Zedge, Inc.

(Unaudited)

Note 1—Basis of Presentation 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, 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, DataSeeds.AI, a B2B offering which offers ethically sourced and fully rights-cleared multimodal - image, video, and audio datasets that companies use to train AI models 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. and its consolidated subsidiaries.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Zedge, Inc. and its subsidiaries: GuruShots Ltd. (“GuruShots”); Zedge Europe AS; and Zedge Lithuania UAB (the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended January 31, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2026 or any other period. The balance sheet at July 31, 2025 has been derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025 (the “2025 Form 10-K”), as filed with the U.S. Securities and Exchange Commission (the “SEC”).

The Company’s 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).

Significant Accounting Policies and Estimates

There have been no material changes to the Company’s significant accounting policies and critical accounting estimates described in the 2025 Form 10-K.

Use of Estimates

The preparation of our unaudited condensed 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. 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.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income*-Expense Disaggregation Disclosures* (Subtopic 220-40) (“ASU 2024-03”), ASU 2024-03 will require public entities to disaggregate, within the notes to the financial statements, certain expenses presented on the face of the financial statements to enhance transparency and help investors better understand an entity’s performance. The amendment will specifically require that an entity disclose the amounts related to purchases of inventory, employee compensation, depreciation and intangible asset amortization. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company will not be required to adopt ASU 2024-03 until August 1, 2027. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on the Company’s financial statement disclosures.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments-Credit Losses (Topic 326):Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Accounting Standards Codification 606, Revenue from Contracts with Customers. The provisions of ASU 2025-05 are effective for fiscal years beginning after December 15, 2025 and interim periods within those fiscal years, with early adoption permitted, and are to be applied prospectively. We do not expect the adoption of ASU 2025-05 to have a material impact on our consolidated financial statements and accompanying Notes.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles-Goodwill and Other-Internal-Use-Software (Subtopic 350-40):Targeted Improvements to the Accounting for Internal-Use Software(“ASU 2025-06”). ASU 2025-06 removes the prescriptive software development “project stages” and requires capitalization of software costs once (1) management authorizes and commits funding and (2) completion and use are probable. Entities must evaluate significant development uncertainty related to technological innovations or performance requirements. The amendments also require Subtopic 360-10 disclosures for all capitalized internal-use software costs and clarify that intangible asset disclosures under Subtopic 350-30 are not required. The standard is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company will not be required to adopt ASU 2025-06 until August 1, 2028. The Company is currently evaluating the impact of the adoption of ASU 2025-06 on the Company’s consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270):Narrow-Scope Improvements(“ASU 2025-11”). ASU 2025-11 clarifies the applicability of interim reporting guidance, provides a comprehensive list of required interim disclosures, and establishes a disclosure principle that requires disclosure of material events that occurred after the end of the last annual reporting period*.* The standard is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company will not be required to adopt ASU 2025-11 until August 1, 2028. The Company is currently evaluating the impact of the adoption of ASU 2025-11 on the Company’s financial statement disclosures.

In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements (“ASU 2025-12”). The amendments in ASU 2025-12 represent changes to certain FASB Accounting Standards Codification topics that clarify, correct errors, or make minor improvements. The standard is effective for annual periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted, and may be applied prospectively or retrospectively. Early adoption and transition method may be elected on an issue-by-issue basis. We do not expect the adoption of ASU 2025-12 to have a material impact on our consolidated financial statements and accompanying Notes.

All 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.

Related Party Transactions

The Company was formerly a majority-owned subsidiary of IDT Corporation (“IDT”). 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. IDT charges the Company for services it provides, and the Company charges IDT for services it provides, pursuant to Services Agreements between the companies.

The 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 owns a significant minority stake in Activist.

The Company is party to a revenue sharing agreement with National Retail Services, Inc. (“NRS”), a subsidiary of IDT, under which Zedge and certain of its subsidiaries (Emojipedia and GuruShots) provide a selection of their digital content for display on NRS screens and share in the revenue generated from the resulting advertisements.

Transactions with these related parties did not have a material impact on the consolidated balance sheets as of January 31, 2026 or July 31, 2025, or the condensed consolidated statements of operations and comprehensive loss for the three and six months ended January 31, 2026 or 2025.

Note 2—Revenue

Disaggregation of Revenue

The following table presents revenue disaggregated by segment and type (in thousands):

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. The Company’s deferred revenue balance for paid subscriptions was approximately $5.8 million related to approximately 1.2 million active subscribers, and approximately $5.1 million, related to approximately 1.0 million active subscribers, as of January 31, 2026 and July 31, 2025, respectively

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 use Zedge Credits to acquire Zedge Premium content or upon expiration of the Zedge Credits upon 180 days of account inactivity (“Breakage”). As of January 31, 2026, and July 31, 2025, the Company’s deferred revenue balance related to Zedge Premium was approximately $280,000 and $248,000, respectively.

The amount of deferred revenue recognized in the six months ended January 31, 2026 that was included in the deferred revenue balance at July 31, 2025 was $1.8 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 and revenues 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 and revenues 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.

For 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 information available to us to date. This estimate represents a significant judgement and is reviewed periodically for changes in customer behavior or other relevant factors.

Note 3—Fair Value Measurements

The fair value measurement of cash equivalents invested in 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*).*

The following table presents the balance of assets and liabilities measured at fair value on a recurring basis (in thousands):

Fair Value of Other Financial Instruments

The Company’s other financial instruments at January 31, 2026 and July 31, 2025 included trade accounts receivable, prepaid expenses and other current assets, 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.

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 10Revolving 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 condensed consolidated statements of operations and comprehensive loss. 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.

As a result of the global restructuring initiated in January 2025, which included the closure of the Company’s Norway operations, the Company no longer has exposure to USD/NOK foreign exchange risk. Accordingly, there were no outstanding NOK forward contracts as of July 31, 2025 or January 31, 2026.

Management has further concluded that there were no current requirement to enter into USD/EUR forward contracts beyond August 2025. As a result, there were no outstanding EUR forward contracts as of January 31, 2026.

The fair value of outstanding derivative instruments recorded in the accompanying unaudited condensed consolidated balance sheets were as follows (in thousands):

The effects of derivative instruments on the condensed consolidated statements of operations and comprehensive loss were as follows (in thousands):

Note 5—Intangible Assets and Goodwill

Intangible assets are initially recorded at fair value and are stated net of accumulated amortization and impairment losses. The Company amortizes intangible assets with finite useful lives using either the straight-line method or, when reliably determinable, based on the pattern in which the economic benefits of the assets are expected to be consumed. Amortization is recorded over estimated useful lives ranging from five to fifteen years.

The Company evaluates the recoverability of its finite-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. In accordance with ASC 360,Property, Plant, and Equipment, recoverability is assessed by comparing the carrying amount of the asset group to the sum of the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset group. If the carrying amount exceeds the undiscounted cash flows, the Company estimates the fair value of the asset group. Fair value is generally determined using an income approach, which includes a discounted cash flow analysis based on the present value of projected after-tax cash flows using a risk-adjusted discount rate. The Company’s fair value estimates incorporate market participant assumptions in accordance with ASC 820,Fair Value Measurement.

The following table presents the detail of intangible assets, net as of January 31, 2026 and July 31, 2025 (in thousands):

Impairment of Emojipedia Intangible Assets

In September 2025, Google implemented changes to its Search Engine Results Page (“SERP”) that allow users to copy emojis directly from the search engine results page, reducing referrals to third-party websites such as Emojipedia. In addition, artificial intelligence platforms, including Gemini, ChatGPT, Claude and others, now provide emoji results directly in response to user queries. These developments have adversely affected traffic and monetization for Emojipedia in the second quarter of fiscal 2026 and are expected to reduce future cash flows. As a result, management has determined that future investment in feature development and growth initiatives for Emojipedia will be limited, and the business will be operated primarily to maintain existing functionality. Accordingly, these factors represent a triggering event under ASC 360.

As a result, the Company performed a recoverability test in accordance with ASC 360 to determine whether the carrying amount of the Emojipedia asset group was recoverable based on estimated undiscounted future cash flows over the remaining useful life of the primary asset. Based on this analysis, the sum of the estimated undiscounted future cash flows was not sufficient to recover the carrying amount of the Emojipedia asset group including intangible asset and capitalized software and technology development costs.

Accordingly, the Company measured the impairment loss by estimating the fair value of the asset group. The Company utilized an income approach based on a discounted cash flow (“DCF”) analysis, which estimates the fair value by projecting after-tax cash flows attributable to the asset group and discounting those cash flows to present value using a risk-adjusted discount rate. The DCF analysis requires significant judgment, including assumptions related to revenue projections, growth rates, terminal values, and the timing and amount 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 applied revenue assumptions including a continued decline in revenue considered reasonable as of the measurement date and consistent with market participant expectations. The discount rate was based on an estimate of the weighted average cost of capital (“WACC”) of market participants and was intended to reflect the risks inherent in the projected cash flows. The Company applied a discount rate of 30.0%.

Based on the DCF analysis, the estimated fair value of the Emojipedia asset group was determined to be $1.2 million and below its carrying amount of $4.9 million. The remaining useful life of the Emojipedia internet domain was estimated to be 4.5 years reduced from 10.5 years as originally estimated.

As a result, the Company recorded a non-cash impairment charge of approximately $3.7 million to reduce the carrying amount of the Emojipedia asset group to its estimated fair value. In accordance with ASC 360-10-35-28, the impairment charge was allocated to the long-lived assets within the asset group on a pro rata basis based on their relative carrying amounts. The impairment charge was allocated as follows:

Estimated future amortization expense for intangible assets as of January 31, 2026 is as follows (in thousands):

The Company’s amortization expense for intangible assets were $224,000 and $224,000 for the six months ended January 31, 2026 and 2025, respectively.

Goodwill

The following table summarizes the changes in the carrying amount of goodwill for the six months ended January 31, 2026 (in thousands).

The total accumulated impairment loss of the Company’s goodwill as of January 31, 2026 was $8.7 million

Note 6—Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

Note 7—Stock-Based Compensation

In November 2025, 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 150,000 shares to an aggregate of 2,781,000 shares. This amendment was ratified by the Company’s stockholders at the Annual Meeting of Stockholders held on January 14, 2026. At January 31, 2026, there were approximately 280,000 shares of Class B common stock available for awards under the 2016 Incentive Plan.

The Company recognizes stock-based compensation for stock-based awards, including stock options, restricted stock and deferred stock units (“DSUs”) based on the estimated fair value of the awards and recognized over the relevant service period and/or market conditions. The Company estimates the fair value of stock options on the measurement date using the Black-Scholes option valuation model. 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.

The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. The Company recognizes stock-based compensation expense related to options and restricted stock units on a straight-line basis over the service period of the award, which is generally 4 years for options and 3 years for restricted stock units.

In the accompanying condensed consolidated statements of operations and comprehensive loss, the Company recognized stock-based compensation expense for our employees and non-employees as follows (in thousands):

As of January 31, 2026, the Company’s unrecognized stock-based compensation expense was $208,000 for unvested stock options, $100,000 for unvested DSUs and $126,000 for unvested restricted stock.

In the six months ended January 31, 2026 and 2025, awards of restricted stock and DSUs with respect to 30,000 shares and 119,000 shares, respectively, vested, and in connection with these vesting events, the Company purchased 4,312 shares and 6,903 shares respectively, of our Class B common stock from certain employees for $13,000 and $22,000, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes.

In the six months ended January 31, 2026 and 2025, the Compensation Committee approved grants of options to purchase 21,750 and 60,100 shares, respectively, of the Company’s Class B common stock to certain employees, vesting mostly over a three-year or four-year period. Unrecognized compensation expense related to these awards granted were $51,000 and $118,000 respectively based on the estimated fair value of the options on the grant dates.

Note 8—Earnings Per Share

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, issuances to be made on the vesting of unvested DSUs and the exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase is anti-dilutive.

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 earnings per share 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):

The following shares were excluded from the dilutive earnings per share computations because their inclusion would have been anti-dilutive (in thousands):

For the three and six months ended January 31, 2026 and 2025, diluted earnings per share equals basic earnings per share because the Company incurred a net loss during those periods and the impact of the assumed exercise of stock options and vesting of restricted stock and DSUs would have been anti-dilutive.

Note 9—Commitments and Contingencies

Legal Proceedings

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 condition.

Note 10—Revolving Credit Facility

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 expiring October 28, 2024. 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%.

On October 28, 2024, the Company entered into an Amended and Restated Loan and Security Agreement Modification Agreement with WAB. Pursuant to the modification agreement, WAB agreed to renew the $4 million revolving credit facility for an additional four-year term, through October 28, 2028, and to remove certain provisions, including financial covenants, related to the $2 million term loan, which has been repaid and is no longer available for re-borrowing.

The Amended Loan Agreement, as amended, 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 January 31, 2026, there were no outstanding foreign exchange contracts. 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.

Note 11—Segment and Geographic Information

Segment Information

The Company determines its operating segments based on how itschief 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 January 31, 2026.

The 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 overhead. Revenue and expenses exclude transactions between the Company’s operating segments.

The 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 segment.

The Company hastwo reportable segments - Zedge Marketplace and GuruShots. The following table provides information about thesetwo reportable segments (in thousands):

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 Lithuania, were as follows (in thousands):

Note 12—Operating Leases

The Company has operating leases primarily for office space. Operating lease right-of-use assets recorded and included in other assets were $308,000 and $64,000 at January 31, 2026 and July 31, 2025, respectively.

Effective October 1, 2025, the Company commenced a new lease and relocated to its new office in Vilnius, Lithuania.

Future minimum lease payments related to this new lease are as follows (in thousands):

There were no other material changes in the Company’s operating or finance leases in the six months ended January 31, 2026, as compared to the disclosure regarding such leases in the 2025 Form 10-K.

Note 13—Income Taxes

The Company’s income tax expense (or benefit) has generally been determined using an estimate of its annual effective tax rate (“ETR”) applied to year-to-date income and records the discrete tax items in the period to which they relate. In each quarter, the Company updates the estimated annual effective tax rate and makes a year-to-date adjustment to the tax provision as necessary. During the second quarter of fiscal 2026, we recorded an unusual and infrequent item related to the Emojipedia asset group impairment, which was treated as a discrete item and reduced our ETR from 24.3% to 20.3% for the six months ended January 31, 2026.

The Company’s estimated annual effective tax rate for the fiscal year ending July 31, 2026 differs from the U.S. federal statutory tax rate due to certain items primarily related to stock-based compensation expense, jurisdictional mix of earnings, foreign derived intangible income deduction, global intangible low-taxed income and the change in basis differences associated with tax deductible intangible assets and goodwill.

As of January 31, 2026, the Company had $6.8 million of deferred tax assets which relate to temporary differences between financial and tax reporting and net operating loss carryforwards. The Company has established a valuation allowance of $1.8 million against its foreign net operating loss carryforwards.

The 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, Lithuania and Israel.

Note 14—Shareholder Distributions and Earnings and Profits (E&P)

On October 14, 2025, the Company issued a press release announcing that its Board of Directors had declared a quarterly cash dividend of $0.016 per share, aggregating approximately $208,000. The dividend was paid on November 7, 2025, to stockholders of record as of October 24, 2025.

On January 14, 2026, the Company issued a press release announcing that its Board of Directors had declared a quarterly cash dividend of $0.016 per share of its Class A common stock and Class B common stock, aggregating approximately $209,000. The dividend was included inAccrued expenses and other current liabilities (see Note 6) as of January 31, 2026, and was paid on February 10, 2026, to stockholders of record as of January 30, 2026.

As of the declaration dates in October 2025 and January 2026, the Company had accumulated deficits of approximately $11.4 million and $11.0 million, respectively. As a result, in accordance with U.S. GAAP, the distributions were accounted for as returns of capital and recorded as reductions of additional paid-in capital in the accompanying financial statements. The distributions had no impact on the Company’s results of operations for the three and six months ended January 31, 2026.

For U.S. federal income tax purposes, the Company had accumulated earnings and profits (“E&P”) of approximately $11.4 million. Pursuant to Internal Revenue Code Section 316(a), distributions to shareholders are characterized as dividends to the extent of current or accumulated E&P. As a result, the quarterly distributions were treated as taxable dividends to our shareholders for U.S. federal income tax reporting purposes.

The difference between the book and tax characterization of the distribution results from timing and permanent differences between financial reporting income and taxable income, primarily related to the impairment of intangible assets and stock-based compensation.

Note 15—Restructuring, Impairments, and Related Charges

In January 2025, the Company initiated a corporate restructuring aimed to reduce headcount and other operating expenses, including the closure of our Norway operations. As a result of the restructuring steps, the Company’s workforce was consolidated in Lithuania and Israel. We expect this to allow for more efficient operations and cost savings beyond the compensation expenses of the terminated employees.

In connection with this initiative, the Company reduced its total global headcount by approximately 22% and recognized a restructuring charge of $0.5 million primarily consisting of employee termination benefit which is recorded in the Company’s condensed consolidated statements of operations and comprehensive loss for the three and six months ended January 31, 2025.

The 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 resulted in a $0.8 million impairment of capitalized software and technology development costs which was recorded in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss for the three and six months ended January 31, 2025.

The following table summarizes total restructuring, impairments, and related charges for the Company’s two reportable segments (in thousands):

The following table provides information about restructuring, impairments, and related charges for the Company’s two reportable segments (in thousands):