What changed in this filing

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Item 1A. Risk Factors

2023-10-30 compared with 2022-11-14 · 1663 added, 1376 removed, 198 unchanged (94% of the section changed)

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:

Our business, operating results or financial

condition could be materially adversely affected by any of the following risks associated with any one of our businesses, as well as

the other risks highlighted elsewhere in this document, particularly the discussions about competition.

The trading price of our Class

B common stock could decline due to any of these risks.

Risk Factor Summary

Our business operations

are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business, financial condition

or operating results to be harmed, including, but not limited to, risks regarding the following:

offer a suite of freemium apps and we may not be successful in adding new users or in retaining

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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.

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

distribute our apps and collect revenues generated on these platforms.

If these platforms

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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.

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

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in these countries.

may be unable to successfully integrate GuruShots into Zedge

A key component of our growth strategy involves the adoption and utilization of artificial intelligence (AI), which introduces certain risks.

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

Zedge may be unable to successfully integrate GuruShots into Zedge

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

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our business.

New laws that may impact our business, such as those affecting artificial intelligence and efforts by lawmakers in various jurisdictions to regulate providers of certain online services which may apply to our business and therefore introduce additional compliance obligations and potential sanctions and penalties for failings in these areas.

Monitoring (and, if applicable, complying with) these developments is likely to increase the cost of doing business and any failure to comply with new laws may harm our business and reputation.

business depends on our ability to collect and effectively use data to serve relevant advertising,

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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:

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

Certain of our offerings, including GuruShots’

participation in gallery exhibitions, are sensitive to consumer spending and economic conditions.

Consumer purchases of discretionary retail items

and specialty retail products, as well as participation in gallery events, may be adversely affected by national and regional economic,

market and other conditions such as employment levels, salary and wage levels, the availability of consumer credit, inflation, high interest

rates, high tax rates, high fuel prices, the threat of a pandemic or other health crisis (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.

GuruShots 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.

We offer a suite of freemium apps and we may

not be successful in adding new users or in retaining existing users, or if our users decrease their level of engagement with our products

or do not make optional purchases of tokens, resources, or content, or convert into paying subscribers and renew their paid subscriptions

our revenue, financial results and business may be significantly harmed.

The size of our user base and our users’ level of engagement

and paid conversion are fundamental to our success.

Our financial performance has been and will continue to be dependent on our ability

to successfully add new users, retain and engage existing users and convert them into paying users and/or subscribers.

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 time.

If consumers and/or creators do not perceive our products as useful,

effective, entertaining, reliable, and/or trustworthy, we may not be able to attract or keep users or otherwise maintain or increase the

frequency and duration of their engagement or the percentage of users that are converted into 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;

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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

Certain of these factors have, at various times,

negatively impacted user and creator growth, MAU and engagement.

If we are unable to maintain or increase our user base and user engagement,

our revenue and financial results may be materially adversely affected.

We may not experience growth or engagement

in certain geographic locations due to local factors.

We may not experience rapid user growth or continued

engagement in countries that have unreliable telecommunications infrastructure or in countries where mobile and internet usage are expensive.

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.

We may not be successful in acquiring a sufficient

number of users that become purchasers or retain existing users who generate profitable revenue for our apps.

Revenues of freemium apps and websites typically

rely on a small percentage of users that convert into paying users by making in-app purchases of digital goods and/or paid subscriptions;

however, the vast majority of users play for free or only occasionally make purchases or opt-in for paid subscriptions.

only a small percentage of our users are paying users.

In addition, a small portion of paying users generate a disproportionate percentage

Because of this, it is imperative for us to both retain these valuable customers and to maintain or increase their spend

In fiscal 2023, we experienced an 8% decline in paid subscriptions.

Conversely, over the past seven years, GuruShots has successfully

increased the compounded annual growth rate of monthly spending per paying player by around 11.6%.

There can be no assurance that we

will be able to continue to retain paying users, grow or maintain subscription levels or that paying users will maintain or increase

their spending.

We may experience a net decline in paying players resulting in a decrease in revenue resulting in a materially adverse

outcome for our business and financial results.

We may not manage our in-app economy well

and as a result, disincentivize users from making in-app purchases.

Any failure to do so could adversely affect our business, financial

condition, and results of operations.

Our apps are available to players for free and

each brand generates a material portion of its revenue by selling digital goods and/or paid subscriptions.

The perceived value of these

digital goods and/or paid subscriptions can be impacted by various factors including their price, discounting policies, etc.

to manage our economy well, we risk confusing or upsetting users to the point that they reduce their purchases which could negatively

hurt the business.

If we fail to attract advertisers or if advertisers

reduce their spend with us, our revenues, profitability and prospects may be materially and adversely affected.

In fiscal 2023, approximately 81% 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.

If the size of the digital advertising market

does not increase from current levels, or if our digital brands are unable to capture and retain a sufficient share of that market, our

ability to maintain or increase our current level of advertising revenues and our revenues, profitability and prospects could be materially

and adversely affected.

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 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:

The digital advertising market may deteriorate

or develop more slowly than expected, which could materially harm our business and results of operations.

We generate the substantial majority of our revenue

from selling advertising inventory.

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

inventory across some if not all of our digital brands.

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 Privacy Sandbox which is meant

to make current tracking mechanisms obsolete, and block covert tracking techniques, like fingerprinting may also reduce the quantity

and quality of the data and metrics that can be collected or used by us and our partners.

These limitations may adversely affect our

advertisers’ ability to effectively target advertisements and measure their performance, which could reduce the demand and pricing

for our advertising products and harm our business.

As such, our digital property’s current and potential advertiser clients may

ultimately find digital advertising to be less effective than traditional advertising media or marketing methods or other technologies

for promoting their products and services, and they may even reduce their spending on mobile advertising from current levels as a result

or for other reasons.

If the market for mobile advertising deteriorates,

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

A material amount of our revenue is generated

from a limited number of geographies and third-party advertising demand partners.

Any change to this mix could result in negatively impacting

our business, financial condition, and results of operations.

In fiscal 2023, revenue from well developed economies

accounted for approximately 78% of our total revenues and 51% of our total revenues were generated by three advertising demand partners.

While our end users are located around the world, the revenue is generated in the United States from our advertising partners.

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 2023, 78% of our Zedge App’s

users were located in emerging markets with 22% of users in well-developed regions compared to 77% and 23% respectively in fiscal 2022.

India comprised 28% of our MAU as of July 31, 2023.

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.

Three advertising demand partners, mainly, Google,

Vungle and AppLovin were responsible for 51% of overall revenue in fiscal 2023.

If any of these advertising demand partners were to alter

their spend on our digital properties the outcome could result in lowering revenues and profitability.

Our apps’ user base is heavily weighted

to the Android operating system and our revenues and profitability may suffer if the market demand for Android smartphones decreases.

Our apps’ user base is heavily weighted

to smartphones running the Android operating system, which constituted approximately 96% of our MAU (excluding Emojipedia) as of July

31, 2023, and most of our revenues for fiscal 2023.

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.

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 apps’ popularity.

the extent that our products and services continue operating on Android smartphones and to the extent that our future revenues substantially

depend on the use and sales of Android smartphones, our business and financial results would be vulnerable to any downturns in the Android

smartphone market.

We may not be successful in diversifying our

revenue mix in order to reduce our significant dependence on third-party advertisers.

In fiscal 2023, approximately 76% 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 2022 with approximately 692,000,

we ended fiscal 2023 with 638,000 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.

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.

Our revenues may fluctuate materially due

to increases and decreases of new mobile device sales, or other factors, over which we have no control.

Our revenue may be materially negatively impacted

by a decrease or slowdown in new mobile device sales.

Demand for mobile devices highly correlates to installs of our apps and associated

usage and revenue generation.

Initially 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

If new mobile device sales decrease or slowdown,

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

We rely on third-party platforms, such as

the iOS App Store, Meta, 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.

Our 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.

Our mobile 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, 2023 we paid Google and Apple up to 30% of the revenue we generated across their respective platforms.

Our cashflow may

be negatively impacted if either platform changes the 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.

We are subject to the standard policies and terms

of service of third-party platforms, which govern the marketing, promotion, distribution, content and operation of our apps on their

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.

Such changes could:

our products and services inaccessible or limit their accessibility;

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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:

Google and Apple are able to terminate our distribution

agreements with them, without cause, with 30 days prior written notice (to the extent allowed by applicable local law).

They also may

terminate our agreements with them immediately (unless a longer period is required by applicable law) under certain circumstances, including

upon our uncured breach of such agreements.

To the extent that they or any other third party platform provider on which we rely make

such changes or terminates our agreements with them, our business, financial condition and results of operations could be materially

adversely affected.

A platform provider may also change its fee structure to our disadvantage,

change how we are able to advertise on the platform, limit how user information is made available to developers, curtail how personal

information is used for advertising purposes, or restrict how users can share information with their friends on the platform or across

For example, in April 2021 Apple released iOS 14 which started requiring users to opt in to share their IDFA with app developers,

on an app-by-app basis.

As a consequence, the ability of advertisers to accurately target and measure their advertising campaigns at the

user level becomes significantly more difficult, typically resulting in higher user acquisition costs.

If 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.

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.

Our business depends on the availability of mobile

app stores and other third party platforms and any outages that these parties experience will likely have a negative impact on our business,

financial condition, results of operations or reputation.

If technologies designed to block the display

of advertisements are adopted en masse, or if web browsers limit or block behavioral targeting technologies our revenues may be adversely

Our 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.

Activities of our advertiser clients and/or

users could damage our reputation or give rise to legal claims against us.

Our advertisers and/or users may not comply with

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

Failure of our

advertisers and/or users to comply with laws or our policies could damage our reputation and expose us to liability under these laws.

We may also be liable to third parties for content in the advertisements or content we deliver or distribute if the artwork, text or

other content involved violates copyrights, trademarks or other intellectual property rights of third parties or if the content is defamatory,

unfair and deceptive, or otherwise in violation of applicable laws.

Although we generally receive assurance from our advertising partners

and users that their advertisements and content, respectively, are lawful and that they have the right to use any copyrights, trademarks

or other intellectual property included in an advertisement or content, and although we are normally indemnified by the advertisers,

a third party or regulatory authority may still file a claim against us.

Any such claims could be costly and time consuming to defend

and could also hurt our reputation within the mobile advertising industry.

Further, if we are exposed to legal liability, we could be

required to pay substantial fines or penalties, redesign our business methods, discontinue some of our services or otherwise expend significant

We may not be able to continually meet our

users’ expectations and retain or expand our user base, and our revenues, profitability and prospects may be materially and adversely

Although we constantly monitor and research our

users’ expectations, we may be unable to meet them on an ongoing basis or anticipate future user needs.

A decrease in the number

of users engaging with our products and services may have a material and adverse effect on our ability to sell advertising, digital goods

and resources, and subscriptions and on our business, financial condition and results of operations.

In order to attract and retain users

and remain competitive, we must continue to innovate our products and services, improve user experience, and implement new technologies

and functionalities.

The internet business is characterized by constant

changes, including but not limited to rapid technological evolution, continual shifts in user expectations, frequent introductions of

new products and services and constant emergence of new industry standards and practices.

As a result, our users may leave us for our

competitors’ products and services more quickly than in other sectors.

Thus, our success will depend, in part, on our ability to

respond to these changes in a timely and cost-effective basis, including improving and marketing our existing products and services and

developing and pricing new products and services in response to evolving user needs.

Our ability to successfully retain or expand our

user base will depend on our ability to achieve the following, among others:

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

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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;

We cannot assure you that our existing products

and services, will remain sufficiently popular with our users.

We may be unsuccessful in adding compelling new features and enhancements;

products and services to further diversify these product offerings.

Unexpected technical,

commercial or operational problems could delay or prevent the introduction of one or more of our new products or services to our users.

Moreover, we cannot be sure that any of our new products and services, will achieve widespread market acceptance or generate incremental

revenue the way our existing products and services have.

If we fail in earning user satisfaction through our products or services or

if our products and services fail to meet our expectation to maintain and expand our user base, our business, results of operations and

financial condition will be materially and adversely affected.

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.

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

If we fail in earning user satisfaction through our products or services or if our products and services fail to meet our expectation

to maintain and expand our user base, our business, results of operations and financial condition will be materially and adversely affected.

Zedge Premium, the section of our marketplace

where we offer premium content (i.e., for purchase), may not yield the strategic goals and objectives that we envision.

Although 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.

Although 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

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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:

If Zedge Premium fails to yield the strategic

goals and objectives that we envision, our business, results of operations and financial condition will be materially and adversely affected.

We may fail to develop popular new features or

expand into new verticals, successfully, negatively impacting our ability to attract new users or retain existing users, which could

negatively impact our business, financial condition, and result of operations.

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

We believe that maintaining and enhancing our

various digital brands and associated reputation is important to the success of our business.

Historically, we have not made material

investments in this effort.

We believe that a well-recognized and respected brand is important to increasing the number of users and

enhancing our attractiveness to users, artists, advertisers and business partners.

Brand recognition and enhancement may directly affect

our ability to maintain our market position.

Many factors, some of which are beyond our control,

are important to maintaining and enhancing our various brands and may negatively impact our brand and reputation if not properly managed,

such as our ability to:

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.

In the future, we may conduct various marketing

and brand promotion activities to expand our brand.

Some of these may require material investment.

We cannot assure you, however, that

these activities will be successful or that we will be able to achieve the brand promotion effect we expect.

In addition, any negative

publicity in relation to our mobile internet products, websites or services could harm our brand and reputation.

We have received, and expect to continue to receive,

complaints from users regarding the quality of our products and services.

If our users’ complaints are not addressed to their satisfaction,

our reputation and our market position could be significantly harmed, which may materially and adversely affect our business, revenues

and profitability.

The market prices of many digital assets, including

NFTs, have experienced significant declines in recent periods and may continue to do so.

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.

The 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.

The value of NFTs is uncertain and may subject

us to unforeseeable risks .

We 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.

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.

The prices of digital assets are extremely

volatile, and such volatility may have a material adverse effect on our NFTs Made Easy offering.

The 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 2022.

Extreme 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.

RISKS RELATED TO FINANCIAL AND ACCOUNTING

Our limited operating history makes it difficult

to evaluate our business with past results not necessarily being indicative for future operating results and may increase your investment

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

Impacting the growth figures is the inclusion of GuruShots for all of fiscal 2023 as compared to only the final three and a half

months of fiscal 2022.

We have encountered and will encounter risks and difficulties frequently experienced by early-stage companies in

rapidly evolving industries, like mobile apps, digital marketplaces and gaming, including the need to:

forecast our revenue and plan our operating expenses;

13 unchanged sentences

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 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

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:

If we do not successfully address any or all

of these risks, our business, revenues and profitability could be materially adversely affected.

Although we had positive cash flow from operating

activities and net earnings in fiscal 2022 and 2023, we had previously incurred, and may once again incur, net losses and experience

negative cash flow from operating activities in the future and may not be able to obtain additional capital in a timely manner or on

acceptable terms, or at all.

Our net loss in fiscal 2023 was $6.1 million,

our net income in fiscal 2022 was $ 9.7 million, and $8.2 million in fiscal 2021.

Our ability to maintain profitability and positive

cash flow from operating activities depends on various factors, including but not limited to, the acceptance of our products and services

by mobile phone and internet users, the growth and maintenance of our user base, user acquisition spend and associated return, our ability

to maintain existing and obtain new advertisers, our ability to grow our revenues, the success of each of our digital brands as measured

by their respective key performance indicators, the effectiveness of our new product initiatives, selling and marketing activities as

well as control our costs and expenses.

We may not be able to sustain profitability or positive cash flow from operating activities,

and any such positive cash flow may not be sufficient to satisfy our anticipated capital expenditures and other cash needs.

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.

Debt 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 Western

Alliance Bank that may curtail our ability to operate or which we may not be able to maintain compliance with.

We maintain a loan facility with Western Alliance

Bank with a new term loan facility in the maximum principal amount of $2,000,000 for a four-year term and a $4,000,000 revolving credit

facility for a two-year term.

Our 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,

22 unchanged sentences

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:

In 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;

6 unchanged sentences

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.

Our 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.

Changes in accounting principles or their

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

We prepare consolidated financial statements

in accordance with accounting principles generally accepted in the United States.

The accounting for our business is subject to change

based on how the business model evolves, interpretation of various accounting principles, enforcement of existing or new regulations,

and changes in policies, rules, regulations, and interpretations, of accounting and financial reporting requirements of the SEC or other

regulatory agencies.

A change in any of these principles or in their interpretations or application to our business, may have a significant

effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported periods,

which may negatively impact our financial statements our business prospects.

It is difficult to predict the impact of future changes

to accounting principles and accounting policies over financial reporting, any of which could adversely affect our results of operations

and financial condition and could require significant investment in systems and personnel.

If our estimates or judgments relating to

our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could suffer and

lower the expectations of equity analysts and investors, resulting in a decline in the market price of our common stock.

Our preparation of financial statements in conformity

with generally accepted accounting principles in the United States requires us to make certain estimates and assumptions that affect

the reported amount of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements

and the reported amount of revenues and expenses during the reporting period.

For example, we make certain assumptions about the interpretation

of these principles and accounting treatment of our useful lives of tangible and intangible assets, fair value of contingent consideration,

and allowance for credit losses.

If these assumptions turn out to be incorrect, the outcomes may be materially higher or lower than expected

for current and future periods, which could have a material adverse effect on our reported earnings.

We base estimates and assumptions

on historical experience, research, and on other factors that we believe to be reasonable and in accordance with generally accepted accounting

principles in the United States, the results of which form the basis for making judgments about the carrying values of assets, liabilities,

equity, revenue and expenses that are not accessible from alternative sources.

We also may make estimates regarding activities for which

the accounting treatment is still evolving.

Actual results may differ from those estimates.

If our assumptions change or if actual circumstances differ

from our assumptions, our operating results may be adversely affected and could negatively impact investors, resulting in a decline in

the market price of our common stock.

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.

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.

Changes in tax laws, tax rates or tax rulings,

or the examination of our tax positions, could materially affect our financial condition, effective tax rate, future profitability and

results of operations.

Tax laws may change as new laws are passed and

new interpretations of the law are issued or applied.

Our existing corporate structure and intercompany arrangements have been implemented

in a manner that we believe comply with current prevailing tax laws.

However, the tax positions that we take advantage of could be undermined

due to changing tax laws, both in the United States and in other applicable jurisdictions, including Norway, Lithuania, and Israel.

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 2023 was 7.0%

compared and 16.3% for fiscal 2022.

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.

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.

Over 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

In 2021, more than 140 countries tentatively signed on to a framework that imposes a minimum tax rate of 15%, among other

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.

Effective January 1, 2022, pursuant to the Tax

Cuts and Jobs Act of 2017, R&D expenses are required to be capitalized and amortized for US tax purposes, which will delay the deductibility

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

We are exposed to fluctuations in foreign

currency exchange rates.

We 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.

Dollar versus these currencies impacts the expenses generated in these foreign currencies when

converted into the U.S.

In fiscal 2023 and fiscal 2022, we recorded a gain of $36,000 and a loss of $281,000, respectively, from

foreign currency movements relative to the U.S.

Included in these amounts were gains from hedging activities of $14,000 and losses

of $368,000 in fiscal 2023 and fiscal 2022, respectively.

While we regularly enter into transactions to hedge portions of our foreign

currency exposure, it is impossible to predict or eliminate the effects of this exposure.

Fluctuations in foreign exchange rates could

significantly impact our financial results.

If we fail to implement and maintain an effective

system of internal controls over financial reporting, we may be unable to accurately report our results of operations, meet our reporting

obligations or prevent fraud.

Under Section 404 of the Sarbanes-Oxley Act of

2002, we are required to include a report of management on our internal control over financial reporting in our annual report on Form

In addition, should we become an accelerated filer, our independent registered public accounting firm must attest to and report

on the effectiveness of our internal control over financial reporting.

Our management may conclude that our internal control over financial

reporting is not effective.

Moreover, even if our management concludes that our internal control over financial reporting is effective,

our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified

if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed,

or if it interprets the relevant requirements differently from us.

In addition, our reporting obligations may place a significant strain

on our management, operational and financial resources and systems for the foreseeable future.

We may be unable to timely complete our

evaluation testing and any required remediation.

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 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.

RISKS RELATED TO OUR OPERATIONS

We may not be able to effectively manage our

growth or implement our future business strategies, in which case our business and results of operations may be materially and adversely

Our continued success depends on our ability

to effectively and efficiently grow each of the properties in our brand portfolio.

We may not be capable of growing our business

organically or with paid marketing campaigns, attract new players and artists and/or establish cooperation with strategic partners.

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 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.

We have also acquired other companies and made asset

purchases and integrating those into Zedge has placed and continues to place significant strain on management and resources.

that continued growth of our business will depend on our ability to successfully develop and enhance our products and services, cost

efficiently attract new artists and individual creators, maintain our relationship with various artists and content partners like Google,

Meta and Apple, sustain our high rankings with the leading search engines including Google, capture the changes that are taking place

in the industry in a timely fashion grow our user base, retain existing users, continue developing innovative technologies in response

to user demand, increase brand awareness through marketing and promotional activities, react to changes in market trends, expand into

new market segments, attract new advertisers, retain existing advertisers, get users to engage with our digital properties and convert

into paying users or subscribers, and take advantage of the growth in the relevant markets.

We cannot assure you that we will achieve

any or all of the above.

In the event that we are not successful in some or all of these areas we may not be able to retain our customers

and advertisers.

We need to invest in paid user acquisition in

order to grow our customer base.

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

if we can secure new profitable customers these customers may not mature into sustainable long-term customers.

To manage our growth and for us to attain and

maintain profitability, we will also need to further expand, train, manage and motivate our workforce across multiple geographies and

manage our relationships with users, consultants, business partners and advertisers globally.

We anticipate that we will need to implement

a variety of enhanced and upgraded operational and financial systems, procedures and controls, including the improvement of our accounting

and other internal management systems.

All of these endeavors involve risks and will require substantial management efforts and skills

and additional expenditures.

Our products currently enjoy a global customer

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 the portion of our total MAU from emerging markets increasing, and the

portion from well-developed markets decreasing.

In fiscal 2023, our Zedge App’s users in emerging markets declined by 2.4% while

its users in well-developed regions declined 6.8% when compared to fiscal 2022.

India comprised 28% of our MAU as of July 31, 2023.

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.

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;

shift has negatively impacted revenues because well-developed markets command materially higher advertising rates when compared to those

in emerging markets.

Although we are investing in reversing this trend, we may not be successful in this effort which may result in lower

revenues and profitability.

In 2021 Apple released iOS 14 which started requiring

users to opt in to share their identifier for advertisers IDFA with app developers.

Apple’s IDFA is a unique string of alphanumeric

characters assigned to Apple devices which advertisers use to identify app users in order to deliver personalized and targeted advertising.

According to Statista the worldwide opt-in rate enabling app tracking after the release of iOS 14 was less than 25%.

As a consequence,

the ability of advertisers to accurately target and measure their advertising campaigns at the user level has become significantly more

difficult typically resulting in higher user acquisition costs.

Our products may contain errors, flaws or failures

that may only become apparent after their release.

From time to time, we receive user feedback in connection with errors, flaws or failures

and such errors, flaws or failures may also come to our attention during our internal testing process.

We generally have been able to

resolve such errors, flaws or failures in a timely manner, but we cannot assure you that we will be able to detect and resolve all of

them effectively or in a timely manner.

Errors, flaws or failures in our services and products may adversely affect user experience and

cause our users to stop using our services and products, which could materially and adversely affect our business and results of operations.

Our marketing efforts

to acquire new, and retain existing, customers may not be effective or cost-efficient, and may be affected by external factors beyond

Maintaining and promoting awareness of our services

is important to our ability to attract and retain customers.

We spend a significant amount on marketing activities to acquire new customers

and retain and engage existing customers and have plans to maintain and increase that focus.

For example, in 2023, and 2022 our marketing

expenses were approximately $3.2 million and $0.9 million, respectively, and we expect our marketing expenses to continue to account for

a significant portion of our operating expenses.

Our business depends on a high degree of app installs from the app stores and website

traffic, which is dependent on many factors, including the availability of appealing website content and search engine optimization (“SEO”),

affiliate marketing and display advertising, as well as social media and email.

The marketing efforts we implement may not succeed for

a variety of reasons, including our inability to execute and implement our plans.

External factors beyond our control may also impact

the success of our marketing initiatives.

Our digital presence heavily depends on search

engine traffic, primarily from platforms like Google.

A key driver of our success in this domain is our website’s visibility and

ranking in response to search queries.

As search engines frequently update their algorithms, affecting our link placements and rankings

we need to regularly manage our search engine optimization in order to avoid a material decrease in web traffic to our online properties.

Substituting free traffic with paid alternatives could also lead to increased costs.

These risks highlight the critical importance of

continuous adaptation to the evolving search engine landscape and the potential consequences if we do not adequately navigate these challenges.

User acquisition of our apps depends on a host of items including and

especially on paid and organic app marketing initiatives.

Effective and profitable user acquisition relies on knowing how to optimize

across each acquisition platform, data analysis, creatives, amongst other things.

In addition, due to the changing nature of what data

the platforms provide to publishers like Zedge may result in elongating testing time windows and increasing testing budgets.

Taken together

if we are unsuccessful in accounting for all of these items, we may be unable to recover our marketing spend and we may not acquire new

customers or our cost to acquire new customers may increase, and our existing customers may reduce the frequency or size of their purchases

from us, any of which could have a material adverse effect on our business, prospects, results of operations, financial condition or cash

Our 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.

Although our products are leaders in their specific

verticals, including mobile phone personalization, emoji related content and information, and digital photo competitions, we cannot guarantee

that our brands will be able to maintain their leadership position.

Our products face potential competition from other internet companies,

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

If we are not able to differentiate our products

from that of our competitors, drive value for our customers, and/or effectively align our resources with our goals and objectives, we

may not be able to compete effectively against our competitors.

Our failure to compete effectively against any of the foregoing competitive

threats could materially and adversely harm our business.

Increased competition may result in new products and offerings which may in

turn require us to take actions to retain and attract our users and advertisers in such a fashion which would lower our gross margins.

If we fail to compete effectively, our market share would decrease and our results from operations, revenues and profits would be materially

and adversely affected.

We are attempting to expand our Zedge Premium

marketplace where professional artists, individual creators and brands offer their content to our users.

We aspire to be a popular destination

that users turn to when looking for high quality digital content.

If we are unsuccessful in meeting our goal, our business may suffer

resulting in diluting our value proposition, losing MAU and having lower revenues and profits.

If we are not able to effectively compete in

any aspect of our business or if our reputation is harmed by rumors or allegations regarding our business or business practices, our

overall user base may decline, making it less attractive to advertisers.

We may be required to spend additional resources to further

increase our brand recognition and promote our products and services, and such additional spending could adversely affect our profitability.

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 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.

Our international operations expose us to

additional risks that could harm our business, operating results and financial condition.

In addition to uncertainty about our ability

to continue expanding and monetizing internationally, our foreign operations may subject us to additional risks including:

difficulties in developing, staffing, traveling to

and simultaneously managing foreign operations as a result of distance, language, and cultural differences;

tariffs, trade barriers, customs classifications and changes in trade

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.

For example, in 2022 the United States imposed broad-ranging economic sanctions against Russia and Belarus because of

Russia’s illegal invasion of the Ukraine;

stringent local labor laws and regulations;

the uncertainty of enforcement of remedies in foreign jurisdictions;

strict and unclear laws around data privacy;

longer payment cycles;

credit risk and higher levels of payment fraud;

profit repatriation restrictions and foreign currency exchange restrictions;

political or social unrest, economic instability, repression, or human

rights issues;

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

import or export regulations;

compliance with U.S.

laws such as the Foreign Corrupt Practices Act,

and local laws prohibiting bribery and corrupt payments to government officials;

antitrust and competition regulations;

potentially adverse tax developments;

seasonal volatility in business activity and local economic conditions;

economic uncertainties relating to European sovereign and other debt;

laws, regulations, licensing requirements, and business practices that

favor local competitors or prohibit foreign ownership or investments;

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

different, uncertain or more stringent user protection, content, data

protection, privacy, intellectual property and other laws;

risks related to other government regulation, required compliance with

local laws or lack of legal precedent.

Further, our ability to expand successfully in

foreign jurisdictions involves other risks, including challenges in integrating foreign operations, risks associated with entering jurisdictions

in which we may have little experience and the day-to-day management of a growing and increasingly geographically diverse company.

may not realize the operating efficiencies, competitive advantages or financial results that we anticipate from our investments in foreign

jurisdictions.

In addition, our international business operations could be interrupted and negatively impacted by terrorist activity,

war, political unrest or other economic or political uncertainties.

Moreover, foreign jurisdictions could impose tariffs, quotas, trade

barriers and other similar restrictions on our international sales.

We are subject to numerous and sometimes conflicting

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.

Violations of these complex laws and regulations that

apply to our international operations could result in damages, awards, fines, litigation, criminal actions, sanctions, or penalties against

us, our officers or our employees, prohibitions on the conduct of our business and our ability to offer products and services, and damage

to our reputation.

Although we have implemented policies and procedures designed to promote compliance with these laws, there can be

no assurance that our employees, contractors, or agents will not violate our policies or that our policies will be sufficient.

risks inherent in our international operations and expansion increase our costs of doing business internationally and could result in

material harm to our business, operating results, and financial condition.

Conditions in Israel,

including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may adversely

affect our operations.

Because a portion of

our operations are conducted in Israel and certain members of our board of directors and management, as well as a many of our employees

and consultants, are located in Israel, our business and operations are directly affected by economic, political, geopolitical and military

conditions affecting Israel.

Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between

Israel and its neighboring countries and other hostile non-state actors.

These conflicts have involved missile strikes, hostile infiltrations

and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.

On October 7, 2023,

Hamas militants and members of other terrorist organizations infiltrated Israel’s southern border from the Gaza Strip and conducted

a series of terror attacks on civilian and military targets.

Thereafter, these terrorists launched extensive rocket attacks on Israeli

population and industrial centers located along the Israeli border with the Gaza Strip.

As of the date of this registration statement,

such attacks collectively resulted in thousands of deaths and injuries, in addition to the kidnapping of a currently indefinite number

of civilians, including women and children.

Shortly following the attack, Israel’s security cabinet declared war against Hamas.

The intensity and duration

of Israel’s current war against Hamas is difficult to predict, and as are such war’s economic implications on the Company’s

business and operations.

It is possible that other terrorist organizations

will join the hostilities as well, including Hezbollah in Lebanon, and Palestinian military organizations in the West Bank.

As a result of the Israeli

security cabinet’s decision to declare war against Hamas, several hundred thousand Israeli reservists were drafted to perform immediate

military service.

Certain of our employees and consultants in Israel have been mobilized for service in the current war against Hamas

as of the date of this report, and such persons are expected may be absent for an extended period of time.

As a result, our operations,

including the development and launch of additional products, may be disrupted by such absences, which may materially and adversely affect

our business and results of operations.

Prior to the Hamas attack

in October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political

debate and unrest.

In response to such initiative, many individuals, organizations and institutions, both within and outside of Israel,

have voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of

foreign investors to invest or transact business in Israel as well as to increased currency fluctuations, downgrades in credit rating,

increased interest rates, increased volatility in security markets, and other changes in macroeconomic conditions.

The risk of such negative

developments has increased in light of the recent Hamas attacks and the war against Hamas declared by Israel.

To the extent that any

of these negative developments do occur, they may have an adverse effect on our business and our results of operations.

In addition, recent political uprisings and conflicts

in various countries in the Middle East, including Syria, 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.

For the most part, we do not have commercial

insurance that cover losses that may occur as a result of an event associated with the security situation in 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.

Any 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.

We 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.

The overwhelming majority of our employees are

located in Lithuania, Israel, and Norway and many of our senior managers live in Israel or Lithuania.

For those that reside in Israel

and Lithuania political, economic and military conditions directly affect our business.

Any hostilities involving these countries or

the interruption or curtailment of trade between these countries and their trading partners could adversely affect our business and results

of operations.

Furthermore, there is always the chance that the citizens in these countries will be required to serve in the army or

perform public duty in the event of an armed conflict.

The State of Israel is currently at war with

Hamas, a terrorist organization that controls the Gaza Strip and has had various armed conflicts with its neighbors as well as terrorist

acts committed within Israel by hostile elements.

In addition, Hezbollah, another terrorist organization based in Lebanon has been indiscriminately

shelling Israel.

The Republic of Lithuania borders both the Russian

exclave of Kaliningrad and the Republic of Belarus, who are aligned in Russia’s illegal invasion of 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.

resulted in temporarily disrupting the work product associated with these contractors at the outset of the war.

Companies and governmental agencies may restrict

access to our website or mobile apps, or the internet generally, which could lead to the loss or slower growth of our user base, in which

case our business and results of operations may be materially and adversely affected.

In order to grow our business, users need to

access the internet and, in particular, our digital products.

Companies and governmental agencies could block access to our websites

and apps or the internet generally.

For example, in 2013 the Indian courts issued orders restraining internet service providers from

providing access to various internet domains including ours.

Access to our Zedge App through any mode was blocked in many parts of India

from February 2013 until August 2019 and there can be no guaranties that this will not recur or happen elsewhere.

If companies or governmental

entities block or limit access to our Zedge App or otherwise adopt policies restricting access to our advertiser’s products and

services our business could be negatively impacted resulting in a loss or slow-down of user growth and/or revenues.

Our core values of focusing on our users and

acting for the long-term may conflict with the short-term interests of our business.

One of our core values is providing an excellent

user experience, which we believe is essential to our success and serves the best, long-term interests of us and our stockholders.

we have made, in the past and/or may make in the future, significant investments or changes in strategy that we think will benefit our

users, even if our decision negatively impacts our operating results in the short term.

In addition, our philosophy of prioritizing our

users may cause disagreements or negatively impact our relationships with advertisers or other third parties.

Our decisions may not result

in the long-term benefits that we expect, in which case the success of our business and operating results could be materially harmed.

If we are unable to attract and retain highly

qualified employees, we may not be able to grow effectively.

Our ability to compete and grow depends in large part on the efforts

and talents of our employees.

Such employees, particularly product managers, designers and engineers, are in high demand, and we devote

significant resources to identifying, hiring, training, and successfully integrating and retaining these employees.

The loss of employees

or the inability to hire additional skilled employees as necessary could result in significant disruptions to our business, and the integration

of replacement personnel could be time-consuming and expensive and cause additional disruptions to our business.

We operate a development center in Vilnius, Lithuania.

If we are unable to recruit and retain well qualified candidates at an attractive rate or manage them well, our business will struggle

to meet our development goals and objectives.

In fiscal 2021 we adopted a “remote-first” work policy that enabled employees

to work from home unless they were needed in the office.

In fiscal 2023 we changed this policy to a hybrid model requiring most employees

to work from the office several days a week.

Although this policy has been well received by employees, it is as of yet unclear whether

it will be further revised.

In April of 2022 we completed the acquisition

of GuruShots Ltd, an Israeli based company.

GuruShots utilized a small number of outsourced contractors based in the Ukraine.

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.

In addition, consumer prices have risen materially

throughout the Eurozone leaving uncertainty about how this may impact employment costs in the future.

In October of 2023 Hamas, a designated terrorist

organization, launched a savage terror attack in Israel along with launching thousands of rockets into Israeli sovereign territory.

State of Israel declared war against Hamas resulting in the mobilization of more than 300,000 army reserve.

In addition, Hezbollah, another

designated terrorist organization, based in Lebanon, has been indiscriminately shelling Israeli territory.

Some GuruShots employees were

impacted and the regular and consistent rocket barrage is taking a toll on productivity.

Coupled with this, most, if not all, schools

are along with our office closed making the work environment complex.

It remains unclear how long this conflict will continue and what

the impact on productivity will be.

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.

continue to grow rapidly, and we develop the infrastructure of a public company, we may find it difficult to maintain our entrepreneurial,

execution-focused culture.

In addition, depending on the performance of our stock price some of our employees are able to receive material

proceeds from sales of our equity in the public markets, which may reduce their motivation to continue to work for us.

We rely on third parties to provide the technologies,

including cloud services, necessary to deliver content, advertising, and services to our users, and any change in the licensing terms,

costs, availability, or acceptance of these formats and technologies could materially adversely affect our business.

Our service and hosting providers may experience

downtime from time to time, which may negatively affect our brand and user perception of the reliability of our service.

Any scheduled

or unscheduled interruptions in service could result in an immediate, and possibly substantial, loss of revenues.

Although we seek to

reduce the possibility of disruptions or other outages, our websites and apps may be disrupted by problems relating either to our own

technology or third-party technology that is used for them.

Our systems may be vulnerable to damage or interruption from telecommunication

failures, power loss, computer 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.

change in the licensing terms, costs, availability, or user acceptance of these technologies could materially and adversely affect our

business, revenues and profitability.

In 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 X, formerly known as Twitter.

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.

This unanticipated migration required

material resource and time investment that delayed the delivery of other product initiatives we had planned for.

We track certain key performance indicators

with internal and third-party tools and do not independently verify that all of this data is accurate.

Certain of these indicators may

have challenges in being tracked accurately which could result in real or perceived inaccuracies that could negatively impact our business.

We track certain key performance indicators,

including daily active users, monthly active users, purchasers, and paying subscribers using both internal and third-party tracking tools.

Our analytical tools have certain limitations, including those from third-party providers, and our ability to access and monitor this

data may change, which would adversely impact our ability to track these KPIs.

If the internal or external tools we use to track data

contain bugs we may make poor decisions, especially when it comes to paid user acquisition, based on flawed and inaccurate data which

can hurt our reputation and financial position.

We use open-source software in our platform

that may subject our technology to general release or require us to re-engineer our solutions, which may cause materially harm to our

We use open-source software in connection with

our services.

From time to time, companies that incorporate open-source software into their products have faced claims challenging the

ownership of open-source software and/or compliance with open-source license terms.

Therefore, we could be subject to lawsuits by parties

claiming ownership of what we believe to be open-source software or noncompliance with open-source licensing terms.

Some open-source

software licenses require users who distribute or make available open-source software as part of their software to publicly disclose

all or part of the source code to such software and/or make available any derivative works of the open-source code on unfavorable terms

or at no cost.

While we monitor our use of open source software and try to ensure that none is used in a manner that would require us

to disclose the source code or that would otherwise breach the terms of an open-source agreement, such use could nevertheless occur and

we may be required to release our proprietary source code, pay damages for breach of contract, re-engineer our applications, discontinue

use in the event re-engineering cannot be accomplished on a timely basis or take other remedial action that may divert resources away

from our development efforts, any of which could materially and adversely affect our business, financial condition or operating results.

Our business, results of operation and financial

condition could be adversely affected by the Covid 19 pandemic, other global epidemics and the restrictions put in place in connection

therewith and/or the loosening of such restrictions could adversely impact our business.

Pandemics, epidemics, medical emergencies and

other public health crises outside of our control could have a negative impact on our business.

Large-scale medical emergencies can take

many forms and result in widespread business interruptions due to illness and death.

For example, in December 2019, a strain of coronavirus

surfaced in Wuhan, China soon evolving into a global pandemic without proven medical treatments or vaccines for prevention.

When vaccines

started to become available demand for the vaccines exceeded the supply in the countries in which we operate.

Furthermore, the vaccines

were not fully effective in preventing illness.

All of these factors introduced challenges in operating our business including the productivity

of our employees and third-party vendors that we depend on while adjusting to shelter-in-place and health regulations.

We also had to

comply with an assortment of regulations specific to returning to our offices, creating additional uncertainty and confusion.

Widespread pandemics, epidemics or other health

crises could result in significant market volatility, regionally or globally.

Furthermore, health crises may disrupt or negatively impact

behaviors of large numbers of users or potential users due to either mandated stay at home orders or the lifting of such orders or non-mandated

changes in consumer behavior.

These changes are almost impossible to predict and could either serve to accelerate, slow down or make

user behavior more volatile which could negatively impact our operating results.

In the event of a new coronavirus surge or other

health emergency we plan to execute to the best of our ability recognizing that the nature and scope of the crisis may result in delays

or changes to our goals and initiatives.

Our business is subject to economic, market,

and geopolitical conditions as well as to cyber-attacks and natural disasters beyond our control.

Our business is subject to economic, market, and

geopolitical conditions, as well as natural disasters beyond our control and as a result we may experience a slowdown or cessation in

customer growth, interruptions or delays in the services or a downturn in user.

Further, our revenue is driven in part by discretionary

consumer spending habits and by advertising spend.

Historically, consumer purchasing and advertising spend have each declined during economic

downturns and periods of economic or geopolitical uncertainty or when disposable income or consumer lending declines.

Macro-economic conditions,

such as a recession or economic slowdown in well developed markets, specifically, and emerging markets, more generally may result in uncertainty

and adversely affect discretionary consumer spending habits and preferences as well as advertising spend.

Uncertain economic conditions

may also adversely affect our vendors making it virtually impossible to grow in the event of future economic malaise.

We are particularly

susceptible to market conditions and risks associated with the mobile app ecosystem, which also include the popularity, price, and timing

of our apps, changes in user demographics, the availability and popularity of other forms of entertainment.

Furthermore, critical reviews

and general tastes and preferences may change quickly and without prior warning.

A key component of our growth strategy involves the adoption and

utilization of artificial intelligence (AI), which introduces certain risks.

We currently incorporate AI into specific existing

and planned products, as well as our internal operations.

For instance, in fiscal 2023, we launched pAInt, a generative AI wallpaper maker

within the Zedge App, and we are in the midst of a soft launch of a new mobile game, AI Art Master, which enables players to create generative

AI images and compete in themed based competitions with these images.

While AI offers substantial opportunities, it also carries inherent

Our competitors may possess greater financial

and technological resources, providing them with a competitive edge in attracting, motivating, and retaining top AI professionals.

could pose challenges in building and maintaining our AI capabilities.

Furthermore, the use of AI brings to the forefront

emerging ethical concerns.

Should we introduce solutions that generate content that is misleading, biased, harmful or controversial due

to perceived or actual societal impact, we may face potential harm to our brand and reputation, competitive disadvantages, or even legal

In addition, we are susceptible to competitive risks arising from the

rapid adoption and integration of new technologies by established industry participants, emerging startups, and other market entrants.

Over time, AI tools are likely to enhance their accuracy and ability to handle complex tasks, potentially disrupting the landscape for

educational technology businesses like ours.

We must remain vigilant in our efforts to predict and respond to these developments in a

timely and cost-effective manner.

Moreover, staying compliant with evolving laws, regulations, and industry

standards pertaining to AI may impose significant operational costs and constrain our ability to develop, deploy, or employ AI technologies.

Failing to adapt appropriately to this evolving regulatory environment could result in legal liability, regulatory actions, and damage

to our brand and reputation.

Our ongoing development and use of generative AI tools may result in

copyright infringement claims, disputes over ownership and licensing, and potential patent infringement claims, among other things.

legal challenges could be costly to defend against, leading to substantial financial obligations and reputational damage.

regulatory environment and uncertain legal precedents in this field further increase our exposure to litigation risks, which could materially

affect our business, financial condition, and results of operations.

Failure to detect or prevent fraudulent activities on our platform

could cause users to lose confidence in our products and harm our business.

We may be subject to fraudulent and/or malicious activities undertaken

by persons seeking to use our platform for improper purposes.

Examples of such activities include the use of bots or other automated or

manual mechanisms to generate fraudulent activity through our platform, which could generate revenue for the perpetrators and involve

our platform in their improper activity.

Detecting fraudulent or malicious activity can be difficult.

Although we have implemented measures

to detect and reduce the occurrence of fraudulent activities, including click fraud, we cannot guarantee that we will be fully successful

If we fail to detect or prevent fraudulent or other malicious activity, it may result in dissuading sellers and customers

alike from engaging with our products and services.

Any actual or alleged future fraudulent activity may damage our reputation, or diminish

the value of our brand name, either of which could adversely impact our business, results of operations and financial condition.

Zedge is exposed to claims from prior owners

of GuruShots objecting to the determination that the conditions for payment of the earnout for the first year following acquisition were

not met, and that the user acquisition spend obligations that we have made to the sellers of GuruShots are not required.

In connection with the acquisition of GuruShots,

3 unchanged sentences

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.

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”.

GuruShots’ financial performance during the period from the April 2022 acquisition through July 31, 2023, was materially impacted

by a combination of industry specific, macroeconomic, and geopolitical challenges that contributed to negatively impacting ROAS.

The conditions

for payment of the earnout for the first year following the acquisition were not met and no earnout payment was made or accrued.

Although we believe that we have acted in compliance

with our obligations, we could be exposed to liability to the prior owners of GuruShots.

One of the prior owners of GuruShots has objected

to the determination that the conditions for payment of the earnout for the first year following acquisition were not met.

to the objection in great detail and believe the assertion to be without merit.

Zedge may be unable to successfully integrate

GuruShots into Zedge.

Zedge and GuruShots will need to integrate their

operations which will require coordination between management, marketing, technology, product development, and operations.

not execute the integration successfully resulting in higher costs, product delays, employee resignations, and overall underperformance.

The GuruShots acquisition may fail to yield

growth opportunities and achieve beneficial synergies.

Zedge acquired GuruShots with the expectation

that the transaction will yield growth on a standalone basis 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.

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

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.

In addition, if appropriate opportunities arise,

we may acquire additional assets, products, technologies or businesses that we believe are complementary to our existing business.

acquisitions and the subsequent integration of new assets and businesses into our own would require significant attention from our management

and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations.

Acquired assets or businesses may not generate the financial results we expect and could require the use of substantial amounts of cash,

potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses

for other intangible assets and exposure to potential unknown liabilities of the acquired business.

Moreover, the costs of identifying

and consummating acquisitions may be significant.

In addition to possible stockholders’ approval, we may also have to obtain approvals

and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which

could result in increased delay and costs.

LEGAL AND REGULATORY RISKS

Legal or regulatory proceedings or allegations

of impropriety could have a material adverse impact on our reputation, results of operations, financial condition and liquidity.

We have been party to and in the future may become

subject to new legal proceedings in the operation of our business, including, but not limited to, with respect to alleged breaches of

consumer privacy regulations, employee matters, alleged service and system malfunctions, alleged intellectual property violations and

claims relating to our contracts, licenses and strategic investments.

Furthermore, we may be included in lawsuits as third-party defendants

due to the use of products or services of the primary defendant.

We may also be subject to fraudulent claims from parties like patent

Additional legal proceedings targeting our

products and services and claiming violations of state or federal laws could occur, based on the unique and particular laws of each

jurisdiction, particularly as litigation claims and regulations continue to evolve.

We cannot predict the outcome of any legal

proceedings to which we may be a party, any of which could have a material adverse effect on our results of operations, cash flows

or financial condition.

As noted above, we have responded to a claim from one of the prior owners of GuruShots, who objected to our

determination that the conditions for payment of the earnout for the first year following acquisition were not met.

We believe the

assertion to be without merit.

A variety of new and existing U.S.

government laws and regulations could subject us to claims, judgments, monetary liabilities and other remedies, and to limitations on

our business practices, in which case our business and results of operations may be materially and adversely affected.

We are subject to numerous U.S.

and foreign laws

and regulations covering a wide variety of subject matters.

New laws and regulations, changes in existing laws and regulations or the

interpretation of them, our introduction of new products, or an extension of our business into new areas could increase our future compliance

costs, make our products and services less attractive to our users, introduce litigation exposure, or cause us to change or limit our

business practices.

We may incur substantial expenses to comply with laws and regulations or defend against a claim that we have not

complied with them.

Further, any failure on our part to comply with any relevant laws or regulations may subject us to significant civil

or criminal liabilities, penalties, taxes, fees, costs, reputational harm, competitive damage and negative publicity.

The application of existing domestic and international

laws and regulations to us relating to issues such as user privacy and data protection, security, defamation, pricing, advertising, taxation,

gambling, sweepstakes, promotions, consumer protection, artificial intelligence and machine learning, accessibility, content regulation,

quality of services, law enforcement demands, telecommunications, mobile, and intellectual property ownership and infringement in many

instances is unclear or unsettled.

Further, the application to us or our subsidiaries of existing laws regulating or requiring licenses

for certain businesses of our advertisers can be unclear.

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.

Any new legislation, in the U.S.

or abroad, may be difficult to comply with in a timely and comprehensive manner and may expose our business to increased costs.

rules, doctrines or currently available defenses change, if international jurisdictions refuse to apply protections similar to those

that are currently available in the U.S.

or the EU, or if a court were to disagree with our application of those rules to our solutions,

our potential liability for information or content created by third parties and posted to our platform could require us to expend significant

resources to try to comply with the new rules and implement additional measures to reduce our exposure to such liability or we could

incur liability and our business, financial condition and results of operations could be harmed.

In addition, the Digital Millennium Copyright

Act (the “DMCA”), has provisions that limit, but do not necessarily eliminate, our liability for caching, hosting, listing

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

The Communications

Decency Act (the “CDA”) further helps to limit our potential liability for certain content uploaded onto our platform by third

For example, Section 230 of the CDA provides immunity from liability for providers of an interactive computer service who publish

tortious and otherwise illegal content provided by users of the service.

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

established, there are 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 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 data.

We face similar risks and costs as our products

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

In many, but not all, territories outside of

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

In some countries, particularly in Europe and the Asia-Pacific region, these laws are being readjusted and new, and potentially

burdensome, constraints are being imposed onto service providers.

In June 2019, the European Union’s Directive

on Copyright in the Digital Single Market (the “Directive”) came into effect, and each of the European Union’s members

were obligated to implement the Directive by June 2021.

To date, several EU Member States have implemented the Directive.

Directive Article 17 removes the shield of the

current ‘hosting exemption,’ enshrined in the Electronic Commerce Directive (2000/31/EC) (the “E-Commerce Directive”),

and replaces it with a principle of full liability where “online content sharing service providers” (“OCSSPs”)

are concerned.

This means that OCSSPs will be liable for copyright-protected material uploaded by users and must obtain authorization

(i.e., a license) from the relevant rightsholders.

However, Article 17 effectively creates a new liability exemption regime for OCSSPs

(albeit a more onerous one than is currently provided by the E-Commerce Directive) under which OCSSPs will not be liable for the copyright-protected

works that they communicate to the public provided that they cooperate with rightsholders by:

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

expeditiously taking down or disabling access to content upon receiving

a sufficiently substantiated notice to do so by rightsholders (i.e., similar to the existing ‘notice and take-down’ requirements);

making best efforts to prevent future uploads of content in respect

of which they have received a notice from rightsholders pursuant to the previous requirement (i.e., a ‘notice and stay down’

requirement);

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.”

Additionally, our increased use of artificial

intelligence (“AI”), including generative AI, in our product offerings presents additional risks.

Namely, uncertain legal

and regulatory treatment around the provision and use of such technologies, for example in the areas of privacy and intellectual property,

may create increased and uncertain litigation exposure, the possibility of regulatory scrutiny, costly compliance requirements and limit

or prohibit certain of our product offerings.

Compliance with these laws and regulations may be onerous and expensive, and may be inconsistent

from jurisdiction to jurisdiction, further increasing the cost of compliance and the risk of liability.

Any such increase in costs or

increased risk of liability as a result of changes in these laws and regulations or in their interpretation could individually or in

the aggregate make our products and services that use AI technologies less attractive to our users, cause us to change or limit our business

practices or affect our financial condition and operating results.

Moreover, AI may produce content seen as infringing upon the rights

of others, including with respect to copyrights.

Additionally, AI may create flawed, biased, harmful, misleading, inaccurate, or unexpected

outputs and content, creating risks to our business, partners, and users.

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.

Data 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.

Our business relies on collecting, processing,

storing, using and sharing data, some of which contains personal information, including the personal information of our users.

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.

On July 10, 2023, the European Commission adopted

its adequacy decision relating to the new EU-U.S.

Data Privacy Framework (“DPF”).

This was followed by the UK Government’s

approval of the UK extension to the DPF, which is effective as of October 12, 2023.

The DPF and UK extension are now lawful means for

transferring personal data from the European Economic Area (“EEA”), or the UK to the U.S.

(in addition to Standard Contractual

Clauses (“SCCs”)).

The DPF (and the associated steps that the U.S.

Government has taken in connection with the DPF) should

improve the ability for personal data to flow from the EEA or UK to the U.S., however the DPF is likely to be subject to challenge and

may be invalidated in the future.

While this does not present an immediate risk to our business, monitoring and ensuring compliance with

shifting data transfer requirements could result in additional costs incurred.

Following the Brexit, the provisions of the EU

General Data Protection Regulation 2016/679 (“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

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

There is a possibility that the United Kingdom may adopt regulations that diverge

from the EU and that require a different compliance regime and that carry different penalties in the event of a breach which could increase

our future compliance costs.

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

in connection with our business operations.

The CCPA also provides a private right of action for security breaches.

Colorado and Virginia

have passed privacy bills similar to the CCPA which will go into effect in 2023.

Washington, Massachusetts and other states have introduced

privacy bills and the U.S.

Congress is debating federal privacy legislation, which if passed, may restrict our business operations and

require us to incur additional costs for compliance.

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

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

They could also misappropriate other information,

including our content.

These circumventions may cause interruptions in our operations or damage our brand image and reputation.

may be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could cause system interruptions,

website slowdown or unavailability, delays in communication or transactions, or loss of data.

We may be required to incur significant

additional costs to protect against security breaches or to alleviate problems caused by such breaches.

In addition, a significant security

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

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.

28, 2021, the European Commission determined that the UK offers an adequate level of data protection, meaning data can continue to flow

between the UK and EEA as it did prior to Brexit, in most circumstances.

On March 8, 2023, the UK Parliament introduced the Data Protection

and Digital Information (No.

2) Bill (“DPDI”) which is currently making its way through the UK legislative process.

proposes various amendments to the UK GDPR.

Based on the DPDI’s current drafting, the amendments do not appear to present a material

risk to our business as they are not considered to substantively alter the obligations placed on businesses.

However, monitoring the DPDI’s

progression through the UK legislative process and considering impacts it may have on our UK data protection compliance may result in

additional costs.

Further, to the extent that the DPDI is amended such that the changes it makes to the UK GDPR are more significant,

this may present a greater risk.

In June 2018, California passed the California

Consumer Privacy Act (“CCPA”), effective January 1, 2020.

The CCPA 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.

to the CCPA under the California Privacy Rights Act (“CPRA”), effective January 1, 2023, expand some of the CCPA rights to

residents to restrict the use of certain information.

These laws may restrict our ability to use personal information in connection with

our business operations, and along with other state laws, such as the California Online Privacy Protection Act, create compliance obligations.

The CCPA also provides a private right of action for certain data breaches.

Additionally, alongside California, several other

states have also enacted comprehensive consumer data privacy laws.

These laws include the Virginia Consumer Data Protection Act, effective

January 1, 2023, the Colorado Privacy Act and the Connecticut Data Privacy Act both of which become effective on July 1, 2023, and the

Utah Consumer Privacy Act which will become effective on December 31, 2023.

Other states, including Oregon, Montana, Iowa, Texas, Delaware,

Tennessee, and Indiana have enacted comprehensive consumer data privacy laws which will become effective in the coming years.

states have enacted narrower consumer data privacy requirements.

These laws generally place limitations on the use of consumer

personal information and create data privacy and protection compliance obligations for businesses covered under the law (the jurisdictional

requirements of which may vary).

Furthermore, all 50 U.S.

states, the District

of Columbia, and the U.S.

territories have enacted breach notification laws which require notification to individuals (and potentially

regulators and other parties) in the event of certain data breaches impacting personal information.

Several states have enacted laws requiring businesses

subject to the laws to implement cyber and data security programs.

For example, New York enacted the Stop Hacks and Improve Electronic

Data Security Act (SHIELD Act), effective March 2020, which requires companies with data relating to New Yorkers to adopt comprehensive

cybersecurity programs.

Since 2010, Massachusetts, through 201 CMR 17.00, has required companies that own or license the personal information

of Massachusetts residents to develop, implement, and maintain a Written Information Security Program.

In recent years, the U.S.

and European lawmakers

and regulators have voiced concern about electronic marketing and the use of third-party cookies and similar technology for online behavioral

In the EU, 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.

While the ePrivacy Regulation

was originally intended to be adopted in May of 2018 it is still making its way through the European legislative process and has faced

repeated setbacks due to an inability by the EU bodies to reach an agreement on the ePrivacy Regulation’s text.

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.

In 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.

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.

Any 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.

Further, 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.

New laws that may impact our business, such

as those affecting artificial intelligence and efforts by lawmakers in various jurisdictions to regulate providers of certain online

services which may apply to our business and therefore introduce additional compliance obligations and potential sanctions and penalties

for failings in these areas.

Monitoring (and, if applicable, complying with) these developments is likely to increase the cost of doing

business and any failure to comply with new laws may harm our business and reputation.

On October 19, 2022, the EU passed Regulation (EU) 2022/2065 on a

Single Market for Digital Services (Digital Services Act) (“DSA”).

The DSA largely comes into effect on February 17, 2024,

and seeks to increase the regulatory obligations on “intermediary service providers.”

Similarly, the UK Parliament recently approved the Online Services

Bill (“OSB”) which is now awaiting royal assent before becoming law (this is expected to occur in late 2023 or early 2024

with a transition period before the obligations are enforceable).

The OSB regulates “user-to-user” services, e.g., services

that allow content to be generated by a user and then shared and encountered by other users.

The DSA and OSB impose additional obligations

on covered service providers and may increase liability for such service providers in relation to content hosted and shared on their

Our business allows users to create accounts and upload content which can then be accessed/encountered by other users.

we will likely incur legal costs in identifying the extent to which obligations under the DSA and OSB may impact our business and there

may be ongoing compliance costs associated with these new laws (and any comparable changes in the law in other jurisdictions).

of these new laws (to the extent they apply) may also lead to penalties and reputational damage.

Furthermore, legislators’ and regulators’

future approach to artificial intelligence (“AI”) may impact our business.

For example, the publication of the White House

Blueprint for an AI Bill of Rights signals that operators of AI systems in the U.S.

may face significant compliance obligations of a go-forward

Similarly, if enacted into law, the European Commission’s Artificial Intelligence Regulation (“AI Regulation”)

would impose compliance obligations on operators of AI systems and introduce regulatory fines for breaches of such obligations.

offer a number of products, services and features that make use of AI, and we are exploring ways in which we can further utilize the technology.

The full extent and applicability of potential AI laws and regulations will require monitoring to ensure we remain in compliance and any

risks are appropriately mitigated.

RISKS RELATED TO CONTENT AND INTELLECTUAL PROPERTY

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 the Zedge Marketplace may not grow as anticipated, or may decline, or users’ level of engagement with the

Zedge Marketplace may decline, all or any of which could materially harm our business and operating results.

Our future success depends, in part, on our ability

to 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.

We believe that users value high-quality content.

As such, we may need to make substantial payments to third parties from whom we license or acquire such content from or from whom we

create this content for our behalf.

Our ability to maintain and build relationships with such third-party providers may become important

to our success.

As competition for compelling content increases both domestically and internationally, our partners may alter business

terms under which they avail their content and services to us and potential providers may not offer their content or services to us at

all, or may offer them on terms that are not agreeable to us.

A change in these commercial terms could harm our operating results and

financial condition.

Further, much of the content that we acquire may only be available on a non-exclusive basis allowing competitors

the ability of offering this content to our disadvantage.

We may be subject to intellectual property infringement

claims or other allegations, which could require us to pay substantial statutory penalties or other damages and fines, remove relevant

content, enter into license agreements which may not be available on commercially reasonable terms or could result in our being barred

from third-party distribution platforms, which could harm our business and competitive position.

There 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

Even though the allegations or claims could be baseless, our defense against any of these allegations or claims would be both

costly and time-consuming and could significantly divert the efforts and resources of our management and other personnel.

We may not be able to prevent others from

unauthorized use of our intellectual property, which could materially harm our business and competitive position.

We regard our trademarks, service marks, patents,

domain names, trade secrets, proprietary technologies and similar intellectual property as critical to our success, and we rely on trademark

and patent law, trade secret protection and confidentiality and license agreements with our employees and others to protect our proprietary

As of July 31, 2023, we have registered, amongst others, the following domain names:

www.zedge.net, www.zedge.com, www.emojipedia.com,

www.emojipedia.org, and gurushots.com.

In addition, we have been granted trademark protection for “Zedge” in the United States,

European Union, United Kingdom, India, and Canada, “We Make Phones Personal,” “Zedge, Everything You,” “Tattoo

Your Phone,” “Shortz – Chat Stories by Zedge,” and “NFTs Made Easy” in the United States, a stylized

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

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

in the United States.

We have also applied for trademark protection for “AI Art Battles (& Design)”, “pAInt,”

and “Zedge pAInt” in the United States, a stylized “D” logo in Canada and India, and “GuruShots”

in Canada, India, the European Union, and the United Kingdom, and have obtained copyright registrations for the GuruShots mobile and

web-based applications, and have obtained a copyright registration for our flagship app, Zedge.

Monitoring unauthorized use of our intellectual

property rights is difficult and costly, and we cannot be certain that we can effectively prevent misappropriation of our intellectual

property, particularly in countries where the laws may not protect our proprietary rights as fully as in the United States.

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 others.

Confidentiality agreements may be breached, and we may not have adequate remedies for any breach.

Even where adequate and relevant laws exist it may not be possible to obtain swift and equitable enforcement of such laws, or to obtain

enforcement of a court judgment or an arbitration award delivered in another jurisdiction, and accordingly, we may not be able to effectively

protect our intellectual property rights or enforce agreements in such countries.

Our insurance may not provide adequate levels

of coverage against claims.

We believe that we maintain insurance customary

for businesses of our size and type.

However, there are types of losses we may incur that cannot be insured against or that we believe

are not economically reasonable or practical to insure.

In addition, any loss incurred could exceed policy limits and policy payments

made to us may not be made on a timely basis.

Such losses could adversely affect our business prospects, results of operations, cash

flows and financial condition.

RISKS RELATED INFORMATION TECHNOLOGY AND DATA SECURITY

Our business depends on our ability to collect

and effectively use data to serve relevant advertising, deliver suitable content, and identify appropriate customer prospects, and any

limitation on the collection and use of this data could significantly diminish the value of our services, cause us to lose clients, make

us less attractive to prospective customers and revenues.

When one uses our products and services, we may

collect both personally identifiable and non-personally identifiable data about the user.

This may include but is not limited to the

user’s name, telephone number, email address, web cookies, Meta and other login credentials, phone model, operating system, location,

Android Advertising ID (“AAID”), Apple’s Identifier for Advertising, IDFA, as well as information relating to their

interaction with advertisements and content appearing within our products.

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 revenues.

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 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.

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.

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 or those of third-parties that we depend on will be secure from future security breaches or computer virus attacks.

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 other online and mobile accounts, if those

users use identical usernames and passwords.

They could also misappropriate other information, including our content.

These circumventions

may cause interruptions in our operations or damage our brand image and reputation.

Our servers may be vulnerable to computer viruses,

physical or electronic break-ins and similar disruptions, which could cause system interruptions, website slowdown or unavailability,

delays in communication or transactions, or loss of data.

We may be required to incur significant additional costs to protect against

security breaches or to alleviate problems caused by such breaches.

In addition, a significant security breach or virus attack on our

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

The investment needed to eliminate or address

security threats and vulnerabilities before or after a cyber-incident could be material.

Our remediation efforts may not be successful

and could result in interruptions, delays or cessation of service, and loss of existing or potential suppliers, users, or creators.

threats related to cyber-attacks continuously evolve and grow, we may also find it necessary to invest additional resources in protecting

our data and infrastructure, which may impact our results of operations.

Although we have insurance coverage protection against cyber-attacks,

it may not be sufficient to cover all possible claims stemming from security breaches, cyberattacks and other types of unlawful activity,

or any resulting disruptions from such events, and we may suffer losses that could have a material adverse effect on our business.

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.

In addition, the platforms that we use to distribute

our apps may encourage, or require, compliance with certain security standards, such as the voluntary cybersecurity framework released

by the National Institute of Standards and Technology which consists of controls designed to identify and manage cyber-security risks,

and we could be negatively impacted to the extent we are unable to comply with such standards.

RISKS RELATED TO OUR OWNERSHIP AND OUR CLASS B COMMON STOCK

We have granted, and may continue to grant,

options, restricted shares and other types of awards under our stock option and equity incentive plans and otherwise, which may result

in increased equity-based compensation expenses.

The expenses associated with equity-based compensation

have affected our net income and may reduce our net income in the future, and any additional equity issued under equity-based compensation

schemes will dilute the ownership interests of our stockholders.

We believe the granting of equity-based compensation is of significant

importance to our ability to attract and retain key personnel and employees, consultants and directors, and we will continue to grant

equity-based compensation in the future.

As a result, our expenses associated with equity-based compensation may increase, which may

have an adverse effect on our results of operations and would dilute the ownership interests of our stockholders.

Investors may suffer dilution.

We may engage in equity financing to fund our

future operations and growth or acquisitions.

If we raise additional funds and/or provide consideration in acquisitions by issuing equity

securities, stockholders may experience significant dilution of their ownership interest (both with respect to the percentage of total

securities held, and with respect to the book value of their securities) and such securities may have rights senior to those of the holders

of our Class B common stock.

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.

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.

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 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.

A 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.

Any such equity financing could occur at prices

below, or well below, the then-current trading price of our Class B common stock, which would further exacerbate the ownership interests

of our stockholders.

Our business, financial condition and results

of operations, as well as our ability to obtain additional financing, may be adversely affected by downturn in the global economy.

The global financial markets have experienced

significant disruptions over the past fifteen years and the recoveries from the lows of 2008 and 2009 as well as from the Covid 19 pandemic

have been uneven.

There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted

by the central banks and financial authorities of some of the world’s leading economies.

There have also been concerns over unrest

in Eastern Europe, the Middle East and Africa, which have resulted in volatility in the energy and food sectors amongst other markets.

We may be affected by economic downturns.

A prolonged slowdown in the world economy

may lead to a reduced amount of mobile internet advertising, which could materially and adversely affect our business, financial condition

and results of operations.

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:

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.

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;

12 unchanged sentences

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 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

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.

In addition, in the past, stockholders have initiated

class action lawsuits against technology companies following periods of volatility in the market prices of these companies’ stock.

Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources.

We are controlled by our majority stockholder,

which limits the ability of other stockholders to affect our management.

Michael Jonas is our majority stockholder, Executive

Chairman, Chairman of the Board and a director, and, as of October 30, 2023, had voting power over 1,918,159 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 1,393,384 shares of our Class B common stock), representing approximately 57.9% 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.

As a result, the ability of any of our other stockholders to influence our management is limited.

If securities or industry analysts do not

publish research or publish unfavorable research about our business or our stock, our stock price and trading volume could decline.

The trading market for our common Class B common

stock relies in part on the research and reports that equity research analysts publish about us and our business.

Currently, only one

investment bank, Maxim Group LLC, publishes equity research about Zedge and there are no guarantees that they will continue providing

coverage in the future.

We may never obtain research coverage by other equity research analysts.

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

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.

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.

We do not have any control over the equity research analysts or their content and opinions included in their

The price of our stock could decline if one or more equity research analysts downgrade our stock or issues other unfavorable

commentary or research.

If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly,

demand for our stock could decrease, which in turn could cause our stock price and/or trading volume to decline.

Our results of operations may be subject to

wide fluctuations due to a number of factors, which may adversely affect the trading price of our Class B common stock.

We may experience seasonality and other fluctuations in our business,

reflecting fluctuations in internet and smartphone usage and advertising.

Revenues from consumer internet and mobile application products

and services are typically higher in the fourth quarter of the calendar year due to increased year-end advertising and marketing budgets.

Conversely, we generally experience lower advertising revenues during the first quarter of the calendar year due to weaker advertising

spend following the holidays.

Thus, our operating results in one or more future quarters or years may fluctuate substantially or fall

below the expectations of securities analysts and investors.

In such an event, the trading price of our Class B common stock may fluctuate

significantly or decrease significantly.

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