What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-06-14 compared with 2022-03-16 · 489 added, 331 removed, 148 unchanged (85% of the section changed)

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

Management’s Discussion

and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction

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This Quarterly Report on Form 10-Q 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 the Form 10-K.

The forward-looking statements

are made as of the date of this 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 SEC pursuant to the Securities

Act of 1933 and the Securities Exchange Act of 1934, including the Form 10-K.

We own a portfolio of leading digital consumer brands

that, as January 31, 2022, served 45 million monthly active users across the globe.

Our portfolio consists of Zedge Ringtones and Wallpapers

(“Zedge App”), Shortz and, as of the beginning of August of 2021, Emojipedia.

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 future results.

Factors that may cause such differences include, but are not limited to:

(1) Economic, geopolitical

and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and

profitability, which in turn could adversely affect our stock price;

(2) Our ability to successfully make acquisitions and/or successfully

integrate acquisitions that we have made in to Zedge without incurring unanticipated costs or without being subject to other integration

issues that may disrupt our existing operations;

(3) Delay or failure to realize the expected synergies and benefits of the GuruShots

(4) The impact of the Covid-19 pandemic on our employees, customers, partners, and the global financial markets;

Russia's recent invasion of Ukraine, and the international community's response.

For further information regarding risks and uncertainties

associated with our business, please refer to Part II, Item 1A (Risk Factors) in this Quarterly Report on Form 10-Q, those discussed under

Item 1A to Part I “Risk Factors” in the Form 10-K.

The forward-looking statements are made as of the date of this 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 SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of

1934, including the Form 10-K.

Impact of COVID-19

In March 2020, the World Health Organization declared

the outbreak of COVID-19 as a pandemic, which continues to impact the U.S.

and the world.

We are unable to accurately predict the full

impact that COVID-19 will have due to numerous uncertainties, including the duration of the outbreak, actions that may be taken by governmental

authorities, the impact to the business of our customers and partners, the risk of additional, and currently-unknown COVID-19 variations

necessitating further measures to mitigate risk and seek to protect employee and vendor health and safety.

We will continue to evaluate

the scope and extent of the impact to our business, consolidated results of operations, and financial condition.

Impact of Russia's recent invasion of Ukraine

In February of 2022, the Russian Federation invaded

As a result, many governments and businesses imposed trade and economic sanctions on the Russian Federation and Belarus.

has a small user base in Russia and Belarus;

however, it also has a development center in Vilnius, Lithuania, which is approximately 40

kilometers from the Belarussian border.

In the event that the conflict spills over into other countries, Zedge may need to relocate personnel

potentially resulting in a slowdown in work product generated by those personnel.

At present, the Company is working on contingency planning

to be in a position to minimize any potential interruptions.

GuruShots has several contractors originally based in Ukraine who were inaccessible

for a period of time.

Most of them are now back at work and some of them have relocated to neighboring countries.

As a result, there has

been minimal disruption in the development work performed for GuruShots.

We disabled both the Zedge app and GuruShots in Russia and Belarus

resulting in a loss of that customer base and associated revenue.

Finally, at the outset of the war, we changed the color of the Zedge

App's icon to the colors of the Ukrainian flag as a demonstration of our solidarity with Ukraine.

This change triggered a spate of users,

primarily located in countries that have close ties to the Russian Federation, to either uninstall the Zedge App and/or reduce our star

ranking across the various storefronts.

We also updated the collateral materials in these storefronts to the color of the Ukrainian flag

resulting in a decline in new installs from these same countries.

Zedge builds marketplaces and games around digital

content that people use to express themselves.

Our portfolio consists of several leading digital consumer brands that, as April 30, 2022,

served 41 million monthly active users across the globe.

Our portfolio consists of Zedge Ringtones and Wallpapers (“Zedge App”),

as of August 1, 2021, Emojipedia and, as of April 12, 2022, GuruShots.

We operate a state-of-the-art digital publishing

platform that powers Zedge App, available in the Google Play store and App Store, which offers an easy, entertaining and immersive way

for end-users to engage with our rich and diverse catalogue of wallpapers, video wallpapers, ringtones, notification sounds on Android

platform that powers the Zedge App, which is available in the Google Play store and App Store, and offers an easy, entertaining and immersive

way for end-users to engage with our rich and diverse catalogue of wallpapers, video wallpapers, ringtones, notification sounds on Android

and wallpapers, video wallpapers, ringtones and custom icon packs on iOS.

secure our content from amateur and professional artists, and also from emerging and major brands.

Artists have the ability to easily

launch a virtual storefront in our Zedge App where they can market and sell their content to our user base.

That same platform powers

an entertainment app called “Shortz – Chat Stories by Zedge”, which is focused on serialized, short-form, fiction stories,

as a beta that runs on our publishing platform.

Over the past year, we have been expanding our content catalogue, started testing audio

versions of a selected number of stories, materially improved our ability to measure all types of engagement within the app, and invested

a modest budget in paid user acquisition.

In August of 2021, we acquired Emojipedia, the leading source of all things emoji.

We secure our content from amateur and professional artists,

and also from emerging and major brands.

Artists have the ability to easily launch a virtual storefront in our Zedge App where they can

market and sell their content to our user base.

In August of 2021, we acquired Emojipedia, the leading source of all things emoji and,

on April 12, 2022, we acquired GuruShots, an Israeli company that operates a platform used for its competitive photography game available

across iOS, Android and the web.

Our Zedge App has been installed approximately 556

million times, and at January 31, 2022, boasted approximately 36 million monthly active users, or MAU.

million times, and at April 30, 2022, served approximately 32 million monthly active users, or MAU.

MAU is a key performance indicator

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in paid user acquisition for our Zedge App;

however, we have started investing more in this area.

Our Zedge App’s success stems from its ability

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Zedge Premium was a “walled garden” – a separate section of the app which users needed to proactively choose to enter.

In 2021, we embedded Zedge Premium content throughout the app making it far more prominent.

We also introduced a new content type on iOS:

In November 2020 , we embedded Zedge Premium content throughout the app making it far more prominent.

We also introduced a new content

custom icon packs.

Over time, we expect that Zedge Premium will contribute to a virtuous cycle whereby it drives new consumers into our

Zedge App resulting in more artist payouts, which in turn makes the platform more attractive for artists and brands looking to expand

their reach and increase their income.

Over time, we expect that Zedge Premium will contribute to a virtuous cycle whereby it drives new consumers

into our Zedge App resulting in more artist payouts, which in turn makes the platform more attractive for artists and brands looking to

expand their reach and increase their income.

In December of 2021 we introduced ‘NFTs Made Easy’ to select Zedge Premium artists

interested in selling single edition, tokenized, video wallpapers.

Our all-in-one platform allows creators to self-publish, mint and sell

their NFTs simply by selecting the NFT option within our self-publishing platform and without the need for them to be cryptocurrency experts

or technology wizards.

‘NFTs Made Easy’ is currency agnostic and allows consumers to purchase NFTs with Zedge tokens acquired

via in-app purchases, eliminating the need to set up a crypto wallet to buy cryptocurrencies.

Over time we expect to expand the offering

with features including features like numbered editions, drop dates and new content types.

In January 2019, we started offering freemium Zedge

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from our Zedge App.

As of January 31, 2022, we had approximately 762,000 active paid subscribers.

During the first 12 months after a customer’s sign up for the subscription-based product, Google retains up

to 30% as a fee, which decreases to 15% from month 13 and beyond.

As of April 30, 2022, we had approximately 713,000 active subscribers,

90% of which had subscribed on an annual basis.

Since inception in January 2019, subscriptions have generated approximately $9.4 million

in gross revenue.

In December 2019, we completed the beta launch of

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and it is now available globally.

New stories are added to the app regularly and we continuously improve content discovery in order to

guide users to the stories that will most interest them and improve engagement.

On August 1, 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, and Emojitracker, which provides real time visualization of all emoji symbols used on Twitter.

In January 2022 Emojipedia receives approximately 45 million monthly page views and has approximately 8.6 million monthly active users

of which approximately 50% are located in well-developed markets.

It is the top resource for all things emoji, offering insights into

data and cultural trends.

As a voting member of the Unicode Consortium, the standards body responsible for approving new emojis, Emojipedia

works alongside major emoji creators including Apple, Google, Facebook and Twitter.

In December of 2021 we introduced ‘NFTs Made

Easy’ to select Zedge Premium artists initially interested in selling single edition, tokenized, video wallpapers.

Our all-in-one

platform allows creators to self-publish, mint and sell their NFTs simply by selecting the NFT option within our self-publishing platform

and without the need for them to be cryptocurrency experts or technology wizards.

‘NFTs Made Easy’ is currency agnostic and

allows consumers to purchase NFTs with Zedge tokens acquired via in-app purchases, eliminating the need to set up a crypto wallet to buy

cryptocurrencies.

Over time we expect to expand the offering with features including features like numbered editions, drop dates and new

content types.

Over the past several years, our Zedge App has experienced

a continuing decline in its MAU in well-developed markets with growth of MAU in emerging markets, so that users in emerging markets represent

an increasing portion of our user base.

In addition, the rate of user growth in emerging markets slowed in the first half of fiscal 2022

compared to prior periods.

As of January 31, 2022, users in emerging markets represented 77% of the MAU for our Zedge App compared to

73% a year prior.

This shift has negatively impacted revenue because advertising rates in emerging markets are materially lower than in

well-developed markets.

In the second quarter of fiscal 2022, users in emerging markets grew by 7.3% while users in well-developed economies

declined 10.5% when compared to the same period in fiscal 2021.

As of January 31, 2022, approximately 41% of our Zedge App’s user

base was located in North America (20%) and Europe (including Eastern Europe, 21%), compared with 42% (North America, 20% and Europe 22%)

as of July 31, 2021.

The remaining 58% of the user base was primarily located in emerging markets with 27% located in India.

MAU growth is tightly coupled with new user growth.

Historically, our relatively high ranking in the Google Play store has been one of the primary drivers for securing new users.

still an important factor, we now also dedicate resources to growth initiatives, both organic and paid.

We have started increasing paid

user acquisition spend while monitoring results to ensure that the investment is yielding a positive return on investment.

we believe that we can change our growth dynamic in well-developed markets and return to more robust growth in all markets.

targeted growth initiatives, we need to continually improve the core user experience, test different mechanisms and content verticals

that may spur growth and capitalize on the role that Zedge Premium artists can have on driving new users into the Zedge platform.

The COVID-19 pandemic has impacted our Zedge App’s

new user growth.

According to Gartner, a leading research and advisory company, new smartphone sales declined 10.5% in calendar year 2020

as a result of the pandemic, negatively impacting new user growth, especially in well-developed markets.

As of September 1, 2021, Gartner

reported that worldwide smartphone sales grew by 10.8% year over year in the second quarter of calendar year 2021 despite supply constraints

relating to COVID-19 component shortages and production disruptions;

however, it is still unclear what the impact on user growth will

be as vaccines become more available globally and as precautions like social distancing start to wane.

The pandemic and measures implement

to promote social distancing had a modest positive impact on user engagement.

In February of 2022 the Russian Federation invaded

As a result, many governments and businesses imposed trade and economic sanctions on the Russian Federation and Belarus.

has a small user base in Russia and Belarus;

however, it also has a development center in Vilnius, Lithuania, which is approximately 40

kilometers from the Belarussian border.

In the event that the conflict broadens to additional countries, Zedge may experience a slowdown

relating to relocating personnel and/or employees being drafted into military or public service.

At present, the Company is working on

contingency planning to be in a position to minimize any potential interruptions.

During the quarters ended January 31, 2022 and 2021,

we generated approximately 79% and 83%, respectively, of our revenues from selling our Zedge App’s advertising inventory to advertising

networks, advertising exchanges, and direct arrangements with advertisers.

Advertising networks and advertising exchanges are third-party

technology platforms that facilitate the buying and selling of media advertising inventory from multiple ad networks.

The price of advertising

inventory is fixed on an advertising network whereas the price for inventory is determined through real-time bidding on an advertising

Advertisers are attracted to our Zedge App because of its sizable user base.

Based on the limited success of Shortz with our user base, we have decided to deprioritize its development

and focus our resources on other opportunities.

During the quarters ended April 30, 2022 and 2021,

we generated approximately 77% and 81%, respectively, of our revenues from selling our Zedge App’s advertising inventory primarily

to advertising networks and advertising exchanges.

Advertising networks and advertising exchanges are third-party technology platforms

that facilitate the buying and selling of media advertising inventory from multiple ad networks.

The price of advertising inventory is

fixed on an advertising network whereas the price for inventory is determined through real-time bidding on an advertising exchange.

are attracted to our Zedge App because of its sizable user base.

In our Zedge Premium marketplace, the content owner

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matures and expands, we expect to also diversify our revenue source mix.

In January 2019, we started offering paid subscriptions

to our Android users which amongst other things removed unsolicited advertisements from our Zedge App.

During the first 12 months after

a customer’s sign up for the subscription-based product, Google retains up to 30% as a fee, which decreases to 15% from month 13

As of January 31, 2022, we had approximately 762,000 active subscribers, 90% of which had subscribed on an annual basis.

inception in January 2019, subscriptions have generated approximately $8.5 million in gross revenue.

The COVID-19 pandemic, which has been ongoing

since the third quarter of fiscal 2020, has resulted in public health responses including travel bans, restrictions, social distancing

requirements, and shelter-in-place orders, which have impacted our business, operations, and financial performance in different ways.

As a result of the COVID-19 pandemic, we experienced a reduction in advertiser demand in the second half of fiscal 2020.

After that time,

advertisers around the world increased their investment on mobile advertising.

We saw continued momentum across key markets and increased

advertiser demand for digital ads in general.

The ongoing impact of the COVID-19 pandemic on our business and on global economic activity

continues to evolve and may again in the future adversely affect our business, operations and financial results.

Our past results may not be indicative of our

future performance, and historical trends in revenue, income (loss) from operations, net income (loss), and net income (loss) per share

may differ materially.

The key risks facing our business are further described in Part I, Item 1A - Risk Factors of the Company’s

Annual Report on Form 10-K for the year ended July 31, 2021, as filed with the SEC.

Over the past several years, our Zedge App has

experienced a continuing decline in its MAU in well-developed markets with growth of MAU in emerging markets, so that users in emerging

markets represent an increasing portion of our user base.

In addition, the rate of user growth in emerging markets slowed in the first

half of fiscal 2022 compared to prior periods.

As of April 30, 2022, users in emerging markets represented 77% of the MAU for our Zedge

App compared to 73% a year prior.

This shift has negatively impacted revenue because advertising rates in emerging markets are materially

lower than in well-developed markets.

In the third quarter of fiscal 2022, users in well-developed economies and emerging markets declined

by 15.6% and 3.9% respectively when compared to the same period in fiscal 2021.

As of April 30, 2022, approximately 41% of our Zedge App’s

user base was located in North America (21%) and Europe (including Eastern Europe, 20%), compared with 42% (North America, 20% and Europe

22%) as of July 31, 2021.

The remaining 59% of the user base was primarily located in emerging markets with 27% located in India.

MAU growth is tightly coupled with new user growth.

Historically, our relatively high ranking in the Google Play store has been one of the primary drivers for securing new users.

still an important factor, we now also dedicate resources to growth initiatives, both organic and paid.

We have started increasing paid

user acquisition spend while monitoring results to ensure that the investment is yielding a positive return on investment.

we believe that we can change our growth dynamic in well-developed markets and return to more robust growth in all markets.

targeted growth initiatives, we need to continually improve the core user experience, test different mechanisms and content verticals

that may spur growth and capitalize on the role that Zedge Premium artists can have on driving new users into the Zedge platform.

Business Combination and Asset Acquisition

On August 1, 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, and Emojitracker, which provides real time visualization of all emoji symbols used on Twitter.

In January 2022 Emojipedia receives approximately 45 million monthly page views and has approximately 8.6 million monthly active users

of which approximately 50% are located in well-developed markets.

It is the top resource for all things emoji, offering insights into

data and cultural trends.

As a voting member of the Unicode Consortium, the standards body responsible for approving new emojis, Emojipedia

works alongside major emoji creators including Apple, Google, Facebook and Twitter.

On April 12, 2022, we completed the acquisition

of GuruShots (“GS”).

GS, founded in 2014, is an Israeli company and the leader in the photo gaming space.

It provides a fun,

educational, and structured way for amateur photographers -- anyone with a cell phone -- to compete and showcase their photos, gain recognition

and progress via votes, badges, and awards.

GS, via its LiveOps team, posts daily competitive challenges that are voted on by the platform's

Gurus and the wider community.

The platform releases approximately 10 challenges daily and users upload more than1 million high-quality

photos monthly.

Challenges can amass more than 20,000 submissions within 36 hours of being posted.

GS has developed a sophisticated gamification platform

that is being used to power its photo game GS business is based on a Free-to-Play model that leads to strong monetization with the purchase

of resources that are used to give competitors a competitive edge while still maintaining a fair and competitive experience for all participants.

Furthermore, it has a built-in social layer with features including leaderboards, chat, and team leagues.

Its uniqueness is tied to several key elements including:

● Retention Dynamics – focused on individual, team, and community dynamics that create a sense of belonging, inspiration, recognition,

improvement, and competition.

Crowd Based Voting System – allows users to vote in favor or other player’s photos in order to secure a higher ranking.

Users can earn greater voting power, or “perceived votes,” by engaging in gameplay.

On a monthly basis, this yields more than 4.5 billion perceived votes, a strong indication of user-engagement.

● Real-Time Image Ranking – a competitive dynamic that acts as a catalyst for users to reach top ranks.

To date, GS has more than

130 million ranked images.

By definition these are high-quality images, otherwise, they would not be ranked.

● Gamification Dynamics – these include challenges, points, levels, achievements, and game loops.

GS’s Business Model

GS generates revenue by selling game resources

via in-app and online purchases.

Some of these resources include increasing a photograph’s exposure, access to locked game content,

exchanging an image in the competition with a different image, and skipping voting sessions.

GS’s User Growth and Acquisition

GS’ user acquisition and growth strategy is

currently focused on paid user acquisition channels including Google, Facebook, and Instagram.

GS is in the early stages of testing additional

user acquisition platforms.

Prior to the acquisition by Zedge, GS outsourced paid user acquisition to a 3 rd party marketing

In the coming months, we expect to migrate many of the marketing responsibilities in-house which we believe will yield improved

ROAS and ROI.

In addition, we plan on investing in organic user growth initiatives including user referral programs, search engine optimization,

app store optimization, etc.

which are standard growth drivers for gaming apps.

Finally, we expect to cross market to existing Zedge users.

GS’s Product Roadmap

In 2021, GS focused on improving retention with

game loops focused on improving challenges and achievements.

In addition, it rolled out “Leagues,” which enables team-play,

and which is scaling well.

GS is increasingly focusing on improving the on boarding process in order to draw more users into the competitions,

introducing a set of self-learning modules that can assist users in becoming better photographers.

Gamifying learning is an area that

can make a material difference in engagement and monetization.

GS’s Technology

GS’ cloud-based platform uses machine learning

ranking technology to ensure fair exposure of all photos submitted to competitions.

It also employs image classification technology to

suggest which competitions a photo should enter.

It has a strong moderation tool that actively detects content for policy violations.

In addition, the platform is self-governing with regards to flagging inappropriate and copyrighted content, as many users are quick to

flag this due to the competition context.

Over time the plan is to migrate GS technology to the same cloud platform that Zedge currently

uses with the expectation that this will yield cost savings and simplify operations.

Critical Accounting Policies

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Our critical accounting policies include those related to capitalized software and technology

development costs, revenue recognition, intangible assets and goodwill.

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.

For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis

of Financial Condition and Results of Operations in the Form 10-K.

development costs, revenue recognition, business combinations and valuing contingent considerations, recognition and impairment of intangible

assets and goodwill.

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.

For additional discussion

of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations

in the Form 10-K.

Recently Issued Accounting Standards Not Yet Adopted

Please refer to

Note 1 to the Unaudited Condensed Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Please refer to Note 1 to the unaudited condensed

consolidated financial statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Key Performance Indicators

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MAU is a key performance indicator that captures the number of unique users that used our Zedge App during the previous

30-day period, which is important to understanding the size of the user base for the Company’s Zedge App which is a main driver

of our 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, changes and trends in ARPMAU are indications of how effective our

monetization investments are.

MAU increased 2.5% in the second quarter of fiscal

30-day period, which is important to understanding the size of the user base for our Zedge App which is a main driver of our 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, changes and trends in ARPMAU are indications of how effective our monetization investments

MAU decreased 7.0% in the third quarter of fiscal

2022 when compared to the same period a year ago and increased 11.6% on a sequential basis.

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a continuing shift in our regional customer make-up with MAU in emerging markets representing an increasing portion of our user base.

As of January 31, 2022, users in emerging markets represented 77% of our MAU compared to 73% a year prior.

As of April 30, 2022, users in emerging markets represented 77% of our MAU compared to 73% a year prior.

This shift impacts our business

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sales in these regions coupled with lower priced subscriptions SKUs.

However, ARPMAU for the three months ended January 31, 2022 was up

approximately 22% when compared to the same period a year ago, pointing to progress we have made in extracting more revenue from our users,

particularly from paid subscriptions sales and improvement in ad optimization.

ARPMAU improved 12.8% on a sequential basis.

However, ARPMAU for the three months ended April 30, 2022 was up

approximately 7.8% when compared to the same period a year ago, pointing to progress we have made in extracting more revenue from our

users, particularly from paid subscriptions sales and improvement in ad optimization.

ARPMAU declined 13.0% on a sequential basis due

to seasonality.

We believe that much of the decline was caused

by one-off events and estimate that a third or more of the MAU decline is attributable to a combination of uninstalls driven by our need

to push a forced upgrade of the Zedge App in order to migrate to AppLovin’s Max ad mediation platform combined with losses attributable

to our decision to change the color of the Zedge App's icon to the colors of the Ukrainian flag as a demonstration of our solidarity with

This change triggered a spate of users, primarily located in countries that have close ties to the Russian Federation, to either

uninstall the Zedge App and/or reduce our star ranking across the various storefronts.

We also updated the collateral materials in these

storefronts to the color of the Ukrainian flag resulting in a decline in new installs from these same countries.

In addition, we disabled

both the Zedge App and GuruShots in Russia and Belarus resulting in a loss of that customer base.

Furthermore, we are accustomed

to experiencing MAU declines resulting from seasonality in the business in Q3, which follows the end-of-year holiday season.

we believe much of the decline was caused by [one-off events.

Nonetheless, we have implemented a variety of product changes to reverse

the trend, including changing our app icon and store branding in India, increasing the frequency and regularity of push notification campaigns

as well as app icon changes, and continuing our rollout of social and community features.

Three Months Ended

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ARPMAU - Zedge App

Three Months Ended

(in millions, except ARPMAU)

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The following charts present the MAU –

Zedge App and ARPMAU – Zedge App for the consecutive eight quarters ended January 31, 2022:

* Please note the MAU-Zedge App graph above excludes MAU for

the Emojipedia.org of approximately 8.6 million for the month of January 31, 2022.

Zedge App and ARPMAU – Zedge App for the consecutive eight quarters ended April 30, 2022:

* Please note the MAU-Zedge App graph above excludes MAU for both

Emojipedia and GuruShots

Results of Operations

Three and Six Months ended January 31, 2022 Compared to Three

and Six Months ended January 31, 2021

Three and Nine months ended April 30, 2022 Compared to Three and

Nine months ended April 30, 2021

Three Months Ended

Six Months Ended

(in thousands)

Direct cost of revenues

Selling, general and administrative

Depreciation and amortization

Income from operations

Interest and other income, net

Net (loss) gain resulting from foreign exchange transactions

Provision for income taxes

Nine Months Ended

cost of revenues

general and administrative

and amortization

from operations

and other income, net

(loss) gain resulting from foreign exchange transactions

for (benefit from) income taxes

nm—not measurable

The following table sets forth the composition

of our revenues for the three and six months ended January 31, 2022 and 2021:

of our revenues for the three and nine months ended April 30, 2022 and 2021:

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

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Advertising revenue increased 7%

24% and 35% in the three and six months ended January 31, 2022, respectively, compared to the three and six months ended January 31, 2021,

primarily due to improvement in our ad optimizations and higher advertising rates.

and 25% in the three and nine months ended April 30, 2022, respectively, compared to the three and nine months ended April 30, 2021, primarily

due to improvement in our ad optimizations and higher advertising rates.

Paid subscription revenue .

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and we generally charge $0.99 per month and $4.99 per year.

We generated $897,000 and $1,816,000 in gross prepaid subscription in the

three and six months ended January 31, 2022, respectively, compared to $952,000 and $1,816,000 in the three and six months ended January

The 6% decline in gross prepaid subscription sale for the three months ended January 31, 2022 when compared to the same period

a year ago was due to approximately 10% decline in new installs in the well-development markets in the corresponding periods.

that from time to time the prices of our subscription in each country/region may change and we may test other plan and price variations.

following table summarizes subscription revenue for the three and six months ended January 31, 2022 and 2021:

Pricing in other markets is based on local conditions.

We generated $931,000

and $2,747,000 in gross prepaid subscription in the three and nine months ended April 30, 2022, respectively, compared to $990,000 and

$2,806,000 in the three and nine months ended April 30, 2021.

The 6% decline in gross prepaid subscription sale for the three months ended

April 30, 2022 when compared to the same period a year ago was primarily due to approximately 3% decline in new installs in well-development

markets in the corresponding periods and a decrease in renewal rate.

As of April 30, 2022, the first year renewal rate was 44% and second

year renewal rate was 53%.

We expect that from time to time the prices of our subscription in each country/region may change and we may

test other plan and price variations.

The following table summarizes subscription revenue for the three and

nine months ended April 30, 2022 and 2021:

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands, except revenue per subscriber and percentages)

3 unchanged sentences

Average monthly revenue per active subscription

In the three and six months ended January 31, 2022, gross transaction value (the total sales volume transacting

through the platform), or “GTV,” generated from Zedge Premium were $434,000 and $763,000, respectively, compared to $211,000

and $419,000 in the three and six months ended January 31, 2021.

In the three and six months ended January 31, 2021 net revenue generated

from Zedge Premium were $241,000 and $428,000, respectively, compared to $103,000 and $228,000 in the three and six months ended January

The gross and net revenue growth in Zedge Premium can be attributed to the investment we made in our new content management

system as well as the landing page redesign.

from Zedge Premium, web-based advertising revenues from Emojipedia and other related sites, as well as revenues generated by Shortz,

are reported under Other Revenues, and those offerings constitute potential growth drivers in the quarters to come.

cost of revenues .

Gaming revenue.

GuruShots sells game

resources via in-app and online purchases.

Some of these virtual items include increasing a photograph’s exposure, exchanging an

image in the competition with a different image, and skipping voting sessions.

GuruShots recognizes revenue at the time of purchase because

the overwhelming majority of users only purchase game resources when they need them to progress in the game.

GuruShots generated $294,000

between April 13, 2022 to April 30, 2022 which is included in Other Revenues.

Zedge Premium .

Gross transaction

value (the total sales volume transacting through the platform), or “GTV,” increased 63% and 75% in the three and nine months

ended April 30, 2022, respectively, compared to the three and nine months ended April 30, 2021.

Net revenue increased 47% and 74% in the

three and nine months ended April 30, 2022, respectively, compared to the three and nine months ended April 30, 2021.The gross and net

revenue growth in Zedge Premium can be attributed to the investment we made in our new content management system as well as the landing

page redesign.

The following table summarizes Zedge Premium

gross and net revenue for the three and nine months ended April 30, 2022 and 2021:

Three Months Ended

Nine Months Ended

(in thousands)

Zedge Premium-gross revenue

Zedge Premium-net revenue

Revenue from Zedge Premium, web-based advertising

revenues from Emojipedia and other related sites, as well as revenues generated by Shortz, are reported under Other Revenues, and those

offerings constitute potential growth drivers in the quarters to come.

Integration bonus.

On April 1, 2022, we

received a one-time integration bonus of $2 million from AppLovin Corporation for migrating to their mediation platform.

This amount is

being amortized over an initial estimated service period of 24 months which is also included in Other Revenues.

Direct cost of revenues .

Direct cost of revenues consists primarily of content hosting and content delivery costs.

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

1 unchanged sentence

As a percentage of revenues

cost of revenues increased 9.3% and 5.7% in the three and six months ended January 31, 2022, respectively, compared to three and six

months ended January 31, 2021.

The increase in the direct cost of revenues can be attributed to the new data analytic tool provided by

Google Cloud:

Cloud Computing Services.

a percentage of revenue, direct cost of revenues in three and six months ended January 31, 2021 were 4.9% and 5.0%, respectively, compared

to 5.9% and 6.8%, in the three and six months ended January 31, 2020, primarily due to significantly higher revenue in the current periods

and the fixed nature of many of our direct cost of revenues.

general and administrative expense .

Selling, general and administrative expense (“SG&A”) consists mainly

of payroll, benefits, recruiting fees, facilities, marketing, content acquisition costs, consulting, professional fees, software licensing

(“SaaS”) and public company related expenses.

Direct cost of revenues increased 38.3% and 16.1%

in the three and nine months ended April 30, 2022, respectively, compared to three and nine months ended April 30, 2021.

in the direct cost of revenues can be attributed to utilizing a new data analytics tool provided by Google’s Cloud Computing Services

and the inclusion of GuruShots’ infrastructure costs.

As a percentage of revenue, direct cost of revenues

in three and nine months ended April 30, 2022 were 6.4% and 5.5%, respectively, compared to 5.5% and 6.3%, in the three and nine months

ended April 30, 2021, primarily due to significant higher revenue in the nine-month periods and the fixed nature of many of our direct

cost of revenues.

Selling, general and administrative expense .

Selling, general and administrative expense (“SG&A”) consists mainly of GuruShots’ operating expenses, payroll,

benefits, recruiting fees, facilities, marketing, consulting, professional fees, software licensing (“SaaS”), M&A related

expenses and public company related expenses.

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

Selling, general and administrative

As a percentage of revenues

expense increased 43.8% and 40.2% in the three and six months ended January 31, 2022, respectively, compared to the three and six months

ended January 31, 2021.

This increase was primarily attributable to higher compensation costs resulting from additional headcount, higher

stock-based compensation as discussed below, higher professional fees offset by reductions in discretionary expenses.

a percentage of revenue, SG&A expense in the three and six months ended January 31, 2021 were 44.9% and 45.1%, respectively, compared

to 40.6% and 45.9%, in the three and six months ended January 31, 2021.

headcount totaled 63 as of January 31, 2022 compared to 46 as of January 31, 2021 with the majority of our employees currently based

As a percentage of

SG&A expense increased 50.9% and 44.4% in

the three and nine months ended April 30, 2022, respectively, compared to the three and nine months ended April 30, 2021.

This increase

was primarily attributable to transaction costs of $860,000 related to the GuruShots acquisition, higher compensation costs resulting

from additional headcount, higher stock-based compensation as discussed below, higher professional fees and offset by reductions in discretionary

As a percentage of revenue, SG&A expense in

the three and nine months ended April 30, 2022 were 65.2% and 51.6%, respectively, compared to 51.3% and 47.9%, in the three and nine

months ended April 30, 2021.

Excluding costs related to the GuruShots acquisition SG&A expense as a percentage of revenue in the three

and nine months ended April 30, 2021 would have been 53.3% and 47.2%.

Our headcount (including 30 added through the

GS acquisition) totaled 93 as of April 30, 2022 compared to 52 as of April 30, 2021 with the majority of our employees currently based

in Lithuania.

expense also included stock-based compensation expense which were $489,000 and $808,000 for the three and six months ended January

31, 2021, respectively, compared to $152,000 and $389,000 for the three and six months ended January 31, 2021.

compensation includes 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 6 to the Unaudited Condensed Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on

and amortization .

Depreciation and amortization consist mainly of amortization of capitalized software and technology development

SG&A expense also included 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 8 to the unaudited

condensed consolidated financial statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Depreciation and amortization .

Depreciation and amortization consist mainly of amortization of intangible assets and 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.

and amortization of intangible assets.

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

1 unchanged sentence

As a percentage of revenues

and amortization expenses increased approximately 11% in both three and six months ended January 31, 2022, compared to three and six

months ended January 31, 2021.

This increase was primarily attributable to the amortization of intangible assets related to the Emojipedia

acquisition which was completed on August 1, 2021.

and other income, net.

Interest and other income, net in the three and six months ended January 31, 2022 increased $7,000 and

$22,000 respectively when compared to the same periods in fiscal 2021 due to higher cash balance resulting from cash flows provided by

operating activities and financing activities in fiscal 2021.

Depreciation and amortization expenses increased

approximately 46.4% and 21.5% in the three and nine months ended April 30, 2022, compared to three and nine months ended April 30, 2021.

This increase was primarily attributable to the amortization of intangible assets related to the acquisition of GuruShots and Emojipedia.

Interest and other income, net.

Interest and other income, net in the three and nine months ended April 30, 2022 increased $6,000 and $28,000 respectively when compared

to the same periods in fiscal 2021 due to higher cash balance resulting from cash flows provided by operating activities and financing

activities in fiscal 2021.

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

1 unchanged sentence

As a percentage of revenues

(loss) gain resulting from foreign exchange transactions .

Net loss resulting from foreign exchange transactions is comprised

of gains and losses generated from movements in NOK and EUR relative to the U.S.

Net (loss) gain resulting from foreign exchange

transactions .

Net loss resulting from foreign exchange transactions is comprised of gains and losses generated from movements

in NOK and EUR relative to the U.S.

Dollar, including gains or losses from our hedging activities.

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

Net loss resulting from foreign exchange transactions

Net (loss) gain resulting from foreign exchange transactions

As a percentage of revenues

the three and six months ended January 31, 2021, we realized losses of $127,000 and $117,000, respectively, from NOK and EUR hedging

activities, compared to gains of $92,000 and $51,000, respectively in the three and six months ended January 31, 2021.

for income taxes .

The tax expense consists of federal and state taxes based on taxable income and allocated net worth

and certain income taxes payable in foreign jurisdictions where our subsidiaries reside.

In the three and nine months ended April 30, 2021,

we realized losses of $154,000 and $271,000, respectively, from NOK and EUR hedging activities, compared to gains of $16,000 and $67,000,

respectively in the three and nine months ended April 30, 2021 due to the strengthening of the US dollars in current periods, as more

fully described in Note 4 to the unaudited condensed consolidated financial statements included in Item 1 to Part I of this Quarterly

Report on Form 10-Q.

Provision for income taxes .

tax expense consists of federal and state taxes based on taxable income and allocated net worth and certain income taxes payable in foreign

jurisdictions where our subsidiaries reside.

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

Provision for income taxes

Provision for (benefit from) income taxes

As a percentage of revenues

tax provision or benefit for income taxes for interim periods has generally been determined using an estimate of its annual effective

tax rate, adjusted for discrete items, if any.

Under certain circumstances where we are unable to make a reliable estimate of the annual

effective tax rate, the accounting guidance permits the use of the actual effective tax rate for the year-to-date period.

expect our overall effective tax rate for fiscal year ending July 31, 2022 to be approximately 22.8%.

The effective tax rate differed

from the United States federal statutory tax rate of 21% due to certain factors with temporary impact primarily related to the equity

compensation expenses.

During the six months ended January 31, 2022, we accounted for a discrete item related to restricted stock windfall

(vesting date fair market value above the grant date fair market value) which resulted in a net effective tax rate of 22.1%.

of January 31, 2022, we had $527,000 of deferred tax assets for which it has not established a valuation allowance, related to the U.S.

Our tax provision or benefit for income taxes

for interim periods has generally been determined using an estimate of its annual effective tax rate, adjusted for discrete items, if

Under certain circumstances where we are unable to make a reliable estimate of the annual effective tax rate, the accounting guidance

permits the use of the actual effective tax rate for the year-to-date period.

We expect our overall effective tax rate for fiscal

year ending July 31, 2022 to be approximately 25.7 %.

The effective tax rate differed from the United States federal statutory tax rate

of 21% due to certain factors with temporary impact primarily related to the equity compensation expenses.

During the nine months ended

April 30, 2022, we accounted for a discrete item related to restricted stock windfall (vesting date fair market value above the grant

date fair market value) which resulted in a net effective tax rate of 24.4%.

As of April 30, 2022, we had $560,000 of deferred

tax assets for which it has not established a valuation allowance, related to the U.S.

federal states and certain international subsidiary.

The Company completed its reassessment of the ability to realize these assets and

concluded that a valuation allowance was not required.

are subject to taxation in the United States and certain foreign jurisdictions.

The Company completed its reassessment of the ability to realize these assets and concluded that a valuation allowance was not required.

We are 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 we are subject to potential examination by tax authorities include the United States,

Norway and Lithuania.

and Capital Resources

January 31, 2022, we had cash and cash equivalents of $30.0 million and working capital (current assets less current liabilities) of

$26.9 million, compared to $24.9 million and $23.4 million, respectively, at July 31, 2021.

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

March 16, 2023.

During fiscal 2021, we raised an aggregate of $15 million through sales of equity in At the Market offerings.

maintain a revolving line of credit of up to $2.0 million and a foreign exchange contract facility of up to $6.5 million with Western

Alliance Bank, as discussed below in Financing Activities.

following tables present selected financial information for the six months ended January 31, 2022 and 2021:

Six Months Ended

activities are subject to local country income tax.

The material jurisdictions

where we are subject to potential examination by tax authorities include the United States, Norway and Lithuania.

Liquidity and Capital Resources

At April 30, 2022, we had cash and cash equivalents

of $17.1 million and working capital (current assets less current liabilities) of $6.4 million, compared to $24.9 million and $23.4 million,

respectively, at July 31, 2021.

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 June 14, 2023.

During fiscal 2021, we raised an aggregate

of $15 million through sales of equity in At the Market offerings.

We also maintain a revolving line of credit of up to $2.0 million and

a foreign exchange contract facility of up to $6.5 million with Western Alliance Bank, as discussed below in Financing Activities.

The following tables

present selected financial information for the nine months ended April 30, 2022 and 2021:

Nine Months Ended

(in thousands)

4 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Increase in cash and cash equivalents

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.

Cash provided

by operating activities increased $1.9 million in the six months ended January 31, 2022 to $5.7 million from $3.7 million in the six

months ended January 31, 2021, primarily attributable to the higher revenues generated from our service offerings, principally advertising

and paid subscription revenues.

to an Asset Purchase Agreement, on August 1, 2021 (“Closing”), we acquired substantially all of the assets of Emojipedia

Pty Ltd, a proprietary company organized under the laws of Australia.

The final purchase price of the assets has been determined to be

$6.7 million of which $4.8 million was paid on August 2, 2021 with the remaining $1.9 million to be paid out on the six-month and twelve-month

anniversary of the Closing.

That $4.8 million was funded into an escrow account on July 30, 2021 and classified as other assets on our

balance sheet as of July 31, 2021.

used in investing activities in six months ended January 31, 2022 and 2021 consisted mostly 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.

December 14, 2020 and January 26, 2021, we sold an aggregate of 761,906 shares of our Class B common stock at an average price of $6.5625

per share for total gross proceeds of $5 million in a registered “At the Market” offering through National Securities Corp.

Wainwright & Co, LLC as sales agents.

(Decrease) increase in cash and cash equivalents

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.

Cash provided by operating activities increased $3.6 million in the

nine months ended April 30, 2022 to $11.3 million from $7.7 million in the nine months ended April 30, 2021, primarily attributable to

the higher revenues generated from our service offerings, principally advertising, paid subscription revenues and a $2 million integration

bonus received from AppLovin.

Investing Activities

On April 12, 2022, we acquired 100% of the outstanding

equity securities of GuruShots.

The purchase price consists of $18 million in cash paid at closing and contingent payments (the “Earnout”)

of up to a maximum of $16.8 million, payable either in cash or Class B common stock of the Company or a combination thereof (in the Company’s

discretion) payable over two years from closing subject to GS achieving certain financial targets set forth in the SPA.

In connection

therewith, we agreed to make certain minimum investments in user acquisition for GS in the period covered by the Earnout, subject to GS

maintaining agreed upon levels of return on ad spend (ROAS).

In addition, we committed to a retention pool of $4 million in cash and issued

626,242 shares of the Company Class B common stock with a fair value of $4 million or $6.39 per share for GuruShots’ founders and

other employees that will be payable or vest, as applicable, over three years from closing based on the beneficiaries thereof remaining

employed by the Company or a subsidiary.

On August 1, 2021, we acquired substantially all of

the assets of Emojipedia Pty Ltd, a proprietary company organized under the laws of Australia.

The final purchase price of the assets

has been determined to be $6.7 million of which $4.8 million was paid on August 2, 2021 with the remaining $1.9 million to be paid out

on the six-month and twelve-month anniversary of the Closing.

We paid approximately half of the $1.9 million on February 1, 2022.

$4.8 million was funded into an escrow account on July 30, 2021 and classified as other assets on our balance sheet as of July 31, 2021.

Business combination and assets acquisition are

more fully described in Note 5 to the unaudited condensed consolidated financial statements the included in Item 1 to Part I of this

Quarterly Report on Form 10-Q.

Cash used in investing activities in nine months

ended April 30, 2022 and 2021 also 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

Between December 14, 2020 and January 26, 2021,

we sold an aggregate of 761,906 shares of our Class B common stock at an average price of $6.5625 per share for total gross proceeds of

$5 million in a registered “At the Market” offering through National Securities Corp.

Wainwright & Co, LLC as

sales agents.

In connection with this offering, total issuance costs were $215,000.

the net proceeds from this offering for general corporate purposes including organic and other growth initiatives.

August 2020, we obtained a loan of $181,000 to finance about 82% of our directors’ and officers’ liability and cyber liability

insurance policies, at an annual percentage interest rate of 3.89% to be repaid over nine equal monthly installments of $20,490 starting

from September 1, 2020.

We repaid approximately $100,000 in principal in the six months ended January 31, 2021.

the six months ended January 31, 2022 and 2021, we issued 3,666 shares and 312,287 shares respectively of Class B common stock and received

$7,000 and $396,000 respectively, in connection with options exercised during the period.

the six months ended January 31, 2022 and 2021, we purchased 16,115 shares and 17,630 shares, respectively, of Class B common stock from

employees for $232,000 and $26,000 respectively, to satisfy tax withholding obligations in connection with the vesting of restricted

stock and DSUs.

maintain a credit facility of up to $2.0 million provided by Western Alliance Bank which is more fully described in Note 9 to the Unaudited

Condensed Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

do not anticipate paying dividends on our common stock until we achieve sustainable profitability and retain certain minimum cash reserves.

The payment of dividends in any specific period will be at the sole discretion of our Board of Directors.

in Trade Accounts Receivable

trade accounts receivable increased $0.7 million to $3.2 million at January 31, 2022 from $2.5 million at July 31, 2021, primarily due

to higher revenue in the preceding two months ended January 31, 2022 when compared to the same period ended July 31, 2021.

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.

MoPub (owned by Twitter until it was sold to AppLovin on January 3, 2022), Google, Facebook

and Applovin, 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.

the six months ended January 31, 2022, three customers represented 25%, 23% and 12% of our revenue.

In the six months ended January 31,

2021, three customers represented 31%, 22% and 12% of our revenue.

At January 31, 2022, two customers represented 39% and 29% of our

accounts receivable balance, and at July 31, 2021, two customers represented 37% and 28% of our accounts receivable balance.

significant customers were advertising exchanges operated by leading companies, and the receivables represent many smaller amounts due

from their advertisers.

Obligations and Other Commercial Commitments

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

Sheet Arrangements

January 31, 2022, we did not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably

likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital

We are using the net proceeds from this offering for

general corporate purposes including organic and other growth initiatives.

In August 2020, we obtained a loan of $181,000

to finance about 82% of our directors’ and officers’ liability and cyber liability insurance policies, at an annual percentage

interest rate of 3.89% to be repaid over nine equal monthly installments of $20,490 starting from September 1, 2020.

We repaid approximately

$100,000 in principal in the nine months ended April 30, 2021.

In the nine months ended April 30, 2022

and 2021, we issued 3,666 shares and 497,252 shares respectively of Class B common stock and received $7,000 and $819,000 respectively,

in connection with options exercised during the period.

In the nine months ended April 30, 2022 and 2021,

we purchased 16,115 shares and 17,630 shares, respectively, of Class B common stock from employees for $232,000 and $26,000 respectively,

to satisfy tax withholding obligations in connection with the vesting of restricted stock and DSUs.

We maintain a credit facility of up to $2.0 million

provided by Western Alliance Bank which is more fully described in Note 11 to the to the unaudited condensed consolidated financial statements

included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

We do not anticipate paying dividends on our common

stock until we achieve sustainable profitability and retain certain minimum cash reserves.

The payment of dividends in any specific period

will be at the sole discretion of our Board of Directors.

Changes in Trade Accounts Receivable

Gross trade accounts receivable increased $0.2

million to $2.7 million at April 30, 2022 from $2.5 million at July 31, 2021, primarily due to the inclusion of GS’ accounts receivable.

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 mobile 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.

MoPub (owned by Twitter until it was sold to AppLovin on January 3, 2022), Google, Facebook and AppLovin, 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.

In the nine months ended April 30, 2022, three

customers represented 29%, 19% and 13% of our revenue.

In the nine months ended April 30, 2021, three customers represented 31%, 22% and

12% of our revenue.

At April 30, 2022, two customers represented 40% and 19% of our accounts receivable balance, and at July 31, 2021,

two customers represented 37% and 28% of our accounts receivable balance.

All of these significant customers were advertising exchanges

operated by leading companies, and the receivables represent many smaller amounts due from their advertisers.

Contractual Obligations and Other Commercial Commitments

Smaller reporting companies are not required

to provide the information required by this item.

Off-Balance Sheet Arrangements

At April 30, 2022, we did not have any “off-balance

sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our

financial condition, results of operations, liquidity, capital expenditures or capital resources.

Quantitative and Qualitative Disclosures About Market Risks

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

Smaller reporting companies are not required

to provide the information required by this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis