10-Q

FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2013
[   ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _________________ Commission file number: 0-31555

BAB, Inc.

(Name of small business issuer in its charter)

Delaware	36-4389547
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 500 Lake Cook Road, Suite 475, Deerfield, Illinois 60015

(Address of principal executive offices) (Zip Code)

Issuer's telephone number (847) 948-7520

Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x  No o

Indicate by checkmark whether the registrant is a large accelerated filer, accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer  o     Accelerated filer  o       Non-accelerated filer  o  (Do not check if a smaller reporting company)      Smaller reporting company  x   

Indicate by checkmark whether the registrant is a shell company.   Yes  o    No  x

As of April 11, 2013 BAB, Inc. had: 7,263,508 shares of Common Stock outstanding.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operation	10
Item 3	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4	Controls and Procedures	13
PART II	OTHER INFORMATION	14
Item 1.	Legal Proceedings	14
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3	Defaults Upon Senior Securities	14
Item 4	Mine Safety Disclosures	14
Item 5	Other Information	14
Item 6	Exhibits	14
SIGNATURE		14

2

PART I

ITEM 1.               FINANCIAL STATEMENTS

BAB, Inc.

Consolidated Balance Sheet

	February 28,2013			November 30, 2012
ASSETS
Current Assets
Cash	$	826,887		$	1,256,257
Restricted cash		355,629			376,837
Receivables
Trade accounts and notes receivable (net of allowance for doubtful accounts of $16,892 in 2013 and $25,580 in 2012 )		81,001			86,070
Marketing fund contributions receivable from franchisees and stores		10,152			16,385
Inventories		25,678			26,953
Prepaid expenses and other current assets		88,377			65,991
Total Current Assets		1,387,724			1,828,493
Property, plant and equipment (net of accumulated depreciation of $140,316 in 2013 and $139,293 in 2012)		9,749			10,773
Assets held for sale		3,783			3,783
Trademarks		445,022			445,022
Goodwill		1,493,771			1,493,771
Definite lived intangible assets (net of accumulated amortization of $57,880 in 2013 and $54,560 in 2012)		56,540			59,710
Deferred tax asset		248,000			248,000
Total Noncurrent Assets		2,256,865			2,261,059
Total Assets	$	3,644,589		$	4,089,552
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt	$	29,070		$	29,070
Accounts payable		16,127			14,120
Accrued expenses and other current liabilities		314,790			328,288
Unexpended marketing fund contributions		366,036			393,477
Deferred franchise fee revenue		60,000			25,000
Deferred licensing revenue		33,333			45,833
Total Current Liabilities		819,356			835,788
Long-term debt (net of current portion)		95,762			95,762
Total Liabilities		915,118			931,550
Stockholders' Equity
Common stock ($.001 par value; 15,000,000 shares authorized; 8,466,953 shares issued and 7,263,508 shares outstanding as of February 28, 2013 and November 30, 2012		13,508,257			13,508,257
Additional paid-in capital		987,034			987,034
Treasury stock		(222,781	)		(222,781	)
Accumulated deficit		(11,543,039	)		(11,114,508	)
Total Stockholders' Equity		2,729,471			3,158,002
Total Liabilities and Stockholders' Equity	$	3,644,589		$	4,089,552

SEE ACCOMPANYING NOTES

3

BAB, Inc.

Consolidated Statements of Income

For the Quarters Ended February 28, 2013 and February 29, 2012

 (Unaudited)

	February 28, 2013			February 29, 2012
REVENUES
Royalty fees from franchised stores	$	419,919		$	442,921
Franchise fees		-			5,000
Licensing fees and other income		115,160			119,571
Total Revenues		535,079			567,492
OPERATING EXPENSES
Selling, general and administrative expenses:
Payroll and payroll-related expenses		378,638			368,251
Occupancy		41,563			19,508
Advertising and promotion		17,477			11,817
Professional service fees		60,783			60,222
Travel		17,015			14,017
Depreciation and amortization		4,344			4,784
Other		79,440			77,966
Total Operating Expenses		599,260			556,565
(Loss)/Income from operations		(64,181	)		10,927
Interest income		307			706
Interest expense		(1,482	)		(1,812	)
Net (Loss)/Income		(65,356	)		9,821
(Loss)/Earnings per share - Basic and Diluted	$	(0.009	)	$	0.001
Weighted average shares outstanding - Basic		7,263,508			7,263,508
Effect of dilutive common stock		2,193			1,757
Weighted average shares outstanding - Diluted		7,265,701			7,265,265
Cash distributions declared per share	$	0.05		$	0.01

SEE ACCOMPANYING NOTES

4

BAB, Inc.

Consolidated Statements of Cash Flows

For the Quarters Ended February 28, 2013 and February 29, 2012

 (Unaudited)

	February 28, 2013			February 29, 2012
Operating activities
Net (loss)/income	$	(65,356	)	$	9,821
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization		4,344			4,784
Provision for uncollectible accounts, net of recoveries		(5,807	)		(2,107	)
Changes in:
Trade accounts receivable and notes receivable		10,876			38,391
Restricted cash		21,208			12,189
Marketing fund contributions receivable		6,233			6,197
Inventories		1,275			(8,210	)
Prepaid expenses and other		(22,386	)		(6,668	)
Accounts payable		2,007			(146	)
Accrued liabilities		(13,498	)		62,893
Unexpended marketing fund contributions		(27,441	)		(18,403	)
Deferred revenue		22,500			17,083
Net Cash (Used)/Provided by Operating Activities		(66,045	)		115,824
Investing activities
Capitalization of trademark renewals		(150	)		-
Net Cash Used In Investing Activities		(150	)		-
Financing activities
Cash distributions/dividends		(363,175	)		(217,905	)
Net Cash Used In Financing Activities		(363,175	)		(217,905	)
Net Decrease in Cash		(429,370	)		(102,081	)
Cash, Beginning of Period		1,256,257			1,236,125
Cash, End of Period	$	826,887		$	1,134,044
Supplemental disclosure of cash flow information:
Interest paid	$	-		$	-
Income taxes paid	$	8,450		$	-

 SEE ACCOMPANYING NOTES

5

BAB, Inc.

Notes to Unaudited Consolidated Financial Statements

For the Quarters Ended February 28, 2013 and February 29, 2012

 (Unaudited)

Note 1 - Nature of Operations

BAB, Inc (“the Company”) has two wholly owned subsidiaries: BAB Systems, Inc. (“Systems”) and BAB Operations, Inc. (“Operations”).  Systems was incorporated on December 2, 1992, and was primarily established to franchise Big Apple Bagel (“BAB”) specialty bagel retail stores.  My Favorite Muffin Too, Inc., a New Jersey corporation, was acquired on May 13, 1997 and is included as a part of Systems. Brewster’s Franchise Corporations (“Brewster’s”) was established on February 15, 1996 and is also included as a part of Systems.  Brewster’s coffee is sold in BAB and My Favorite Muffin (“MFM”) locations as well as through license agreements.  Operations was formed on August 30, 1995, primarily to operate Company-owned stores.  There are currently no Company-owned stores.  The assets of Jacobs Bros. Bagels (“Jacobs Bros.”) were acquired on February 1, 1999, and any branded wholesale business uses this trademark.

The Company was incorporated under the laws of the State of Delaware on July 12, 2000.  The Company currently franchises and licenses bagel and muffin retail units under the BAB and MFM trade names. At February 28, 2013 the Company had 98 franchise units and 6 licensed units in operation in 24 states.  The Company additionally derives income from the sale of its trademark bagels, muffins and coffee through nontraditional channels of distribution including under licensing agreements with Kohr Bros. Frozen Custard, Kaleidoscoops, Green Beans Coffee, Sodexo and through direct home delivery of specialty muffin gift baskets and coffee.  Also included in licensing fees and other income is Operation’s Sign Shop results.  For franchise consistency and convenience, the Sign Shop provides the majority of signage to franchisees, including but not limited to, posters, menu panels, build charts, outside window stickers and counter signs.

On May 7, 2012 the Company issued a press release announcing the launch of its new franchise concept, SweetDuet Frozen Yogurt & Gourmet Muffins (“SweetDuet”), which it is hoping to roll out in fiscal 2013. While BAB will be offering franchises in all 50 states, its initial development focus is targeted for the Midwest, specifically Illinois, Michigan, Wisconsin and Ohio. As part of its introductory development plan, BAB will be donating 10% of the initial franchise fee from its first 50 SweetDuet units to the Cystic Fibrosis Foundation, of which BAB is a corporate sponsor.  SweetDuet, as its name implies, is a fusion concept, pairing self-serve frozen yogurt with BAB’s exclusive line of My Favorite Muffin gourmet muffins, broadening the shop’s offering and thereby differentiating itself from the numerous frozen yogurt outlets already populating the market. SweetDuet shops will also include BAB’s Brewster’s Coffee and a streamlined breakfast menu. The SweetDuet concept will be included as part of Systems franchise operating and financial information.

The accompanying condensed consolidated financial statements are unaudited. These financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted pursuant to such SEC rules and regulations; nevertheless, the Company believes that the disclosures are adequate to make the information presented not misleading.  These financial statements and the notes hereto should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended November 30, 2012 which was filed February 22, 2013.  In the opinion of the Company's management, the condensed consolidated financial statements for the unaudited interim periods presented include all adjustments, including normal recurring adjustments, necessary to fairly present the results of such interim periods and the financial position as of the end of said period. The results of operations for the interim period are not necessarily indicative of the results for the full year.

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2. Locations Open and Under Development

Locations which are open or under development at February 28, 2013 are as follows:

Locations open:
Franchisees	98
Licensed	6
Under development	2
Total	106

3. (Loss)/Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share:

	February 28, 2013			February 29, 2012
Numerator:
Net (loss)/income available to common shareholders	$	(65,356	)	$	9,821
Denominator:
Weighted average outstanding shares Basic		7,263,508			7,263,508
(Loss)/Earnings per Share - Basic	$	(0.009	)	$	0.001
Effect of dilutive common stock		2,193			1,757
Weighted average outstanding shares Diluted		7,265,701			7,265,265
(Loss)/Earnings per share - Diluted	$	(0.009	)	$	0.001

The Company excluded 350,400 potential shares attributable to outstanding stock options from the calculation of diluted earnings per share for the three months ended February 28, 2013 and February 29, 2012 because their inclusion would have been anti-dilutive.

4.  Long-Term Debt

The total debt balance of $125,000 represents a note payable to a former shareholder that requires an annual payment of $35,000, including interest at 4.75%, due October 1 and running through 2016.

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5.  Stock Options

In May 2001, the Company approved a Long-Term Incentive and Stock Option Plan (Plan).  The Plan reserves 1,400,000 shares of common stock for grant.  As of February 28, 2013, 1,400,000 stock options were granted to directors, officers and employees.  As of February 28, 2013, there were 1,031,627 stock options exercised or forfeited under the Plan. 

	February 28, 2013		February 29, 2012
	Options		Options
Options Outstanding at beginning of period		368,373		368,373
Granted		0		0
Forfeited		0		0
Exercised		0		0
Options Outstanding at end of period		368,373		368,373

All compensation cost arising from share-based payment arrangements in payroll-related expenses was expensed as of November 30, 2011.

The Company uses historical volatility of common stock over a period equal to the expected life of the options to estimate their fair value.  The dividend yield assumption is based on the Company’s history and expectation of future dividend payouts on the common stock. The risk-free interest rate is based on the implied yield available on U.S. treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. To value option grants and other awards for actual and pro forma stock-based compensation, the Company uses the Black-Scholes option valuation model. When the measurement date is certain, the fair value of each option grant is estimated on the date of grant and is based on the assumptions used for the expected stock price volatility, expected term, risk-free interest rates and future dividend payments.

The Company’s stock option terms expire in 10 years and vary in vesting from immediate to a vesting period of five years.

The following table summarizes the stock options outstanding and exercisable at February 28, 2013:

Options Outstanding								Options Exercisable
Outstanding		Wghtd. Avg.		Wghtd. Avg.		Aggregate		Exercisable		Wghtd. Avg.		Aggregate
at 2/28/13		Remaining Life		Exercise Price		Intrinsic Value		at 2/28/13		Exercise Price		Intrinsic Value
	368,373		3.05	$	1.16	$	-		368,373	$	1.16	$	-

There is no computation for the aggregate intrinsic value in the table above because the outstanding options weighted average exercise price was greater than the Company’s closing stock price of $0.63 as of the last business day of the period ended February 28, 2013.  No options were exercised during the three month period ended February 28, 2013.

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6. Goodwill and Other Intangible Assets

Accounting Standard Codification (“ASC”) 350, “Goodwill and Other Intangible Assets” requires that assets with indefinite lives no longer be amortized, but instead be subject to annual impairment tests.  The Company follows this guidance.

ASU No. 2012-02, Intangibles – Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment provides an entity the option to make a qualitative assessment about the likelihood that an indefinite-lived intangible asset is impaired to determine whether it should perform a quantitative impairment test. The update also enhances consistency of impairment testing guidance among long-lived asset categories by permitting entities to assess qualitative factors to determine whether it is necessary to calculate the asset’s fair value when testing for impairment, which is equivalent to the impairment testing requirements for other long-lived assets.  The Company adopted this guidance for its fiscal year ending November 30, 2012.

The Company tests goodwill that is not subject to amortization for impairment annually or more frequently if events or circumstances indicate that impairment is possible.  Goodwill was tested at the end of the first quarter, February 28, 2013 and it was found that the carrying value of goodwill and intangible assets were not impaired.

The impairment test performed February 28, 2013 was based on a discounted cash flow model using management’s business plan projected for expected cash flows.  Based on the computation it was determined that no impairment has occurred.  An impairment test was performed at February 29, 2012 and based on the computation using discounted cash flows, it was also determined that no impairment occurred.

7.  Recent Accounting Pronouncements

Management does not believe that there are any recently issued and effective, or not yet effective, pronouncements as of February 28, 2013 that would have, or are expected to have, any significant effect on the Company’s consolidated financial position, cash flows or results of operations.

8.  Equity

On December 3, 2012 the Board of Directors declared a cash distribution/dividend of $0.05 per share.  This was a $0.01 quarterly and a $0.04 per share special distribution/dividend.  This was paid December 27, 2012 to shareholders of record as of December 17, 2012.  The total cash distribution during this quarter was $363,175.

There is no cash distribution/dividend payable included in accrued expenses for February 28, 2013.  A cash distribution/dividend in the amount of $0.01 per share, totaling $72,635 was declared on March 14, 2013, payable April 11, 2013 to shareholders of record as of March 28, 2013.  Included in accrued expenses and other liabilities at February 29, 2012 is a cash distribution/dividend payable in the amount of $72,635 declared February 27, 2012 and paid April 9, 2012.

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

Certain statements contained in Management's Discussion and Analysis of Financial Condition and Results of Operations, including statements regarding the development of the Company's business, the markets for the Company's products, anticipated capital expenditures, and the effects of completed and proposed acquisitions, and other statements contained herein regarding matters that are not historical facts, are forward-looking statements as is within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because such statements include risks and uncertainties, actual results could differ materially from those expressed or implied by such forward-looking statements as set forth in this report, the Company's Annual Report on Form 10-K and other reports that the Company files with the Securities and Exchange Commission. Certain risks and uncertainties are wholly or partially outside the control of the Company and its management, including its ability to attract new franchisees; the continued success of current franchisees; the effects of competition on franchisees and Company-owned store results; consumer acceptance of the Company's products in new and existing markets; fluctuation in development and operating costs; brand awareness; availability and terms of capital; adverse publicity; acceptance of new product offerings; availability of locations and terms of sites for store development; food, labor and employee benefit costs; changes in government regulation (including increases in the minimum wage); regional economic and weather conditions; the hiring, training, and retention of skilled corporate and restaurant management; and the integration and assimilation of acquired concepts. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

General

There are 98 franchised and 6 licensed units at February 28, 2013.  Units in operation at February 29, 2012 included 101 franchised and 7 licensed units.  System-wide revenues for the three months ended February 28, 2013 were $8.5 million as compared to February 29, 2012 which were $9.0 million.

The Company's revenues are derived primarily from the ongoing royalties paid to the Company by its franchisees and receipt of initial franchise fees.  Additionally, the Company derives revenue from the sale of licensed products (My Favorite Muffin mix, Big Apple Bagels cream cheese and Brewster's coffee), and through licensing and  nontraditional channels of distribution (Kohr Bros., Braeda Café, Kaleidoscoops, Green Beans Coffee and Sodexo).  Also included in licensing fees and other income is Operation’s Sign Shop revenue.  The Sign Shop provides the majority of signage, which includes but is not limited to, posters, menu panels, build charts, outside window stickers and counter signs to franchisees to provide consistency and convenience.

Royalty fees represent a 5% fee on net retail and wholesale sales of franchised units.  Royalty revenues are recognized on an accrual basis using actual franchise receipts.  Generally, franchisees report and remit royalties on a weekly basis.  The majority of month-end receipts are recorded on an accrual basis based on actual numbers from reports received from franchisees shortly after the month-end.  Estimates are utilized in certain instances where actual numbers have not been received and such estimates are based on the average of the last 10 weeks’ actual reported sales.

The Company recognizes franchise fee revenue upon the opening of a franchise store. Direct costs associated with the franchise sale are deferred until the franchise fee revenue is recognized.  These costs include site approval, construction approval, commissions, blueprints and training costs.

The Company earns a licensing fee from the sale of BAB branded products, which includes coffee, cream cheese, muffin mix, scoop and bake muffin batter and par baked bagels from a third-party commercial bakery, to the franchised and licensed units.

10

As of February 28, 2013, the Company employed 15 full-time and 4 part-time employees at the Corporate office.  The employees are responsible for corporate management and oversight, accounting, advertising and franchising.  None of the Company's employees are subject to any collective bargaining agreements and management considers its relations with its employees to be good.

Results of Operations

Three Months Ended February 28, 2013 versus February 29, 2012

For the three months ended February 28, 2013 and February 29, 2012, the Company reported a net loss of $65,000 and net income of $10,000, respectively.  Total revenue of $535,000 decreased $32,000, or 5.6%, for the three months ended February 28, 2013, as compared to total revenue of $567,000 for the three months ended February 29, 2012.

Royalty fee revenue of $420,000, for the quarter ended February 28, 2013, decreased $23,000, or 5.2%, from the $443,000 for quarter ended February 29, 2013.  The Company had three fewer franchise locations at February 28, 2013 compared to February 29, 2012.

There was no franchise fee revenue during the first quarter February 28, 2013 versus $5,000 for a store transfer for the quarter ended February 29, 2012.

Licensing fee and other income of $115,000, for the quarter ended February 28, 2013, decreased $4,000, from $119,000 for the quarter ended February 29, 2013.  License fee revenue decreased $6,000, offset by an increase in  Sign Shop revenue of $2,000 in the first quarter 2013 compared to the same period 2012.

Total operating expenses of $599,000 increased $42,000, or 7.5%, for the quarter ended February 28, 2013, from $557,000 for the same period 2012.  The increase in total operating expenses in 2013 as compared to same period 2012 was primarily due to an increase of $22,000 in occupancy expense because of an office lease renewal construction credit received in 2012, an increase in payroll in 2013 due to an additional employee and an increase in advertising expenses in 2013 of $6,000 relating to the SweetDuet concept.

Interest income was less than $1,000 during the first quarter of 2013 compared to $1,000 in the same period 2012.

Interest expense was $1,000 for quarter ended February 28, 2013 compared to $2,000 for the same period 2012.

Earnings per share, as reported for basic and diluted outstanding shares for the first quarter ended February 28, 2013 was a loss of $0.009 per share compared to income of $0.001 for the same period 2012.

11

Liquidity and Capital Resources

At February 28, 2013, the Company had working capital of $568,000 and unrestricted cash of $827,000.  At November 30, 2012 the Company had working capital of $993,000 and unrestricted cash of $1,256,000.

During the first quarter of 2013, the Company had a net loss of $65,000 and operating activities used cash of $66,000.  The principal adjustments to reconcile net income to cash used in operating activities were depreciation and amortization of $4,000, less provision for uncollectible accounts of $6,000.  In addition, changes in operating assets and liabilities increased cash by $1,000.  During February 29, 2012, the Company had net income of $10,000 and operating activities provided cash of $116,000.  The principal adjustments to reconcile net income to cash provided by operating activities for first quarter 2012 were depreciation and amortization of $5,000 less the provision for uncollectible accounts of $2,000.  In addition changes in operating assets and liabilities increased cash by $103,000.

For the three months ended February 28, 2013 the Company used less than $1,000 for investing activities and none for the three months ended February 29, 2012.

The Company used $363,000 and $218,000 for cash distribution/dividend payments during the three month period ended February 28, 2013 and February 29, 2012, respectively.

Although there can be no assurances that the Company will be able to pay cash distributions/dividends in the future, it is the Company’s intent that future cash distributions/dividends will be considered based on profitability expectations and financing needs and will be declared at the discretion of the Board of Directors. It is the Company’s intent going forward to declare and pay cash distributions/dividends on a quarterly basis if warranted.  On March 14, 2013, the Board of Directors authorized a $0.01 per share quarterly cash distribution/dividend to shareholders of record as of March 28, 2013 payable April 11, 2013.

The Company believes execution of its cash distribution/dividend policy will not have any material adverse effects on its cash or its ability to fund current operations or future capital investments.

The Company has no financial covenants on its outstanding debt.

Cash Distribution and Dividend Policy

It is the Company’s intent that future cash distributions/dividends will be considered after reviewing profitability expectations and financing needs and will be declared at the discretion of the Board of Directors.  Due to the general economic downturn and its impact on the Company, there can be no assurance that the Company will generate sufficient earnings to pay out cash distributions/dividends.  The Company will continue to analyze its ability to pay cash distributions/dividends on a quarterly basis.

The Company believes that for tax purposes the cash distribution declared in 2013 may be treated as a return of capital to stockholders depending on each stockholder’s basis or it may be treated as a dividend or a combination of the two.  Determination of whether it is a cash distribution, cash dividend or combination of the two will not be made until after December 31, 2013, as the classification or combination is dependent upon the Company’s earnings and profits for tax purposes for its fiscal year ending November 30, 2013.

The Company believes execution of this policy will not have any material adverse effect on its ability to fund current operations or future capital investments.

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Recent Accounting Pronouncements

Management does not believe that there are any recently issued and effective, or not yet effective, pronouncements as of February 28, 2013 that would have, or are expected to have, any significant effect on the Company’s consolidated financial position, cash flows or results of operations.

Critical Accounting Policies

The Company has identified significant accounting policies that, as a result of the judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved could result in material changes to its financial condition or results of operations under different conditions or using different assumptions.  The Company's most critical accounting policies are related to revenue recognition, valuation of long-lived and intangible assets, deferred tax assets and the related valuation allowance.  Details regarding the Company's use of these policies and the related estimates are described in the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2012, filed with the Securities and Exchange Commission on February 22, 2013.  There have been no material changes to the Company's critical accounting policies that impact the Company's financial condition, results of operations or cash flows for the three months ended February 28, 2013.

ITEM 3.              QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

BAB, Inc. has no interest, currency or derivative market risk.

ITEM 4.              CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of both our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report.  Based on such evaluation, both our Chief Executive Officer and Chief Financial Officer have concluded that, as of February 28, 2013 our disclosure controls and procedures are effective (i) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) to ensure that information required to be disclosed by us in the reports that we submit under the Exchange Act is accumulated and communicated to our management, including our executive and financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the three months of fiscal year 2013 to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Compliance with Section 404 of Sarbanes-Oxley Act

The Company is in compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Act”).

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PART II

ITEM 1.              LEGAL PROCEEDINGS

None.

ITEM 2.              UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS

None.

ITEM 3.              DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.              MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.              OTHER INFORMATION

None.

ITEM 6.              EXHIBITS

See index to exhibits

SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BAB, Inc.

Dated:  April 12, 2013	/s/ Jeffrey M. Gorden
	Jeffrey M. Gorden
	Chief Financial Officer

14

INDEX TO EXHIBITS

(a)  EXHIBITS

The following exhibits are filed herewith.

INDEX NUMBER	DESCRIPTION
21.1	List of Subsidiaries of the Company
31.1	Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Executive Officer
31.2	Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer
32.1	Section 906 of the Sarbanes-Oxley Act of 2002 Certification of Chief Executive Officer
32.2	Section 906 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer
101.INS*	XBRL Instance
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation
101.DEF*	XBRL Taxonomy Extension Definition
101.LAB*	XBRL Taxonomy Extension Labels
101.PRE*	XBRL Taxonomy Extension Presentation

* XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

15

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF BAB, INC.

BAB Systems, Inc., an Illinois corporation

BAB Operations, Inc., an Illinois corporation

Brewster's Franchise Corporation, an Illinois corporation

My Favorite Muffin Too, Inc., a New Jersey corporation

BAB Investments, Inc., an Illinois corporation

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14 (a) OR RULE 15d-14 (a) OF THE SECURITIES EXCHANGE ACT OF 1934.

I, Michael W. Evans, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of BAB, Inc.

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a -15(e) and 15d -15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d -15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information  relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 12, 2013	By:	/s/ Michael W. Evans
		Michael W. Evans, Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14 (a) OR RULE 15d-14 (a) OF THE SECURITIES EXCHANGE ACT OF 1934.

I, Jeffrey M. Gorden, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of BAB, Inc.

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a -15(e) and 15d -15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d -15(f)) for the registrant andhave:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information  relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.  

Date: April 12, 2013	By:	/s/ Jeffrey M. Gorden
		Jeffrey M. Gorden, Chief Financial Officer

EX-32.1

Exhibit 32.1

BAB, Inc.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the BAB, Inc. (the "Company") Quarterly Report on Form 10-Q for the period ended February 28, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael W. Evans, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition, results of operations, and cash flows of the Company.

Date: April 12, 2013	By:	/s/ Michael W. Evans
		Michael W. Evans, Chief Executive Officer

EX-32.2

Exhibit 32.2

BAB, Inc.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the BAB, Inc. (the "Company") Quarterly Report on Form 10-Q for the period ended February 28, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeffrey M. Gorden, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition, results of operations, and cash flows of the Company.

Date: April 12, 2013	By:	/s/ Jeffrey M. Gorden
		Jeffrey M. Gorden, Chief Financial Officer

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Note 4 - Long-Term Debt

3 Months Ended

Feb. 28, 2013

Long-term Debt [Text Block]

4.  Long-Term Debt

The total debt balance of $125,000 represents a note payable to a former shareholder that requires an annual payment of $35,000, including interest at 4.75%, due October 1 and running through 2016.

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Note 3 - (Loss)/Earnings per Share

3 Months Ended

Feb. 28, 2013

Earnings Per Share [Text Block]

3. (Loss)/Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share:

	February 28, 2013			February 29, 2012
Numerator:
Net (loss)/income available to common shareholders	$	(65,356	)	$	9,821
Denominator:
Weighted average outstanding shares Basic		7,263,508			7,263,508
(Loss)/Earnings per Share - Basic	$	(0.009	)	$	0.001
Effect of dilutive common stock		2,193			1,757
Weighted average outstanding shares Diluted		7,265,701			7,265,265
(Loss)/Earnings per share - Diluted	$	(0.009	)	$	0.001

The Company excluded 350,400 potential shares attributable to outstanding stock options from the calculation of diluted earnings per share for the three months ended February 28, 2013 and February 29, 2012 because their inclusion would have been anti-dilutive.

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Consolidated Balance Sheet (USD $)	Feb. 28, 2013	Nov. 30, 2012
Current Assets
Cash	$ 826,887	$ 1,256,257
Restricted cash	355,629	376,837
Receivables
Trade accounts and notes receivable (net of allowance for doubtful accounts of $16,892 in 2013 and $25,580 in 2012 )	81,001	86,070
Marketing fund contributions receivable from franchisees and stores	10,152	16,385
Inventories	25,678	26,953
Prepaid expenses and other current assets	88,377	65,991
Total Current Assets	1,387,724	1,828,493
Property, plant and equipment (net of accumulated depreciation of $140,316 in 2013 and $139,293 in 2012)	9,749	10,773
Assets held for sale	3,783	3,783
Trademarks	445,022	445,022
Goodwill	1,493,771	1,493,771
Definite lived intangible assets (net of accumulated amortization of $57,880 in 2013 and $54,560 in 2012)	56,540	59,710
Deferred tax asset	248,000	248,000
Total Noncurrent Assets	2,256,865	2,261,059
Total Assets	3,644,589	4,089,552
Current Liabilities
Current portion of long-term debt	29,070	29,070
Accounts payable	16,127	14,120
Accrued expenses and other current liabilities	314,790	328,288
Unexpended marketing fund contributions	366,036	393,477
Deferred franchise fee revenue	60,000	25,000
Deferred licensing revenue	33,333	45,833
Total Current Liabilities	819,356	835,788
Long-term debt (net of current portion)	95,762	95,762
Total Liabilities	915,118	931,550
Common stock ($.001 par value; 15,000,000 shares authorized; 8,466,953 shares issued and 7,263,508 shares outstanding as of February 28, 2013 and November 30, 2012	13,508,257	13,508,257
Additional paid-in capital	987,034	987,034
Treasury stock	(222,781)	(222,781)
Accumulated deficit	(11,543,039)	(11,114,508)
Total Stockholders' Equity	2,729,471	3,158,002
Total Liabilities and Stockholders' Equity	$ 3,644,589	$ 4,089,552

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Note 1 - Nature of Operations

3 Months Ended

Feb. 28, 2013

Nature of Operations [Text Block]

Note 1 - Nature of Operations

BAB, Inc (“the Company”) has two wholly owned subsidiaries: BAB Systems, Inc. (“Systems”) and BAB Operations, Inc. (“Operations”).  Systems was incorporated on December 2, 1992, and was primarily established to franchise Big Apple Bagel (“BAB”) specialty bagel retail stores.  My Favorite Muffin Too, Inc., a New Jersey corporation, was acquired on May 13, 1997 and is included as a part of Systems. Brewster’s Franchise Corporations (“Brewster’s”) was established on February 15, 1996 and is also included as a part of Systems.  Brewster’s coffee is sold in BAB and My Favorite Muffin (“MFM”) locations as well as through license agreements.  Operations was formed on August 30, 1995, primarily to operate Company-owned stores.  There are currently no Company-owned stores.  The assets of Jacobs Bros. Bagels (“Jacobs Bros.”) were acquired on February 1, 1999, and any branded wholesale business uses this trademark.

The Company was incorporated under the laws of the State of Delaware on July 12, 2000.  The Company currently franchises and licenses bagel and muffin retail units under the BAB and MFM trade names. At February 28, 2013 the Company had 98 franchise units and 6 licensed units in operation in 24 states.  The Company additionally derives income from the sale of its trademark bagels, muffins and coffee through nontraditional channels of distribution including under licensing agreements with Kohr Bros. Frozen Custard, Kaleidoscoops, Green Beans Coffee, Sodexo and through direct home delivery of specialty muffin gift baskets and coffee.  Also included in licensing fees and other income is Operation’s Sign Shop results.  For franchise consistency and convenience, the Sign Shop provides the majority of signage to franchisees, including but not limited to, posters, menu panels, build charts, outside window stickers and counter signs.

On May 7, 2012 the Company issued a press release announcing the launch of its new franchise concept, SweetDuet Frozen Yogurt & Gourmet Muffins (“SweetDuet”), which it is hoping to roll out in fiscal 2013. While BAB will be offering franchises in all 50 states, its initial development focus is targeted for the Midwest, specifically Illinois, Michigan, Wisconsin and Ohio. As part of its introductory development plan, BAB will be donating 10% of the initial franchise fee from its first 50 SweetDuet units to the Cystic Fibrosis Foundation, of which BAB is a corporate sponsor.  SweetDuet, as its name implies, is a fusion concept, pairing self-serve frozen yogurt with BAB’s exclusive line of My Favorite Muffin gourmet muffins, broadening the shop’s offering and thereby differentiating itself from the numerous frozen yogurt outlets already populating the market. SweetDuet shops will also include BAB’s Brewster’s Coffee and a streamlined breakfast menu. The SweetDuet concept will be included as part of Systems franchise operating and financial information.

The accompanying condensed consolidated financial statements are unaudited. These financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted pursuant to such SEC rules and regulations; nevertheless, the Company believes that the disclosures are adequate to make the information presented not misleading.  These financial statements and the notes hereto should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended November 30, 2012 which was filed February 22, 2013.  In the opinion of the Company's management, the condensed consolidated financial statements for the unaudited interim periods presented include all adjustments, including normal recurring adjustments, necessary to fairly present the results of such interim periods and the financial position as of the end of said period. The results of operations for the interim period are not necessarily indicative of the results for the full year.

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Note 5 - Stock Options (Detail) - Share-based Compensation, Stock Options, Activity	3 Months Ended		141 Months Ended
	Feb. 28, 2013	Feb. 29, 2012	Feb. 28, 2013
Options Outstanding at beginning of period	368,373	368,373
Granted	0	0	1,400,000
Forfeited	0	0
Exercised	0	0	1,031,627
Options Outstanding at end of period	368,373	368,373	368,373

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Note 8 - Equity (Detail) (USD $)	0 Months Ended	1 Months Ended	3 Months Ended		0 Months Ended			1 Months Ended
	Dec. 03, 2012	Dec. 27, 2012	Feb. 28, 2013	Feb. 29, 2012	Mar. 14, 2013 Subsequent Event [Member] Special Distrigution/Dividend [Member]	Dec. 03, 2012 Quarterly [Member]	Dec. 03, 2012 Special Distrigution/Dividend [Member]	Apr. 09, 2012 Special Distrigution/Dividend [Member]
Common Stock, Dividends, Per Share, Declared (in Dollars per share)	$ 0.05		$ 0.05	$ 0.01	$ 0.01	$ 0.01	$ 0.04
Payments of Dividends		$ 363,175	$ 363,175	$ 217,905	$ 72,635			$ 72,635
Dividends Payable			$ 0

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Note 2 - Locations Open and Under Development

3 Months Ended

Feb. 28, 2013

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

2. Locations Open and Under Development

Locations which are open or under development at February 28, 2013 are as follows:

Locations open:
Franchisees	98
Licensed	6
Under development	2
Total	106

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Consolidated Balance Sheet (Parentheticals) (USD $)	Feb. 28, 2013	Nov. 30, 2012
Allowance for doubtful accounts (in Dollars)	$ 16,892	$ 25,580
Accumulated depreciation, property, plant and equipment (in Dollars)	140,316	139,293
Definite lived intangible assets, accumulated amortization (in Dollars)	$ 57,880	$ 54,560
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	8,466,953	7,263,508
Common stock, shares outstanding	8,466,953	7,263,508

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Note 2 - Locations Open and Under Development (Detail) - Locations Open	Feb. 28, 2013
Locations	106
Franchisees [Member]
Locations	98
Licensed [Member]
Locations	6
Under Development [Member]
Locations	2

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Document And Entity Information	3 Months Ended
	Feb. 28, 2013	Apr. 11, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	BAB, INC.
Document Type	10-Q
Current Fiscal Year End Date	--11-30
Entity Common Stock, Shares Outstanding		7,263,508
Amendment Flag	false
Entity Central Index Key	0001123596
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Feb. 28, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1

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Note 3 - (Loss)/Earnings per Share (Detail)	3 Months Ended
	Feb. 28, 2013	Feb. 29, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	350,400	350,400

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Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Feb. 28, 2013	Feb. 29, 2012
REVENUES
Royalty fees from franchised stores	$ 419,919	$ 442,921
Franchise fees		5,000
Licensing fees and other income	115,160	119,571
Total Revenues	535,079	567,492
OPERATING EXPENSES
Payroll and payroll-related expenses	378,638	368,251
Occupancy	41,563	19,508
Advertising and promotion	17,477	11,817
Professional service fees	60,783	60,222
Travel	17,015	14,017
Depreciation and amortization	4,344	4,784
Other	79,440	77,966
Total Operating Expenses	599,260	556,565
(Loss)/Income from operations	(64,181)	10,927
Interest income	307	706
Interest expense	(1,482)	(1,812)
Net (Loss)/Income	$ (65,356)	$ 9,821
(Loss)/Earnings per share - Basic and Diluted (in Dollars per share)	$ (0.009)	$ 0.001
Weighted average shares outstanding - Basic (in Shares)	7,263,508	7,263,508
Effect of dilutive common stock (in Shares)	2,193	1,757
Weighted average shares outstanding - Diluted (in Shares)	7,265,701	7,265,265
Cash distributions declared per share (in Dollars per share)	$ 0.05	$ 0.01

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Note 7 - Recent Accounting Pronouncements

3 Months Ended

Feb. 28, 2013

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

7.  Recent Accounting Pronouncements

Management does not believe that there are any recently issued and effective, or not yet effective, pronouncements as of February 28, 2013 that would have, or are expected to have, any significant effect on the Company’s consolidated financial position, cash flows or results of operations.

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Note 6 - Goodwill and Other Intangible Assets

3 Months Ended

Feb. 28, 2013

Goodwill and Intangible Assets Disclosure [Text Block]

6. Goodwill and Other Intangible Assets

Accounting Standard Codification (“ASC”) 350, “Goodwill and Other Intangible Assets” requires that assets with indefinite lives no longer be amortized, but instead be subject to annual impairment tests.  The Company follows this guidance.

ASU No. 2012-02, Intangibles – Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment provides an entity the option to make a qualitative assessment about the likelihood that an indefinite-lived intangible asset is impaired to determine whether it should perform a quantitative impairment test. The update also enhances consistency of impairment testing guidance among long-lived asset categories by permitting entities to assess qualitative factors to determine whether it is necessary to calculate the asset’s fair value when testing for impairment, which is equivalent to the impairment testing requirements for other long-lived assets.  The Company adopted this guidance for its fiscal year ending November 30, 2012.

The Company tests goodwill that is not subject to amortization for impairment annually or more frequently if events or circumstances indicate that impairment is possible.  Goodwill was tested at the end of the first quarter, February 28, 2013 and it was found that the carrying value of goodwill and intangible assets were not impaired.

The impairment test performed February 28, 2013 was based on a discounted cash flow model using management’s business plan projected for expected cash flows.  Based on the computation it was determined that no impairment has occurred.  An impairment test was performed at February 29, 2012 and based on the computation using discounted cash flows, it was also determined that no impairment occurred.

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Note 5 - Stock Options (Detail) - Summary of Stock Options Outstanding and Exercisable (USD $)	3 Months Ended
	Feb. 28, 2013	Nov. 30, 2012	Feb. 29, 2012	Nov. 30, 2011
	368,373	368,373	368,373	368,373
	3 years 18 days
(in Dollars per share)	$ 1.16
(in Dollars)	$ 0
	368,373
(in Dollars per share)	$ 1.16
(in Dollars)	$ 0

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Note 3 - (Loss)/Earnings per Share (Detail) - Computation of Basic and Diluted Earnings per Share (USD $)	3 Months Ended
	Feb. 28, 2013	Feb. 29, 2012
Numerator:
Net (loss)/income available to common shareholders (in Dollars)	$ (65,356)	$ 9,821
Denominator:
Weighted average outstanding shares Basic	7,263,508	7,263,508
(Loss)/Earnings per Share - Basic (in Dollars per share)	$ (0.009)	$ 0.001
Effect of dilutive common stock	2,193	1,757
Weighted average outstanding shares Diluted	7,265,701	7,265,265
(Loss)/Earnings per share - Diluted (in Dollars per share)	$ (0.009)	$ 0.001

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Note 3 - (Loss)/Earnings per Share (Tables)

3 Months Ended

Feb. 28, 2013

Schedule of Calculation of Numerator and Denominator in Earnings Per Share [Table Text Block]

	February 28, 2013			February 29, 2012
Numerator:
Net (loss)/income available to common shareholders	$	(65,356	)	$	9,821
Denominator:
Weighted average outstanding shares Basic		7,263,508			7,263,508
(Loss)/Earnings per Share - Basic	$	(0.009	)	$	0.001
Effect of dilutive common stock		2,193			1,757
Weighted average outstanding shares Diluted		7,265,701			7,265,265
(Loss)/Earnings per share - Diluted	$	(0.009	)	$	0.001

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Note 8 - Equity

3 Months Ended

Feb. 28, 2013

Stockholders' Equity Note Disclosure [Text Block]

8.  Equity

On December 3, 2012 the Board of Directors declared a cash distribution/dividend of $0.05 per share.  This was a $0.01 quarterly and a $0.04 per share special distribution/dividend.  This was paid December 27, 2012 to shareholders of record as of December 17, 2012.  The total cash distribution during this quarter was $363,175.

There is no cash distribution/dividend payable included in accrued expenses for February 28, 2013.  A cash distribution/dividend in the amount of $0.01 per share, totaling $72,635 was declared on March 14, 2013, payable April 11, 2013 to shareholders of record as of March 28, 2013.  Included in accrued expenses and other liabilities at February 29, 2012 is a cash distribution/dividend payable in the amount of $72,635 declared February 27, 2012 and paid April 9, 2012.

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Note 2 - Locations Open and Under Development (Tables)

3 Months Ended

Feb. 28, 2013

Schedule of Franchisor Disclosure [Table Text Block]

Locations open:
Franchisees	98
Licensed	6
Under development	2
Total	106

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Note 5 - Stock Options (Tables)

3 Months Ended

Feb. 28, 2013

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	February 28, 2013		February 29, 2012
	Options		Options
Options Outstanding at beginning of period		368,373		368,373
Granted		0		0
Forfeited		0		0
Exercised		0		0
Options Outstanding at end of period		368,373		368,373

Schedule of Stock Options Roll Forward [Table Text Block]

Options Outstanding								Options Exercisable
Outstanding		Wghtd. Avg.		Wghtd. Avg.		Aggregate		Exercisable		Wghtd. Avg.		Aggregate
at 2/28/13		Remaining Life		Exercise Price		Intrinsic Value		at 2/28/13		Exercise Price		Intrinsic Value
	368,373		3.05	$	1.16	$	-		368,373	$	1.16	$	-

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Note 5 - Stock Options (Detail) (USD $)	3 Months Ended		141 Months Ended
	Feb. 28, 2013	Feb. 29, 2012	Feb. 28, 2013	May 31, 2001
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant				1,400,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0	0	1,400,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	0	0	1,031,627
Share Price (in Dollars per share)	$ 0.63		$ 0.63

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Feb. 28, 2013	Feb. 29, 2012
Operating activities
Net (loss)/income	$ (65,356)	$ 9,821
Depreciation and amortization	4,344	4,784
Provision for uncollectible accounts, net of recoveries	(5,807)	(2,107)
Changes in:
Trade accounts receivable and notes receivable	10,876	38,391
Restricted cash	21,208	12,189
Marketing fund contributions receivable	6,233	6,197
Inventories	1,275	(8,210)
Prepaid expenses and other	(22,386)	(6,668)
Accounts payable	2,007	(146)
Accrued liabilities	(13,498)	62,893
Unexpended marketing fund contributions	(27,441)	(18,403)
Deferred revenue	22,500	17,083
Net Cash (Used)/Provided by Operating Activities	(66,045)	115,824
Investing activities
Capitalization of trademark renewals	(150)
Net Cash Used In Investing Activities	(150)
Financing activities
Cash distributions/dividends	(363,175)	(217,905)
Net Cash Used In Financing Activities	(363,175)	(217,905)
Net Decrease in Cash	(429,370)	(102,081)
Cash, Beginning of Period	1,256,257	1,236,125
Cash, End of Period	826,887	1,134,044
Income taxes paid	$ 8,450

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Note 5 - Stock Options

3 Months Ended

Feb. 28, 2013

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

5.  Stock Options

In May 2001, the Company approved a Long-Term Incentive and Stock Option Plan (Plan).  The Plan reserves 1,400,000 shares of common stock for grant.  As of February 28, 2013, 1,400,000 stock options were granted to directors, officers and employees.  As of February 28, 2013, there were 1,031,627 stock options exercised or forfeited under the Plan. 

	February 28, 2013		February 29, 2012
	Options		Options
Options Outstanding at beginning of period		368,373		368,373
Granted		0		0
Forfeited		0		0
Exercised		0		0
Options Outstanding at end of period		368,373		368,373

All compensation cost arising from share-based payment arrangements in payroll-related expenses was expensed as of November 30, 2011.

The Company uses historical volatility of common stock over a period equal to the expected life of the options to estimate their fair value.  The dividend yield assumption is based on the Company’s history and expectation of future dividend payouts on the common stock. The risk-free interest rate is based on the implied yield available on U.S. treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. To value option grants and other awards for actual and pro forma stock-based compensation, the Company uses the Black-Scholes option valuation model. When the measurement date is certain, the fair value of each option grant is estimated on the date of grant and is based on the assumptions used for the expected stock price volatility, expected term, risk-free interest rates and future dividend payments.

The Company’s stock option terms expire in 10 years and vary in vesting from immediate to a vesting period of five years.

The following table summarizes the stock options outstanding and exercisable at February 28, 2013:

Options Outstanding								Options Exercisable
Outstanding		Wghtd. Avg.		Wghtd. Avg.		Aggregate		Exercisable		Wghtd. Avg.		Aggregate
at 2/28/13		Remaining Life		Exercise Price		Intrinsic Value		at 2/28/13		Exercise Price		Intrinsic Value
	368,373		3.05	$	1.16	$	-		368,373	$	1.16	$	-

There is no computation for the aggregate intrinsic value in the table above because the outstanding options weighted average exercise price was greater than the Company’s closing stock price of $0.63 as of the last business day of the period ended February 28, 2013.  No options were exercised during the three month period ended February 28, 2013.

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Note 4 - Long-Term Debt (Detail) (USD $)		12 Months Ended
	Feb. 28, 2013	Sep. 30, 2013 Notes Payable, Other Payables [Member]
Long-term Debt	$ 125,000
Repayments of Related Party Debt		$ 35,000
Debt Instrument, Interest Rate, Stated Percentage		4.75%