UNITED
STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM

 Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 for
the Fiscal Year Ended July 31, 2025

 or

 Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 Commission File
Number: 1-37782

 Zedge,
Inc.

 (Exact
Name of Registrant as Specified in its Charter)

 Delaware

 26-3199071

 (State or Other Jurisdiction of
 Incorporation or Organization)

 (I.R.S. Employer
 Identification No.)

 1178 Broadway, 3rd Floor #1450, New York, NY

 10001

 (Address of Principal Executive Offices)

 (Zip Code)

 (330) 577-3424

 (Registrant's
Telephone Number, Including Area Code)

 Title of each class

 Trading Symbol

 Name of each exchange on which registered

 Class B common stock, par value $0.01 per share

 ZDGE

 NYSE American

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

 None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes No

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes No

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

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer",
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

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

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant, based on the adjusted closing price
on January 31, 2025 (the last business day of the registrant's most recently completed second fiscal quarter) of the Class B common
stock of $2.71 per share, as reported on the New York Stock Exchange, was approximately $ 37.9 million.

 As
of October 24, 2025, the registrant had outstanding 524,775 shares of Class A common stock and 12,479,136 shares of Class B common
stock.

 DOCUMENTS
INCORPORATED BY REFERENCE

 The
definitive proxy statement relating to the registrant's Annual Meeting of Stockholders, to be held January 14, 2026, is incorporated
by reference into Part III of this Form 10-K to the extent described therein.

 Zedge,
Inc.

 TABLE
OF CONTENTS

 Item
 1.

 Business

 Item
 1A.

 Risk
 Factors

 Item
 1B.

 Unresolved
 Staff Comments

 Item 1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal
 Proceedings

 Item
 4.

 Mine
 Safety Disclosures

 Item
 5.

 Market
 for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.

 [Reserved]

 Item
 7.

 Management's
 Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative
 and Qualitative Disclosures about Market Risks

 Item
 8.

 Financial
 Statements and Supplementary Data

 Item
 9.

 in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.

 Controls
 and Procedures

 Item
 9B.

 Other
 Information

 Item
 9C.

 Disclosure
 Regarding Foreign Jurisdictions that Prevent Inspections

 Item
 10.

 Directors
 and Executive Officers of the Registrant, and Corporate Governance

 Item
 11.

 Executive
 Compensation

 Item
 12.

 Security
 Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain
 Relationships and Related Transactions, and Director Independence

 Item
 14.

 Principal
 Accounting Fees and Services

 Item
 15.

 Exhibits,
 Financial Statement Schedules

 Item
 16.

 Form
 10-K Summary

 SIGNATURES

 PART
I

 As
used in this Annual Report, unless the context otherwise requires, the terms the "Company," "Zedge," "we,"
"us," and "our" refer to Zedge, Inc., a Delaware corporation, and its subsidiaries, collectively. Our fiscal
year runs from August 1 through July 31. Each reference to a fiscal year in this Annual Report refers to the fiscal year ending in the
calendar year indicated (for example, fiscal 2025 refers to the fiscal year ended July 31, 2025).

 Item
1. Business

 Company
Overview

 Zedge
builds digital marketplaces and friendly competitive games around content that people use to express themselves. Our leading products
include Zedge Ringtones and Wallpapers, which we refer to as our "Zedge App," a freemium digital content marketplace offering
mobile phone wallpapers, video wallpapers, ringtones, and notification sounds as well as pAInt, a generative AI wallpaper and ringtone
maker, GuruShots, a skill-based photo challenge game, and Emojipedia, the #1 trusted source for 'all things emoji'. Our vision
is to enable and connect creators who enjoy friendly competitions with a community of prospective consumers in order to drive commerce.

 We
are part of the 'Creator Economy,' which is estimated to be worth between $191 billion and $250 billion globally in 2025,
with some forecasts placing the global market size as high as $848 billion by 2032 123. According to multiple reports,
there are now over 207 million active content creators worldwide. 45 Furthermore, between 45% and 47% of creators identify
as working full-time in this space 678. Most creators earn modest incomes, and studies suggest that only a small portion,
approximately 4%, of creators earn more than $100,000 per year 91011. We view the Creator Economy as an opportunity for
Zedge to expand our business, especially as we execute by connecting our gamers with our marketplace.

 Our
Zedge App (which is named "Zedge Wallpapers" in the App Store) offers a wide array of mobile personalization content including
wallpapers, video wallpapers, ringtones, and notification sounds, and is available both in Google Play and the App Store. Over the past
two fiscal years, our Zedge App has had between 22.1 million and 28.7 million monthly active users ("MAU"), ending with 23.3
million MAU as of July 31, 2025. MAU is a key performance indicator ("KPI") for our Zedge App that captures the number of
unique users that used our Zedge App during the final 30 days of the relevant period. Our platform allows creators to upload content
to our marketplace and avail it to our users either for free or, via 'Zedge Premium,' the section of our marketplace where
we offer premium content for purchase. In turn, our users utilize the content to personalize their phones and express their individuality.

 In
fiscal 2023, we introduced pAInt, a generative AI wallpaper maker in the Zedge App. A generative AI wallpaper maker is an implementation
of artificial intelligence software that can create images from text descriptions. To interface with a generative AI image maker, a user
enters a text description of the image they want to create, and the software generates an image based on that description. Today, pAInt
is available for text-to-image, image-to-image, and text-to-audio creation. In addition, we upgraded Zedge+, our paid subscription offering
by bundling together an ad-free experience with value adds making the offering more compelling.

 We often refer to our freemium ringtones and wallpapers, our subscription
offering, the functionality for creators to market their products and ancillary offerings and features both in our Zedge App and website,
as our Zedge Marketplace.

 The
Zedge Marketplace's monetization stack consists of advertising revenue generated when users view advertisements when using the
Zedge App (and the related functionality under the zedge.net website), the in-app sale of Zedge Credits, our virtual currency, that is
used to purchase Zedge Premium content, and a paid-subscription offering that provides an ad-free experience to users that purchase a
monthly or annual subscription. In April 2023, we introduced a subscription tier in the iOS version of the app. As of July 31, 2025,
we had approximately 984,000 active subscribers.

 In
fiscal 2025, we began building DataSeeds. AI ("DataSeeds"), a business-to-business marketplace offering access to our rapidly
growing catalog of over 30 million high-quality, fully rights-cleared images for AI training, ecommerce, and stock photos. Uniquely positioned
to deliver custom content at scale, DataSeeds leverages its global creator network, tens of thousands of photographers from GuruShots
and creators from Zedge to fulfill highly specific client briefs across geographies, themes, and use cases. DataSeeds addresses a critical
challenge facing foundational models today: the need for edge-case visual content to improve accuracy and performance. Each asset can
be enhanced with detailed annotations, segmentation masks, technical metadata, and peer-based quality rankings, ensuring datasets are
both robust and production-ready. With scalable infrastructure and fast turnaround times, DataSeeds is a powerful partner for enterprises
building the next generation of AI-powered applications.

 In April 2022, we acquired GuruShots Ltd ("GuruShots"),
a gamified photography platform that engages a global community of photographers through daily challenges, real-time feedback, and a competitive,
interactive experience. GuruShots offers a platform spanning iOS, Android, and the web that provides a fun, educational and structured
way for amateur photographers to compete in a wide variety of contests showcasing their photos while gaining recognition with votes, badges,
and awards. We estimate that the total addressable market of amateur photographers using their smartphones to take and publicly share
artistic photos is 30-40 million people per month and that the market is still in its infancy. Every month, GuruShots stages more than
300 competitions that result in players uploading in excess of 550,000 photographs and casting close to 2.8 billion "perceived votes,"
which are calculated by multiplying the number of votes that each player casts by a weighting factor based on various factors related
to that user. To improve engagement, GuruShots has adopted a set of retention dynamics focused on individual, team and community dynamics
that create a sense of belonging, inspiration, recognition, improvement, and competition.

utilizes a 'Free-to-Play' business model and generates revenue through in-app purchases of virtual currency. Players can
use this currency to unlock competitions or gain an edge by purchasing resources and participating in additional gameplay. Over the past
eight years, the monthly average paying player spend has increased in excess of 6.2% annually to more than $40.9 per player.

 In
fiscal 2024, we revamped GuruShots' customer onboarding experience by guiding new players through simplified photo competitions
of limited size and duration. The upgrade was designed to enhance the gaming experience for new players by increasing their potential
for winning and providing immediate gratification. The new onboarding has shown improvements in engagement, retention, and revenue from
new users. In addition, we migrated to a coin-based economy with multiple currencies in order to enable more players to earn and spend
their currency on in-game resources.

 Since
the acquisition, GuruShots has faced challenges in growth and profitability, and its revenue has declined. We have cut costs at GuruShots,
including as part of the restructuring implemented in January 2025, and have materially scaled back on paid user acquisition (PUA) for
the unit. In parallel, we are developing a plan, referred to as GuruShots 2.0, to revamp GuruShots' offering in order to put it
on a growth trajectory and unlock the potential value of this asset. Our strategy focuses on attracting new users and converting them
into recurring, paying players. To date, we have introduced a fun and comprehensive onboarding experience to draw new users into the
gameplay with ease and migrated to a coin-based in-game economy to enable more opportunities to reward and monetize players

 Historically,
we marketed GuruShots to prospective players primarily via PUA channels including Google, Meta, TikTok and other platforms, utilizing
a variety of advertising media, formats, such as static and video ads. As part of the GuruShots 2.0 development plan, we have significantly
reduced PUA investment for GuruShots to improve Return-on-Ad-Spend (ROAS) and intend to continue managing PUA spend in the current timeframe.

 In
addition to its potential as a standalone game, we believe that the extensive library of photographs generated by GuruShots players through
submissions to GuruShots' competitions represents a valuable dataset for our emerging DataSeeds offering. To date, we have secured
rights to license a portion of this library for various applications, including AI training, and we continue to expand the licensable
catalog by securing rights to additional photographs. We believe the scale and distinctive characteristics of this dataset position it
as a meaningful resource for DataSeeds' target market.

 In
August 2021, we acquired Emojipedia Pty Ltd ("Emojipedia"), the world's leading authority dedicated to providing up-to-date
and well-researched emoji definitions, information, and news, as well as World Emoji Day and the annual World Emoji Awards. In July 2025,
Emojipedia received approximately 48.4 million monthly page views and has approximately 8.9 million monthly active users as of July 31,
2025 of which approximately 46.2% are located in well-developed markets. It is the top resource for all things emoji, offering insights
into data and cultural trends.

 Post
its acquisition in August 2021, Emojipedia was immediately accretive to earnings. In the past year, we have implemented multiple changes
to Emojipedia including an AI-powered emoji sticker generator tool as well as an extensive emoji sticker library.

 In late September 2025, Google released an update to its Search Engine
Results Page (SERP) enabling users to copy emojis directly from search results rather than being directed to third-party sites such as
Emojipedia. In addition, AI platforms, including ChatGPT and Claude, now return emoji results in response to user queries. While it is
too early to accurately quantify the impact of these changes on Emojipedia's monthly active users (MAU), we believe they are likely
to result in reduced traffic and adversely affect revenue. In light of these developments, we are evaluating potential mitigation strategies
and will determine whether such measures warrant investment given the associated costs and expected benefits.

 Our
Strategy

 Our
vision is to provide tools that enable easy and high-quality digital content creation, connect the creators together with friendly competitions
and expose the content to communities of prospective consumers in order to drive commerce.

 Our
Strategic Flywheel

 Our
long-term strategy calls for creating and supporting a flywheel that leverages the synergies of content creation, gaming and marketplaces
by empowering consumers with easy-to-use content creation utilities whose output can be used to engage across a multitude of online and
mobile platforms including social networks, messaging, and gaming as well as for commerce purposes. This is unlike the existing dynamic
that many gaming platforms offer to players, who can create and sell virtual goods that are valuable only within the context of that
particular ecosystem. Although the foundation of our strategy is currently centered around existing offerings, over time we expect to
expand into other content verticals that have relevance beyond gameplay and we continuously evaluate our units to determine which best
fit into our strategic goals in their current forms, which need revamping and which no longer support our long term goals.

 One
example of this approach in practice using our current is GuruShots. GuruShots is a skill-based game that attracts creators (mainly,
amateur photographers) with friendly photo competitions in which they compete to gain recognition and pedigree. We believe that adding
the ability for them to benefit by availing their content to third-parties is an attractive benefit that enables players not only to
have fun, but also to earn money while doing so. If this dual purpose resonates well with our players it may contribute to improving
user growth and increasing the lifetime value. It will also enable us to expand our marketplace with a business-to-business offering
where we can sell to enterprises including technology companies, stock photo sites, ecommerce vendors, to name a few. Recently, we have
begun to utilize the extensive library of photographs generated by GuruShots players through submissions to GuruShots' competitions
as a dataset for our emerging DataSeeds offering. This is an example of our ongoing efforts to apply our assets and strengths to support
existing or new offerings that will enhance the value creation of our company.

 Executing
this strategy calls for concentrating our efforts on the following goals:

 Invest in growing our
 user base and improving profitably. We expect to continue devoting resources to growing our user base profitably by:

 analyzing user demographics to identify key segments
 that yield the highest profitability and quickest ROAS;

 testing to determine which user segments are most responsive
 to new offerings and crafting targeted marketing strategies based on those insights;

 studying our users' needs and enhancing our products
 to align with the preferences of our most profitable segments;

 developing and offering
 new features and services that are attractive to both new and existing users;

 investing in paid user
 acquisition campaigns that yield profitable customers, based on empirical data and focused, primarily, on well-developed markets;
 and

 exploring crossover marketing opportunities between
 user segments to maximize reach and engagement.

 Improve monetization.
 Continue developing monetization methods that will help us grow, including advancements of the in-app economy, subscription models,
 e-commerce, and new advertising products, implementations, and optimizations. For example, in fiscal 2024 we revamped our subscription
 offering and have experienced growth as a result of this overhaul. We believe that our products and customer base are attractive
 to advertisers, brands, artists, and players and will yield new monetization opportunities. In addition, we expect that we will be
 able to capitalize on cross marketing our suite of products to this customer base.

 Continue to invest in
 product and technology in and across our product suite. We plan to make continued, selected investments in product feature sets
 and functionality in order to both maintain our existing user base and attract new users. In addition, we envision applying our product
 expertise to verticals that we currently do not have in our portfolio. For example, we launched pAInt, our generative AI wallpaper
 maker in late 2022 in order to avail our consumers with the ability of becoming creators.

 Better utilize data
 to improve user acquisition and customer engagement. We plan to better utilize data to improve the user experience, scale profitable
 user acquisition and improve the use of our product through personalized recommendations and content feeds, enhanced search and content
 discovery, and optimized pricing. We have benefited from the investment we have made in our data and business analytics teams enabling
 us to make data driven decisions in shortened timeframes and also expand the number of A/B tests that we use to compare various product
 changes.

 Build our marketplaces
 into a compelling platform for artists and creators. One goal we have set for ourselves is to build marketplaces where artists'
 needs are prioritized and where they can generate incremental income or benefits from their artwork. As we upgrade offerings (including
 the developing GuruShots 2.0) or introduce new products and services, we seek to determine which features can support this goal.

 Increase our marketing
 efforts. We use our full-stack marketing team to scale user acquisition—both paid and organic—invest in building
 and/or buying data analytic tools that provide valuable insights into our marketing initiatives and focus on the evolving fields
 of search engine optimization and app store optimization. We have also invested resources to improve product marketing with the goal
 of driving engagement and retention. Finally, we utilize AI to quickly and efficiently market to prospective users.

 Diversify our revenue
 stack. Historically, the majority of our revenue has been derived from advertising. We plan to diversify our revenue streams,
 most recently by enabling GuruShots' players to monetize their content, with the Company retaining a portion of the proceeds.

 Product Innovation Team.
 We have established a Product Innovation Team to leverage AI, vibe coding, and automations in order to accelerate the development
 of minimally viable products ("MVPs") and rapidly determine, based on empirical data, which concepts merit further investment.
 Our enterprise-wide adoption of AI is yielding efficiencies that are enabling us to achieve this goal, allowing us to reallocate
 employees from existing product responsibilities to new product development. In early fiscal 2026, we launched an MVP of an app,
 developed in just weeks by a streamlined team of two engineers and one designer.

 Selectively pursue strategic
 investments, partnerships, and acquisitions. On a selective basis, we will look to invest in, partner with, or purchase entities
 that can provide synergistic growth opportunities for our Zedge Marketplace and otherwise. For example, in April 2022 we acquired
 GuruShots and in August 2021 we acquired Emojipedia. Each of these acquisitions offers new growth opportunities both on a stand-alone
 basis as well as on an integrated and synergistic basis that we believe can impact our business in a materially positive fashion.

 Our
Competitive Advantages

 We
believe that the following competitive strengths will drive the growth of our business:

 Large, global customer
 base. We benefit from having a large customer base. As of July 31, 2025, the Zedge App had 23.3 million MAU, of which approximately
 23.3% were in well-developed markets and 76.7% were in emerging markets. Typically, customers in well-developed markets monetize
 at a material premium when compared to those in emerging markets. The Android version of the Zedge App is available in 14 languages
 and Emojipedia is available in 19 languages. We possess a highly diversified portfolio of content and attribute this in part to our
 global reach which makes us attractive to creators interested in meeting various customer tastes and preferences. In addition, our
 diverse customer base attracts advertisers seeking customers that have adequate disposable income to purchase their products and
 services. Our Zedge Marketplace's large customer base is also a draw to artists and brands looking to market their content
 to a critical mass of users.

 Leading global provider
 of mobile personalization content. The Zedge App has a global customer base of approximately 23.3 million MAU as of July 31,
 2025, enabling users to easily personalize their mobile phones with a wide variety of free, high-quality ringtones, wallpapers, notification
 sounds, video wallpapers, custom app icons (only available for iOS), as well as create bespoke wallpapers with pAInt, our generative
 AI creation suite. We believe that the Zedge Marketplace is well positioned for continued leadership in the personalization space.

 Deep Knowledge of Gaming.
 We have leaders with years of experience in building and operating games of skill across digital platforms including iOS, Android,
 and web. We intimately understand game design, onboarding, game mechanics, LiveOps, feedback loops, in-game resource balancing, scarcity,
 and how to make a game fun, challenging, and fair.

 Extensive Experience
 Combining Gaming and a Real-World Activity. We have years of experience in combining game dynamics with a real-world activity.
 In the case of GuruShots the real-world activity is photography. Successfully combining these is non-trivial and requires a great
 deal of expertise and understanding that the team has acquired over the years.

 High-quality products.
 We do our best to provide our customers with high-quality products and superior user experiences. We prioritize our customers'
 needs and believe that this focus is critical for our long-term growth and expansion. We invest significant resources in product
 development, design, and usability. We beta test product enhancements extensively and closely monitor customer feedback to ensure
 that we meet users' needs. To date, our Zedge App has received more than 16 million reviews in Google Play where it boasts
 a 4.7 star rating out of a maximum of 5 stars. GuruShots has a 4.4-star rating in the App Store albeit from a universe of several
 thousand reviews.

 Human Capital. We
 have a team of highly experienced professionals that take pride and ownership in their work product. Our diverse employee base is
 passionate about our product suite and its mission to make our strategy a reality. Our culture is founded on respect and empowerment
 which are critical in light of us having offices in four different countries with a hybrid in-person work attendance policy. We strive
 to create an environment where our employees can be autonomous and creative. Our people possess deep expertise in product design
 and management, development, marketing, monetization, data and analytics and operations.

 Management team.
 We have an experienced management team with longstanding tenure with the company and deep knowledge of the mobile app landscape who
 are highly focused on execution. Our core management team possesses a solid understanding of the mobile app industry, product design
 and development, operations, and monetization. Collectively, our management team has a proven ability in building and scaling a business
 and pursuing opportunities with a manageable risk profile.

 Large and diverse content
 catalog. Our large and diverse catalog of content includes wallpapers, ringtones, notification sounds, video wallpapers, photographs,
 and emojis. With artists and contributors spanning the globe, we have assembled a vast array of both user generated and licensed
 content to meet the needs of our users.

 Scalable and Reliable
 Technology and infrastructure. Our products are built upon scalable technology and infrastructure that reliably serves tens of
 millions of MAU, globally. We use a combination of off-the-shelf and proprietary technologies and infrastructure solutions that scale
 efficiently to meet the needs of our large customer base.

 Competition

 We
face competition in all aspects of our business and especially from other digital marketplaces and gaming companies. In running our business,
we compete for:

 Consumers. We compete
 for consumers' leisure time, attention, and spending versus alternative forms of entertainment that are available to them as
 well as against online platforms and marketplaces that offer utility and content for mobile phone personalization.

 Content creators.
 There are many online platforms that offer content creators an ecosystem in which they can make their content available to consumers.
 Some of these platforms may have better incentives, paid or other, that may potentially make them more attractive than our marketplace.

 Advertisers. We
 face significant competition in securing spend from advertisers.

 Other Game and Mobile
 App Developers. Game and mobile app developers that offer engaging and interesting products are competitors and we may not be
 aware of many of them who may be more proficient at capitalizing on user acquisition channels in order to gain access to large user
 bases and their network effects to expand virally and quickly.

 Alternative options
 and products for mobile personalization, generative AI creation tools, games and emojis. There are many other marketplaces and
 platforms that offer mobile personalization content, generative AI creation tools, games, and emoji resources, some of whom are better
 funded than we are. We believe that we possess a competitive advantage because of our:

 large user base;

 "one-stop shop"
 approach to mobile personalization and creation features, which avails customers with a wide array of ringtones, wallpapers, notification
 sounds, and video wallpapers within the same Android app;

 flexibility that allows
 the customer to selectively choose what they would like to personalize without handing over the core elements of the native operating
 system to a third party and overwhelming the user with a myriad of complex options;

 large content catalog;

 recognized and well-respected
 brands;

 proprietary recommendation
 engine; and

 market ranking and longevity.

 Rapid-Paced and Changing
 World of Mobile App Development. The mobile app ecosystem changes quickly and regularly with new apps capturing massive audiences
 competing for consumers' time, mindshare, and money. This is an ongoing competitive threat requiring us to do our best to adapt
 as necessary to remain relevant and meaningful.

 Distribution and Discovery
 Platforms including Google, Apple, OpenAI, and other large intermediaries. Their algorithms, policies and AI-driven results increasingly
 surface answers and content within the platform UI, which may diminish referral traffic to our properties and impact acquisition
 costs and monetization.

 Our
History

 In
2003, Tom Arnoy, Kenneth Sundnes, and Paul Shaw launched a consumer website at www.zedge.net that people used to upload and download
ringtones.

 In
December 2006, IDT Corporation acquired 90% of Zedge. Zedge Holdings, Inc. was incorporated in Delaware in 2008, and our name was changed
to Zedge, Inc. in 2016.

 In
2016, IDT Corporation spun off our stock to its stockholders, and our Class B common stock was listed on the NYSE American with the ticker
symbol "ZDGE".

 In
March 2018, we completed the launch of Zedge Premium, a section of our marketplace where artists can launch a virtual store and market,
distribute, and sell their digital content, including wallpapers, video wallpapers, ringtones, and notification sounds to our users.

 In
January 2019, we started offering freemium Zedge App Android users the ability to convert into paying subscribers in exchange for removing
unsolicited advertisements from our Zedge App. In April 2023, we introduced a subscription tier in the iOS version of the app. As of
July 31, 2025, we had approximately 984,000 active subscribers, including approximately 693,000 lifetime subscriptions.

 In
August 2021, we acquired Emojipedia, the world's leading authority dedicated to providing up-to-date and well-researched emoji
definitions, information, and news as well as World Emoji Day and the annual World Emoji Awards.

 In
April 2022, we acquired GuruShots, a recognized category leader that fuses photography with mobile gaming. GuruShots, headquartered in
Israel, offers a platform spanning iOS, Android, and the web that gamifies photography by providing a fun, educational, and structured
way for amateur photographers – essentially anyone with a mobile phone – to compete in a wide variety of contests showcasing
their photos while gaining recognition with votes, badges, and awards. On a monthly basis, GuruShots users currently cast more than 3
billion "perceived votes" in more than 300 competitions. GuruShots currently generates revenue from selling digital resources
that, if used skillfully, can provide additional visibility to competitors' photographs, a critical factor in securing votes for
competitive ranking.

 In
December 2022, we introduced 'pAInt' our generative AI creation suite within the Zedge App. pAInt enables users with the
ability to create high quality AI images and audio by typing a brief description of what they are interested in or by uploading visual
content that they want to tune with AI.

 In
early 2025, Zedge implemented cost cutting initiatives to enhance profitability and support long-term growth. Overall, the estimated
total savings from the global restructuring and other cost reduction initiatives were expected to range from $3.9 million to
$4.1 million annually. In total, our global workforce was reduced by 22% and annualized compensation-related cost savings were projected
to be in the vicinity of $2.6 million.

 Our
Technology

 Our
ecosystem is powered by a scalable, distributed platform that integrates both open-source and proprietary technologies. It spans key
domains such as content management, content discovery, web and mobile application development, data science and analytics, device compatibility,
advertising and marketing technology, and reporting.

 We
have built a robust infrastructure that enables continuous ideation, experimentation, and deployment. This environment allows our development
teams to quickly test hypotheses, analyze outcomes, and operationalize successful innovations.

 Generative
AI and large language models (LLMs) are embedded throughout our technology stack, powering a wide range of workflows—from automating
content creation and enrichment to facilitating content translation. For example, generative models assist users in creating wallpapers,
ringtones, and other digital assets by generating imagery and audio based on user input and LLM-generated suggestions. Meanwhile, LLM-driven
systems enhance content translation for a broader global audience and refine search and discovery algorithms for real-time, relevant
content delivery.

 Our
data pipelines continuously train and fine-tune machine learning models using user engagement signals. These insights feed into recommender
systems and ranking algorithms, optimizing for both user satisfaction and content diversity.

 Operationally,
LLM tools assist developers and data scientists by automating tasks such as code refactoring and documentation generation, improving
productivity and reducing turnaround time.

 From
an end user's perspective, our platform minimizes response latency and optimizes resource allocation while maintaining cost efficiency.
Distributed systems, caching strategies, and inference optimization techniques ensure fast content rendering and real-time recommendations.
At GuruShots, our unique technology stack combines open-source and proprietary systems to power a highly-engaging gamified photography
platform. Our advanced ranking algorithms ensure fair exposure for participants, while our real-time voting and ranking engine scales
seamlessly to support millions of concurrent interactions. Our AI-driven recommendation system curates personalized competition suggestions
based on users' photographic style and historical engagement.

 To
sustain vibrant participation across all competitions, AI bots intelligently maintain gameplay liquidity, ensuring active, competitive,
and socially engaging challenges. All of this operates on a fully redundant, cloud-hosted infrastructure designed for high availability,
scalability, and performance.

 Intellectual
Property

 Our
trademarks, copyrights, domain names, proprietary technology, know-how, and other intellectual property are vital to our success. We
seek to protect our intellectual property rights by relying on federal, state, and common law rights in the United States and other countries,
as well as contractual restrictions. We enter into confidentiality and nondisclosure agreements with our employees and business partners.
The agreements we enter into with our employees also provide that all software, inventions, developments, works of authorship, and trade
secrets created by them during the course of their employment are our property.

 We
have been granted trademark protection for "Zedge" in the United States, European Union, United Kingdom, India, and Canada,
"We Make Phones Personal," "Zedge, Everything You," "Tattoo Your Phone," "Shortz – Chat
Stories By Zedge," and "NFTs Made Easy" in United States and a stylized "D" logo in the European Union,
United Kingdom, the United States, and Canada. We also have applied for trademark protection for "pAInt," and "Zedge
pAInt" in the United States, a stylized "D" logo in India, and have obtained a copyright registration for our flagship
app, Zedge. In addition, we have registered, amongst others, the following domain names: www.zedge.net and www.zedge.com.

 On
August 1, 2021, we acquired Emojipedia. As part of this acquisition, we acquired trademark registrations for "Emojipedia"
in the United States, the European Union, the United Kingdom, and Australia, and trademark registrations for "World Emoji Day"
in the United States and the United Kingdom. We also acquired the following domain name registrations: www.emojipedia.com and www.emojipedia.org.

 On
April 12, 2022, we acquired GuruShots Ltd. As part of this acquisition, we acquired all intellectual property rights associated with,
and encompassed within the GuruShots mobile and web-based applications, including the following domain name: GuruShots.com. In addition,
we have obtained trademark registrations for "GuruShots" in the United States, Canada, European Union, and United Kingdom
applied for trademark protection for "GuruShots" in India, and have obtained copyright registrations for the GuruShots mobile
and web-based applications.

 Human
Capital

 Attracting
and retaining qualified personnel familiar with our businesses who head our different businesses units is critical to our success. Our
headcount totaled 82 as of July 31, 2025.

 Our
human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing
and new employees, advisors and consultants. To accomplish that, our compensation practices are designed to attract and retain qualified
and motivated personnel and align their interests with the goals of the Company and with the best interests of our stockholders. Our
compensation philosophy is to provide compensation to attract the individuals necessary for our current needs and growth initiatives,
and provide them with the proper incentives to motivate those individuals to achieve our long-term plans, which includes among other
things, equity and cash incentive plans that attract, retain and reward personnel through the granting of stock-based and cash-based
compensation awards.

 We
believe that talent attraction and retention are critical to our ability to achieve our strategy and that a trained, diverse and inspired
workforce is integral to delivering on our objectives. Our recruiting process reaches a wide array of potential employees, and we employ
a rigorous screening process to ensure that we identify and hire quality professionals. We work to ensure that compensation and benefits
offered to employees are fair and reflects industry standards and best practices.

 We
are committed to diversity and inclusion in the workforce including a policy of non-discriminatory treatment and respect of human rights
for all current and prospective employees. Discrimination on the basis of an individual's race, religion, creed, color, sex, sexual
orientation, age, marital status, disability, national origin or veteran's status is not permitted by us and is illegal in many
jurisdictions. We respect the human rights of all employees and strive to treat them with dignity consistent with standards and practices
recognized by the international community.

 Facilities

 We
do not maintain office space in the United States in light of having a small domestic team. We address certain aspects of our commercial
operations, including accounting and finance, and business development from the New York area. We maintain leased facilities in Vilnius,
Lithuania and Tel Aviv, Israel for members of both GuruShots and Zedge teams and that make up our product, design, monetization, marketing
and technology teams. We lease space in Trondheim, Norway that formerly housed members of our team and we are exploring alternatives
for that space in light of the recent restructuring and shut down of that office.

 A certain number of our servers are hosted in leased data centers in
different geographic locations in the United States. We utilize cloud-based resources for a significant portion of our needs and those
services are hosted at the providers' facilities.

 Item
1A. Risk Factors

 Our
business, operating results or financial condition could be materially adversely affected by any of the following risks associated with
any one of our businesses, as well as the other risks highlighted elsewhere in this document, particularly the discussions about competition.
The trading price of our Class B common stock could decline due to any of these risks.

 Risk
Factor Summary

 Our
business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business,
financial condition or operating results to be harmed, including, but not limited to, risks regarding the following:

 If we fail to keep up with
 rapid technological changes in the internet, smartphone industries, and AI, and adapt our products and services accordingly, our
 results of operations and future growth may be adversely affected.

 A key component of our
 growth strategy involves the adoption, integration, and effective utilization of AI technologies across our products, services, and
 internal operations, which introduces significant and evolving risks.

 We offer a suite of freemium
 apps and we may not be successful in adding new users or in retaining existing users, or if our users decrease their level of engagement
 with our products or do not make optional purchases of tokens, resources, or content, or convert into paying subscribers and renew
 their paid subscriptions our revenue, financial results and business may be significantly harmed.

 We may not be successful
 in acquiring a sufficient number of users that become purchasers or retain existing users who generate profitable revenue for our
 apps.

 We may not manage our in-app
 economy well and as a result, disincentivize users from making in-app purchases. Any failure to do so could adversely affect our
 business, financial condition, and results of operations.

 If we are unable to compete
 for advertisers or if advertisers reduce their spend with us, our revenues, profitability and prospects may be materially and adversely
 affected.

 The digital advertising
 market may deteriorate or develop more slowly than expected, which could materially harm our business and results of operations.

 A material amount of our
 revenue is generated from a limited number of geographies and third-party advertising demand partners. Any change to this mix could
 result in negatively impacting our business, financial condition, and results of operations.

 Our apps' user base
 is heavily weighted to the Android operating system and our revenues and profitability may suffer if the market demand for Android
 smartphones decreases.

 We rely on third-party
 platforms, primarily the iOS App Store, Meta, and Google Play Store, to distribute our apps, process payments, and collect revenues
 generated on these platforms. These platforms exercise significant control over app distribution, monetization, advertising, and
 privacy policies, and frequently update their algorithms and terms of service. In addition, the integration of AI-driven content
 and search results by these platforms (e.g., Google's "AI Overviews" and similar generative AI features from Apple
 and Meta) may reduce organic traffic to our properties by embedding content directly in platform experiences. If these platforms
 adopt policies — including those relating to AI integration, advertising, privacy, monetization, or content display —
 that are counter to our strategy, our business could be materially and adversely affected.

 Zedge Premium, the section
 of our marketplace where we offer premium content (i.e., for purchase), may not yield the strategic goals and objectives that we
 envision, and our revenues, profitability and prospects may be materially and adversely negatively affected.

 We operate in a highly
 competitive industry with low barriers to entry, and our failure to compete effectively, particularly with our AI-based offerings,
 could adversely affect our business and results of operations.

 Our efforts to develop
 and expand our content licensing business exposes us to a number of risks that could limit our ability to grow, achieve commercial
 success, and maintain our overall, business, results of operations, and financial condition. Contributors may choose not to provide
 their content for licensing purposes, which could prevent us from scaling our licensing business.

 If we fail to maintain
 and enhance our various brands, or if we incur excessive expenses in this effort, our business, results of operations and prospects
 may be materially and adversely affected.

 We may not be able to effectively
 manage our growth or implement our future business strategies, in which case our business and results of operations may be materially
 and adversely affected.

 We have offices and other
 significant operations located in Lithuania, and Israel, and, therefore, our results may be adversely affected by political, economic
 and military instability in these countries.

 Data privacy, security,
 and emerging AI laws and regulations in the jurisdictions in which we operate subject us to possible sanctions, civil lawsuits (including
 class action or similar representative lawsuits) and other penalties in the event of non-compliance. The need to observe these evolving
 requirements increases the cost of doing business and may impose operational burdens that could adversely affect our products, user
 experience, and competitiveness. Compliance failures by us, our partners, or our vendors could harm our business, reputation, and
 financial results.

 New laws may impact our
 business, such as those affecting artificial intelligence and efforts by lawmakers in various jurisdictions to regulate providers
 of certain online services which may apply to our business and therefore introduce additional compliance obligations and potential
 sanctions and penalties for failings in these areas. Monitoring (and, if applicable, complying with) these developments is likely
 to increase the cost of doing business and any failure to comply with new laws may harm our business and reputation.

 Our business depends on
 our ability to collect and effectively use data to serve relevant advertising, deliver suitable content, and identify appropriate
 customer prospects, and any limitation on the collection and use of this data could significantly diminish the value of our services,
 cause us to lose clients, make us less attractive to prospective customers and revenues.

 Any significant system
 or network disruption or cyberattack could have a material adverse effect on our business prospects and results of operations.

 We are controlled by our
 majority stockholder, which limits the ability of other stockholders to affect our management.

 RISKS
RELATED TO OUR BUSINESS AND INDUSTRY

 If
we fail to keep up with rapid technological changes in the internet, smartphone industries, and artificial intelligence ("AI"),
and adapt our products and services accordingly, our results of operations and future growth may be adversely affected.

 The
internet and smartphone industries are characterized by rapid and innovative technological changes. Our future success will depend, in
part, on our ability to respond to fast changing technologies, adapt our products and services, including those of Emojipedia, to evolving
industry standards and improve the performance, functionality and reliability of our products and services. For example, AI platforms,
including ChatGPT and Claude, now return emoji results in response to user queries. While it is too early to accurately quantify the
impact of these changes on Emojipedia's monthly active users (MAU), we believe they are likely to result in reduced traffic and
adversely affect revenue. Our increasing reliance on AI technologies for various operational aspects, such as content moderation, personalization,
and user engagement, may pose risks if these systems fail or produce unintended outcomes. Technical issues, data inaccuracies, or system
malfunctions could disrupt our services and negatively impact user experience. Ensuring the reliability and accuracy of AI systems requires
ongoing maintenance, testing, and potential human oversight, which may increase operational complexity and costs. Our failure to continue
to adapt to such changes could harm our business. If we are slow to develop products and services that are compatible with smartphones,
or if the products and services we develop are not widely accepted and used by smartphone users, we may not be able to capture a significant
share of this important market. In addition, the widespread adoption of new internet, networking or telecommunications technologies or
other technological changes for smartphones could require substantial expenditures to modify or adapt our products, services or infrastructure.
If we fail to keep up with rapid and innovative technological changes to remain competitive, our future growth may be materially and
adversely affected and our results of operations could be materially and adversely affected.

 A
key component of our growth strategy involves the adoption, integration, and effective utilization of AI technologies across our products,
services, and internal operations, which introduces significant and evolving risks.

 We
currently incorporate AI into certain existing and planned products, as well as our internal operations. For example, in fiscal 2023
we launched pAInt, a generative AI creation suite within the Zedge App. We also rely on AI tooling, automation platforms, and emerging
practices such as "vibe coding" to improve operational efficiency, enhance content creation workflows, and accelerate product
development. Developing, testing, and deploying these AI systems, particularly those leveraging third-party services, may increase our
cost profile due to high computing costs, which could reduce our margins and adversely affect our financial results. Achieving consistent,
secure, and compliant AI adoption across departments—including Product & Engineering, Content Operations, Trust & Safety,
Customer Support, Finance, and Legal/Compliance—requires ongoing investment in training, governance, and change management. Failure
by any function to adopt or appropriately use these tools could reduce productivity, impair product quality, or cause compliance or security
issues.

 AI
technologies are complex, resource-intensive, and rapidly evolving. Market demand and acceptance of AI-driven offerings, such as pAInt
and Zedge Premium, remain uncertain, and our product development efforts may not achieve widespread adoption or may be outpaced by competitors.
Competitors with greater financial, technical, data, or distribution resources may gain an advantage in attracting and retaining AI talent
and in acquiring training data and compute capacity, which could impair our ability to maintain competitive AI capabilities. If our AI
solutions, or those of others in our industry, draw controversy due to their perceived or actual societal impact—such as generating
biased, harmful, or misleading content—we may experience brand or reputational harm, competitive harm, or legal liability, which
could slow user adoption of our products.

 The
use of AI also raises ethical, reputational, and legal concerns. AI systems can generate or amplify content that is inaccurate, misleading,
biased, discriminatory, harmful, or otherwise controversial, or be misused by third parties. If our AI tools produce, or are perceived
to produce, such outputs, or if we fail to implement adequate human oversight, testing, and safeguards (including data governance, evaluation,
and post-deployment monitoring), our brand and competitive standing could be harmed and we could face complaints, investigations, or
litigation. Potential litigation or government regulation related to AI may increase the burden and cost of research and development,
further subjecting us to reputational harm, competitive harm, or legal liability. Failure to address perceived or actual technical, legal,
compliance, privacy, security, or ethical issues could undermine public confidence in AI, slowing customer adoption of our AI-driven
products and services, such as pAInt and Zedge Premium.

 We
are susceptible to platform and competitive risks arising from the rapid adoption and integration of AI by established technology platforms,
app stores, search engines, and new market entrants. For example, platforms may incorporate AI-driven wallpaper, emoji, or other personalization
features directly into their services or AI overviews, reduce referral traffic, alter algorithms or terms governing AI content, or restrict
use of third-party AI tools, any of which could decrease usage of our products or increase customer acquisition costs. Over time, improvements
in AI accuracy, efficiency, and capabilities could disrupt our business model if we fail to anticipate and respond effectively.

 Laws
and regulations focused on the development, use, and provision of AI technologies and other digital products and services are proliferating
in many jurisdictions around the world. Staying compliant with evolving laws, regulations, and industry standards pertaining to AI may
impose significant operational costs and constrain our ability to develop, deploy, or employ AI technologies. Failing to adapt appropriately
to this evolving regulatory environment could result in legal liability, regulatory actions, monetary penalties and damage to our brand
and reputation.

 Operationally,
AI models depend on the quality, provenance, and security of data and on reliable third-party infrastructure. Inadequate, outdated, biased,
or compromised datasets can produce flawed outputs and "model drift." Our reliance on third-party models, APIs, datasets,
and cloud providers exposes us to outages, cost volatility, performance degradation, or changes in licensing or acceptable-use terms,
which could disrupt our operations if these services become unavailable or are no longer offered on commercially reasonable terms. Integrating
AI introduces new cybersecurity risks, including prompt-injection, data exfiltration, model poisoning, and supply-chain vulnerabilities,
as well as the risk that employees inadvertently input confidential or personal data into external systems.

 Intellectual
property ownership surrounding AI technologies has not been fully addressed by U.S. courts or federal and state laws, nor by international
legal frameworks globally. Our ongoing development and use of generative AI tools may result in copyright infringement claims, disputes
over ownership and licensing, and potential patent infringement claims, among other things. These legal challenges could be costly to
defend against, leading to substantial financial obligations and reputational damage. The evolving regulatory environment and uncertain
legal precedents in this field further increase our exposure to litigation risks, which could materially affect our business, financial
condition, and results of operations.

laws and regulations focused on the development and use of AI are proliferating globally and continue to evolve (for example, comprehensive
AI frameworks in the EU and emerging federal and state guidance in the U.S.). Compliance may require significant documentation, transparency
and record-keeping, risk assessments, model governance, content provenance or watermarking, impact assessments, vendor oversight, and
restrictions on certain use cases. Noncompliance could result in investigations, fines, injunctions, remediation obligations, or other
sanctions. Cross-border data transfer rules, sanctions, and export controls may affect access to datasets, models, or compute resources
in some jurisdictions.

 Further,
our use of generative AI in aspects of our platforms may present risks and challenges that could increase as AI solutions become more
prevalent. AI algorithms may be flawed. Datasets may be insufficient or contain biased information. These deficiencies and other failures
of AI systems could have negative impacts on our users' experience and subject us to competitive harm, regulatory action, legal
liability, and brand or reputational harm. Contractual indemnities from vendors may be unavailable or insufficient. We may also face
claims related to privacy (including the processing of personal or biometric information), publicity rights, deceptive practices, or
content moderation failures. Defending such claims can be costly and time-consuming, could require changes to our products or processes,
and could harm our reputation and financial results.

 Finally,
AI-related development and inference can increase energy consumption and costs, and investor or regulatory focus on sustainability may
impose additional constraints. If we fail to implement robust AI governance, align employee practices with our policies, maintain sufficient
human oversight, and continuously evaluate and improve our systems, the risks described above could materially and adversely affect our
business, financial condition, results of operations, and reputation.

 We
offer a suite of freemium apps and we may not be successful in adding new users or in retaining existing users, or if our users decrease
their level of engagement with our products or do not make optional purchases of tokens, coins, resources, or content, or convert into
paying subscribers and renew their paid subscriptions our revenue, financial results and business may be significantly harmed.

 The
size of our user base and our users' level of engagement and paid conversion are fundamental to our success. Our financial performance
has been and will continue to be dependent on our ability to successfully add new users, retain and engage existing users and convert
them into paying users and/or subscribers. We expect that the size of our user base will fluctuate or decline in one or more markets
from time to time. If consumers and/or creators do not perceive our products as useful, effective, entertaining, reliable, and/or trustworthy,
we may not be able to attract or keep users or otherwise maintain or increase the frequency and duration of their engagement or the percentage
of users that are converted into or remain paying subscribers. We may continue to see declines in our user base or engagement levels,
which could further erode our ability to maintain or grow revenue. User engagement can be difficult to measure, particularly as we introduce
new and different products and services, and as various privacy regulations evolve. Any number of factors can negatively affect user
retention, growth, engagement and conversion, including if:

 users opt to utilize other
 competitive products or services instead of our own;

 user behavior changes with
 respect to our products and services resulting in a decrease of engagement and/or session time;

 users decrease their engagement,
 session time, or uninstall our apps because they feel their experience is diminished due to product decisions that we make with respect
 to introducing new features, feature enhancements, and/or monetization techniques;

 users become concerned
 about our user data practices or other matters related to privacy, security and the sharing of user data;

 users are no longer willing
 to pay for subscriptions or in-app purchases or we are unable to increase the price of our subscriptions or in-app purchases;

 users have difficulty installing,
 updating or otherwise accessing our products and services as a result of our actions or those of third parties that we rely on to
 distribute our products and deliver our services;

 we fail to introduce new
 features, products or services that users find engaging or enhance the existing products and services with improvements that users
 are interested in;

 we are unable to acquire
 users through cost-effective marketing efforts, including both organic and paid channels;

 we are unable attract sufficient
 new paying users to offset and exceed those lost through natural churn thus making it more difficult to maintain and grow revenues;

 initiatives designed to
 attract and maintain users and increase engagement are unsuccessful because of errors that we make or policies instituted by third
 parties that we use to distribute our products or deliver our services;

 third-party initiatives
 that may enable greater use of our products, including low-cost or discounted data plans, are discontinued;

 we adopt terms, policies
 or procedures related to areas such as privacy, user data, content ownership, or monetization techniques that are received negatively
 by our users or creators;

 we fail to combat inappropriate
 or abusive activity on our platforms;

 we are unable to offer
 relevant content to our users;

 we fail to provide adequate
 support for our users and creators;

 there are outages or other
 technical problems that result in making our products and services inaccessible, unreliable or that result in a poor user experience;

 there are actions by governments
 that affect accessibility to our products and services in any market; or

 there are regulations and/or
 litigation that result in users not accepting our terms of use because of measures that we have taken in order to ensure compliance.

 Certain
of these factors have, at various times, negatively impacted user and creator growth, MAU and engagement. If we are unable to maintain
or increase our user base and user engagement, our revenue and financial results may be materially adversely affected.

 We
may not experience growth or engagement in certain geographic locations due to local factors.

 We
may not experience rapid user growth or continued engagement in countries that have unreliable telecommunications infrastructure or in
countries where mobile and internet usage are expensive or limited in regular accessibility. Any decrease in user retention, growth or
engagement may have a material and adverse impact on our popularity, revenue, business, reputation, financial condition, and results
of operations.

 We
may not be successful in acquiring a sufficient number of users that become purchasers or retain existing users who generate profitable
revenue for our apps.

of freemium apps and websites typically rely on a small percentage of users that convert into paying users by making in-app purchases
of digital goods and/or paid subscriptions; however, the vast majority of users play for free or only occasionally make purchases or
opt-in for paid subscriptions. Accordingly, only a small percentage of our users are paying users. In addition, a small portion of paying
users generate a disproportionate percentage of revenue. Because of this, it is imperative for us to both retain these valuable customers
and to maintain or increase their spend over time. In fiscal 2025, we experienced a 17% increase in subscription revenue and a 29% increase
in subscription billings. Conversely, over the past nine years, GuruShots has successfully increased the compounded annual growth rate
of monthly spending per paying player by around 6.2%. There can be no assurance that we will be able to continue to retain paying users,
grow or maintain subscription levels or that paying users will maintain or increase their spending. We may experience a net decline in
paying players resulting in a decrease in revenue resulting in a materially adverse outcome for our business and financial results.

 We
may not manage our in-app economy well and as a result, disincentivize users from making in-app purchases. Any failure to do so could
adversely affect our business, financial condition, and results of operations.

 Our
apps are available to players for free and each brand generates a material portion of its revenue by selling digital goods and/or paid
subscriptions. The perceived value of these digital goods and/or paid subscriptions can be impacted by various factors including, but
not limited to, their price, discounting policies, promotional strategies, market competition, user reviews, and user engagement levels.
If we fail to manage our economy well, we risk confusing or upsetting users to the point that they reduce their purchases which could
negatively hurt the business.

 If
we are unable to compete for advertisers or if advertisers reduce their spend with us, our revenues, profitability and prospects may
be materially and adversely affected.

 In
fiscal 2025, approximately 75% of our revenues (excluding GuruShots) were generated from selling advertising inventory. We generally
enter into arrangements with the major programmatic advertising networks to monetize our advertising inventory. We need to maintain good
relationships with these advertising networks to provide us with a sufficient inventory of advertisements. Online advertising, including
through mobile applications, is an intensely competitive industry. Many large companies, such as Applovin, Meta and Google, invest significantly
in data analytics to make their properties and platforms more attractive to advertisers. Our advertising revenue is primarily a function
of the number and hours of engagement of our free users and our ability to provide innovative advertising products that are relevant
to our users, maintain or increase user engagement and satisfaction with our products, and enhance returns and add incremental gains
for our advertising partners. If our relationship with any advertising partners terminates for any reason, or if the commercial terms
of our relationships are changed or do not continue to be renewed on favorable terms, or if we cannot source high-quality ads consistent
with our brand or product experience, we would need to qualify new advertising partners, which could negatively impact our revenues,
at least in the short term.

 In
addition, internet-connected devices and operating systems controlled by third parties increasingly contain features that allow device
users to disable functionality that allows for the delivery of advertising on their devices or reduce the ability to provide personalized
or targeted advertising, which results in less valuable ads. Device and browser manufacturers may include or expand these features as
part of their standard device specifications. For example, when Apple announced that IDFA, a standard device identifier used in some
applications, was being superseded and would no longer be supported, application developers were required to update their apps to utilize
alternative device identifiers such as universally unique identifier, or, more recently, identifier-for-advertising, which simplifies
the process for Apple users to opt out of behavioral targeting. Furthermore, laws and regulations may also make it more difficult to
deliver personalized or targeted advertising or impose requirements that result in more users making elections to block our ability to
deliver targeted ads. If users do not elect to participate in functionality that supports the delivery of targeted advertising on their
devices, our ability to deliver effective advertising campaigns could suffer, which could cause our business, financial condition, or
operating results to be adversely affected.

 We
anticipate that our growth and profitability will continue to depend on our ability to sell our advertising inventory. Companies that
advertise with us may choose to utilize other advertising channels or may reduce or eliminate their marketing altogether for a variety
of reasons, many of which are out of our control, including, without limitation, if the demand for mobile phone personalization industry
declines or otherwise falls out of favor with advertisers or consumers. In addition, we previously disclosed that disruptions caused
by U.S. regulatory action, specifically the TikTok ban that took effect in early 2025 shortly after President Trump assumed office, had
an immediate impact on advertiser behavior. During that period, U.S. advertising revenue fell, with TikTok advertising spend for the
most part disappearing. This experience illustrates how government-mandated restrictions on a major advertiser can impact revenue quickly.
Should future regulation, such as a reinstated or expanded ban on TikTok or restrictions on other platforms result, our revenue could
be materially and adversely affected.

 If
the size of the digital advertising market does not increase from current levels, or if our digital brands are unable to capture and
retain a sufficient share of that market, our ability to maintain or increase our current level of advertising revenues and our revenues,
profitability and prospects could be materially and adversely affected.

 The
digital advertising market may deteriorate, which could materially harm our business and results of operations.

 We
generate the substantial majority of our revenue from selling advertising inventory. We anticipate that our growth and profitability
will continue to depend on our ability to sell advertising inventory across some if not all of our digital brands.

 Future
demand for mobile advertising is uncertain. Many advertisers still have limited experience with mobile advertising and may continue to
devote larger portions of their advertising budgets to more traditional offline or online personal computer-based advertising, instead
of shifting additional advertising resources to mobile advertising.

 Further,
our advertisers' ability to effectively target their advertising to our user's interests may be negatively impacted by the
degree to which our privacy control measures that we have implemented or may implement in the future in connection with regulations,
regulatory actions, the user experience, or otherwise, and our advertising revenue may decrease or otherwise be curtailed as a result.
Changes to operating systems' practices and policies, such as Apple's deprecating the Identifier for Advertisers ("IDFA")
and changes by Google to its advertising and tracking policies, including the planned deprecation of third-party cookies in Chrome and
a shift away from certain elements of its Privacy Sandbox initiative, as well as efforts to block covert tracking techniques like fingerprinting,
may also reduce the quantity and quality of the data and metrics that can be collected or used by us and our partners. These limitations
may adversely affect our advertisers' ability to effectively target advertisements and measure their performance, which could reduce
the demand and pricing for our advertising products and harm our business. As such, our digital property's current and potential
advertiser clients may ultimately find digital advertising to be less effective than traditional advertising media or marketing methods
or other technologies for promoting their products and services, and they may even reduce their spending on mobile advertising from current
levels as a result or for other reasons.

 If
the market for mobile advertising deteriorates, we may not be able to increase our revenues or our revenues and profitability could decline
materially.

 A
material amount of our revenue is generated from a limited number of geographies and third-party advertising demand partners. Any change
to this mix could result in negatively impacting our business, financial condition, and results of operations.

 In
fiscal 2025, revenue from well developed economies accounted for approximately 81% of our total revenues and 72% of our total
advertising revenues were generated by three advertising demand partners. While our end users are located around the world, the
revenue is generated in the United States from our advertising partners. During the past five years, we have experienced a shift in
our Zedge App's regional customer make-up with the percentage of our total MAU from emerging markets increasing, while the
portion from well-developed markets is decreasing. In fiscal 2025, 76.7% of our Zedge App's users were located in emerging
markets with 23.3% of users in well-developed regions compared to 21.1% and 78.9% respectively in fiscal 2024. India comprised 32.5%
of our MAU as of July 31, 2025. This shift has negatively impacted revenues because well-developed markets command materially higher
advertising rates when compared to those in emerging markets. Although we are investing in reversing this trend, we may not be
successful in this effort which may result in lower revenues and profitability. Although GuruShots' and Emojipedia' s
user bases are more heavily weighted to well-developed economies, our overall revenue remains sensitive to the regional composition
of our Zedge App's user base.

 Three
advertising demand partners, mainly, Google, Liftoff, and AppLovin were responsible for 72% of advertising revenue in fiscal 2025. If
any of these advertising demand partners were to alter their spend on our digital properties the outcome could result in lowering revenues
and profitability.

 In
addition, on April 24, 2024, President Biden signed the Protecting Americans from Foreign Adversary Controlled Applications
Act (PAFACA), which required ByteDance, TikTok's Chinese owner, to divest the app's U.S. operations by January 19, 2025,
or face a nationwide ban. This law was upheld by the U.S. Supreme Court in January 2025 in TikTok v. Garland.

 After
briefly going offline in mid-January, TikTok continued to operate in the U.S. under a series of executive orders signed by President
Trump, each delaying enforcement of the federal ban by 75- to 90-day increments. The most recent extension set a compliance deadline
of September 17, 2025. Shortly before that date, the U.S. and China announced they had reached a framework agreement to transition TikTok's
U.S. operations toward a U.S.-based ownership structure, aimed at preserving continued operation in the U.S. while satisfying national
security concerns. Consistent with this framework, on September 16, 2025, the President signed a new executive order further extending
the compliance deadline to December 16, 2025.

 Should
TikTok fail to complete an approved divestiture or meet U.S. requirements under the PAFACA and its implementing regulations by December
16, 2025, enforcement of the federal ban could resume, including removal of the app from U.S. app stores and other restrictions. This
poses material risks to advertising and e-commerce, including revenue tied to TikTok-based promotions on Zedge's platform.

 Our
apps' user base is heavily weighted to the Android operating system and our revenues and profitability may suffer if the market
demand for Android smartphones decreases.

 Our
apps' user base is heavily weighted to smartphones running the Android operating system, which constituted approximately 95% of
our MAU (excluding Emojipedia) as of July 31, 2025, and most of our revenues for fiscal 2025. Any significant downturn in the overall
demand for Android smartphones or the use of Android smartphones could significantly and adversely affect the demand for our products
and services and would materially affect our revenues.

the Android smartphone market has grown rapidly in recent years, it is uncertain whether the Android smartphone market will continue
growing at a similar rate in the future. In addition, due to the constantly evolving nature of the smartphone industry, another operating
system for smartphones may eclipse the Android operating system and result in a decline in its popularity, which would likely adversely
affect our apps' popularity. To the extent that our products and services continue operating on Android smartphones and to the
extent that our future revenues substantially depend on the use and sales of Android smartphones, our business and financial results
would be vulnerable to any downturns in the Android smartphone market.

 We
may not be successful in diversifying our revenue mix in order to reduce our significant dependence on third-party advertisers.

 In
fiscal 2025, approximately 75% of our revenues excluding GuruShots were generated from advertising sales. We cannot assure you that we
will be successful in diversifying our revenue mix by identifying new revenue drivers that complement our advertising-heavy business.
Although the Zedge App had initial success in converting freemium users into paid subscribers, starting with zero in January 2019 and
ending fiscal 2024 with approximately 669,000, we ended fiscal 2025 with 984,000 subscribers, a 47% increase and we may not be successful
in improving subscriber base growth or in maintaining our current subscriber base. Furthermore, the subscription growth we experienced
in fiscal 2025 was fueled by converting users to lifetime subscriptions and offers that aligned with localized pricing dynamics. We may
not be able to continue to be able to drive this growth as market dynamics may change. To date, Zedge Premium has taken longer to scale
than we originally anticipated. Furthermore, we are still integrating GuruShots and have not achieved its expected growth trajectory
or realized synergies between GuruShots and our legacy operations. Finally, Android users constitute approximately 95% of our overall
MAU and are prone to spend less money in apps than iOS and web users. Even if our new initiatives are successful on one platform, we
may not be able to replicate that success across other platforms.

 Our
revenues may fluctuate materially due to increases and decreases of new mobile device sales, or other factors, over which we have no
control.

 Our
revenue may be materially negatively impacted by a decrease or slowdown in new mobile device sales. Demand for mobile devices highly
correlates to installs of our apps and associated usage and revenue generation.

 If
new mobile device sales decrease or slowdown, our products and services will likely experience fewer installations which will negatively
impact our revenue and operations.

 We
rely on third-party platforms, primarily the iOS App Store, Meta, and Google Play Store, to distribute our apps, process payments, and
collect revenues generated on these platforms. These platforms exercise significant control over app distribution, monetization, advertising,
and privacy policies, and frequently update their algorithms and terms of service. In addition, the integration of AI-driven content
and search results by these platforms (e.g., Google's "AI Overviews" and similar generative AI features from Apple
and Meta) may reduce organic traffic to our properties by embedding content directly in platform experiences. If these platforms adopt
policies — including those relating to AI integration, advertising, privacy, monetization, or content display — that are
counter to our strategy, our business could be materially and adversely affected.

 Our
products and services depend almost entirely on mobile app stores, particularly Google Play and Apple's App Store, and on other
third parties such as data center service providers, as well as third party cloud infrastructure and service providers, payment aggregators,
computer systems, internet transit providers and other communications systems and service providers. Our mobile applications are almost
exclusively accessed through and depend on the Google Play Store and Apple's App Store. While our apps are generally free to download,
we monetize through in-app purchases, subscriptions, and advertising, all of which depend on compliance with evolving platform policies.
As of July 31, 2025, we paid Google and Apple processing fees of up to 30% for transactions, and we remain exposed to changes in fee
structures, payout timing, and permitted monetization models. Any interruption, degradation, or policy change, including restrictions
on AI-generated content or mandatory labeling of such content, could materially impact our business. While we do not anticipate any interruption
in their distribution platforms or ability to accept customer payments, any such disruptions, even temporary, may have material impacts
on our business and operations.

 Platform-driven
changes to content accessibility may also impact our traffic and revenue. For instance, in late September 2025, Google updated its Search
Engine Results Page (SERP) to allow users to copy emojis directly from search results, bypassing third-party sites like Emojipedia. This
change could reduce organic traffic to our content-dependent services, potentially leading to a decline in revenue.

 We
are subject to the standard policies and terms of service of third-party platforms, which govern the marketing, promotion, distribution,
content and operation of our apps on their platforms. Each platform provider has the discretion to make changes to its operating system,
payment services, manner in which their mobile operating system operates as well as change and interpret the terms and conditions of
its developer policies. These changes may be harmful to our business and result in a negative outcome. For example, in September 2019,
our Zedge App was temporarily removed from Google Play because they asserted that the Zedge App violated their malicious behavior policy.
As a result, prospective Android users were prevented from installing our Zedge App, freemium users were unable to convert into paying
subscribers and existing users were unable to purchase Zedge Credits. Shortly after the notice was issued, two of our major advertising
suppliers ceased serving advertisements to our Zedge App. In addition, Google Play sent a notification to users that had the problematic
version of the app on their phone recommending that they uninstall it. We identified the source of the problem as buggy code from a long-term,
third-party advertising partner's standard technology integration in our app. We corrected the problem by removing the offensive
code, releasing a new version of our app and our Zedge App was reinstated after approximately 72 hours and concurrently the two major
advertising suppliers resumed purchasing our advertising inventory. We estimate the immediate financial impact of the suspension resulted
in approximately $100,000 in lost revenue and a material decline in MAU with the majority of uninstalls in emerging markets.

 Such
changes could:

 make our products and services
 inaccessible or limit their accessibility;

 curtail our ability to
 distribute and update our applications as we see fit across their platforms;

 impose changes in the way
 in which we monetize our users;

 limit the scope of feature
 enhancements or new features;

 decrease or eliminate our
 ability to market to prospective and existing users; or

 cease our ability to collect
 certain data about users and their respective usage.

 Google
and Apple are able to terminate our distribution agreements with them, without cause, with 30 days prior written notice (to the extent
allowed by applicable local law). They also may terminate our agreements with them immediately (unless a longer period is required by
applicable law) under certain circumstances, including upon our uncured breach of such agreements. To the extent that they or any other
third party platform provider on which we rely make such changes or terminates our agreements with them, our business, financial condition
and results of operations could be materially adversely affected.

 A
platform provider may also change its fee structure to our disadvantage, change how we are able to advertise on the platform, limit how
user information is made available to developers, curtail how personal information is used for advertising purposes, or restrict how
users can share information with their friends on the platform or across platforms. For example, in April 2021 Apple released iOS 14
which started requiring users to opt in to share their IDFA with app developers, on an app-by-app basis. As a consequence, the ability
of advertisers to accurately target and measure their advertising campaigns at the user level becomes significantly more difficult, typically
resulting in higher user acquisition costs.

 Furthermore,
both Apple and Google have broad discretion to make changes to their operating systems or payment services or change the manner in which
their mobile operating systems function and their respective terms and conditions applicable to the distribution of our applications,
including the amount of, and requirement to pay, certain fees associated with purchases required to be facilitated by Apple and Google
through our applications, and to interpret their respective terms and conditions in ways that may limit, eliminate or otherwise interfere
with our products, our ability to distribute our applications through their stores, our ability to update our applications, including
to make bug fixes or other feature updates or upgrades, the features we provide, the manner in which we market our in-app products, our
ability to access native functionality or other aspects of mobile devices, and our ability to access information about our users that
they collect. To the extent either or both of them do so, our business, financial condition and results of operations could be materially
adversely affected.

 For
example, pursuant to Google's policy whereby only Google Play's in-app billing system could be used for transactions in its
store, we were mandated to stop the provision of non-native payment options to our users on Android during 2021, which caused disruptions
for users and led to a decline in Paying Users. Since announcing this policy in 2020, following industry pushback and country-specific
regulations Google has introduced in select markets the option of "user choice billing," which allows eligible developers
to offer users an additional billing system alongside Google Play's billing system, and in the European Economic Area the option
for eligible developers to offer users an alternative to Google Play's billing system. In July 2025, the Japan Fair Trade Commission
approved a settlement requiring Google to allow alternative billing systems in Japan beginning in 2026, and other jurisdictions are considering
similar measures. We are exploring such solutions on a country-by-country basis. However, as these solutions are in their infancy, they
may evolve following subsequent regulatory mandates or organically at Google's behest, and as such we will need to be ready to
continuously adapt to such changes. Any deadlines imposed on developers by future iterations of Google's policy will require prompt
and active development; failure to comply could result in the discontinuation of alternative billing methods for our users. Additionally,
a December 2024 ruling in Epic Games v. Google, now under appeal, requires Google to permit third-party app stores and direct
app downloads on Android devices in the United States from November 1, 2024 through November 1, 2027, which could alter app distribution
economics, fee structures, and competitive dynamics in ways that may materially affect our business.

 Similarly,
Apple is experiencing industry pushback and country-specific regulations. In response to a recent U.S. antitrust settlement, effective
January 2025 Apple now allows all digital apps in the United States to include a "prominent link" or button directing users
to the developer's website to process payments for in-app purchases, subject to Apple's updated commission structure and
compliance requirements. In the EU, pursuant to the Digital Markets Act (DMA) and related March 2025 enforcement actions, Apple has been
required to (i) permit third-party app stores, (ii) allow side-loading of apps from the web, and (iii) support alternative in-app payment
systems without imposing anti-steering restrictions, with similar obligations anticipated for Google. South Korea and Australia have
also advanced legislative proposals that, if enacted, could mandate alternative billing options. Further complicating the competitive
landscape, regulators in the United Kingdom are reviewing Apple's compliance with its existing commitments under the UK Competition
and Markets Authority's mobile ecosystem investigation. These global regulatory shifts may require us to adopt highly nuanced,
jurisdiction-specific billing and distribution strategies, devote additional resources to compliance, and manage multiple app versions
tailored to local rules. Changes to billing options and distribution channels may disrupt the user experience and payment flow, potentially
reducing paying user conversion rates. Conversely, opting not to implement alternative options where available could result in missed
monetization opportunities. Any of these developments could materially adversely affect our business, financial condition, and results
of operations.

 Should
we choose to explore such policy initiatives for the benefit of our business and our users, we may potentially become subject to highly
nuanced, country-specific billing policies and commissions of major app store operators, we may need to devote more resources and time
in creating and managing separate app bundles for each country in which we want to offer alternative billing options, which could become
burdensome, and/or we could become subject to higher commissions overall. Furthermore, changes to billing options may cause a disruption
to the user journey, which could cause a decrease in paying user conversion rates. Alternatively, choosing not to explore such policy
initiatives could present a risk of missed opportunity. Any of the foregoing could materially adversely affect our business, financial
condition and results of operations.

 If
we violate, or if a platform provider believes we have violated, its terms of service or applicable policies, the provider may limit
or terminate our access to its platform, with or without notice. This risk extends to emerging AI-content compliance rules, such as disclosure
or watermarking requirements, which may be interpreted differently across jurisdictions. Given our dependence on single-source distribution
via Google Play and the App Store, any limitation or termination could significantly reduce our reach, impair monetization, and materially
harm our business.

 Our
business depends on the availability of mobile app stores and other third party platforms and any outages that these parties experience
will likely have a negative impact on our business, financial condition, results of operations or reputation.

 If
technologies designed to block the display of advertisements are adopted en masse, or if web browsers limit or block behavioral targeting
technologies our revenues may be adversely affected.

 Technologies
have been developed, and will likely continue to be developed, that can block the display of advertisements on our digital products and
services. We may suffer negative consequences, including a material reduction of revenue, with mass adoption of website ad blocking technologies
or other technologies that limit the ability to personalize advertisements, including, without limitation, if the price for this advertising
inventory declines. We generate substantially all of our revenue from advertising, and ad-blocking technologies may prevent the display
of certain advertisements appearing on our platform, which could harm our business, operating results, and financial condition. Existing
ad-blocking technologies that have not been effective on our platform may become effective as we make certain platform changes, and new
ad-blocking technologies may be developed in the future.

 Activities
of our advertiser clients and/or users could damage our reputation or give rise to legal claims against us.

 Our
advertisers and/or users may not comply with international or domestic laws, including, but not limited to, laws and regulations relating
to mobile communications. Failure of our advertisers and/or users to comply with laws or our policies could damage our reputation and
expose us to liability under these laws. We may also be liable to third parties for content in the advertisements or content we deliver
or distribute if the artwork, text or other content involved violates copyrights, trademarks or other intellectual property rights of
third parties or if the content is defamatory, unfair and deceptive, or otherwise in violation of applicable laws. Although we generally
receive assurance from our advertising partners and users that their advertisements and content, respectively, are lawful and that they
have the right to use any copyrights, trademarks or other intellectual property included in an advertisement or content, and although
we are normally indemnified by the advertisers, a third party or regulatory authority may still file a claim against us. Any such claims
could be costly and time consuming to defend and could also hurt our reputation within the mobile advertising industry. Further, if we
are exposed to legal liability, we could be required to pay substantial fines or penalties, redesign our business methods, discontinue
some of our services or otherwise expend significant resources.

 We
may not be able to continually meet our users' expectations and retain or expand our user base, and our revenues, profitability
and prospects may be materially and adversely affected.

we constantly monitor and research our users' expectations, we may be unable to meet them on an ongoing basis or anticipate future
user needs. A decrease in the number of users engaging with our products and services may have a material and adverse effect on our ability
to sell advertising, digital goods and resources, and subscriptions and on our business, financial condition and results of operations.
In order to attract and retain users and remain competitive, we must continue to innovate our products and services, improve user experience,
and implement new technologies and functionalities.

 The
internet business is characterized by constant changes, including but not limited to rapid technological evolution, continual shifts
in user expectations, frequent introductions of new products and services and constant emergence of new industry standards and practices.
As a result, our users may leave us for our competitors' products and services more quickly than in other sectors. Thus, our success
will depend, in part, on our ability to respond to these changes in a timely and cost-effective basis, including improving and marketing
our existing products and services and developing and pricing new products and services in response to evolving user needs. Our ability
to successfully retain or expand our user base will depend on our ability to achieve the following, among others:

 anticipate and effectively
 respond to the growing number of internet users in general and our users in particular;

 attract, retain and motivate
 talent, including but not limited to application developers, visual designers, product and program managers and engineers who have
 experience developing consumer facing digital products or other mobile internet products and services;

 effectively market our
 existing and new products and services in response to evolving user needs;

 develop in a timely fashion
 and launch new products and features, and develop and launch other internet products cost-effectively;

 funnel our existing users
 and prospects into new products that we develop, independent of our current product suite, and convert them into recurring users
 of these new products;

 successfully recruit new
 users, artists, individual creators and brands that offer their content to our users;

 further improve our platform
 to provide a compelling and optimal user experience through integration of products and services provided by existing and new third-party
 developers or business partners; and

 continue to provide quality
 content to attract and retain our users and advertisers.

 We
cannot assure you that our existing products and services, will remain sufficiently popular with our users. We may be unsuccessful in
adding compelling new features and enhancements; products and services to further diversify these product offerings. Unexpected technical,
commercial or operational problems could delay or prevent the introduction of one or more of our new products or services to our users.
Moreover, we cannot be sure that any of our new products and services will achieve widespread market acceptance or generate incremental
revenue the way our existing products and services have. If we fail in earning user satisfaction through our products or services or
if our products and services fail to meet our expectation to maintain and expand our user base, our business, results of operations and
financial condition will be materially and adversely affected.

 Zedge
Premium, the section of our marketplace where we offer premium content (i.e., for purchase), may not yield the strategic goals and objectives
that we envision.

we believe that Zedge Premium will act as an important driver in helping our platform become a leading platform for professional artists,
individual creators and brands looking to distribute their work to consumers looking for an easy, entertaining and unique way to express
their voice, individuality and essence, it's premature to conclude this as being the case.

Zedge Premium's gross transaction revenue has shown impressive growth it is still too early to state with conviction that Zedge
Premium will have a materially positive impact on our business. In order to do so, we still need, among other things, to:

 successfully market the
 recently-launched web-based offering to both creators and consumers;

 expand the digital content
 types we offer to include more types of creators;

 continue to ensure that
 we build best-of-breed tools for Zedge Premium content creators that, amongst other things, meet their needs and properly address
 marketing, distribution, monetization, reporting, support, and ease of use;

 continue to develop a wide
 array of monetization mechanisms Zedge Premium creators in order to optimize revenue generation;

 continue evolving exclusive,
 limited edition digital content functionality that meets the needs of both creators and consumers;

 successfully market Zedge
 Premium to the creative community and secure their adoption as a must-have in their omnichannel distribution mix;

 establish that Zedge Premium
 can be valuable to a sufficient number of creators in achieving their marketing and monetization objectives; and

 continue to offer an excellent
 and differentiated consumer experience in Zedge Premium, including all end-user facing attributes ranging from the user interface
 to customer support.

 If
Zedge Premium fails to yield the strategic goals and objectives that we envision, our business, results of operations and financial condition
will be materially and adversely affected.

 We
may fail to develop popular new features or expand into new verticals, successfully, negatively impacting our ability to attract new
users or retain existing users, which could negatively impact our business, financial condition, and result of operations.

 We
operate in a highly competitive industry with low barriers to entry, and our failure to compete effectively, particularly with our AI-based
offerings, could adversely affect our business and results of operations.

 The
industry for digital content and AI-based offerings, including mobile personalization, emoji content, and photo competition platforms,
is intensely competitive with low barriers to entry. We compete with a diverse range of entities, from large media companies and established
online marketplaces to emerging startups and generative AI providers offering content creation, licensing, and personalization tools.
Competitors include stock content suppliers, providers of free or low-cost imagery and music, social media platforms, and AI-driven content
creation services. Key competitive factors include the quality, relevance, and breadth of content; effectiveness of AI technologies;
pricing; ease of access; and brand reputation. Many competitors have greater financial, technical, or marketing resources, or stronger
brand recognition, enabling them to innovate faster or offer more attractive pricing and terms to users and content creators. Low barriers
to entry allow new entrants to quickly develop platforms that could divert users and creators from our offerings, such as Zedge Premium
and pAInt, by providing easier submission processes, higher royalties, or exclusive distribution incentives. Additionally, advancements
in generative AI could render our content or tools less competitive if competitors deploy superior AI-driven solutions. Increased competition,
pricing pressures, or failure to meet user and creator expectations could reduce our market share, lower margins, or limit growth, materially
harming our business, financial condition, and results of operations.

 Our
efforts to develop and expand our content licensing business exposes us to a number of risks that could limit our ability to grow, achieve
commercial success, and maintain our overall, business, results of operations, and financial condition. Contributors may choose not to
provide their content for licensing purposes, which could prevent us from scaling our licensing business.

 The
success of our licensing business depends in part on contributors agreeing to make their content available for licensing, including through
opt-in mechanisms across our platforms such as Zedge Premium and GuruShots. Contributors may decline to opt-in for licensing because
of concerns over compensation, exclusivity, loss of control, or how their content may be used by third parties, such as for commercial
applications including training AI systems. If we cannot secure sufficient contributor participation, the breadth, diversity, and quality
of our licensing catalog may be inadequate, which would materially limit our ability to generate revenue from licensing activities and
harm our overall growth prospects.

 Our
licensing catalog may not contain the types of content prospective licensors seek, which could limit demand for our licensing business.

 The
success of our content licensing business depends on our ability to maintain a catalog of content that meets the specific and evolving
needs of prospective licensors, including e-commerce vendors, stock photo libraries, and companies seeking datasets to train AI models.
If our catalog is too limited in subject matter, quality, or format, licensors may choose to obtain content from other providers or develop
their own sources. A mismatch between available content and market demand could diminish our licensing business's viability, harm
our reputation, and negatively impact user engagement and revenue across our broader ecosystem.

 Challenges
in delivering "content-on-demand" could undermine our ability to secure or generate the content that prospective licensors
require.

 We
aim to provide prospective licensors the ability to request content through on-demand generation tools, by engaging our contributor community,
or by finding other methods of securing rights to content or development of content that we own. However, there is no assurance that
we can fulfill such requests at the required scale, quality, or within the necessary timeframe due to limitations in our technology,
contributor base, or compliance with regulatory requirements. If we are unable to deliver requested content, or if generated content
raises intellectual property, authenticity, or ethical concerns, prospective licensors may elect not to engage with us. This could harm
our reputation and limit the growth and sustainability of our licensing business.

 Dependence
on a limited number of prospective licensing partners could restrict our growth and profitability.

 Our
content licensing business may initially rely on a relatively small number of potential licensing partners. The market for such content
is novel and unproven, and revenue depends on a few partners, with no assurance of additional orders, renewals or favorable terms. We
may fail to meet contractual obligations, such as API performance requirements, or prevent unauthorized use of our content by third parties,
which could require costly enforcement efforts. Regulatory or market factors may reduce the value of AI training content, and failure
to prevent partner misuse could harm our reputation. If we fail to establish or maintain these relationships, or if prospective licensors
reduce or discontinue their reliance on third-party content providers, our ability to scale and sustain our licensing business could
be significantly impaired. Because these partners may have substantial bargaining power, they may also impose unfavorable terms that
reduce our margins or restrict our flexibility. As a result, there can be no assurance that our licensing business will achieve or sustain
commercial success.

 If
we fail to maintain and enhance our various brands, or if we incur excessive expenses in this effort, our business, results of operations
and prospects may be materially and adversely affected.

 We
believe that maintaining and enhancing our various digital brands and associated reputation is important to the success of our business.
Historically, we have not made material investments in this effort. We believe that a well-recognized and respected brand is important
to increasing the number of users and enhancing our attractiveness to users, artists, advertisers and business partners. Brand recognition
and enhancement may directly affect our ability to maintain our market position.

 Many
factors, some of which are beyond our control, are important to maintaining and enhancing our various brands and may negatively impact
our brand and reputation if not properly managed, such as our ability to:

 maintain an easy and reliable
 user experience as user preferences evolve and as our brands expand into new service categories and new service lines;

 remain relevant to users
 who can turn to other providers for digital content and marketplaces and mobile games;

 increase brand awareness
 among existing and potential users, advertisers and content providers through various marketing and promotional activities;

 adopt new technologies
 or adapt our products and services to meet user needs or emerging industry standards;

 distinguish
 us from the competition and maintain this distinction; and

 address
 ethical concerns related to our use of AI technologies, particularly if users perceive AI-driven decisions as opaque or unfair, which
 could harm our brand and user trust. Public scrutiny and negative perceptions regarding our AI deployment could necessitate costly
 transparency measures and proactive ethical governance to mitigate reputational risks.

 In
the future, we may conduct various marketing and brand promotion activities to expand our brand. Some of these may require material investment.
We cannot assure you, however, that these activities will be successful or that we will be able to achieve the brand promotion effect
we expect. In addition, any negative publicity in relation to our mobile internet products, websites or services could harm our brand
and reputation.

 We
have received, and expect to continue to receive, complaints from users regarding the quality of our products and services. If our users'
complaints are not addressed to their satisfaction, our reputation and our market position could be significantly harmed, which may materially
and adversely affect our business, revenues and profitability.

 In
addition, despite our ongoing efforts to prevent violation of our user guidelines, problematic content on our platforms, including but
not limited to, low-quality user-generated content, socially unacceptable material, and other violations of our guidelines could affect
the quality of our services and offerings and the manner in which they are viewed by our users or potential users. This could harm our
reputation and negatively impact user participation of our various platforms.

 Our
products face competition in all aspects of their business. If our apps fail to compete effectively or if their reputation is damaged,
our business, financial condition and results of operations may be materially and adversely affected.

our products are leaders in their specific verticals, including mobile phone personalization, emoji related content and information,
and digital photo competitions, we cannot guarantee that our brands will be able to maintain their leadership position. Our products
face potential competition from other internet companies, app developers and smartphone manufacturers, and new market entrants may also
emerge. AI models used by competitors may produce biased or discriminatory outcomes if not properly managed, potentially giving us a
competitive advantage if we effectively address algorithmic bias through robust data curation, model evaluation, and fairness measures;
however, failure to do so could result in unfair treatment of users or creators, violating anti-discrimination laws and damaging our
brand reputation, thereby harming our competitive position. If we are not able to differentiate our products from that of our competitors,
drive value for our customers, and/or effectively align our resources with our goals and objectives, we may not be able to compete effectively
against our competitors. Our failure to compete effectively against any of the foregoing competitive threats could materially and adversely
harm our business. Increased competition may result in new products and offerings which may in turn require us to take actions to retain
and attract our users and advertisers in such a fashion which would lower our gross margins. If we fail to compete effectively, our market
share would decrease and our results from operations, revenues and profits would be materially and adversely affected.

 We
are attempting to expand our Zedge Premium marketplace where professional artists, individual creators and brands offer their content
to our users. We aspire to be a popular destination that users turn to when looking for high quality digital content. If we are unsuccessful
in meeting our goal, our business may suffer resulting in diluting our value proposition, losing MAU and having lower revenues and profits.

 If
we are not able to effectively compete in any aspect of our business or if our reputation is harmed by rumors or allegations regarding
our business or business practices, our overall user base may decline, making it less attractive to advertisers. We may be required to
spend additional resources to further increase our brand recognition and promote our products and services, and such additional spending
could adversely affect our profitability.

 The
GuruShots acquisition may fail to yield growth opportunities and achieve beneficial synergies.

 Zedge
acquired GuruShots with the expectation that the transaction will yield growth on a standalone basis. To date this has not been the case.
In addition, the acquisition was meant to deliver strategic synergies on a combined basis. Our success in realizing these growth opportunities
and strategic synergies, and their associated timing depends, amongst other things, on the successful integration of the respective businesses.
Even if we are successful with the integration, there is no guarantee that the strategic synergies that we envisioned will bear fruit.

 Certain
of our offerings are sensitive to consumer spending and economic conditions.

 Consumer
purchases of discretionary retail items and specialty retail products, as well as participation in gallery events, may be adversely affected
by national and regional economic, market and other conditions such as employment levels, salary and wage levels, the availability of
consumer credit, inflation, high interest rates, high tax rates, high fuel prices, the threat of a pandemic or other health crisis and
consumer confidence with respect to current and future economic, market and other conditions. Consumer purchases may decline during recessionary
periods or at other times when unemployment is higher or disposable income is lower. Consumer willingness to make discretionary purchases
may decline, may stall or may be slow to increase due to national and regional economic conditions. There remains considerable uncertainty
and volatility in the national and global economy. Further or future slowdowns or disruptions in the economy, market and other conditions
could adversely affect us and our business strategy. We may not be able to sustain or increase our current net sales if there is a decline
in consumer spending.

 RISKS
RELATED TO FINANCIAL AND ACCOUNTING MATTERS

 Our
limited operating history makes it difficult to evaluate our business with past results not necessarily being indicative for future operating
results and may increase your investment risk.

 We
have only a limited operating history, especially with respect to Emojipedia and GuruShots, upon which you can evaluate our business
and prospects. Although we experienced impressive year-over-year revenue growth of 36% and 107% in fiscal 2022 and 2021 respectively,
our growth in fiscal 2020 was moderate and even declined in fiscal 2019. Impacting the growth figures in fiscal 2023 as compared to fiscal
2024 is the inclusion of GuruShots for all of fiscal 2023 as compared to only the final three and a half months of fiscal 2022. We have
encountered and will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving industries,
like mobile apps, digital marketplaces and gaming, including the need to:

 accurately
 forecast our revenue and plan our operating expenses;

 hire,
 integrate, and retain key personnel;

 successfully
 integrate and realize the benefits of the acquisitions that we have made;

 develop
 a scalable technology infrastructure that can efficiently and reliably address increased usage, as well as new features and services;

 comply
 with existing and new laws and regulations applicable to our business;

 anticipate
 and effectively respond to the global economy and the markets in which we operate;

 establish
 and expand our various digital brands;

 maintain
 our reputation and build trust with users, artists, advertisers and employees;

 offer
 competitive economics to advertisers and users alike;

 maintain
 and expand revenue producing initiatives including ad sales, in-app purchases and subscriptions;

 deliver
 superior experiences and results for users, artists and advertisers alike;

 identify,
 attract, retain and motivate new users and artists; and

 manage
 our expanding operations.

 If
we do not successfully address any or all of these risks, our business, revenues and profitability could be materially adversely affected.

 Our
recent restructuring efforts may not achieve anticipated financial and operational goals, increasing our investment risk.

 Our
recent restructuring efforts may not achieve the anticipated cost savings, operational efficiencies, or strategic benefits, which could
hinder our ability to meet financial and operational goals and further complicate our growth trajectory. Failure to realize these expected
outcomes could materially and adversely affect our business, financial condition, and results of operations.

we had positive cash flow from operating activities fiscal 2023, 2024 and 2025, we had previously incurred, and may once again incur,
net losses and experience negative cash flow from operating activities in the future and may not be able to obtain additional capital
in a timely manner or on acceptable terms, or at all.

 Our
net loss in fiscal 2025 was $2.4 million, our net loss in fiscal 2024 was $9.2 million. Our ability to maintain profitability and positive
cash flow from operating activities depends on various factors, including but not limited to, the acceptance of our products and services
by mobile phone and internet users, the growth and maintenance of our user base, user acquisition spend and associated return, our ability
to maintain existing and obtain new advertisers, our ability to grow our revenues, the success of each of our digital brands as measured
by their respective key performance indicators, the effectiveness of our new product initiatives, selling and marketing activities as
well as control our costs and expenses. We may not be able to sustain profitability or positive cash flow from operating activities,
and any such positive cash flow may not be sufficient to satisfy our anticipated capital expenditures and other cash needs. As such,
we may not be able to fund our operating expenses and expenditures out of cash flows, which would require us to utilize debt or equity
financing which we may not be able to secure or which we may only secure on terms that are not favorable, which may result in significant
dilution or voluntary or involuntary dissolution or liquidation proceeding of us and a total loss of your investment.

in accounting principles or their application could result in accounting charges or effects which could adversely affect our operating
results and prospects.

 We
prepare consolidated financial statements in accordance with accounting principles generally accepted in the United States. The accounting
for our business is subject to change based on how the business model evolves, interpretation of various accounting principles, enforcement
of existing or new regulations, and changes in policies, rules, regulations, and interpretations, of accounting and financial reporting
requirements of the SEC or other regulatory agencies. A change in any of these principles or in their interpretations or application
to our business, may have a significant effect on our reported results, as well as our processes and related controls, and may retroactively
affect previously reported periods, which may negatively impact our financial statements our business prospects. It is difficult to predict
the impact of future changes to accounting principles and accounting policies over financial reporting, any of which could adversely
affect our results of operations and financial condition and could require significant investment in systems and personnel.

 If
our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect,
our operating results could suffer and lower the expectations of equity analysts and investors, resulting in a decline in the market
price of our common stock.

 Our
preparation of financial statements in conformity with generally accepted accounting principles in the United States requires us to make
certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities
as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. For example,
we make certain assumptions about the interpretation of these principles and accounting treatment of our useful lives of tangible and
intangible assets, fair value of contingent consideration, and allowance for credit losses. If these assumptions turn out to be incorrect,
the outcomes may be materially higher or lower than expected for current and future periods, which could have a material adverse effect
on our reported earnings. We base estimates and assumptions on historical experience, research, and on other factors that we believe
to be reasonable and in accordance with generally accepted accounting principles in the United States, the results of which form the
basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not accessible from
alternative sources. We also may make estimates regarding activities for which the accounting treatment is still evolving. Actual results
may differ from those estimates. If our assumptions change or if actual circumstances differ from our assumptions, our operating results
may be adversely affected and could negatively impact investors, resulting in a decline in the market price of our common stock.

in tax laws, tax rates or tax rulings, or the examination of our tax positions, could materially affect our financial condition, effective
tax rate, future profitability and results of operations.

 Tax
laws may change as new laws are passed and new interpretations of the law are issued or applied. Our existing corporate structure and
intercompany arrangements have been implemented in a manner that we believe comply with current prevailing tax laws. However, the tax
positions that we take advantage of could be undermined due to changing tax laws, both in the United States and in other applicable jurisdictions,
including Lithuania, and Israel. In addition, the tax authorities in the United States and other jurisdictions in which we operate regularly
examine income and other tax returns and we expect that they may examine our income and other tax returns. The ultimate outcome of these
examinations may not benefit our business.

 Our
effective tax rate for fiscal 2025 was 11.9% compared with 19.3% for fiscal 2024. In general, changes in applicable U.S. federal and
state and foreign tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect,
could affect our tax expense.

 Effective
January 1, 2022, pursuant to the Tax Cuts and Jobs Act of 2017, R&D expenses are required to be capitalized and amortized for US
tax purposes, which has delayed the deductibility of these expenses and potentially increase the amount of cash taxes we paid during
the years ended July 31, 2024 and 2023. In the future, among other things, Congress may consider legislation that would defer the capitalization
requirement to later years or eliminate the capitalization requirement, possibly with retroactive effect, and/or the IRS may issue guidance
on the currently enacted tax law which differs from our interpretation. It is possible that the enactment of new legislation and/or issuance
of IRS guidance could have a material effect on our financial condition, results of operations and cash flows in future periods.

 In
July 2025, the U.S. government enacted The One Big Beautiful Bill Act ("OBBBA") which includes a broad range of tax reform
provisions that may affect our financial results. The OBBBA includes, among other provisions, the allowance of immediate expensing of
qualifying domestic research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act,
which was signed into law in 2017. The Inflation Reduction Act ("IRA"), signed into law in 2022, includes various corporate
tax provisions including a new alternative corporate minimum tax on applicable corporations. The IRA tax provisions may become applicable
to us in future years, which could result in additional taxes, a higher effective tax rate, reduced cash flows and lower overall profitability
of our operations.

 The
OECD introduced significant changes to the international tax law framework through the Pillar Two guidelines. The framework outlines
a coordinated set of rules to prevent multinational enterprises from shifting profits to low-tax jurisdictions by implementing a 15%
global minimum tax. Many countries in which we operate, including the member states of the EU, have enacted Pillar Two. Pillar Two rules
began applying to us in fiscal year 2025. In January 2025, the United States issued an executive order announcing opposition to aspects
of these rules. In late June 2025, a shared understanding of a new "side-by-side" solution to address U.S. concerns with
Pillar Two was announced. If agreed upon and legislated by the OECD countries, this would exclude U.S.-parented groups from certain provisions
of Pillar Two. The potential effects of Pillar Two may vary depending on the specific provisions and rules implemented by each country
that adopts Pillar Two and may include tax rate changes, higher effective tax rates, potential tax disputes and adverse impacts to our
cash flows, tax liabilities, results of operations and financial position.

 Global
tax developments applicable to multinational companies may continue to result in new tax regimes or changes to existing tax laws, regulations,
and taxation officer interpretations. If the U.S. or foreign taxing authorities change tax laws, our overall taxes could increase, lead
to a higher effective tax rate, harm our cash flows, results of operations and financial position.

 We
are exposed to fluctuations in foreign currency exchange rates.

 The
substantial majority of our revenues are denominated in U.S. dollars, and our operating expenses are generally denominated in the local
currencies of the countries where our operations are located. We have significant operations in Europe and Israel that are denominated
in the Euro and Israeli Shekel. The strengthening or weakening of the U.S. Dollar versus these currencies impacts the expenses generated
in these foreign currencies when converted into the U.S. Dollar. In fiscal 2025 and fiscal 2024, we recorded losses of $151,000 and $190,000,
respectively, from foreign currency movements relative to the U.S. Dollar. Included in these amounts were gains from hedging activities
of $44,000 and losses of $245,000 in fiscal 2025 and fiscal 2024, respectively. While we regularly enter into transactions to hedge portions
of our foreign currency exposure, it is impossible to predict or eliminate the effects of this exposure. Fluctuations in foreign exchange
rates could significantly impact our financial results.

 If
we fail to implement and maintain an effective system of internal controls over financial reporting, we may be unable to accurately report
our results of operations, meet our reporting obligations or prevent fraud.

 Under
Section 404 of the Sarbanes-Oxley Act of 2002, we are required to include a report of management on our internal control over financial
reporting in our annual report on Form 10-K. In addition, should we become an accelerated filer, our independent registered public accounting
firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that
our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control
over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing,
may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented,
designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, our reporting obligations
may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may
be unable to timely complete our evaluation testing and any required remediation.

the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify
weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our
internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be
able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404.
If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial
statements and fail to meet our reporting obligations, and we may be required to restate our financial statements from prior periods,
any of which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access
to capital markets, harm our results of operations, and lead to a decline in the trading price of our stock.

ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject
us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.

 RISKS
RELATED TO OUR OPERATIONS

 We
may not be able to effectively manage our growth or implement our future business strategies, in which case our business and results
of operations may be materially and adversely affected.

 Our
continued success depends on our ability to effectively and efficiently grow each of the properties in our brand portfolio.

 We
may not be capable of growing our business organically or with paid marketing campaigns, attract new players and artists and/or establish
cooperation with strategic partners. Our business has experienced periods of rapid growth and expansion that has placed, and continues
to place, significant strain on our management and resources. We cannot assure you that these periods will recur or be sustainable. We
have also acquired other companies and made asset purchases and integrating those into Zedge has placed and continues to place significant
strain on management and resources. We believe that continued growth of our business will depend on our ability to successfully develop
and enhance our products and services, cost efficiently attract new artists and individual creators, maintain our relationship with various
artists and content partners like Google, Meta and Apple, sustain our high rankings with the leading search engines including Google,
capture the changes that are taking place in the industry in a timely fashion grow our user base at a cost effective rate, retain existing
users, continue developing innovative technologies in response to user demand, increase brand awareness through marketing and promotional
activities, react to changes in market trends, expand into new market segments, attract new advertisers, retain existing advertisers,
get users to engage with our digital properties and convert into paying users or subscribers, and take advantage of the growth in the
relevant markets. We cannot assure you that we will achieve any or all of the above. In the event that we are not successful in some
or all of these areas we may not be able to retain our customers and advertisers.

 To
manage our growth and for us to attain and maintain profitability, we will also need to further expand, train, manage and motivate our
workforce across multiple geographies and manage our relationships with users, consultants, business partners and advertisers globally.
We anticipate that we will need to implement a variety of enhanced and upgraded operational and financial systems, procedures and controls,
including the improvement of our accounting and other internal management systems. All of these endeavors involve risks and will require
substantial management efforts and skills and additional expenditures.

 Our
products currently enjoy a global customer base. This geographic diversity may raise the level of difficulty in managing future growth
and profitability. We cannot assure you that our current and planned personnel, systems, procedures and controls will be adequate to
support our future operations. In addition, we cannot assure you that we will be able to effectively manage our growth or implement our
future business strategies effectively, and failure to do so may materially and adversely affect our business and results of operations.

the past five years, we have experienced a shift in our Zedge App's regional customer make-up with the portion of our total MAU
from emerging markets increasing, and the portion from well-developed markets decreasing. In Q4 of fiscal 2025, our Zedge App's
users in emerging markets declined by 13.6% while its users in well-developed regions declined 1.8% when compared to fiscal 2024. India
comprised 32.5% of our MAU as of July 31, 2025. This shift has negatively impacted revenues because well-developed markets command materially
higher advertising rates when compared to those in emerging markets. Although we are investing in reversing this trend, we may not be
successful in this effort which may result in lower revenues and profitability.

 In
2021, Apple released iOS 14 which started requiring users to opt in to share their identifier for advertisers IDFA with app developers.
Apple's IDFA is a unique string of alphanumeric characters assigned to Apple devices which advertisers use to identify app users
in order to deliver personalized and targeted advertising. According to Statista, the worldwide opt-in rate enabling app tracking after
the release of iOS 14 was less than 25%. As a consequence, the ability of advertisers to accurately target, measure and optimize their
advertising campaigns at the user level has become significantly more difficult typically resulting in higher user acquisition costs.
Further, other companies upon whom the industry depends to identify potential users such as Google may implement similar changes with
respect to its Android operating system. The longer-term impact of these changes on the overall mobile advertising ecosystem, our competitors,
our business, and the developers, partners, and advertisers within our community remains uncertain, and depending on how we, our competitors,
and the overall mobile advertising ecosystem adjusts, and how our partners, advertisers, and users respond, our business could be seriously
harmed. If we are unable to mitigate or respond to these and future developments, and alternative solutions do not become widely adopted
by our advertisers, then targeting, measurement, and optimization capabilities will be materially and adversely affected, which would
in turn negatively impact our advertising revenue.

 Our
products may contain errors, flaws or failures that may only become apparent after their release. From time to time, we receive user
feedback in connection with errors, flaws or failures and such errors, flaws or failures may also come to our attention during our internal
testing process. We generally have been able to resolve such errors, flaws or failures in a timely manner, but we cannot assure you that
we will be able to detect and resolve all of them effectively or in a timely manner. Errors, flaws or failures in our services and products
may adversely affect user experience and cause our users to stop using our services and products, which could materially and adversely
affect our business and results of operations.

 We
need to invest in paid user acquisition in order to grow our customer base. However, we may not be able to secure new users at scale
with a positive return on investment. Even if we can secure new profitable customers these customers may not mature into sustainable
long-term customers.

 Our
marketing efforts to acquire new, and retain existing, customers may not be effective or cost-efficient, and may be affected by external
factors beyond our control.

 Maintaining
and promoting awareness of our services is important to our ability to attract and retain customers. We spend a significant amount on
marketing activities to acquire new customers and retain and engage existing customers and have plans to maintain and increase that focus.
For example, in 2025 and 2024 our marketing expenses were approximately $8.2 million and $6.9 million, respectively, and we expect our
marketing expenses to continue to account for a significant portion of our operating expenses. Our business depends on a high degree
of app installs from the app stores and website traffic, which is dependent on many factors, including the availability of appealing
website content and search engine optimization, affiliate marketing and display advertising, as well as social media and email. The marketing
efforts we implement may not succeed for a variety of reasons, including our inability to execute and implement our plans. External factors
beyond our control may also impact the success of our marketing initiatives.

 Our
digital presence heavily depends on search engine traffic, primarily from platforms like Google. A key driver of our success in this
domain is our website's visibility and ranking in response to search queries. Search engines frequently update their algorithms,
which may affect our link placements and rankings, and require ongoing investment in search engine optimization to mitigate potential
traffic losses. In addition, the integration of artificial intelligence features by search engines, such as AI-generated overviews, summaries,
or embedded rich media, may reduce the likelihood that users click through to our properties, as they may receive the desired content
directly within the search results page. These developments could also extend to the direct display of emojis, wallpapers, or other types
of content that we currently provide, further diminishing referral traffic. A sustained decrease in organic traffic from these or similar
changes could require us to increase our reliance on paid user acquisition or other marketing channels, potentially increasing costs
and adversely affecting margins. These risks highlight the critical importance of continuous adaptation to the evolving search engine
and AI landscape and the potential consequences if we do not effectively anticipate, respond to, and capitalize on these changes.

 User
acquisition for our apps depends on a host of items including and especially on paid and organic app marketing initiatives. Effective
and profitable user acquisition relies on knowing how to optimize across each acquisition platform, data analysis, creatives, amongst
other things. In addition, due to the changing nature of what data the platforms provide to publishers like Zedge may result in elongating
testing time windows and increasing testing budgets. Taken together if we are unsuccessful in accounting for all of these items, we may
be unable to recover our marketing spend and we may not acquire new customers or our cost to acquire new customers may increase, and
our existing customers may reduce the frequency or size of their purchases from us, any of which could have a material adverse effect
on our business, prospects, results of operations, financial condition or cash flows.

 Our
international operations expose us to additional risks that could harm our business, operating results and financial condition.

 In
addition to uncertainty about our ability to continue expanding and monetizing internationally, our foreign operations may subject us
to additional risks including:

 difficulties
 in developing, staffing, traveling to and simultaneously managing foreign operations as a result of distance, language, and cultural
 differences;

 tariffs,
 trade barriers, customs classifications and changes in trade regulations. For example, in 2022 the United States imposed broad-ranging
 economic sanctions against Russia and Belarus because of Russia's illegal invasion of Ukraine;

 stringent
 local labor laws and regulations;

 the uncertainty
 of enforcement of remedies in foreign jurisdictions;

 strict
 and unclear laws around data privacy;

 longer
 payment cycles;

 credit
 risk and higher levels of payment fraud;

 profit
 repatriation restrictions and foreign currency exchange restrictions;

 political
 or social unrest, economic instability, repression, or human rights issues;

 geopolitical
 events, including natural disasters, acts of war and terrorism;

 import
 or export regulations;

 compliance
 with U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting bribery and corrupt payments to government officials;

 antitrust
 and competition regulations;

 potentially
 adverse tax developments;

 seasonal
 volatility in business activity and local economic conditions;

 economic
 uncertainties relating to European sovereign and other debt;

 laws,
 regulations, licensing requirements, and business practices that favor local competitors or prohibit foreign ownership or investments;

 laws,
 regulations or rulings that block or limit access to our products;

 different,
 uncertain or more stringent user protection, content, data protection, privacy, intellectual property and other laws;

 risks
 related to other government regulation, required compliance with local laws or lack of legal precedent; and

 risks
 specific to operating in war-torn regions where employees may be mobilized for army service and where damage and/or loss of life
 may occur when under attack.

 Further,
our ability to expand successfully in foreign jurisdictions involves other risks, including challenges in integrating foreign operations,
risks associated with entering jurisdictions in which we may have little experience and the day-to-day management of a growing and increasingly
geographically diverse company. We may not realize the operating efficiencies, competitive advantages or financial results that we anticipate
from our investments in foreign jurisdictions. In addition, our international business operations could be interrupted and negatively
impacted by terrorist activity, war, political unrest or other economic or political uncertainties. Moreover, foreign jurisdictions could
impose tariffs, quotas, trade barriers and other similar restrictions on our international sales.

 We
are subject to numerous and sometimes conflicting U.S. and foreign laws and regulations that increase our cost of doing business. Violations
of these complex laws and regulations that apply to our international operations could result in damages, awards, fines, litigation,
criminal actions, sanctions, or penalties against us, our officers or our employees, prohibitions on the conduct of our business and
our ability to offer products and services, and damage to our reputation. Although we have implemented policies and procedures designed
to promote compliance with these laws, there can be no assurance that our employees, contractors, or agents will not violate our policies
or that our policies will be sufficient. These risks inherent in our international operations and expansion increase our costs of doing
business internationally and could result in material harm to our business, operating results, and financial condition.

 Conditions
in Israel, including the October 7, 2023 attack by Hamas and other terrorist organizations from the Gaza Strip and Israel's war
against them, may adversely affect our operations adversely affect operations and financial condition, particularly given the ongoing
war in Gaza, the June 2025 '12-Day War' between Israel and Iran, broader regional instability, and potential long-term impacts on Israel's
economy, technology sector, and foreign investment.

 Political,
economic and military conditions in and surrounding Israel, including the ongoing war in Gaza, the June 2025 '12-Day War'
between Israel and Iran and related cross-border hostilities involving Hezbollah in Lebanon and Houthi militants in Yemen, may materially
and adversely affect our business, operations and financial condition. A portion of our personnel and operations are located in Israel;
accordingly, regional instability and escalation directly affect our people, facilities, vendors and service continuity (including potential
airspace or infrastructure disruptions, cyberattacks, electricity or network interruptions, impaired logistics, or temporary office closures).
Israeli reserve-duty mobilizations may require some employees or contractors to serve for extended periods, which can delay product development,
reduce support capacity and impact hiring and retention. The security situation can also impair domestic demand, international travel,
partner engagement and supplier reliability, and may increase insurance costs or leave certain risks uninsurable. Broader macroeconomic
effects, such as currency volatility, higher risk premia, capital-market dislocation, sanctions or trade restrictions, and shifts in
advertiser or consumer spending, could further pressure our results. Although temporary ceasefires have occurred, cross-border rocket,
drone and missile activity has persisted intermittently, and future flare-ups or a wider regional conflict (including renewed hostilities
with Iran or coordinated attacks by Iran-aligned groups) could occur without notice. Any of these developments, together or separately,
could disrupt our operations, harm our ability to execute our strategy, increase costs, delay initiatives, or otherwise negatively affect
our business, results of operations, cash flows and financial condition.

 Prior
to the Hamas attack in October 2023, the Israeli government pursued extensive changes to Israel's judicial system, which sparked
extensive political debate, mass protests, and civil unrest. In response to such initiative, many individuals, organizations and institutions,
both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel
including due to reluctance of foreign investors to invest or transact business in Israel as well as to increased currency fluctuations,
downgrades in credit rating, increased interest rates, increased volatility in security markets, and other changes in macroeconomic conditions.
The risk of such negative developments has increased in light of the war with Hamas. To the extent that any of these negative developments
do occur, they may have an adverse effect on our business and our results of operations.

 In
addition, recent political uprisings and conflicts in various countries in the Middle East, including Syria and Lebanon, are affecting
the political stability of those countries. In addition, the ongoing threats that Iran and various extremist groups in the region make
against Israel may escalate in the future and turn violent, which could affect the Israeli economy in general and us in particular. Any
armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions, harm our results
of operations and make it harder for us to raise capital.

 For
the most part, we do not have commercial insurance that cover losses that may occur as a result of an event associated with the security
situation in Israel. Although the Israeli government has in the past covered the reinstatement value of certain damages that were caused
by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or, if maintained, will be
sufficient to compensate us fully for damages incurred. Any losses or damages incurred would likely cause a significant disruption in
our employees' lives and possibly put their lives at risk, which would have a material adverse effect on our operations. Any armed
conflicts or political instability in the region would likely negatively affect business conditions generally and could harm our results
of operations.

in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business
with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our results of
operations, financial conditions or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken
against Israel, which could also adversely impact our business.

 We
have offices and other significant operations in Lithuania and Israel, and, therefore, our results may be adversely affected by political,
economic and military instability in these countries.

 The
overwhelming majority of our employees are located in Lithuania and Israel and many of our senior managers live in these countries. For
those that reside in Israel and Lithuania political, economic and military conditions directly affect our business. Any hostilities involving
these countries or the interruption or curtailment of trade between these countries and their trading partners could adversely affect
our business and results of operations. Furthermore, there is always the chance that the citizens in these countries will be required
to serve in the army or perform public duty in the event of an armed conflict.

 The
Republic of Lithuania borders both the Russian exclave of Kaliningrad and the Republic of Belarus, who are aligned in Russia's
illegal invasion of Ukraine. This places Lithuania at a higher risk of military conflict, may negatively impact the ability to travel
to and from Lithuania, and may damage its economy. This action also negatively impacted GuruShots because it utilizes a small number
of outsourced contractors based in Ukraine. This resulted in temporarily disrupting the work product associated with these contractors
at the outset of the war.

 Companies
and governmental agencies may restrict access to our website or mobile apps, or the internet generally, which could lead to the loss
or slower growth of our user base, in which case our business and results of operations may be materially and adversely affected.

 In
order to grow our business, users need to access the internet and, in particular, our digital products. Companies and governmental agencies
could block access to our websites and apps or the internet generally. For example, in 2013 the Indian courts issued orders restraining
internet service providers from providing access to various internet domains including ours. Access to our Zedge App through any mode
was blocked in many parts of India from February 2013 until August 2019 and there can be no guaranties that this will not recur or happen
elsewhere. If companies or governmental entities block or limit access to our Zedge App or otherwise adopt policies restricting access
to our advertiser's products and services our business could be negatively impacted resulting in a loss or slow-down of user growth
and/or revenues.

 Our
core values of focusing on our users and acting for the long-term may conflict with the short-term interests of our business.

 One
of our core values is providing an excellent user experience, which we believe is essential to our success and serves the best, long-term
interests of us and our stockholders. Therefore, we have made in the past, and/or may make in the future, significant investments or
changes in strategy that we think will benefit our users, even if our decision negatively impacts our operating results in the short
term. In addition, our philosophy of prioritizing our users may cause disagreements or negatively impact our relationships with advertisers
or other third parties. Our decisions may not result in the long-term benefits that we expect, in which case the success of our business
and operating results could be materially harmed.

 If
we are unable to attract and retain highly qualified employees, we may not be able to grow effectively.

 Our
ability to compete and grow depends in large part on the efforts and talents of our employees. Such employees, particularly product managers,
designers and engineers, are in high demand, and we devote significant resources to identifying, hiring, training, and successfully integrating
and retaining these employees. The specialized nature of AI development further intensifies competition for skilled personnel, and challenges
in attracting and retaining qualified AI professionals could impede our ability to innovate and maintain our AI systems effectively.
We may need to offer competitive compensation and invest in training programs to build and sustain our AI capabilities, increasing operational
costs. The loss of employees or the inability to hire additional skilled employees as necessary could result in significant disruptions
to our business, and the integration of replacement personnel could be time-consuming and expensive and cause additional disruptions
to our business.

 We
operate a development center in Vilnius, Lithuania. If we are unable to recruit and retain well qualified candidates at an attractive
rate or manage them well, our business will struggle to meet our development goals and objectives. In fiscal 2021 we adopted a "remote-first"
work policy that enabled employees to work from home unless they were needed in the office. In fiscal 2023 we changed this policy to
a hybrid model requiring most employees to work from the office several days a week. Although this policy has been well received by employees,
it is as of yet unclear whether it will be further revised.

 In
April of 2022 we completed the acquisition of GuruShots Ltd, an Israeli based company. GuruShots utilized a small number of outsourced
contractors based in Ukraine. Russia's illegal invasion of Ukraine in February 2022 resulted in temporarily disrupting the work
product associated with these contractors. Furthermore, Zedge employees situated in Vilnius were distracted due to the proximity to the
Belarusian border and uncertainty related to Belarus' complicity with Russia's illegal action and associated intent. In addition,
consumer prices have risen materially throughout the Eurozone leaving uncertainty about how this may impact employment costs in the future.

 In
October of 2023 Hamas, a designated terrorist organization, launched a savage terror attack in Israel along with launching thousands
of rockets into Israeli sovereign territory. The State of Israel declared war against Hamas resulting in the mobilization of more than
300,000 army reserve. In addition, Hezbollah, another designated terrorist organization, based in Lebanon, has been indiscriminately
shelling Israeli territory. Some GuruShots employees were impacted and the regular and consistent rocket barrage is taking a toll on
productivity. Coupled with this, most, if not all, schools are along with our office closed making the work environment complex. In June
of 2025 Israel and Iran entered into the '12-Day War' during which our office and schools were closed and there were shelter
in place orders that were issued. The constant barrage of ballistic missiles launched from Iran and Yemen interrupted our operations.

 We
believe that two critical components of our success are our ability to retain our best people by preserving our culture and maintaining
competitive compensation practices. As we continue to grow rapidly, and we develop the infrastructure of a public company, we may find
it difficult to maintain our entrepreneurial, execution-focused culture. In addition, depending on the performance of our stock price
some of our employees are able to receive material proceeds from sales of our equity in the public markets, which may reduce their motivation
to continue to work for us.

 We
rely on third parties to provide the technologies, including cloud services, necessary to deliver content, advertising, and services
to our users, and any change in the licensing terms, costs, availability, or acceptance of these formats and technologies could materially
adversely affect our business.

 Our
service and hosting providers may experience downtime from time to time, which may negatively affect our brand and user perception of
the reliability of our service. Any scheduled or unscheduled interruptions in service could result in an immediate, and possibly substantial,
loss of revenues. Although we seek to reduce the possibility of disruptions or other outages, our websites and apps may be disrupted
by problems relating either to our own technology or third-party technology that is used for them. Our systems may be vulnerable to damage
or interruption from telecommunication failures, power loss, computer or hacking attacks or viruses, earthquakes, floods, fires, terrorist
attacks and similar events. Parts of our system are not fully redundant or backed up, and our disaster recovery planning may not be sufficient
for all eventualities. Despite any precaution we may take, the occurrence of a natural disaster or other unanticipated problems at our
hosting facilities could result in lengthy interruptions in the availability of our products. Any interruption in the ability of users
to access our websites or apps could reduce our future revenues, harm our future profits, subject us to regulatory scrutiny and lead
users to seek alternative internet mobile products. In addition, a hacking attack or another security incident, could result in unauthorized
access to, damage to, disablement or encryption of, use or misuse of, disclosure of, modification of, destruction of, or loss of our
data or our developers', creators', and users' data or disrupt our ability to provide our platforms or services.

 There
can be no assurance that these providers will continue licensing their technologies or intellectual property to us on reasonable terms,
or at all. Providers may change the fees they charge users or otherwise change their business model in a manner that slows the widespread
acceptance of their technologies. Any change in the licensing terms, costs, availability, or user acceptance of these technologies could
materially and adversely affect our business, revenues and profitability.

 We
track certain key performance indicators with internal and third-party tools and do not independently verify that all of this data is
accurate. Certain of these indicators may have challenges in being tracked accurately which could result in real or perceived inaccuracies
that could negatively impact our business.

 We
track certain key performance indicators, including daily active users, monthly active users, purchasers, and paying subscribers using
both internal and third-party tracking tools. Our analytical tools have certain limitations, including those from third-party providers,
and our ability to access and monitor this data may change, which would adversely impact our ability to track these KPIs. If the internal
or external tools we use to track data contain bugs we may make poor decisions, especially when it comes to paid user acquisition, based
on flawed and inaccurate data which can hurt our reputation and financial position.

 We
use open-source software in our platform that may subject our technology to general release or require us to re-engineer our solutions,
which may cause materially harm to our business.

 We
use open-source software in connection with our services. From time to time, companies that incorporate open-source software into their
products have faced claims challenging the ownership of open-source software and/or compliance with open-source license terms. Therefore,
we could be subject to lawsuits by parties claiming ownership of what we believe to be open-source software or noncompliance with open-source
licensing terms. Some open-source software licenses require users who distribute or make available open-source software as part of their
software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open-source
code on unfavorable terms or at no cost. While we monitor our use of open source software and try to ensure that none is used in a manner
that would require us to disclose the source code or that would otherwise breach the terms of an open-source agreement, such use could
nevertheless occur and we may be required to release our proprietary source code, pay damages for breach of contract, re-engineer our
applications, discontinue use in the event re-engineering cannot be accomplished on a timely basis or take other remedial action that
may divert resources away from our development efforts, any of which could materially and adversely affect our business, financial condition
or operating results.

 Our
business, results of operation and financial condition could be adversely affected by the Covid 19 pandemic, other global epidemics and
the restrictions put in place in connection therewith and/or the loosening of such restrictions could adversely impact our business.

 Pandemics,
epidemics, medical emergencies and other public health crises outside of our control could have a negative impact on our business. Large-scale
medical emergencies can take many forms and result in widespread business interruptions due to illness and death. For example, in December
2019, a strain of coronavirus surfaced in Wuhan, China soon evolving into a global pandemic without proven medical treatments or vaccines
for prevention. When vaccines started to become available demand for the vaccines exceeded the supply in the countries in which we operate.
Furthermore, the vaccines were not fully effective in preventing illness. All of these factors introduced challenges in operating our
business including the productivity of our employees and third-party vendors that we depend on while adjusting to shelter-in-place and
health regulations. We also had to comply with an assortment of regulations specific to returning to our offices, creating additional
uncertainty and confusion.

 Widespread
pandemics, epidemics or other health crises could result in significant market volatility, regionally or globally. Furthermore, health
crises may disrupt or negatively impact behaviors of large numbers of users or potential users due to either mandated stay at home orders
or the lifting of such orders or non-mandated changes in consumer behavior. These changes are almost impossible to predict and could
either serve to accelerate, slow down or make user behavior more volatile which could negatively impact our operating results.

 In
the event of a new coronavirus surge or other health emergency we plan to execute to the best of our ability recognizing that the nature
and scope of the crisis may result in delays or changes to our goals and initiatives.

 Our
business is subject to economic, market, and geopolitical conditions as well as to cyber-attacks and natural disasters beyond our control.

 Our
business is subject to economic, market, and geopolitical conditions, as well as natural disasters beyond our control and as a result
we may experience a slowdown or cessation in customer growth, interruptions or delays in the services or a downturn in user. Further,
our revenue is driven in part by discretionary consumer spending habits and by advertising spend. Historically, consumer purchasing and
advertising spend have each declined during economic downturns and periods of economic or geopolitical uncertainty or when disposable
income or consumer lending declines. Macro-economic conditions, such as a recession or economic slowdown in well developed markets, specifically,
and emerging markets, more generally may result in uncertainty and adversely affect discretionary consumer spending habits and preferences
as well as advertising spend. Uncertain economic conditions may also adversely affect our vendors making it virtually impossible to grow
in the event of future economic malaise. We are particularly susceptible to market conditions and risks associated with the mobile app
ecosystem, which also include the popularity, price, and timing of our apps, changes in user demographics, the availability and popularity
of other forms of entertainment. Furthermore, critical reviews and general tastes and preferences may change quickly and without prior
warning.

 Failure
to detect or prevent fraudulent activities on our platform could cause users to lose confidence in our products and harm our business.

 We
may be subject to fraudulent and/or malicious activities undertaken by persons seeking to use our platform for improper purposes. Examples
of such activities include the use of bots or other automated or manual mechanisms to generate fraudulent activity through our platform,
which could generate revenue for the perpetrators and involve our platform in their improper activity. Detecting fraudulent or malicious
activity can be difficult. Although we have implemented measures to detect and reduce the occurrence of fraudulent activities, including
click fraud, we cannot guarantee that we will be fully successful in doing so. If we fail to detect or prevent fraudulent or other malicious
activity, it may result in dissuading sellers and customers alike from engaging with our products and services. Any actual or alleged
future fraudulent activity may damage our reputation, or diminish the value of our brand name, either of which could adversely impact
our business, results of operations and financial condition.

 Future
strategic alliances or acquisitions may not be successful and may have a material and adverse effect on our business, reputation and
results of operations.

 We
may enter into strategic alliances, including joint ventures or minority equity investments, or acquisitions with various third parties
to further our business purpose from time to time. An important focus of our business is to identify business relationships that can
enhance our services, enable us to develop solutions that differentiate us from our competitors, drive users to our websites, and monetize
our data. We have entered into several alliance agreements or license agreements with respect to certain of our datasets and services
and may enter into similar agreements in the future. These arrangements may require us to restrict our use of certain of our technologies
or datasets among certain customer industries, restrict content on our websites, or grant licenses on terms that ultimately may prove
to be unfavorable to us, any of which could adversely affect our business, financial condition, or results of operations. These alliances
and acquisitions could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance
by the third party and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our
business. Relationships with our alliance agreement partners may be the subject of contractual disputes, and if we or our partners are
not successful in maintaining or commercializing the alliance agreements' services, such commercial failure could adversely affect
our business. We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic
third parties suffer negative publicity or harm to their reputation from events relating to their business, we may also suffer negative
publicity or harm to our reputation by virtue of our association with any such third party.

 In
addition, if appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that we believe
are complementary to our existing business. Future acquisitions and the subsequent integration of new assets and businesses into our
own would require significant attention from our management and could result in a diversion of resources from our existing business,
which in turn could have an adverse effect on our business operations. Acquired assets or businesses may not generate the financial results
we expect and could require the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence
of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities
of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant. In addition to possible
stockholders' approval, we may also have to obtain approvals and licenses from relevant government authorities for the acquisitions
and to comply with any applicable laws and regulations, which could result in increased delay and costs.

 LEGAL
AND REGULATORY RISKS

 Legal
or regulatory proceedings or allegations of impropriety could have a material adverse impact on our reputation, results of operations,
financial condition and liquidity.

 We
have been party to and in the future may become subject to new legal proceedings in the operation of our business, including, but not
limited to, with respect to alleged breaches of consumer privacy regulations, employee matters, alleged service and system malfunctions,
alleged intellectual property violations and claims relating to our contracts, licenses and strategic investments. Furthermore, we may
be included in lawsuits as third-party defendants due to the use of products or services of the primary defendant. We may also be subject
to fraudulent claims from parties like patent trolls.

 Additional
legal proceedings targeting our products and services and claiming violations of state or federal laws could occur, based on the unique
and particular laws of each jurisdiction, particularly as litigation claims and regulations continue to evolve. We cannot predict the
outcome of any legal proceedings to which we may be a party, any of which could have a material adverse effect on our results of operations,
cash flows or financial condition.

 A
variety of new and existing U.S. and foreign government laws and regulations could subject us to claims, judgments, monetary liabilities
and other remedies, and to limitations on our business practices, in which case our business and results of operations may be materially
and adversely affected.

 We
are subject to numerous U.S. and foreign laws and regulations covering a wide variety of subject matters. New laws and regulations, changes
in existing laws and regulations or the interpretation of them, our introduction of new products, or an extension of our business into
new areas could increase our future compliance costs, make our products and services less attractive to our users, introduce litigation
exposure, or cause us to change or limit our business practices. We may incur substantial expenses to comply with laws and regulations
or defend against a claim that we have not complied with them. Further, any failure on our part to comply with any relevant laws or regulations
may subject us to significant civil or criminal liabilities, penalties, taxes, fees, costs, reputational harm, competitive damage and
negative publicity.

 The
application of existing domestic and international laws and regulations to us relating to issues such as user privacy and data protection,
security, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, consumer protection, artificial intelligence
and machine learning, accessibility, content regulation, quality of services, law enforcement demands, telecommunications, mobile, and
intellectual property ownership and infringement in many instances is unclear or unsettled. Further, the application to us or our subsidiaries
of existing laws regulating or requiring licenses for certain businesses of our advertisers can be unclear. U.S. export control laws
and regulations also impose requirements and restrictions on exports to certain nations and persons and on our business. Internationally,
we may also be subject to laws regulating our activities in foreign countries and to foreign laws and regulations that are inconsistent
from country to country. The regulatory landscape for AI is rapidly evolving, with new laws and guidelines emerging globally. Compliance
with diverse and potentially conflicting AI regulations across jurisdictions may require significant resources and adjustments to our
AI development and deployment practices. Failure to adhere to applicable AI laws could result in legal penalties, restrictions on our
operations, and harm to our reputation. Any new legislation, in the U.S. or abroad, may be difficult to comply with in a timely and comprehensive
manner and may expose our business to increased costs. If the rules, doctrines or currently available defenses change, if international
jurisdictions refuse to apply protections similar to those that are currently available in the U.S. or the EU, or if a court were to
disagree with our application of those rules to our solutions, our potential liability for information or content created by third parties
and posted to our platform could require us to expend significant resources to try to comply with the new rules and implement additional
measures to reduce our exposure to such liability or we could incur liability and our business, financial condition and results of operations
could be harmed.

 The
Digital Millennium Copyright Act (the "DMCA") has provisions that limit, but do not necessarily eliminate, our liability
for caching, hosting, listing or linking user-generated materials that infringe copyrights, so long as we comply with the statutory requirements
in the DMCA. The Communications Decency Act (the "CDA") further helps to limit our potential liability for certain content
uploaded onto our platform by third parties. For example, Section 230 of the CDA provides immunity from liability for providers of an
interactive computer service who publish tortious and otherwise illegal content provided by users of the service. While the immunity
provisions of the DMCA and the CDA are well established, there are regularly cases seeking to limit the application of such immunity.
There are ongoing legal challenges to Section 230 of the CDA, which could alter the scope of liability protections. Various U.S. and
international laws restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability
of online services to collect information from minors.

 In
many, but not all, territories outside of the U.S. there are laws similar to the DMCA that exempt us from copyright infringement liability
that may arise due to hosting user-uploaded materials. In some countries, particularly in Europe and the Asia-Pacific region, these laws
are being readjusted and new, and potentially burdensome, constraints are being imposed onto service providers.

 For
example, the European Union's Directive on Copyright in the Digital Single Market (the "DSM Directive") is in effect
and has been implemented by all EU Member States.

 The
DSM Directive Article 17 removes the shield of the current 'hosting exemption,' enshrined in the Electronic Commerce Directive
(2000/31/EC) (the "E-Commerce Directive"), and replaces it with a principle of full liability where "online content
sharing service providers" ("OCSSPs") are concerned. This means that OCSSPs will be liable for copyright-protected
material uploaded by users and must obtain authorization (i.e., a license) from the relevant rightsholders. However, Article 17 effectively
creates a new liability exemption regime for OCSSPs (albeit a more onerous one than is currently provided by the E-Commerce Directive)
under which OCSSPs will not be liable for the copyright-protected works that they communicate to the public provided that they cooperate
with rightsholders by:

 making
 best efforts to obtain the necessary authorization (i.e., a license);

 expeditiously
 taking down or disabling access to content upon receiving a sufficiently substantiated notice to do so by rightsholders (i.e., similar
 to the existing 'notice and take-down' requirements);

 making
 best efforts to prevent future uploads of content in respect of which they have received a notice from rightsholders pursuant to
 the previous requirement (i.e., a 'notice and stay down' requirement); and

 making
 best efforts, in accordance with high industry standards of professional diligence, to ensure the unavailability of specific works
 in respect of which rightsholders have provided the 'relevant and necessary information.'

 The
article also extends any licenses granted to OCSSPs to their users, as long as those users are not acting "on a commercial basis."

 Our
increased use of artificial intelligence (AI), including generative AI, in our product offerings presents additional risks. For example,
uncertain legal and regulatory treatment around the provision and use of such technologies, for example in the areas of privacy and intellectual
property, may create increased and uncertain litigation exposure, the possibility of regulatory scrutiny, costly compliance requirements
and limit or prohibit certain of our product offerings. Compliance with these laws and regulations may be onerous and expensive, and
may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and the risk of liability. Any such
increase in costs or increased risk of liability as a result of changes in these laws and regulations or in their interpretation could
individually or in the aggregate make our products and services that use AI technologies less attractive to our users, cause us to change
or limit our business practices or affect our financial condition and operating results. Moreover, AI may produce content seen as infringing
upon the rights of others, including with respect to copyrights. Additionally, AI may create flawed, biased, harmful, misleading, inaccurate,
or unexpected outputs and content, creating risks to our business, partners, and users.

we have invested and continue to invest in systems and resources, which are intended to help us comply with the requirements of the GDPR,
CCPA, DMCA, the DSM Directive and other U.S. and international laws relating to, among other things, materials that infringe on copyrights
and contain other objectionable content, our systems may not be sufficient or we may unintentionally err and fail to comply with these
laws and regulations which could expose us to claims, judgments, monetary liabilities and other remedies, and to limitations on our business
practices which could materially adversely affect our business and financial results.

 Data
privacy, security, and emerging AI laws and regulations in the jurisdictions in which we operate subject us to possible sanctions, civil
lawsuits (including class action or similar representative lawsuits) and other penalties in the event of non-compliance. The need to
observe these evolving requirements increases the cost of doing business and may impose operational burdens that could adversely affect
our products, user experience, and competitiveness. Compliance failures by us, our partners, or our vendors could harm our business,
reputation, and financial results.

 Our
business relies on collecting, processing, storing, using and sharing data, some of which contains personal data, including the personal
data of our users. The deployment of AI technologies in our products and services may involve the collection, processing, and storage
of personal data, potentially exposing us to heightened privacy and data protection risks. Non-compliance with data protection and privacy
regulations could result in significant fines, legal actions, and reputational damage. Moreover, AI systems can inadvertently process
sensitive information, leading to unauthorized processing, disclosures or misuse of personal data. As regulatory frameworks evolve, we
may incur increased costs to ensure compliance and adapt our AI systems accordingly. We also incorporate AI into specific products and
internal workflows, including generative AI features in our Zedge App and AI-driven content capabilities in other offerings. As a result,
we are subject to a growing number of federal, state, local, and foreign laws, regulations, regulatory codes, and guidelines governing
privacy, data protection, AI, and information security. These regimes—covering the collection, storage, use, processing, transmission,
sharing, and protection of personal information, as well as the training and deployment of AI systems—may be inconsistent across
jurisdictions, conflict with one another, and change frequently.

 The
EU General Data Protection Regulation ("GDPR") and the UK GDPR impose stringent privacy requirements, increase compliance
costs, and authorize substantial fines for non-compliance. Changes to data protection laws in the UK, introduced by the Data (Use and
Access) Act 2025, introduce an additional compliance burden represented by divergence of UK privacy standards previously aligned to those
in the EU, following the UK's exit from the EU on December 31, 2020. Several countries have enacted or are considering laws mandating
local storage and processing of data or restricting cross-border data flows, potentially requiring us to modify systems architecture
or withdraw certain services from affected jurisdictions.

 In
the United States, the California Consumer Privacy Act ("CCPA"), as amended by the California Privacy Rights Act ("CPRA"),
and many similar or forthcoming state privacy laws impose restrictions on the collection and use of personal information, sometimes with
heightened protections for minors, provide various rights to consumers, and may provide private rights of action for certain data breaches.
All 50 U.S. states, the District of Columbia, and U.S. territories have enacted breach-notification laws, and several require implementation
of comprehensive cybersecurity programs. Compliance with these requirements increases operational costs and the risk of liability. In
addition, there has been a significant increase in putative class action activity under privacy and privacy-related laws, often with
claims for statutory damages and demands for changes in business operations.

 In
recent years, the U.S. and European lawmakers, regulators, and plaintiffs' attorneys have voiced concern about electronic marketing
and the use of third-party cookies and similar technology for online behavioral advertising. Regulation of cookies may result in broader
restrictions on our online activities, including efforts to understand followers' internet usage and promote ourselves to them.

 In
parallel, legislators and regulators globally are moving quickly to address AI-specific risks and operators of AI systems may face significant
compliance obligations. California and Colorado have enacted AI laws imposing transparency, risk-management, and accountability requirements,
and other states are considering similar measures. For example, Colorado's SB 24-205, effective in 2026, will require deployers
and developers of high-risk AI systems to implement risk management policies, conduct impact assessments, and provide transparency disclosures.
Additional state and federal legislative activity may result in further binding obligations. In addition, the EU Regulation on Artificial
Intelligence ("EU AI Act") entered into force in August 2024, with phased applicability beginning in 2025, imposing obligations
on providers and users of AI systems, including risk classification, data-governance, documentation, transparency, and human-oversight
requirements, backed by significant fines for non-compliance. In addition to these EU-wide requirements, EU Member States are beginning
to introduce their own individual AI laws, which have the potential to go beyond those requirements of the EU AI Act. The UK, Canada,
and Australia are developing their own AI-specific legal frameworks. Complying with overlapping and potentially inconsistent regimes
may require us to modify algorithms, retrain models, restrict features, alter data-handling practices, or delay or forego product launches.

 In
addition, as major platforms and competitors integrate their own AI features, such as Google's AI Overviews in search, AI-driven
emoji rendering, or direct delivery of wallpaper and personalization content, traffic to our properties, including Emojipedia and the
Zedge Marketplace, could decline, which could adversely impact user acquisition, engagement, and monetization. AI outputs may also inadvertently
infringe third-party intellectual property, produce flawed, biased, misleading, or harmful content, or fail to meet user expectations,
exposing us to legal claims, regulatory scrutiny, and reputational harm.

 Efforts
to comply with this complex and evolving legal landscape may require substantial modifications to our data-processing practices, AI governance,
and product features, increasing operational costs and reducing speed to market. Failure to comply—or perceived failure to comply—with
applicable privacy, security, or AI-related obligations may result in investigations, enforcement actions, litigation, fines, negative
publicity, loss of user trust, and other harm to our business, financial condition, and results of operations. Moreover, compliance failures
or breaches by our service providers or other third parties with whom we share data may subject us to liability and reputational damage
even if we are not directly at fault.

 New
laws may impact our business, such as those affecting artificial intelligence, online platforms, and digital content providers, and efforts
by lawmakers in various jurisdictions to regulate providers of certain online services which may apply to our business and therefore
introduce additional compliance obligations and potential sanctions and penalties for failings in these areas. Monitoring (and, if applicable,
complying with) these developments is likely to increase the cost of doing business, and any failure to comply with new laws may harm
our business and reputation.

 The
legal and regulatory landscape and industry standards surrounding the use of data and/or artificial intelligence technologies is rapidly
evolving and remains uncertain, and compliance may impose significant operational costs and may limit our ability to develop, deploy,
or use artificial intelligence technologies. New EU laws related to the use of data, including the EU Regulation on a Single Market for
Digital Services (2022/2065) ("DSA"), the EU Regulation (2023/2854) on fair access to and use of data ("EU Data Act"),
and the EU AI Act, which entered into force in August 2024, may impose additional rules and restrictions on the use of the data in our
products. If we were required to change our business activities or revise or eliminate services, or to implement burdensome compliance
measures, our business and results of operations could be harmed. We may be subject to fines, penalties, and potential litigation, including
class action lawsuits, if we fail to comply with applicable privacy, data security, or AI-specific laws, regulations, standards, and
other requirements. The costs of compliance with, and other burdens imposed by, evolving data-related and AI-related laws, regulations,
and standards may limit the use and adoption of our products and reduce overall demand.

 Similarly,
the UK has implemented the Online Safety Act 2023 ("OSA"), which regulates "user-to-user" services and imposes
additional obligations on covered service providers, potentially increasing liability in relation to content hosted and shared on their
services. Our business allows users to create accounts and upload content that can be accessed or encountered by other users. As such,
we will likely incur legal costs in identifying the extent to which obligations under the DSA, OSA, and comparable laws in other jurisdictions
may impact our business, and there may be ongoing compliance costs associated with these laws. Any breaches of such laws (to the extent
they apply) may also lead to penalties and reputational damage.

 Furthermore,
legislators' and regulators' future approach to AI may impact our business. In the United States, state-level AI laws continue
to proliferate, with notable developments in California and Colorado, and additional states actively considering similar legislation.
In the EU, the AI Act introduces tiered compliance requirements, bans certain "unacceptable-risk" systems, and mandates transparency
and risk-management obligations for "high-risk" AI systems. Other jurisdictions, including Canada (through the proposed Artificial
Intelligence and Data Act), Brazil, and several Asia-Pacific markets, are advancing their own AI regulatory frameworks. We currently
offer a number of products, services, and features that make use of AI, and we are exploring ways to further utilize the technology.
The full extent and applicability of potential AI laws and regulations will require continuous monitoring to help ensure we remain in
compliance and any associated risks are appropriately mitigated.

 Finally,
emerging policy trends—including initiatives by major search and platform operators to integrate AI-generated content and features
directly into their core services—could lead to regulatory changes impacting discoverability of our products and services, use
of our content in training AI models, and our ability to monetize user-generated or AI-generated content. These developments, whether
arising from statutory changes, administrative rule-making, or industry-imposed standards, could materially and adversely affect our
operations, competitive position, and results of operations.

 RISKS
RELATED TO CONTENT AND INTELLECTUAL PROPERTY

 If
we face intellectual property infringement claims, or are unable to license, acquire or otherwise obtain access to compelling content
and services at reasonable cost, or if we do not develop or commission compelling content of our own, the number of users of the Zedge
Marketplace may not grow as anticipated, or may decline, or users' level of engagement with the Zedge Marketplace may decline,
all or any of which could materially harm our business and operating results.

 Our
future success depends, in part, on our ability to develop or aggregate and host compelling content and deliver that content to our users
via our digital properties. We achieve this when users play our game, when artists, individual creators and brands upload their licensed
content to our marketplace, or when we create content or enter into business partnerships with content owners and distribute this content
in our marketplaces. In addition, we commission authors to write articles for our blog and use other tools and third parties to generate
content.

 We
believe that users value high-quality content. As such, we may need to make substantial payments to third parties from whom we license
or acquire such content from or from whom we create this content for our behalf. Our ability to maintain and build relationships with
such third-party providers may become important to our success. As competition for compelling content increases both domestically and
internationally, our partners may alter business terms under which they avail their content and services to us and potential providers
may not offer their content or services to us at all, or may offer them on terms that are not agreeable to us. A change in these commercial
terms could harm our operating results and financial condition. Further, much of the content that we acquire may only be available on
a non-exclusive basis allowing competitors the ability of offering this content to our disadvantage.

 We
may be subject to intellectual property infringement claims or other allegations, which could require us to pay substantial statutory
penalties or other damages and fines, remove relevant content, enter into license agreements which may not be available on commercially
reasonable terms or could result in our being barred from third-party distribution platforms, which could harm our business and competitive
position.

 From
time to time, we are subject to claims from owners of technology patents, copyrights, trademarks, trade secrets and content, who assert
claims against us. There may also be new laws and regulations that are adopted that change the rules related to the safe harbor for user
generated content and ultimately requiring us to pay licensing fees. The use of AI-generated content raises complex intellectual property
(IP) considerations, including questions about ownership rights and potential infringement of third-party IP. Uncertainties in IP law
regarding AI outputs may expose us to legal disputes and challenges in protecting our proprietary content. We may need to invest in legal
expertise and adjust our content policies to navigate these complexities effectively, increasing costs and potential liability. If a
claim of infringement is brought against us that we are not able to successfully and cost-effectively defend, we may be required to pay
substantial penalties or other damages and fines, remove relevant content, enter into license agreements that may not be available on
commercially reasonable terms or at all or be barred from any of the third-party distribution platforms. Even though the allegations
or claims could be baseless, our defense against any of these allegations or claims would be both costly and time-consuming and could
significantly divert the efforts and resources of our management and other personnel.

 We
may not be able to prevent others from unauthorized use of our intellectual property, which could materially harm our business and competitive
position.

 We
regard our trademarks, service marks, patents, domain names, trade secrets, proprietary technologies and similar intellectual property
as critical to our success, and we rely on trademark and patent law, trade secret protection and confidentiality and license agreements
with our employees and others to protect our proprietary right. As of July 31, 2023, we have registered, amongst others, the following
domain names: www.zedge.net, www.zedge.com, www.emojipedia.com, www.emojipedia.org, and gurushots.com. In addition, we have been granted
trademark protection for "Zedge" in the United States, European Union, United Kingdom, India, and Canada, "We Make
Phones Personal," "Zedge, Everything You," "Tattoo Your Phone," "Shortz – Chat Stories by Zedge,"
and "NFTs Made Easy" in the United States, a stylized "D" logo in the European Union, United Kingdom, United
States, and Canada, "Emojipedia" in the United States, the European Union, the United Kingdom and Australia, "World
Emoji Day" in the United States and United Kingdom, and "GuruShots" in the United States, Canada, European Union, and
the United Kingdom. We have also applied for trademark protection for "pAInt," and "Zedge pAInt" in the United
States, a stylized "D" logo in India, and "GuruShots" in India, and have obtained copyright registrations for
the GuruShots mobile and web-based applications, and have obtained a copyright registration for our flagship app, Zedge.

 Monitoring
unauthorized use of our intellectual property rights is difficult and costly, and we cannot be certain that we can effectively prevent
misappropriation of our intellectual property, particularly in countries where the laws may not protect our proprietary rights as fully
as in the United States. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could
result in substantial costs and diversion of our resources and may not be successful.

 We
may face challenges in enforcing intellectual property rights in international markets.

 It
is often difficult to create and enforce intellectual property rights in certain international markets. Patents, trademarks and service
marks may also be invalidated, circumvented, or challenged. Trade secrets are difficult to protect, and our trade secrets may be leaked
or otherwise become known or be independently discovered by others. Confidentiality agreements may be breached, and we may not have adequate
remedies for any breach. Even where adequate and relevant laws exist it may not be possible to obtain swift and equitable enforcement
of such laws, or to obtain enforcement of a court judgment or an arbitration award delivered in another jurisdiction, and accordingly,
we may not be able to effectively protect our intellectual property rights or enforce agreements in such countries.

 Our
insurance may not provide adequate levels of coverage against claims.

 We
believe that we maintain insurance customary for businesses of our size and type. However, there are types of losses we may incur that
cannot be insured against or that we believe are not economically reasonable or practical to insure. In addition, any loss incurred could
exceed policy limits and policy payments made to us may not be made on a timely basis. Such losses could adversely affect our business
prospects, results of operations, cash flows and financial condition.

 RISKS
RELATED INFORMATION TECHNOLOGY AND DATA SECURITY

 Our
business depends on our ability to collect and effectively use data to serve relevant advertising, deliver suitable content, and identify
appropriate customer prospects, and any limitation on the collection and use of this data could significantly diminish the value of our
services, cause us to lose clients, make us less attractive to prospective customers, and harm our revenues.

 When
one uses our products and services, we may collect both personally identifiable and non-personally identifiable data about the user.
This may include, but is not limited to, the user's name, telephone number, email address, web cookies, Meta and other login credentials,
phone model, operating system, location, Android Advertising ID ("AAID"), Apple's Identifier for Advertising ("IDFA"),
as well as information relating to their interaction with advertisements and content appearing within our products. We use certain of
this data to provide a better experience for the user by delivering both relevant content and advertisements. We also use some of this
data to help us target prospective customers and for advertising reporting purposes.

internet-enabled devices, browsers, and operating systems, controlled by third parties, offer options that allow users to disable or
limit functionality that supports advertising and analytics. Device and browser manufacturers may include or expand these features as
part of their standard specifications. For example, Apple deprecated UDID, replacing it with IDFA, and later required opt-in consent
for IDFA tracking, while Google is developing the Privacy Sandbox for Android, limiting cross-app tracking. If users elect to opt out
of data sharing, we will be curtailed in our ability to deliver effective advertising, which could negatively affect our digital advertising
revenues.

 The
regulatory landscape for online tracking continues to evolve, particularly in relation to the use of cookies and similar technologies.
In the EU, UK, and certain other jurisdictions, businesses are required to obtain informed user consent before placing non-essential
cookies or engaging in behavioral advertising. To facilitate compliance, many publishers, including us, employ consent management platforms
("CMPs") that present cookie banners or preference centers, record user choices, and transmit consent signals to advertising
partners. However, CMP implementation increases operational complexity, may cause user friction, and can materially reduce the percentage
of users granting consent for personalized advertising. Industry data indicates that consent rates can vary widely (often below 70% in
some markets), and further regulatory changes or browser-level restrictions on CMP frameworks (such as Google Chrome's planned
third-party cookie phase-out) could depress those rates further. A sustained drop in consent rates would directly impact the volume and
value of addressable advertising inventory.

our Privacy Policy and Terms of Service provide extensive details about how we use customer data, our clients or advertising partners
may decide not to allow us to collect some or all of this data or may limit how we can use it. Any limitation on our ability to collect
behavioral, engagement, or device data would likely make it more difficult for us to deliver relevant content to our users and effective
advertising campaigns that meet advertiser demands.

 Our
contracts with advertisers generally permit us to aggregate data from campaigns; however, clients might nonetheless request that we discontinue
using previously aggregated data. Complying with such requests may be difficult or impossible and could require us to invest significant
resources. Interruptions, failures, or defects in our data collection, analysis, and storage systems, combined with privacy concerns,
consent-management restrictions, and regulatory changes, could limit our ability to aggregate and analyze mobile device user data. If
that happens, we may be unable to optimize ad placement for our clients, making our services less valuable and potentially resulting
in client losses and materially reduced revenues.

 Any
significant system or network disruption or cyberattack could have a material adverse effect on our business prospects and results of
operations.

 We
rely heavily on complex information technology systems and networks to operate our business efficiently. Any significant disruption or
cyberattack affecting these systems could have a detrimental impact on our operations and financial performance. Our technological infrastructure
includes systems and services managed by third-party providers. This reliance has become increasingly complicated due to ongoing supply
chain disruptions exacerbated by geopolitical events, such as conflicts that may further complicate existing supply chain constraints.

 All
information technology systems and networks face potential vulnerabilities from various sources, including cyberattacks, computer viruses,
malicious software, energy blackouts, natural disasters, and telecommunication failures. AI systems can introduce new cybersecurity vulnerabilities,
including susceptibility to adversarial attacks, model inversion, and data poisoning. Exploitation of these vulnerabilities could lead
to unauthorized access to sensitive information, disruption of services, or manipulation of AI outputs. As cyber threats become more
sophisticated, we must invest in advanced security measures and continuously monitor our AI systems to mitigate potential risks. We securely
store sensitive data, and any breach—whether physical or electronic—of the systems housing this information could lead to
significant risks, including data piracy or compromise.

third-party partners may be granted access to our proprietary information to provide necessary services, which involves a risk of data
misappropriation or unauthorized use. A data intrusion into the servers hosting our products could disrupt operations, particularly for
those offering online features. The risks associated with such breaches may be heightened by global events, further complicating our
cybersecurity posture.

 Disruption
to our information technology systems, network failures, or security breaches could negatively impact our business continuity, operations,
and financial results. These risks are confined to the networks and e-commerce platforms of console providers and online partners. External
factors, such as extended remote work arrangements, geopolitical tensions, and internal factors like data migration and system maintenance,
further exacerbate these risks.

 Our
systems and those of our third-party service providers may not always be fully adequate against all vulnerabilities. We lack redundancy
for every system, and our disaster recovery planning may not account for all contingencies. As our digital business continues to expand,
we will require increasingly robust internal and external technological infrastructure to meet player demands. Failure to adapt and effectively
scale this infrastructure may compromise the performance and reliability of our products and negatively impact our business.

 The
investment needed to eliminate or address security threats and vulnerabilities before or after a cyber-incident could be material. Our
remediation efforts may not be successful and could result in interruptions, delays or cessation of service, and loss of existing or
potential suppliers, users, or creators. As threats related to cyber-attacks continuously evolve and grow, we may also find it necessary
to invest additional resources in protecting our data and infrastructure, which may impact our results of operations. Although we have
insurance coverage protection against cyber-attacks, it may not be sufficient to cover all possible claims stemming from security breaches,
cyberattacks and other types of unlawful activity, or any resulting disruptions from such events, and we may suffer losses that could
have a material adverse effect on our business. We could also be negatively impacted by existing and proposed laws and regulations in
the United States, Lithuania, Israel, the European Union, and other jurisdictions, as well as government policies and practices related
to cybersecurity, data privacy, data localization and data protection.

 Furthermore,
the exploitation of our systems can adversely affect our products and services. The virtual economies within many of our digital offerings
are particularly susceptible to abuse and fraudulent activities. Despite implementing ongoing measures to prevent such issues, activities
like the illicit generation and sale of accounts or virtual items can result in loss of revenue, interfere with player enjoyment, and
cause reputational harm.

 In
addition, the platforms that we use to distribute our apps may encourage, or require, compliance with certain security standards, such
as the voluntary cybersecurity framework released by the National Institute of Standards and Technology which consists of controls designed
to identify and manage cyber-security risks, and we could be negatively impacted to the extent we are unable to comply with such standards.

 RISKS
RELATED TO OUR OWNERSHIP AND OUR CLASS B COMMON STOCK

 We
have granted, and may continue to grant, options, restricted shares and other types of awards under our stock option and equity incentive
plans and otherwise, which may result in increased equity-based compensation expenses.

 The
expenses associated with equity-based compensation, including the potential repricing of options, have affected our net income and may
reduce our net income in the future, and any additional equity issued under equity-based compensation schemes will dilute the ownership
interests of our stockholders. We believe the granting of equity-based compensation is of significant importance to our ability to attract
and retain key personnel and employees, consultants and directors, and we will continue to grant equity-based compensation in the future.
As a result, our expenses associated with equity-based compensation may increase, which may have an adverse effect on our results of
operations and would dilute the ownership interests of our stockholders.

 Investors
may suffer dilution.

 We
may engage in equity financing to fund our future operations and growth or acquisitions. If we raise additional funds and/or provide
consideration in acquisitions by issuing equity securities, stockholders may experience significant dilution of their ownership interest
(both with respect to the percentage of total securities held, and with respect to the book value of their securities) and such securities
may have rights senior to those of the holders of our Class B common stock.

 Any
such equity financing could occur at prices below, or well below, the then-current trading price of our Class B common stock, which would
further exacerbate the ownership interests of our stockholders.

 Our
business, financial condition and results of operations, as well as our ability to obtain additional financing, may be adversely affected
by downturn in the global economy.

 The
global financial markets have experienced significant disruptions over the past fifteen years and the recoveries from the lows of 2008
and 2009 as well as from the Covid 19 pandemic have been uneven. There is considerable uncertainty over the long-term effects of the
expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world's leading
economies. There have also been concerns over unrest in Eastern Europe, the Middle East and Africa, which have resulted in volatility
in the energy and food sectors amongst other markets. We may be affected by economic downturns. A prolonged slowdown in the world economy
may lead to a reduced amount of mobile internet advertising, which could materially and adversely affect our business, financial condition
and results of operations.

 Moreover,
a slowdown or disruption in the global economy may have a material and adverse impact on financings available to us. The weakness in
the economy could erode investor confidence, which constitutes the basis of the credit market. Turmoil affecting the financial markets
and banking system may significantly restrict our ability to obtain financing in the capital markets or from financial institutions on
commercially reasonable terms, or at all.

 The
trading price of the shares of our Class B common stock may be volatile, and purchasers of our Class B common stock could incur substantial
losses.

 Our
stock price could be volatile. The stock market in general and the market for mobile internet companies in particular have experienced
extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility,
investors may not be able to sell their Class B common stock at or above the price paid for the shares. The market price for our Class
B common stock may be influenced by many factors, including:

 actual
 or anticipated variations in quarterly operating results;

 changes
 in financial estimates by us or by any securities analysts who might cover our stock;

 conditions
 or trends in our industry;

 stock
 market price and volume fluctuations of other publicly traded companies and, in particular, those that operate in the advertising,
 internet or media industries;

 announcements
 by us or our competitors of new product or service offerings, significant acquisitions;

 strategic
 partnerships or divestitures;

 announcements
 of investigations or regulatory scrutiny of our operations or lawsuits filed against us;

 changes
 to regulations including but not limited to, data privacy, and copyrighted content;

 capital
 commitments;

 additions
 or departures of key personnel; and

 sales
 of our Class B common stock common stock, including sales by our directors and officers or specific stockholders.

 In
addition, in the past, stockholders have initiated class action lawsuits against technology companies following periods of volatility
in the market prices of these companies' stock. Such litigation, if instituted against us, could cause us to incur substantial
costs and divert management's attention and resources.

 We
are controlled by our majority stockholder, which limits the ability of other stockholders to affect our management.

 Michael
Jonas is our controlling stockholder, Executive Chairman, Chairman of our Board of Directors, and, as of October 24, 2025, had voting
power over approximately 61% of the combined voting power of our outstanding capital stock. Mr. Jonas is able to control matters requiring
approval by our stockholders, including the election of all of the directors and the approval of significant corporate matters, including
any merger, consolidation or sale of all or substantially all of our assets. As a result, the ability of any of our other stockholders
to influence our management is limited.

 If
securities or industry analysts do not publish research or publish unfavorable research about our business or our stock, our stock price
and trading volume could decline.

 The
trading market for our common Class B common stock relies in part on the research and reports that equity research analysts publish about
us and our business. Currently, only one investment bank, Maxim Group LLC, publishes equity research about Zedge and there are no guarantees
that they will continue providing coverage in the future. We may never obtain research coverage by other equity research analysts. Equity
research analysts may elect not to provide research coverage of our Class B common stock, and such lack of research coverage may adversely
affect the market price of our Class B common stock. We do not have any control over the equity research analysts or their content and
opinions included in their reports. The price of our stock could decline if one or more equity research analysts downgrade our stock
or issues other unfavorable commentary or research. If one or more equity research analysts ceases coverage of our company or fails to
publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price and/or trading volume
to decline.

 Our
results of operations may be subject to wide fluctuations due to a number of factors which may adversely affect the trading price of
our Class B common stock.

 We
may experience seasonality and other fluctuations in our business, reflecting fluctuations in internet and smartphone usage and advertising.
Revenues from consumer internet and mobile application products and services are typically higher in the fourth quarter of the calendar
year due to increased year-end advertising and marketing budgets. Conversely, we generally experience lower advertising revenues during
the first quarter of the calendar year due to weaker advertising spend following the holidays. Thus, our operating results in one or
more future quarters or years may fluctuate substantially or fall below the expectations of securities analysts and investors. In such
an event, the trading price of our Class B common stock may fluctuate significantly or decrease significantly.

 Item
1B. Unresolved Staff Comments.

 None.

 Item
1C. Cybersecurity.

 Cybersecurity Risk Management and Strategy

 Our
cybersecurity framework (which includes management of related risks), is based on recognized cybersecurity industry frameworks and standards,
including those of the National Institute of Standards and Technology, the Center for Internet Security Controls, and the International
Organization for Standardization. We do not certify that we meet any particular technical standards, specifications, or requirements,
but we use the aforementioned frameworks and standards as a guide to help us identify, assess, and manage cybersecurity risks relevant
to our business. We use these frameworks, together with information collected from internal assessments, to develop policies for the
use of our information assets (e.g., IT business information and information resources such as mobile phones, computers and workstations),
access to specific intellectual property or technologies, and protection of personal information. We protect these information assets
through industry-standard techniques, by strong Identity and Access Management framework, such as Role Based Access Control, Attribute
Based Access Control, principle of Least Privilege, Need-to-Know access and multi factor authentication as obligatory second factor to
our core resources. We also enhance our endpoint protection by deploying an endpoint detection and response tool. Its core mission is
to defend our endpoints and systems against new malware, rootkits, spywares and ransomware. We also work with internal stakeholders across
the Company to integrate foundational cybersecurity principles throughout our operations, including the employment of multiple layers
of cybersecurity defenses, restricted access based on business needs, and integrity of our business information. We routinely train our
employees on cybersecurity awareness on social engineering attacks, confidential information protection, emerging threats and simulated
phishing attacks to improve self-awareness of our employees.

 We
have standing engagements with incident response experts and external counsel, including through our cyber insurance. We frequently collaborate
with industry experts and cybersecurity practitioners at other companies to exchange intelligence about potential cybersecurity threats,
best practices and trends. We continuously monitor and collect insights on the latest vulnerabilities and attack patterns (TTPs) released
by the Cybersecurity and Infrastructure Security Agency (CISA) and the National Institute of Standards and Technology (NIST).

 The
annual "Threat Landscape" report published by the European Union Agency for Cybersecurity (ENISA) each October serves as
a key strategic intelligence source supporting the hardening and protection of our infrastructure. This report offers a comprehensive
perspective on prevalent attack types, mapped across threat vectors and industry domains, accompanied by actionable defense strategies
that support effective risk reduction to levels aligned with our organizational tolerance. It allows for the deployment of tailored security
measures, enhancing Zedge's ability to withstand evolving cyber risks.

 We
also have our own incident response team who is engaged in dealing with security events triggered by our Security Information and Event
Management (SIEM) system. Continuous monitoring of our infrastructure — from endpoint devices to virtual clusters — helps
detect potential interception of internal communications, preventing the leakage of business-critical data.

 Our
cybersecurity risk management extends to risks associated with our use of third-party service providers. For instance, we conduct risk
and compliance assessments of third-party service providers by checking on a permanent basis every new vendor that is going to cooperate
with the Company. The aim is to verify if vendors due diligence and risks associated with it are within our risk tolerance set by management.

 Our
cybersecurity risk management is an important part of our comprehensive business continuity program and enterprise risk management. Our
global information security team periodically engages with a cross-functional group of subject matter experts and leaders to assess and
refine our cybersecurity risk posture and preparedness. For example, we regularly evaluate and update contingency strategies for our
business in the event that a portion of our information resources were to be unavailable due to a cybersecurity incident. We practice
our response to potential cybersecurity incidents through regular tabletop exercises, threat hunting and red team exercises.

 Our
vulnerability management program involves regular scanning and testing of systems, endpoints, virtual environments, and cloud-based assets
to identify potential software flaws, misconfigurations, or exposure points. Once vulnerabilities are detected, we prioritize remediation
based on risk impact and business criticality, ensuring that all gaps are addressed in a timely and effective manner. This proactive
approach enables us to maintain a hardened infrastructure, reduce attack surface, and align with industry best practices and regulatory
expectations.

 As
part of our secure development lifecycle (SDLC), we conduct both automated and manual code reviews to ensure that the applications we
deliver to our users are resilient against exploitation and designed to prevent data leakage. By embedding security controls throughout
the development process — from design to deployment — we uphold confidentiality, integrity, and reliability. This approach
not only protects sensitive user data, but also reinforces trust in our platform and supports long-term compliance with regulatory frameworks.

 In
response to the growing use of AI, by bad actors, we adapt our internal policies, procedures, and control mechanisms to address AI-driven
threats, including:

 Automated
 phishing campaigns and deepfake content used for impersonation or fraud.

 Malicious
 code generation via large language models.

 Adversarial
 attacks that manipulate input data to bypass security algorithms.

 AI-assisted
 vulnerability scanning and exploitation of system weaknesses.

 Our
multi-layered defense strategy includes:

 Continuous
 monitoring and anomaly detection powered by machine learning to identify AI-driven attack
 patterns.

 Enhanced
 SDLC with static and dynamic code analysis to detect AI-generated vulnerabilities.

 Employee
 training on AI-related risks, such as synthetic media, prompt injection, and suspicious automation.

 Third-party
 risk assessments that evaluate the AI capabilities of vendors and partners to prevent external
 exposures.

 Incident
 response playbooks tailored to AI-specific scenarios, such as automated botnet coordination
 or synthetic identity fraud.

 These
practices ensure our organization remains agile, secure, and prepared for the evolving AI-driven threat landscape.

 Governance of Cybersecurity Risk Management

 The
board of directors, as a whole, has oversight responsibility for our strategic and operational risks and sets associated risk parameters
and tolerance levels. The audit committee assists the board of directors with this responsibility by reviewing and discussing the defined
risks, its assessment and proposed mitigation strategies, including cybersecurity risks, with members of management. The audit committee,
in turn, periodically reports on its review with the board of directors.

 Management
is responsible for day-to-day assessment and management of cybersecurity risks and reports regularly to the audit committee.

 Zedge's
Cybersecurity risk governance has several components that can help our organization understand and implement cybersecurity governance
practices achieve long-term cybersecurity goals beyond the day-to-day information security tasks, align with legal and regulatory compliance,
and the direction of the Company through:

 Developing
 a mature cybersecurity culture which ensures that all employees understand they are stakeholders in cybersecurity. Employees not
 only engage with cybersecurity controls but must be proactive in risk mitigation and remediation.

 Cyber
 risk assessments which identify cybersecurity business risks and the Company's cybersecurity gaps and vulnerabilities. Using
 agreed-upon key performance indicators (KPIs), stakeholders can measure the Company's cybersecurity capabilities clearly and
 objectively. This facilitates our ability to audit the effectiveness of future vulnerabilities and remediation activities.

 An
Accountability Framework which measures performance across departments and systems and ensures that those identified as responsible for
meeting objectives are aware of the results and work with the cyber risk governance team leader to achieve and enhance them. With consistent
feedback and the ability to reference established metrics, we can successfully monitor, review, and enforce cyber risk governance plans.
In turn, through these processes, we improve our framework, remediate serious issues, and update organizational cyber risk governance
roadmaps accordingly.

 Embedding cybersecurity within the broader enterprise risk
management (ERM) strategies to evaluate cyber risks alongside financial, operational, and reputational risks, enabling executive leadership
to make informed decisions.

 Leveraging external threat intelligence and collaborating
with industry peers, regulatory bodies, and national cybersecurity agencies to adapt to emerging threats.

 Embedding security into software development through deployment,
with regular code reviews, SDLC checkpoints, and secure architecture principles.

 Reviewing governance practices, incorporating lessons learned
from incidents, audits, and tabletop exercises to refine policies, controls, and strategic priorities.

 Providing transparent cyber risk metrics and governance outcomes
to the Board of Directors, ensuring alignment with strategic priorities and positioning cybersecurity as a business enabler.

 Item
2. Properties

 Since
July 2020, we have not maintained a physical headquarters, but maintain a virtual presence as our headquarters as our corporate staff
has been working remotely. We lease a 4,900 square-foot office in Trondheim, Norway, as well as a development center in Vilnius, Lithuania,
that accommodate our product, design, monetization, marketing and technology teams. The Trondheim lease is due to expire in March 2027
and we are exploring alternatives for that space in light of the recent restructuring and shut down of that office. On June 6, 2025,
we signed a lease for a 3,600 square feet office space in Vilnius with the estimated move-in date on or before October 31, 2025, Note
19, Subsequent Events, to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. We lease
approximately 2,200 square feet of office space in Tel Aviv, Israel that accommodates members of both the GuruShots and Zedge teams.
The Tel Aviv lease is due to expire in October 2026. Our servers are hosted in leased data centers in different geographic locations
in the United States. These data centers are owned and maintained by third-party data center providers. The Company believes it has sufficient
space to accommodate its employees and operations.

 Item
3. Legal Proceedings

 We
may from time to time be subject to claims, demands and legal proceedings that arise in the ordinary course of business. Although there
can be no assurance in this regard, we do not expect any of those legal proceedings to have a material adverse effect on our results
of operations, cash flows or financial condition.

 Item
4. Mine Safety Disclosures

 None.

 PART
II

 Item
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Class
B Common Stock

 Our Class B common stock is quoted on the NYSE American stock exchange
under the trading symbol ZDGE. Trading commenced on the NYSE American on June 1, 2016. On October 27, 2025, the last sales price reported
on the NYSE American for our Class B common stock was $3.79 per share.

 On October 27, 2025, there were 257 holders of record of our Class
B common stock and 1 holder of record of our Class A common stock. As of October 27, 2025, all shares of Class A common stock are beneficially
owned by Michael Jonas. The number of holders of record of our Class B common stock does not include the number of persons whose shares
are in nominee or in "street name" accounts through brokers.

 The
information required by Item 201(d) of Regulation S-K will be contained in our Proxy Statement for our Annual Stockholders Meeting, which
we will file with the Securities and Exchange Commission within 120 days after July 31, 2025 and which is incorporated by reference herein.

 Recent
Sales of Unregistered Securities

 None.

 Performance
Graph of Stock

 We
are a smaller reporting company as defined by Rule 12b-2 of the Securities and Exchange Act of 1934 and are not required to provide the
information under this item.

 Issuer
Repurchases of Equity Securities

 In October 2021, our board of directors authorized a repurchase program
of up to 1.5 million shares of our Class B common stock at a maximum aggregate purchase price of $3 million ("2021 Share Repurchase
Plan") which was completed on August 28, 2024. On September 9, 2024, our Board approved a $5 million share buyback program (the
"2024 Share Repurchase Plan"). Repurchases under the 2021 Share Repurchase Plan were, and under the 2024 Share Repurchase
Plan are to be, made from time to time through open market purchases or through privately negotiated transactions, subject to market conditions,
applicable legal requirements and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements
of Rule 10b-18. We may also, from time to time, enter into Rule 10b5-1 trading plans to facilitate repurchases of our shares under the
2024 Repurchase Plan. The 2024 Repurchase Plan does not obligate us to acquire any particular amount of our Class B common stock, has
no expiration date and may be modified, suspended, or terminated at any time at our discretion.

 The
following table summarizes the share repurchase activity for the fourth quarter of fiscal 2025:

 Period

 Total
 Purchased

 Average
 Price Paid
 Per Share (1)

 Total
 Purchased
 as Part of
 Publicly
Announced
 Programs

 Approximate
 Dollar Value
 of Shares
 that May Yet
 Be Purchased
 Under the
 Program

 May 1, 2025 to May 31, 2025

 $
 2.40

 $
 3,631

 June 1, 2025 to June 30, 2025

 $
 3.72

 $
 2,165

 July 1, 2025-July 31, 2025

 $
 4.27

 $
 1,378

 Total

 (1)

 The average price paid per
 share includes any broker commissions.

 Item
6. [Reserved].

 Not
applicable.

 Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 This
Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, including statements that contain the words "believes," "anticipates," "expects,"
"plans," "intends" and similar words and phrases. These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the
factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those
differences include, but are not limited to, those discussed under Item 1A to Part I "Risk Factors" in this Annual Report.
The forward-looking statements are made as of the date of this Annual Report, and we assume no obligation to update the forward-looking
statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors
should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed
with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including
our reports on Forms 10-Q and 8-K.

 The
following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of
this Annual Report.

 Overview

 Zedge
builds digital marketplaces and friendly competitive games around content that people use to express themselves. Our leading products
include Zedge Ringtones and Wallpapers, which we refer to as our "Zedge App," a freemium digital content marketplace offering
mobile phone wallpapers, video wallpapers, ringtones, and notification sounds as well as pAInt, a generative AI wallpaper maker, GuruShots,
a skill-based photo challenge game, and Emojipedia, the #1 trusted source for 'all things emoji'. Our vision is to enable
and connect creators who enjoy friendly competitions with a community of prospective consumers in order to drive commerce.

 We
are part of the 'Creator Economy,' which is estimated to be worth between $191 billion and $250 billion globally in 2025,
with some forecasts placing the global market size as high as $848 billion by 2032 121314. According to multiple reports, there
are now over 207 million active content creators worldwide. 1516 Furthermore, between 45% and 47% of creators identify as working
full-time in this space 171819. Most creators earn modest incomes, and studies suggest that only a small portion, approximately
4%, of creators earn more than $100,000 per year 202122. We view the Creator Economy as an opportunity for Zedge to expand
our business, especially as we execute by connecting our gamers with our marketplace.

 Our
Zedge App (which is named "Zedge Wallpapers" in the App Store) offers a wide array of mobile personalization content including
wallpapers, video wallpapers, ringtones, and notification sounds, and is available both in Google Play and the App Store. Over the past
two fiscal years, our Zedge App has had between 22.1 million and 28.7 million MAU, ending with 23.3 million MAU as of July 31, 2025.
MAU is a KPI for our Zedge app that captures the number of unique users that used our Zedge App during the final 30 days of the relevant
period. Our platform allows creators to upload content to our marketplace and avail it to our users either for free or, via 'Zedge
Premium,' the section of our marketplace where we offer premium content for purchase. In turn, our users utilize the content to
personalize their phones and express their individuality.

 In
fiscal 2023, we introduced pAInt, a generative AI wallpaper maker in the Zedge App. A generative AI wallpaper maker is an implementation
of artificial intelligence software that can create images from text descriptions. To interface with a generative AI image maker, a user
enters a text description of the image they want to create, and the software generates an image based on that description. Today, pAInt
is available for text-to-image, image-to-image, and text-to-audio creation. In addition, we upgraded Zedge+, our paid subscription offering
by bundling together an ad-free experience with value adds making the offering more compelling.

 We often refer to our freemium ringtones and wallpapers, our subscription
offering, the functionality for creators to market their products and ancillary offerings and features both in our Zedge App and website,
as our Zedge Marketplace.

 The
Zedge Marketplace's monetization stack consists of advertising revenue generated when users view advertisements when using the
Zedge App (and the related functionality under the zedge.net website), the in-app sale of Zedge Credits, our virtual currency, that is
used to purchase Zedge Premium content, and a paid-subscription offering that provides an ad-free experience to users that purchase a
monthly, annual or lifetime subscription. In April 2023, we introduced a subscription tier in the iOS version of the app. As of July
31, 2025, we had approximately 984,000 active subscribers.

 In
fiscal 2025, we began building DataSeeds. AI ("DataSeeds"), a business-to-business marketplace offering access to our rapidly
growing catalog of over 30 million high-quality, fully rights-cleared images for AI training, ecommerce, and stock photos. Uniquely positioned
to deliver custom content at scale, DataSeeds leverages its global creator network, tens of thousands of photographers from GuruShots
and creators from Zedge to fulfill highly specific client briefs across geographies, themes, and use cases. DataSeeds addresses a critical
challenge facing foundational models today: the need for edge-case visual content to improve accuracy and performance. Each asset can
be enhanced with detailed annotations, segmentation masks, technical metadata, and peer-based quality rankings, ensuring datasets are
both robust and production-ready. With scalable infrastructure and fast turnaround times, DataSeeds is a powerful partner for enterprises
building the next generation of AI-powered applications.

 In April 2022, we acquired GuruShots Ltd ("GuruShots"),
a gamified photography platform that engages a global community of photographers through daily challenges, real-time feedback, and a competitive,
interactive experience. GuruShots offers a platform spanning iOS, Android, and the web that provides a fun, educational and structured
way for amateur photographers to compete in a wide variety of contests showcasing their photos while gaining recognition with votes, badges,
and awards. We estimate that the total addressable market of amateur photographers using their smartphones to take and publicly share
artistic photos is 30-40 million people per month and that the market is still in its infancy. Every month, GuruShots stages more than
300 competitions that result in players uploading in excess of 550,000 photographs and casting close to 2.8 billion "perceived votes,"
which are calculated by multiplying the number of votes that each player casts by a weighting factor based on various factors related
to that user. To improve engagement, GuruShots has adopted a set of retention dynamics focused on individual, team and community dynamics
that create a sense of belonging, inspiration, recognition, improvement, and competition.

utilizes a 'Free-to-Play' business model and generates revenue through in-app purchases of virtual currency. Players can
use this currency to unlock competitions or gain an edge by purchasing resources and participating in additional gameplay. Over the past
eight years, the monthly average paying player spend has increased in excess of 6.2% annually to more than $40.9 per player.

 In
fiscal 2024, we revamped GuruShots' customer onboarding experience by guiding new players through simplified photo competitions
of limited size and duration. The upgrade was designed to enhance the gaming experience for new players by increasing their potential
for winning and providing immediate gratification. The new onboarding has shown improvements in engagement, retention, and revenue from
new users. In addition, we migrated to a coin-based economy with multiple currencies in order to enable more players to earn and spend
their currency on in-game resources.

 Since
the acquisition, GuruShots has faced challenges in growth and profitability, and its revenue has declined. We have cut costs at GuruShots,
including as part of the restructuring implemented in January 2025, and have materially scaled back on PUA for the unit. In parallel,
we are developing a plan, referred to as GuruShots 2.0, to revamp GuruShots' offering in order to put it on a growth trajectory
and unlock the potential value of this asset. Our strategy focuses on attracting new users and converting them into recurring, paying
players. To date, we have introduced a fun and comprehensive onboarding experience to draw new users into the gameplay with ease and
migrated to a coin-based in-game economy to enable more opportunities to reward and monetize players

 Historically,
we marketed GuruShots to prospective players primarily via PUA channels including Google, Meta, TikTok and other platforms, utilizing
a variety of ad formats, such as static and video ads. As part of the restructuring plan, we have significantly reduced PUA investment
to improve ROAS and intend to continue managing PUA spend in this framework performance.

 In
addition to its potential as a standalone game, we believe that the extensive library of photographs generated by GuruShots players through
submissions to GuruShots' competitions represents a valuable dataset for our emerging DataSeeds offering. To date, we have secured
rights to license a portion of this library for various applications, including AI training, and we continue to expand the licensable
catalog by securing rights to additional photographs. We believe the scale and distinctive characteristics of this dataset position it
as a meaningful resource for DataSeeds' target market.

 In
August 2021, we acquired Emojipedia Pty Ltd ("Emojipedia"), the world's leading authority dedicated to providing up-to-date
and well-researched emoji definitions, information, and news, as well as World Emoji Day and the annual World Emoji Awards. In July 2025,
Emojipedia received approximately 48.4 million monthly page views and has approximately 8.9 million monthly active users as of July 31,
2025 of which approximately 46.2% are located in well-developed markets. It is the top resource for all things emoji, offering insights
into data and cultural trends.

 Post
its acquisition in August 2021, Emojipedia was immediately accretive to earnings. In the past year, we have made many changes to Emojipedia
including an AI-powered emoji sticker generator tool as well as an extensive emoji sticker library.

 In
late September 2025, Google released an update to its Search Engine Results Page (SERP) enabling users to copy emojis directly from search
results rather than being directed to third-party sites such as Emojipedia. In addition, AI platforms, including ChatGPT and Claude,
now return emoji results in response to user queries. While it is too early to accurately quantify the impact of these changes on Emojipedia'
s monthly active users (MAU), we believe they are likely to result in reduced traffic and adversely affect revenue. In light of these
developments, we will evaluate potential mitigation strategies and determine whether such measures warrant investment given the associated
costs and expected benefits.

 CRITICAL
ACCOUNTING POLICIES AND ESTIMATES

 Our
consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in
the United States of America, or U.S. GAAP. The preparation of financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities.
Critical accounting policies are those that require application of management's most subjective or complex judgments, often as
a result of matters that are inherently uncertain and may change in subsequent periods. Management bases its estimates and judgments
on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from
these estimates under different assumptions or conditions.

 The
methods, estimates, interpretations, and judgments we use in applying our most critical accounting policies can have a significant impact
on the results that we report in our consolidated financial statements. The SEC considers an entity's most critical accounting
policies to be those policies that are both most important to the portrayal of the entity's financial condition and results of
operations and those that require the entity's most difficult, subjective, or complex judgments, often as a result of the need
to make assumptions and estimates about matters that are inherently uncertain. We believe that the following critical accounting policies
reflect the more significant judgments, estimates and assumptions used in the preparation of our consolidated financial statements.

 Revenue
 Recognition

 Assets-Net

 software and technology development costs

 Stock-Based
 Compensation

 Restructuring
 Charges

 Taxes

 See
Note 1, Description of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements in Item
8 of this Annual Report on Form 10-K for a complete discussion of our significant accounting policies.

 Revenue
Recognition

 We
generate revenue from the following sources: (1) Advertising; (2) Paid Subscription; (3) Other revenues including primarily Zedge Premium
(the section of our marketplace where we offer premium content for purchase), and (4) Digital Goods and Services. The substantial majority
of our revenue is generated from selling our advertising inventory ("Advertising Revenue") to advertising networks and advertising
exchanges. Our weekly, monthly, yearly and life-time subscriptions allow users to prepay a fixed fee to remove unsolicited advertisements
from our Zedge App. In Zedge Premium, we receive 30% of the net purchase price, after payment of fees to Google Play or the App Store,
when users purchase licensed content using Zedge Credits or unlock licensed content by watching a video or taking a survey on Zedge Premium.
Sales and other similar taxes are excluded from revenues.

 Advertising
Revenue: We generate the bulk of our revenue from selling the Zedge Marketplace's advertising inventory to advertising
networks and advertising exchanges.

 Advertising
 Networks. An advertising network is a third-party relationship where buyers of advertising inventory go to purchase either specific
 targeted inventory or a large scale of inventory at a set price. Advertising Networks serve as an indirect source of advertising
 fill to a variety of branded ad campaigns and performance-based ad campaigns.

 Advertising
 Exchanges. An advertising exchange is similar to an advertising network, except that the exchange typically bids in real-time for
 advertising inventory. Advertisers may utilize an exchange when looking for scale or specific audiences, and accept that the price
 will vary based on when and how much volume of inventory they wish to buy.

 We
recognize advertising revenue as advertisements are delivered to users through impressions or ad views (depending on the terms agreed
upon with the advertiser). For in-app display ads, in-app offers, engagement advertisements and other advertisements, our performance
obligations are satisfied over the life of the relevant contract (i.e., over time), with revenue being recognized as advertising units
are delivered, which is Zedge's performance obligation. The advertiser may compensate us on a cost-per-impression, cost-per-click,
cost-per-action basis.

 Paid
Subscription Revenue: Beginning in January 2019 and April 2023, we started offering paid
subscription services sold through Google Play and the App Store, respectively. When a customer subscribes, they execute a clickthrough
agreement with Zedge outlining the terms and conditions between Zedge and the subscriber. Google Play and the App Store process subscription
prepayment on Zedge's behalf, and retain a fee of up to 30%. Subscriptions are nonrefundable after a period of seven days. Paid
subscriptions are automatically renewed at expiration unless cancelled by subscribers. While customers can cancel at any time, they will
not receive any refund, and will continue to receive the service until the end of the subscription period. The duration of these contracts
is daily, and revenue for these contracts is recognized on a daily ratable basis. The payment terms for subscriptions sold through Google
Play is net 30 days after month-end. The payment terms for subscriptions sold through the App Store is net 45 days after month-end. We
recognize subscription revenue ratably over the subscription periods which range from weekly, monthly, yearly and lifetime with lifetime
subscriptions deemed to have an estimated lifespan of 30 months.

 Zedge
Premium: Zedge Premium is our marketplace where artists and brands can market,
distribute and sell their digital content to our users. The content owner sets the price and end users can purchase the content by paying
for it with Zedge Credits, our closed virtual currency. Alternatively, the content owner may opt to place some items behind video ad gates,
in which case end users can acquire the content by watching a brief video ad. A user can earn Zedge Credits when taking specific actions
such as watching rewarded videos or completing electronic surveys. Alternatively, users can buy Zedge Credits with an in-app purchase.
If a user purchases Zedge Credits, Google Play or the App Store retains a fee of 30% of the purchase price. When a user purchases Zedge
Premium content using Zedge credits or watching a rewarded video, the artist or brand receives 70% of the actual revenue after the Google
Play or App Store fee ("Royalty Payment") and we receive the remaining 30%, which is recognized as revenue.

 Digital
Goods and Services: GuruShots generates the substantial majority of its revenues from the sale of virtual tokens that players
can redeem for in-game goods and services (e.g., power-ups, entry fees, or resource bundles). GuruShots distributes its game to users
through mobile platforms such as Apple's App Store and Google Play, as well as via the internet. Through these platforms, users
can download the free-to-play game and can purchase virtual goods which are redeemed in the game to enhance their game-playing experience.

 Players
can pay for their virtual item purchases through various widely accepted payment methods offered in the game. Payments from players for
virtual goods are required at the time of purchase, are non-cancellable and relate to non-cancellable contracts that specify GuruShots'
obligations and cannot be redeemed for cash nor exchanged for anything other than virtual goods within the GuruShots' game. The
purchase price is a fixed amount which reflects the consideration that GuruShots expects to be entitled to receive in exchange for use
of virtual goods by its customers. The platform providers collect proceeds from the game players and remit the proceeds to GuruShots
after deducting their respective platform fees. Sales and other taxes collected from customers on behalf of governmental authorities
are accounted for on a net basis and are not included in revenues or operating expenses. GuruShots' performance obligation is to
display the virtual goods in game play based upon the nature of the virtual item.

categorizes its virtual goods as consumable. GuruShots' game sells only consumable virtual goods. Consumable virtual goods represent
items that can be consumed by a specific player action and do not provide the player any continuing benefit following consumption. GuruShots
has determined - through a review of game play behavior - that players generally do not purchase additional virtual goods until their
existing virtual goods balances have been substantially consumed. This review includes an analysis of game players' historical
play behavior, purchase behavior, and the amounts of virtual goods outstanding. Revenue is recognized once the virtual goods are sold.
GuruShots monitors its analysis of customer play behavior on a quarterly basis.

 As
discussed above, GuruShots concluded that revenue related to the promise of enhancing users' gaming experience through in-game
resource purchases should be recognized ratably over the period of benefit period (i.e., the period over which the enhanced gaming experience
is provided). However, for practical reasons, GuruShots does not defer the portion of revenue attributable to future uses of resources
as of any given balance sheet date. This is due to the duration of the enhanced gaming experience that is provided being, in substantially
all of the cases, and applying the portfolio approach (as GuruShots reasonably expects that the effects on the financial statements of
applying Accounting Standards Codification ("ASC") 606 guidance to the portfolio would not differ materially from applying
ASC 606 guidance to the individual contracts), a very short time frame ranging from a few hours to less than two weeks. Therefore, the
result of recognizing the related revenues at the point in time which user first consumes the respective resource would yield a result
that is not substantially different then ratable recognition over the period of benefit. Accordingly, revenue is recognized once the
virtual goods are sold.

 Gross
Versus Net Revenue Recognition

 We
report revenue on a gross or net basis based on management's assessment of whether we act as a principal or agent in the transaction.
To the extent we act as the principal, revenue is reported on a gross basis. To the extent we act as the agent, revenue is reported on
a net basis. The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we
control the good or service prior to transfer to the customer.

 We
generally report our advertising revenue net of amounts due to agencies and brokers because we are not the primary obligor in the relevant
arrangements, we do not finalize the pricing, and we do not establish or maintain a direct relationship with the advertiser.

is primarily responsible for providing the virtual goods, has control over the content and functionality of games and has the discretion
to establish the virtual goods' prices. Therefore, GuruShots is the principal and, accordingly revenues are recorded on a gross
basis. Payment processing fees paid to platform providers are recorded within selling, general and administrative expenses.

 We
report subscription revenue gross of the fee retained by Google Play and the App Store, as the subscriber is our customer in the contract
and we control the service prior to the transfer to the subscriber.

 With
respect to Zedge Premium, Zedge, as provider of the platform, is effectively operating as a broker or intermediary connecting online
content providers with the end user. While we use gross revenue (net of the 30% fee retained by Google Play or the App Store when
a user purchases Zedge Credits) as a performance metric, we record revenue on a net basis from Zedge Premium which consists of a 30%
platform fee, in-app purchases profit and breakage. Content providers are paid their portion of revenue which is a 70% share of
the gross revenue calculated.

Assets-Net

 We
test the recoverability of our intangible assets with finite useful lives whenever events or changes in circumstances indicate that the
carrying value of the asset may not be recoverable. We test for recoverability based on the projected undiscounted cash flows to be derived
from such asset. If the projected undiscounted future cash flows are less than the carrying value of the asset, we will record an impairment
loss, if any, based on the difference between the estimated fair value and the carrying value of the asset. We generally measure fair
value by considering sale prices for similar assets or by discounting estimated future cash flows from such asset using an appropriate
discount rate. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the
estimates and assumptions prove to be incorrect, we may be required to record impairments in future periods and such impairments could
be material.

assets are carried at cost, less accumulated amortization, unless a determination has been made that their value has been impaired. Intangible
assets are amortized on a straight-line basis over their estimated useful lives of between five to fifteen years. We review identifiable
amortizable intangible assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying
value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted
cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of
the carrying value of the asset over its fair value. We recorded $11.9 million impairment charges in Q2 of our fiscal year ended July
31, 2024.

represents the excess of purchase price and related costs over the fair value of assets acquired and liabilities assumed of the business
acquired. Under ASC 350, Intangibles-Goodwill and Other, goodwill is not amortized, but instead is tested for impairment annually,
or if certain circumstances indicate a possible impairment may exist.

 We
test goodwill for impairment on the first day of the fourth fiscal quarter or upon the occurrence of events or changes in circumstances
that indicate that the asset might be impaired. Goodwill is assigned to our reporting units, which are our operating segments, or components
of an operating segment, that constitute a business for which discrete financial information is available, and for which segment management
regularly reviews the operating results. During the annual impairment review process we have the option to first perform a qualitative
assessment (commonly referred to as "step zero") over relative events and circumstances to determine whether it is more likely
than not that the fair value of a reporting unit is less than its carrying value or to perform a quantitative assessment ("step
one") where we estimate the fair value of each reporting unit using primarily a market capitalization approach.

 We
would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however,
the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. Additionally, we consider income
tax effects from any tax-deductible goodwill on the carrying amount of its reporting unit when measuring the goodwill impairment loss,
if applicable.

software and technology development costs

Software and Technology Development Costs-Internal-Use Software

 Software
and technology development activities generally fall into three stages:

 Planning
 Stage activities include developing a project or business plan that outlines the goals for the content distribution platform
 or new product or service; determining the functionality; identifying hardware and software applications that will achieve functionality,
 security, and traffic flows; and selecting the internal resources that will be assigned to the project as well as the external vendors
 where applicable.

 Application
 and Infrastructure Development Stage activities focus on acquiring or developing hardware and software to operate a content distribution
 platform or new product and service; and

 Post-Implementation/Operating
 Stage activities address training, administration, maintenance, and all other activities to operate an existing content distribution
 platform or new product or service.

the Planning Stage, we charge all costs to expense as incurred.

the Application and Infrastructure Development Stage, we begin to capitalize costs when the project has been properly authorized and
we determine that completion is probable. If a project is subsequently cancelled prior to placement in service, costs that have been
capitalized to date will be reviewed for potential impairment. Capitalization ceases no later than the point at which a computer software
project is substantially complete and ready for its intended use. Amortization, which is generally over three years, begins for each
project when the code is ready for use, whether or not it is actually placed in service at that time (an exception being if the project's
functionality completely depends on the completion of another project, in which case, amortization begins when that other project is
ready for use).

the Post-Implementation/Operating Stage, we expense training costs and maintenance costs as incurred. However, upgrades and enhancements,
defined as modifications to existing internal-use software that result in additional functionality (modifications to enable the software
to perform tasks that it was previously incapable of performing, normally requiring new software specifications and perhaps a change
to all or part of the existing software specifications) are treated as though they were new projects, and are assessed utilizing the
same stages and criteria on a project-by-project basis. As such, internal costs incurred for upgrades and enhancements are expensed or
capitalized based on the requirements noted above, while costs incurred for maintenance are expensed as incurred. These projects are
tracked individually, such that the beginning and ending of the capitalization can be appropriately established, as well as the amounts
capitalized therein.

of these costs is included in depreciation and amortization in the consolidated statements of operations and comprehensive loss.

Software and Technology Development Costs-Software to Be Sold, Leased, or Marketed

 We
expense research and development costs incurred in the process of software development until technological feasibility has been established
for the product. Once technological feasibility has been established, software costs are capitalized until the product is available for
general release to customers. Costs incurred from the time that the product is available for general release to customers are expensed
as incurred. Costs related to upgrades and enhancements are capitalized only if they result in added functionality or marketability of
the original product.

 The
amortization of these capitalized costs begins when a product is available for general release to customers and is computed on a product-by-product
basis at a rate not less than straight-line basis over the product's estimated economic life. At each balance sheet date, we compare
the unamortized capitalized costs to the net realizable value of that product and write off the amount by which the unamortized capitalized
costs of that product exceed its net realizable value.

of these costs is included in depreciation and amortization in the consolidated statements of operations and comprehensive loss.

 We
evaluate these long-lived assets for impairment whenever circumstances arise that indicate the carrying amount of an asset may not be
recoverable. The Company's strategic reassessment of GuruShots' operations in connection with the restructuring initiative
resulted in a $0.8 million impairment of capitalized software and technology development costs which is recorded in the Company's
consolidated statements of operations and comprehensive loss for the fiscal year ended July 31, 2025.

 Stock-Based
Compensation

 We
account for our share-based compensation arrangements in accordance with ASC 718, "Compensation-Stock Compensation" ("ASC
718") which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and
directors based on estimated fair values on the grant date. Compensation cost for awards is recognized using the straight-line method
over the vesting period or the graded vesting method if awards with market or performance conditions include graded vesting features
or if an award includes both a service condition and a market or performance condition. Stock-based compensation is included in selling,
general and administrative expense in the consolidated statements of operations and comprehensive loss.

 Restructuring
Charges

 The
restructuring charges incurred by the Company in fiscal 2025 consist primarily of cash expenditures for compensation and severance payments,
employee benefits, payroll taxes and related facilities restructuring costs associated with the Company's workforce reduction announced
(and substantially implemented) in the second quarter of fiscal 2025. Employee termination benefits are recognized as a liability at
estimated fair value, at the time of communication to employees, unless future service is required, in which case the costs are recognized
ratably over the future service period. Ongoing termination benefits are recognized as a liability at estimated fair value when the amount
of such benefits is probable and reasonably estimable. Charges related to facilities restructuring actions are comprised of costs related
to early termination of the lease agreement and impairment of the right-of-use asset in connection with the abandonment of the property.

Taxes

 We
recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the consolidated
financial statements carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is provided
when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred
tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible.
We consider the scheduled reversal of deferred tax assets and liabilities, projected future taxable income and tax planning strategies
in its assessment of a valuation allowance. Deferred tax assets and liabilities are measured using the enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change.

 We
use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. We determine whether
it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation
processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition
threshold, we presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant
information. Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit
to recognize in the consolidated financial statements. The tax position is measured at the largest amount of benefit that is greater
than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts
recognized in the consolidated financial statements will generally result in one or more of the following: an increase in a liability
for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred
tax liability.

 We
classify interest and penalties on income taxes as a component of income tax expense included in the provision for (benefit from) income
taxes line item in our consolidated statements of operations and comprehensive loss.

 Trends
and Uncertainties

 Current
Economic Conditions

 The
majority of our users and employees are located outside of the United States exposing us to a range of economic factors and regulations
including foreign exchange fluctuations. There is uncertainty surrounding macroeconomic factors in the U.S. and globally. We believe
these macroeconomic conditions coupled with the global political climate and unrest, including the ongoing wars between Ukraine and Russia
and Israel and Hamas, may negatively impact our performance.

 The
Israel-Hamas and Israel-Hezbollah Conflicts

 Given
our operations in Israel, the impact of economic, political, geopolitical, and military conditions in the region directly affects us,
including conflicts involving missile strikes, infiltrations, and terrorism. Notably, on October 7, 2023, Hamas, a designated terrorist
organization, launched a savage terror attack in Israel, along with launching thousands of rockets into Israeli sovereign territory.
The State of Israel declared war against Hamas resulting in the mobilization of more than 300,000 army reserve. In addition, Hezbollah,
another designated terrorist organization, based in Lebanon, has been indiscriminately shelling Israeli territory. Since October 8, 2023,
the Houthi rebels based in Yemen have also launched ballistic missiles and kamikaze drones at Israel, and the Islamic Republic of Iran
has on two occasions attacked Israel with a barrage of ballistic missiles. In June of 2025 Israel and Iran entered into the '12-Day
War' during which our office and schools were closed and there were shelter in place orders that were issued. The constant barrage
of ballistic missiles launched from Iran and Yemen interrupted our operations. Although a temporary ceasefire is in place, it is unclear
if it is sustainable. The extent and duration of this conflict remain uncertain. Israel's response to Hamas' unprecedented
attack led to the mobilization of IDF reservists, affecting our workforce. Prior to this, changes in Israel's judicial system had
already raised concerns about the business environment, compounded by recent events, potentially impacting foreign investment, currency
fluctuations, credit ratings, interest rates, and security markets. Furthermore, regional political unrest and threats from extremist
groups, notably Iran, pose additional risks. Management and our Board of Directors are closely monitoring the situation in Israel to
address potential business disruptions and implications.

 AI
Technology Trends

 A
key component of our growth strategy involves the adoption and utilization of AI, which introduces certain risks that may materially
and adversely affect our business, financial condition, results of operations, and reputation. We incorporate AI into products such as
pAInt and rely on AI for content moderation, personalization, and user engagement, but market demand for AI-driven offerings remains
uncertain and may be outpaced by competitors. Compliance with evolving AI laws, such as the EU AI Act, may impose significant operational
costs. Additionally, in late September 2025, Google released an update to its Search Engine Results Page (SERP) enabling users to copy
emojis directly from search results rather than being directed to third-party sites such as Emojipedia, and AI platforms, including ChatGPT
and Claude, now return emoji results in response to user queries. While it is too early to accurately quantify the impact of these changes
on Emojipedia's MAU, we believe they are likely to result in reduced traffic and adversely affect revenue. These uncertainties
could significantly diminish the value of our services and materially and adversely affect our revenue, profitability, and prospects.

 Key
Performance Indicators

 Our
results of operations discussion includes disclosure of four key performance indicators - Monthly Active Users (MAU) and Average Revenue
Per Monthly Active User (ARPMAU) for our Zedge App and Monthly Active Payers (MAP) and Average Revenue Per Monthly Active Payer (ARPMAP)
for GuruShots.

 Zedge
App's MAU and ARPMAU

 MAU
is a key performance indicator that captures the number of unique users that used our Zedge App in the last thirty days of the relevant
period, which is important to understanding the size of the user base for our Zedge App which is a significant driver of revenue. Changes
and trends in MAU are useful for measuring the general health of our business, gauging both present and potential customers' experience,
assessing the efficacy of product improvements and marketing campaigns and overall user engagement. ARPMAU is valuable because it provides
insight into how well we monetize our users and the changes and trends in ARPMAU are indications of how effective our monetization investments
are.

 As
of July 31, 2025 MAU declined 11.1% year over year primarily due to attrition in emerging markets, particular in Latin America and South
Asia. As a result, users in emerging markets represented 76.7% of our MAU as of July 31, 2025 compared to 78.9% a year prior.

 ARPMAU
increased 16.9% for the three months ended July 31, 2025 when compared to the same period a year ago, primarily due to higher advertising
rate and higher subscription revenue.

 The
following tables present the MAU – Zedge App and ARPMAU – Zedge App for the three months ended July 31, 2025 as compared
to the same period a year ago:

 Three Months Ended July 31,

 (in millions, except ARPMAU - Zedge App)

 2025

 2024

 % Change

 MAU - Zedge App

 23.3

 26.1

 -11.1
 %

 Developed Markets MAU - Zedge App

 5.4

 5.5

 -1.8
 %

 Emerging Markets MAU - Zedge App

 17.8

 20.6

 -13.6
 %

 Emerging Markets MAU - Zedge App/Total MAU - Zedge App

 76.7
 %

 78.9
 %

 -2.8
 %

 ARPMAU - Zedge App

 $
 0.0925

 $
 0.0791

 16.9
 %

 The
following charts present the MAU – Zedge App and ARPMAU – Zedge App for the consecutive eight fiscal quarters ended July
31, 2025:

 GuruShots-MAPs
and ARPMAP

 Monthly
Active Payers ("MAPs"). We define a MAP as a unique active user on the GuruShots app or GuruShots.com in a
month that completed at least one in-app purchase ("IAP") during that time period. MAPs for a time period longer than one
month are the average MAPs for each month during that period. We estimate the number of MAPs by aggregating certain data from third-party
attribution platforms.

 Average
Revenue Per Monthly Active Payer ("ARPMAP"). We define ARPMAP as (i) the total revenue from IAPs
derived from GuruShots and GuruShots.com in a monthly period, divided by (ii) MAPs in that same period. ARPMAP for a particular time
period longer than one month is the average ARPMAP for each month during that period. ARPMAP shows how efficiently we are monetizing
each MAP.

 The
following table shows our MAP and ARPMAP for the three months ended July 31, 2025 as compared to the same period a year ago:

 Three Months Ended July 31,

 2025

 2024

 % Change

 Monthly Active Payers

 3,326

 4,521

 -26.4
 %

 Average Revenue per Monthly Active Payer

 $
 43.5

 $
 52.5

 -17.1
 %

 The
following charts present the MAP and ARPMAP – GuruShots for the consecutive eight quarters ended July 31, 2025:

 Our
KPIs related to GuruShots are not based on any standardized industry methodology and are not necessarily calculated in the same manner
that other companies or third parties may use to calculate these or similarly titled measures. The numbers that we use to calculate MAP
and ARPMAP are derived from data that we generate internally. While these numbers are based on what we believe to be reasonable judgments
and estimates for the applicable period of measurement, there are inherent challenges in measuring usage and engagement. We regularly
review and may adjust our processes for calculating our internal metrics to improve their accuracy.

 Results
of Operations

 The
following table sets forth certain of our consolidated results of operations data for the fiscal year ended July 31, 2025 compared to
the fiscal year ended July 31, 2024:

 2025

 2024

 $ Change

 % Change

 $
 29,398

 $
 30,091

 $
 (693
)

 -2.3
 %

 Direct cost of revenues

 1,841

 1,859

 (18
)

 -1.0
 %

 Selling, general and administrative

 27,187

 25,625

 1,562

 6.1
 %

 Depreciation and amortization

 1,149

 2,454

 (1,305
)

 -53.2
 %

 Impairment of intangible assets

 -

 11,958

 (11,958
)

 -100.0
 %

 Restructuring charges

 1,605

 -

 1,605

 nm

 Loss on disposal of property and equipment

 -

 nm

 Impairment of capitalized software and technology development costs

 -

 nm

 Loss from operations

 (3,232
)

 (11,805
)

 8,573

 72.6
 %

 Interest and other income, net

 6.4
 %

 Net loss resulting from foreign exchange transactions

 (151
)

 (190
)

 20.5
 %

 Income taxes benefit

 (325
)

 (2,198
)

 1,873

 85.2
 %

 $
 (2,392
)

 $
 (9,171
)

 $
 6,779

 73.9
 %

 nm-not meaningful

 Comparison
of Our Results of Operations for the fiscal years ended July 31, 2025 and 2024

 The
following table sets forth the composition of our revenues for the periods indicated:

 2025

 2024

 (in thousands, except percentage)

 Advertising revenue

 $
 20,338

 $
 21,042

 $
 (704
)

 -3.3
 %

 Paid subscription revenue

 5,093

 4,349

 17.1
 %

 Other revenues

 1,782

 1,225

 45.5
 %

 Total Zedge Marketplace revenue

 27,213

 26,616

 2.2
 %

 Digital goods and services

 2,185

 3,475

 (1,290
)

 -37.1
 %

 Total revenue

 $
 29,398

 $
 30,091

 $
 (693
)

 -2.3
 %

 The
following table summarizes our subscription revenue for the periods indicated:

 2025

 2024

 (in thousands, except revenue per subscriber and percentages)

 Subscription Revenue

 $
 5,093

 $
 4,349

 17.1
 %

 Active subscriptions net increase

 1331.8
 %

 Active subscriptions at end of period

 47.1
 %

 Average active subscriptions during the period

 20.6
 %

 Average monthly revenue per active subscription

 $
 0.54

 $
 0.55

 -1.8
 %

 The
following table presents a reconciliation of subscription billings to the most directly comparable GAAP financial measures for the fiscal
years ended July 31, 2025 and 2024. We calculate subscription billings by adding the change in subscription deferred revenue between
the start and end of the period to subscription revenue recognized in the same period. Subscription billings is a performance measure
that we believe provides useful information to our management and investors as it allows us to better track the growth of the subscription-based
portion of our business, which is a critical part of our business plan. The $2.3 million and $1.4 million increase in deferred revenue
for the fiscal years ended July 31, 2025 and 2024, respectively, were primarily attributable to the life-time subscription offering we
introduced in fiscal 2024.

 2025

 2024

 $ Change

 Subscription Revenue

 $
 5,093

 $
 4,349

 $

 17.1
 %

 Changes in subscription deferred revenue

 2,267

 1,356

 67.2
 %

 Subscription Billings (Non-GAAP)

 $
 7,360

 $
 5,705

 $
 1,655

 29.0
 %

 The
following table summarizes Zedge Premium gross and net revenue for the fiscal years ended July 31, 2025 and 2024.

 2025

 2024

 Zedge Premium-gross revenue ("GTV")

 $
 2,617

 $
 2,148

 $

 21.8
 %

 Zedge Premium-net revenue

 $
 1,778

 $
 1,196

 $

 48.7
 %

 Gross margin

 %

 %

 For
the fiscal year ended July 31, 2025, our advertising revenue decreased by $0.7 million, or 3.3%, from the prior year period primarily
due to the decrease in our ad inventory. This decrease was partially offset by an increase in price per advertising impression paid by
the advertisers on our platform.

 For
the fiscal year ended July 31, 2025, our subscription revenue increased by $0.7 million, or 17.1%, from the prior year period primarily
due to the growth in lifetime subscriptions. Subscription billings increased by $1.7 million, or 29.0%, to $7.4 million in fiscal 2025
from $5.7 million in fiscal 2024.

 For
the fiscal year ended July 31, 2025, our other revenue increased by $0.6 million, or 45.5%, from the prior year period. The increase
in fiscal 2025 was primarily due to Zedge Premium net revenue growth which increased $0.6 million, or 48.7%, compared to fiscal 2024.
Zedge Premium gross margin was 68% in fiscal 2025 compared to 56% in fiscal 2024. We introduced certain generative AI features in our
Zedge App in fiscal 2024 which contributed in part to the higher gross margin in fiscal 2025 as we keep 100% of the associated revenue,
i.e. no royalty payment owed to the content creators.

 For
the fiscal year ended July 31, 2025, digital goods and services revenue decreased by $1.3 million, or 37.1%, from the prior year period
primarily due to the 27.0% decrease in GuruShots' MAP year over year.

 Direct
cost of revenues. Direct cost of revenues consists primarily of content hosting, content serving and filtering, and data analytic
tools, excluding amortization of capitalized software and technology development costs for both internal used software and software to
be sold, leased, or marketed.

 2025

 2024

 Direct cost of revenues

 $
 1,841

 $
 1,859

 $
 (18
)

 -1.0
 %

 6.3
 %

 6.2
 %

 Direct
cost of revenues in fiscal 2025 decreased by $18,000, or 1.0%, compared to fiscal 2024 primarily due to the savings from continuing optimizing
of our backend infrastructure. Direct cost of revenues as percentage of revenue remained relatively flat year over year at about 6.2%

 Selling,
general and administrative expense. Selling, general and administrative expense ("SG&A") consists mainly of personnel
related expenses, user acquisition costs, stock-based compensation expense (as discussed below), third-party payment processing fees
related to in-app purchases ("platform fees"), marketing, consulting, professional fees, software licensing fees, recruiting
fees, facilities and public company related expenses.

 2025

 2024

 Selling, general and administrative

 $
 27,187

 $
 25,625

 $
 1,562

 6.1
 %

 92.5
 %

 85.2
 %

 SG&A
expense in fiscal 2025 increased by $1.6 million, or 6.1%, compared to fiscal 2024. The increase was primarily due to the increase in
user acquisition costs, platform fee, consulting, professional fees, software licensing fees offset by the decrease in personnel related
expenses primarily from the corporate restructuring implemented in January 2025. We ramped up paid user acquisition for our Zedge App
significantly but scaled back paid user acquisition for GuruShots in fiscal 2025 when compared to fiscal 2024. As a percentage of revenue,
SG&A expense was 92.5% in fiscal 2025 compared to 85.2% in fiscal 2024.

 Our
headcount was 82 and 99 as of July 31, 2025 and 2024, respectively. The reduction in our headcount can be attributed to the corporate
restructuring implemented in January 2025. The majority of our employees are based in Lithuania and Israel.

 SG&A
expense also includes stock-based compensation expense including equity grants to employees and consultants, as well as stock issuances
to pay for board compensations and 401(k) matching contributions. Certain stock options, deferred stock unit and restricted stock grants
are more fully described in Note 13, Stock-Based Compensation, to the Consolidated Financial Statements in Part II, Item 8 of
this Annual Report on Form 10-K.

 The
following table summarizes stock-based compensation expense for the fiscal year ended July 31, 2025 and 2024.

 2025

 2024

 Stock-based compensation expense

 $
 1,445

 $
 2,141

 $
 (696
)

 -32.5
 %

 Stock-based
compensation expense in fiscal 2025 decreased by $0.7 million, or 32.5%, compared to fiscal 2024. The decrease was primarily attributable
to lower aggregate fair value related to the deferred stock units ("DSUs") granted in November 2024 compared to that of the
DSUs granted in September 2021 which were being recognized on a graded vesting basis over the requisite service periods. Additionally,
our stock-based compensation expense related to the retention bonuses in connection with the GuruShots acquisition were fully recognized
as of April 1, 2025, which contributed in part to the year over year decrease.

 Depreciation
and amortization. Depreciation and amortization expense consists mainly of amortization of intangible assets related to
the GuruShots (prior to the full impairment charge of $11.9 million recorded in Q2 of our fiscal 2024) and Emojipedia acquisitions, capitalized
software and technology development costs of our internal developers on various projects that we invested in specific to the various
platforms on which we operate our service.

 2025

 2024

 Depreciation and amortization

 $
 1,149

 $
 2,454

 $
 (1,305
)

 -53.2
 %

 3.9
 %

 8.2
 %

 Depreciation
and amortization expense in fiscal 2025 decreased by $1.3 million, or 53.2%, compared to fiscal 2024, primarily due to the $11.9 million
impairment charge of intangible assets recorded in Q2 of fiscal 2024 discussed below.

 Impairment
of intangible assets. We performed an impairment assessment of intangible assets of our GuruShots reporting segment in Q2 of
fiscal 2024 and determined that its fair value was approximately $0 and recorded a full impairment charge of $11.9 million, as more fully
described in Note 7, Intangible Assets, Net and Goodwill, to the Consolidated Financial Statements in Part II, Item 8 of this
Annual Report on Form 10-K for additional information.

 Restructuring
charges. In fiscal 2025, we recorded approximately $1.6 million in restructuring charges primarily consisting of severance and
employee benefits in connection with the global restructuring implemented in January 2025, as more fully described in Note 18 Restructuring
and Other Related Charges to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

 Loss
on disposal of property and equipment. In fiscal 2025, we incurred a $21,000 loss on disposal of property and equipment from
the closing of our office in Norway in connection with the restructuring implemented in January 2025, as more fully described in
Note 18 Restructuring and Other Related Charges to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report
on Form 10-K

 Impairment
of capitalized software and technology development costs. In fiscal 2025, we wrote off approximately $0.8 million of GuruShots'
capitalized software and technology development costs in connection with the global restructuring implemented in January 2025, as
more fully described in Note 18 Restructuring and Other Related Charges to the Consolidated Financial Statements in Part II, Item
8 of this Annual Report on Form 10-K.

 Interest
and other income, net.

 2025

 2024

 Interest and other income, net

 $

 $

 $

 6.4
 %

 2.3
 %

 2.1
 %

 The
increase in interest and other income, net in fiscal 2025 when compared to fiscal 2024 was primarily due to lower interest yield we received
on our cash in fiscal 2025, which was partially offset by $65,000 in interest expense related to the $2 million term loan which was repaid
in November 2023 and the $50,000 impairment charge related to our investment in a privately held company of which the carrying value
was reduced to $0 as of October 30, 2023.

 Net
loss resulting from foreign exchange transactions. Net loss resulting from foreign exchange transactions is comprised of gains
and losses generated from movements in Norwegian Krone ("NOK") and Euros ("EUR") relative to the U.S. Dollar,
including gains or losses from our currency hedging activities.

 2025

 2024

 Net loss resulting from foreign exchange transactions

 $
 (151
)

 $
 (190
)

 $

 20.5
 %

 -0.5
 %

 -0.6
 %

 nm-not meaningful

 In
fiscal 2025 and 2024, net loss resulting from foreign exchange transactions decreased by $39,000 to $151,000 in fiscal 2025 from $190,000
in fiscal 2024 primarily due to unfavorable FX movement related to our NOK and EUR hedging activities in both periods.

 We
recognized a mark-to-market gain of $18,000 and a mark-to-market loss of $51,000 from NOK and EUR hedging activities, respectively, as
of July 31, 2025 and July 31, 2024, as more fully described in Note 4, Derivative Instruments, to the Consolidated Financial Statements
in Part II, Item 8 of this Annual Report on Form 10-K.

 Following
closure of our Norwegian office, we do not anticipate further USD to NOK hedging activities.

taxes benefit. During fiscal 2025, we had a pretax loss of $2.7 million in respect of which we accrued $0.3 million in income
tax benefit, an effective tax rate of 11.9% which is lower than the statutory rate primarily due to adjustments related to certain stock-based
compensation and the inclusion for U.S. tax purposes, of foreign earnings partially offset by state taxes and foreign tax differential.

fiscal 2024 we had a pretax loss of about $11.4 million in respect of which we accrued $2.2 million in income tax benefit, an effective
tax rate of 19.3% which is lower than the statutory rate primarily due to the addition of $185,000 in valuation allowances related to
certain stock-based compensation and the inclusion for U.S. tax purposes, of foreign earnings partially offset by state taxes and foreign
tax differential.

 See
Note 12, Income Taxes, to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K, for information
regarding income taxes.

 2025

 2024

 Income taxes benefit

 $
 (325
)

 $
 (2,198
)

 $
 1,873

 85.2
 %

 -1.1
 %

 -7.3
 %

 Comparison
of our Segment Results of Operations

 The
following table presents the results for our Zedge Marketplace and GuruShots segment income (loss) from operations for the period indicated:

 2025

 2024

 (in thousands,
 except percentages)

 Segment income (loss) from operations:

 Zedge Marketplace:

 $
 2,338

 $
 5,667

 $
 (3,329
)

 -58.7
 %

 GuruShots:

 (5,570
)

 (17,472
)

 11,902

 68.1
 %

 Total

 $
 (3,232
)

 $
 (11,805
)

 $
 8,573

 72.6
 %

 In
fiscal 2025, our income from operations related to the Zedge Marketplace decreased 58.7% to $2.3 million from $5.7 million in fiscal
2024, primarily due to higher users acquisition costs and higher other expenses incurred in the current period. Additionally, we recorded
$1.2 million restructuring charges in fiscal 2025 which contributed in part to the decrease in the segment income from operation related
to the Zedge Marketplace.

 In
fiscal 2025, our loss from operations related to GuruShots decreased 68.1% to $5.6 million from $17.5 million in fiscal 2024, primarily
due to the $11.9 million impairment charge of intangible assets recorded in the prior period.

 LIQUIDITY
AND CAPITAL RESOURCES

 General

 At
July 31, 2025, we had cash and cash equivalents of $18.6 million and working capital (current assets less current liabilities) of $14.7
million, compared to $20.0 million and $17.7 million, respectively, at July 31, 2024. We expect that our cash and cash equivalents on
hand and our cash flow from operations will be sufficient to meet our anticipated cash requirements for the twelve-month period ending
October 28, 2026, including payment of our recently announced quarterly dividend. We maintain a revolving credit facility of $4 million,
including a foreign exchange contract facility of up to $7.5 million with WAB, as discussed below under Financing Activities and in Note
16, Revolving Credit Facility, to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

 The
following table presents selected cash flow information for the periods indicated:

 2025

 2024

 Cash flows provided by (used in):

 Operating activities

 $
 3,422

 $
 5,850

 $
 (2,428
)

 Investing activities

 (549
)

 (1,194
)

 Financing activities

 (4,371
)

 (2,643
)

 (1,728
)

 Effect of exchange rate changes on cash and cash equivalents

 (140
)

 (Decrease) increase in cash and cash equivalents

 $
 (1,389
)

 $
 1,873

 $
 (3,262
)

 Operating
Activities

 Our
cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and
the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable.

 Net
cash provided by operating activities was $3.4 million for the fiscal year ended July 31, 2025, primarily consisting of a $2.4 million
net loss, adjusted for certain non-cash items, which included a $0.5 million impairment charge (net of tax effect) of capitalized software
and technology development costs, $1.1 million of amortization, depreciation, impairment of ROU assets and loss on disposal of property
and equipment, $1.5 million of stock-based compensation expense, and a net increase in operating assets and liabilities of $2.7 million,
primarily from the deferred revenue associated with the lifetime subscriptions sold in fiscal 2025.

 Net
cash provided by operating activities was $5.8 million for the fiscal year ended July 31, 2024, primarily consisting of $9.2 million
of net loss, adjusted for certain non-cash items, which included a $9.5 million impairment charge (net of tax effect) of intangible assets,
$2.5 million of amortization, depreciation, and write-offs, $2.1 million of stock-based compensation expense, and a net increase in operating
assets and liabilities of $0.9 million.

in Trade Accounts Receivable

 Gross
trade accounts receivables were $3.2 million and $3.4 million at July 31, 2025 and 2024, respectively. Our cash collections in fiscal
2025 and fiscal 2024 were $30.0 million and $29.2 million, respectively.

 Investing
Activities

 Cash
used in investing activities in the fiscal years ended July 31, 2025 and 2024 consisted of capitalized software and technology development
costs related to various projects that we invested in specific to the various platforms on which we operate our service.

 Financing
Activities

 On
October 28, 2022, we entered into an Amended Loan Agreement with Western Alliance Bank. Pursuant to the Amended Loan Agreement, Western
Alliance Bank agreed to provide the Company with a new term loan facility in the maximum principal amount of $7 million for a four-year
term and a $4 million revolving credit facility for a two-year term. Pursuant to the Amended Loan Agreement, $2 million was advanced
in a single-cash advance on the closing date on October 28, 2022.

 At
our request, the maximum principal amount of the term loan was reduced from $7 million to $2 million as of May 11, 2023. On November
15, 2023, the Company voluntarily prepaid the entire principal amount of $2 million in accordance with the terms of the Amended Loan
Agreement without incurring any prepayment penalty.

 On
October 28, 2024, the revolving credit facility was renewed for another four years term, please see Note 16, Revolving Credit Facility,
to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

fiscal 2025 we repurchased (a) 219,573 shares of our Class B Common Stock outstanding for approximately $0.8 million pursuant to the
2021 Share Repurchase Plan and (b) 1,104,142 shares of our Class B Common Stock outstanding for approximately $3.6 million pursuant to
the 2024 Share Repurchase Plan. As of July 31, 2025, the Company had remaining authorization of approximately $1.4 million for future
share repurchases under the 2024 Repurchase Plan.

fiscal 2024, we repurchased 211,495 shares of our Class B Common Stock outstanding for approximately $0.6 million pursuant to the 2021
Share Repurchase Plan.

 On
September 9, 2024, our Board approved the $5 million 2024 Share Repurchase Plan.

 In
fiscal 2025, we received proceeds of $62,126 from the exercise of stock options in respect of which we issued 105,144 shares of Class
B common stock. In fiscal 2024, we received proceeds of $2,975 from the exercise of stock options in respect of which we issued 2,500
shares of Class B common stock.

 In fiscal 2025 and fiscal 2024, we purchased
6,903 shares and 6,328 shares respectively of Class B Stock from certain employees for $22,000 and $13,000 respectively, to satisfy tax
withholding obligations in connection with the vesting of restricted stock and DSUs.

 In
light of operational improvements, including consistent positive cash flow from operations and cost cutting, as well as the currently
anticipated cash needs, on October 12, 2025 our Board of Directors declared a dividend of $0.01615 per share to be paid on shares of
our Class A common stock and Class B common stock held of record on October 24, 2025, to be paid on or around November 7, 2025, as well
as the intent to pay a regular quarterly dividend so long as the conditions that allow for it continue.

 Concentration
of Credit Risk and Significant Customers

 Historically,
we have had very little or no bad debt, which is common with other platforms of our size that derive their revenue from digital advertising,
as we aggressively manage our collections and perform due diligence on our customers. In addition, the majority of our revenue is derived
from large, credit-worthy customers, e.g. Google and Meta, and we terminate our services with smaller customers immediately upon balances
becoming past due. Since these smaller customers rely on us to derive their own revenue, they generally pay their outstanding balances
on a timely basis.

 We
routinely assess the financial strength of our customers. As a result, we believe that our accounts receivable credit risk exposure is
limited and have not experienced significant write-downs in our accounts receivable balances. In the fiscal year ended July 31, 2025,
two largest customers represented 37% and 6% of our revenue. In the fiscal year ended July 31, 2024, two largest customers represented
31% and 9% of our revenue. At July 31, 2025, two largest customers represented 48% and 13% of our accounts receivable balance and at
July 31, 2024, three largest customers represented 37%, 15% and 10% of our accounts receivable balance. All of these significant customers
are advertising exchanges operated by leading companies, and the receivables represent many smaller amounts due from advertisers.

 Reportable
Segments

 Our business consists of two reportable segments:
Zedge Marketplace and GuruShots, as further discussed in Note 15, Segment and Geographic Information.

 Recent
Accounting Pronouncements

 See
Note 1, Description of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements in Part
II, Item 8 of this Annual Report, for discussion of new accounting pronouncements.

 Item
7A. Quantitative and Qualitative Disclosures about Market Risks.

 Smaller
reporting companies are not required to provide the information required by this item.

 Item
8. Financial Statements and Supplementary Data.

 The
Consolidated Financial Statements of the Company and the report of the independent registered public accounting firm thereon starting
on page F-1 are included herein.

 Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 None.

 Item
9A. Controls and Procedures.

 Evaluation
of Disclosure Controls and Procedures

 Our
Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Annual
Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure
controls and procedures were effective as of July 31, 2025.

 Report
of Management on Internal Control over Financial Reporting

 We,
the management of Zedge, Inc. and subsidiaries (the "Company"), are responsible for establishing and maintaining adequate
internal control over financial reporting of the Company.

 The
Company's internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities
Exchange Act of 1934 as a process designed by, or under the supervision of, the Company's principal executive and principal financial
officers and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance
with generally accepted accounting principles in the United States and includes those policies and procedures that:

 1.

 Pertain
 to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets
 of the Company;

 2.

 Provide
 reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
 generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with
 authorizations of management and directors of the Company; and

 3.

 Provide
 reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's
 assets that could have a material effect on the financial statements.

 Management
has assessed the effectiveness of the Company's internal control over financial reporting as of July 31, 2025. In making this assessment,
the Company's management used the criteria established in Internal Control — Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission.

 Under
the supervision and with the participation of our management, including our principal executive officer and principal financial officer,
we conducted an evaluation of our internal control over financial reporting, as prescribed above, as of July 31, 2025. Based on our evaluation,
our principal executive officer and principal financial officer concluded that the Company's internal control over financial reporting
was effective as of July 31, 2025.

in Internal Control over Financial Reporting

 There
were no changes in our internal control over financial reporting during the fourth quarter of fiscal 2025 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.

 Item
9B. Other Information.

 None.

 Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 Not
applicable.

 Item
10. Directors and Executive Officers of the Registrant, and Corporate Governance

 The
following is a list of our directors and executive officers along with the specific information required by Rule 14a-3 of the Securities
Exchange Act of 1934:

 Executive
Officers

 Michael
Jonas – Executive Chairman

 Jonathan
Reich – Chief Executive Officer and President

 Yi
Tsai – Chief Financial Officer and Treasurer

 Directors

 Michael
Jonas, Chairman of the Board

 Howard
Jonas, Vice Chairman of the Board

 Mark
Ghermezian

 Elliot
Gibber

 Paul
Packer

 Gregory
Suess

 The
remaining information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will
be filed with the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

 Insider
Trading Policies and Procedures

We have insider trading policies and procedures that govern the purchase, sale, and other dispositions of its securities by directors,
officers, employees, and consultants, as well as our own. We believe these policies and procedures are reasonably designed to promote
compliance with insider trading laws, rules and regulations and applicable listing standards. See "Index of Exhibits" within
this Annual Report on Form 10-K for our Insider Trading Policy.

 Corporate
Governance

 We
have included as exhibits to this Annual Report on Form 10-K certificates of our Chief Executive Officer and Chief Financial Officer
certifying the quality of our public disclosure.

 We
make available free of charge through the investor relations page of our web site ( investor.zedge.net) our Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports, and all beneficial ownership reports
on Forms 3, 4 and 5 filed by directors, officers and beneficial owners of more than 10% of our equity, as soon as reasonably practicable
after such reports are electronically filed with the Securities and Exchange Commission. We have adopted codes of business conduct and
ethics for all of our employees, including our principal executive officer, principal financial officer and principal accounting officer.
Copies of the codes of business conduct and ethics are available on our web site.

 Our
web site and the information contained therein or incorporated therein are not intended to be incorporated into this Annual Report on
Form 10-K or our other filings with the Securities and Exchange Commission.

 Item
11. Executive Compensation

 The
information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with
the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The
information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with
the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

 Item
13. Certain Relationships and Related Transactions, and Director Independence

 The
information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with
the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

 Item
14. Principal Accounting Fees and Services

 The
information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with
the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

 PART
IV

 Item
15. Exhibits, Financial Statement Schedules.

 (a)

 The
 following documents are filed as part of this Report:

 1.

 Report
 of Independent Registered Public Accounting Firm on Consolidated Financial Statements

 Consolidated
Financial Statements covered by Report of Independent Registered Public Accounting Firm

 2.

 Financial
 Statement Schedule.

 All
schedules have been omitted since they are either included in the Notes to Consolidated Financial Statements or not required or not applicable.

 3.

 Exhibits.
 Exhibit Numbers 10.1, 10.6, 10.7, 10.8 and 10.9 are management contracts or compensatory plans or arrangements.

 The
exhibits listed in paragraph (b) of this item are filed, furnished, or incorporated by reference as part of this Form 10-K.

 Certain
of the agreements filed as exhibits to this Form 10-K contain representations and warranties by the parties to the agreements that
have been made solely for the benefit of the parties to the agreement. These representations and warranties:

 may
 have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which
 disclosures are not necessarily reflected in the agreements;

 may
 apply standards of materiality that differ from those of a reasonable investor; and

 were
 made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.

 Accordingly,
these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties
were made or at any other time. Investors should not rely on them as statements of fact.

 (b)

 Exhibits.

 Exhibit

Number

 Description of Exhibits

 3.01(1)

 Third Amended and Restated Certificate of Incorporation of Zedge, Inc.

 3.02(2)

 Second Amended and Restated By-Laws of Zedge, Inc.

 4.02(3)

 Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.

 10.01(4)

 2016 Stock Option and Incentive Plan, as Amended and Restated

 10.02(1)

 Transition Services Agreement

 10.03(1)

 Tax Separation Agreement

 10.04(5)

 Google Services Agreement between Zedge, Inc. and Google, Inc., dated June 18, 2014

 10.05(6)

 Marketplace for Premier Publishers Agreement between Zedge, Inc. and MoPub, Inc., dated February 20, 2013

 10.06(6)

 Zedge Holdings, Inc. 2008 Omnibus Stock Incentive Plan, as amended and restated on November 1, 2011

 10.07(1)

 Form of ISO Stock Option Agreement

 10.08(1)

 Form of Nonqualified Stock Option Agreement

 10.09(1)

 Form of Restricted Stock Agreement

 10.10(7)

 Amended and Restated Loan and Security Agreement Modification Agreement between Zedge, Inc. and Western Alliance Bank, dated October 28, 2024

 19.01*

 Insider Trading Policy

 21.01*

 Subsidiaries of the Registrant

 23.01*

 Consent of UHY, LLP, Independent Registered Public Accounting Firm

 31.01*

 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.02*

 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.01*

 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 32.02*

 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 97.01(7)

 Compensation Clawback Policy

 101.INS*

 101.SCH*

 101.CAL*

 101.DEF*

 101.LAB*

 101.PRE*

 *

 filed
 herewith.

 (1)

 by reference to Form 10-12G/A, filed June 1, 2016.

 (2)

 by reference to Form 10-K, filed October 28, 2019

 (3)

 by reference to Form 10-K/A, filed December 9, 2020.

 (4)

 by reference to the Schedule 14A, filed November 25, 2024.

 (5)

 by reference to Form 10-12G/A, filed April 25, 2016.

 (6)

 by reference to Form 10-12G/A, filed May 20, 2016.

 (7)

 by reference to Form 10-K, filed October 29, 2024.

 Item 16.
Form 10-K Summary.

 None.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report
on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

 INC.

 By:

 /s/
 Jonathan Reich

 Jonathan
 Reich

 Chief Executive Officer

 Date:
October 28, 2025

 Pursuant
to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.

 Signature

 Titles

 Date

 /s/
 Jonathan Reich

 Chief
 Executive Officer

 Jonathan
 Reich

 (Principal
 Executive Officer)

 /s/
 Yi Tsai

 Chief
 Financial Officer

 Yi
 Tsai

 (Principal
 Financial Officer and

 Principal
 Accounting Officer)

 /s/
 Michael Jonas

 Michael
 Jonas

 /s/
 Howard S. Jonas

 Howard
 S. Jonas

 /s/
 Mark Ghermezian

 Mark
 Ghermezian

 /s/
 Elliot Gibber

 Elliot
 Gibber

 /s/
 Paul Packer

 Paul
 Packer

 /s/
 Gregory Suess

 Gregory
 Suess

 Zedge,
Inc.

to Consolidated Financial Statements

 Report of Independent Registered Public Accounting Firm- UHY LLP (PCAOB ID 1195)

 Consolidated Balance Sheets as of July 31, 2025 and 2024

 Consolidated Statements of Operations and Comprehensive Loss for the Fiscal Years Ended July 31, 2025 and 2024

 Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended July 31, 2025 and 2024

 Consolidated Statements of Cash Flows for the Fiscal Years Ended July 31, 2025 and 2024

 Notes to Consolidated Financial Statements

 F- 1

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Board of Directors and

 Stockholders
of Zedge, Inc.

 Opinion
on the Financial Statements

 We have audited the accompanying consolidated
balance sheets of Zedge, Inc. (the Company) as of July 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive
loss, stockholders' equity, and cash flows for each of the fiscal years in the two-year period ended July 31, 2025, and the related
notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of July 31, 2025 and 2024, and the results of its operations
and its cash flows for each of the fiscal years in the two-year period ended July 31, 2025, in conformity with accounting principles
generally accepted in the United States of America.

 Basis for Opinion

 These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on the Company's consolidated 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 audits to obtain reasonable assurance about whether the consolidated 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 consolidated 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
consolidated 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 consolidated financial statements. We believe that our audits
provide a reasonable basis for our opinion.

 Critical Audit Matters

 The critical audit matter communicated below
is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated
to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

 F- 2

 Impairment of Capitalized Software and Technology
Development Costs

 As described in Note 18 to the consolidated financial
statements, the Company implemented a corporate restructuring plan aimed to reduce costs throughout the organization. As part of the
restructuring plan, the Company initiated a strategic reassessment of its GuruShots' operations, resulting in a full impairment
of its capitalized software and technology development costs. As a result, an impairment charge of $0.8 million was recorded in the Company's
consolidated statements of operations and comprehensive loss for the fiscal year ended July 31, 2025.

 The principal considerations for our determination
that performing procedures relating to the impairment charge is a critical audit matter are the significant assumptions required by management
in estimating the net realizable value, including estimated sales proceeds less costs to sell.

 Our audit procedures related to estimated sales
proceeds less costs to sell included the following, among others:

 Evaluated the reasonableness of management's estimates
of net realizable value of capitalized software and technology development costs, including testing assumptions supporting management's
estimated sales proceeds less costs to sell, testing the completeness and accuracy of underlying data, and performing a retrospective
review of the estimates.

 Tested the design and implementation of controls over management's
process for developing the impairment charges, including controls over the review of estimated sales proceeds less costs to sell, and
the completeness and accuracy of underlying data.

 /s/
 UHY LLP

 We
have served as the Company's auditor since 2023.

 New
York, New York

 F- 3

INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

 2025

 2024

 Assets

 Current assets:

 Cash and cash equivalents

 $
 18,609

 $
 19,998

 Trade accounts receivable

 3,164

 3,406

 Prepaid expenses and other current assets

 Total Current assets

 22,444

 23,997

 Property and equipment, net

 1,290

 2,306

 Intangible assets, net

 4,922

 5,369

 1,931

 1,824

 Deferred tax assets, net

 4,823

 4,344

 Other assets

 Total assets

 $
 35,654

 $
 38,195

 Liabilities and stockholders' equity

 Current liabilities:

 Trade accounts payable

 $
 1,471

 $
 1,113

 Accrued expenses and other current liabilities

 2,867

 2,969

 Deferred revenues

 3,425

 2,168

 Total Current liabilities

 7,763

 6,250

 Deferred revenues--non-current

 1,937

 Other liabilities

 Total liabilities

 9,753

 7,299

 Commitments and contingencies (Note 10)

 Stockholders' equity:

 Preferred stock, $.01 par value; authorized shares— 2,400; no shares issued and outstanding

 -

 -

 Class A common stock, $.01 par value; authorized shares— 2,600; 525 shares issued and outstanding at July 31, 2025 and 2024

 Class B common stock, $.01 par value; authorized shares— 40,000; 15,073 shares issued and 12,692 shares outstanding at July 31, 2025, and 14,866 shares issued and 13,815 outstanding at July 31, 2024

 Additional paid-in capital

 49,768

 48,263

 Accumulated other comprehensive loss

 ( 1,509
)

 ( 1,832
)

 Accumulated deficit

 ( 15,505
)

 ( 13,113
)

 Treasury stock, 2,381 shares at July 31, 2025 and 1,051 shares at July 31, 2024, at cost

 ( 7,009
)

 ( 2,576
)

 Total stockholders' equity

 25,901

 30,896

 Total liabilities and stockholders' equity

 $
 35,654

 $
 38,195

 See
Accompanying Notes to Consolidated Financial Statements.

 F- 4

INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

 Year ended July 31,

 2025

 2024

 $
 29,398

 $
 30,091

 Costs and expenses:

 Direct cost of revenues (excluding amortization of capitalized software and technology development costs which is included below)

 1,841

 1,859

 Selling, general and administrative

 27,187

 25,625

 Depreciation and amortization

 1,149

 2,454

 Impairment of intangible assets

 -

 11,958

 Restructuring charges

 1,605

 -

 Loss on disposal of property and equipment

 -

 Impairment of capitalized software and technology development costs

 -

 Loss from operations

 ( 3,232
)

 ( 11,805
)

 Interest and other income, net

 Net loss resulting from foreign exchange transactions

 ( 151
)

 ( 190
)

 Loss before income taxes

 ( 2,717
)

 ( 11,369
)

 Income taxes benefit

 ( 325
)

 ( 2,198
)

 $
 ( 2,392
)

 $
 ( 9,171
)

 Other comprehensive income (loss):

 Foreign currency translation adjustment

 ( 295
)

 Total other comprehensive income (loss)

 ( 295
)

 Total comprehensive loss

 $
 ( 2,069
)

 $
 ( 9,466
)

 Loss per share attributable to Zedge, Inc. common stockholders:

 Basic and diluted

 $
 ( 0.17
)

 $
 ( 0.65
)

 Weighted-average number of shares used in calculation of loss per share:

 Basic and diluted

 13,736

 14,092

 See
Accompanying Notes to Consolidated Financial Statements.

 F- 5

INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

 Class A

 Common Stock

 Class B

 Common Stock

 Additional Paid-in

 Accumulated Other Comprehensive

 Accumulated

 Treasury Stock

 Total Stockholders'

 Amount

 Amount

 Capital

 Loss

 Deficit

 Amount

 Equity

 Balance – July 31, 2023

 $

 14,634

 $

 $
 46,122

 $
 ( 1,537
)

 $
 ( 3,942
)

 $
 ( 1,930
)

 $
 38,864

 Exercise of stock options

 -

 -

 -

 -

 -

 -

 -

 Stock-based compensation

 -

 -

 2,138

 -

 -

 -

 -

 2,141

 Purchase of treasury stock

 -

 -

 -

 -

 -

 -

 -

 ( 646
)

 ( 646
)

 Foreign currency translation adjustment

 -

 -

 -

 -

 -

 ( 295
)

 -

 -

 -

 ( 295
)

 -

 -

 -

 -

 -

 -

 ( 9,171
)

 -

 -

 ( 9,171
)

 Balance – July 31, 2024

 14,866

 48,263

 ( 1,832
)

 ( 13,113
)

 1,051

 ( 2,576
)

 30,896

 Exercise of stock options

 -

 -

 -

 -

 -

 -

 Stock-based compensation

 -

 -

 1,444

 -

 -

 -

 -

 1,445

 Purchase of treasury stock

 -

 -

 -

 -

 -

 -

 -

 1,330

 ( 4,433
)

 ( 4,433
)

 Foreign currency translation adjustment

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 2,392
)

 -

 -

 ( 2,392
)

 Balance – July 31, 2025

 $

 15,073

 $

 $
 49,768

 $
 ( 1,509
)

 $
 ( 15,505
)

 2,381

 $
 ( 7,009
)

 $
 25,901

 See
Accompanying Notes to Consolidated Financial Statements.

 F- 6

INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 Year ended July 31,

 2025

 2024

 Operating activities

 $
 ( 2,392
)

 $
 ( 9,171
)

 Adjustments to reconcile net loss to net cash provided by operating activities:

 Depreciation

 Amortization of intangible assets

 1,382

 Amortization of capitalized software and technology development costs

 1,016

 Loss on disposal of property and equipment

 -

 Amortization of deferred financing costs

 -

 Stock-based compensation

 1,445

 2,141

 Impairment charge of capitalized software and technology development costs

 -

 Impairment charge of ROU asset

 -

 Impairment charge of intangible assets

 -

 11,958

 Impairment of investment in privately-held company

 -

 Deferred income taxes

 ( 479
)

 ( 2,502
)

 Change in assets and liabilities:

 Trade accounts receivable

 ( 523
)

 Prepaid expenses and other current assets

 ( 78
)

 ( 24
)

 Other assets

 ( 94
)

 Trade accounts payable and accrued expenses

 Deferred revenues

 2,263

 Net cash provided by operating activities

 3,422

 5,850

 Investing activities

 Capitalized software and technology development costs

 ( 466
)

 ( 1,147
)

 Purchase of property and equipment

 ( 83
)

 ( 47
)

 Net cash used in investing activities

 ( 549
)

 ( 1,194
)

 Financing activities

 Purchase of treasury stock in connection with share buyback program and stock awards vesting

 ( 4,433
)

 ( 646
)

 Prepayment of term loan

 -

 ( 2,000
)

 Proceeds from exercise of stock options

 Net cash used in financing activities

 ( 4,371
)

 ( 2,643
)

 Effect of exchange rate changes on cash and cash equivalents

 ( 140
)

 Net (decrease) increase in cash and cash equivalents

 ( 1,389
)

 1,873

 Cash and cash equivalents at beginning of period

 19,998

 18,125

 Cash and cash equivalents at end of period

 $
 18,609

 $
 19,998

 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 Cash payments made for income taxes

 $

 $

 Cash payments made for interest expenses

 $
 -

 $

 See
Accompanying Notes to Consolidated Financial Statements.

 F- 7

INC.

 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 Note
1—Description of Business and Summary of Significant Accounting Policies

 Description
of Business

 Zedge
builds digital marketplaces and friendly competitive games around content that people use to express themselves. Our leading products
include Zedge Ringtones and Wallpapers, which we refer to as our "Zedge App," a freemium digital content marketplace offering
mobile phone wallpapers, video wallpapers, ringtones, and notification sounds as well as pAInt, a generative AI wallpaper and ringtone
maker, GuruShots, a skill-based photo challenge game, and Emojipedia, the #1 trusted source for 'all things emoji'. Our vision
is to enable and connect creators who enjoy friendly competitions with a community of prospective consumers in order to drive commerce.
Except where the context clearly indicates otherwise, the terms the "Company," "Zedge" "we," "us"
or "our" refer to Zedge, Inc. and its consolidated subsidiaries.

 The
Company is headquartered in New York, New York, and has international office locations in Lithuania and Israel.

 Our
fiscal year ends on July 31 of each calendar year. Each reference below to a fiscal year refers to the fiscal year ending in the
calendar year indicated (e.g., fiscal 2025 refers to the fiscal year ended July 31, 2025).

 The
Spin-Off

 The
Company was formerly a majority-owned subsidiary of IDT Corporation ("IDT"). On June 1, 2016, IDT spun off its interest in
the Company to IDT's stockholders and the Company became an independent public company through a pro rata distribution of the Company's
common stock held by IDT to IDT's stockholders (the "Spin-Off").

 Principles
of Consolidation

 The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.

 Reportable
Segments

 The
Company has two reportable segments: Zedge Marketplace and GuruShots, as further discussed in Note 15, Segment and Geographic Information.

 Use
of Estimates

 The
preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and
liabilities. Actual results could differ materially from our estimates due to risks and uncertainties, including uncertainty in the economic
environment due to various global events. To the extent that there are material differences between these estimates and actual results,
our financial condition or operating results will be affected. We base our estimates on past experience and other assumptions that we
believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.

 Revenue
Recognition

 We
generate revenue from the following sources: (1) Advertising; (2) Paid Subscription; (3) Other revenues including primarily Zedge Premium
(the section of our marketplace where we offer premium content for purchase), and (4) Digital Goods and Services. The substantial majority
of our revenue is generated from selling our advertising inventory ("Advertising Revenue") to advertising networks and advertising
exchanges. Our weekly, monthly, yearly and life-time subscriptions allow users to prepay a fixed fee to remove unsolicited advertisements
from our Zedge App. In Zedge Premium, we receive 30 % of the net purchase price, after payment of fees to Google Play or the App Store,
when users purchase licensed content using Zedge Credits or unlock licensed content by watching a video or taking a survey on Zedge Premium.
Sales and other similar taxes are excluded from revenues.

 F- 8

 Advertising
Revenue: We generate the bulk of our revenue from selling the Zedge Marketplace's advertising inventory to advertising
networks and advertising exchanges.

 Advertising Networks. An advertising network is a third-party relationship where buyers of advertising inventory go to purchase either specific targeted inventory or a large scale of inventory at a set price. Advertising Networks serve as an indirect source of advertising fill to a variety of branded ad campaigns and performance-based ad campaigns.

 Advertising Exchanges. An advertising exchange is similar to an advertising network, except that the exchange typically bids in real-time for advertising inventory. Advertisers may utilize an exchange when looking for scale or specific audiences, and accept that the price will vary based on when and how much volume of inventory they wish to buy.

 We
recognize advertising revenue as advertisements are delivered to users through impressions or ad views (depending on the terms agreed
upon with the advertiser). For in-app display ads, in-app offers, engagement advertisements and other advertisements, our performance
obligations are satisfied over the life of the relevant contract (i.e., over time), with revenue being recognized as advertising units
are delivered, which is Zedge's performance obligation. The advertiser may compensate us on a cost-per-impression, cost-per-click,
cost-per-action basis.

 Paid
Subscription Revenue: Beginning in January 2019 and April 2023, we started offering paid
subscription services sold through Google Play and the App Store, respectively. When a customer subscribes, they execute a clickthrough
agreement with Zedge outlining the terms and conditions between Zedge and the subscriber. Google Play and the App Store process subscription
prepayment on Zedge's behalf, and retain a fee of up to 30 %. Subscriptions are nonrefundable after a period of seven days. Paid
subscriptions are automatically renewed at expiration unless cancelled by subscribers. While customers can cancel at any time, they will
not receive any refund, and will continue to receive the ad-free service until the end of the subscription period. The duration of these
contracts is daily, and revenue for these contracts is recognized on a daily ratable basis. The payment terms for subscriptions sold through
Google Play is net 30 days after month-end. The payment terms for subscriptions sold through the App Store is net 45 days after month-end. We
recognize subscription revenue ratably over the subscription periods which range from weekly, monthly, yearly and lifetime with lifetime
subscriptions deemed to have an estimated lifespan of 30 months.

 Zedge
Premium: Zedge Premium is our marketplace where artists and brands can market,
distribute and sell their digital content to our users. The content owner sets the price and end users can purchase the content by paying
for it with Zedge Credits, our closed virtual currency. Alternatively, the content owner may opt to place some items behind video ad gates,
in which case end users can acquire the content by watching a brief video ad. A user can earn Zedge Credits when taking specific actions
such as watching rewarded videos or completing electronic surveys. Alternatively, users can buy Zedge Credits with an in-app purchase.
If a user purchases Zedge Credits, Google Play or the App Store retains a fee of 30 % of the purchase price. When a user purchases Zedge
Premium content using Zedge credits or watching a rewarded video, the artist or brand receives 70 % of the actual revenue after the Google
Play or App Store fee ("Royalty Payment") and we receive the remaining 30 %, which is recognized as revenue.

 Digital
Goods and Services: GuruShots generates the substantial majority of its revenues by selling virtual goods (e.g. power-ups and
in-game resources) to its users. GuruShots distributes its game to users through mobile platforms such as Apple's App Store and
Google Play, as well as via the internet. Through these platforms, users can download the free-to-play game and can purchase virtual
goods which are redeemed in the game to enhance their game-playing experience.

 Players
can pay for their virtual item purchases through various widely accepted payment methods offered in the game. Payments from players for
virtual goods are required at the time of purchase, are non-cancellable and relate to non-cancellable contracts that specify GuruShots'
obligations and cannot be redeemed for cash nor exchanged for anything other than virtual goods within the GuruShots' game. The
purchase price is a fixed amount which reflects the consideration that GuruShots expects to be entitled to receive in exchange for use
of virtual goods by its customers. The platform providers collect proceeds from the game players and remit the proceeds to GuruShots
after deducting their respective platform fees. Sales and other taxes collected from customers on behalf of governmental authorities
are accounted for on a net basis and are not included in revenues or operating expenses. GuruShots' performance obligation is to
display the virtual goods in game play based upon the nature of the virtual item.

 F- 9

categorizes its virtual goods as consumable. GuruShots' game sells only consumable virtual goods. Consumable virtual goods represent
items that can be consumed by a specific player action and do not provide the player any continuing benefit following consumption. GuruShots
has determined - through a review of game play behavior - that players generally do not purchase additional virtual goods until their
existing virtual goods balances have been substantially consumed. This review includes an analysis of game players' historical
play behavior, purchase behavior, and the amounts of virtual goods outstanding. Revenue is recognized once the virtual goods are sold.
GuruShots monitors its analysis of customer play behavior on a quarterly basis.

 As
discussed above, GuruShots concluded that revenue related to the promise of enhancing users' gaming experience through in-game
resource purchases should be recognized ratably over the period of benefit period (i.e., the period over which the enhanced gaming experience
is provided). However, for practical reasons, GuruShots does not defer the portion of revenue attributable to future uses of resources
as of any given balance sheet date. This is due to the duration of the enhanced gaming experience that is provided being, in substantially
all of the cases, and applying the portfolio approach (as GuruShots reasonably expects that the effects on the financial statements of
applying Accounting Standards Codification ("ASC") 606 guidance to the portfolio would not differ materially from applying
ASC 606 guidance to the individual contracts), a very short time frame ranging from a few hours to less than two weeks. Therefore, the
result of recognizing the related revenues at the point in time which user first consumes the respective resource would yield a result
that is not substantially different then ratable recognition over the period of benefit. Accordingly, revenue is recognized once the
virtual goods are sold.

 Gross
Versus Net Revenue Recognition

 We
report revenue on a gross or net basis based on management's assessment of whether we act as a principal or agent in the transaction.
To the extent we act as the principal, revenue is reported on a gross basis. To the extent we act as the agent, revenue is reported on
a net basis. The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we
control the good or service prior to transfer to the customer.

 We
generally report our advertising revenue net of amounts due to agencies and brokers because we are not the primary obligor in the relevant
arrangements, we do not finalize the pricing, and we do not establish or maintain a direct relationship with the advertiser.

is primarily responsible for providing the virtual goods, has control over the content and functionality of games and has the discretion
to establish the virtual goods' prices. Therefore, GuruShots is the principal and, accordingly revenues are recorded on a gross
basis. Payment processing fees paid to platform providers are recorded within selling, general and administrative expenses.

 We
report subscription revenue gross of the fee retained by Google Play and the App Store, as the subscriber is our customer in the contract
and we control the service prior to the transfer to the subscriber.

 With
respect to Zedge Premium, Zedge, as provider of the platform, is effectively operating as a broker or intermediary connecting online
content providers with the end user. While we use gross revenue (net of the 30 % fee retained by Google Play or the App Store when
a user purchases Zedge Credits) as a performance metric, we record revenue on a net basis from Zedge Premium which consists of a 30 %
platform fee, in-app purchases profit and breakage. Content providers are paid their portion of revenue which is a 70 % share of
the gross revenue calculated.

 Concentration
of Credit Risk and Significant Customers

 Financial
instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents and trade
accounts receivable. We hold cash and cash equivalents at several major financial institutions, which may exceed FDIC insured limits.
Historically, the Company has not experienced any losses due to such concentration of credit risk. The Company's temporary cash
investments policy is to limit the dollar amount of investments with any one financial institution and monitor the credit ratings of
those institutions. While we may be exposed to credit losses due to the nonperformance of the holders of its deposits, we do not expect
the settlement of these transactions to have a material effect on its results of operations, cash flows or financial condition.

 We
routinely assess the financial strength of our customers. As a result, we believe that our accounts receivable credit risk exposure is
limited and have not experienced significant write-downs in our accounts receivable balances. In the fiscal year ended July 31, 2025,
two largest customers represented 37 % and 6 % of our revenue. In the fiscal year ended July 31, 2024, two largest customers represented
 31 % and 9 % of our revenue. At July 31, 2025, two customers represented 48 % and 13 % of our accounts receivable balance and at July 31,
2024, three customers represented 37 %, 15 % and 10 % of our accounts receivable balance. All of these significant customers are advertising
exchanges operated by leading companies, and the receivables represent many smaller amounts due from advertisers.

 F- 10

 Direct
Cost of Revenues

 Direct
cost of revenues for the Company consists of fees paid to third parties that provide the Company with internet hosting, content serving
and filtering, data analytic tools and marketing automation services. Such costs are charged to expense as incurred.

 Property
and Equipment, net

 Property
and equipment is recorded at cost less accumulated depreciation and amortization, and depreciated or amortized on a straight-line basis
over its estimated useful lives, which range as follows: capitalized software and technology development costs— 3 years; and other— 5
years. Other is comprised of furniture and fixtures, office equipment, video conference equipment, computer hardware and computer software.
Normal repairs and maintenance are expensed as incurred. Replacement property and equipment is capitalized and the property and equipment
accounts are relieved of the items being replaced or disposed of if no longer of value. The related cost and accumulated depreciation
of the disposed assets are eliminated and any gain or loss on disposition is included in the results of operations in the year of disposal.

Software and Technology Development Costs-Internal-Use Software related to Zedge Marketplace

 Software
and technology development activities generally fall into three stages:

 Planning
 Stage activities include developing a project or business plan that outlines the goals for the content distribution platform
 or new product or service; determining the functionality; identifying hardware and software applications that will achieve functionality,
 security, and traffic flows; and selecting the internal resources that will be assigned to the project as well as the external vendors
 where applicable.

 Application
 and Infrastructure Development Stage activities focus on acquiring or developing hardware and software to operate a content distribution
 platform or new product and service; and

 Post-Implementation/Operating
 Stage activities address training, administration, maintenance, and all other activities to operate an existing content distribution
 platform or new product or service.

the Planning Stage, we charge all costs to expense as incurred.

the Application and Infrastructure Development Stage, we begin to capitalize costs when the project has been properly authorized and
we determine that completion is probable. If a project is subsequently cancelled prior to placement in service, costs that have been
capitalized to date will be reviewed for potential impairment. Capitalization ceases no later than the point at which a computer software
project is substantially complete and ready for its intended use. Amortization, which is generally over three years, begins for each
project when the code is ready for use, whether or not it is actually placed in service at that time (an exception being if the project's
functionality completely depends on the completion of another project, in which case, amortization begins when that other project is
ready for use).

the Post-Implementation/Operating Stage, we expense training costs and maintenance costs as incurred. However, upgrades and enhancements,
defined as modifications to existing internal-use software that result in additional functionality (modifications to enable the software
to perform tasks that it was previously incapable of performing, normally requiring new software specifications and perhaps a change
to all or part of the existing software specifications) are treated as though they were new projects, and are assessed utilizing the
same stages and criteria on a project-by-project basis. As such, internal costs incurred for upgrades and enhancements are expensed or
capitalized based on the requirements noted above, while costs incurred for maintenance are expensed as incurred. These projects are
tracked individually, such that the beginning and ending of the capitalization can be appropriately established, as well as the amounts
capitalized therein.

of these costs is included in depreciation and amortization in the consolidated statements of operations and comprehensive loss.

Software and Technology Development Costs-Software to Be Sold, Leased, or Marketed related to GuruShots

 We
expense research and development costs incurred in the process of software development until technological feasibility has been established
for the product. Once technological feasibility has been established, software costs are capitalized until the product is available for
general release to customers. Costs incurred from the time that the product is available for general release to customers are expensed
as incurred. Costs related to upgrades and enhancements are capitalized only if they result in added functionality or marketability of
the original product.

 F- 11

 The
amortization of these capitalized costs begins when a product is available for general release to customers and is computed on a product-by-product
basis at a rate not less than straight-line basis over the product's estimated economic life. At each balance sheet date, we compare
the unamortized capitalized costs to the net realizable value of that product and write off the amount by which the unamortized capitalized
costs of that product exceed its net realizable value.

of these costs is included in depreciation and amortization in the consolidated statements of operations and comprehensive loss.

 We
evaluate these long-lived assets for impairment whenever circumstances arise that indicate the carrying amount of an asset may not be
recoverable. The Company's strategic reassessment of GuruShots' operations in connection with the restructuring initiative
resulted in a $ 0.8 million impairment of capitalized software and technology development costs which is recorded in the Company's
consolidated statements of operations and comprehensive loss for the fiscal year ended July 31, 2025. See Note 18, Restructuring,
Impairments, and Related Charges, for additional information.

Assets, Net

 We
test the recoverability of its intangible assets (see Note 7, Intangible Assets, Net and Goodwill, for additional information)
with finite useful lives whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.
We test for recoverability based on the projected undiscounted cash flows to be derived from such asset. If the projected undiscounted
future cash flows are less than the carrying value of the asset, we will record an impairment loss, if any, based on the difference between
the estimated fair value and the carrying value of the asset. We generally measure fair value by considering sale prices for similar
assets or by discounting estimated future cash flows from such asset using an appropriate discount rate. Cash flow projections and fair
value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect,
we may be required to record impairments in future periods and such impairments could be material.

assets are carried at cost, less accumulated amortization, unless a determination has been made that their value has been impaired. Intangible
assets are amortized on a straight-line basis over their estimated useful lives of between five to fifteen years. We review identifiable
amortizable intangible assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying
value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted
cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of
the carrying value of the asset over its fair value.

 We
performed an interim impairment test during the second quarter of fiscal 2024 and concluded that the carrying value of the intangible
assets of GuruShots reporting unit exceeded its fair value. Accordingly, we recorded a non-cash impairment charge of $ 11.9 million during
the second quarter of fiscal 2024. See Note 7, Intangible, Net and Goodwill, for additional information.

represents the excess of purchase price and related costs over the fair value of assets acquired and liabilities assumed of the business
acquired. Under ASC 350, Intangibles-Goodwill and Other, goodwill is not amortized, but instead is tested for impairment annually,
or if certain circumstances indicate a possible impairment may exist.

 We
test goodwill for impairment on the first day of the fourth fiscal quarter or upon the occurrence of events or changes in circumstances
that indicate that the asset might be impaired. Goodwill is assigned to our reporting units, which are our operating segments, or components
of an operating segment, that constitute a business for which discrete financial information is available, and for which segment management
regularly reviews the operating results. During the annual impairment review process we have the option to first perform a qualitative
assessment (commonly referred to as "step zero") over relative events and circumstances to determine whether it is more likely
than not that the fair value of a reporting unit is less than its carrying value, or to perform a quantitative assessment ("step
one") where we estimate the fair value of each reporting unit using primarily a market capitalization approach.

 We
would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however,
the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. Additionally, we consider income
tax effects from any tax-deductible goodwill on the carrying amount of its reporting unit when measuring the goodwill impairment loss,
if applicable.

 F- 12

 Investments

 From
time to time, when opportunities present themselves, the Company considers strategic investments in privately-held companies. The Company's
sole investment at August 1, 2024, is a simple agreement for future equity (SAFE) in which the Company holds the right to receive equity
at some later date and upon certain events. Investments in SAFE's are carried at cost due to insufficient observable market inputs
to determine fair value. The Company adjusts the carrying value of its investments to fair value upon observable transactions for identical
or similar investments of the same issuer or upon impairment (referred to as the measurement alternative). All gains and losses on investments,
realized and unrealized, are recognized in interest and other income, net in the consolidated statements of operations and comprehensive
loss.

 The
Company periodically evaluates the carrying value of its investments, when events and circumstances indicate that the carrying amount
of the investment may not be recovered. The Company estimates the fair value of the investment to assess whether impairment losses shall
be recorded using Level 3 inputs. This investment includes the Company's holding that is not exchange traded and therefore not
supported with observable market prices; hence, the Company may determine the fair value by reviewing equity valuation reports, current
financial results, long-term plans of the private company, the amount of cash that the privately-held company has on-hand, the ability
to obtain additional financing and overall market conditions in which the private company operates or based on the price observed from
the most recent completed financing.

the first quarter of fiscal 2024, we reduced the carrying value of this SAFE investment to $ 0 and recorded $ 50,000 loss in the accompanying
consolidated financial statements.

 Cash
and Cash Equivalents

 The Company considers all highly liquid investments
with an original maturity of three months or less when purchased to be cash equivalents. There were $ 13.9 million and $ 10.9 million in
cash equivalents as of July 31, 2025 and 2024, respectively.

Taxes

 The
accompanying consolidated financial statements include provisions for federal, state and foreign income taxes. We recognize deferred
tax assets and liabilities for the future tax consequences attributable to temporary differences between the consolidated financial statements
carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is provided when it is more
likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets
depends on the generation of future taxable income during the period in which related temporary differences become deductible. We consider
the scheduled reversal of deferred tax assets and liabilities, projected future taxable income and tax planning strategies in its assessment
of a valuation allowance. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the enactment date of such change.

 We
use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. We determine whether
it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation
processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition
threshold, we presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant
information. Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit
to recognize in the consolidated financial statements. The tax position is measured at the largest amount of benefit that is greater
than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts
recognized in the consolidated financial statements will generally result in one or more of the following: an increase in a liability
for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred
tax liability.

 We
classify interest and penalties on income taxes as a component of income tax expense included in the provision for (benefit from) income
taxes line item in the accompanying consolidated statements of operations and comprehensive loss.

 Contingencies

 We
accrue for loss contingencies when both (a) information available prior to issuance of the consolidated financial statements indicates
that it is probable that a liability had been incurred at the date of the consolidated financial statements and (b) the amount of
loss can reasonably be estimated. When we accrue for loss contingencies and the reasonable estimate of the loss is within a range, we
record its best estimate within the range. When no amount within the range is a better estimate than any other amount, we accrue the
minimum amount in the range. We disclose an estimated possible loss or a range of loss when it is at least reasonably possible that a
loss may have been incurred.

 F- 13

 Earnings
Per Share ("EPS")

 Basic
earnings per share is computed by dividing net income attributable to all classes of common stockholders of the Company by the weighted
average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed
in the same manner as basic earnings per share, except that the number of shares is increased to include restricted stock still subject
to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect
of such increase is anti-dilutive.

 As
disclosed in Note-9 Equity, the rights of holders of Class A common stock and Class B common stock are identical except for certain
voting and conversion rights and restrictions on transferability. As such, the Company is not required to break out EPS by class.

 The
weighted-average number of shares used in the calculation of basic and diluted earnings per share attributable to the Company's
common stockholders consists of the following (in thousands):

 Fiscal Year Ended

 2025

 2024

 Basic weighted-average number of shares

 13,736

 14,092

 Effect of dilutive securities:

 Stock options

 -

 -

 Non-vested restricted Class B common stock

 -

 -

 Deferred stock units

 -

 -

 Diluted weighted-average number of shares

 13,736

 14,092

 The
following shares were excluded from the diluted earnings per share computation because their inclusion would have been anti-dilutive
(in thousands):

 Fiscal Year Ended

 2025

 2024

 Stock options

 Non-vested restricted Class B common stock

 Deferred stock units

 Shares excluded from the calculation of diluted earnings per share

 1,034

 1,299

 For
the fiscal years ended July 31, 2025 and 2024, the diluted loss per share equals basic loss per share because the Company incurred a
net loss during these periods and the impact of the assumed exercise of stock options and vesting of restricted stock and deferred stock
units ("DSUs") would have been anti-dilutive.

 Stock-Based
Compensation

 We
account for our share-based compensation arrangements in accordance with ASC 718, Compensation-Stock Compensation ("ASC
718") which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and
directors based on estimated fair values on the grant date. Compensation cost for awards is recognized using the straight-line method
over the vesting period or the graded vesting method if awards with market or performance conditions include graded vesting features,
or if an award includes both a service condition and a market or performance condition. Stock-based compensation is included in selling,
general and administrative expense in the consolidated statements of operations and comprehensive loss. We account for forfeitures for
all awards as they occur.

 F- 14

 Fair
Value Measurements

 Fair
value of financial and non-financial assets and liabilities is defined as an exit price, which is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier
hierarchy for inputs used to measure fair value, which prioritizes the inputs to valuation techniques used to measure fair value, is
as follows:

 Level 1 –

 quoted
 prices (unadjusted) in active markets for identical assets or liabilities.

 Level 2 –

 quoted
 prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly
 or indirectly through market corroboration, for substantially the full term of the financial instrument.

 Level 3 –

 unobservable
 inputs based on the Company's assumptions used to measure assets and liabilities at fair value.

 A
financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant
to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment,
and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

 Derivative
Instruments – Foreign Exchange Forward Contracts

 The
Company's earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, primarily the
U.S. Dollar ("USD") -NOK and USD-EUR exchange rates. The Company's risk management policy allows for the use of derivative
financial instruments to prudently manage foreign currency exchange rate exposure. Foreign currency derivative activities are subject
to the management, direction and control of the executive management. Foreign exchange forward contracts are recognized on the consolidated
balance sheets at their fair value in "Prepaid expenses and other receivables" or "Accrued expenses and other current
liabilities", and changes in fair value are recognized in "Net loss resulting from foreign exchange transactions" in
the consolidated statements of operations and comprehensive loss.

 Functional
Currency

 The
U.S. Dollar is the Company's functional currency. The functional currencies for the Company's subsidiaries that operate outside
of the United States are USD for GuruShots, NOK for Zedge Europe AS and EUR for Zedge Lithuania UAB which is a wholly-owned subsidiary
of Zedge Europe AS, which are the currencies of the primary economic environments in which they primarily expend cash. The Company translates
assets and liabilities denominated in foreign currencies to U.S. Dollars at the exchange rate in effect as of the consolidated financial
statement date, and translates accounts from the consolidated statements of operations and comprehensive loss using the weighted average
exchange rate for the period. Gains or losses resulting from foreign currency translations are recorded in "Accumulated other comprehensive
loss" in the accompanying consolidated balance sheets. Foreign currency transaction gains and losses including gains and losses
from currency exchange rate changes related to intercompany receivables and payables are reported in "Net (loss) income resulting
from foreign exchange transactions" in the accompanying consolidated statements of operations and comprehensive loss.

 Allowance
for Credit Losses

 The
allowance for credit losses reflects the Company's best estimate of probable losses inherent in the accounts receivable balance.
The allowance is determined based on known troubled accounts, historical experience and other currently available evidence. Bad debts
are written-off upon final determination that the trade accounts will not be collected. There were no allowance for credit losses as
of July 31, 2025 and 2024.

 Comprehensive
Income (Loss)

 Comprehensive
income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss)
refers to gains and losses that are recorded as an element of stockholders' equity and are excluded from net income (loss). The
Company's other comprehensive income (loss) and accumulated other comprehensive income (loss) are comprised principally of foreign
currency translation adjustments.

 F- 15

 Operating
and Finance Leases

 The
Company has operating leases primarily for office space. The determination of whether an arrangement is a lease or contains a lease is
made at inception by evaluating whether the arrangement conveys the right to use ("ROU") an identified asset and whether
the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset. Operating leases
are included in other assets, accrued expenses and other current liabilities, and other liabilities, on the Company's consolidated
balance sheets. The Company does not have any finance leases.

 Leases
with a term greater than one year are recognized on the consolidated balance sheets in the line items cited above. The Company has elected
not to recognize leases with terms of one year or less on the consolidated balance sheets. Lease obligations and their corresponding
ROU assets are recorded based on the present value of lease payments over the expected lease term. As the interest rate implicit in lease
contracts is typically not readily determinable, the Company utilizes the materially approximate incremental borrowing rate, which is
the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic
environment. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will
exercise that option.

 Restructuring
Charges

 The
restructuring charges incurred by the Company in fiscal 2025 consist primarily of cash expenditures for compensation and severance payments,
employee benefits, payroll taxes and related facilities restructuring costs associated with the Company's workforce reduction implemented
in the second quarter of fiscal 2025. Employee termination benefits are recognized as a liability at estimated fair value, at the time
of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service
period. Ongoing termination benefits are recognized as a liability at estimated fair value when the amount of such benefits is probable
and reasonably estimable. Charges related to facilities restructuring actions are comprised of costs related to early termination of
the lease agreement and impairment of the right-of-use asset in connection with the abandonment of the property. We recorded an impairment
of ROU asset of $ 140,000 in the fourth quarter of fiscal 2025. See Note 18, Restructuring, Impairments, and Related Charges, for
additional information. The related early lease termination costs have not been determined as of July 31, 2025. See Note 11, Operating
Leases, for additional information.

 Recently
Adopted Accounting Pronouncements

 In
November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The guidance in ASU 2023-07 seeks to improve reportable
segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU
require a public entity to disclose the following: significant segment expenses that are regularly provided to the chief operating decision
maker ("CODM") and included within each reported measure of segment profit or loss; an amount for other segment items by
reportable segment and a description of its composition; and the title and position of the CODM and how the CODM uses the reported measure(s)
of segment profit or loss in assessing segment performance and deciding how to allocate resources. This ASU requires public entities
to provide all annual disclosures about a reportable segment's profit or loss and assets currently required by Topic 280 in interim
periods. ASU 2023-07 clarifies that if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance
and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. ASU 2023-07
is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15,
2024. The Company adopted ASU 2023-07 on February 1, 2025 and the adoption did not have a material effect on the Company's consolidated
financial statements.

 In
December 2023, the FASB issued ASU 2023-09, Income Taxes (ASC 740): Improvements to Income Tax Disclosures, which includes amendments
that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and
income taxes paid by jurisdiction. The amendments are effective for all public entities for fiscal years beginning after December 15,
2024, and early adoption is permitted. The Company elected to early adopt ASU 2023-09 on August 1, 2024 retrospectively and the adoption
has an effect on the Company's disclosures on income taxes (Note 12).

 F- 16

 Recent
Accounting Pronouncements (Issued Not Yet Adopted)

Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.
 In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses,
which requires public entities to disclose, in the notes to the financial statements, specified information about certain costs and expenses
at each interim and annual reporting period. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods
within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the disclosure requirements
related to the new standard.

 All
other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not
expected to have a material impact on our financial position or results of operations.

 We
reviewed all other accounting pronouncements issued during fiscal 2025 and concluded that they were not applicable to the Company.

 Note
2—Revenue

 Disaggregation
of Revenue

 The
following table summarizes revenue by type of monetization for the Zedge Marketplace and GuruShots for the periods presented:

 2025

 2024

 Advertising revenue

 $
 20,338

 $
 21,042

 Paid subscription revenue

 5,093

 4,349

 Other revenues

 1,782

 1,225

 Total Zedge Marketplace revenue

 27,213

 26,616

 Digital goods and services

 2,185

 3,475

 Total revenue

 $
 29,398

 $
 30,091

 Contract
Balances

 Contract
liabilities consist of deferred revenue, which are recorded for payments received in advance of the satisfaction of performance obligations.

 The
Company records deferred revenues related to the unsatisfied performance obligations with respect to subscription revenue. As of July
31, 2025, the Company's deferred revenue balance related to subscriptions was approximately $ 5.1 million, representing approximately
 984,000 active subscribers, including approximately 693,000 lifetime subscriptions that we rolled out in August 2023. As of July 31,
2024, the Company's deferred revenue balance related to subscriptions was approximately $ 2.9 million, representing approximately
 669,000 active subscribers, including approximately 210,000 lifetime subscriptions. As of July 31, 2023, the Company's deferred
revenue balance related to subscriptions was approximately $ 1.5 million, representing approximately 638,000 active subscribers.

 The
Company also records deferred revenues when users purchase or earn Zedge Credits. Unused Zedge Credits represent the value of the Company's
unsatisfied performance obligation to its users. Revenue is recognized when Zedge App users redeem Zedge Credits to acquire Zedge Premium
content or upon expiration of the Zedge Credits upon 180 days of account inactivity. As of July 31, 2025, 2024 and 2023, the Company's
deferred revenue balance related to Zedge Premium was approximately $ 248,000, $ 251,000 and $ 255,000, respectively.

 The
amount of deferred revenue recognized in fiscal 2025 that was included in the deferred revenue balance at July 31, 2024 was $ 1.9 million.
The amount of deferred revenue recognized in fiscal 2024 that was included in the deferred revenue balance at July 31, 2023 was $ 2.1
million.

 F- 17

 Unsatisfied
Performance Obligations

 Substantially
all of the Company's unsatisfied performance obligations relate to contracts with an original expected length of 30 months or less.

 Significant
Judgments

 The
advertising networks and advertising exchanges to which the Company sells its inventory track and report the impressions to Zedge and
Zedge recognizes revenues based on these reports. The networks and exchanges base their payments off of those reports and Zedge independently
compares the data to each of the client sites to validate the imported data and identify any differences. The number of impressions delivered
by the advertising networks and advertising exchanges is determined at the end of each month, which resolves any uncertainty in the transaction
price during the reporting period.

 For
lifetime subscriptions, revenue is recognized over the estimated retention period during which the customer is expected to
benefit from use of the Zedge app, which management has determined to be 30 months based on historical usage and retention patterns.
This estimate represents a significant judgement and is reviewed periodically for changes in customer behavior or other relevant
factors.

 Note
3—Fair Value Measurements

 The
fair value measurement of cash equivalents invested money market funds is based on quoted market prices in active markets (Level 1).
The fair value measurement of foreign exchange forward contracts is based on observable market-based inputs principally derived from
or corroborated by observable market data (Level 2).

 The
following table presents the balance of assets and liabilities measured at fair value on a recurring basis (in thousands):

 July 31, 2025

 Total

 Level 1

 Level 2

 Level 3

 Assets:

 Cash equivalents

 $
 13,907

 $
 13,907

 $
 -

 $
 -

 -

 -

 Total

 $
 13,925

 $
 13,907

 $

 $
 -

 Liabilities:

 $
 -

 $
 -

 $
 -

 $
 -

 July 31, 2024

 Total

 Level 1

 Level 2

 Level 3

 Assets:

 Cash equivalents

 $
 10,881

 $
 10,881

 $
 -

 $
 -

 -

 -

 -

 -

 Total

 $
 10,881

 $
 10,881

 $
 -

 $
 -

 Liabilities:

 $

 $
 -

 $

 $
 -

 Fair
Value of Other Financial Instruments

 The
Company's other financial instruments at July 31, 2025 and 2024 included prepaid expenses and other current assets, and trade accounts
payable and accrued expenses and other liabilities are stated at their carrying value, which approximates fair value due to the short
time to the expected receipt or payment date.

 Note
4—Derivative Instruments

 The primary risk managed by the Company using derivative instruments
is foreign exchange risk. Foreign exchange forward contracts are entered into as hedges against unfavorable fluctuations in the USD to
NOK and USD to EUR exchange rates. The Company is party to a Foreign Exchange Agreement with Western Alliance Bank allowing the Company
to enter into foreign exchange contracts under its revolving credit facility with the bank (see Note 16 Revolving Credit Facility).
The Company does not apply hedge accounting to these contracts because these are not qualified as hedging accounting pursuant to ASC 815;
therefore the changes in fair value are recorded in the consolidated statements of operations and comprehensive loss. By using derivative
instruments to mitigate exposures to changes in foreign exchange rates, the Company is exposed to credit risk from the failure of the
counterparty to perform under the terms of the contract. The credit or repayment risk is minimized by entering into transactions with
high-quality counterparties.

 F- 18

 In light of the corporate restructuring implemented in January 2025
that resulted in the closure of our Norway operations, we are no longer exposed to the USD to NOK foreign exchange risk. As such, there
are no outstanding NOK forward contracts and the only outstanding EUR contract at July 31, 2025 was as follows:

 Settlement Date

 U.S. Dollar Amount

 EUR Amount

 Aug-25

 425,000

 387,456

 Total

 425,000

 387,456

 The
fair value of outstanding derivative instruments recorded in the accompanying consolidated balance sheets were as follows (in thousands):

 2025

 2024

 Assets and Liabilities Derivatives:

 Balance Sheet Location

 Derivatives not designated or not qualifying as hedging instruments

 Prepaid expenses and other current assets

 $

 $
 -

 Accrued expenses and other current liabilities

 $
 -

 $

 The
effects of derivative instruments on the consolidated statements of operations and comprehensive loss were as follows (in thousands):

 Amount of Income (Loss) Recognized on Derivatives

 2025

 2024

 Derivatives not designated or not qualifying as hedging instruments

 Location of income (loss) recognized on derivatives

 Net loss resulting from foreign exchange transactions

 $
 ( 245
)

 Note
5—Property and Equipment, Net

 Property
and equipment, net consisted of the following (in thousands):

 2025

 2024

 Capitalized software and technology development costs

 $
 9,596

 $
 10,588

 Other

 9,955

 11,141

 Less accumulated depreciation and amortization

 ( 8,665
)

 ( 8,835
)

 Total

 $
 1,290

 $
 2,306

 Depreciation
and amortization expense pertaining to property and equipment was approximately $ 0.7 million and $ 1.1 million for the fiscal years ended
July 31, 2025 and 2024, respectively.

 F- 19

 Note
6—Business Combination and Asset Acquisition

Acquisition - On April 12, 2022, the Company consummated the acquisition of 100 % of the outstanding equity securities of GuruShots,
Ltd., an Israeli company that operates a platform used for its competitive photography game available across iOS, Android and the web.
The acquisition was effected pursuant to a Share Purchase Agreement (the "SPA") between the Company, GuruShots and the holders
of the GuruShots equity interests. This acquisition was accounted for as a business combination under the acquisition method of accounting
and the results of operations of GuruShots have been included in the Company's results of operations as of the acquisition date.

 The
purchase price for the equity securities of GuruShots consists of approximately $ 18 million in cash paid at closing and contingent payments
(the "Earnout") of up to a maximum of $ 8.4 million due on each of the first and second anniversaries from the closing, payable
either in cash or Class B common stock of the Company, or a combination thereof, at the Company's discretion, and subject to GuruShots
achieving specified financial targets set forth in the SPA. The fair value of the earnout amount at the acquisition date was estimated
at $ 5.9 million based on a Monte Carlo simulation model in an option pricing framework, whereby a range of possible scenarios were simulated.
This fair value was reduced from $ 5.9 million to $ 1.9 million as of July 31, 2022 and further reduced to $ 0 as of July 31, 2023.

 Under
the SPA, the Company agreed to make certain minimum investments in user acquisition for GuruShots during the period covered by the Earnout,
subject to, among other conditions, the acquired users generating minimum levels of Return On Ad Spend ("ROAS") as set forth
in the SPA. The Company was prepared to make the minimum investment, however, GuruShots was unable to achieve those minimum ROAS target
conditions. GuruShots' financial performance during the period from the April 2022 acquisition through July 31, 2023, was materially
impacted by a combination of industry specific, macroeconomic, and geopolitical challenges that contributed to negatively impacting ROAS.
The conditions for payment of the Earnout for the first and second anniversaries from the closing were not met and no Earnout payment
was made. One of the prior owners of GuruShots objected to that determination.

 The
parties to the SPA made various representations, warranties and covenants subject to the qualifications and limitations agreed by the
respective parties in the SPA. On September 26, 2023, the Company noticed a claim for indemnification regarding material inaccuracies
in certain of those representations and warranties.

 In
the first quarter of fiscal 2024, the Company and the prior owners of GuruShots agreed to withdraw and settle claims related to the purchase
agreement pursuant to which the Company purchased the equity of GuruShots, including any dispute about minimum user acquisition spend
for GuruShots, any right of the prior owners to an earnout payment and the Company's claim for indemnification related to alleged
misrepresentations in the agreement.

 In
addition to the cash payment at closing and the contingent Earnout, the Company has committed to a retention pool of $ 4 million in cash
and 626,242 shares of the Company Class B common stock with a grant date fair value of $ 4 million for GuruShots' founders and employees
that will be payable or vest, as applicable, over three years from April 1, 2022, based on the beneficiaries thereof remaining employed
by the Company or a subsidiary. In fiscal 2025 and 2024, 180,563 shares and 182,656 shares were vested with a fair value of $ 529,000
and $ 446,000, respectively. See Note 13, Stock-Based Compensation, for additional information. In aggregate, there were 568,837
shares vested over the three years period from April 1, 2022, 57,405 shares less than the initial share bonus pool due to termination
of employment of eligible employees. In fiscal 2025 and 2024, we paid $ 1.1 million and $ 1.3 million in cash retention bonuses, respectively.
The aggregated cash retention bonus payments were $ 0.5 million lower than the initial cash bonus pool due to termination of employment
of eligible employees.

 Identified
intangible assets consist of trade names, technology and customer relationships. The fair value of intangible assets and the determination
of their respective useful lives were made in accordance with ASC 805 and are outlined in the table below:

 (Dollar Amounts in Thousands)

 Asset Value

 Useful Life

 Identified intangible assets:

 Trade names

 $
 3,570

 12 years

 Acquired developed technology

 3,950

 5 years

 Customer relationships

 7,800

 10 years

 Total identified intangible assets

 $
 15,320

 The
Company's initial fair value estimates related to the various identified intangible assets were determined under various valuation
approaches including the relief-from-royalty method and multi-period excess earnings. These valuation methods require management to project
revenues, operating expenses, working capital investment, capital spending and cash flows for GuruShots over a multiyear period, as well
as determine the weighted average cost of capital to be used as a discount rate.

 F- 20

 The
Company amortizes its intangible assets assuming no residual value over periods in which the economic benefit of these assets is consumed.
As of January 31, 2024, the Company wrote off the remaining carrying value of the intangible assets and recorded impairment charge of
$ 11.9 million as discussed below in Note 7, Intangible Assets, Net and Goodwill.

 Note
7—Intangible Assets, Net and Goodwill

assets are initially recorded at fair value and stated net of accumulated amortization and impairments. The Company amortizes its intangible
assets that have finite lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic
benefit of the asset is expected to be utilized. Amortization is recorded over the estimated useful lives ranging from 5 to 15 years.
The Company evaluates the recoverability of its definite lived intangible assets whenever events or changes in circumstances or business
conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash
flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates
the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of after-tax cash flows
to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, the Company uses market
participant assumptions pursuant to ASC 820, Fair Value Measurements.

the second quarter of fiscal 2024, in connection with its company-wide strategic planning process as well as evaluating the current operating
performance of its GuruShots reporting unit, including product enhancement and marketing, the Company reassessed its short-term and long-term
commercial plans for this business. The Company made certain operational and strategic decisions to invest in, and increase its focus
on, the long-term success of this business, which resulted in the Company significantly reducing its forecasted revenues and operating
results.

 As
a result, the Company identified indicators of impairment and performed an undiscounted cash flow analysis pursuant to ASC 360, Property,
Plant, and Equipment - Overall, to determine if the cash flows expected to be generated by the GuruShots business over the estimated
remaining useful life of its primary assets were sufficient to recover the carrying value of the asset group. Based on this analysis,
the undiscounted cash flows were not sufficient to recover the carrying value of the long-lived assets. As a result, the Company was
required to perform Step 3 of the impairment test and determine the fair value of the asset group. To estimate the fair value of the
asset group, the Company utilized the income approach, which is based on a discounted cash flow (DCF) analysis and calculates the fair
value by estimating the after-tax cash flows attributable to the asset group and then discounting the after-tax cash flows to present
value using a risk-adjusted discount rate. Assumptions used in the DCF require significant judgment, including judgment about appropriate
discount rates, growth rates, and the amount and timing of expected future cash flows. The forecasted cash flows were based on the Company's
most recent strategic plan and for periods beyond the strategic plan, the Company's estimates were based on assumed growth rates
expected as of the measurement date. The Company believes its assumptions were consistent with the plans and estimates that a market
participant would use to manage the business. The discount rate used was intended to reflect the risks inherent in future cash flow projections
and was based on an estimate of the weighted average cost of capital (WACC) of market participants relative to the asset group. The Company
used a discount rate of 30.5 %. Based on this analysis, the fair value of the GuruShots asset group was below its carrying value. The
Company determined that the fair value of this asset group was approximately zero and the carrying value of the long-lived assets was
fully impaired.

 To
record the adjustment of the carrying value of the asset group to fair value, the Company recorded an impairment charge of $ 11.9 million
during the second quarter of fiscal 2024. The impairment charge was allocated to the long-lived assets on a pro-rata basis as follows:
$ 2.5 million to acquired developed technology, $ 6.4 million to customer relationships, and $ 3.0 million to trade names. The Company believes
its assumptions used to determine the fair value of the asset group were reasonable.

 The
following table presents the detail of intangible assets, net as of July 31, 2025 and 2024 (in thousands):

 July 31, 2025

 July 31, 2024

 Gross Carrying Value

 Accumulated Amortization

 Allocation of Impairment Loss

 Net Carrying Value

 Gross Carrying Value

 Accumulated Amortization

 Allocation of Impairment Loss

 Net Carrying Value

 Emojipedia.org and other internet domains acquired

 $
 6,711

 $
 1,789

 $
 -

 $
 4,922

 $
 6,711

 $
 1,342

 $
 -

 $
 5,369

 Acquired developed technology

 -

 -

 -

 -

 3,950

 1,422

 2,528

 -

 Customer relationships

 -

 -

 -

 -

 7,800

 1,403

 6,397

 -

 Trade names

 -

 -

 -

 -

 3,570

 3,033

 -

 Total intangible assets

 $
 6,711

 $
 1,789

 $
 -

 $
 4,922

 $
 22,031

 $
 4,704

 $
 11,958

 $
 5,369

 F- 21

expense of intangible assets for the fiscal years ended July 31, 2025 and 2024 were approximately $ 0.4 million and $ 1.4 million,
respectively.

 Estimated
future amortization expense as of July 31, 2025 is as follows (in thousands):

 Fiscal 2026

 $

 Fiscal 2027

 Fiscal 2028

 Fiscal 2029

 Fiscal 2030

 Thereafter

 2,687

 Total

 $
 4,922

 The
Company's goodwill related to acquisitions is carried on the balance sheet of Zedge Europe AS. The table below reconciles the change
in the carrying amount of goodwill for the period from July 31, 2023 to July 31, 2025:

 Carrying Amounts

 Balance as of July 31, 2023

 $
 1,961

 Impact of currency translation

 ( 137
)

 Balance as of July 31, 2024

 1,824

 Impact of currency translation

 Balance as of July 31, 2025

 $
 1,931

 Note
8—Accrued Expenses and Other Current Liabilities

 Accrued
expenses and other current liabilities consist of the following:

 2025

 2024

 Accrued payroll and bonuses

 $
 1,252

 $
 1,416

 Accrued vacation

 Accrued expenses

 Restructuring accrual and related charges (1)

 -

 Due to artists

 Operating lease liability-current portion

 Accrued payroll taxes

 Derivative liability for foreign exchange contracts

 -

 Accrued income taxes payable

 Due to related party - IDT

 Total accrued expenses and other current liabilities

 $
 2,867

 $
 2,969

 1)
 See Note 18 Restructuring, impairments, and Related Charges for more details

 F- 22

 Note
9—Equity

 Class
A Common Stock and Class B Common Stock

 The
rights of holders of Class A common stock and Class B common stock are identical except for certain voting and conversion rights and
restrictions on transferability. The holders of Class A common stock and Class B common stock have the right to receive identical dividends
per share if and when declared by the Company's Board of Directors. In addition, the holders of Class A common stock and Class
B common stock have identical and equal priority rights per share in liquidation. The Class A common stock and Class B common stock do
not have any other contractual participation rights. The holders of Class A common stock are entitled to three votes per share and the
holders of Class B common stock are entitled to one-tenth of a vote per share. Each share of Class A common stock may be converted into
 one share of Class B common stock, at any time, at the option of the holder. Shares of Class A common stock are subject to certain limitations
on transferability that do not apply to shares of Class B common stock.

 Note
10—Commitments and Contingencies

 Commitments

 In
connection with the acquisition of GuruShots, the Company (i) committed to a retention pool of $ 4 million in cash (in addition to the
$ 4 million portion of the retention pool to be paid in the Company's Class B common stock discussed in Note 13, Stock-Based
Compensation) to be paid to the founders and employees of GuruShots payable over three years from April 1, 2022 based on the beneficiaries
thereof remaining employed by the Company or a subsidiary; and (ii) agreed to invest a minimum in user acquisition in the first 24 months
following the closing subject to the acquired users generating minimum ROAS thresholds and payment of an earnout if certain growth targets
were met.

 In
April 2025, we made the final cash retention payment, and the final tranche of shares included in the retention pool vested.

 In
the first quarter of fiscal 2024, the Company and the prior owners of GuruShots agreed to withdraw and settle claims related to the purchase
agreement pursuant to which the Company purchased the equity of GuruShots, including any dispute about minimum user acquisition spend
for GuruShots, any right of the prior owners to an earnout payment and the Company's claim for indemnification related to alleged
misrepresentations in the agreement.

 Legal
Proceedings

 The Company may from time to time be subject to
claims, demands and legal proceedings that arise in the ordinary course of business. Although there can be no assurance in this regard,
the Company does not expect any of those legal proceedings to have a material adverse effect on the Company's results of operations,
cash flows or financial condition.

 Note
11—Operating Leases

 The
Company has operating leases primarily for office space located in Tel Aviv, Israel, as well as a short-term lease in Vilnius, Lithuania.

 The
Company reviews the impairment of ROU assets consistent with the approach applied for the Company's other long-lived assets. The
Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the carrying
value of the asset may not be recoverable. The assessment of possible impairment is based on the Company's ability to recover the
carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.

 In
connection with the restructuring we implemented in January 2025 (See Note 18 Restructuring, Impairments, and Related Charges
for more details), we have determined that the carrying value of the ROU asset for our office in Trondheim are not recoverable and recorded
an impairment charge of approximately $ 140,000 in the fourth quarter of fiscal 2025. Operating lease right-of-use assets recorded and
included in other assets were approximately $ 64,000 and $ 214,000 at July 31, 2025 and 2024, respectively. The remaining $ 139,000 lease
liabilities related to the office in Trondheim is included and presented under accrued expenses and other current liabilities and other
liabilities. The Company will continue to make lease payments under the lease until the end of the lease term on March 31, 2027, or sooner
upon signing of an early lease termination agreement.

 F- 23

 The
following table presents the lease-related assets and liabilities for leases recorded on the consolidated balance sheets (in thousands)
as of July 31, 2025 and 2024:

 As of July 31,

 2025

 2024

 Operating leases:

 Other assets

 $

 $

 Accrued expenses and other current liabilities

 $

 $

 Other liabilities

 Total operating lease liabilities

 $

 $

 The
following table includes the components of our occupancy costs in our consolidated statements of operations and comprehensive loss:

 Years ended July 31,

 2025

 2024

 Operating lease cost (1)

 $

 $

 Short-term lease cost

 $

 $

 Variable lease cost (2)

 $

 $

 (1)
 Operating lease costs include costs associated with fixed lease payments and index-based variable payments that qualified for lease accounting under ASC 842, Leases and complied with the practical expedients and exceptions we elected.

 (2)
 Variable lease costs include costs that were not fixed at the lease commencement date and are not dependent on an index or rate. These costs were not included in the measurement of lease liabilities and primarily include variable non-lease costs, such as utilities, real estate taxes, insurance and maintenance.

 The
following table summarizes the weighted average remaining lease term and weighted average discount rate as of July 31, 2025 and 2024:

 As of July 31,

 2025

 2024

 Weighted average remaining lease term:

 Operating leases

 1.48 years

 2.55 years

 Weighted average discount rate:

 Operating leases

 4.86
 %

 3.77
 %

 Future
minimum lease payments under non-cancellable leases at July 31, 2024 are as follows (in thousands):

 Years ending July 31,

 Operating Leases

 2026

 $

 2027

 Total future minimum lease payments

 Less imputed interest

 Total

 $

 Zedge
Lithuania UAB is the lessee under a three-year lease agreement (through October 2028) for a 3,600 square feet office space. The annual
lease cost is approximately $ 103,000, including eight parking spaces. See Note 19, Subsequent Events.

 F- 24

 Note
12—Income Taxes

 The
components of loss before income taxes are as follows (in thousands):

 2025

 2024

 Domestic

 $
 ( 3,240
)

 $
 ( 11,779
)

 Loss before income taxes

 $
 ( 2,717
)

 $
 ( 11,369
)

taxes benefit consisted of the following (in thousands):

 2025

 2024

 Current:

 $

 $

 Federal

 ( 33
)

 State

 Total current expense

 Deferred:

 Federal

 ( 406
)

 ( 2,337
)

 State

 ( 73
)

 ( 165
)

 Total deferred expense

 ( 479
)

 ( 2,502
)

 Income taxes benefit

 $
 ( 325
)

 $
 ( 2,198
)

 During the fiscal year ended July 31, 2025, the
Company has early adopted ASU 2023-09 to enhance the income taxes disclosures regarding income taxes paid and the rate reconciliation
disclosure. The income taxes paid by the Company are as follows (in thousands):

 2025

 2024

 Federal

 $

 $

 State

 Total income taxes paid

 $

 $

 Income taxes paid (net of refunds) exceeds 5 percent of total income
taxes paid (net of refunds) in the following jurisdictions (in thousands):

 2025

 2024

 State

 Minnesota

 $

 *

 Norway

 $

 *

 Lithuania

 $

 $

 *
 Jurisdiction below the threshold for the period presented.

 F- 25

 The
differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes reported were as follows (in
thousands):

 2025

 2024

 Fiscal Year ended July 31,

 $

 %

 $

 %

 Loss before income taxes

 $
 ( 2,717
)

 $
 ( 11,369
)

 U.S. Federal Statutory Tax Rate

 ( 571
)

 21.0
 %

 ( 2,387
)

 21.0
 %

 Current State and Local Income Taxes, Net of Federal Income Tax Effect

 ( 56
)

 2.1
 %

 ( 149
)

 1.3
 %

 Foreign Tax Effects

 Norway

 Statutory tax rate difference between Norway and United States

 0.0
 %

 -

 0.0
 %

 Other

 - 0.1
 %

 0.0
 %

 Lithuania

 Statutory tax rate difference between Lithuania and United States

 ( 22
)

 0.8
 %

 ( 22
)

 0.2
 %

 Other

 -

 0.0
 %

 -

 0.0
 %

 Effect of Changes in Tax Laws or Rates Enacted in the Current Period

 -

 0.0
 %

 -

 0.0
 %

 Effect of Cross-Border Tax Laws

 Global intangible low-taxed income

 - 3.3
 %

 - 0.3
 %

 Foreign-derived intangible income

 -

 0.0
 %

 ( 50
)

 0.4
 %

 Foreign Tax Credit

 -

 0.0
 %

 -

 0.0
 %

 Nontaxable or Nondeductible Items

 Share-based payment awards

 - 14.8
 %

 - 2.3
 %

 Other

 - 0.1
 %

 0.0
 %

 Changes in Valuation Allowances

 ( 185
)

 6.8
 %

 - 1.6
 %

 Other Adjustments

 - 0.4
 %

 ( 76
)

 0.7
 %

 Effective Tax Rate

 $
 ( 325
)

 11.9
 %

 $
 ( 2,198
)

 19.3
 %

 The
Company is subject to taxation in the United States and certain foreign jurisdictions. Earnings from non-U.S. activities are subject
to local country income tax.

 The
material jurisdictions where the Company is subject to potential examination by tax authorities include the United States, Norway and
Lithuania.

 The
Tax Cuts and Jobs Act of 2017 (the "Tax Act") contains a provision which subjects a U.S parent of a foreign subsidiary to
current U.S. tax on its global intangible low-taxed income ("GILTI"). The GILTI income is eligible for a deduction, which
lowers the effective tax. The Company will report the tax impact of GILTI as a period cost when incurred. Accordingly, the Company is
not providing deferred taxes for basis differences expected to reverse as GILTI.

 U.S
companies are eligible for a deduction that lowers the effective tax rate on certain foreign income. This regime is referred to as the
Foreign-Derived Intangible Income deduction ("FDII").

 F- 26

 Significant
components of the Company's deferred tax assets and are as follows (in thousands):

 2025

 2024

 Deferred tax assets:

 Depreciation and amortization

 $
 3,260

 $
 3,561

 Net operating loss carryforwards (Foreign)

 1,840

 1,840

 Net operating loss carryforwards (Federal)

 -

 Net operating loss carryforwards (State)

 Reserves and accruals

 Stock-based compensation

 Deferred revenue

 -

 Others

 Net deferred tax assets

 6,663

 6,369

 Less valuation allowance

 ( 1,840
)

 ( 2,025
)

 Total deferred tax assets

 $
 4,823

 $
 4,344

 At
July 31, 2025, the Company had available gross U.S. federal and state net operating loss ("NOL") carryforwards from domestic
operations of approximately $ 2.3 million and $ 1.3 million, respectively, to offset future taxable income. The state NOL carryforwards
will begin to expire in 2040. In addition, the Company has approximately $ 8.0 million of Foreign NOLs (Israel) which are available to
offset future taxable income in Israel without time limit.

 The
change in the valuation allowance is as follows (in thousands):

 Balance at beginning of year

 Additions related to stock-based compensation

 Deductions

 Balance at end

of year

 2025

 Reserves deducted from deferred income taxes, net:

 Valuation allowance

 $
 2,025

 $
 -

 $
 ( 185
)

 $
 1,840

 2024

 Reserves deducted from deferred income taxes, net:

 Valuation allowance

 $
 1,840

 $

 $
 -

 $
 2,025

 At
July 31, 2025 and 2024, the Company did not have any unrecognized tax benefits and does not anticipate any significant changes to the
unrecognized tax benefits within the twelve months of this reporting date. In the fiscal years ended July 31, 2025 and 2024, the Company
recorded $ 0 and $ 4,500, respectively, in interest and penalties on income taxes. At July 31, 2025 and 2024, there was no accrued interest
included in income taxes payable.

 The
Company currently remains subject to examinations of its U.S. federal, state, and foreign tax returns generally for fiscal years 2020
through 2024.

 The
Tax Cuts and Jobs Act of 2017 (TCJA) has modified the IRC 174 expenses related to research and development (R&D) for the tax years
beginning after December 31, 2021. The Company is required to capitalize the expenditures related to R&D activities and amortize
over 5 years for US activities and 15 years for non-US activities using mid-year convention. For US GAAP purposes, the Company capitalize
all R&D expenditures on the consolidated balance sheet and amortize over 3 years for book purposes. Therefore, we will have book
to tax difference in amortization expense and no additional capitalization on R&D expenditures for tax purposes under IRC 174.

 On
July 4, 2025, the One Big Beautiful Act ("OBBBA") was signed into law, which enacts significant changes to the U.S. tax and
related laws. Some of the provisions of the new tax law that affect corporations include but are not limited to expensing of domestic
specified research or experimental expenditures, increasing the limitation on the deductibility of business interest expense under IRC
§163(j) to thirty percent of EBITDA, and one hundred percent bonus depreciation on eligible property acquired after January 19,
2025. The Company is currently evaluating the impact that the new tax law will have on its financial condition and results of operations.

 F- 27

 Note
13—Stock-Based Compensation

 2016
Stock Incentive Plan

 In
November 2024, the Company's Board of Directors amended the Company's 2016 Stock Option and Incentive Plan (as amended to
date, the "2016 Incentive Plan") to increase the number of shares of the Company's Class B common stock available for
the grant of awards thereunder by an additional 100,000 shares to an aggregate of 2,631,000 shares. This amendment was ratified by the
Company's stockholders at the Annual Meeting of Stockholders held on January 15, 2025. At July 31, 2025, there were 143,000 shares
of Class B common stock available for awards under the 2016 Incentive Plan.

 Stock-based
compensation

 The
Company recognizes stock-based compensation for stock-based awards, including stock options, restricted stock and deferred stock units
based on the estimated fair value of the awards and recognized over the relevant service period and/or market conditions. The Company
estimates the fair value of stock options on the measurement date using the Black-Scholes option valuation model ("BSM").
The Company estimates the fair value of the restricted stock and DSU's with service conditions only using the current market price
of the stock. The Company estimates the fair value of the DSU's with both service and market conditions using the Monte Carlo Simulation
valuation model.

 The
Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected term of
options or awards, a risk-free interest rate and dividend yield. The Company recognizes stock-based compensation using the straight-line
method over the vesting period or the graded vesting method if awards with market or performance conditions include graded vesting features,
or if an award includes both a service condition and a market or performance condition.

 In
fiscal 2025 and fiscal 2024, the Company recognized stock-based compensation for its employees and non-employees as follows (in thousands):

 2025

 2024

 Stock-based compensation expense

 $
 1,445

 $
 2,141

 As
of July 31, 2025, the Company's unrecognized stock-based compensation expense was $ 219,000 for unvested stock options, $ 190,000
for unvested restricted stock and $ 184,000 for unvested DSUs.

 In
fiscal 2025 and fiscal 2024, restricted stock and DSUs awards with respect to 250,000 shares and 246,000 shares, respectively, vested.
In connection with this vesting, the Company purchased 6,903 shares and 6,328 shares respectively of Class B Stock from certain employees
for $ 22,000 and $ 13,000 respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock and DSUs.

 In
the fiscal years ended July 31, 2025 and 2024 there was no income tax benefit resulting from tax deductions in excess of the compensation
cost recognized for the Company's stock-based compensation.

 Stock Options

 The
Company's option awards generally have a term of 10 years from grant date, are exercisable upon vesting unless otherwise designated
for early exercise by the Board of Directors at the time of grant and are pursuant to individual written agreements. Grants generally
vest over a three-year or four -year period.

 In
fiscal years 2025 and 2024, the Compensation Committee approved grants of options to purchase 85,000 and 18,000 shares, respectively,
of the Company's Class B common stock to various executives, consultants and employees, vesting mostly over a three-year or four-year
period. Unrecognized compensation expense related to these awards granted in fiscal 2025 and 2024 were $ 163,000 and $ 32,000 respectively
based on the estimated fair value of the options on the grant dates.

 F- 28

 In
fiscal 2025, the Company received proceeds of $ 62,000 from the exercise of stock options for which the Company issued 105,000 shares
of its Class B common stock. In fiscal 2024, the Company received proceeds of $ 2,975 from the exercise of stock options for which
the Company issued 2,500 shares of its Class B common stock.

 The
Company cancelled or forfeited options grants of 5,000 shares and 5,200 shares in fiscal 2025 and fiscal 2024 respectively primarily
due to employee resignations.

 The
fair value of stock options was estimated on the date of the grant using the BSM and the assumptions in the following table. Expected
volatility is based on historical volatility of the Company's Class B common stock. The Company uses the simplified method to estimate
the expected term of the stock-based payments granted due to the limited history of the Company. The risk-free rate is based on the U.S.
Treasury yield curve in effect at the time of grant.

 The
Company used the following weighted average assumptions in its BSM pricing model:

 2025

 2024

 Expected term

 6.0 years

 6.0 years

 Volatility

 88.1
 %

 87.7
 %

 Risk free interest rate

 4.3
 %

 4.1
 %

 Dividends

 —

 —

 The
following represents option activity for the fiscal years ended July 31, 2025 and 2024, including options granted prior to our separation
from our former parent in a spin-off on June 1, 2016 and options granted under the 2016 Incentive Plan adopted on June 2, 2016:

 Stock Options

 Weighted-
 Average

Remaining

 Options

 Weighted-
 Average
 Exercise Price

 Contractual
 Term

(in years)

 Aggregate

Intrinsic Value

 Outstanding at July 31, 2023

 $
 1.79

 4.98

 2.45

 Exercised

 ( 2
)

 1.19

 Cancelled / forfeited

 ( 5
)

 1.96

 Outstanding at July 31, 2024

 $
 1.81

 4.07

 $
 1,597

 2.53

 Exercised

 ( 105
)

 0.59

 Cancelled / forfeited

 ( 5
)

 2.26

 Outstanding at July 31, 2025

 $
 2.03

 3.85

 $
 1,694

 Exercisable at July 31, 2025

 $
 1.94

 2.89

 $
 1,482

 The
following table summarizes the weighted average grant date fair value of options granted, intrinsic value of options exercised and fair
value of awards vested in the periods indicated:

 2025

 2024

 (in thousands except per share amounts)

 Weighted average grant date fair value of options granted

 $
 1.92

 $
 1.84

 Intrinsic value of options exercised

 $

 $

 Fair value of awards vested

 $

 $

 F- 29

 At
July 31, 2025, there was approximately $ 219,000 of total unrecognized compensation cost related to non-vested stock options, which is
expected to be recognized over a weighted-average period of 2.8 years.

 At
July 31, 2024, there was approximately $ 185,000 of total unrecognized compensation cost related to non-vested stock options, which is
expected to be recognized over a period of 1.9 years.

 Restricted
Stock

 In
fiscal 2023, in connection with the GuruShots acquisition, the Company issued 626,242 shares of the Company's Class B common stock
with a grant date fair value of $ 4 million to the founders and employees as a retention bonus pool which is managed by a trustee based
in Israel. These shares shall vest, in equal tranches, over three years assuming that the recipients remain employed by the Company or
a subsidiary through the vesting dates. In fiscal 2025 and 2024, the Company has amortized $ 0.8 million and $ 1.2 million in stock-based
compensation expenses related to these shares. In fiscal 2024 and 2023, 6,262 shares and 51,143 were forfeited due to resignations. There
was no forfeiture in fiscal 2025.

 At
July 31, 2025, there were 77,000 non-vested restricted shares of the Company's Class B common stock. At July 31, 2025, there was
$ 190,000 of total unrecognized compensation cost related to these non-vested restricted shares, which is expected to be recognized over
a weighted-average period of 1.5 years.

 At
July 31, 2024, there were 297,000 non-vested restricted shares of the Company's Class B common stock. At July 31, 2024, there was
$ 1.1 million of total unrecognized compensation cost related to these non-vested restricted shares, which is expected to be recognized
over a weighted-average period of 1.2 years.

 In
fiscal 2025 and fiscal 2024, 219,000 and 213,000, previously restricted shares vested, respectively. There were no shares repurchased
in connection with tax withholdings related to these vesting events.

 The
following represents restricted shares activity for the fiscal years ended July 31, 2025 and 2024:

 Weighted
 Average Grant
 Date Fair Value

 Non-vested stock award as of July 31, 2023

 400,345

 $
 6.19

 116,208

 3.27

 Vested

 ( 213,520
)

 6.01

 Forfeited

 ( 6,262
)

 6.39

 Non-vested stock award as of July 31, 2024

 296,771

 $
 5.17

 -

 -

 Vested

 ( 219,299
)

 5.84

 Forfeited

 -

 -

 Non-vested stock award as of July 31, 2025

 77,472

 $
 3.27

 Deferred
Stock Units

 Deferred
Stock Units Equity Incentive Programs

 In
November 2024, the Company adopted an equity incentive program (under the 2016 Incentive Plan) in the form of grants of DSUs that, upon
vesting, will entitle the grantees to receive shares of the Company's Class B common stock. The number of shares that will be issuable
on each vesting date will vary between 33 % to 300 % of the number of DSUs that vest on that vesting date, depending on the market price
for the underlying Class B common stock on the vesting date relative to the grant price approved by the Compensation Committee of the
Company's Board of Directors of $ 2.76 per share.

 The
Company estimated that the fair value of the DSUs on the date of grants was $ 388,000 in aggregate, which is being recognized on a graded
vesting basis over the requisite service periods ending in September 2027. The Company used a risk neutral Monte Carlo simulation method
in its valuation of the DSUs, which simulated the range of possible future values of the Company's Class B common stock over the
life of the DSUs. The Monte Carlo simulation model incorporates the likelihood of achieving the stock price targets and requires the
input of assumptions including the underlying stock price, expected volatility, risk-free rate and dividend yield.

 F- 30

 In
fiscal 2025, the Company purchased 6,903 shares of Class B Common Stock from various employees for $ 22,000 to satisfy tax withholding
obligations in connection with the vesting of DSUs. In fiscal 2024, the Company purchased 6,328 shares of Class B Common Stock from various
employees for $ 13,000 to satisfy tax withholding obligations in connection with the vesting of DSUs.

 The
following represents DSU activity for the fiscal years ended July 31, 2025 and 2024:

 Weighted
 Average Grant
 Date

Fair Value

 Non-vested DSU award as of July 31, 2023

 238,605

 $
 8.81

 -

 -

 Vested

 ( 32,966
)

 11.55

 Forfeited

 ( 3,601
)

 8.98

 Non-vested DSU award as of July 31, 2024

 202,038

 $
 8.36

 89,683

 4.32

 Vested

 ( 30,388
)

 15.03

 Forfeited

 ( 170,450
)

 7.22

 Non-vested DSU award as of July 31, 2025

 90,883

 $
 4.29

 The
DSUs with both service and market conditions granted in September 2021 were valued using a Monte Carlo Simulation valuation model, with
a valuation of $ 7.19 per DSU. Total grant date fair value for these DSUs was approximately $ 1.5 million. On September 7, 2024, these
DSUs award with respect to approximately 170,000 shares were canceled without the reversal of compensation expenses of approximately
$ 1.2 million because the market condition was not achieved.

 At
July 31, 2025, there were 90,883 non-vested DSUs and the unrecognized compensation expense related to unvested DSUs was an aggregate
of $ 184,000 which is expected to be recognized over a weighted-average period of 2.1 years.

 At
July 31, 2024, there were 202,038 non-vested DSUs and the unrecognized compensation expense related to unvested DSUs was an aggregate
of $ 48,000 which is expected to be recognized over a weighted-average period of 3 months.

 Note
14—Related Party Transactions

 On
June 1, 2016, IDT's interest in the Company was spun-off by IDT to IDT's stockholders and the Company became an independent
publicly-held company. Following the Spin-Off, IDT charges the Company for services it provides, and the Company charges IDT for services
it provides, pursuant to Services Agreements.

 In
fiscal 2025 and 2024, the Company was charged by IDT a total of $ 126,000 and $ 125,000, respectively, for legal services. In addition,
the Company charged IDT approximately $ 86,000 and $ 81,000, respectively, for consulting services provided to IDT by a Zedge employee.
As of July 31, 2025 and 2024, the Company owed IDT $ 1,000 and $ 2,000 respectively.

 F- 31

 The
activities between the Company and IDT were as follows (in thousands):

 July, 31

 2025

 2024

 Balance at beginning of year

 $

 Legal services provided by IDT

 Consulting services provided to IDT

 ( 86
)

 ( 81
)

 Cash payments made to IDT

 ( 40
)

 ( 50
)

 Due to IDT*

 $

 *
 Due to IDT is included in accrued expenses and other current liabilities

 On
June 19, 2024, the Company signed a revenue sharing agreement with National Retail Services, Inc. ("NRS"), a wholly owned subsidiary
of IDT, whereby the Zedge group of companies (Zedge, Emojipedia and GuruShots) will provide a selection of their digital content for
display on NRS's screens and share in the revenue generated from the resulting advertisements.

In fiscal 2025 and 2024 the Company's revenue generated in accordance to the NRS revenue sharing agreement was $ 147,000 and $ 28,000,
respectively. As of July 31, 2025 and 2024, the Company was owed $ 10,000 and $ 19,000, respectively, from NRS which is included in prepaid
expenses and other receivables.

 2025

 2024

 Balance at beginning of year

 $
 ( 19
)

 -

 Revenue share from NRS

 ( 147
)

 ( 28
)

 Cash payments received from NRS

 Due from NRS

 $
 ( 10
)

 ( 19
)

 The
Company is party to a consulting agreement with Activist Artist Management, LLC ("Activist"), which assists the company in
strategic business development. A member of the Company's Board of Directors and the Chairman of the Audit Committee owns a significant
minority stake in Activist. The Company paid approximately $ 60,000 and $ 60,000 respectively, to Activist in the fiscal years ended July
31, 2025 and 2024, respectively.

 Note
15—Segment and Geographic Information

 Segment
Information

 The
Company determines its operating segments based on how its chief operating decision maker ("CODM") manages the business,
allocates resources, makes operating decisions and evaluates operating performance. The Company's CODM was its Chief Executive
Officer as of July 31, 2025.

 The
CODM evaluates the performance of each operating segment using segment income (loss) from operations. The Company defines segment income
(loss) from operations as revenue less costs and expenses. Expenses include indirect costs that are allocated to operating segments based
on a reasonable allocation methodology, which are generally related to sales and marketing activities and general and administrative
overhead. Revenue and expenses exclude transactions between the Company's operating segments.

 The
CODM uses segment income (loss) from operations to allocate resources during the annual budgeting and forecasting process. The CODM considers
segment income (loss) from operations when making decisions on operating and capital resource allocation. Additionally, the CODM uses
segment income (loss) from operations to evaluate operating strategy and assess segment performance by comparing the results of each
segment.

 F- 32

 There
are two reportable segments, which are the Zedge Marketplace and GuruShots. The following table provides information about these two
reportable segments (in thousands):

 2025

 2024

 Zedge Marketplace:

 $
 27,213

 $
 26,616

 Less:

 Personnel related expenses

 8,265

 8,791

 Users acquisition costs

 7,284

 5,576

 Data center and SaaS costs

 1,988

 1,688

 Restructuring and related charges

 1,235

 -

 Other expenses 1

 6,103

 4,894

 Zedge Marketplace segment income from operations

 2,338

 5,667

 GuruShots:

 $
 2,185

 $
 3,475

 Less:

 Personnel related expenses

 3,117

 3,579

 Users acquisition costs

 1,362

 Platform fees

 Data center and SaaS costs

 1,035

 Acquisition and restructuring related charges

 1,218

 11,959

 Other expenses 2

 1,205

 2,373

 GuruShots segment loss from operations

 ( 5,570
)

 ( 17,472
)

 Total segment income (loss) from operations

 $
 ( 3,232
)

 $
 ( 11,805
)

 1.
 Other segment items for the Zedge Marketplace reportable segment include professional services costs, platform fee, depreciation and amortization, facilities costs, public company related expenses and other individually insignificant costs.

 2.
 Other segment items for the GuruShots reportable segment include professional services costs, depreciation and amortization, facilities costs, and other individually insignificant costs.

 The
CODM does not evaluate operating segments using asset information and, accordingly, the Company does not report asset information by
segment.

 Geographic
Information

 Net
long-lived assets and total assets held outside of the United States, which are located primarily in Israel and Lithuania, were as follows
(in thousands):

 United States

 Total

 Long-lived assets, net:

 July 31, 2025

 $
 6,120

 $

 $
 6,455

 July 31, 2024

 $
 6,570

 $
 1,460

 $
 8,030

 Total assets:

 July 31, 2025

 $
 30,504

 $
 5,150

 $
 35,654

 July 31, 2024

 $
 32,412

 $
 5,783

 $
 38,195

 F- 33

 Note
16—Revolving Credit Facility

 On
October 28, 2022, the Company entered into an Amended and Restated Loan and Security Agreement ("Amended Loan Agreement")
with WAB. Pursuant to the Amended Loan Agreement, WAB agreed to provide the Company with a new term loan facility in the maximum principal
amount of $ 7 million for a four-year term and a $ 4 million revolving credit facility for a two-year term. Amounts outstanding under the
term loan and credit facility of the Amended Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in
The Wall Street Journal) plus 0.5 %, with a Prime "floor" rate of 4.00 %.

 Pursuant
to the Amended Loan Agreement, $ 2 million was advanced in a single-cash advance on October 28, 2022, with the remaining $ 5 million available
for drawdown during twenty-four (24) months after closing. Each drawdown must be in an amount of not less than One Million Dollars ($ 1
million). On May 11, 2023, the Company entered into a Modification Agreement pursuant to which the Company agreed to modify the Amended
Loan Agreement to reduce the remaining $ 5 million availability to $ 0. On November 15, 2023, the Company elected to prepay the entire
principal amount of $ 2 million.

 On
October 28, 2024, the Company entered into an Amended and Restated Loan and Security Agreement Modification Agreement with WAB. Pursuant
to the modification agreement, WAB agreed to renew the $ 4 million revolving credit facility for another four-year term through October
28, 2028, and remove certain provisions, including financial covenants, in respect of the $ 2 million term loan which has been repaid.

 The
Amended Loan Agreement also includes customary negative covenants, subject to exceptions, which limit transfers, capital expenditures,
indebtedness, certain liens, investments, acquisitions, dispositions of assets, restricted payments and the business activities of the
Company, as well as customary representations and warranties, affirmative covenants and events of default, including cross defaults and
a change of control default.

 As
of November 16, 2016, the Company entered into a Foreign Exchange Agreement with WAB to allow the Company to enter into foreign exchange
contracts not to exceed $ 5.0 million in the aggregate at any point in time under its revolving credit facility. This limit was raised
to approximately $ 7.5 million pursuant to the Loan and Security Modification Agreement dated May 30, 2018. The available borrowing under
the revolving credit facility is reduced by an applicable foreign exchange reserve percentage as determined by WAB, in its reasonable
discretion from time to time, which was set at 10 % of the nominal amount of the foreign exchange contracts in effect at the relevant
time. At July 31, 2025, there were $ 425,000 of outstanding foreign exchange contracts, which reduced the available borrowing under the
revolving credit facility by $ 42,500.

 Note
17—Defined Contribution Plan

 In
September 2016, the Company adopted a 401(k) Plan, effective August 1, 2016, available to all employees based in the United States meeting
certain eligibility criteria. The 401(k) Plan permits participants to elect pre-tax or after-tax salary deferrals that will be contributed
to the 401(k) Plan, not to exceed the limits established by the Internal Revenue Code. The 401(k) Plan provides for enhanced safe harbor
employer matching contributions. All contributions made by participants and safe harbor matching contributions by the Company will be
fully vested. The Company's Class B common stock is not an investment option for elective deferrals by the 401(k) Plan's
participants. However, matching contributions may be made in shares of Class B common stock of the Company.

 The
Company's cost for matching contributions to the 401(k) Plan were $ 52,000 and $ 49,000 for the fiscal years ended July 31, 2025
and 2024, respectively. In lieu of making cash contributions, the Company opted to contribute 20,225 shares and 21,629 shares of the
Company's Class B common stock to the 401(k) Plan for fiscal 2025 and fiscal 2024, respectively.

 Note
18—Restructuring, Impairments, and Related Charges

 In
January 2025, we implemented a corporate restructuring aimed to reduce headcount at GuruShots and other operating expenses, and ultimately
resulting in the closure of our Norway operations. This restructuring allows us to consolidate our workforce in Lithuania and Israel,
streamlining operations, driving efficiency and reducing expenses beyond compensation, and is designed to position us for sustainable
growth and support our strategic objectives.

 In
connection with this initiative, the Company instituted moves expected to result in the reduction of its total global headcount by approximately
 22 % and recognized a restructuring charge of $ 1.6 million primarily consisting of employee termination benefit which is recorded in the
Company's consolidated statements of operations and comprehensive loss for the fiscal year ended July 31, 2025.

 F- 34

 The
Company capitalizes certain costs related to software to be sold, leased, or marketed in accordance with ASC 985-20, Costs of Software
to Be Sold, Leased, or Marketed related to GuruShots. The Company evaluates these long-lived assets for impairment whenever circumstances
arise that indicate the carrying amount of an asset may not be recoverable. The Company's strategic reassessment of GuruShots'
operations in connection with the restructuring initiative resulted in a $ 0.8 million impairment of capitalized software and technology
development costs which is recorded in the Company's consolidated statements of operations and comprehensive loss for the fiscal
year ended July 31, 2025.

 The
following table summarizes total restructuring, impairments, and related charges for the Company's two reportable segments (in
thousands):

 2025

 2024

 $
 1,235

 $
 -

 1,218

 -

 Total restructuring, impairments, and related charges

 $
 2,453

 $
 -

 The
following table provides information about restructuring, impairments, and related charges for the Company's two reportable segments
(in thousands):

 Restructuring, Impairment, and Related Charges

 Termination
 Benefits (1)

 Facility Related
 Costs (2)

 Impairments and Assets Disposal (3)

 Total

 $
 1,074

 $

 $

 $
 1,235

 -

 1,218

 Fiscal Year Ended July 31, 2025

 $
 1,465

 $

 $

 $
 2,453

 1)
 Primarily relates to the global restructuring initiated in January 2025 and consists of termination benefits related to workforce reduction actions across all reporting segments.

 2)
 Primarily represents impairment of ROU asset related to the closing of our Norway operations.

 3)
 Primarily represents impairment of capitalized software and technology development costs resulting from the strategy assessment related to the restructuring initiative implemented in GuruShots and the loss on disposal of property and equipment related to the closing of our Norway operations.

 The
following table shows a roll forward of restructuring reserves, primarily consists of employee termination benefits, that will result
in cash spending. These amounts exclude asset impairment charges and other asset disposal activities (in thousands):

 Restructuring and Related Charges by Segment

 Balance at
 7/31/24

 Change in
 reserves (1)

 Cash
 payments

 Other (2)

 Balance at
 7/31/25 (3)

 $
 -

 $
 1,074

 $
 ( 1,108
)

 $

 $
 -

 -

 ( 385
)

 -

 Total

 $
 -

 $
 1,465

 $
 ( 1,493
)

 $

 $

 1)
 Primarily consists of severance and employee termination costs. The impairment charges and other asset disposals associated with the restructuring implemented in January 2025 that have impacted our property, plant and equipment, intangible balances or other asset balances are not included in this table.

 2)
 Primarily comprised of foreign currency translation and other non-cash adjustments.

 3)
 Included in "Accrued expenses and other current liabilities" on the condensed consolidated balance sheets.

 As
of July 31, 2025, the restructuring initiated in January 2025 has been substantially completed.

 F- 35

 Note
19—Subsequent Events

 DSU
Vesting

 On
September 8, 2025, 29,888 DSUs granted under the incentive program discussed in Note 13 above vested (the first tranche of the 89,683
DSUs granted in November 2024). In connection with the vesting of the DSUs, the Company issued 29,888 shares of Class B common stock
(based on a 100 % conversion ratio determined due to the market price of $ 3.06 per share relative to the grant price approved by the Compensation
Committee of the Company's Board of Directors of $ 2.76 per share).

 Operating
Lease

 On
October 1, 2025, the Company moved into its new office in Vilnius, Lithuania.

 Future minimum lease payments related to this
new lease are as follows (in thousands):

 Years ending July 31,

 Operating Leases

 2026

 $

 2027

 2028

 2029

 Total future minimum lease payments

 $

 Less imputed interest

 Total

 $

 Quarterly
Dividend

 On
October 14, 2025, the Company issued a press release announcing that its Board of Directors has declared a quarterly cash dividend of
$ 0.016 per share. The dividend is payable on or about November 7, 2025 to stockholders of record as of October 24, 2025.

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