Bab, Inc - (3,357 ) (7,067 ) (12,531 )...

Bab, Inc - Recent Material Event

Item 1.	Unaudited Financial Information

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operation

Item 3	Controls and Procedures

PART II

Item 1.	Legal Proceedings

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds

Item 3	Defaults Upon Senior Securities

Item 4	Submission of Matters to a Vote of Security Holders

Item 5	Other Information

Item 6	Exhibits and Reports on Form 8-K

SIGNATURE

Table of Contents

PART I

ITEM 1.

FINANCIAL INFORMATION

BAB, Inc.

Condensed Consolidated Balance Sheet (Unaudited)

As of August 31, 2007

ASSETS
Current Assets
Cash	$	1,479,713
Restricted cash		272,529
Receivables
Trade accounts receivable (net of allowance for doubtful accounts of $4,650)		98,933
Marketing fund contributions receivable from franchisees and stores		14,841
Notes receivable		5,672
Inventories		53,664
Prepaid expenses and other current assets		117,452
Total Current Assets		2,042,804

Noncurrent Assets
Property, plant and equipment (net of accumulated depreciation of $518,982)		72,064
Notes receivable (net of allowance for doubtful accounts of $4,931)		1,711
Trademarks		763,667
Goodwill		3,542,772
Total Noncurrent Assets		4,380,214

Total Assets	$	6,423,018

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt	$	22,005
Accounts payable		37,412
Accrued expenses and other current liabilities		354,204
Unexpended marketing fund contributions		207,283
Deferred franchise fee revenue		170,000
Deferred revenue		50,885
Total Current Liabilities		841,789

Noncurrent Liabilities
Long-term debt (net of current portion)		251,567
Deferred revenue (net of current portion)		12,510
Total Noncurrent Liabilities		264,077
Total Liabilities		1,105,866

Stockholders' Equity (Deficit)
Common stock		13,508,256
Additional paid-in capital		923,255
Treasury stock		(222,781	)
Accumulated deficit		(8,891,578	)
Total Stockholders' Equity		5,317,152
Total Liabilities and Stockholders' Equity	$	6,423,018

SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

BAB, Inc.

Condensed Consolidated Statements of Operations

For the Quarter and Year to Date Periods Ended August 31, 2007 and August 31, 2006

(Unaudited)

	3 months ended				9 months ended
			Restated				Restated
	August 31, 2007		August 31, 2006		August 31, 2007		August 31, 2006
REVENUES
Royalty fees from franchised stores	$	557,467	$	591,519	$	1,656,363	$	1,715,490
Net sales by Company-owned stores		124,408		116,282		357,770		384,523
Franchise fees		70,000		20,000		195,000		225,500
Licensing fees and other income		230,147		217,158		761,365		644,153
Total Revenues		982,022		944,959		2,970,498		2,969,666
OPERATING EXPENSES
Food, beverage and paper costs		41,120		35,893		113,069		123,779
Store payroll and other operating expenses		111,481		108,822		335,525		369,815
Selling, general and administrative expenses:
Payroll-related expenses		338,338		314,869		1,079,812		1,030,477
Occupancy		35,552		34,903		108,781		106,564
Advertising and promotion		30,949		18,857		85,752		78,482
Professional service fees		40,986		44,554		153,109		166,173
Travel expenses		24,574		27,209		67,889		73,373
Depreciation and amortization		8,432		17,229		35,227		51,797
Other		126,942		114,306		432,348