| "GRAVITY Co., Ltd. [...] announced today that its Board of Directors has approved a termination of the license and distribution agreement for Ragnarok Online II with Gungho Online Entertainment Inc. (“Gungho”), its majority shareholder. Gravity and Gungho entered into the license and distribution agreement on September 29, 2006, which granted Gungho the exclusive right to service Ragnarok Online II in Japan. However, Ragnarok Online II has not yet been launched in Japan and has had limited success in certain jurisdictions where the game has been launched. Therefore, in relation to Ragnarok Online II in Japan, after discussions with Gungho and due consideration, the Company’s board of directors unanimously approved the termination of the license agreement with Gungho.
As part of the termination, US$5 million in initial payments received from Gungho will be refunded in a manner mutually agreed by the parties. The Company also anticipates recognizing an impairment loss on intangible assets of approximately Won 4,605 million, which represents the total remaining capitalized development cost of Ragnarok Online II.
Currently, Ragnarok Online II is offered globally except for Japan and China."
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