WEBTOON Entertainment Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Audited Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID 1103 ) F- 2 Consolidated Balance Sheets F- 4 Consolidated Statements of Operations and Comprehensive Loss F- 6 Consolidated Statements of Stockholders’ Equity and Group Equity F- 7 Consolidated Statements of Cash Flows F- 8 Notes to Consolidated Financial Statements F- 9 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of WEBTOON Entertainment Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of WEBTOON Entertainment Inc. and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity and group equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. F-2 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Goodwill Impairment Assessments for Certain Reporting Units As described in Notes 1 and 7 to the consolidated financial statements, the Company’s goodwill balance (net) was $336.8 million as of December 31, 2025, of which the reporting units Wattpad, Munpia and LDF comprise the significant portion. Management conducts an impairment test as of October 1 of each year, or more frequently if events or circumstances result in it being more likely than not that the fair value of a reporting unit is less than its carrying amount. Reporting units are tested for impairment by comparing the estimated fair value of each reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recorded based on the difference between the fair value and carrying amount, not to exceed the associated carrying amount of goodwill. Management utilizes the discounted cash flow method under the income approach to estimate the fair value of reporting units. Management’s cash flow projections included significant assumptions related to revenue growth rates, discount rates, and terminal growth rates. The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments of certain reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value of the reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, discount rates, and terminal growth rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. As previously disclosed by management, a material weakness existed during the year that impacted this matter. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Wattpad, Munpia, and LDF reporting units. These procedures also included, among others, (i) testing management’s process for developing the fair value of the reporting units; (ii) evaluating the appropriateness of the discounted cash flow method used by management; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow method; and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, discount rates, and terminal growth rates. Evaluating management’s assumptions related to revenue growth rates, discount rates, and terminal growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and (ii) the reasonableness of the discount rates and terminal growth rates assumptions. /s/ Samil PricewaterhouseCoopers Seoul, Korea March 5, 2026 We have served as the Company’s auditor since 2023. F-3 Table of Contents WEBTOON Entertainment Inc. Consolidated Balance Sheets (in thousands of USD, except share and per share data) As of December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 581,806 $ 572,402 Receivables 1 , net of allowance for credit losses of $ 3,378 and $ 3,418 at December 31, 2025 and December 31, 2024, respectively 176,779 169,187 Prepaid expenses and other current assets, net 2 72,647 94,783 Total current assets 831,232 836,372 Property and equipment, net 8,339 3,782 Operating lease right-of-use assets 23,705 16,649 Debt and equity securities 69,669 70,178 Intangible assets, net 157,804 180,912 Goodwill, net 336,825 665,275 Equity method investments 80,440 78,668 Deferred tax assets 22,302 17,592 Other non-current assets, net 3 65,194 65,906 Total assets $ 1,595,510 $ 1,935,334 Liabilities and equity Current liabilities: Accounts payable 4 $ 136,962 $ 127,306 Accrued expenses 5 66,690 62,209 Current portion of operating lease liabilities 6 9,617 6,053 Contract liabilities 89,994 85,860 Income tax payables – corporate tax 1,236 10,093 Consumption taxes payables 2,900 8,339 Provisions and defined pension benefits 8,766 11,133 Other current liabilities 2,457 2,231 Total current liabilities 318,622 313,224 Non-current liabilities: Long-term operating lease liabilities 7 14,055 11,187 Defined severance benefits 25,069 22,030 Deferred tax liabilities 5,755 30,271 Other non-current liabilities 3,737 2,161 Total liabilities $ 367,238 $ 378,873 Commitments and Contingencies (Note 10) Redeemable non-controlling interest in subsidiary 24,540 36,580 F-4 Table of Contents WEBTOON Entertainment Inc. Consolidated Balance Sheets (in thousands of USD, except share and per share data) As of December 31, 2025 2024 Stockholders’ equity: Preferred stock, $ 0.0001 par value 100,000,000 authorized and no shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively $ — $ — Common stock, $ 0.0001 par value 2,000,000,000 authorized, 130,776,161 shares and 128,587,944 shares issued and outstanding as of December 31, 2025, and December 31, 2024, respectively $ 13 $ 13 Additional paid-in capital 2,137,926 2,103,931 Accumulated other comprehensive loss ( 114,363 ) ( 124,620 ) Accumulated deficit ( 853,124 ) ( 507,197 ) Total stockholders’ equity attributable to WEBTOON Entertainment Inc. 1,170,452 1,472,127 Non-controlling interests in consolidated subsidiaries 33,280 47,754 Total equity 1,203,732 1,519,881 Total liabilities, redeemable non-controlling interest, and equity $ 1,595,510 $ 1,935,334 ______________ 1. Includes amounts due from related parties of $ 55,156 and $ 59,495 as of December 31, 2025, and December 31, 2024, respectively. (See Note 16. Related Parties and Variable Interest Entity ) 2. Includes amounts due from related parties of $ 4,730 and $ 9,258 as of December 31, 2025, and December 31, 2024, respectively. (See Note 16. Related Parties and Variable Interest Entity ) 3. Includes amounts due from related parties of $ 33,913 and $ 32,072 as of December 31, 2025, and December 31, 2024, respectively. (See Note 16. Related Parties and Variable Interest Entity ) 4. Includes amounts due to related parties of $ 18,765 and $ 17,173 as of December 31, 2025, and December 31, 2024, respectively. (See Note 16. Related Parties and Variable Interest Entity ) 5. Includes amounts due to related parties of $ 6,849 and $ 5,562 as of December 31, 2025, and December 31, 2024, respectively. (See Note 16. Related Parties and Variable Interest Entity ) 6. Includes amounts due to related parties of $ 5,221 and $ 3,506 as of December 31, 2025, and December 31, 2024, respectively. (See Note 16. Related Parties and Variable Interest Entit y) 7. Includes amounts due to related parties of $ 5,371 and $ 9,519 as of December 31, 2025, and December 31, 2024, respectively. (See Note 16. Related Parties and Variable Interest Entity ) The accompanying notes are an integral part of these Consolidated Financial Statements. F-5 Table of Contents WEBTOON Entertainment Inc. Consolidated Statements of Operations and Comprehensive Loss (in thousands of USD, except share and per share data) Year Ended December 31, 2025 2024 2023 Revenue 1 $ 1,382,705 $ 1,348,478 $ 1,282,748 Cost of revenue 2 ( 1,060,524 ) ( 1,009,410 ) ( 987,258 ) Marketing 3 ( 126,149 ) ( 107,783 ) ( 121,086 ) General and administrative expenses 4 ( 259,543 ) ( 331,984 ) ( 210,762 ) Operating Loss ( 63,511 ) ( 100,699 ) ( 36,358 ) Interest income 19,170 15,820 3,009 Interest expense ( 56 ) ( 45 ) ( 79 ) Impairment losses on goodwill and other intangible assets, net ( 336,486 ) ( 69,743 ) ( 63,412 ) Gain (loss) on equity method investments, net 1,282 ( 1,123 ) ( 12,339 ) Other income (loss), net 5 ( 9,808 ) 6,482 ( 23,574 ) Loss before income tax ( 389,409 ) ( 149,308 ) ( 132,753 ) Income tax benefit (expense) 16,022 ( 3,604 ) ( 12,006 ) Net loss ( 373,387 ) ( 152,912 ) ( 144,759 ) Net income (loss) attributable to WEBTOON Entertainment Inc. ( 345,927 ) ( 143,905 ) ( 116,455 ) Net income (loss) attributable to non-controlling interests and redeemable non-controlling interests ( 27,460 ) ( 9,007 ) ( 28,304 ) Other comprehensive income (loss): Foreign currency translation adjustments, net of tax 9,792 ( 71,935 ) ( 17,251 ) Share of other comprehensive income (loss) of equity method investments, net of tax 896 ( 94 ) ( 906 ) Total other comprehensive loss, net of tax 10,688 ( 72,029 ) ( 18,157 ) Total comprehensive loss $ ( 362,699 ) $ ( 224,941 ) $ ( 162,916 ) Total comprehensive loss attributable to WEBTOON Entertainment Inc. ( 335,669 ) ( 213,704 ) ( 134,612 ) Total comprehensive loss attributable to non-controlling interests and redeemable non-controlling interests ( 27,030 ) ( 11,237 ) ( 28,304 ) Weighted average shares outstanding Basic 130,177,475 119,231,997 109,505,150 Diluted 130,177,475 119,231,997 109,505,150 Income (loss) per share attributable to WEBTOON Entertainment Inc. Basic ( 2.66 ) ( 1.21 ) ( 1.06 ) Diluted ( 2.66 ) ( 1.21 ) ( 1.06 ) 1. Includes amounts earned from related parties of $ 74,297 , $ 72,228 and $ 78,698 for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. (See Note 16. Related Parties and Variable Interest Entity ) 2. Includes amounts incurred from related parties of $ 111,254 , $ 96,498 and $ 22,412 for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. (See Note 16. Related Parties and Variable Interest Entity ) 3. Includes amounts incurred from related parties of $( 9,339 ), $( 7,691 ) and $ 203 for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. (See Note 16. Related Parties and Variable Interest Entity ) 4. Includes amounts incurred from related parties of $ 31,249 , $ 32,478 and $ 30,945 for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. (See Note 16. Related Parties and Variable Interest Entity ) 5. Includes amounts earned from related parties of $ 1,687 , $ 3,592 and $ 4,761 for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. (See Note 16. Related Parties and Variable Interest Entity ) The accompanying notes are an integral part of these Consolidated Financial Statements. F-6 Table of Contents WEBTOON Entertainment Inc. Consolidated Statements of Stockholders’ Equity and Group Equity (in thousands of USD, except share and per share data) Common Stock Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total stockholders’ equity attributable to WEBTOON Entertainment Inc. Non-controlling interests in consolidated subsidiaries Group Equity Total equity Shares Amount Balance as of December 31, 2022 97,091,692 $ 10 $ 1,038,262 $ ( 36,667 ) $ ( 212,033 ) $ 789,594 $ 85,395 $ 593,513 $ 1,468,502 Net loss — — — — ( 102,818 ) ( 102,818 ) ( 22,769 ) ( 13,637 ) ( 139,225 ) Foreign currency translation adjustments, net of tax 1 — — — ( 17,251 ) — ( 17,251 ) — — ( 17,251 ) Equity in income of equity method investees — — — ( 906 ) — ( 906 ) — — ( 906 ) Equity-based compensation and others 2 — — 646 — — 646 2,155 — 2,801 Changes in scope of consolidation — — — — — — ( 7,875 ) — ( 7,875 ) Common control transaction 12,413,458 1 628,338 — ( 48,441 ) 579,876 — ( 579,876 ) — Balance as of December 31, 2023 109,505,150 11 1,667,246 ( 54,824 ) ( 363,292 ) 1,249,141 56,906 — 1,306,047 Net loss — — — — ( 143,905 ) ( 143,905 ) ( 5,153 ) — ( 149,058 ) Foreign currency translation adjustments, net of tax 1 — — — ( 69,702 ) — ( 69,702 ) ( 1,236 ) — ( 70,938 ) Issuance of common stock through initial public offering 15,000,000 2 281,735 — — 281,737 — — 281,737 Issuance of common stock through private placement 2,380,952 — 50,000 — — 50,000 — — 50,000 Issuance of common stock for exercise of over-allotment 1,371,549 — 26,576 — — 26,576 — — 26,576 Equity in income of equity method investees — — — ( 94 ) — ( 94 ) — — ( 94 ) Equity-based compensation and others 2 330,293 — 78,374 — — 78,374 1,098 — 79,472 Changes in scope of consolidation — — — — — — ( 3,861 ) — ( 3,861 ) Balance as of December 31, 2024 128,587,944 13 2,103,931 ( 124,620 ) ( 507,197 ) 1,472,127 47,754 — 1,519,881 Net loss — — — — ( 345,927 ) ( 345,927 ) ( 15,227 ) — ( 361,154 ) Foreign currency translation adjustments, net of tax 1 — — — 9,361 — 9,361 238 — 9,599 Equity in income of equity method investees — — — 896 — 896 — — 896 Equity-based compensation and others 2 2,188,217 — 33,995 — — 33,995 515 — 34,510 Balance as of December 31, 2025 130,776,161 13 2,137,926 ( 114,363 ) ( 853,124 ) 1,170,452 33,280 $ — 1,203,732 1. As of December 31, 2025, December 31, 2024, and December 31, 2023, the ending balance in accumulated other comprehensive loss related to foreign currency translation adjustments was $ 111.5 million, $ 120.9 million, and $ 51.2 million, respectively. 2. The Company recorded dividends of $ 0.3 million, $ 17.4 million and $ 0.0 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively, as a reduction in additional paid-in capital for stock options granted to NAVER's employees who did not provide services to the Company (See Note 1. Description of Business and Summary of Significant Accounting Policies for the definitions of the Company and NAVER). The accompanying notes are an integral part of these Consolidated Financial Statements. F-7 Table of Contents WEBTOON Entertainment Inc. Consolidated Statements of Cash Flows (in thousands of USD) For the Year Ended December 31, 2025 2024 2023 Operating activities: Net loss $ ( 373,387 ) $ ( 152,912 ) $ ( 144,759 ) Adjustments to reconcile net loss to cash used in operating activities: Allowance for credit losses 4,772 6,034 3,481 Depreciation and amortization 35,431 40,074 38,359 Impairment losses on goodwill and other intangible assets 336,486 69,743 63,412 Operating lease expense 9,690 10,446 11,965 Loss (Gain) on foreign currency, net ( 1,605 ) ( 2,519 ) 5,533 Deferred tax benefit ( 28,965 ) ( 24,535 ) ( 15,573 ) Loss (Gain) on debt and equity securities, net 8,605 ( 2,263 ) 22,585 Loss (Gain) on equity method investment ( 1,282 ) 1,123 12,339 Contingent consideration liability — ( 3,712 ) ( 789 ) Stock-based compensation 41,907 87,379 3,220 Gain on disposal of right-of-use assets, net — ( 1,899 ) ( 62 ) Change in severance benefit, net 5,584 3,725 ( 737 ) Loss on investments in subsidiaries, net — 2,713 884 Other non-cash items 14 ( 707 ) ( 3,411 ) Changes in operating assets and liabilities Changes in receivables ( 873 ) ( 24,063 ) 30,919 Changes in other assets 1,219 ( 35,928 ) ( 6,523 ) Changes in accounts payable 3,421 26,177 ( 7,583 ) Changes in accrued expenses 6,216 1,869 3,083 Changes in consumption taxes payables ( 5,725 ) 3,287 3,213 Changes in contract liabilities 2,400 21,584 1,088 Changes in withholdings ( 6,122 ) ( 8 ) 1,262 Changes in income tax payable - corporate tax ( 8,857 ) 634 1,081 Changes in other liabilities ( 6,540 ) ( 812 ) 4,907 Changes in operating lease liabilities ( 8,062 ) ( 9,035 ) ( 10,193 ) Changes in deposits ( 294 ) 2,444 ( 260 ) Transfer of severance benefits ( 2,817 ) ( 956 ) ( 2,637 ) Net cash provided by operating activities $ 11,216 $ 17,883 $ 14,804 Investing activities: Proceeds from maturities of short-term investments $ 42,538 $ 68,018 $ 15,321 Proceeds from sale of debt and equity securities — 2,970 2,428 Proceeds from sale of property and equipment 297 6,495 659 Proceeds from sale of equity method investments — 5,938 5,439 Proceeds from loan receivable 1,684 — 311 Payment from maturities of short-term investments ( 26,372 ) ( 77,371 ) ( 35,100 ) Payment made for loan receivable ( 904 ) ( 264 ) ( 11,491 ) Purchases of debt and equity securities ( 6,801 ) ( 1,000 ) ( 8,700 ) Purchases of property and equipment ( 7,619 ) ( 2,404 ) ( 10,199 ) Purchases of intangible assets ( 10,292 ) ( 10,745 ) ( 12,143 ) Purchases of equity method investments — ( 9,068 ) ( 682 ) Acquisition of businesses, net of cash ( 148 ) — — Disposal of businesses, net of cash — ( 315 ) 1,988 Other investing activities 119 470 187 Net cash used in investing activities $ ( 7,498 ) $ ( 17,276 ) $ ( 51,982 ) Financing activities: Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions — 292,950 — Proceeds from issuance of common stock related to private placement $ — 50,000 $ — Capital contribution to a non-wholly owned subsidiary from a limited partner — — 3,257 Payments of initial public offering costs — ( 11,154 ) — Proceeds from exercise of over-allotment, net of underwriting discounts and commissions — 26,786 — Proceeds from stock option exercise 1,327 746 — Proceeds from short-term borrowings 139 — 383 Repayments of short-term borrowings — ( 3,597 ) ( 6,279 ) Repayments of long-term borrowings — ( 15 ) ( 64 ) Payment of contingent consideration related to business acquisition — ( 1,849 ) ( 3,796 ) Net cash provided by (used in) financing activities $ 1,466 $ 353,867 $ ( 6,499 ) Effect of exchange rate changes on cash and cash equivalents $ 4,220 $ ( 13,817 ) $ ( 4,287 ) Net increase (decrease) in cash and cash equivalents 9,404 340,657 ( 47,964 ) Cash and cash equivalents at beginning of the year 572,402 231,745 279,709 Cash and cash equivalents at end of the year $ 581,806 $ 572,402 $ 231,745 Supplemental disclosure: Income taxes paid $ 24,702 $ 25,675 $ 26,644 Interest paid $ 1 $ 85 $ 92 Non-cash transactions: Reclassification of debt and equity securities to equity method investments $ — $ 18,701 $ — Reclassification of deferred offering costs to additional paid-in capital upon IPO $ — $ 11,215 $ — Share exchange with NAVER upon issuance of new WEBTOON Entertainment Inc. shares 1 $ — $ — $ 579,876 Purchase of property and equipment included in accounts payable — 2 11 ______________ 1 Refer to Organization and Description of Business in Note 1. Description of Business and Summary of Significant Accounting Policies. The accompanying notes are an integral part of these Consolidated Financial Statements. F-8 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 1. Description of Business and Summary of Significant Accounting Policies Organization and Description of Business WEBTOON Entertainment Inc. (the “Parent”), together with its subsidiaries, (the “Company”, “we”, “us” or “our”), is a majority-owned subsidiary of NAVER Corporation (“NAVER”), and a leading online and web-comic platform service company. We provide hosting services for web-comics through both web and mobile applications and offer thousands of titles with episodes that are updated on a daily basis. We offer extensive and diverse genres of content, including fantasy, romance, and science fiction, on our platform. Platform refers to the various offerings through which we engage with users across diverse geographical markets including Korea, the United States, Japan, Southeast Asia, and Europe. Basis of Presentation On June 1, 2023, the Parent entered into a stock contribution agreement with NAVER pursuant to which the Parent acquired 100 % of the common shares of Wattpad in exchange for 413,482 shares of the common stock of the Parent (the “Wattpad Transfer”). The Wattpad Transfer was accounted for as a common control transaction in a manner similar to the pooling-of-interest method. Thus, the financial statements of Wattpad were combined, retrospectively, as if the transaction had occurred as of January 1, 2022. For the period after June 1, 2023, Wattpad is presented as part of the Company consolidated financial information. These financial statements and footnotes are therefore referred to as “Consolidated Financial Statements” throughout. NAVER’s equity interest in Wattpad during the period preceding the Wattpad Transfer is reflected within “Group Equity” within the Consolidated Statements of Stockholders’ Equity and Group Equity. Upon completion of the Wattpad Transfer, the Company acquired NAVER’s equity interest in Wattpad and the Group Equity is no longer applicable. On June 26, 2024, the Company filed an Amended and Restated Certificate of Incorporation (the “Amended Charter”) which effectuated a 30 -for-1 forward stock split of its common stock and adjusted the par value of its common stock from $ 0.01 to $ 0.0001 on such date. Accordingly, all share and per share amounts presented in the Consolidated Financial Statements have been retroactively adjusted to reflect the stock split and change in par value for all periods presented. In lieu of issuing fractional shares, the Company opted to pay the holder thereof an amount in cash equal to the fair market value of such fractional share. The Amended Charter authorized 2,100,000,000 shares of capital stock, consisting of 2,000,000,000 shares of common stock, par value $ 0.0001 per share, and 100,000,000 shares of undesignated preferred stock, par value $ 0.0001 per share. No preferred stock was issued and outstanding as of December 31, 2024 and December 31, 2023. On June 28, 2024, the Company completed its initial public offering (the “IPO”) in which it issued and sold 15,000,000 shares of its common stock at a public offering price of $ 21.00 per share. The Company received proceeds of approximately $ 281.7 million from the IPO, net of underwriting discounts and commissions of $ 22.1 million and offering costs of $ 11.2 million. Additionally, the underwriters have the option, for a period of 30 days, to purchase up to an additional 2,250,000 common shares at the public offering price, less the underwriting discount and commissions to cover over-allotment. On July 26, 2024, the underwriters exercised the over-allotment option to purchase 1,371,549 shares of common stock for proceeds of $ 26.8 million, net of underwriting discounts and commissions. Substantially concurrently with the closing of the IPO, the Company issued 2,380,952 shares of common stock to NAVER U.Hub Inc., a wholly-owned subsidiary of NAVER, at the public offering price of $ 21.00 per share for aggregate proceeds of $ 50.0 million. The sale of such shares to U.Hub is not registered under the Securities Act and these shares were subject to a 180-day lock-up agreement with the underwriters in connection with the offering. The underwriters did not receive any fees in connection with the sale of such shares. Prior to the IPO, deferred offering costs, which consist of direct incremental legal, accounting, and other fees relating to the IPO, were capitalized in Other non-current assets on the Consolidated Balance Sheets. Upon completion of the IPO, all deferred offering costs were reclassified into stockholders’ equity as an offset against proceeds from the IPO. In addition, as of June 30, 2024, the Company had accrued a $ 30.0 million cash bonus that became due to the chief executive F-9 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements officer upon completion of the IPO. The bonus was paid out, less applicable payroll related taxes and expenses, in July 2024. The following Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Our fiscal year ends on December 31. Dollar amounts presented in tables are shown in thousands of United States Dollars (in thousands of USD) . Changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions (investments by owners and distributions to owners acting in their capacity as owners) with no gain or loss recognized in net loss or comprehensive loss. The carrying amount of any non-controlling interest is adjusted to reflect the change in a parent’s ownership interest in the subsidiary. Any difference between the fair value of the consideration received or paid and the amount by which the non-controlling interest is adjusted is recognized in equity attributable to the parent. All intercompany and intra-entity transactions and balances have been eliminated. The Consolidated Financial Statements for all periods presented include all the costs of doing business, including the expenses that represent services provided by NAVER to the Company and its subsidiaries. Such services under certain agreements are charged to the Company and its subsidiaries based on estimated cost allocation plus mark-up methodology, which management believes is approximating arm’s length costs. The Company believes the charges are reasonably calculated in accordance with SAB Topic 1 Q2. The amounts are billed to and paid for by the Company or its subsidiaries on a regular basis. Reclassifications Certain amounts reported for prior years have been reclassified to conform to the current year's presentation. None of these reclassifications impacted reported operating or net loss for any presented period. Use of Estimates The preparation of Consolidated Financial Statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates relate primarily to determining the fair value of assets and liabilities acquired in business combinations, acquired intangible assets and goodwill, unit price of virtual currency in revenue recognition, deferred revenue, allowance for credit losses, evaluation of contingencies, deferred tax assets net of a valuation allowance, uncertain tax positions, the fair value of stock-based awards, the fair value of debt and equity securities and the fair value of reporting units for goodwill impairment testing. We based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates. Segment Information The Company operates as one operating segment which is also its reportable segment. Our Chief Executive Officer (“CEO”) is our Chief Operating Decision Maker (“CODM”), who assesses performance and makes resource allocations based on financial data presented on a consolidated basis. See Note 14. Segment and Geographic Information for more information related to the Company’s segment. Foreign Currency The functional currency of the Parent and reporting currency for the Company is U.S. dollars. The Korean won and the Japanese yen are the functional currencies of our major operating subsidiaries. The other subsidiaries predominantly utilize their local currencies as their functional currencies. Assets and liabilities of each subsidiary are translated into U.S. dollars at the exchange rate in effect at the end of each period. Revenue and expenses for these subsidiaries are translated into U.S. dollars using average rates that approximate those in effect during the period. Translation adjustments are included in Accumulated other comprehensive loss as a separate component of the Consolidated Statements of Stockholders’ Equity and Group Equity and in the effect of exchange rate changes on cash and cash equivalents in the Consolidated Statements of Cash Flows. F-10 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Revenue Recognition The Company primarily generates revenue through its platform by providing users with access to Paid Content, and by providing advertising services on the platform. We recognize revenue when services are transferred to customers at the transaction price which considers estimated returns on promotional discounts and earned loyalty rewards. Revenue excludes amounts collected on behalf of third parties, such as value added taxes. Historical data is used to estimate returns, promotional discounts, and earned loyalty rewards using the expected value method. We include these amounts in the transaction price to the extent it is probable that a significant reversal of revenue will not occur and update our estimate of transaction price as additional information becomes available. For revenue contracts with multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price which is primarily determined based on the price charged to customers for sales on a stand-alone basis. Paid Content Revenue Paid Content revenue is recognized when the Company provides services that provide content to users through the platform. Content provided by the platform includes, but is not limited to, web-comics, movies, web-novels, and e-books. We have an obligation to upload and maintain content on the platform by contracting with creators and publishers to make the content available to our customers. On most of our offering, customers purchase access to content by first purchasing a virtual currency (such as Coins or Cookies) then redeeming such virtual currency for access to particular content. There are other offerings where content can be purchased directly with cash. For the majority of transactions, we have determined that we are the principal for services provided to users and recognize revenue gross of commissions payable to the creator or publisher. In cases where we have determined that we are an agent in the transaction, we recognize revenue net of amounts remitted to the creator or publisher. The determination of whether the Company is a principal or as an agent in Paid Content revenue transactions requires significant judgment and is based on an assessment of relevant accounting guidance and the arrangements the Company has in place with creators or publishers and end users. Key considerations in this determination include the Company’s ability to control access to, monetization of, and promotion of the content, as well as its responsibility for resolution of end user inquiries and complaints and its ability to establish the price of the content on the platform. The period of time the user can view the content varies depending on the platform and the terms of the arrangement with the user. We recognize Paid Content revenue over the estimated service period, which we determine based on the weighted average number of days between the first day the user can access the content and last day the user views the content, which varies by platform and is typically within one week. We believe this provides a reasonable depiction of the transfer of services. Paid Content revenue also includes the sale of physical books from other publishers. The Company earns commissions on the sales of books to end users from merchants that sell their products through the Company’s offerings. For the majority of these transactions, the Company is not the seller of record, nor does it take control of the related inventory, which has led the Company to determine that it is an agent in these transactions. Accordingly, although the Company processes and collects the full payment on these transactions, it records revenue net of amounts remitted to the third party merchant when control transfers to the customer, generally at the time of product shipment from its facilities. Advertising Revenue We post advertisements on our websites and mobile applications and recognize revenue for advertising services. Advertising revenue is recognized at the point in time the advertisement is displayed or based on clicks, impressions, or end-user activity, which represents the point in time that control is transferred to the customer thereby completing our performance obligation. When the customer is an advertising agency, advertising revenue is comprised of the commission the Company earns for lending advertisement space to the advertising agency. IP Adaptations We internally develop IP Adaptations for films, streaming series, or other rich media format adaptations, the majority of which are commissioned for production by third party studios or streaming platforms. IP Adaptations revenue is recognized based on the terms of the contract with the customer and the determination of the Company’s performance obligation is dependent on which party has authority to make key creative decisions on the produced content. For IP Adaptations where the content is made to an individual customer specification such that the customer controls the output during the production process, the Company’s performance obligation is production services. Revenue and the associated F-11 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements costs of such contracts are recognized over time on a percentage of completion basis. For IP Adaptations where the Company controls the key creative decisions and output of the production process, its performance obligation is the sale of content to third-party studios and video-streaming platforms. Fixed payments for the content are recognized as revenue on a gross basis upon delivery and acceptance of the content or as sales-based royalties when sell-through sales of the content occur. IP Adaptations revenue also includes license fees generated from sub-licensing content to third parties for secondary media such as video game production. Content sub-licensing revenue is recognized when the Company brokers licensing arrangements between creators or publishers and other third-party platforms on a net commission basis as the Company is acting as an agent in these transactions. IP Adaptations also include the sale of licensed merchandise under two types of arrangements. In one type of arrangement the Company acts as a principal in the sale of licensed merchandise, while in the other, the Company serves as an agent. In Korea, the Company directly sells licensed merchandise to customers through digital storefronts, including the related-party NAVER platform and other e-commerce websites. The merchandise is manufactured by third parties in small batches to meet estimated demand or fulfill preorders. As the seller of record, the Company takes control of the relevant inventory prior to distribution, sets the merchandise price, and manages any after-sale issues including refund claims. Thus, the Company is considered a principal in this type of arrangement and recognizes revenues on a gross basis. In other countries, the Company generates merchandise revenues by licensing IP to third parties who operate all aspects of the revenue stream, from manufacturing the products to maintaining the online merchandise store which operates under the WEBTOON brand. Licensing fees are determined by the contractual commission rate or fixed fee applied to the underlying sales of merchandise. In this type of arrangement, the Company is considered an agent as it is not the seller of record, nor does it take control of the related inventory. Accordingly, although the Company processes and collects the full payments on these transactions, the Company recognizes revenues net of the amounts remitted to the third-party merchant when control transfers to the customer, generally at the time of product shipment from its facilities. Cost of Revenue Cost of revenue primarily consists of the commission fees payable to content rights holders as well as other costs directly associated with the acquisition, licensing and production of content, such as payroll and related personnel expenses, amortization and production related costs. Cost of revenue also includes fees charged by payment gateway companies for processing payments on the offerings as well as platform fees payable to companies that provide consumers with the ability to download the mobile app through app stores (such as Google and Apple) or to third parties providing a platform hosting service. Marketing Marketing expenses primarily consist of online and offline advertising and marketing program costs. Marketing expenses also include market research and public relations related expenses that support marketing activities. Advertising costs are expensed as incurred and total advertising expenses were $ 67.0 million, $ 36.6 million, and $ 28.3 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. General and Administrative Expenses General and administrative expenses include all our operating costs, excluding cost of revenue and marketing, as described above. More specifically, these expenses include costs related to operating and maintenance of our platform, general corporate function costs, and depreciation and amortization of non-operating assets. Stock-Based Compensation The Company accounts for stock-based employee compensation arrangements in accordance with U.S. GAAP which requires compensation expense for the grant-date fair value of equity-based awards to be recognized over the requisite service period. The Company determines the fair value of equity-based awards granted on the grant date using appropriate valuation techniques. Forfeitures are estimated using historical experience at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimate. See Note 11. Stock-Based Compensation for more information on the Company’s stock compensation plans. F-12 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Stock-Based Awards Issued to Employees of NAVER The Company issues stock-based awards to employees of NAVER that do not render services to the Company. The Company measures the award based on the grant-date fair value and accounts for the awards as a dividend distribution to NAVER following the attribution principles of ASC 718. Forward Stock Split, Change in Par Value On June 26, 2024, the Company filed an Amended and Restated Certificate of Incorporation which effectuated a 30 -for-1 forward stock split of its common stock and adjusted the par value of its common stock from $ 0.01 to $ 0.0001 on such date. Accordingly, all share and per share amounts presented in the audited Consolidated Financial Statements have been retroactively adjusted to reflect the stock split and change in par value for all periods presented. Phantom Units During the twelve months ended December 31, 2025, the Company granted awards in the form of “Phantom Units”, which provide recipients with the right to receive cash payments, less applicable withholding, equivalent to the fair market value of one share of the Company’s common stock on the applicable vesting date, multiplied by the number of Phantom Units that vest. While these Phantom Units do not confer ownership rights, they are also entitled to dividends, if declared, equivalent in an amount in cash and form equal to the dividend that would have been paid on the shares underlying the Phantom Unit had such shares been outstanding on such record date. Any such dividend equivalents shall be subject to the same vesting conditions applicable to the underlying Phantom Unit with respect to which they accrue. Phantom Units are recorded as an expense based on the fair value of the units on the balance sheet date. The fair value of these awards is updated at each balance sheet date and changes in the fair value of the vested portions of the awards are recorded as increases or decreases to compensation expense in the Consolidated Statements of Operations and Comprehensive Loss. All of the outstanding Phantom Units at December 31, 2025 met the criteria to be treated under liability classification in accordance with ASC 718, given that these awards will settle in cash on the vesting date. See Note 11 . Stock-Based Compensation for more information on the Company’s Phantom Units. Defined severance benefits We accrue severance benefits for employees of our Korean subsidiaries. Pursuant to the Employee Retirement Benefit Security Act of Korea, eligible employees with one or more years of service are entitled to severance payments upon the termination of their employment based on their length of service and pay rate. We recognize the defined severance benefits in the Consolidated Balance Sheets with a corresponding adjustment to Consolidated Statements of Operations and Comprehensive Loss. The obligations are measured annually, or more frequently if there is a remeasurement event, based on our measurement date utilizing various actuarial assumptions and methodologies. We use certain assumptions including, but not limited to, the discount rates, salary growth rates, and certain employee-related factors, such as turnover, retirement age and mortality. We review our actuarial assumptions and make modifications to the assumptions based on current rates and trends when appropriate. We have adopted a policy of immediate recognition of actuarial gains and losses where any differences arising from the annual remeasurement is immediately charged in the period of the remeasurement within the Consolidated Statements of Operations and Comprehensive Loss as Other income (loss), net. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based upon the difference between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Our deferred tax assets are recorded net of valuation allowances when, based on the weight of available evidence, it is more likely than not that all or some portion of the recorded deferred tax assets will not be realized in future periods. The consolidated financial statements reflect the jurisdictional netting of deferred tax assets and liabilities within each tax jurisdiction. However, the tax footnote disclosures are presented on a gross basis, without netting across jurisdictions, to provide a detailed breakdown of deferred tax balances as required by the applicable F-13 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements accounting standards. Realization of our deferred tax assets is dependent on the generation of future taxable income. In considering the need for a valuation allowance, we consider our historical, as well as future projected taxable income, along with other positive and negative evidence in assessing the realizability of our deferred tax assets. Decreases to valuation allowances are recorded as reductions to our income tax expense and increases to valuation allowances result in additional expense for income taxes. We recognize and measure uncertain tax positions taken or expected to be taken in a tax return utilizing a two-step process. In the first step, recognition, we determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step addresses measurement of a tax position that meets the more-likely-than-not criteria. The tax position is measured at the largest amount of benefit that has a likelihood of greater than 50 percent of being realized upon ultimate settlement. The Company does not record a deferred tax liability for the excess of the book basis over the tax basis of its investments in foreign subsidiaries to the extent that the basis difference meets the indefinite reversal criteria. These criteria are met if the Company has invested or will invest the undistributed earnings on the foreign subsidiaries indefinitely. The management’s intention is to invest the undistributed earnings on the foreign subsidiaries indefinitely. The decision as to the amount of undistributed earnings that the Company intends to maintain in non-U.S. subsidiaries takes into account various items, including, but not limited to, forecasts and budgets of financial needs of cash for working capital, liquidity plans, capital improvement programs, merger and acquisition plans, and planned loans to other non-U.S. subsidiaries. Cash and Cash Equivalents Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less from the date of purchase and are mainly comprised of bank deposits . Receivables, net of allowance for credit losses Receivables, net of allowance for credit losses, are stated at their carrying value, net of allowance for credit losses based on lifetime expected losses. Receivable balances are primarily receivables due from payment gateway providers relating to sales processed for the Company’s online platform service business, as well as receivables from advertising activities, net of estimated allowances for credit losses. The Company estimates the allowance for credit losses based upon historical experience, the age and delinquency rates of receivables and the credit quality of the customers, as well as economic and regulatory conditions combined with reasonable and supportable management forecasts of collectibility and other economic factors over the lifetime of the receivables. The Company writes off accounts against the allowance for credit losses when they are deemed to be uncollectible. The total allowances for credit losses as of December 31, 2025, and December 31, 2024, were $ 3.4 million and $ 3.4 million, respectively. Credit loss expense is included in General and administrative expenses. Property and Equipment, net Property and equipment, net is stated at historical cost, less accumulated depreciation. Property and equipment primarily include buildings, land, leasehold improvements, and information technology equipment. Depreciation expense is classified within General and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss. We compute depreciation using the straight-line method over the estimated useful lives of the assets. Maintenance and repairs are expensed as incurred. Leases We determine whether an arrangement is or contains a lease at contract inception. Leases with contractual terms greater than twelve months are classified as either operating or finance leases. Operating leases are recorded as operating lease right-of-use assets and operating lease liabilities on the Consolidated Balance Sheets. We elected to account for lease and non-lease components as a single lease component for all classes of assets and elected to not record leases with an initial term of twelve months or less on the Consolidated Balance Sheets. If the rate implicit in the Company’s leases is not readily determinable, we use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments over the lease term. When the Company has the option to extend the term or terminate the lease before the contractual expiration date, and it is reasonably certain that it will exercise the option, the Company considers these options in determining the lease term. The Company’s operating leases are comprised of leases of real estate and equipment that are typically entered into for a fixed term that may contain F-14 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements extension and termination options. Certain agreements have free rent periods or escalating rent payment provisions. Rent expense is recognized on a straight-line basis over the lease term. The Company subleases its properties, which are all classified as operating leases. Any sub-leasing revenue is classified as Other income (loss), net. The Company does not have any finance leases. See Note 8. Leases for further information. Impairment of Long-lived Assets Long-lived assets include property and equipment, trademarks, copyrights, patents, software, brand and other intangible assets with finite lives. Long-lived assets are not required to be tested for impairment annually, but rather whenever circumstances indicate that the carrying amount of the asset may not be recoverable. Conditions that may necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may indicate potential impairment. When the undiscounted future cash flows indicate the long-lived asset or asset group is not recoverable, any potential impairment loss is measured and recognized at the amount by which the carrying value exceeds its fair value. Change in Estimated Useful Lives of Intangible Assets The Company conducts an annual review, at a minimum, of the estimated useful lives of its finite-lived intangible assets. This review indicates that the actual lives of certain intangible assets were shorter than the estimated useful lives over which such assets are amortized due to the abandonment of certain intangible assets that cease to be used. As a result, the Company recognized accelerated amortization expense for these intangible assets of $ 1.6 million, $ 3.9 million and $ 2.5 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. Fair Value Measurements Certain financial instruments are required to be recorded at fair value. Other financial instruments, including cash and cash equivalents, are recorded at cost, which approximates fair value. Additionally, receivables, term deposits, accounts payable, and accrued expenses approximate fair value because of the short-term nature of these financial instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. We measure the fair value of certain equity securities based on quoted prices in active markets for identical assets or liabilities. Other debt and equity securities are valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. Fair Value Option The Company elects to account for debt securities under the fair value option in accordance with ASC 825, Financial Instruments, (“ASC 825”). Under the fair value option, these debt securities are recognized at fair value at inception and change in fair value at each subsequent reporting date is recognized as a component of Other income (loss), net in the Consolidated Statements of Operations and Comprehensive Loss. Equity Securities without Readily Determinable Fair Value For equity securities without readily determinable fair value, securities are recorded at cost less impairment, and adjusted for subsequent observable price changes as of the date that an observable transaction takes place. The Company F-15 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements performs a qualitative assessment on a quarterly basis to determine if any observable price changes have occurred. If the qualitative assessment indicates that an observable price change has occurred for the same or similar security of the issuer, a gain or loss is recorded equal to the difference between the fair value and carrying value in the current period as a component of Other income (loss), net. Loans Typically, loans that do not meet the definition of a debt security, are stated at amortized cost, net of allowance for credit losses. We write off loans against the allowance for credit losses when they are deemed to be uncollectible. Refer to Receivables, net of allowance for credit losses in Note 1. Description of Business and Summary of Significant Accounting Policies for additional information on estimated credit losses for loan receivables. Accrued interest receivable on loans is recorded in the Consolidated Balance Sheets in Other current assets, net. As of December 31, 2025, and December 31, 2024, accrued interest receivable was $ 0.7 million and $ 0.7 million, respectively. Equity Method Investments We apply the equity method to account for investments in which we have the ability to exercise significant influence, but not control, over the investee. There is a rebuttable presumption that an investor has significant influence when it owns more than 20% of the common stock of a corporation and more than 3% partnership interest in a partnership. This presumption may be overcome based on specific facts and circumstances that demonstrate the ability to exercise significant influence is restricted. We apply the equity method to investments in common stock. We record the investment at cost and subsequently increase or decrease the carrying amount of the investment by our proportionate share of the net earnings or losses and other comprehensive income of the investee. Basis differences between the cost of an equity method investment and the underlying equity in the intangible assets are amortized over the estimated economic useful life of the underlying intangible asset. We record dividends or other equity distributions as reductions in the carrying value of the investment. If net losses reduce our carrying amount to zero, additional net losses may reduce other investments in the same investee, if they exist. Such additional equity method losses, if any, are based upon the change in our claim on the investee’s book value. Equity method investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company may estimate the fair value of its equity method investments by considering recent investee equity transactions, discounted cash flow analysis, recent operating results, comparable public company operating cash flow multiples and, in certain situations, balance sheet liquidation values. If the fair value of the investment has dropped below its carrying amount, management considers several factors when determining whether an other-than-temporary decline has occurred, such as the length of the time and the extent to which the estimated fair value or market value has been below the carrying value, the financial condition and the near-term prospects of the investee, the intent and ability of the Company to retain its investment in the investee for a period of time sufficient to allow for any anticipated recovery in market value, and general market conditions. The estimation of fair value and whether an other-than-temporary impairment has occurred requires the application of significant judgment and future results may vary from current assumptions. If declines in the value of the equity method investments are determined to be other-than-temporary, a loss is recorded in earnings in the current period as a component of Loss on equity method investment, net on the Consolidated Statements of Operations and Comprehensive Loss. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, cash equivalents, term deposits, receivables and loan receivables. We maintain cash deposits, cash equivalent balances with several financial institutions. Cash and cash equivalents may be withdrawn or redeemed on demand. We believe that these financial institutions that hold our cash, cash equivalents and term deposits are financially sound and, accordingly, minimal credit risk exists with respect to these balances. We extend credit to our customers, payment gateway companies and borrowers based on an evaluation of their ability to pay amounts due under contractual arrangement and generally do not obtain or require collateral. Cash and cash equivalents, receivables and loan receivables are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with several financial institutions that management believes are of high credit quality. F-16 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The Company’s receivables include amounts concentrated with three payment gateway companies representing 55.3 % and 54.9 % of the total receivables balance as of December 31, 2025 and December 31, 2024, respectively. Three borrowers represent 88.9 % and 89.0 % of the total loan receivables balance as of December 31, 2025 and December 31, 2024, respectively. There are no individual customers who account for more than 10% of total revenue for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, or 10% or more of its receivables balance as of December 31, 2025 or December 31, 2024. Business Combinations We include the results of operations of the businesses that we acquire from the date of acquisition. We determine the fair value of the assets acquired and liabilities assumed based on their estimated fair values as of the respective date of acquisition. The excess purchase price over the fair values of identifiable assets and liabilities is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection of comparable companies. Our estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. As a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill. At the conclusion of the measurement period, any subsequent adjustments are reflected in the Consolidated Statements of Operations and Comprehensive Loss. When we issue payments or grants of equity to selling stockholders in connection with an acquisition, we evaluate whether the payments or awards are compensatory. This evaluation includes whether cash payments or stock award vesting is contingent on the continued employment of the selling stockholder beyond the acquisition date. If continued employment is required for the cash to be paid or stock awards to vest, the award is treated as compensation for post-acquisition services and is recognized as compensation expense. Transaction costs associated with business combinations are expensed as incurred and are included in General and administrative expenses in our Consolidated Statements of Operations and Comprehensive Loss. Variable Interest Entity We determine at the inception of each arrangement whether an entity in which we have made an investment or in which we have other variable interests is considered a variable interest entity (“VIE”). We consolidate a VIE when we are the primary beneficiary (see Note 16. Related Parties and Variable Interest Entity ). We are the primary beneficiary of a VIE when we have the power to direct activities that most significantly affect the economic performance of the VIE and have the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If we are not the primary beneficiary in a VIE, we account for the investment or other variable interests in a VIE in accordance with applicable GAAP. Periodically, we assess whether any changes in our interest or relationship with the entity affect our determination of whether the entity is a VIE and, if so, whether we are the primary beneficiary. Non-Controlling Interest and Redeemable Non-Controlling Interest in Subsidiary A non-controlling interest in a consolidated subsidiary represents the portion of the equity in a subsidiary not attributable, directly or indirectly, to the Company. Non-controlling interests are presented as a separate component of equity in the consolidated balance sheets and the presentation of net income is modified to present earnings attributed to controlling and non-controlling interests. Redeemable non-controlling interests are presented as a component of temporary equity in the mezzanine section of the consolidated balance sheet and the presentation of net income is modified to present earnings attributed to the controlling and redeemable non-controlling interest. The redeemable non-controlling interest is initially recorded at the acquisition date fair value. Subsequently, if it is probable that redeemable non-controlling interest will become redeemable, they are recorded at the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 (i.e., initial carrying amount, increased or decreased for the non-controlling interest’s share of net income or loss, OCI or other comprehensive loss, and dividends) or (2) the redemption price. If it is not probable that redeemable F-17 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements non-controlling interest will become redeemable, they are recorded at the amount based on step (1) and when the redemption becomes probable, the Group recognizes changes in the redemption price immediately. The Company does not consider the redemption of the redeemable non-controlling interest probable of being redeemable. Accordingly, the redeemable non-controlling interest will not be remeasured until the redeemable non-controlling interest is probable of becoming redeemable. See Note 20. Redeemable Non-Controlling Interest in Subsidiary Note 21. Non-Controlling Interest in Subsidiaries for more information on the Company’s redeemable and nonredeemable non-controlling interests. Common Control Transactions Assets and liabilities transferred in common control transactions are recognized at the historical cost of the ultimate parent of the entities under common control. In determining the receiving entity in common control transactions, the entity that first came under control of the ultimate parent is presented as the accounting receiving entity regardless of the legal form of the transaction. Any difference in the amount paid by the receiving entity versus the assets and liabilities transferred at the historical cost of the ultimate parent to the receiving entity is recorded as an adjustment to equity. Business combinations between entities under common control that result in a change in reporting entity are accounted for retrospectively for all periods presented as if the combination had been in effect since the inception of common control. Assets acquisitions between entities under common control are accounted for prospectively. When performing goodwill impairment testing during the period when common control transactions are retrospectively presented, we use the historical reporting unit structures of each of the respective common control entities. The reporting units are reassessed for goodwill impairment testing purposes at the time of the common control transaction to the extent any changes are made to the reporting units as a result of such common control transaction. Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. The Company evaluates goodwill and indefinite-lived intangible assets such as membership and intellectual property rights for impairment annually as of October 1, or earlier if an event or other circumstance indicates that it may not recover the carrying value of the asset. If the Company believes that, as a result of its qualitative assessment, it is more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is greater than its carrying amount, a quantitative impairment test is not required. Reporting units are businesses for which individual financial information is available. If a qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit goodwill or other indefinite-lived intangible asset exceeds its fair value, a quantitative impairment test is performed. The Company may elect to bypass this qualitative assessment for annual impairment evaluations as of October 1 for some or all of its reporting units and perform a quantitative test. If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, an impairment charge is recorded for the amount by which the carrying amount exceeds the fair value, not to exceed the amount of goodwill recorded for that reporting unit. Application of the goodwill impairment test requires judgment based on market and operational conditions at the time of the evaluation, including management’s best estimates of the reporting unit’s future business activity and the related estimates and assumptions of future cash flows from the assets that include the associated goodwill. In determining the fair value of the reporting units, management considers both the income approach and the market approach. Fair value is estimated using a discounted cash flow model (income valuation approach) based on projections of future years’ operating results and associated cash flows combined with comparable trading and transaction multiples based on guideline public companies. The calculated estimated fair value of the reporting unit reflects a number of significant management assumptions and estimates including the forecast of revenue growth, terminal growth rates, and discount rates. Changes in these assumptions could materially impact the estimated fair value. The Company’s projections incorporate management’s best estimates of the expected future results, which include expectations related to new and retained business and future operating margins. Projected future cash flows are then discounted to present value using a discount rate management believes is commensurate with the risks inherent in the cash flows. F-18 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Basic and Diluted Losses per Share The share numbers are retroactively stated for purposes of calculating weighted average number of shares outstanding for loss per share to reflect the outstanding shares of Wattpad as if the equity structure of the Parent (the accounting acquirer) was stated to reflect the number of shares of Wattpad (the accounting acquiree) issued in the common control transactions. Basic loss per share available to common stockholders is computed by dividing the net loss available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted loss per share is computed using the weighted-average number of shares of common stock and potentially dilutive potential common shares outstanding during the period. The dilutive loss per share impact of the subsidiaries is included in our numerator when calculating loss per share. Each reporting period, a measurement period adjustment is recorded to adjust the redeemable non-controlling interest to its maximum redemption amount with changes recorded in retained earnings (or Additional paid-in capital if the Company has an accumulated deficit) if such non-controlling interest is probable of being redeemed. Changes to redemption value will be reflected as a corresponding adjustment to the numerator for earnings (loss) per share. As of December 31, 2025, December 31, 2024, and December 31, 2023, no adjustments were made to redemption value or loss per share as the redeemable non-controlling interest was not probable of being redeemed. Recent Accounting Pronouncements Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures, which requires enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This update is effective for fiscal years beginning after December 15, 2024, on a prospective basis and retrospective application is permitted. The Company adopted ASU 2023-09 prospectively during the year ended December 31, 2025. See Note 12. Income Taxes ” for more information about the impact of the adoption of ASU 2023-09. Recent Accounting Pronouncements Yet to Be Adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement (Topic 220): Disaggregation of Income Statement Expenses, which requires additional disclosures of certain amounts included in the expense captions presented on the Statement of Operations as well as disclosures about selling expenses. The ASU is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impacts of adopting this guidance on its financial statement disclosures. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides an expedient for measuring expected credit losses on current trade receivables and contract assets by assuming that current conditions remain unchanged over the life of the asset, and for non-public business entities, an accounting policy election to consider subsequent cash collections. The amendments are effective for annual and interim periods beginning after December 15, 2025, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our Consolidated Financial Statements. In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for software costs by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. The amendments are effective for annual and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impacts of adopting this guidance on its financial statement disclosures. F-19 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 2. Revenue Disaggregation of Revenue The following table shows revenues disaggregated by revenue stream for the years ended December 31, 2025, December 31, 2024, and December 31, 2023: Year Ended December 31, 2025 2024 2023 (in thousands of USD) Paid Content $ 1,087,496 $ 1,083,026 $ 1,028,960 Advertising 164,257 166,087 145,452 IP Adaptations 130,952 99,365 108,336 Total $ 1,382,705 $ 1,348,478 $ 1,282,748 The revenue stream disaggregation above takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Paid Content revenue is generated from the provision of platform services that enable users to access content. Paid Content revenue also includes $ 11.2 million, $ 10.9 million and $ 7.5 million of physical book sales through the platform for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. Advertising revenue represents amounts earned for the display of advertisements on our offerings or product placement within content. IP Adaptations include the internal development of film, streaming series, or other rich media format adaptations commissioned by third party studios or streaming platforms; the license fees generated by sublicensing content to third parties are $ 13.6 million, $ 12.9 million and $ 11.5 million in 2025, 2024 and 2023, respectively; as well as $ 5.7 million, $ 15.1 million and $ 14.0 million of merchandise sales generated through external platforms, IP royalties, and pop-up stores for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. The following table shows disaggregation of revenue by geography for the years ended December 31, 2025, December 31, 2024, and December 31, 2023: Year Ended December 31, 2025 2024 2023 (in thousands of USD) Korea $ 522,033 $ 517,534 $ 566,368 Japan 681,821 648,247 557,349 Rest of World 178,851 182,697 159,031 Total $ 1,382,705 $ 1,348,478 $ 1,282,748 Paid Content revenue in the revenue disaggregation by geography above is based on the location of the Company’s customers at the time of sign-up as determined by the Company’s internal systems utilizing standard geolocation technology. Contract Liabilities Contract liabilities primarily include payments received for virtual currency prior to the Company satisfying its performance obligation to deliver content to the customer. We recognized revenues of $ 81.6 million, $ 70.4 million and $ 66.3 million in 2025, 2024, and 2023, respectively, that were included within Contract liabilities on the Consolidated Balance Sheets as of the beginning of the respective year. F-20 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements As of December 31, 2025, December 31, 2024, and December 31, 2023, our remaining performance obligations were $ 90.0 million, $ 85.9 million, and $ 76.7 million, respectively, and we expect to recognize the entire amounts within one year of the respective year-end. Note 3. Loss per Share For the years ended December 31, 2025, December 31, 2024, and December 31, 2023, for the purpose of calculating loss per share and as a result of the common control transaction as described in Note 1. Description of Business and Summary of Significant Accounting Policies the weighted-average number of shares used in the calculation reflects the outstanding shares of Wattpad as if the equity structure of the Parent (the accounting acquirer) was retroactively stated to reflect the number of shares issued in the Wattpad Transfer. Basic loss per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted loss per share is computed using the weighted average number of outstanding shares of common stock and, potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of incremental shares issuable upon the assumed exercise of stock options and vesting of RSUs. For the years ended December 31, 2025, December 31, 2024, and December 31, 2023, the Company’s Korean subsidiaries and equity method investees each had outstanding stock options that will be settled in each respective subsidiary or equity method investee’s common shares. The numerator of the Company’s loss per share includes the Parent’s proportionate share of the diluted loss per share impact of outstanding subsidiaries and equity method investees’ stock options. The following table sets forth the computation of basic and diluted loss per share for the years ended December 31, 2025, December 31, 2024, and December 31, 2023: Year Ended December 31, 2025 2024 2023 (in thousands of USD, except share and per share data) Basic loss per share: Net loss attributable to WEBTOON Entertainment Inc. $ ( 345,927 ) $ ( 143,905 ) $ ( 116,455 ) Add: allocation to subsidiary/equity method investee participating security 1 ( 207 ) 123 210 Net loss available to WEBTOON Entertainment Inc. $ ( 346,134 ) $ ( 143,782 ) $ ( 116,245 ) Shares used in computation: Weighted-average common shares outstanding 130,177,475 119,231,997 109,505,150 Basic loss per share $ ( 2.66 ) $ ( 1.21 ) $ ( 1.06 ) Diluted loss per share: Net loss available to WEBTOON Entertainment Inc. $ ( 346,134 ) $ ( 143,782 ) $ ( 116,245 ) Add: dilutive impact of subsidiary/equity method investee stock options ( 8 ) ( 9 ) — Diluted net loss available to WEBTOON Entertainment Inc. $ ( 346,142 ) $ ( 143,791 ) $ ( 116,245 ) Shares used in computation: Weighted-average common shares outstanding 130,177,475 119,231,997 109,505,150 Diluted weighted-average common shares outstanding 130,177,475 119,231,997 109,505,150 Diluted loss per share $ ( 2.66 ) $ ( 1.21 ) $ ( 1.06 ) ______________ 1. Represents net loss allocable to Jakga Company Inc. (“Jakga”) redeemable convertible preferred stock which is a participating security per ASC 260. Jakga became an equity method investee from a subsidiary when it was deconsolidated on March 28, 2024 (Refer to Note 17. Disposition and Business Combinations for additional information for Jakga disposition). F-21 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The following potentially dilutive outstanding securities were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented, or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period: Year Ended December 31, 2025 2024 2023 Stock options 10,577,848 10,932,250 10,883,310 Unvested RSUs 3,298,513 2,635,775 509,190 Subsidiary / equity method investee stock options 441,297 332,597 610,897 Total 14,317,658 13,900,622 12,003,397 Note 4. Other Income (Loss), net The following table summarizes Other income (loss), net for the years ended December 31, 2025, December 31, 2024, and December 31, 2023: Year Ended December 31, 2025 2024 2023 (in thousands of USD) Gain (loss) on debt and equity securities, net $ ( 8,605 ) $ 2,263 $ ( 22,585 ) Loss on foreign currency, net ( 625 ) ( 2,103 ) ( 7,590 ) Retirement benefit (loss), net ( 601 ) 2,807 8,763 Dividend income — 2,640 — Other 23 1,689 ( 1,341 ) Loss on disposal of investment in subsidiaries, net — ( 2,713 ) ( 884 ) Gain on right of use asset disposal, net — 1,899 63 Total other income (loss), net $ ( 9,808 ) $ 6,482 $ ( 23,574 ) Note 5 . Balance Sheet Components Prepaid Expenses and Other Current Assets, net As of December 31, 2025 2024 (in thousands of USD) Advance payments, net $ 38,138 $ 47,545 Prepaid expenses 14,635 14,008 Other current assets, net 9,100 6,902 Term deposits 10,774 26,328 Total other current assets, net $ 72,647 $ 94,783 Advance payments are primarily comprised of the payment of minimum guarantees to creators or publishers for their provision of content, such as web-comics, on the Company’s platform. The advance payments for production of film contents are directly related to the contract that will be used to satisfy a future performance obligation and are expected to be recovered. The Company’s balance of advance payments due to film F-22 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements production contracts are $ 29.0 million and $ 35.1 million, as of December 31, 2025, and December 31, 2024, respectively. These costs are amortized on a systematic basis consistent with the transfer of services to the customer to which the asset relates. The Company recorded amortization of $ 10.2 million, $ 11.5 million ,and $ 8.0 million during the years ended December 31, 2025, December 31, 2024, and December 31, 2023 respectively. The advance payments for minimum guarantee are amortized as the associated commission expenses payable to creators or publishers are incurred. When the Company determines the estimated future commission expenses payable are less than the carrying amount of such advance payments, the remaining portion of that advance payment is charged to expense in the period in which such determination is made. The Company charged advance payments to expense due to such determination in the amounts of $ 0.2 million, $ 0.2 million, and $ 1.2 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 respectively. Other current assets, net, consist primarily of inventories, the current portion of leasehold deposits and contract asset. The allowances on short-term loans were immaterial to the Company’s consolidated balance sheets as of December 31, 2025, and December 31, 2024, respectively. Term deposits are bank deposits held by Korean and Japanese subsidiaries of the Company with maturities of less than one year but more than three months. As of December 31, 2025, and December 31, 2024, the term deposit balance of $ 8.7 million and $ 8.0 million was pledged to Sumitomo Mitsui Banking Corporation as a compensating balance deposit on contract liabilities of the Company’s subsidiary in accordance with the Payment Services Act in Japan. Other Non-Current Assets, net As of December 31, 2025 2024 (in thousands of USD) Advance payments, net $ 25,486 $ 29,222 Long-term loans, net 30,890 31,859 Other non-current assets, net 8,818 4,825 Total other non-current assets, net $ 65,194 $ 65,906 Long-term advance payments represent the portion of advance payments expected to remain on the balance sheet beyond one year. When the Company determines the estimated future commission expenses payable are less than the carrying amount of the long-term advance payments, the remaining portion of that long-term advance payment is charged to expense in the period in which such determination is made. The Company’s balance of advance payments due to film production contracts are $ 7.3 million and $ 8.5 million as of December 31, 2025 and December 31, 2024, respectively, and charged long-term advance payments to expense due to such determination in the amounts of $ 11.9 million, $ 6.9 million and $ 4.4 million, for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. The Company recorded amortization expense of $ 65.3 million, $ 36.3 million, and $ 64.2 million, and impairment loss of $ 0.7 million, $ 0.4 million and $ 0.5 million during the years ended December 31, 2025, and December 31, 2024, and December 31, 2023, respectively, for contracts related to film products. F-23 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Accrued Expenses Accrued expenses as of December 31, 2025, and December 31, 2024, consisted of: As of December 31, 2025 2024 (in thousands of USD) Accrued royalties $ 26,126 $ 21,201 Accrued allowances 10,959 8,531 Accrued bonuses 16,070 14,987 Accrued other expenses 13,535 17,490 Total Accrued Expenses $ 66,690 $ 62,209 Accrued royalties are liabilities recorded on an accrual basis for amounts to be paid to the content providers by the Company, and Accrued other expenses are liabilities recorded on an accrual basis for marketing and advertising expenses. Accrued allowances and Accrued bonuses are liabilities recorded on an accrual basis for labor expenses. Note 6. Property and Equipment, net Property and equipment, net consists of the following: As of December 31, Estimated Useful Lives (in years) 2025 2024 (in thousands of USD) Land Indefinite $ 110 $ 108 Buildings 40 174 170 Equipment 3 - 5 13,775 10,457 Leasehold improvements Lesser of lease term or useful life 3,280 652 Construction in progress 295 82 Property and equipment 17,634 11,469 Less: Accumulated depreciation ( 9,295 ) ( 7,687 ) Property and equipment, net $ 8,339 $ 3,782 Depreciation expenses on property and equipment were $ 2.1 million, $ 3.4 million and $ 3.8 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively and were recorded within General and administrative expenses. F-24 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 7. Goodwill, net and Intangible Assets, net Intangible assets, net as of December 31, 2025 and December 31, 2024 consist of the following: As of December 31, 2025 Estimated Useful Lives (in years) Gross amount Accumulated Amortization Impairment Carrying amount (in thousands of USD) Intangible assets with definite lives: Brand 15 $ 133,164 $ ( 36,354 ) $ — $ 96,810 Intellectual property rights 4 - 14 120,165 ( 66,481 ) ( 978 ) 52,706 Software 5 55,120 ( 47,484 ) — 7,636 Trademarks, copyrights, and patents 4.32 - 15 98 ( 57 ) — 41 Intangible assets with indefinite lives: — Intellectual property rights Indefinite 346 — — 346 Membership Indefinite 265 — — 265 Total intangible assets $ 309,158 $ ( 150,376 ) $ ( 978 ) $ 157,804 As of December 31, 2024 Estimated Useful Lives (in years) Gross amount Accumulated Amortization Carrying amount (in thousands of USD) Intangible assets with definite lives: Brand 15 $ 133,837 $ ( 27,565 ) $ 106,272 Intellectual property rights 4 - 14 109,552 ( 50,270 ) 59,282 Software 5 41,290 ( 26,576 ) 14,714 Trademarks, copyrights, and patents 4.32 - 15 80 ( 41 ) 39 Intangible assets with indefinite lives: Intellectual property rights Indefinite 346 — 346 Membership Indefinite 259 — 259 Total intangible assets $ 285,364 $ ( 104,452 ) $ 180,912 Intangible assets, other than goodwill, are initially recognized at cost and stated net of accumulated amortization. The amortization expense is recorded in General and administrative expenses or Cost of revenue in our Consolidated Statements of Operations and Comprehensive Loss, depending upon the nature of activities. Brands, software, trademarks, copyrights and patents are amortized on a straight-line basis over their estimated useful lives. Intellectual property rights consist of exclusive rights under contracts, customer relationships, and publishing rights. Intellectual property rights with definite lives are amortized over their economic useful lives or the period over which we have exclusive and unrestricted rights to the content under the contract on a straight-line basis, while intellectual property rights with perpetual exclusive rights are treated as indefinite-lived assets. Amortization expense for intangible assets for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, was $ 33.3 million, $ 36.7 million, and $ 34.5 million, respectively, which included the accelerated amortization expense for abandoned intellectual property rights of $ 1.6 million, $ 3.9 million, and $ 2.5 million, respectively. F-25 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Intangible assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During the fourth quarter of 2025, based on management’s updated cash flow forecasts, management determined that the carrying amount of the Bootcamp video production assets was no longer recoverable as no further revenues or cost recoveries are anticipated from the project. As a result, the Company recognized an impairment charge of $ 1.0 million for the year ended December 31, 2025, in Impairment losses on goodwill and other intangible assets in the Consolidated Statements of Operations and Comprehensive Loss, representing a full write-off of the remaining carrying balance. There were no impairments of intangible assets, other than goodwill, during the years ended December 31, 2024, or December 31, 2023. Intangible asset amortization expenses for the following five years are expected to be as follows: Years Ended December 31, (in thousands of USD) 2026 $ 31,826 2027 17,058 2028 12,982 2029 12,980 2030 12,980 Thereafter 70,346 Total intangible assets, net $ 158,172 The changes in the carrying amount of goodwill for the years ended December 31, 2025, and December 31, 2024 are as follows: 2025 2024 (in thousands of USD) Goodwill at January 1 $ 761,770 $ 843,298 Less: accumulated impairment losses ( 96,495 ) ( 64,122 ) Goodwill, net at January 1 $ 665,275 $ 779,176 Goodwill Activity: Acquisition 1,398 — Foreign currency translation adjustments 5,660 ( 30,564 ) Disposition, net — ( 13,594 ) Impairments ( 335,508 ) ( 69,743 ) Goodwill, net at December 31 $ 336,825 $ 665,275 Goodwill at December 31 $ 768,165 $ 761,770 Less: accumulated impairment losses * ( 431,340 ) ( 96,495 ) Goodwill, net at December 31 $ 336,825 $ 665,275 ______________ (*) Accumulated impairment losses include $ 437.0 million and $ 101.4 million of impairment charges for the years ended December 31, 2025, and December 31, 2024, respectively. Additionally, cumulative translation adjustments (“CTA”) resulted in a net reversal of $ 5.6 million and $ 5.0 million for the year ended December 31, 2025, and December 31, 2024, respectively. During 2025, the Company acquired a controlling interest in Purple Duck through a business combination achieved in stages, and recognized goodwill of $ 1.4 million. During 2024, the Company deconsolidated its reporting unit Jakga, which resulted in the Company derecognizing goodwill, net in the amount of $ 13.6 million, which consisted of goodwill of $ 44.3 million and accumulated impairment of $ 30.7 million. (see Note 17. Disposition and Business Combinations, for more information on these transactions). F-26 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025, and December 31, 2024, the Company elected to bypass a qualitative assessment and performed a quantitative assessment to fulfill its annual goodwill impairment testing requirements under U.S. GAAP. The fair value of each reporting unit as of October 1, 2025, and October 1, 2024, respectively, was estimated using a discounted cash flow method with significant Level 3 inputs such as projected future cash flows, discount rate and terminal growth rate. The carrying values were based on each respective reporting unit’s net asset balance as of October 1, 2025, and October 1, 2024, respectively, and included directly attributable assets and liabilities, including goodwill. The Company recognized impairment loss on goodwill for Wattpad, Munpia, Wattpad WEBTOON Studios Corp. (“WWS”), and Purple Duck of $ 257.2 million, $ 74.0 million, $ 2.9 million and $ 1.4 million respectively, for the year ended December 31, 2025, as the carrying value of each reporting unit exceeded the fair value of the respective reporting unit. For Wattpad, the impairment charge was primarily driven by a downward revision in projected operating results, which led to a lowered outlook for 2026 and beyond. This adjustment resulted from challenges in the advertising business, where delays in key strategic initiatives, such as the migration to the advertising platform, caused by organizational restructuring in the North American advertising division, along with the loss of sales personnel, led to a shortfall in advertising revenue. Additionally, user metrics declined due to a sustained decrease in Monthly Active Users (MAU) and traffic from prolonged service bans in Russia and Turkey, combined with technical issues affecting search engine functionality, which collectively resulted in lower ad impressions and slower growth in paid content revenue. For Munpia, while recent standalone operating performance remains stable, the Company recalibrated its long term forecast to reflect a lower than expected realization of synergies from IP expansion. Recent financial analysis indicated that the conversion of webnovels into secondary content and the subsequent increase in distribution revenue were slower than initially anticipated. This structural realignment resulted in a reduction in projected business scale, which in turn increased the discount rate applied in the valuation due to a higher size premium. For WWS, business strategy shifted from drama and movie production to providing scripts or rights utilizing Webtoon IP to clients, such as drama and movie production companies, leading to a significant reduction in projected future cash flows. In the case of Purple Duck, lower than expected operating profits and cash flows contributed to the impairment of the reporting unit. The Company recognized impairment loss on goodwill for Wattpad, Munpia, and WWS of $ 46.7 million, $ 20.3 million, and $ 2.7 million respectively, for the year ended December 31, 2024, as the carrying value of each reporting unit exceeded the fair value of the respective reporting unit. For Wattpad, strategic shifts toward an ad-based revenue model had not yet yielded significant revenue improvement, resulting in delayed profitability enhancement which contributed to the impairment of the reporting unit. For Munpia, structural changes in operations, workforce reduction, and project delays resulted in the underperformance in revenue growth which contributed to the impairment of the reporting unit. In the case of WWS, lower than expected operating profits and cash flows contributed to the impairment of the reporting unit. The company recognized impairment loss on goodwill for WWS, Munpia, and Jakga of $ 6.1 million, $ 25.6 million, and $ 31.7 million, respectively, for the year ended December 31, 2023, as the carrying value of each reporting unit exceeded the fair value of the respective reporting unit. For WWS, the delay in web-novel video production resulted in lower operating profits and cash flows than expected, leading to the impairment of the reporting unit. As for Munpia, operating profits and cash flows were lower than anticipated due to a delay in realizing synergies and returns from investments in content creation and IP Adaptations which were initiated as a vertical expansion from Munpia’s platform business, leading to the impairment of the reporting unit. In the case of Jakga, the postponement of releases for major works led to operating profits and cash flows that were lower than anticipated, leading to the impairment of the reporting unit. Making estimates requires significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the Consolidated Financial Statements could change in the near term due to one or more future events. Changes in these estimates and assumptions could materially affect the fair value of the reporting units, potentially resulting in a non-cash impairment charge. F-27 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 8. Leases The Company engages in leasing arrangements that primarily involve office buildings, some of which are further subleased to third parties or related parties. The Company has not entered into any arrangements that include residual value guarantees for its leases. The Company has extension options for four lease offices, with extension periods ranging from one year to five years ; however, since the likelihood of extension is not reasonably certain, it is not reflected in the right-of-use assets and liabilities. The components of lease expense for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, are as follows: Year Ended December 31, 2025 2024 2023 (in thousands of USD) Operating lease expense 1 $ 9,690 $ 10,446 $ 11,965 Short-term lease expense 564 922 653 Total lease expense $ 10,254 $ 11,368 $ 12,618 1. Includes operating lease expense of $ 4.3 million, $ 5.5 million, and $ 7.2 million related to NAVER for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. See Note. 16 “Related Parties and Variable Interest Entity” for further details. Lease expense is included within General and administrative expenses of the Consolidated Statements of Operations and Comprehensive Loss. Supplemental disclosure of cash flow information related to operating leases is as follows: As of December 31, 2025 2024 2023 (in thousands of USD) Cash paid for amounts included in the measurement of operating lease liabilities $ 8,062 $ 9,035 $ 10,193 Right-of-use assets obtained in exchange for operating lease liabilities 13,533 15,070 2,806 The following table presents the weighted average remaining lease terms and discount rates as of December 31, 2025 and December 31, 2024: As of December 31, 2025 2024 Weighted-average remaining lease term 3.24 years 3.56 years Weighted-average discount rate 3.86 % 4.49 % F-28 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The aggregate future lease payments for operating lease liabilities as of December 31, 2025, are as follows: Year (in thousands of USD) 2026 $ 10,188 2027 7,148 2028 3,612 2029 3,234 2030 734 Thereafter 691 Total future lease payments 25,607 Less: Imputed interest ( 1,935 ) Total $ 23,672 The Company subleases a portion of its operating lease right-of-use assets for buildings. Total other income generated from subleases is $ 0.3 million, $ 0.3 million, and $ 0.6 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively, and is included within Other income (loss), net of the Consolidated Statements of Operations and Comprehensive Loss. Note 9. Debt Revolving Credit Facilities In October 2025, the Company entered into a new one-year revolving credit facility arrangement with Shinhan Bank Japan. During the year ended December 31, 2025, the Company extended its previous one-year revolving credit facility arrangements with Shinhan Bank, KEB Hana Bank, and Kookmin Bank. Collectively, the revolving credit facilities provide available credits of $ 64.0 million and $ 54.4 million as of December 31, 2025, and December 31, 2024, respectively. As of December 31, 2025, and December 31, 2024, the Company had not drawn any amounts from these facilities. Note 10. Commitments and Contingencies Contingencies The Company records a loss contingency, consistent with ASC 450, when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses material contingencies when it believes a loss is not probable but reasonably possible. Accounting for contingencies requires us to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. Legal Proceedings The Company is involved in a number of claims pending with various courts, or otherwise unresolved as of December 31, 2025 and December 31, 2024. Adverse results in these claims may include awards of damages and may also result in, or even compel a change in the Company’s business practices, which could materially impact the Company’s future financial results. The Company cannot determine the potential loss or a range of possible losses for cases in their initial stages or where there is an unclear and inconsistent interpretation of laws related to the industry-specific grievances across various jurisdictions. Though the outcome of pending lawsuits and claims cannot be anticipated with certainty, the Company does not expect adverse results from its pending lawsuits and claims, as of December 31, 2025, and December 31, 2024. The timing and outcome of ongoing legal proceedings are uncertain by nature. Therefore, while management deems the chance of a significant loss for all pending claims, whether asserted or unasserted, to be remote, the resolution of one or more of these legal matters against the Company during the same reporting period in excess of F-29 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements management’s projections could negatively impact the Company’s Consolidated Financial Statements for that reporting period. Securities Litigation On September 5, 2024, a purported stockholder filed a putative class action lawsuit against the Company, its directors, and the underwriters of the IPO in the federal court for the Central District of California, purportedly on behalf of all purchasers of shares of the Company’s common stock pursuant or traceable to the IPO Prospectus and the Company’s Registration Statement on Form S-1 (File No. 333-279863) relating to the IPO (the “Registration Statement”). The complaint alleges that the Registration Statement was materially false and misleading in violation of Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”). On October 10, 2024, the court ordered that the defendants are not required to answer or otherwise respond to the complaint, deferring any response until after the court rules on any motion by a purported class member to serve as lead plaintiff. On December 12, 2024, the court appointed a lead plaintiff and lead counsel. On February 3, 2025, the lead plaintiff filed an amended complaint, and on March 4, 2025, the Company, its directors, and the underwriters of the IPO moved to dismiss the amended complaint. On November 14, 2025, the court denied the motion to dismiss. On November 14, 2025, the court issued an order granting in part and deny in part the motion to dismiss. On December 2, 2025, the court issued an amended order granting in part and denying in part the motion to dismiss. On January 9, 2026, the WEBTOON defendants and underwriter defendants filed answers to the operative complaint. The Company intends to defend this case vigorously. At this early state of the proceedings, the Company can neither predict the ultimate outcome of the litigation nor estimate any range of possible losses. On November 15, 2024, a purported stockholder filed a shareholder derivative lawsuit against the Company’s directors, naming the Company as a nominal defendant, in the federal court for the Central District of California. The complaint focuses on the same allegations as the putative securities class action described above, including that the Company’s Registration Statement was materially false or misleading. The complaint includes claims for violations of Section 14 (a) of the Exchange Act, breach of fiduciary duties, and unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and contribution under Section 11(f) of the Securities Act, and the Section 31D of the Exchange Act of 1934. On January 13, 2025, by stipulation of the parties, the court ordered the shareholder derivative lawsuit stayed pending resolution of the Company’s motion to dismiss in the putative securities class action. On December 9, 2025, by stipulation of the parties, the court ordered the shareholder derivative lawsuit stayed until the court in the putative securities class action holds a scheduling conference and issues a scheduling order. At this early stage of the proceedings, the Company can neither predict the ultimate outcome of the litigation nor estimate any range of possible losses. Note 11. Stock-Based Compensation 2020 Equity Incentive Plan In November 2020, the Company’s board of directors approved and adopted the 2020 Equity Incentive Plan (the “2020 Plan”) that was amended and restated in December 2021 (“First Amendment”), February 2023 (“Second Amendment”) and in November 2023 (“Third Amendment”). The 2020 Plan governs the terms for the granting of incentive stock options, non-statutory stock options and RSUs, to employees, consultants, and directors of the Company. The Company granted stock options that vest upon the satisfaction of both service-based and performance-based conditions and stock options that vest upon satisfaction of a service-based condition. In addition, the Company granted RSUs that vest upon the satisfaction of both service-based and performance-based conditions, RSUs that vest upon the satisfaction of either a service-based condition or a performance-based condition and RSUs that vest upon the satisfaction of a service-based condition. For the stock options and RSUs with the performance conditions satisfied upon the completion of the Company’s IPO, the Company recorded $ 48.6 million in stock-based compensation expense in 2024, consisting primarily of a cumulative catch-up adjustment related to such awards based on the full or partial fulfillment of requisite service periods. Unrecognized stock-based compensation expense related to these awards will be recorded over the remaining requisite service period. Under the 2020 Plan, 7,639,440 shares of the Company’s common stock reflecting 2024 stock split effect were initially reserved for grant. Options and RSUs under the 2020 Plan that expire or are forfeited, canceled, exchanged or repurchased are returned to the pool of shares of common stock available for issuance under the 2020 Plan. The maximum number of shares of the Company’s common stock issuable under the 2020 Plan is 19,288,192 shares. As of December 31, 2025, and December 31, 2024, the Company had 4,652,016 shares and 5,277,764 shares of common stock available for future issuance, respectively. F-30 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements 2024 Omnibus Incentive Plan In June 2024, the Company's board of directors adopted, and the stockholders approved, the 2024 Omnibus Incentive Plan ("2024 Plan"), which became effective on June 14, 2024. The Company initially reserved 10,950,515 shares of common stock for issuance under the 2024 Plan. Under the 2024 Plan, the number of common shares reserved will be increased by 5 % or any such smaller number of shares as determined by the board of directors beginning on January 1, 2025 through January 1, 2034. Shares of the Company’s common stock subject to an award under the 2024 Plan shall again be made available for issuance or delivery under the 2024 Plan if such shares are (i) shares delivered, withheld or surrendered in payment of the exercise or purchase price of an award, (ii) shares delivered, withheld, or surrendered to satisfy any tax withholding obligation or (iii) shares subject to a stock-settled award that expires or is canceled, forfeited or terminated without issuance of the full number of shares to which the award related. The 2024 Plan provides for the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, other share-based awards, other cash-based awards, substitute awards, and performance awards to employees, consultants, executives, and directors. As of December 31, 2025, and December 31, 2024, the Company had 7,570,494 and 10,818,583 shares, respectively, of common stock available for future issuance under the 2024 Plan. Stock options The Company’s stock options are granted with exercise prices equal to the estimated fair value of common stock at the date of grant. For stock options that vest only upon the satisfaction of both service and performance-based vesting conditions with cliff vesting at the end of the requisite service period (all of which were granted prior to the completion of the Company’s IPO), the Company recognizes stock-based compensation expense over the requisite service period when the performance condition is deemed probable or met. Such pre-IPO options vest on the third anniversary of the grant date, subject to the recipient remaining an employee of the Company and the performance-based condition was satisfied upon the completion of the Company's IPO. Options with only a service-based condition generally vest quarterly over three years from the vesting start date, subject to the recipient remaining an employee of the Company at each vesting date. Stock options issued under the 2020 Plan expire eight years from the grant date. As of December 31, 2025, and December 31, 2024, the total unrecognized compensation expense related to unvested stock options was $ 4.6 million and F-31 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements $ 12.4 million, respectively, and is expected to be recognized over the remaining weighted-average service period of 0.96 years using the straight-line method, net of estimated forfeitures. The table below summarizes the Company’s stock option activity: (in thousands of USD, except unit price) Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Balance as of January 1, 2024 10,883,310 $ 14.18 5.8 $ 75,758 Granted 241,920 22.45 Forfeited ( 125,490 ) 16.67 Exercised ( 67,489 ) 11.05 252 Balance as of December 31, 2024 10,932,251 $ 14.36 4.9 $ 19,163 Options vested and expected to vest as of December 31, 2024 10,790,203 14.27 4.3 19,163 Options exercisable as of December 31, 2024 8,381,081 11.45 4.1 19,163 Balance as of January 1, 2025 10,932,251 $ 14.36 4.9 $ 19,163 Granted — — Forfeited ( 241,501 ) 17.48 56 Exercised ( 112,902 ) 11.75 648 Balance as of December 31, 2025 10,577,848 $ 14.31 3.7 $ 14,372 Options vested and expected to vest as of December 31, 2025 10,558,530 $ 14.30 3.7 14,372 Options exercisable as of December 31, 2025 8,896,348 $ 12.96 3.2 14,372 The fair value of the Company’s stock options was estimated using a Black-Scholes option pricing model on the grant date based on the following assumptions: 2024 2023 Weighted-average expected term 5.5 years 4.9 years Weighted-average expected volatility 34.60 % 34.15 % Expected dividend yield — — Risk-free interest rate 3.85 %- 4.52 % 4.15 %- 4.62 % Weighted-average grant-date fair value $ 9.04 $ 7.94 All stock options were granted prior to the completion of the Company’s IPO. As the Company was privately held prior to its IPO and did not have trading history for the Company’s common stock, the expected price volatility for the Company’s common stock was estimated by taking the average historical price volatility for industry peers that also served as benchmark references in the Company’s common stock valuations. The expected term is the midpoint between the end of the requisite service period and the contractual term of the award. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group. The Company utilized a dividend yield of zero , as it had no history or plan of declaring dividends on its common stock. No options were granted during the year ended December 31, 2025. Restricted Stock Units The Company granted (i)under the 2020 Plan RSUs with both a service- and performance-based condition, RSUs that vest upon satisfaction of a service-based condition or a performance-based condition, and RSUs that vest upon a service-based condition and (ii) under the 2024 Plan, RSUs that vest upon a service-based condition. RSUs generally time- F-32 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements vest over one to four years from the vesting start date, subject to the recipient remaining an employee of the Company at each vesting date. For RSUs subject to a performance-based condition, the performance condition was satisfied upon the completion of the Company's IPO. The RSUs carry dividend-equivalent rights during the vesting period which is accrued over the vesting period if the Company declares any dividends. Dividend equivalents are subject to the same vesting conditions applicable to the underlying RSUs and the dividend-equivalent rights are forfeited in the event the recipient is no longer an employee on the vesting date. The accrued dividend is paid upon vesting of the RSUs. As of December 31, 2025, no dividends were declared. As of December 31, 2025 and December 31, 2024, the total unrecognized compensation expense related to unvested RSUs was $ 27.0 million and $ 28.8 million respectively, and is expected to be recognized over the remaining weighted-average service period of 1.43 years using the straight-line method and graded-vesting methods, as appropriate, net of estimated forfeitures. The total fair value of RSUs vested during the years ended December 31, 2025, and December 31, 2024, was $ 40.4 million and $ 6.6 million respectively. No RSUs vested during the year ended December 31, 2023. The table below summarizes the Company’s RSU activity: (in USD per unit) Number of RSUs Weighted Average Grant-Date Fair Value Balance as of January 1, 2024 509,192 $ 20.34 Granted 2,783,197 22.06 Forfeited ( 149,769 ) 22.50 Released ( 506,845 ) 20.53 Balance as of December 31, 2024 2,635,775 $ 22.00 Balance as of January 1, 2025 2,635,775 $ 22.00 Granted 3,248,089 9.08 Forfeited ( 177,535 ) 10.73 Released ( 2,407,816 ) 16.77 Balance as of December 31, 2025 3,298,513 $ 13.69 A summary of compensation expenses for all stock-based payment arrangements recognized in Cost of revenue, Marketing and General and administrative expense on our Consolidated Statements of Operations and Comprehensive Loss is as follows: Year Ended December 31, 2025 2024 2023 (in thousands of USD) Cost of revenue $ 9,472 $ 10,561 $ 1,196 Marketing 1,574 1,575 444 General and administrative expenses 30,861 75,243 6,705 Total $ 41,907 $ 87,379 $ 8,345 F-33 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The following table summarizes the Company's Phantom Unit activity for the year ended December 31, 2025: Number of Phantom Units Weighted Average Grant-Date Fair Value Balance as of January 1, 2025 — $ — Granted 557,180 9.04 Forfeited ( 21,399 ) 9.04 Vested ( 207,033 ) 9.04 Balance as of December 31, 2025 328,748 $ 9.04 As of December 31, 2025, the Company recognized stock-based compensation expense related to the Phantom Units of $ 4.1 million. Compensation expense for the Phantom Units is based on the fair value of the units as of the balance sheet date, as further discussed in Note 1. Description of Business and Summary of Significant Accounting Policies , and such costs are recognized ratably over the service period of the awards. As the fair value of liability awards is required to be re-measured each period end, stock compensation expense amounts recognized in future periods for these awards will vary. The estimated future cash payments of these awards are presented within accrued expenses on the Company's Consolidated Balance Sheets. As of December 31, 2025, the total unrecognized compensation expense related to unvested Phantom Units is $ 2.1 million and is expected to be recognized over the remaining weighted-average service period of 1.06 years using the straight-line method, net of estimated forfeitures. F-34 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 12. Income Taxes The Company is subject to U.S. federal and various state corporate income taxes as well as taxes in foreign jurisdictions where foreign subsidiaries have been established. Loss before income tax expense for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 is as follows: As of December 31, 2025 2024 2023 (in thousands of USD) U.S. $ ( 9,894 ) $ ( 92,622 ) $ ( 26,780 ) Korea ( 106,975 ) 26,166 ( 10,850 ) Other ( 272,540 ) ( 82,852 ) ( 95,123 ) Loss before income tax expense $ ( 389,409 ) $ ( 149,308 ) $ ( 132,753 ) The components of income tax expense for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, consist of the following: As of December 31, 2025 2024 2023 (in thousands of USD) Current income tax expense: U.S. Federal $ 2,810 $ 2,419 $ — State ( 575 ) 1,025 150 Korea 10,758 23,074 25,881 Other 208 1,790 1,816 Uncertain tax position liability (Korea) ( 258 ) ( 169 ) ( 268 ) Total current income tax expense 12,943 28,139 27,579 Deferred income tax expense: Korea ( 4,822 ) ( 5,673 ) ( 13,156 ) Other ( 24,143 ) ( 18,862 ) ( 2,417 ) Total deferred income tax expense ( 28,965 ) ( 24,535 ) ( 15,573 ) Total income tax expense (benefit) $ ( 16,022 ) $ 3,604 $ 12,006 Effective tax rate 4.11 % ( 2.41 )% ( 9.04 )% On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act (the “Act”), with certain provisions of the Act effective in 2025 and other provisions becoming effective in 2026 and beyond. The provisions of the Act effective in 2025 were not material and have been reflected in our results, as applicable. F-35 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The reconciliation from the statutory federal income tax rate to our effective income tax rate, applying ASU 2023-09 prospectively, for the year ended December 31, 2025 is as follows: 2025 % (in thousands of USD) Provision computed at federal statutory rate $ ( 81,776 ) 21.0 % State income taxes, net of federal effect * 188 — % Foreign tax effects Korea Difference in foreign tax rates ( 816 ) 0.2 % Non-deductible stock compensation 5,374 ( 1.4 ) % Foreign tax ( 1,701 ) 0.4 % Impairment of goodwill 5 15,809 ( 4.1 ) % Others 1,201 ( 0.3 ) % Japan Difference in foreign tax rates 1,853 ( 0.5 ) % Non-deductible stock compensation 1,548 ( 0.4 ) % Change in valuation allowance ( 8,425 ) 2.2 % Withholding tax 7 8,533 ( 2.2 ) % Others 717 ( 0.2 ) % Canada Difference in foreign tax rates ( 1,145 ) 0.3 % Change in valuation allowance ( 17,059 ) 4.4 % Impairment of goodwill 5 54,622 ( 14.0 ) % Others 1,189 ( 0.3 ) % Effect of changes in tax laws or rates enacted in the current period — — % Effect of cross-border tax laws Disavowed Deduction Addback 3 13,755 ( 3.5 ) % Global Intangible Low Taxed Income 4 2,195 ( 0.6 ) % Branch (loss)/income 1 ( 14,736 ) 3.8 % Investments in affiliates 8,169 ( 2.1 ) % Tax credits Foreign tax credits 1 ( 6,031 ) 1.5 % Changes in valuation allowances Change in valuation allowance ( 363 ) 0.1 % Nontaxable or nondeductible items Disallowed Deduction of Covered Employees Compensation 2 1,461 ( 0.4 ) % Other ( 324 ) 0.1 % Changes in unrecognized tax benefits Uncertain tax positions liability ( 258 ) 0.1 % Income tax expense (benefit) $ ( 16,022 ) 4.1 % *The state that contributes to the majority (greater than 50%) of the tax effect in this category is California for 2025. F-36 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The reconciliation from the statutory federal income tax rate to our effective income tax rate, applying ASC 740 prior to the adoption of ASU 2023-09 for the years ended December 31, 2024 and December 31, 2023 is as follows: 2024 2023 (in thousands of USD) Provision computed at federal statutory rate $ ( 31,355 ) $ ( 27,878 ) State income taxes, net of federal effect 1,006 150 Difference in foreign tax rates 1,406 ( 6,317 ) Permanent differences: Foreign tax ( 1,681 ) ( 1,145 ) Branch (loss) income 1 ( 16,834 ) ( 13,987 ) Non-deductible interest expense 489 1,038 Non-deductible stock compensation 6,500 1 Disallowed deduction of covered employee compensation 2 15,680 — Disavowed deduction addback 3 10,290 — Global intangible low taxed income 4 3,899 — Investment in subsidiaries 3,993 1,784 Impairment of goodwill 5 13,618 13,317 Disposition of LOCUS 6 — 5,355 Other permanent differences 1,105 850 Other tax credits ( 534 ) ( 47 ) Withholding tax 7 7,969 5,479 Foreign currency translation adjustments on deferred tax 7,734 699 Taxation on foreign currency translation gains or losses 8 ( 13,256 ) — Change in valuation allowance ( 7,198 ) 26,465 Uncertain tax positions liability ( 169 ) ( 268 ) Tax audit payment 9 — 7,044 Other 942 ( 534 ) Income tax expense $ 3,604 $ 12,006 ______________ 1. For the years ended December 31, 2025, December 31, 2024 and December 31, 2023, a permanent difference of $( 14.7 ) million, $( 16.8 ) million and $( 14.0 ) million, respectively, were included as branch (loss)/income. The branch loss of $ 14.7 million for the year ended December 31, 2025, represents the tax effect on $ 70.2 million of accounting loss and $ 6.0 million of foreign tax credits generated by NAVER WEBTOON. The branch loss of $ 16.8 million for the year ended December 31, 2024, represents the tax effect on $ 20.7 million of accounting income and $ 21.2 million of foreign tax credits generated by NAVER WEBTOON. The branch loss of $ 14.0 million for the year ended December 31, 2023, represents the tax effect on $ 4.6 million of accounting loss and $ 13.0 million of foreign tax credits generated by NAVER WEBTOON. The foreign tax credits include income taxes paid in Korea and withholding taxes paid in various countries by NAVER WEBTOON, which are adjusted for the effect of changes in foreign tax credits in connection with the future reversal of the deferred taxes recorded under the Korean tax laws. 2. Internal Revenue Code (“IRC”) Section 162(m) limits the deductible compensation paid to covered employees of publicly traded companies, which includes the CEO and CFO, to $1 million per covered employee per year. The Company has disallowed total cash and equity compensation of $ 7.0 million for the year ended December 31, 2025. The Company has disallowed total cash and equity compensation of $ 74.7 million for the year ended December 31, 2024. 3. IRC Section 59A levies a tax on certain qualifying large corporations that have deductions with respect to amounts paid or accrued to foreign related parties that are 3% or more of their total deductions (“base erosion percentage”). A taxpayer may elect to waive such deductions to reduce their base erosion percentage below the 3% threshold. For the year ended December 31, 2025, the Company has waived approximately $ 65.5 million of deductions. For the year ended December 31, 2024, the Company has waived approximately $ 49.0 million of deductions. 4. IRC Section 951A requires a U.S. taxpayer to include income from its Controlled Foreign Corporations (“CFCs”) as Global Intangible Low Tax Income (“GILTI”) in computing U.S. taxable income. The section allows for a special deduction up to 50% of the income inclusion. The Company has GILTI inclusion of $ 10.5 million net of deductions for the year ended December 31, 2025. The Company has GILTI inclusion of $ 18.6 million net of deductions for the year ended December 31, 2024. 5. The Company recognized impairment loss on goodwill of $ 257.2 million, $ 74.0 million, $ 2.9 million, and $ 1.4 million for Wattpad, Munpia, WWS and Purple Duck, respectively, for the year ended December 31, 2025. In 2025, the impairment loss was recognized as the carrying value of each reporting unit exceeded the fair value of the respective reporting unit. None of the goodwill generated from business combinations structured as a F-37 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements sale/purchase of stock was tax deductible and thus, the impairment of goodwill for book purpose for Wattpad, Munpia, WWS, and Purple Duck have been added back as permanent difference. The Company recognized impairment loss on goodwill for Wattpad, Munpia, and WWS of $ 46.7 million, $ 20.3 million, and $ 2.7 million respectively, for the year ended December 31, 2024. The Company recognized impairment loss on goodwill for WWS, Munpia, and Jakga of $ 6.1 million, $ 25.6 million, and $ 31.7 million, respectively, for the year ended December 31, 2023. The impairment loss was recognized as the carrying value of each reporting unit exceeded the fair value of the respective reporting unit. None of the goodwill generated from business combinations structured as a sale/purchase of stock was tax deductible and thus, the impairment of goodwill for book purpose for Wattpad, WWS, Munpia, and Jakga has been added back as permanent difference. 6. On June 27, 2023, the Company sold part of its voting interest in LOCUS, decreasing its ownership to 39.2 %. This resulted in the deconsolidation of LOCUS and its subsidiaries. $ 5.4 million of net DTA of LOCUS was removed upon deconsolidation. Since LOCUS had recorded a full valuation allowance, there was a change in the valuation allowance of $( 5.4 ) million upon deconsolidation and no tax expense or benefit was recognized upon deconsolidation. 7. NAVER WEBTOON has received royalty income from various foreign entities and has paid withholding taxes on such income. 8. On December 11, 2024, the US Treasury and IRS released final regulations under IRC Section 987 and related rules, which are effective on December 10, 2024, and generally apply to taxable years beginning after December 31, 2024. For the year-ended December 31, 2024, NAVER WEBTOON is the only Section 987 qualified business unit (“QBU”) of the Company whose functional currency is non-USD. The Company has calculated pre-transition loss of $ 63.1 million based on the rules prescribed in the final regulations. 9. In December 2022, the Korean National Tax Service (“KNTS”) initiated a regular tax audit for NAVER WEBTOON covering tax years 2020 and 2021. The tax assessment primarily relates to the disallowance of losses on a disposition of the Parent’s shares in 2020. The assessment also includes a deemed distribution from a disproportionate capital increase of its investment in an affiliate and the disallowance of research and development credits. NAVER WEBTOON did not appeal the assessment result and settled the tax payment in May 2023. F-38 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Deferred tax assets (liabilities) as of December 31, 2025, and December 31, 2024, consist of the following: 2025 2024 (in thousands of USD) Deferred tax assets: Stock compensation $ 6,252 $ 4,991 Accrued expenses 10,313 9,701 Operating lease liabilities 8,073 5,253 Property and equipment 4,754 47 Intangible assets 4,388 7,565 Foreign currency translation 1,705 — Valuation of investment 11,641 9,307 Provision for retirement benefits 6,285 6,437 Bad debt allowance 5,455 3,266 Unearned revenue 14,309 10,792 Taxation on foreign currency translation gains or losses 11,975 13,830 Capitalization of specified research 10,942 7,392 Net operating loss carry-forwards 53,036 62,360 Tax credits 13,245 24,940 Others 1,931 662 Subtotal deferred tax assets 164,304 166,543 Less: Valuation allowance ( 100,833 ) ( 125,648 ) Total deferred tax assets $ 63,471 $ 40,895 Deferred tax liabilities: Operating lease right -of-use assets ( 6,406 ) ( 4,459 ) Foreign currency translation — ( 1,805 ) Deferred gain on restructuring — ( 322 ) Intangible assets ( 40,520 ) ( 46,988 ) Total deferred tax liabilities ( 46,926 ) ( 53,574 ) Net deferred tax assets (liabilities) $ 16,545 $ ( 12,679 ) Cash paid for income taxes, net of refunds received, by jurisdiction for the year ended December 31, 2025, is as follows (in thousands): As of December 31, 2025 (in thousands of USD) Federal 4,305 State 577 Foreign Korea 10,176 Japan 9,644 Cash Paid for income taxes, net of refunds received $ 24,702 The amount of cash income taxes paid by the Company during the years ended December 31, 2024, and December 31, 2023, was $ 25,675 and $ 26,644 , respectively. F-39 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Changes in the valuation allowance for deferred tax assets for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 are as follows: 2025 2024 2023 (in thousands of USD) Beginning balance $ 125,648 $ 131,524 $ 105,345 Disposition of LOCUS — — ( 5,355 ) Changes to existing valuation allowances ( 25,473 ) 5,167 32,246 Valuation allowance release — ( 16,987 ) — Taxation on foreign currency translation gains or losses — 13,830 — Translation adjustments 650 ( 7,886 ) ( 712 ) Rate Change 8 — — Valuation allowance, balance at the ending $ 100,833 $ 125,648 $ 131,524 As of December 31, 2025, December 31, 2024, and December 31, 2023, the Company recorded a valuation allowance of $ 100.8 million, $ 125.6 million and $ 131.5 million, respectively, on its deferred tax assets related to temporary differences, taxation on foreign currency translation gains or losses, NOL carry-forwards and foreign tax credits. The changes to existing valuation allowances for the year ended December 31, 2025 were primarily attributable to the utilization of foreign tax credits and net operating losses. The changes to existing valuation allowances for the year ended December 31, 2024 were primarily attributable to the release of valuation allowance due to the LDF-eBIJ merger. The changes to existing valuation allowances for the year ended December 31, 2023 were primarily attributable to the increase in outside basis differences of investments at the Company level and NOLs incurred by the Canadian and Japanese subsidiaries for which the Company has recorded a full valuation allowance and a valuation allowance release of $ 5.4 million from the deconsolidation of LOCUS. The Company makes an ongoing assessment of our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences, expiration of foreign tax credit and NOL carry-forwards and tax planning strategies. The Company will continue to evaluate the ability to realize our net deferred tax assets on an ongoing basis to identify whether any significant changes in circumstances or assumptions have occurred that could materially affect the ability to realize deferred tax assets. Net operating loss carryforwards as of December 31, 2025 and December 31, 2024 follows: 2025 2024 (in thousands of USD) Net operating loss carry-forwards $ 182,722 $ 208,021 As of December 31, 2025, the Company had $ 182.7 million of NOL carry-forwards, which $ 17.9 million, $ 76.5 million and $ 88.3 million are associated with the Company’s Korean, Japanese and Canadian subsidiaries, respectively. NOLs from our Japanese subsidiary begin to expire from 2032 through 2034 and NOLs from Canadian subsidiaries begin to expire from 2039 through 2045. The remaining NOLs related its Korean subsidiaries which expire at various years from 2036 through 2041. The Company has U.S. foreign tax credit carry-forwards of approximately $ 27.8 million as of December 31, 2025, which begin to expire from 2032 through 2034. As of December 31, 2024, the Company had $ 208.0 million of NOL carry-forwards available to offset future taxable income, of which $ 18.8 million, $ 103.4 million and $ 85.4 million are associated with the Company’s Korean, Japanese and Canadian subsidiaries, respectively. F-40 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The material filing jurisdictions are the U.S. and Korea. The Company and its subsidiaries are subject to examinations by tax authorities of these jurisdictions for all open tax years. The open tax years for the company’s major tax jurisdictions are 2022 through 2025 for the U.S. and 2020 through 2025 for Korea. The Company is currently under examination by local taxing authorities in the United States and in Canada. The Company has not identified additional uncertain tax positions during the audits. We continue to monitor the progress of ongoing discussions with tax authorities. F-41 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 13. Retirement Benefits Defined severance benefits Changes in Defined severance benefits are as follows: 2025 2024 (in thousands of USD) Beginning balance, January 1 $ 23,031 $ 24,316 Current service costs 4,983 6,532 Interest expense 1,081 1,279 Actuarial gain ( 480 ) ( 4,086 ) Payments from plans ( 1,955 ) ( 1,026 ) Transfer in/(out) ( 863 ) 70 Cumulative effects of foreign currency translation 467 ( 4,054 ) Ending balance, December 31 $ 26,264 $ 23,031 Current $ 1,195 $ 1,001 Non-current $ 25,069 $ 22,030 There were no changes to plan assets during the years ended December 31, 2025, and December 31, 2024. Our provision for retirement benefits is as follows: As of December 31, 2025 2024 (in thousands of USD) Defined benefit liabilities $ 26,264 $ 23,031 Plan assets — — Provision for Defined severance benefits $ 26,264 $ 23,031 Net periodic cost (income) consists of the following: As of December 31, 2025 2024 2023 (in thousands of USD) Current service costs $ 4,983 $ 6,532 $ 8,026 Interest expense 1,081 1,279 1,509 Actuarial gain ( 480 ) ( 4,086 ) ( 10,272 ) Net periodic benefit cost (income) $ 5,584 $ 3,725 $ ( 737 ) The principal actuarial assumptions used to determine defined severance benefits were as follows: As of December 31, 2025 2024 Discount rates 3.75 % — 5.35 % 3.71 % — 4.74 % Salary growth rates 3.67 % — 8.12 % 4.00 % — 9.63 % F-42 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The principal actuarial assumptions used to determine the net periodic benefit cost (income) were as follows: As of December 31, 2025 2024 Discount rates 3.71 % — 4.74 % 4.81 % — 5.95 % Salary growth rates 4.00 % — 9.63 % 5.00 % — 10.31 % The expected maturity analysis of undiscounted defined severance benefits as of December 31, 2025 is as follows: Defined severance benefits (in thousands of USD) Less than 1 year $ 1,360 Between 1 - 2 years 1,644 Between 2 - 5 years 5,425 Over 5 years 276,596 Total $ 285,025 Defined severance contribution During the years ended December 31, 2025, December 31, 2024, and December 31, 2023, we recognized expense of $ 2.3 million, $ 2.7 million and $ 2.3 million, respectively. Note 14. Segment and Geographic Information Segment Information The Company operates as one reportable segment, which derives its revenue from paid content, advertising, and IP adaptations revenue streams. Our chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance. The CODM manages the Company as a consolidated ecosystem because the revenue streams are interrelated, and resources are shared. The CODM uses net income (loss) as reported in our Consolidated Statements of Operations and Comprehensive Loss to assess performance and allocate resources such as employees and capital expenditures. Additionally, the net income (loss) is used to monitor trends in year-over-year or quarter-over-quarter performance comparisons and to compare actual results to forecasts. The CODM receives and reviews expenses included in segment operating performance regularly. However, the CODM reviews general and administrative expenses on a more disaggregated basis to ensure the resources are in line with its business and operating needs. The measure of segment revenue and assets are reported on the Consolidated Statements of Operations and Comprehensive Loss as total sales and the Consolidated Balance Sheets as total assets, respectively. All intercompany and intra-entity transactions and balances have been eliminated. F-43 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The following table presents reportable segment profit and loss, including significant expense categories, attributable to the Company’s reportable segment for the periods presented: Year Ended December 31, 2025 2024 2023 (in thousands of USD) Revenue $ 1,382,705 $ 1,348,478 $ 1,282,748 Less: Cost of revenue 1,060,524 1,009,410 987,258 Marketing 126,149 107,783 121,086 General and administrative expenses - labor related 104,211 129,705 94,397 General and administrative expenses - non-labor related 155,332 202,279 116,365 Interest income ( 19,170 ) ( 15,820 ) ( 3,009 ) Interest expense 56 45 79 Loss (gain) on equity method investment, net ( 1,282 ) 1,123 12,339 Impairment losses on goodwill and other intangible assets 336,486 69,743 63,412 Other loss (income), net 9,808 ( 6,482 ) 23,574 Income tax expense (benefit) ( 16,022 ) 3,604 12,006 Net Loss $ ( 373,387 ) $ ( 152,912 ) $ ( 144,759 ) The following non-cash expense items are also included in the measure of segment profit or loss reviewed by the CODM: Stock-based compensation 37,798 $ 87,379 $ 8,345 Depreciation and amortization 35,431 $ 40,074 $ 38,359 Geographic Information Refer to Note 2. Revenue for revenues by location. The Company’s long-lived tangible assets as well as the Company’s operating lease right-of-use assets recognized on the Consolidated Balance Sheets, are located as follows: As of December 31, 2025 2024 (in thousands of USD) Korea $ 14,131 $ 17,465 Japan 15,620 182 Rest of World 2,294 2,784 Total long-lived tangible assets and operating lease right-of-use assets $ 32,045 $ 20,431 Note 15. Fair Value Measurements A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Note 1. Description of Business and Summary of Significant Accounting Policies should be read in conjunction with the information outlined below. F-44 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 3 Instruments. Level 3 Instruments Valuation Techniques and Significant Inputs Debt and Equity Securities Recent third-party investments or pending transactions are considered to be the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate and available (i) Transactions in similar instruments; (ii) discounted cash flow techniques; (iii) third party appraisals; (iv) binomial option pricing models; and (v) industry multiples and public comparables. Evidence of value in investees includes recent or pending reorganizations (for example, merger proposals, tender offers and debt restructurings) and significant changes in financial metrics, including (i) current financial performance as compared to projected performance; (ii) capitalization rates and multiples; and (iii) market yields implied by transactions of similar or related assets. The tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of December 31, 2025, and December 31, 2024. These ranges do not represent a range of values for any single instrument. For example, the lowest discount rate for a particular redeemable convertible preferred stock investment may be appropriate for valuing that specific debt security but may not be appropriate for valuing any other debt securities in this asset class. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 assets. Level 3 Instruments Amount Valuation Techniques Significant Unobservable Inputs Range of Significant Unobservable Inputs As of December 31, 2025 Debt Securities Redeemable Convertible Preferred Stock $ 46,024 Option Pricing model Discount rate 8.25 %- 21.68 % Volatility 39.98 %- 51.46 % Total $ 46,024 Equity Securities Redeemable Convertible Preferred Stock $ 15,000 Measurement alternative Contribution to investment fund 642 Measurement alternative Private equity securities 735 Measurement alternative Convertible Preferred Stock 6,268 Option Pricing model Discount rate 2.35 %- 2.94 % Volatility 51.46 %- 51.46 % Simple Agreement For Future Equity (SAFE) 1,000 Measurement alternative Total $ 23,645 F-45 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Level 3 Instruments Amount Valuation Techniques Significant Unobservable Inputs Range of Significant Unobservable Inputs As of December 31, 2024 Debt Securities Redeemable Convertible Preferred Stock $ 48,142 Option Pricing model Discount rate 9.01 %- 21.94 % Volatility 41.60 %- 66.30 % Total $ 48,142 Equity Securities Redeemable Convertible Preferred Stock $ 15,000 Measurement alternative Contribution to investment fund 506 Measurement alternative Private equity securities 51 Measurement alternative Convertible Preferred Stock 5,477 Option Pricing model Discount rate 3.00 %- 16.71 % Volatility 44.96 %- 50.60 % Simple Agreement For Future Equity (SAFE) 1,000 Measurement alternative Total $ 22,034 ______________ As noted above, the binomial optional pricing model was used in the determination of fair value of Level 3 assets as of December 31, 2025, and December 31, 2024. The significant unobservable inputs used in the binomial option pricing model are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates or market yields is risk of default, rating of the investment, call provisions and comparable company investments. The following tables present a summary of the Company’s assets categorized within the fair value hierarchy, or accounted for under the measurement alternative, as of December 31, 2025, and December 31, 2024: As of December 31, 2025 (in thousands of USD) Level 1 Level 2 Level 3 Total Equity Securities $ — $ — $ 23,645 $ 23,645 Debt Securities — — 46,024 46,024 Total $ — $ — $ 69,669 $ 69,669 As of December 31, 2024 (in thousands of USD) Level 1 Level 2 Level 3 Total Equity Securities $ 2 $ — $ 22,034 $ 22,036 Debt Securities — — 48,142 48,142 Total $ 2 $ — $ 70,176 $ 70,178 The Level 1 equity securities relate to a contribution to investments in public equity securities that have readily determinable fair values. F-46 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The Level 3 equity securities relate to the Company’s investments in privately held companies through the purchase of convertible preferred stock, private equity securities, Simple Agreement For Future Equity (SAFE), contribution to investment fund and redeemable convertible preferred stock. For these equity securities, the Company does not have the ability to exercise significant influence on the investee, and therefore accounts for them as equity securities under ASC Topic 321, Investments in Equity Securities. The Level 3 debt securities relate to the Company’s investments in privately held companies through the purchase of redeemable convertible preferred stock that meet the definition of a debt security. The Level 3 equity securities include non-marketable equity investments without readily determinable fair values. The company has elected to account for these investments using the measurement alternative, under which the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. For the year ended December 31, 2025, there were no upward or downward adjustments resulting from observable price changes, and no impairment losses were identified or recognized for these investments. The following table presents a summary of the changes in the carrying value of our equity securities measured using the measurement alternative for the year ended December 31, 2025, and December 31, 2024. 2025 2024 (in thousands of USD) Beginning balance, January 1 $ 16,557 $ 16,431 Purchases 844 1,000 Disposition and Other — ( 773 ) Net unrealized gain (loss) — — Currency translation differences ( 24 ) ( 101 ) Ending balance, December 31 $ 17,377 $ 16,557 The below tables present a summary of changes in fair value of Level 1 and Level 3 assets by investment type (in thousands of USD): Year Ended December 31, 2025 Level 1 Level 3 Total Equity Securities Equity Securities Debt Securities Debt & Equity Securities Beginning balance, January 1 $ 2 $ 22,034 $ 48,142 $ 70,178 Purchases — 846 5,955 6,801 Net unrealized gain (loss) ( 2 ) 649 ( 9,252 ) ( 8,605 ) Currency translation differences — 117 1,178 1,295 Ending balance, December 31 $ — $ 23,646 $ 46,023 $ 69,669 F-47 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Year Ended December 31, 2024 Level 1 Level 3 Total Equity Securities Equity Securities Debt Securities Debt & Equity Securities Beginning balance, January 1 $ 16,109 $ 26,847 $ 48,277 $ 91,233 Purchases — 1,000 — 1,000 Consolidation inclusion — ( 776 ) 6,522 5,746 Net unrealized gain (loss) 3,351 ( 949 ) ( 81 ) 2,321 Sales and settlement — ( 2,713 ) ( 19 ) ( 2,732 ) Reclassification 1 ( 18,702 ) — — ( 18,702 ) Currency translation differences ( 756 ) ( 1,375 ) ( 6,557 ) ( 8,688 ) Ending balance, December 31 $ 2 $ 22,034 $ 48,142 $ 70,178 1 Relates to reclassification of Celsys, which was an equity security as of December 31, 2023, and became an equity method investee as the Company acquired the right to appoint directors during 2024. F-48 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 16. Related Parties and Variable Interest Entity The Company’s Related Parties NAVER and LY Corporation (“LY”, and formerly named Z Holdings Corporation) are the primary shareholders of the Parent. Related parties include NAVER’s controlled affiliates, Company’s management, Company directors, and stakeholders that hold significant influence over the Company. During the years ended December 31, 2025 and December 31, 2024, the Company provided advertising services to NAVER group companies and LY giving rise to related party receivables as of December 31, 2025 and December 31, 2024. Additionally, during the years ended December 31, 2025 and December 31, 2024, the Company received brand-usage and outsourcing services from NAVER and LY, which resulted in the Company recognizing related party payables as of December 31, 2025 and December 31, 2024. During the year ended December 31, 2025, and December 31, 2024, the Company received payment gateway services from NAVER group companies and LY group companies, which resulted in the Company recognizing related party receivables as of December 31, 2025, and December 31, 2024. During the year ended December 31, 2025, and December 31, 2024, the Company published content provided by various content providers over which the Company exercised significant influence and are considered as related parties. The Company recognized cost of revenue, other assets and accounts payable as of December 31, 2025, and December 31, 2024. In March 2022, the Company started leasing office space from NAVER. Operating lease expenses from the lease were $ 4.3 million, $ 5.5 million and $ 7.2 million during the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively, with related lease obligations of $ 10.6 million and $ 13.0 million as of December 31, 2025 and December 31, 2024, respectively. The Company paid a rental security deposit of $ 2.4 million related to a new office during the year ended December 31, 2024. The Company also subleases part of its office space to other related parties and the total other income generated from subleases was $ 0.2 million and $ 0.3 million for the years ended December 31, 2025 and December 31, 2024, respectively. In February 2023, the Company issued a one-year loan to its related party, NAVER WEBTOON Company Corporation, for $ 11.6 million with a fixed interest rate of 5.26 %. In February 2024 the loan was extended for an additional one-year with a fixed interest rate of 4.6 %. In February 2025, the loan was once again extended for an additional year. The Company awarded a non-employee director with 2,832,270 stock options in exchange for non-director services in November 2020. The options contained a performance-based condition which was satisfied upon the completion of the Company's IPO. The Company recorded the transaction as a dividend of $ 16.6 million and a reduction in additional paid-in capital as the director is employed by NAVER (See Note 1. Description of Business and Summary of Significant Accounting Policies for the treatment of stock-based awards issued to employees of NAVER). On September 1, 2024, the merger between LDF and eBIJ became effective, following approval by the Company’s Board of Directors on March 27, 2024. Under the applicable corporate laws of Japan, eBIJ was merged into LDF through an absorption-type merger, with LDF as the surviving entity. Prior to this, eBIJ had been receiving reimbursements from Yahoo for certain costs and expenses incurred under its platform service agreement. The reimbursed amounts primarily related to platform service fees, marketing-related expenses, and other outsourcing fees. However, in the fourth quarter of 2023, Yahoo merged with Line, forming LY, resulting in these transactions being classified as related party transactions for financial reporting purposes. Following the merger of LDF and eBIJ in September 2024, the recipient of these reimbursements transitioned from eBIJ to LDF. For the years ended December 31, 2025, and December 31, 2024, LDF received total gross reimbursements of $ 20.0 million and $ 24.0 million, respectively, which is deducting $ 2.7 million and $ 11.0 million for cost of revenue, $ 11.8 million and $ 10.3 million for marketing, and $ 5.5 million and $ 2.7 million for general and administrative expenses, respectively. Variable Interest Entity In August 2023, WWS, the Company’s wholly-owned subsidiary, entered into a Limited Partnership Agreement with NWMC, a wholly-owned subsidiary of NAVER and a sister company of WEBTOON, to establish Bootcamp Limited Partnership (“Bootcamp”) pursuant to Limited Partnerships Act of the Province of Ontario, Canada. Bootcamp distributes a film produced by GPM Boot Productions Inc. which is a film adaptation of a web-novel titled Boot Camp published on our platform. F-49 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements WWS is the general partner (“GP”) of Bootcamp and manages as well as makes all operating decisions over Bootcamp and receives a 1.0 % variable interest management fee based on contributed capital. NWMC is the sole limited partner (“LP”) and has no unilateral participating or kick-out rights over the GP. Bootcamp is a VIE over which WWS is the primary beneficiary because the LP with the equity at risk is not able to exercise substantive kick-out rights or participating rights and WWS has the obligation to absorb losses and right to receive benefits that could potentially be significant to Bootcamp. Accordingly, we consolidated Bootcamp into the Consolidated Financial Statements. Related Party Transactions and Balances The Company entered into the following significant related party transactions during the periods presented: Year Ended December 31, 2025 2024 2023 (in thousands of USD) Revenue generated $ 74,297 $ 72,228 $ 78,698 Cost of revenue incurred 1 111,254 96,498 22,412 Marketing expenses incurred (cost reimbursed) 1 ( 9,339 ) ( 7,691 ) 203 General and administrative expenses incurred 1 31,249 32,478 30,945 Other income, net 1,687 3,592 4,761 NW Media Loan repaid — ( 3,638 ) — Loan receivable provided — — 11,633 Loan receivable received ( 783 ) ( 204 ) — ______________ 1. All expenses are net amounts including reimbursement from its related parties. The Company had the following significant balances due from and due to related parties as of December 31, 2025 and December 31, 2024: As of December 31, 2025 2024 (in thousands of USD) Due from related parties Receivables $ 55,156 $ 59,495 Other current assets 4,730 9,258 Other non-current assets 5,496 3,569 Loan receivables 28,417 28,503 Due to related parties Current portion of operating lease liabilities 5,221 3,506 Long-term operating lease liabilities 5,371 9,519 Accounts payables 18,765 17,173 Accrued expenses 6,849 5,562 Other — 3 F-50 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 17. Disposition and Business Combinations Jakga On March 28, 2024, the Company entered into a stock transfer agreement with a third party (the “Buyer”), pursuant to which the Buyer agreed to acquire 0.3 % of Jakga voting interests from the Company. The Company completed the sale for consideration of $ 0.1 million in cash. On the same day, Jakga entered into a share investment agreement with another third party, pursuant to which Jakga issued new shares of redeemable convertible preferred stock representing 3.5 % of the voting equity interest of Jakga. Following the completion of the stock transfer agreement and the share investment agreement, the Company entered into a shareholder’s agreement to forgo its ability to appoint a member on Jakga’s board of directors to divest Jakga. The stock transfer agreement, share investment agreement, and shareholder’s agreement (collectively, the “Jakga Transactions”) resulted in a dilution of the Company’s ownership to 49.2 % and losing controlling financial interest in Jakga. The Company deconsolidated Jakga on March 28, 2024 and accounted for the retained common stock as an equity method investment and the retained redeemable convertible preferred stock as a debt security (see additional details related to the redeemable preferred stock in Note 15. Fair Value Measurements ). Jakga became a related party of the Company after the deconsolidation. As of the disposition date, the retained common stock and redeemable convertible preferred stock in Jakga were measured at fair value using a discounted cash flow model applying a discount rate of 15.1 % and a terminal growth rate of 1.0 % incorporating historical financial information, business plans of Jakga, and market outlook information. The Company recorded a $ 2.5 million loss on disposition of Jakga in Other income (loss), net in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2024. The loss includes the accounting for assets sold, liabilities transferred upon sale and the loss of $ 2.1 million relating to the remeasurement of the retained interest in Jakga. The Company has accounted for the transaction as follows (in thousands of USD): Cash consideration received $ 149 Fair value of retained common stock of Jakga by the Company 3,075 Fair value of retained redeemable convertible preferred stock of Jakga by the Company 6,432 Carrying value of non-controlling interest in Jakga held by other than the Company 3,861 Carrying amount of net assets of Jakga including goodwill, identified intangibles and deferred tax liabilities ( 15,998 ) Loss on disposal of Jakga $ ( 2,481 ) LOCUS On June 2, 2023, the Company entered into stock transfer agreements with two unrelated parties, (the “Buyers”) pursuant to which the Buyers agreed to collectively acquire 14.4 % of LOCUS voting interests from the Company. On June 27, 2023, the Company completed the sale for an aggregate consideration of $ 5.0 million in cash. As a result of the sale, the voting interest of LOCUS held by the Company decreased from 53.6 % to 39.2 % and the Company no longer held a controlling financial interest in LOCUS, and deconsolidated LOCUS and its subsidiaries on June 27, 2023 and recognized the retained non-controlling interest in LOCUS as an equity method investment. LOCUS and its subsidiaries became related parties of the Company after the deconsolidation. As of the disposition date, the retained interest in LOCUS was measured at fair value using a discounted cash flow model applying a discount rate of 16.0 % and a terminal growth rate of 1.0 % incorporating historical financial information, business plans of LOCUS and its subsidiaries, and market outlook information. The Company recorded a $ 0.8 million loss on sale of the 14.4 % of the voting interests of LOCUS in Other income (loss), net in the Company’s Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2023. The loss includes the accounting for assets sold, liabilities transferred upon sale and the gain of $ 0.6 million relating to the remeasurement of the retained interest in LOCUS. The Company has accounted for the transaction as follows (in thousands of USD): F-51 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Cash consideration received $ 4,951 Retained non-controlling interest in LOCUS by the Company at fair value 13,436 Carrying amount of non-controlling interest in LOCUS held by other than the Company 11,132 Carrying amount of net assets of LOCUS including goodwill, identified intangibles and deferred tax liabilities ( 30,302 ) Loss on sale of LOCUS $ ( 783 ) Note 18. Equity Method Investments The Company accounts for investments using the equity method when the Company can exercise significant influence over operating and financial policies, but does not hold a controlling interest in the investee. Equity method investments as of December 31, 2025, and December 31, 2024, are as follows: As of December 31, 2025 2024 (in thousands of USD) Equity method investments in affiliates $ 78,038 $ 75,708 Joint venture 2,402 2,960 Total $ 80,440 $ 78,668 The Company’s proportionate share of net income (loss) resulting from these investments is reported under the line item captioned Loss on equity method investments, net in our Consolidated Statements of Operations and Comprehensive Loss. The following tables summarize revenues for the years ended December 31, 2025, December 31, 2024, and December 31, 2023: 2025 2024 2023 (in thousands of USD) Equity method investments in affiliates $ 1,901 $ ( 342 ) $ ( 11,887 ) Joint venture ( 619 ) ( 781 ) ( 452 ) Total $ 1,282 $ ( 1,123 ) $ ( 12,339 ) F-52 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements The carrying value of our equity method investments is reported under the line item captioned Equity method investments in the Consolidated Balance Sheets. The following table summarizes the change in the balance of the Company’s equity method investment: 2025 2024 (in thousands of USD) Balance at January 1 $ 78,668 $ 64,222 Additions — 9,068 Disposals — ( 5,938 ) Other than temporary impairment losses ( 953 ) ( 3,566 ) Valuation gain, net 2,236 2,443 Reclassification 1 ( 1,134 ) 21,820 Share of other comprehensive income 896 ( 94 ) Dividends ( 725 ) — Currency translation differences 1,452 ( 9,287 ) Balance at December 31 $ 80,440 $ 78,668 1 In 2025, the investment in Purple Duck Co. was reclassified from an equity method investee to a subsidiary as the Company obtained control by acquiring the entire remaining equity interest. In 2024, the investment in Celsys was reclassified from an equity security to an equity method investee as the Company acquired the right to appoint directors, while the investment in Jakga was reclassified from a subsidiary to an equity method investee following a partial disposition of the Company’s interest. Investments in affiliates and joint ventures that are accounted for under the equity method are as follows: 2025 2024 Purple Duck Co. 1 100.0 % 76.9 % Studio Toon Corp. 2 49.0 % 49.0 % Studio White 2 40.0 % 40.0 % Jakga Company Inc. 3 26.5 % 26.5 % Namu Actors 4 20.0 % 20.0 % Celsys, Inc. 5 10.4 % 10.1 % Ylab 6 9.3 % 9.3 % No9 Inc. 7 9.1 % 9.1 % Others 8 1.8 % - 47.0 % 1.6 % - 41.5 % ______________ 1. In 2025, the Company obtained control of Purple Duck by acquiring the remaining equity interest, and consequently classified the investee as a subsidiary. 2. Studio Toon Corp. and Studio White are joint ventures. 3. Jakga was a subsidiary as at December 31, 2023, and became an equity method investee in 2024 as a result of a partial disposition of the Company’s investment in Jakga. 4. The Company classified Namu Actors under the equity method by acquiring more than 20% of its ownership interest in 2024. 5. In March 2024, the Company gained significant influence by obtaining the right to appoint one board member, reclassifying the investment from an equity security to the equity method even though the Company holds less than 20.0% of the voting stock. 6. The equity method is applied to the investment since the Company has the ability to exercise significant influence over the investee even though the Company holds less than 20.0% of the voting stock. 7. In December 2024, the Company made a new capital contribution and secured the right to appoint one board member, resulting in the classification of the investment under the equity method due to significant influence even though the Company holds less than 20.0% of the voting stock. 8. Individually immaterial investments are grouped as others. The equity method is applied for investees where the Company holds less than 20.0% of the voting stock, yet the Company has the ability to exercise significant influence over the investees. F-53 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 19. Condensed Financial Information of Parent The Company performed a test on the restricted net assets of combined subsidiary in accordance with U.S. Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial statements of the parent company, WEBTOON Entertainment Inc. These condensed Parent company only financial statements have been derived from its consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto of WEBTOON Entertainment, Inc. and subsidiaries included in Part II, Item 8 of this Form 10-K. The Parent’s significant accounting policies are consistent with those described in Note 1 - “Description of Business and Summary of Significant Accounting Policies” in Part II, Item 8, except that all subsidiaries are accounted for as equity method investments. Certain foreign subsidiaries are regulated by governmental requirements. As a result, the ability of these subsidiaries to pay dividends or loan money to our Parent company is restricted due to their earnings and applicable law. In addition, the Parent has certain regulatory restrictions that dividends are only payable out of surplus or current net profits. F-54 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Condensed Balance Sheet (in thousands of USD, except share and per share data) As of December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 338,159 $ 364,927 Receivables, net of allowance 4,518 15,883 Other current assets, net 9,749 10,736 Total current assets $ 352,425 $ 391,546 Property and equipment, net 488 210 Operating lease right-of-use assets 625 1,040 Debt and equity securities 16,000 16,000 Intangible asset, net 466 110 Investments in subsidiaries 738,743 1,001,775 Long-term loan 1 76,131 76,131 Other non-current assets, net 1,005 48 Total assets $ 1,185,883 $ 1,486,860 Liabilities and Equity Current liabilities: Accounts payable 3,986 4,689 Accrued expenses 9,301 7,287 Current portion of long-term operating lease liabilities 630 1,300 Contract liabilities 1,514 591 Other current liabilities — 866 Total current liabilities $ 15,431 $ 14,733 Total liabilities $ 15,431 $ 14,733 Stockholders’ equity: Common stock 13 13 Additional paid-in capital 2,137,926 2,103,931 Accumulated other comprehensive loss ( 114,363 ) ( 124,620 ) Accumulated deficit ( 853,124 ) ( 507,197 ) Total stockholders’ equity $ 1,170,452 $ 1,472,127 Total liabilities and stockholders’ equity $ 1,185,883 $ 1,486,860 ______________ 1. Consists of long-term loans to our subsidiaries NAVER WEBTOON, and LDF of $ 22,839 and $ 53,292 , respectively, as of December 31, 2025 and December 31, 2024. F-55 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Condensed Statement of Operations and Comprehensive Loss (in thousands of USD) Year Ended December 31, 2025 2024 2023 Revenue $ 50,320 $ 38,836 $ 73,922 Cost of revenue ( 18,554 ) ( 33,737 ) ( 60,478 ) Marketing ( 240 ) ( 2,761 ) ( 16,760 ) General and administrative expenses ( 61,572 ) ( 145,667 ) ( 26,226 ) Operating Loss $ ( 30,046 ) $ ( 143,329 ) $ ( 29,542 ) Interest income 18,256 14,326 3,513 Loss on equity method investments, net ( 333,972 ) ( 13,933 ) ( 89,524 ) Other income (loss), net 1,959 2,476 ( 752 ) Loss before income tax $ ( 343,803 ) $ ( 140,460 ) $ ( 116,305 ) Income tax benefit (expense) ( 2,124 ) ( 3,445 ) ( 150 ) Net loss $ ( 345,927 ) $ ( 143,905 ) $ ( 116,455 ) Other comprehensive income (loss): Share of other comprehensive income (loss) of equity method investments, net of tax 10,260 ( 69,796 ) ( 18,157 ) Total other comprehensive income (loss), net of tax 10,260 ( 69,796 ) ( 18,157 ) Total comprehensive loss $ ( 335,667 ) $ ( 213,701 ) $ ( 134,612 ) F-56 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Condensed Statement of Cash Flows (in thousands of USD) For the Year Ended December 31, 2025 2024 2023 Operating activities: Net loss $ ( 345,927 ) $ ( 143,905 ) $ ( 116,455 ) Adjustments to reconcile net income to cash used in operating activities: Depreciation and amortization 1,536 229 244 Interest income ( 18,256 ) ( 14,326 ) ( 2,324 ) Operating lease expense 1,168 1,229 1,595 Loss on equity method investments, net 333,972 13,933 89,524 Income tax expense (benefit) 2,124 3,445 — Stock-based compensation 7,520 81,893 — Other non-cash items 27 72 407 Changes in operating assets and liabilities: Changes in receivables 11,366 10,184 ( 14,436 ) Changes in other assets 18,368 3,588 ( 3,392 ) Changes in accounts payable ( 4,559 ) 10,532 ( 16,360 ) Changes in accrued expenses ( 2,112 ) ( 4,785 ) 7,085 Changes in operating lease liabilities ( 1,448 ) ( 1,512 ) ( 1,919 ) Changes in contract liabilities 923 ( 835 ) ( 13,304 ) Changes in other liabilities ( 6,395 ) ( 1,242 ) ( 15 ) Net cash used in operating activities $ ( 1,693 ) $ ( 41,500 ) $ ( 69,350 ) Investing activities: Proceeds from maturities of short-term investments — 20,000 — Proceeds from sale of debt and equity securities — 2,264 — Proceeds from sale of property and equipment — 19 6 Payment made for short-term investments — ( 20,000 ) — Purchases of debt and equity securities — ( 1,000 ) — Purchases of property and equipment ( 450 ) ( 144 ) ( 29 ) Purchases of intangible assets ( 2 ) ( 4 ) ( 2 ) Purchases of investments in subsidiaries ( 26,000 ) — ( 6,000 ) Net cash provided by (used in) investing activities $ ( 26,452 ) $ 1,135 $ ( 6,025 ) Financing activities: Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions — 292,950 — Proceeds from issuance of common stock related to private placement — 50,000 — Payments of initial public offering costs — ( 11,154 ) — Proceeds from exercise of over-allotment, net of underwriting discounts and commissions — 26,786 — Proceeds from stock option exercise 1,377 746 — Net cash provided by financing activities $ 1,377 $ 359,328 $ — Effect of exchange rate changes on cash and cash equivalents $ — $ ( 2 ) $ — Net increase (decrease) in cash and cash equivalents ( 26,768 ) 318,961 ( 75,375 ) Cash and cash equivalents at beginning of the year 364,927 45,966 121,341 Cash and cash equivalents at end of the year $ 338,159 $ 364,927 $ 45,966 Supplemental disclosure: Income taxes paid $ ( 4,787 ) $ ( 1,242 ) $ ( 15 ) Interest received $ 18,792 $ 13,225 $ 1,189 F-57 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Non-cash transactions: Share exchange with NAVER upon issuance of new WEBTOON Entertainment Inc. shares 1 $ — $ — $ 579,876 Reclassification of deferred offering costs to additional paid-in capital upon IPO $ — $ 11,215 $ — ______________ 1. Refer to Organization and Desc ription of Business in Note 1. Description of Business and Summary of Significant Accounting Policies. Note 20. Redeemable Non-Controlling Interest in Subsidiary In February 2022, the Company entered into a shareholders’ agreement under which the third-party former majority owner of Munpia has the right to require the Company to redeem its Munpia shares if certain events that are not solely within the Company’s control occur. The redemption price on the put option shall equal $ 26.20 (the equivalent of KRW 33,251 ) per share plus 15 % per annum. As a portion of the Munpia shares held by holders other than the Company are redeemable, such shares must be classified outside of stockholders’ equity. During the year 2023, the third-party former owner of Munpia sold a portion of their Munpia shares to their employees and other third-parties, and the redemption rights under the shareholders’ agreement did not transfer along with the shares that were sold. Accordingly, such shares sold are no longer redeemable and the shares that were sold were reclassified from redeemable non-controlling interest to non-controlling interest. Prior to the acquisition, in September 2021, the Company entered into a side letter agreement with a third party, Cloudary, under which the Cloudary had the option to require the Company to purchase Cloudary’s Munpia shares for $ 26.20 per share (the equivalent of KRW 33,251 ). Such put option was set to expire upon the earlier of (i) March 2023 or (ii) when Cloudary holds less than 5 % of the outstanding shares of Munpia. When the Company acquired Munpia in February 2022, the shares held by Cloudary were recognized as redeemable non-controlling interest. In December 2023, Cloudary exercised its put option and the Company purchased 425,016 of Cloudary’s Munpia shares. As a result of the exercise, Cloudary owned less than 5 % of the outstanding shares of Munpia, and the remaining Munpia shares held by Cloudary were no longer redeemable. Accordingly, the remaining Cloudary owned shares were reclassified from redeemable non-controlling interest to non-controlling interest. The Company has redeemable non-controlling interests in one subsidiary, Munpia. The following table summarizes the redeemable non-controlling interest activity of Munpia for the periods indicated below (in thousands of USD): Balance as of December 31, 2022 $ 46,964 Total comprehensive income (loss) attributable to redeemable non-controlling interest ( 5,535 ) Balance as of December 31, 2023 $ 41,429 Total comprehensive income (loss) attributable to redeemable non-controlling interest ( 4,849 ) Balance as of December 31, 2024 $ 36,580 Total comprehensive income (loss) attributable to redeemable non-controlling interest ( 12,040 ) Balance as of December 31, 2025 $ 24,540 F-58 Table of Contents WEBTOON Entertainment Inc. Notes to Consolidated Financial Statements Note 21. Non-Controlling Interest in Subsidiaries The Company had non-controlling interests in several of its subsidiaries. The balances of non-controlling interest as of December 31, 2025, and December 31, 2024. are as follows: As of December 31, 2025 2024 (in thousands of USD) Munpia 1 $ 33,160 $ 46,593 Bootcamp 2 120 1,161 Total $ 33,280 $ 47,754 ______________ 1. The Munpia non-controlling interest balance excludes redeemable non-controlling interest discussed in Note 20. Redeemable Non-Controlling Interest in Subsidiary. 2. The portion of net assets in Bootcamp attributable to the LP represents a non-controlling interest (See Note 16. Related Parties and Variable Interest Entity for detail). Note 22. Subsequent Events On January 8, 2026, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a wholly owned indirect subsidiary of The Walt Disney Company (“Disney”), pursuant to which Disney purchased 2,666,757 shares of the Company’s common stock, par value $ 0.0001 per share (the “Shares”), representing an approximately 2 % equity interest in the Company, for an aggregate purchase price of $ 32.8 million. The Shares were issued in a private placement in reliance on the exemption provided by Section 4(a)(2) of the Securities Act, as a transaction not involving a public offering. In connection with the Purchase Agreement, the Company has provided Disney with certain rights related to its investment in the Shares, including the ability to approve certain corporate actions that would adversely affect Disney or its affiliates and the ability to sell or otherwise transfer the Shares for the same consideration, on the same terms and subject to the same conditions as a sale or transfer made by NAVER Corporation or LY Corporation. F-59 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None.