BAB Holdings, Inc. (Nasdaq:BAGL - news), the Chicago based operator of Big Apple Bagels®, My Favorite Muffin®, and Brewster's® Coffee today announced the financial results for its second quarter ended May 28, 2000 reporting a net loss of $.09 per share, compared to a $.14 per share loss for the year ago period. For the six months ended May 28, 2000, the Company reported a net loss of $.08 per share, compared to a $.22 per share loss in the year ago period.

Net Loss was $194,615 for the second quarter of 2000 compared to a loss of $196,247 for the second quarter of 1999. For the six months ended May 28, 2000, net loss was $173,960 compared to a net loss of $315,352 in 1999.

During the second quarter, continued progress was made on the company's plan to sell previously identified Company-owned stores to franchisees. The stores that have been sold or are under contract to be sold incurred operating losses of $165,000 during the first six months of the fiscal year. In addition, the Company has reduced its debt by $450,000 since the beginning of the year and has cut its selling, general & administrative expenses by 10% from the previous year.

The Company and Planet Zanett Corporate Incubator, Inc. are in the process of completing the proxy statement for submission to the Securities and Exchange Commission concerning the proposed merger of the two companies. It is anticipated that the proxy statement will be filed within the next two weeks.

BAB Holdings, Inc. operates, franchises, and licenses Big Apple Bagels®, My Favorite Muffin®, and Brewster's® Coffee. It currently has units in 28 states, two Canadian provinces, Peru and Egypt and has master franchise agreements for South Korea and the United Arab Emirates. The Company owns Jacobs Bros. Bagels, a Chicago based bagel bakery chain and has licensing agreements with Host Marriott, Mrs. Fields Cookies, Beatrice Group, Inc., a division of ConAgra and Alonti Deli. The Company's stock is traded on the Nasdaq Small-Cap market under the symbol "BAGL" and its web site can be visited at www.babholdings.com.

Certain statements contained in this press release, including statements regarding the development of the company's business, the markets for the company's products, anticipated capital expenditures, and the effects of completed and proposed acquisitions, and other statements contained herein regarding matters that are not historical facts, are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). 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 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 and company-owned 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 law); regional economic and weather conditions; the hiring, training, and retention of skilled corporate and restaurant management; and the integration and assimilation of acquired concepts. Some of these risks and uncertainties are wholly outside of the control of the company. 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.

TABLES TO FOLLOW

BAB Holdings, Inc.

Condensed Consolidated Statement of Operations

Unaudited

Three Months Ended

May 28 May 31


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2000 1999 % Change

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REVENUES Net Sales by Company-owned stores 2,323,088 2,744,937 -15.4%

Royalty fees from franchised stores 770,343 770,299 0.0%

Licensing fees and other income 275,657 272,001 1.3%

Franchise and area development fees 31,468 79,000 -60.2%


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3,400,556 3,866,237 -12.0%

OPERATING COSTS AND EXPENSES Food, beverage and paper costs 722,632 800,748 9.8%

Store payroll and other operating expenses 1,523,572 1,787,151 14.7%

Selling, general and administrative 1,037,506 1,079,249 3.9%

Depreciation and amortization 243,683 338,097 27.9%


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3,527,393 4,005,245 11.9%

Income (Loss) before interest (126,837) (139,008) 8.8%

Interest expense (85,505) (92,510) 7.6% Interest income 17,727 66,668 -73.4%


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Net income (loss) (194,615) (164,850) -18.1%

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Preferred stock dividend accumulated - 31,397 N/M

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Net income (loss) attributable to common shareholders (194,615) (196,247) 0.8%

====================================== Earnings (Loss) per share - basic and diluted $ (0.09) $ (0.14) 37.1%

Average number of shares outstanding 2,237,557 1,419,051 -57.7%

EBITDA 116,846 199,089 -41.3%

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System-wide revenues 18,963,200 19,550,900 -3.0%

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BAB Holdings, Inc.

Condensed Consolidated Statement of Operations

Unaudited

Six Months Ended

May 28 May 31


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2000 1999 % Change


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REVENUES Net Sales by Company-owned stores 4,588,480 4,831,024 -5.0%

Royalty fees from franchised stores 1,522,439 1,585,379 -4.0%

Licensing fees and other income 521,394 509,274 2.4%

Franchise and area development fees 270,868 209,500 29.3%


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6,903,181 7,135,177 -3.3%

OPERATING COSTS AND EXPENSES Food, beverage and paper costs 1,378,472 1,505,555 8.4%

Store payroll and other operating expenses 3,083,615 2,983,504 -3.4%

Selling, general and administrative 1,991,564 2,220,064 10.3%

Depreciation and amortization 489,037 630,545 22.4%


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6,942,688 7,339,668 5.4%

Income (Loss) before interest (39,507) (204,491) 80.7%

Interest expense (168,061) (131,532) -27.8% Interest income 33,608 97,767 -65.6%


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Net income (loss) (173,960) (238,256) 27.0%

===================================== Preferred stock dividend accumulated - 77,096 N/M


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Net income (loss) attributable to common shareholders (173,960) (315,352) 44.8%

===================================== Earnings (Loss) per share - basic and diluted $ (0.08) $ (0.22) 65.3%

Average number of shares outstanding 2,237,557 1,406,774 -59.1%

EBITDA 449,530 426,054 5.5%


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System-wide revenues 37,514,400 39,514,600 -5.1%