10-Q

FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2025
☐	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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BABB	OTCQB

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 ☒ No ☐      

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).   Yes ☒   No ☐      

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 ☐      Accelerated filer ☐     Non-accelerated filer ☒     Smaller reporting company ☒     Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      ☐                               

Indicate by check mark whether the registrant is a shell company. Yes ☐         No ☒

As of April 11, 2025 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 Operations	17
Item 3	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4	Controls and Procedures	20
PART II	OTHER INFORMATION	21
Item 1.	Legal Proceedings	21
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3	Defaults Upon Senior Securities	21
Item 4	Mine Safety Disclosures	21
Item 5	Other Information	21
Item 6	Exhibits	22
SIGNATURE		23

2

PART I

ITEM 1. FINANCIAL STATEMENTS

BAB, Inc.

Consolidated Balance Sheets

	February 28, 2025			November 30, 2024
	(unaudited)			(audited)
ASSETS
Current Assets
Cash	$	2,004,518		$	2,177,586
Restricted cash		223,909			159,704
Receivables
Trade accounts and notes receivable (net of allowance for credit losses of $50,340 in 2025 and $51,103 in 2024)		65,095			70,090
Marketing fund contributions receivable from franchisees and stores		15,679			17,394
Prepaid expenses and other current assets		74,530			84,825
Total Current Assets		2,383,731			2,509,599
Property, plant and equipment (net of accumulated depreciation of $159,414 in both 2025 and 2024.		-			-
Trademarks		461,445			461,445
Goodwill		1,493,771			1,493,771
Definite lived intangible assets (net of accumulated amortization of $143,644 in 2025 and $142,664 in 2024)		12,292			13,272
Operating lease right of use		351,771			365,714
Total Noncurrent Assets		2,319,279			2,334,202
Total Assets	$	4,703,010		$	4,843,801
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	53,790		$	1,313
Income tax payable		101,231			80,695
Accrued expenses and other current liabilities		281,647			409,179
Unexpended marketing fund contributions		213,823			164,756
Deferred franchise fee revenue		21,464			21,353
Current portion operating lease liability		49,796			47,846
Total Current Liabilities		721,751			725,142
Long-term Liabilities (net of current portion)
Operating lease liability		313,259			330,215
Deferred franchise revenue		131,025			130,094
Deferred tax liability		297,396			317,132
Total Long-term Liabilities		741,680			777,441
Total Liabilities	$	1,463,431		$	1,502,583
Stockholders' Equity
Preferred shares -$.001 par value; 4,000,000 authorized; no shares outstanding as of February 28, 2025 and November 30, 2024		-			-
Preferred shares -$.001 par value; 1,000,000 Series A authorized; no shares outstanding as of February 28, 2025 and November 30, 2024		-			-
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, 2025 and November 30, 2024		13,508,257			13,508,257
Additional paid-in capital		987,034			987,034
Treasury stock		(222,781	)		(222,781	)
Accumulated deficit		(11,032,931	)		(10,931,292	)
Total Stockholders' Equity		3,239,579			3,341,218
Total Liabilities and Stockholders' Equity	$	4,703,010		$	4,843,801

SEE ACCOMPANYING NOTES

3

BAB, Inc.

Consolidated Statements of Income

For the Three Months ended February 28, 2025 and February 29, 2024

(Unaudited)

	Three months ended
	February 28, 2025			February 29, 2024
REVENUES
Royalty fees from franchised stores	$	457,194		$	459,690
Franchise Fees		8,583			10,246
Licensing fees and other income		74,378			106,587
Marketing fund revenue		217,046			259,411
Total Revenues		757,201			835,934
OPERATING EXPENSES
Selling, general and administrative expenses:
Payroll and payroll-related expenses		252,560			256,329
Occupancy		32,478			33,341
Advertising and promotion		1,083			364
Professional service fees		50,716			51,779
Travel		1,767			3,022
Employee benefit expenses		15,501			36,804
Depreciation and amortization		980			980
Marketing fund expenses		217,046			259,411
Other		37,891			71,924
Total Operating Expenses		610,022			713,954
Income from operations		147,179			121,980
Interest income		14,888			15,525
Income before provision for income taxes		162,067			137,505
Provision for income taxes
Current tax expense		65,536			60,791
Deferred tax		(19,736	)		(21,791	)
Total Tax Provision		45,800			39,000
Net Income	$	116,267		$	98,505
Net Income per share - Basic and Diluted	$	0.02		$	0.01
Weighted average shares outstanding - Basic and diluted		7,263,508			7,263,508
Cash distributions declared per share	$	0.03		$	0.02

SEE ACCOMPANYING NOTES

4

BAB, Inc.

Consolidated Statements of Cash Flows

For the Three Months ended February 28, 2025 and February 29, 2024

(Unaudited)

	February 28, 2025			February 29, 2024
Operating activities
Net Income	$	116,267		$	98,505
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization		980			980
Deferred tax expense		(19,736	)		(21,791	)
Provision for credit losses, net of recoveries		(763	)		22,582
Noncash lease expense		21,710			24,828
Changes in:
Trade accounts receivable and notes receivable		5,758			(18,128	)
Marketing fund contributions receivable		1,715			(707	)
Prepaid expenses and other		5,795			3,505
Accounts payable		52,477			46,834
Accrued liabilities		(106,996	)		46,744
Unexpended marketing fund contributions		49,067			29,723
Deferred revenue		1,042			(10,621	)
Operating lease liability		(22,773	)		(30,132	)
Net Cash Provided by Operating Activities		104,543			192,322
Investing Activities
Proceeds from sale of asset		4,500			-
Net Cash Provided by Investing Activities		4,500			-
Financing activities
Cash distributions/dividends		(217,906	)		(145,270	)
Net Cash Used In Financing Activities		(217,906	)		(145,270	)
Net (Decrease)/Increase in Cash and Restricted Cash		(108,863	)		47,052
Cash and Restricted Cash - Beginning of Period		2,337,290			2,072,672
Cash and Restricted Cash - End of Period	$	2,228,427		$	2,119,724
Supplemental disclosure of cash flow information:
Interest paid	$	-		$	-
Income taxes paid	$	45,000		$	-
Non-cash operating activities:
Right-of-use operating asset obtained in exchange for operating lease liability	$	-		$	401,430

SEE ACCOMPANYING NOTES

5

BAB, Inc.

Notes to Unaudited Consolidated Financial Statements

For Three Months Ended February 28, 2025 and February 29, 2024

(Unaudited)

Note 1. Nature of Operations

BAB, Inc. (“the Company”) has three wholly owned subsidiaries: BAB Systems, Inc. (“Systems”), BAB Operations, Inc. (“Operations”) and BAB Investments, Inc. (“Investments”). Systems was incorporated on December 2, 1992, and was primarily established to franchise Big Apple Bagels® (“BAB”) specialty bagel retail stores. My Favorite Muffin (“MFM”) was acquired in 1997 and is included as a part of Systems. Brewster’s (“Brewster’s”) was established in 1996 and the coffee is sold in BAB and MFM locations. SweetDuet® (“SD”) frozen yogurt can be added as an additional brand in a BAB location. Operations was formed in 1995, primarily to operate Company-owned stores of which there are currently none. The assets of Jacobs Bros. Bagels (“Jacobs Bros.”) were acquired in 1999, and any branded wholesale business uses this trademark. Investments was incorporated in 2009 to be used for the purpose of acquisitions. To date there have been no acquisitions.

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, MFM and SD trade names. At February 28, 2025, the Company had 61 franchise units and 4 licensed units in operation in 18 states. There are 4 units under development. The Company additionally derives income from the sale of its trademark bagels, muffins and coffee through nontraditional channels of distribution including under licensing agreements.

The BAB franchised brand consists of units operating as “Big Apple Bagels®,” featuring daily baked bagels, flavored cream cheeses, premium coffees, gourmet bagel sandwiches and other related products. BAB units are primarily concentrated in the Midwest and Western United States. The MFM brand consists of units operating as “My Favorite Muffin Gourmet Muffin Bakery®” (“MFM Bakery”), featuring a large variety of freshly baked muffins and coffees and units operating as “My Favorite Muffin Your All-Day Bakery Café®” (“MFM Cafe”) featuring these products as well as a variety of specialty bagel sandwiches and related products. The SweetDuet® is a branded self-serve frozen yogurt that can be added as an additional brand in a BAB location. Although the Company doesn't actively market Brewster's stand-alone franchises, Brewster's coffee products are sold in most franchised units.

The Company is leveraging on the natural synergy of distributing muffin products in existing BAB units and, alternatively, bagel products and Brewster's Coffee in existing MFM units. The Company expects to continue to realize efficiencies in servicing the combined base of BAB and MFM franchisees.

The Company has a minority interest in Athletes HQ Systems, Inc. (“AHQ”). AHQ franchises indoor baseball and softball practice and coaching facilities with knowledgeable instructors.

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, 2024 which was filed February 26, 2025. In the opinion of the Company's management, the condensed consolidated financial statements for the unaudited interim period presented include all adjustments, including normal recurring adjustments, necessary to fairly present the results of such interim period 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.

6

2. Summary of Significant Accounting Policies

Unaudited Consolidated Financial Statements

The accompanying unaudited Condensed Consolidated Financial Statements of BAB, Inc. have been prepared pursuant to generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for Form 10-Q. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the financial statements and accompanying notes are in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits and treasury notes with banks and equity firms with original maturities of less than 90 days. The balance of bank accounts may, at times, exceed federally insured credit limits. The Company has not experienced any loss in such accounts and believes it is not subject to any significant credit risk related to cash at February 28, 2025.

Accounts Receivable and Notes Receivable

The CECL reserve methodology requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Under the CECL model, reserves may be established against financial asset balances even if the risk of loss is remote or has not yet manifested itself. The Company records specific reserves against account balances of franchisees deemed at-risk when a potential loss is likely or imminent as a result of prolonged payment delinquency (greater than 90 days past due) and where notable credit deterioration has become evident. For financial assets that are not currently deemed at-risk, an allowance is recorded based on expected loss rates derived pursuant to the Company's CECL methodology that assesses four components - historical losses, current conditions, reasonable and supportable forecasts, and a reversion to history, if applicable.

The Company considers its portfolio segments to be the following:

Accounts Receivable (Franchise-Related): Most of the Company’s short-term receivables due from franchisees are derived from royalty, advertising and other franchise-related fees.

Notes Receivable: Notes receivable balances primarily relate to the conversion of (1) certain past due franchisee accounts receivable or (2) early franchise termination fees converted to notes receivable. These notes are usually not collateralized. A significant portion of these notes have specific reserves recorded against them amounting to $50,340 as of February 28, 2025.

Accounts Receivables (Vendor Related): Receivables due from vendors and distributors consist of royalty receivables related to the sale of certain food products to franchisees through the Company’s network of suppliers and distributors and are included as part of Accounts Receivable.

7

2. Summary of Significant Accounting Policies (Continued)

Accounts Receivable and Notes Receivable (Continued)

Receivable balances by portfolio segment are as follows:

	February 28, 2025			November 30, 2024
Accounts Receivable (Franchisee Related)	$	45,294		$	69,284
Accounts Receivable (Vendor Related)		35,480			18,200
Notes Receivable		50,340			51,103
		131,114			138,587
Less: Allowance for Credit Losses		(50,340	)		(51,103	)
Total Receivables		80,774			87,484
Less: Current Portion		(80,774	)		(87,484	)
Long-Term Receivables	$	-		$	-

The Company's internal credit quality indicators for all portfolio segments primarily consider delinquency. Current and collateralized lease receivables have an internal risk rating of Grade I. The Company does not currently have any uncollateralized lease receivables. Past due lease receivables would be assigned an internal risk rating of Grade II-IV, depending on significance of delinquency. For uncollateralized notes receivable, the Company also considers the status of the franchisee note holder and the term of the note. Notes receivable from current franchisees are considered to have an elevated risk of credit loss based on their common origination from past due franchise accounts receivable but have some indication of collectability given ongoing operations (Internal Grade II). Notes receivable due from payers who no longer have an operating franchise are considered to have a high likelihood of credit loss (Internal Grade III). That likelihood increases if the note is outstanding for longer than one year (Internal Grade IV). At February 28, 2025, all notes receivable were due from former franchisees and had an original term over one year.

Changes in the allowance for credit losses during the three months ended February 28, 2025 were as follows:

	Accounts Receivable (Franchise Related)		Accounts Receivable (Vendor Related)		Notes Receivable			Lease Receivable, Net		Total
Balance at November 30, 2024	$	-	$	-	$	51,103		$	-	$	51,103
Adjustments to Allowance for Adoption of ASU 2016-13		-		-		-			-		-
Write-offs		-		-		-			-		-
Recoveries		-		-		(763	)		-		(763	)
Provision for Credit Losses		-		-		-			-		-
Balance at February 28, 2025	$	-	$	-	$	50,340		$	-	$	50,340

8

2. Summary of Significant Accounting Policies (Continued)

Accounts Receivable and Notes Receivable (Continued)

The Company considers a receivable past due 31 days after the payment due date. The delinquency status of receivables (other than accounts receivable) at February 28, 2025 was as follows:

	Current		0-30 days Past Due		30-60 days Past Due		60-90 days past due		Over 90 days past due		Total
Notes Receivable	$	39,467	$	-	$	-	$	-	$	10,873	$	50,340
	$	39,467	$	-	$	-	$	-	$	10,873	$	50,340

The fiscal year of origination of the Company's gross notes receivable and lease receivables by risk rating are as follows

	2024		2023		2022		2021		2020		Prior		Total
Risk rating
Internal Grade I	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Internal Grade II		-		-		-		-		-		-		-
Internal Grade III		21,580		17,887		-		-		-		-		39,467
Internal Grade IV		-		-		-		-		-		10,873		10,873
Notes and Lease Receivables,
Net of Unamortized Interest	$	21,580	$	17,887	$	-	$	-	$	-	$	10,873	$	50,340

Property, Plant and Equipment

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Estimated useful lives are 3 to 7 years for property and equipment and 10 years, or term of lease if less, for leasehold improvements. Maintenance and repairs are charged to expense as incurred. Expenditures that materially extend the useful lives of assets are capitalized.

Other Assets

Other assets include a minority investment in AHQ Systems, Inc. The shares were issued to BAB, Inc. as compensation for consulting services and are valued at $2,250. The value of the investment is immaterial and has not been adjusted to fair market value.

Advertising and Promotion Costs

The Company expenses advertising and promotion costs as incurred. All advertising and promotion costs were related to the Company’s franchise operations.

9

2. Summary of Significant Accounting Policies (Continued)

Lease Liabilities

The company accounts for leases under ASC 842. Lease arrangements are determined at the inception of the contract. Operating leases are included in operating lease right-of-use (“ROU”) assets and other current and long-term operating lease liabilities on the consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities on the consolidated balance sheets. 

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which is intended to simplify various aspects related to accounting for income taxes. ASU 2023-09 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in ASU 2023-09 are effective for public business entities for fiscal years beginning after December 15, 2024, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Company will adopt ASU 2023-09 for fiscal year ending November 30, 2026.

Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of February 28, 2025 that would have or are expected to have any significant effect on the Company’s financial position, cash flows or income statement.

10

3. Revenue Recognition

Statement of Cash Flows

The chart below shows the cash and restricted cash within the consolidated statements of cash flows as of February 28, 2025 and February 29, 2024 were as follows:

	February 28, 2025		February 29, 2024
Cash and cash equivalents	$	2,004,518	$	1,890,204
Restricted cash		223,909		229,520
Total cash and restricted cash	$	2,228,427	$	2,119,724

Franchise and related revenue

The Company sells individual franchises. The franchise agreements typically require the franchisee to pay an initial, non-refundable fee prior to opening the respective location(s), and continuing royalty fees on a weekly basis based upon a percentage of franchisee net sales. The initial term of franchise agreements are typically 10 years.  Subject to the Company’s approval, a franchisee may generally renew the franchise agreement upon its expiration.  If approved, a franchisee may transfer a franchise agreement to a new or existing franchisee, at which point a transfer fee is typically paid by the current owner which then terminates that franchise agreement. A franchise agreement is signed with the new franchisee with no franchise fee required. If a contract is terminated prior to its term, it is a breach of contract and a penalty is assessed based on a formula reviewed and approved by management. Revenue generated from a contract breach is termed settlement income by the Company and included in licensing fees and other income.

Under the terms of our franchise agreements, the Company typically promises to provide franchise rights, pre-opening services such as blueprints, operational materials, planning and functional training courses, and ongoing services, such as management of the marketing fund. The Company considers certain pre-opening activities and the franchise rights and related ongoing services to represent two separate performance obligations. The franchise fee revenue has been allocated to the two separate performance obligations using a residual approach. The Company has estimated the value of performance obligations related to certain pre-opening activities deemed to be distinct based on cost plus an applicable margin, and assigned the remaining amount of the initial franchise fee to the franchise rights and ongoing services. Revenue allocated to preopening activities is recognized when (or as) these services are performed. Revenue allocated to franchise rights and ongoing services is deferred until the store opens, and recognized on a straight-line basis over the duration of the agreement, as this ensures that revenue recognition aligns with the customer’s access to the franchise right.

Royalty fees from franchised stores 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.

Royalty revenue is recognized during the respective franchise agreement based on the royalties earned each period as the underlying franchise store sales occur.

There are two items involving revenue recognition of contracts that require us to make subjective judgments: the determination of which performance obligations are distinct within the context of the overall contract and the estimated stand-alone selling price of each obligation. In instances where our contract includes significant customization or modification services, the customization and modification services are generally combined and recorded as one distinct performance obligation.

11

3. Revenue Recognition (continued)

Gift Card Breakage Revenue

The Company sells gift cards to its customers in its retail stores and through its Corporate office. The Company’s gift cards do not have an expiration date and are not redeemable for cash except where required by law. Revenue from gift cards is recognized upon redemption in exchange for product and reported within franchisee store revenue and the royalty and marketing fees are paid and shown in the Condensed Consolidated Statements of Income. Until redemption, outstanding customer balances are recorded as a liability. An obligation is recorded at the time of sale of the gift card and it is included in accrued expenses on the Company’s Condensed Consolidated Balance Sheets.

The liability is reduced when the gift cards are redeemed by a franchise. Although there are no expiration dates for our gift cards, based on our analysis of historical gift card redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote, which is referred to as “breakage.” The Company recognizes gift card breakage proportional to actual gift card redemptions on a quarterly basis and the corresponding revenue is included in licensing fees and other revenue. Significant judgments and estimates are required in determining the breakage rate and will be reassessed each quarter. During the quarter ended February 28, 2025, management reassessed its breakage estimate and recognized an additional $12,000 of income, based on the likelihood of the redemption of certain gift cards becoming remote.

Nontraditional and rebate revenue

As part of the Company’s franchise agreements, the franchisee purchases products and supplies from designated vendors.  The Company may receive various fees and rebates from the vendors and distributors on product purchases by franchisees.  In addition, the Company may collect various initial fees, and those fees are classified as deferred revenue in the balance sheet and straight lined over the life of the contract as deferred revenue in the balance sheet. The Company does not possess control of the products prior to their transfer to the franchisee and products are delivered to franchisees directly from the vendor or their distributors. The Company recognizes the rebates as franchisees purchase products and supplies from vendors or distributors and recognizes the initial fees over the contract life and the fees are reported as licensing fees and other income in the Condensed Consolidated Statements of Income.

Marketing Fund

Franchise agreements require the franchisee to pay continuing marketing fees on a weekly basis, based on a percentage of franchisee sales. Marketing fees are not paid on franchise wholesale sales. The balance sheet includes marketing fund cash, which is the restricted cash, accounts receivable and unexpended marketing fund contributions. Although the marketing fees are not separate performance obligations distinct from the underlying franchise right, the Company acts as the principal as it is primarily responsible for the fulfillment and control of the marketing services. As a result, the Company records marketing fees in revenues and related marketing fund expenditures in expenses in the Condensed Consolidated Statement of Income.

12

3. Revenue Recognition (continued)

Disaggregation of Revenue

The following table presents disaggregation of revenue from contracts with customers:

	For three months ended February 28, 2025		For three months ended February 29, 2024
Revenue recognized at a point in time
Sign Shop revenue	$	-	$	1,379
Settlement revenue		4,875		25,610
Total revenue at a point in time		4,875		26,989
Revenue recognized over time
Royalty revenue		457,194		459,690
Franchise fees		8,583		10,246
License fees		5,978		5,978
Gift card revenue		13,559		2,846
Nontraditional revenue		49,966		70,774
Marketing fund revenue		217,046		259,411
Total revenue over time		752,326		808,945
Grand total	$	757,201	$	835,934

Contract balances

The balance of contract liabilities includes franchise fees, license fees and vendor payments that have ongoing contract rights and the fees are being straight lined over the contract life. Contract liabilities also include marketing fund balances and gift card liability balances.

	February 28, 2025		November 30, 2024
Liabilities
Contract liabilities - current	$	462,413	$	420,379
Contract liabilities - long-term		131,025		130,094
Total Contract Liabilities	$	593,438	$	550,473

	February 28, 2025			November 30, 2024
Contracts at beginning of period	$	550,473		$	620,188
Revenue Recognized during period		(336,265	)		(1,499,334	)
Additions during period		379,230			1,429,619
Contracts at end of period	$	593,438		$	550,473

13

3. Revenue Recognition (continued)

Contract balances (continued)

Transaction price allocated to remaining performance obligations (franchise agreements and license fee agreement) for the year ended November 30:

2025	$	17,978	*
2026		21,084
2027		22,800
2028		16,084
2029		14,870
2030		13,855
Thereafter		45,818
Total	$	152,489

*represents the estimate for the remainder of 2025

4. Units Open and Under Development

Units which are open or under development are as follows:

	February 28, 2025		February 29, 2024
Stores open:
Franchisee-owned stores		61		64
Licensed Units		4		4
		65		68
Unopened stores with Franchise
Agreements		4		4
Total operating units and units with Franchise Agreements		69		72

5. Earnings per Share

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

	For the three months ended:
	February 28, 2025		February 29, 2024
Numerator:
Net income available to common shareholders	$	116,267	$	98,505
Denominator:
Weighted average outstanding shares
Basic and diluted common stock		7,263,508		7,263,508
Earnings per Share - Basic	$	0.02	$	0.01

14

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.

Following the guidelines contained in ASC 350, the Company tests goodwill and intangible assets that are not subject to amortization for impairment annually or more frequently if events or circumstances indicate that impairment is possible. The Company has elected to conduct its annual test during the first quarter. During the quarters ended February 28, 2025 and February 29, 2024, management qualitatively assessed goodwill to determine whether testing was necessary. Factors that management considers in this assessment include macroeconomic conditions, industry and market considerations, overall financial performance (both current and projected), changes in management and strategy, and changes in the composition and carrying amounts of net assets. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than it’s carrying value, a quantitative assessment is then performed. Based on the qualitative analysis conducted during this quarter, management does not believe that an impairment exists at February 28, 2025 and February 29, 2024.

7. Lease Commitments

The Company rents its office under an operating lease which requires it to pay base rent, real estate taxes, insurance and general repairs and maintenance.  The lease effective during the quarter was signed in June of 2018, effective October 1, 2018, expiring on March 31, 2024.  On February 15, 2024, a lease amendment was signed, effective April 1, 2024 for a 6-year period, expiring March 31, 2030, with an option to renew for a 5-year period.  The amendment continues to require the Company to pay base rent, real estate taxes, insurance and general repairs and maintenance.  The amendment includes a ten-month rent abatement over the lease term, specifically defined in the agreement, and tenant allowance in the amount of $158,940. The tenant allowance is to be applied evenly to the 62 months that were not abated. The renewal option has not been included in the measurement of the lease liability. 

Monthly rent expense is recognized on a straight-line basis over the term of the lease. At February 28, 2025 the weighted average remaining lease term was 61 months. The lease amendment is reflected in the balance of the Lease Liability on the balance sheet at the present value of the lease payments using an 8.50% discount rate. The discount rate was considered to be an estimate of the Company’s incremental borrowing rate.

Gross future minimum annual rental commitments as of February 28, 2025 are as follows:

	Undiscounted Rent Payments
Year Ending November 30:
2025		54,964
2026		80,837
2027		84,024
2028		96,163
2029		99,898
Thereafter		36,827
Total Undiscounted Rent Payments	$	452,713
Present Value Discount		(89,658	)
Present Value	$	363,055
Short-term lease liability	$	49,796
Long-term lease liability		313,259
Total Operating Lease Liability	$	363,055

15

8. Income Taxes

For the three months ended February 28, 2025, the Company recorded current tax expense of $65,536 and a deferred tax benefit of $19,736, for a total tax provision of $45,800, with an effective tax rate of 28.3%. For the three months ended February 29, 2024, the Company recorded current tax expense of $60,791 and a deferred tax benefit of $21,791, for a total tax provision of $39,000, with an effective tax rate of 28.4%.

9. Stockholder’s Equity

On March 7, 2025 the Board of Directors (“Board”) declared a $0.01 quarterly cash distribution/dividend per share, to stockholders of record as of March 24, 2025, payable April 14, 2025. On December 4, 2024 the Board declared a $0.03 cash distribution/dividend per share, $0.01 quarterly and $0.02 special, to stockholders of record as of December 23, 2024, paid January 9, 2025. 

On September 6, 2024 the Board declared a $0.01 quarterly cash distribution/dividend, payable on October 11, 2024 to stockholders of record as of September 23, 2024. On June 06, 2024 the Board declared a $0.01 quarterly cash distribution/dividend, paid on July 12, 2024 to stockholders of record as of June 24, 2024. On March 6, 2024 the Board declared a $0.01 quarterly cash distribution/dividend, paid on April 12, 2024 to stockholders of record as of March 21, 2024.

On December 11, 2023 the Board declared a $0.02 cash distribution/dividend per share, $0.01 quarterly and $0.01 special to stockholders of record as of December 27, 2023, paid January 16, 2024. On September 12, 2023 the Board declared a $0.01 distribution/dividend per share to stockholders of record as of September 28, 2023, payable October 18, 2023. On June 6, 2023 the Board declared a $0.01 distribution/dividend per share to stockholders of record as of June 22, 2023, paid on July 11, 2023. On March 13, 2023 the Board declared a $0.01 distribution/dividend per share to stockholders of record as of March 30, 2023, paid on April 19, 2023. On December 07, 2022 the Board declared a $0.02 cash distribution/dividend per share, $0.01 quarterly and $0.01 special, to stockholders of record as of December 22, 2022, paid January 11, 2023.

On May 6, 2013, the Board authorized and declared a dividend distribution of one right for each outstanding share of the common stock of the Company to stockholders of record at the close of business on May 13, 2013. Each right entitles the registered holder to purchase from the Company one one-thousandth of a share of the Series A Participating Preferred Stock of the Company at an exercise price of $0.90 per one-thousandth of a Preferred Share, subject to adjustment. The complete terms of the Rights are set forth in a Preferred Shares Rights Agreement, dated May 6, 2013, between the Company and IST Shareholder Services, as rights agent.

The Board adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group, other than exempt person as defined in the agreement, that acquires 15% (or 20% in the case of certain institutional investors who report their holdings on Schedule 13G) or more of the Common Shares without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board. However, neither the Rights Agreement nor the Rights should interfere with any merger, tender or exchange offer or other business combination approved by the Board.

Full details about the Rights Plan are contained in a Form 8-K filed by the Company with the U.S. Securities and Exchange Commission on May 7, 2013.

16

9. Stockholder’s Equity (continued)

On June 18, 2014 an amendment to the Preferred Shares Rights Agreement was filed appointing American Stock Transfer & Trust Company, LLC as successor to Illinois Stock Transfer Company. All original rights and provisions remain unchanged. On August 18, 2015 an amendment was filed to the Preferred Shares Rights Agreement changing the final expiration date to mean the fifth anniversary of the date of the original agreement. All other original rights and provisions remain the same. On May 22, 2017 an amendment was filed extending the final expiration date to mean the seventh anniversary date of the original agreement. All other original rights and provisions remain the same. On February 22, 2019 an amendment was filed extending the final expiration date to mean the ninth anniversary date of the original agreement. All other original rights and provisions remain the same. On March 4, 2021 an amendment was filed extending the final expiration date to mean the eleventh anniversary date of the original agreement. All other original rights and provisions remain the same. On April 4, 2023 an amendment was filed extending the final expiration date to mean the fourteenth anniversary date of the original agreement. All other original rights and provisions remain the same.

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 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.

17

General

There are 61 franchised and 4 licensed units at February 28, 2025 compared to 64 franchised and 4 licensed units at February 29, 2024.  System-wide revenues for the three months ended February 28, 2025 were $9.4 million and February 29, 2024 was $9.6 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, and Brewster's coffee), and through nontraditional channels of distribution.

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.

There are two items involving revenue recognition of contracts that require us to make subjective judgments: the determination of which performance obligations are distinct within the context of the overall contract and the estimated stand-alone selling price of each obligation. In instances where our contract includes significant customization or modification services, the customization and modification services are generally combined and recorded as one distinct performance obligation.

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

As of February 28, 2025, the Company employed 11 full-time employees and one part-time employee 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, 2025 versus Three Months Ended February 29, 2024

For the three months ended February 28, 2025 and February 29, 2024, the Company reported net income of $116,000 and $99,000, respectively. Total revenue of $757,000 decreased $79,000, or 9.4%, for the three months ended February 28, 2025, as compared to total revenue of $836,000 for the three months ended February 29, 2024.

Royalty fee revenue of $457,000, for the quarter ended February 28, 2025, decreased $3,000, or 0.7%, from the $460,000 for quarter ended February 29, 2024. Fiscal 2024 was leap year and included one additional sales day.

Franchise fee revenue was $9,000, for the quarter ended February 28, 2025, a decrease of $1,000, or 10.0%, from $10,000 for February 29, 2024. In the first quarter 2025 there was a transfer compared to a store opened in 2024, and then both years had normal annual amortization. Licensing fee and other income of $74,000, for the quarter ended February 28, 2025, decreased $33,000 or 29.9% from $107,000 for same quarter 2024. Settlement revenue decreased $21,000 in the first quarter 2025 primarily from a note receivable for a store that closed in 2024 and license fee revenue decreased by $21,000 primarily because a final payment on an annual coffee contract was made, and these were offset by an increase in gift card revenue of $11,000 in the first quarter 2025 compared to the same period 2024.

18

Marketing Fund revenues of $217,000, for the quarter ended February 28, 2024, decreased $42,000, or 16.2% from $259,000 for the quarter ended February 29, 2024. This is offset by a reduction of $42,000 in marketing fund expenses.

Total operating expenses of $610,000, for the quarter ended February 28, 2025, decreased $104,000, or 14.6% from $714,000 for the quarter ended February 29, 2024. The decrease was primarily related to a decrease in, marketing fund expenses of $42,000, a decrease in provision for credit losses of $23,000, and a decrease in health benefit expense of $21,000 because of some employees transitioning to Medicare. Franchise development expenses were down $6,000 in the three months of 2025 because a new store was opened in the same period 2024 and general business expenses were down in the first quarter 2025 compared to the same period 2024.

For the three months ended February 28, 2025 the provision for income tax was $46,000, compared to $39,000 for the three months ending February 29, 2024.

Earnings per share, as reported for basic and diluted outstanding shares, was $0.02 for the quarter ended February 28, 2025 and $0.01 earnings for quarter ended February 29, 2024.

Liquidity and Capital Resources

At February 28, 2025, the Company had working capital of $1,662,000 and unrestricted cash of $2,005,000. At February 29, 2024 the Company had working capital of $1,529,000, and unrestricted cash of $1,890,000.

During the three months ended February 28, 2025, the Company had net income of $116,000 and operating activities provided cash of $105,000. The principal adjustments to reconcile the net income to cash provided by operating activities for the three months ending February 28, 2025 was depreciation and amortization of $1,000 and noncash lease expense of $22,000, less $1,000 provision for credit losses and deferred tax expense of $20,000. In addition, changes in operating assets and liabilities decreased cash by $14,000. During the three months ended February 29, 2024, the Company had net income of $99,000 and operating activities provided cash of $192,000. The principal adjustments to reconcile the net income to cash provided by operating activities for the three months ending February 29, 2024 was depreciation and amortization of $1,000, noncash lease expense $25,000 and $23,000 provision for uncollectible accounts, less deferred tax expense of $22,000. In addition, changes in operating assets and liabilities increased cash by $67,000.

Cash distributions/dividends used $218,000 and $145,000 in financing activities for the three months ending February 28, 2025 and February 29, 2024, respectively.

Cash Distribution and Dividend Policy

It is the Company’s intent that future cash distributions/dividend payments will be considered after reviewing profitability expectations and financing needs and will be declared at the discretion of the Board of Directors. The Company will continue to analyze its ability to pay cash distributions/dividends on a quarterly basis. For 2025, a $0.03 cash distribution/dividend was declared for the first quarter and a $0.01 cash distribution/dividend has been declared for the second quarter.

Determination of whether distributions are considered a cash distribution, cash dividend or combination of the two will not be made until after December 31, 2025, as the classification or combination is dependent upon the Company’s earnings and profits for tax purposes for its fiscal year ending November 30, 2025.

19

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which is intended to simplify various aspects related to accounting for income taxes. ASU 2023-09 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in ASU 2023-09 are effective for public business entities for fiscal years beginning after December 15, 2024, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Company will adopt ASU 2023-09 for fiscal year ending November 30, 2026.

Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of February 28, 2025 that would have or are expected to have any significant effect on the Company’s financial position, cash flows or income statement.

Critical Accounting Policies

The Company has identified other 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, 2024, filed with the Securities and Exchange Commission on February 26, 2025. 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES 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, 2025 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 ending February 28, 2025 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”).

20

PART II

ITEM 1. LEGAL PROCEEDINGS

We may be subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of such proceedings or claims cannot be predicted with certainty, management does not believe that the outcome of any of such proceedings or claims will have a material effect on our financial position. We know of no pending or threatened proceeding or claim to which we are or will be a party.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

There was no adoption, modification or termination of any Rule 10b5-1 or non-Rule 10b5-1 plans by any Directors or Officers of the Company in the quarter ended February 28, 2025.

21

(a)  EXHIBITS

The following exhibits are filed herewith.

INDEX NUMBER DESCRIPTION

3.1 Articles of Incorporation (See Form 10-KSB for year ended November 30, 2006 filed February 28, 2007)

3.2 Bylaws of the Company (See Form 10-KSB for year ended November 30, 2006 filed February 28, 2007)

4.1 Preferred Shares Rights Agreement (See Form 8-K filed May 7, 2013)

4.2 Preferred Shares Rights Agreement Amendment No. 1 (See Form 8-K filed June 18, 2014)

4.3 Preferred Shares Rights Agreement Amendment No. 2 (See Form 8-K filed August 18, 2015)

4.4 Preferred Shares Rights Agreement Amendment No. 3 (See Form 8-K filed May 22, 2017)

4.5 Preferred Shares Rights Agreement Amendment No. 4 (See Form 8-K filed February 25, 2019)

4.6 Preferred Shares Rights Agreement Amendment No. 5 (See Form 8-K filed March 8, 2021)

4.7 Preferred Shares Rights Agreement Amendment No. 6 (See Form 8-K filed April 4, 2023)

21.1 List of Subsidiaries of the Company

31.1, 31.2 Section 302 of the Sarbanes-Oxley Act of 2002

32.1, 32.2 Section 906 of the Sarbanes-Oxley Act of 2002

101.INS Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH Inline XBRL Taxonomy Extension Schema

101.CAL Inline XBRL Taxonomy Extension Calculation

101.DEF Inline XBRL Taxonomy Extension Definition

101.LAB Inline XBRL Taxonomy Extension Labels

101.PRE Inline XBRL Taxonomy Extension Presentation

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

22

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 11, 2025	/s/ Geraldine Conn
	Geraldine Conn
	Chief Financial Officer

23

EX-21.1

Exhibit 21.1

BAB Systems, Inc., an Illinois corporation

BAB Operations, Inc., an Illinois 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 11, 2025	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, Geraldine Conn, 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 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 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 11, 2025	By:	/s/ Geraldine Conn
		Geraldine Conn, 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, 2025, 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 11, 2025	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, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Geraldine Conn, 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 11, 2025	By:	/s/ Geraldine Conn
		Geraldine Conn, Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Feb. 28, 2025	Apr. 11, 2025
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Feb. 28, 2025
Document Transition Report	false
Entity File Number	0-31555
Entity Registrant Name	BAB, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-4389547
Entity Address, Address Line One	500 Lake Cook Road, Suite 475
Entity Address, City or Town	Deerfield
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60015
City Area Code	847
Local Phone Number	948-7520
Title of 12(b) Security	Common Stock
Trading Symbol	BABB
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		7,263,508
Entity Central Index Key	0001123596
Current Fiscal Year End Date	--11-30
Document Fiscal Year Focus	2025
Document Fiscal Period Focus	Q1
Amendment Flag	false

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Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Feb. 28, 2025	Nov. 30, 2024
Current Assets
Cash	$ 2,004,518	$ 2,177,586
Restricted cash	223,909	159,704
Receivables
Trade accounts and notes receivable (net of allowance for credit losses of $50,340 in 2025 and $51,103 in 2024)	65,095	70,090
Marketing fund contributions receivable from franchisees and stores	15,679	17,394
Prepaid expenses and other current assets	74,530	84,825
Total Current Assets	2,383,731	2,509,599
Property, plant and equipment (net of accumulated depreciation of $159,414 in both 2025 and 2024.	0	0
Trademarks	461,445	461,445
Goodwill	1,493,771	1,493,771
Definite lived intangible assets (net of accumulated amortization of $143,644 in 2025 and $142,664 in 2024)	12,292	13,272
Operating lease right of use	351,771	365,714
Total Noncurrent Assets	2,319,279	2,334,202
Total Assets	4,703,010	4,843,801
Accrued expenses and other current liabilities	281,647	409,179
Accounts payable	53,790	1,313
Income tax payable	101,231	80,695
Current portion operating lease liability	49,796	47,846
Total Current Liabilities	721,751	725,142
Deferred tax liability	297,396	317,132
Operating lease liability	313,259	330,215
Deferred franchise revenue	131,025	130,094
Total Long-term Liabilities	741,680	777,441
Total Liabilities	1,463,431	1,502,583
Additional paid-in capital	987,034	987,034
Preferred shares - value	0	0
Common stock -$.001 par value; 15,000,000 shares authorized; 8,466,953 shares issued and 7,263,508 shares outstanding as of February 28, 2025 and November 30, 2024	13,508,257	13,508,257
Treasury stock	(222,781)	(222,781)
Accumulated deficit	(11,032,931)	(10,931,292)
Total Stockholders' Equity	3,239,579	3,341,218
Total Liabilities and Stockholders' Equity	4,703,010	4,843,801
Series A Preferred Stock [Member]
Receivables
Preferred shares - value	0	0
Marketing Fund [Member]
Receivables
Contract Liabilities - Current	213,823	164,756
Franchise [Member]
Receivables
Contract Liabilities - Current	21,464	21,353
Deferred franchise revenue	$ 131,025	$ 130,094

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Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Feb. 28, 2025	Nov. 30, 2024
Trade accounts and notes receivable, allowance for doubtful accounts	$ 50,340	$ 51,103
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	159,414	159,414
Definite lived intangible assets, accumulated amortization	$ 143,644	$ 142,664
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Preferred shares, authorized (in shares)	4,000,000	4,000,000
Preferred Stock, Shares Outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	15,000,000	15,000,000
Common stock, issued (in shares)	8,466,953	8,466,953
Common stock, outstanding (in shares)	7,263,508	7,263,508
Series A Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Preferred shares, authorized (in shares)	1,000,000	1,000,000
Preferred Stock, Shares Outstanding (in shares)	0	0

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Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended
	Feb. 28, 2025	Feb. 29, 2024
REVENUES
Revenues	$ 757,201	$ 835,934
Selling, general and administrative expenses:
Payroll and payroll-related expenses	252,560	256,329
Occupancy	32,478	33,341
Advertising and promotion	1,083	364
Professional service fees	50,716	51,779
Travel	1,767	3,022
Employee benefit expenses	15,501	36,804
Depreciation and amortization	980	980
Marketing fund expenses	217,046	259,411
Other	37,891	71,924
Total Operating Expenses	610,022	713,954
Income from operations	147,179	121,980
Interest income	14,888	15,525
Income before provision for income taxes	162,067	137,505
Income Tax Expense (Benefit), Continuing Operations [Abstract]
Current tax expense	65,536	60,791
Deferred tax	(19,736)	(21,791)
Total Tax Provision	45,800	39,000
Net Income	$ 116,267	$ 98,505
Net Income per share - Basic and Diluted (in dollars per share)	$ 0.02	$ 0.01
Weighted average shares outstanding - Basic and diluted (in shares)	7,263,508	7,263,508
Cash distributions declared per share (in dollars per share)	$ 0.03	$ 0.02
Royalty [Member]
REVENUES
Revenues	$ 457,194	$ 459,690
Franchise [Member]
REVENUES
Revenues	8,583	10,246
Licensing Fees and Other Income [Member]
REVENUES
Revenues	74,378	106,587
Marketing Fund [Member]
REVENUES
Revenues	$ 217,046	$ 259,411

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Feb. 28, 2025	Feb. 29, 2024
Operating activities
Net Income	$ 116,267	$ 98,505
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization	980	980
Deferred tax	(19,736)	(21,791)
Provision for credit losses, net of recoveries	(763)	22,582
Noncash lease expense	21,710	24,828
Changes in:
Trade accounts receivable and notes receivable	5,758	(18,128)
Marketing fund contributions receivable	1,715	(707)
Prepaid expenses and other	5,795	3,505
Accounts payable	52,477	46,834
Accrued liabilities	(106,996)	46,744
Unexpended marketing fund contributions	49,067	29,723
Deferred revenue	1,042	(10,621)
Operating lease liability	(22,773)	(30,132)
Net Cash Provided by Operating Activities	104,543	192,322
Net Cash Provided by Investing Activities
Proceeds from sale of asset	4,500	0
Net Cash Provided by Investing Activities	4,500	0
Net Cash Provided by (Used in) Financing Activities [Abstract]
Cash distributions/dividends	(217,906)	(145,270)
Net Cash Used In Financing Activities	(217,906)	(145,270)
Net (Decrease)/Increase in Cash and Restricted Cash	(108,863)	47,052
Cash and Restricted Cash - Beginning of Period	2,337,290	2,072,672
Cash and Restricted Cash - End of Period	2,228,427	2,119,724
Supplemental disclosure of cash flow information:
Interest paid	0	0
Income taxes paid	45,000	0
Other Noncash Investing and Financing Items [Abstract]
Right-of-use operating asset obtained in exchange for operating lease liability	$ 0	$ 401,430

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Note 1 - Nature of Operations

3 Months Ended

Feb. 28, 2025

Notes to Financial Statements

Nature of Operations [Text Block]

Note 1. Nature of Operations

BAB, Inc. (“the Company”) has three wholly owned subsidiaries: BAB Systems, Inc. (“Systems”), BAB Operations, Inc. (“Operations”) and BAB Investments, Inc. (“Investments”). Systems was incorporated on December 2, 1992, and was primarily established to franchise Big Apple Bagels® (“BAB”) specialty bagel retail stores. My Favorite Muffin (“MFM”) was acquired in 1997 and is included as a part of Systems. Brewster’s (“Brewster’s”) was established in 1996 and the coffee is sold in BAB and MFM locations. SweetDuet® (“SD”) frozen yogurt can be added as an additional brand in a BAB location. Operations was formed in 1995, primarily to operate Company-owned stores of which there are currently none. The assets of Jacobs Bros. Bagels (“Jacobs Bros.”) were acquired in 1999, and any branded wholesale business uses this trademark. Investments was incorporated in 2009 to be used for the purpose of acquisitions. To date there have been no acquisitions.

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, MFM and SD trade names. At February 28, 2025, the Company had 61 franchise units and 4 licensed units in operation in 18 states. There are 4 units under development. The Company additionally derives income from the sale of its trademark bagels, muffins and coffee through nontraditional channels of distribution including under licensing agreements.

The BAB franchised brand consists of units operating as “Big Apple Bagels®,” featuring daily baked bagels, flavored cream cheeses, premium coffees, gourmet bagel sandwiches and other related products. BAB units are primarily concentrated in the Midwest and Western United States. The MFM brand consists of units operating as “My Favorite Muffin Gourmet Muffin Bakery®” (“MFM Bakery”), featuring a large variety of freshly baked muffins and coffees and units operating as “My Favorite Muffin Your All-Day Bakery Café®” (“MFM Cafe”) featuring these products as well as a variety of specialty bagel sandwiches and related products. The SweetDuet® is a branded self-serve frozen yogurt that can be added as an additional brand in a BAB location. Although the Company doesn't actively market Brewster's stand-alone franchises, Brewster's coffee products are sold in most franchised units.

The Company is leveraging on the natural synergy of distributing muffin products in existing BAB units and, alternatively, bagel products and Brewster's Coffee in existing MFM units. The Company expects to continue to realize efficiencies in servicing the combined base of BAB and MFM franchisees.

The Company has a minority interest in Athletes HQ Systems, Inc. (“AHQ”). AHQ franchises indoor baseball and softball practice and coaching facilities with knowledgeable instructors.

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, 2024 which was filed February 26, 2025. In the opinion of the Company's management, the condensed consolidated financial statements for the unaudited interim period presented include all adjustments, including normal recurring adjustments, necessary to fairly present the results of such interim period 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 2 - Summary of Significant Accounting Policies

3 Months Ended

Feb. 28, 2025

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. Summary of Significant Accounting Policies

Unaudited Consolidated Financial Statements

The accompanying unaudited Condensed Consolidated Financial Statements of BAB, Inc. have been prepared pursuant to generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for Form 10-Q. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the financial statements and accompanying notes are in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits and treasury notes with banks and equity firms with original maturities of less than 90 days. The balance of bank accounts may, at times, exceed federally insured credit limits. The Company has not experienced any loss in such accounts and believes it is not subject to any significant credit risk related to cash at February 28, 2025.

Accounts Receivable and Notes Receivable

The CECL reserve methodology requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Under the CECL model, reserves may be established against financial asset balances even if the risk of loss is remote or has not yet manifested itself. The Company records specific reserves against account balances of franchisees deemed at-risk when a potential loss is likely or imminent as a result of prolonged payment delinquency (greater than 90 days past due) and where notable credit deterioration has become evident. For financial assets that are not currently deemed at-risk, an allowance is recorded based on expected loss rates derived pursuant to the Company's CECL methodology that assesses four components - historical losses, current conditions, reasonable and supportable forecasts, and a reversion to history, if applicable.

The Company considers its portfolio segments to be the following:

Accounts Receivable (Franchise-Related): Most of the Company’s short-term receivables due from franchisees are derived from royalty, advertising and other franchise-related fees.

Notes Receivable: Notes receivable balances primarily relate to the conversion of (1) certain past due franchisee accounts receivable or (2) early franchise termination fees converted to notes receivable. These notes are usually not collateralized. A significant portion of these notes have specific reserves recorded against them amounting to $50,340 as of February 28, 2025.

Accounts Receivables (Vendor Related): Receivables due from vendors and distributors consist of royalty receivables related to the sale of certain food products to franchisees through the Company’s network of suppliers and distributors and are included as part of Accounts Receivable.

Receivable balances by portfolio segment are as follows:

	February 28, 2025			November 30, 2024
Accounts Receivable (Franchisee Related)	$	45,294		$	69,284
Accounts Receivable (Vendor Related)		35,480			18,200
Notes Receivable		50,340			51,103
		131,114			138,587
Less: Allowance for Credit Losses		(50,340	)		(51,103	)
Total Receivables		80,774			87,484
Less: Current Portion		(80,774	)		(87,484	)
Long-Term Receivables	$	-		$	-

The Company's internal credit quality indicators for all portfolio segments primarily consider delinquency. Current and collateralized lease receivables have an internal risk rating of Grade I. The Company does not currently have any uncollateralized lease receivables. Past due lease receivables would be assigned an internal risk rating of Grade II-IV, depending on significance of delinquency. For uncollateralized notes receivable, the Company also considers the status of the franchisee note holder and the term of the note. Notes receivable from current franchisees are considered to have an elevated risk of credit loss based on their common origination from past due franchise accounts receivable but have some indication of collectability given ongoing operations (Internal Grade II). Notes receivable due from payers who no longer have an operating franchise are considered to have a high likelihood of credit loss (Internal Grade III). That likelihood increases if the note is outstanding for longer than one year (Internal Grade IV). At February 28, 2025, all notes receivable were due from former franchisees and had an original term over one year.

Changes in the allowance for credit losses during the three months ended February 28, 2025 were as follows:

	Accounts Receivable (Franchise Related)		Accounts Receivable (Vendor Related)		Notes Receivable			Lease Receivable, Net		Total
Balance at November 30, 2024	$	-	$	-	$	51,103		$	-	$	51,103
Adjustments to Allowance for Adoption of ASU 2016-13		-		-		-			-		-
Write-offs		-		-		-			-		-
Recoveries		-		-		(763	)		-		(763	)
Provision for Credit Losses		-		-		-			-		-
Balance at February 28, 2025	$	-	$	-	$	50,340		$	-	$	50,340

The Company considers a receivable past due 31 days after the payment due date. The delinquency status of receivables (other than accounts receivable) at February 28, 2025 was as follows:

	Current		0-30 days Past Due		30-60 days Past Due		60-90 days past due		Over 90 days past due		Total
Notes Receivable	$	39,467	$	-	$	-	$	-	$	10,873	$	50,340
	$	39,467	$	-	$	-	$	-	$	10,873	$	50,340

The fiscal year of origination of the Company's gross notes receivable and lease receivables by risk rating are as follows

	2024		2023		2022		2021		2020		Prior		Total
Risk rating
Internal Grade I	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Internal Grade II		-		-		-		-		-		-		-
Internal Grade III		21,580		17,887		-		-		-		-		39,467
Internal Grade IV		-		-		-		-		-		10,873		10,873
Notes and Lease Receivables,
Net of Unamortized Interest	$	21,580	$	17,887	$	-	$	-	$	-	$	10,873	$	50,340

Property, Plant and Equipment

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Estimated useful lives are 3 to 7 years for property and equipment and 10 years, or term of lease if less, for leasehold improvements. Maintenance and repairs are charged to expense as incurred. Expenditures that materially extend the useful lives of assets are capitalized.

Other Assets

Other assets include a minority investment in AHQ Systems, Inc. The shares were issued to BAB, Inc. as compensation for consulting services and are valued at $2,250. The value of the investment is immaterial and has not been adjusted to fair market value.

Advertising and Promotion Costs

The Company expenses advertising and promotion costs as incurred. All advertising and promotion costs were related to the Company’s franchise operations.

Lease Liabilities

The company accounts for leases under ASC 842. Lease arrangements are determined at the inception of the contract. Operating leases are included in operating lease right-of-use (“ROU”) assets and other current and long-term operating lease liabilities on the consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities on the consolidated balance sheets. 

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which is intended to simplify various aspects related to accounting for income taxes. ASU 2023-09 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in ASU 2023-09 are effective for public business entities for fiscal years beginning after December 15, 2024, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Company will adopt ASU 2023-09 for fiscal year ending November 30, 2026.

Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of February 28, 2025 that would have or are expected to have any significant effect on the Company’s financial position, cash flows or income statement.

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Note 3 - Revenue Recognition

3 Months Ended

Feb. 28, 2025

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

3. Revenue Recognition

Statement of Cash Flows

The chart below shows the cash and restricted cash within the consolidated statements of cash flows as of February 28, 2025 and February 29, 2024 were as follows:

	February 28, 2025		February 29, 2024
Cash and cash equivalents	$	2,004,518	$	1,890,204
Restricted cash		223,909		229,520
Total cash and restricted cash	$	2,228,427	$	2,119,724

Franchise and related revenue

The Company sells individual franchises. The franchise agreements typically require the franchisee to pay an initial, non-refundable fee prior to opening the respective location(s), and continuing royalty fees on a weekly basis based upon a percentage of franchisee net sales. The initial term of franchise agreements are typically 10 years.  Subject to the Company’s approval, a franchisee may generally renew the franchise agreement upon its expiration.  If approved, a franchisee may transfer a franchise agreement to a new or existing franchisee, at which point a transfer fee is typically paid by the current owner which then terminates that franchise agreement. A franchise agreement is signed with the new franchisee with no franchise fee required. If a contract is terminated prior to its term, it is a breach of contract and a penalty is assessed based on a formula reviewed and approved by management. Revenue generated from a contract breach is termed settlement income by the Company and included in licensing fees and other income.

Under the terms of our franchise agreements, the Company typically promises to provide franchise rights, pre-opening services such as blueprints, operational materials, planning and functional training courses, and ongoing services, such as management of the marketing fund. The Company considers certain pre-opening activities and the franchise rights and related ongoing services to represent two separate performance obligations. The franchise fee revenue has been allocated to the two separate performance obligations using a residual approach. The Company has estimated the value of performance obligations related to certain pre-opening activities deemed to be distinct based on cost plus an applicable margin, and assigned the remaining amount of the initial franchise fee to the franchise rights and ongoing services. Revenue allocated to preopening activities is recognized when (or as) these services are performed. Revenue allocated to franchise rights and ongoing services is deferred until the store opens, and recognized on a straight-line basis over the duration of the agreement, as this ensures that revenue recognition aligns with the customer’s access to the franchise right.

Royalty fees from franchised stores 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.

Royalty revenue is recognized during the respective franchise agreement based on the royalties earned each period as the underlying franchise store sales occur.

There are two items involving revenue recognition of contracts that require us to make subjective judgments: the determination of which performance obligations are distinct within the context of the overall contract and the estimated stand-alone selling price of each obligation. In instances where our contract includes significant customization or modification services, the customization and modification services are generally combined and recorded as one distinct performance obligation.

Gift Card Breakage Revenue

The Company sells gift cards to its customers in its retail stores and through its Corporate office. The Company’s gift cards do not have an expiration date and are not redeemable for cash except where required by law. Revenue from gift cards is recognized upon redemption in exchange for product and reported within franchisee store revenue and the royalty and marketing fees are paid and shown in the Condensed Consolidated Statements of Income. Until redemption, outstanding customer balances are recorded as a liability. An obligation is recorded at the time of sale of the gift card and it is included in accrued expenses on the Company’s Condensed Consolidated Balance Sheets.

The liability is reduced when the gift cards are redeemed by a franchise. Although there are no expiration dates for our gift cards, based on our analysis of historical gift card redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote, which is referred to as “breakage.” The Company recognizes gift card breakage proportional to actual gift card redemptions on a quarterly basis and the corresponding revenue is included in licensing fees and other revenue. Significant judgments and estimates are required in determining the breakage rate and will be reassessed each quarter. During the quarter ended February 28, 2025, management reassessed its breakage estimate and recognized an additional $12,000 of income, based on the likelihood of the redemption of certain gift cards becoming remote.

Nontraditional and rebate revenue

As part of the Company’s franchise agreements, the franchisee purchases products and supplies from designated vendors.  The Company may receive various fees and rebates from the vendors and distributors on product purchases by franchisees.  In addition, the Company may collect various initial fees, and those fees are classified as deferred revenue in the balance sheet and straight lined over the life of the contract as deferred revenue in the balance sheet. The Company does not possess control of the products prior to their transfer to the franchisee and products are delivered to franchisees directly from the vendor or their distributors. The Company recognizes the rebates as franchisees purchase products and supplies from vendors or distributors and recognizes the initial fees over the contract life and the fees are reported as licensing fees and other income in the Condensed Consolidated Statements of Income.

Marketing Fund

Franchise agreements require the franchisee to pay continuing marketing fees on a weekly basis, based on a percentage of franchisee sales. Marketing fees are not paid on franchise wholesale sales. The balance sheet includes marketing fund cash, which is the restricted cash, accounts receivable and unexpended marketing fund contributions. Although the marketing fees are not separate performance obligations distinct from the underlying franchise right, the Company acts as the principal as it is primarily responsible for the fulfillment and control of the marketing services. As a result, the Company records marketing fees in revenues and related marketing fund expenditures in expenses in the Condensed Consolidated Statement of Income.

Disaggregation of Revenue

The following table presents disaggregation of revenue from contracts with customers:

	For three months ended February 28, 2025		For three months ended February 29, 2024
Revenue recognized at a point in time
Sign Shop revenue	$	-	$	1,379
Settlement revenue		4,875		25,610
Total revenue at a point in time		4,875		26,989
Revenue recognized over time
Royalty revenue		457,194		459,690
Franchise fees		8,583		10,246
License fees		5,978		5,978
Gift card revenue		13,559		2,846
Nontraditional revenue		49,966		70,774
Marketing fund revenue		217,046		259,411
Total revenue over time		752,326		808,945
Grand total	$	757,201	$	835,934

Contract balances

The balance of contract liabilities includes franchise fees, license fees and vendor payments that have ongoing contract rights and the fees are being straight lined over the contract life. Contract liabilities also include marketing fund balances and gift card liability balances.

	February 28, 2025		November 30, 2024
Liabilities
Contract liabilities - current	$	462,413	$	420,379
Contract liabilities - long-term		131,025		130,094
Total Contract Liabilities	$	593,438	$	550,473

	February 28, 2025			November 30, 2024
Contracts at beginning of period	$	550,473		$	620,188
Revenue Recognized during period		(336,265	)		(1,499,334	)
Additions during period		379,230			1,429,619
Contracts at end of period	$	593,438		$	550,473

Transaction price allocated to remaining performance obligations (franchise agreements and license fee agreement) for the year ended November 30:

2025	$	17,978	*
2026		21,084
2027		22,800
2028		16,084
2029		14,870
2030		13,855
Thereafter		45,818
Total	$	152,489

*represents the estimate for the remainder of 2025

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Note 4 - Units Open and Under Development

3 Months Ended

Feb. 28, 2025

Notes to Financial Statements

Units Open and Under Development [Text Block]

4. Units Open and Under Development

Units which are open or under development are as follows:

	February 28, 2025		February 29, 2024
Stores open:
Franchisee-owned stores		61		64
Licensed Units		4		4
		65		68
Unopened stores with Franchise
Agreements		4		4
Total operating units and units with Franchise Agreements		69		72

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Note 5 - Earnings Per Share

3 Months Ended

Feb. 28, 2025

Notes to Financial Statements

Earnings Per Share [Text Block]

5. Earnings per Share

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

	For the three months ended:
	February 28, 2025		February 29, 2024
Numerator:
Net income available to common shareholders	$	116,267	$	98,505
Denominator:
Weighted average outstanding shares
Basic and diluted common stock		7,263,508		7,263,508
Earnings per Share - Basic	$	0.02	$	0.01

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Note 6 - Goodwill and Other Intangible Assets

3 Months Ended

Feb. 28, 2025

Notes to Financial Statements

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.

Following the guidelines contained in ASC 350, the Company tests goodwill and intangible assets that are not subject to amortization for impairment annually or more frequently if events or circumstances indicate that impairment is possible. The Company has elected to conduct its annual test during the first quarter. During the quarters ended February 28, 2025 and February 29, 2024, management qualitatively assessed goodwill to determine whether testing was necessary. Factors that management considers in this assessment include macroeconomic conditions, industry and market considerations, overall financial performance (both current and projected), changes in management and strategy, and changes in the composition and carrying amounts of net assets. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than it’s carrying value, a quantitative assessment is then performed. Based on the qualitative analysis conducted during this quarter, management does not believe that an impairment exists at February 28, 2025 and February 29, 2024.

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Note 7 - Lease Commitments

3 Months Ended

Feb. 28, 2025

Notes to Financial Statements

Commitments Disclosure [Text Block]

7. Lease Commitments

The Company rents its office under an operating lease which requires it to pay base rent, real estate taxes, insurance and general repairs and maintenance.  The lease effective during the quarter was signed in June of 2018, effective October 1, 2018, expiring on March 31, 2024.  On February 15, 2024, a lease amendment was signed, effective April 1, 2024 for a 6-year period, expiring March 31, 2030, with an option to renew for a 5-year period.  The amendment continues to require the Company to pay base rent, real estate taxes, insurance and general repairs and maintenance.  The amendment includes a ten-month rent abatement over the lease term, specifically defined in the agreement, and tenant allowance in the amount of $158,940. The tenant allowance is to be applied evenly to the 62 months that were not abated. The renewal option has not been included in the measurement of the lease liability. 

Monthly rent expense is recognized on a straight-line basis over the term of the lease. At February 28, 2025 the weighted average remaining lease term was 61 months. The lease amendment is reflected in the balance of the Lease Liability on the balance sheet at the present value of the lease payments using an 8.50% discount rate. The discount rate was considered to be an estimate of the Company’s incremental borrowing rate.

Gross future minimum annual rental commitments as of February 28, 2025 are as follows:

	Undiscounted Rent Payments
Year Ending November 30:
2025		54,964
2026		80,837
2027		84,024
2028		96,163
2029		99,898
Thereafter		36,827
Total Undiscounted Rent Payments	$	452,713
Present Value Discount		(89,658	)
Present Value	$	363,055
Short-term lease liability	$	49,796
Long-term lease liability		313,259
Total Operating Lease Liability	$	363,055

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Note 8 - Income Taxes

3 Months Ended

Feb. 28, 2025

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8. Income Taxes

For the three months ended February 28, 2025, the Company recorded current tax expense of $65,536 and a deferred tax benefit of $19,736, for a total tax provision of $45,800, with an effective tax rate of 28.3%. For the three months ended February 29, 2024, the Company recorded current tax expense of $60,791 and a deferred tax benefit of $21,791, for a total tax provision of $39,000, with an effective tax rate of 28.4%.

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Note 9 - Stockholder's Equity

3 Months Ended

Feb. 28, 2025

Notes to Financial Statements

Equity [Text Block]

9. Stockholder’s Equity

On March 7, 2025 the Board of Directors (“Board”) declared a $0.01 quarterly cash distribution/dividend per share, to stockholders of record as of March 24, 2025, payable April 14, 2025. On December 4, 2024 the Board declared a $0.03 cash distribution/dividend per share, $0.01 quarterly and $0.02 special, to stockholders of record as of December 23, 2024, paid January 9, 2025. 

On September 6, 2024 the Board declared a $0.01 quarterly cash distribution/dividend, payable on October 11, 2024 to stockholders of record as of September 23, 2024. On June 06, 2024 the Board declared a $0.01 quarterly cash distribution/dividend, paid on July 12, 2024 to stockholders of record as of June 24, 2024. On March 6, 2024 the Board declared a $0.01 quarterly cash distribution/dividend, paid on April 12, 2024 to stockholders of record as of March 21, 2024.

On December 11, 2023 the Board declared a $0.02 cash distribution/dividend per share, $0.01 quarterly and $0.01 special to stockholders of record as of December 27, 2023, paid January 16, 2024. On September 12, 2023 the Board declared a $0.01 distribution/dividend per share to stockholders of record as of September 28, 2023, payable October 18, 2023. On June 6, 2023 the Board declared a $0.01 distribution/dividend per share to stockholders of record as of June 22, 2023, paid on July 11, 2023. On March 13, 2023 the Board declared a $0.01 distribution/dividend per share to stockholders of record as of March 30, 2023, paid on April 19, 2023. On December 07, 2022 the Board declared a $0.02 cash distribution/dividend per share, $0.01 quarterly and $0.01 special, to stockholders of record as of December 22, 2022, paid January 11, 2023.

On May 6, 2013, the Board authorized and declared a dividend distribution of one right for each outstanding share of the common stock of the Company to stockholders of record at the close of business on May 13, 2013. Each right entitles the registered holder to purchase from the Company one one-thousandth of a share of the Series A Participating Preferred Stock of the Company at an exercise price of $0.90 per one-thousandth of a Preferred Share, subject to adjustment. The complete terms of the Rights are set forth in a Preferred Shares Rights Agreement, dated May 6, 2013, between the Company and IST Shareholder Services, as rights agent.

The Board adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group, other than exempt person as defined in the agreement, that acquires 15% (or 20% in the case of certain institutional investors who report their holdings on Schedule 13G) or more of the Common Shares without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board. However, neither the Rights Agreement nor the Rights should interfere with any merger, tender or exchange offer or other business combination approved by the Board.

Full details about the Rights Plan are contained in a Form 8-K filed by the Company with the U.S. Securities and Exchange Commission on May 7, 2013.

On June 18, 2014 an amendment to the Preferred Shares Rights Agreement was filed appointing American Stock Transfer & Trust Company, LLC as successor to Illinois Stock Transfer Company. All original rights and provisions remain unchanged. On August 18, 2015 an amendment was filed to the Preferred Shares Rights Agreement changing the final expiration date to mean the fifth anniversary of the date of the original agreement. All other original rights and provisions remain the same. On May 22, 2017 an amendment was filed extending the final expiration date to mean the seventh anniversary date of the original agreement. All other original rights and provisions remain the same. On February 22, 2019 an amendment was filed extending the final expiration date to mean the ninth anniversary date of the original agreement. All other original rights and provisions remain the same. On March 4, 2021 an amendment was filed extending the final expiration date to mean the eleventh anniversary date of the original agreement. All other original rights and provisions remain the same. On April 4, 2023 an amendment was filed extending the final expiration date to mean the fourteenth anniversary date of the original agreement. All other original rights and provisions remain the same.

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Insider Trading Arrangements

3 Months Ended

Feb. 28, 2025

Trading Arrangements, by Individual [Table]

Material Terms of Trading Arrangement [Text Block]

ITEM 5. OTHER INFORMATION

There was no adoption, modification or termination of any Rule 10b5-1 or non-Rule 10b5-1 plans by any Directors or Officers of the Company in the quarter ended February 28, 2025.

Rule 10b5-1 Arrangement Adopted [Flag]

false

Rule 10b5-1 Arrangement Terminated [Flag]

false

Non-Rule 10b5-1 Arrangement Adopted [Flag]

false

Non-Rule 10b5-1 Arrangement Terminated [Flag]

false

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Significant Accounting Policies (Policies)

3 Months Ended

Feb. 28, 2025

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Unaudited Consolidated Financial Statements

The accompanying unaudited Condensed Consolidated Financial Statements of BAB, Inc. have been prepared pursuant to generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for Form 10-Q. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of the financial statements and accompanying notes are in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits and treasury notes with banks and equity firms with original maturities of less than 90 days. The balance of bank accounts may, at times, exceed federally insured credit limits. The Company has not experienced any loss in such accounts and believes it is not subject to any significant credit risk related to cash at February 28, 2025.

Receivable [Policy Text Block]

Accounts Receivable and Notes Receivable

The CECL reserve methodology requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Under the CECL model, reserves may be established against financial asset balances even if the risk of loss is remote or has not yet manifested itself. The Company records specific reserves against account balances of franchisees deemed at-risk when a potential loss is likely or imminent as a result of prolonged payment delinquency (greater than 90 days past due) and where notable credit deterioration has become evident. For financial assets that are not currently deemed at-risk, an allowance is recorded based on expected loss rates derived pursuant to the Company's CECL methodology that assesses four components - historical losses, current conditions, reasonable and supportable forecasts, and a reversion to history, if applicable.

The Company considers its portfolio segments to be the following:

Accounts Receivable (Franchise-Related): Most of the Company’s short-term receivables due from franchisees are derived from royalty, advertising and other franchise-related fees.

Notes Receivable: Notes receivable balances primarily relate to the conversion of (1) certain past due franchisee accounts receivable or (2) early franchise termination fees converted to notes receivable. These notes are usually not collateralized. A significant portion of these notes have specific reserves recorded against them amounting to $50,340 as of February 28, 2025.

Accounts Receivables (Vendor Related): Receivables due from vendors and distributors consist of royalty receivables related to the sale of certain food products to franchisees through the Company’s network of suppliers and distributors and are included as part of Accounts Receivable.

Receivable balances by portfolio segment are as follows:

	February 28, 2025			November 30, 2024
Accounts Receivable (Franchisee Related)	$	45,294		$	69,284
Accounts Receivable (Vendor Related)		35,480			18,200
Notes Receivable		50,340			51,103
		131,114			138,587
Less: Allowance for Credit Losses		(50,340	)		(51,103	)
Total Receivables		80,774			87,484
Less: Current Portion		(80,774	)		(87,484	)
Long-Term Receivables	$	-		$	-

The Company's internal credit quality indicators for all portfolio segments primarily consider delinquency. Current and collateralized lease receivables have an internal risk rating of Grade I. The Company does not currently have any uncollateralized lease receivables. Past due lease receivables would be assigned an internal risk rating of Grade II-IV, depending on significance of delinquency. For uncollateralized notes receivable, the Company also considers the status of the franchisee note holder and the term of the note. Notes receivable from current franchisees are considered to have an elevated risk of credit loss based on their common origination from past due franchise accounts receivable but have some indication of collectability given ongoing operations (Internal Grade II). Notes receivable due from payers who no longer have an operating franchise are considered to have a high likelihood of credit loss (Internal Grade III). That likelihood increases if the note is outstanding for longer than one year (Internal Grade IV). At February 28, 2025, all notes receivable were due from former franchisees and had an original term over one year.

Changes in the allowance for credit losses during the three months ended February 28, 2025 were as follows:

	Accounts Receivable (Franchise Related)		Accounts Receivable (Vendor Related)		Notes Receivable			Lease Receivable, Net		Total
Balance at November 30, 2024	$	-	$	-	$	51,103		$	-	$	51,103
Adjustments to Allowance for Adoption of ASU 2016-13		-		-		-			-		-
Write-offs		-		-		-			-		-
Recoveries		-		-		(763	)		-		(763	)
Provision for Credit Losses		-		-		-			-		-
Balance at February 28, 2025	$	-	$	-	$	50,340		$	-	$	50,340

The Company considers a receivable past due 31 days after the payment due date. The delinquency status of receivables (other than accounts receivable) at February 28, 2025 was as follows:

	Current		0-30 days Past Due		30-60 days Past Due		60-90 days past due		Over 90 days past due		Total
Notes Receivable	$	39,467	$	-	$	-	$	-	$	10,873	$	50,340
	$	39,467	$	-	$	-	$	-	$	10,873	$	50,340

The fiscal year of origination of the Company's gross notes receivable and lease receivables by risk rating are as follows

	2024		2023		2022		2021		2020		Prior		Total
Risk rating
Internal Grade I	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Internal Grade II		-		-		-		-		-		-		-
Internal Grade III		21,580		17,887		-		-		-		-		39,467
Internal Grade IV		-		-		-		-		-		10,873		10,873
Notes and Lease Receivables,
Net of Unamortized Interest	$	21,580	$	17,887	$	-	$	-	$	-	$	10,873	$	50,340

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Estimated useful lives are 3 to 7 years for property and equipment and 10 years, or term of lease if less, for leasehold improvements. Maintenance and repairs are charged to expense as incurred. Expenditures that materially extend the useful lives of assets are capitalized.

Other Assets, Policy [Policy Text Block]

Other Assets

Other assets include a minority investment in AHQ Systems, Inc. The shares were issued to BAB, Inc. as compensation for consulting services and are valued at $2,250. The value of the investment is immaterial and has not been adjusted to fair market value.

Advertising Cost [Policy Text Block]

Advertising and Promotion Costs

The Company expenses advertising and promotion costs as incurred. All advertising and promotion costs were related to the Company’s franchise operations.

Lessee, Leases [Policy Text Block]

Lease Liabilities

The company accounts for leases under ASC 842. Lease arrangements are determined at the inception of the contract. Operating leases are included in operating lease right-of-use (“ROU”) assets and other current and long-term operating lease liabilities on the consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities on the consolidated balance sheets. 

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which is intended to simplify various aspects related to accounting for income taxes. ASU 2023-09 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in ASU 2023-09 are effective for public business entities for fiscal years beginning after December 15, 2024, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Company will adopt ASU 2023-09 for fiscal year ending November 30, 2026.

Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of February 28, 2025 that would have or are expected to have any significant effect on the Company’s financial position, cash flows or income statement.

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Note 2 - Summary of Significant Accounting Policies (Tables)

3 Months Ended

Feb. 28, 2025

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	February 28, 2025			November 30, 2024
Accounts Receivable (Franchisee Related)	$	45,294		$	69,284
Accounts Receivable (Vendor Related)		35,480			18,200
Notes Receivable		50,340			51,103
		131,114			138,587
Less: Allowance for Credit Losses		(50,340	)		(51,103	)
Total Receivables		80,774			87,484
Less: Current Portion		(80,774	)		(87,484	)
Long-Term Receivables	$	-		$	-

Accounts Receivable, Allowance for Credit Loss [Table Text Block]

	Accounts Receivable (Franchise Related)		Accounts Receivable (Vendor Related)		Notes Receivable			Lease Receivable, Net		Total
Balance at November 30, 2024	$	-	$	-	$	51,103		$	-	$	51,103
Adjustments to Allowance for Adoption of ASU 2016-13		-		-		-			-		-
Write-offs		-		-		-			-		-
Recoveries		-		-		(763	)		-		(763	)
Provision for Credit Losses		-		-		-			-		-
Balance at February 28, 2025	$	-	$	-	$	50,340		$	-	$	50,340

Financing Receivable, Past Due [Table Text Block]

	Current		0-30 days Past Due		30-60 days Past Due		60-90 days past due		Over 90 days past due		Total
Notes Receivable	$	39,467	$	-	$	-	$	-	$	10,873	$	50,340
	$	39,467	$	-	$	-	$	-	$	10,873	$	50,340

Financing Receivable Credit Quality Indicators [Table Text Block]

	2024		2023		2022		2021		2020		Prior		Total
Risk rating
Internal Grade I	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Internal Grade II		-		-		-		-		-		-		-
Internal Grade III		21,580		17,887		-		-		-		-		39,467
Internal Grade IV		-		-		-		-		-		10,873		10,873
Notes and Lease Receivables,
Net of Unamortized Interest	$	21,580	$	17,887	$	-	$	-	$	-	$	10,873	$	50,340

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Note 3 - Revenue Recognition (Tables)

3 Months Ended

Feb. 28, 2025

Notes Tables

Cash, Cash Equivalents, and Restricted Cash, Cash Flow Statement Reconciliation [Table Text Block]

	February 28, 2025		February 29, 2024
Cash and cash equivalents	$	2,004,518	$	1,890,204
Restricted cash		223,909		229,520
Total cash and restricted cash	$	2,228,427	$	2,119,724

Disaggregation of Revenue [Table Text Block]

	For three months ended February 28, 2025		For three months ended February 29, 2024
Revenue recognized at a point in time
Sign Shop revenue	$	-	$	1,379
Settlement revenue		4,875		25,610
Total revenue at a point in time		4,875		26,989
Revenue recognized over time
Royalty revenue		457,194		459,690
Franchise fees		8,583		10,246
License fees		5,978		5,978
Gift card revenue		13,559		2,846
Nontraditional revenue		49,966		70,774
Marketing fund revenue		217,046		259,411
Total revenue over time		752,326		808,945
Grand total	$	757,201	$	835,934

Contract With Customer Asset and Liability, Subject to Change [Table Text Block]

	February 28, 2025		November 30, 2024
Liabilities
Contract liabilities - current	$	462,413	$	420,379
Contract liabilities - long-term		131,025		130,094
Total Contract Liabilities	$	593,438	$	550,473

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

	February 28, 2025			November 30, 2024
Contracts at beginning of period	$	550,473		$	620,188
Revenue Recognized during period		(336,265	)		(1,499,334	)
Additions during period		379,230			1,429,619
Contracts at end of period	$	593,438		$	550,473

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block]

2025	$	17,978	*
2026		21,084
2027		22,800
2028		16,084
2029		14,870
2030		13,855
Thereafter		45,818
Total	$	152,489

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Note 4 - Units Open and Under Development (Tables)

3 Months Ended

Feb. 28, 2025

Notes Tables

Schedule of Franchisor Disclosure [Table Text Block]

	February 28, 2025		February 29, 2024
Stores open:
Franchisee-owned stores		61		64
Licensed Units		4		4
		65		68
Unopened stores with Franchise
Agreements		4		4
Total operating units and units with Franchise Agreements		69		72

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Note 5 - Earnings Per Share (Tables)

3 Months Ended

Feb. 28, 2025

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the three months ended:
	February 28, 2025		February 29, 2024
Numerator:
Net income available to common shareholders	$	116,267	$	98,505
Denominator:
Weighted average outstanding shares
Basic and diluted common stock		7,263,508		7,263,508
Earnings per Share - Basic	$	0.02	$	0.01

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Note 7 - Lease Commitments (Tables)

3 Months Ended

Feb. 28, 2025

Notes Tables

Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

	Undiscounted Rent Payments
Year Ending November 30:
2025		54,964
2026		80,837
2027		84,024
2028		96,163
2029		99,898
Thereafter		36,827
Total Undiscounted Rent Payments	$	452,713
Present Value Discount		(89,658	)
Present Value	$	363,055
Short-term lease liability	$	49,796
Long-term lease liability		313,259
Total Operating Lease Liability	$	363,055

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Note 1 - Nature of Operations (Details Textual)	Feb. 28, 2025	Feb. 29, 2024
Number of Wholly Owned Subsidiaries	3
Number of Stores	69	72
Number of States in which Entity Operates	18
Franchised Units [Member]
Number of Stores	61	64
Licensed Units [Member]
Number of Stores	4	4
Units Under Development [Member]
Number of Stores	4

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Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	Feb. 28, 2025	Nov. 30, 2024
Financing Receivable, Allowance for Credit Loss	$ 50,340	$ 51,103
Investment Owned, Fair Value	$ 2,250
Leasehold Improvements [Member]
Property, Plant and Equipment, Useful Life	10 years
Minimum [Member]
Property, Plant and Equipment, Useful Life	3 years
Maximum [Member]
Property, Plant and Equipment, Useful Life	7 years

XML

Note 2 - Summary of Significant Accounting Policies - Summary of Portfolio Segments for Receivables (Details) - USD ($)	Feb. 28, 2025	Nov. 30, 2024
Notes Receivable	$ 50,340	$ 51,103
Total Receivables, Before Allowance for Credit Losses	131,114	138,587
Less: Allowance for Credit Losses	(50,340)	(51,103)
Total Receivables	80,774	87,484
Less: Current Portion	(80,774)	(87,484)
Long-Term Receivables	0	0
Franchise [Member]
Accounts Receivable	45,294	69,284
Vendor Related [Member]
Accounts Receivable	$ 35,480	$ 18,200

XML

Note 2 - Summary of Significant Accounting Policies - Allowance for Credit Losses (Details) - USD ($)	3 Months Ended
	Feb. 28, 2025	Feb. 29, 2024
Balance, Notes Receivable	$ 51,103
Balance, Lease Receivable	0
Balance	51,103
Write-offs, Notes Receivable	0
Write-offs, Lease Receivable	0
Write-offs	0
Recoveries, Notes Receivable	(763)
Recoveries, Lease Receivable	0
Recoveries	(763)
Provision for Credit Losses, Accounts Receivable	(763)	$ 22,582
Provision for Credit Losses, Notes Receivable	0
Provision for Credit Losses, Lease Receivable	0
Provision for Credit Losses	0
Balance, Notes Receivable	50,340
Balance, Lease Receivable	0
Balance	50,340
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance, Notes Receivable	0
Balance, Lease Receivable	0
Balance	0
Franchise [Member]
Balance, Accounts Receivable	0
Write-offs, Accounts Receivable	0
Recoveries, Accounts Receivable	0
Provision for Credit Losses, Accounts Receivable	0
Balance, Accounts Receivable	0
Franchise [Member] | Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance, Accounts Receivable	0
Vendor Related [Member]
Balance, Accounts Receivable	0
Write-offs, Accounts Receivable	0
Recoveries, Accounts Receivable	0
Provision for Credit Losses, Accounts Receivable	0
Balance, Accounts Receivable	0
Vendor Related [Member] | Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance, Accounts Receivable	$ 0

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Note 2 - Summary of Significant Accounting Policies - Summary of Past Due Financing Receivables (Details) - USD ($)	Feb. 28, 2025	Nov. 30, 2024
Notes Receivable	$ 50,340	$ 51,103
Notes and Lease Receivables, Net of Unamortized Interest	50,340
Financial Asset, Not Past Due [Member]
Notes Receivable	39,467
Notes and Lease Receivables, Net of Unamortized Interest	39,467
Financial Asset, 1 to 29 Days Past Due [Member]
Notes Receivable	0
Notes and Lease Receivables, Net of Unamortized Interest	0
Financial Asset, 30 to 59 Days Past Due [Member]
Notes Receivable	0
Notes and Lease Receivables, Net of Unamortized Interest	0
Financial Asset, 60 to 89 Days Past Due [Member]
Notes Receivable	0
Notes and Lease Receivables, Net of Unamortized Interest	0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Notes Receivable	10,873
Notes and Lease Receivables, Net of Unamortized Interest	$ 10,873

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Note 2 - Summary of Significant Accounting Policies - Schedule of Receivables by Year and Risk Rating (Details)	3 Months Ended
	Feb. 28, 2025 USD ($)
Internal Grade, year one	$ 21,580
Internal Grade, year two	17,887
Internal Grade, year three	0
Internal Grade, year four	0
Internal Grade, year five	0
Internal Grade, prior	10,873
Internal Grade, total	50,340
Internal Grade 1 [Member]
Internal Grade, year one	0
Internal Grade, year two	0
Internal Grade, year three	0
Internal Grade, year four	0
Internal Grade, year five	0
Internal Grade, prior	0
Internal Grade, total	0
Internal Grade 2 [Member]
Internal Grade, year one	0
Internal Grade, year two	0
Internal Grade, year three	0
Internal Grade, year four	0
Internal Grade, year five	0
Internal Grade, prior	0
Internal Grade, total	0
Internal Grade 3 [Member]
Internal Grade, year one	21,580
Internal Grade, year two	17,887
Internal Grade, year three	0
Internal Grade, year four	0
Internal Grade, year five	0
Internal Grade, prior	0
Internal Grade, total	39,467
Internal Grade 4 [Member]
Internal Grade, year one	0
Internal Grade, year two	0
Internal Grade, year three	0
Internal Grade, year four	0
Internal Grade, year five	0
Internal Grade, prior	10,873
Internal Grade, total	$ 10,873

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Note 3 - Revenue Recognition (Details Textual)	3 Months Ended
	Feb. 28, 2025
Initial Franchise Term	10 years
Royalty Fees From Franchises Percentage	5.00%

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Note 3 - Revenue Recognition - Cash Flow Statement Reconciliation (Details) - USD ($)	Feb. 28, 2025	Nov. 30, 2024	Feb. 29, 2024	Nov. 30, 2023
Cash and cash equivalents	$ 2,004,518	$ 2,177,586	$ 1,890,204
Restricted cash	223,909		229,520
Total cash and restricted cash	$ 2,228,427	$ 2,337,290	$ 2,119,724	$ 2,072,672

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Note 3 - Revenue Recognition - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended
	Feb. 28, 2025	Feb. 29, 2024
Revenues	$ 757,201	$ 835,934
Transferred at Point in Time [Member]
Revenues	4,875	26,989
Transferred over Time [Member]
Revenues	752,326	808,945
Sign Shop [Member] | Transferred at Point in Time [Member]
Revenues	0	1,379
Structured Settlement Annuity [Member] | Transferred at Point in Time [Member]
Revenues	4,875	25,610
Royalty [Member]
Revenues	457,194	459,690
Royalty [Member] | Transferred over Time [Member]
Revenues	457,194	459,690
Franchise [Member]
Revenues	8,583	10,246
Franchise [Member] | Transferred over Time [Member]
Revenues	8,583	10,246
License [Member] | Transferred over Time [Member]
Revenues	5,978	5,978
Gift Card [Member] | Transferred over Time [Member]
Revenues	13,559	2,846
Non-traditional Revenue [Member] | Transferred over Time [Member]
Revenues	49,966	70,774
Marketing Fund [Member]
Revenues	217,046	259,411
Marketing Fund [Member] | Transferred over Time [Member]
Revenues	$ 217,046	$ 259,411

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Note 3 - Revenue Recognition - Contract Balances Subject to ASC 606 (Details) - USD ($)	Feb. 28, 2025	Nov. 30, 2024
Contract liabilities - long-term	$ 131,025	$ 130,094
Total Contract Liabilities	593,438	550,473
Contract Liabilities, Current and Accrued Expenses and Other Current Liabilities [Member]
Contract liabilities - current	$ 462,413	$ 420,379

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Note 3 - Revenue Recognition - Changes in Contract Balances (Details) - USD ($)	3 Months Ended	12 Months Ended
	Feb. 28, 2025	Nov. 30, 2024
Contracts	$ 550,473	$ 620,188
Revenue Recognized during period	(336,265)	(1,499,334)
Additions during period	379,230	1,429,619
Contracts	$ 593,438	$ 550,473

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Note 3 - Revenue Recognition - Remaining Performance Obligations (Details)	Feb. 28, 2025 USD ($)
Remaining Performance Obligation	$ 152,489

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Note 3 - Revenue Recognition - Remaining Performance Obligations 2 (Details)	Feb. 28, 2025 USD ($)
Remaining Performance Obligation	$ 152,489
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Remaining Performance Obligation	$ 17,978	[1]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-12-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Remaining Performance Obligation	$ 21,084
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-12-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Remaining Performance Obligation	$ 22,800
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-12-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Remaining Performance Obligation	$ 16,084
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-12-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Remaining Performance Obligation	$ 14,870
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-12-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Remaining Performance Obligation	$ 13,855
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2030-12-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Remaining Performance Obligation	$ 45,818

[1] represents the estimate for the remainder of 2025

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Note 4 - Units Open and Under Development - Operating Units (Details)	Feb. 28, 2025	Feb. 29, 2024
Number of Stores	69	72
Franchised Units [Member]
Number of Stores	61	64
Licensed Units [Member]
Number of Stores	4	4
Total Franchised Owned and Licensed Units [Member]
Number of Stores	65	68
Unopened Store [Member]
Number of Stores	4	4

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Note 5 - Earnings Per Share - Computation of Earnings Per Share (Details) - USD ($)	3 Months Ended
	Feb. 28, 2025	Feb. 25, 2025	Feb. 29, 2024
Net income available to common shareholders		$ 116,267	$ 98,505
Weighted average shares outstanding - Basic and diluted (in shares)	7,263,508	7,263,508	7,263,508
Net Income per share - Basic and Diluted (in dollars per share)	$ 0.02	$ 0.02	$ 0.01

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Note 6 - Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2025	Feb. 29, 2024
Goodwill, Impairment Loss	$ 0	$ 0

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Note 7 - Lease Commitments (Details Textual) - USD ($)	Feb. 28, 2025	Feb. 15, 2024
Lessee, Operating Lease, Renewal Term		5 years
Tenant Allowance		$ 158,940
Lessee, Operating Lease, Remaining Lease Term	61 months
Lessee, Operating Lease, Discount Rate	8.50%

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Note 7 - Lease Commitments - Gross Future Minimum Annual Rental Commitments (Details) - USD ($)	Feb. 28, 2025	Nov. 30, 2024
2025	$ 54,964
2026	80,837
2027	84,024
2028	96,163
2029	99,898
Thereafter	36,827
Total Undiscounted Rent Payments	452,713
Present Value Discount	(89,658)
Present Value	363,055
Short-term lease liability	49,796	$ 47,846
Long-term lease liability	313,259	$ 330,215
Total Operating Lease Liability	$ 363,055

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Note 8 - Income Taxes (Details Textual) - USD ($)	3 Months Ended
	Feb. 28, 2025	Feb. 29, 2024
Current Income Tax Expense (Benefit)	$ 65,536	$ 60,791
Deferred Income Tax Expense (Benefit)	19,736	21,791
Income Tax Expense (Benefit)	$ 45,800	$ 39,000
Effective Income Tax Rate Reconciliation, Percent	28.30%	28.40%

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Note 9 - Stockholder's Equity (Details Textual) - $ / shares																3 Months Ended
	Mar. 07, 2025	Dec. 04, 2024	Sep. 06, 2024	Jun. 06, 2024	Mar. 06, 2024	Dec. 11, 2023	Sep. 12, 2023	Jun. 06, 2023	Mar. 13, 2023	Dec. 07, 2022	Mar. 04, 2021	Feb. 22, 2019	May 22, 2017	Aug. 18, 2015	May 06, 2013	Feb. 28, 2025	Feb. 29, 2024
Common Stock, Dividends, Per Share, Declared																$ 0.03	$ 0.02
Preferred Stock Dividends Number of Rights Declared															1
Preferred Stock Dividends Number of Rights Minimum Percent of Common Stock that must be Acquired to Make Rights Exercisable															15.00%
Preferred Stock Dividends Number of Rights Minimum Percent of Common Stock that Must be Acquired to Make Rights Exercisable, Institutional Investors															2000.00%
Right to Purchase Series A Preferred Stock [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right															0.001
Class of Warrant or Right, Exercise Price of Warrants or Rights															$ 0.9
Class of Warrant or Right, Term											11 years	9 years	7 years	5 years
O 2025 Q2 Dividends [Member] | Forecast [Member]
Dividends Payable, Date Declared	Mar. 07, 2025
Common Stock, Dividends, Per Share, Declared	$ 0.01
Dividends Payable, Date of Record	Mar. 24, 2025
Dividends Payable, Date to be Paid	Apr. 14, 2025
O 2025 Q1 Ordinary and Special Dividends [Member]
Dividends Payable, Date Declared		Dec. 04, 2024
Common Stock, Dividends, Per Share, Declared		$ 0.03
Dividends Payable, Date of Record		Dec. 23, 2024
Dividends Payable, Date to be Paid		Jan. 09, 2025
O 2025 Q1 Dividends [Member]
Common Stock, Dividends, Per Share, Declared		$ 0.01
S 2025 Q1 Dividends [Member]
Common Stock, Dividends, Per Share, Declared		$ 0.02
O 2024 Q4 Dividends [Member]
Dividends Payable, Date Declared			Sep. 06, 2024
Dividends Payable, Date of Record			Sep. 23, 2024
Dividends Payable, Date to be Paid			Oct. 11, 2024
Dividends Payable, Amount Per Share			$ 0.01
O 2024 Q3 Dividends [Member]
Dividends Payable, Date Declared				Jun. 06, 2024
Dividends Payable, Date of Record				Jun. 24, 2024
Dividends Payable, Date to be Paid				Jul. 12, 2024
Dividends Payable, Amount Per Share				$ 0.01
O 2024 Q2 Dividends [Member]
Dividends Payable, Date Declared					Mar. 06, 2024
Dividends Payable, Date of Record					Mar. 21, 2024
Dividends Payable, Date to be Paid					Apr. 12, 2024
Dividends Payable, Amount Per Share					$ 0.01
O 2024 Q1 Ordinary and Special Dividends [Member]
Dividends Payable, Date Declared						Dec. 11, 2023
Common Stock, Dividends, Per Share, Declared						$ 0.02
Dividends Payable, Date of Record						Dec. 27, 2023
Dividends Payable, Date to be Paid						Jan. 16, 2024
O 2024 Q1 Dividends [Member]
Common Stock, Dividends, Per Share, Declared						$ 0.01
S 2024 Q1 Dividends [Member]
Common Stock, Dividends, Per Share, Declared						$ 0.01
O 2023 Q4 Dividends [Member]
Dividends Payable, Date Declared							Sep. 12, 2023
Common Stock, Dividends, Per Share, Declared							$ 0.01
Dividends Payable, Date of Record							Sep. 28, 2023
Dividends Payable, Date to be Paid							Oct. 18, 2023
O 2023 Q3 Dividends [Member]
Dividends Payable, Date Declared								Jun. 06, 2023
Common Stock, Dividends, Per Share, Declared								$ 0.01
Dividends Payable, Date of Record								Jun. 22, 2023
Dividends Payable, Date to be Paid								Jul. 11, 2023
O 2023 Q2 Dividends [Member]
Dividends Payable, Date Declared									Mar. 13, 2023
Common Stock, Dividends, Per Share, Declared									$ 0.01
Dividends Payable, Date of Record									Mar. 30, 2023
Dividends Payable, Date to be Paid									Apr. 19, 2023
O 2023 Q1 Ordinary and Special Dividends [Member]
Dividends Payable, Date Declared										Dec. 07, 2022
Common Stock, Dividends, Per Share, Declared										$ 0.02
Dividends Payable, Date of Record										Dec. 22, 2022
Dividends Payable, Date to be Paid										Jan. 11, 2023
O 2023 Q1 Dividends [Member]
Common Stock, Dividends, Per Share, Declared										$ 0.01
S 2023 Q1 Dividends [Member]
Common Stock, Dividends, Per Share, Declared										$ 0.01