BABB 10-K & 10-Q changes, risk factors and insider trading
Bab, Inc. · OTC · Retail-Eating Places · CIK 1123596 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Not required for smaller reporting companies.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Franchise and related revenue (cont’d)”
Largest changes
During fiscal 2025, the Company had net income of $559,000 and operating activities which provided cash of $414,000. The principal adjustments to reconcile net income to cash provided by operating activities were depreciation and amortization of $4,000, deferred tax expense of $15,000, noncash lease expense of $87,000, less provision for credit losses of $2,000. In addition, changes in other operating assets and liabilities decreased cash a total of $249,000. During fiscal 2024, the Company had net income of $525,000 and operating activities which provided cash of $638,000. The principal adjustments to reconcile net income to cash provided by operating activities were depreciation and amortization of $4,000, deferred tax expense of $8,000, provision for uncollectible accounts of $28,000, noncash lease expense of $91,000 and $12,000 for a loss on sales-type lease termination. In addition, changes in other operating assets and liabilities decreased cash a total of $30,000.see in full comparisonDuring fiscal 2023, the Company had net income of $467,000 and operating activities which provided cash of $534,000. The principal adjustments to reconcile net income to cash provided by operating activities were depreciation and amortization of $4,000, deferred tax expense of $28,000, provision for uncollectible accounts of $18,000 and noncash lease expense of $99,000. In addition, changes in other operating assets and liabilities decreased cash a total of $82,000.
“The decrease in operating expenses of $162,000, or 5.6% in 2025 was primarily due to a decrease in marketing expenses of $35,000, occupancy expense of $9,000, a $79,000 decrease in employee benefit expense due to several employees moving from the company health policy to Medicare, a decrease in professional fees $20,000, and a $16,000 decrease in other expenses. There was a $12,000 decrease in 2025 expenses because there was a loss on lease termination in 2024. This was offset by an increase of $7,000 in payroll expenses and a $2,000 increase in advertising and promotions.”see in full comparison
“On July 30, 2025 the FASB issued ASU 2025-05, “Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The ASU relates to estimating credit losses under CECL for current accounts receivable and current contract assets arising from revenue transactions accounted for under ASC 606, Revenue from Contracts with Customers, including those acquired in a transaction accounted for under ASC 805, Business Combinations. The ASU does not apply to other types of accounts receivable and loans.”see in full comparison
“The decrease in operating expenses of $15,000, or 0.5% in 2024 was primarily due to a decrease in marketing expenses of $67,000, occupancy expense of $13,000, a $10,000 decrease in advertising and promotion and other expenses decreased $4,000, offset by an increase in payroll and payroll taxes of $48,000, an increase in professional fees of $19,000, and a sales-type lease termination added $12,000 in expenses compared to the same period 2023.”see in full comparison
Franchise fee revenuesee in full comparisonincreaseddecreased$29,000,$33,000, or107.4%,58.9%, to $23,000 in 2025 as compared to $56,000 in20242024.asIncompared2025 there were two transfers, in addition to$27,000theinnormal2023.monthly amortization. In 2024 there were two transfers, one store opened and one store closed that had not been fully amortized that resulted in an additional $23,000 in franchise fees recognized, in addition to the normal monthly amortization.In 2023 there were two transfers, and one store closed that had not been fully amortized resulting in $2,000 in franchise fees recognized, in addition to the normal monthly amortization.
Full comparison: every changed paragraph (17)
Total revenues from all sources increaseddecreased $35,000,$106,000, or 1.0%,3.0%, to $3,545,000$3,439,000 in 20242025 from $3,510,000$3,545,000 in the prior year. Franchise fee revenue increaseddecreased $29,000,$33,000, royalty revenue increaseddecreased $50,000 and$11,000, licensing fees and other revenue increaseddecreased $24,000$29,000, in 2024 compared to 2023, offset by a decrease inand Marketing Fund revenue ofdecrease $67,000$35,000 in 20242025 compared to 2023.2024.
Royalty fee revenue of $1,995,000,$1,984,000, for the fiscal year ended November 30, 2024,2025, increaseddecreased $50,000,$11,000, or 2.6%,0.6%, from the $1,945,000$1,995,000 for fiscal year ended November 30, 2023. The increase in royalties for the fiscal year ended November 30, 2024 was primarily due to franchisees continued increase in usage of online ordering and delivery services in their areas.2024.
Franchise fee revenue increaseddecreased $29,000,$33,000, or 107.4%,58.9%, to $23,000 in 2025 as compared to $56,000 in 20242024. asIn compared2025 there were two transfers, in addition to $27,000the innormal 2023.monthly amortization. In 2024 there were two transfers, one store opened and one store closed that had not been fully amortized that resulted in an additional $23,000 in franchise fees recognized, in addition to the normal monthly amortization. In 2023 there were two transfers, and one store closed that had not been fully amortized resulting in $2,000 in franchise fees recognized, in addition to the normal monthly amortization.
Licensing fees and other income increaseddecreased $24,000,$29,000, or 8.2%,9.1%, to $289,000 in 2025 compared to $318,000 in 2024 compared to $294,000 in 2023.2024. Marketing fund revenues decreased $67,000,$35,000, or 5.4%3.0% to $1,142,000 in 2025 compared to $1,177,000 in 2024 compared to $1,244,000 in 2023.2024.
The decrease in operating expenses of $162,000, or 5.6% in 2025 was primarily due to a decrease in marketing expenses of $35,000, occupancy expense of $9,000, a $79,000 decrease in employee benefit expense due to several employees moving from the company health policy to Medicare, a decrease in professional fees $20,000, and a $16,000 decrease in other expenses. There was a $12,000 decrease in 2025 expenses because there was a loss on lease termination in 2024. This was offset by an increase of $7,000 in payroll expenses and a $2,000 increase in advertising and promotions.
The decrease in operating expenses of $15,000, or 0.5% in 2024 was primarily due to a decrease in marketing expenses of $67,000, occupancy expense of $13,000, a $10,000 decrease in advertising and promotion and other expenses decreased $4,000, offset by an increase in payroll and payroll taxes of $48,000, an increase in professional fees of $19,000, and a sales-type lease termination added $12,000 in expenses compared to the same period 2023.
Interest income increaseddecreased $30,000,$8,000, or 83.3%12.1% to $58,000 in 2025 compared to $66,000 in 2024 compared to 36,000 in 2023.2024.
At November 30. 2025, the Company had working capital of $1,914,000 and unrestricted cash of $2,154,000. At November 30, 2024, the Company had working capital of $1,784,000 and unrestricted cash of $2,178,000.
At November 30. 2024, the Company had working capital of $1,784,000 and unrestricted cash of $2,178,000. At November 30, 2023, the Company had working capital of 1,614,000 and unrestricted cash of $1,889,000.
During fiscal 2025, the Company had net income of $559,000 and operating activities which provided cash of $414,000. The principal adjustments to reconcile net income to cash provided by operating activities were depreciation and amortization of $4,000, deferred tax expense of $15,000, noncash lease expense of $87,000, less provision for credit losses of $2,000. In addition, changes in other operating assets and liabilities decreased cash a total of $249,000. During fiscal 2024, the Company had net income of $525,000 and operating activities which provided cash of $638,000. The principal adjustments to reconcile net income to cash provided by operating activities were depreciation and amortization of $4,000, deferred tax expense of $8,000, provision for uncollectible accounts of $28,000, noncash lease expense of $91,000 and $12,000 for a loss on sales-type lease termination. In addition, changes in other operating assets and liabilities decreased cash a total of $30,000. During fiscal 2023, the Company had net income of $467,000 and operating activities which provided cash of $534,000. The principal adjustments to reconcile net income to cash provided by operating activities were depreciation and amortization of $4,000, deferred tax expense of $28,000, provision for uncollectible accounts of $18,000 and noncash lease expense of $99,000. In addition, changes in other operating assets and liabilities decreased cash a total of $82,000.
Financing activities in fiscal 20242025 and fiscal 20232024 included cash used for distributions/dividend payments to common stockholders of $363,000$436,000 forand each$363,000, year.respectively.
Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of royalty and wholesale accounts receivables. The Company believes it has maintained adequate reserves for doubtfulcredit accounts.losses.
In the first quarter of fiscal 2024 BAB Inc. adopted FASB ASC Topic 326, Financial Instruments - Credit Losses, (“CECL”) with an adoption date of December 1, 2023. As a result, the Company changed its accounting policy for allowance for credit losses and the policy pursuant to CECL is disclosed in Note 2 of the audited Consolidated Financial Statements.
Franchise and related revenue (cont’d)
On July 30, 2025 the FASB issued ASU 2025-05, “Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The ASU relates to estimating credit losses under CECL for current accounts receivable and current contract assets arising from revenue transactions accounted for under ASC 606, Revenue from Contracts with Customers, including those acquired in a transaction accounted for under ASC 805, Business Combinations. The ASU does not apply to other types of accounts receivable and loans.
For all entities, the ASU provides a practical expedient to assume that current conditions as of the balance sheet date will persist through the reasonable and supportable forecast period for eligible assets. Entities will still be required to adjust historical data used in the estimation to reflect current conditions.
The new guidance will be effective for interim and annual periods beginning after December 15, 2025 and is to be adopted on a prospective basis. The Company will adopt ASU 2025-09 for fiscal year ending November 30, 2027.
What changed in the latest 10-Q
Risk Factors
We could not find a separate Risk Factors item in the latest 10-Q. Some companies leave it out of quarterly reports; see the annual 10-K risk factors and the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
New heading “Six Months Ended May 31, 2026 versus Six Months Ended May 31, 2025”
Largest changes
“Six Months Ended May 31, 2026 versus Six Months Ended May 31, 2025”see in full comparison
“Interest income was $26,000 for the six months ended May 31, 2026, decreasing $3,000, or 10.3% from $29,000 for the six months ended May 31, 2025 primarily because of reduced short-term interest rates in the six months of 2026 compared to the same period 2025.”see in full comparison
Interest income was $13,000 for the quarter endedsee in full comparisonFebruaryMay28,31, 2026, decreasing$2,000,$1,000, or13.3%7.1%, from$15,000$14,000 for the three months endedFebruaryMay28, 2025, primarily because of reduced short-term interest rates in 2026 compared to31, 2025.
“Franchise fee revenue was $15,000, for the six months ended May 31, 2026, increasing $3,000, or 17%, from $12,000 for May 31, 2025. In the six months of 2026 there was one store opening compared to one transfer in the same period in 2025 with both years having normal monthly amortization. Licensing fee and other income of $121,000, for the six months ended May 31, 2026, decreased $19,000 or 13.6% from $140,000 for same period 2025. …”see in full comparison
During thesee in full comparisonthreesix months endedFebruaryMay28,31, 2026, the Company had net income of$119,000$306,000 and operating activities provided cash of$182,000.$464,000. The principal adjustments to reconcile the net income to cash provided by operating activities for thethreesix months endingFebruaryMay28,31, 2026 was depreciation and amortization of$1,000$14,000, and noncash lease expense of$22,000,$43,000,lessand a deferred taxexpensereduction of$16,000.$57,000. In addition, changes in operating assets and liabilities increased cash by$56,000. 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.$158,000.
“For the six months ended May 31, 2026 and May 31, 2025, the Company reported net income of $306,000 and $271,000, respectively. Total revenue of $1,527,000 decreased $39,000, or 2.5%, for the six months ended May 31, 2026, as compared to total revenue of $1,566,000 for the six months ended May 31, 2025. Our total revenue for the six months ended May 31, 2025 decreased compared to the prior period primarily due to a decrease in marketing fund expenses, which drive the recognition of marketing fund revenue. Under U.S. …”see in full comparison
Full comparison: every changed paragraph (27)
There are 5960 franchised and 3 licensed units at FebruaryMay 28,31, 2026 compared to 61 franchised and 4 licensed units at FebruaryMay 28,31, 2025. System-wide revenues, meaning revenues for the threeentire franchise system, for the six months ended FebruaryMay 28,31, 2026 were $9.6$20.3 million and FebruaryMay 28,31, 2025 was $9.4$20.0 million.
As of FebruaryMay 28,31, 2026, the Company employed 10 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.
Three Months Ended FebruaryMay 28,31, 2026 versus Three Months Ended FebruaryMay 28,31, 2025
For the three months ended FebruaryMay 28,31, 2026 and FebruaryMay 28,31, 2025, the Company reported net income of $119,000$187,000 and $116,000,$154,000, respectively. Total revenue of $724,000$804,000 decreased $33,000,$4,000, or 4.4%,0.0%, for the three months ended FebruaryMay 28,31, 2026, as compared to total revenue of $757,000$808,000 for the three months ended FebruaryMay 28,31, 2025.
Royalty fee revenue of $466,000,$520,000, for the quarter ended FebruaryMay 28,31, 2026, increased $9,000,$8,000, or 2.0%,1.6%, from the $457,000$512,000 for quarter ended FebruaryMay 28,31, 2025.2026.
Franchise fee revenue was $8,000,$7,000, for the quarter ended FebruaryMay 28,31, 2026, aincreased decrease of $1,000,$3,000, or 11.1%,75.0%, from $9,000$4,000 for FebruaryMay 28,31, 2025. In the firstsecond quarter 2026 and 2025 there was oneno transfertransfers and then both years had normal annual amortization. In the second quarter 2026, there was one store opening.
Licensing fee and other income decreased to $52,000 for the three months ended February 28, 2026 from $74,000 for the three months ended February 28, 2025, a decrease of $22,000, or 29.7%. This decrease was primarily attributable to a $5,000 reduction in settlement revenue that had been recognized in the prior-year period from a closed location, a $2,000 decline in license fee revenue resulting from the closure of a licensed establishment in 2025, and a $15,000 decrease in non-traditional revenue due to temporarily reduced vendor rebates and the timing of franchisee purchases.
MarketingLicensing fundfee revenuesand wereother $198,000income increased to $69,000 for the three months ended FebruaryMay 28,31, 2026, comparedfrom to $217,000$66,000 for the three months ended FebruaryMay 28,31, 2025, aan decreaseincrease of $19,000,$3,000, or 8.8%.4.5%. The decreaseincrease was driven by an increase in marketinggift fundcard revenuesbreakage wasrevenue of $18,000, offset by a corresponding $19,000 decrease in marketingsign fundshop expenses.revenue of $8,000 and settlement revenue of $8,000.
Marketing fund revenues were $207,000 for the three months ended May 31, 2026, compared to $227,000 for the three months ended May 31, 2025, a decrease of $20,000, or 8.8%. The decrease in marketing fund revenues was offset by a corresponding $20,000 decrease in marketing fund expenses.
Total operating expenses of $571,000,$556,000 for the quarter ended FebruaryMay 28,31, 2026,2026 decreased $39,000,$52,000, or 6.4%8.6%, from $610,000$608,000 for the quarter ended FebruaryMay 28,31, 2025. The decrease in 2026 operating expenses was primarily related to a decrease in payroll expenses of $28,000, decrease in marketing fund expenses of $19,000,$20,000, and a decrease in payrollprofessional andservice payroll related expensesfees of $50,000.$6,000, These werepartially offset by an increase in February 28, 2026 professional services of $20,000, which included increased filing fees for annual Franchise Disclosure Document, an$11,000 increase in employeedepreciation benefitsand of $5,000amortization, and an increasedecrease in generalother expenses of $5,000$8,000 compared to the same period in 2025.
Interest income was $13,000 for the quarter ended FebruaryMay 28,31, 2026, decreasing $2,000,$1,000, or 13.3%7.1%, from $15,000$14,000 for the three months ended FebruaryMay 28, 2025, primarily because of reduced short-term interest rates in 2026 compared to31, 2025.
For the three months ended FebruaryMay 28,31, 2026 and 20252025, the provision for income tax was $47,000$73,000 and $46,000,$60,000, respectively.
Earnings per share, as reported for basic and diluted outstanding shares, was $0.03 and $0.02 for the quarters ended FebruaryMay 28,31, 2026 and 2025.2025, respectively.
Six Months Ended May 31, 2026 versus Six Months Ended May 31, 2025
For the six months ended May 31, 2026 and May 31, 2025, the Company reported net income of $306,000 and $271,000, respectively. Total revenue of $1,527,000 decreased $39,000, or 2.5%, for the six months ended May 31, 2026, as compared to total revenue of $1,566,000 for the six months ended May 31, 2025. Our total revenue for the six months ended May 31, 2025 decreased compared to the prior period primarily due to a decrease in marketing fund expenses, which drive the recognition of marketing fund revenue. Under U.S. GAAP, we recognize marketing fund revenue at the time the related marketing fund expenses are incurred. As marketing fund revenue and expense directly offset each other in any given period, the decline has no impact on net income.
Royalty fee revenue of $986,000, for the six months ended May 31, 2026, increased $17,000, or 1.8%, from the $969,000 for the six months ended May 31, 2025.
Franchise fee revenue was $15,000, for the six months ended May 31, 2026, increasing $3,000, or 17%, from $12,000 for May 31, 2025. In the six months of 2026 there was one store opening compared to one transfer in the same period in 2025 with both years having normal monthly amortization. Licensing fee and other income of $121,000, for the six months ended May 31, 2026, decreased $19,000 or 13.6% from $140,000 for same period 2025. Nontraditional revenue decreased $12,000, sign shop revenue decreased $8,000, license fee revenue decreased $5,000, and settlement revenue decreased $12,000, offset by an $17,000 increase in gift card revenue in the six months ended May 31, 2026 compared to May 31, 2025. Marketing Fund revenues of $405,000, for the six months ended May 31, 2026, decreased $39,000, or 8.8% from $444,000 for the six months ended May 31, 2025.
Management continues to review expenses and control costs in a time of rising costs. Total operating expenses of $1,127,000, for the six months ended May 31, 2026, decreased $91,000, or 7.5% from $1,218,000 the six months ended May 31, 2025. Marketing expenses accounted for $39,000 of the decrease for the six months of 2026 compared to same period 2025. There were decreases in expenses for May 31, 2026 compared to May 31, 2025 in payroll expenses of $77,000 due to the retirement of an employee, offset by increases in professional services of $14,000, in employee benefits of $4,000, and an increase in depreciation and amortization of $12,000.
Interest income was $26,000 for the six months ended May 31, 2026, decreasing $3,000, or 10.3% from $29,000 for the six months ended May 31, 2025 primarily because of reduced short-term interest rates in the six months of 2026 compared to the same period 2025.
Earnings per share, as reported for basic and diluted outstanding shares, were $0.04 for both the six ended May 31, 2026 and 2025.
At FebruaryMay 28,31, 2026, the Company had working capital of $1,865,000$1,974,000 and unrestricted cash of $2,109,000.$2,215,000. At FebruaryMay 28,31, 20252025, the Company had working capital of $1,662,000,$1,733,000, and unrestricted cash of $2,005,000.$2,048,000.
During the threesix months ended FebruaryMay 28,31, 2026, the Company had net income of $119,000$306,000 and operating activities provided cash of $182,000.$464,000. The principal adjustments to reconcile the net income to cash provided by operating activities for the threesix months ending FebruaryMay 28,31, 2026 was depreciation and amortization of $1,000$14,000, and noncash lease expense of $22,000,$43,000, lessand a deferred tax expensereduction of $16,000.$57,000. In addition, changes in operating assets and liabilities increased cash by $56,000. 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.$158,000.
During the six months ended May 31, 2025, the Company had net income of $271,000 and operating activities provided cash of $286,000. The principal adjustments to reconcile the net income to cash provided by operating activities for the six months ending May 31, 2025 was depreciation and amortization of $2,000, and noncash lease expense of $43,000, less provision for uncollectible accounts of $1,000 and deferred tax reduction of $39,000. In addition, changes in operating assets and liabilities increased cash by $10,000.
During fiscal 2026, no funds were provided or used in investing activities. During fiscal 2025, net cash provided by investing activities was $2,000.
Cash distributions/dividends used $145,000$218,000 and $218,000$291,000 in financing activities for the threesix months ending FebruaryMay 28,31, 2026 and February 28, 2025, respectivelyrespectively.
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 2026, a $0.02 cash distribution/dividend was declared for the first quarter, a $0.01 cash distribution/dividend was declared for the second quarter, and a $0.01 cash distribution/dividend was declared for the secondthird quarter.
Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of FebruaryMay 28,31, 2026 that would have or are expected to have any significant effect on the Company’s financial position, cash flows or income statement.
BABB insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding BABB (13F)
None of the 59 investors we track reported a position in their latest 13F.