# EDGAR Filing Document

**Accession Number:** 0001123596
**File Stem:** 0001437749-25-022643
**Filing Date:** 2025-7
**Character Count:** 79637
**Document Hash:** d842656bc5788bfd54b88c3bd3ea5809
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-25-022643.hdr.sgml**: 20250714

**ACCESSION NUMBER**: 0001437749-25-022643

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 59

**CONFORMED PERIOD OF REPORT**: 20250531

**FILED AS OF DATE**: 20250714

**DATE AS OF CHANGE**: 20250714

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BAB, INC.
- **CENTRAL INDEX KEY:** 0001123596
- **STANDARD INDUSTRIAL CLASSIFICATION:** RETAIL-EATING PLACES [5812]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 364389547
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1130

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-31555
- **FILM NUMBER:** 251120596

**BUSINESS ADDRESS:**
- **STREET 1:** 500 LAKE COOK ROAD
- **STREET 2:** SUITE 475
- **CITY:** DEERFIELD
- **STATE:** IL
- **ZIP:** 60015
- **BUSINESS PHONE:** 847 948-7520

**MAIL ADDRESS:**
- **STREET 1:** 500 LAKE COOK ROAD
- **STREET 2:** SUITE 475
- **CITY:** DEERFIELD
- **STATE:** IL
- **ZIP:** 60015

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** BAB INC
- **DATE OF NAME CHANGE:** 20000912

?xml version='1.0' encoding='ASCII'? babs20250531_10q.htm

[**Table of Contents**](#toc)

FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2025

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _________________ Commission file number: 0-31555

BAB, Inc.

(Name of small business issuer in its charter)

---

| | |
|:---|:---|
| Delaware | 36-4389547 |
| (State or other jurisdiction of incorporation or<br> organization) | (I.R.S. Employer Identification No.) |

---

500 Lake Cook Road, Suite 475, Deerfield, Illinois 60015

(Address of principal executive offices) (Zip Code)

Issuer's telephone number (847) 948-7520

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which<br> registered |
| Common Stock | BABB | OTCQB |

---

Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐&nbsp;&nbsp;&nbsp;&nbsp; Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. &nbsp;&nbsp;&nbsp;&nbsp; ☐&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Indicate by check mark whether the registrant is a shell company. Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No ☒

As of July 14, 2025 BAB, Inc. had: 7,263,508 shares of Common Stock outstanding.

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[**Table of Contents**](#toc)

**TABLE OF CONTENTS**

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| | | |
|:---|:---|:---|
| PART I | [FINANCIAL INFORMATION](#part_1) | [3](#part_1) |
| Item 1. | [<u>Financial Statements</u>](#fin_statements) | [3](#fin_statements) |
| Item 2 | [<u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#mda) | [17](#mda) |
| Item 3 | [<u>Quantitative and Qualitative Disclosures About Market Risk</u>](#quant_qual) | [20](#quant_qual) |
| Item 4 | [<u>Controls and Procedures</u>](#controls) | [20](#controls) |
| PART II | [OTHER INFORMATION](#part_2) | [21](#part_2) |
| Item 1. | [<u>Legal Proceedings</u>](#legal) | [21](#legal) |
| Item 2 | [<u>Unregistered Sales of Equity Securities and Use of Proceeds</u>](#unregistered) | [21](#unregistered) |
| Item 3 | [<u>Defaults Upon Senior Securities</u>](#defaults) | [21](#defaults) |
| Item 4 | [<u>Mine Safety Disclosures</u>](#mine_safety) | [21](#mine_safety) |
| Item 5 | [<u>Other Information</u>](#other) | [21](#other) |
| Item 6 | [<u>Exhibits</u>](#exhibits) | [22](#exhibits) |
| [<u>SIGNATURE</u>](#sig) | [<u>SIGNATURE</u>](#sig) | [23](#sig) |

---

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[**Table of Contents**](#toc)

**PART I** 

---

| | |
|:---|:---|
| **ITEM 1.** | **FINANCIAL STATEMENTS** |

---

**BAB, Inc.** 

**Consolidated Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | May 31, 2025 | November 30, 2024 |
|  | (unaudited) | (audited) |
| ASSETS |  |  |
| Current Assets |  |  |
| Cash | $2048454 | $2177586 |
| Restricted cash | 286328 | 159704 |
| Receivables |  |  |
| Trade accounts and notes receivable (net of allowance for credit losses of $50,129 in 2025 and $51,103 in 2024) | 64630 | 70090 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marketing fund contributions receivable from franchisees and stores | 20270 | 17394 |
| Prepaid expenses and other current assets | 47156 | 84825 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Current Assets | 2466838 | 2509599 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and equipment (net of accumulated depreciation of $159,414 in both 2025 and 2024. |  |  |
| Trademarks | 461445 | 461445 |
| Goodwill | 1493771 | 1493771 |
| Definite lived intangible assets (net of accumulated amortization of $144,625 in 2025 and $142,664 in 2024) | 13492 | 13272 |
| Operating lease right of use | 337669 | 365714 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Noncurrent Assets | 2306377 | 2334202 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Assets | $4773215 | $4843801 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
| Current Liabilities |  |  |
| Accounts payable | $1085 | $1313 |
| Income tax payable | 68829 | 80695 |
| Accrued expenses and other current liabilities | 300672 | 409179 |
| Unexpended marketing fund contributions | 291793 | 164756 |
| Deferred franchise fee revenue | 20775 | 21353 |
| Current portion operating lease liability | 51173 | 47846 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Current Liabilities | 734327 | 725142 |
| Long-term Liabilities (net of current portion) |  |  |
| Operating lease liability | 311898 | 330215 |
| Deferred franchise revenue | 127756 | 130094 |
| Deferred tax liability | 277998 | 317132 |
| Total Long-term Liabilities | 717652 | 777441 |
| Total Liabilities | $1451979 | $1502583 |
| Stockholders' Equity |  |  |
| Preferred shares -$.001 par value; 4,000,000 authorized; no shares outstanding as of May 31, 2025 and November 30, 2024 |  |  |
| Preferred shares -$.001 par value; 1,000,000 Series A authorized; no shares outstanding as of May 31, 2025 and November 30, 2024 |  |  |
| Common stock -$.001 par value; 15,000,000 shares authorized; 8,466,953 shares issued and 7,263,508 shares outstanding as of May 31, 2025 and November 30, 2024 | 13508257 | 13508257 |
| Additional paid-in capital | 987034 | 987034 |
| Treasury stock | (222781) | (222781) |
| Accumulated deficit | (10951274) | (10931292) |
| Total Stockholders' Equity | 3321236 | 3341218 |
| Total Liabilities and Stockholders' Equity | $4773215 | $4843801 |

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SEE ACCOMPANYING NOTES

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[**Table of Contents**](#toc)

**BAB, Inc.**

**Consolidated Statements of Income**

**For the Three Months and Six Months ended May 31, 2025 and May 31, 2024**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended May 31, | Three months ended May 31, | Six months ended May 31, | Six months ended May 31, |
|  | 2025 | 2024 | 2025 | 2024 |
| **REVENUES** |  |  |  |  |
| Royalty fees from franchised stores | $511879 | $513474 | $969073 | $973163 |
| Franchise Fees | 3583 | 9215 | 12166 | 19461 |
| Licensing fees and other income | 65975 | 53513 | 140353 | 160101 |
| Marketing fund revenue | 227049 | 306636 | 444095 | 566047 |
| Total Revenues | 808486 | 882838 | 1565687 | 1718772 |
| **OPERATING EXPENSES** |  |  |  |  |
| Selling, general and administrative expenses: |  |  |  |  |
| Payroll and payroll-related expenses | 238336 | 231482 | 490896 | 487811 |
| Occupancy | 22515 | 28950 | 54995 | 62291 |
| Advertising and promotion | 758 | 398 | 1841 | 762 |
| Professional service fees | 22818 | 37834 | 73533 | 89613 |
| Travel | 3932 | 5209 | 5700 | 8231 |
| Employee benefit expenses | 20239 | 33829 | 35739 | 70633 |
| Depreciation and amortization | 981 | 981 | 1961 | 1961 |
| Marketing fund expenses | 227049 | 306636 | 444095 | 566047 |
| Other | 71100 | 51069 | 108990 | 122993 |
| Total Operating Expenses | 607728 | 696388 | 1217750 | 1410342 |
| **Income from operations** | 200758 | 186450 | 347937 | 308430 |
| Interest income | 13734 | 16735 | 28622 | 32260 |
| **Income before provision for income taxes** | 214492 | 203185 | 376559 | 340690 |
| Provision for income taxes |  |  |  |  |
| Current tax expense | 79598 | 61349 | 145134 | 122140 |
| Deferred tax | (19398) | (3849) | (39134) | (25640) |
| Total Tax Provision | 60200 | 57500 | 106000 | 96500 |
| **Net Income** | $154292 | $145685 | $270559 | $244190 |
| Net Income per share - Basic and Diluted | $0.02 | $0.02 | $0.04 | $0.03 |
| Weighted average shares outstanding - Basic and diluted | 7263508 | 7263508 | 7263508 | 7263508 |
| Cash distributions declared per share | $0.01 | $0.01 | $0.04 | $0.03 |

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SEE ACCOMPANYING NOTES

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[**Table of Contents**](#toc)

**BAB, Inc.**

**Consolidated Statements of Cash Flows**

**For the Six Months ended May 31, 2025 and May 31, 2024** 

**(Unaudited)**

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| | | |
|:---|:---|:---|
|  | May 31, 2025 | May 31, 2024 |
| **Operating activities** |  |  |
| Net Income | $270559 | $244190 |
| Adjustments to reconcile net income to cash flows provided by operating activities: |  |  |
| Depreciation and amortization | 1961 | 1961 |
| Deferred tax expense | (39134) | (25640) |
| Provision for credit losses, net of recoveries | (974) | 20745 |
| Noncash lease expense | 43419 | 47577 |
| Changes in: |  |  |
| Trade accounts receivable and notes receivable | 6434 | (19253) |
| Marketing fund contributions receivable | (2876) | (3561) |
| Prepaid expenses and other | 33169 | 731 |
| Accounts payable | (228) | 13460 |
| Accrued liabilities | (120373) | 57596 |
| Unexpended marketing fund contributions | 127037 | 25413 |
| Deferred revenue | (2916) | (10211) |
| Operating lease liability | (30364) | (40177) |
| Net Cash Provided by Operating Activities | 285714 | 312831 |
| Investing Activities |  |  |
| Proceeds from sale of asset | 4500 |  |
| Captialized trademark costs | (2181) |  |
| Net Cash Provided by Investing Activities | 2319 |  |
| **Financing activities** |  |  |
| Cash distributions/dividends | (290541) | (217906) |
| Net Cash Used In Financing Activities | (290541) | (217906) |
| Net (Decrease)/Increase in Cash and Restricted Cash | (2508) | 94925 |
| Cash and Restricted Cash - Beginning of Period | 2337290 | 2072672 |
| Cash and Restricted Cash - End of Period | $2334782 | $2167597 |
| Supplemental disclosure of cash flow information: |  |  |
| Interest paid | $- | $- |
| Income taxes paid | $157000 | $78500 |
| Non-cash operating activities: |  |  |
| Right-of-use operating asset obtained in exchange for operating lease liability | $- | $401430 |

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SEE ACCOMPANYING NOTES

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[**Table of Contents**](#toc)

**BAB, Inc.** 

**Notes to Unaudited Consolidated Financial Statements** 

**For Three Months and Six Months Ended May 31, 2025 and May 31, 2024**

**(Unaudited)**

**Note 1. Nature of Operations** 

BAB, Inc. ("the Company") has three wholly owned subsidiaries: BAB Systems, Inc. ("Systems"), BAB Operations, Inc. ("Operations") and BAB Investments, Inc. ("Investments"). Systems was incorporated on December 2, 1992, and was primarily established to franchise Big Apple Bagels® ("BAB") specialty bagel retail stores. My Favorite Muffin ("MFM") was acquired in 1997 and is included as a part of Systems. Brewster's ("Brewster's") was established in 1996 and the coffee is sold in BAB and MFM locations. SweetDuet® ("SD") frozen yogurt can be added as an additional brand in a BAB location. Operations was formed in 1995, primarily to operate Company-owned stores of which there are currently none. The assets of Jacobs Bros. Bagels ("Jacobs Bros.") were acquired in 1999, and any branded wholesale business uses this trademark. Investments was incorporated in 2009 to be used for the purpose of acquisitions. To date there have been no acquisitions.

The Company was incorporated under the laws of the State of Delaware on July 12, 2000. The Company currently franchises and licenses bagel and muffin retail units under the BAB, MFM and SD trade names. At May 31, 2025, the Company had 61 franchise units and 4 licensed units in operation in 18 states. There are 4 units under development. The Company additionally derives income from the sale of its trademark bagels, muffins and coffee through nontraditional channels of distribution including under licensing agreements.

The BAB franchised brand consists of units operating as "Big Apple Bagels®," featuring daily baked bagels, flavored cream cheeses, premium coffees, gourmet bagel sandwiches and other related products. BAB units are primarily concentrated in the Midwestern United States. The MFM brand consists of units operating as "My Favorite Muffin Gourmet Muffin Bakery®" ("MFM Bakery"), featuring a large variety of freshly baked muffins and coffees and units operating as "My Favorite Muffin Your All-Day Bakery Café®" ("MFM Cafe") featuring these products as well as a variety of specialty bagel sandwiches and related products. The SweetDuet® is a branded self-serve frozen yogurt that can be added as an additional brand in a BAB location. Although the Company doesn't actively market Brewster's stand-alone franchises, Brewster's coffee products are sold in most franchised units.

The Company is leveraging on the natural synergy of distributing muffin products in existing BAB units and, alternatively, bagel products and Brewster's Coffee in existing MFM units. The Company expects to continue to realize efficiencies in servicing the combined base of BAB and MFM franchisees.

The Company has a minority interest in Athletes HQ Systems, Inc. ("AHQ"). AHQ franchises indoor baseball and softball practice and coaching facilities with knowledgeable instructors.

The accompanying condensed consolidated financial statements are unaudited. These financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted pursuant to such SEC rules and regulations; nevertheless, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements and the notes hereto should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended November 30, 2024 which was filed February 26, 2025. In the opinion of the Company's management, the condensed consolidated financial statements for the unaudited interim period presented include all adjustments, including normal recurring adjustments, necessary to fairly present the results of such interim period and the financial position as of the end of said period. The results of operations for the interim period are not necessarily indicative of the results for the full year.

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[**Table of Contents**](#toc)

**2. Summary of Significant Accounting Policies**

**<u>Unaudited Consolidated Financial Statements</u>**

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.

**<u>Use of Estimates</u>**

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.

**<u>Cash and Cash Equivalents</u>**

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 is not subject to any significant credit risk related to cash at May 31, 2025.

**<u>Accounts Receivable and Notes Receivable</u>**

The CECL reserve methodology requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Under the CECL model, reserves may be established against financial asset balances even if the risk of loss is remote or has not yet manifested itself. The Company records specific reserves against account balances of franchisees deemed at-risk when a potential loss is likely or imminent as a result of prolonged payment delinquency (greater than 90 days past due) and where notable credit deterioration has become evident. For financial assets that are not currently deemed at-risk, an allowance is recorded based on expected loss rates derived pursuant to the Company's CECL methodology that assesses four components - historical losses, current conditions, reasonable and supportable forecasts, and a reversion to history, if applicable.

The Company considers its portfolio segments to be the following:

*Accounts Receivable (Franchise-Related*): Most of the Company's short-term receivables due from franchisees are derived from royalty, advertising and other franchise-related fees.

*Notes Receivable*: Notes receivable balances primarily relate to the conversion of (1) certain past due franchisee accounts receivable or (2) early franchise termination fees converted to notes receivable. These notes are usually not collateralized. The current notes receivable are reserved in their entirety and have specific reserves recorded against them amounting to $50,129 as of May 31, 2025.

*Accounts Receivables (Vendor Related)*: Receivables due from vendors and distributors consist of royalty receivables related to the sale of certain food products to franchisees through the Company's network of suppliers and distributors and are included as part of Accounts Receivable.

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[**Table of Contents**](#toc)

**2. Summary of Significant Accounting Policies (Continued)**

**<u>Accounts Receivable and Notes Receivable (Continued)</u>**

Receivable balances by portfolio segment are as follows:

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| | | |
|:---|:---|:---|
|  | May 31,<br> 2025 | November 30,<br> 2024 |
| Accounts Receivable (Franchisee Related) | $58250 | $69284 |
| Accounts Receivable (Vendor Related) | 26650 | 18200 |
| Notes Receivable | 50129 | 51103 |
|  | 135029 | 138587 |
| Less: Allowance for Credit Losses | (50129) | (51103) |
| Total Receivables | 84900 | 87484 |
| Less: Current Portion | (84900) | (87484) |
| Long-Term Receivables | $- | $- |

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The Company's internal credit quality indicators for all portfolio segments primarily consider delinquency. Current and collateralized lease receivables have an internal risk rating of Grade I. The Company does not currently have any uncollateralized lease receivables. Past due lease receivables would be assigned an internal risk rating of Grade II-IV, depending on significance of delinquency. For uncollateralized notes receivable, the Company also considers the status of the franchisee note holder and the term of the note. Notes receivable from current franchisees are considered to have an elevated risk of credit loss based on their common origination from past due franchise accounts receivable but have some indication of collectability given ongoing operations (Internal Grade II). Notes receivable due from payers who no longer have an operating franchise are considered to have a high likelihood of credit loss (Internal Grade III). That likelihood increases if the note is outstanding for longer than one year (Internal Grade IV). At May 31, 2025, all notes receivable were due from former franchisees and had an original term over one year.

Changes in the allowance for credit losses during the six months ended May 31, 2025 were as follows:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Accounts Receivable (Franchise Related) | Accounts Receivable (Vendor<br> Related) | Notes<br> Receivable | Lease<br> Receivable,<br> Net | Total |
| Balance at November 30, 2024 | $– $|  | $51103 | $– $| 51103 |
| Adjustments to Allowance for Adoption of ASU 2016-13 | – |  |  | – |  |
| Write-offs | – |  |  | – |  |
| Recoveries | – |  | (974) | – | (974) |
| Provision for Credit Losses | – |  |  | – |  |
| Balance at May 31, 2025 | $– $|  | $50129 | $– $| 50129 |

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[**Table of Contents**](#toc)

**2. Summary of Significant Accounting Policies (Continued)**

**<u>Accounts Receivable and Notes Receivable (Continued)</u>**

The Company considers a receivable past due 31 days after the payment due date. The delinquency status of receivables (other than accounts receivable) at May 31, 2025 was as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Current | 0-30 days Past Due | 30-60 days<br> Past Due | 60-90 days<br> past due | Over 90<br> days past<br> due | Total |
| Notes Receivable | $37956 | $550 | $250 | $500 | $10873 | $50129 |
|  | $37956 | $550 | $250 | $500 | $10873 | $50129 |

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The fiscal year of origination of the Company's gross notes receivable and lease receivables by risk rating are as follows

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Total |
| Risk rating |  |  |  |  |  |  |  |
| Internal Grade I | $- | $- | $- | $- | $- | $- | $- |
| Internal Grade II |  |  |  |  |  |  |  |
| Internal Grade III | 21370 | 17886 |  |  |  |  | 39256 |
| Internal Grade IV |  |  |  |  |  | 10873 | 10873 |
| Notes and Lease Receivables, |  |  |  |  |  |  |  |
| Net of Unamortized Interest | $21370 | $17886 | $- | $- | $- | $10873 | $50129 |

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**<u>Property, Plant and Equipment</u>**

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Estimated useful lives are 3 to 7 years for property and equipment and 10 years, or term of lease if less, for leasehold improvements. Maintenance and repairs are charged to expense as incurred. Expenditures that materially extend the useful lives of assets are capitalized.

**<u>Other Assets</u>**

Other assets include a minority investment in AHQ Systems, Inc. The shares were issued to BAB, Inc. as compensation for consulting services and are valued at $2,250. The value of the investment is immaterial and has not been adjusted to fair market value.

**<u>Advertising and Promotion Costs</u>**

The Company expenses advertising and promotion costs as incurred. All advertising and promotion costs were related to the Company's franchise operations.

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[**Table of Contents**](#toc)

**2. Summary of Significant Accounting Policies (Continued)**

**<u>Lease Liabilities</u>**

The company accounts for leases under ASC 842. Lease arrangements are determined at the inception of the contract. Operating leases are included in operating lease right-of-use ("ROU") assets and other current and long-term operating lease liabilities on the consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities on the consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

**<u>Recent Accounting Pronouncements</u>**

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.

Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of May 31, 2025 that would have or are expected to have any significant effect on the Company's financial position, cash flows or income statement.

**<u>Statement of Cash Flows</u>**

The chart below shows the cash and restricted cash within the consolidated statements of cash flows as of May 31, 2025 and 2024 were as follows:

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| | | |
|:---|:---|:---|
|  | May 31, 2025 | May 31, 2024 |
| Cash and cash equivalents | $2048454 | $1937678 |
| Restricted cash | 286328 | 229919 |
| Total cash and restricted cash | $2334782 | $2167597 |

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**<u>3. Revenue Recognition</u>**

**<u>Franchise and related revenue</u>**

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 Company's 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 separate performance obligations. The franchise fee revenue has been allocated to the two separate performance obligations using a residual approach. The Company has estimated the value of performance obligations related to certain pre-opening activities deemed to be distinct based on cost plus an applicable margin, and assigned the remaining amount of the initial franchise fee to the franchise rights and ongoing services. Revenue allocated to preopening activities is recognized when (or as) these services are performed. Revenue allocated to franchise rights and ongoing services is deferred until the store opens, and recognized on a straight-line basis over the duration of the agreement, as this ensures that revenue recognition aligns with the customer's access to the franchise right.

Royalty fees from franchised stores represent a 5% fee on net retail and wholesale sales of franchised units. Royalty revenues are recognized on an accrual basis using actual franchise receipts. Generally, franchisees report and remit royalties on a weekly basis. The majority of month-end receipts are recorded on an accrual basis based on actual numbers from reports received from franchisees shortly after the month-end. Estimates are utilized in certain instances where actual numbers have not been received and such estimates are based on the average of the last 10 weeks' actual reported sales.

Royalty revenue is recognized during the respective franchise agreement based on the royalties earned each period as the underlying franchise store sales occur.

There are two items involving revenue recognition of contracts that require us to make subjective judgments: the determination of which performance obligations are distinct within the context of the overall contract and the estimated stand-alone selling price of each obligation. In instances where our contract includes significant customization or modification services, the customization and modification services are generally combined and recorded as one distinct performance obligation.

**<u>Gift Card Breakage Revenue</u>**

The Company sells gift cards to its customers in its retail stores and through its Corporate office. The Company's gift cards do not have an expiration date and are not redeemable for cash except where required by law. Revenue from gift cards is recognized upon redemption in exchange for product and reported within franchisee store revenue and the royalty and marketing fees are paid and shown in the Condensed Consolidated Statements of Income. Until redemption, outstanding customer balances are recorded as a liability. An obligation is recorded at the time of sale of the gift card and it is included in accrued expenses on the Company's Condensed Consolidated Balance Sheets.

The liability is reduced when the gift cards are redeemed by a franchise. Although there are no expiration dates for our gift cards, based on our analysis of historical gift card redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote, which is referred to as "breakage." The Company recognizes gift card breakage proportional to actual gift card redemptions on a quarterly basis and the corresponding revenue is included in licensing fees and other revenue. Significant judgments and estimates are required in determining the breakage rate and will be reassessed each quarter. During the six months ended May 31, 2025, management reassessed its breakage estimate and recognized an additional $12,000 of income, based on the likelihood of the redemption of certain gift cards becoming remote.

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**<u>3. Revenue Recognition (continued)</u>**

**<u>Nontraditional and rebate revenue</u>**

As part of the Company's franchise agreements, the franchisee purchases products and supplies from designated vendors. The Company may receive various fees and rebates from the vendors and distributors on product purchases by franchisees. In addition, the Company may collect various initial fees, and those fees are classified as deferred revenue in the balance sheet and straight lined over the life of the contract as deferred revenue in the balance sheet. The Company does not possess control of the products prior to their transfer to the franchisee and products are delivered to franchisees directly from the vendor or their distributors. The Company recognizes the rebates as franchisees purchase products and supplies from vendors or distributors and recognizes the initial fees over the contract life and the fees are reported as licensing fees and other income in the Condensed Consolidated Statements of Income.

**<u>Marketing Fund</u>**

Franchise agreements require the franchisee to pay continuing marketing fees on a weekly basis, based on a percentage of franchisee sales. Marketing fees are not paid on franchise wholesale sales. The balance sheet includes marketing fund cash, which is the restricted cash, accounts receivable and unexpended marketing fund contributions. Although the marketing fees are not separate performance obligations distinct from the underlying franchise right, the Company acts as the principal as it is primarily responsible for the fulfillment and control of the marketing services. As a result, the Company records marketing fees in revenues and related marketing fund expenditures in expenses in the Condensed Consolidated Statement of Income.

**<u>Disaggregation of Revenue</u>**

The following table presents disaggregation of revenue from contracts with customers:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For three<br> months ended May 31, 2025 | For three<br> months ended May 31, 2024 | For six<br> months ended<br> May 31, 2025 | For six<br> months ended<br> May 31, 2024 |
| Revenue recognized at a point in time | Revenue recognized at a point in time | Revenue recognized at a point in time | Revenue recognized at a point in time |  |
| Sign Shop revenue | $8033 | $- | $8033 | $1379 |
| Settlement revenue | 7625 | 1000 | 12500 | 26610 |
| Total revenue at a point in time | 15658 | 1000 | 20533 | 27989 |
| Revenue recognized over time |  |  |  |  |
| Royalty revenue | 511879 | 513474 | 969073 | 973163 |
| Franchise fees | 3583 | 9215 | 12166 | 19461 |
| License fees | 5978 | 5978 | 11956 | 11956 |
| Gift card revenue | 639 | 313 | 14197 | 3159 |
| Nontraditional revenue | 43700 | 46222 | 93667 | 116997 |
| Marketing fund revenue | 227049 | 306636 | 444095 | 566047 |
| Total revenue over time | 792828 | 881838 | 1545154 | 1690783 |
| Grand total | $808486 | $882838 | $1565687 | $1718772 |

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**<u>3. Revenue Recognition (continued)</u>**

**<u>Contract balances</u>**

The balance of contract liabilities includes franchise fees, license fees and vendor payments that have ongoing contract rights and the fees are being straight lined over the contract life. Contract liabilities also include marketing fund balances and gift card liability balances.

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| | | |
|:---|:---|:---|
|  | May 31, 2025 | November 30, 2024 |
| Liabilities |  |  |
| Contract liabilities - current | $534094 | $420379 |
| Contract liabilities - long-term | 127756 | 130094 |
| Total Contract Liabilities | $661850 | $550473 |

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| | | |
|:---|:---|:---|
|  | May 31, 2025 | November 30, 2024 |
| Contracts at beginning of period | $550473 | $620188 |
| Revenue Recognized during period | (616329) | (1499334) |
| Additions during period | 727706 | 1429619 |
| Contracts at end of period | $661850 | $550473 |

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Transaction price allocated to remaining performance obligations (franchise agreements and license fee agreement) for the year ended November 30:

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| | |
|:---|:---|
|  | **Total**  |
| 2025 | $13433 \* |
| 2026 | 21082 |
| 2027 | 22798 |
| 2028 | 16082 |
| 2029 | 14868 |
| 2030 | 13853 |
| Thereafter | 46415 |
| **Total** | $148531 |

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\*represents the estimate for the remainder of 2025

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**<u>4. Units Open and Under Development</u>**

Units which are open or under development are as follows:

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| | | |
|:---|:---|:---|
|  | May 31, 2025 | May 31, 2024 |
| Stores open: |  |  |
| Franchisee-owned stores | 61 | 64 |
| Licensed Units | 4 | 4 |
|  | 65 | 68 |
| Unopened stores with Franchise Agreements | 4 | 4 |
| Total operating units and units with Franchise Agreements | 69 | 72 |

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**<u>5. Earnings per Share</u>**

The following table sets forth the computation of basic and diluted earnings per share:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | For the three months ended: | For the three months ended: | For the six months ended: | For the six months ended: |
|  | May 31, 2025 | May 31, 2024 | May 31, 2025 | May 31, 2024 |
| **Numerator:** |  |  |  |  |
| Net income available to common shareholders | $154292 | $145685 | $270559 | $244190 |
| **Denominator:** |  |  |  |  |
| Weighted average outstanding shares |  |  |  |  |
| Basic and diluted common stock | 7263508 | 7263508 | 7263508 | 7263508 |
| Earnings per Share - Basic | $0.02 | $0.02 | $0.04 | $0.03 |

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**<u>6. Goodwill and Other Intangible Assets</u>**

Accounting Standard Codification ("ASC") 350 "Goodwill and Other Intangible Assets" requires that assets with indefinite lives no longer be amortized, but instead be subject to annual impairment tests.

Following the guidelines contained in ASC 350, the Company tests goodwill and intangible assets that are not subject to amortization for impairment annually or more frequently if events or circumstances indicate that impairment is possible. The Company has elected to conduct its annual test during the first quarter. During the quarters ended February 28, 2025 and February 29, 2024, management qualitatively assessed goodwill to determine whether testing was necessary. Factors that management considers in this assessment include macroeconomic conditions, industry and market considerations, overall financial performance (both current and projected), changes in management and strategy, and changes in the composition and carrying amounts of net assets. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than it's carrying value, a quantitative assessment is then performed. Based on the annual qualitative test conducted during the quarter ended February 28, 2025, management did not identify an impairment related to goodwill. No events or circumstances occurred during the quarter ended May 31, 2025, that would have indicated a need for the test to be performed during the quarter. Management does not believe an impairment exists at May 31, 2025.

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**<u>7. Lease Commitments</u>**

The Company rents its office under an operating lease which requires it to pay base rent, real estate taxes, insurance and general repairs and maintenance. The lease effective during the quarter was signed in June of 2018, effective October 1, 2018, expiring on March 31, 2024. On February 15, 2024, a lease amendment was signed, effective April 1, 2024 for a 6-year period, expiring March 31, 2030, with an option to renew for a 5-year period. The amendment continues to require the Company to pay base rent, real estate taxes, insurance and general repairs and maintenance. The amendment includes a ten-month rent abatement over the lease term, specifically defined in the agreement, and tenant allowance in the amount of $158,940. The tenant allowance is to be applied evenly to the 62 months that were not abated. The renewal option has not been included in the measurement of the lease liability.

Monthly rent expense is recognized on a straight-line basis over the term of the lease. At May 31, 2025 the weighted average remaining lease term was 58 months. The lease amendment is reflected in the balance of the Lease Liability on the balance sheet at the present value of the lease payments using an 8.50% discount rate. The discount rate was considered to be an estimate of the Company's incremental borrowing rate.

Gross future minimum annual rental commitments as of May 31, 2025 are as follows:

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| | |
|:---|:---|
|  | Undiscounted Rent Payments |
| Year Ending November 30: |  |
| 2025 | 47373 |
| 2026 | 80837 |
| 2027 | 84024 |
| 2028 | 96163 |
| 2029 | 99898 |
| Thereafter | 36827 |
| Total Undiscounted Rent Payments | $445122 |
| Present Value Discount | (82051) |
| Present Value | $363071 |
| Short-term lease liability | $51173 |
| Long-term lease liability | 311898 |
| Total Operating Lease Liability | $363071 |

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**<u>8. Income Taxes</u>**

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 three months ended May 31, 2024, the Company recorded current tax expense of $61,349 and a deferred tax benefit of $3,849, for a total tax provision of $57,500, with an effective tax rate of 28.3%.

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%. For the six months ended May 31, 2024, the Company recorded current tax expense of $122,140 and a deferred tax benefit of $25,640, for a total tax provision of $96,500, with an effective tax rate of 28.3%.

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**<u>9. Stockholder</u>**<u>'</u>**<u>s Equity</u>**

On June 6, 2025 the Board of Directors ("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 of Directors 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 September 6, 2024 the Board declared a $0.01 quarterly cash distribution/dividend, payable on October 11, 2024 to stockholders of record as of September 23, 2024. On June 06, 2024 the Board declared a $0.01 quarterly cash distribution/dividend, paid on July 12, 2024 to stockholders of record as of June 24, 2024. On March 6, 2024 the Board declared a $0.01 quarterly cash distribution/dividend, paid on April 12, 2024 to stockholders of record as of March 21, 2024. On December 11, 2023 the Board declared a $0.02 cash distribution/dividend per share, $0.01 quarterly and $0.01 special to stockholders of record as of December 27, 2023, paid January 16, 2024.

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 Share, subject to adjustment. The complete terms of the Rights are set forth in a Preferred Shares Rights Agreement, dated May 6, 2013, between the Company and IST Shareholder Services, as rights agent.

The Board adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group, other than exempt person as defined in the agreement, that acquires 15% (or 20% in the case of certain institutional investors who report their holdings on Schedule 13G) or more of the Common Shares without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board. However, neither the Rights Agreement nor the Rights should interfere with any merger, tender or exchange offer or other business combination approved by the Board.

Full details about the Rights Plan are contained in a Form 8-K filed by the Company with the U.S. Securities and Exchange Commission on May 7, 2013.

On June 18, 2014 an amendment to the Preferred Shares Rights Agreement was filed appointing American Stock Transfer & Trust Company, LLC as successor to Illinois Stock Transfer Company. All original rights and provisions remain unchanged. On August 18, 2015 an amendment was filed to the Preferred Shares Rights Agreement changing the final expiration date to mean the fifth anniversary of the date of the original agreement. All other original rights and provisions remain the same. On May 22, 2017 an amendment was filed extending the final expiration date to mean the seventh anniversary date of the original agreement. All other original rights and provisions remain the same. On February 22, 2019 an amendment was filed extending the final expiration date to mean the ninth anniversary date of the original agreement. All other original rights and provisions remain the same. On March 4, 2021 an amendment was filed extending the final expiration date to mean the eleventh anniversary date of the original agreement. All other original rights and provisions remain the same. On April 4, 2023 an amendment was filed extending the final expiration date to mean the fourteenth anniversary date of the original agreement. All other original rights and provisions remain the same.

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|:---|:---|
| **ITEM 2.**  | **MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |

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Certain statements contained in Management's Discussion and Analysis of Financial Condition and Results of Operations, including statements regarding the development of the Company's business, the markets for the Company's products, anticipated capital expenditures, and the effects of completed and proposed acquisitions, and other statements contained herein regarding matters that are not historical facts, are forward-looking statements as is within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because such statements include risks and uncertainties, actual results could differ materially from those expressed or implied by such forward-looking statements as set forth in this report, the Company's Annual Report on Form 10-K and other reports that the Company files with the Securities and Exchange Commission. Certain risks and uncertainties are wholly or partially outside the control of the Company and its management, including its ability to attract new franchisees; the continued success of current franchisees; the effects of competition on franchisees and consumer acceptance of the Company's products in new and existing markets; fluctuation in development and operating costs; brand awareness; availability and terms of capital; adverse publicity; acceptance of new product offerings; availability of locations and terms of sites for store development; food, labor and employee benefit costs; changes in government regulation (including increases in the minimum wage); regional economic and weather conditions; the hiring, training, and retention of skilled corporate and restaurant management; and the integration and assimilation of acquired concepts. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

**General**

There are 61 franchised and 4 licensed units at May 31, 2025 compared to 64 franchised and 4 licensed units at May 31, 2024. System-wide revenues for the six months ended May 31, 2025 were $20.0 million and May 31, 2024 was $20.2 million.

The Company's revenues are derived primarily from the ongoing royalties paid to the Company by its franchisees and receipt of initial franchise fees. Additionally, the Company derives revenue from the sale of licensed products (My Favorite Muffin mix, and Brewster's coffee), and through nontraditional channels of distribution.

Royalty fees represent a 5% fee on net retail and wholesale sales of franchised units. Royalty revenues are recognized on an accrual basis using actual franchise receipts. Generally, franchisees report and remit royalties on a weekly basis. The majority of month-end receipts are recorded on an accrual basis based on actual numbers from reports received from franchisees shortly after the month-end. Estimates are utilized in certain instances where actual numbers have not been received and such estimates are based on the average of the last 10 weeks' actual reported sales.

There are two items involving revenue recognition of contracts that require us to make subjective judgments: the determination of which performance obligations are distinct within the context of the overall contract and the estimated stand-alone selling price of each obligation. In instances where our contract includes significant customization or modification services, the customization and modification services are generally combined and recorded as one distinct performance obligation.

The Company earns licensing fees from the sale of BAB branded products, which includes coffee, cream cheese, muffin mix and frozen bagels from a third-party commercial bakery, to the franchised and licensed units.

As of May 31, 2025, the Company employed 11 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.

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**Results of Operations** 

**Three Months Ended May 31, 2025 versus Three Months Ended May 31, 2024**

For the three months ended May 31, 2025 and May 31, 2024, the Company reported net income of $154,000 and $146,000, respectively. Total revenue of $808,000 decreased $75,000, or 8.5%, for the three months ended May 31, 2025, as compared to total revenue of $883,000 for the three months ended May 31, 2024. Our total revenue for the three 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 $512,000, for the quarter ended May 31, 2025, decreased $1,000, or 0.2%, from the $513,000 for quarter ended May 31, 2024.

Franchise fee revenue was $4,000, for the quarter ended May 31, 2025, decreasing $5,000, or 55.6%, from $9,000 for May 31, 2024. In the second quarter of 2025 there were no transfers and in the same period 2024 there was one store transferred and both years had normal annual amortization. Licensing fee and other income of $66,000, for the quarter ended May 31, 2025, increased $12,000 or 22.2% from $54,000 for same quarter 2024. Settlement revenue increased $7,000, Sign Shop revenue increased by $8,000 in the second quarter 2025 compared to second quarter 2024, offset by a $3,000 decrease in nontraditional revenue in 3 months of 2025 compared to same period 2024. Marketing Fund revenues of $227,000, for the quarter ended May 31, 2025, decreased $80,000, or 26.1% from $307,000 for the quarter ended May 31, 2024. This is offset by a reduction of $80,000 in marketing fund expenses.

Total operating expenses of $608,000, for the quarter ended May 31, 2025, decreased $88,000, or 12.6% from $696,000 for the quarter ended May 31, 2024. The decrease was primarily related to a decrease in, marketing fund expenses of $80,000, a decrease in professional services of $15,000, a decrease in employee benefits of $14,000 and a decrease in occupancy expense of $6,000, offset by an increase in payroll of $7,000 an increase in other selling and general expenses of $20,000.

Interest income was $14,000 for the quarter ended May 31, 2025, decreasing $3,000, or 17.6% from $17,000 for the three months ended May 31, 2024 primarily because of reduced short-term interest rates in 2025 compared to 2024.

For the three months ended May 31, 2025 the provision for income tax was $60,000, compared to $58,000 for the three months ending May 31, 2024.

Earnings per share, as reported for basic and diluted outstanding shares, was $0.02 for quarters ended May 31, 2025 and 2024.

**Six Months Ended May 31, 2025 versus Six Months Ended May 31, 2024**

For the six months ended May 31, 2025 and May 31, 2024, the Company reported net income of $271,000 and $244,000, respectively. Total revenue of $1,566,000 decreased $153,000, or 8.9%, for the six months ended May 31, 2025, as compared to total revenue of $1,719,000 for the six months ended May 31, 2024. 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 $969,000, for the six months ended May 31, 2025, decreased $4,000, or 0.4%, from the $973,000 for the six months ended May 31, 2024.

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Franchise fee revenue was $12,000, for the six months ended May 31, 2025, decreasing $7,000, or 36.8%, from $19,000 for May 31, 2024. In the six months of 2025 there was one transfer compared to one transfer and one store opened in the same period 2024 with both years having normal monthly amortization. Licensing fee and other income of $140,000, for the six months ended May 31, 2025, decreased $20,000 or 12.5% from $160,000 for same period 2024. Nontraditional revenue decreased $23,000 and settlement revenue decreased $14,000, offset by an $11,000 increase in gift card revenue and an increase in Sign Shop revenue of $7,000 in the six months ended May 31, 2025 compared to May 31, 2024. Marketing Fund revenues of $444,000, for the six months ended May 31, 2025, decreased $122,000, or 21.6% from $566,000 for the six months ended May 31, 2024.

Management continues to review expenses and control costs in a time of rising costs. Total operating expenses of $1,218,000, for the six months ended May 31, 2025, decreased $192,000, or 13.6% from $1,410,000 the six months ended May 31, 2024. Marketing expenses accounted for $122,000 of the decrease for the six months of 2025 compared to same period 2024. The Marketing Department is planning on increased spending in the third and fourth quarters of fiscal 2025 as they complete scheduled marketing projects. There were decreases in expenses for May 31, 2025 compared to May 31, 2024 in professional services of $16,000, in employee benefits of $35,000 as some employees transitioned from the employer health plan to Medicare, there was a decrease in occupancy expense of $7,000, a decrease in travel expense of $2,000, and a decrease in other expenses of $14,000. These decreases were offset by an increase in payroll of $3,000 and an increase in franchise advertising of $1,000 for the six months ended May 31, 2025 compared to May 31, 2024.

Interest income was $29,000 for the six months ended May 31, 2025, decreasing $3,000, or 9.4% from $32,000 for the six months ended May 31, 2024 primarily because of reduced short-term interest rates in the six months of 2025 compared to the same period 2024.

Earnings per share, as reported for basic and diluted outstanding shares, was $0.04 and $0.03 for six ended May 31, 2025 and 2024, respectively.

**Liquidity and Capital Resources** 

At May 31, 2025, the Company had working capital of $1,733,000 and unrestricted cash of $2,048,000. At May 31, 2024 the Company had working capital of $1,618,000, and unrestricted cash of $1,938,000.

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 the six months ended May 31, 2024 the Company had net income of $244,000 and operating activities provided cash of $313,000. The principal adjustments to reconcile the net income to cash provided by operating activities for the six months ending May 31, 2024 was depreciation and amortization of $2,000, provision for uncollectible accounts of $21,000 and noncash lease expense of $48,000, less deferred tax reduction of $26,000. In addition, changes in operating assets and liabilities increased cash by $24,000.

During fiscal 2025, net cash provided by investing activities was $2,000 and no funds were provided or used in fiscal 2024.

Cash distributions/dividends used $291,000 and $218,000 in financing activities for the six months ending May 31, 2025 and 2024, respectively.

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**Cash Distribution and Dividend Policy**

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 2025, a $0.03 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 has been declared for the third quarter.

Determination of whether distributions are considered a cash distribution, cash dividend or combination of the two will not be made until after December 31, 2025, as the classification or combination is dependent upon the Company's earnings and profits for tax purposes for its fiscal year ending November 30, 2025.

**Recent 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.

Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of May 31, 2025 that would have or are expected to have any significant effect on the Company's financial position, cash flows or income statement.

**Critical Accounting Policies** 

The Company has identified other significant accounting policies that, as a result of the judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved could result in material changes to its financial condition or results of operations under different conditions or using different assumptions. The Company's most critical accounting policies are related to revenue recognition, valuation of long-lived and intangible assets, deferred tax assets and the related valuation allowance. Details regarding the Company's use of these policies and the related estimates are described in the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2024, filed with the Securities and Exchange Commission on February 26, 2025.

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

BAB, Inc. has no interest, currency or derivative market risk.

**ITEM 4. CONTROLS AND PROCEDURES**

**Evaluation of Disclosure Controls and Procedures**

Our management, with the participation of both our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report. Based on such evaluation, both our Chief Executive Officer and Chief Financial Officer have concluded that, as of May 31, 2025 our disclosure controls and procedures are effective (i) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) to ensure that information required to be disclosed by us in the reports that we submit under the Exchange Act is accumulated and communicated to our management, including our executive and financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

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**Changes in Internal Control Over Financial Reporting**

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the six months ending May 31, 2025 to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**Compliance with Section 404 of Sarbanes-Oxley Act**

The Company is in compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (the "Act").

**PART II** 

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| | |
|:---|:---|
| **ITEM 1.**  | **LEGAL PROCEEDINGS**  |

---

We may be subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of such proceedings or claims cannot be predicted with certainty, management does not believe that the outcome of any of such proceedings or claims will have a material effect on our financial position. We know of no pending or threatened proceeding or claim to which we are or will be a party.

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| | |
|:---|:---|
| **ITEM 2.**  | **UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**  |

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None.

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| | |
|:---|:---|
| **ITEM 3.**  | **DEFAULTS UPON SENIOR SECURITIES** |

---

None.

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| | |
|:---|:---|
| **ITEM 4.** | **MINE SAFETY DISCLOSURES** |

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Not applicable

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| | |
|:---|:---|
| **ITEM 5.** | **OTHER INFORMATION** |

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There was no adoption, modification or termination of any Rule 10b5-1 or non-Rule 10b5-1 plans by any Directors or Officers of the Company in the quarter ended May 31, 2025.

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(a) EXHIBITS

The following exhibits are filed herewith.

 **INDEX NUMBER DESCRIPTION**

[3.1](http://www.sec.gov/Archives/edgar/data/1123596/000115752307002165/a5344135ex3_1.txt) Articles of Incorporation (See Form 10-KSB for year ended November 30, 2006 filed February 28, 2007)

[3.2](http://www.sec.gov/Archives/edgar/data/1123596/000115752307002165/a5344135ex3_2.txt) Bylaws of the Company (See Form 10-KSB for year ended November 30, 2006 filed February 28, 2007)

[4.1](http://www.sec.gov/Archives/edgar/data/1123596/000143774913005403/ex4-1.htm) Preferred Shares Rights Agreement (See Form 8-K filed May 7, 2013)

[4.2](http://www.sec.gov/Archives/edgar/data/1123596/000143774914011451/ex99-1.htm) Preferred Shares Rights Agreement Amendment No. 1 (See Form 8-K filed June 18, 2014)

[4.3](http://www.sec.gov/Archives/edgar/data/1123596/000143774915016090/ex99-2.htm) Preferred Shares Rights Agreement Amendment No. 2 (See Form 8-K filed August 18, 2015)

[4.4](http://www.sec.gov/Archives/edgar/data/1123596/000143774917009820/ex99-2.htm) Preferred Shares Rights Agreement Amendment No. 3 (See Form 8-K filed May 22, 2017)

[4.5](http://www.sec.gov/Archives/edgar/data/1123596/000143774919003271/ex_135784.htm) Preferred Shares Rights Agreement Amendment No. 4 (See Form 8-K filed February 25, 2019)

[4.6](http://www.sec.gov/Archives/edgar/data/1123596/000143774921005258/ex_232343.htm) Preferred Shares Rights Agreement Amendment No. 5 (See Form 8-K filed March 8, 2021)

[4.7](http://www.sec.gov/Archives/edgar/data/1123596/000143774923009128/ex_496454.htm) Preferred Shares Rights Agreement Amendment No. 6 (See Form 8-K filed April 4, 2023)

[21.1](ex_836513.htm) List of Subsidiaries of the Company

[31.1](ex_836514.htm), [31.2](ex_836515.htm) Section 302 of the Sarbanes-Oxley Act of 2002

[32.1](ex_836516.htm), [32.2](ex_836517.htm) Section 906 of the Sarbanes-Oxley Act of 2002

101. INS Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101. SCH Inline XBRL Taxonomy Extension Schema

101. CAL Inline XBRL Taxonomy Extension Calculation

101. DEF Inline XBRL Taxonomy Extension Definition

101. LAB Inline XBRL Taxonomy Extension Labels

101. PRE Inline XBRL Taxonomy Extension Presentation

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BAB, Inc.

---

| | |
|:---|:---|
| Dated: July 14, 2025 | <u>/s/ Geraldine Conn</u> |
|  | Geraldine Conn |
|  | Chief Financial Officer |

---

## Exhibit 21.1

Exhibit 21.1

BAB Systems, Inc., an Illinois corporation

BAB Operations, Inc., an Illinois corporation

BAB Investments, Inc., an Illinois corporation

## Exhibit 31.1

Exhibit 31.1

**CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14 (a) OR RULE 15d-14 (a) OF THE SECURITIES EXCHANGE ACT OF 1934.**

I, Michael W. Evans, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) I have reviewed this quarterly report on Form 10-Q of BAB, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a -15(e) and 15d -15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d -15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 14, 2025 By <u>/ s/ Michael W. Evans</u> <br> Michael W. Evans, Chief Executive Officer

## Exhibit 31.2

Exhibit 31.2

**CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14 (a) OR RULE 15d-14 (a) OF THE SECURITIES EXCHANGE ACT OF 1934.**

I, Geraldine Conn, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) I have reviewed this quarterly report on Form 10-Q of BAB, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a -15(e) and 15d -15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d -15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: July 14, 2025 | By:  | <u>/s/ Geraldine Conn</u> |
|  | Geraldine Conn, Chief Financial Officer | Geraldine Conn, Chief Financial Officer |

---

## Exhibit 32.1

Exhibit 32.1

BAB, Inc.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the BAB, Inc. (the "Company") Quarterly Report on Form 10-Q for the period ended May 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael W. Evans, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition, results of operations, and cash flows of the Company.

---

| | | |
|:---|:---|:---|
| Date: July 14, 2025 | By:  | <u> </u><u>/s/</u><u> </u><u>Michael W. Evans</u><u> </u><u> </u> |
|  | Michael W. Evans, Chief Executive Officer | Michael W. Evans, Chief Executive Officer |

---

## Exhibit 32.2

Exhibit 32.2

BAB, Inc.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the BAB, Inc. (the "Company") Quarterly Report on Form 10-Q for the period ended May 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Geraldine Conn, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition, results of operations, and cash flows of the Company.

---

| | | |
|:---|:---|:---|
| Date: July 14, 2025 | By:  | <u> </u> <u>/s/ Geraldine Conn</u><u> </u> |
|  | Geraldine Conn, Chief Financial Officer | Geraldine Conn, Chief Financial Officer |

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