DEF: Zedge Sets 2026 Annual Meeting, Proposes Share Plan Boost

Zedge, Inc. announces its 2026 Annual Meeting of Stockholders to elect directors, ratify auditors, and approve an increase of 150,000 shares for its 2016 Stock Option and Incentive Plan.

Summary

• The Annual Meeting of Stockholders will be held on Wednesday, January 14, 2026, at 12:00 p.m. Eastern Standard Time, in New York, New York.
• Stockholders will vote on the election of six directors, each for a term of one year.
• The ratification of UHY LLP as the Company's independent registered public accounting firm for the Fiscal Year ending July 31, 2026, is on the agenda.
• An amendment to the Zedge, Inc. 2016 Stock Option and Incentive Plan will be proposed to increase the number of shares of Class B Common Stock available for awards by 150,000, bringing the total to 2,781,000 shares if approved.
• The record date for determining stockholders entitled to vote is November 17, 2025.
• As of the record date, the Company had 13,003,911 shares outstanding and entitled to vote, consisting of 524,775 shares of Class A Common Stock and 12,479,136 shares of Class B Common Stock.
• Holders of Class A Common Stock are entitled to three votes per share, while Class B Common Stock holders receive one-tenth of one vote per share.
• The Board of Directors recommends a vote FOR the election of all nominated directors, the ratification of UHY LLP, and the approval of the 2016 Stock Option and Incentive Plan amendment.

Sentiment

Score: 6

Explanation: The filing outlines routine annual meeting proposals and corporate governance updates. While financial performance shows a reduced net loss, it remains a loss. The proposed increase in the stock option plan is a positive for talent retention but dilutive. Related party transactions are disclosed. Overall, it's a standard proxy statement with some positive financial trends but no major catalysts.

Positives

• The Company maintains a comprehensive corporate governance framework and does not rely on 'controlled company' exemptions, ensuring its Audit, Compensation, and Corporate Governance and Nominating Committees are entirely comprised of independent directors.
• The proposed increase in the stock option plan aims to provide a sufficient reserve of shares for future grants, which is deemed essential to attract and retain key employees, directors, and consultants for long-term success.
• Fiscal Year 2025 reported the lowest annual net loss for the three-year period presented in the pay vs. performance table, indicating an improvement in financial performance.
• Compensation actually paid to the Chief Executive Officer and other Named Executive Officers in Fiscal 2025 exceeded the amounts reported in the Summary Compensation Table, primarily driven by the appreciation in the Company's stock price, aligning executive interests with Total Shareholder Return.

Negatives

• The Company is classified as a 'controlled company' due to Michael Jonas controlling over 50% of the voting power, which, despite not utilizing exemptions, could be a governance concern for some investors.
• Despite improvements, the Company still reported a net loss of $2,392,000 for Fiscal Year 2025.
• The average compensation actually paid to non-CEO Named Executive Officers did not correlate with Total Shareholder Return over the three-year period, primarily due to the specific structure of Michael Jonas's base salary equity grants.

Risks

• Broker non-votes on non-routine proposals (such as director elections and the stock option plan amendment) will not be counted as votes for or against, effectively reducing the number of affirmative votes required for adoption by lowering the total number of shares from which a majority is calculated.
• Payments contingent upon a change in control, including awards under the 2016 Plan, could be treated as 'parachute payments' under Section 280G of the Code if they equal or exceed three times an individual's base amount, potentially leading to non-deductibility for the Company and a 20% excise tax for the participant.
• Section 162(m) of the Code denies a deduction to publicly held corporations for compensation paid to certain executive officers in excess of $1 million per executive per taxable year, which could impact the Company's tax deductions.
• The Company does not warrant that any award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local, or foreign law, and will not be liable to any grantee for any related tax, interest, or penalties.

Future Outlook

The proposed amendment to the 2016 Stock Option and Incentive Plan is deemed necessary to provide a sufficient reserve of shares for future grants, which are essential to attract and retain key employees, directors, and consultants for the Company's long-term success. The Company aims to align executive interests with stockholders through equity awards, with vesting criteria potentially linked to operational or market price achievements.

Management Comments

• "The Board of Directors believes that the proposed amendment to increase the number of shares of Class B Common Stock available for the grant of awards thereunder by 150,000 is necessary in order to provide the Company with a sufficient reserve of shares of Class B Common Stock for future grants needed to attract and retain the services of key employees, directors and consultants of the Company essential to the Companys long -term success."
• "The Company does not schedule its equity grants in anticipation of the release of material, non -public information (MNPI), nor does the Company time the release of MNPI based on equity grant dates."
• "In the event MNPI becomes known to the Compensation Committee prior to granting an equity award, the Compensation Committee will take the existence of such information into consideration and use its collective business judgment to determine whether to delay the grant of equity to avoid any impropriety."

Industry Context

The filing highlights the company's commitment to attracting and retaining talent through equity incentives, a common practice in the technology and mobile app ecosystem to align management interests with shareholder value. The company's efforts to expand beyond phone personalization, as indicated by director Gregory Suess's experience in the entertainment industry, suggest a strategic move to diversify its offerings within the broader digital content and entertainment market.

Comparison to Industry Standards

• The company's corporate governance framework, which does not rely on 'controlled company' exemptions for committee independence, aligns with best practices often seen in larger, more mature public companies, even though Zedge qualifies as a controlled company.
• The proposed increase in the stock option pool by 150,000 shares, bringing the total to 2,781,000, is a common mechanism for growth-oriented companies to maintain competitive compensation packages for key talent, comparable to similar practices in the tech and digital content sectors.
• The repricing of stock options in October 2022 to $2.27, the then-current market value, is a practice sometimes employed by companies to re-incentivize employees when stock prices have fallen below previous grant prices, a strategy seen across various industries to retain and motivate staff.

Corporate Governance

Related Party Transactions

• There is a father/son relationship between Howard S. Jonas (Vice Chairman of the Board) and Michael Jonas (Chairman of the Board, Executive Chairman, and controlling stockholder).
• The Company paid IDT Corporation $126,000 for legal services in Fiscal 2025 under a Transition Services Agreement (TSA). Howard S. Jonas is the Chairman of the Board of IDT Corporation.
• IDT Corporation paid the Company $86,000 for consulting services provided by a Company employee in Fiscal 2025.
• As of July 31, 2025, the Company owed IDT Corporation $1,000 for services provided under the TSA.
• The Company has a revenue sharing agreement with IDT Corporation (entered in 2018) for 15% of net profits from advertising revenue from kiosks in certain bodegas served by IDT's National Retail Services (NRS) business; no money was received from this agreement in Fiscal 2025.
• On June 19, 2024, the Company entered into a new revenue sharing agreement with NRS (an IDT subsidiary) to provide digital content for NRS screens and share in advertising revenue; the Company received $156,000 from this agreement in Fiscal 2025.
• As of July 31, 2025, the Company was owed $10,000 from NRS.
• Activist Artists, 32.05% owned by director Gregory Suess, has a referral agreement with the Company, receiving $5,000 per month plus possible commissions; the Company paid Activist Artists a total of $60,000 in Fiscal 2025.

Stakeholder Impact

• Shareholders will participate in key governance decisions, including the election of directors, ratification of auditors, and approval of an amendment to the stock option plan, which could lead to potential dilution.
• Employees and management stand to benefit from the proposed increase in the stock option plan, which is intended to enhance the Company's ability to attract and retain key talent through equity incentives.
• Current directors are nominated for re-election, ensuring continuity in board leadership and strategic direction.
• UHY LLP's continued appointment as the independent registered public accounting firm ensures ongoing external audit services and financial oversight for the Company.
• Related parties, including IDT Corporation and NRS, will continue their existing service and revenue-sharing agreements with the Company.

Next Steps

• Stockholders are to vote on director elections, auditor ratification, and the 2016 Stock Option and Incentive Plan amendment at the Annual Meeting on January 14, 2026.
• The Company expects to mail proxy materials to stockholders starting on or about December 1, 2025.
• UHY LLP is appointed to serve as the independent registered public accounting firm for the Fiscal Year ending July 31, 2026.
• The Compensation Committee will consider and approve annual equity grants for executive officers at its regularly scheduled meeting in November of each year.
• Stockholder proposals for inclusion in the Company's proxy materials for the 2027 annual meeting must be submitted by August 4, 2026.
• Stockholder proposals for the 2027 annual meeting (outside Rule 14a-8) must be received by October 20, 2026, to avoid being untimely.
• Notice of director nominees for the 2027 Annual Meeting under universal proxy rules must be provided by November 16, 2026.

Key Dates

Recommendation

The filing is a routine proxy statement for an annual meeting, detailing standard corporate governance matters, director elections, and auditor ratification. While the proposed increase in the stock option plan is a common practice for talent retention, it doesn't present a significant catalyst for immediate price movement. The company's net loss has improved but remains negative. Related party transactions are disclosed and appear to be ongoing business. No new material financial results or strategic announcements are made that would warrant a change from a 'hold' position based solely on this filing.

Keywords

Zedge, Proxy Statement, Annual Meeting, Director Election, Corporate Governance, Stock Option Plan, Executive Compensation, SEC Filing, Shareholder Vote, UHY LLP, Class B Common Stock, NYSE American