BAB, Inc. Reports Profit for 3rd 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 third quarter ended August 31, 2005, reporting net income of $147,600.

For the quarter ended August 31, 2005, BAB had revenues of $1,265,600 and net income of $147,600, or $0.02 per share, versus revenues of $1,411,000 and net income of $308,400, or $0.04 per share, for the same quarter last year. This is the 16th consecutive quarter BAB earned a net profit.

For the nine months ended August 31, 2005, BAB had revenues of $3,913,900 and net income of $530,300, or $0.07 per share, versus revenues of $4,292,800 and net income of $520,500, or $0.07 per share for the same period in 2004. YTD August 31, 2005, total operating costs were $3,355,800, or 85.7% of revenues, versus $3,714,600, or 86.5% in 2004.

The Company paid cash dividends of $717,200 and reduced debt by $248,400 over the past year ending August 31, 2005, while maintaining its cash position - cash was $2,213,300 at August 31, 2005 versus $2,266,400 at August 31, 2004.

BAB, Inc. operates, franchises, and licenses Big Apple Bagels (R), My Favorite Muffin (R) and Brewster's (R) Coffee. 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.

BAB, INC.
            CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                       ------------------------------
                                           Quarter Ended
                                        08/31/05   08/31/04  % Change
                                       -------------------------------

REVENUES
Net sales by company-owned stores        370,594    395,463     -6.3%
Royalty fees from franchised stores      581,675    596,574     -2.5%
Franchise and area development fee
 revenue                                  40,000    145,235    -72.5%
Licensing fees and other income          273,368    273,758     -0.1%
                                       ---------------------
                                       1,265,637  1,411,030    -10.3%

OPERATING COSTS AND EXPENSES
Food, beverage and paper costs           136,030    132,054      3.0%
Store payroll and other operating
 expenses                                316,565    389,824    -18.8%
Selling, general and administrative      635,903    534,580     19.0%
Depreciation and amortization             21,106     26,385    -20.0%
                                       ---------------------
                                       1,109,604  1,082,843      2.5%

Income before interest, other and
 taxes                                   156,033    328,187      N/M

Interest expense                          10,696     22,498    -52.5%
Interest/other income                      2,249      2,728    -17.6%

                                       ---------------------
NET INCOME                               147,586    308,417      N/M
                                       =====================

Earnings per share - basic                  0.02       0.04      N/M
Average number of shares outstanding   7,208,946  7,021,373

Earnings per share - diluted                0.02       0.04      N/M
Average number of shares outstanding   7,250,558  7,187,315


                                       -------------------------------
                                         Nine Months Ended
                                        08/31/05   08/31/04  % Change
                                       -------------------------------

REVENUES
Net sales by company-owned stores      1,115,622  1,404,043     -20.5%
Royalty fees from franchised stores    1,703,786  1,750,789      -2.7%
Franchise and area development fee
 revenue                                 147,500    293,680     -49.8%
Licensing fees and other income          946,969    844,324      12.2%
                                       ---------------------
                                       3,913,877  4,292,836      -8.8%

OPERATING COSTS AND EXPENSES
Food, beverage and paper costs           388,332    464,520     -16.4%
Store payroll and other operating
 expenses                                939,213  1,302,678     -27.9%
Selling, general and administrative    1,964,747  1,816,042       8.2%
Depreciation and amortization             63,507    131,386     -51.7%
                                       ---------------------
                                       3,355,799  3,714,626      -9.7%

Income before interest, other and
 taxes                                   558,078    578,210       N/M

Interest expense                          34,363     69,208     -50.3%
Interest/other income                      6,592     11,451     -42.4%

                                       ---------------------
NET INCOME                               530,307    520,453       N/M
                                       =====================

Earnings per share - basic                  0.07       0.07       N/M
Average number of shares outstanding   7,175,427  6,940,199

Earnings per share - diluted                0.07       0.07       N/M
Average number of shares outstanding   7,245,677  7,106,141