WBTN 10-K & 10-Q changes, risk factors and insider trading

•We have identified certain material weaknesses in our internal control over financial reporting, and if our remediation of such material weaknesses is not effective, or ifIf we experience additional material weaknesses or otherwise are unable to implement and maintain effective internal control over financial reporting in the future, we may fail to prevent or detect material misstatements in our financial statements, in which case investors couldmay lose confidence in the accuracy and completeness of our financial reports and the market price of shares of our common stock couldmay be adversely affected.decline.

We offer both Paid Content and free content to our users on our platform. A majority of our revenues are generated from the Paid Content on our platform. Our users may access our Paid Content by purchasing either our Fast Pass, which provides users with early access to upcoming episodes for ongoing series, or our DailyTitle Pass,Purchase, which provides users with access to lockedall episodes primarilyof fromselect completed titles.series.

The success of our business depends largely on our ability to generate sufficient paying user traffic through engaging content so as to retain existing and attract new users that are willing to pay for the Paid Content. Among all users who use our platform in any period, only a small percentage of such users are paying users. To attract and retain our paying users, we must continue to offer engaging and diversified content that meets our users’ fast changing appetite and enhance the interaction between users and creators. To that end, we must continuously anticipate, understand and respond appropriately to market trends and rapidly changing user preferences by generating suitable content in a timely and effective manner. We may not be able to maintain or continue to increase our paying ratio to achieve expected Paid Content revenues. If we fail to cater to the fast changing needs and preferences of our users, in particular our younger generation of users whose appetite may evolve from time to time and who may have higher demand in the quality and entertaining level of content, and, as a result, fail to deliver suitable content and a satisfactory user experience, our paying users will not find our Paid Content attractive or may find our DailyFast Pass or FastTitle PassPurchase expensive. Consequently, they may reduce their spending on our Paid Content. As we generate a majority of our revenues from our paying users, it is particularly important for us to retain and increase the percentage of paying users and to maintain or increase their spending levels. There can be no assurance that we will be able to retain or increase paying users or that paying users will maintain or increase their spending. It is possible that we could lose more paying users than we gain in the future, which would cause a decrease in the monetization of our content and could adversely affect our business, financial condition and results of operations.

We currently generate a substantial majority of our revenues from Paid Content distribution. We also generate a portion of our revenues from online advertising. We plan to strengthen revenue contribution from our other monetization methods, such as monetizing content on our platform via adaptations into film, streaming series and other rich media formats. We currently have various business models for IP Adaptations, including licensing out the rights to adapt content created by certain creators to intellectual property adaptation partners (e.g., studios, publishers, financiers, distributors, producers and potential buyers), participating in the pre-production phase for such adaptations, co-producing or investing in production for such adaptations alongside intellectual property adaptation partners and directly funding the entire project for such adaptations. We are still in the early stage of our adaptation business and have a limited track record of, or experience in, generating substantial revenues from such adaptations. If our adaptation initiative does not enhance our monetization ability or enable us to develop new approaches to monetization, we may not be able to substantially increase our revenues or recover any associated costs. In addition, we may in the future introduce new services to further diversify our revenue streams, including services with which we have little or no prior development or operating experience. If these new or enhanced services fail to engage users, customers or content partners, we may fail to attract or retain users or to generate sufficient revenues to justify our investments and our business and operating results may suffer as a result.

We rely on relationships with third parties in many aspects of our business, which exposes us to additional risks. For instance, we rely on certain local creators or popular technology platforms, such as our partnerships with Discord,DC PatreonComics, Duolingo and DCHYBE Comics,Entertainment to drive user acquisitions, especially in new markets. Such local creators or popular technology platforms may limit or discontinue the access of potential users to our platform if they establish more favorable relationships with one or more of our competitors or they determine that we are a competitor. Any limitation on or discontinuation of access of potential users to our platform could significantly reduce our ability to acquire users, decrease the size of the user base we could convert into paying users or decrease the revenues we derive from paying users or advertisers, each of which would materially and adversely affect our business, financial condition and results of operations. We also rely on third-party intellectual property adaptation partners (e.g., studios, publishers, financiers, distributors, producers and potential buyers) for the adaptation or production of our content. We may not have sufficient control over the adaptation process and quality of the adaptation of content on our platform produced, on an outsourced basis, by our intellectual property adaptation partners, and we may be negatively affected by the activities or the lack of financial soundness of our intellectual property adaptation partners.

We believe that a critical component of our success has been our culture. We have invested substantial time and resources in building out our team with an emphasis on shared values and a commitment to diversity and inclusion. As we continue to grow and develop the infrastructure associated with being a public company, we will need to expend significant efforts to maintain our culture among a larger number of employees dispersed in various geographic regions. Additionally, with some of our employees currently working remotely following the COVID-19 pandemic, it may be more difficult to maintain or enhance our culture. Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our mission to build a leading story-based entertainment platform that engages and inspires creators and users globally.

In addition to our efforts to mitigate cybersecurity risks, we have made and are continuing to make investments in privacy, data protection, cybersecurity, safety and content review efforts to combat misuse of our services and user data by third parties, including investigations of individuals we have determined to have attempted to access user data without authorization. Our internal teams also continually monitor and address any unauthorized attempts to access data stored on servers that we own or control or data available to our third-party customer service providers. As a result of these efforts, we have discovered and announced, and anticipate that we will continue to discover and announce, additional incidents of misuse of, or unauthorized access of, user data or other undesirable activity by third parties. We have taken steps to protect the data that we have access to, but despite these efforts, our security measures or those of our third-party service providers could be insufficient or breached as a result of third-party action, malfeasance, employee errors, service provider errors, technological limitations, defects or vulnerabilities in our platform or otherwise. We may not discover all such incidents or activity or be able to respond to or otherwise address them, promptly or at all. Such incidents and activities have in the past, and may in the future, include the use of user data or our systems in a manner inconsistent with our terms, contracts or policies, the existence of false or undesirable user accounts, theft of Coins or other virtual items in valid user accounts, activities that threaten people’s safety on-or offline, or instances of spamming, scraping or spreading disinformation. Additionally, as artificial intelligence technologies, including generative artificial intelligence models, develop rapidly, threat actors are using these technologies to create sophisticated new attack methods that are increasingly automated, targeted, and coordinated and more difficult to defend against. We may also be unsuccessful in our efforts to enforce our policies or otherwise remediate any such incidents. Any of the foregoing developments, whether actual or perceived, may negatively affect user trust and engagement, harm our reputation and brands, require us to change our business practices in a manner adverse to our business and adversely affect our business and financial results. Any such developments may also subject us to future litigation and regulatory inquiries, investigations and proceedings, including from data protection authorities in countries where we offer services or have users, which could subject us to monetary penalties and damages, divert management’s time and attention and lead to enhanced regulatory oversight.

InCertain recentinvestors, years,customers, companiesregulators acrossand all industries are facing increasing scrutiny fromother stakeholders relatedhave toincreasingly theirfocused on sustainability and ESG and sustainability practices. A numberpractices of advocacycompanies, groups,including, bothamong domesticallyother andthings, internationally,practices havewith campaigned for governmental and private action to promote change at public companies related to ESG matters, including increasing attention and demands for action relatedrespect to climate change, promotinghuman thecapital useresources, emissions, and environmental impact. Expectations and requirements of substitutesour toinvestors, fossilcustomers, fuel productsregulators and encouragingother thethird divestmentparties of companies(both in the fossilUnited fuel industry. Investor advocacy groups, proxy advisory firms, certain institutional investors and lenders, investment fundsStates and other influentialjurisdictions) investorsevolve rapidly, may diverge across jurisdictions and rating agencies are alsolargely increasinglyout focusedof onour ESGcontrol, and sustainabilityour practicesinitiatives and mattersdisclosures in response to such expectations and onrequirements themay implicationsresult in increased costs or other adverse impacts to our business, financial condition and social costresults of their investments and loans.operations. We have established a long-term strategy intended to meet ESG-related objectives, which currently includes certain sustainability targets. However, we cannot guarantee that this long-term strategy will meet our ESG-related objectives.objectives and there is no assurance that our stakeholders will agree with our ESG-related strategies, and investors may decide to reallocate capital or to not commit capital as a result of their assessment of our practices. Such initiatives are voluntary, not binding on our business or management and subject to change. We may determine in our discretion that it is not feasible or practical to implement or complete certain of our ESG-related initiatives, or to meet previously set goals and targets based on cost, timing or other considerations. If we do not adapt to or comply with investor or other stakeholder expectations and standards on ESG matters (or meet ESG-related goals and targets that we have set), as they continue to evolve, if we are perceived to have not responded appropriately or quickly enough to growing concern for ESG and sustainability issues, regardless of whether there is a regulatory or legal requirement to do so, or if estimates, assumptions and/or third-party information we currently believe to be reasonable are subsequently considered erroneous or misinterpreted, we may suffer from reputational damage and our business, financial condition and/or stock price could be materially and adversely affected.

Further, our operations, projects and growth opportunities require us to have strong relationships with various key stakeholders, including our stockholders, employees, suppliers, customers, local communities and others. We may face pressures from stakeholders, many of whom are increasingly focused on climate change,stakeholders to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability while at the same time remaining a successfully operating public company. If we do not successfully manage expectations across these varied stakeholder interests, it could erode our stakeholder trust and thereby affect our brands and reputation. Such erosion of confidence could negatively impact our business through decreased demand and growth opportunities, increased legal action and regulatory oversight, adverse press coverage and other adverse public statements, difficulty hiring and retaining top talent, difficulty obtaining necessary approvals and permits from governments and regulatory agencies on a timely basis and on acceptable terms and difficulty securing investors and access to capital. The occurrence of any of the foregoing could have a material adverse effect on our business and financial condition. In addition, we expect there will likely be increasingincreased levels of regulation, disclosure-related and otherwise, with respect to ESG matters, which will likelymay lead to increased compliance costs as well as scrutiny that could heighten all of the risks identified in this risk factor. Such ESG matters may also impact our suppliers or customers, which could augment existing or cause additional impacts to our business or operations.

Concerns over global economic or market conditions, a recession or economic slowdown, geopolitical issues, including continued hostilities in Europe and the Middle East, the impacts of the COVID-19 pandemic, the availability and cost of credit and slowing economic growth have contributed to general economic uncertainty and diminished expectations for the global economy. Additionally, acts of protest and civil unrest have caused economic and political disruption in the U.S., and the occurrence or threat of terrorist attacks in the U.S. or other countries could adversely affect the economies of the U.S. and other countries. A deterioration in global economic or market conditions could adversely affect our business, financial condition or results of operations. Further, inflation has been an ongoing concern in the U.S. since 2021. Ongoing inflationary pressures have resulted in and may result in additional increases to the costs of goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise. For instance, as inflation increases, our costs related to web-comic production and software infrastructure maintenance may rise. SustainedIn levelsaddition, of highas inflation causedrises, the U.S. Federal Reserve and other central banks may continue to increase interest rates multiple times in 2023 and the Bank of Japan in 2024 in an effort to curb inflationary pressure on the costs of goods and services. Although the U.S. Federal Reserve cut interest rates during 2024, they may again raise interest rates in the future,future to combat inflation, which could have the effects of raising the cost of capital and depressing economic growth, either of which (or the combination thereof) could hurt the financial and operating results of our business. To the extent elevated inflation remains, we may experience further cost increases for our operations.

In addition to generally blocking inappropriate content, we have statutory obligations under U.S. federal law to block or remove child pornography and report offenses to the National Center for Missing and Exploited Children, or NCMEC. Notwithstanding our efforts, from time to time, sexual content involving cartoon characters that appear to be children are uploaded to our platform and viewed by others prior to being removed by us, and any future noncompliance by us or allegations of noncompliance by us with respect to U.S. federal laws on child pornography or the sexual exploitation of children could harm our reputation, create criminal liability and could be costly and time consuming to address or defend. We may also be subject to additional criminal liability related to child pornography or child sexual exploitation under other domestic and international laws and regulations.

In addition, governmental agencies in the countries in which we, our users or creators are located have blocked, and could block in the future, access to or require a license for parts or all of our platform, our website, our application stores or the internet generally for a number of reasons, including privacy, data protection, cybersecurity, confidentiality or regulatory concerns which may include, among other things, governmental restrictions on certain content in a particular country and a requirement that user information be stored on servers in a country within which we operate. Governmental agencies could issue fines or penalties if there are instances where we are found not to have been in compliance with regulations in any of these areas. Users generally need to access the internet, including in geographically diverse areas, and also mobile platforms such as the Apple App Store and the Google Play Store, to access our content on our platform. If governmental or other entities block, limit or otherwise restrict creators and users from accessing our platform, or users from engaging with content on our platform, our business could be negatively impacted, we could be subject to additional fines and penalties, our creators and users could decline or grow more slowly and our business, financial condition or results of operations could be adversely affected.

Brexit has led to changes with regard to the regulation of privacy, data protection and cybersecurity in the United Kingdom. The United Kingdom maintains the Data Protection Act of 2018 and the United Kingdom General Data Protection Regulation (collectively, the “UK GDPR”), which together implement and complement the GDPR and provide for penalties for noncompliance of up to the greater of £17.5 million or four percent of worldwide revenues. The UK GDPR currently imposes the same obligations as the GDPR in most material respects, but we cannot fully predict how the Data Protection Act, the UK GDPR and other United Kingdom data protection laws or regulations may develop in the medium to longer term, nor the effects of divergent laws and guidance regarding how personal data will be regulated. We continue to monitor and review the impact of any changes to EU, United Kingdom or Swiss law or guidance that could affect our operations. For example, we are evaluating the United Kingdom’s AADC, which focuses on online safety and protection of children’s privacy online. The AADC became effective September 2, 2021, and noncompliance with the AADC may result in audits or other proceedings by the United Kingdom’s Information Commissioner Office (“ICO”), the regulatory body set up to uphold information rights in the United Kingdom, and other regulators in the EEA or Switzerland, as noncompliance with the AADC may indicate noncompliance with other applicable data protection laws. In addition, we are monitoring developments with the EU’s Digital Services Act (“DSA”), which came into force on November 16, 2022, and will become fully applicable on February 17, 2024.2022. The DSA imposes new content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online. Noncompliance with the DSA could result in fines of up to 6% of annual global revenues, which are in addition to the ability of civil society organizations and non-governmental organizations to lodge class action lawsuits. We may incur liabilities, expenses, costs and other operational losses under the GDPR and laws and regulations of applicable member states of the European Union and the United Kingdom relating to privacy, data protection and cybersecurity in connection with any measures we take to comply with them.

In both the EEA and United Kingdom, we rely on data transfer mechanisms such as Standard Contractual Clauses (“SCCs”) or UK SCCs to comply with data protection requirements when transferring personal data from the EEA or the United Kingdom to other countries. On June 4, 2021, the European Commission published two sets of new SCCs, which took effect on June 27, 2021. On June 28, 2021, the European Commission announced a decision of “adequacy” concluding that the United Kingdom ensures an equivalent level of data protection to the GDPR, which provides some relief regarding the legality of continued personal data flows from the EEA to the United Kingdom. Such adequacy decision must, however, be renewed after four years and may be modified or revoked in the interim. Further, data protection authorities may require measures to be put in place in addition to SCCs or UK SCCs for transfers to countries outside of the EEA, as well as Switzerland and the United Kingdom. In July 2023, the European Commission adopted an adequacy decision concluding the new EU-U.S. data privacy framework (the “EU-U.S. DPF”) constitutes a lawful data transfer mechanism under EU law for participating U.S. entities; however, the EU-U.S. DPF may be in flux as such adequacy decision has been challenged, and is likely tomay face additional challenges, at the Court of Justice of the European Union. In addition, in June 2023, the U.S. and UK announced a commitment in principle to establish a “data bridge” to extend the EU-U.S. DPF to the flow of UK personal data under the UK GDPR to participating entities in the U.S. Such data bridge could not only be challenged, but also may be affected by any challenges to the EU-U.S. DPF. Our third-party service providers may be affected similarly by these changes. In addition to other impacts, we may experience additional costs associated with increased compliance burdens, and we and our creators and users face the potential for regulators in the EEA, Switzerland or the United Kingdom to apply different standards to the transfer of personal data from the EEA, Switzerland or the United Kingdom to the U.S. and other non-EEA, Switzerland or United Kingdom countries, and to block, or require ad hoc verification of measures taken with respect to, certain data flows from the EEA, Switzerland and the United Kingdom to the U.S. and other non-EEA, Switzerland or United Kingdom countries. We also may be required to engage in new contract negotiations with third parties that aid in processing data on our behalf, to the extent that any of our service providers or consultants have been relying on invalidated or insufficient contractual protections for compliance with evolving interpretations of, and guidance for, cross-border data transfers pursuant to the GDPR and UK GDPR. In such cases, we may not be able to find alternative service providers, which could limit our ability to process personal data from the EEA, Switzerland or the United Kingdom and increase our costs.

We are potentially subject to a number of foreign and domestic laws and regulations that affect the offering of certain types of content, such as that which depicts violence, many of which are ambiguous, still evolving and could be interpreted in ways that could adversely affect our business or expose us to liability. Foreign governments have in the past and may continue to censor parts or all of our platform in their countries, restrict access to parts or all of our platform from their countries entirely, impose other restrictions that may affect their citizens’ ability to access parts or all of our platform for an extended period of time or even indefinitely, require data localization or impose other laws or regulations that we cannot comply with, would be difficult for us to comply with or would require us to rebuild parts or all of our platform or the infrastructurerelated for our platform.infrastructure. Numerous countries, including Germany, have regulations relating to this area and they may impose significant fines for failure to comply with certain content removal and disclosure obligations. Other countries, including Singapore, India, Turkey, Mexico, Australia and the United Kingdom, have implemented or are considering similar legislation imposing penalties for failure to remove certain types of content. On the other hand, some users and creators may choose not to use our platform if we actively police content.

The protection of our intellectual property rights may require the expenditure of significant financial, managerial and operational resources. We utilize various means, including our proprietary technology Toon Radar, to prevent and monitor unauthorized use of our intellectual property. However, the steps we take to obtain, maintain, protect, defend and enforce our intellectual property rights may be inadequate. For example, it is possible that third parties, including our competitors, may obtain patents relating to technologies that overlap or compete with our platform and technology. If third parties obtain patent protection with respect to such technologies, they may assert that our platform and technology infringes their patents and seek to charge us a licensing fee or otherwise preclude the use of our platform and technology. We may not be able to protect our intellectual property rights if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property rights.rights, including unauthorized use by artificial intelligence. If we fail to protect our intellectual property rights adequately, unauthorized third parties could copy and distribute our content. In addition, enforcing and defending our intellectual property rights might entail significant expense and may not ultimately be successful. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or intellectual property rights.

We utilize, and may continue to utilize in the future, artificial intelligence, machine learning, data analytics and similar tools that collect, aggregate and analyze data (collectively, “AI Tools”) in connection with our business. Further, in the year ended December 31, 2024,2025, we have expanded our usage of AI Tools,Tools by introducingutilizing an artificial intelligence-driven personalized recommendation model.model and an AI-based chat feature that allows text-based conversations with characters in real-time. We may continue to expand such usage in the future.Therefuture. There are significant risks involved in utilizing AI Tools and no assurance can be provided that the usage of such AI Tools will enhance our business or assist our business in being more efficient or profitable. AI Tools may have errors or inadequacies that are not easily detectable. If AI Tools are incorrectly designed or the data used to train them is incomplete, inadequate or biased in some way, our use of AI Tools may inadvertently reduce our efficiency or cause unintentional or unexpected outputs that are incorrect, do not match our business goals, do not comply with our policies or interfere with the performance of our platform, services, business and reputation. Additionally, our reliance on AI Tools could pose ethical concerns and lead to a lack of human oversight and control, which could have negative implications for our organization.

•overall market fluctuations and domestic and worldwide economic and political conditions, including related to geopolitical issues or the COVID-19 pandemic; and

We have identified certain material weaknesses in our internal control over financial reporting, and if our remediation of such material weaknesses is not effective, or ifIf we experience additional material weaknesses or otherwise are unable to implement and maintain effective internal control over financial reporting in the future, we may fail to prevent or detect material misstatements in our financial statements, in which case investors couldmay lose confidence in the accuracy and completeness of our financial reports and the market price of shares of our common stock couldmay be adversely affected.decline.

TheAs processa ofpublic designingcompany, andwe implementingare required to maintain internal control over financial reportingreporting. We are required to comply with the disclosureSEC’s rules implementing Sections 302 and attestation requirements of Section 404 of the Sarbanes-Oxley ActAct, iswhich timerequire consumingmanagement to certify financial and costly.other If during the evaluation and testing process we identify additional material weaknessesinformation in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting or determine that these existing material weaknesses have not been remediated, our management will be unablereporting, to assert that our internal control over financial reporting is effective. Even if our management concludes that our internal control over financial reporting is effective,which our independent registered public accounting firm maywill concludeneed thatto thereattest arein accordance with guidelines set forth by the Public Company Accounting Oversight Board (“PCAOB”). We have previously identified material weaknesses with respect toin our internal controls, all of which have been remediated as of December 31, 2025, as described in Item 9A. “Controls and Procedures” of this Annual Report. We cannot assure you that additional material weaknesses will not be identified in the future. Further, our current internal control over financial reporting.reporting and any additional internal control over financial reporting that we develop may become inadequate because of changes in conditions in our business. Additionally, weaknesses in our disclosure controls and procedures and internal control over financial reporting may be discovered in the future. Further, completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly or remain adequate. If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to litigation or investigations by the stock exchange on which our common stock is listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

This section of this Annual Report generally discusses 20242025 and 20232024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2024 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form S-1/A (File No. 333-279863)10-K which was declaredfiled effective bywith the SEC on JuneMarch 26,11, 2024.2025. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included in this Annual Report on Form 10-K.

•In Korea, our MAU was approximately 24.424 million as of the year ended December 31, 2024,2025, compared to MAU of 24.927 million as of the year ended December 31, 2023. Our user base in Korea is highly engaged, and our cohorts have demonstrated deeper engagement and levels of consumption over time.2024. Our decrease in MAU for the year ended December 31, 2024,2025, was driven largely by short-termthe engagementimpact impacts fromof political turbulence in Korea.Korea during the fourth quarter of 2024, which did not fully recover during the year ended December 31, 2025.

•In Japan, our MAU have reached 21.923 million as of the year ended December 31, 2025, compared to MAU of 22 million as of the year ended December 31, 2024, compared to MAU of 21.2 million as of the year ended December 31, 2023, largely attributable to growth ofin LINE MangaeBookJapan and localincreased Japaneseinvestments titlein launches.marketing. In addition, we continued to optimize and improve our existing AI-based personalized content recommendation capabilities. We expect to complete our infrastructure investments by the end of the first quarter of 2026, and redeploy engineering resources to support improvements across our personalized recommendation tools.

•In Rest of World, our MAU was approximately 120.1110 million as of the year ended December 31, 2024,2025, which declined from 122.9120 million as of December 31, 2023. The decline was primarily attributable to decline in web users. We do not monetize web users in North America, which is why we are focused on converting users to the app.2024. The MAU for the Rest of World is a relatively larger portion compared to Korea and Japan as it includes Wattpad, which has a large global user base. RoughlyThe two-thirdsdecrease was primarily attributable to government bans on Wattpad in certain countries, as well as the impact of a Wattpad security upgrade which unintentionally affected search engine indexing, causing a dip in search traffic. The search engine indexing issue, as described above, was fully resolved as of the declineyear wasended isolatedDecember 31, 2025; however, we expect to one country where the government bannedsee a numberperiod of globaltime contentfor sites,search includingtraffic Wattpad.to fully stabilize and return to historical levels.

•In Korea, our MPU have decreased to around 3.73.6 million with a paying ratio of 15.4%,14.8%, compared to MPU of 4.13.7 million and a paying ratio of 16.3%13.9% as of the year ended December 31, 2023.2024.

•In Japan, our MPU have reachedwas 2.2 million with a paying ratio of 10.2%,9.7%, compared to MPU of 2.02.2 million and a paying ratio of 9.2%10.2% as of the year ended December 31, 2023.2024.

•In Rest of World, our MPU iswas 1.7 million with a paying ratio of 1.4%,1.5%, which has remained similar to the year ended December 31, 2023,2024, reflecting our current strategic plans and marketing discipline to focus on select markets for long-term value creation. OurThe paying ratio for the Rest of World is relatively lower as compared to Korea or Japan due to the inclusion of Wattpad. Wattpad has a different monetization model that primarily focuses on advertising and the business is in its early stage of monetizing its content. We plan to continue to leverage our successful pattern of engagement to drive monetization, especially as we have seen our highly engaged users in North America reading a similar number of episodes to users in other mature markets.

Engagement is a key aspect to drive our monetization. For the year ended December 31, 2024,2025, our ARPPU has increased to $11.7,$12.1, or 6.2%3.5% growth compared to December 31, 2023.2024. The growth in ARPPU was driven primarily by our strategic effort to shift users from web to the app, as app users are more engaged and present better monetization opportunities. We continue to focus on driving users to the app, as well as converting them to paying users, by continuing to improveadvancing our recommendationpersonalization models.tools.

•In Japan, our ARPPU for the year ended December 31, 20242025, has decreasedincreased to $22.1,$23.2, or 1.7%4.7% decreaseincrease compared to the year ended December 31, 2023, but still remained relatively comparable.2024.

IncomeGain (Loss) on Equity Method Investment, Net

IncomeGain (loss) on equity method investment, net, includes recognized incomegain (loss) associated with our investments accounted for using the equity method. See Note 18. Equity Method Investments in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information.

Other income,income (loss), net, primarily consists of gains or losses on valuation of debt and equity securities, net, income or loss on foreign currency, net, retirement benefit, net, and other non-operating income or loss, net.

Revenue increased by $65.7$34.2 million, or 5.1%,2.5%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, primarily related to strong growth in PaidIP Content and Advertising, partially offset by our exposure to weaker foreign currencies.Adaptations. The increasesdecrease of $20.6$1.8 million, or 14.2%,1.1%, in advertising revenue,revenue was driven by declines in Korea and Rest of World, largely drivenoffset by double-digit growth in Japan and ROW. Such increases were largely offset by the Company's exposure to weaker foreign currencies including the KRW and JPY.Japan.

Our cost of revenue increased by $22.2$51.1 million, or 2.2%,5.1%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. SuchThe increase was primarily duedriven toby stockhigher based compensation expense of $12.2 million for the year ended December 31, 2024, compared to $1.2 million for the year ended December 31, 2023, and overall increases insales commissions and content fees paid to creators, associatedwhich were commensurate with higherthe revenues.growth in revenue. In addition, we have invested in labor to further improve our platform and drive growth.

Marketing expenses decreasedincreased by $13.3$18.4 million, or 11.0%,17.0%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. The decreasesincrease werewas a result of increased efficiencies with our marketing,continued asinvestment we reported higher revenue on similar levels ofin marketing spendto fromdrive lastgrowth yearin onconverting ausers globalto basis.paid users.

General and administrative expenses increaseddecreased by $121.2$72.4 million, or 57.5%,21.8%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024. The decrease was primarily driven by lower stock-based compensation expense of $75.2$30.9 million, compared to $6.7$75.2 million for the year ended December 31, 2023,2024. In addition, the decrease was due to the base effect of a one-time bonus of $30.0 million granted to the CEO for a successful IPO,IPO and increasedother non-recurring costs associated with beingour ainitial public company.offering The increaseincurred in stock-based compensation expense for the year ended December 31, 2024, was largely attributable to the consummation of the IPO, at which performance obligation for vesting had been achieved.2024. (See Note. 11 - Stock-Based Compensation for more information about our stock-based compensation expense).

Impairment Losses on Goodwill and Other Intangible Assets, Net

Impairment losses on goodwill and other intangible assets, net increased by $6.3$266.7 million, or 10.0%,382.5%, for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024. whichThe increase was primarily driven by downward revisions in projected cash flows and long-term operating results due to higheroperational impairmentchallenges lossesand relatedstrategic shifts at Wattpad and WWS, slower-than-expected IP synergies at Munpia, which caused the carrying values of these units to ourexceed webnoveltheir businesses.fair values. For the years ended December 31, 2024,2025, and December 31, 2023,2024, we elected to bypass a qualitative assessment and performed a quantitative assessment to fulfill our annual goodwill impairment testing requirements under U.S. GAAP. See Note 7. Goodwill, net and Intangible Assets, net and Critical Accounting Policies and Estimates - Goodwill and Intangible Assets for further details on our impairment losses on goodwill.

Gain (Loss) on Equity Method Investment, Net

LossGain (loss) on equity method investment, net, decreasedincreased by $11.2$2.4 million, or 90.9%,214.2%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. This decreaseincrease wasresulted primarilyfrom duebetter to recognized lossesperformance of $11.0certain millionof associatedthe withcompanies ourequity method investments in AtoZ Corporation during the year ended December 31, 2023,2025, whichas wecompared account for usingto the equityprior method.year. See Note 18. Equity Method Investments for more information.

Other income (loss), net, increaseddecreased by $30.1$16.3 million, or 127.5%,251.3%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. This increasedecrease was primarily due to losses during the year ended December 31, 2023,2025, related to valuation of financial assets measured at fair value of approximately $7.8$7.7 million, $6.8 million,million and $5.3$0.8 million related to NAVERContents ZFirst Inc. and Bifrost Co., Ltd,Ltd Contentsrespectively. First,The Inc.,decrease andwas Clovafurther Games,impacted Inc.,by respectively,net thatretirement didbenefit not occur during the year ended December 31, 2024, and positive fluctuations in foreign currency exchange rateslosses of approximately $5.4$0.6 million during the year ended December 31, 2024, when compared to the year ended December 31, 2023.2025.

Income tax benefit (expense) decreasedincreased by $8.4$19.6 million, or 70.0%,544.6%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. This increase was primarily attributable to a decrease wasin current income tax expense as certain of the Company’s subsidiaries shifted to a net operating loss position. The Company also realized deferred tax benefits, primarily driven by achanges releasein the valuation allowance, resulting from the utilization of aforeign valuationtax allowancecredits uponand completionnet ofoperating the LDF-eBIJ Merger.losses..

We define EBITDA as net income (loss) before interest income, interest expense, income tax expense and depreciation and amortization. Starting with the third quarter of 2024, our calculation of EBITDA has been revised to adjust for interest income in addition to interest expense. In prior periods, we only adjusted for interest expense because interest income amounts were insignificant. Prior comparable periodsperiod have nowhas been recast to conform to the current presentation. Likewise, EBITDA margin is calculated by adjusting for interest income in addition to interest expense and prior comparable periodsperiod havehas been recast to conform to the current presentation. We define Adjusted EBITDA as EBITDA with further adjustments to eliminate the effects of loss on equity method investments, effect of applying the valuation method of fair value through profit or loss (“FVPL”), impairment of goodwill, non-cash stock-based compensation and certain other non-recurring costs. We believe that EBITDA and Adjusted EBITDA provide useful information to investors regarding our performance, as it removes the impact of certain items that are not representative of our ongoing business, such as certain non-cash charges and variable charges. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures and are not intended to be substitutes for any GAAP financial measures. They should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP, such as consolidated net income (loss) or consolidated net income (loss) margin.

(1)Represents impairment losses on goodwill for Wattpad Corp., Wattpad WEBTOON Studios Corp, Munpia Inc.Inc., Purple Duck and Jakga Company Inc. The amounts also include a $1.0 million impairment of the definite lived intangible assets for Bootcamp Limited Partnership for the year ended December 31, 2025.

(2)Represents non-cash stock-based compensation expense related to WEBTOON’s equity incentive plan and stock-based compensation plans of NAVER Corp., Munpia Inc. and LOCUSMunpia, Inc.including amounts which are cash settled. See Note 11. Stock-Based Compensation in the accompanying notes to our audited Consolidated Financial Statements in this Annual Report for further details on the amounts included within.

(3)Represents unrealized net loss (gain) of financial assets measured at FVPL, which include the Company’s equity investments in entities including NAVER Z Co., Ltd., Contents First Inc. and Clova Games Inc.investments.

(4)Represents non-recurring expenses that we do not consider representative of the operating performance of the business. OtherFor coststhe areyear ended December 31, 2025, these amounts include legal fees and advisory fees. For the year ended December 31, 2024, these amounts were comprised of thea following$30.0 expensesmillion associatedone-time withCEO (i)bonus financialand legal and advisory fees (ii)related consultingto feesthe and (iii) severance fees and (iv) office relocation fee.IPO.

(5)Represents our proportionate share of recognized losses associated with our investments accounted for using the equity method. See Note 18. Equity Method Investments in the accompanying notes to our audited Consolidated Financial Statements included in this Annual Report.

We provide revenue, including period-over-period growth rates, adjusted to remove the impact of foreign currency rate fluctuations and the impact of deconsolidated and transferred operations, which we refer to as revenue on a constant currency basis. We calculate revenue on a constant currency basis in a given period by applying the average currency exchange rates in the comparable period of the prior year to the local currency revenue in the current period. We calculate revenue growth (as a percentage) on a constant currency basis by determining the increase in current period revenue over prior period revenue, where current period foreign currency revenue is translated using prior period average currency exchange rates. In addition to adjustments for foreign currency exchange fluctuations, we have also adjusted revenue to exclude the impact of deconsolidation of Jakga and LOCUS and its subsidiaries, and the transfer of SERIES ON, one of our offerings, from NAVER WEBTOON to NAVER to improve comparability between the two periods. We calculate revenue (including growth rates) on a constant currency basis in each of our revenue streams - Paid Content, Advertising and IP Adaptations - using the same method as laid out herein. See Note 17. Disposition and Business CombinationCombinations in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information.

For the year ended December 31, 2024,2025, net cash provided by operating activities was $17.9$11.2 million, which primarily consisted of a net loss of $152.9$373.4 million, adjusted for certain non-cash items of $185.6$410.6 million. The non-cash items primarily consisted of impairment losses of $336.5 million, stock-based compensation of $87.4 million, impairment losses of $69.7$41.9 million, and depreciation and amortization of approximately $40.1$35.4 million, which was offset by a decrease of $24.5$29.0 million in a deferred tax expenses.benefit. The net cash outflow from changes in our operating assets and liabilities was primarily due to unfavorablecash foreignoutflows currencyrelated translationto adjustments.income taxes payable, operating lease liabilities, and other liabilities, partly offset by cash inflows from an increase in accrued expenses and accounts payable.

As discussed above, there is an inherent degree of uncertainty in preparing any forecast of future results, and the key inputs require significant judgments to be made. Any significant changes in these underlying assumptions may significantly affect our impairment conclusions and net book value of our corresponding assets in our consolidated financial statements. During the fourth quarter of the year ended December 31, 2024,2025, there was a material change in the cash flow assumptions that led to the impairment of goodwill arising from a delay in realizing synergies and returns from investments in content creation and IP Adaptations,for the postponement of releases for major works, the ongoing Wattpad ban in a certain country, and the delay in web-novel video production at theWattpad, Munpia, Wattpad, and Wattpad WEBTOON Studios Corp. (“Wattpad WEBTOON Studios”), and Purple Duck reporting units, respectively,units as of October 1, 2024.2025. These impairments were primarily driven by a sustained decrease in traffic at Wattpad resulting from prolonged service bans in certain countries combined with technical issues affecting search engine functionality, lower-than-expected realization of synergies from IP expansion at Munpia, a shift in business strategy from content production to providing scripts at Wattpad WEBTOON Studios, and lower-than-expected operating profits and cash flows at Purple Duck.

As of the October 1, 2024,2025, annual impairment testing date, fourfive reporting units had goodwill – Wattpad, Munpia, Wattpad WEBTOON Studios, Wattpad,Purple Duck and LDF (in each case, including its subsidiaries, if any).LDF. On October 1, 2024,2025, we performed a quantitative annual impairment test for all reporting units, which resulted in $46.7$257.2 million, $20.3$74.0 millionmillion, $2.9 million, and $2.7$1.4 million impairment of goodwill at Wattpad, Munpia, and Wattpad WEBTOON StudiosStudios, and Purple Duck reporting units, respectively. The remaining goodwill at the Wattpad, Munpia, LDF and Wattpad WEBTOON StudiosStudios, Purple Duck, and LDF reporting units following impairment were $437.2$179.9 million, $154.2$85.6 million, $71$0.0 million, $0.01 million and $2.9$71.3 million, respectively. No goodwill impairment was recorded for the LDF reporting unit given as its fair value substantially exceeded its respective carrying value.

We strive to detect and minimize unauthorized access to our platform, fake user accounts and fraudulent accounts created by bots that inflate user activity and we have decided to exclude such usersstarting from our MAUQuarterly calculation,Report startingon fromForm 10-Q for the quarter ended March 31, 2026, filed with the SEC on May 11, 2026, we have excluded such users from our MAU calculation to ensure the accuracy and consistency of our MAU reporting. In the previous comparable period, amounts related to such activity were immaterial to our reported results.

As of the quarter ended MarchJune 31,30, 2026, our global MAU was approximately 144.3156.9 million. The global MAU decreasedincreased by approximately 5.9%0.5% compared to MarchJune 31,30, 2025, primarily due to a decrease of MAU in ROW.2025.

•In Korea, our MAU was approximately 23.124.3 million as of the quarter ended MarchJune 31,30, 2026, compared to MAU of 24.223.0 million as of the same quarter of 2025.

•In Japan, our MAU was 21.121.8 million as of the quarter ended MarchJune 31,30, 2026, compared to MAU of 21.922.6 million as of the same quarter of 2025.

•In Rest of World, our MAU was 100.0110.7 million as of the quarter ended MarchJune 31,30, 2026, which declinedincreased from 107.3110.5 million as of the comparable prior year period. InThis addition,increase whilewas weprimarily expectedattributable to seecontent, reducedproduct automatedand webmarketing trafficinitiatives, inincluding thebrand firstmarketing quartercampaigns ofrelated 2026to asmajor we disclosed in our Annual Report, in March 2026, we saw a spike in automated web traffic in certain non-core markets,IP, which wecontributed haveto excludeduser from our MAU calculation.acquisition.

While MAU declinedincreased 5.9%0.5% year-over-year, MPU grew by approximately 2.2%.1.8%. This shift reflects the success of our content recommendation initiatives, which are driving higher conversion through better relevance.

During the first quarter of 2026, we navigated foreign exchange headwinds. As of the quarter ended MarchJune 31,30, 2026, our global MPU was 7.5 million with a paying ratio of 5.2%,4.8%, which is an increase of 0.4%0.1% compared to the paying ratio for the quarter ended MarchJune 31,30, 2025 of 4.8%.4.7%. By geographic regions, Korea, Japan, and Rest of World contributed 49.5%,50.4%, 27.4% and 23.1%22.2% of global MPU, respectively. Paying ratio varies due to the user’s ability and propensity to pay across different regions and different product offerings.

•In Korea, our MPU have increased to around 3.73.8 million with a paying ratio of 16.1%,15.5%, compared to MPU of 3.4 million and a paying ratio of 14.2%14.9% as of the quarter ended MarchJune 31,30, 2025.

•In Japan, our MPU have reached 2.1 million with a paying ratio of 9.8%,9.4%, compared to MPU of 2.22.3 million and a paying ratio of 10.3%10.0% as of the quarter ended MarchJune 31,30, 2025.

Engagement is a key aspect to drive our monetization. For the quarter ended MarchJune 31,30, 2026, our ARPPU decreased to $11.6,$11.7, or a 1.7%5.7% decline, compared to the same quarter of 2025. The reduction in ARPPU stemmed primarily from a substantial redistribution of the paying user base to areas generating less average revenue per paying user, a factor that overshadowed the organic increases in monetization within each distinct market. We continue to focus on driving users to the app, as well as converting them to paying users, by advancing our personalization tools.

•In Korea, our ARPPU for the quarter ended MarchJune 31,30, 2026, has increased to $7.8,$8.3, or a 4.0%5.0% increase compared to the same quarter of 2025.

•In Japan, our ARPPU for the quarter ended MarchJune 31,30, 2026, has increaseddecreased to $22.5,$22.1, or a 0.9%6.7% increasedecrease compared to the same quarter of 2025.

•In Rest of World, our ARPPU for the quarter ended MarchJune 31,30, 2026, has increased to $6.8,$6.9, or a 4.4% increase compared to the same quarter of 2025, primarily driven by reader habituation in paying to view content.

The following table sets forth our condensed consolidated statementstatements of operations for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively. We have derived this data from our unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. The information for each of the periods presented has been prepared on the same basis as our audited Consolidated Financial Statements and, in the opinion of management, reflects all adjustments of a normal, recurring nature that are necessary for the fair statement of the results of operations for the period. This data should be read in conjunction with our audited consolidated financial statements in the Annual Report, and unaudited Condensed Consolidated Financial Statements included in this Report. Historical results are not necessarily indicative of the results that may be expected in the future.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025

Revenue decreased by $4.8$9.8 million, or 1.5%2.8% for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. This decrease was primarily drivenattributable byto significantunfavorable foreign currency exchange headwinds and timing-related volatility in our IP Adaptations, partially offset by organic growth in Paid Content. Although we experienced a decline in advertising revenue from NAVER, this was offset by revenue from other partners.rates.

On a constant currency basis, our revenue increased $0.7by $18.1 million, or 0.2%.5.2%, primarily due to increases in Paid Content revenue and Advertising revenue. We estimate that foreign exchange fluctuations had a total negative impact of approximately $5.5$27.9 million on our reported revenue for the quarter. Refer to the Non-GAAP Financial Measures section of this report for a quantitative reconciliation and a description of how we calculate these measures.

Our cost of revenue decreased by $16.3$10.7 million, or 6.4%,4.1%, for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily attributable to a shift in the revenue mix to higher margin revenue streams, a reduction in third party transaction fees, a $3.2 million decrease in stock-based compensation expense due to timing of grants, and a decrease in total sales commissions and content fees paid to creators, reflecting lower revenue during the period.creators.

Marketing expense decreasedincreased by $1.0$7.3 million, or 3.2%,23.4%, for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, primarily due to aincreased strategicmarketing shiftspend towardto high-retentionacquire acquisition channelsusers and adrive reductiontraffic inacross lower-efficiencyour promotional spend.offerings.

General and administrative expenses decreasedincreased by $6.1$0.4 million, or 9.2%,0.6%, for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The decreaseincrease was primarily driven by a $6.8$2.9 million decreaseincrease in stock-based compensation expense due to timing of grants, which was partially offset by increasesdecreases in other general and administrative costs. We expect our stock-based compensation expense to increase in the second quarter of 2026.

Interest income decreased by $0.7$0.4 million, or 14.5%,8.7%, for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The decrease was attributable to lower interest rates as compared to the firstsecond quarter of 2025.

Gain (loss) on equity method investment, net, decreasedincreased by $0.1$0.5 million, or 21.6%,94.9%, for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. See Note 16. Equity Method Investments in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information on the Company's equity method investments.

Other income (loss), net, decreasedincreased by $4.7$3.8 million, or (175.1%280.8%), for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The change was primarily attributable to a $2.1$0.4 million increase in net foreign currency losses,income, and a $1.7$3.4 million increase in net unrealized lossgain on financial assets measured at fair value, and a $0.9 million increase in net periodic benefit costsvalue during the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025.

Income tax expensebenefit increaseddecreased by $0.1$7.8 million, or 4.9%,933.8%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. See Note 11. Income Taxes in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information on our taxes.

We define EBITDA as net income(loss) before interest income, interest expense, income tax benefit (expense) and depreciation and amortization. We define Adjusted EBITDA as EBITDA with further adjustments to eliminate the effects of (Gain) loss on equity method investments, effect of applying the valuation method of fair value through profit or loss (“FVPL”), impairment of goodwill, non-cash stock-based compensation and certain other non-recurring costs. We believe that EBITDA and Adjusted EBITDA provide useful information to investors regarding our performance, as it removes the impact of certain items that are not representative of our ongoing business, such as certain non-cash charges and variable charges. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures and are not intended to be substitutes for any GAAP financial measures. They should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP, such as consolidated net income (loss) or consolidated net income (loss) margin.

(2)Represents specific costs that are discrete to the periods presented and are not indicative of our core ongoing operations. For the three months ended MarchJune 31,30, 2026, these amounts were comprised of (i) non-routine legal and professional fees associated with the defense of the 2024 IPO-related shareholder litigation, which are outside the ordinary course of business; (ii) professional fees and severance costs directly related to the strategic restructuring initiative of our Wattpad business; and (iii) a penalty, and related professional fees, arising from a resolved regulatory matter concerning foreign exchange transaction reporting. For the six months ended June 30, 2026, these amounts were comprised of (i) non-routine legal and professional fees associated with the defense of the 2024 IPO-related shareholder litigation, which are outside the ordinary course of business, (ii) one-time advisory fees related to the Purchase Agreement that do not qualify as equity issuance costs; and (iii) professional fees and severance costs directly related to the strategic restructuring initiative of our Wattpad business.business; and (iv) a penalty, and related professional fees, arising from a resolved regulatory matter concerning foreign exchange transaction reporting. For the three and six months ended MarchJune 31,30, 2025, these amounts included (i) non-routine legal and professional fees associated with the defense of the 2024 IPO-related shareholder litigation, which are outside the ordinary course of business,business; and (ii) professional service fees associated with the initial implementation of Sarbanes-Oxley (“SOX”) compliance and IPO readiness.

(3)Represents unrealized net loss (gain) loss of financial assets measured at FVPL, which include the Company's equity investments.

(4)Represents our proportionate share of recognized gains or losses associated with our investments accounted for using the equity method. See Note 16. Equity Method Investments in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report.

Cash and cash equivalents, along with the proceeds generated from the issuance of equity securities, constitute our main liquidity sources. ByAt MarchJune 31,30, 2026, our principal liquidity was derived from the residual net proceeds of our 2024 Initial Public Offering (IPO), a subsequent private placement, and a strategic equity investment secured in the first quarter of 2026.

On January 8, 2026, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a wholly ownedwholly-owned indirect subsidiary of The Walt Disney Company (“Disney”), pursuant to which Disney purchased 2,666,757 shares of our 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. We received net proceeds of approximately $32.5 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

Historically, we have relied primarily upon cash generated from operations and cash provided by NAVER through capital contributions to finance our operations, repay or repurchase indebtedness, finance acquisitions and fund our capital expenditures. NAVER does not have any contractual obligation to provide additional capital to us and therefore there can be no assurance that NAVER will continue to provide additional capital in the form of debt or equity investment in the future to enable us to operate our business. As of MarchJune 31,30, 2026, we had $594.9$583.1 million of cash and cash equivalents, which were primarily invested in 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. We believe that our existing cash and cash equivalent balances will be sufficient to support our working capital requirements for at least the next 12 months based on our current operating plans. However, our future capital requirements will depend on many factors, including our growth rate, sales and marketing activities and other factors affecting our business, including those described in the section entitled “Risk Factors” in the Annual Report. Our expected primary uses of our capital on short and long-term bases are for acquisitions and strategic investments, repayment of debt, interest payments, working capital, capital expenditures, geographic expansion and other general corporate purposes.

We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products and technologies, including intellectual property rights, which may require us to seek additional financing. To the extent additional funds are necessary to meet our liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of indebtedness, the issuance of additional equity or a combination of these potential sources of funds. Such financing, however, may however, not be available to us on favorable terms, or at all. In particular, high inflation and interest rates have resulted, and may continue to result, in significant disruption of global financial markets, reducing our ability to access capital. If we are unable to raise additional funds on commercially reasonable terms or at all, our business, financial condition and results of operations could be adversely affected. See “Risk Factors—Risks Related to Our Business, Industry and Operations—We may require additional capital to support our business in the future, and this capital might not be available on reasonable terms, if at all,” in the Annual Report.

For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $6.7$10.3 million, compared to $8.0$5.7 million net cash provided by investing activities for the threesix months ended MarchJune 31,30, 2025. The decreaseincrease in net cash used was primarily attributable to a reduction in purchasesproceeds from the maturities of marketableshort-term securities, largely offset by increased capital expenditures related to facility preparations.investments.

For the threesix months ended MarchJune 31,30, 2026, net cash provided by financing was $32.7$33.0 million,million relatedcompared to $0.2 million during the six months ended June 30, 2025, primarily driven by proceeds of $32.7 million from the issuance of common stock related to a private placement.placement during the first quarter of 2026.