Financial Analysis

For three months ended May 31, 2026 For three months ended May 31, 2025 For six months ended May 31, 2026 For six months ended May 31, 2025 Revenue recognized at a point in time Sign Shop revenue $ 192 $ 8,033 $ 433 $ 8,033 Settlement revenue - 7,625 700 12,500 Total revenue at a point in time 192 15,658 1,133 20,533 Revenue recognized over time Royalty revenue 520,020 511,879 985,908 969,073 Franchise fees 7,117 3,583 15,200 12,166 License fees 3,378 5,978 6,756 11,956 Gift card revenue 17,577 639 30,739 14,197 Nontraditional revenue 47,964 43,700 82,244 93,667 Marketing fund revenue 207,441 227,049 405,372 444,095 Total revenue over time 803,497 792,828 1,526,219 1,545,154 Grand total $ 803,689 $ 808,486 $ 1,527,352 $ 1,565,687

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6. Goodwill and Other Intangible Assets Management reviewed and updated the qualitative assessment conducted during the second quarter 2026 and does not believe that any impairment exists. The net book value of goodwill and intangible assets with indefinite and definite lives are as follows: Goodwill Trademarks Definite Lived Intangibles Total Net Balance as of November 30, 2024 $ 1,493,771 $ 461,445 $ 13,272 $ 1,968,488 Additions - - 4,049 4,049 Amortization expense - - (4,081 ) (4,081 ) Net Balance as of November 30, 2025 $ 1,493,771 $ 461,445 $ 13,240 $ 1,968,456 Additions - - - - Amortization expense - - (13,240 ) (13,240 ) Net Balance as of May 31, 2026 $ 1,493,771 $ 461,445 $ - $ 1,955,216

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8. Income Taxes For the three months ended May 31, 2026, the Company recorded current tax expense of $113,913 and a deferred tax benefit of $40,813, for a total tax provision of $73,100, with an effective tax rate of 28.1%. For the six months ended May 31, 2026, the Company recorded current tax expense of $176,826 and a deferred tax benefit of $57,026, for a total tax provision of $119,800, with an effective tax rate of 28.1%. For the three months ended May 31, 2025, the Company recorded current tax expense of $79,598 and a deferred tax benefit of $19,398, for a total tax provision of $60,200, with an effective tax rate of 28.1%. For the six months ended May 31, 2025, the Company recorded current tax expense of $145,134 and a deferred tax benefit of $39,134, for a total tax provision of $106,000, with an effective tax rate of 28.1%.

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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. In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update No. 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (ASU2024-03), which requires public business entities to provide enhanced disclosures that disaggregate certain expense captions in the notes to the financial statements to improve transparency about components of expense categories such as purchases of inventory, employee compensation, depreciation, amortization and related items. ASU2024-03 does not change the recognition or measurement of expenses presented on the face of the income statement, but will require additional tabular disclosures in the notes for annual and interim reporting periods. The guidan …

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3. Revenue Recognition 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 Companys 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 separa …

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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 …

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9. Stockholder s Equity On March 10, 2026, the Board declared a $0.01 cash distribution/dividend per share, to stockholders of record on March 30, 2026, paid on April 20, 2026. On December 9, 2025 the Board declared a $0.02 cash distribution/dividend per share, of $0.01 quarterly and $0.01 special, to stockholders of record as of December 30, 2025 paid January 21, 2026. On September 9, 2025 the Board declared a $0.01 quarterly cash distribution/dividend per share, to stockholders of record as of September 26, 2025, paid October 15, 2025. On June 6, 2025 the Board declared a $0.01 quarterly cash distribution/dividend per share, to stockholders of record as of June 26, 2025, paid July 14, 2025. On March 7, 2025 the Board declared a $0.01 quarterly cash distribution/dividend per share, to stockholders of record as of March 24, 2025, paid 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 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 S …

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10. Subsequent Event On June 5, 2026 the Board of Directors (Board) declared a $0.01 cash distribution/dividend per share, to stockholders of record as of June 23, 2026 payable July 14, 2026. …

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