0001213900-17-002515.txt : 20170317 0001213900-17-002515.hdr.sgml : 20170317 20170317095429 ACCESSION NUMBER: 0001213900-17-002515 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 53 CONFORMED PERIOD OF REPORT: 20170131 FILED AS OF DATE: 20170317 DATE AS OF CHANGE: 20170317 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Zedge, Inc. CENTRAL INDEX KEY: 0001667313 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 263199071 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37782 FILM NUMBER: 17696609 BUSINESS ADDRESS: STREET 1: 22 CORTLANDT STREET STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10007 BUSINESS PHONE: 330-577-3424 MAIL ADDRESS: STREET 1: 22 CORTLANDT STREET STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10007 10-Q 1 f10q0117_zedgeinc.htm QUARTERLY REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2017

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-37782

ZEDGE, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware		26-3199071
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

22 Cortlandt Street, 14^th Floor, New York, NY		10007
(Address of principal executive offices)		(Zip Code)

(330) 577-3424

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒

As of March 10, 2017, the registrant had the following shares outstanding:

Class A common stock, $.01 par value:	524,775 shares outstanding
Class B common stock, $.01 par value:	9,119,363 shares outstanding

ZEDGE, INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Comprehensive (Loss) Income	2
	Consolidated Statements of Cash Flows	3
	Notes to Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	15
Item 4.	Controls and Procedures	15

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	16
SIGNATURES		17

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

ZEDGE, INC.

CONSOLIDATED BALANCE SHEETS

	January 31, 2017			July 31, 2016
	(Unaudited)			(Note 1)
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	5,604		$	5,978
Trade accounts receivable, net of allowance for doubtful accounts of $0 at January 31, 2017 and July 31, 2016		1,617			1,668
Prepaid expenses		192			210
Other current assets		326			107
Total current assets		7,739			7,963
Property and equipment, net		2,271			1,843
Goodwill		2,403			2,361
Other assets		262			266
Total assets	$	12,675		$	12,433
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	30		$	36
Accrued expenses		1,824			1,487
Deferred revenue		1			15
Due to IDT Corporation		77			299
Total current liabilities		1,932			1,837
Commitments and contingencies
Stockholders’ Equity:
Preferred stock, $.01 par value; authorized shares—2,400; no shares issued		—			—
Class A common stock, $.01 par value; authorized shares—2,600; 525 shares issued and outstanding at January 31, 2017 and July 31, 2016		5			5
Class B common stock, $.01 par value; authorized shares—40,000; 9,114 and 8,819 shares issued and outstanding at January 31, 2017 and July 31, 2016, respectively		91			88
Additional paid-in capital		21,294			21,045
Accumulated other comprehensive loss		(758	)		(817	)
Accumulated deficit		(9,889	)		(9,725	)
Total stockholders’ equity		10,743			10,596
Total liabilities and stockholders’ equity	$	12,675		$	12,433

See accompanying notes to consolidated financial statements.

ZEDGE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)

	Three Months Ended January 31,						Six Months Ended January 31,
	2017			2016			2017			2016
	(in thousands, except per share data)
Revenues	$	2,572		$	3,530		$	4,955		$	6,089
Costs and expenses:
Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included below)		412			310			780			605
Selling, general and administrative		2,314			1,781			4,070			3,466
Depreciation and amortization		184			156			322			317
Write-off of capitalized software and technology development costs		—			—			9			—
(Loss) income from operations		(338	)		1,283			(226	)		1,701
Interest and other income		7			1			8			2
Net (loss) gain resulting from foreign exchange transactions		(17	)		(106	)		33			(161	)
(Loss) income before income taxes		(348	)		1,178			(185	)		1,542
Benefit from (provision for) income taxes		22			(67	)		21			(106	)
Net (loss) income		(326	)		1,111			(164	)		1,436
Other comprehensive (loss) income:
Changes in foreign currency translation adjustment		(14	)		(68	)		59			(159	)
Total other comprehensive (loss) income		(14	)		(68	)		59			(159	)
Total comprehensive (loss) income	$	(340	)	$	1,043		$	(105	)	$	1,277

(Loss) earnings per share attributable to Zedge, Inc. common stockholders:
Basic	$	(0.03	)	$	0.14		$	(0.02	)	$	0.18
Diluted	$	(0.03	)	$	0.12		$	(0.02	)	$	0.16

Weighted-average number of shares used in calculation of (loss) earnings per share:
Basic		9,413			8,161			9,337			8,161
Diluted		9,413			8,962			9,337			8,948

See accompanying notes to consolidated financial statements.

ZEDGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended January 31,
	2017			2016
	(in thousands)
Operating activities
Net (loss) income	$	(164	)	$	1,436
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		322			317
Deferred income taxes		5			—
Stock-based compensation		143			9
Write-off of capitalized software and technology development costs		9			—
Change in assets and liabilities:
Trade accounts receivable		51			(728	)
Prepaid expenses and other current assets		(258	)		60
Other assets		(2	)		6
Trade accounts payable and accrued expenses		335			333
Due to IDT Corporation		(222	)		(5	)
Deferred revenue		(14	)		—
Net cash provided by operating activities		205			1,428
Investing activities
Capitalized software and technology development costs and purchase of equipment		(757	)		(344	)
Net cash used in investing activities		(757	)		(344	)
Financing activities
Proceeds from exercise of stock options		166			—
Net cash provided by financing activities		166			—
Effect of exchange rate changes on cash and cash equivalents		12			(61	)
Net (decrease) increase in cash and cash equivalents		(374	)		1,023
Cash and cash equivalents at beginning of period		5,978			2,170
Cash and cash equivalents at end of period	$	5,604		$	3,193

See accompanying notes to consolidated financial statements.

ZEDGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1—Basis of Presentation

The accompanying unaudited consolidated financial statements of Zedge, Inc. and its subsidiaries, Zedge Europe AS and Zedge Canada, Inc. (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 10 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, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2017. The balance sheet at July 31, 2016 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 year ended July 31, 2016, as filed with the U.S. Securities and Exchange Commission (“SEC”).

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 public company through a pro rata distribution of the Company’s common stock held by IDT to IDT’s stockholders (the “Spin-Off”).

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 2017 refers to the fiscal year ending July 31, 2017).

Note 2—Fair Value Measurements

The following tables present the balance of assets and liabilities measured at fair value on a recurring basis:

	Level 1 (1)		Level 2 (2)		Level 3 (3)		Total
	(in thousands)
January 31, 2017
Assets:
Foreign exchange forward contracts	$	—	$	44	$	—	$	44
Liabilities:
Foreign exchange forward contracts	$	—	$	—	$	—	$	—
July 31, 2016
Assets:
Foreign exchange forward contracts	$	—	$	21	$	—	$	21
Liabilities:
Foreign exchange forward contracts	$	—	$	15	$	—	$	15

(1) – quoted prices in active markets for identical assets or liabilities

(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities

(3) – no observable pricing inputs in the market

Fair Value of Other Financial Instruments

The Company’s other financial instruments at January 31, 2017 and July 31, 2016 included trade accounts receivable, trade accounts payable and due to IDT Corporation. The carrying amounts of the trade accounts receivable, trade accounts payable and due to IDT Corporation balances approximated fair value due to their short-term nature. This fair value estimate was classified as Level 2 of the fair value hierarchy.

Note 3—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 U.S. Dollar - NOK exchange rate. Subsequent to the Spin-Off and until November 2016, IDT provided hedging services to the Company pursuant to the Transition Services Agreement (see Note 7). As of November 16, 2016, the Company entered into 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 8). The Company does not apply hedge accounting to these contracts; therefore the changes in fair value are recorded in earnings. 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.

The outstanding contracts at January 31, 2017 were as follows:

Settlement Date	U.S. Dollar Amount	NOK Amount
February 2017	500,000	4,235,537
March 2017	500,000	4,234,454
April 2017	250,000	2,067,554
May 2017	500,000	4,132,484
June 2017*	500,000	4,179,494
July 2017*	500,000	4,179,038

* Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank.

The fair value of outstanding derivative instruments recorded as assets in the accompanying consolidated balance sheets were as follows:

Asset Derivatives	Balance Sheet Location	January 31, 2017		July 31, 2016
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Other current assets	$	44	$	21

The fair value of outstanding derivative instruments recorded as liabilities in the accompanying consolidated balance sheets were as follows:

Liability Derivatives	Balance Sheet Location	January 31, 2017		July 31, 2016
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Accrued expenses	$	—	$	15

The effects of derivative instruments on the consolidated statements of comprehensive (loss) income were as follows:

		Amount of Loss Recognized on Derivatives
		Three Months Ended January 31,						Six Months Ended January 31,
Derivatives not designated or not qualifying as hedging instruments	Location of Loss Recognized on Derivatives	2017			2016			2017			2016
		(in thousands)
Foreign exchange forward contracts	Net loss (gain) resulting from foreign exchange transactions	$	(110	)	$	(123	)	$	(43	)	$	(225	)

Note 4—Accrued Expenses

Accrued expenses consist of the following:

	January 31, 2017		July 31, 2016
	(in thousands)
Accrued vacation	$	601	$	494
Accrued payroll taxes		274		210
Accrued payroll and bonuses		76		72
Accrued direct cost of revenues		5		111
Accrued advertising		294		242
Accrued income taxes		69		119
Other		505		239

Total accrued expenses	$	1,824	$	1,487

Note 5—Equity

Changes in the components of equity were as follows:

	Six Months Ended January 31, 2017
	(in thousands)
Balance, July 31, 2016	$	10,596
Exercise of stock options		109
Stock-based compensation		143
Comprehensive loss:
Net loss		(164	)
Foreign currency translation adjustments		59
Total comprehensive loss		(105	)
Balance, January 31, 2017	$	10,743

Stock Options

In the six months ended January 31, 2017, the Company received proceeds of $109,335 from the exercise of stock options for which the Company issued 277,200 shares of its Class B common stock. In addition, in the six months ended January 31, 2017, the Company received proceeds of $56,840 from the exercise of stock options in fiscal 2016 which was recorded as a receivable as of July 31, 2016.

In September 2016, the Compensation Committee of the Company’s Board of Directors approved an equity grant of options to purchase 231,327 shares of the Company’s Class B common stock to its executive officers, a consultant and a non-executive employee. The options vest over a three-year period. Unrecognized compensation expense related to this grant was an aggregate of $681,000 based on the estimated fair value of the options on the grant date. The unrecognized compensation expense is recognized on a straight-line basis over the vesting period.

Note 6—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 and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase is anti-dilutive.

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:

	Three Months Ended January 31,				Six Months Ended January 31,
	2017		2016		2017		2016
	(in thousands)
Basic weighted-average number of shares		9,413		8,161		9,337		8,161
Effect of dilutive securities:
Stock options		—		801		—		787
Non-vested restricted Class B common stock		—		—		—		—
Diluted weighted-average number of shares		9,413		8,962		9,337		8,948

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

	Three Months Ended January 31,				Six Months Ended January 31,
	2017		2016		2017		2016
	(in thousands)
Stock options		1,434		707		1,434		707
Non-vested restricted Class B common stock		53		—		53		—
Shares excluded from the calculation of diluted earnings per share		1,487		707		1,487		707

For the three and six months ended January 31, 2017, the diluted earnings per share equals basic earnings per share because the Company had a net loss and the impact of the assumed exercise of stock options and vesting of restricted stock would have been anti-dilutive. For the three and six months ended January 31, 2016, outstanding stock options were excluded from the calculation of diluted earnings per share because the exercise price of the stock option was greater than the average market price of the Company’s stock during the periods.

Note 7—Related Party Transactions

Prior to the Spin-Off, IDT charged the Company for certain transactions and allocated routine expenses based on company specific items covered under a Master Services Agreement. This agreement provided for, among other things: (1) the allocation between the Company and IDT of costs of employee benefits, taxes and other liabilities and obligations; (2) services provided by IDT relating to human resources and employee benefits administration; and (3) finance, accounting, tax, facilities and legal services provided by IDT to the Company. Following the Spin-Off, IDT charges the Company for services it provides pursuant to the Transition Services Agreement. The services provided pursuant to the Transition Services Agreement include human resources, payroll, investor relations, legal, accounting, tax, financial systems, management consulting and foreign exchange risk management. The Transition Services Agreement has a twelve-month term (expiring May 31, 2017) with automatic renewals for additional six month terms unless terminated by either party upon 90 days’ notice prior to the end of the then-current term. IDT’s charges are included in “Selling, general and administrative expense” in the consolidated statements of comprehensive (loss) income.

	Three Months Ended January 31,						Six Months Ended January 31,
	2017			2016			2017			2016
	(in thousands)
Payments by IDT on behalf of the Company	$	161		$	552		$	638		$	865
Cash repayments, net of advances	$	(157	)	$	(464	)	$	(860	)	$	(870	)

Note 8—Revolving Credit Facility

As of September 27, 2016, the Company entered into a loan and security agreement with Western Alliance Bank for a revolving credit facility of up to $2.5 million. Advances under this facility may not exceed the lesser of $2.5 million or 80% of the Company’s eligible accounts receivable subject to certain concentration limits. The revolving credit facility is secured by a lien on substantially all of the Company’s assets. The outstanding principal amount bears interest per annum at the greater of 3.5% or the prime rate plus 1.25%. Interest is payable monthly and all outstanding principal and any accrued and unpaid interest is due on the maturity date of September 27, 2018. The Company is required to pay an annual facility fee of $12,500 to Western Alliance Bank. The Company is 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 include a prohibition on the Company paying any dividend on its capital stock. The Company may terminate this agreement at any time without penalty or premium provided that it pays down any outstanding principal, accrued interest and bank expenses. At January 31, 2017, there were no amounts outstanding under the revolving credit facility and the Company was in compliance with all of the covenants.

As of November 16, 2016, the Company entered into a Foreign Exchange Agreement with Western Alliance Bank 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. The available borrowing under the revolving credit facility shall be reduced by an applicable foreign exchange reserve percentage as determined by Western Alliance Bank, in its reasonable discretion from time to time, which was initially set at 10%. In December 2016, the applicable foreign exchange reserve percentage was changed so that major currency forward contracts less than six months tenor is set at 10% and for contracts over six months tenor, 12.5%. As of January 31, 2017, there was $1.0 million of outstanding foreign exchange contracts with less than six months tenor under the credit facility (and no contracts of greater than six months tenor) which reduced the available borrowing under the revolving credit facility by $100,000.

Note 9—Business Segment and Geographic Information

The Company provides a content distribution platform, worldwide, centered on self-expression, attracting both creators looking to promote their content and consumers who utilize such content to express their identity, feelings, tastes and interests. The Company’s platform enables consumers to personalize their mobile devices with free, high quality ringtones, wallpapers, home screen app icons and notification sounds. The Company conducts business as one operating segment. There were no revenues from customers located outside of the United States in all periods presented.

Net long-lived assets and total assets held outside of the United States, which are located primarily in Norway, were as follows:

	United States		Foreign		Total
	(in thousands)
Long-lived assets, net:
January 31, 2017	$	2,146	$	250	$	2,396
July 31, 2016		1,719		247		1,966

Total assets:
January 31, 2017	$	7,780	$	4,895	$	12,675
July 31, 2016		8,576		3,857		12,433

Note 10—Legal Proceeding and Tax Matters

Legal Proceedings

In March 2014, Saregama India, Limited filed a lawsuit against the Company before the Barasat District Court, seeking approximately $1,595,700 as damages and an injunction for copyright infringement. The main ground for the lawsuit was an allegation that the Company avails the plaintiff’s sound recordings through the Company’s platform with full knowledge that the sound recordings have been uploaded and are being communicated to the public without obtaining any license from the plaintiff. The Company believes that the possibility of it bearing material liability on the matter is remote.

The Company may from time to time be subject to other 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.

Tax Audits

In September 2016, the Company was notified that the Zedge Europe AS tax returns for 2012 through 2016 were going to be audited by the tax authorities in Norway. The initial audit meeting took place in October 2016 and the audit is progressing. No significant issues have been identified at this time. Amounts asserted by taxing authorities or the amount ultimately assessed against the Company could be greater than any accrued amount. Accordingly, provisions may be recorded in the future as estimates are revised or underlying matters are settled or resolved. Imposition of assessments as a result of tax audits could have an adverse effect on the Company’s results of operations, cash flows and financial condition.

Research and Development Credits

As of October 31, 2016, the Company recorded a $0.2 million receivable from Norway’s SkatteFUNN government program designed to stimulate research and development in Norwegian trade and industry, which related to previous periods. At January 31, 2017, the balance was $0.3 million, which was included in “Other current assets” in the consolidated balance sheet.

Note 11—Recently Issued Accounting Standards Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. The Company will adopt the new standard on August 1, 2020. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In March 2016, the FASB issued an ASU to improve the accounting for employee share-based payments. The new standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company will adopt the new standard on August 1, 2017. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company will adopt the new standard on August 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that will supersede most of the current revenue recognition guidance under U.S. GAAP and IFRS. The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. To accomplish this objective, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company is required to adopt this standard on August 1, 2018. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company is evaluating the impact that the standard will have on its consolidated financial statements and has not yet selected an adoption date or a transition method. The Company cannot reasonably estimate the impact that the adoption of the standard will have on its consolidated financial statements.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended July 31, 2016, as filed with the U.S. Securities and Exchange Commission (or SEC).

As used below, unless the context otherwise requires, the terms “the Company,” “Zedge,” “we,” “us,” and “our” refer to Zedge, Inc., a Delaware corporation, and its subsidiaries, Zedge Europe AS and Zedge Canada, Inc., collectively.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31, 2016. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the fiscal year ended July 31, 2016.

Overview

We provide one of the most popular content platforms, worldwide, centered on self-expression, attracting both creators looking to promote their content and consumers who utilize such content to express their identity, feelings, tastes and interests. Today our platform enables consumers to personalize their mobile devices with free, high-quality ringtones, wallpapers, home screen app icons, widgets and notification sounds. Our smartphone app, available in Google Play and iTunes app stores, has been installed over 246 million times, has more than 33 million monthly active users and has averaged among the top 25 free applications in the Google Play store in the U.S. for the past seven years and in the top 15 most popular free apps in the iTunes Entertainment category. To date, we have grown our user base without material investment in marketing, user acquisition or advertising.

We generate over 90% of our revenues from selling our advertising inventory to advertising networks/exchanges, real time bidding platforms, and game publishers. Advertising networks/exchanges are technology platforms that facilitate the buying and selling of media advertising inventory from multiple ad networks. Advertisers are attracted to us because of our sizable and growing user base and associated demographics and our focus on mobile phone personalization. The remainder of our revenue is primarily generated from managing and optimizing advertising inventory for a third-party app publisher, as well as revenue billing, collection and reporting with respect to the advertising.

A key element in maintaining our position is our ability to meet user’s expectations, which necessitates retaining employees with solid educational and professional credentials who are passionate about our mission to serve as a medium for self-expression.

We must offer advertisers exposure to an active and engaged user base with attractive demographic characteristics.

Our ability to continue to present advertisers with a compelling platform depends on continued growth of our user base, increased app usage and improved retention, which will require ongoing investment in product and technology and increased marketing efforts. Our growth plan also depends on improved monetization techniques and selective strategic investments and acquisitions.

We believe that our business model is scalable and allows for significant portions of revenue growth to flow to our bottom line.

We were formerly a majority-owned subsidiary of IDT Corporation, or IDT. On June 1, 2016, IDT’s interest in Zedge was spun-off by IDT to IDT’s stockholders and we became an independent public company through a pro rata distribution of our common stock held by IDT to IDT’s stockholders (the Spin-Off).

Critical Accounting Policies

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2016. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to capitalized software and technology development costs, revenue recognition and goodwill. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended July 31, 2016.

Recently Issued Accounting Standards Not Yet Adopted

In June 2016, the Financial Accounting Standards Board, or FASB, issued an Accounting Standards Update, or ASU, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. We will adopt the new standard on August 1, 2020. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In March 2016, the FASB issued an ASU to improve the accounting for employee share-based payments. The new standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We will adopt the new standard on August 1, 2017. We are evaluating the impact that the new standard will have on our consolidated financial statements.

In February 2016, the FASB issued ASU related to the accounting for leases. The new standard establishes a right-of-use, or ROU, model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. We will adopt the new standard on August 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact that the new standard will have on our consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that will supersede most of the current revenue recognition guidance under U.S. GAAP and International Financial Reporting Standards, or IFRS. The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. To accomplish this objective, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We are required to adopt this standard on August 1, 2018. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. We are evaluating the impact that the standard will have on our consolidated financial statements and have not yet selected an adoption date or a transition method. We cannot reasonably estimate the impact that the adoption of the standard will have on our consolidated financial statements.

Results of Operations

Three and Six Months Ended January 31, 2017 Compared to Three and Six Months Ended January 31, 2016

	Three months ended January 31,						Change						Six months ended January 31,						Change
	2017			2016			$			%			2017			2016			$			%
	(in thousands)
Revenues	$	2,572		$	3,530		$	(958	)		(27.1	)%	$	4,955		$	6,089		$	(1,134	)		(18.6	)%
Direct cost of revenues		412			310			102			32.9			780			605			175			28.9
Selling, general and administrative		2,314			1,781			533			29.9			4,070			3,466			604			17.4
Depreciation and amortization		184			156			28			17.9			322			317			5			1.6
Write-off of capitalized software and technology development costs.		—			—			—			—			9			—			9			nm
(Loss) income from operations		(338	)		1,283			(1,621	)		(126.3	)		(226	)		1,701			(1,927	)		(111.3	)
Interest and other income		7			1			6			600.0			8			2			6			300.0
Net (loss) gain resulting from foreign exchange transactions		(17	)		(106	)		89			84.0			33			(161	)		194			120.5
Benefit from (provision for) from income taxes		22			(67	)		89			132.8			21			(106	)		127			119.8
Net (loss) income	$	(326	)	$	1,111		$	(1,437	)		(129.3	)%	$	(164	)	$	1,436		$	(1,600	)		(111.4	)%

nm—not meaningful

Revenues. Revenues decreased in the three and six months ended January 31, 2017 compared to the same periods in fiscal 2016 primarily due to a 26.6% and 19.2% decrease in our average revenue per monthly active user, or ARPMAU, to $0.0237 from $0.0323 in the three months ended January 31, 2017 and 2016, respectively, and to $0.0236 from $0.0292 in the six months ended January 31, 2017 and 2016, respectively. The ARPMAU decrease was primarily due to our app being temporarily removed from the iTunes Store in late January, 2016 which lowered the revenue per user that we were able to generate, as well as our decision to reduce our investments in our Game Channel in mid-April 2016, which resulted in a decline in game installs for which we are paid on a “cost per install” basis. In addition, the decrease was also attributable to user growth accelerating at a faster past in emerging markets when compared to the U.S. negatively impacting ARPMAU due to advertising rates being lower in the less well developed economies.

Also, we experienced lower advertising eCPMs (“effective cost per thousand impressions”) than expected when compared to last year due to what we believe to be a shift in advertising budgets allocating more spend for video and/or native ad units vs. static ad units like banners and interstitials. Due to user concerns and the current nature of our product we have limited amounts of higher value ad formats although we have recently started addressing this by testing new, higher value ad formats that do not negatively impact on the user experience. Monthly Active Users, or MAU during the last 30 days of the quarter, decreased by 0.6% to 33.4 million at January 31, 2017 from 33.6 million at January 31, 2016. We have several initiatives underway focused on content discovery and availability which we believe will improve user growth, engagement and retention. In addition, we are releasing new features and investing in product marketing across both the Android and iOS apps in order to reverse the downturn we experienced on a year-over-year basis. MAU is a performance indicator that captures the number of unique users that opened our app in the previous 30-day period. Our install count, that is the number of times the Zedge app has been installed on devices, increased to 246.3 million at January 31, 2017 from 189.1 million a year ago.

Zedge introduced a standalone wallpaper app in iTunes in March 2016 and a standalone ringtone app in iTunes in December 2016. The rollout of these individual apps was done in order to both fully comply with iTunes terms and conditions as well as mitigate risk considering that iTunes removed our bundled ringtone and wallpaper app in January 2016 leaving us with no market offering for many months. In mid-December 2016, we launched a new ad strategy with our Wallpaper and Ringtones apps, intended to improve user engagement.

Direct cost of revenues. The increase in direct cost of revenues in the three and six months ended January 31, 2017 compared to the same periods in fiscal 2016 was attributable to the fees that we pay to third parties that provide us with internet hosting, content serving and filtering and marketing automation services. The costs associated with content serving and filtering and push notification marketing increased as a result of a new product offering from one of our vendors and because of expanding the addressable customer base that benefits from marketing automation services, respectively.

Selling, general and administrative expense. Selling, general and administrative expense consists mainly of payroll, benefits, facilities, marketing, content acquisition and consulting and professional fees. The increase in selling, general and administrative expense in the three and six months ended January 31, 2017 compared to the same periods in fiscal 2016 was mostly due to increases in payroll and benefits, accounting, tax and legal fees. The increase was partially offset by a reduction in benefits expense in the six months ended January 31, 2017 due to the recording of a $0.2 million receivable from Norway’s SkatteFUNN government program designed to encourage research and development in Norwegian trade and industry, which related to previous periods. In addition, our headcount increased from 53 employees at January 31, 2016 to 61 employees at January 31, 2017.

Selling, general and administrative expense included stock-based compensation expense of $117,000 and $3,000 in the three months ended January 31, 2017 and 2016, respectively, and $143,000 and $9,000 in the six months ended January 31, 2017 and 2016, respectively. At January 31, 2017, unrecognized compensation expense related to unvested stock-based compensation was an aggregate of $711,000. The unrecognized compensation expense will be recognized on a straight-line basis over the remaining vesting period that ends in 2020. In September 2016, the Compensation Committee of our Board of Directors approved an equity grant of options to purchase 231,327 shares of our Class B common stock to our executive officers, a consultant and a non-executive employee. The options vest over a three-year period. Unrecognized compensation expense related to this grant was an aggregate of $681,000 based on the estimated fair value of the options on the grant date. The unrecognized compensation expense is recognized on a straight-line basis over the vesting period.

While many of the costs of being a public company were already borne by us either directly or by allocation of corporate overhead from IDT, those expenses were allocated among all of IDT’s operations, and we need to have the proper infrastructure in place to perform the necessary, legal, treasury, accounting, internal audit and reporting functions. We anticipate our total costs will increase by $750,000 to $900,000 per year as a result of the Spin-Off. Several of the costs included in this estimated range are preliminary, subject to negotiation, and may vary from the estimates when finalized.

Depreciation and amortization. Depreciation and amortization consists mainly of amortization of capitalized software and technology development costs of our internal developers on various projects that we invested in specific to the various platforms on which we operate our service.

Write-off of capitalized software and technology development costs. In the six months ended January 31, 2017, we decided not to launch a project that was in development. Since this abandoned project did not have any future benefit, we charged the capitalized software and technology development costs for the project to expense.

Net (loss) gain resulting from foreign exchange transactions. Net (loss) gain resulting from foreign exchange transactions are comprised of losses and gains generated from movements in Norwegian Krone, or NOK, relative to the U.S. Dollar, including gains or losses from our NOK hedging activities. In the three months ended January 31, 2017 and 2016, we had losses of $110,000 and $123,000, respectively, from NOK hedging activities, and in the six months ended January 31, 2017 and 2016, we had losses of $43,000 and $225,000, respectively, from NOK hedging activities.

Benefit from (Provision for) income taxes. The decrease in the provision for income taxes in the three and six months ended January 31, 2017 compared to the same periods in fiscal 2016 was due to the jurisdiction in which income was earned in the three and six months ended January 31, 2017 compared to the same periods in fiscal 2016 and our ability to use net operating losses in those jurisdictions.

Liquidity and Capital Resources

General

At January 31, 2017, we had cash and cash equivalents of $5.6 million and working capital (current assets less current liabilities) of $5.8 million. We currently expect that our cash and cash equivalents on hand, and our cash from operations will be sufficient to meet our anticipated cash requirements during the twelve months ending January 31, 2018.

	Six months ended January 31,
	2017			2016
	(in thousands)
Cash flows provided by (used in):
Operating activities	$	205		$	1,428
Investing activities		(757	)		(344	)
Financing activities		166			—
Effect of exchange rates on cash and cash equivalents		12			(61	)
(Decrease) increase in cash and cash equivalents	$	(374	)	$	1,023

Operating Activities

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Cash provided by operating activities in the six months ended January 31, 2017 and 2016 was primarily due to the revenues generated from our service offerings. We anticipate that our total operating costs will increase by $750,000 to $900,000 per year as a result of being a public reporting company. Several of the costs included in this estimated range are preliminary, subject to negotiation, and may vary from the estimates when finalized.

In September 2016, we were notified that the Zedge Europe AS tax returns for 2012 through 2016 were going to be audited by the tax authorities in Norway. The initial audit meeting took place in October 2016 and the audit is progressing. No significant issues have been identified at this time. Amounts asserted by taxing authorities or the amount ultimately assessed against us could be greater than the accrued amount. Accordingly, provisions may be recorded in the future as estimates are revised or underlying matters are settled or resolved. Imposition of assessments as a result of tax audits could have an adverse effect on our results of operations, cash flows and financial condition.

Investing Activities

Cash used in investing activities in the six months ended January 31, 2017 and 2016 consisted mostly of capitalized software and technology development costs related to various projects that we invested in specific to the various platforms on which we operate our service.

Financing Activities

We received proceeds of $109,335 from the exercise of stock options in the six months ended January 31, 2017 in connection with which we issued 277,200 shares of our Class B common stock. In addition, in the six months ended January 31, 2017, we received proceeds of $56,840 from the exercise of stock options in fiscal 2016 which was recorded as a receivable as of July 31, 2016. No stock options were exercised in the six months ended January 31, 2016.

As of September 27, 2016, we entered into a loan and security agreement with Western Alliance Bank for a revolving credit facility of up to $2.5 million. Advances under this facility may not exceed the lesser of $2.5 million or 80% of our eligible accounts receivable subject to certain concentration limits. The revolving credit facility is secured by a lien on substantially all of our assets. The outstanding principal amount bears interest per annum at the greater of 3.5% or the prime rate plus 1.25%. Interest is payable monthly and all outstanding principal and any accrued and unpaid interest is due on the maturity date of September 27, 2018. We are required to pay an annual facility fee of $12,500 to Western Alliance Bank. We are also required to comply with various affirmative and negative covenants as well as maintain certain financial ratios during the term of the revolving credit facility. The covenants include a prohibition on us not paying any dividend on our capital stock. We may terminate this agreement at any time without penalty or premium provided that we pay down any outstanding principal, accrued interest and bank expenses. At January 31, 2017, there were no amounts outstanding under the revolving credit facility and we were in compliance with all of the covenants.

As of November 16, 2016, we entered into a Foreign Exchange Agreement with Western Alliance Bank to allow us to enter into foreign exchange contracts not to exceed $5.0 million in the aggregate at any point in time under our revolving credit facility. The available borrowing under the revolving credit facility shall be reduced by an applicable foreign exchange reserve percentage as determined by Western Alliance Bank, in its reasonable discretion from time to time, which was initially set at 10%. In December 2016, the applicable foreign exchange reserve percentage was changed so that major currency forward contracts less than six months tenor is set at 10% and for contracts over six months tenor, 12.5%. As of January 31, 2017, there was $1.0 million of outstanding foreign exchange contracts with less than six months tenor under the credit facility (and no contracts of greater than six months tenor) which reduced the available borrowing under the revolving credit facility by $100,000.

We do not anticipate paying dividends on our common stock until we achieve sustainable profitability and retain certain minimum cash reserves. The payment of dividends in any specific period will be at the sole discretion of our Board of Directors.

Changes in Trade Accounts Receivable

Gross trade accounts receivable were $1.6 million at January 31, 2017 and $1.7 million at July 31, 2016. Our cash collections during the six months ended January 31, 2017 and 2016 were $5.5 million and $6.4 million, respectively.

Concentration of Credit Risk and Significant Customers

Historically, we have had very little or no bad debt, which is common with other platforms of our size that derive their revenue from digital advertising, as we aggressively manage our collections and perform due diligence on our customers. In addition, the majority of our revenue is derived from large, credit-worthy customers (e.g. MoPub (owned by Twitter), Millennial Media (owned by AOL, which is owned by Verizon), Google, Facebook, and Amazon) and we terminate our services with smaller customers immediately upon balances becoming past due. Since these smaller customers rely on us to derive their own revenue, they generally pay their outstanding balances on a timely basis.

In the six months ended January 31, 2017, three customers represented 49%, 18% and 11% of our revenue, and in the six months ended January 31, 2016, three customers represented 47%, 22% and 12% of our revenue. At January 31, 2017, two customers represented 60% and 11% of our accounts receivable balance, and at July 31, 2016, one customer represented 62% of our accounts receivable balance. All of these significant customers were advertising exchanges operated by leading companies, and the receivables represent many smaller amounts due from advertisers.

Contractual Obligations and Other Commercial Commitments

Smaller reporting companies are not required to provide the information required by this item.

Off-Balance Sheet Arrangements

At January 31, 2017, we did not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources, other than the following.

In connection with our Spin-Off, we and IDT entered into various agreements prior to the Spin-Off including a Separation and Distribution Agreement to effect the separation and provide a framework for our relationship with IDT after the Spin-Off, and a Tax Separation Agreement, which sets forth the responsibilities of us and IDT with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the Spin-Off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to Separation and Distribution Agreement, among other things, we indemnify IDT and IDT indemnifies us for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, among other things, IDT indemnifies us from all liability for taxes of ours and any of our subsidiaries or relating to our business with respect to taxable periods ending on or before the Spin-Off, and we indemnify IDT from all liability for taxes of ours and any of our subsidiaries or relating to our business accruing after the Spin-Off. Notwithstanding the foregoing, we are responsible for, and IDT has no obligation to indemnify us for, any tax liability of ours resulting from an audit, examination or other proceeding related to any tax returns that relate solely to us and our subsidiaries regardless of whether such tax return relates to a period prior to or following the Spin-Off.

Item 3.

Quantitative and Qualitative Disclosures About Market Risks

Smaller reporting companies are not required to provide the information required by this item.

Item 4.

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 Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of January 31, 2017.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended January 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In addition, we have begun the process of documenting, reviewing and, as appropriate, improving our internal controls and procedures in anticipation of becoming subject to the SEC rules concerning internal control over financial reporting, which take effect beginning with the filing of our second Annual Report on Form 10-K (which will be due in October 2017).

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Legal proceedings in which we are involved are more fully described in Note 10 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Item 1A.

Risk Factors

There are no material changes from the risk factors previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended July 31, 2016.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.

Defaults Upon Senior Securities

None

Item 4.

Mine Safety Disclosures

Not applicable

Item 5.

Other Information

None

Item 6.

Exhibits

Exhibit Number		Description

31.1*		Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

* Filed or furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ZEDGE, INC.

March 17, 2017	By:	/s/ Tom Arnoy
		Tom Arnoy Chief Executive Officer

March 17, 2017	By:	/s/ Jonathan Reich
		Jonathan Reich Chief Financial Officer

EX-31.1 2 f10q0117ex31i_zedgeinc.htm CERTIFICATION

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tom Arnoy, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Zedge, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 17, 2017

/s/ Tom Arnoy

Tom Arnoy

Chief Executive Officer

EX-31.2 3 f10q0117ex31ii_zedgeinc.htm CERTIFICATION

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jonathan Reich, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Zedge, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 17, 2017

/s/ Jonathan Reich

Jonathan Reich

Chief Financial Officer

EX-32.1 4 f10q0117ex32i_zedgeinc.htm CERTIFICATION

EXHIBIT 32.1

Certification Pursuant to
18 U.S.C. Section 1350
(as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act Of 2002)

In connection with the Quarterly Report of Zedge, Inc. (the “Company”) on Form 10-Q for the quarter ended January 31, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Tom Arnoy, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 17, 2017

/s/ Tom Arnoy

Tom Arnoy

Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Zedge, Inc. and will be retained by Zedge, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 5 f10q0117ex32ii_zedgeinc.htm CERTIFICATION

EXHIBIT 32.2

Certification Pursuant to
18 U.S.C. Section 1350
(as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act Of 2002)

In connection with the Quarterly Report of Zedge, Inc. (the “Company”) on Form 10-Q for the quarter ended January 31, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Jonathan Reich, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 17, 2017

/s/ Jonathan Reich

Jonathan Reich

Chief Financial Officer

EX-101.INS 6 zedg-20170131.xml XBRL INSTANCE FILE 0001667313 2014-03-20 2014-03-31 0001667313 2015-07-31 0001667313 2015-11-01 2016-01-31 0001667313 us-gaap:EmployeeStockOptionMember 2015-11-01 2016-01-31 0001667313 zedg:NonVestedRestrictedClassBCommonStockMember 2015-11-01 2016-01-31 0001667313 2015-08-01 2016-01-31 0001667313 us-gaap:EmployeeStockOptionMember 2015-08-01 2016-01-31 0001667313 zedg:NonVestedRestrictedClassBCommonStockMember 2015-08-01 2016-01-31 0001667313 2016-01-31 0001667313 2016-07-31 0001667313 us-gaap:CommonClassAMember 2016-07-31 0001667313 us-gaap:CommonClassBMember 2016-07-31 0001667313 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2016-07-31 0001667313 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2016-07-31 0001667313 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2016-07-31 0001667313 country:US 2016-07-31 0001667313 zedg:ForeignMember 2016-07-31 0001667313 us-gaap:RevolvingCreditFacilityMember 2016-09-27 0001667313 us-gaap:RevolvingCreditFacilityMember 2016-09-01 2016-09-27 0001667313 us-gaap:StockOptionMember 2016-09-30 0001667313 us-gaap:StockOptionMember 2016-09-01 2016-09-30 0001667313 2016-10-31 0001667313 us-gaap:RevolvingCreditFacilityMember zedg:ForeignExchangeAgreementMember 2016-11-16 0001667313 us-gaap:RevolvingCreditFacilityMember zedg:ForeignExchangeAgreementMember 2016-12-01 2016-12-31 0001667313 2016-11-01 2017-01-31 0001667313 us-gaap:EmployeeStockOptionMember 2016-11-01 2017-01-31 0001667313 zedg:NonVestedRestrictedClassBCommonStockMember 2016-11-01 2017-01-31 0001667313 2016-08-01 2017-01-31 0001667313 us-gaap:EmployeeStockOptionMember 2016-08-01 2017-01-31 0001667313 zedg:NonVestedRestrictedClassBCommonStockMember 2016-08-01 2017-01-31 0001667313 us-gaap:RevolvingCreditFacilityMember 2016-08-01 2017-01-31 0001667313 us-gaap:StockOptionMember 2016-08-01 2017-01-31 0001667313 us-gaap:RevolvingCreditFacilityMember zedg:ForeignExchangeAgreementMember 2016-08-01 2017-01-31 0001667313 zedg:FebruaryTwoZeroOneSevenMember 2016-08-01 2017-01-31 0001667313 zedg:MarchTwoZeroOneSevenMember 2016-08-01 2017-01-31 0001667313 zedg:AprilTwoZeroOneSevenMember 2016-08-01 2017-01-31 0001667313 zedg:MayTwoZeroOneSevenMember 2016-08-01 2017-01-31 0001667313 us-gaap:StockOptionMember us-gaap:CommonClassBMember 2016-08-01 2017-01-31 0001667313 zedg:JuneTwoZeroOneSevenMember 2016-08-01 2017-01-31 0001667313 zedg:JulyTwoZeroOneSevenMember 2016-08-01 2017-01-31 0001667313 2017-01-31 0001667313 us-gaap:CommonClassAMember 2017-01-31 0001667313 us-gaap:CommonClassBMember 2017-01-31 0001667313 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2017-01-31 0001667313 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2017-01-31 0001667313 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2017-01-31 0001667313 country:US 2017-01-31 0001667313 zedg:ForeignMember 2017-01-31 0001667313 zedg:NorwaySkattefunnMember 2017-01-31 0001667313 us-gaap:CommonClassAMember 2017-03-10 0001667313 us-gaap:CommonClassBMember 2017-03-10 xbrli:shares iso4217:USD iso4217:USDxbrli:shares iso4217:NOK Zedge, Inc. 0001667313 false --07-31 10-Q 2017-01-31 2017 Q2 Smaller Reporting Company 524775 9119363

2170000

3193000

5978000

5604000

1668000

1617000

210000

192000

107000

326000

300000

7963000

7739000

1843000

2271000

2361000

2403000

266000

262000

12433000

8576000

3857000

12675000

7780000

4895000

36000

30000

1487000

1824000

15000

1000

299000

77000

1837000

1932000

5000

88000

5000

91000

21045000

21294000

-817000

-758000

-9725000

-9889000

10596000

10743000

12433000

12675000

0.01

2400000

0.01

2600000

40000000

2600000

40000000

525000

8819000

525000

9114000

525000

8819000

525000

9114000

3530000

6089000

2572000

4955000

310000

605000

412000

780000

1781000

3466000

2314000

4070000

156000

317000

184000

322000

-9000

1283000

1701000

-338000

-226000

1000

2000

7000

8000

-106000

-161000

-17000

33000

1178000

1542000

-348000

-185000

67000

106000

-22000

-21000

1111000

1436000

-326000

-164000

-68000

-159000

-14000

59000

-68000

-159000

-14000

59000

1043000

1277000

-340000

-105000

0.14

0.18

-0.03

-0.02

0.12

0.16

-0.03

-0.02

8161000

9413000

9337000

8962000

8948000

9413000

9337000

5000

9000

143000

728000

-51000

-60000

258000

-6000

2000

333000

335000

-5000

-222000

-14000

1428000

205000

344000

757000

-344000

-757000

166000

-61000

12000

1023000

-374000

<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-weight: bold; font-stretch: normal; line-height: normal; margin: 0px;">Note 2—Fair Value Measurements<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-weight: bold; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">The following tables present the balance of assets and liabilities measured at fair value on a recurring basis:<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Level 1 (1)</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Level 2 (2)</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Level 3 (3)</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Total</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="14">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold;">January 31, 2017</td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom;"><td style="padding-left: 10pt;">Assets:</td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 788.344px; text-align: left; padding-bottom: 4pt; padding-left: 20pt;">Foreign exchange forward contracts</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 142px; border-bottom: 4pt double black; text-align: right;">—</td><td style="width: 16px; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 142px; border-bottom: 4pt double black; text-align: right;">44</td><td style="width: 16px; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">—</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">44</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="padding-left: 10pt;">Liabilities:</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; padding-bottom: 4pt; padding-left: 20pt;">Foreign exchange forward contracts</td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-weight: bold;">July 31, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-left: 10pt;">Assets:</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 4pt; padding-left: 20pt;">Foreign exchange forward contracts</td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">21</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">21</td><td style="padding-bottom: 4pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-left: 10pt;">Liabilities:</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 4pt; padding-left: 20pt;">Foreign exchange forward contracts</td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">15</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">15</td><td style="padding-bottom: 4pt; text-align: left;"> </td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;">(1) – quoted prices in active markets for identical assets or liabilities<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;">(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;">(3) – no observable pricing inputs in the market<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-style: italic; font-stretch: normal; line-height: normal; margin: 0px;">Fair Value of Other Financial Instruments<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-style: italic; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">The Company’s other financial instruments at January 31, 2017 and July 31, 2016 included trade accounts receivable, trade accounts payable and due to IDT Corporation. The carrying amounts of the trade accounts receivable, trade accounts payable and due to IDT Corporation balances approximated fair value due to their short-term nature. This fair value estimate was classified as Level 2 of the fair value hierarchy.

<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-weight: bold; font-stretch: normal; line-height: normal; margin: 0px;">Note 3—Derivative Instruments<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-weight: bold; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">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 U.S. Dollar - NOK exchange rate. Subsequent to the Spin-Off and until November 2016, IDT provided hedging services to the Company pursuant to the Transition Services Agreement (see Note 7). As of November 16, 2016, the Company entered into 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 8). The Company does not apply hedge accounting to these contracts; therefore the changes in fair value are recorded in earnings. 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.<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">The outstanding contracts at January 31, 2017 were as follows:<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-weight: bold; border-bottom: 1.5pt solid black;">Settlement Date</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;">U.S. Dollar Amount</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;">NOK Amount</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 518px;">February 2017</td><td style="width: 16px;"> </td><td style="width: 517px; text-align: right;">500,000</td><td style="width: 15px;"> </td><td style="width: 501px; text-align: right;">4,235,537</td></tr><tr style="vertical-align: bottom; background-color: white;"><td>March 2017</td><td> </td><td style="text-align: right;">500,000</td><td> </td><td style="text-align: right;">4,234,454</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td>April 2017</td><td> </td><td style="text-align: right;">250,000</td><td> </td><td style="text-align: right;">2,067,554</td></tr><tr style="vertical-align: bottom; background-color: white;"><td>May 2017</td><td> </td><td style="text-align: right;">500,000</td><td> </td><td style="text-align: right;">4,132,484</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td>June 2017*</td><td> </td><td style="text-align: right;">500,000</td><td> </td><td style="text-align: right;">4,179,494</td></tr><tr style="vertical-align: bottom; background-color: white;"><td>July 2017*</td><td> </td><td style="text-align: right;">500,000</td><td> </td><td style="text-align: right;">4,179,038</td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;">* Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank.<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">The fair value of outstanding derivative instruments recorded as assets in the accompanying consolidated balance sheets were as follows:<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="text-align: center; border-bottom: 1.5pt solid black;"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Asset Derivatives</td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Balance Sheet Location</td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">January 31, 2017</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">July 31, 2016</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td> </td><td> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="6">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td>Derivatives not designated or not qualifying as hedging instruments:</td><td> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 894px; text-align: left; padding-bottom: 4pt;">Foreign exchange forward contracts</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 283px; text-align: left; padding-bottom: 4pt;">Other current assets</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">44</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">21</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;"> </td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">The fair value of outstanding derivative instruments recorded as liabilities in the accompanying consolidated balance sheets were as follows:<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="text-align: center; border-bottom: 1.5pt solid black;"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Liability Derivatives</td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Balance Sheet Location</td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">January 31, 2017</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">July 31, 2016</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td> </td><td> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="6">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td>Derivatives not designated or not qualifying as hedging instruments:</td><td> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 894px; text-align: left; padding-bottom: 4pt;">Foreign exchange forward contracts</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 283px; text-align: left; padding-bottom: 4pt;">Accrued expenses</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">—</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">15</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;"> </td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">The effects of derivative instruments on the consolidated statements of comprehensive (loss) income were as follows:<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td colspan="3"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="14">Amount of Loss Recognized on Derivatives</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td colspan="3"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="6"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Three Months Ended<p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">January 31,</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="6"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Six Months Ended<p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">January 31,</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold; border-bottom: 1.5pt solid black;">Derivatives not designated or not qualifying as hedging instruments</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;">Location of Loss Recognized on Derivatives</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="2">2017</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="2">2016</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="2">2017</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="2">2016</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td> </td><td> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="14">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 518px; text-align: left; padding-bottom: 4pt; vertical-align: top;">Foreign exchange forward contracts</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 283px; text-align: left; padding-bottom: 4pt;">Net loss (gain) resulting from foreign exchange transactions</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 142px; border-bottom: 4pt double black; text-align: right;">(110</td><td style="width: 16px; padding-bottom: 4pt; text-align: left;">)</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">(123</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;">)</td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">(43</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;">)</td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">(225</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;">)</td></tr></table><div> </div>

<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-weight: bold; font-stretch: normal; line-height: normal; margin: 0px;">Note 6—Earnings Per Share<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-weight: bold; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">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.<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">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:<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="6"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Three Months Ended January 31,</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="6"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Six Months Ended January 31,</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">2017</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">2016</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">2017</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">2016 </td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="14">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 815px;">Basic weighted-average number of shares</td><td style="width: 16px;"> </td><td style="width: 16px; text-align: left;"> </td><td style="width: 142px; text-align: right;">9,413</td><td style="width: 16px; text-align: left;"> </td><td style="width: 16px;"> </td><td style="width: 16px; text-align: left;"> </td><td style="width: 142px; text-align: right;">8,161</td><td style="width: 16px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 141px; text-align: right;">9,337</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 141px; text-align: right;">8,161</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Effect of dilutive securities:</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; padding-left: 10pt;">Stock options</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">801</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">787</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt;">Non-vested restricted Class B common stock</td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">—</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">—</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">—</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">—</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-bottom: 4pt;">Diluted weighted-average number of shares</td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;"> </td><td style="border-bottom: 4pt double black; text-align: right;">9,413</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;"> </td><td style="border-bottom: 4pt double black; text-align: right;">8,962</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;"> </td><td style="border-bottom: 4pt double black; text-align: right;">9,337</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;"> </td><td style="border-bottom: 4pt double black; text-align: right;">8,948</td><td style="padding-bottom: 4pt; text-align: left;"> </td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">The following shares were excluded from the dilutive earnings per share computations because their inclusion would have been anti-dilutive:<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="padding-left: 10pt; text-indent: -10pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="6"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Three Months Ended January 31,</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="6"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Six Months Ended January 31,</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td style="padding-bottom: 1.5pt; padding-left: 10pt; text-indent: -10pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">2017</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">2016</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">2017</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">2016</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td style="padding-left: 10pt; text-indent: -10pt;"> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="14">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 801.672px; text-align: left; padding-left: 10pt; text-indent: -10pt;">Stock options</td><td style="width: 16px;"> </td><td style="width: 16px; text-align: left;"> </td><td style="width: 142px; text-align: right;">1,434</td><td style="width: 16px; text-align: left;"> </td><td style="width: 16px;"> </td><td style="width: 16px; text-align: left;"> </td><td style="width: 142px; text-align: right;">707</td><td style="width: 16px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 141px; text-align: right;">1,434</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 141px; text-align: right;">707</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt; text-indent: -10pt;">Non-vested restricted Class B common stock</td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">53</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">—</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">53</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">—</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; padding-bottom: 4pt; padding-left: 10pt; text-indent: -10pt;">Shares excluded from the calculation of diluted earnings per share</td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;"> </td><td style="border-bottom: 4pt double black; text-align: right;">1,487</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;"> </td><td style="border-bottom: 4pt double black; text-align: right;">707</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;"> </td><td style="border-bottom: 4pt double black; text-align: right;">1,487</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;"> </td><td style="border-bottom: 4pt double black; text-align: right;">707</td><td style="padding-bottom: 4pt; text-align: left;"> </td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;">For the three and six months ended January 31, 2017, the diluted earnings per share equals basic earnings per share because the Company had a net loss and the impact of the assumed exercise of stock options and vesting of restricted stock would have been anti-dilutive. For the three and six months ended January 31, 2016, outstanding stock options were excluded from the calculation of diluted earnings per share because the exercise price of the stock option was greater than the average market price of the Company’s stock during the periods.

<div> <p style="font: bold 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Note 9—Business Segment and Geographic Information <p style="font: bold 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The Company provides a content distribution platform, worldwide, centered on self-expression, attracting both creators looking to promote their content and consumers who utilize such content to express their identity, feelings, tastes and interests. The Company’s platform enables consumers to personalize their mobile devices with free, high quality ringtones, wallpapers, home screen app icons and notification sounds. The Company conducts business as one operating segment. There were no revenues from customers located outside of the United States in all periods presented. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Net long-lived assets and total assets held outside of the United States, which are located primarily in Norway, were as follows: <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2"> United States </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2"> Foreign </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2"> Total </td> <td style="padding-bottom: 1.5pt;"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td style="font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold;" colspan="10">(in thousands)</td> <td style="font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom;"> <td>Long-lived assets, net:</td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="width: 989.67px; padding-bottom: 4pt; padding-left: 10pt;">January 31, 2017</td> <td style="width: 16px; padding-bottom: 4pt;"> </td> <td style="width: 16px; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="width: 142px; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">2,146</td> <td style="width: 16px; text-align: left; padding-bottom: 4pt;"> </td> <td style="width: 16px; padding-bottom: 4pt;"> </td> <td style="width: 16px; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="width: 141px; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">250</td> <td style="width: 15px; text-align: left; padding-bottom: 4pt;"> </td> <td style="width: 15px; padding-bottom: 4pt;"> </td> <td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="width: 141px; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">2,396</td> <td style="width: 15px; text-align: left; padding-bottom: 4pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 4pt; padding-left: 10pt;">July 31, 2016</td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1,719</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">247</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1,966</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">Total assets:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="padding-bottom: 4pt; padding-left: 10pt;">January 31, 2017</td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">7,780</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">4,895</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">12,675</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 4pt; padding-left: 10pt;">July 31, 2016</td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">8,576</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">3,857</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">12,433</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> </tr> </table> </div>

<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Note 10—Legal Proceeding and Tax Matters<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Legal Proceedings<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">In March 2014, Saregama India, Limited filed a lawsuit against the Company before the Barasat District Court, seeking approximately $1,595,700 as damages and an injunction for copyright infringement. The main ground for the lawsuit was an allegation that the Company avails the plaintiff’s sound recordings through the Company’s platform with full knowledge that the sound recordings have been uploaded and are being communicated to the public without obtaining any license from the plaintiff. The Company believes that the possibility of it bearing material liability on the matter is remote.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">The Company may from time to time be subject to other 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.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Tax Audits<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">In September 2016, the Company was notified that the Zedge Europe AS tax returns for 2012 through 2016 were going to be audited by the tax authorities in Norway. The initial audit meeting took place in October 2016 and the audit is progressing. No significant issues have been identified at this time. Amounts asserted by taxing authorities or the amount ultimately assessed against the Company could be greater than any accrued amount. Accordingly, provisions may be recorded in the future as estimates are revised or underlying matters are settled or resolved. Imposition of assessments as a result of tax audits could have an adverse effect on the Company’s results of operations, cash flows and financial condition.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Research and Development Credits<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">As of October 31, 2016, the Company recorded a $0.2 million receivable from Norway’s SkatteFUNN government program designed to stimulate research and development in Norwegian trade and industry, which related to previous periods. At January 31, 2017, the balance was $0.3 million, which was included in “Other current assets” in the consolidated balance sheet.</div>

<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Note 11—Recently Issued Accounting Standards Not Yet Adopted<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">In June 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. The Company will adopt the new standard on August 1, 2020. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">In March 2016, the FASB issued an ASU to improve the accounting for employee share-based payments. The new standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company will adopt the new standard on August 1, 2017. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company will adopt the new standard on August 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is evaluating the impact that the new standard will have on its consolidated financial statements.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 23.75pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that will supersede most of the current revenue recognition guidance under U.S. GAAP and IFRS. The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. To accomplish this objective, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company is required to adopt this standard on August 1, 2018. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company is evaluating the impact that the standard will have on its consolidated financial statements and has not yet selected an adoption date or a transition method. The Company cannot reasonably estimate the impact that the adoption of the standard will have on its consolidated financial statements.</div>

<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px; text-indent: 23.75pt;"> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Level 1 (1)</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Level 2 (2)</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Level 3 (3)</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Total</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="14">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold;">January 31, 2017</td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom;"><td style="padding-left: 10pt;">Assets:</td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 788.344px; text-align: left; padding-bottom: 4pt; padding-left: 20pt;">Foreign exchange forward contracts</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 142px; border-bottom: 4pt double black; text-align: right;">—</td><td style="width: 16px; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 142px; border-bottom: 4pt double black; text-align: right;">44</td><td style="width: 16px; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">—</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">44</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="padding-left: 10pt;">Liabilities:</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; padding-bottom: 4pt; padding-left: 20pt;">Foreign exchange forward contracts</td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-weight: bold;">July 31, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-left: 10pt;">Assets:</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 4pt; padding-left: 20pt;">Foreign exchange forward contracts</td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">21</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">21</td><td style="padding-bottom: 4pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-left: 10pt;">Liabilities:</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 4pt; padding-left: 20pt;">Foreign exchange forward contracts</td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">15</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">—</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">15</td><td style="padding-bottom: 4pt; text-align: left;"> </td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;">(1) – quoted prices in active markets for identical assets or liabilities<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;">(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; line-height: normal; margin: 0px;">(3) – no observable pricing inputs in the market

<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td colspan="3"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="14">Amount of Loss Recognized on Derivatives</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td colspan="3"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="6"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Three Months Ended<p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">January 31,</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="6"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">Six Months Ended<p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">January 31,</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold; border-bottom: 1.5pt solid black;">Derivatives not designated or not qualifying as hedging instruments</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;">Location of Loss Recognized on Derivatives</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="2">2017</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="2">2016</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="2">2017</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom: 1.5pt solid black;" colspan="2">2016</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td> </td><td> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="14">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 518px; text-align: left; padding-bottom: 4pt; vertical-align: top;">Foreign exchange forward contracts</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 283px; text-align: left; padding-bottom: 4pt;">Net loss (gain) resulting from foreign exchange transactions</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 142px; border-bottom: 4pt double black; text-align: right;">(110</td><td style="width: 16px; padding-bottom: 4pt; text-align: left;">)</td><td style="width: 16px; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">(123</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;">)</td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">(43</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;">)</td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; border-bottom: 4pt double black; text-align: left;">$</td><td style="width: 141px; border-bottom: 4pt double black; text-align: right;">(225</td><td style="width: 15px; padding-bottom: 4pt; text-align: left;">)</td></tr></table><div> </div>

<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">January 31, 2017</td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom: 1.5pt solid black;" colspan="2"><p style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; margin: 0px; text-align: center;">July 31, 2016</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="6">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1191px; text-align: left;">Accrued vacation</td><td style="width: 16px;"> </td><td style="width: 16px; text-align: left;">$</td><td style="width: 142px; text-align: right;">601</td><td style="width: 16px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;">$</td><td style="width: 141px; text-align: right;">494</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Accrued payroll taxes</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">274</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">210</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left;">Accrued payroll and bonuses</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">76</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">72</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Accrued direct cost of revenues</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">5</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">111</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left;">Accrued advertising</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">294</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">242</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Accrued income taxes</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">69</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">119</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-bottom: 1.5pt;">Other</td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">505</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom: 1.5pt solid black; text-align: left;"> </td><td style="border-bottom: 1.5pt solid black; text-align: right;">239</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; padding-bottom: 4pt; padding-left: 10pt;">Total accrued expenses</td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">1,824</td><td style="padding-bottom: 4pt; text-align: left;"> </td><td style="padding-bottom: 4pt;"> </td><td style="border-bottom: 4pt double black; text-align: left;">$</td><td style="border-bottom: 4pt double black; text-align: right;">1,487</td><td style="padding-bottom: 4pt; text-align: left;"> </td></tr></table><div> </div>

<div> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2"> United States </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2"> Foreign </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2"> Total </td> <td style="padding-bottom: 1.5pt;"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td style="font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold;" colspan="10">(in thousands)</td> <td style="font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom;"> <td>Long-lived assets, net:</td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="width: 989.67px; padding-bottom: 4pt; padding-left: 10pt;">January 31, 2017</td> <td style="width: 16px; padding-bottom: 4pt;"> </td> <td style="width: 16px; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="width: 142px; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">2,146</td> <td style="width: 16px; text-align: left; padding-bottom: 4pt;"> </td> <td style="width: 16px; padding-bottom: 4pt;"> </td> <td style="width: 16px; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="width: 141px; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">250</td> <td style="width: 15px; text-align: left; padding-bottom: 4pt;"> </td> <td style="width: 15px; padding-bottom: 4pt;"> </td> <td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="width: 141px; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">2,396</td> <td style="width: 15px; text-align: left; padding-bottom: 4pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 4pt; padding-left: 10pt;">July 31, 2016</td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1,719</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">247</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1,966</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">Total assets:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="padding-bottom: 4pt; padding-left: 10pt;">January 31, 2017</td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">7,780</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">4,895</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">12,675</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 4pt; padding-left: 10pt;">July 31, 2016</td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">8,576</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">3,857</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">12,433</td> <td style="text-align: left; padding-bottom: 4pt;"> </td> </tr> </table> </div>

21000

44000

15000

2017-02-28

2017-03-31

2017-04-30

2017-05-31

2017-06-30

2017-07-31

500000 4235537 500000 4234454 250000 2067554 500000 4132484 500000 4179494 500000 4179038

21000

44000

15000

-123000

-225000

-110000

-43000

494000

601000

210000

274000

72000

76000

111000 5000

242000

294000

119000

69000

239000

505000

10596000

10743000

109000

109335

143000

-105000

231327

277200

681000

P3Y

56840

801000

787000

707000

1487000

1434000

53000

1487000

1434000

53000

552000

865000

161000

638000

464000

870000

157000

860000

2500000

5000000

Advances under this facility may not exceed the lesser of $2.5 million or 80% of the Company's eligible accounts receivable subject to certain concentration limits.

The revolving credit facility shall be reduced by an applicable foreign exchange reserve percentage as determined by Western Alliance Bank, in its reasonable discretion from time to time, which was initially set at 10%.

The outstanding principal amount bears interest per annum at the greater of 3.5% or the prime rate plus 1.25%.

2018-09-27

12500

The applicable foreign exchange reserve percentage was changed so that major currency forward contracts less than six months tenor is set at 10% and for contracts over six months tenor, 12.5%.

There was $1.0 million of outstanding foreign exchange contracts with less than six months tenor under the credit facility (and no contracts of greater than six months tenor) which reduced the available borrowing under the revolving credit facility by $100,000.

1966000

1719000

247000

2396000

2146000

250000

Saregama India, Limited filed a lawsuit against the Company before the Barasat District Court, seeking approximately $1,595,700 as damages and an injunction for copyright infringement.

1595700

200000

quoted prices in active markets for identical assets or liabilities observable inputs other than quoted prices in active markets for identical assets and liabilities no observable pricing inputs in the market Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank.

EX-101.SCH 7 zedg-20170131.xsd XBRL SCHEMA FILE 001 - Document - Document and Entity Information link:presentationLink link:definitionLink link:calculationLink 002 - Statement - Consolidated Balance Sheets link:presentationLink link:definitionLink link:calculationLink 003 - Statement - Consolidated Balance Sheets (Parenthetical) link:presentationLink link:definitionLink link:calculationLink 004 - Statement - Consolidated Statements of Comprehensive (Loss) Income (Unaudited) link:presentationLink link:definitionLink link:calculationLink 005 - Statement - Consolidated Statements of Cash Flows (Unaudited) link:presentationLink link:definitionLink link:calculationLink 006 - Disclosure - Basis of Presentation link:presentationLink link:definitionLink link:calculationLink 007 - Disclosure - Fair Value Measurements link:presentationLink link:definitionLink link:calculationLink 008 - Disclosure - Derivative Instruments link:presentationLink link:definitionLink link:calculationLink 009 - Disclosure - Accrued Expenses link:presentationLink link:definitionLink link:calculationLink 010 - Disclosure - Equity link:presentationLink link:definitionLink link:calculationLink 011 - Disclosure - Earnings Per Share link:presentationLink link:definitionLink link:calculationLink 012 - Disclosure - Related Party Transactions link:presentationLink link:definitionLink link:calculationLink 013 - Disclosure - Revolving Credit Facility link:presentationLink link:definitionLink link:calculationLink 014 - Disclosure - Business Segment and Geographic Information link:presentationLink link:definitionLink link:calculationLink 015 - Disclosure - Legal Proceeding and Tax Matters link:presentationLink link:definitionLink link:calculationLink 016 - Disclosure - Recently Issued Accounting Standards Not Yet Adopted link:presentationLink link:definitionLink link:calculationLink 017 - Disclosure - Fair Value Measurements (Tables) link:presentationLink link:definitionLink link:calculationLink 018 - Disclosure - Derivative Instruments (Tables) link:presentationLink link:definitionLink link:calculationLink 019 - Disclosure - Accrued Expenses (Tables) link:presentationLink link:definitionLink link:calculationLink 020 - Disclosure - Equity (Tables) link:presentationLink link:definitionLink link:calculationLink 021 - Disclosure - Earnings Per Share (Tables) link:presentationLink link:definitionLink link:calculationLink 022 - Disclosure - Related Party Transactions (Tables) link:presentationLink link:definitionLink link:calculationLink 023 - Disclosure - Business Segment and Geographic Information (Tables) link:presentationLink link:definitionLink link:calculationLink 024 - Disclosure - Fair Value Measurements (Details) link:presentationLink link:definitionLink link:calculationLink 025 - Disclosure - Derivative Instruments (Details) link:presentationLink link:definitionLink link:calculationLink 026 - Disclosure - Derivative Instruments (Details 1) link:presentationLink link:definitionLink link:calculationLink 027 - Disclosure - Derivative Instruments (Details 2) link:presentationLink link:definitionLink link:calculationLink 028 - Disclosure - Derivative Instruments (Details 3) link:presentationLink link:definitionLink link:calculationLink 029 - Disclosure - Accrued Expenses (Details) link:presentationLink link:definitionLink link:calculationLink 030 - Disclosure - Equity (Details) link:presentationLink link:definitionLink link:calculationLink 031 - Disclosure - Equity (Details Textual) link:presentationLink link:definitionLink link:calculationLink 032 - Disclosure - Earnings Per Share (Details) link:presentationLink link:definitionLink link:calculationLink 033 - Disclosure - Earnings Per Share (Details 1) link:presentationLink link:definitionLink link:calculationLink 034 - Disclosure - Related Party Transactions (Details) link:presentationLink link:definitionLink link:calculationLink 035 - Disclosure - Revolving Credit Facility (Details) link:presentationLink link:definitionLink link:calculationLink 036 - Disclosure - Business Segment and Geographic Information (Details) link:presentationLink link:definitionLink link:calculationLink 037 - Disclosure - Legal Proceeding and Tax Matters (Details) link:presentationLink link:definitionLink link:calculationLink EX-101.CAL 8 zedg-20170131_cal.xml XBRL CALCULATION FILE EX-101.DEF 9 zedg-20170131_def.xml XBRL DEFINITION FILE EX-101.LAB 10 zedg-20170131_lab.xml XBRL LABEL FILE Document and Entity Information [Abstract] Statement [Table] Class of Stock [Axis] Class of Stock [Domain] Common Class A [Member] Class A common stock Common Class B [Member] Class B common stock [Member] Class B common stock Statement [Line Items] Entity Registrant Name Entity Central Index Key Amendment Flag Current Fiscal Year End Date Document Type Document Period End Date Document Fiscal Year Focus Document Fiscal Period Focus Entity Filer Category Entity Common Stock, Shares Outstanding Statement of Financial Position [Abstract] Assets [Abstract] Assets Assets, Current [Abstract] Current assets: Cash and Cash Equivalents, at Carrying Value Cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Receivables, Net, Current Trade accounts receivable, net of allowance for doubtful accounts of $0 at January 31, 2017 and July 31, 2016 Prepaid Expense, Current Prepaid expenses Other Assets, Current Other current assets Assets, Current Total current assets Property, Plant and Equipment, Net Property and equipment, net Goodwill Goodwill Other Assets, Noncurrent Other assets Total assets Total assets Total assets Liabilities and Equity [Abstract] Liabilities and stockholders' equity Liabilities, Current [Abstract] Current liabilities: Accounts Payable, Current Trade accounts payable Accrued Liabilities, Current Accrued expenses Total accrued expenses Deferred Revenue, Current Deferred revenue Due to Related Parties, Current Due to IDT Corporation Liabilities, Current Total current liabilities Commitments and Contingencies Commitments and contingencies Stockholders' Equity Attributable to Parent [Abstract] Stockholders' Equity: Preferred Stock, Value, Issued Preferred stock, $.01 par value; authorized shares-2,400; no shares issued Common Stock, Value, Issued Common stock value Additional Paid in Capital Additional paid-in capital Accumulated Other Comprehensive Income (Loss), Net of Tax Accumulated other comprehensive loss Retained Earnings (Accumulated Deficit) Accumulated deficit Stockholders' Equity Attributable to Parent Total stockholders' equity Liabilities and Equity Total liabilities and stockholders' equity Allowance for Doubtful Accounts Receivable, Current Allowance for doubtful accounts Preferred Stock, Par or Stated Value Per Share Preferred stock, par value Preferred Stock, Shares Authorized Preferred stock, shares authorized Preferred Stock, Shares Issued Preferred stock, shares issued Common Stock, Par or Stated Value Per Share Common stock, par value Common Stock, Shares Authorized Common stock, shares authorized Common Stock, Shares, Issued Common stock, shares issued Common Stock, Shares, Outstanding Common stock, shares outstanding Consolidated Statements of Comprehensive Income [Abstract] Revenues Revenues Operating Expenses [Abstract] Costs and expenses: Cost of Revenue Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included below) Selling, General and Administrative Expense Selling, general and administrative Depreciation, Depletion and Amortization, Nonproduction Depreciation and amortization Gain (Loss) on Disposition of Assets Write-off of capitalized software and technology development costs Write-off of capitalized software and technology development costs Operating Income (Loss) Income from operations (Loss) income from operations Interest Income (Expense), Net Interest and other income Foreign Currency Transaction Gain (Loss), before Tax Net (loss) gain resulting from foreign exchange transactions Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Income before income taxes (Loss) income before income taxes Income Tax Expense (Benefit) (Provision for) benefit from income taxes Benefit from (provision for) income taxes Net income Net (loss) income Net loss Net (loss) income Other Comprehensive Income (Loss), Net of Tax [Abstract] Other comprehensive (loss) income: Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax Changes in foreign currency translation adjustment Foreign currency translation adjustments Other Comprehensive Income (Loss), Net of Tax Total other comprehensive (loss) income Total comprehensive income Total comprehensive income Total comprehensive (loss) income Total comprehensive income Earnings Per Share [Abstract] (Loss) earnings per share attributable to Zedge, Inc. common stockholders: Earnings Per Share, Basic Basic Earnings Per Share, Diluted Diluted Earnings Per Share, Basic and Diluted, Other Disclosures [Abstract] Weighted-average number of shares used in calculation of (loss) earnings per share: Weighted Average Number of Shares Outstanding, Basic Basic Basic weighted-average number of shares Weighted Average Number of Shares Outstanding, Diluted Diluted Diluted weighted-average number of shares Diluted weighted-average number of shares Statement of Cash Flows [Abstract] Net Cash Provided by (Used in) Operating Activities, Continuing Operations [Abstract] Operating activities Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] Adjustments to reconcile net (loss) income to net cash provided by operating activities: Deferred Income Taxes and Tax Credits Deferred income taxes Share-based Compensation Stock-based compensation Stock-based compensation Stock-based compensation Increase (Decrease) in Operating Capital [Abstract] Change in assets and liabilities: Increase (Decrease) in Accounts Receivable Trade accounts receivable Trade accounts receivable Increase (Decrease) in Prepaid Expense and Other Assets Prepaid expenses and other current assets Prepaid expenses and other current assets Increase (Decrease) in Other Operating Assets Other assets Other assets Increase (Decrease) in Accounts Payable and Accrued Liabilities Trade accounts payable and accrued expenses Increase (Decrease) in Due to Related Parties, Current Due to IDT Corporation Increase (Decrease) in Deferred Revenue Deferred revenue Net Cash Provided by (Used in) Operating Activities, Continuing Operations Net cash provided by operating activities Net cash provided by operating activities Net Cash Provided by (Used in) Investing Activities, Continuing Operations [Abstract] Investing activities Payments to Develop Software Capitalized software and technology development costs and purchase of equipment Capitalized software and technology development costs and purchase of equipment Net Cash Provided by (Used in) Investing Activities, Continuing Operations Net cash (used in) provided by investing activities Net cash used in investing activities Net Cash Provided by (Used in) Financing Activities, Continuing Operations [Abstract] Financing activities Proceeds from Stock Options Exercised Proceeds from exercise of stock options Exercise of stock options Net Cash Provided by (Used in) Financing Activities, Continuing Operations Net cash used in financing activities Net cash provided by financing activities Effect of Exchange Rate on Cash and Cash Equivalents Effect of exchange rate changes on cash and cash equivalents Cash and Cash Equivalents, Period Increase (Decrease) Net (decrease) increase in cash and cash equivalents Net (decrease) increase in cash and cash equivalents Basis of Presentation [Abstract] Business Description and Accounting Policies [Text Block] Basis of Presentation Fair Value Measurements [Abstract] Fair Value Disclosures [Text Block] Fair Value Measurements Derivative Instruments [Abstract] Derivative Instruments and Hedging Activities Disclosure [Text Block] Derivative Instruments Accrued Expenses [Abstract] Accounts Payable and Accrued Liabilities Disclosure [Text Block] Accrued Expenses Equity [Abstract] Stockholders' Equity Note Disclosure [Text Block] Equity Earnings Per Share [Text Block] Earnings Per Share Related Party Transactions [Abstract] Related Party Transactions Disclosure [Text Block] Related Party Transactions Revolving Credit Facility [Abstract] Short-term Debt [Text Block] Revolving Credit Facility Business Segment and Geographic Information [Abstract] Segment Reporting Disclosure [Text Block] Business Segment and Geographic Information Legal Proceeding and Tax Matters [Abstract] Legal Matters and Contingencies [Text Block] Legal Proceeding and Tax Matters Recently Issued Accounting Standards Not Yet Adopted [Abstract] Description of New Accounting Pronouncements Not yet Adopted [Text Block] Recently Issued Accounting Standards Not Yet Adopted Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] Summary of balance of assets and liabilities measured at fair value on a recurring basis Schedule of Foreign Exchange Contracts, Statement of Financial Position [Table Text Block] Schedule of derivative instruments outstanding contracts Schedule of Derivative Assets at Fair Value [Table Text Block] Schedule of derivative assets fair value Schedule of Derivative Liabilities at Fair Value [Table Text Block] Schedule of derivative liability fair value Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location [Table Text Block] Schedule of derivative instruments on consolidated statements of comprehensive (loss) income Schedule of Accrued Liabilities [Table Text Block] Summary of accrued expenses Schedule of Stockholders Equity [Table Text Block] Summary of changes in the components of stockholders' equity Schedule of Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Table Text Block] Summary of weighted-average number of shares used in the calculation of basic and diluted earnings per share Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] Shares excluded from the diluted earnings per share computations Schedule of Related Party Transactions [Table Text Block] Schedule of related party transactions Long-lived Assets by Geographic Areas [Table Text Block] Schedule of net long-lived assets and total assets by geographic areas Fair Value Measurements, Recurring and Nonrecurring [Table] Measurement Frequency [Axis] Fair Value, Measurement Frequency [Domain] Fair Value, Measurements, Recurring [Member] Fair Value, Hierarchy [Axis] Fair Value Hierarchy [Domain] Fair Value, Inputs, Level 1 [Member] Level 1 [Member] Fair Value, Inputs, Level 2 [Member] Level 2 [Member] Fair Value, Inputs, Level 3 [Member] Level 3 [Member] Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] Assets, Fair Value Disclosure [Abstract] Assets: Foreign Currency Contract, Asset, Fair Value Disclosure Foreign exchange forward contracts Liabilities, Fair Value Disclosure [Abstract] Liabilities: Foreign Currency Contracts, Liability, Fair Value Disclosure Foreign exchange forward contracts Derivative Instruments, Gain (Loss) [Table] Derivative Instrument [Axis] Derivative Contract [Domain] February Two Zero One Seven [Member] February 2017 [Member] March Two Zero One Seven [Member] March 2017 [Member] April Two Zero One Seven [Member] April 2017 [Member] May Two Zero One Seven [Member] May 2017 [Member] June Two Zero One Seven [Member] June 2017 [Member] June two zero one seven. July Two Zero One Seven [Member] July 2017 [Member] July two zero one seven. Derivative [Line Items] Maturity of Foreign Currency Derivatives Settlement Date Derivative Underlying Amount Amount Amount of underlying refers to the price on the security, commodity, index, or other variable specified by the contract. Derivative Instruments Not Designated as Hedging Instruments [Abstract] Derivatives not designated or not qualifying as hedging instruments: Derivatives not designated or not qualifying as hedging instruments Foreign Currency Derivative Instruments Not Designated as Hedging Instruments, Asset at Fair Value Foreign exchange forward contracts Foreign Currency Derivative Instruments Not Designated as Hedging Instruments, Liability at Fair Value Foreign exchange forward contracts Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments Foreign exchange forward contracts Accrued Vacation, Current Accrued vacation Accrued Payroll Taxes, Current Accrued payroll taxes Accrued Bonuses, Current Accrued payroll and bonuses Accrued Direct Cost Current Accrued direct cost of revenues Accrued direct cost current. Accrued Advertising, Current Accrued advertising Accrued Income Taxes, Current Accrued income taxes Other Accrued Liabilities, Current Other Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest Balance, July 31, 2016 Balance, January 31, 2017 Stock Issued During Period, Value, Stock Options Exercised Exercise of stock options Allocated Share-based Compensation Expense Stock-based compensation Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] Comprehensive loss: Other Comprehensive Income, Other, Net of Tax Total comprehensive loss Total comprehensive income Equity Option [Member] Stock Option [Member] Derivative Instruments, Gain (Loss) [Line Items] Equity Textual [Abstract] Equity (Textual) Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross Options to purchase shares of the Company's Class B common stock Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options Unrecognized compensation expense Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period Vesting period Collection Of Receivable From Stockholder For Stock Option Exercise Collection of receivable from stockholder for stock option exercise It represents collection of receivable from stockholder for stock option exercise. Weighted Average Number of Shares Outstanding Reconciliation [Abstract] Weighted-average number of shares used in the calculation of basic and diluted earnings per share Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract] Effect of dilutive securities: Incremental Common Shares Attributable to Dilutive Effect of Call Options and Warrants Stock options Incremental Common Shares Attributable to Dilutive Effect of Nonvested Shares with Forfeitable Dividends Non-vested restricted Class B common stock Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table] Antidilutive Securities [Axis] Antidilutive Securities, Name [Domain] Employee Stock Option [Member] Stock options [Member] Non Vested Restricted Class B Common Stock [Member] Non-vested restricted Class B common stock [Member] Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount Shares excluded from the calculation of diluted earnings per share Shares excluded from the calculation of diluted earnings per share Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party Payments by IDT on behalf of the Company Repayments of Related Party Debt Cash repayments, net of advances Cash repayments, net of advances EX-101.PRE 11 zedg-20170131_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jan. 31, 2017	Mar. 10, 2017
Entity Registrant Name	Zedge, Inc.
Entity Central Index Key	0001667313
Amendment Flag	false
Current Fiscal Year End Date	--07-31
Document Type	10-Q
Document Period End Date	Jan. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Entity Filer Category	Smaller Reporting Company
Class A common stock
Entity Common Stock, Shares Outstanding		524,775
Class B common stock
Entity Common Stock, Shares Outstanding		9,119,363

XML 13 R2.htm IDEA: XBRL DOCUMENT

Consolidated Balance Sheets - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Current assets:
Cash and cash equivalents	$ 5,604	$ 5,978
Trade accounts receivable, net of allowance for doubtful accounts of $0 at January 31, 2017 and July 31, 2016	1,617	1,668
Prepaid expenses	192	210
Other current assets	326	107
Total current assets	7,739	7,963
Property and equipment, net	2,271	1,843
Goodwill	2,403	2,361
Other assets	262	266
Total assets	12,675	12,433
Current liabilities:
Trade accounts payable	30	36
Accrued expenses	1,824	1,487
Deferred revenue	1	15
Due to IDT Corporation	77	299
Total current liabilities	1,932	1,837
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value; authorized shares-2,400; no shares issued
Additional paid-in capital	21,294	21,045
Accumulated other comprehensive loss	(758)	(817)
Accumulated deficit	(9,889)	(9,725)
Total stockholders' equity	10,743	10,596
Total liabilities and stockholders' equity	12,675	12,433
Class A common stock
Stockholders' Equity:
Common stock value	5	5
Class B common stock
Stockholders' Equity:
Common stock value	$ 91	$ 88

XML 14 R3.htm IDEA: XBRL DOCUMENT

Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Allowance for doubtful accounts	$ 0	$ 0
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,400	2,400
Preferred stock, shares issued
Class A common stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	2,600	2,600
Common stock, shares issued	525	525
Common stock, shares outstanding	525	525
Class B common stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	40,000	40,000
Common stock, shares issued	9,114	8,819
Common stock, shares outstanding	9,114	8,819

XML 15 R4.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Consolidated Statements of Comprehensive Income [Abstract]
Revenues	$ 2,572	$ 3,530	$ 4,955	$ 6,089
Costs and expenses:
Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included below)	412	310	780	605
Selling, general and administrative	2,314	1,781	4,070	3,466
Depreciation and amortization	184	156	322	317
Write-off of capitalized software and technology development costs			9
(Loss) income from operations	(338)	1,283	(226)	1,701
Interest and other income	7	1	8	2
Net (loss) gain resulting from foreign exchange transactions	(17)	(106)	33	(161)
(Loss) income before income taxes	(348)	1,178	(185)	1,542
Benefit from (provision for) income taxes	22	(67)	21	(106)
Net (loss) income	(326)	1,111	(164)	1,436
Other comprehensive (loss) income:
Changes in foreign currency translation adjustment	(14)	(68)	59	(159)
Total other comprehensive (loss) income	(14)	(68)	59	(159)
Total comprehensive (loss) income	$ (340)	$ 1,043	$ (105)	$ 1,277
(Loss) earnings per share attributable to Zedge, Inc. common stockholders:
Basic	$ (0.03)	$ 0.14	$ (0.02)	$ 0.18
Diluted	$ (0.03)	$ 0.12	$ (0.02)	$ 0.16
Weighted-average number of shares used in calculation of (loss) earnings per share:
Basic	9,413	8,161	9,337	8,161
Diluted	9,413	8,962	9,337	8,948

XML 16 R5.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016
Operating activities
Net (loss) income	$ (164)	$ 1,436
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	322	317
Deferred income taxes	5
Stock-based compensation	143	9
Write-off of capitalized software and technology development costs	9
Change in assets and liabilities:
Trade accounts receivable	51	(728)
Prepaid expenses and other current assets	(258)	60
Other assets	(2)	6
Trade accounts payable and accrued expenses	335	333
Due to IDT Corporation	(222)	(5)
Deferred revenue	(14)
Net cash provided by operating activities	205	1,428
Investing activities
Capitalized software and technology development costs and purchase of equipment	(757)	(344)
Net cash used in investing activities	(757)	(344)
Financing activities
Proceeds from exercise of stock options	166
Net cash provided by financing activities	166
Effect of exchange rate changes on cash and cash equivalents	12	(61)
Net (decrease) increase in cash and cash equivalents	(374)	1,023
Cash and cash equivalents at beginning of period	5,978	2,170
Cash and cash equivalents at end of period	$ 5,604	$ 3,193

XML 17 R6.htm IDEA: XBRL DOCUMENT

Basis of Presentation

6 Months Ended

Jan. 31, 2017

Basis of Presentation [Abstract]

Basis of Presentation

Note 1—Basis of Presentation

XML 18 R7.htm IDEA: XBRL DOCUMENT

Fair Value Measurements

6 Months Ended

Jan. 31, 2017

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 2—Fair Value Measurements

The following tables present the balance of assets and liabilities measured at fair value on a recurring basis:

	Level 1 (1)		Level 2 (2)		Level 3 (3)		Total
	(in thousands)
January 31, 2017
Assets:
Foreign exchange forward contracts	$	—	$	44	$	—	$	44
Liabilities:
Foreign exchange forward contracts	$	—	$	—	$	—	$	—
July 31, 2016
Assets:
Foreign exchange forward contracts	$	—	$	21	$	—	$	21
Liabilities:
Foreign exchange forward contracts	$	—	$	15	$	—	$	15

(1) – quoted prices in active markets for identical assets or liabilities

(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities

(3) – no observable pricing inputs in the market

Fair Value of Other Financial Instruments

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

XML 19 R8.htm IDEA: XBRL DOCUMENT

Derivative Instruments

6 Months Ended

Jan. 31, 2017

Derivative Instruments [Abstract]

Derivative Instruments

Note 3—Derivative Instruments

The outstanding contracts at January 31, 2017 were as follows:

Settlement Date	U.S. Dollar Amount	NOK Amount
February 2017	500,000	4,235,537
March 2017	500,000	4,234,454
April 2017	250,000	2,067,554
May 2017	500,000	4,132,484
June 2017*	500,000	4,179,494
July 2017*	500,000	4,179,038

* Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank.

The fair value of outstanding derivative instruments recorded as assets in the accompanying consolidated balance sheets were as follows:

Asset Derivatives	Balance Sheet Location	January 31, 2017		July 31, 2016
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Other current assets	$	44	$	21

The fair value of outstanding derivative instruments recorded as liabilities in the accompanying consolidated balance sheets were as follows:

Liability Derivatives	Balance Sheet Location	January 31, 2017		July 31, 2016
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Accrued expenses	$	—	$	15

The effects of derivative instruments on the consolidated statements of comprehensive (loss) income were as follows:

		Amount of Loss Recognized on Derivatives
		Three Months Ended January 31,						Six Months Ended January 31,
Derivatives not designated or not qualifying as hedging instruments	Location of Loss Recognized on Derivatives	2017			2016			2017			2016
		(in thousands)
Foreign exchange forward contracts	Net loss (gain) resulting from foreign exchange transactions	$	(110	)	$	(123	)	$	(43	)	$	(225	)

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624171-113959

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41620-113959

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624163-113959

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579240-113959

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4D
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624177-113959

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41641-113959

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579245-113959

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4H
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624258-113959

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4K
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708775-113959

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4J
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708773-113959

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5618551-113959

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5580258-113959

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4E
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624181-113959

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 25
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41638-113959

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(n))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

+ Details

XML 20 R9.htm IDEA: XBRL DOCUMENT

Accrued Expenses

6 Months Ended

Jan. 31, 2017

Accrued Expenses [Abstract]

Accrued Expenses

Note 4—Accrued Expenses

Accrued expenses consist of the following:

	January 31, 2017		July 31, 2016
	(in thousands)
Accrued vacation	$	601	$	494
Accrued payroll taxes		274		210
Accrued payroll and bonuses		76		72
Accrued direct cost of revenues		5		111
Accrued advertising		294		242
Accrued income taxes		69		119
Other		505		239

Total accrued expenses	$	1,824	$	1,487

XML 21 R10.htm IDEA: XBRL DOCUMENT

Equity

6 Months Ended

Jan. 31, 2017

Equity [Abstract]

Equity

Note 5—Equity

Changes in the components of equity were as follows:

	Six Months Ended January 31, 2017
	(in thousands)
Balance, July 31, 2016	$	10,596
Exercise of stock options		109
Stock-based compensation		143
Comprehensive loss:
Net loss		(164	)
Foreign currency translation adjustments		59
Total comprehensive loss		(105	)
Balance, January 31, 2017	$	10,743

Stock Options

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB Topic 4.E)
-URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74567-122707

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(31))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB Topic 4.C)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(30))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(d))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

+ Details

XML 22 R11.htm IDEA: XBRL DOCUMENT

Earnings Per Share

6 Months Ended

Jan. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Note 6—Earnings Per Share

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:

	Three Months Ended January 31,				Six Months Ended January 31,
	2017		2016		2017		2016
	(in thousands)
Basic weighted-average number of shares		9,413		8,161		9,337		8,161
Effect of dilutive securities:
Stock options		—		801		—		787
Non-vested restricted Class B common stock		—		—		—		—
Diluted weighted-average number of shares		9,413		8,962		9,337		8,948

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

	Three Months Ended January 31,				Six Months Ended January 31,
	2017		2016		2017		2016
	(in thousands)
Stock options		1,434		707		1,434		707
Non-vested restricted Class B common stock		53		—		53		—
Shares excluded from the calculation of diluted earnings per share		1,487		707		1,487		707

XML 23 R12.htm IDEA: XBRL DOCUMENT

Related Party Transactions

6 Months Ended

Jan. 31, 2017

Related Party Transactions

Note 7—Related Party Transactions

	Three Months Ended January 31,						Six Months Ended January 31,
	2017			2016			2017			2016
	(in thousands)
Payments by IDT on behalf of the Company	$	161		$	552		$	638		$	865
Cash repayments, net of advances	$	(157	)	$	(464	)	$	(860	)	$	(870	)

XML 24 R13.htm IDEA: XBRL DOCUMENT

Revolving Credit Facility	6 Months Ended
Revolving Credit Facility	Jan. 31, 2017
Revolving Credit Facility [Abstract]
Revolving Credit Facility	Note 8—Revolving Credit Facility As of September 27, 2016, the Company entered into a loan and security agreement with Western Alliance Bank for a revolving credit facility of up to $2.5 million. Advances under this facility may not exceed the lesser of $2.5 million or 80% of the Company’s eligible accounts receivable subject to certain concentration limits. The revolving credit facility is secured by a lien on substantially all of the Company’s assets. The outstanding principal amount bears interest per annum at the greater of 3.5% or the prime rate plus 1.25%. Interest is payable monthly and all outstanding principal and any accrued and unpaid interest is due on the maturity date of September 27, 2018. The Company is required to pay an annual facility fee of $12,500 to Western Alliance Bank. The Company is 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 include a prohibition on the Company paying any dividend on its capital stock. The Company may terminate this agreement at any time without penalty or premium provided that it pays down any outstanding principal, accrued interest and bank expenses. At January 31, 2017, there were no amounts outstanding under the revolving credit facility and the Company was in compliance with all of the covenants. As of November 16, 2016, the Company entered into a Foreign Exchange Agreement with Western Alliance Bank 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. The available borrowing under the revolving credit facility shall be reduced by an applicable foreign exchange reserve percentage as determined by Western Alliance Bank, in its reasonable discretion from time to time, which was initially set at 10%. In December 2016, the applicable foreign exchange reserve percentage was changed so that major currency forward contracts less than six months tenor is set at 10% and for contracts over six months tenor, 12.5%. As of January 31, 2017, there was $1.0 million of outstanding foreign exchange contracts with less than six months tenor under the credit facility (and no contracts of greater than six months tenor) which reduced the available borrowing under the revolving credit facility by $100,000.

XML 25 R14.htm IDEA: XBRL DOCUMENT

Business Segment and Geographic Information

6 Months Ended

Jan. 31, 2017

Business Segment and Geographic Information [Abstract]

Business Segment and Geographic Information

Note 9—Business Segment and Geographic Information

Net long-lived assets and total assets held outside of the United States, which are located primarily in Norway, were as follows:

	United States		Foreign		Total
	(in thousands)
Long-lived assets, net:
January 31, 2017	$	2,146	$	250	$	2,396
July 31, 2016		1,719		247		1,966

Total assets:
January 31, 2017	$	7,780	$	4,895	$	12,675
July 31, 2016		8,576		3,857		12,433

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 29
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599

+ Details

XML 26 R15.htm IDEA: XBRL DOCUMENT

Legal Proceeding and Tax Matters	6 Months Ended
Legal Proceeding and Tax Matters	Jan. 31, 2017
Legal Proceeding and Tax Matters [Abstract]
Legal Proceeding and Tax Matters	Note 10—Legal Proceeding and Tax Matters Legal Proceedings In March 2014, Saregama India, Limited filed a lawsuit against the Company before the Barasat District Court, seeking approximately $1,595,700 as damages and an injunction for copyright infringement. The main ground for the lawsuit was an allegation that the Company avails the plaintiff’s sound recordings through the Company’s platform with full knowledge that the sound recordings have been uploaded and are being communicated to the public without obtaining any license from the plaintiff. The Company believes that the possibility of it bearing material liability on the matter is remote. The Company may from time to time be subject to other 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. Tax Audits In September 2016, the Company was notified that the Zedge Europe AS tax returns for 2012 through 2016 were going to be audited by the tax authorities in Norway. The initial audit meeting took place in October 2016 and the audit is progressing. No significant issues have been identified at this time. Amounts asserted by taxing authorities or the amount ultimately assessed against the Company could be greater than any accrued amount. Accordingly, provisions may be recorded in the future as estimates are revised or underlying matters are settled or resolved. Imposition of assessments as a result of tax audits could have an adverse effect on the Company’s results of operations, cash flows and financial condition. Research and Development Credits As of October 31, 2016, the Company recorded a $0.2 million receivable from Norway’s SkatteFUNN government program designed to stimulate research and development in Norwegian trade and industry, which related to previous periods. At January 31, 2017, the balance was $0.3 million, which was included in “Other current assets” in the consolidated balance sheet.

XML 27 R16.htm IDEA: XBRL DOCUMENT

Recently Issued Accounting Standards Not Yet Adopted	6 Months Ended
Recently Issued Accounting Standards Not Yet Adopted	Jan. 31, 2017
Recently Issued Accounting Standards Not Yet Adopted [Abstract]
Recently Issued Accounting Standards Not Yet Adopted	Note 11—Recently Issued Accounting Standards Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. The Company will adopt the new standard on August 1, 2020. The Company is evaluating the impact that the new standard will have on its consolidated financial statements. In March 2016, the FASB issued an ASU to improve the accounting for employee share-based payments. The new standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company will adopt the new standard on August 1, 2017. The Company is evaluating the impact that the new standard will have on its consolidated financial statements. In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company will adopt the new standard on August 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is evaluating the impact that the new standard will have on its consolidated financial statements. In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that will supersede most of the current revenue recognition guidance under U.S. GAAP and IFRS. The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. To accomplish this objective, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company is required to adopt this standard on August 1, 2018. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company is evaluating the impact that the standard will have on its consolidated financial statements and has not yet selected an adoption date or a transition method. The Company cannot reasonably estimate the impact that the adoption of the standard will have on its consolidated financial statements.

XML 28 R17.htm IDEA: XBRL DOCUMENT

Fair Value Measurements (Tables)

6 Months Ended

Jan. 31, 2017

Fair Value Measurements [Abstract]

Summary of balance of assets and liabilities measured at fair value on a recurring basis

	Level 1 (1)		Level 2 (2)		Level 3 (3)		Total
	(in thousands)
January 31, 2017
Assets:
Foreign exchange forward contracts	$	—	$	44	$	—	$	44
Liabilities:
Foreign exchange forward contracts	$	—	$	—	$	—	$	—
July 31, 2016
Assets:
Foreign exchange forward contracts	$	—	$	21	$	—	$	21
Liabilities:
Foreign exchange forward contracts	$	—	$	15	$	—	$	15

(1) – quoted prices in active markets for identical assets or liabilities

(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities

(3) – no observable pricing inputs in the market

XML 29 R18.htm IDEA: XBRL DOCUMENT

Derivative Instruments (Tables)

6 Months Ended

Jan. 31, 2017

Derivative Instruments [Abstract]

Schedule of derivative instruments outstanding contracts

Settlement Date	U.S. Dollar Amount	NOK Amount
February 2017	500,000	4,235,537
March 2017	500,000	4,234,454
April 2017	250,000	2,067,554
May 2017	500,000	4,132,484
June 2017*	500,000	4,179,494
July 2017*	500,000	4,179,038

* Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank.

Schedule of derivative assets fair value

Asset Derivatives	Balance Sheet Location	January 31, 2017		July 31, 2016
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Other current assets	$	44	$	21

Schedule of derivative liability fair value

Liability Derivatives	Balance Sheet Location	January 31, 2017		July 31, 2016
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Accrued expenses	$	—	$	15

Schedule of derivative instruments on consolidated statements of comprehensive (loss) income

		Amount of Loss Recognized on Derivatives
		Three Months Ended January 31,						Six Months Ended January 31,
Derivatives not designated or not qualifying as hedging instruments	Location of Loss Recognized on Derivatives	2017			2016			2017			2016
		(in thousands)
Foreign exchange forward contracts	Net loss (gain) resulting from foreign exchange transactions	$	(110	)	$	(123	)	$	(43	)	$	(225	)

XML 30 R19.htm IDEA: XBRL DOCUMENT

Accrued Expenses (Tables)

6 Months Ended

Jan. 31, 2017

Accrued Expenses [Abstract]

Summary of accrued expenses

	January 31, 2017		July 31, 2016
	(in thousands)
Accrued vacation	$	601	$	494
Accrued payroll taxes		274		210
Accrued payroll and bonuses		76		72
Accrued direct cost of revenues		5		111
Accrued advertising		294		242
Accrued income taxes		69		119
Other		505		239

Total accrued expenses	$	1,824	$	1,487

XML 31 R20.htm IDEA: XBRL DOCUMENT

Equity (Tables)

6 Months Ended

Jan. 31, 2017

Equity [Abstract]

Summary of changes in the components of stockholders' equity

	Six Months Ended January 31, 2017
	(in thousands)
Balance, July 31, 2016	$	10,596
Exercise of stock options		109
Stock-based compensation		143
Comprehensive loss:
Net loss		(164	)
Foreign currency translation adjustments		59
Total comprehensive loss		(105	)
Balance, January 31, 2017	$	10,743

XML 32 R21.htm IDEA: XBRL DOCUMENT

Earnings Per Share (Tables)

6 Months Ended

Jan. 31, 2017

Earnings Per Share [Abstract]

Summary of weighted-average number of shares used in the calculation of basic and diluted earnings per share

	Three Months Ended January 31,				Six Months Ended January 31,
	2017		2016		2017		2016
	(in thousands)
Basic weighted-average number of shares		9,413		8,161		9,337		8,161
Effect of dilutive securities:
Stock options		—		801		—		787
Non-vested restricted Class B common stock		—		—		—		—
Diluted weighted-average number of shares		9,413		8,962		9,337		8,948

Shares excluded from the diluted earnings per share computations

	Three Months Ended January 31,				Six Months Ended January 31,
	2017		2016		2017		2016
	(in thousands)
Stock options		1,434		707		1,434		707
Non-vested restricted Class B common stock		53		—		53		—
Shares excluded from the calculation of diluted earnings per share		1,487		707		1,487		707

XML 33 R22.htm IDEA: XBRL DOCUMENT

Related Party Transactions (Tables)

6 Months Ended

Jan. 31, 2017

Schedule of related party transactions

	Three Months Ended January 31,						Six Months Ended January 31,
	2017			2016			2017			2016
	(in thousands)
Payments by IDT on behalf of the Company	$	161		$	552		$	638		$	865
Cash repayments, net of advances	$	(157	)	$	(464	)	$	(860	)	$	(870	)

XML 34 R23.htm IDEA: XBRL DOCUMENT

Business Segment and Geographic Information (Tables)

6 Months Ended

Jan. 31, 2017

Business Segment and Geographic Information [Abstract]

Schedule of net long-lived assets and total assets by geographic areas

	United States		Foreign		Total
	(in thousands)
Long-lived assets, net:
January 31, 2017	$	2,146	$	250	$	2,396
July 31, 2016		1,719		247		1,966

Total assets:
January 31, 2017	$	7,780	$	4,895	$	12,675
July 31, 2016		8,576		3,857		12,433

XML 35 R24.htm IDEA: XBRL DOCUMENT

Fair Value Measurements (Details) - USD ($)
$ in Thousands

Jan. 31, 2017

Jul. 31, 2016

Assets:

Foreign exchange forward contracts

$ 44

$ 21

Liabilities:

Foreign exchange forward contracts

Fair Value, Measurements, Recurring [Member] | Level 1 [Member]

Assets:

Foreign exchange forward contracts

^[1]

Liabilities:

Foreign exchange forward contracts

^[1]

Fair Value, Measurements, Recurring [Member] | Level 2 [Member]

Assets:

Foreign exchange forward contracts

^[2]

Liabilities:

Foreign exchange forward contracts

^[2]

Fair Value, Measurements, Recurring [Member] | Level 3 [Member]

Assets:

Foreign exchange forward contracts

^[3]

Liabilities:

Foreign exchange forward contracts

^[3]

[1]	quoted prices in active markets for identical assets or liabilities
[2]	observable inputs other than quoted prices in active markets for identical assets and liabilities
[3]	no observable pricing inputs in the market

XML 36 R25.htm IDEA: XBRL DOCUMENT

Derivative Instruments (Details)

6 Months Ended

Jan. 31, 2017

USD ($)

Jan. 31, 2017

NOK

February 2017 [Member]

Derivative [Line Items]

Settlement Date

Feb. 28, 2017

Amount

$ 500,000

NOK 4,235,537

March 2017 [Member]

Derivative [Line Items]

Settlement Date

Mar. 31, 2017

Amount

$ 500,000

NOK 4,234,454

April 2017 [Member]

Derivative [Line Items]

Settlement Date

Apr. 30, 2017

Amount

$ 250,000

NOK 2,067,554

May 2017 [Member]

Derivative [Line Items]

Settlement Date

May 31, 2017

Amount

$ 500,000

NOK 4,132,484

June 2017 [Member]

Derivative [Line Items]

Settlement Date

Jun. 30, 2017

Amount

$ 500,000

^[1]

NOK 4,179,494

^[1]

July 2017 [Member]

Derivative [Line Items]

Settlement Date

Jul. 31, 2017

Amount

$ 500,000

^[1]

NOK 4,179,038

^[1]

[1]	Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank.

XML 37 R26.htm IDEA: XBRL DOCUMENT

Derivative Instruments (Details 1) - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	$ 44	$ 21

XML 38 R27.htm IDEA: XBRL DOCUMENT

Derivative Instruments (Details 2) - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts		$ 15

XML 39 R28.htm IDEA: XBRL DOCUMENT

Derivative Instruments (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Derivative Instruments (Details 3) - USD ($) $ in Thousands	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Derivatives not designated or not qualifying as hedging instruments
Foreign exchange forward contracts	$ (110)	$ (123)	$ (43)	$ (225)

XML 40 R29.htm IDEA: XBRL DOCUMENT

Accrued Expenses (Details) - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Accrued Expenses [Abstract]
Accrued vacation	$ 601	$ 494
Accrued payroll taxes	274	210
Accrued payroll and bonuses	76	72
Accrued direct cost of revenues	5	111
Accrued advertising	294	242
Accrued income taxes	69	119
Other	505	239
Total accrued expenses	$ 1,824	$ 1,487

XML 41 R30.htm IDEA: XBRL DOCUMENT

Equity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Equity (Details) - USD ($) $ in Thousands	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Equity [Abstract]
Balance, July 31, 2016			$ 10,596
Exercise of stock options			109
Stock-based compensation			143
Comprehensive loss:
Net loss	$ (326)	$ 1,111	(164)	$ 1,436
Foreign currency translation adjustments	(14)	$ (68)	59	$ (159)
Total comprehensive loss			(105)
Balance, January 31, 2017	$ 10,743		$ 10,743

XML 42 R31.htm IDEA: XBRL DOCUMENT

Equity (Details Textual) - USD ($)	1 Months Ended	6 Months Ended
Equity (Details Textual) - USD ($)	Sep. 30, 2016	Jan. 31, 2017
Equity (Textual)
Exercise of stock options		$ 109,000
Stock Option [Member]
Equity (Textual)
Options to purchase shares of the Company's Class B common stock	231,327
Unrecognized compensation expense	$ 681,000
Vesting period	3 years
Collection of receivable from stockholder for stock option exercise		$ 56,840
Stock Option [Member] \| Class B common stock [Member]
Equity (Textual)
Options to purchase shares of the Company's Class B common stock		277,200
Exercise of stock options		$ 109,335

XML 43 R32.htm IDEA: XBRL DOCUMENT

Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
Earnings Per Share (Details) - shares shares in Thousands	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Weighted-average number of shares used in the calculation of basic and diluted earnings per share
Basic weighted-average number of shares	9,413	8,161	9,337	8,161
Effect of dilutive securities:
Stock options		801		787
Non-vested restricted Class B common stock
Diluted weighted-average number of shares	9,413	8,962	9,337	8,948

XML 44 R33.htm IDEA: XBRL DOCUMENT

Earnings Per Share (Details 1) - shares shares in Thousands	3 Months Ended		6 Months Ended
Earnings Per Share (Details 1) - shares shares in Thousands	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the calculation of diluted earnings per share	1,487	707	1,487	707
Stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the calculation of diluted earnings per share	1,434	707	1,434	707
Non-vested restricted Class B common stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the calculation of diluted earnings per share	53		53

XML 45 R34.htm IDEA: XBRL DOCUMENT

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jan. 31, 2017	Jan. 31, 2016	Jan. 31, 2017	Jan. 31, 2016
Related Party Transactions [Abstract]
Payments by IDT on behalf of the Company	$ 161	$ 552	$ 638	$ 865
Cash repayments, net of advances	$ (157)	$ (464)	$ (860)	$ (870)

XML 46 R35.htm IDEA: XBRL DOCUMENT

Revolving Credit Facility (Details) - Revolving Credit Facility [Member] - USD ($)	1 Months Ended		6 Months Ended
	Dec. 31, 2016	Sep. 27, 2016	Jan. 31, 2017	Nov. 16, 2016
Revolving Credit Facility (Textual)
Loan and security agreement with Western Alliance Bank for revolving credit facility		$ 2,500,000
Line of credit facility, borrowing capacity, description			Advances under this facility may not exceed the lesser of $2.5 million or 80% of the Company's eligible accounts receivable subject to certain concentration limits.
Interest rate description			The outstanding principal amount bears interest per annum at the greater of 3.5% or the prime rate plus 1.25%.
Line of credit maturity date		Sep. 27, 2018
Line of credit facility annual fee		$ 12,500
Foreign Exchange Agreement [Member]
Revolving Credit Facility (Textual)
Loan and security agreement with Western Alliance Bank for revolving credit facility				$ 5,000,000
Line of credit facility, borrowing capacity, description			The revolving credit facility shall be reduced by an applicable foreign exchange reserve percentage as determined by Western Alliance Bank, in its reasonable discretion from time to time, which was initially set at 10%.
Foreign exchange, Description	The applicable foreign exchange reserve percentage was changed so that major currency forward contracts less than six months tenor is set at 10% and for contracts over six months tenor, 12.5%.		There was $1.0 million of outstanding foreign exchange contracts with less than six months tenor under the credit facility (and no contracts of greater than six months tenor) which reduced the available borrowing under the revolving credit facility by $100,000.

XML 47 R36.htm IDEA: XBRL DOCUMENT

Business Segment and Geographic Information (Details) - USD ($) $ in Thousands	Jan. 31, 2017	Jul. 31, 2016
Business Segment Information [Line Items]
Long-lived assets, net	$ 2,396	$ 1,966
Total assets	12,675	12,433
United States [Member]
Business Segment Information [Line Items]
Long-lived assets, net	2,146	1,719
Total assets	7,780	8,576
Foreign [Member]
Business Segment Information [Line Items]
Long-lived assets, net	250	247
Total assets	$ 4,895	$ 3,857

XML 48 R37.htm IDEA: XBRL DOCUMENT

Legal Proceeding and Tax Matters (Details) - USD ($)		6 Months Ended
Legal Proceeding and Tax Matters (Details) - USD ($)	Mar. 31, 2014	Jan. 31, 2017	Oct. 31, 2016	Jul. 31, 2016
Legal Proceeding and Tax Audits (Textual)
Lawsuit description		Saregama India, Limited filed a lawsuit against the Company before the Barasat District Court, seeking approximately $1,595,700 as damages and an injunction for copyright infringement.
Lawsuit approximate amount	$ 1,595,700
Amounts receivable from Norway's SkatteFUNN government			$ 200,000
Other current assets		326,000		$ 107,000
Norway SkatteFUNN [Member]
Legal Proceeding and Tax Audits (Textual)
Other current assets		$ 300,000