Crayfish Agreement

On March 1, 2003, we entered into a software delivery agreement with IE Group, Inc. (iE, a subsidiary of Hikari Tsushin, Inc.) under which IE purchased computer software from Crayfish and then sold the software to its customers. The objective of the contract is to provide that Crayfish will permanently sell the product to IE in accordance with the terms of the contract and that IE will purchase the Crayfish product and resell it to its customers. The agreement between Crayfish and IE includes conditions such as the sale price, product order, product delivery and so on. On June 1, 2002, we entered into a software delivery agreement with CalltoWeb, Inc. (CTW, a subsidiary of Hikari Tsushin, Inc.) under which CTW purchased computer software from Crayfish and then sold the software to its customers. The agreement authorizes Crayfish to use the name and display OSAMA DESK services, including: (1) server hosting services; (2) PPU services; (3) leasing and selling pc applications; and (4) additional services related to the above points. The department has currently negotiated three such agreements with other First Nations, the Elsipogtog and Esgeno-petitj First Nations in New Brunswick and the Maliseet de Viger First Nation in Quebec. While these agreements give nations a degree of autonomy, the DFO ultimately claims to be responsible for the overall management of Canada`s fisheries. In addition, the service charge paid primarily to Hikari Tsushin, Inc. for its sales services prior to the termination of our contract with Hikari Tsushin in November 2000 was included in the revenues. In previous years, service charges have been included in operating costs. We reclassified these costs for each of the years that ended September 30, 2000 and 2001 into revenue costs.

In order for our businesses to expand to regions outside Japan in the future, the laws in these regions must not protect our services or intellectual property rights to the same extent as Japanese laws. As long as we rely on technologies that we grant to third parties, such licences may not be available at all in the future or under economically acceptable conditions. To date, we have not received any notification that our services or products violate the property rights of third parties, but third parties may claim that our current or future services or products violate their rights. We anticipate that participants in our markets will increasingly be subject to infringement procedures due to the increase in the number of services, products and competitors in our markets. We may be unwittingly involved in this kind of action. Each of these claims, meritorious or not, could take time, lead to costly litigation, delays in the installation of the service, or require us to enter into licensing or licensing agreements. Licensing or licensing agreements may not be available on terms acceptable to us or not at all. As a result, each of these claims could have a negative impact on our business. But instead of implementing their contractual rights, the agreements are simply “a small piece” of commercial fishing, says indigenous law professor Naiomi Metallic, who teaches at Dalhousie University. OUTSOURCING PART OF THE DESKWING OPERATION TO GLOBAL MEDIA ONLINE INC. AND CALLTOWEB, INC. On September 1, 2002, the management and maintenance of servers that support DESKWING and related operations were outsourced to GMOs and, on August 1, 2002, to CTW, a subsidiary of Hikari Tsushin, the in-house call centre.

That`s why we paid outsourcing fees to GMO and CTW for these operations. These outsourcing agreements can help to keep costs down, even though the number of DESKWING subscribers would continue to decline at current rates.

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