BAB, Inc. Reports Profit for 2nd Quarter 2005.

DEERFIELD, Ill. -- BAB, Inc. (OTCBB: BABB), operator and franchisor of Big Apple Bagels, My Favorite Muffin and Brewster's Coffee, today announced the financial results for its second quarter ended May 31, 2005, reporting net income of $279,700.

For the quarter ended May 31, 2005, BAB had revenues of $1,444,700 and net income of $279,700, or $0.04 per share, versus revenues of $1,433,600 and net income of $155,500, or $0.02 per share, for the same quarter last year. This is the 15th consecutive quarter BAB earned a net profit.

For the six months ended May 31, 2005, BAB had revenues of $2,648,200 and net income of $382,700, or $0.05 per share, versus revenues of $2,881,800 and net income $212,000, or $0.03 per share for the same period in 2004.

Total operating costs for the quarter ended May 31, 2005, were $1,155,200, or 80.0% of revenues, versus $1,266,800, or 88.4% in 2004. YTD May 31, 2005, total operating costs were $2,246,200, or 84.8% of revenues, versus $2,631,800, or 91.3% in 2004.

The Company also continues to improve its balance sheet. From May 31, 2004 to May 31, 2005, cash increased $90,200 even though the Company paid cash dividends of $713,500 and also paid $208,500 to reduce debt.

BAB, Inc. operates, franchises, and licenses Big Apple Bagels (R), My Favorite Muffin (R), Brewster's (R) Coffee and Jacob Bros. Bagels. The Company's stock is traded on the OTCBB under the symbol BABB and its web site can be visited at www.babcorp.com.

Certain statements in this press release constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast," "estimate," "project," "intend," "expect," "should," "would," "believe" and similar expressions and all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the company's actual results, performance (financial or operating), or achievements to differ from the future results, performance (financial or operating), or achievements expressed or implied by such forward-looking statements. The above factors are more fully discussed in the company's SEC filings.

(TABLE FOLLOWS)

BAB, INC.
            CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                       -------------------------------
                                           Quarter  Ended
                                        05/31/05   05/31/04  % Change
                                       -------------------------------

REVENUES
Net sales by company-owned stores        399,690    433,369      -7.8%
Royalty fees from franchised stores      581,216    598,913      -3.0%
Franchise and area development fee
 revenue                                  77,500    120,945     -35.9%
Licensing fees and other income          386,271    280,375      37.8%
                                       ---------------------
                                       1,444,677  1,433,602       0.8%

OPERATING COSTS AND EXPENSES
Food, beverage and paper costs           134,886    147,160      -8.3%
Store payroll and other operating
 expenses                                336,548    422,957     -20.4%
Selling, general and administrative      662,605    655,413       1.1%
Depreciation and amortization             21,203     41,222     -48.6%
                                       ---------------------
                                       1,155,242  1,266,752      -8.8%

Income from operations                   289,435    166,850       N/M

Interest expense                          11,518     21,422     -46.2%
Interest/other income                      1,822     10,054     -81.9%

                                       ---------------------
NET INCOME                               279,739    155,482       N/M
                                       =====================

Earnings per share - basic                  0.04       0.02       N/M
Average number of shares outstanding   7,166,191  6,964,758

Earnings per share - diluted                0.04       0.02       N/M
Average number of shares outstanding   7,240,866  7,165,836

                                       -------------------------------
                                          Six Months Ended
                                        05/31/05   05/31/04  % Change
                                       -------------------------------

REVENUES
Net sales by company-owned stores        745,028  1,008,580     -26.1%
Royalty fees from franchised stores    1,122,112  1,154,215      -2.8%
Franchise and area development fee
 revenue                                 107,500    148,445     -27.6%
Licensing fees and other income          673,601    570,566      18.1%
                                       ---------------------
                                       2,648,241  2,881,806      -8.1%

OPERATING COSTS AND EXPENSES
Food, beverage and paper costs           252,302    332,466     -24.1%
Store payroll and other operating
 expenses                                622,648    919,492     -32.3%
Selling, general and administrative    1,328,842  1,274,823       4.2%

Depreciation and amortization             42,402    105,001     -59.6%
                                       ---------------------
                                       2,246,194  2,631,782     -14.7%

Income from operations                   402,047    250,024       N/M

Interest expense                          23,667     46,710     -49.3%
Interest/other income                      4,342      8,723     -50.2%

                                       ---------------------
NET INCOME                               382,722    212,037       N/M
                                       =====================

Earnings per share - basic                  0.05       0.03       N/M
Average number of shares outstanding   7,158,483  6,899,390

Earnings per share - diluted                0.05       0.03       N/M
Average number of shares outstanding   7,240,956  7,100,468