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BABB News BAB, Inc. Reports Profit for 2nd Quarter 2006

For the quarter ended May 31, 2006, BAB had revenues of $1,049,000 and net income of $283,000, or $0.04 per share, versus revenues of $1,445,000 and net income of $280,000, or $0.04 per share, for the same quarter last year.

For the six months ended May 31, 2006, BAB had revenues of $2,025,000 and net income of $399,000, or $0.05 per share, versus revenues of $2,648,000 and net income of $383,000, or $0.05 per share for the same period in 2005.

Total operating expenses for the quarter ended May 31, 2006, were $771,000, or 73.5% of revenues, versus $1,155,000, or 80.0% in 2005. YTD May 31, 2006, total operating expenses were $1,623,000, or 80.2% of revenues, versus $2,246,000, or 84.8% in 2005.

The Company also continues to improve its balance sheet as it reduced its total debt by $259,000 from May 31, 2005 to May 31, 2006.

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

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

                            (TABLE FOLLOWS)


                              BAB, INC.
            CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                      --------------------------------
                                               Quarter Ended
                                       05/31/06   05/31/05   % Change
                                      --------------------------------
REVENUES
Net sales by company-owned stores       125,128    399,690      -68.7%
Royalty fees from franchised stores     590,198    581,216        1.5%
Franchise and area development fee
 revenue                                105,500     77,500       36.1%
Licensing fees and other income         227,706    386,271      -41.1%
                                      ---------------------
                                      1,048,532  1,444,677      -27.4%

OPERATING COSTS AND EXPENSES
Food, beverage and paper costs           37,693    134,886      -72.1%
Store payroll and other operating
 expenses                               115,635    336,548      -65.6%
Selling, general and administrative     600,412    662,605       -9.4%
Depreciation and amortization            16,876     21,203      -20.4%
                                      ---------------------
                                        770,616  1,155,242      -33.3%

Income from operations                  277,916    289,435        N/M

Interest expense                         (7,935)   (11,518)     -31.1%
Interest/other income                    13,244      1,822      626.9%

                                      ---------------------
NET INCOME                              283,225    279,739        N/M
                                      =====================

Earnings per share - basic                 0.04       0.04        N/M
Average number of shares outstanding  7,222,526  7,166,191

Earnings per share - diluted               0.04       0.04        N/M
Average number of shares outstanding  7,330,759  7,240,866


                                      --------------------------------
                                              Six Months Ended
                                       05/31/06   05/31/05   % Change
                                      --------------------------------
REVENUES
Net sales by company-owned stores       268,241    745,028      -64.0%
Royalty fees from franchised stores   1,123,971  1,122,112        0.2%
Franchise and area development fee
 revenue                                205,500    107,500       91.2%
Licensing fees and other income         426,995    673,601      -36.6%
                                      ---------------------
                                      2,024,707  2,648,241      -23.5%

OPERATING COSTS AND EXPENSES
Food, beverage and paper costs           87,886    252,302      -65.2%
Store payroll and other operating
 expenses                               260,993    622,648      -58.1%
Selling, general and administrative   1,240,046  1,328,842       -6.7%
Depreciation and amortization            34,568     42,402      -18.5%
                                      ---------------------
                                      1,623,493  2,246,194      -27.7%

Income from operations                  401,214    402,047        N/M

Interest expense                        (16,620)   (23,667)     -29.8%
Interest/other income                    14,293      4,342      229.2%

                                      ---------------------
NET INCOME                              398,887    382,722        N/M
                                      =====================

Earnings per share - basic                 0.06       0.05        N/M
Average number of shares outstanding  7,222,186  7,158,483

Earnings per share - diluted               0.05       0.05        N/M
Average number of shares outstanding  7,260,462  7,240,956