What changed in this filing

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Item 1A. Risk Factors

2022-11-14 compared with 2021-11-09 · 1536 added, 1131 removed, 38 unchanged (99% of the section changed)

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.

If our digital brands including our Zedge app and Emojipedia

fail to attract advertisers or if its advertisers reduce their spending with us, our revenues, profitability and prospects may be materially

and adversely affected.

In fiscal 2021, approximately 80% of our revenues were generated from

our Zedge app selling advertising inventory.

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.

If the size of the digital advertising market does not increase from

current levels, or if our Zedge app and/or Emojipedia website 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

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.

Factor Summary

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:

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

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.

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.

we fail to attract advertisers or if advertisers reduce their spend with us, our revenues,

profitability and prospects may be materially and adversely affected.

digital advertising market may deteriorate or develop more slowly than expected, which could

materially harm our business and results of operations.

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.

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.

rely on third-party platforms, such as the iOS App Store, Facebook, and Google Play Store,

to distribute our apps and collect revenues generated on these platforms.

If these platforms

adopt policies including those relating to advertising, privacy, or monetization that are

counter to our strategy it could result in materially and adversely affecting our business.

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 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

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 fail to keep up with rapid technological changes in the internet and smartphone industries

and adapt our products and services accordingly, our results of operations and future growth

may be adversely affected.

have offices and other significant operations located in Lithuania, Israel, and Norway, and,

therefore, our results may be adversely affected by political, economic and military instability

in these countries.

may be unable to successfully integrate GuruShots into Zedge

privacy and security laws and regulations in the jurisdictions in which we do business subject

us to possible sanctions, civil lawsuits (including class action or similar representative

lawsuits) and other penalties in the event of non-compliance, additionally the need to observe

these regulations increases the cost of doing business and these laws and regulations are

continually evolving.

Compliance failure either by us or our partners, or vendors could harm

our business.

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.

breaches or computer virus attacks could have a material adverse effect on our business prospects

and results of operations.

are controlled by our majority stockholder, which limits the ability of other stockholders

to affect our management.

RELATED TO OUR BUSINESS AND INDUSTRY

of our offerings, including GuruShots’ participation in gallery exhibitions, are sensitive to consumer spending and economic conditions.

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 (such

as COVID-19) 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.

derives revenues form arranging for certain of its users to display their photographs in art galleries.

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.

market prices of many digital assets, including NFTs, have experienced significant declines in recent periods and may continue to do

Further declines in the market prices of digital assets, could have a material adverse effect on our NFTs Made Easy offering, our

financial performance, and results of our operations.

market prices of many digital assets, including NFTs, experienced significant declines in the fourth quarter of 2021 and to date in 2022.

Despite the increased popularity of NFTs in 2021, sales volumes of NFTs declined consistently throughout 2022, dropping by as much as

60% in the third quarter of 2022 as compared to the previous quarter, according to some market analysts.

Further declines in the market

prices of digital assets, could have a material adverse effect on our NFTs Made Easy offerings, our financial performance, and results

of our operations.

value of NFTs is uncertain and may subject us to unforeseeable risks.

allow our creators to offer NFTs for sale.

NFTs are unique, one-of-a-kind, or limited series, digital assets made possible by certain

digital asset network protocols.

Because of their non-fungible nature, NFTs introduce digital scarcity and have become popular as online

“collectibles,” similar to physical rare collectible items, such as trading cards or art.

Like real world collectibles, the

value of NFTs may be prone to “boom and bust” cycles as popularity increases and subsequently subsides.

If any of these bust

cycles were to occur, it could adversely affect the value of certain of our future strategies.

prices of digital assets are extremely volatile, and such volatility may have a material adverse effect on our NFTs Made Easy offering.

market prices of many digital assets, including NFTs, have experienced extreme volatility in recent periods and may continue to do so.

For instance, there were steep increases in the value of certain digital assets over the course of 2017, and multiple market observers

asserted that digital assets were experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2018

in digital asset trading prices.

These drawdowns notwithstanding, digital asset prices, increased significantly again during 2019, decreased

significantly again in the first quarter of 2020 amidst broader market declines as a result of the novel coronavirus outbreak and increased

significantly again over the remainder of 2020 and the first quarter of 2021.

Digital asset prices continued to experience significant

and sudden changes throughout 2021 followed by steep drawdowns in the fourth quarter of 2021 and to date in 2022.

in the price of even a single other digital asset may cause volatility in the entire digital asset industry and may affect the value

of other digital assets, including our NFTs Made Easy offering.

For example, a security breach or any other incident or set of

circumstances that affects purchaser or user confidence in a well-known digital asset may affect the industry as a whole and may also

cause the price of other digital assets, including NFTs, to fluctuate.

volatility may persist and the value of NFTs may significantly decline in the future without recovery.

Moreover, digital asset platforms

are relatively new and the digital asset markets may still be experiencing a bubble or may experience a bubble again in the future.

example, in the first half of 2022, each of Celsius Network, Voyager Digital Ltd., and Three Arrows Capital declared bankruptcy, resulting

in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly.

volatility in the future could have a material adverse effect on the value of NFTs Made Easy offering.

Furthermore, negative perception,

a lack of stability and standardized regulation in the digital asset economy may reduce confidence in the digital asset economy and may

result in greater volatility in the price of NFTs and other digital assets, including a depreciation in value.

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.

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 by our ability to successfully add new users, retain and engage existing users and convert

them into paying users and/or subscribers.

Over the past several years, we have experienced periods of growth and contraction, as well

as a shift of users from well developed markets to emerging markets and we expect that the size of our user base will fluctuate over

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 paying subscribers.

There is no guarantee that we will not experience a decline in our user base or

engagement levels.

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 growth, engagement and conversion, including:

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

behavior changes with respect to our products and services resulting in a decrease of engagement

and/or session time;

decrease their engagement, session time, or uninstall our apps because of product decisions

that we make with respect to introducing new features, feature enhancements, an/or monetization

lose confidence in how we utilize user data and/or or privacy policy;

cease making in-app purchases or in paying for subscriptions;

have difficulty 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;

fail to introduce new features, products or services that users want or enhance the existing

products and services with improvements that users are interested in;

are unable to acquire users through cost-effective marketing efforts, including both organic

and paid channels;

● 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;

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;

to offer relevant content to our users;

support for our users and creators;

or other technical problems that result in making our products and services inaccessible,

unreliable or that result in a poor user experience;

by governments that affect accessibility to our products and services in any market;

● 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.

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.

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

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.

Any decrease in user growth or engagement may have a material and adverse impact

on our popularity, revenue, business, reputation, financial condition, and results of operations.

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 subscription.

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 2022, we experienced a 3.7% decline in in-app purchases and paid subscriptions.

Conversely, over the past six years, GuruShots has successfully increased the compounded annual growth rate of monthly spending per paying

player by around 14%.

There can be no assurance that we will be able to continue to retain paying users 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.

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.

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 their

price, discounting policies, etc.

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.

we fail to attract 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.

We generate substantial majority of our revenue from our Zedge app

and from our Emojipedia website selling advertising inventory.

We anticipate that our growth and profitability will continue to depend

on our ability to sell advertising inventory across our digital brands.

Mobile connected devices, especially smartphones, are a relatively

new advertising medium.

Advertisers have historically spent a smaller portion of their advertising budgets on mobile media as compared

to traditional advertising methods, such as television, newspapers, radio and billboards, or online advertising over the internet, such

as placing banner ads on websites.

Future demand and market acceptance 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 Google’s expected deprecation of “tracking

cookies”

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, or develops more

slowly than we expect, we may not be able to increase our revenues or our revenues and profitability could decline materially.

We may not be successful in diversifying our revenue mix to

reduce our significant dependence on third-party advertisers.

In fiscal 2021, approximately 80% of our revenues were generated from

our Zedge app selling advertising inventory.

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 we have had initial success in converting freemium users

into paid subscribers, starting with zero in January 2019 and ending fiscal 2021 with approximately 752,000, there is no guarantee that

we will continue growing at this pace or how many of our current subscribers will remain as paying subscribers.

fiscal 2022, approximately 76% of our revenues (excluding GuruShots) were generated from selling advertising inventory.

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.

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.

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

of operations.

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.

connected devices, especially smartphones, are a relatively new advertising medium.

Advertisers have historically spent a smaller portion

of their advertising budgets on mobile media as compared to traditional advertising methods, such as television, newspapers, radio and

billboards, or online advertising over the internet, such as placing banner ads on websites.

demand and market acceptance 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.

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 Google’s expected deprecation of “tracking cookies” 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.

the market for mobile advertising deteriorates, or develops more slowly than we expect, we may not be able to increase our revenues or

our revenues and profitability could decline materially.

material amount of our revenue is generated from a limited number of geographies and third-party advertising demand partners.

to this mix could result in negatively impacting our business, financial condition, and results of operations.

In fiscal 2022, revenue from well developed economies accounted for

approximately 73% of our total revenues and 83% of our total revenues were generated by four 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 2022, 77% our Zedge App’s users were

located in emerging markets with 23% of users in well-developed regions compared to 75% and 24% respectively in fiscal 2021.

India comprised

28% of our MAU as of July 31, 2022.

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, we are still exposed to the impact of a shift in our Zedge App’s user base toward

emerging markets.

advertising demand partners, mainly, Google, Facebook and Applovin were responsible for 63% of overall revenue in fiscal 2022.

of these advertising demand partners were to alter their spend on our digital properties the outcome could result in lowering revenues

and profitability.

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.

apps’ user base is heavily weighted to smartphones running the Android operating system, which constituted approximately 96% of

our MAU (excluding Emojipedia) as of July 31, 2022, and most of our revenues for fiscal 2022.

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.

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

fiscal 2022, approximately 80% 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 2021 with approximately 752,000, we ended fiscal 2022 with 692,000 subscribers, an 8% decline and there is no guarantee

that we will be successful in improving subscriber base growth or in maintaining our current subscriber base.

To date, Zedge Premium

has taken longer to scale than we originally anticipated, and we have not experienced the success that we anticipated by selling print-on-demand

merchandise which sells at a higher price unit price than the other digital goods that we offer.

We previously thought that certain marketers

would embrace our platform as a critical distribution medium enabling us to secure a recurring set of advertisers willing to pay for sponsorships,

but this has not yet occurred and may not occur.

Finally, Android users are prone to spend less money in apps than iOS users.

our new initiatives are successful with our Android users, we may not able to replicate that success on iOS, especially since we have

fewer iOS users.

Our revenues may fluctuate materially due to increases and decreases

of new mobile device sales, 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 correlates to installs of the Zedge app and associated usage and revenue

Initially the COVID-19 pandemic has negatively impacted our Zedge app’s

new user growth.

New smartphone sales suffered as a result of retail business closures, negatively impacting new user growth, especially

in well-developed markets.

Assuming the retail business rebounds from the COVID-19 pandemic, we expect that our Zedge app’s new

user growth will also recover and we will benefit accordingly but there can no assurance of such rebound or new user growth.

If new mobile device sales decrease or slowdown, our Zedge app will

experience fewer installations which will negatively impact our revenue and operations.

If mobile connected devices, their operating systems or content

distribution channels develop in ways that violate policies of Google Play or the App Store, prevent users from downloading our Zedge

app or block advertising from being delivered to our Zedge app’s users, our ability to grow our revenues, profitability and prospects

may be materially and adversely affected.

Our business model depends upon the continued compatibility between

our Zedge app and the major mobile operating systems.

Third parties with whom we do not have any formal relationships control the design

of mobile devices and operating systems.

These parties frequently introduce new devices, and from time to time they may introduce new

operating systems or modify existing ones.

Network carriers, including but not limited to Verizon, AT&T or T-Mobile, may also impact

the ability to download apps or access specified content on mobile devices.

We rely upon third-party distribution platforms, including the Google

Play store and Apple’s App Store, for distribution of our Zedge app.

The Google Play store and Apple’s App Store are global

application distribution platforms and the main distribution channels for our Zedge app.

As such, the promotion, distribution and operation

of our Zedge app are subject to the respective distribution platforms’

standard terms and policies for application developers, which

are very broad and subject to frequent changes and interpretation.

Furthermore, the distribution platforms may not enforce their standard

terms and policies for application developers consistently and uniformly across all applications and with all publishers.

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 we 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.

In addition, if any of these providers were to limit or disable advertising

on their platforms, devices or operating systems, either because of technological constraints or because a maker of these devices, developer

of these operating systems or owner of these distribution platforms wished to impair our ability to serve ads on them, our Zedge app’s

ability to generate revenues could be significantly harmed.

Also, technologies may be developed that can block the display of our Zedge

app’s ads.

Most of our revenues are derived from fees paid to us by our Zedge app’s advertisers in connection with the display

As a result, ad-blocking technology could materially adversely affect our business, revenues and profitability.

Certain material functions related to our business depend on

a single supplier to carry out our business, and the inability to do business with this supplier could have a materially adverse effect

on our business and financial results.

We depend on Google and its affiliated companies for multiple material

functions related to our business, including advertising on our Zedge app and certain cloud services, and we expect to expand the services

provided by Google in fiscal 2022.

If the services of Google that we depend on were unavailable, or available only in decreased capacity

or at less advantageous terms, this could result in interruptions to our ability to provide certain services, could cause reduction in

service and/or quality as the function is transitioned to an alternate provider, if an alternate provider is available, or could increase

our cost, which we may not be able to pass along to customers.

Accordingly, any of these events could materially and negatively impact

our business, our revenues, our profits, and our relationships with customers.

If technologies designed to block the display of advertisements

or if in the future web browsers limit or block behavioral targeting technologies.

our revenues may be adversely affected.

Our apps and Emojipedia 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.

Although we had positive cash flow from operating activities

and net earnings in fiscal 2021, 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 income in fiscal 2021 was $8.2 million compared to net loss

of $0.6 million in and fiscal 2020.

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, our ability to maintain existing and obtain new advertisers, our ability to grow our revenues, the success

of Zedge Premium and paid subscriptions, and 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, which may result in significant

dilution or voluntary or involuntary dissolution or liquidation proceeding of us and a total loss of your investment.

Our limited operating history makes it difficult to evaluate

our business and prospects and may increase your investment risk.

We have only a limited operating history upon which you can evaluate

our business and prospects.

Although we experienced impressive year-over-year revenue growth of 107% in fiscal 2021 our growth in fiscal

2020 was moderate and even declined in fiscal 2019.

As part of the nascent mobile advertising industry, we will encounter risks and difficulties

frequently encountered by early-stage companies in rapidly evolving industries, including the need to:

maintain our reputation and build trust with our advertiser and developer clients;

offer competitive pricing to both advertisers and developers;

maintain and expand our network of advertising space through which we deliver mobile advertising campaigns;

deliver advertising results that are superior to those that advertisers or developers could achieve directly or through the use of

competing providers or technologies;

continue to develop and upgrade the technologies that enable us to provide mobile advertising services;

respond to evolving government regulations relating to the internet, telecommunications, privacy, direct marketing and advertising

aspects of our business;

identify, attract, retain and motivate qualified personnel;

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.

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 brand and reputation

important to the success of our business.

has taken longer to scale than we originally anticipated, and our ‘NFTs Made Easy’ offering is still in the early stages

of development.

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 96% 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.

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

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.

the COVID-19 pandemic negatively impacted new user growth.

New smartphone sales suffered as a result of retail business closures, negatively

impacting new user growth, especially in well-developed markets.

Any e-retail business rebound will be subject to many factors including

the state of the global and local economies.

new mobile device sales decrease or slowdown, our products and services will likely experience fewer installations which will negatively

impact our revenue and operations.

rely on third-party platforms, such as the iOS App Store, Facebook, and Google Play Store, to distribute our apps and collect revenues

generated on these platforms.

If these platforms adopt policies including those relating to advertising, privacy, or monetization that

are counter to our strategy it could result in materially and adversely affecting our business.

products and services depend on mobile app stores and other third parties such as data center service providers, as well as third party

payment aggregators, computer systems, internet transit providers and other communications systems and service providers.

applications are almost exclusively accessed through and depend on the Google Play store and Apple’s App Store.

While our mobile

applications are generally free to download, we offer our users the opportunity to make in-app purchases and/or purchase paid subscriptions.

In certain instances, we determine the prices at which these items and subscriptions are sold.

These purchases are processed by Google’s

and Apple’s in-app payment and subscription systems.

As of July 31, 2022 we paid Google and Apple, approximately 16% of the revenue

we generated across their respective platforms.

Our cashflow may be negatively impacted if either platform changes that timing of their

payments to us.

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.

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 we 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.

changes could:

our products and services inaccessible or limit their accessibility;

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

changes in the way in which we monetize our users;

the scope of feature enhancements or new features;

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

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

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.

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 become significantly more difficult typically

resulting in higher user acquisition costs.

we violate, or a platform provider believes we have violated, its terms of service, the platform provider reserves the right to limit

or cease access to their platform.

If we are unable to maintain a productive working relationship with any platform distribution and

access to our products and services could also be curtailed or permanently disabled.

This is especially true in instances where we are

dependent on single source providers for their respective services.

Any limitation or discontinuation of access to any platform could

significantly reduce our ability to distribute and/or provide access to our products to users and would like result in materially and

adversely affecting our business, financial condition and results of operations.

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.

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.

digital products and services 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.

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

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.

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

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.

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.

to successfully retain or expand our user base will depend on our ability to achieve the following, among others:

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

in particular;

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;

in a timely fashion and launch new products and features, and develop and launch other internet

products cost-effectively;

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

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

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

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.

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 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 modest 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:

● demonstrate

that a critical mass of artists, individual creators and brands will offer their content

to our Zedge App’s users;

to add new premium content verticals, with ample content in each vertical, to secure end-user

demand and consumption;

a reliable and attractive web-based offering and successfully market it to both creators

and consumers;

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;

to develop a wide array of monetization mechanisms Zedge Premium creators in order to optimize

revenue generation;

evolving ‘NFTs Made Easy’, our NFT platform, in order to meet 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;

● effectively

market and convert GuruShots’ players into Zedge Premium artists;

that Zedge Premium can be valuable to a sufficient number of creators in achieving their

marketing and monetization objectives;

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.

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.

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.

RELATED TO FINANCIAL AND ACCOUNTING MATTERS

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 is the inclusion of Emojipedia for fiscal 2022 and GuruShots for the final two months of fiscal 2022.

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:

forecast our revenue and plan our operating expenses;

integrate, and retain key personnel;

● successfully

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

a scalable technology infrastructure that can efficiently and reliably address increased

usage, as well as new features and services;

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

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

and expand our various digital brands;

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

competitive economics to advertisers and users alike;

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

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

attract, retain and motivate new user and artists;

our expanding operations.

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

we had positive cash flow from operating activities and net earnings in fiscal 2021 and 2022, 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.

net income in fiscal 2022 was $9.7 million and $8.2 million in fiscal 2021 compared to net loss of $0.6 million in fiscal 2020.

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.

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.

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 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

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 with a plethora of other content offerings and entertainment platforms;

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

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

distinguish it from the competition and maintain this distinction.

In the future, we may conduct various marketing and brand promotion

activities to expand our brand.

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.

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:

an easy and reliable user experience as user preferences evolve and as our brands expand

into new service categories and new service lines;

relevant to users who can turn to other providers for digital content and marketplaces and

mobile games;

brand awareness among existing and potential users, advertisers and content providers through

various marketing and promotional activities;

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

● distinguish

us from the competition and maintain this distinction.

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.

We may not be able to continually meet our users’

and retain or expand our user base, and our revenues, profitability and prospects may be materially and adversely affected.

Although we constantly monitor and research our users’

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 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 demands, frequent introductions of new products and services

and constant emergence of new industry standards and practices.

As a result, our Zedge users may leave us for our competitors’

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 talented application designers, product managers and engineers who have experience developing personalization

products or other mobile internet products and services;

effectively market our existing and new mobile internet products 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 artists, individual creators and brands that offer their content to our Zedge app’s users;

attract and retain writers and actors for Shortz;

further improve our Zedge app 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;

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

We cannot assure you that our existing products and services, including

our Zedge app and Emojipedia, will remain sufficiently popular with our users.

We may be unsuccessful in adding compelling new 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, including Zedge Premium, our subscription offering, Shortz or Emojipedia, will achieve widespread market acceptance

or generate incremental revenue the way our existing Zedge app’s products and services have.

If we fail to continue to achieve sufficient

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.

Our marketplace for premium content, called Zedge Premium, may

not yield the strategic goals and objectives that we envision, and our revenues, profitability and prospects may be materially and adversely

negatively affected.

Our marketplace where we charge our users for premium content in our

Zedge app is called Zedge Premium.

Although we believe that Zedge Premium will act as an important driver in helping our Zedge app 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

Zedge Premium’s gross transaction revenue has been growing slowly,

but it is still too early to state with conviction that Zedge Premium will have a materially positive impact on our business.

to do so, we still need, among other things, to:

demonstrate that a critical mass of artists, individual creators and brands will offer their content to our Zedge app’s users;

continue to add new premium content verticals, with ample content in each vertical, to secure end-user demand and consumption;

continue to ensure that our Zedge app is building best-of-breed tools for content contributors in Zedge Premium that, amongst other

things, meet their needs with respect to marketing, distribution, monetization, reporting, support, and ease of use;

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

successfully market to the creative community and secure their adoption of our Zedge Premium platform 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;

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.

Our Zedge app’s 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 Zedge app’s user base is heavily weighted to smartphones

running the Android operating system, which constituted approximately 96% of its MAU as of July 31, 2021, and most of our revenues for

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 Zedge app and would materially affect our revenues.

Although 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 Zedge app’s popularity.

To the extent

that our Zedge app continues to be operated 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

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 grow each of the properties

in our brand portfolio.

We may not be capable of growing our Zedge apps organically, attract

new artists and establish cooperation with strategic partners.

Our Zedge app 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 believe that continued growth of our Zedge app will depend on our ability to develop and enhance its products and

services, attract new artists and individual creators, grow its user base, 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 and take advantage of the growth in the relevant

We cannot assure you that our Zedge app will achieve any or all of the above.

We may not be successful in increasing the number of users that engage

with Emojipedia, maintain our relationship with various content partners like Google, Twitter and Apple or sustain our high rankings with

the leading search engines including Google.

We believe the Emojipedia’s continued success depends on our ability to invest in product

initiatives like localization, provide newsworthy and value-added information and capture the changes that are taking place in the industry

in a timely fashion.

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.

We may need to invest in paid user acquisition in order to grow our

Zedge’s customer base.

However, we may not be able to secure new users at scale with a positive return on investment.

can secure new profitable customers these new customers may be seasonal and/or unsustainable.

To manage our Zedge app’s growth and for us to attain and maintain

profitability, we will also need to further expand, train, manage and motivate our workforce and manage our relationships with users,

consultants, business partners and advertisers.

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.

of these endeavors involve risks and will require substantial management efforts and skills and additional expenditures.

Our Zedge app and Emojipedia currently enjoy a global customer base.

This geographic diversification may raise the level of difficulty in managing their 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.

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.

We cannot assure you, however, that these activities will be successful or that we will be able to achieve the brand promotion effect

In addition, any negative publicity in relation to our mobile internet products, websites or services could harm our brand

and reputation.

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.

obligations could adversely affect our ability to raise additional capital or to fund our operations and also exposes us to interest

rate risk which could negatively impact our ability to make debt service payments.

In addition, we are subject to obligations and restrictive

covenants under our loan from Bridge Bank that may curtail our ability to operate or which we may not be able to maintain compliance

maintain a loan facility with Western Alliance Bank with a new term loan facility in the maximum principal amount of $7,000,000 for a

four-year term and a $4,000,000 revolving credit facility for a two-year term.

indebtedness could have important consequences for us, including, but not limited to, the following:

our ability to borrow money for our working capital, capital expenditures, debt service requirements,

acquisitions, research and development, strategic initiatives or other purposes;

it more difficult for us to satisfy our obligations, and any failure to comply with the obligations

of any of our debt instruments, including restrictive covenants, financial covenants and

borrowing conditions, could result in an event of default under the agreements governing

our indebtedness;

us to dedicate a substantial portion of our cash flow from operations to the payment of interest

and the repayment of our indebtedness, thereby reducing funds available to us for other purposes;

our flexibility in planning for, or reacting to, changes in our operations or business and

the industry in which we operate;

us at a competitive disadvantage compared to our competitors that are less leveraged and

that, therefore, may be able to take advantage of opportunities that our leverage prevents

us from exploring;

our vulnerability to general adverse economic industry and competitive conditions;

us from making strategic acquisitions, engaging in development activities, introducing new

technologies, or exploiting business opportunities;

● potentially

limit the amount of net interest expense that we and our subsidiaries can use in the future

as a deduction against taxable income under applicable tax laws;

along with the financial and other restrictive covenants in the agreements governing our

indebtedness, among other things, our ability to borrow additional funds, make investments

or dispose of assets;

our ability to repurchase shares and pay cash dividends;

us to the risk of increased interest rates.

addition, our credit agreement contains financial and restrictive covenants that limit our ability to engage in activities that may be

in our long-term best interest, including our ability to, among other things:

additional debt under certain circumstances;

or incur certain liens or permit them to exist;

into certain sale and lease-back transactions;

certain investments and acquisitions;

● consolidate,

merge or otherwise transfer, sell or dispose of our assets;

dividends, repurchase stock and make other certain restricted payments;

into certain types of transactions with affiliates.

failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration

of substantially all of our indebtedness.

In the event of such default, the Bank could elect to terminate their commitments thereunder,

cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation.

in accounting principles or their application could result in accounting charges or effects which could adversely affect our operating

results and prospects.

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.

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.

had a material weakness in our internal control over financial reporting as of July 31, 2021, and if we fail to maintain an effective

system of internal controls over financial reporting, we may not be able to accurately report our financial results, and current and

potential stockholders may lose confidence in our financial reporting which could have a negative effect on the trading price of our

are required to establish and maintain adequate internal controls over financial reporting that provide reasonable assurance regarding

the reliability of our financial reporting and the preparation of financial statements in accordance with generally accepted accounting

Likewise, we are required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any

changes and material weaknesses in those internal controls.

A material weakness is a deficiency, or a combination of deficiencies, in

internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s

annual or interim financial statements will not be prevented or detected on a timely basis.

our Annual Report on Form 10-K for the year ended July 31, 2021, we reported that we had a material weakness related to the valuation

allowance against deferred tax assets (see Item 9A Control and Procedures ).

Remediation of the weakness was completed during the

quarterly period ended April 30, 2022.

Management and our Audit Committee will monitor remedial measures and the effectiveness of our

internal controls and procedures.

we aim to work diligently to ensure a robust internal control that is devoid of significant deficiencies and material weaknesses, given

the complexity of the accounting rules, we may, in the future, identify additional significant deficiencies or material weaknesses in

our disclosure controls and procedures and internal control over financial reporting.

Any failure to maintain or implement required new

or improved controls, or any difficulties we encounter in their implementation, could result in additional significant deficiencies or

material weaknesses, cause us to fail to meet our periodic reporting obligations or result in material misstatements in our financial

Any such failure could also adversely affect the results of periodic management evaluations and annual auditor attestation

reports regarding the effectiveness of our internal control over financial reporting required under Section 404 of the Sarbanes-Oxley

Act of 2002 and the rules promulgated under Section 404.

The existence of a material weakness could result in errors in our financial

statements that could result in a restatement of financial statements, cause us to fail to meet our reporting obligations and cause investors

to lose confidence in our reported financial information, leading to a decline in our stock price.

See Item 9A Controls and Procedures

for a further discussion of our assessment of our internal controls over financial reporting.

we believe that our remediation efforts strengthened our internal controls over financial reporting and address the concern that gave

rise to the material weakness as of July 31, 2021, we cannot be certain that our expanded knowledge and revised internal control practices

will ensure that we maintain adequate internal control over our financial reporting in future periods.

Any failure to maintain such internal

controls could adversely impact our ability to report our financial results on a timely and accurate basis.

If our financial statements

are not accurate, investors may not have a complete understanding of our operations.

Likewise, if our financial statements are not filed

on a timely basis as required by the Securities and Exchange Commission and The New York Stock Exchange, we could face severe consequences

from those authorities.

In either case, there could result a material adverse effect on our business.

Inferior internal controls could

also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price

of our 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.

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.

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 Norway, 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 2022 was 16.3% compared and 24.5%

for fiscal 2021.

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.

In addition, and in response to significant

market volatility and disruptions to business operations resulting from the global spread of COVID-19, taxing authorities in many jurisdictions

in which we operate may propose changes to their tax laws and regulations.

These potential changes could have a material impact on our

effective tax rate, long-term tax planning and financial results.

the last several years, the Organization for Economic Cooperation and Development has been working on a Base Erosion and Profits Shifting

Project that, if implemented, would change various aspects of the existing framework under which our tax obligations are determined in

many of the countries in which we do business.

In 2021, more than 140 countries tentatively signed on to a framework that imposes a minimum

tax rate of 15%, among other provisions.

As this framework is subject to further negotiation and implementation by each member country,

the timing and ultimate impact of any such changes on our tax obligations are uncertain.

Similarly, the European commission and several

countries have issued proposals that would apply to various aspects of the current tax framework under which we are taxed.

These proposals

include changes to the existing framework to calculate income tax, as well as proposals to change or impose new types of non-income taxes,

including taxes based on a percentage of revenue.

For example, several jurisdictions have proposed or enacted taxes applicable to digital

services, which includes business activities on digital advertising and online marketplaces, and which may apply to our business.

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 will delay the deductibility of these expenses and potentially increase the amount of cash taxes we pay.

are exposed to fluctuations in foreign currency exchange rates.

have significant operations in Europe and Israel that are denominated in foreign currencies, primarily the Norwegian Krone, Euro and

Israel Shekel, subjecting us to foreign currency risk.

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.

In fiscal 2022 and fiscal 2021, we recorded a

loss of $281,000 and $2,000, respectively, from foreign currency movements relative to the U.S.

Included in these amounts were

losses from hedging activities of $368,000 and $18,000 in fiscal 2022 and fiscal 2021, 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.

in foreign exchange rates could significantly impact our financial results.

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.

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.

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.

Additionally,

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.

RELATED TO OUR OPERATIONS

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.

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

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.

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, Twitter 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, 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.

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.

may 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.

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.

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.

During the past five years, we have experienced a shift in our Zedge

app’s regional customer make-up with MAU increasing in the emerging markets and decreasing in the well-developed markets.

2021, our Zedge app’s users in the emerging markets grew by 16.1% while its users in the well-developed regions declined 11.5% when

compared to fiscal 2020.

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 fiscal 2022, our Zedge App’s users in emerging markets declined by 4.6% while its users in well-developed

regions declined 14.1% when compared to fiscal 2021.

India comprised 28.4% of our MAU as of July 31, 2022.

This shift has negatively impacted revenues because the well-developed

markets command materially higher advertising rates when compared to those in the 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.

Our products may contain errors, flaws or failures that may only become

apparent after their release, especially in updates to our Zedge app.

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.

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, including our Zedge app,

This shift has negatively impacted

revenues because well-developed markets command materially higher advertising rates when compared to those in emerging markets.

we are investing in reversing this trend, we may not be successful in this effort which may result in lower revenues and profitability.

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 and measure their advertising

campaigns at the user level has become significantly more difficult typically resulting in higher user acquisition costs.

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 may not be able to convert freemium users into paying subscribers

or maintain paying subscribers for more than a year.

Much of our growth in our Zedge’s app’s MAU since January

2019 is attributable to offering a paid subscription option which is weighted to securing annual prepaid subscriptions.

In addition, approximately,

45% of annual subscribers have renewed their subscription for a second year while approximately 60% of those subscribers have renewed

their subscription for a third year.

Depending on the success of our product, the evolution of subscriptions and items beyond our control

users may opt not to convert into paying subscribers and/or paying subscribers may choose not to renew their subscriptions.

these would adversely impact the business.

During the second half of fiscal 2021, active subscription numbers were flat as new subscriptions

were offset by cancellations during the period.

This trend may continue into future periods.

We do not have long-term agreements with our advertisers, and

we may be unable to retain existing advertisers, attract new advertisers or replace departing advertisers with advertisers that can provide

comparable revenues to us, in which case our business and results of operations may be materially and adversely affected.

In fiscal 2021, approximately 80% of our revenues were generated from

our Zedge app selling advertising inventory.

We anticipate that our growth and profitability will continue to depend on our ability to

effectively sell and optimize our advertising inventory.

Our success requires us to maintain and expand our current advertiser relationships

and to develop new relationships.

Our contracts with our Zedge app’s and Emojipedia’s advertising

partners generally do not include long-term obligations requiring them to purchase our inventory and are cancelable upon short or no notice

and without penalty.

Furthermore, the majority of our advertisers buy our inventory via third-party platforms and bidding exchanges that

own the relationship with the advertiser.

As a result, we may have limited visibility as to our future advertising revenue streams.

We cannot assure you that advertisers will continue to purchase our

inventory, or that we will be able to replace, in a timely or effective manner, departing advertisers with new advertisers that generate

comparable revenue.

If one or more major advertisers representing a significant portion of our business decide to materially reduce its

advertising spend with us or cease purchasing our Zedge app’s advertising inventory, our revenues and profitability could be significantly

Furthermore, MoPub, a fully owned division of Twitter, has been our

ad mediation platform for the past ten years and is in the process of being purchased by AppLovin a provider of advanced tools for mobile

app developers to grow their businesses by automating and optimizing the marketing and monetization of their apps.

In the event that this

transaction closes it is possible that MoPub’s mediation platform will be deprecated requiring us to migrate to a different mediation

This will not only require resource and time investment, which may slow down are ability to deliver other product initiatives

but may also negatively impact the demand for and pricing of our advertising inventory.

Our products face competition in all aspects of its business.

If our Zedge app fails to compete effectively or if its reputation is damaged, our business, financial condition and results of operations

may be materially and adversely affected.

Although our Zedge app is currently a leading platform for smartphone

personalization end Emojipedia is a leading provider for emoji related content and information, we cannot guarantee that either of these

properties will be able to maintain their leadership position.

Both of these properties face potential competition from other internet

companies, app developers and smartphone manufacturers, and new market entrants may also emerge.

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

products face competition in all aspects of its 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.

face potential competition from other internet companies, app developers and smartphone manufacturers, and new market entrants may also

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.

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, including NFTs.

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.

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.

we fail to keep up with rapid technological changes in the internet and smartphone industries and adapt our products and services accordingly,

our results of operations and future growth may be adversely affected.

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 to evolving industry standards and improve

the performance, functionality and reliability of our products and services.

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.

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

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

For example, in May 2019, the United States banned U.S.

companies from doing business with Huawei, a major smartphone manufacturer,

in 2020 the United States threatened to ban TikTok from operating in the U.S.

market, and in 2022 the United States imposed broad-ranging

economic sanctions against Russia and Belarus because of Russia’s illegal invasion of the Ukraine;

local labor laws and regulations;

uncertainty of enforcement of remedies in foreign jurisdictions;

and unclear laws around data privacy;

payment cycles;

risk and higher levels of payment fraud;

repatriation restrictions and foreign currency exchange restrictions;

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

● geopolitical

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

or export regulations;

laws such as the Foreign Corrupt Practices Act, and local laws prohibiting bribery

and corrupt payments to government officials;

and competition regulations;

● potentially

adverse tax developments;

volatility in business activity and local economic conditions;

uncertainties relating to European sovereign and other debt;

regulations, licensing requirements, and business practices that favor local competitors

or prohibit foreign ownership or investments;

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

uncertain or more stringent user protection, content, data protection, privacy, intellectual

property and other laws;

related to other government regulation, required compliance with local laws or lack of legal

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.

are subject to numerous and sometimes conflicting U.S.

and foreign laws and regulations that increase our cost of doing business.

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.

have offices and other significant operations located in Lithuania, Israel, and Norway, and, therefore, our results may be adversely

affected by political, economic and military instability in these countries.

overwhelming majority of our employees are located in Lithuania, Israel, and Norway and many of our senior managers live in Israel or

For those that reside in Israel and Lithuania political, economic and military conditions directly affect our business.

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.

State of Israel has had various armed conflicts with its neighbors as well as terrorist acts committed within Israel by hostile elements.

In addition, recent political uprisings and conflicts in various countries in the Middle East, including Syria, are affecting the political

stability of those countries.

In addition, the 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.

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 either of these locations.

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.

armed conflicts or political instability in the region would likely negatively affect business conditions generally and could harm our

results of operations.

Additionally,

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.

Republic of Lithuania borders both the Russian exclave of Kaliningrad and the Republic of Belarus, who are aligned in Russia’s

illegal invasion of the 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 the economy.

This action also negatively impacted GuruShots because it utilizes a small number

of outsourced contractors based in the Ukraine.

This resulted in temporarily disrupting the work product associated with these contractors

at the outset of the war.

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.

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

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.

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

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

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.

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

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, successfully integrating

and retaining these employees.

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.

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 enables employees to work from home unless they are needed in the office.

Although this policy has been well received

by employees, it is as of yet unclear whether it will be revised as many businesses have been returning to an office environment as a

result of better public health measures relating to Covid management.

April of 2022 we completed the acquisition of GuruShots Ltd, an Israeli based company.

GuruShots utilized a small number of outsourced

contractors based in the Ukraine.

Russia’s illegal invasion of the 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.

addition, consumer prices have risen materially throughout the Eurozone leaving uncertainty about how this may impact employment costs

in the future.

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.

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.

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 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.

can be no assurance that these providers will continue licensing their technologies or intellectual property to us on reasonable terms,

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.

January 2022, AppLovin a mobile technology company that enables developers of all sizes to market, monetize, analyze and publish their

apps through its mobile advertising, marketing, and analytics platforms consummated the acquisition of mobile monetization company MoPub

from Twitter.

MoPub had been our ad mediation platform for the past ten years.

At the time of the acquisition, AppLovin announced that

it would deprecate MoPub’s mediation platform.

This resulted in Zedge needing to migrate to a different mediation platform.

unanticipated migration required material resource and time investment that delayed the delivery of other product initiatives we had

track certain key performance indicators with internal and third-party tools and do not independently verify that all of this data 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.

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.

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.

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.

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.

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.

epidemics, medical emergencies and other public health crises outside of our control could have a negative impact on our business.

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.

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.

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.

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

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.

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 is 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.

Zedge may experience a material downturn in

its business making it impossible to meet, or other factors may prevent us from meeting, the user acquisition spend obligations that we

have made to the sellers of GuruShots.

In connection with the acquisition of GuruShots,

the Company has (i) committed to a retention pool of $4 million in cash to be paid to the founders and employees of GuruShots that will

be payable over three years from closing of the acquisition based on the beneficiaries thereof remaining employed by the Company or a

and (ii) agreed to make certain minimum investments in user acquisition for GuruShots in the period covered by the earnout

to be contingently paid to the prior owners of GuruShots subject to GuruShots maintaining agreed upon levels of return on ad spend (ROAS).

In the event that there is a material economic setback or another catastrophic event that negatively impacts advertising spend we may

be unable to meet our user acquisition spend obligations.

Other factors, including those related to GuruShots’

operations, may also prevent us from making the committed user acquisition spend commitments, and the current levels of spend would not

meet the commitments.

Although we believe that we have acted in compliance with our obligations, we could be exposed to liability to

the prior owners of GuruShots.

may be unable to successfully integrate GuruShots into Zedge.

and GuruShots will need to integrate their operations which will require coordination between management, marketing, technology, product

development, and operations.

Zedge may not execute the integration successfully resulting in higher costs, product delays, employee resignations,

and overall underperformance.

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

acquired GuruShots with the expectation that the transaction will yield growth on a standalone basis as well as 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.

strategic alliances or acquisitions may not be successful and may have a material and adverse effect on our business, reputation and

results of operations.

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.

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.

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.

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.

AND REGULATORY RISKS

or regulatory proceedings or allegations of impropriety could have a material adverse impact on our reputation, results of operations,

financial condition and liquidity.

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.

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.

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.

Our Zedge app in the midst of expanding beyond mobile phone personalization

and focusing on becoming a distribution platform for professional artists, individual creators and brands interested in offering their

content to consumers that are looking for an easy, entertaining and unique way of using this content to express their voice, individuality

We aspire to have our Zedge app be the destination that smartphone users turn to when looking for mobile optimized, digital

If we are unsuccessful in meeting our goal, our brand 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.

If we fail to keep up with rapid technological changes in the

internet and smartphone industries 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 to evolving industry standards and improve the performance, functionality and reliability of our products and

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.

Our international operations and availability 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, there are additional risks inherent in doing business internationally, including:

tariffs, trade barriers, customs classifications and changes in trade regulations.

For example, in May 2019, the United Stated banned

companies from doing business with Huawei, a major smartphone manufacturer, the result of which is that our Zedge app will not be

available on new Huawei phones, and in 2020 the United States threatened to ban TikTok from the U.S.

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

stringent local labor laws and regulations;

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

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.

We are subject to numerous and sometimes conflicting U.S.

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.

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.

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

as discussed more fully in the Legal Proceedings section below 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 a focus on our users’

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.

We had a material weakness in our internal control over financial

reporting as of July 31, 2021, and if we fail to maintain an effective system of internal controls over financial reporting we may not

be able to accurately report our financial results, and current and potential stockholders may lose confidence in our financial reporting

which could have a negative effect on the trading price of our stock.

We are required to establish and maintain adequate internal controls

over financial reporting that provide reasonable assurance regarding the reliability of our financial reporting and the preparation of

financial statements in accordance with generally accepted accounting principles.

Likewise, we are required, on a quarterly basis, to

evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses in those internal controls.

material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is

a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented

or detected on a timely basis.

In this Annual Report on Form 10-K for the year ended July 31, 2021,

we reported that we had a material weakness related to the valuation allowance against deferred tax assets (see Item 9A Control and

Procedures in this Annual Report on Form 10-K).

Notwithstanding the material weakness described above, we have performed additional

analyses and other procedures to enable management to conclude that our financial statements included in this Form 10-K fairly present,

in all material respects, our financial condition and results of operations as of and for the year ended July 31, 2021.

Remediation of

these weaknesses had not yet been completed, and therefore these deficiencies continued to exist as of November 3, 2021.

Management and

our Audit Committee will monitor remedial measures and the effectiveness of our internal controls and procedures.

While we aim to work diligently to ensure a robust internal control

that is devoid of significant deficiencies and material weaknesses, given the complexity of the accounting rules, we may, in the future,

identify additional significant deficiencies or material weaknesses in our disclosure controls and procedures and internal control over

financial reporting.

Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their

implementation, could result in additional significant deficiencies or material weaknesses, cause us to fail to meet our periodic reporting

obligations or result in material misstatements in our financial statements.

Any such failure could also adversely affect the results

of periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our internal control over financial

reporting required under Section 404 of the Sarbanes-Oxley Act of 2002 and the rules promulgated under Section 404.

The existence of a

material weakness could result in errors in our financial statements that could result in a restatement of financial statements, cause

us to fail to meet our reporting obligations and cause investors to lose confidence in our reported financial information, leading to

a decline in our stock price.

See Item 9A Controls and Procedures for a further discussion of our assessment of our internal controls

over financial reporting.

Although we believe that our remediation efforts will strengthen our

internal controls over financial reporting and address the concern that gave rise to the material weakness as of July 31, 2021, we cannot

be certain that our expanded knowledge and revised internal control practices will ensure that we maintain adequate internal control over

our financial reporting in future periods.

Any failure to maintain such internal controls could adversely impact our ability to report

our financial results on a timely and accurate basis.

If our financial statements are not accurate, investors may not have a complete

understanding of our operations.

Likewise, if our financial statements are not filed on a timely basis as required by the Securities and

Exchange Commission and The New York Stock Exchange, we could face severe consequences from those authorities.

In either case, there could

result a material adverse effect on our business.

Inferior internal controls could also cause investors to lose confidence in our reported

financial information, which could have a negative effect on the trading price of our stock.

Legal proceedings or allegations of impropriety could have a

material adverse impact on our reputation, results of operations, financial condition and liquidity.

We have been, and may be in the future, subject to allegations or lawsuits

by entities claiming that we engage in unethical, fraudulent or otherwise inappropriate business practices.

Any such lawsuit or allegation,

with or without merit, or any perceived unfair, unethical, fraudulent or inappropriate business practice by us or perceived wrong-doing

by any key member of our management team could harm our reputation and user base and distract our management from our day-to-day operations.

We cannot assure you that we will not be subject to lawsuits or allegations in the future.

When we can make a reasonable estimate of the

liability relating to pending litigation and determine that an adverse liability resulting from such litigation is probable, we will record

a related contingent liability.

As additional information becomes available, we will assess the potential liability and revise estimates

as appropriate.

In fiscal years 2020 and 2021, we did not record any contingent liabilities

relating to pending litigation.

When we record or revise our estimates of contingent liabilities in the future, the amount of our estimates

may be inaccurate due to the inherent uncertainties relating to litigation.

In addition, the outcomes of actions we institute against

third parties may not be successful or favorable to us.

Litigations and allegations against us may also generate negative publicity that

significantly harms our reputation, which may materially and adversely affect our user base and our ability to attract publishers and

In addition to the related cost, managing and defending litigation and related indemnity obligations can significantly divert

management’s and the board of directors’

attention from operating our business.

We may also need to pay damages or settle

the litigation with a substantial amount of cash or equity.

All of these could have a material adverse impact on our business, results

of operation and cash flows.

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, 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 and negative

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, 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.

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.

On July 16, 2020, rulings from the Court of Justice of the European

Union invalidated the EU-U.S.

Privacy Shield as a lawful means for transferring personal data from the European Economic Area, or the

EEA, or the United Kingdom to the United States The court upheld that the Standard Contractual Clauses, or SCCs, can act as a valid transfer

mechanism for personal data transfer, but that additional measures may be required to ensure adequate protection of personal data.

rely on SCCs, a data exporter must verify that the jurisdiction in which the data importer is based offers adequate protection for personal

Data exporters may also need to put in place additional measures to deal with any risks associated with data transfer, such as technical

controls and additional contractual obligations on how to manage onward transfers and compelled disclosures to public authorities.

such assessments and implementing additional measures could restrict our business operations and require us to incur additional costs

for compliance.

Following the United Kingdom’s exit from the EU, the provisions

of the EU General Data Protection Regulation 2016/679, or GDPR, have been incorporated directly into UK law as the “UK GDPR”.

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, 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 and negative publicity.

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, 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.

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.

addition, the Digital Millennium Copyright Act, or DMCA, has provisions that limit, but do not necessarily eliminate, our liability for

hosting user-generated materials that infringe copyrights, so long as we comply with the statutory requirements in the DMCA.

Also, Section

230 of the Communications Decency Act, or CDA, provides immunity from liability for providers of an interactive computer service who

publish defamatory information provided by users of the service.

While the immunity provisions of the DMCA and the CDA are well established,

there are regular cases seeking to limit the application of such immunity.

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

In the area of data protection, every state has passed a law requiring notification, and at times, the provision of identity

theft protection, to users when there is a security breach for personal data.

We face similar risks and costs as our products and services

are offered in international markets and may be subject to additional regulations.

many, but not all, territories outside of the United States there are laws similar to the DMCA which exempt us from copyright infringement

liability that may arise due to hosting user-uploaded materials.

In some countries, particularly in Europe and the APAC region, these

laws are being readjusted and new - at times burdensome - constraints are being imposed onto service providers.

June 2019, the European Union’s Directive on Copyright in the Digital Single Market, or the Directive, came into effect, and each

of the European Union’s members were supposed to have implemented the Directive by June 2021.

To date seven EU Member States (including

Germany, the Netherlands, Croatia, Malta, France, Italy and Hungary).

Article 17 removes the shield of the current ‘hosting exemption’, enshrined in 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:

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);

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);

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’.

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

we have invested and continue to invest in systems and resources, which are intended to ensure that we are compliant with the requirements

CCPA, DMCA, the 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.

privacy and security laws and regulations in the jurisdictions in which we do business subject us to possible sanctions, civil lawsuits

(including class action or similar representative lawsuits) and other penalties in the event of non-compliance, additionally the need

to observe these regulations increases the cost of doing business and these laws and regulations are continually evolving.

failure either by us or our partners, or vendors could harm our business.

business relies on collecting, processing, storing, using and sharing data, some of which contains personal information, including the

personal information of our users.

Our business is therefore subject to a number of federal, state, local and foreign laws, regulations,

regulatory codes and guidelines governing data privacy, data protection and security, including with respect to the collection, storage,

use, processing, transmission, sharing and protection of personal information.

Such laws, regulations, regulatory codes and guidelines

may be inconsistent across jurisdictions or conflict with other rules and change regularly.

July 16, 2020, rulings from the Court of Justice of the European Union invalidated the EU-U.S.

Privacy Shield as a lawful means for transferring

personal data from the European Economic Area, or the EEA, or the United Kingdom to the United States.

The court upheld that the Standard

Contractual Clauses (“SCCs”), can act as a valid transfer mechanism for personal data transfer, but that additional measures

may be required to ensure adequate protection of personal data.

To rely on SCCs, a data exporter must verify that the jurisdiction in

which the data importer is based offers adequate protection for personal data.

Data exporters may also need to put in place additional

measures to deal with any risks associated with data transfer, such as technical controls and additional contractual obligations on how

to manage onward transfers and compelled disclosures to public authorities.

Undertaking such assessments and implementing additional

measures could restrict our business operations and require us to incur additional costs for compliance.

Following the United Kingdom’s exit from the EU, the provisions

of the EU General Data Protection Regulation 2016/679, or GDPR, have been incorporated directly into UK law as the “UK GDPR”.

In practice, there is little change to the core data protection principles, rights and obligations under UK data protection law.

28 2021, the EU approved the United Kingdom’s adequacy decision, meaning data can continue to flow between the United Kingdom and

28, 2021, the EU approved the United Kingdom’s adequacy decision, meaning data can continue to flow between the United Kingdom and

EEA as it did prior to Brexit, in most circumstances.

2 unchanged sentences

our future compliance costs.

In addition to the actual and potential changes to laws and regulations

described elsewhere in these Risk Factors, compliance with privacy and data security regulations, particularly within the EU, is likely

to require ongoing investment and changes in how we operate.

For example, in May 2018 the EU implemented the GDPR, whose goal is to provide

a uniform standard for data protection and privacy for all individuals in the EU and EEA, including both end-users and employees.

compliance required us to invest a considerable amount of resources in fiscal 2018 in addition to adopting new operational procedures

in order to assure ongoing compliance.

In 2018, California passed the California Consumer Privacy Act, or CCPA, which is a privacy law

that provides consumers significant rights over the use of their personal information, including the right to object to the “sale”

of their personal information.

Amendments to the CCPA under the California Privacy Rights Act which will take effect in 2023 expand some

of the CCPA rights to residents to restrict the use of certain information.

addition to the actual and potential changes to laws and regulations described elsewhere in these Risk Factors, compliance with privacy

and data security regulations, particularly within the EU, is likely to require ongoing investment and changes in how we operate.

example, in May 2018 the EU implemented the GDPR, whose goal is to provide a uniform standard for data protection and privacy for all

individuals in the EU and EEA, including both end-users and employees.

GDPR compliance required us to invest a considerable amount of

resources in fiscal 2018 in addition to adopting new operational procedures in order to assure ongoing compliance.

2018, California passed the California Consumer Privacy Act (“CCPA”), which is a privacy law that provides consumers significant

rights over the use of their personal information, including the right to object to the “sale” of their personal information.

Amendments to the CCPA under the California Privacy Rights Act (“CPRA”) which will take effect in 2023 expand some of the

CCPA rights to residents to restrict the use of certain information.

These rights may restrict our ability to use personal information

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require us to incur additional costs for compliance.

While we carefully consider the compliance mandates of the GDPR and CCPA, it is possible

that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict

with other rules or our business practices.

In addition, the Digital Millennium Copyright Act, or DMCA, has provisions

that limit, but do not necessarily eliminate, our liability for hosting user-generated materials that infringe copyrights, so long as

we comply with the statutory requirements in the DMCA.

Also, Section 230 of the Communications Decency Act, or CDA, provides immunity

from liability for providers of an interactive computer service who publish defamatory information provided by users of the service.

the immunity provisions of the DMCA and the CDA are well established, there are regular cases seeking to limit the application of such

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 the area of data protection, every state has passed

a law requiring notification, and at times, the provision of identity theft protection, to users when there is a security breach for personal

We face similar risks and costs as our products and services are offered in international markets and may be subject to additional

In many, but not all, territories outside of the United States there

are laws similar to the DMCA which exempt us from copyright infringement liability that may arise due to hosting user-uploaded materials.

In some countries, particularly in Europe and the APAC region, these laws are being readjusted and new - at times burdensome - constraints

are being imposed onto service providers.

the Digital Single Market, or the Directive, came into effect, and each of the European Union’s member were supposed to have implemented

the Directive by June 2021.

To date seven EU Member States (including Germany, the Netherlands, Croatia, Malta, France, Italy and Hungary) .

Directive Article 17 removes the shield of the current ‘hosting

exemption’, enshrined in 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 licence) 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 rightholders

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

expeditiously taking down or disabling access to content upon receiving a sufficiently substantiated notice to do so by rightholders

(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 rightholders pursuant

to the previous requirement (i.e., a ‘notice and stay down’

requirement);

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”.

Although we have invested and continue to invest in systems and resources,

which are intended to ensure that we are compliant with the requirements of the GDPR.

CCPA, DMCA, the 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.

If we 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 our Zedge app may not grow as anticipated, or may decline, or users’

level of engagement with our Zedge app 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 aggregate and

host compelling content and deliver that content to our users via our products.

We achieve this when users upload their own user-generated

content to our Zedge app, when artists, individual creators and brands upload their licensed content to our Zedge app, or when we create

content or enter into business partnerships with content owners and distribute this content on our Zedge app.

For Shortz, we typically

commissioning the content by paying a small upfront fee and sharing in the future revenues with the author of that content.

In Emojipedia’s

case, we usually receive new emojis from the content owner while paying authors to write articles on our blog.

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 or from whom we have create this content on

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.

There may be owners of technology patents, copyrights, trademarks,

trade secrets and content, who assert claims against us.

If a claim of infringement is brought against us, 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.

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, successfully integrating and retaining these employees.

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.

At the end of the first quarter of fiscal 2017, we implemented a modest

reduction in workforce, primarily in Norway.

This action may have impacted employee morale and led, or may lead, to higher rates of voluntary

attrition compared to prior years.

If we are unable to retain and attract qualified employees, particularly in critical areas of operations

such as engineering, we may not achieve our strategic goals and our business and operations could be harmed.

In August of 2018 we opened a development center in Vilnius, Lithuania

in order to diversify our talent pool with a qualified and more affordable talent base.

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 its development goals and objectives.

successful in ramping up the recruitment and hiring in fiscal 2020 and ended the fiscal year with a team of 16 engineers product managers,

operations professionals and designers.

In August 2020, we moved to a serviced office space which provides maximum flexibility during

the pandemic.

In March 2021 our Trondheim, Norway office executed a new lease for a smaller location which we moved into in April.

fiscal 2021 we adopted a “remote-first”

work policy that enables employees to work from home unless they are needed in the

This policy has been well received by employees.

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, 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 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.

of July 31, 2021, we have registered, amongst others, the following domain names:

www.zedge.net and www.zedge.com.

In addition, we have

been granted trademark protection for “Zedge”

in the United States, European Union, United Kingdom, India, and Canada and

for “Tonesync”

in the European Union and the United Kingdom, and “We Make Phones Personal”

and “Shortz –

Chat Stories by Zedge”

in the United States, and have obtained a copyright registration for our flagship app, Zedge.

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, China and

Australia, and trademark registrations for “World Emoji Day”

in the United States and United Kingdom.

We also acquired the

following domain name registrations:

www.emojipedia.com and www.emojipedia.org.

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.

In addition, 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

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

We rely on third parties to provide the technologies 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 interruption

of our Zedge app 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 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.

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.

In October 2021 AppLovin a provider of advanced tools for mobile app

developers to grow their businesses by automating and optimizing the marketing and monetization of their apps announced that subject to

regulatory approval that they were purchasing MoPub, a fully owned division of Twitter.

MoPub has been our ad mediation platform for the

past ten years.

In the event that this transaction closes it is possible that MoPub’s mediation platform will be deprecated requiring

us to migrate to a different mediation platform.

This will not only require resource and time investment, which may slow down are ability

to deliver other product initiatives but may also negatively impact the demand for and pricing of our advertising inventory potentially

resulting in lower revenue.

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.

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 depends on our ability to collect and use data

to deliver relevant content and advertisements, and any limitation on the collection and use of this data could significantly diminish

the value of our services and cause us to lose clients and revenues.

When one uses our products and services, including our Zedge app, 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, Facebook and other login credentials, phone model, operating system,

location, Android Advertising ID, the collection of apps running on the user’s mobile device as well as information relating to

their interaction with advertisements appearing within our products.

Often we use some of this data to provide a better experience for

the user by delivering both relevant content and advertisements.

In addition, we use some of this data for advertising reporting purposes.

Although our Privacy Policy and Terms of Service provide extensive

details about how we use customer data our clients may decide not to allow us to collect some or all of this data or may limit our use

of this data.

Any limitation on our ability to collect data about user behavior and app interactions would likely make it more difficult

for us to deliver germane content to our users and effective mobile advertising campaigns that meet the demands of our advertisers.

Our contracts with advertisers generally permit us to aggregate data

from advertising campaigns, yet these clients might nonetheless request that we discontinue using data obtained from their campaigns that

have already been aggregated with other clients’

campaign data.

It would be difficult, if not impossible, to comply with these requests,

and these kinds of requests could also cause us to invest significant amounts of resources.

Interruptions, failures or defects in our

data collection, mining, analysis and storage systems, as well as privacy concerns and regulatory restrictions regarding the collection

of data, could also limit our ability to aggregate and analyze mobile device user data from our clients’

advertising campaigns.

If that happens, we may not be able to optimize the placement of advertising for the benefit of our advertiser clients, which could make

our services less valuable, and, as a result, we may lose clients and our revenues may materially decline.

Concerns about collection and use of personal data could damage

our reputation and deter current and potential users from using our products and services, which could have material adverse effects on

our business and results of operations.

Concerns about products with regard to the collection, use or disclosure

of personal information or other privacy-related matters, even if unfounded, could damage our reputation and results of operations.

apply strict management and protection of user-provided data and only use this data as described in our Privacy Policy and Terms of Service.

While we strive to comply with our Privacy Policy as well as all applicable data protection laws and regulations, including GDPR and soon

to be the CCPA, any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others,

and could damage our reputation.

User and regulatory attitudes towards privacy are evolving, and future regulatory or user concerns about

the extent to which personal information is used or shared with advertisers or others may adversely affect our ability to share certain

data with advertisers, which may limit certain methods of targeted advertising.

In addition, new regulatory requirements or orders or

other federal, state or international privacy or consumer protection-related laws and regulations or proceedings or actions against us

by governmental entities or others (e.g., class action privacy litigation) could result in us having to change our business practices,

increase our costs and adversely affect our business.

For instance, U.S.

courts have begun to define a level of reasonable security that

is required when maintaining personal information, and such requirements could both increase our cost of operations and subject us to

liability for failure to maintain such levels of security.

Data collection, privacy and security have become the subject of increasing

public concern.

If internet and mobile customers were to reduce their use of our products, and services as a result of these concerns,

our business could be harmed.

As noted above, we are also subject to the possibility of security breaches, which themselves may result

in a violation of these laws.

Concerns about the security of personal data could also lead to a decline

in general usage of our products and services, which could lead to lower user numbers.

A significant reduction in user numbers could

have a material and adverse effect on our business, financial condition and results of operations.

Activities of our advertiser clients could damage our reputation

or give rise to legal claims against us.

Our advertisers may not comply with federal, state and local laws,

including, but not limited to, laws and regulations relating to mobile communications.

Failure of our clients to comply with federal,

state or local 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 we deliver 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 that their advertisements are lawful and that

they have the right to use any copyrights, trademarks or other intellectual property included in an advertisement, 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.

Security breaches or computer virus attacks could have a material

adverse effect on our business prospects and results of operations.

Any significant breach of security of our computer systems could significantly

harm our business, reputation and results of operations and could expose us to lawsuits brought by our users and partners and to sanctions

by governmental authorities in the jurisdictions in which we operate.

We cannot assure you that our IT systems will be secure from future

security breaches or computer virus attacks.

While we carefully consider the compliance mandates of the GDPR and CCPA/CPRA, it

is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and

may conflict with other rules or our business practices.

recent years, the United States and European lawmakers and regulators have voiced concern about electronic marketing and the use of third-party

cookies and similar technology for online behavioral advertising.

In the European Union, marketing is defined broadly to include any

promotional material and the rules specifically on e-marketing are currently set out in the ePrivacy Directive which is expected to be

replaced by a new ePrivacy Regulation in 2023.

While the ePrivacy Regulation was originally intended to be adopted on in May of 2018

it is still making its way through the European legislative process.

The current draft of the ePrivacy Regulation imposes strict opt-in

e-marketing rules with limited exceptions for business-to-business communications and significantly increases fining powers to the same

levels as the GDPR.

Regulation of cookies may result in broader restrictions on our online activities, including efforts to understand

followers’ internet usage and promote ourselves to them.

addition, Lithuania, Israel, and Norway, each have unique data privacy regulations that impact how and what we can do with employee data

and require local compliance efforts.

to comply with these and other data privacy and security restrictions that may be adopted could require us to modify our data processing

practices and policies increasing the cost of our operations.

Failure to comply could subject us to criminal and civil sanctions and

other penalties.

In part due to the uncertainty of the legal climate, complying with regulations, and any applicable rules or guidance

from regulatory authorities or self-regulatory organizations relating to privacy, data protection, information security and consumer

protection, may result in substantial costs and may require changes to our business practices, which may limit our growth strategy, adversely

impact our ability to attract or retain players, and otherwise negatively affect our business, reputation, legal exposure, financial

condition and results of operations.

failure or perceived compliance failure with our posted privacy policies, our privacy-related obligations to users or other third parties,

or any other legal obligations or regulatory requirements relating to privacy, data protection, or information security may result in

official investigations or enforcement actions, litigation, legal claims, or negative publicity from consumer advocacy groups or the

press and could result in significant liability, cause our users to lose trust in us to the point of severing their relationship with

us, and otherwise materially and adversely affect our business.

Furthermore, the costs of compliance with, and other burdens imposed

by, the laws, regulations, and policies that are applicable to us may limit the adoption and use of, and reduce the overall demand for,

our products and services.

Additionally, service providers or other third parties that we work with, violate applicable laws, regulations,

or agreements, such violations may put our users’ and/or employees’ data at risk, could result in formal investigations or

enforcement actions, fines, litigation, claims or negative publicity from consumer advocacy groups or the press and could result in significant

liability, cause our players to lose trust in us and otherwise materially and adversely affect our reputation and business.

public scrutiny of data practices and privacy, or complaints about, such practices, especially when lodged against technology companies,

may heighten the chances for an official investigation and result in modifications to existing or the introduction of new regulatory

requirements resulting in higher costs and risks.

RELATED TO CONTENT AND INTELLECTUAL PROPERTY

we 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 our Zedge App may not grow as anticipated, or may decline, or users’

level of engagement with our Zedge App may decline, all or any of which could materially harm our business and operating results.

future success depends, in part, on our ability to aggregate and host compelling content and deliver that content to our users via our

digital properties.

We achieve this when users play our games, 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 marketplace.

In addition we commission authors to write articles for our blog.

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.

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

may be owners of technology patents, copyrights, trademarks, trade secrets and content, who assert claims against us.

There may also

be 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.

If a claim of infringement is brought against us, 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.

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

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, 2022, 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, “Tonesync”

in the European Union and the United Kingdom, “We Make Phones Personal,” and “Zedge, Everything You” in the United

States, a stylized “D” logo in the European Union and the United Kingdom, “Emojipedia” in the United States,

the European Union, the United Kingdom, China and Australia, and “World Emoji Day” in the United States and United Kingdom.

We have also applied for trademark protection for “Tattoo your phone,” and “NFTs Made Easy” in the United States,

a stylized “D” logo in the United States, Canada, and India, and “GuruShots” in the United States, and have filed

copyright applications for the GuruShots mobile and web-based applications, and have obtained a copyright registration for our flagship

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.

addition, 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.

insurance may not provide adequate levels of coverage against claims.

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.

RELATED INFORMATION TECHNOLOGY AND DATA SECURITY

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.

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, Facebook 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.

Often, we use

some of this data to provide a better experience for the user by delivering both relevant content and advertisements.

In addition, we

use some of this data to help us target prospective customers as well as for advertising reporting purposes.

Additionally,

internet enabled devices and operating systems are controlled by third parties and in most cases offer options that allow users to disable

functionality that allows for the delivery of advertising on their devices.

Device and browser manufacturers may include or expand these

features as part of their standard device specifications.

For example, Apple deprecated UDID, a standard device identifier, ultimately

replacing it with IDFA, which makes the process for iPhone users to opt out of behavioral targeting easier.

If players elect to opt-out

of sharing data about themselves we will be curtailed in our ability to deliver effective which could negatively affect our digital advertising

our Privacy Policy and Terms of Service provide extensive details about how we use customer data our clients may decide not to allow

us to collect some or all of this data or may limit how we can use this data.

Any limitation on our ability to collect data about user

behavior and app interactions would likely make it more difficult for us to deliver germane content to our users and effective mobile

advertising campaigns that meet the demands of our advertisers.

contracts with advertisers generally permit us to aggregate data from advertising campaigns, yet these clients might nonetheless request

that we discontinue using data obtained from their campaigns that have already been aggregated with other clients’ campaign data.

It would be difficult, if not impossible, to comply with these requests, and these kinds of requests could also cause us to invest significant

amounts of resources.

Interruptions, failures or defects in our data collection, mining, analysis and storage systems, as well as privacy

concerns and regulatory restrictions regarding the collection of data, could also limit our ability to aggregate and analyze mobile device

user data from our clients’ advertising campaigns.

If that happens, we may not be able to optimize the placement of advertising

for the benefit of our advertiser clients, which could make our services less valuable, and, as a result, we may lose clients and our

revenues may materially decline.

breaches or computer virus attacks could have a material adverse effect on our business prospects and results of operations.

significant breach of security of our computer systems could significantly harm our business, reputation and results of operations and

could expose us to lawsuits brought by our users and partners and to sanctions by governmental authorities in the jurisdictions in which

We cannot assure you that our IT systems or those of third-parties that we depend on will be secure from future security

breaches or computer virus attacks.

Anyone who is able to circumvent our security measures could misappropriate proprietary information,

including the personal information of our users, obtaining users’

names and passwords and enabling the hackers to access user’s

including the personal information of our users, obtaining users’ names and passwords and enabling the hackers to access user’s

other online and mobile accounts, if those users use identical usernames and passwords.

8 unchanged sentences

breach or virus attack on our system could result in a material adverse impact on our business and results of operations.

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 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

For example, between December 14, 2020 and January 26, 2021, we sold

761,906 shares of our Class B common stock at an average price of $6.5625 per share for total proceeds of $5 million in a registered “At-the-Market”

offering through National Securities Corp.

investment needed to eliminate or address security threats and vulnerabilities before or after a cyber-incident could be material.

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 investment additional resources in protecting our data and infrastructure, which may impact our results of operations.

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, Norway the European Union, and other jurisdictions, as well as government policies and practices

related to cybersecurity, data privacy, data localization and data protection.

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.

RELATED TO OUR OWNERSHIP AND OUR CLASS B COMMON STOCK

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.

expenses associated with equity-based compensation 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.

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.

may suffer dilution.

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.

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

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

Wainwright & Co, LLC as sales agents.

We intend to use the net proceeds from this

offering for general corporate purposes including organic and other growth initiatives.

In addition, on March 16, 2021, we filed a prospectus supplement with

the Securities and Exchange Commission which contemplates the sale, for a gross aggregate sale price of up to $10,000,000, of shares of

our Class B common stock, from time to time in “At-The-Market”

offerings pursuant to an At Market Issuance Sales Agreement

with National Securities Corporation and Maxim Group LLC dated as of March 16, 2021.

Through June 11, 2021, we sold 663,686 shares at

an average price of $15.0674 per share for total proceeds of $10 million in this offering.

We intend to use the net proceeds from this

offering for general corporate purposes including organic and other growth initiatives.

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.

We are exposed to fluctuations in foreign currency exchange

We have significant operations in Europe that are denominated in foreign

currencies, primarily the Norwegian Kroner and Euro, subjecting us to foreign currency risk.

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.

2021 and fiscal 2020, we recorded a loss of $2,000 and $152,000, respectively, from foreign currency movements relative to the U.S.

Included in these amounts were losses from hedging activities of $18,000 and $218,000 in fiscal 2021 and fiscal 2020, respectively.

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

During 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

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

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.

Additionally, 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.

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.

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

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 suffers 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.

Acquisitions could result in 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

Our business, results of operation and financial condition could

be adversely affected by the coronavirus COVID-19 pandemic and the restrictions put in place in connection therewith.

Our business could be adversely affected by health epidemics, including

the current COVID-19 pandemic, impacting the markets and communities in which we, our partners and customers operate.

The COVID-19 pandemic

has caused and continues to cause significant business and financial markets disruption worldwide and there is material uncertainty about

the duration of this pandemic and its impact on the ongoing effects on our business.

The COVID-19 pandemic has resulted in a dramatic increase in unemployment

that could result in interfering with freemium users converting into paid subscribers or in paid subscribers renewing their subscriptions

because of the impact on discretionary spend.

In addition, we may experience a decline in advertising.

Initially the COVID-19 pandemic negatively impacted our Zedge app’s

new user growth.

New smartphone sales suffered as a result of retail business closures, negatively impacting new user growth, especially

in well-developed markets.

Assuming the retail business rebounds from the COVID-19 pandemic, we expect that our Zedge app’s new

user growth will also recover and we will benefit accordingly but there can no assurance of such rebound or new user growth.

If new mobile

device sales decrease or slowdown, our Zedge app will experience fewer installations which will negatively impact our revenue and operations.

In addition, in response to the spread of COVID-19, many of our employees

have had to work from home which may negatively impact productivity and innovation.

More generally, the COVID-19 outbreak has adversely

affected economies and financial markets globally, which could decrease technology spending and adversely affect demand for our products.

As of July 31, 2021, we had not experienced significant adverse impacts

to our results of operations, financial condition, or cash flows.

However, the situation remains fluid and we cannot predict with certainty

the potential impact of COVID-19 on our business, results of operations, financial condition, and cash flows.

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 ten years and the recovery from the lows of 2008 and 2009 has 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 the Middle East and Africa, which have resulted in volatility in oil and

other markets.

We intend to use the net proceeds from this offering for general corporate purposes including

organic and other growth initiatives.

addition, on March 16, 2021, we filed a prospectus supplement with the Securities and Exchange Commission which contemplates the sale,

for a gross aggregate sale price of up to $10,000,000, of shares of our Class B common stock, from time to time in “At-The-Market”

offerings pursuant to an At Market Issuance Sales Agreement with National Securities Corporation and Maxim Group LLC dated as of March

Through June 11, 2021, we sold 663,686 shares at an average price of $15.0674 per share for total proceeds of $10 million in

this offering.

We intend to use the net proceeds from this offering for general corporate purposes including organic and other growth

portion of the purchase price for GuruShots may be paid, at the Company’s discretion in Class B common stock and, in

connection with the acquisition, the Company committed to issuing 626,242 shares of the Company Class B common stock to serve

as a retention pool for GuruShots employees .

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.

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.

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

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;

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’

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.

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.

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.

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

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:

or anticipated variations in quarterly operating results;

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

or trends in our industry;

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;

partnerships or divestitures;

● announcements

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

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

or departures of key personnel;

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

specific stockholders.

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.

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

Michael Jonas is our majority stockholder, Executive Chairman, Chairman

of the Board and a director, and, as of October 25, 2021, has voting power over 1,862,498 shares of our Class B common stock (which includes

of the Board and a director, and, as of November 10, 2022, had voting power over 1,864,673 shares of our Class B common stock (which includes

524,775 shares of our Class A common stock, which are convertible into shares of our Class B common stock on a 1-for-1 basis, and 1,339,898

1,337,723shares of our Class B common stock), representing approximately 57.7% of the combined voting power of our outstanding capital

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.

We exercised our option for the “controlled company”

exemption under NYSE American stock exchange rules with respect to our Nominating Committee.

We are a “controlled company”

as defined in section 801(a)

of the NYSE American Company Guide because more than 50% of the combined voting power of all of our outstanding common stock is beneficially

owned by a single stockholder.

As a “controlled company,”

we are exempt from certain NYSE American rules requiring a board

of directors with a majority of independent members, a compensation committee composed entirely of independent directors and a nominating

committee composed entirely of independent directors.

These independence standards are intended to ensure that directors who meet those

standards are free of any conflicting interest that could influence their actions as directors.

We applied this “controlled company”

exemption for our corporate governance practices only with respect to the requirement of a Nominating Committee and we disbanded our Nominating

Committee in fiscal 2020.

Accordingly, with respect to our lack of a Nominating Committee you will not have the same protections afforded

to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE American stock exchange, and

if we were to apply the controlled company exemption to other independence requirements, you would not have the protection afforded by

those requirements either.

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.

We do not currently have and may never obtain

research coverage by 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.

In the event we do receive

equity research analyst coverage, we will not have any control over the analysts or the 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 issue other unfavorable commentary

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 mobile internet and smartphone usage and advertising.

Revenues from 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.

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 event, the trading price of our Class B common stock may fluctuate significantly or decrease

significantly.

shares of our Class B common stock), representing approximately 56.7% of the combined voting power of our outstanding capital stock.

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.

the ability of any of our other stockholders to influence our management is limited.

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.

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.

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

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.

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.

event, the trading price of our Class B common stock may fluctuate significantly or decrease significantly.

Unresolved Staff Comments.

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-K

Item 1A. Risk Factors