BAB Holdings, Inc. (Nasdaq:INCU), the Chicago based operator of Big Apple Bagels®, My Favorite Muffin®, and Brewster's® Coffee today announced the financial results for its third quarter ended August 27, 2000 reporting net income of $.01 per share, compared to a $.15 per share loss for the year ago period. For the nine months ended August 27, 2000, the Company reported a net loss of $.07 per share, compared to a $.37 per share loss in the year ago period.

Net Income was $22,896 for the third quarter of 2000 compared to a loss of $208,671for the third quarter of 1999. For the nine months ended August 27, 2000, net loss was $151,064 compared to a net loss of $524,023 in 1999.

During the third quarter, continued progress was made on the company's plan to sell previously identified Company-owned stores to franchisees. In addition, the Company has reduced its debt by $479,000 since the beginning of the year and has cut its selling, general & administrative expenses by 13% from the previous year.

The Company has scheduled a special meeting of shareholders on October 18, 2000 to vote on the proposed merger with Planet Zanett Corporate Incubator, Inc. In conjunction with the merger, the Company is planning to spin off the restaurant operations to the current shareholders of BAB Holdings, Inc.

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 "INCU" 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.


Condensed Consolidated Statement of Operations
Unaudited


Three Months Ended Nine Months Ended

Aug 27 Aug 31 Aug 27 Aug 31
2000 1999 % Change 2000 1999 % Change
---------------------------- -----------------------------
REVENUES

Net Sales
by Company
-owned
stores 2,076,452 2,856,754 -27.3% 6,664,932 7,687,778 -13.3%

Royalty
fees from
franchised
stores 763,529 743,319 2.7% 2,285,968 2,328,698 -1.8%

Licensing
fees and
other
income 479,887 324,667 47.8% 1,001,281 833,941 20.1%


Franchise
and area
development
fees 42,110 202,500 -79.2% 312,978 412,000 -24.0%
----------------------------- ----------------------------
3,361,978 4,127,240 -18.5% 10,265,159 11,262,417 -8.9%


OPERATING
COSTS AND EXPENSES

Food,
beverage
and paper
costs 653,310 847,185 22.9% 2,031,782 2,352,740 13.6%

Store
payroll and
other
operating
expenses 1,387,405 1,860,505 25.4% 4,471,020 4,840,832 7.6%

Selling,
general
and
adminis. 1,004,223 1,234,704 18.7% 2,995,787 3,457,944 13.4%

Depreciation
and
amorti-
zation 229,151 322,151 28.9% 718,188 952,697 24.6%
---------------------------- -----------------------------
3,274,089 4,264,545 30.3% 10,216,777 11,604,213 13.6%

Income (Loss)
before
interest 87,889 (137,305) N/M 48,382 (341,796) N/M

Interest
expense (82,182) (78,622) -4.5% (250,243) (210,154) -19.1%

Interest
income 17,189 37,174 -53.8% 50,797 134,941 -62.4%
-------------------------- -----------------------------
Net income
(loss) 22,896 (178,753) N/M (151,064) (417,009) N/M
========================== =============================

Preferred
stock dividend
accumulated - 29,918 N/M - 107,014 N/M
-------------------------- -----------------------------
Net income
(loss)
attributable
to common
shareholders 22,896 (208,671) N/M (151,064) (524,023) N/M
========================== =============================

Earnings
(Loss)
per share -
basic and
diluted $ 0.01 $ (0.15) N/M $ (0.07) $ (0.37) N/M

Average
number
of shares
outstanding 2,237,557 1,419,051 57.7% 2,237,557 1,410,896 58.6%

EBITDA 317,040 184,846 71.5% 766,570 610,901 25.5%

System-wide
revenues 18,614,000 19,500,000 -4.5% 56,161,000 59,100,000 -5.0%