What changed in this filing

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Item 9A. Controls and Procedures

2025-10-28 compared with 2024-10-29 · 1276 added, 1516 removed, 360 unchanged (89% of the section changed)

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial

Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the

Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation,

our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as

of July 31, 2024.

Report of Management on Internal Control over Financial Reporting

We, the management of Zedge, Inc.

and its subsidiaries

(the “Company”), are responsible for establishing and maintaining adequate internal control over financial reporting of the

The Company’s internal control over financial

reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by,

or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s

board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of the Company’s financial statements for external purposes in accordance with generally accepted accounting

principles in the United States and includes those policies and procedures that:

of Disclosure Controls and Procedures

Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined

in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Annual

Report on Form 10-K.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure

controls and procedures were effective as of July 31, 2025.

of Management on Internal Control over Financial Reporting

the management of Zedge, Inc.

and subsidiaries (the “Company”), are responsible for establishing and maintaining adequate

internal control over financial reporting of the Company.

Company’s internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities

Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial

officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance

with generally accepted accounting principles in the United States and includes those policies and procedures that:

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

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assets that could have a material effect on the financial statements.

Management has assessed the effectiveness of

the Company’s internal control over financial reporting as of July 31, 2024.

In making this assessment, the Company’s management

used the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations

of the Treadway Commission.

Under the supervision and with the participation

of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our internal

control over financial reporting, as prescribed above, as of July 31, 2024.

Based on our evaluation, our principal executive officer and

principal financial officer concluded that the Company’s internal control over financial reporting was effective, at the reasonable

assurance level , as of July 31, 2024.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control

over financial reporting during the fourth quarter of fiscal 2024 that have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

has assessed the effectiveness of the Company’s internal control over financial reporting as of July 31, 2025.

In making this assessment,

the Company’s management used the criteria established in Internal Control — Integrated Framework (2013) issued by

the Committee of Sponsoring Organizations of the Treadway Commission.

the supervision and with the participation of our management, including our principal executive officer and principal financial officer,

we conducted an evaluation of our internal control over financial reporting, as prescribed above, as of July 31, 2025.

Based on our evaluation,

our principal executive officer and principal financial officer concluded that the Company’s internal control over financial reporting

was effective as of July 31, 2025.

in Internal Control over Financial Reporting

were no changes in our internal control over financial reporting during the fourth quarter of fiscal 2025 that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent

Not applicable.

Directors and Executive Officers of the Registrant, and

Corporate Governance

The following is a list of our directors and

executive officers along with the specific information required by Rule 14a-3 of the Securities Exchange Act of 1934:

Executive Officers

Jonathan Reich – Chief Executive Officer and President

Yi Tsai – Chief Financial Officer and Treasurer

Michael Jonas – Executive Chairman

Michael Jonas, Chairman of the Board

Howard Jonas, Vice Chairman of the Board

Mark Ghermezian

Elliot Gibber

Gregory Suess

The remaining information required by this Item

will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with the Securities and Exchange Commission

within 120 days after July 31, 2024, and which is incorporated by reference herein.

Corporate Governance

We have included as exhibits to this Annual Report

on Form 10-K certificates of our Chief Executive Officer and Chief Financial Officer certifying the quality of our public disclosure.

We make available free of charge through the investor

relations page of our website ( investor.zedge.net ) our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports

on Form 8-K and all amendments to those reports, and all beneficial ownership reports on Forms 3, 4 and 5 filed by directors, officers

and beneficial owners of more than 10% of our equity, as soon as reasonably practicable after such reports are electronically filed with

the Securities and Exchange Commission.

We have adopted codes of business conduct and ethics for all of our employees, including our principal

executive officer, principal financial officer and principal accounting officer.

Copies of the codes of business conduct and ethics are

available on our website.

Our website and the information contained therein

or incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K or our other filings with the Securities

and Exchange Commission.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Directors and Executive Officers of the Registrant, and Corporate Governance

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

Exchange Act of 1934:

Jonas – Executive Chairman

Reich – Chief Executive Officer and President

Tsai – Chief Financial Officer and Treasurer

Jonas, Chairman of the Board

Jonas, Vice Chairman of the Board

remaining information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will

be filed with the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

Trading Policies and Procedures

We have insider trading policies and procedures that govern the purchase, sale, and other dispositions of its securities by directors,

officers, employees, and consultants, as well as our own.

We believe these policies and procedures are reasonably designed to promote

compliance with insider trading laws, rules and regulations and applicable listing standards.

See “Index of Exhibits” within

this Annual Report on Form 10-K for our Insider Trading Policy.

have included as exhibits to this Annual Report on Form 10-K certificates of our Chief Executive Officer and Chief Financial Officer

certifying the quality of our public disclosure.

make available free of charge through the investor relations page of our web site ( investor.zedge.net ) our Annual Reports on Form

10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports, and all beneficial ownership reports

on Forms 3, 4 and 5 filed by directors, officers and beneficial owners of more than 10% of our equity, as soon as reasonably practicable

after such reports are electronically filed with the Securities and Exchange Commission.

We have adopted codes of business conduct and

ethics for all of our employees, including our principal executive officer, principal financial officer and principal accounting officer.

Copies of the codes of business conduct and ethics are available on our web site.

web site and the information contained therein or incorporated therein are not intended to be incorporated into this Annual Report on

Form 10-K or our other filings with the Securities and Exchange Commission.

Executive Compensation

The information required by this Item will be

contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with the Securities and Exchange Commission

within 120 days after July 31, 2024, and which is incorporated by reference herein.

Security Ownership of Certain Beneficial

Owners and Management and Related Stockholder Matters

The information required by this Item will be

contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with the Securities and Exchange Commission

within 120 days after July 31, 2024, and which is incorporated by reference herein.

Certain Relationships and Related

Transactions, and Director Independence

The information required by this Item will be

contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with the Securities and Exchange Commission

within 120 days after July 31, 2024, and which is incorporated by reference herein.

information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with

the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

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

information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with

the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

Certain Relationships and Related Transactions, and Director Independence

information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with

the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

Principal Accounting Fees and Services

The information required by this Item will be

contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with the Securities and Exchange Commission

within 120 days after July 31, 2024, and which is incorporated by reference herein.

information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with

the Securities and Exchange Commission within 120 days after July 31, 2025, and which is incorporated by reference herein.

Exhibits, Financial Statement Schedules.

The following

documents are filed as part of this Report:

following documents are filed as part of this Report:

of Independent Registered Public Accounting Firm on Consolidated Financial Statements

Consolidated Financial Statements

covered by Report of Independent Registered Public Accounting Firm

Financial Statements covered by Report of Independent Registered Public Accounting Firm

Statement Schedule.

All schedules have been omitted since

they are either included in the Notes to Consolidated Financial Statements or not required or not applicable.

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

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

The exhibits listed in paragraph (b) of

this item are filed, furnished, or incorporated by reference as part of this Form 10-K.

Certain of the agreements filed

as exhibits to this Form 10-K contain representations and warranties by the parties to the agreements that have been made solely for

the benefit of the parties to the agreement.

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

of the agreements filed as exhibits to this Form 10-K contain representations and warranties by the parties to the agreements that

have been made solely for the benefit of the parties to the agreement.

These representations and warranties:

been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures

are not necessarily reflected in the agreements;

standards of materiality that differ from those of a reasonable investor;

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

Accordingly, these representations

and warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at

any other time.

have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which

disclosures are not necessarily reflected in the agreements;

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

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

these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties

were made or at any other time.

Investors should not rely on them as statements of fact.

Description of Exhibits

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

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and Western Alliance Bank, dated October 28, 2024

Insider Trading Policy

Subsidiaries of the Registrant

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Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Definition Linkbase

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (formatted as Inline

XBRL and contained in Exhibit 101)

filed herewith.

Incorporated by reference

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

Incorporated by reference

to Form 10-K, filed October 28, 2019

Incorporated by reference

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

Incorporated by reference

to the Schedule 14A, filed November 28, 2022.

Incorporated by reference

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

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

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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

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

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

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

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

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

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

Form 10-K Summary.

Pursuant to the requirements of Section 13

or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf

by the undersigned, thereunto duly authorized.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report

on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Jonathan Reich

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October 28, 2025

Pursuant to the requirements of the Securities

Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf of the Registrant and in the

capacities and on the dates indicated.

Chief Executive Officer

October 29, 2024

to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons

on behalf of the Registrant and in the capacities and on the dates indicated.

Jonathan Reich

(Principal Executive Officer)

Chief Financial Officer

October 29, 2024

(Principal Financial Officer and

Principal Accounting Officer)

October 29, 2024

Executive Officer

Executive Officer)

Financial Officer

Financial Officer and

Accounting Officer)

Michael Jonas

October 29, 2024

/s/ Mark Ghermezian

October 29, 2024

Mark Ghermezian

October 29, 2024

Elliot Gibber

/s/ Paul Packer

October 29, 2024

Gregory Suess

Index to Consolidated Financial Statements

to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm- UHY LLP (PCAOB ID 1195 ) F-2

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Notes to Consolidated Financial Statements F-8

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Board of Directors and

Stockholders of Zedge, Inc.

Opinion on the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and

of Zedge, Inc.

on the Financial Statements

We have audited the accompanying consolidated

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fairly, in all material respects, the financial position of the Company as of July 31, 2025 and 2024, and the results of its operations

and its cash flows for each of the fiscal years in the two-year period ended July 31, 2024, in conformity with accounting principles generally

accepted in the United States of America.

and its cash flows for each of the fiscal years in the two-year period ended July 31, 2025, in conformity with accounting principles

generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

These consolidated financial statements are the responsibility of

the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements

based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal

control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Our audits included performing procedures to assess the risks of

material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that

respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated

The critical audit matter communicated below

is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and

(1) relates to accounts or disclosures that are material to the consolidated financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

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in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Definite-Lived Intangible Assets Impairment

– GuruShots Asset Group

As described in Notes 1 and 7 to the consolidated financial statements,

the Company identified indicators of impairment with the GuruShots asset group and performed an undiscounted cash flow analysis to determine

if the cash flows expected to be generated over the estimated remaining useful life of its primary assets were sufficient to recover the

carrying value of the asset group.

Based on this analysis, the undiscounted cash flows were not sufficient to recover the carrying value

of the asset group.

As a result, the Company compared the carrying value of the asset group to its fair value, determined that the fair

value of the asset group was approximately zero, and recorded an impairment charge of $11.9 million related to the GuruShots asset group.

The principal considerations for our determination that performing

procedures relating to the definite-lived intangible assets impairment is a critical audit matter are (i) the significant judgment by

management when developing the fair value measurements of the intangible assets;

and (ii) a high degree of auditor judgment, subjectivity,

and effort in performing procedures and evaluating management’s significant assumptions relating to the fair value measurements.

Significant assumptions included projected sales, cost of platform fees, selling and administrative expenses, long-term growth rates,

and the weighted average cost of capital.

Addressing the matter involved performing procedures

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures

included, among others (i) testing management’s process for developing the fair value measurements;

(ii) evaluating the appropriateness

of the methodology used;

(iii) testing the completeness and accuracy of underlying data;

and (iv) evaluating the significant assumptions

used by management.

Evaluating management’s significant assumptions involved assessing whether the assumptions used by management

were reasonable considering (i) the current and past performance of the individual intangible assets;

(ii) the consistency of the data

and assumptions utilized with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained

in other areas of the audit.

We have served as the Company’s auditor

New York, New York

October 29, 2024

matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Impairment of Capitalized Software and Technology

Development Costs

As described in Note 18 to the consolidated financial

statements, the Company implemented a corporate restructuring plan aimed to reduce costs throughout the organization.

As part of the

restructuring plan, the Company initiated a strategic reassessment of its GuruShots’ operations, resulting in a full impairment

of its capitalized software and technology development costs.

As a result, an impairment charge of $0.8 million was recorded in the Company’s

consolidated statements of operations and comprehensive loss for the fiscal year ended July 31, 2025.

The principal considerations for our determination

that performing procedures relating to the impairment charge is a critical audit matter are the significant assumptions required by management

in estimating the net realizable value, including estimated sales proceeds less costs to sell.

Our audit procedures related to estimated sales

proceeds less costs to sell included the following, among others:

● Evaluated the reasonableness of management’s estimates

of net realizable value of capitalized software and technology development costs, including testing assumptions supporting management’s

estimated sales proceeds less costs to sell, testing the completeness and accuracy of underlying data, and performing a retrospective

review of the estimates.

● Tested the design and implementation of controls over management’s

process for developing the impairment charges, including controls over the review of estimated sales proceeds less costs to sell, and

the completeness and accuracy of underlying data.

have served as the Company’s auditor since 2023.

York, New York

CONSOLIDATED BALANCE SHEETS

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Trade accounts receivable

Prepaid expenses and other receivables

Prepaid expenses and other current assets

Total Current assets

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Total Current liabilities

Term loan, net of deferred financing costs

Deferred revenues--non-current

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Total liabilities and stockholders’ equity

See Accompanying Notes to Consolidated Financial

Accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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Costs and expenses:

Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included below)

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

Selling, general and administrative

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Impairment of intangible assets

Impairment of goodwill

Change in fair value of contingent consideration

Restructuring charges

Loss on disposal of property and equipment

Impairment of capitalized software and technology development costs

Loss from operations

Interest and other income, net

Net (loss) income resulting from foreign exchange transactions

Net loss resulting from foreign exchange transactions

Loss before income taxes

Income tax benefit

Other comprehensive loss:

Income taxes benefit

Other comprehensive income (loss):

Foreign currency translation adjustment

Total other comprehensive loss

Total other comprehensive income (loss)

Total comprehensive loss

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common stockholders:

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

See Accompanying Notes to Consolidated Financial

Basic and diluted

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

Basic and diluted

Accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Class A Common Stock

Class B Common Stock

Additional Paid-in

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Exercise of stock options

Restricted stock issuance in connection with GuruShots acquisition

Stock-based compensation

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Balance – July 31, 2025

See Accompanying Notes to Consolidated Financial

Accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Amortization of capitalized software and technology development costs

Loss on disposal of property and equipment

Amortization of deferred financing costs

Stock-based compensation

Impairment charge of capitalized software and technology development costs

Impairment charge of ROU asset

Impairment charge of intangible assets

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Deferred income taxes

Impairment charge of goodwill

Change in fair value of contingent consideration

Change in assets and liabilities:

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Trade accounts payable and accrued expenses

Deferred revenue

Deferred revenues

Net cash provided by operating activities

Investing activities

Final payment for asset acquisitions

Capitalized software and technology development costs

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Financing activities

Prepayment of term loan

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

Prepayment of term loan

Proceeds from exercise of stock options

Proceeds from term loan

Payment of deferred financing costs

Net cash (used in) provided by financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

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Cash payments made for interest expenses

See Accompanying Notes to Consolidated Financial

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Description of Business and Summary of Significant

Accounting Policies

Description of Business

(“Zedge”) builds digital

marketplaces and friendly competitive games around content that people use to express themselves.

Our leading products include Zedge Ringtones

and Wallpapers, a freemium digital content marketplace offering mobile phone wallpapers, video wallpapers, ringtones, and notification

sounds as well as pAInt, a generative AI wallpaper maker, GuruShots, a skill-based photo challenge game, and Emojipedia, the #1 trusted

source for ‘all things emoji’.

Our vision is to enable and connect creators who enjoy friendly competitions with a community

of prospective consumers in order to drive commerce.

Except where the context clearly indicates otherwise, the terms the “Company,”

“Zedge” “we,” “us” or “our” refer to Zedge, Inc.

Accompanying Notes to Consolidated Financial Statements.

TO CONSOLIDATED FINANCIAL STATEMENTS

1—Description of Business and Summary of Significant Accounting Policies

builds digital marketplaces and friendly competitive games around content that people use to express themselves.

Our leading products

include Zedge Ringtones and Wallpapers, which we refer to as our “Zedge App,” a freemium digital content marketplace offering

mobile phone wallpapers, video wallpapers, ringtones, and notification sounds as well as pAInt, a generative AI wallpaper and ringtone

maker, GuruShots, a skill-based photo challenge game, and Emojipedia, the #1 trusted source for ‘all things emoji’.

is to enable and connect creators who enjoy friendly competitions with a community of prospective consumers in order to drive commerce.

Except where the context clearly indicates otherwise, the terms the “Company,” “Zedge” “we,” “us”

or “our” refer to Zedge, Inc.

and its consolidated subsidiaries.

The Company is headquartered in New York, New

York, and has international office locations in Norway, Lithuania and Israel.

Our fiscal year ends on July 31 of each calendar

Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal 2024 refers

to the fiscal year ended July 31, 2024).

The Company was formerly a majority-owned subsidiary

of IDT Corporation (“IDT”).

On June 1, 2016, IDT spun off its interest in the Company to IDT’s stockholders and the

Company became an independent public company through a pro rata distribution of the Company’s common stock held by IDT to IDT’s

stockholders (the “Spin-Off”).

Principles of Consolidation

The consolidated financial statements include

the accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated

in consolidation.

Reportable Segments

Effective Q1 of our fiscal 2023, we revised the

presentation of segment information to reflect our acquisition of GuruShots (see Note 6, Business Combination and Asset Acquisition,

for additional information).

As such, we report operating results through two reportable segments:

Zedge Marketplace and GuruShots,

as further discussed in Note 15, Segment and Geographic Information .

Use of Estimates

The preparation of our consolidated financial

statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets,

liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities.

Actual results could differ materially

from our estimates due to risks and uncertainties, including uncertainty in the economic environment due to various global events.

the extent that there are material differences between these estimates and actual results, our financial condition or operating results

will be affected.

We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances,

and we evaluate these estimates on an ongoing basis.

Revenue Recognition

We generate revenue from the following sources:

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

fiscal year ends on July 31 of each calendar year.

Each reference below to a fiscal year refers to the fiscal year ending in the

calendar year indicated (e.g., fiscal 2025 refers to the fiscal year ended July 31, 2025).

Company was formerly a majority-owned subsidiary of IDT Corporation (“IDT”).

On June 1, 2016, IDT spun off its interest in

the Company to IDT’s stockholders and the Company became an independent public company through a pro rata distribution of the Company’s

common stock held by IDT to IDT’s stockholders (the “Spin-Off”).

of Consolidation

consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany

accounts and transactions have been eliminated in consolidation.

Company has two reportable segments:

Zedge Marketplace and GuruShots, as further discussed in Note 15, Segment and Geographic Information .

preparation of our consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and

Actual results could differ materially from our estimates due to risks and uncertainties, including uncertainty in the economic

environment due to various global events.

To the extent that there are material differences between these estimates and actual results,

our financial condition or operating results will be affected.

We base our estimates on past experience and other assumptions that we

believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.

generate revenue from the following sources:

(1) Advertising;

(2) Paid Subscription;

(3) Other revenues including primarily Zedge Premium, the section of our marketplace where we

offer premium content (i.e., for purchase), and (4) Digital Goods and Services (from the GuruShots acquisition).

(3) Other revenues including primarily Zedge Premium

(the section of our marketplace where we offer premium content for purchase), and (4) Digital Goods and Services.

The substantial majority

of our revenue is generated from selling our advertising inventory (“Advertising Revenue”) to advertising networks and advertising

monthly, yearly and life-time subscriptions allow users to prepay a fixed fee to remove unsolicited advertisements

Our weekly, monthly, yearly and life-time subscriptions allow users to prepay a fixed fee to remove unsolicited advertisements

from our Zedge App.

In Zedge Premium, we receive 30 % as a fee when users purchase licensed content using Zedge Credits or unlock licensed

content by watching a video or taking a survey on Zedge Premium.

In Zedge Premium, we receive 30 % of the net purchase price, after payment of fees to Google Play or the App Store,

when users purchase licensed content using Zedge Credits or unlock licensed content by watching a video or taking a survey on Zedge Premium.

Sales and other similar taxes are excluded from revenues.

Advertising Revenue :

the bulk of our revenue from selling the Zedge Marketplace’s advertising inventory to advertising networks and advertising exchanges

and direct sales to advertisers.

We generate the bulk of our revenue from selling the Zedge Marketplace’s advertising inventory to advertising

networks and advertising exchanges.

Advertising Networks.

An advertising network is

a third-party relationship where buyers of advertising inventory go to purchase either specific targeted inventory or a large scale of

inventory at a set price.

Advertising Networks serve as an indirect source of advertising fill to a variety of branded ad campaigns and

performance-based ad campaigns.

An advertising network is a third-party relationship where buyers of advertising inventory go to purchase either specific targeted inventory or a large scale of inventory at a set price.

Advertising Networks serve as an indirect source of advertising fill to a variety of branded ad campaigns and performance-based ad campaigns.

Advertising Exchanges.

An advertising exchange

is similar to an advertising network, except that the exchange typically bids in real-time for inventory.

Advertisers may utilize an exchange

when looking for scale or specific audiences, and accept that the price will vary based on when and how much volume of inventory they

We recognize advertising revenue as advertisements

are delivered to users through impressions or ad views (depending on the terms agreed upon with the advertiser).

For in-app display ads,

in-app offers, engagement advertisements and other advertisements, our performance obligations are satisfied over the life of the relevant

contract (i.e., over time), with revenue being recognized as advertising units are delivered, which is Zedge’s performance obligation.

The advertiser may compensate us on a cost-per-impression, cost-per-click, cost-per-action basis.

Paid Subscription Revenue:

in January 2019 and April 2023, we started offering paid subscription services sold through Google Play and App Store, respectively.

a customer subscribes, they execute a clickthrough agreement with Zedge outlining the terms and conditions between Zedge and the subscriber.

Google Play and App Store process subscription prepayment on Zedge’s behalf, and retain a fee of up to 30 %.

Subscriptions are nonrefundable

after a period of seven days.

Paid subscriptions are automatically renewed at expiration unless cancelled by subscribers.

While the customer

can cancel at any time, he or she will not receive any refund but will remain entitled to receive the ad free service until the end of

the subscription period.

The duration of these contracts is daily, and revenue for these contracts is recognized on a daily ratable basis.

The payment terms for subscriptions sold through Google Play is net 30 days after month-end.

The payment terms for subscriptions

sold through App Store is net 45 days after month-end.

We recognize subscription revenue ratably over the subscription periods which

range from weekly, monthly, yearly and lifetime with an estimated lifespan of 30 months.

Zedge Premium :

Zedge Premium is our

marketplace where artists and brands can market, distribute and sell their digital content to Zedge’s users.

The content owner sets

the price and the end user can purchase the content by paying for it with Zedge Credits, our closed virtual currency.

Alternatively, the

content owner may opt to place some items behind video ad gates, in which case the end user can acquire the content by watching a brief

A user can earn Zedge Credits when taking specific actions such as watching rewarded videos or completing electronic surveys.

An advertising exchange is similar to an advertising network, except that the exchange typically bids in real-time for advertising inventory.

Advertisers may utilize an exchange when looking for scale or specific audiences, and accept that the price will vary based on when and how much volume of inventory they wish to buy.

recognize advertising revenue as advertisements are delivered to users through impressions or ad views (depending on the terms agreed

upon with the advertiser).

For in-app display ads, in-app offers, engagement advertisements and other advertisements, our performance

obligations are satisfied over the life of the relevant contract (i.e., over time), with revenue being recognized as advertising units

are delivered, which is Zedge’s performance obligation.

The advertiser may compensate us on a cost-per-impression, cost-per-click,

cost-per-action basis.

Subscription Revenue:

Beginning in January 2019 and April 2023, we started offering paid

subscription services sold through Google Play and the App Store, respectively.

When a customer subscribes, they execute a clickthrough

agreement with Zedge outlining the terms and conditions between Zedge and the subscriber.

Google Play and the App Store process subscription

prepayment on Zedge’s behalf, and retain a fee of up to 30 %.

Subscriptions are nonrefundable after a period of seven days.

subscriptions are automatically renewed at expiration unless cancelled by subscribers.

While customers can cancel at any time, they will

not receive any refund, and will continue to receive the ad-free service until the end of the subscription period.

The duration of these

contracts is daily, and revenue for these contracts is recognized on a daily ratable basis.

The payment terms for subscriptions sold through

Google Play is net 30 days after month-end.

The payment terms for subscriptions sold through the App Store is net 45 days after month-end.

recognize subscription revenue ratably over the subscription periods which range from weekly, monthly, yearly and lifetime with lifetime

subscriptions deemed to have an estimated lifespan of 30 months.

Zedge Premium is our marketplace where artists and brands can market,

distribute and sell their digital content to our users.

The content owner sets the price and end users can purchase the content by paying

for it with Zedge Credits, our closed virtual currency.

Alternatively, the content owner may opt to place some items behind video ad gates,

in which case end users can acquire the content by watching a brief video ad.

A user can earn Zedge Credits when taking specific actions

such as watching rewarded videos or completing electronic surveys.

Alternatively, users can buy Zedge Credits with an in-app purchase.

If a user purchases Zedge Credits, Google Play or App Store retains

a fee of 30% of the purchase price.

When a user purchases Zedge Premium content using Zedge credits or watching a rewarded video, the

artist or brand receives 70 % of the actual revenue after the Google Play or iTunes fee (“Royalty Payment”) and we receive

the remaining 30 %, which is recognized as revenue.

Digital Goods and

GuruShots generates substantially all of its revenues by selling virtual goods (ex.

power-ups, in-game resources to

GuruShots distributes its game to the end customer through mobile platforms such as Apple’s App Store and Google Play,

as well as via the web.

Through these platforms, users can download the free-to-play game and can purchase virtual goods which are redeemed

in the game to enhance their game-playing experience.

Players can pay for their

virtual item purchases through various widely accepted payment methods offered in the game.

Payments from players for virtual goods are

required at the time of purchase, are non-cancellable and relate to non-cancellable contracts that specify GuruShots’ obligations

and cannot be redeemed for cash nor exchanged for anything other than virtual goods within the GuruShots’ game.

The purchase price

is a fixed amount which reflects the consideration that GuruShots expects to be entitled to receive in exchange for use of virtual goods

by its customers.

The platform providers collect proceeds from the game players and remit the proceeds to GuruShots after deducting their

respective platform fees.

Sales and other taxes collected from customers on behalf of governmental authorities are accounted for on a

net basis and are not included in revenues or operating expenses.

GuruShots’ performance obligation is to display the virtual goods

in game play based upon the nature of the virtual item.

GuruShots categorizes

its virtual goods as consumable.

If a user purchases Zedge Credits, Google Play or the App Store retains a fee of 30 % of the purchase price.

When a user purchases Zedge

Premium content using Zedge credits or watching a rewarded video, the artist or brand receives 70 % of the actual revenue after the Google

Play or App Store fee (“Royalty Payment”) and we receive the remaining 30 %, which is recognized as revenue.

Goods and Services :

GuruShots generates the substantial majority of its revenues by selling virtual goods (e.g.

power-ups and

in-game resources) to its users.

GuruShots distributes its game to users through mobile platforms such as Apple’s App Store and

Google Play, as well as via the internet.

Through these platforms, users can download the free-to-play game and can purchase virtual

goods which are redeemed in the game to enhance their game-playing experience.

can pay for their virtual item purchases through various widely accepted payment methods offered in the game.

Payments from players for

virtual goods are required at the time of purchase, are non-cancellable and relate to non-cancellable contracts that specify GuruShots’

obligations and cannot be redeemed for cash nor exchanged for anything other than virtual goods within the GuruShots’ game.

purchase price is a fixed amount which reflects the consideration that GuruShots expects to be entitled to receive in exchange for use

of virtual goods by its customers.

The platform providers collect proceeds from the game players and remit the proceeds to GuruShots

after deducting their respective platform fees.

Sales and other taxes collected from customers on behalf of governmental authorities

are accounted for on a net basis and are not included in revenues or operating expenses.

GuruShots’ performance obligation is to

display the virtual goods in game play based upon the nature of the virtual item.

categorizes its virtual goods as consumable.

GuruShots’ game sells only consumable virtual goods.

Consumable virtual goods represent items that

can be consumed by a specific player action and do not provide the player any continuing benefit following consumption.

GuruShots has

determined through a review of game play behavior that players generally do not purchase additional virtual goods until their existing

virtual goods balances have been substantially consumed.

This review includes an analysis of game players’ historical play behavior,

purchase behavior, and the amounts of virtual goods outstanding.

Consumable virtual goods represent

items that can be consumed by a specific player action and do not provide the player any continuing benefit following consumption.

has determined - through a review of game play behavior - that players generally do not purchase additional virtual goods until their

existing virtual goods balances have been substantially consumed.

This review includes an analysis of game players’ historical

play behavior, purchase behavior, and the amounts of virtual goods outstanding.

Revenue is recognized once the virtual goods are sold.

GuruShots monitors

its analysis of customer play behavior on a quarterly basis.

As discussed above, GuruShots

concluded that revenue related to the promise of enhancing users’ gaming experience through in-game resource purchases should be

recognized ratably over the period of benefit period (i.e., the period over which the enhanced gaming experience is provided).

for practical reasons, GuruShots does not defer the portion of revenue attributable to future uses of resources as of any given balance

This is due to the duration of the enhanced gaming experience that is provided being, in substantially all of the cases, and

applying the portfolio approach (as GuruShots reasonably expects that the effects on the financial statements of applying ASC 606 guidance

to the portfolio would not differ materially from applying ASC 606 guidance to the individual contracts), a very short time frame ranging

from a few hours to less than two weeks.

Therefore, the result of recognizing the related revenues at the point in time which user first

consumes the respective resource would yield a result that is not substantially different then ratable recognition over the period of

Accordingly, revenue is recognized once the virtual goods are sold.

Gross Versus Net Revenue Recognition

We report revenue on a gross or net basis based

on management’s assessment of whether we act as a principal or agent in the transaction.

To the extent we act as the principal,

revenue is reported on a gross basis.

To the extent we act as the agent, revenue is reported on a net basis.

The determination of whether

we act as a principal or an agent in a transaction is based on an evaluation of whether we control the good or service prior to transfer

to the customer.

We generally report our advertising revenue net

of amounts due to agencies and brokers because we are not the primary obligor in the relevant arrangements, we do not finalize the pricing,

and we do not establish or maintain a direct relationship with the advertiser.

Certain advertising arrangements that are directly between

us and advertisers are recognized on a gross basis equal to the price paid to us by the customer since we are the primary obligor and

we determine the price.

Any third-party costs related to such direct relationships are recognized as direct cost of revenues.

GuruShots is primarily responsible for providing

the virtual goods, has control over the content and functionality of games and has the discretion to establish the virtual goods’

Therefore, GuruShots is the principal and, accordingly revenues are recorded on a gross basis.

Payment processing fees paid to

platform providers are recorded within selling, general and administrative expenses.

We report subscription revenue gross of the fee

retained by Google Play and App Store, as the subscriber is our customer in the contract and we control the service prior to the transfer

to the subscriber.

With respect to Zedge Premium, Zedge, as provider

of the platform, is effectively operating as a broker or intermediary connecting online content providers with the end user.

use gross revenue ( net of the 30 % fee retained by Google Play or App Store when a user purchases

Zedge Credits ) as a performance metric, we record net revenue from Zedge Premium which consists of a 30 % platform fee, in-app purchases

profit and breakage.

Content providers are paid their portion of revenue which is a 70 % share

of the gross revenue calculated.

Concentration of Credit Risk and Significant

Financial instruments that potentially subject

the Company to concentration of credit risk consist principally of cash, cash equivalents and trade accounts receivable.

and cash equivalents at several major financial institutions, which may exceed FDIC insured limits.

Historically, the Company has not

experienced any losses due to such concentration of credit risk.

The Company’s temporary cash investments policy is to limit the

dollar amount of investments with any one financial institution and monitor the credit ratings of those institutions.

While we may be

exposed to credit losses due to the nonperformance of the holders of its deposits, we do not expect the settlement of these transactions

to have a material effect on its results of operations, cash flows or financial condition.

We routinely assess the financial strength of

our customers.

As a result, we believe that our accounts receivable credit risk exposure is limited and have not experienced significant

write-downs in our accounts receivable balances.

In the fiscal year ended July 31, 2024, two customers represented 31 % and 9 % of our revenue.

In the fiscal year ended July 31, 2023, two customers represented 26 % and 16 % of our revenue.

At July 31, 2024, three customers represented

37 %, 15 % and 10 % of our accounts receivable balance and at July 31, 2023, two customers represented 36 % and 18 % of our accounts receivable

All of these significant customers are advertising exchanges operated by leading companies, and the receivables represent many

smaller amounts due from advertisers.

Direct Cost of Revenues

Direct cost of revenues for the Company consists

of fees paid to third parties that provide the Company with internet hosting, content serving and filtering, data analytic tools and marketing

automation services.

GuruShots monitors its analysis of customer play behavior on a quarterly basis.

discussed above, GuruShots concluded that revenue related to the promise of enhancing users’ gaming experience through in-game

resource purchases should be recognized ratably over the period of benefit period (i.e., the period over which the enhanced gaming experience

is provided).

However, for practical reasons, GuruShots does not defer the portion of revenue attributable to future uses of resources

as of any given balance sheet date.

This is due to the duration of the enhanced gaming experience that is provided being, in substantially

all of the cases, and applying the portfolio approach (as GuruShots reasonably expects that the effects on the financial statements of

applying Accounting Standards Codification (“ASC”) 606 guidance to the portfolio would not differ materially from applying

ASC 606 guidance to the individual contracts), a very short time frame ranging from a few hours to less than two weeks.

Therefore, the

result of recognizing the related revenues at the point in time which user first consumes the respective resource would yield a result

that is not substantially different then ratable recognition over the period of benefit.

Accordingly, revenue is recognized once the

virtual goods are sold.

Versus Net Revenue Recognition

report revenue on a gross or net basis based on management’s assessment of whether we act as a principal or agent in the transaction.

To the extent we act as the principal, revenue is reported on a gross basis.

To the extent we act as the agent, revenue is reported on

The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we

control the good or service prior to transfer to the customer.

generally report our advertising revenue net of amounts due to agencies and brokers because we are not the primary obligor in the relevant

arrangements, we do not finalize the pricing, and we do not establish or maintain a direct relationship with the advertiser.

is primarily responsible for providing the virtual goods, has control over the content and functionality of games and has the discretion

to establish the virtual goods’ prices.

Therefore, GuruShots is the principal and, accordingly revenues are recorded on a gross

Payment processing fees paid to platform providers are recorded within selling, general and administrative expenses.

report subscription revenue gross of the fee retained by Google Play and the App Store, as the subscriber is our customer in the contract

and we control the service prior to the transfer to the subscriber.

respect to Zedge Premium, Zedge, as provider of the platform, is effectively operating as a broker or intermediary connecting online

content providers with the end user.

While we use gross revenue (net of the 30 % fee retained by Google Play or the App Store when

a user purchases Zedge Credits) as a performance metric, we record revenue on a net basis from Zedge Premium which consists of a 30 %

platform fee, in-app purchases profit and breakage.

Content providers are paid their portion of revenue which is a 70 % share of

the gross revenue calculated.

Concentration

of Credit Risk and Significant Customers

instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents and trade

accounts receivable.

We hold cash and cash equivalents at several major financial institutions, which may exceed FDIC insured limits.

Historically, the Company has not experienced any losses due to such concentration of credit risk.

The Company’s temporary cash

investments policy is to limit the dollar amount of investments with any one financial institution and monitor the credit ratings of

those institutions.

While we may be exposed to credit losses due to the nonperformance of the holders of its deposits, we do not expect

the settlement of these transactions to have a material effect on its results of operations, cash flows or financial condition.

routinely assess the financial strength of our customers.

As a result, we believe that our accounts receivable credit risk exposure is

limited and have not experienced significant write-downs in our accounts receivable balances.

In the fiscal year ended July 31, 2025,

two largest customers represented 37 % and 6 % of our revenue.

In the fiscal year ended July 31, 2024, two largest customers represented

31 % and 9 % of our revenue.

At July 31, 2025, two customers represented 48 % and 13 % of our accounts receivable balance and at July 31,

2024, three customers represented 37 %, 15 % and 10 % of our accounts receivable balance.

All of these significant customers are advertising

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

Cost of Revenues

cost of revenues for the Company consists of fees paid to third parties that provide the Company with internet hosting, content serving

and filtering, data analytic tools and marketing automation services.

Such costs are charged to expense as incurred.

Property and Equipment, net

Property and equipment is recorded at cost less

accumulated depreciation and amortization, and depreciated or amortized on a straight-line basis over its estimated useful lives, which

range as follows:

and Equipment, net

and equipment is recorded at cost less accumulated depreciation and amortization, and depreciated or amortized on a straight-line basis

over its estimated useful lives, which range as follows:

capitalized software and technology development costs— 3 years;

and other— 5 years.

Other is comprised of

furniture and fixtures, office equipment, video conference equipment, computer hardware and computer software.

Normal repairs and maintenance

are expensed as incurred.

Replacement property and equipment is capitalized and the property and equipment accounts are relieved of the

items being replaced or disposed of if no longer of value.

The related cost and accumulated depreciation of the disposed assets are eliminated

and any gain or loss on disposition is included in the results of operations in the year of disposal.

Capitalized Software and Technology Development Costs-Internal-Use

Software related to Zedge Marketplace

Software and technology development activities

generally fall into three stages:

Planning Stage activities include developing a project or business plan that outlines the goals for the content distribution platform or new product or service;

Other is comprised of furniture and fixtures, office equipment, video conference equipment, computer hardware and computer software.

Normal repairs and maintenance are expensed as incurred.

Replacement property and equipment is capitalized and the property and equipment

accounts are relieved of the items being replaced or disposed of if no longer of value.

The related cost and accumulated depreciation

of the disposed assets are eliminated and any gain or loss on disposition is included in the results of operations in the year of disposal.

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

and technology development activities generally fall into three stages:

Stage activities include developing a project or business plan that outlines the goals for the content distribution platform

or new product or service;

determining the functionality;

identifying hardware and software applications that will achieve functionality, security, and traffic flows;

and selecting the internal resources that will be assigned to the project as well as the external vendors where applicable.

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

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

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

During the Application and Infrastructure Development

Stage, we begin to capitalize costs when the project has been properly authorized and we determine that completion is probable.

is subsequently cancelled prior to placement in service, costs that have been capitalized to date will be reviewed for potential impairment.

Capitalization ceases no later than the point at which a computer software project is substantially complete and ready for its intended

Amortization, which is generally over three years, begins for each project when the code is ready for use, whether or not it is actually

placed in service at that time (an exception being if the project’s functionality completely depends on the completion of another

project, in which case, amortization begins when that other project is ready for use).

During the Post-Implementation/Operating Stage,

we expense training costs and maintenance costs as incurred.

However, upgrades and enhancements, defined as modifications to existing

internal-use software that result in additional functionality (modifications to enable the software to perform tasks that it was previously

incapable of performing, normally requiring new software specifications and perhaps a change to all or part of the existing software specifications)

are treated as though they were new projects, and are assessed utilizing the same stages and criteria on a project-by-project basis.

such, internal costs incurred for upgrades and enhancements are expensed or capitalized based on the requirements noted above, while costs

incurred for maintenance are expensed as incurred.

These projects are tracked individually, such that the beginning and ending of the

capitalization can be appropriately established, as well as the amounts capitalized therein.

Amortization of these costs is included in depreciation

and amortization in the consolidated statements of operations and comprehensive loss.

Capitalized Software and Technology Development Costs-Software to

Be Sold, Leased, or Marketed related to GuruShots

We expense research and development costs incurred

in the process of software development until technological feasibility has been established for the product.

Once technological feasibility

has been established, software costs are capitalized until the product is available for general release to customers.

Costs incurred from

the time that the product is available for general release to customers are expensed as incurred.

Costs related to upgrades and enhancements

are capitalized only if they result in added functionality or marketability of the original product.

The amortization of these capitalized costs begins

when a product is available for general release to customers and is computed on a product-by-product basis at a rate not less than straight-line

basis over the product’s estimated economic life.

At each balance sheet date, we compare the unamortized capitalized costs to the

net realizable value of that product and write off the amount by which the unamortized capitalized costs of that product exceed its net

realizable value.

Amortization of these costs is included in depreciation

and amortization in the consolidated statements of operations and comprehensive loss.

Intangible Assets, Net

We test the recoverability of its intangible assets

(see Note 7, Intangible Assets, Net and Goodwill , for additional information) with finite useful lives whenever events or

changes in circumstances indicate that the carrying value of the asset may not be recoverable.

We test for recoverability based on the

projected undiscounted cash flows to be derived from such asset.

If the projected undiscounted future cash flows are less than the carrying

value of the asset, we will record an impairment loss, if any, based on the difference between the estimated fair value and the carrying

value of the asset.

We generally measure fair value by considering sale prices for similar assets or by discounting estimated future cash

flows from such asset using an appropriate discount rate.

Cash flow projections and fair value estimates require significant estimates

and assumptions by management.

Should the estimates and assumptions prove to be incorrect, we may be required to record impairments in

future periods and such impairments could be material.

Intangible assets are carried at cost, less accumulated

amortization, unless a determination has been made that their value has been impaired.

Intangible assets are amortized on a straight-line

basis over their estimated useful lives of between five to fifteen years .

We review identifiable amortizable intangible assets to be held

and used for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the

asset and its eventual disposition.

Measurement of any impairment loss is based on the excess of the carrying value of the asset over

its fair value.

We performed an interim impairment test during

the second quarter of fiscal 2024 and concluded that the carrying value of the intangible assets of GuruShots reporting unit exceeded

its fair value.

Accordingly, we recorded a non-cash impairment charge of $ 11.9 million during the second quarter of fiscal 2024.

7, Intangible, Net and Goodwill , for additional information.

Goodwill represents the excess of purchase price

and related costs over the fair value of assets acquired and liabilities assumed of the business acquired.

Under ASC 350, Intangibles-Goodwill

and Other , goodwill is not amortized, but instead is tested for impairment annually, or if certain circumstances indicate a possible

impairment may exist.

We test goodwill for impairment on the first day

of the fourth fiscal quarter or upon the occurrence of events or changes in circumstances that indicate that the asset might be impaired.

Goodwill is assigned to our reporting units, which are our operating segments, or components of an operating segment, that constitute

a business for which discrete financial information is available, and for which segment management regularly reviews the operating results.

During the annual impairment review process we have the option to first perform a qualitative assessment (commonly referred to as “step

zero”) over relative events and circumstances to determine whether it is more likely than not that the fair value of a reporting

unit is less than its carrying value, or to perform a quantitative assessment (“step one”) where we estimate the fair value

of each reporting unit using primarily a market capitalization approach.

We would recognize an impairment charge for the

amount by which the carrying amount exceeds the reporting unit’s fair value;

however, the loss recognized would not exceed the total

amount of goodwill allocated to that reporting unit.

Additionally, we consider income tax effects from any tax-deductible goodwill on

the carrying amount of its reporting unit when measuring the goodwill impairment loss, if applicable.

We performed an interim impairment test during

the third quarter of fiscal 2023 and concluded that the carrying value of the GuruShots reporting unit exceeded its fair value.

we recorded a non-cash goodwill impairment charge of $ 8.7 million during the third quarter of fiscal 2023.

See Note 7, Intangible,

Net and Goodwill , for additional information.

From time to time, when opportunities present

themselves, the Company considers strategic investments in privately-held companies.

The Company’s sole investment at July 31, 2023,

is a simple agreement for future equity (SAFE) in which the Company holds the right to receive equity at some later date and upon certain

Investments in SAFE’s are carried at cost due to insufficient observable market inputs to determine fair value.

adjusts the carrying value of its investments to fair value upon observable transactions for identical or similar investments of the same

issuer or upon impairment (referred to as the measurement alternative).

All gains and losses on investments, realized and unrealized,

are recognized in interest and other income, net in the consolidated statements of operations and comprehensive loss.

The Company periodically evaluates the carrying

value of its investments, when events and circumstances indicate that the carrying amount of the investment may not be recovered.

Company estimates the fair value of the investment to assess whether impairment losses shall be recorded using Level 3 inputs.

This investment

includes the Company’s holding that is not exchange traded and therefore not supported with observable market prices;

Company may determine the fair value by reviewing equity valuation reports, current financial results, long-term plans of the private

company, the amount of cash that the privately-held company has on-hand, the ability to obtain additional financing and overall market

conditions in which the private company operates or based on the price observed from the most recent completed financing.

During fiscal 2024, we reduced the carrying value

of this SAFE investment to $ 0 and recorded $ 50,000 loss in the accompanying consolidated financial statements.

Cash and Cash Equivalents

identifying hardware and software applications that will achieve functionality,

security, and traffic flows;

and selecting the internal resources that will be assigned to the project as well as the external vendors

where applicable.

and Infrastructure Development Stage activities focus on acquiring or developing hardware and software to operate a content distribution

platform or new product and service;

Post-Implementation/Operating

Stage activities address training, administration, maintenance, and all other activities to operate an existing content distribution

platform or new product or service.

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

the Application and Infrastructure Development Stage, we begin to capitalize costs when the project has been properly authorized and

we determine that completion is probable.

If a project is subsequently cancelled prior to placement in service, costs that have been

capitalized to date will be reviewed for potential impairment.

Capitalization ceases no later than the point at which a computer software

project is substantially complete and ready for its intended use.

Amortization, which is generally over three years , begins for each

project when the code is ready for use, whether or not it is actually placed in service at that time (an exception being if the project’s

functionality completely depends on the completion of another project, in which case, amortization begins when that other project is

ready for use).

the Post-Implementation/Operating Stage, we expense training costs and maintenance costs as incurred.

However, upgrades and enhancements,

defined as modifications to existing internal-use software that result in additional functionality (modifications to enable the software

to perform tasks that it was previously incapable of performing, normally requiring new software specifications and perhaps a change

to all or part of the existing software specifications) are treated as though they were new projects, and are assessed utilizing the

same stages and criteria on a project-by-project basis.

As such, internal costs incurred for upgrades and enhancements are expensed or

capitalized based on the requirements noted above, while costs incurred for maintenance are expensed as incurred.

These projects are

tracked individually, such that the beginning and ending of the capitalization can be appropriately established, as well as the amounts

capitalized therein.

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

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

expense research and development costs incurred in the process of software development until technological feasibility has been established

for the product.

Once technological feasibility has been established, software costs are capitalized until the product is available for

general release to customers.

Costs incurred from the time that the product is available for general release to customers are expensed

Costs related to upgrades and enhancements are capitalized only if they result in added functionality or marketability of

the original product.

amortization of these capitalized costs begins when a product is available for general release to customers and is computed on a product-by-product

basis at a rate not less than straight-line basis over the product’s estimated economic life.

At each balance sheet date, we compare

the unamortized capitalized costs to the net realizable value of that product and write off the amount by which the unamortized capitalized

costs of that product exceed its net realizable value.

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

evaluate these long-lived assets for impairment whenever circumstances arise that indicate the carrying amount of an asset may not be

The Company’s strategic reassessment of GuruShots’ operations in connection with the restructuring initiative

resulted in a $ 0.8 million impairment of capitalized software and technology development costs which is recorded in the Company’s

consolidated statements of operations and comprehensive loss for the fiscal year ended July 31, 2025.

See Note 18, Restructuring,

Impairments, and Related Charges , for additional information.

test the recoverability of its intangible assets (see Note 7, Intangible Assets, Net and Goodwill , for additional information)

with finite useful lives whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

We test for recoverability based on the projected undiscounted cash flows to be derived from such asset.

If the projected undiscounted

future cash flows are less than the carrying value of the asset, we will record an impairment loss, if any, based on the difference between

the estimated fair value and the carrying value of the asset.

We generally measure fair value by considering sale prices for similar

assets or by discounting estimated future cash flows from such asset using an appropriate discount rate.

Cash flow projections and fair

value estimates require significant estimates and assumptions by management.

Should the estimates and assumptions prove to be incorrect,

we may be required to record impairments in future periods and such impairments could be material.

assets are carried at cost, less accumulated amortization, unless a determination has been made that their value has been impaired.

assets are amortized on a straight-line basis over their estimated useful lives of between five to fifteen years .

We review identifiable

amortizable intangible assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying

value of the assets may not be recoverable.

Determination of recoverability is based on the lowest level of identifiable estimated undiscounted

cash flows resulting from use of the asset and its eventual disposition.

Measurement of any impairment loss is based on the excess of

the carrying value of the asset over its fair value.

performed an interim impairment test during the second quarter of fiscal 2024 and concluded that the carrying value of the intangible

assets of GuruShots reporting unit exceeded its fair value.

Accordingly, we recorded a non-cash impairment charge of $ 11.9 million during

the second quarter of fiscal 2024.

See Note 7, Intangible, Net and Goodwill , for additional information.

represents the excess of purchase price and related costs over the fair value of assets acquired and liabilities assumed of the business

Under ASC 350, Intangibles-Goodwill and Other , goodwill is not amortized, but instead is tested for impairment annually,

or if certain circumstances indicate a possible impairment may exist.

test goodwill for impairment on the first day of the fourth fiscal quarter or upon the occurrence of events or changes in circumstances

that indicate that the asset might be impaired.

Goodwill is assigned to our reporting units, which are our operating segments, or components

of an operating segment, that constitute a business for which discrete financial information is available, and for which segment management

regularly reviews the operating results.

During the annual impairment review process we have the option to first perform a qualitative

assessment (commonly referred to as “step zero”) over relative events and circumstances to determine whether it is more likely

than not that the fair value of a reporting unit is less than its carrying value, or to perform a quantitative assessment (“step

one”) where we estimate the fair value of each reporting unit using primarily a market capitalization approach.

would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;

the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.

Additionally, we consider income

tax effects from any tax-deductible goodwill on the carrying amount of its reporting unit when measuring the goodwill impairment loss,

if applicable.

time to time, when opportunities present themselves, the Company considers strategic investments in privately-held companies.

The Company’s

sole investment at August 1, 2024, is a simple agreement for future equity (SAFE) in which the Company holds the right to receive equity

at some later date and upon certain events.

Investments in SAFE’s are carried at cost due to insufficient observable market inputs

to determine fair value.

The Company adjusts the carrying value of its investments to fair value upon observable transactions for identical

or similar investments of the same issuer or upon impairment (referred to as the measurement alternative).

All gains and losses on investments,

realized and unrealized, are recognized in interest and other income, net in the consolidated statements of operations and comprehensive

Company periodically evaluates the carrying value of its investments, when events and circumstances indicate that the carrying amount

of the investment may not be recovered.

The Company estimates the fair value of the investment to assess whether impairment losses shall

be recorded using Level 3 inputs.

This investment includes the Company’s holding that is not exchange traded and therefore not

supported with observable market prices;

hence, the Company may determine the fair value by reviewing equity valuation reports, current

financial results, long-term plans of the private company, the amount of cash that the privately-held company has on-hand, the ability

to obtain additional financing and overall market conditions in which the private company operates or based on the price observed from

the most recent completed financing.

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

consolidated financial statements.

and Cash Equivalents

The Company considers all highly liquid investments

2 unchanged sentences

cash equivalents as of July 31, 2025 and 2024, respectively.

The accompanying consolidated financial statements

include provisions for federal, state and foreign income taxes.

We recognize deferred tax assets and liabilities for the future tax consequences

attributable to temporary differences between the consolidated financial statements carrying amounts of existing assets and liabilities

and their respective tax basis.

A valuation allowance is provided when it is more likely than not that some portion or all of a deferred

tax asset will not be realized.

The ultimate realization of deferred tax assets depends on the generation of future taxable income during

the period in which related temporary differences become deductible.

We consider the scheduled reversal of deferred tax assets and liabilities,

projected future taxable income and tax planning strategies in its assessment of a valuation allowance.

Deferred tax assets and liabilities

are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected

to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the

period that includes the enactment date of such change.

We use a two-step approach for recognizing and

measuring tax benefits taken or expected to be taken in a tax return.

We determine whether it is more-likely-than-not that a tax position

will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits

of the position.

In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position

will be examined by the appropriate taxing authority that has full knowledge of all relevant information.

Tax positions that meet the

more-likely-than-not recognition threshold are measured to determine the amount of tax benefit to recognize in the consolidated financial

The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon

ultimate settlement.

Differences between tax positions taken in a tax return and amounts recognized in the consolidated financial statements

will generally result in one or more of the following:

an increase in a liability for income taxes payable, a reduction of an income tax

refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability.

We classify interest and penalties on income taxes

as a component of income tax expense included in the provision for (benefit from) income taxes line item in the accompanying consolidated

statements of operations and comprehensive loss.

accompanying consolidated financial statements include provisions for federal, state and foreign income taxes.

We recognize deferred

tax assets and liabilities for the future tax consequences attributable to temporary differences between the consolidated financial statements

carrying amounts of existing assets and liabilities and their respective tax basis.

A valuation allowance is provided when it is more

likely than not that some portion or all of a deferred tax asset will not be realized.

The ultimate realization of deferred tax assets

depends on the generation of future taxable income during the period in which related temporary differences become deductible.

the scheduled reversal of deferred tax assets and liabilities, projected future taxable income and tax planning strategies in its assessment

of a valuation allowance.

Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income

in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities

of a change in tax rates is recognized in income in the period that includes the enactment date of such change.

use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return.

We determine whether

it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation

processes, based on the technical merits of the position.

In evaluating whether a tax position has met the more-likely-than-not recognition

threshold, we presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant

Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit

to recognize in the consolidated financial statements.

The tax position is measured at the largest amount of benefit that is greater

than 50 percent likely of being realized upon ultimate settlement.

Differences between tax positions taken in a tax return and amounts

recognized in the consolidated financial statements will generally result in one or more of the following:

an increase in a liability

for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred

tax liability.

classify interest and penalties on income taxes as a component of income tax expense included in the provision for (benefit from) income

taxes line item in the accompanying consolidated statements of operations and comprehensive loss.

Contingencies

We accrue for loss contingencies when both (a) information

available prior to issuance of the consolidated financial statements indicates that it is probable that a liability had been incurred

at the date of the consolidated financial statements and (b) the amount of loss can reasonably be estimated.

When we accrue for loss

contingencies and the reasonable estimate of the loss is within a range, we record its best estimate within the range.

When no amount

within the range is a better estimate than any other amount, we accrue the minimum amount in the range.

We discloses an estimated possible

loss or a range of loss when it is at least reasonably possible that a loss may have been incurred.

Earnings Per Share (“EPS”)

Basic earnings per share is computed by dividing

net income attributable to all classes of common stockholders of the Company by the weighted average number of shares of all classes of

common stock outstanding during the applicable period.

Diluted earnings per share is computed in the same manner as basic earnings per

share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise

of potentially dilutive stock options using the treasury stock method, unless the effect of such increase is anti-dilutive.

As disclosed in Note-9 Equity , the rights

of holders of Class A common stock and Class B common stock are identical except for certain voting and conversion rights and restrictions

on transferability.

accrue for loss contingencies when both (a) information available prior to issuance of the consolidated financial statements indicates

that it is probable that a liability had been incurred at the date of the consolidated financial statements and (b) the amount of

loss can reasonably be estimated.

When we accrue for loss contingencies and the reasonable estimate of the loss is within a range, we

record its best estimate within the range.

When no amount within the range is a better estimate than any other amount, we accrue the

minimum amount in the range.

We disclose an estimated possible loss or a range of loss when it is at least reasonably possible that a

loss may have been incurred.

Per Share (“EPS”)

earnings per share is computed by dividing net income attributable to all classes of common stockholders of the Company by the weighted

average number of shares of all classes of common stock outstanding during the applicable period.

Diluted earnings per share is computed

in the same manner as basic earnings per share, except that the number of shares is increased to include restricted stock still subject

to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect

of such increase is anti-dilutive.

disclosed in Note-9 Equity , the rights of holders of Class A common stock and Class B common stock are identical except for certain

voting and conversion rights and restrictions on transferability.

As such, the Company is not required to break out EPS by class.

The weighted-average number of shares used in

the calculation of basic and diluted earnings per share attributable to the Company’s common stockholders consists of the following

(in thousands):

weighted-average number of shares used in the calculation of basic and diluted earnings per share attributable to the Company’s

common stockholders consists of the following (in thousands):

Fiscal Year Ended

5 unchanged sentences

Diluted weighted-average number of shares

The following shares were excluded from the diluted

earnings per share computation because their inclusion would have been anti-dilutive (in thousands):

following shares were excluded from the diluted earnings per share computation because their inclusion would have been anti-dilutive

(in thousands):

Fiscal Year Ended

3 unchanged sentences

Shares excluded from the calculation of diluted earnings per share

For the fiscal years ended July 31, 2024 and 2023,

the diluted loss per share equals basic loss per share because the Company incurred a net loss during these periods and the impact of

the assumed exercise of stock options and vesting of restricted stock and deferred stock units (“DSUs”) would have been anti-dilutive.

Stock-Based Compensation

We account for our share-based compensation arrangements in accordance

with ASC 718, Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based

payment awards to employees and directors based on estimated fair values on the grant date.

Compensation cost for awards is recognized

using the straight-line method over the vesting period or the graded vesting method if awards with market or performance conditions include

graded vesting features, or if an award includes both a service condition and a market or performance condition.

Stock-based compensation

is included in selling, general and administrative expense in the consolidated statements of operations and comprehensive loss.

for forfeitures for all awards as they occur.

Fair Value Measurements

Fair value of financial and non-financial assets

and liabilities is defined as an exit price, which is the price that would be received to sell an asset or paid to transfer a liability

in an orderly transaction between market participants at the measurement date.

The three-tier hierarchy for inputs used to measure fair

value, which prioritizes the inputs to valuation techniques used to measure fair value, is as follows:

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

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

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

A financial asset or liability’s classification

within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The assessment of

the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the assets and

liabilities being measured and their placement within the fair value hierarchy.

The Company’s financial liabilities (which include

contingent considerations as discussed in Note 3 – Fair Value Measurements ) have been initially valued at the transaction

price and subsequently valued, at the end of each reporting period, utilizing a third-party valuation specialist.

Derivative Instruments – Foreign Exchange Forward Contracts

The Company’s earnings and cash flows are

subject to fluctuations due to changes in foreign currency exchange rates, primarily the U.S.

Dollar (“USD”)–NOK and

USD-EUR exchange rates.

The Company’s risk management policy allows for the use of derivative financial instruments to prudently

manage foreign currency exchange rate exposure.

Foreign currency derivative activities are subject to the management, direction and control

of the executive management.

Foreign exchange forward contracts are recognized on the consolidated balance sheets at their fair value

in “Prepaid expenses” or “Accrued expenses and other current liabilities”, and changes in fair value are recognized

in “Net (loss) income resulting from foreign exchange transactions” in the consolidated statements of operations and comprehensive

Functional Currency

Dollar is the Company’s functional

The functional currencies for the Company’s subsidiaries that operate outside of the United States are USD for GuruShots,

NOK for Zedge Europe AS and EUR for Zedge Lithuania UAB which is a wholly-owned subsidiary of Zedge Europe AS, which are the currencies

of the primary economic environments in which they primarily expend cash.

The Company translates assets and liabilities denominated in

foreign currencies to U.S.

Dollars at the exchange rate in effect as of the consolidated financial statement date, and translates accounts

from the consolidated statements of operations and comprehensive loss using the weighted average exchange rate for the period.

losses resulting from foreign currency translations are recorded in “Accumulated other comprehensive loss” in the accompanying

consolidated balance sheets.

Foreign currency transaction gains and losses including gains and losses from currency exchange rate changes

related to intercompany receivables and payables are reported in “Net (loss) income resulting from foreign exchange transactions”

in the accompanying consolidated statements of operations and comprehensive loss.

Allowance for Credit Losses

The allowance for credit losses reflects the Company’s

best estimate of probable losses inherent in the accounts receivable balance.

The allowance is determined based on known troubled accounts,

historical experience and other currently available evidence.

Bad debts are written-off upon final determination that the trade accounts

will not be collected.

There were no allowances for credit losses as of July 31, 2024 and 2023.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of two components,

net income (loss) and other comprehensive income (loss).

Other comprehensive income (loss) refers to gains and losses that are recorded

as an element of stockholders’ equity and are excluded from net income (loss).

The Company’s other comprehensive income (loss)

and accumulated other comprehensive income (loss) are comprised principally of foreign currency translation adjustments.

Operating and Finance Leases

The Company has operating leases primarily for

office space.

The determination of whether an arrangement is a lease or contains a lease is made at inception by evaluating whether the

arrangement conveys the right to use (“ROU”) an identified asset and whether the Company obtains substantially all of the

economic benefits from and has the ability to direct the use of the asset.

Operating leases are included in other assets, accrued expenses

and other current liabilities, and other liabilities, on the Company’s consolidated balance sheets.

The Company does not have any

finance leases.

Leases with a term greater than one year are recognized

on the consolidated balance sheets in the line items cited above.

The Company has elected not to recognize leases with terms of one year

or less on the consolidated balance sheets.

Lease obligations and their corresponding ROU assets are recorded based on the present value

of lease payments over the expected lease term.

As the interest rate implicit in lease contracts is typically not readily determinable,

the Company utilizes the materially approximate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis

over a similar term an amount equal to the lease payments in a similar economic environment.

The lease term may include options to extend

or terminate the lease when it is reasonably certain that the Company will exercise that option.

The Company has elected the practical expedient

to combine lease components (including land, building or other similar items) and non-lease components (including common area maintenance,

maintenance, consumables, or other similar items) as a single component and therefore the non-lease components are included the calculation

of the present value of lease payments.

The lease expense is recognized over the expected term on a straight-line basis.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 Segment Reporting (Topic 280):

to Reportable Segment Disclosures .

The guidance in ASU 2023-07 seeks to improve reportable segment disclosure requirements, primarily

through enhanced disclosures about significant segment expenses.

The amendments in this ASU require a public entity to disclose the following:

significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within

each reported measure of segment profit or loss;

an amount for other segment items by reportable segment and a description of its composition;

and the title and position of the CODM and how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance

and deciding how to allocate resources.

This ASU requires public entities to provide all annual disclosures about a reportable segment’s

profit or loss and assets currently required by Topic 280 in interim periods.

ASU 2023-07 clarifies that if the CODM uses more than one

measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may

report one or more of those additional measures of segment profit.

ASU 2023-07 is effective for fiscal years beginning after December

15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

ASU 2023-07 is a requirement

for additional disclosure and is not expected to materially impact the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The guidance in this ASU enhances the transparency and decision

functionality of income tax disclosures to provide investors information to better assess how an entity’s operations and related

tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flow.

the fiscal years ended July 31, 2025 and 2024, the diluted loss per share equals basic loss per share because the Company incurred a

net loss during these periods and the impact of the assumed exercise of stock options and vesting of restricted stock and deferred stock

units (“DSUs”) would have been anti-dilutive.

account for our share-based compensation arrangements in accordance with ASC 718, Compensation-Stock Compensation (“ASC

718”) which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and

directors based on estimated fair values on the grant date.

Compensation cost for awards is recognized using the straight-line method

over the vesting period or the graded vesting method if awards with market or performance conditions include graded vesting features,

or if an award includes both a service condition and a market or performance condition.

Stock-based compensation is included in selling,

general and administrative expense in the consolidated statements of operations and comprehensive loss.

We account for forfeitures for

all awards as they occur.

Value Measurements

value of financial and non-financial assets and liabilities is defined as an exit price, which is the price that would be received to

sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The three-tier

hierarchy for inputs used to measure fair value, which prioritizes the inputs to valuation techniques used to measure fair value, is

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

prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly

or indirectly through market corroboration, for substantially the full term of the financial instrument.

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

financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant

to the fair value measurement.

The assessment of the significance of a particular input to the fair value measurement requires judgment,

and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Instruments – Foreign Exchange Forward Contracts

Company’s earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, primarily the

Dollar (“USD”) -NOK and USD-EUR exchange rates.

The Company’s risk management policy allows for the use of derivative

financial instruments to prudently manage foreign currency exchange rate exposure.

Foreign currency derivative activities are subject

to the management, direction and control of the executive management.

Foreign exchange forward contracts are recognized on the consolidated

balance sheets at their fair value in “Prepaid expenses and other receivables” or “Accrued expenses and other current

liabilities”, and changes in fair value are recognized in “Net loss resulting from foreign exchange transactions” in

the consolidated statements of operations and comprehensive loss.

Dollar is the Company’s functional currency.

The functional currencies for the Company’s subsidiaries that operate outside

of the United States are USD for GuruShots, NOK for Zedge Europe AS and EUR for Zedge Lithuania UAB which is a wholly-owned subsidiary

of Zedge Europe AS, which are the currencies of the primary economic environments in which they primarily expend cash.

The Company translates

assets and liabilities denominated in foreign currencies to U.S.

Dollars at the exchange rate in effect as of the consolidated financial

statement date, and translates accounts from the consolidated statements of operations and comprehensive loss using the weighted average

exchange rate for the period.

Gains or losses resulting from foreign currency translations are recorded in “Accumulated other comprehensive

loss” in the accompanying consolidated balance sheets.

Foreign currency transaction gains and losses including gains and losses

from currency exchange rate changes related to intercompany receivables and payables are reported in “Net (loss) income resulting

from foreign exchange transactions” in the accompanying consolidated statements of operations and comprehensive loss.

for Credit Losses

allowance for credit losses reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance.

The allowance is determined based on known troubled accounts, historical experience and other currently available evidence.

are written-off upon final determination that the trade accounts will not be collected.

There were no allowance for credit losses as

of July 31, 2025 and 2024.

Comprehensive

Income (Loss)

Comprehensive

income (loss) consists of two components, net income (loss) and other comprehensive income (loss).

Other comprehensive income (loss)

refers to gains and losses that are recorded as an element of stockholders’ equity and are excluded from net income (loss).

Company’s other comprehensive income (loss) and accumulated other comprehensive income (loss) are comprised principally of foreign

currency translation adjustments.

and Finance Leases

Company has operating leases primarily for office space.

The determination of whether an arrangement is a lease or contains a lease is

made at inception by evaluating whether the arrangement conveys the right to use (“ROU”) an identified asset and whether

the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset.

Operating leases

are included in other assets, accrued expenses and other current liabilities, and other liabilities, on the Company’s consolidated

balance sheets.

The Company does not have any finance leases.

with a term greater than one year are recognized on the consolidated balance sheets in the line items cited above.

The Company has elected

not to recognize leases with terms of one year or less on the consolidated balance sheets.

Lease obligations and their corresponding

ROU assets are recorded based on the present value of lease payments over the expected lease term.

As the interest rate implicit in lease

contracts is typically not readily determinable, the Company utilizes the materially approximate incremental borrowing rate, which is

the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic

The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will

exercise that option.

Restructuring

restructuring charges incurred by the Company in fiscal 2025 consist primarily of cash expenditures for compensation and severance payments,

employee benefits, payroll taxes and related facilities restructuring costs associated with the Company’s workforce reduction implemented

in the second quarter of fiscal 2025.

Employee termination benefits are recognized as a liability at estimated fair value, at the time

of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service

Ongoing termination benefits are recognized as a liability at estimated fair value when the amount of such benefits is probable

and reasonably estimable.

Charges related to facilities restructuring actions are comprised of costs related to early termination of

the lease agreement and impairment of the right-of-use asset in connection with the abandonment of the property.

We recorded an impairment

of ROU asset of $ 140 ,000 in the fourth quarter of fiscal 2025.

See Note 18, Restructuring, Impairments, and Related Charges , for

additional information.

The related early lease termination costs have not been determined as of July 31, 2025.

See Note 11, Operating

Leases , for additional information.

Adopted Accounting Pronouncements

November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The guidance in ASU 2023-07 seeks to improve reportable

segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments in this ASU

require public entities to disclose the following specific categories in the rate reconciliation by both percentages and reporting currency

the effect of state and local income tax, net of federal (national) income tax, foreign tax effects, effects of changes in tax

laws or rates enacted in the current period, effects of cross-border tax laws, tax credits, changes in valuation allowances, nontaxable

or nondeductible items and changes in unrecognized tax benefits.

The amendments in ASU 2023-09 also require public entities to provide

additional information for reconciling items that meet the qualitative threshold (if the effect of those reconciling items is equal to

or greater than 5 percent of the amount computed by multiplying pre-tax income (loss) by the applicable statutory income tax rate).

ASU requires reporting entities to annually disclose the year-to-date amount of income taxes paid (net of refunds received) disaggregated

by federal, state and foreign localities.

The amendments in this ASU should be applied on a prospective basis and retrospective application

is permitted.

For public business entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

Early adoption

is permitted for annual financial statements not yet issued.

ASU 2023-09 is a requirement for additional disclosure and is not expected

to materially impact the consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01, Compensation-Stock

Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards, which provides illustrative guidance to help

entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the

scope of FASB Accounting Standards Codification (FASB ASC) 718, Compensation-Stock Compensation.

For public business entities, ASU 2024-01

is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements not yet

We are currently evaluating the impact of this accounting standard, but do not expect it to have a material impact on our consolidated

require a public entity to disclose the following:

significant segment expenses that are regularly provided to the chief operating decision

maker (“CODM”) and included within each reported measure of segment profit or loss;

an amount for other segment items by

reportable segment and a description of its composition;

and the title and position of the CODM and how the CODM uses the reported measure(s)

of segment profit or loss in assessing segment performance and deciding how to allocate resources.

This ASU requires public entities

to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim

ASU 2023-07 clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance

and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit.

is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15,

The Company adopted ASU 2023-07 on February 1, 2025 and the adoption did not have a material effect on the Company’s consolidated

financial statements.

In March 2024, the FASB issued ASU 2024-02, Codification

Improvements-Amendments to Remove References to the Concepts Statements, which removes references to various FASB Concepts Statements.

Note that this ASU finalizes amendments proposed in Section A of Proposed ASU No.

2019-800, Codification Improvements, issued in November

For public business entities, ASU 2024-02 is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted

for annual financial statements not yet issued.

We are currently evaluating the impact of this accounting standard, but do not expect

it to have a material impact on our consolidated financial statements.

We reviewed all other accounting pronouncements

issued during fiscal 2024 and concluded that they were not applicable to the Company

Note 2—Revenue

Disaggregation of Revenue

The following table summarizes revenue by type

of monetization for the Zedge Marketplace and GuruShots for the periods presented:

Fiscal Years Ended

December 2023, the FASB issued ASU 2023-09, Income Taxes (ASC 740):

Improvements to Income Tax Disclosures, which includes amendments

that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and

income taxes paid by jurisdiction.

The amendments are effective for all public entities for fiscal years beginning after December 15,

2024, and early adoption is permitted.

The Company elected to early adopt ASU 2023-09 on August 1, 2024 retrospectively and the adoption

has an effect on the Company’s disclosures on income taxes (Note 12).

Accounting Pronouncements (Issued Not Yet Adopted)

Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40):

Disaggregation of Income Statement Expenses ,

which requires public entities to disclose, in the notes to the financial statements, specified information about certain costs and expenses

at each interim and annual reporting period.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods

within fiscal years beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the disclosure requirements

related to the new standard.

other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not

expected to have a material impact on our financial position or results of operations.

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

Disaggregation

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

Fiscal Year Ended July 31,

Zedge Marketplace

5 unchanged sentences

Total revenue

Contract Balances

Contract liabilities consist of deferred revenue,

which are recorded for payments received in advance of the satisfaction of performance obligations .

The Company records deferred revenues related

to the unsatisfied performance obligations with respect to subscription revenue.

As of July 31, 2024, the Company’s deferred revenue

balance related to subscriptions was approximately $ 2.9 million, representing approximately 669,000 active subscribers, including approximately

210,000 lifetime subscriptions that we rolled out in August 2023.

As of July 31, 2023, the Company’s deferred revenue balance related

to subscriptions was approximately $ 1.5 million, representing approximately 638,000 active subscribers.

As of July 31, 2022, the Company’s

deferred revenue balance related to subscriptions was approximately $ 1.5 million, representing approximately 692,000 active subscribers.

The Company also records deferred revenues when

users purchase or earn Zedge Credits.

Unused Zedge Credits represent the value of the Company’s unsatisfied performance obligation

to its users.

Revenue is recognized when Zedge App users redeem Zedge Credits to acquire Zedge Premium content or upon expiration of the

Zedge Credits upon 180 days of account inactivity.

As of July 31, 2024, 2023 and 2022, the Company’s deferred revenue balance related

to Zedge Premium was approximately $ 251,000 , $ 255,000 and $ 259,000 , respectively.

On April 1, 2022, the Company received a one-time

integration bonus for set up activities of $ 2 million from AppLovin Corporation for migrating to their mediation platform.

is being amortized over an estimated service period of 24 months.

As of July 31, 2024 and 2023, the Company’s deferred revenue balance

related to this integration bonus was $ 0 and $ 667,000 , respectively.

The amount of deferred revenue recognized in fiscal

2024 that was included in the deferred revenue balance at July 31, 2023 was $ 2.1 million.

Unsatisfied Performance Obligations

Substantially all of the Company’s unsatisfied

performance obligations relate to contracts with an original expected length of 30 months or less.

Significant Judgments

The advertising networks and advertising exchanges

to which the Company sells its inventory track and report the impressions to Zedge and Zedge recognizes revenues based on these reports.

The networks and exchanges base their payments off of those reports and Zedge independently compares the data to each of the client sites

to validate the imported data and identify any differences.

The number of impressions delivered by the advertising networks and advertising

exchanges is determined at the end of each month, which resolves any uncertainty in the transaction price during the reporting period.

Note 3—Fair Value Measurements

The following table presents the balance of assets

and liabilities measured at fair value on a recurring basis (in thousands):

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

Company records deferred revenues related to the unsatisfied performance obligations with respect to subscription revenue.

31, 2025, the Company’s deferred revenue balance related to subscriptions was approximately $ 5.1 million, representing approximately

984,000 active subscribers, including approximately 693,000 lifetime subscriptions that we rolled out in August 2023.

As of July 31,

2024, the Company’s deferred revenue balance related to subscriptions was approximately $ 2.9 million, representing approximately

669,000 active subscribers, including approximately 210,000 lifetime subscriptions.

As of July 31, 2023, the Company’s deferred

revenue balance related to subscriptions was approximately $ 1.5 million, representing approximately 638,000 active subscribers.

Company also records deferred revenues when users purchase or earn Zedge Credits.

Unused Zedge Credits represent the value of the Company’s

unsatisfied performance obligation to its users.

Revenue is recognized when Zedge App users redeem Zedge Credits to acquire Zedge Premium

content or upon expiration of the Zedge Credits upon 180 days of account inactivity.

As of July 31, 2025, 2024 and 2023, the Company’s

deferred revenue balance related to Zedge Premium was approximately $ 248 ,000, $ 251 ,000 and $ 255 ,000, respectively.

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

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

Performance Obligations

Substantially

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

advertising networks and advertising exchanges to which the Company sells its inventory track and report the impressions to Zedge and

Zedge recognizes revenues based on these reports.

The networks and exchanges base their payments off of those reports and Zedge independently

compares the data to each of the client sites to validate the imported data and identify any differences.

The number of impressions delivered

by the advertising networks and advertising exchanges is determined at the end of each month, which resolves any uncertainty in the transaction

price during the reporting period.

lifetime subscriptions, revenue is recognized over the estimated retention period during which the customer is expected to

benefit from use of the Zedge app, which management has determined to be 30 months based on historical usage and retention patterns.

This estimate represents a significant judgement and is reviewed periodically for changes in customer behavior or other relevant

3—Fair Value Measurements

fair value measurement of cash equivalents invested money market funds is based on quoted market prices in active markets (Level 1).

The fair value measurement of foreign exchange forward contracts is based on observable market-based inputs principally derived from

or corroborated by observable market data (Level 2 ).

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

July 31, 2025

Cash equivalents

Foreign exchange forward contracts

July 31, 2024

Cash equivalents

Foreign exchange forward contracts

Contingent Consideration

Contingent consideration related to the business

combinations discussed below in Note 6, Business Combination and Asset Acquisition are classified within Level 3 of the fair value

hierarchy as the determination of fair value uses considerable judgment and represents the Company’s best estimate of an amount

that could be realized in a market exchange for the asset or liability.

The following table provides a rollforward of

the contingent consideration related to business acquisition discussed in Note 6, Business Combinations and Assets Acquisition (in

Balance at July 31, 2021

Change in fair value

Balance at July 31, 2022

Change in fair value

Balance at July 31, 2023

The overall fair value of the contingent consideration

decreased by $ 1.9 million during the fiscal year ended July 31, 2023, primarily due to the decrease in the likelihood that certain contingent

milestones would be achieved.

Fair Value of Other Financial Instruments

Fair value of the outstanding foreign exchange

forward contracts are marked to market at the end of each measurement dates.

The Company’s other financial instruments

at July 31, 2024 and 2023 included trade accounts receivable and trade accounts payable.

The carrying amounts of the trade accounts receivable

and trade accounts payable approximated fair value due to their short-term nature.

Note 4—Derivative Instruments

The primary risk managed by the Company using

derivative instruments is foreign exchange risk.

Foreign exchange forward contracts are entered into as hedges against unfavorable fluctuations

in the USD to NOK and USD to EUR exchange rates.

The Company is party to a Foreign Exchange Agreement with Western Alliance Bank allowing

the Company to enter into foreign exchange contracts under its revolving credit facility with the bank (see Note 16 Revolving Credit

The Company does not apply hedge accounting to these contracts because these are not qualified as hedging accounting pursuant

Foreign exchange forward contracts

Value of Other Financial Instruments

Company’s other financial instruments at July 31, 2025 and 2024 included prepaid expenses and other current assets, and trade accounts

payable and accrued expenses and other liabilities are stated at their carrying value, which approximates fair value due to the short

time to the expected receipt or payment date.

4—Derivative Instruments

The primary risk managed by the Company using derivative instruments

is foreign exchange risk.

Foreign exchange forward contracts are entered into as hedges against unfavorable fluctuations in the USD to

NOK and USD to EUR exchange rates.

The Company is party to a Foreign Exchange Agreement with Western Alliance Bank allowing the Company

to enter into foreign exchange contracts under its revolving credit facility with the bank (see Note 16 Revolving Credit Facility ).

The Company does not apply hedge accounting to these contracts because these are not qualified as hedging accounting pursuant to ASC 815;

therefore the changes in fair value are recorded in the consolidated statements of operations and comprehensive loss.

derivative instruments to mitigate exposures to changes in foreign exchange rates, the Company is exposed to credit risk from the failure

of the counterparty to perform under the terms of the contract.

The credit or repayment risk is minimized by entering into transactions

with high-quality counterparties.

The outstanding contracts at July 31, 2024 were as follows:

Settlement Date

Dollar Amount

By using derivative

instruments to mitigate exposures to changes in foreign exchange rates, the Company is exposed to credit risk from the failure of the

counterparty to perform under the terms of the contract.

The credit or repayment risk is minimized by entering into transactions with

high-quality counterparties.

In light of the corporate restructuring implemented in January 2025

that resulted in the closure of our Norway operations, we are no longer exposed to the USD to NOK foreign exchange risk.

As such, there

are no outstanding NOK forward contracts and the only outstanding EUR contract at July 31, 2025 was as follows:

Settlement Date

Dollar Amount

The fair value of outstanding derivative instruments

recorded in the accompanying consolidated balance sheets were as follows (in thousands):

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

Assets and Liabilities Derivatives:

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Foreign exchange forward contracts

Other current assets

Prepaid expenses and other current assets

Foreign exchange forward contracts

Accrued expenses and other current liabilities

The effects of derivative instruments on the consolidated

statements of operations and comprehensive loss were as follows (in thousands):

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

Fiscal Year Ended July 31,

Amount of Loss (Income) Recognized on Derivatives

Amount of Income (Loss) Recognized on Derivatives

Derivatives not designated or not qualifying as hedging instruments

Location of loss (income) recognized on derivatives

Location of income (loss) recognized on derivatives

Foreign exchange forward contracts

Net loss (income) resulting from foreign exchange transactions

Note 5—Property and Equipment, Net

Property and equipment, net consisted of the following

(in thousands):

Net loss resulting from foreign exchange transactions

5—Property and Equipment, Net

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

Capitalized software and technology development costs

Less accumulated depreciation and amortization

Depreciation and amortization expense pertaining

to property and equipment was approximately $ 1,074,000 and $ 958,000 for the fiscal years ended July 31, 2024 and 2023, respectively.

Note 6—Business Combination and Asset Acquisition

GuruShots Acquisition - On April 12, 2022,

the Company consummated the acquisition of 100 % of the outstanding equity securities of GuruShots, Ltd., an Israeli company that operates

a platform used for its competitive photography game available across iOS, Android and the web.

The acquisition was effected pursuant

to a Share Purchase Agreement (the “SPA”) between the Company, GuruShots and the holders of the GuruShots equity interests.

This acquisition was accounted for as a business combination under the acquisition method of accounting and the results of operations

of GuruShots have been included in the Company’s results of operations as of the acquisition date.

The purchase price for the equity securities of

GuruShots consists of approximately $ 18 million in cash paid at closing and contingent payments (the “Earnout”) of up to a

maximum of $ 8.4 million due on each of the first and second anniversaries from the closing, payable either in cash or Class B common stock

of the Company, or a combination thereof, at the Company’s discretion, and subject to GuruShots achieving specified financial targets

set forth in the SPA.

The fair value of the earnout amount at the acquisition date was estimated at $ 5.9 million based on a Monte Carlo

simulation model in an option pricing framework, whereby a range of possible scenarios were simulated.

This fair value was reduced from

$ 5.9 million to $ 1.9 million as of July 31, 2022 and further reduced to $ 0 as of July 31, 2023.

See Note 3, Fair Value Measurements .

Under the SPA, the Company agreed to make certain

minimum investments in user acquisition for GuruShots during the period covered by the Earnout, subject to, among other conditions, the

acquired users generating minimum levels of Return On Ad Spend (“ROAS”) as set forth in the SPA.

The Company was prepared

to make the minimum investment, however, GuruShots was unable to achieve those minimum ROAS target conditions.

GuruShots’ financial

performance during the period from the April 2022 acquisition through July 31, 2023, was materially impacted by a combination of industry

specific, macroeconomic, and geopolitical challenges that contributed to negatively impacting ROAS.

The conditions for payment of the

Earnout for the first year following the acquisition were not met and no Earnout payment was made.

One of the prior owners of GuruShots

objected to that determination.

The parties to the SPA made various representations,

warranties and covenants subject to the qualifications and limitations agreed by the respective parties in the SPA.

On September 26, 2023,

the Company noticed a claim for indemnification regarding material inaccuracies in certain of those representations and warranties.

In the first quarter of fiscal 2024, the Company

and the prior owners of GuruShots agreed to withdraw and settle claims related to the purchase agreement pursuant to which the Company

purchased the equity of GuruShots, including any dispute about minimum user acquisition spend for GuruShots, any right of the prior owners

to an earnout payment and the Company’s claim for indemnification related to alleged misrepresentations in the agreement.

In addition to the cash payment at closing and

the contingent Earnout, the Company has committed to a retention pool of $ 4 million in cash and 626,242 shares of the Company Class B

common stock with a grant date fair value of $ 4 million for GuruShots’ founders and employees that will be payable or vest, as applicable,

over three years from April 1, 2022, based on the beneficiaries thereof remaining employed by the Company or a subsidiary.

In fiscal 2024

and 2023, 182,565 shares and 205,618 shares were vested with a fair value of $ 446,000 and $ 397,000 , respectively.

See Note 13, Stock-Based

Compensation , for additional information.

In fiscal 2024 and 2023, we paid $ 1.3 million and $ 1.1 million in cash retention bonuses,

respectively.

The aggregated cash retention bonus payments are expected to be $ 500,000 lower than the initial cash bonus pool due to termination

and amortization expense pertaining to property and equipment was approximately $ 0.7 million and $ 1.1 million for the fiscal years ended

July 31, 2025 and 2024, respectively.

6—Business Combination and Asset Acquisition

Acquisition - On April 12, 2022, the Company consummated the acquisition of 100 % of the outstanding equity securities of GuruShots,

Ltd., an Israeli company that operates a platform used for its competitive photography game available across iOS, Android and the web.

The acquisition was effected pursuant to a Share Purchase Agreement (the “SPA”) between the Company, GuruShots and the holders

of the GuruShots equity interests.

This acquisition was accounted for as a business combination under the acquisition method of accounting

and the results of operations of GuruShots have been included in the Company’s results of operations as of the acquisition date.

purchase price for the equity securities of GuruShots consists of approximately $ 18 million in cash paid at closing and contingent payments

(the “Earnout”) of up to a maximum of $ 8.4 million due on each of the first and second anniversaries from the closing, payable

either in cash or Class B common stock of the Company, or a combination thereof, at the Company’s discretion, and subject to GuruShots

achieving specified financial targets set forth in the SPA.

The fair value of the earnout amount at the acquisition date was estimated

at $ 5.9 million based on a Monte Carlo simulation model in an option pricing framework, whereby a range of possible scenarios were simulated.

This fair value was reduced from $ 5.9 million to $ 1.9 million as of July 31, 2022 and further reduced to $ 0 as of July 31, 2023.

the SPA, the Company agreed to make certain minimum investments in user acquisition for GuruShots during the period covered by the Earnout,

subject to, among other conditions, the acquired users generating minimum levels of Return On Ad Spend (“ROAS”) as set forth

The Company was prepared to make the minimum investment, however, GuruShots was unable to achieve those minimum ROAS target

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

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

The conditions for payment of the Earnout for the first and second anniversaries from the closing were not met and no Earnout payment

One of the prior owners of GuruShots objected to that determination.

parties to the SPA made various representations, warranties and covenants subject to the qualifications and limitations agreed by the

respective parties in the SPA.

On September 26, 2023, the Company noticed a claim for indemnification regarding material inaccuracies

in certain of those representations and warranties.

the first quarter of fiscal 2024, the Company and the prior owners of GuruShots agreed to withdraw and settle claims related to the purchase

agreement pursuant to which the Company purchased the equity of GuruShots, including any dispute about minimum user acquisition spend

for GuruShots, any right of the prior owners to an earnout payment and the Company’s claim for indemnification related to alleged

misrepresentations in the agreement.

addition to the cash payment at closing and the contingent Earnout, the Company has committed to a retention pool of $ 4 million in cash

and 626,242 shares of the Company Class B common stock with a grant date fair value of $ 4 million for GuruShots’ founders and employees

that will be payable or vest, as applicable, over three years from April 1, 2022, based on the beneficiaries thereof remaining employed

by the Company or a subsidiary.

In fiscal 2025 and 2024, 180,563 shares and 182,656 shares were vested with a fair value of $ 529 ,000

and $ 446 ,000, respectively.

See Note 13, Stock-Based Compensation , for additional information.

In aggregate, there were 568,837

shares vested over the three years period from April 1, 2022, 57,405 shares less than the initial share bonus pool due to termination

of employment of eligible employees.

The cash purchase price and the earnout have been allocated to GuruShots’ tangible assets,

identifiable intangible assets, and assumed liabilities based on their estimated fair values.

The preliminary fair value estimates of

the net assets acquired are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change

as the Company obtains additional information for those estimates during the measurement period.

The excess of the total consideration

over the tangible assets, identifiable intangible assets, and assumed liabilities was recorded as goodwill which was $ 8.9 million at closing.

The Company recorded a measurement period adjustment

of $ 180,000 in the three months period ended July 31, 2022 which reduced the goodwill balance from $ 8.9 million to $ 8.7 million.

wrote off the remaining goodwill balance and recorded a loss on goodwill impairment of $ 8.7 million in the in the third quarter of fiscal

2023 as discussed below in Note 7, Intangible Assets, Net and Goodwill .

Of the 8.7 million of goodwill impairment loss recorded,

$ 2.8 million is deductible for tax purposes.

Identified intangible assets consist of trade

names, technology and customer relationships.

The fair value of intangible assets and the determination of their respective useful lives

were made in accordance with ASC 805 and are outlined in the table below:

In fiscal 2025 and 2024, we paid $ 1.1 million and $ 1.3 million in cash retention bonuses, respectively.

The aggregated cash retention bonus payments were $ 0.5 million lower than the initial cash bonus pool due to termination of employment

of eligible employees.

intangible assets consist of trade names, technology and customer relationships.

The fair value of intangible assets and the determination

of their respective useful lives were made in accordance with ASC 805 and are outlined in the table below:

(Dollar Amounts in Thousands) Asset Value Useful Life

4 unchanged sentences

Total identified intangible assets $ 15,320

The Company’s initial fair value estimates

related to the various identified intangible assets were determined under various valuation approaches including the relief-from-royalty

method and multi-period excess earnings.

These valuation methods require management to project revenues, operating expenses, working capital

investment, capital spending and cash flows for GuruShots over a multiyear period, as well as determine the weighted average cost of capital

to be used as a discount rate.

The Company amortizes its intangible assets assuming

no residual value over periods in which the economic benefit of these assets is consumed.

As of January 31, 2024, the Company wrote off

the remaining carrying value of the intangible assets and recorded impairment charge of $ 11.9 million as discussed below in Note 7, Intangible

Assets, Net and Goodwill .

The cash consideration paid included $ 2.7 million

deposited with the escrow agent that is available to satisfy for post-closing indemnification claims made within 18 months of the acquisition

There were no claims made against the escrow account which was released in its entirety on November 15, 2023.

We incurred approximately $ 860,000 in acquisition-related

transaction costs in connection with the GuruShots transaction which were not included as a component of consideration transferred but

were expensed as incurred in fiscal 2022.

Emojipedia Acquisition

Pursuant to an Asset Purchase Agreement, on August

1, 2021 (“Closing”), the Company consummated the acquisition of substantially all of the assets of Emojipedia Pty Ltd, a proprietary

company organized under the laws of Australia.

The total purchase price of the assets was $ 6.7 million, of which $ 4.8 million was paid

on August 2, 2021, $ 917,000 was paid on February 1, 2022, and the remaining $ 962,000 paid on August 1, 2022.

The assets purchased include emojipeida.org, a

set of smaller websites, a bank of emoji related URLs related to the seller’s business, including World Emoji Day, the annual World

Emoji Awards.

The asset purchase does not qualify as a business combination under FASB ASC 805, Business Combinations , and

has therefore been accounted for as an asset acquisition.

The total purchase price for this acquisition was allocated to intangible assets

are amortized on a straight-line basis over their estimated useful lives of fifteen years .

Note 7—Intangible Assets, Net and Goodwill

Intangible assets are initially recorded at fair

value and stated net of accumulated amortization and impairments.

The Company amortizes its intangible assets that have finite lives using

either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected

to be utilized.

Company’s initial fair value estimates related to the various identified intangible assets were determined under various valuation

approaches including the relief-from-royalty method and multi-period excess earnings.

These valuation methods require management to project

revenues, operating expenses, working capital investment, capital spending and cash flows for GuruShots over a multiyear period, as well

as determine the weighted average cost of capital to be used as a discount rate.

Company amortizes its intangible assets assuming no residual value over periods in which the economic benefit of these assets is consumed.

As of January 31, 2024, the Company wrote off the remaining carrying value of the intangible assets and recorded impairment charge of

$ 11.9 million as discussed below in Note 7, Intangible Assets, Net and Goodwill .

7—Intangible Assets, Net and Goodwill

assets are initially recorded at fair value and stated net of accumulated amortization and impairments.

The Company amortizes its intangible

assets that have finite lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic

benefit of the asset is expected to be utilized.

Amortization is recorded over the estimated useful lives ranging from 5 to 15 years.

The Company evaluates the recoverability

of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying

value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group.

If the carrying

value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates the fair value of the assets, generally utilizing

a discounted cash flow analysis based on the present value of after-tax cash flows to be generated by the assets using a risk-adjusted

discount rate.

To estimate the fair value of the assets, the Company uses market participant assumptions pursuant to ASC 820, Fair

Value Measurements.

During the second quarter of fiscal 2024, in connection

with its company-wide strategic planning process as well as evaluating the current operating performance of its GuruShots reporting unit,

including product enhancement and marketing, the Company reassessed its short-term and long-term commercial plans for this business.

Company made certain operational and strategic decisions to invest in, and increase its focus on, the long-term success of this business,

which resulted in the Company significantly reducing its forecasted revenues and operating results.

As a result, the Company identified indicators

of impairment and performed an undiscounted cash flow analysis pursuant to ASC 360, Property, Plant, and Equipment - Overall , to

determine if the cash flows expected to be generated by the GuruShots business over the estimated remaining useful life of its primary

assets were sufficient to recover the carrying value of the asset group.

Based on this analysis, the undiscounted cash flows were not

sufficient to recover the carrying value of the long-lived assets.

As a result, the Company was required to perform Step 3 of the impairment

test and determine the fair value of the asset group.

To estimate the fair value of the asset group, the Company utilized the income approach,

which is based on a discounted cash flow (DCF) analysis and calculates the fair value by estimating the after-tax cash flows attributable

to the asset group and then discounting the after-tax cash flows to present value using a risk-adjusted discount rate.

Assumptions used

in the DCF require significant judgment, including judgment about appropriate discount rates, growth rates, and the amount and timing

of expected future cash flows.

The forecasted cash flows were based on the Company’s most recent strategic plan and for periods

beyond the strategic plan, the Company’s estimates were based on assumed growth rates expected as of the measurement date.

believes its assumptions were consistent with the plans and estimates that a market participant would use to manage the business.

discount rate used was intended to reflect the risks inherent in future cash flow projections and was based on an estimate of the weighted

average cost of capital (WACC) of market participants relative to the asset group.

The Company used a discount rate of 30.5 %.

this analysis, the fair value of the GuruShots asset group was below its carrying value.

The Company determined that the fair value of

this asset group was approximately zero and the carrying value of the long-lived assets was fully impaired.

To record the adjustment of the carrying value

of the asset group to fair value, the Company recorded an impairment charge of $ 11.9 million during the second quarter of fiscal 2024.

The Company evaluates the recoverability of its definite lived intangible assets whenever events or changes in circumstances or business

conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash

flows for each asset group.

If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates

the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of after-tax cash flows

to be generated by the assets using a risk-adjusted discount rate.

To estimate the fair value of the assets, the Company uses market

participant assumptions pursuant to ASC 820, Fair Value Measurements.

the second quarter of fiscal 2024, in connection with its company-wide strategic planning process as well as evaluating the current operating

performance of its GuruShots reporting unit, including product enhancement and marketing, the Company reassessed its short-term and long-term

commercial plans for this business.

The Company made certain operational and strategic decisions to invest in, and increase its focus

on, the long-term success of this business, which resulted in the Company significantly reducing its forecasted revenues and operating

a result, the Company identified indicators of impairment and performed an undiscounted cash flow analysis pursuant to ASC 360, Property,

Plant, and Equipment - Overall , to determine if the cash flows expected to be generated by the GuruShots business over the estimated

remaining useful life of its primary assets were sufficient to recover the carrying value of the asset group.

Based on this analysis,

the undiscounted cash flows were not sufficient to recover the carrying value of the long-lived assets.

As a result, the Company was

required to perform Step 3 of the impairment test and determine the fair value of the asset group.

To estimate the fair value of the

asset group, the Company utilized the income approach, which is based on a discounted cash flow (DCF) analysis and calculates the fair

value by estimating the after-tax cash flows attributable to the asset group and then discounting the after-tax cash flows to present

value using a risk-adjusted discount rate.

Assumptions used in the DCF require significant judgment, including judgment about appropriate

discount rates, growth rates, and the amount and timing of expected future cash flows.

The forecasted cash flows were based on the Company’s

most recent strategic plan and for periods beyond the strategic plan, the Company’s estimates were based on assumed growth rates

expected as of the measurement date.

The Company believes its assumptions were consistent with the plans and estimates that a market

participant would use to manage the business.

The discount rate used was intended to reflect the risks inherent in future cash flow projections

and was based on an estimate of the weighted average cost of capital (WACC) of market participants relative to the asset group.

used a discount rate of 30.5 %.

Based on this analysis, the fair value of the GuruShots asset group was below its carrying value.

Company determined that the fair value of this asset group was approximately zero and the carrying value of the long-lived assets was

fully impaired.

record the adjustment of the carrying value of the asset group to fair value, the Company recorded an impairment charge of $ 11.9 million

during the second quarter of fiscal 2024.

The impairment charge was allocated to the long-lived assets on a pro-rata basis as follows:

$ 2.5 million to acquired developed technology,

$ 6.4 million to customer relationships, and $ 3.0 million to trade names.

The Company believes its assumptions used to determine the fair

value of the asset group were reasonable.

The following table presents the detail of intangible

assets, net as of July 31, 2024 and 2023 (in thousands):

$ 2.5 million to acquired developed technology, $ 6.4 million to customer relationships, and $ 3.0 million to trade names.

The Company believes

its assumptions used to determine the fair value of the asset group were reasonable.

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

July 31, 2025

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Accumulated Amortization

Allocation of Impairment Loss

Net Carrying Value

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Total intangible assets

Amortization expense of intangible assets for

the fiscal years ended July 31, 2024 and 2023 were approximately $ 1.4 million and $ 2.3 million, respectively.

Estimated future amortization expense as of July 31, 2024 is as follows

(in thousands):

Goodwill represents the difference between the

purchase price and the fair value of assets and liabilities acquired in a business combination (see Note 6, Business Combination and

Asset Acquisition ).

The Company reviews goodwill annually, or more frequently whenever circumstances and situations change such that

there is an indication that the carrying amounts may not be recovered, for impairment by initially considering qualitative factors to

determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill,

as a basis for determining whether it is necessary to perform a quantitative analysis.

If it is determined that it is more likely than

not that the fair value of reporting unit is less than its carrying amount, a quantitative analysis is performed to identify goodwill

If it is determined that it is not more likely than not that the fair value of the reporting unit is less than its carrying

amount, it is unnecessary to perform a quantitative analysis.

The Company may elect to bypass the qualitative assessment and proceed directly

to performing a quantitative analysis.

The Company has two reporting units and assesses

impairment based upon qualitative factors and if necessary, quantitative factors.

A reporting unit’s fair value is determined using

the income approach and discounted cash flow models by utilizing Level 3 inputs and assumptions such as future cash flows, discount rates,

long-term growth rates, market value and income tax considerations.

Specifically, the value of each reporting unit is determined on a

stand-alone basis from the perspective of a market participant and represents the price estimated to be received in a sale of the reporting

unit in an orderly transaction between market participants at the measurement date.

The Company then reconciles the values of all reporting

units to the market capitalization of the Company.

Interim Impairment Assessment

The Company performs its annual goodwill impairment

tests on the first day of its fiscal 4 th quarter in accordance with ASC 350-20 In light of a significant and sustained decline

in the Company’s Class B common stock price, circumstances became evident that a possible goodwill impairment existed since the

last annual impairment test on May 1, 2022.

The Company performed an interim impairment test during the third quarter of fiscal 2023 and

concluded that the carrying value of the GuruShots reporting unit exceeded its fair value.

Accordingly, the Company recorded a non-cash

goodwill impairment charge of $ 8.7 million in that quarter.

The Company’s goodwill related to acquisitions

is carried on the balance sheet of Zedge Europe AS and GuruShots Ltd.

The table below reconciles the change in the carrying amount of

goodwill for the period from July 31, 2022 to July 31, 2024:

(in thousands)

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

respectively.

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

Company’s goodwill related to acquisitions is carried on the balance sheet of Zedge Europe AS.

The table below reconciles the change

in the carrying amount of goodwill for the period from July 31, 2023 to July 31, 2025:

Carrying Amounts

Balance as of July 31, 2023

Goodwill impairment charge

Impact of currency translation

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Balance as of July 31, 2025

The total accumulated impairment loss of the Company’s

goodwill as of July 31, 2024 was $ 8.7 million.

There were no accumulated impairment losses prior to the fiscal year ended July 31, 2022.

Note 8—Accrued Expenses and Other Current

8—Accrued Expenses and Other Current Liabilities

consist of the following:

expenses and other current liabilities consist of the following:

Accrued payroll and bonuses

Accrued vacation

Accrued payroll taxes

Due to artists

Accrued expenses

Restructuring accrual and related charges (1)

Due to artists

Operating lease liability-current portion

Accrued payroll taxes

Derivative liability for foreign exchange contracts

2 unchanged sentences

Total accrued expenses and other current liabilities

Note 9—Equity

Class A Common Stock and Class B Common Stock

The rights of holders of Class A common stock

and Class B common stock are identical except for certain voting and conversion rights and restrictions on transferability.

of Class A common stock and Class B common stock have the right to receive identical dividends per share if and when declared by the Company’s

Board of Directors.

In addition, the holders of Class A common stock and Class B common stock have identical and equal priority rights

per share in liquidation.

The Class A common stock and Class B common stock do not have any other contractual participation rights.

holders of Class A common stock are entitled to three votes per share and the holders of Class B common stock are entitled to one-tenth

of a vote per share.

Each share of Class A common stock may be converted into one share of Class B common stock, at any time, at the option

of the holder.

Shares of Class A common stock are subject to certain limitations on transferability that do not apply to shares of Class

B common stock.

Note 10—Commitments and Contingencies

In connection with the acquisition of GuruShots, the Company (i) committed

to a retention pool of $ 4 million in cash (in addition to the $ 4 million portion of the retention pool to be paid in the Company’s

Class B common stock discussed in Note 13-Stock-Based Compensation) to be paid to the founders and employees of GuruShots payable over

three years from April 1, 2022 based on the beneficiaries thereof remaining employed by the Company or a subsidiary;

and (ii) agreed to

invest a minimum in user acquisition in the first 24 months following the closing subject to the acquired users generating minimum ROAS

thresholds and payment of an earnout if certain growth targets were met.

In the first quarter of fiscal 2024, the Company and the prior owners

of GuruShots agreed to withdraw and settle claims related to the purchase agreement pursuant to which the Company purchased the equity

of GuruShots, including any dispute about minimum user acquisition spend for GuruShots, any right of the prior owners to an earnout payment

and the Company’s claim for indemnification related to alleged misrepresentations in the agreement.

Legal Proceedings

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

A Common Stock and Class B Common Stock

rights of holders of Class A common stock and Class B common stock are identical except for certain voting and conversion rights and

restrictions on transferability.

The holders of Class A common stock and Class B common stock have the right to receive identical dividends

per share if and when declared by the Company’s Board of Directors.

In addition, the holders of Class A common stock and Class

B common stock have identical and equal priority rights per share in liquidation.

The Class A common stock and Class B common stock do

not have any other contractual participation rights.

The holders of Class A common stock are entitled to three votes per share and the

holders of Class B common stock are entitled to one-tenth of a vote per share.

Each share of Class A common stock may be converted into

one share of Class B common stock, at any time, at the option of the holder.

Shares of Class A common stock are subject to certain limitations

on transferability that do not apply to shares of Class B common stock.

10—Commitments and Contingencies

connection with the acquisition of GuruShots, the Company (i) committed to a retention pool of $ 4 million in cash (in addition to the

$ 4 million portion of the retention pool to be paid in the Company’s Class B common stock discussed in Note 13, Stock-Based

Compensation ) to be paid to the founders and employees of GuruShots payable over three years from April 1, 2022 based on the beneficiaries

thereof remaining employed by the Company or a subsidiary;

and (ii) agreed to invest a minimum in user acquisition in the first 24 months

following the closing subject to the acquired users generating minimum ROAS thresholds and payment of an earnout if certain growth targets

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

the first quarter of fiscal 2024, the Company and the prior owners of GuruShots agreed to withdraw and settle claims related to the purchase

agreement pursuant to which the Company purchased the equity of GuruShots, including any dispute about minimum user acquisition spend

for GuruShots, any right of the prior owners to an earnout payment and the Company’s claim for indemnification related to alleged

misrepresentations in the agreement.

The Company may from time to time be subject to

legal proceedings that arise in the ordinary course of business.

Although there can be no assurance in this regard, the Company does not

expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial

Note 11—Operating Leases

The Company has operating leases primarily for

office space located in Trondheim, Norway and Tel Aviv, Israel, as well as a short-term lease in Vilnius, Lithuania.

Operating lease right-of-use

assets recorded and included in other assets were approximately $ 214,000 and $ 360,000 at July 31, 2024 and 2023, respectively.

The following table presents the lease-related

assets and liabilities for leases recorded on the consolidated balance sheets (in thousands) as of July 31, 2024 and 2023:

claims, demands and legal proceedings that arise in the ordinary course of business.

Although there can be no assurance in this regard,

the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations,

cash flows or financial condition.

11—Operating Leases

Company has operating leases primarily for office space located in Tel Aviv, Israel, as well as a short-term lease in Vilnius, Lithuania.

Company reviews the impairment of ROU assets consistent with the approach applied for the Company’s other long-lived assets.

Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the carrying

value of the asset may not be recoverable.

The assessment of possible impairment is based on the Company’s ability to recover the

carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.

connection with the restructuring we implemented in January 2025 (See Note 18 Restructuring, Impairments, and Related Charges

for more details), we have determined that the carrying value of the ROU asset for our office in Trondheim are not recoverable and recorded

an impairment charge of approximately $ 140 ,000 in the fourth quarter of fiscal 2025.

Operating lease right-of-use assets recorded and

included in other assets were approximately $ 64 ,000 and $ 214 ,000 at July 31, 2025 and 2024, respectively.

The remaining $ 139 ,000 lease

liabilities related to the office in Trondheim is included and presented under accrued expenses and other current liabilities and other

The Company will continue to make lease payments under the lease until the end of the lease term on March 31, 2027, or sooner

upon signing of an early lease termination agreement.

following table presents the lease-related assets and liabilities for leases recorded on the consolidated balance sheets (in thousands)

as of July 31, 2025 and 2024:

As of July 31,

3 unchanged sentences

Total operating lease liabilities

The following table includes the components of

our occupancy costs in our consolidated statements of operations and comprehensive loss:

following table includes the components of our occupancy costs in our consolidated statements of operations and comprehensive loss:

Years ended July 31,

5 unchanged sentences

(2) Variable lease costs include costs that were not fixed at the lease commencement date and are not dependent on an index or rate.

These costs were not included in the measurement of lease liabilities and primarily include variable non-lease costs, such as utilities, real estate taxes, insurance and maintenance, as well as lease costs for those leases that qualified for the short-term lease exception.

The following table summarizes the weighted average

remaining lease term and weighted average discount rate as of July 31, 2024 and 2023:

These costs were not included in the measurement of lease liabilities and primarily include variable non-lease costs, such as utilities, real estate taxes, insurance and maintenance.

following table summarizes the weighted average remaining lease term and weighted average discount rate as of July 31, 2025 and 2024:

As of July 31,

3 unchanged sentences

Operating leases 4.86 % 3.77 %

Future minimum lease payments under non-cancellable

leases at July 31, 2024 are as follows (in thousands):

minimum lease payments under non-cancellable leases at July 31, 2024 are as follows (in thousands):

Years ending July 31,

2 unchanged sentences

Less imputed interest

As of July 31, 2024,

the Company did not have any leases that have not yet commenced that create significant rights and obligations.

Note 12—Income Taxes

The components of (loss) income before income

taxes are as follows (in thousands):

Lithuania UAB is the lessee under a three-year lease agreement (through October 2028) for a 3,600 square feet office space.

lease cost is approximately $ 103 ,000, including eight parking spaces.

See Note 19, Subsequent Events .

12—Income Taxes

components of loss before income taxes are as follows (in thousands):

Fiscal year ended July 31,

Loss before income taxes

Benefit from (provision for) income taxes consisted

of the following (in thousands):

taxes benefit consisted of the following (in thousands):

Fiscal year ended July 31,

1 unchanged sentence

Total deferred expense

Benefit from income taxes

The differences between income taxes expected

federal statutory income tax rate and income taxes reported were as follows (in thousands):

Income taxes benefit

During the fiscal year ended July 31, 2025, the

Company has early adopted ASU 2023-09 to enhance the income taxes disclosures regarding income taxes paid and the rate reconciliation

The income taxes paid by the Company are as follows (in thousands):

Fiscal year ended July 31,

U.S federal income tax at statutory rate

State tax (net of federal benefit)

Change in valuation allowance

Foreign tax rate differential

Change in fair value of contingent consideration and goodwill impairment

Stock-based compensation

Benefit from income taxes

The Company is subject to taxation in the United

States and certain foreign jurisdictions.

Total income taxes paid

Income taxes paid (net of refunds) exceeds 5 percent of total income

taxes paid (net of refunds) in the following jurisdictions (in thousands):

Fiscal year ended July 31,

* Jurisdiction below the threshold for the period presented.

differences between income taxes expected at the U.S.

federal statutory income tax rate and income taxes reported were as follows (in

Fiscal Year ended July 31,

Loss before income taxes

Federal Statutory Tax Rate

Current State and Local Income Taxes, Net of Federal Income Tax Effect

Foreign Tax Effects

Statutory tax rate difference between Norway and United States

Statutory tax rate difference between Lithuania and United States

Effect of Changes in Tax Laws or Rates Enacted in the Current Period

Effect of Cross-Border Tax Laws

Global intangible low-taxed income

Foreign-derived intangible income

Foreign Tax Credit

Nontaxable or Nondeductible Items

Share-based payment awards

Changes in Valuation Allowances

Other Adjustments

Effective Tax Rate

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

Earnings from non-U.S.

activities are subject to local country income tax.

The material jurisdictions where the Company is

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

The Tax Cuts and Jobs Act of 2017 (the “Tax

Act”) contains a provision which subjects a U.S parent of a foreign subsidiary to current U.S.

tax on its global intangible low-taxed

income (“GILTI”).

The GILTI income is eligible for a deduction, which lowers the effective tax.

The Company will report the

tax impact of GILTI as a period cost when incurred.

Accordingly, the Company is not providing deferred taxes for basis differences expected

to reverse as GILTI.

U.S companies are eligible for a deduction that

lowers the effective tax rate on certain foreign income.

This regime is referred to as the Foreign-Derived Intangible Income deduction

Significant components of the Company’s

deferred tax assets and deferred tax liabilities are as follows (in thousands):

activities are subject

to local country income tax.

material jurisdictions where the Company is subject to potential examination by tax authorities include the United States, Norway and

Tax Cuts and Jobs Act of 2017 (the “Tax Act”) contains a provision which subjects a U.S parent of a foreign subsidiary to

tax on its global intangible low-taxed income (“GILTI”).

The GILTI income is eligible for a deduction, which

lowers the effective tax.

The Company will report the tax impact of GILTI as a period cost when incurred.

Accordingly, the Company is

not providing deferred taxes for basis differences expected to reverse as GILTI.

companies are eligible for a deduction that lowers the effective tax rate on certain foreign income.

This regime is referred to as the

Foreign-Derived Intangible Income deduction (“FDII”).

components of the Company’s deferred tax assets and are as follows (in thousands):

Fiscal year ended July 31,

Deferred tax assets:

1 unchanged sentence

Net operating loss carryforwards (Foreign)

Net operating loss carryforwards (Federal)

Net operating loss carryforwards (State)

1 unchanged sentence

Stock-based compensation

Total deferred tax assets

Less valuation allowance

Deferred revenue

Net deferred tax assets

At July 31, 2024 and 2023, the Company had available

state net operating loss (“NOL”) carryforwards from domestic operations of approximately $ 0 and $ 741,000 , respectively,

to offset future taxable income.

The state NOL carryforwards will begin to expire in 2038.

At July 31, 2024 and 2023, the Company has

approximately $ 8.0 millions of Foreign NOLs (Israel) which is available to offset Israel’s future taxable income without time limit.

The change in the valuation allowance is as follows

(in thousands):

Less valuation allowance

Total deferred tax assets

July 31, 2025, the Company had available gross U.S.

federal and state net operating loss (“NOL”) carryforwards from domestic

operations of approximately $ 2.3 million and $ 1.3 million, respectively, to offset future taxable income.

The state NOL carryforwards

will begin to expire in 2040.

In addition, the Company has approximately $ 8.0 million of Foreign NOLs (Israel) which are available to

offset future taxable income in Israel without time limit.

change in the valuation allowance is as follows (in thousands):

Fiscal year ended July 31,

(in thousand)

Balance at beginning of year

Additions related to stock-based compensation

Balance at end of year

Balance at end

Reserves deducted from deferred income taxes, net:

2 unchanged sentences

Valuation allowance

At July 31, 2024 and 2023, the Company did not

have any unrecognized tax benefits and does not anticipate any significant changes to the unrecognized tax benefits within twelve months

of this reporting date.

In the fiscal years ended July 31, 2024 and 2023, the Company recorded $ 4,500 in interest and penalties on income

At July 31, 2024 and 2023, there was no accrued interest included in income taxes payable.

The Company currently remains subject to examinations

federal, state, and foreign tax returns generally for fiscal years 2019 through 2023.

The Tax Cuts and Jobs Act of 2017 (TCJA) has modified

the IRC 174 expenses related to research and development (R&D) for the tax years beginning after December 31, 2021.

The Company must

now capitalize the expenditures related to R&D activities and amortize over 5 years for US activities and 15 years for non-US activities

using mid-year convention.

For US GAAP purposes, the Company capitalize all R&D expenditures on the consolidated balance sheet and

amortize over 3 years for book purposes.

Therefore, we will have book to tax difference in amortization expense and no additional capitalization

on R&D expenditures for tax purposes under IRC 174.

Note 13—Stock-Based Compensation

2016 Stock Incentive Plan

On March 23, 2022, the Company’s Board of

Directors amended the Company’s 2016 Stock Option and Incentive Plan (as amended to date, the “2016 Incentive Plan”)

to increase the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by an additional

685,000 shares to an aggregate of 2,531,000 shares, including 626,000 shares for the GuruShots retention pool.

This amendment was ratified

by the Company’s stockholders at the Annual Meeting of Stockholders held on January 18, 2023.

At July 31, 2024, there were 346,000 shares of

Class B common stock available for awards under the 2016 Incentive Plan before accounting for the remaining 170,000 contingently issuable

shares related to the DSUs with both service and market conditions discussed below.

July 31, 2025 and 2024, the Company did not have any unrecognized tax benefits and does not anticipate any significant changes to the

unrecognized tax benefits within the twelve months of this reporting date.

In the fiscal years ended July 31, 2025 and 2024, the Company

recorded $ 0 and $ 4,500 , respectively, in interest and penalties on income taxes.

At July 31, 2025 and 2024, there was no accrued interest

included in income taxes payable.

Company currently remains subject to examinations of its U.S.

federal, state, and foreign tax returns generally for fiscal years 2020

through 2024.

Tax Cuts and Jobs Act of 2017 (TCJA) has modified the IRC 174 expenses related to research and development (R&D) for the tax years

beginning after December 31, 2021.

The Company is required to capitalize the expenditures related to R&D activities and amortize

over 5 years for US activities and 15 years for non-US activities using mid-year convention.

For US GAAP purposes, the Company capitalize

all R&D expenditures on the consolidated balance sheet and amortize over 3 years for book purposes.

Therefore, we will have book

to tax difference in amortization expense and no additional capitalization on R&D expenditures for tax purposes under IRC 174.

July 4, 2025, the One Big Beautiful Act (“OBBBA”) was signed into law, which enacts significant changes to the U.S.

related laws.

Some of the provisions of the new tax law that affect corporations include but are not limited to expensing of domestic

specified research or experimental expenditures, increasing the limitation on the deductibility of business interest expense under IRC

§163(j) to thirty percent of EBITDA, and one hundred percent bonus depreciation on eligible property acquired after January 19,

The Company is currently evaluating the impact that the new tax law will have on its financial condition and results of operations.

13—Stock-Based Compensation

The Company recognizes stock-based compensation

for stock-based awards, including stock options, restricted stock and DSUs based on the estimated fair value of the awards and recognizes

over the relevant service period.

The Company estimates the fair value of stock options on the measurement date using the Black-Scholes

option valuation model (“BSM”).

The Company estimates the fair value of restricted stock and DSUs with service conditions

only using the current market price of the stock.

The Company estimates the fair value of DSUs with both service and market conditions

using the Monte Carlo Simulation valuation model.

The Black-Scholes and Monte Carlo Simulation valuation

models incorporate assumptions as to stock price volatility, the expected term of options or awards, a risk-free interest rate and dividend

The Company recognizes stock-based compensation using the straight-line method over the vesting period or the graded vesting method

if awards with market or performance conditions include graded vesting features, or if an award includes both a service condition and

a market or performance condition.

In fiscal 2024 and fiscal 2023, the Company recognized

stock-based compensation for its employees and non-employees as follows (in thousands):

Stock Incentive Plan

November 2024, the Company’s Board of Directors amended the Company’s 2016 Stock Option and Incentive Plan (as amended to

date, the “2016 Incentive Plan”) to increase the number of shares of the Company’s Class B common stock available for

the grant of awards thereunder by an additional 100,000 shares to an aggregate of 2,631,000 shares.

This amendment was ratified by the

Company’s stockholders at the Annual Meeting of Stockholders held on January 15, 2025.

At July 31, 2025, there were 143,000 shares

of Class B common stock available for awards under the 2016 Incentive Plan.

Company recognizes stock-based compensation for stock-based awards, including stock options, restricted stock and deferred stock units

based on the estimated fair value of the awards and recognized over the relevant service period and/or market conditions.

estimates the fair value of stock options on the measurement date using the Black-Scholes option valuation model (“BSM”).

The Company estimates the fair value of the restricted stock and DSU’s with service conditions only using the current market price

of the stock.

The Company estimates the fair value of the DSU’s with both service and market conditions using the Monte Carlo Simulation

valuation model.

Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected term of

options or awards, a risk-free interest rate and dividend yield.

The Company recognizes stock-based compensation using the straight-line

method over the vesting period or the graded vesting method if awards with market or performance conditions include graded vesting features,

or if an award includes both a service condition and a market or performance condition.

fiscal 2025 and fiscal 2024, the Company recognized stock-based compensation for its employees and non-employees as follows (in thousands):

Fiscal Year Ended July 31,

Stock-based compensation expense

As of July 31, 2024, the Company’s unrecognized

stock-based compensation expense was $ 185,000 for unvested stock options, $ 48,000 for unvested DSUs and $ 1.1 million for unvested restricted

stock including $ 769,000 related to the portion of retention bonus to be paid in the Company’s Class B common stock in connection

with the GuruShots acquisition.

In fiscal 2024 and fiscal 2023, restricted stock

and DSUs awards with respect to 246,000 shares and 267,000 shares vested.

In connection with this vesting, the Company purchased 6,328

shares and 6,310 shares respectively of Class B Stock from certain employees for $ 13,000 and $ 17,000 respectively, to satisfy tax withholding

obligations in connection with the vesting of restricted stock and DSUs.

In the fiscal years ended July 31, 2024 and 2023

there was no income tax benefit resulting from tax deductions in excess of the compensation cost recognized for the Company’s stock-based

compensation.

of July 31, 2025, the Company’s unrecognized stock-based compensation expense was $ 219,000 for unvested stock options, $ 190,000

for unvested restricted stock and $ 184,000 for unvested DSUs.

fiscal 2025 and fiscal 2024, restricted stock and DSUs awards with respect to 250,000 shares and 246,000 shares, respectively, vested.

In connection with this vesting, the Company purchased 6,903 shares and 6,328 shares respectively of Class B Stock from certain employees

for $ 22,000 and $ 13,000 respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock and DSUs.

the fiscal years ended July 31, 2025 and 2024 there was no income tax benefit resulting from tax deductions in excess of the compensation

cost recognized for the Company’s stock-based compensation.

Stock Options

The Company’s option awards generally have

a term of 10 years from grant date, are exercisable upon vesting unless otherwise designated for early exercise by the Board of Directors

at the time of grant and are pursuant to individual written agreements.

Grants generally vest over a three-year or four -year period.

In fiscal years 2024 and 2023, the Compensation

Committee approved grants of options to purchase 18,000 and 58,000 shares, respectively, of the Company’s Class B common stock to

various executives, consultants and employees, vesting mostly over a three-year or four-year period.

Unrecognized compensation expense

related to these awards granted in fiscal 2024 and 2023 were $ 32,000 and $ 104,000 respectively based on the estimated fair value of the

options on the grant dates.

In fiscal 2024, the Company received proceeds

of $ 2,975 from the exercise of stock options for which the Company issued 2,500 shares of its Class B common stock.

In fiscal 2023,

the Company received proceeds of $ 1,785 from the exercise of stock options for which the Company issued 1,500 shares of its Class B common

The Company cancelled or forfeited options grants

of 5,200 shares and 57,000 shares in fiscal 2024 and fiscal 2023 respectively primarily due to employee resignations.

Repricing of Outstanding and Unexercised Options

On October 20, 2022, the Board unanimously approved

the repricing of all outstanding and unexercised stock options granted under the 2016 Plan with exercise prices above the then current

market value held by then current employees, executive officers, and consultants of the Company (the “Eligible Stock Options”).

Effective October 20, 2022, the exercise price of the eligible stock options was reduced to $ 2.27 , the closing price of its common stock

on October 19, 2022.

Except for the modification to the exercise price of the Eligible Stock Options, all other terms and conditions of

each of the Eligible Stock Options remained in full force and effect.

Pursuant to the 2016 Incentive Plan, the Compensation

Committee of the Board of Directors, as the administrator, has discretionary authority, exercisable on such terms and conditions that

it deems appropriate under the circumstances, to reduce the exercise price in effect for outstanding options under the 2016 Incentive

In approving the repricing, the Compensation Committee considered the impact of the current exercise prices of outstanding stock

options on the incentives provided to employees and consultants, the lack of retention value provided by the outstanding stock options

to employees and consultants, and the impact of such options on the capital structure of the Company.

As of October, 2022, there were

532,750 stock options outstanding under the 2016 Incentive Plan, of which 191,663 outstanding stock options had exercise prices in excess

of the market price of the Company’s common stock as of October 20, 2022, which is why the Compensation Committee made the determination

to deem all outstanding and unexercised stock options held by current employees, executive officers, and consultants as Eligible Stock

Jonathan Reich, the Company’s Chief Executive

Officer, and Yi Tsai, the Company’s Chief Financial Officer, hold Eligible Stock Options exercisable for an aggregate of 64,898

and 15,000 shares of the Company’s common stock, respectively.

The option repricing resulted in incremental stock-based

compensation of $ 87,000 , of which $ 52,000 was recorded as expense in the fiscal 2023, and $ 35,000 will be recognized as expense over the

requisite service periods over which the Eligible Stock Options vest.

The fair value of stock options was estimated

on the date of the grant using a Black-Scholes valuation model and the assumptions in the following table.

Expected volatility is based

on historical volatility of the Company’s Class B common stock.

The Company uses the simplified method to estimate the expected

term of the stock-based payments granted due to the limited history of the Company.

Company’s option awards generally have a term of 10 years from grant date, are exercisable upon vesting unless otherwise designated

for early exercise by the Board of Directors at the time of grant and are pursuant to individual written agreements.

Grants generally

vest over a three-year or four -year period.

fiscal years 2025 and 2024, the Compensation Committee approved grants of options to purchase 85,000 and 18,000 shares, respectively,

of the Company’s Class B common stock to various executives, consultants and employees, vesting mostly over a three-year or four-year

Unrecognized compensation expense related to these awards granted in fiscal 2025 and 2024 were $ 163,000 and $ 32,000 respectively

based on the estimated fair value of the options on the grant dates.

fiscal 2025, the Company received proceeds of $ 62,000 from the exercise of stock options for which the Company issued 105,000 shares

of its Class B common stock.

In fiscal 2024, the Company received proceeds of $ 2,975 from the exercise of stock options for which

the Company issued 2,500 shares of its Class B common stock.

Company cancelled or forfeited options grants of 5,000 shares and 5,200 shares in fiscal 2025 and fiscal 2024 respectively primarily

due to employee resignations.

fair value of stock options was estimated on the date of the grant using the BSM and the assumptions in the following table.

volatility is based on historical volatility of the Company’s Class B common stock.

The Company uses the simplified method to estimate

the expected term of the stock-based payments granted due to the limited history of the Company.

The risk-free rate is based on the U.S.

Treasury yield

curve in effect at the time of grant.

The Company used the following weighted average assumptions in its

BSM pricing model:

Treasury yield curve in effect at the time of grant.

Company used the following weighted average assumptions in its BSM pricing model:

Fiscal year ended July 31, 2025 2024

2 unchanged sentences

Risk free interest rate 4.3 % 4.1 %

The following represents option activity for the

fiscal years ended July 31, 2024 and 2023, including options granted prior to our separation from our former parent in a spin-off on June

1, 2016 and options granted under the 2016 Incentive Plan adopted on June 2, 2016:

Stock Options Weighted-Average Aggregte

Number of Options Weighted-Average Remaining Contractual Intrinsic Value

(in thousands) Exercise Price Term (in years) (in thousands)

following represents option activity for the fiscal years ended July 31, 2025 and 2024, including options granted prior to our separation

from our former parent in a spin-off on June 1, 2016 and options granted under the 2016 Incentive Plan adopted on June 2, 2016:

Stock Options Weighted-

(in thousands) Weighted-

Exercise Price Contractual

(in years) Aggregate

Intrinsic Value

(in thousands)

Outstanding at July 31, 2023 856 $ 1.79 4.98 346

8 unchanged sentences

Exercisable at July 31, 2025 705 $ 1.94 2.89 $ 1,482

The following table summarizes the weighted average

grant date fair value of options granted, intrinsic value of options exercised and fair value of awards vested in the periods indicated:

following table summarizes the weighted average grant date fair value of options granted, intrinsic value of options exercised and fair

value of awards vested in the periods indicated:

(in thousands except per share amounts)

2 unchanged sentences

Fair value of awards vested

At July 31, 2024, there was approximately $ 185,000

of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average

period of 1.9 years.

At July 31, 2023, there was approximately $ 321,000

of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a period of 2.4 years.

Restricted Stock

In fiscal 2023 and in connection with the GuruShots

acquisition, the Company issued 626,242 shares of the Company’s Class B common stock with a grant date fair value of $ 4 million

to the founders and employees as a retention bonus pool which is managed by a trustee based in Israel.

These shares shall vest, in equal

tranches, over three years assuming that the recipients remain employed by the Company or a subsidiary through the vesting dates.

2024 and 2023, the Company has amortized $ 1.2 million and $ 1.3 million in stock-based compensation expenses related to these shares.

fiscal 2024, 6,262 shares were forfeited due to resignations.

In fiscal 2023, 51,143 shares were forfeited due to resignations.

At July 31, 2024, there were 297,000 non-vested

restricted shares of the Company’s Class B common stock.

At July 31, 2024, there was $ 1.1 million of total unrecognized compensation

cost related to these non-vested restricted shares, which is expected to be recognized over a weighted-average period of 1.2 years.

At July 31, 2023, there were 400,000 non-vested

restricted shares of the Company’s Class B common stock.

At July 31, 2023, there was $ 2.0 million of total unrecognized compensation

cost related to these non-vested restricted shares, which is expected to be recognized over a weighted-average period of 1.6 years.

In fiscal 2024 and fiscal 2023, 213,000 and 237,000 ,

previously restricted shares vested, respectively.

There were no shares repurchased in connection with tax withholdings related to these

vesting events.

The following represents restricted shares activity

for the fiscal years ended July 31, 2024 and 2023:

Number of Shares

Weighted Average Grant Date Fair Value

July 31, 2025, there was approximately $ 219,000 of total unrecognized compensation cost related to non-vested stock options, which is

expected to be recognized over a weighted-average period of 2.8 years.

July 31, 2024, there was approximately $ 185,000 of total unrecognized compensation cost related to non-vested stock options, which is

expected to be recognized over a period of 1.9 years.

fiscal 2023, in connection with the GuruShots acquisition, the Company issued 626,242 shares of the Company’s Class B common stock

with a grant date fair value of $ 4 million to the founders and employees as a retention bonus pool which is managed by a trustee based

These shares shall vest, in equal tranches, over three years assuming that the recipients remain employed by the Company or

a subsidiary through the vesting dates.

In fiscal 2025 and 2024, the Company has amortized $ 0.8 million and $ 1.2 million in stock-based

compensation expenses related to these shares.

In fiscal 2024 and 2023, 6,262 shares and 51,143 were forfeited due to resignations.

was no forfeiture in fiscal 2025.

July 31, 2025, there were 77,000 non-vested restricted shares of the Company’s Class B common stock.

At July 31, 2025, there was

$ 190,000 of total unrecognized compensation cost related to these non-vested restricted shares, which is expected to be recognized over

a weighted-average period of 1.5 years.

July 31, 2024, there were 297,000 non-vested restricted shares of the Company’s Class B common stock.

At July 31, 2024, there was

$ 1.1 million of total unrecognized compensation cost related to these non-vested restricted shares, which is expected to be recognized

over a weighted-average period of 1.2 years.

fiscal 2025 and fiscal 2024, 219,000 and 213,000 , previously restricted shares vested, respectively.

There were no shares repurchased

in connection with tax withholdings related to these vesting events.

following represents restricted shares activity for the fiscal years ended July 31, 2025 and 2024:

Average Grant

Date Fair Value

Non-vested stock award as of July 31, 2023

1 unchanged sentence

Non-vested stock award as of July 31, 2025

Deferred Stock Units

On September 7, 2021, the Company granted a total

of 291,320 DSUs to 64 of its employees and consultants.

Each DSU represents the right to receive one share of the Company’s Class

B common stock.

30% of the DSU’s (or 87,396) had service

vesting conditions only, with a vesting schedule of 25% on September 7, 2022, 33% on September 7, 2023, and the remaining 42% on September

Vesting of the remaining 70% of the DSUs (or 203,924) is subject to continued service as well as a market condition.

will vest if the grantee remains in service to the Company and only if the aggregate market capitalization of the Company’s equity

securities has reached or exceeded $451 million for five consecutive trading days between the grant date and the vest date.

satisfaction of both of those conditions, these DSU’s with both service and market conditions have a vesting schedule of 25% September

7, 2022, up to 58% (the 25% eligible to vest in 2022 and an additional 33%) on September 7, 2023, and up to 100% on September 7, 2024.

In the event the market capitalization condition has not been met prior to a vesting date, but is met by a subsequent vesting date, all

DSUs with a market condition eligible for vesting prior to that date shall vest.

In the event that the market capitalization condition

has not been met by September 7, 2024, the DSUs with a market condition shall expire.

See Note 18, Subsequent Events .

In fiscal 2024, the Company purchased 6,328 shares

of Class B Common Stock from various employees for $ 13,000 to satisfy tax withholding obligations in connection with the vesting of DSUs.

In fiscal 2023, the Company purchased 6,310 shares of Class B Common Stock from various employees for $ 17,000 to satisfy tax withholding

Stock Units Equity Incentive Programs

November 2024, the Company adopted an equity incentive program (under the 2016 Incentive Plan) in the form of grants of DSUs that, upon

vesting, will entitle the grantees to receive shares of the Company’s Class B common stock.

The number of shares that will be issuable

on each vesting date will vary between 33 % to 300 % of the number of DSUs that vest on that vesting date, depending on the market price

for the underlying Class B common stock on the vesting date relative to the grant price approved by the Compensation Committee of the

Company’s Board of Directors of $ 2.76 per share.

Company estimated that the fair value of the DSUs on the date of grants was $ 388,000 in aggregate, which is being recognized on a graded

vesting basis over the requisite service periods ending in September 2027.

The Company used a risk neutral Monte Carlo simulation method

in its valuation of the DSUs, which simulated the range of possible future values of the Company’s Class B common stock over the

life of the DSUs.

The Monte Carlo simulation model incorporates the likelihood of achieving the stock price targets and requires the

input of assumptions including the underlying stock price, expected volatility, risk-free rate and dividend yield.

fiscal 2025, the Company purchased 6,903 shares of Class B Common Stock from various employees for $ 22,000 to satisfy tax withholding

obligations in connection with the vesting of DSUs.

The following represents DSU activity for the fiscal years ended July

31, 2024 and 2023:

Number of Shares

Weighted Average Grant Date Fair Value

In fiscal 2024, the Company purchased 6,328 shares of Class B Common Stock from various

employees for $ 13,000 to satisfy tax withholding obligations in connection with the vesting of DSUs.

following represents DSU activity for the fiscal years ended July 31, 2025 and 2024:

Average Grant

Non-vested DSU award as of July 31, 2023

1 unchanged sentence

Non-vested DSU award as of July 31, 2025

The DSUs with both service and market conditions were valued using

a Monte Carlo Simulation valuation model, with a valuation of $ 7.19 per DSU.

Total grant date fair value for these DSUs was approximately

$ 1.5 million.

The unrecognized compensation expense is being recognized on a graded vesting method over the vesting period.

The DSUs with

a service condition had a grant date fair value of $ 1.3 million.

The unrecognized compensation expense is being recognized on a straight-line

basis over the vesting period.

At July 31, 2023, there were 202,038 non-vested

DSUs and the unrecognized compensation expense related to unvested DSUs was an aggregate of $ 48,000 which is expected to be recognized

over a weighted-average period of 0.3 year.

Note 14—Related Party Transactions

On June 1, 2016, IDT’s interest in the Company

was spun-off by IDT to IDT’s stockholders and the Company became an independent publicly-held company.

Following the Spin-Off, IDT

charges the Company for services it provides, and the Company charges IDT for services it provides, pursuant to a Transition Services

Agreement (“TSA”).

In fiscal 2024 and 2023, the Company was charged

by IDT a total of $ 125,000 and $ 125,000 , respectively, for legal services.

In addition, the Company charged IDT approximately $ 81,000

and $ 81,000 , respectively, for consulting services provided to IDT by a Zedge employee.

As of July 31, 2024 and 2023, the Company

owed IDT $ 2,000 and $ 8,000 respectively.

The activities between the Company and IDT were

as follows (in thousands):

Fiscal years ended July 31,

DSUs with both service and market conditions granted in September 2021 were valued using a Monte Carlo Simulation valuation model, with

a valuation of $ 7.19 per DSU.

Total grant date fair value for these DSUs was approximately $ 1.5 million.

On September 7, 2024, these

DSUs award with respect to approximately 170,000 shares were canceled without the reversal of compensation expenses of approximately

$ 1.2 million because the market condition was not achieved.

July 31, 2025, there were 90,883 non-vested DSUs and the unrecognized compensation expense related to unvested DSUs was an aggregate

of $ 184,000 which is expected to be recognized over a weighted-average period of 2.1 years.

July 31, 2024, there were 202,038 non-vested DSUs and the unrecognized compensation expense related to unvested DSUs was an aggregate

of $ 48,000 which is expected to be recognized over a weighted-average period of 3 months.

14—Related Party Transactions

June 1, 2016, IDT’s interest in the Company was spun-off by IDT to IDT’s stockholders and the Company became an independent

publicly-held company.

Following the Spin-Off, IDT charges the Company for services it provides, and the Company charges IDT for services

it provides, pursuant to Services Agreements.

fiscal 2025 and 2024, the Company was charged by IDT a total of $ 126,000 and $ 125,000 , respectively, for legal services.

the Company charged IDT approximately $ 86,000 and $ 81,000 , respectively, for consulting services provided to IDT by a Zedge employee.

As of July 31, 2025 and 2024, the Company owed IDT $ 1,000 and $ 2,000 respectively.

activities between the Company and IDT were as follows (in thousands):

Balance at beginning of year

3 unchanged sentences

* Due to IDT is included in accrued expenses and other current liabilities

On June 19, 2024, the Company signed a revenue sharing agreement with

National Retail Services, Inc.

(“NRS”), a wholly owned subsidiaries of IDT, whereby the Zedge group of companies (Zedge, Emojipedia

and GuruShots) will provide a selection of their digital content for display on NRS’s screens and share in the revenue generated

from the resulting advertisements.

In fiscal 2024 the Company’s revenue generated in accordance to the NRS revenue sharing agreement was $ 28,000 .

As of July 31, 2024, the

Company was owed $ 19,000 from NRS which is included in prepaid expenses and other receivables.

The Company is party to a consulting agreement

with Activist Artist Management, LLC (“Activist”), which assists the company in strategic business development.

the Company’s Board of Directors and Chairman of the Audit Committee owns a significant minority stake in Activist.

paid approximately $ 60,000 and $ 60,000 respectively, to Activist in the fiscal years ended July 31, 2024 and 2023, respectively.

Note 15—Segment and Geographic Information

Operating segments are components of an enterprise

about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”),

or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision

maker is its Chief Executive Officer as of July 31, 2024.

Effective Q1 of fiscal 2023, the Company revised

the presentation of segment information to align with changes to how the Company’s CODM manages the business, allocates resources

and assesses operating performance reports operating results based on two reportable segments, which are the Zedge Marketplace and GuruShots.

The CODM evaluates the performance of each operating

segment using revenue and income (loss) from operations.

The following table provides information about the Company’s two reportable

segments (in thousands):

June 19, 2024, the Company signed a revenue sharing agreement with National Retail Services, Inc.

(“NRS”), a wholly owned subsidiary

of IDT, whereby the Zedge group of companies (Zedge, Emojipedia and GuruShots) will provide a selection of their digital content for

display on NRS’s screens and share in the revenue generated from the resulting advertisements.

In fiscal 2025 and 2024 the Company’s revenue generated in accordance to the NRS revenue sharing agreement was $ 147,000 and $ 28,000 ,

respectively.

As of July 31, 2025 and 2024, the Company was owed $ 10,000 and $ 19,000 , respectively, from NRS which is included in prepaid

expenses and other receivables.

Balance at beginning of year

Revenue share from NRS

Cash payments received from NRS

Company is party to a consulting agreement with Activist Artist Management, LLC (“Activist”), which assists the company in

strategic business development.

A member of the Company’s Board of Directors and the Chairman of the Audit Committee owns a significant

minority stake in Activist.

The Company paid approximately $ 60,000 and $ 60,000 respectively, to Activist in the fiscal years ended July

31, 2025 and 2024, respectively.

15—Segment and Geographic Information

Company determines its operating segments based on how its chief operating decision maker (“CODM”) manages the business,

allocates resources, makes operating decisions and evaluates operating performance.

The Company’s CODM was its Chief Executive

Officer as of July 31, 2025.

CODM evaluates the performance of each operating segment using segment income (loss) from operations.

The Company defines segment income

(loss) from operations as revenue less costs and expenses.

Expenses include indirect costs that are allocated to operating segments based

on a reasonable allocation methodology, which are generally related to sales and marketing activities and general and administrative

Revenue and expenses exclude transactions between the Company’s operating segments.

CODM uses segment income (loss) from operations to allocate resources during the annual budgeting and forecasting process.

The CODM considers

segment income (loss) from operations when making decisions on operating and capital resource allocation.

Additionally, the CODM uses

segment income (loss) from operations to evaluate operating strategy and assess segment performance by comparing the results of each

are two reportable segments, which are the Zedge Marketplace and GuruShots.

The following table provides information about these two

reportable segments (in thousands):

Fiscal Year Ended July 31,

Zedge Marketplace:

Total Revenues

Segment income (loss) from operations:

Zedge Marketplace

Total loss from operations

The CODM does not evaluate operating segments

using asset information and, accordingly, the Company does not report asset information by segment.

Geographic Information

Net long-lived assets and total assets held outside

of the United States, which are located primarily in Israel and Norway, were as follows (in thousands):

Personnel related expenses

Users acquisition costs

Data center and SaaS costs

Restructuring and related charges

Other expenses 1

Zedge Marketplace segment income from operations

Personnel related expenses

Users acquisition costs

Platform fees

Data center and SaaS costs

Acquisition and restructuring related charges

Other expenses 2

GuruShots segment loss from operations

Total segment income (loss) from operations

Other segment items for the Zedge Marketplace reportable segment include professional services costs, platform fee, depreciation and amortization, facilities costs, public company related expenses and other individually insignificant costs.

Other segment items for the GuruShots reportable segment include professional services costs, depreciation and amortization, facilities costs, and other individually insignificant costs.

CODM does not evaluate operating segments using asset information and, accordingly, the Company does not report asset information by

long-lived assets and total assets held outside of the United States, which are located primarily in Israel and Lithuania, were as follows

(in thousands):

United States

5 unchanged sentences

July 31, 2024

Note 16—Revolving Credit Facility

As of September 27, 2016, the Company entered

into a loan and security agreement with Western Alliance Bank (“WAB”) for a revolving credit facility of up to $ 2.5 million

for an initial two-year term which was extended twice for another two-year term which expired September 26, 2022 and was amended on October

28, 2022 as discussed below.

The revolving credit facility was secured by a lien on substantially all of the Company’s assets.

with the September 2020 extension, the outstanding principal amount bore interest per annum at the greater of 3.5 % or the prime rate plus

Previously the interest rate was capped at 5.0 %.

Interest was payable monthly and all outstanding principal and any accrued and

unpaid interest was due on the maturity date of September 26, 2022 .

The Company was required to pay an annual facility fee of $ 10,000

The Company was also required to comply with various affirmative and negative covenants and to maintain certain financial ratios

during the term of the revolving credit facility.

The covenants included a prohibition on the Company paying any dividend on its capital

At October 27, 2022, there were no amounts outstanding under the revolving credit facility and the Company was in compliance with

all of the covenants.

On October 28, 2022, the Company entered into

an Amended and Restated Loan and Security Agreement (“Amended Loan Agreement”) with WAB.

Pursuant to the Amended Loan Agreement,

WAB agreed to provide the Company with a new term loan facility in the maximum principal amount of $ 7 million for a four-year term and

a $ 4 million revolving credit facility for a two-year term.

Amounts outstanding under the term loan and credit facility of the Amended

Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 0.5 %, with a Prime

“floor” rate of 4.00 %.

Pursuant to the Amended Loan Agreement, the Company

discontinued the existing $ 2 million revolving credit facility under the prior version of the Loan and Security Agreement.

of the discontinuance, there was no outstanding balance on the revolving credit facility.

Pursuant to the Amended Loan Agreement, $ 2 million

was advanced in a single-cash advance on October 28, 2022, with the remaining $ 5 million available for drawdown during twenty-four (24)

months after closing.

Each drawdown must be in an amount of not less than One Million Dollars ($ 1 million).

On May 11, 2023, the Company

entered into a Modification Agreement pursuant to which the Company agreed to modify the Amended Loan Agreement to reduce the remaining

$ 5 million availability to $ 0 .

Interest accrued under the Amended Loan Agreement

is due monthly, and the Company shall make monthly interest-only payments related to the term loan through the eighteen (18) month anniversary

of the closing date.

From the nineteen (19) month anniversary of the Closing Date through the maturity date, the Company shall repay each

outstanding term loan by paying the Applicable Term Advance Amortization Payment equal to 1/12 th of 10 % of the outstanding

term loan balance plus monthly payments of accrued interest, in each case payable on the tenth (10 th ) day of each month.

final payment for each Term Advance, due on the Term Loan Maturity Date, shall include all outstanding principal of and accrued and unpaid

interest on such Term Advance.

Once repaid, a Term Advance may not be reborrowed.

On November 15, 2023, the Company elected to prepay

the entire principal amount of $ 2 million.

The Amended Loan Agreement may also require early

repayments if certain conditions are met.

Borrowings under the Amended Loan Agreement is secured by substantially all of the assets of

the Company, its subsidiaries, and certain of its affiliates.

The Amended Loan Agreement includes the following

financial covenants:

a) Debt Service Coverage Ratio .

Zedge shall maintain, at all times, a Debt Service Coverage Ratio of no less than 1.25 to 1.00 .

This covenant shall be tested quarterly as of the end of each fiscal quarter.

Maximum Debt to EBITDA .

Zedge shall maintain, at all times, a ratio of (a) indebtedness owed by Zedge to WAB, to (b) Zedge’s EBITDA for the trailing twelve (12) month period ended on such date of determination, shall not be greater than the amount set forth under the heading “Maximum Debt to EBITDA Ratio” as of, and for each of the dates appearing adjacent to such Maximum Debt to EBITDA Ratio”.

Maximum Debt to Quarter Ending

October 31, 2022

January 31, 2023

April 30, 2023

July 31, 2023

October 31, 2023

January 31, 2024

April 30, 2024

July 31, 2024

To be agreed upon

The Amended Loan Agreement also includes customary

negative covenants, subject to exceptions, which limit transfers, capital expenditures, indebtedness, certain liens, investments, acquisitions,

dispositions of assets, restricted payments and the business activities of the Company, as well as customary representations and warranties,

affirmative covenants and events of default, including cross defaults and a change of control default.

As of November 16, 2016, the Company entered into

a Foreign Exchange Agreement with WAB to allow the Company to enter into foreign exchange contracts not to exceed $ 5.0 million in the

aggregate at any point in time under its revolving credit facility.

This limit was raised to approximately $ 7.5 million pursuant to the

Loan and Security Modification Agreement dated May 30, 2018.

The available borrowing under the revolving credit facility is reduced by

an applicable foreign exchange reserve percentage as determined by WAB, in its reasonable discretion from time to time, which was set

at 10 % of the nominal amount of the foreign exchange contracts in effect at the relevant time.

At July 31, 2024, there were $ 1.9 million

of outstanding foreign exchange contracts, which reduced the available borrowing under the revolving credit facility by $ 190,000 .

Note 17—Defined Contribution Plan

In September 2016, the Company adopted a 401(k)

Plan, effective August 1, 2016, available to all employees based in the United States meeting certain eligibility criteria.

Plan permits participants to elect pre-tax or after-tax salary deferrals that will be contributed to the 401(k) Plan, not to exceed the

limits established by the Internal Revenue Code.

The 401(k) Plan provides for enhanced safe harbor employer matching contributions.

contributions made by participants and safe harbor matching contributions by the Company will be fully vested.

The Company’s Class

B common stock is not an investment option for elective deferrals by the 401(k) Plan’s participants.

However, matching contributions

may be made in shares of Class B common stock of the Company.

The Company’s cost for matching contributions

to the 401(k) Plan were $ 49,000 and $ 45,000 for the fiscal years ended July 31, 2024 and 2023, respectively.

In lieu of making cash contributions,

the Company opted to contribute 21,629 shares and 18,278 shares of the Company’s Class B common stock to the 401(k) Plan for fiscal

2024 and fiscal 2023, respectively.

Note 18—Subsequent Events

Term Loan and Revolving Credit Facility

with Western Alliance Bank

On October 28, 2024, the Company entered into

an Amended and Restated Loan and Security Agreement Modification Agreement (“Amended Loan Agreement”) with WAB.

which, WAB agreed to renew the $ 4,000,000 revolving credit facility for another four-year term through October 28, 2028 and remove certain

provisions, including financial covenants, in respect of the $ 2,000,000 Term Loan which was repaid in full in November 2023.

Foreign Exchange Forward Contracts

On August 1, 2024 the Company entered into the following FX forward

contracts with WAB, which reduced the available borrowing under the revolving credit facility by $ 300,000 .

Dollar Amount

Operating Lease

On August 7, 2024, the Company renewed its lease for the office space

in Tel Avis for a two-year term.

16—Revolving Credit Facility

October 28, 2022, the Company entered into an Amended and Restated Loan and Security Agreement (“Amended Loan Agreement”)

Pursuant to the Amended Loan Agreement, WAB agreed to provide the Company with a new term loan facility in the maximum principal

amount of $ 7 million for a four-year term and a $ 4 million revolving credit facility for a two-year term.

Amounts outstanding under the

term loan and credit facility of the Amended Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in

The Wall Street Journal) plus 0.5 %, with a Prime “floor” rate of 4.00 %.

to the Amended Loan Agreement, $ 2 million was advanced in a single-cash advance on October 28, 2022, with the remaining $ 5 million available

for drawdown during twenty-four (24) months after closing.

Each drawdown must be in an amount of not less than One Million Dollars ($ 1

On May 11, 2023, the Company entered into a Modification Agreement pursuant to which the Company agreed to modify the Amended

Loan Agreement to reduce the remaining $ 5 million availability to $ 0 .

On November 15, 2023, the Company elected to prepay the entire

principal amount of $ 2 million.

October 28, 2024, the Company entered into an Amended and Restated Loan and Security Agreement Modification Agreement with WAB.

to the modification agreement, WAB agreed to renew the $ 4 million revolving credit facility for another four-year term through October

28, 2028, and remove certain provisions, including financial covenants, in respect of the $ 2 million term loan which has been repaid.

Amended Loan Agreement also includes customary negative covenants, subject to exceptions, which limit transfers, capital expenditures,

indebtedness, certain liens, investments, acquisitions, dispositions of assets, restricted payments and the business activities of the

Company, as well as customary representations and warranties, affirmative covenants and events of default, including cross defaults and

a change of control default.

of November 16, 2016, the Company entered into a Foreign Exchange Agreement with WAB to allow the Company to enter into foreign exchange

contracts not to exceed $ 5.0 million in the aggregate at any point in time under its revolving credit facility.

This limit was raised

to approximately $ 7.5 million pursuant to the Loan and Security Modification Agreement dated May 30, 2018.

The available borrowing under

the revolving credit facility is reduced by an applicable foreign exchange reserve percentage as determined by WAB, in its reasonable

discretion from time to time, which was set at 10 % of the nominal amount of the foreign exchange contracts in effect at the relevant

At July 31, 2025, there were $ 425,000 of outstanding foreign exchange contracts, which reduced the available borrowing under the

revolving credit facility by $ 42,500 .

17—Defined Contribution Plan

September 2016, the Company adopted a 401(k) Plan, effective August 1, 2016, available to all employees based in the United States meeting

certain eligibility criteria.

The 401(k) Plan permits participants to elect pre-tax or after-tax salary deferrals that will be contributed

to the 401(k) Plan, not to exceed the limits established by the Internal Revenue Code.

The 401(k) Plan provides for enhanced safe harbor

employer matching contributions.

All contributions made by participants and safe harbor matching contributions by the Company will be

fully vested.

The Company’s Class B common stock is not an investment option for elective deferrals by the 401(k) Plan’s

participants.

However, matching contributions may be made in shares of Class B common stock of the Company.

Company’s cost for matching contributions to the 401(k) Plan were $ 52,000 and $ 49,000 for the fiscal years ended July 31, 2025

and 2024, respectively.

In lieu of making cash contributions, the Company opted to contribute 20,225 shares and 21,629 shares of the

Company’s Class B common stock to the 401(k) Plan for fiscal 2025 and fiscal 2024, respectively.

18—Restructuring, Impairments, and Related Charges

January 2025, we implemented a corporate restructuring aimed to reduce headcount at GuruShots and other operating expenses, and ultimately

resulting in the closure of our Norway operations.

This restructuring allows us to consolidate our workforce in Lithuania and Israel,

streamlining operations, driving efficiency and reducing expenses beyond compensation, and is designed to position us for sustainable

growth and support our strategic objectives.

connection with this initiative, the Company instituted moves expected to result in the reduction of its total global headcount by approximately

22 % and recognized a restructuring charge of $ 1.6 million primarily consisting of employee termination benefit which is recorded in the

Company’s consolidated statements of operations and comprehensive loss for the fiscal year ended July 31, 2025.

Company capitalizes certain costs related to software to be sold, leased, or marketed in accordance with ASC 985-20, Costs of Software

to Be Sold, Leased, or Marketed related to GuruShots.

The Company evaluates these long-lived assets for impairment whenever circumstances

arise that indicate the carrying amount of an asset may not be recoverable.

The Company’s strategic reassessment of GuruShots’

operations in connection with the restructuring initiative resulted in a $ 0.8 million impairment of capitalized software and technology

development costs which is recorded in the Company’s consolidated statements of operations and comprehensive loss for the fiscal

year ended July 31, 2025.

following table summarizes total restructuring, impairments, and related charges for the Company’s two reportable segments (in

Fiscal Year Ended July 31,

Zedge Marketplace

Total restructuring, impairments, and related charges

following table provides information about restructuring, impairments, and related charges for the Company’s two reportable segments

(in thousands):

Restructuring, Impairment, and Related Charges

Facility Related

Impairments and Assets Disposal (3)

Zedge Marketplace

Fiscal Year Ended July 31, 2025

1) Primarily relates to the global restructuring initiated in January 2025 and consists of termination benefits related to workforce reduction actions across all reporting segments.

2) Primarily represents impairment of ROU asset related to the closing of our Norway operations.

3) Primarily represents impairment of capitalized software and technology development costs resulting from the strategy assessment related to the restructuring initiative implemented in GuruShots and the loss on disposal of property and equipment related to the closing of our Norway operations.

following table shows a roll forward of restructuring reserves, primarily consists of employee termination benefits, that will result

in cash spending.

These amounts exclude asset impairment charges and other asset disposal activities (in thousands):

Restructuring and Related Charges by Segment

Zedge Marketplace

1) Primarily consists of severance and employee termination costs.

The impairment charges and other asset disposals associated with the restructuring implemented in January 2025 that have impacted our property, plant and equipment, intangible balances or other asset balances are not included in this table.

2) Primarily comprised of foreign currency translation and other non-cash adjustments.

3) Included in “Accrued expenses and other current liabilities” on the condensed consolidated balance sheets.

of July 31, 2025, the restructuring initiated in January 2025 has been substantially completed.

19—Subsequent Events

September 8, 2025, 29,888 DSUs granted under the incentive program discussed in Note 13 above vested (the first tranche of the 89,683

DSUs granted in November 2024).

In connection with the vesting of the DSUs, the Company issued 29,888 shares of Class B common stock

(based on a 100 % conversion ratio determined due to the market price of $ 3.06 per share relative to the grant price approved by the Compensation

Committee of the Company’s Board of Directors of $ 2.76 per share).

October 1, 2025, the Company moved into its new office in Vilnius, Lithuania.

Future minimum lease payments related to this

lease renewal are as follows (in thousands):

new lease are as follows (in thousands):

Years ending July 31,

2 unchanged sentences

Less imputed interest

DSUs with both service and market condition

On September 7, 2024, 169,820 DSUs with both service

and market condition expired because the market capitalization condition has not been met.

Share Buyback Program

On September 9, 2024, our Board approved a new

$ 5 million share buyback program after the completion of our prior $ 3 million share buyback program on August 28, 2024.

October 14, 2025, the Company issued a press release announcing that its Board of Directors has declared a quarterly cash dividend of

$ 0.016 per share.

The dividend is payable on or about November 7, 2025 to stockholders of record as of October 24, 2025.

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 9A. Controls and Procedures