BOWLIN TRAVEL CENTERS, INC. Financial

BOWLIN TRAVEL CENTERS, INC. Financial Statements January 31, 2012 and 2011 150 Louisiana NE, Albuquerque, NM 87108 (505) 266-5985 Accountin g & Consultin g Group , LL P Certified Public Accountants REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Bowlin Travel Centers, Inc. We have audited the accompanying balance sheets of Bowlin Travel Centers, Inc. as of January 31, 2012 and 2011, and the related statements of income, stockholders’ equity and cash flows for each of the years in the three-year period ended January 31, 2012. Bowlin Travel Center, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bowlin Travel Centers, Inc. as of January 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the three-year period ended January 31, 2012 in conformity with accounting principles generally accepted in the United States of America. Accounting & Consulting Group, LLP Certified Public Accountants Albuquerque, New Mexico April 11, 2012 BOWLIN TRAVEL CENTERS, INC. Balance Sheets January 31, 2012 and 2011 Assets 2012 2011 Current assets: Cash and cash equivalents $ 2,061,313 $ 2,891,085 Marketable securities 900,000 1,000,000 Accounts receivable 5,491 29,841 Inventories 3,488,003 3,513,730 Income taxes 602,282 113,190 Interest receivable 440 1,308 Prepaid expenses 240,531 209,159 Deferred income taxes 623,812 50,928 Notes receivable, current maturities 1,488 1,488 Total current assets 7,923,360 7,810,729 Property and equipment, net 10,800,139 10,929,954 Capital lease, net 243,103 — Assets held for sale 413,378 413,503 Intangible assets, net of $141,444 and $132,417 accumulated amortization 49,904 48,931 Investment in real estate 419,389 419,389 Notes receivable, less current portion 1,484 2,972 Total assets $ 19,850,757 $ 19,625,478 Liabilities and Stockholders’ Equity Current liabilities: Current maturities of long-term debt $ 195,036 $ 184,239 Current maturity of capital lease obligation 54,716 — Accounts payable 463,685 827,017 Accrued salaries and benefits 323,705 444,585 Accrued liabilities 232,744 202,298 Deferred revenue, current 21,192 32,010 Total current liabilities 1,291,078 1,690,149 Deferred income taxes 1,643,412 715,128 Long-term debt, less current maturities 4,990,700 5,181,505 Capital lease obligation, less current maturities 188,387 — Total liabilities 8,113,577 7,586,782 Commitments and contingencies — — Stockholders’ equity: Preferred stock, $0.001 par value; 1,000,000 shares authorized, none issued or outstanding at January 31, 2012 and 2011 — — Common stock, $0.001 par value; 10,000,000 shares authorized, 4,186,133 issued and outstanding at January 31, 2012 and 4,213,141 4,583 4,583 issued and outstanding at January 31, 2011 Less: treasury stock 397 370 Common stock outstanding 4,186 4,213 Additional paid-in capital, net 9,343,737 9,383,568 Retained earnings 2,389,257 2,650,915 Total stockholders’ equity 11,737,180 12,038,696 Total liabilities and stockholders’ equity $ 19,850,757 $ 19,625,478 See accompanying notes to financial statements. 3 BOWLIN TRAVEL CENTERS, INC. Statements of Income Years ended January 31, 2012 2011 2010 Gross sales $ 27,914,044 $ 26,298,132 $ 23,271,386 Less discounts on sales (347,895) (212,494) (225,855) Net sales 27,566,149 26,085,638 23,045,531 Cost of goods sold 19,169,139 17,394,486 14,990,088 Gross profit 8,397,010 8,691,152 8,055,443 General and administrative expense (7,643,200) (7,778,437) (7,389,744) Depreciation and amortization (1,033,684) (941,534) (919,687) Operating loss (279,874) (28,819) (253,988) Other non-operating (expense) income: Interest income 9,167 23,933 43,440 Gain (loss) on sale of property and equipment 11,835 34,580 22,604 Rental income 190,558 226,308 176,494 Miscellaneous — 740 51 Interest expense (336,744) (291,464) (274,252) Total other non-operating (expense) income (125,184) (5,903) (31,663) Loss before income tax benefit (expense) (405,058) (34,722) (285,651) Income tax benefit (expense) 143,400 (1,900) 95,800 Net loss $ (261,658) $ (36,622) $ (189,851) Loss per share: Basic and diluted, net loss $ (0.06) $ (0.01) $ (0.04) Weighted average common shares outstanding 4,186,133 4,213,141 4,384,277 See accompanying notes to financial statements. 4 BOWLIN TRAVEL CENTERS, INC. Statements of Stockholders’ Equity For the Years Ended January 31, 2012, 2011 and 2010 Common Additional Number stock, paid-in Retained of shares at par capital earnings Total Balance at January 31, 2010 4,384,277 4,384 9,568,428 2,687,537 12,260,349 Net loss — — — (36,622) (36,622) Treasury stock (171,136) (171) — — (171) Additional paid-in capital, treasury — — (184,860) — (184,860) Balance at January 31, 2011 4,213,141 4,213 9,383,568 2,650,915 12,038,696 Net loss — — — (261,658) (261,658) Treasury stock (27,008) (27) — — (27) Additional paid-in capital, treasury — — (39,831) — (39,831) Balance at January 31, 2012 4,186,133 $ 4,186 $ 9,343,737 $ 2,389,257 $ 11,737,180 See accompanying notes to financial statements. 5 BOWLIN TRAVEL CENTERS, INC. Statements of Cash Flows Years ended January 31, 2012 2011 2010 Cash flows from operating activities: Net loss $ (261,658) (36,622) (189,851) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,033,684 941,534 919,687 Amortization of loan fee 6,194 4,609 3,475 (Gain) loss on sale of property and equipment (11,835) (34,580) (22,604) Provision for deferred income taxes 294,300 66,200 (85,700) Changes in operating assets and liabilities: Accounts receivable 24,350 58,363 (34,858) Inventories 25,727 (248,413) (89,308) Prepaid expenses and other (459,364) (72,076) 283,499 Accounts payable and accrued liabilities (453,766) 46,719 152,386 Deferred revenue (10,818) 1,898 (5,557) Net cash provided by operating activities 186,814 727,632 931,169 Cash flows from investing activities: Proceeds from sale of assets 4,500 79,242 8,800 Purchases of property and equipment (850,973) (1,826,734) (559,735) Accrued interest receivable 868 4,914 13,557 Purchase of marketable securities (900,000) (1,000,000) (1,657,128) Franchise fee payment (10,000) — — Proceeds from sale of marketable securities 1,000,000 1,657,128 1,500,000 Increase in notes receivable — (52,000) — Payment received from notes receivable 10,000 159,605 115,650 Net cash used in investing activities (745,605) (977,845) (578,856) Cash flows from financing activities: Payments on long-term debt (180,007) (153,761) (132,975) Proceeds from new debt — 1,070,000 — Payments for debt issuance costs — (13,593) — Payments for capital lease obligation (51,114) — — Treasury stock (27) (171) (198) Additional paid-in capital, treasury stock (39,833) (184,860) (205,165) Net cash used in (provided by) financing activities (270,981) 717,615 (338,338) Net decrease (increase) in cash and cash equivalents (829,772) 467,402 13,975 Cash and cash equivalents at beginning of year 2,891,085 2,423,683 2,409,708 Cash and cash equivalents at end of year $ 2,061,313 2,891,085 2,423,683 (Continued) 6 BOWLIN TRAVEL CENTERS, INC. Statements of Cash Flows Years ended January 31, 2012 2011 2010 Supplemental disclosure of cash flow information: Cash paid for interest $ 336,744 $ 291,464 $ 274,252 Noncash investing and financing activities: Capital lease $ 294,218 $ — $ — See accompanying notes to financial statements. 7 BOWLIN TRAVEL CENTERS, INC. Notes to Financial Statements January 31, 2012 (1) Summary of Significant Accounting Policies (a) Description of Business Bowlin Travel Centers, Inc. (BTC or the Company) is located in Albuquerque, New Mexico. The Company’s tradition of serving the public dates back to 1912, when the founder, Claude M. Bowlin, started trading goods and services with Native Americans in New Mexico. The Company’s principal business activities include the operation of ten travel centers and five restaurants strategically located along well- traveled interstate highways in New Mexico and Arizona where there are generally few gas stations, convenience stores or restaurants.

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