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. Brewsters (Brewsters) 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 May 31, 2020, the Company had 72 franchise units and 7 licensed units in operation in 22 states and the United Arab Emirates. There are 2 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 a licensing agreement with Green Beans Coffee. 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 Cafe (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 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, 2019 which was filed February 24, 2020. 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.