EDGAR 10-K Filing

Company CIK: 1123596
Filing Year: 2021
Filename: 1123596_10-K_2021_0001437749-21-004215.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
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 or MFM 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 November 30, 2020, the Company had 72 franchise units and 7 licensed units in operation in 22 states and the United Arab Emirates. There is 1 unit under development. The Company's revenues are derived primarily from the ongoing royalties paid to the Company by its franchisees and from receipt of initial franchise fees. Additionally, the Company derives revenue from the sale of licensed products (My Favorite Muffin mix, Big Apple Bagels cream cheese and Brewster's coffee) to franchisees, licensees and other approved customers.
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 Midwest and Western 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.
Net Income
The Company reported a net loss $66,000 for fiscal year ended November 30, 2020 and net income of $449,000 for 2019. November 30, 2020 net operating income was $233,000 compared to $473,000 in 2019.
Food Service Industry
Food service businesses are often affected by changes in consumer tastes; national, regional, and local economic conditions; demographic trends; traffic patterns; and the type, number and location of competing restaurants. Multi-unit food service chains, such as the Company's, can also be substantially adversely affected by publicity resulting from problems with food quality, illness, injury or other health concerns or operating issues stemming from one store or a limited number of stores. The food service business is also subject to the risk that shortages or interruptions in supply caused by adverse weather or other conditions could negatively affect the availability, quality and cost of ingredients and other food products. In addition, factors such as inflation, increased food and labor costs, regional weather conditions, availability and cost of suitable sites and the availability of experienced management and hourly employees may also adversely affect the food service industry in general and the Company's results of operations and financial condition in particular.
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CUSTOMERS
The Company’s franchisees represent a varied geographic and demographic group. Among some of the primary services the Company provides to its franchisees are marketing assistance, training, time-tested successful recipes, bulk purchasing discounts, food service knowledgeable personnel and brand recognition.
SUPPLIERS
The Company's major suppliers are Coffee Bean International, Dawn Food Products, Inc., Savencia Cheese USA, Coca-Cola and U.S. Foods. The Company is not dependent on any of these suppliers for future growth and profitability since like products that may be purchased from these suppliers is available from other sources.
LOCATIONS
The Company had 72 franchised locations and 7 licensed units in 22 states and the United Arab Emirates. There is 1 unit under development.
STORE OPERATIONS
BIG APPLE BAGELS®--BAB franchised stores bake a variety of fresh bagels daily and offer up to 11 flavors of cream cheese spreads. Stores also offer a wide assortment of breakfast and lunch bagel sandwiches, salads, soups, various dessert items, fruit smoothies, gourmet coffees and other beverages. A typical BAB store is in an area with a mix of both residential and commercial properties and ranges from 1,500 to 2,000 square feet. The Company's current store design is approximately 1,800 square feet, with seating capacity for 20 to 30 persons, and includes approximately 750 square feet devoted to production and baking. A satellite store is typically smaller than a production store, averaging 800 to 1,200 square feet. Although franchise stores may vary in size from other franchise stores, store layout is generally consistent.
MY FAVORITE MUFFIN®--MFM franchised stores bake 20 to 25 varieties of muffins daily from over 125 recipes. They also serve gourmet coffees, beverages and, at MFM Cafe locations, a variety of bagels, bagel sandwiches and related products. A typical MFM store is in an area with a mix of both residential and commercial properties and ranges from 1,500 to 2,000 square feet. The typical MFM Café store design is approximately 1,800 square feet, with seating capacity for 20 to 30 persons. The MFM Bakery is approximately 1,500 square feet, with seating for 10 to 12 persons and typically sells only muffins and coffee. Although franchise stores may vary in size from other franchise stores, store layout is generally consistent.
SWEETDUET®--SD the Company has one SweetDuet franchised store which offers frozen yogurt and various toppings from which customers prepare their own yogurt creations. They also serve My Favorite Muffin® gourmet muffins and Brewster’s® Coffee. Beginning in 2014, the SweetDuet concept is available as an added brand to a BAB or MFM location.
BREWSTER'S® COFFEE--Although the Company doesn't have, or actively market, Brewster's stand-alone franchises, Brewster's coffee products are sold in most of the franchised units.
FRANCHISING
The Company requires payment of an initial franchise fee per store, plus an ongoing 5% royalty on net sales. Additionally, BAB, MFM and SD franchisees are members of a marketing fund requiring an ongoing 3% contribution for general system-wide marketing. BAB currently requires a franchise fee of $25,000 on a franchisee's first full production BAB store. There is currently a $10,000 veterans discount for the franchise fee for the first location. The fee for subsequent production stores for BAB is $20,000. MFM currently requires a franchise fee of $30,000 on a franchisee's first full production MFM store. The fee for subsequent production stores for MFM is $25,000.
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The Company's current Franchise Disclosure Documents (“FDD”) provides for, among other things, the opportunity for prospective franchisees to enter into a Preliminary Agreement for their first production store. This agreement enables a prospective franchisee a period of 60 days in which to locate a site. The fee for this Preliminary Agreement is $10,000. If a prospective franchisee fails to submit a site to Corporate in the designated timeframe, the preliminary agreement may be terminated and the fee is nonrefundable. If the prospective franchisee submits in writing, the request to terminate the agreement within the required timeframe, prior to submitting a site for approval Corporate will issue a refund of the preliminary fee less $3,000. If the prospective franchisee submits one site for approval that is not approved by Corporate, Corporate may, at its sole discretion either grant an extension to the above referenced 60 day period or terminate the Preliminary Agreement and refund the preliminary fee less $3,000. If a site is approved, the entire $10,000 will be applied toward the initial franchise fee. See also last paragraph under "Government Regulation" section in this 10-K. The Company's Franchise Agreement provides a franchisee with the right to develop one store at a specific location. Each Franchise Agreement is for a term of 10 years with the right to renew. Franchisees are expected to be in operation no later than 10 months following the signing of the Franchise Agreement.
The Company currently advertises its franchising opportunities in directories, newspapers and the internet. In addition, prospective franchisees contact the Company as a result of patronizing an existing store.
COMPETITION
The quick service restaurant industry is intensely competitive with respect to product quality, concept, location, service and price. There are a number of national, regional and local chains operating both owned and franchised stores which compete with the Company on a national level or solely in a specific market or region. The Company believes that because the industry is extremely fragmented, there is a significant opportunity for expansion in the bagel, muffin and coffee concept chains.
The Company believes the primary direct competitors of its bagel units are Panera Bread Company, Bruegger's Bagel Bakery and Einstein Noah Restaurant Group, which operates Einstein Bros. Bagels. There are several other regional bagel chains with fewer than 50 stores, as well as numerous small, independently owned bagel bakeries and national fast food restaurants such as Dunkin’ Donuts and McDonald’s, all of which may compete with the Company. There is no major national competitor in the muffin business, but there are a number of regional and local operators. Additionally, the Company competes directly with a number of national, regional and local coffee competitors.
Other competition includes supermarket bakery sections and prepackaged, fresh and frozen bagels, muffins and yogurt. Certain of these competitors may have greater product and name recognition and larger financial, marketing and distribution capabilities than the Company. The Company believes the startup costs associated with opening a retail food establishment offering similar products on a stand-alone basis are competitive with the startup costs associated with opening its stores and, accordingly, such startup costs are not an impediment to entry into the retail bagel, muffin, frozen yogurt or coffee businesses.
The Company believes that its stores compete favorably in terms of food quality, and taste, convenience and customer service and value, which the Company believes are important factors to its targeted customers. Competition in the food service industry is often affected by changes in consumer tastes, national, regional and local economic and real estate conditions, demographic trends, traffic patterns, the cost and availability of labor, consumer purchasing power, availability of product and local competitive factors. The Company attempts to manage or adapt to these factors, but not all such factors are within the Company's control. Such factors could cause the Company and some or all of its franchisees to be adversely affected.
The Company competes for qualified franchisees with a wide variety of investment opportunities in the restaurant business, as well as other industries. Investment opportunities in the bagel bakery cafe business include franchises offered by Einstein Noah Restaurant Group and Panera Bread Company. The Company's continued success is dependent on its reputation for providing high quality and value with respect to its service, products and franchises. This reputation is affected by the performance of its franchise stores and licensed units that sell branded products over which the Company has limited control.
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TRADEMARKS AND SERVICE MARKS
The trademarks, trade names and service marks used by the Company contain common descriptive English words and thus may be subject to challenge by users of these words, alone or in combination with other words, to describe other services or products. Some persons or entities may have prior rights to these names or marks in their respective localities. Accordingly, there is no assurance that such names and marks are available in all locations. Any challenge, if successful, in whole or in part, could restrict the Company's use of the names and marks in areas in which the challenger is found to have used the name or mark prior to the Company's use. Any such restriction could limit the expansion of the Company's use of the names or marks into that region, and the Company and its franchisees may be materially and adversely affected.
The trademarks and service marks "Big Apple Bagels®," "My Favorite Muffin®," “SweetDuet®”and "Brewster's® Coffee" are registered under applicable federal trademark law. These marks are licensed by the Company to its franchisees pursuant to Franchise Agreements. In February 1999, the Company acquired the trademark of "Jacobs Bros. Bagels®" upon purchasing certain assets of Jacobs Bros. The "Jacobs Bros. Bagels®" mark is also registered under applicable federal trademark law.
The Company is aware of the use by other persons and entities in certain geographic areas of names and marks which are the same as, or similar to, the Company's names and marks. Some of these persons or entities may have prior rights to those names or marks in their respective localities; therefore, there is no assurance that the names and marks are available in all locations. It is the Company's policy to pursue registration of its names and marks whenever possible and to vigorously oppose any infringement of its names and marks.
GOVERNMENT REGULATION
The Company is subject to the Trade Regulation Rule of the Federal Trade Commission (the "FTC") entitled “Disclosure Requirements and Prohibitions Concerning Franchising'' (the "Amended FTC Franchise Rule") and state and local laws and regulations that govern the offer, sale and termination of franchises and the refusal to renew franchises. Continued compliance with these broad federal, state and local regulatory networks is essential and costly. The failure to comply with such regulations may have a material adverse effect on the Company and its franchisees. Violations of franchising laws and/or state laws and regulations regulating substantive aspects of doing business in a particular state could limit the Company's ability to sell franchises or subject the Company and its affiliates to rescission offers, monetary damages, penalties, imprisonment and/or injunctive proceedings. In addition, under court decisions in certain states, absolute vicarious liability may be imposed upon franchisors based upon claims made against franchisees. Even if the Company is able to obtain insurance coverage for such claims, there can be no assurance that such insurance will be sufficient to cover potential claims against the Company.
The Company and its franchisees are required to comply with federal, state and local government regulations applicable to consumer food service businesses, including those relating to the preparation and sale of food, minimum wage requirements, overtime, working and safety conditions, citizenship requirements, as well as regulations relating to zoning, construction, health and business licensing. Each store is subject to regulation by federal agencies and to licensing and regulation by state and local health, sanitation, safety, fire and other departments. Difficulties or failures in obtaining the required licenses or approvals could delay or prevent the opening of a new Company-owned or franchise store, and failure to remain in compliance with applicable regulations could cause the temporary or permanent closing of an existing store. The Company believes that it is in material compliance with these provisions. Continued compliance with these federal, state and local laws and regulations is costly but essential, and failure to comply may have an adverse effect on the Company and its franchisees.
The Company's franchising operations are subject to regulation by the FTC under the Amended FTC Franchise Rule which requires, among other things, that the Company prepare and periodically update a comprehensive disclosure document known as a Franchise Disclosure Document (“FDD”) in connection with the sale and operation of its franchises. In addition, some states require a franchisor to register its franchise with the state before it may offer a franchise to a prospective franchisee. The Company believes its FDDs, together with any applicable state versions or supplements, comply with both the FTC guidelines and all applicable state laws regulating franchising in those states in which it has offered franchises.
The Company is also subject to a number of state laws, as well as foreign laws (to the extent it offers franchises outside of the United States), that regulate substantive aspects of the franchisor-franchisee relationship, including, but not limited to, those concerning termination and non-renewal of a franchise.
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COVID-19 DISCUSSION
In March 2020, the COVID-19 outbreak was declared a national public health emergency and states placed restrictions on many businesses. Many states mandated reduced hours, reduced or no public access. The restaurant industry was hit particularly hard because of the normal human contact.
As like many businesses across the world, BAB, Inc. was hard hit in March and April of 2020. Our franchise locations were restricted to limited hours and restrictions were put on contact between customers and workers. We promoted and provided tools and social media posting which provided our franchisees with the ability to continue to operate with limited contact, such as, online orders, third party pick-up and curbside service. Our franchisees began using the tools and sales increased May through our fiscal year end, November 30, 2020.
The Company responded to the COVID-19 pandemic by reducing variable costs as quickly as possible. Franchise advertising expense was reduced, salaries were reduced until we received our Payroll Protection loan, a decrease in operating supplies and professional fees were reduced. We encouraged and provided information to our franchises as to how to apply for the loan and later how to get the loan forgiven. This stimulus package was of great help to us, and to many of the franchises in our system.
To assist our franchisees financially during COVID-19, the Company waived marketing fees, from week ending March 22, through May 31, 2020.. A graduated return to the original 3% fees was reinstated with 1.5% in June, 2% in July and then 3% week ending August 2, 2020.
During the pandemic we have instituted policies and procedures to keep our employees safe. Temperatures are taken upon entering the office area, hand sanitizer, sanitizing wipes and masks are provided. Masks are required to be worn in the office. Some of the measures we instituted were staggered in office days to minimize personal contact. Employees were able to work at home with little to no problems.
EMPLOYEES
As of November 30, 2020, the Company employed 12 full time persons in the Corporate headquarters. The employees are responsible for corporate management and oversight, franchising, accounting, advertising and operations. None of the Company's employees are subject to any collective bargaining agreements and management considers its relations with its employees to be good.
BAB, Inc. considers its employees one of its greatest assets. The Company offers its employees competitive pay and a benefit program. Employees receive fair and equitable pay regardless of gender. The Company contributes 65% of the cost of health, dental and vision insurance premiums. The Company also contributes up to 4% of matching funds for the 401(k) program. Daily working hours are reasonably flexible.
The Company from time to time hires individuals who are beginning their career with an entry level job and provides on the job training. We encourage employees to expand and develop their talents while employed at the Company so that when the Company has open employment opportunities it can promote from within its employee base.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
Not required for smaller reporting companies.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not required for smaller reporting companies.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
The Company's principal executive office, consisting of approximately 5,300 square feet, is located in Deerfield, Illinois and is leased. A lease was signed in June of 2018, effective October 1, 2018, expiring on March 31, 2024 with an option to renew for a 5 year period.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. 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 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 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
None
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PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The following table sets forth the quarterly high and low reported closing sales prices for the Company's common stock, as reported in the Nasdaq Small Cap Market for the two years ended November 30, 2020 and 2019. The Company's common stock is traded on the NASDAQ OTCQB Marketplace under the symbol "BABB."
Year Ended: November 30, 2020
Low
High
First quarter
0.79
0.87
Second quarter
0.44
0.81
Third quarter
0.46
0.60
Fourth quarter
0.50
0.60
Year Ended: November 30, 2019
Low
High
First quarter
0.65
0.74
Second quarter
0.69
0.84
Third quarter
0.70
0.89
Fourth quarter
0.70
0.90
As of February 22, 2021, the Company's Common Stock was held by 128 registered holders of record. Registered ownership includes nominees who may hold securities on behalf of multiple beneficial owners. The Company estimates that the number of beneficial owners of its common stock at February 22, 2021, is approximately 1,000 based upon information provided by a proxy services firm.
CASH DISTRIBUTION AND DIVIDEND POLICY
On January 27, 2021 the Board of Directors declared a $0.01 quarterly cash distribution/dividend per share to stockholders of record as of February 10, 2021 and paid February 24, 2021.
On December 5, 2019, a $0.01 quarterly and a $0.02 special cash distribution/dividend per share was declared and paid on January 9, 2020. On March 4, 2020, a $0.01 quarterly cash distribution/dividend per share was declared to stockholders of record as of March 23, 2020 and paid April 08, 2020.
The Board of Directors declared a $0.01 quarterly cash distribution/dividend per share on March 13, June 5 and September 5, 2019, paid April 18, July 10, and October 8, 2019, respectively.
On December 6, 2018, a $0.01 quarterly and a $0.02 special cash distribution/dividend per share was declared and paid on January 11, 2019.
On May 6, 2013, the Board of Directors (“Board”) of BAB, Inc. authorized and declared a dividend distribution of one right for each outstanding share of the common stock of BAB, Inc. 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.
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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 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.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
Not required for smaller reporting companies.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The selected financial data contained herein has been derived from the consolidated financial statements of the Company included elsewhere in this Report on Form 10-K. The data should be read in conjunction with the consolidated financial statements and notes thereto. 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 and disclosures contained herein and throughout this Annual Report regarding matters that are not historical facts, are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). In such cases, we may use words such as "believe," "intend," "expect," "anticipate" and the like. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. 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 franchisee store results; 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.
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GENERAL
The Company has 72 franchised and 7 licensed units with 1 unit under development at the end of 2020. Units in operation and under development at the end of 2019 included 72 franchised and 7 licensed units and 2 units under development. System-wide revenues were $28.6 million in 2020 and $34.3 million in 2019.
The Company's revenues are derived primarily from the ongoing royalties paid to the Company by its franchisees and from receipt of initial franchise fees. Additionally, the Company derives revenue from the sale of licensed products (My Favorite Muffin mix, Big Apple Bagels cream cheese and Brewster's coffee) to franchisees, licensees and other approved customers.
YEAR 2020 COMPARED TO YEAR 2019
Total revenues from all sources decreased $698,000, or 22.7%, to $2,372,000 in 2020 from $3,070,000 in the prior year. Marketing revenue decreased $316,000 in 2020 compared to 2019, franchise fee revenue decreased $12,000 in 2020 versus 2019, royalty revenue decreased $267,000 and licensing and other revenue decreased $103,000 in 2020 compared to 2019.
Royalty revenue from franchise stores decreased $267,000, or 16.2%, to $1,379,000 in 2020 as compared to $1,646,000 in 2019. The decrease in royalty revenue was primarily a result of the COVID-19 pandemic, resulting in temporary store closings and reduced customer traffic. Franchise fee revenue decreased $12,000, or 35.3%, to $22,000 in 2020 as compared to $34,000 in 2019. During fiscal 2020 there were 4 transfers of which $5,000 was recognized and 3 were amortizable compared to 5 transfers recognizing $20,000 in 2019 with 1 being amortizable. Licensing fees and other income decreased $103,000, or 25.6%, to $299,000 in 2020 compared to $402,000 in 2019. Marketing fund revenues decreased in 2020 compared to 2019 because of a decrease in sales due to the COVID-19 pandemic and because the Company waived marketing fees from franchises. In order for the Company to assist its franchises during COVID-19, from week ending March 22, through May 31, 2020 marketing fees were waived and a graduated return to the original 3% fees was reinstated with 1.5% in June, 2% in July and then 3% week ending August 2, 2020.
Total operating expenses in 2020 were $2,138,000, or 90.2% of revenues, compared to $2,596,000, or 84.6% of revenues in 2019. Total operating expenses in 2020 decreased $458,000, or 17.6%, in 2020 compared to 2019.
The decrease in operating expenses of $458,000 in 2020 was primarily due to a decrease in marketing expenses of $316,000, which was due to COVID-19 and reduced marketing fund revenues. In addition, the Company responded to the COVID-19 pandemic by reducing several variable expenses such as advertising expense, which decreased $37,000. Additionally, an employee retired in May 2020 without replacement and no bonuses were paid in 2020 reducing employee benefit expense and payroll and payroll tax expenses by $100,000. Our professional service providers worked with us during the pandemic to assist us in reducing accounting fees by $4,000 and we reduced legal and consulting fees by $13,000. The pandemic also restricted travel and the expense was reduced by $29,000. In 2020 compared to 2019. These reductions in expenses were offset by fixed cost increases in 2020 of $14,000 in occupancy expense, $10,000 in general tax expense, $4,000 in insurance expense and general expenses of $13,000 compared to 2019.
Interest income was less than $1,000 in 2020 and $1,000 in 2019.
There was an income tax expense in 2020 of $300,000, which includes $285,000 of noncash deferred tax expense and $15,000 of state income tax expense in 2020 compared to $25,000 of state income tax expense in 2019. There was a net loss of $66,000 in 2020 versus net income of $449,000 in 2019. The fiscal 2020 net loss included a deferred tax adjustment related to utilized and projected unutilized federal net operating losses which reduced the deferred tax asset for expiring federal NOL’s.
Total operating income was $233,000 in 2020 or 9.8% of revenue as compared to $473,000 or 15.4% of revenue in the prior year. In 2020 there was a $0.01 loss per share for basic and diluted outstanding shares and $.06 per share income for basic and diluted outstanding shares in 2019.
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LIQUIDITY AND CAPITAL RESOURCES
At November 30, 2020, the Company had working capital of $732,000 and unrestricted cash of $1,236,000, which includes the proceeds of a Payroll Protection Program loan of $228,155. At November 30, 2019, the Company had working capital of $813,000 and unrestricted cash of $1,095,000.
During fiscal 2020, the Company had a net loss of $66,000 and operating activities which provided cash of $213,000. The principal adjustments to reconcile the net loss to cash provided by operating activities were depreciation and amortization of $4,000, deferred tax expense of $285,000 and noncash lease expense of $99,000, less the provision for uncollectible accounts of $7,000. In addition, changes in other operating assets and liabilities decreased cash a total of $88,000. During fiscal 2019, the Company had net income of $449,000 and operating activities which provided cash of $432,000. The principal adjustments to reconcile net income to cash provided by operating activities were depreciation and amortization of $2,000, deferred tax expense of $48,000 and noncash lease expense of $75,000, less the provision for uncollectible accounts of $15,000. In addition, changes in other operating assets and liabilities decreased cash a total of $128,000.
During fiscal 2020, the Company used $13,000 for investing activities for equipment purchases and trademark renewal. During fiscal 2019, the Company used $9,000 for investing activities for equipment purchases and trademark renewals.
Financing activities in fiscal 2020 included funds increasing cash flow of $228,155 for a PPP loan and cash distributions/dividend payments to common stockholders of $291,000 and in 2019, $436,000 was used for cash distributions/dividend payments to common stockholders.
Although there can be no assurances that the Company will be able to pay cash distributions/dividends in the future, it is the Company’s intent that future cash distributions/dividends will be considered based on profitability expectations and financing needs and will be declared at the discretion of the Board of Directors. It is the Company’s intent going forward to declare and pay cash distributions/dividends on a quarterly basis if warranted.
Due to the impact of the COVID-19 pandemic, the Company suspended dividends through the fourth quarter of 2020. Future cash distributions/dividends will be considered after reviewing profitability expectations and financing needs for fiscal 2021. On January 27, 2021 the Board of Directors declared a $0.01 dividend payable February 2021.
Determination of whether distributions are considered a cash distribution, cash dividend or combination of the two will not be made until after December 31, 2020, as the classification or combination is dependent upon the Company’s earnings and profits for tax purposes for its fiscal year ending November 30, 2020.
The Company believes execution of its cash distribution/dividend policy will not have any material adverse effects on its ability to fund current operations or future capital investments.
The Company was granted a Payroll Protection Program loan in May 2020 in the amount $228,155. The loan was forgiven through the SBA on December 8, 2020 and will be reflected in other income during our fiscal year 2021 first quarter.
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OFF BALANCE SHEET ARRANGEMENTS
The Company has no off balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES
The Company's significant accounting policies are presented in the Notes to the Consolidated Financial Statements (see Note 2 of the audited consolidated financial statements included herein). While all of the significant accounting policies impact the Company's Consolidated Financial Statements, some of the policies may be viewed to be more critical. The more critical policies are those that are most important to the portrayal of the Company's financial condition and results of operations and that require management's most difficult, subjective and/or complex judgments and estimates. Management bases its judgments and estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. The results of judgments and estimates form the basis for making judgments about the Company's value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions or conditions. Management believes the following are its most critical accounting policies because they require more significant judgments and estimates in preparation of its consolidated financial statements.
Long-Lived Assets
Property and equipment are recorded at cost. Improvements and replacements are capitalized, while expenditures for maintenance and routine repairs that do not extend the life of the asset are charged to expense as incurred. Depreciation is calculated on the straight-line basis over the estimated useful lives of the assets. Property, equipment and leasehold improvements are stated at cost, less accumulated depreciation. Estimated useful lives for the purpose of depreciation and amortization are 3 to 7 years for property and equipment and 10 years, or the term of the lease if less, for leasehold improvements.
Goodwill and Other Intangible Assets
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, 2020 and 2019 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 its carrying value, a quantitative assessment is then performed.
Although the COVID-19 pandemic has caused significant disruption to our industry, the Company has been able to recover much quicker than expected and 2020 total revenues, excluding marketing fund revenues were 81.6% of fiscal 2019 total revenues. Management reviewed and updated the qualitative assessment conducted during the first quarter 2020 and at year end and does not believe that any impairment exists at November 30, 2020.
Concentrations of Credit Risk
Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of royalty and wholesale accounts receivables. The Company believes it has maintained adequate reserves for doubtful accounts. The Company reviews the collectability of receivables periodically taking into account payment history and industry conditions.
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Valuation Allowance and Deferred Taxes
A valuation allowance is the portion of a deferred tax asset for which it is more likely than not that a tax benefit will not be realized.
The Company routinely reviews the future realization of tax assets based on projected future reversals of taxable temporary differences, available tax planning strategies and projected future taxable income. As of November 30, 2020, the net operating loss carryforwards which it believes it will utilize are approximately $756,000, expiring between 2021 and 2029 for U.S. federal tax purposes.
Leases
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, other current liabilities 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.
Franchise and related revenue
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 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 income 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.
- 14 -
Nontraditional and rebate revenue
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.
Gift card breakage revenue
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. Included in accounts payable and accrued expenses at November 30, 2020 and 2019 were liabilities of $183,800 and $170,900, respectively for unredeemed gift cards.
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.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope, including trade receivables. The amendments in this update broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The guidance in ASU 2016-13 is effective for public companies for fiscal years and for interim periods with those fiscal years beginning after December 15, 2019. The Company will adopt ASU 2019-12 for fiscal year ending November 30, 2021.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 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 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have yet been issued. The Company will adopt ASU 2019-12 for fiscal year ending November 30, 2022.
Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of November 30, 2020 that would have or are expected to have any significant effect on the Company’s financial position, cash flows or income statement.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In regard to interest, foreign currency and commodity price risk the Company does not believe that these are significant risk factors.
- 15 -

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS
The Consolidated Financial Statements and Report of Independent Registered Public Accounting Firm is included immediately following.
BAB, Inc.
Years Ended November 30, 2020 and 2019
C o n t e n t s
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements 22 - 36
- 16 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of BAB, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BAB, Inc. (the Company) as of November 30, 2020 and 2019, and the related statements of income, stockholders’ equity, and cash flows for each of the years in the two-year period ended November 30, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended November 30, 2020, in conformity with accounting principles generally accepted in the United States of America.
Adoption of Revenue Recognition Standard
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for revenue recognition for the year ended November 30, 2019 using the modified retrospective approach, pursuant to the guidance in ASU No. 2014-09, Revenue from Contracts with Customers.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2007.
Oak Park, Illinois
February 26, 2021
6611 North Ave, Oak Park, Illinois 60302 ▪ 708.386.1433 ▪ 1776 Legacy Cir #118, Naperville, Illinois 60563 ▪ 630.577.9074 ▪ sassetti.com
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BAB, Inc
Consolidated Balance Sheets
November 30, 2020 and 2019
November 30, 2020
November 30, 2019
ASSETS
Current Assets
Cash
$ 1,236,081
$ 1,095,235
Restricted cash
396,842
400,434
Receivables
Trade accounts and notes receivable (net of allowance for doubtful accounts of $18,152 in 2020 and $24,792 in 2019 )
62,969
66,870
Marketing fund contributions receivable from franchisees and stores
17,544
17,219
Prepaid expenses and other current assets
96,723
94,145
Total Current Assets
1,810,159
1,673,903
Property, plant and equipment (net of accumulated depreciation of $157,118 in 2020 and $155,752 in 2019)
2,296
3,662
Trademarks
461,445
461,445
Goodwill
1,493,771
1,493,771
Definite lived intangible assets (net of accumulated amortization of $127,474 in 2020 and $125,278 in 2019)
23,707
12,625
Operating lease right of use
303,084
384,159
Deferred tax asset
-
200,000
Total Noncurrent Assets
2,284,303
2,555,662
Total Assets
$ 4,094,462
$ 4,229,565
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable
$ 10,279
$ 4,195
Accrued expenses and other current liabilities
288,888
287,414
Unexpended marketing fund contributions
387,117
416,305
Deferred franchise fee revenue
33,957
29,363
Deferred licensing revenue
31,071
31,072
Current portion operating lease liability
99,149
92,139
Payroll Protection Program loan
228,155
-
Total Current Liabilities
1,078,616
860,488
Long-term Liabilities (net of current portion)
Operating lease liability
260,094
359,242
Deferred franchise revenue
93,929
72,670
Deferred tax liability
84,940
-
Deferred licensing revenue
3,869
7,440
Total Long-term Liabilities
442,832
439,352
Total Liabilities
$ 1,521,448
$ 1,299,840
Stockholders' Equity
Preferred shares -$.001 par value; 4,000,000 authorized; no shares outstanding as of November 30, 2020 and 2019
-
-
Preferred shares -$.001 par value; 1,000,000 Series A authorized; no shares outstanding as of November 30, 2020 and 2019
-
-
Common stock -$.001 par value; 15,000,000 shares authorized; 8,466,953 shares issued and 7,263,508 shares outstanding as of November 30, 2020 and 2019
13,508,257
13,508,257
Additional paid-in capital
987,034
987,034
Treasury stock
(222,781 )
(222,781 )
Accumulated deficit
(11,699,496 )
(11,342,785 )
Total Stockholders' Equity
2,573,014
2,929,725
Total Liabilities and Stockholders' Equity
$ 4,094,462
$ 4,229,565
See accompanying notes
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BAB, Inc
Consolidated Statements of Income
Years Ended November 30, 2020 and 2019
REVENUES
Royalty fees from franchised stores
$ 1,379,153
$ 1,645,639
Franchise Fees
21,955
33,817
Licensing fees and other income
298,766
402,293
Marketing fund revenue
671,659
987,943
Total Revenues
2,371,533
3,069,692
OPERATING EXPENSES
Selling, general and administrative expenses:
Payroll and payroll-related expenses
885,410
974,362
Occupancy
133,053
119,379
Advertising and promotion
25,216
62,487
Professional service fees
112,981
129,854
Travel
10,245
39,206
Employee benefit expenses
136,821
147,435
Depreciation and amortization
3,562
2,057
Marketing fund expenses
671,659
987,943
Other
159,195
133,488
Total Operating Expenses
2,138,142
2,596,211
Income from operations
233,391
473,481
Interest income
Income before provision for income taxes
233,769
474,093
Provision for income taxes
Current tax expense
15,000
(23,000 )
Deferred tax expense
284,940
48,000
Total Tax Provision
299,940
25,000
Net (Loss)/Income
$ (66,171 )
$ 449,093
Net (Loss)/Income per share - Basic and Diluted
$ (0.01 )
$ 0.06
Weighted average shares outstanding - Basic and diluted
7,263,508
7,263,508
Cash distributions declared per share
$ 0.04
$ 0.05
See accompanying notes
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BAB, Inc
Consolidated Statements of Stockholders’ Equity
Years Ended November 30, 2020 and 2019
Additional
Accumulated
Common Stock
Paid-In
Treasury Stock
Deficit
November 30, 2018
8,466,953
$ 13,508,257
$ 987,034
1,203,445
$ (222,781 )
$ (11,272,448 )
$ 3,000,062
Cummulative Effect of Adoption of ASC606
(83,619 )
(83,619 )
Dividends Declared
(435,811 )
(435,811 )
Net Income
449,093
449,093
November 30, 2019
8,466,953
$ 13,508,257
$ 987,034
1,203,445
$ (222,781 )
$ (11,342,785 )
$ 2,929,725
Dividends Declared
(290,540 )
(290,540 )
Net (Loss)/Income
(66,171 )
(66,171 )
November 30, 2020
8,466,953
$ 13,508,257
$ 987,034
1,203,445
$ (222,781 )
$ (11,699,496 )
$ 2,573,014
See accompanying notes
- 20 -
BAB, Inc
Consolidated Statements of Cash Flows
Years Ended November 30, 2020 and 2019
November 30, 2020
November 30, 2019
Operating activities
Net (Loss)/Income
$ (66,171 )
$ 449,093
Adjustments to reconcile net income to cash
flows provided by operating activities:
Depreciation and amortization
3,562
2,057
Deferred tax expense
284,940
48,000
Provision for uncollectible accounts, net of recoveries
(7,080 )
(14,945 )
Noncash lease expense
99,312
75,423
Changes in:
Trade accounts receivable and notes receivable
10,981
26,087
Marketing fund contributions receivable
(325 )
(1,388 )
Prepaid expenses and other
(2,578 )
(23,307 )
Accounts payable
6,084
(34,029 )
Accrued liabilities
1,474
(11,555 )
Unexpended marketing fund contributions
(29,188 )
(43,108 )
Deferred revenue
22,281
(15,347 )
Operating lease liability
(110,375 )
(25,460 )
Net Cash Provided by Operating Activities
212,917
431,521
Investing activities
Capitalization of trademark renewals
(13,278 )
(6,020 )
Purchase of property
-
(3,248 )
Net Cash Used In Investing Activities
(13,278 )
(9,268 )
Financing activities
Loan proceeds
228,155
-
Cash distributions/dividends
(290,540 )
(435,811 )
Net Cash Used In Financing Activities
(62,385 )
(435,811 )
Net Increase/(Decrease) in Cash and Restricted Cash
137,254
(13,558 )
Cash and Restricted Cash - Beginning of Period
1,495,669
1,509,227
Cash and Restricted Cash - End of Period
$ 1,632,923
$ 1,495,669
Supplemental disclosure of cash flow information:
Interest paid
$ -
$ -
Income taxes paid
$ 36,012
$ 3,050
Non cash operating activities:
Tenant improvement allowance
$ -
$ 21,203
See accompanying notes
- 21 -
BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 1 - Nature of Operations
BAB, Inc (“the Company”) has three wholly owned subsidiaries: BAB Systems, Inc. (“Systems”) and 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 or MFM 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 November 30, 2020, the Company had 72 franchise units and 7 licensed units in operation in 22 states and the United Arab Emirates. There is 1 unit under development. The Company's revenues are derived primarily from the ongoing royalties paid to the Company by its franchisees and from receipt of initial franchise fees. Additionally, the Company derives revenue from the sale of licensed products (My Favorite Muffin mix, Big Apple Bagels cream cheese and Brewster's coffee) to franchisees, licensees and other approved customers.
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 Midwest and Western 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.
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
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.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 2 - Summary of Significant Accounting Policies (continued)
Uses of Estimates
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.
Accounts and Notes Receivable
Receivables are carried at original invoice amount less estimates for doubtful accounts. Management determines the allowance for doubtful accounts by reviewing and identifying troubled accounts and by using historical collection experience. A receivable is considered to be past due if any portion of the receivable balance is outstanding 90 days past the due date. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as income when received. Certain receivables have been converted to unsecured interest-bearing notes.
Property, Plant and Equipment
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.
Goodwill and Other Intangible Assets
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. The Company follows this guidance.
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, 2020 and 2019, 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 its carrying value, a quantitative assessment is then performed.
Although the COVID-19 pandemic has caused significant disruption to our industry, the Company has been able to recover much quicker than expected and 2020 total revenues, excluding marketing were 81.6% of fiscal 2019 total revenues, excluding marketing. Management reviewed and updated the qualitative assessment conducted during the first quarter 2020 and at year end and does not believe that any impairment exists at November 30, 2020.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 2 - Summary of Significant Accounting Policies (continued)
Goodwill and Other Intangible Assets (continued)
The net book value of goodwill and intangible assets with indefinite and definite lives are as follows:
Goodwill
Trademarks
Definite Lived Intangibles
Total
Net Balance as of November 30, 2018
$ 1,493,771
$ 459,637
$ 9,742
$ 1,963,150
Additions
-
1,808
4,212
6,020
Amortization expense
-
-
(1,329 )
(1,329 )
Net Balance as of November 30, 2019
$ 1,493,771
$ 461,445
$ 12,625
$ 1,967,841
Additions
-
-
13,278
13,278
Amortization expense
-
-
(2,196 )
(2,196 )
Net Balance as of November 30, 2020
$ 1,493,771
$ 461,445
$ 23,707
$ 1,978,923
Advertising and Promotion Costs
The Company expenses advertising and promotion costs as incurred. All advertising and promotion costs were related to the Company’s franchise operations. Advertising and promotion expense was $25,000 and $62,000 in 2020 and 2019, respectively.
Income Taxes
The Company accounts for income taxes in accordance with FASB Topic 40. Deferred tax assets and liabilities are classified as noncurrent on the balance sheet. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The benefits from net operating losses carried forward may be impaired or limited in certain circumstances. In addition, a valuation allowance can be provided for deferred tax assets when it is more likely than not that all or some portion of the deferred tax asset will not be realized.
The Company files a consolidated U.S. income tax return and tax returns in various state jurisdictions. Review of the Company’s possible tax uncertainties as of November 30, 2020 did not result in any positions requiring disclosure. Should the Company need to record interest and/or penalties related to uncertain tax positions or other tax authority assessments, it would classify such expenses as part of the income tax provision. The Company has not changed any of its tax policies or adopted any new tax positions during the fiscal year ended November 30, 2020 and believes it has filed appropriate tax returns in all jurisdictions for which it has nexus.
The Company’s income tax returns, which are filed as a consolidated return under Inc. for the years ending November 30, 2017, 2018 and 2019 are subject to examination by the IRS and corresponding states, generally for three years after they are filed.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 2 - Summary of Significant Accounting Policies (continued)
Leases
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, other current liabilities 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.
We have elected certain practical expedients available under the guidance, including a package of practical expedients which allow us to not reassess prior conclusions related to contracts containing leases, lease classification, and initial direct costs. We have also elected to not recast its comparative periods.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope, including trade receivables. The amendments in this update broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The guidance in ASU 2016-13 is effective for public companies for fiscal years and for interim periods with those fiscal years beginning after December 15, 2019. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company will adopt ASU 2019-12 for fiscal year ending November 30, 2021.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 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 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have yet been issued. The Company will adopt ASU 2019-12 for fiscal year ending November 30, 2022.
Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of November 30, 2020 that would have or are expected to have any significant effect on the Company’s financial position, cash flows or income statement.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 2 - Summary of Significant Accounting Policies (continued)
Segments
Accounting standards have established annual reporting standards for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. The Company’s operations were a single reportable segment and an international segment. The international segment operations are immaterial.
Statement of Cash Flows
The chart below shows the cash and restricted cash within the consolidated statements of cash flows as of November 30, 2020 and November 30, 2019 were as follows:
November 30, 2020
November 30, 2019
Cash and cash equivalents
$ 1,236,081
$ 1,095,235
Restricted cash
396,842
400,434
Total cash and restricted cash
$ 1,632,923
$ 1,495,669
Earnings Per Share
The Company computes earnings per share (“EPS”) under ASC 260 “Earnings per Share.” Basic net earnings are divided by the weighted average number of common shares outstanding during the year to calculate basic net earnings per common share. Diluted net earnings per common share are calculated to give effect to the potential dilution that could occur if options or other contracts to issue common stock were exercised and resulted in the issuance of additional common shares. There are currently no stock options issued or outstanding.
Numerator:
Net income available to common shareholders
$ (66,171 )
$ 449,093
Denominator:
Weighted average outstanding shares
Basic and diluted
7,263,508
7,263,508
Earnings per Share - Basic and diluted
$ (0.01 )
$ 0.06
At November 30, 2020 and 2019, there are no common stock equivalents. In addition, the weighted average shares do not include any effects for potential shares related to the Preferred Shares Rights Agreement.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 2 - Summary of Significant Accounting Policies (continued)
Revenue Recognition
The Company adopted Topic 606 on December 1, 2018 using the modified retrospective transition method and recorded an increase to opening accumulated deficit of $84,000. The adoption of this standard update resulted in no tax impact. The Company adopted Topic 606 only for contracts with remaining performance obligations as of December 1, 2018, under the modified retrospective transition method.
Franchise and related revenue
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.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 2 - Summary of Significant Accounting Policies (continued)
Gift card breakage revenue
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.
Nontraditional and rebate revenue
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.
Marketing Fund
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. The Company historically presented the net activities of the marketing fund within the balance sheet in the Condensed Consolidated Balance Sheet. While this reclassification impacts the gross amount of reported revenue and expenses the amounts will be offsetting, and there is no impact on net income.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 3 - Revenue Recognition
Disaggregation of Revenue
The following table presents disaggregation of revenue from contracts with customers for the year ended November 30, 2020 and 2019:
For year ended
November 30, 2020
For year ended
November 30, 2019
Revenue recognized at a point in time
Sign Shop revenue
$ 2,697
$ 2,409
Settlement revenue
33,553
80,307
Total revenue at a point in time
36,250
82,716
Revenue recognized over time
Royalty revenue
1,379,153
1,645,639
Franchise fees
21,955
33,817
License fees
29,354
19,875
Gift card revenue
4,472
4,494
Nontraditional revenue
228,690
295,208
Marketing fund revenue
671,659
987,943
Total revenue over time
2,335,283
2,986,976
Grand total
$ 2,371,533
$ 3,069,692
Contract balances
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.
November 30, 2020
November 30, 2019
Liabilities
Contract liabilities - current
599,965
622,724
Contract liabilities - long-term
97,798
80,110
Total Contract Liabilities
$ 697,763
$ 702,834
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Contract balances (continued)
Contract Liabilities at beginning of period
$ 702,834
$ 754,542
Revenue Recognized during period
(780,834 )
(1,141,617 )
Additions during period
775,869
1,089,909
Contracts at end of period
$ 697,869
$ 702,834
Transaction price allocated to remaining performance obligations (franchise agreements and license fee agreement) for the year ended November 30:
$ 57,028
$ 21,631
$ 16,937
$ 14,806
$ 11,044
Thereafter
$ 41,380
Total
$ 162,826
The Company has elected to apply certain practical expedients as defined in ASC 606-10-50-14 through 606-10-50-14A, including (i) performance obligations that are a part of a contract that has an original expected duration of one year or less; (ii) the right to invoice practical expedient; and (iii) variable consideration related to unsatisfied performance obligations that is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation, and the terms of that variable consideration relate specifically to our efforts to transfer the distinct service, or to a specific outcome from transferring the distinct service. As such, sales-based royalty and marketing income, as well as gift card breakage revenue, is not included in the above transaction price chart.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 4 - Units Open, Licensed and Under Development
Big Apple Bagels®, SweetDuet Frozen Yogurt and Gourmet Muffins® and My Favorite Muffin® operating units, licensed units and unopened stores for which a Franchise Agreement has been executed, are as follows:
Stores open:
Franchisee-owned stores
Licensed Units
Unopened stores with Franchise
Agreements
Total operating units and units
with Franchise Agreements
Note 5 - Income Taxes
The components of the Company’s provision for income taxes are as follows:
Current
Federal
$ -
$ (17,181 )
State
15,000
(5,819 )
Deferred
284,940
48,000
Total
$ 299,940
$ 25,000
The decrease in the net deferred tax asset was due to a change in the actual and expected use of net operating losses, (“NOL’s”) that will be expiring in 2021 through 2029. The reduction in current tax expense in 2020 and 2019 relates to the utilization of NOL’s.
The effective tax rate used to compute income tax expense and deferred tax assets and liabilities is a federal rate of 21% and a state rate of 7.11%, net of the federal tax effect.
A reconciliation of the expected income tax expense to the recorded income tax expense is as follows for the years ended November 30:
Federal income tax provision computed at federal statutory rate
$ 49,091
$ 99,560
State income taxes, net of federal tax provision
16,620
33,708
Change in valuation allowance, utilization of NOL's and expected future use of NOL's and other adjustments
234,229
(108,268 )
Income Tax Provision
$ 299,940
$ 25,000
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 5 - Income Taxes (continued)
The components of the Company’s deferred tax assets and liabilities for federal and state income taxes consist of the following:
Deferred revenue
$ 45,771
$ 39,507
Marketing Fund net contributions
111,552
112,562
Allowance for doubtful accounts and notes receivable
5,103
6,969
Accrued expenses
49,176
44,582
Operating lease liability
100,983
126,883
Net operating loss carryforwards
159,567
475,380
Valuation allowance
-
(28,500 )
Total Deferred Income Tax Asset
$ 472,152
$ 777,383
Depreciation and amortization
$ (471,895 )
$ (469,396 )
Right of use lease asset
(85,197 )
(107,987 )
Total Deferred Income Tax Liabilities
$ (557,092 )
$ (577,383 )
Total Net Deferred Tax (Liability)/Asset
$ (84,940 )
$ 200,000
As of November 30, 2020 the Company has estimated realizable net operating loss carryforwards of approximately $756,000 expiring between 2021 and 2029 for U.S. federal income tax purposes. There are no remaining net operating loss carryforwards to be utilized for state taxes. The Company routinely reviews the future realization of tax assets based on projected future reversals of taxable temporary differences, available tax planning strategies and projected future taxable income. There is no valuation allowance established for 2020 because it is expected that the NOLs will be utilized. A valuation allowance was established in 2019 for $29,000 for the portion of the deferred tax benefit related to loss carryforwards that were more likely than not to be realized.
The Company’s income tax returns, which are filed as a consolidated return under Inc. for the years ending November 30, 2017, 2018 and 2019 are subject to examination by the IRS and corresponding states, generally for three years after they are filed.
Note 6 - Stockholders’ Equity
Due to the impact of the COVID-19 pandemic, the Company suspended dividends for the third and fourth quarters of fiscal 2020. Future cash distributions/dividends will be considered after reviewing profitability expectations and financing needs for fiscal 2021. On January 27, 2021, the Board of Directors declared a $0.01 dividend payable February 2021. The Company will continue to analyze its ability to pay cash distributions/dividends on a quarterly basis.
On December 5, 2019, a $0.01 quarterly and a $0.02 special cash distribution/dividend per share was declared and paid on January 9, 2020 and a $0.01 cash dividend was declared on March 4, 2020 and paid April 8, 2020. On December 6, 2018 a $0.01 quarterly and a $0.02 special cash distribution/dividend was declared and paid on January 11, 2019. A $0.01 quarterly cash distribution/dividend was declared on March 13, June 5, and September 5, 2019, paid April18, July 10 and October 8, 2019, respectively.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 6 - Stockholders’ Equity (continued)
Determination of whether distributions are considered a cash distribution, cash dividend or combination of the two will not be made until after December 31, 2020, as the classification or combination is dependent upon the Company’s earnings and profits for tax purposes for its fiscal year ending November 30, 2020.
The Company believes execution of its cash distribution/dividend policy will not have any material adverse effects on its ability to fund current operations or future capital investments.
On May 6, 2013, the Board of Directors (“Board”) of BAB, Inc. authorized and declared a dividend distribution of one right for each outstanding share of the common stock of BAB, Inc. 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 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.
Note 7 - Recent Accounting Pronouncement
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope, including trade receivables. The amendments in this update broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The guidance in ASU 2016-13 is effective for public companies for fiscal years and for interim periods with those fiscal years beginning after December 15, 2019. The Company will adopt ASU 2019-12 for fiscal year ending November 30, 2021.
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 7 - Recent Accounting Pronouncement (continued)
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 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 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have yet been issued. The Company will adopt ASU 2019-12 for fiscal year ending November 30, 2022.
Management does not believe that there are any recently issued and effective or not yet effective accounting pronouncements as of November 30, 2020 that would have or are expected to have any significant effect on the Company’s financial position, cash flows or income statement.
Note 8 - Lease Commitments
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. A lease was signed in June of 2018, effective October 1, 2018, expiring on March 31, 2024 with an option to renew for a 5 year period. A six month rent abatement and tenant allowance was provided in the lease, with any unused portion to be applied to base rent. The unused portion was determined to be $21,300. 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. Rent expenses for fiscal 2020 and 2019 were $88,600 and $83,800, respectively. At November 30, 2020, the remaining lease term was 40 months. The operating lease is included in the balance sheet at the present value of the lease payments at a 5.25% 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 November 30, 2020, are as follows:
Undiscounted Rent
Payments
Year Ending November 30:
113,024
115,673
118,322
40,177
Total Undiscounted Rent Payments
387,196
Present Value Discount
(27,953 )
Present Value
$ 359,243
Short-term lease liability
$ 99,149
Long-term lease liability
260,094
Total Operating Lease Liability
$ 359,243
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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 9 - Employee Benefit Plan
The Company maintains a qualified 401(k) plan which allows participants to make pretax contributions. In fiscal 2015, the Company amended the 401(k) plan, establishing it as a Safe Harbor plan effective January 1, 2015. Employee contributions are matched by the Company in accordance with the Plan up to a maximum of 4% of employee earnings. The Company may also make discretionary contributions to the Plan. In fiscal 2020 and 2019 the Company’s employer match was $34,000 and $40,000, respectively. There were no Company discretionary contributions in 2020 or 2019.
Note 10 - Payroll Protection Program Loan
On May 1, 2020, BAB Systems, Inc. received loan proceeds of $228,155 from Lake Forest Bank and Trust Company, N.A., pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title 1 of the CARES Act, which was enacted March 27, 2020.
The PPP Loan, which was in the form of a Note dated April 30, 2020 was issued to BAB Systems, Inc. The BAB PPP Loan has a two-year term and bears interest at a rate of 1% per annum. Monthly principal and interest payments are deferred for nine months after the date of disbursement. The BAB PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Note contains events of default and other provisions customary for a loan of this type.
Under the terms of the CARES Act, PPP Loan participants can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Under the terms of the PPP, PPP loans and accrued interest are forgivable between eight weeks and twenty-four weeks, as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight week period. BAB has used the loan proceeds for purposes consistent with the PPP, and had anticipated that all or a majority of the loan amount would be forgiven.
On December 9, 2020 the PPP loan in the amount of $228,155 and related accrued interest was forgiven by the Small Business Administration (“SBA”). The amount forgiven will be recognized as a gain upon debt extinguishment during the quarter ended February 28, 2021.
Note 11 - Contingencies
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 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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BAB, Inc
Notes to the Consolidated Financial Statements
November 30, 2020 and 2019
Note 12 - Uncertainties and COVID-19
The COVID-19 pandemic outbreak in the United States has resulted in reduced customer traffic for our franchisees, resulting in reduced royalty revenue and ultimately reduced nontraditional revenues with a significant impact in April and May. Management believes that the disruption in customer traffic is temporary and as of the end of August 2020, most states have opened up or are opening up for limited indoor and outdoor dining.
In order to support our franchisees during this difficult time, the Company waived the 3% marketing fees from March 16, 2020 through May 31, 2020, with graduated amounts of marketing fees reinstated beginning in June and July 2020. We provided our franchises information on the CARES stimulus package, and several franchises received Payroll Protection Program (PPP) loans. We applied and received PPP loan funds. For information, see the 8-K filed on May 5, 2020 with the Security and Exchange Commission.
While the COVID-19 pandemic has created challenges for restaurants around the country, we are proud of the work our franchisees have put in to adapt to changing regulations and government mandates. As states begin to open up and ease restrictions we have seen franchise locations total royalty revenue rebound from down approximately 60.7% in April 2020 compared to 2019 to down approximately 9.5% in November 2020 compared to 2019. We are continuing to evaluate the effects of the COVID-19 pandemic outbreak on our operations.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
In connection with the audits of the Company’s consolidated financial statements for each of the fiscal years ended November 30, 2020 and 2019, and through the date of this Current Report, there were: (1) no disagreements between the Company and Sassetti LLC on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
BAB, Inc.’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Item 307 of Regulation S-K of the Securities Exchange Act of 1934, as of the end of the period covered by this report, and they have concluded that these controls and procedures were 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.
Internal Control Over Financial Reporting
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Chief Financial Officer, management and other personnel, 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.
Our evaluation of internal control over financial reporting includes using the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment.
Based on our evaluation under the framework described above, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s internal controls and procedures were effective over financial reporting as of November 30, 2020.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation requirements by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permits the Company to provide only management’s report in this annual report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls or in other factors that could materially affect these controls over financial reporting during the last fiscal quarter. We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.
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PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors, and persons who beneficially own more than ten percent of the Company's Common Stock, to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission (the "SEC"). Executive officers, directors and greater than ten percent beneficial owners are required by the SEC to furnish the Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the Company, the Company believes that all Section 16(a) filing requirements applicable to its executive officers and directors were met during the year ended November 30, 2020.
BAB, Inc. (the Company) has a formally established Code of Ethics, pursuant to Section 406 of the Sarbanes-Oxley Act. In order to view the Code of Ethics in its entirety, see the BAB, Inc. Annual Report, Part III, Item 9, dated November 30, 2007 and filed with the Securities and Exchange Commission on February 28, 2008.
Identification of Directors
The following two directors are independent directors:
Steven G. Feldman became a director of the Company in May 2003. Mr. Feldman brings 26 plus years of experience in business, sales and marketing as the CEO of Techcare, LLC (1987-2011), an IT managed services firm in Deerfield, IL that was purchased in 2011 by All Covered, a Division of Konica Minolta Solutions, USA, Inc. Since 2014 Mr. Feldman has been working with and investing in a variety of startup companies in the Chicago area. Mr. Feldman earned his degree in accounting and his CPA at the University of Illinois at Champaign-Urbana.
James A. Lentz became a director of the Company in May 2004. From 1971 until 2000, Mr. Lentz was a business professor for Moraine Valley Community College (MVCC). During his tenure at MVCC, Mr. Lentz taught a variety of business related classes, including accounting, finance and marketing. In addition, Mr. Lentz has 10 years of experience in the food industry, including holding the position of Director of Franchise Training for BAB Systems, Inc. from 1992 through 1996. Mr. Lentz received both his undergraduate degree and a Masters in Business Administration from Northern Illinois University.
Executive Officers and Directors
Michael W. Evans has served as Chief Executive Officer, President and Director of the Company since its inception. Mr. Evans oversees all aspects of BAB, Inc., including franchise development, marketing, as well as all corporate franchise sales performance, corporate finance and corporate and franchise operations.
Michael K. Murtaugh has served as Vice President and General Counsel and Director of the Company since its inception. Mr. Murtaugh is responsible for dealing directly with state franchise regulatory officials, for the negotiation and enforcement of franchise and area development agreements and for negotiations of acquisition and other business arrangements. Before joining the Company, Mr. Murtaugh was a partner with the law firm of Baker & McKenzie, where he practiced law from 1971 to 1993.
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Executive Officer
Geraldine Conn joined the Company as Controller in 2001. In 2014 she became the Chief Financial Officer and Treasurer upon the resignation of the prior Chief Financial Officer. She is responsible for accounting, financial reporting, risk management and human resource administration. Ms. Conn has over 25 years of accounting and finance experience in a management role. Ms. Conn received her CPA in 1986 and a Masters in Business Administration in 1990 from DePaul University.
Directors and Executive Officers
The following tables set forth certain information with respect to each of the Directors and Executive Officers of the Company and certain key management personnel.
Directors and Executive Officers
Age
Position Held with Company
Michael W. Evans
Chief Executive Officer, President and Director
Michael K. Murtaugh
Vice President, General Counsel, Secretary and Director
Geraldine Conn
Chief Financial Officer and Treasurer
Steven G. Feldman
Director
James A. Lentz
Director
Audit Committee
The Audit Committee consists of two members, who are both independent directors and both have been deemed to be financial experts as defined in Regulation S-K, Item 407. The function of the Audit Committee is to interact with the independent registered public accounting firm of the Company and to recommend to the Board of Directors the appointment of the independent registered public accounting firm.
The current Audit Committee consists of Steven G. Feldman and James A. Lentz. The two independent directors comply with the definition of "independent directors" as required by current law and regulations. The Audit Committee has adopted a written Audit Charter. See Appendix I in the Proxy, Form14A filed on April 19, 2006 for the Charter in its entirety.
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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation by executive officers that received annual salary and bonus compensation of more than $100,000 during years 2020 and 2019 (the "Named Executive Officers"). The Company has no employment agreements with any of its executive officers.
Summary Compensation Table
Name and Principal
Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Options
Awards
($)
Nonequity
Incentive Plan
Compensation
(S)
Non-qualified
deferred
Compensation
earnings
(S)
All other
compensation
($)
(1)
Total
($)
Michael W. Evans
207,887
-
-
-
-
-
8,316
216,203
President and CEO
207,887
27,000
-
-
-
-
9,395
244,282
Michael K. Murtaugh
149,671
-
-
-
-
-
5,238
154,909
Vice President and General Counsel
149,671
19,440
-
-
-
-
5,918
175,029
Geraldine Conn
110,046
-
-
-
-
-
4,406
114,452
Chief Financial Officer
107,908
6,375
-
-
-
-
4,571
118,854
In fiscal 2020 bonuses were earned and waived in full by Mr Evans and Mr. Murtaugh. In fiscal 2019 bonuses were earned and a portion was paid and a portion waived by Mr. Evans and Mr. Murtaugh. Bonuses for Executive Officers that are Directors are determined using measurable financial criteria approved by the Compensation Committee including, but not limited to, company profitability levels and performance in system-wide same store sales. A bonus for the Chief Financial Officer is at the discretion of the Chief Executive Officer. All other compensation includes the Company 401(k) matching funds.
(1)
401(k) matching funds:
2020 M. Evans $8,316; M. Murtaugh $5,238; G. Conn $4,406
2019 M. Evans $9,395; M. Murtaugh $5,918; G. Conn $4,571
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The following tables set forth any stock or stock options awarded to executive officers that that are exercisable and not yet exercised or unexercisable as of November 30, 2020:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Name
Number of
securities
underlying
unexercised
options
(#)
Exercisable
Number of
securities
underlying
unexercised
options
(#)
Unexercisable
Equity
incentive plan
awards: number
of securities
underlying
unexercised
unearned
options
(#)
Option
exercise
price
($)
Option
expiration
date
Michael W. Evans
-
-
-
-
President and CEO
-
-
-
-
Michael K. Murtaugh
-
-
-
-
Vice President and General Counsel
-
-
-
-
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
(Continued)
Name
Number of shares
or units of stock
that have not
vested
(#)
Market value of
shares or units
of stock that
have not vested
($)
Equity incentive
plan awards:
number of
unearned shares,
units or other
rights that have
not vested
(#)
Equity incentive
plan awards: market
or payout value of
unearned shares,
units or other rights
that have not vested
($)
Michael W. Evans
-
-
-
-
President and CEO
-
-
-
-
Michael K. Murtaugh
-
-
-
-
Vice President and General Counsel
-
-
-
-
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The following table sets forth any compensation paid to directors during fiscal year ended November 30, 2020:
DIRECTOR COMPENSATION
Compensation for fiscal year ended November 30, 2020
Name
Fees
earned or
paid in
cash
($)
Stock
awards
($)
Option
awards
($)
Non-equity
incentive
plan
compensation
($)
Non-
qualifies
deferred
compensation
earnings
($)
All other
compensation
($)
Total
($)
Steven Feldman
2,500
-
-
-
-
-
2,500
James Lentz
2,500
-
-
-
-
-
2,500
Indemnification of Directors and Officers
The Company's Certificate of Incorporation limits personal liability for breach of fiduciary duty by its directors to the fullest extent permitted by the Delaware General Corporation Law (the "Delaware Law"). Such Certificate eliminates the personal liability of directors to the Company and its shareholders for damages occasioned by breach of fiduciary duty, except for liability based on breach of the director's duty of loyalty to the Company, liability for acts or omissions not made in good faith, liability for acts or omissions involving intentional misconduct, liability based on payments or improper dividends, liability based on violation of state securities laws, and liability for acts occurring prior to the date such provision was added. Any amendment to or repeal of such provisions in the Company's Certificate of Incorporation shall not adversely affect any right or protection of a director of the Company for with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
In addition to the Delaware Law, the Company's Bylaws provide that officers and directors of the Company have the right to indemnification from the Company for liability arising out of certain actions to the fullest extent permissible by law. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers or persons controlling the Company pursuant to such indemnification provisions, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth as of February 22, 2021 the record and beneficial ownership of Common Stock held by (i) each person who is known to the Company to be the beneficial owner of more than 5% of the Common Stock of the Company; (ii) each current director; (iii) each "named executive officer" (as defined in Regulation S-B, Item 402 under the Securities Act of 1933); and (iv) all executive officers and directors of the Company as a group. Securities reported as "beneficially owned" include those for which the named persons may exercise voting power or investment power, alone or with others. Voting power and investment power are not shared with others unless so stated. The number and percent of shares of Common Stock of the Company beneficially owned by each such person as of February 22, 2020 includes the number of shares which such person has the right to acquire within sixty (60) days after such date.
Name and Address
Shares
Percentage
Michael W. Evans
500 Lake Cook Road, Suite 475
Deerfield, IL 60015
1,432,468 (1)
19.72
Michael K. Murtaugh
500 Lake Cook Road, Suite 475
Deerfield, IL 60015
968,054
13.33
Geraldine Conn
500 Lake Cook Road, Suite 475
Deerfield, IL 60015
20,300
.28
Steven G. Feldman
500 Lake Cook Road, Suite 475
Deerfield, IL 60015
10,000
.14
James A. Lentz
1415 College Lane South
Wheaton, IL 60189
14,932
.21
Camelot Event-Driven Fund
Frank Funds
781 Crandon Blvd, Unit 602
Key Biscayne, FL 33149
479,411
6.6
Executive officers and directors as a group (5 persons)
2,445,754 (1)
33.67
(1) Includes 3,500 shares inherited by spouse.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
There are no transactions between the Company and related parties, including officers and directors of the Company. It is the Company's policy that it will not enter into any transactions with officers, directors or beneficial owners of more than 5% of the Company's Common Stock, or any entity controlled by or under common control with any such person, on terms less favorable to the Company than could be obtained from unaffiliated third parties and all such transactions require the consent of the majority of disinterested members of the Board of Directors.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Board of Directors upon recommendation of the Audit Committee, appointed the firm Sassetti LLC, certified public accountants, for 2020 audit and tax services.
The audit reports of Sassetti LLC on the consolidated financial statements of BAB, Inc. and Subsidiaries as of and for the years ended November 30, 2020 and 2019 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles.
Audit fees relate to audit work performed on the financial statements as well as work that generally only the independent auditor can reasonably be expected to provide, including discussions surrounding the proper application of financial accounting and/or reporting standards and reviews of the financial statements included in quarterly reports filed on Form 10-Q. Fees for audit services provided by Sassetti LLC were $54,600 and $59,400 for fiscal 2020 and 2019, respectively.
Tax compliance services provided by Sassetti LLC were $11,200 for fiscal 2020 and 2019.
During the years ended November 30, 2020 and 2019, Sassetti LLC did not perform any other services for the Company.
Preapproval of Policies and Procedures by Audit Committee
The accountants provide a quote for services to the Audit Committee before work begins for the fiscal year. After discussion, the Audit Committee then makes a recommendation to the Board of Directors on whether to accept the proposal.
Percentage of Services Approved by Audit Committee
All services were approved by the Audit Committee.
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PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
(1)
Financial Statements
Consolidated Balance Sheets as at November 30, 2020 and 2019 and the Consolidated Statements of Income, Shareholders’ Equity and Cash Flows for the years ended November 30, 2020 and 2019 are reported on by Sassetti LLC. These statements are prepared in accordance with United States GAAP.
(2)
Financial Statement Schedules - none
(b) INDEX TO EXHIBITS
The following Exhibits are filed herewith or incorporated by reference:
INDEX NUMBER
DESCRIPTION
3.1
Articles of Incorporation (See Form 10-KSB for year ended November 30, 2006)
3.2
Bylaws of the Company (See Form 10-KSB for year ended November 30, 2006)
4.1
Preferred Shares Rights Agreement (See Form 8-K filed May 6, 2013 and as amended June 18, 2014, August 18, 2015)
21.1
List of Subsidiaries of the Company
31.1, 31.2
Section 302 of the Sarbanes-Oxley Act of 2002
32.1, 32.2
Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*
XBRL Instance
101.SCH*
XBRL Taxonomy Extension Schema
101.CAL*
XBRL Taxonomy Extension Calculation
101.DEF*
XBRL Taxonomy Extension Definition
101.LAB*
XBRL Taxonomy Extension Labels
101.PRE*
XBRL Taxonomy Extension Presentation
*XBRL
Information is furnished and not filed or a part of a registration statement or prospectus
For purpose of sections 110 or 12 of the Securities Act of 1933, as amended is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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