The 20th term business report.

April 1, 2006 to March 31, 2007

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Japan Third Party Co., Ltd.

Message from Top Management

JTP was founded 20 years ago as a company specializing in providing outsourcing of technical services of overseas companies' Japanese subsidiaries. Since then, we have established a unique position through our business deals with a variety of customers around the world, from global IT venture firms to leading companies.

For overseas companies seeking to expand their sales of IT products, building and maintaining a service framework presents a more important management challenge than establishing sales channels because the cycles of such products are short. In Japan, manufacturers usually establish integrated business operations on their own, covering everything from the development and production of IT products to the provision of services. In other countries on the cutting edge of IT technology, however, the prevailing business formula is to maximize the leverage by outsourcing non-core operations, such as production, logistics and services while retaining core operations like marketing, technology development and sales.

For manufacturers seeking to establish their own service frameworks in the IT sector, wherein technological innovation occurs rapidly, an enormous initial investment in personnel is required so as to secure human resources and provide technical training and education. Furthermore, in order to cope with a rapidly changing market environment, it is necessary to adopt a flexible service framework, closing in some cases and restructuring it in others. The effectiveness of our business model in reducing the costs necessary for such flexibility has been widely recognized in Japan. Having already begun preparations for spreading our business model throughout the Asian region in response to customer requests, we intend to actively operate in the region in anticipation of opportunities for further business expansion.

Under these circumstances, in our 20th term we managed to post the best business results in our corporate history in terms of both sales and profits, and also consolidate our management foundation. For this, we are appreciative of the support from our customers, shareholders and employees.

June 2007

Business Model

We serve as a "second service division" of leading overseas companies by providing business solutions and technical support services.

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Business Strategy

"SMS Strategy"--Business Model that Enables Quick Adaptation to Changes in Business Environments

When an overseas high-tech company engages in business in Japan, it can be assumed that they face three stages in their business life cycle: 1. Business growth following market entry (Sunrise), 2. Business maturity (Midday) and 3. Withdrawal from the market (Sunset). JTP provides a "framework" and "service system" that enable flexible actions at each stage. More specifically, JTP provides software solutions, field solutions and hardware solutions in the manner best suited to each stage.

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JTP's Advantage 1

We have earned the trust of major global companies in our role as their strategic partner over the past 20 years.

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JTP's Advantage 2

We provide world-class human resources and service quality through the "Muscat Strategy."

Licenses obtained by business divisions and individual employees

Support based on Vendor names License names international standards * Sun Microsystems * SCSA * SJC-D

* SCNA * SJC-Wc

* SCSecA * SJD-EA

* SISC * SJD-BC

* SCFE * Star Suite

* SJC-P * Hewlett Packard * HP-UX * HP-HA * Cisco Systems * CCNA * CCIE

* CCDA * CSE

* CCNP * WLAN

* CCIP * Linux Professional * LPIC Level 1

Institute * LPIC Level 2 * Oracle * Silver * Platinum

* Gold * Microsoft * MCP * MCSE

* MCSA * MCDST * VERITAS * SFS * DPS-X

* DPA-X * DPS-W

* DPA-W * HAS-X

* BUES * HAS-W * EMC * Associate Level

* Specialist Level * XML * XML Master Basic * OMG * UML Professional

Fundamental * CheckPoint * CCSA * IBM * SCS * Comp TIA * A+

* NETWORK+ * Brocade * CFP * SAP * ABAP * Turbolinux * Turbolinux * OGC * ITIL

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Qualifications acquired by individual employees

Bilingual

Multilingual engineers who can communicate in several languages

TOEIC

It is quite natural for JTP engineers working across national borders to have full command of English as an international language.

Employees make full use of their skills in English, Chinese (Mandarin and Cantonese) and Korean when engaging in business activities in the Asia-Pacific region, including business negotiations, system design, training, technical transfers and presentation. To facilitate this, we foster an environment that enables all of our employees to improve their capabilities as multilingual engineers.

Qualifications acquired by business divisions

Acquisition of ISO9001: 2000 certificate Education division JQA-2598 Repair center division JQA-2699 IT-based system support division JQA-QM5320 Computer system support JQA-QM6085 Integration support JQA-QM6413 Computer system support (peripherals) JQA-QM8338

Through the "Muscat Strategy" (which owes its name to an analogy with the Muscat variety of grape), we simultaneously seek to develop human resources in ways wherein individual employees are trained so as to be able to work proactively and effectively as an individual (like individual grapes in a bunch), thereby enhance the entire organization (the whole bunch). In order to ensure the provision of high-quality services, JTP has in place the Lx[e.sup.2] system, which outlines individual employees' skills in numerical terms for easy recognition and provides quality assurance based on our acquisition of ISO9001 certification. Furthermore, JTP trains its employees in ways that enables them to perform multiple jobs, thus enhancing efficiency. Moreover, thanks to its combination of high service quality and price competitiveness in international markets, JTP has been designated as a participant in international competitive bids.

Future Challenges

Challenge 1

Maintaining a Slim but Strong Management Based on the "Pay-As-You-Use" Pricing System Instead of Fixed-Rate Contracts

You pay as you use in the case of utility services such as electricity, gas and water supply. In your everyday life, one can sense a shift to this type of service pricing system taking place in Japan's IT sector. For example, you can obtain a mobile phone for free and pay a monthly bill for a variety of services, such as voice calling and e-mails, based only to the extent to which you actually used said services. Thus, the utility service model that is becoming popular in the United States and Europe is also starting to take hold in Japan. Until now, the business management of IT service companies has mostly relied on stable revenue assured by a fixed-rate system based on annual contracts that factor in possible system glitches and breakdowns, just like non-refundable insurance contracts that require fixed-premium payments on the assumption of possible accidents and diseases. Under our "pay-as-you-use" pricing system, we charge a fee each time we provide our services aimed at solving customer problems. From a customer standpoint, we simply provide services and charge fees as necessary. We will maintain this management principle without being tempted by the comfort of the fixed-rate contract system.

Challenge 2

Aiming to Become a Future Employment Magnet for School Children Receiving Education Grounded in High Technology

Elementary school children who are now using high-tech machines like PCs and advanced mobile terminals in their classrooms are set to join society as adults in ten years' time. We endeavor to become the kind of company that would appear attractive to such people as a potential employer. The key words for achieving this end are "suitability for international business" and "social contributions." By developing employees into "human assets" well suited to international business by way of our unique education system, we aim to become over the next ten years a knowledge-intensive support company that provides up-to-date technical expertise and information and multi-faceted skills.

Challenge 3

Presenting the Ultimate Support System Based on Web-Based Knowledge and Information Instead of Physical Support