 2006, a hypothetical 1% increase in interest rates would result in an annual increase in interest expense of approximately $50,000.

The Company has not entered into any market risk sensitive instruments for trading purposes. Further, the Company does not currently have any derivative instruments outstanding and has no plans to use any form of derivative instruments to manage the Company’s business in the foreseeable future. Profit margins on gasoline sales can be adversely affected by factors beyond the control of the Company, including supply and demand in the retail gasoline market, price volatility and price competition from other gasoline marketers. The availability and price of gas could have an adverse impact on general highway traffic. The Company has not entered into any long-term fixed-price supply agreements for gasoline. Any substantial decrease in profit margins on gasoline sales or number of gallons sold could have a material adverse effect on the Company’s gross margins and operating income.

Index

BOWLIN TRAVEL CENTERS, INC.

Item 4.

Controls and Procedures.

The Company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive ~~Officer~~ Officer and Chief Financial Officer have concluded that ~~the~~there ~~Company’s~~was a ~~disclosure~~material ~~controls~~weaknesses ~~and~~in the ~~procedures~~ control ~~were~~environment ~~effective~~related asto ofgeneral merchandise inventory at the ~~end~~Company’s twelve ofretail locations and that the ~~period~~related ~~covered~~disclosure by controls ~~this~~and ~~report~~procedures ~~except~~ are ~~for~~ineffective. ~~weaknesses~~The ~~noted~~Company inuses estimates throughout the ~~control~~year ~~environment~~ that ~~result~~ ~~from~~are ~~the lack~~based of on anstandard ~~electronic~~markups ~~point~~within ofdefined ~~sale~~categories ~~merchandise~~to record ~~tracking~~cost ~~system as~~of ~~the~~goods. ~~Company~~The Company historically counts physical inventory at each location at the end of ~~each~~ each fiscal year, ~~resulting in~~and ~~differences~~variances between ~~estimates~~the estimates used ~~throughout~~and ~~the~~physical ~~year~~counts are accounted for at that ~~are~~time. ~~based~~To onsolve the material ~~standard~~ weaknesses ~~markups~~in ~~within~~the ~~defined~~control environment ~~categories~~related to ~~record~~general ~~cost~~merchandise inventory of at ~~goods~~the ~~and~~Company’s twelve retail locations, the Company took interim inventories ~~year-end~~ during ~~physical~~the ~~count~~third quarter of fiscal year 2007. The ~~company~~Company ~~has~~will ~~dedicated~~take ~~resources~~interim to physical ~~correct~~inventories ~~these~~during ~~issues~~ the ~~and~~third ~~has~~quarter ~~implemented~~ending aOctober ~~plan~~31, to2007 ~~use~~and anwill adjust ~~electronic~~variances ~~point~~between of estimates ~~sale~~and ~~merchandise~~physical inventories as needed. The ~~tracking~~ Company ~~system~~had ~~that~~no ~~will~~material adjustments ~~provide~~at ~~the~~fiscal ~~Company~~year ~~with~~end ~~the~~January ~~ability~~31, 2007, does not expect to ~~conduct~~have ~~more~~a ~~periodic~~ material ~~physical~~adjustment at the interim inventories at asOctober ~~well~~31, as2007 ~~more~~and ~~accurately~~does not ~~monitor~~ anticipate ~~cost~~material ofadjustments ~~goods sold~~going forward.

12The general merchandise inventory at the Company’s twelve retail locations was approximately $1.640 million or 41.9% of the Company’s total inventory. Inventory at the Company’s warehouse was maintained on a perpetual inventory system where purchases and issues are recorded directly into the inventory account as they occur. Therefore, the balance in the warehouse inventory account represents the ending inventory amount and management has concluded there is no weakness related to the warehouse inventory. The warehouse inventory balance at the end of the Company’s first quarter was approximately $1.243 million or 31.7% of the Company’s total inventory. Other key inventories including gasoline, Dairy Queen food and jewelry were taken monthly and the physical count was reconciled to the Company’s records; therefore management has concluded there are no weaknesses related to these inventories. Gasoline, Dairy Queen food, and jewelry inventories were approximately $926 million or 23.6% of the Company’s total inventory.

The Company is dedicating resources to correct this issue and is in the process of implementing a plan to use an electronic point of sale merchandise tracking system that will provide the Company with the ability to conduct more periodic physical inventories as well as more accurately monitor cost of goods sold. Other than the above issue, there were no changes in the Company’s internal control over financial reporting during the first quarter of fiscal 2008 that has materially affected, or is reasonable likely to materially affect, the Company’s internal control over financial reporting. The first phase of the plan, which was completed in March 2007, was to have all items in the Company’s central warehouse bar-coded. The second phase of the plan, which is to bar code the merchandise at the Company’s twelve retail locations, is in process.

Item 4T.

Controls and Procedures.

Not applicable.

Index

BOWLIN TRAVEL CENTERS, INC.

Other than the above issue, there were no changes in the Company’s internal control over financial reporting that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective at the “reasonable assurance” level.

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings. None.

Item 1A. Risk Factors. There were no material changes from the Company’s risk factors disclosed in Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended January 31, ~~2006~~2007.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds. None.

Item 3.

Defaults Upon Senior Securities. None.

Item 4.

Submission of Matters to a Vote of Security Holders. None.

Item 5.

Other Information. None.

Item 6.

Exhibits

Exhibit 10.3846 - ~~Purchase~~Special ~~and~~warranty ~~Sale Agreements~~deed, dated ~~August~~May 1524, ~~2006~~2007, by and between ~~Bowlin~~ Bowlin Travel Centers, Inc. and ~~Teak,~~the ~~LLC~~Pueblo ~~for~~of aLaguna ~~tract~~to ofhereby ~~land~~grant, ~~known~~bargain, assell ~~Lot~~ and 1convey ~~Bowlin~~ all ~~Tracts~~the inreal ~~the~~property ~~County~~located of17 ~~Dona~~miles ~~Ana~~west of Albuquerque, New Mexico at the Rio Puerco exit.

Exhibit 10.39 - Purchase and Sale Agreements, dated August 15, 2006 by and between Bowlin Travel Centers, Inc. and Teak, LLC for a tract of land known as Lot 2 Bowlin Tracts in the County of Dona Ana, New Mexico.

Exhibit 10.40 - Purchase and Sale Agreements, dated August 15, 2006 by and between Bowlin Travel Centers, Inc. and Larjon, LLC for a tract of land known as part of Lot 53, Subdivision of Lots 4 and 5 of the Brazito Tract.

Index

BOWLIN TRAVEL CENTERS, INC.

Exhibit 10.41 - Promissory Note, dated August 15, 2006 by and between Bowlin Travel Centers Inc. and C. C. Bess.

Exhibit 31.1 - Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

Exhibit 31.2 - Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

Exhibit 32.1 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Index

BOWLIN TRAVEL CENTERS, INC.

Signatures

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

Dated: ~~September~~June 13, ~~2006~~2007 /s/ Michael L. Bowlin Michael L. Bowlin, Chairman of the Board, President and Chief Executive Officer



		/s/ Nina J. Pratz

		Nina J. Pratz, Chief Financial Officer

1416

Filing Compare · BOWLIN TRAVEL CENTERS INC