What changed in this filing

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Item 1A. Risk Factors

2024-10-29 compared with 2023-10-30 · 924 added, 935 removed, 926 unchanged (67% of the section changed)

Our business, operating results or financial

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

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

The trading price of our Class

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

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

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

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

existing users, or if our users decrease their level of engagement with our products or do

not make optional purchases of tokens, resources, or content, or convert into paying subscribers

and renew their paid subscriptions our revenue, financial results and business may be significantly

may not be successful in acquiring a sufficient number of users that become purchasers or

retain existing users who generate profitable revenue for our apps.

may not manage our in-app economy well and as a result, disincentivize users from making

in-app purchases.

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

and results of operations.

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

profitability and prospects may be materially and adversely affected.

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

materially harm our business and results of operations.

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

advertising demand partners.

Any change to this mix could result in negatively impacting

our business, financial condition, and results of operations.

apps’ user base is heavily weighted to the Android operating system and our revenues

and profitability may suffer if the market demand for Android smartphones decreases.

rely on third-party platforms, such as the iOS App Store, 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.

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.

may not be successful in acquiring a sufficient number of users that become purchasers or retain existing users who generate profitable

revenue for our apps.

may not manage our in-app economy well and as a result, disincentivize users from making in-app purchases.

Any failure to do so could

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

we are unable to compete for advertisers or if advertisers reduce their spend with us, our

revenues, profitability and prospects may be materially and adversely affected.

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

of operations.

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

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

apps’ user base is heavily weighted to the Android operating system and our revenues and profitability may suffer if the market

demand for Android smartphones decreases.

rely on third-party platforms, such as the iOS App Store, 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.

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

that we envision, and our revenues, profitability and prospects may be materially and adversely negatively affected.

we fail to maintain and enhance our various brands, or if we incur excessive expenses in

this effort, our business, results of operations and prospects may be materially and adversely

may not be able to effectively manage our growth or implement our future business strategies,

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

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

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

may be adversely affected.

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

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

in these countries.

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.

may not be able to effectively manage our growth or implement our future business strategies, in which case our business and results

of operations may be materially and adversely affected.

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

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

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

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

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

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.

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,

deliver suitable content, and identify appropriate customer prospects, and any limitation

on the collection and use of this data could significantly diminish the value of our services,

cause us to lose clients, make us less attractive to prospective customers and revenues.

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

and results of operations.

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

to affect our management.

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

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.

laws may impact our business, such as those affecting artificial intelligence and efforts by lawmakers in various jurisdictions to regulate

providers of certain online services which may apply to our business and therefore introduce additional compliance obligations and potential

sanctions and penalties for failings in these areas.

Monitoring (and, if applicable, complying with) these developments is likely to

increase the cost of doing business and any failure to comply with new laws may harm our business and reputation.

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.

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

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

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.

Certain of our offerings are sensitive to consumer

spending and economic conditions.

Consumer purchases of discretionary retail items

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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.

rates, high tax rates, high fuel prices, the threat of a pandemic or other health crisis and consumer confidence with respect to current

and future economic, market and other conditions.

Consumer purchases may decline during recessionary periods or at other times when unemployment

is higher or disposable income is lower.

Consumer willingness to make discretionary purchases may decline, may stall or may be slow to

increase due to national and regional economic conditions.

There remains considerable uncertainty and volatility in the national and global

Further or future slowdowns or disruptions in the economy, market and other conditions could adversely affect us and our business

We may not be able to sustain or increase our current net sales if there is a decline in consumer spending.

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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

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

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

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

and paid conversion are fundamental to our success.

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

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

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:

The size of our user base and our users’

level of engagement and paid conversion are fundamental to our success.

Our financial performance has been and will continue to be dependent

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

We expect that the size of our user base will fluctuate or decline in one or more markets from time to time.

If consumers and/or creators

do not perceive our products as useful, effective, entertaining, reliable, and/or trustworthy, we may not be able to attract or keep users

or otherwise maintain or increase the frequency and duration of their engagement or the percentage of users that are converted into or

remain paying subscribers.

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

Any number of factors can negatively affect user retention, growth, engagement and conversion, including if:

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

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

and/or session time;

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

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

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

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

have difficulty accessing our products and services as a result of our actions or those of

third parties that we rely on to distribute our products and deliver our services;

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

products and services with improvements that users are interested in;

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

and paid channels;

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

decrease their engagement, session time, or uninstall our apps because they feel their experience is diminished due to product decisions

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

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

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

have difficulty installing, updating or otherwise accessing our products and services as a result of our actions or those of third parties

that we rely on to distribute our products and deliver our services;

fail to introduce new features, products or services that users find engaging or enhance the existing products and services with improvements

that users are interested in;

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

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

maintain and grow revenues;

● initiatives

designed to attract and maintain users and increase engagement are unsuccessful because of

errors that we make or policies instituted by third parties that we use to distribute our

products or deliver our services;

terms, policies or procedures related to areas such as privacy, user data, content ownership,

or monetization techniques that are received negatively by our users or creators;

to offer relevant content to our users;

support for our users and creators;

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

unreliable or that result in a poor user experience;

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

● regulations

and/or litigation that result in users not accepting our terms of use because of measures

that we have taken in order to ensure compliance.

designed to attract and maintain users and increase engagement are unsuccessful because of errors that we make or policies instituted

by third parties that we use to distribute our products or deliver our services;

● third-party

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

adopt terms, policies or procedures related to areas such as privacy, user data, content ownership, or monetization techniques that are

received negatively by our users or creators;

fail to combat inappropriate or abusive activity on our platforms;

are unable to offer relevant content to our users;

fail to provide adequate support for our users and creators;

are outages or other technical problems that result in making our products and services inaccessible, unreliable or that result in a

poor user experience;

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

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

to ensure compliance.

Certain of these factors have, at various times,

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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 experience rapid user growth or continued engagement in

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

in regular accessibility.

Any decrease in user retention, growth or engagement may have a material and adverse impact on our popularity,

revenue, business, reputation, financial condition, and results of operations.

We may not be successful in acquiring a sufficient

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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.

Accordingly, 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

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

In fiscal 2024, we experienced an 8% decline in paid subscriptions.

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increased the compounded annual growth rate of monthly spending per paying player by around 9.9%.

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.

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

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

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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.

digital goods and/or paid subscriptions can be impacted by various factors including, but not limited to, their price, discounting policies,

promotional strategies, market competition, user reviews, and user engagement levels.

If we fail to manage our economy well, we risk confusing

or upsetting users to the point that they reduce their purchases which could negatively hurt the business.

If we are unable to compete for advertisers

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

In fiscal 2024, approximately 79% 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

We generally enter into arrangements with the major programmatic

advertising networks to monetize our advertising inventory.

We need to maintain good relationships with these advertising networks to

provide us with a sufficient inventory of advertisements.

Online advertising, including through mobile applications, is an intensely competitive

Many large companies, such as Applovin, Meta and Google, invest significantly in data analytics to make their properties and

platforms more attractive to advertisers.

Our advertising revenue is primarily a function of the number and hours of engagement of our

free users and our ability to provide innovative advertising products that are relevant to our users, maintain or increase user engagement

and satisfaction with our products, and enhance returns and add incremental gains for our advertising partners.

If our relationship with

any advertising partners terminates for any reason, or if the commercial terms of our relationships are changed or do not continue to

be renewed on favorable terms, or if we cannot source high-quality ads consistent with our brand or product experience, we would need

to qualify new advertising partners, which could negatively impact our revenues, at least in the short term.

In addition, internet-connected devices and operating

systems controlled by third parties increasingly contain features that allow device users to disable functionality that allows for the

delivery of advertising on their devices or reduce the ability to provide personalized or targeted advertising, which results in less

valuable ads.

Device and browser manufacturers may include or expand these features as part of their standard device specifications.

example, when Apple announced that UDID, a standard device identifier used in some applications, was being superseded and would no longer

be supported, application developers were required to update their apps to utilize alternative device identifiers such as universally

unique identifier, or, more recently, identifier-for-advertising, which simplifies the process for Apple users to opt out of behavioral

Furthermore, laws and regulations may also make it more difficult to deliver personalized or targeted advertising or impose

requirements that result in more users making elections to block our ability to deliver targeted ads.

If users do not elect to participate

in functionality that supports the delivery of targeted advertising on their devices, our ability to deliver effective advertising campaigns

could suffer, which could cause our business, financial condition, or operating results to be adversely affected.

We anticipate that our growth and profitability

will continue to depend on our ability to sell our advertising inventory.

Companies that advertise with us may choose to utilize other

advertising channels or may reduce or eliminate their marketing altogether for a variety of reasons, many of which are out of our control,

including, without limitation, if the demand for mobile phone personalization industry declines or otherwise falls out of favor with advertisers

or consumers.

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The digital advertising market may deteriorate,

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

which could materially harm our business and results of operations.

We generate the substantial majority of our revenue

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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.

Future demand for mobile advertising is uncertain.

Many advertisers still have limited experience with mobile advertising and may continue to devote larger portions of their advertising

budgets to more traditional offline or online personal computer-based advertising, instead of shifting additional advertising resources

to mobile advertising.

Further, our advertisers’ ability to effectively

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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.

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.

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

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In fiscal 2024, 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.

accounted for approximately 80% of our total revenues and 69% of our total advertising revenues were generated by three advertising demand

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.

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 2024, 79% of our Zedge

App’s users were located in emerging markets with 21% of users in well-developed regions compared to 78% and 22% respectively in

India comprised 30% of our MAU as of July 31, 2024.

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.

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

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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.

Vungle and AppLovin were responsible for 69% of overall advertising revenue in fiscal 2024.

If any of these advertising demand partners

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

In addition, on April 24, 2024 President Joe Biden signed a bill that

would ban TikTok in the United States if ByteDance, TikTok’s Chinese owner, didn’t sell the platform to a non-Chinese owner

within nine months.

Although TikTok is challenging the legality of this bill in court it is unclear if they will prevail.

impact of a TikTok ban could be material impacting advertising and ecommerce.

In light of TikTok running ads in Zedge’s platform

a ban could negatively impact revenue.

Our apps’ user base is heavily weighted

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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.

of Android smartphones could significantly and adversely affect the demand for our products and services and would materially affect our

Although the Android smartphone market has grown

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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.

Although the Zedge App had initial success in converting

freemium users into paid subscribers, starting with zero in January 2019 and ending fiscal 2023 with approximately 647,000, we ended fiscal

2024 with 669,000 subscribers, a 3.4% increase 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.

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

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

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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.

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.

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 cloud infrastructure and service providers,

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

Our mobile applications

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

While our mobile applications

are generally free to download from these stores, 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, 2024 we paid Google and Apple up to 30% of the revenue we generated

across their respective platforms for processing fees.

Our revenues and earnings could be negatively impacted should Google or Apple decide

to impose higher processing fees.

Further, our cashflow may be negatively impacted if either platform changes the timing of their payments

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.

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

Shortly after the notice was issued, two of our major advertising suppliers ceased serving advertisements to our Zedge App.

addition, Google Play sent a notification to users that had the problematic version of the app on their phone recommending that they uninstall

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:

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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.

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

A platform provider may also change its fee structure

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

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

platform or across platforms.

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

IDFA with app developers, on an app-by-app basis.

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

advertising campaigns at the user level becomes significantly more difficult, typically resulting in higher user acquisition costs.

Furthermore, both Apple and Google have broad

discretion to make changes to their operating systems or payment services or change the manner in which their mobile operating systems

function and their respective terms and conditions applicable to the distribution of our applications, including the amount of, and requirement

to pay, certain fees associated with purchases required to be facilitated by Apple and Google through our applications, and to interpret

their respective terms and conditions in ways that may limit, eliminate or otherwise interfere with our products, our ability to distribute

our applications through their stores, our ability to update our applications, including to make bug fixes or other feature updates or

upgrades, the features we provide, the manner in which we market our in-app products, our ability to access native functionality or other

aspects of mobile devices, and our ability to access information about our users that they collect.

To the extent either or both of them

do so, our business, financial condition and results of operations could be materially adversely affected.

For example, pursuant to Google’s policy

whereby only Google Play’s in-app billing system could be used for transactions in its store, we were mandated to stop the provision

of non-native payment options to our users on Android during 2021, which caused disruptions for users and led to a decline in Paying Users.

Since announcing this policy in 2020, following industry pushback and country-specific regulations Google has introduced in select markets

the option of “user choice billing,” which allows eligible developers to offer users an additional billing system alongside

Google Play’s billing system, and in the European Economic Area the option for eligible developers to offer users an alternative

to Google Play’s billing system.

We are exploring such solutions on a country-by-country basis.

However, as these solutions are

in their infancy, they may evolve following subsequent regulatory mandates or organically at Google’s behest, and as such we will

need to be ready to continuously adapt to such changes.

Any deadlines imposed on developers by future iterations of Google’s policy

will require prompt and active development, and failure to do so may result in the discontinuation of the provision of alternative billing

methods to our users.

Similarly, Apple is experiencing industry pushback

and country-specific regulations.

In response to a recent antitrust lawsuit, Apple now allows all digital apps in the United States to

include a link to the developer’s website to process payments for in-app purchases.

Additionally, in the EU, pursuant to the Digital

Markets Act, all major app store operators such as Google and Apple will be forced to introduce more country-specific billing policies

that allow developers to offer alternative billing methods, and it is expected that other markets may follow suit.

Further complicating

this landscape, a recent ruling by the United States District Court for the Northern District of California in Epic Games v.

mandates that Google must open its Android app store to third-party competitors for three years, from November 1, 2024 through November

1, 2027, which will likely foster increased competition and could lead to changes in fee structures and app distribution practices.

Should we choose to explore such policy initiatives

for the benefit of our business and our users, we may potentially become subject to highly nuanced, country-specific billing policies

and commissions of major app store operators, we may need to devote more resources and time in creating and managing separate app bundles

for each country in which we want to offer alternative billing options, which could become burdensome, and/or we could become subject

to higher commissions overall.

Furthermore, changes to billing options may cause a disruption to the user journey, which could cause a

decrease in paying user conversion rates.

Alternatively, choosing not to explore such policy initiatives could present a risk of missed

Any of the foregoing could materially adversely affect our business, financial condition and results of operations.

If we violate, or a platform provider believes

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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.

Technologies have been developed, and will likely

continue to be developed, that can block the display of advertisements on our digital products and services.

We may suffer negative consequences,

including a material reduction of revenue, with mass adoption of website ad blocking technologies or other technologies that limit the

ability to personalize advertisements, including, without limitation, if the price for this advertising inventory declines.

substantially all of our revenue from advertising, and ad-blocking technologies may prevent the display of certain advertisements appearing

on our platform, which could harm our business, operating results, and financial condition.

Existing ad-blocking technologies that have

not been effective on our platform may become effective as we make certain platform changes, and new ad-blocking technologies may be developed

in the future.

Activities of our advertiser clients and/or

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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,

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.

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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

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

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

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

in particular;

retain and motivate talent, including but not limited to application developers, visual designers,

product and program managers and engineers who have experience developing consumer facing

digital products or other mobile internet products and services;

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

retain and motivate talent, including but not limited to application developers, visual designers, product and program managers and engineers

who have experience developing consumer facing digital products or other mobile internet products and services;

● effectively

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

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

products cost-effectively;

our existing users and prospects into new products that we develop, independent of our current

product suite, and convert them into recurring users of these new products;

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

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

users of these new products;

● successfully

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

improve our platform to provide a compelling and optimal user experience through integration

of products and services provided by existing and new third-party developers or business

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

improve our platform to provide a compelling and optimal user experience through integration of products and services provided by existing

and new third-party developers or business partners;

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

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

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

and consumers;

to ensure that we build best-of-breed tools for Zedge Premium content creators that, amongst

other things, meet their needs and properly address marketing, distribution, monetization,

reporting, support, and ease of use;

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

revenue generation;

evolving ‘NFTs Made Easy’, our NFT platform, in order to meet the needs of both

creators and consumers;

● successfully

market Zedge Premium to the creative community and secure their adoption as a must-have in

their omnichannel distribution mix;

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

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

to ensure that we build best-of-breed tools for Zedge Premium content creators that, amongst other things, meet their needs and properly

address marketing, distribution, monetization, reporting, support, and ease of use;

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

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

● successfully

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

● effectively

market and convert GuruShots’ players into Zedge Premium artists;

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

marketing and monetization objectives;

to offer an excellent and differentiated consumer experience in Zedge Premium, including

all end-user facing attributes ranging from the user interface to customer support.

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

to offer an excellent and differentiated consumer experience in Zedge Premium, including all end-user facing attributes ranging from

the user interface to customer support.

If Zedge Premium fails to yield the strategic

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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.

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

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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.

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,

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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

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

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 standards;

● distinguish

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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

In addition, despite our ongoing efforts to prevent

violation of our user guidelines, problematic content on our platforms, including but not limited to, low-quality user-generated content,

socially unacceptable material, and other violations of our guidelines could affect the quality of our services and offerings and the

manner in which they are viewed by our users or potential users.

This could harm our reputation and negatively impact user participation

of our various platforms.

RISKS RELATED TO FINANCIAL AND ACCOUNTING MATTERS

Our limited operating history makes it difficult

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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:

Impacting the growth figures in fiscal 2023 as compared to fiscal 2024 is the inclusion of GuruShots for all of fiscal 2023 as compared

to only the final three and a half months of fiscal 2022.

We have encountered and will encounter risks and difficulties frequently experienced

by early-stage companies in rapidly evolving industries, like mobile apps, digital marketplaces and gaming, including the need to:

forecast our revenue and plan our operating expenses;

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

a scalable technology infrastructure that can efficiently and reliably address increased

usage, as well as new features and services;

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

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

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

attract, retain and motivate new user and artists;

attract, retain and motivate new users and artists;

our expanding operations.

If we do not successfully address any or all

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

If we 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.

activities fiscal 2023 and 2024, 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 2024 was $9.2 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,

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

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

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

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

our indebtedness;

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

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

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

the industry in which we operate;

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

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

us from exploring;

our vulnerability to general adverse economic industry and competitive conditions;

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

technologies, or exploiting business opportunities;

● potentially

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

as a deduction against taxable income under applicable tax laws;

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

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

or dispose of assets;

our ability to repurchase shares and pay cash dividends;

us to the risk of increased interest rates.

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;

or incur certain liens or permit them to exist;

into certain sale and lease-back transactions;

certain investments and acquisitions;

● consolidate,

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

dividends, repurchase stock and make other certain restricted payments;

into certain types of transactions with affiliates.

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 net loss in fiscal 2023 was $6.1 million.

Our ability to maintain profitability and positive cash flow from operating activities depends

on various factors, including but not limited to, the acceptance of our products and services by mobile phone and internet users, the

growth and maintenance of our user base, user acquisition spend and associated return, our ability to maintain existing and obtain new

advertisers, our ability to grow our revenues, the success of each of our digital brands as measured by their respective key performance

indicators, the effectiveness of our new product initiatives, selling and marketing activities as well as control our costs and expenses.

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

sufficient to satisfy our anticipated capital expenditures and other cash needs.

As such, we may not be able to fund our operating expenses

and expenditures out of cash flows, which would require us to utilize debt or equity financing which we may not be able to secure or which

we may only secure on terms that are not favorable, which may result in significant dilution or voluntary or involuntary dissolution or

liquidation proceeding of us and a total loss of your investment.

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

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.

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

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Our effective tax rate for fiscal 2024 was 19.3%

compared and 16.3% for fiscal 2022.

compared with 7.0% for fiscal 2023.

In general, changes in applicable U.S.

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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.

for Economic Cooperation and Development (the “OECD”) has been working on a Base Erosion and Profits Shifting Project that

would change various aspects of the existing framework under which our tax obligations are determined in many of the countries in which

In this regard, the OECD has proposed policies aiming to modernize global tax systems, including a country-by-country 15%

minimum effective tax rate (“Pillar Two”) for multinational companies.

Numerous countries have enacted, or are in the process

of enacting, legislation to implement the Pillar Two model rules with a subset of the rules becoming effective during our fiscal year

ending July 31, 2025, and the remaining rules becoming effective for our fiscal year ending July 31, 2026, or in later periods.

point in time, we do not expect material tax impacts associated with Pillar Two rules in the countries where we operate for the fiscal

year ending July 31, 2025.

As these rules continue to evolve with new legislation and guidance, we will continue to monitor and account

for the enactment of Pillar Two rules in the countries where we operate, and the potential impacts such rules may have on our effective

tax rate and cash flows in future years.

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.

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

of these expenses and potentially increase the amount of cash taxes we paid during the years ended July 31, 2024 and 2023.

In the future,

among other things, Congress may consider legislation that would defer the capitalization requirement to later years or eliminate the

capitalization requirement, possibly with retroactive effect, and/or the IRS may issue guidance on the currently enacted tax law which

differs from our interpretation.

It is possible that the enactment of new legislation and/or issuance of IRS guidance could have a material

effect on our financial condition, results of operations and cash flows in future periods.

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.

that are denominated in foreign currencies, primarily the Norwegian Krone, Euro and Israeli Shekel, subjecting us to foreign currency

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 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.

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

when converted into the U.S.

In fiscal 2024 and fiscal 2023, we recorded a loss of $190,000 and a gain of $36,000, respectively,

from foreign currency movements relative to the U.S.

Included in these amounts were losses from hedging activities of $245,000

and gains of $14,000 in fiscal 2024 and fiscal 2023, 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

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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.

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

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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.

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

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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.

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

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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

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

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

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

in a timely fashion grow our user base at a cost effective rate, retain existing users, continue developing innovative technologies in

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

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

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

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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.

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

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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.

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

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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.

In Q4 of fiscal 2024, our Zedge App’s users in emerging markets declined by 15%

while its users in well-developed regions declined 19% when compared to fiscal 2023.

India comprised 30% of our MAU as of July 31, 2024.

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.

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

those in emerging markets.

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

in lower revenues and profitability.

In 2021, Apple released iOS 14 which started requiring

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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.

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

more difficult typically resulting in higher user acquisition costs.

Further, other companies upon whom the industry depends to identify

potential users such as Google may implement similar changes with respect to its Android operating system.

The longer-term impact of these

changes on the overall mobile advertising ecosystem, our competitors, our business, and the developers, partners, and advertisers within

our community remains uncertain, and depending on how we, our competitors, and the overall mobile advertising ecosystem adjusts, and how

our partners, advertisers, and users respond, our business could be seriously harmed.

If we are unable to mitigate or respond to these

and future developments, and alternative solutions do not become widely adopted by our advertisers, then targeting, measurement, and optimization

capabilities will be materially and adversely affected, which would in turn negatively impact our advertising revenue.

Our products may contain errors, flaws or failures

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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.

traffic, which is dependent on many factors, including the availability of appealing website content and search engine optimization, affiliate

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

The marketing efforts we implement may not succeed for a variety

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

External factors beyond our control may also impact the success

of our marketing initiatives.

Our digital presence heavily depends on search

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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

User acquisition for our apps depends on a host

of items including and especially on paid and organic app marketing initiatives.

Effective and profitable user acquisition relies on knowing

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

In addition, due to the changing nature

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

Taken together if we are unsuccessful in accounting for all of these items, we may be unable to recover our marketing spend and we may

not acquire new customers or our cost to acquire new customers may increase, and our existing customers may reduce the frequency or size

of their purchases from us, any of which could have a material adverse effect on our business, prospects, results of operations, financial

condition or cash flows.

Our products face competition in all aspects

of its business.

of their business.

If our apps fail to compete effectively or if their reputation is damaged, our business, financial condition and results

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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 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

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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 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.

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

trade barriers, customs classifications and changes in trade regulations.

For example, in 2022 the United States imposed broad-ranging

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

specific to operating in war-torn regions where employees may be mobilized for army service and where damage and/or loss of life may

occur when under attack.

Further, our ability to expand successfully in

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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.

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.

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.

including the October 7, 2023 attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them,

may adversely affect our operations.

Because a portion of

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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.

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, Hamas launched extensive rocket attacks on Israeli population and

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

Shortly following the attack, Israel’s security cabinet

declared war against Hamas and launched an aerial bombardment of various targets within the Gaza Strip.

The Israeli government subsequently

called for the evacuation of over one million residents of the northern part of the Gaza Strip and initiated ground operations in the

The intensity and duration of Israel’s current war against Hamas is difficult to predict as are such war’s economic

implications on the global economy.

The intensity and duration

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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.

Other terrorist organizations have since joined

the hostilities, including Hezbollah in Lebanon, and Palestinian military organizations in the West Bank.

In September 2024 Israel initiated

a ground invasion of southern Lebanon to rid it of Hezbollah operatives who have been shelling Israel since October 8, 2023.

Israeli officials

have stated that their aim is to allow tens of thousands of its citizens to return home without the threat of attack by Hezbollah militants.

Furthermore, Iran has fired hundreds of missiles

and drones into Israel and Israel has recently responded to that action with attacks on military sites in Iran.

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.

security cabinet’s decision to declare war against Hamas and more recently expand their operations against Hezbollah, 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

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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.

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.

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.

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

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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

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.

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

and Hezbollah, terrorist organizations that control the Gaza Strip and Lebanon, respectively, and has had various armed conflicts with

its neighbors as well as terrorist acts committed within Israel by hostile elements.

The Republic of Lithuania borders both the Russian

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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.

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

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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.

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.

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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.

failures, power loss, computer or hacking attacks or viruses, earthquakes, floods, fires, terrorist attacks and similar events.

of our system are not fully redundant or backed up, and our disaster recovery planning may not be sufficient for all eventualities.

any precaution we may take, the occurrence of a natural disaster or other unanticipated problems at our hosting facilities could result

in lengthy interruptions in the availability of our products.

Any interruption in the ability of users to access our websites or apps

could reduce our future revenues, harm our future profits, subject us to regulatory scrutiny and lead users to seek alternative internet

mobile products.

In addition, a hacking attack or another security incident, could result in unauthorized access to, damage to, disablement

or encryption of, use or misuse of, disclosure of, modification of, destruction of, or loss of our data or our developers’, creators’,

and users’ data or disrupt our ability to provide our platforms or services.

There can be no assurance that these providers

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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.

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

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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 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

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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.

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

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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.

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

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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.

within the Zedge App.

Additionally, we have other offerings utilizing AI in soft launch or development and we view this evolving technology

as a key driver and focus of new products.

While AI offers substantial opportunities, it also carries inherent risks to our business,

reputation and financial results.

AI technologies are complex and evolving rapidly.

Our competitors may

possess greater financial and technological resources, providing them with a competitive edge in attracting, motivating, and retaining

top AI professionals.

This could pose challenges in building and maintaining our AI capabilities.

In addition, market acceptance of AI

technologies is uncertain, and we may be unsuccessful in product development efforts which incorporate AI.

Our products offerings that

use AI could fail to achieve market acceptance, or our competitors may use AI technologies more efficiently than we do.

Furthermore, the use of AI brings to the forefront

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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.

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.

Laws and regulations focused on the development,

use, and provision of AI technologies and other digital products and services are proliferating in many jurisdictions around the world.

Staying compliant with evolving laws, regulations, and industry standards pertaining to AI may impose significant operational costs and

constrain our ability to develop, deploy, or employ AI technologies.

Failing to adapt appropriately to this evolving regulatory environment

could result in legal liability, regulatory actions, monetary penalties and damage to our brand and reputation.

Intellectual property ownership surrounding AI

technologies has not been fully addressed by U.S.

courts or other federal or state laws or regulations, Our ongoing development and use

of generative AI tools may result in copyright infringement claims, disputes over ownership and licensing, and potential patent infringement

claims, among other things.

These legal challenges could be costly to defend against, leading to substantial financial obligations and

reputational damage.

The evolving regulatory environment and uncertain legal precedents in this field further increase our exposure to

litigation risks, which could materially affect our business, financial condition, and results of operations.

Further, our use of generative AI in aspects of

our platforms may present risks and challenges that could increase as AI solutions become more prevalent.

AI algorithms may be flawed.

Datasets may be insufficient or contain biased information.

These deficiencies and other failures of AI systems could have negative impacts

on our users’ experience and subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm.

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.

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.

Although we have implemented

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

successful in doing so.

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

customers alike from engaging with our products and services.

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

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

Zedge is exposed to claims from prior owners

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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

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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.

that the transaction will yield growth on a standalone basis.

To date this has not been the case.

In addition, the acquisition was meant

to deliver strategic synergies on a combined basis.

Our success in realizing these growth opportunities and strategic synergies, and their

associated timing depends, amongst other things, on the successful integration of the respective businesses.

Even if we are successful

with the integration, there is no guarantee that the strategic synergies that we envisioned will bear fruit.

Future strategic alliances or acquisitions

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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 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

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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.

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.

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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.

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

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.

laws and regulations to us relating to issues such as user privacy and data protection, artificial intelligence, 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.

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

to increased costs.

If the rules, doctrines or currently available defenses change, if international jurisdictions refuse to apply protections

similar to those that are currently available in the U.S.

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

to our solutions, our potential liability for information or content created by third parties and posted to our platform could require

us to expend significant resources to try to comply with the new rules and implement additional measures to reduce our exposure to such

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

In addition, the Digital Millennium Copyright

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

In many, but not all, territories outside of

In many, but not all, territories outside of the

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

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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”),

For example, the European Union’s Directive

on Copyright in the Digital Single Market (the “DSM Directive”) is in effect and has been implemented by all EU Member States.

The DSM Directive Article 17 removes the shield

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

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

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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.’

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.’

The article also extends any licenses granted

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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.

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

in systems and resources, which are intended to ensure that we are compliant with the requirements of the GDPR, CCPA, DMCA, the DSM Directive

and other U.S.

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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.

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.

For example, on July 10, 2023, the European Commission

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

Data Privacy Framework (“DPF”).

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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 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 addition, the EU General Data Protection Regulation

2016/679 (“GDPR”) and the UK General Data Protection Regulation (the “UK GDPR”), incorporating the GDPR into UK

law, impose more stringent data protection requirements, provide an enforcement authority which substantially increases compliance costs,

and impose large penalties for noncompliance.

Such laws and regulations may require companies to implement new privacy and security policies,

conduct processing or transfer impact assessments, permit individuals to access, correct and delete personal information stored or maintained

by such companies, inform individuals of security breaches that affect their personal information, and, among other things, obtain individuals’

consent to use personal information for certain purposes.

In addition, some countries have enacted, or are currently considering, legislation

that imposes local storage and processing of data to avoid any form of transfer to a third country, or other restrictions on transfer

and disclosure of personal data outside of that country which may impact our compliance obligations, potentially exposing us to liability,

and increase the cost and complexity of delivering our products and services.

In June 2018, California passed the California

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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).

states have also enacted comprehensive consumer data privacy laws that are currently effective or will become effective in the coming

Moreover, some U.S.

states have more specific consumer data privacy requirements, some with onerous notice, consent, and other

These laws generally place limitations on the collection, processing, and 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

Some of the laws specifically regulate the processing of information from individuals under the age of 18.

Furthermore, all 50 U.S.

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

In addition, there has been a significant

increase in putative class action activity under privacy and privacy-related laws, often with claims for statutory damages and demands

for changes in business operations.

Several states have enacted laws requiring businesses

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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.

regulators, and plaintiffs’ attorneys have voiced concern about electronic marketing and the use of third-party cookies and similar

technology for online behavioral advertising.

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,

which will impose 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

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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.

New laws may impact our business, such as those

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

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

in these areas.

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

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

and regulatory landscape and industry standards surrounding the use of data and/or artificial intelligence technologies is rapidly evolving

and remains uncertain, and compliance may impose significant operational costs and may limit our ability to develop, deploy or use artificial

intelligence technologies.

New EU laws related to the use of data, including the EU Regulation on a Single Market for Digital Services

(2022/2065) (“DSA”), the EU Regulation (2023/2854) on fair access to and use of data (“EU Data Act”), and the

EU Regulation on Artificial Intelligence (“EU AI Act”), may impose additional rules and restrictions on the use of the data

in our products.

If we were required to change our business activities or revise or eliminate services, or to implement burdensome compliance

measures, our business and results of operations could be harmed.

We may be subject to fines, penalties, and potential litigation, including

class action lawsuits, if we fail to comply with applicable privacy and/or data security laws, regulations, standards, and other requirements.

The costs of compliance with and other burdens imposed by evolving data-related laws, regulations, and standards may limit the use and

adoption of our products and reduce overall demand.

Similarly, the UK has recently passed the Online

Safety Act 2023 (“OSA”).

The OSA 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 OSA impose additional obligations on covered service providers and

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

Our business allows users

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

As such, we will likely incur legal costs

in identifying the extent to which obligations under the DSA and OSA 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).

Any breaches 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.

future approach to 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 on a go-forward basis.

State laws relating to AI

are also proliferating, including significant state AI laws in California and Colorado.

Similarly, the EU AI Act entered into force in

The EU AI Act imposes compliance obligations on providers and users of AI systems and introduces regulatory fines for breaches

of such obligations.

We currently 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.

If we face intellectual property infringement

claims, or are unable to license, acquire or otherwise obtain access to compelling content and services at reasonable cost, or if we do

not develop or commission compelling content of our own, the number of users of the Zedge Marketplace may not grow as anticipated, or

may decline, or users’ level of engagement with the Zedge Marketplace may decline, all or any of which could materially harm our

business and operating results.

Our future success depends, in part, on our ability

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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.

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

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

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

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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.

From time to time, we are subject to claims from

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

There may also be new

laws and regulations that are adopted that change the rules related to the safe harbor for user generated content and ultimately requiring

us to pay licensing fees.

If a claim of infringement is brought against us that we are not able to successfully and cost-effectively

defend, we may be required to pay substantial penalties or other damages and fines, remove relevant content, enter into license agreements

that may not be available on commercially reasonable terms or at all or be barred from any of the third-party distribution platforms.

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

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

We may not be able to prevent others from

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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.

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

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

“GuruShots” in the United States.

We have also applied for trademark protection for “pAInt,” and “Zedge

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

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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.

We may face challenges in enforcing intellectual

property rights in international markets.

It is often difficult to create and enforce intellectual

property rights in certain international markets.

Patents, trademarks and service marks may also be invalidated, circumvented, or challenged.

Trade secrets are difficult to protect, and our trade secrets may be leaked or otherwise become known or be independently discovered

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.

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

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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.

Any significant system or network disruption

or cyberattack could have a material adverse effect on our business prospects and results of operations.

We rely heavily on complex information technology

systems and networks to operate our business efficiently.

Any significant disruption or cyberattack affecting these systems could have

a detrimental impact on our operations and financial performance.

Our technological infrastructure includes both internal systems and

services managed by third-party providers.

This reliance has become increasingly complicated due to ongoing supply chain disruptions

exacerbated by geopolitical events, such as conflicts that may further complicate existing supply chain constraints.

All information technology systems and networks

face potential vulnerabilities from various sources, including cyberattacks, computer viruses, malicious software, energy blackouts,

natural disasters, and telecommunication failures.

We securely store sensitive data, and any breach—whether physical or electronic—of

the systems housing this information could lead to significant risks, including data piracy or compromise.

Additionally, third-party partners may be granted

access to our proprietary information to provide necessary services, which involves a risk of data misappropriation or unauthorized use.

A data intrusion into the servers hosting our products could disrupt operations, particularly for those offering online features.

risks associated with such breaches may be heightened by global events, further complicating our cybersecurity posture.

Disruption to our information technology systems,

network failures, or security breaches could negatively impact our business continuity, operations, and financial results.

are not confined to our internal systems;

they also extend to the networks and e-commerce platforms of console providers and online partners.

External factors, such as extended remote work arrangements, geopolitical tensions, and internal factors like data migration and system

maintenance, further exacerbate these risks.

Our systems and those of our third-party service

providers may not always be fully adequate against all vulnerabilities.

We lack redundancy for every system, and our disaster recovery

planning may not account for all contingencies.

As our digital business continues to expand, we will require increasingly robust internal

and external technological infrastructure to meet player demands.

Failure to adapt and effectively scale this infrastructure may compromise

the performance and reliability of our products and negatively impact our business.

The investment needed to eliminate or address

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and data protection.

Furthermore, the exploitation of our systems

can adversely affect our products and services.

The virtual economies within many of our digital offerings are particularly susceptible

to abuse and fraudulent activities.

Despite implementing ongoing measures to prevent such issues, activities like the illicit generation

and sale of accounts or virtual items can result in loss of revenue, interfere with player enjoyment, and cause reputational harm.

In addition, the platforms that we use to distribute

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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.

including the potential repricing of options, have affected our net income and may reduce our net income in the future, and any additional

equity issued under equity-based compensation schemes will dilute the ownership interests of our stockholders.

We believe the granting

of equity-based compensation is of significant importance to our ability to attract and retain key personnel and employees, consultants

and directors, and we will continue to grant equity-based compensation in the future.

As a result, our expenses associated with equity-based

compensation may increase, which may have an adverse effect on our results of operations and would dilute the ownership interests of

our stockholders.

Investors may suffer dilution.

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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.

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

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or trends in our industry;

market price and volume fluctuations of other publicly traded companies and, in particular,

those that operate in the advertising, internet or media industries;

market price and volume fluctuations of other publicly traded companies and, in particular, those that operate in the advertising,

internet or media industries;

announcements

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or departures of key personnel;

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

specific stockholders.

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

In addition, in the past, stockholders have initiated

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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.

Michael Jonas is our controlling stockholder,

Executive Chairman, Chairman of our Board of Directors, and, as of October 28, 2024, had voting power over approximately 58.1% 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

If securities or industry analysts do not

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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.

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.

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