1.  Basis for Presentation

The accompanying unaudited condensed consolidated financial statements of Bowl America Incorporated and subsidiaries (the(collectively, the "Company"), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  The condensed consolidated balance sheet as of July 3, 2016 has been derived from the Company's audited financial statements.  Certain information and note disclosures normally included in the annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments and reclassifications (all of which are of a normal, recurring nature) that are necessary for the fair presentation of the Company’s financial position and results of operations for the periods presented.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended July 3, 2016.

2.  Investments

     The Company’s investments are categorized as available-for-sale. Short-term investments consist of certificates of deposits with maturities of generally three months to one year. Equity securities consist primarily of telecommunications stocks. Mutual funds consist of federal agency mortgage backed securities (Ginnie Mae). The fair value of the Company’s investments at October 2, 2016January 1, 2017 and July 3, 2016 were as follows:

The fair values of the Company’s investments were determined as follows:

The shares of common stock included in the equity securities portfolio includes the following stocks:as of January 1, 2017 were:

       On August 1, 2016, Dex Media, a spin off from Verizon, completed a financial restructure. Previous shares of Dex Media’s common stock were cancelled with no distribution to shareholders resulting in a loss of $5,845 on the Company’s holdings.

      The Mutual fund included in the table above is Vanguard GNMA Admiral Shares #536 fund. The fair value of certificates of deposits is estimated using present value techniques and comparing the values derived from those techniques to certificates with similar values.

2.3. Note Payable

     In August 2016, the Company obtained a $500,000 short-term loan that matureswas due in February 2017. The loan bears interest was at the one month LIBOR rate plus 2.5% with interest only payable monthly. A portion of the loan iswas collateralized by certificates of deposits.

3.4. Commitments and Contingencies

The Company’s purchase commitments at October 2, 2016,January 1, 2017 are for materials, supplies, services and equipment as part of the normal course of business.

Company.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business, our sales and the industry in which we operate and our management’s beliefs and assumptions. These statements are not guarantees of future performance or development and involve risks, uncertainties and other factors that are in some cases beyond our control. The forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date hereof. We are under no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

LIQUIDITY AND CAPITAL RESOURCES

The Company views a strong financial position as a major benefit to shareholders and emphasizes payment of dividends aspartas part of its financial plan.  A portion of earnings has consistently been invested to create a reserve to protect the Company in downturns in business, to capitalize on opportunities for expansion and modernization, to provide a secure source of income and to provide a predictable return to its owners.  For these reasons, the Company prefers a conservative approach to investing rather than taking greater risk for possible rapid growth.  The Company balances market volatility by using both fixed income and equity investments in managing its reserve funds. Any equity security is subject to price fluctuation, however, the stocks held by the Company have relatively low volatility. The Company has long been invested in a Government National Mortgage Association (“Ginnie Mae”) fund and domestically domiciled stocks with the perceived potential of appreciation, primarily telecommunications stocks. The Company considers that this diversity also provides a measure of safety of principal.

With the exception of 13,120 shares of Verizon, the shares of common stocksstock in our portfolio have come from spin-offs,mergers and acquisitions of AT&T and United Telecommunications (now Sprint) purchased in 1979 and 1984 and one insurancefrom oneinsurance company acquired at no cost when thethat company demutualized. While not all stocksshares in the portfolio are domestic AmericandomesticAmerican companies any longer, since the original purchases at an approximate cost of $630,000, we have received approximatelyreceivedapproximately $967,000 from mergers and sales, and over $4,400,000 in dividends, the majority of which were tax favored in theinthe form of an exclusion from federal taxable income. The dividends exclusion continues into this fiscal year. These marketableThesemarketable securities are carried at their fair value on the last day of each reporting period. The value of the securities on October 2, 2016onJanuary 1, 2017 was approximately $5.7 million. The value of securities held at$5,933,000 and on July 3, 2016 was approximately $6 million. Short-term investments consisting mainly of Certificates of Deposits, cash and cash equivalents totaled $1,057,000 at October 2, 2016 compared to $1,471,000 at July 3, 2016.$6,002,000.

The Company’s original investment in the Vanguard GNMA bond fund began in 1988 with purchases of shares in the fund totaling approximately $1,400,000. The fund is carried at fair value on the last day of the reporting period. At October 2, 2016,January 1, 2017, the value was approximately $2,838,000. In August 2015 $1,000,000$2,786,000.

Short-term investments consisting mainly of this fund was redeemedCertificates of Deposits, and cash and cash equivalents totaled $1,855,000 at the end of the fiscal second quarter of 2017 compared to meet the August 2015 dividend payment.$1,471,000 at July 3, 2016.

The Company’s position in all the above investments is a source of capital for possible expansion. Potential volatility in the trading prices of the marketable securities held by the Company could impact the Company’s opportunities for expansion. The Board of Directors reviews the portfolio weekly and any use of this reserve at its quarterly meetings.

In August 2016 the Company obtained a $500,000 short-term loan to meet the August 2016 dividend obligation. The loan was collateralized by certificates of deposits, is due in February 2017.deposits. Interest iswas due and paid monthly and iswas based on the one-monthone- month LIBOR rate plus 2.5%. The loan was repaid in full on January 6, 2017.

DuringIn the three-monthsix-month period ended October 2, 2016,January 1, 2017, the Company expended approximately $105,000$170,000 for the purchase of building, entertainment and restaurant equipment. Except as noted above, theThe Company has no long-term debt and has no current plans to obtain additional third party funding as cash and cash flows are sufficient to finance all contemplated purchases and to meet short-term purchase commitments and operating lease commitments.

The first quartersix-month decreases in the categories of Prepaid expenses and other, and of Accounts Payable were attributableand Accrued Expenses are primarily due to theseasonal timing of the payments including compensation, insurance and taxes and for contributions to benefit plans.

Current liabilities generally increase during the first three quarters of the fiscal year as bowling leagues deposit prize fund monies with the Company throughout the league season. These funds are returned to the leagues at the end of the bowling season, generally in the fourth quarter. At October 2, 2016,January 1, 2017, league deposits of approximately $766,000$1,396,000 were included in the current liabilities category.

Cash flow provided by operating activities in the thirteentwenty-six weeks ended October 2, 2016January 1, 2017 was $84,000$1,859,000 which, along with cash on hand, and a note in the amount of $500,000, mentioned above, was sufficient to meet day-to-day cash needs and pay dividends. Cash dividends of approximately $877,000, or $.17 per share, were paid to shareholders during the three-month periodquarter ended October 2, 2016.January 1, 2017, and the six months total was approximately $1,754,000 or $.34 per share.   In SeptemberDecember 2016 the Company declared a regular quarterly dividend of $.17 per share, payable November 16, 2016.February 15, 2017 to shareholders of record on January 10, 2017. The economic climate is part of the consideration at the Directors’ quarterly reviews of future estimates of cash flows. The Board of Directors decides the amount and timing of any dividend at its quarterly meeting based on its appraisal of the state and trends of the business and estimate of future opportunities at such time.

OverviewOVERVIEW

The Company is in the entertainment business which, by its nature, has ups and downs based on consumer tastes and preferences.  Generally, promotional and open play bowling which depends on the public’s discretionary budget dollars and their choices, accounts for more than half of our business. An unstable economy can lead many to participate in entertainment that is close to home and relatively inexpensive.  Bowling has those advantages.  However ifthe longer the economy remainsunstable,remains unsteady, the less willing people are less willing to spend on other than necessities.  Weather is also a factor, especially for casual bowlers.  While extreme heat or rainy weather prompt people to look for indoor activities, heavy snow storms can keep customers from reaching the centers. Postponed league games are made up later in the season, but lost open play income isneveris never recovered.  The Company operates primarily in the Washington, DC area where its business is vulnerable to sequestrationdecreases in government spending or other downsizing of the federal government. Current economic conditions continue to create challenging times but our response will be helped by having the resources to be able to promote the sport.

RESULTS OF OPERATIONS

The following table setstables set forth the items in our consolidated summary of operations for the fiscal quarters and year-to-date periods ended October 2, 2016January 1, 2017, and SeptemberDecember 27, 2015, and the dollar and percentage changes therein.

For

Earnings were $695,906 for the thirteen week period and $695,186, or $.14 per share for both the thirteen and twenty-six week periods ended October 2, 2016 there was a loss of $720 or $.00 per share.January 1, 2017. For the thirteen week periodthirteen-week and twenty-six periods ended SeptemberDecember 27, 2015, there was a loss of $148,076net earnings were $508,901 or $.03$.10 per share.share and $360,825 or $.07 per share, respectively. Eighteen locationscenters were in operation in both the current and prior year quarters.quarters although Hurricane Matthew caused the closure of our Florida centers for two days. The bowling business is seasonalfiscal 2017 second quarter included the holiday week between Christmas and New Year’s Day which typically falls in the first quarter which includes summer months is typically the slowest.third fiscal quarter. The operating results for the fiscal 2017 periodperiods included in this report are not necessarily indicative of results to be expected for the year.

Operating Revenues

Total operating revenues increased 2.9% or $144,000$229,000 to $5,064,000$6,235,000 in the thirteen-week period ended October 2, 2016, compared to an increase of 6.3% or $291,000 to $4,920,000 in the three-month period ended September 27, 2015.  Bowling and other revenue increased $103,000 or 3% in the current year fiscalmost recent quarter compared to an increase of $173,000 or 5%$36,000 to $6,006,000 in the three-month period ended December 27, 2015.  The current fiscal six-month period operating revenues were up $373,000 versus an increase of $327,000 in the comparable priorsix-month period a year quarter. ago.  Bowling and other revenue increased $213,000 in the quarter and $316,000 year-to-date for the periods ended January 1, 2017 versus a decline of $37,000 in the quarter and an increase of $135,000 for the six-month period ended December 27, 2015.

Food, beverage and merchandise sales were up $41,000increased $16,000 or 2.8%0.8% in the current year quarter due to increased traffic, compared to an increase of $118,000 or 8.9%and were up $57,000 in the prior year comparable quarter.six-month period.  Cost of sales increased $13,0002.5% in both the current year three-month period due to higher sales.fiscal three month and six month periods ended January 1, 2017.

Operating Expenses

Operating expenses were down $138,000$44,000 or 2.6% to $5,156,0000.8% in the three-monthcurrent three month period ended October 2, 2016 compared toand $183,000 or 1.7% in six-month period versus a decrease of  $23,000 and an increase of $34,000 or 1% to $5,294,000 in the prior year quarter ended September 27, 2015.  Employee compensation and benefits were down $65,000 or 2% and down $7,000$13,000 or less than 1% in the three and six month periods, respectively, last year.  Employee compensation and benefits for the fiscal first quarters of 2017 second quarter were flat and 2016, respectively. The Company continued to make scheduling adjustments resultingwere down $64,000 or 1.2% in a decrease in compensation.  In addition, state unemployment tax rates decreased from the prior year.six month period. In the currentcomparable prior year groupperiods ended December 27, 2015 there were decreases of $6,000 and $12,000 or less than 1%, respectively. Group health insurance costs were lower due todecreased 6.4% as a result of changes in plan offerings withand lower premiums. Included in this category of expense are contributions to our two benefit plans, both of which are defined contribution plans. There is no additional obligation beyond the current year contribution.

Cost of bowling and other services increased $25,000 or 1.7% and decreased $42,000$16,000 or 3%0.5% in the quarterthree month and six month periods ended October 2, 2016 versus a decrease of $18,000 or 1% inJanuary 1, 2017, respectively. In the comparable quartertwenty-six weeks ended September 27, 2015. MaintenanceJanuary 1, 2017, maintenance and repair costs were up $22,000declined $15,000 or 10% and $2,000 or 1% in3.6%. Advertising costs during the current year and prior year quarters, respectively. The current yeartwenty-six week period included roof repairs and plumbing repairs at several locations. The priorended January 1, 2017, were up $4,000 or 2.2%.

For the fiscal yearsix-month period included air conditioning repairs at several locations. Advertising costs decreased $6,000 or 7% in the quarter ended October 2, 2016.  UtilityJanuary 1, 2017 utility costs were up $3,000$14,000 or 1% in the in both the current and prior year periods.2.1 % primarily a result of higher utility taxes. Supplies and services expenses were down $20,000$11,000 or 10%2.8% in the current year six-month period and were up $15,000$9,000 or 8%2.2% in the thirteen-week periods ended October 2, 2016 and September 27, 2015, respectively, partially due tosix-month period in the prior year. The timing of bulk purchases.purchases was the primary reason for the fluctuations in both years.

Insurance expense excluding health insurance decreased 1.7% in the current year-to-date period versus a decrease of 10% in last year’s comparable period.

Depreciation and amortization expense was down 13%15.9% in the three-monthcurrent six-month period ended October 2, 2016 asthe result of a large group of assets reachedreaching full depreciation.

As stateda result of the above, the first quartersix-month period of the fiscal year is seasonally the slowest and the quarter ended October 2, 20162017 resulted in an operating lossincome of $720$869,900 compared to an operating lossincome of $148,000$314,465 in the prior year comparable six-month period.

Interest,Dividend and OtherIncome

Interest, dividend and other income declineddecreased $36,000 in the three monthfiscal 2017 six-month period ended October 2,and decreased $17,000 in the comparable 2016 year-to-date period, respectively. The decrease in both years relates primarily due to the timing of receipts for ancillary income andincluding the end of some parking lot rental agreements.

CRITICAL ACCOUNTING POLICIES

Management has identified accounting for marketable investment securities as a critical accounting policy due to the significance of the amounts included in the Company’s balance sheet under the captions of Short-term investments and Marketable securities.  The Company exercises judgment in determining the classification of its investment securities asavailable-for-saleas available-for-sale and in determining their fair value.  The Company records these investments at their fair value with the unrealized gain or loss recorded in accumulated other comprehensive earnings, a component of stockholders’ equity, net of deferred taxes.  Additionally, from time to time the Company must assess whether write-downs are necessary for other than temporary declines in value.

Management has identified accounting for the impairment of long-lived assets as a critical accounting policy due to the significance of the amounts included in the Company’s balance sheet under the caption of Land, Buildings and

Equipment.  The Company reviews long-lived assets whenever events or changes indicate that the carrying amount of an asset may not be recoverable.  In making such evaluations, the Company compares the expected future cash flows to the carrying amount of the assets.  An impairment loss equal to the difference between the assets’ fair value and carrying value is recognized when the estimated future cash flows are less than the carrying amount.

ITEM 4. CONTROLS AND PROCEDURES.

The Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective based on their evaluation of such controls and procedures as of October 2, 2016.January 1, 2017. There was no change in the Company’s internal control over financial reporting identified in connection with the evaluation that occurred during the quarter ended October 2, 2016,January 1, 2017, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

BOWL AMERICA INCORPORATED AND SUBSIDIARIES

S.E.C. FORM 10-Q

PART II - OTHER INFORMATION

Item 6.  Exhibits.

SIGNATURES

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

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