# UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549

# FORM 20-F

(Mark One)

|[  ] | REGISTRATION  STATEMENT
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|---- | -----------------------------------------------------------------------------------------------

# OR

|[X] | ANNUAL  REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 2003
|--- | --------------------------------------------------------------------------------------------------------------------------------

# OR

|[  ] | TRANSITION  REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to   ___________________
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

Commission file number  0-30456

Chartwell Technology Inc.(Exact name of Registrant as specified in its charter)

(Translation of Registrants name into English)

Alberta, Canada (Jurisdiction of
incorporation or organization)

Suite 400, 750  11thStreet SW, Calgary, Alberta, Canada T2P 3N7
(Address of principal executive offices)

Securities registered or to be
registered pursuant to Section 12(b) of the Act.

|Title of each classNone | Name of each exchange on which registeredNone
|----------------------- | ---------------------------------------------

Securities registered or to be registered
pursuant to Section 12(g) of the Act.

Common Shares (Title of Class)

Securities for which there is a
reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable (Title of Class)

Indicate the number of outstanding
shares of each of the issuers classes of capital or common stock as of the close of
the period covered by the annual report. 15,987,701 Common Shares as at October 31,
2003

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

[X]    Yes
      No [  ]

Indicate by check mark which
financial statement item the registrant has elected to follow.

[X]    Item 17      Item 18 [  ]

(APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the
registrant has filed all documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.

[  ]    Yes
      No [  ]

---

# NOTE REGARDING FORWARD
LOOKING STATEMENTS

Except for statements of historical
fact, certain information contained herein constitute forward-looking
statements, including without limitation statements containing the words
believes, anticipates, intends, expects
and words of similar import, as well as all projections of future results. Such
forward-looking statements involved known and unknown risks, uncertainties and other
factors which may cause the actual results or achievements of the Registrant to be
materially different from any future results or achievements of the Registrant expressed
or implied by such forward-looking statements. Such factors include, among others, the
following: Registrants limited operating history; under-capitalization; government
regulations; risks involving new product development; unpredictability of future revenues;
risks of technological change; our dependence on key personnel; competition and low
barriers to entry; dependence on continued growth in use of the Internet; our ability to
protect its intellectual property rights and uncertainty regarding infringing intellectual
property rights of others and the other risks and uncertainties described under
Business Overview  Risk Factors in this Annual Report.

The Registrants management has
included projections and estimates in this Annual Report, which are based primarily on
managements assessment of the Registrants results of operations, discussions
and negotiations with third parties, managements experience and a review of
information filed by its competitors with the Securities and Exchange Commission.

The Registrant cautions readers not
to place undue reliance on any such forward-looking statements, which speak only as of the
date made. The Registrant disclaims any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after the date of such
statements or to reflect the occurrence of anticipated or unanticipated events.

i

---

# GLOSSARY

Some of the terms and
abbreviations used throughout this Annual Report are defined below:

CGC means
Chartwell Games Corp. a wholly-owned subsidiary of the Company (formerly Gaming Tech
Corporation (GT)).

Common Shares
means one or more common shares in the authorized capital of Chartwell Technology Inc.

Company or
Chartwell means Chartwell Technology Inc.

Flash is a bandwidth
friendly and browser independent vector-graphic animation technology. As long as different
browsers are equipped with the necessary plug-ins, Flash animations will look the same.
With Flash, user can draw their own animations or import other vector-based images.

GT means Gaming
Tech Corporation, a wholly-owned subsidiary of the Company (see also CGC).

GTI means Gateway
Technology, Inc., a wholly-owned subsidiary of the Company.

HTML means the
Hyper Text Markup Language which is the authoring language used to create documents on the
World Wide Web. HTML defines the structure and layout of a Web document by using a variety
of tags and attributes. There are hundreds of tags used to format and layout the
information on a Web Site and on individual Web pages. Tags are also used to specify
hypertext links. These allow Web developers to direct users to other Web Sites or pages
with only a click of the mouse on either an image or word(s).

Internet is a
global network connecting millions of computers. As of 1999, the Internet has more than
200 million users worldwide, and that number is growing rapidly. More than 100 countries
are linked into exchanges of data, news and opinions. Unlike online services, which are
centrally controlled, the Internet is decentralized by design. Each Internet computer,
called the host, is independent. Its operators can choose which Internet services to use
and which local services to make available to the global Internet community. There are a
variety of ways to access the Internet including online services such as America Online or
through a commercial Internet Service Provider.

Intranet is a
network based on transmission control and Internet protocols (an Internet) belonging to an
organization, accessible only by such organizations members, employee or others with
authorization. An Intranets Web Sites look and act just like any other Web Sites,
but the firewall surrounding an Intranet prevents unauthorized access. Like the Internet
itself, Intranets are used to share information. Secure Intranets are a growing segment of
the Internet because they are much less expensive to build and manage than private
networks based on proprietary protocols.

Java is a high
level programming language developed by Sun Microsystems. Compiled Java code can be run on
most computers because Java interpreters and runtime environments, known as Java Virtual
Machines (VMs), exist for most operating systems, including UNIX, the Macintosh OS, and
Windows. Bytecode can also be converted directly into machine language instructions by a
just-in-time compiler (JIT). Java is a general purpose programming language with a number
of features that make the language well suited for use on the World Wide Web. Small Java
applications are called Java applets and can be downloaded from a Web server and run on a
computer by a Java-compatible Web browser, such as Netscape Navigator or Microsoft
Internet Explorer.

server means is a
computer or device on a network that manages network resources. For example, a file server
is a computer and storage device dedicated to storing files. Any user on the network can
store files on the server. A print server is a computer that manages one or more printers,
and a network server is a

ii

---

computer that manages network
traffic. A database server is a computer system that processes database queries. Servers
are often dedicated, meaning that they perform no other tasks besides their server tasks.

Shockwave is a
technology developed by Macromedia, Inc. that enables Web pages to include multimedia
objects. To create a shockwave object, you use Macromedias multimedia authoring tool
called DIRECTOR, and then compress the object with a program called AFTERBURNER. You then
insert a reference to the shocked file in your Web page. To see a Shockwave
object, you need the Shockwave plug-in, a program that integrates seamlessly with your Web
browser. The plug-in is freely available from Macromedias Web site as either a
Netscape Navigator plug-in or an ActiveX control. Shockwave supports audio, animation,
video and even processes user actions such as mouse clicks. It runs on all Windows
platforms as well as the Macintosh.

software means
computer instructions or data and includes anything that can be stored electronically. The
storage devices and display devices are hardware. Software is often divided into two
categories: (i) system software which includes the operating system and all the utilities
that enable the computer to function; and (ii) applications software which includes
programs that assist users such as word processors, spreadsheets and database management
systems.

TSX or the
Exchange means the TSX Venture Exchange.

Web Site is a
location on the World Wide Web. Each Web Site contains a home page, which is the first
document users see on entering the site. The site might also contain additional documents
and files.

World Wide Web or
Web refers to a system of Internet servers that support specially
formatted documents. The documents are formatted in a language called Hyper Text Mark-up
Language (HTML) that supports links to other documents as well as graphics,
audio and video files.

iii

---

TABLE OF CONTENTS

|                                                                                       |   
|-------------------------------------------------------------------------------------- | --
|PART I                                                                                 | 1 
|Item 1.  Identity
of Directors, Senior Management and Advisers                         | 1 
|A.         Directors and senior management                                             | 1 
|B.         Advisers                                                                    | 1 
|C.         Auditor                                                                     | 1 
|Item 2.  Offer Statistics and Expected Timetable                                       | 1 
|A.         Offer statistics                                                            | 1 
|B.         Method and expected timetable                                               | 1 
|Item 3.  Key Information                                                               | 1 
|A.         Selected financial data                                                     | 1 
|B.         Capitalization and indebtedness                                             | 3 
|C.         Reasons for the offer and use of proceeds                                   | 3 
|D.         Risk factors                                                                | 3 
|Item 4.  Information on the Company                                                    | 11
|A.         History and development of the company                                      | 11
|B.         Business overview                                                           | 12
|C.         Organizational structure                                                    | 27
|D.         Property, plants and equipment                                              | 27
|Item 5.  Operating and Financial Review and Prospects                                  | 27
|A.         Operating results                                                           | 27
|B.         Liquidity and capital resources                                             | 30
|C.         Research and development, patents and licenses, etc.                        | 31
|D.         Trend information                                                           | 31
|Item 6.  Directors, Senior Management and Employees                                    | 31
|A.         Directors and senior management                                             | 31
|B.         Compensation                                                                | 34
|C.         Board practices                                                             | 36
|D.         Employees                                                                   | 36
|E.         Share ownership                                                             | 37
|Item 7.  Major Shareholders and Related Party Transactions                             | 38
|A.         Major shareholders                                                          | 38
|B.         Related party transactions                                                  | 39
|C.         Interests of experts and counsel                                            | 39
|Item 8.  Financial Information                                                         | 39
|A.         Consolidated statements and other financial information                     | 39
|B.         Significant changes                                                         | 39
|Item 9.  The Offer and Listing                                                         | 39
|A.         Offer and listing details                                                   | 39
|B.         Plan of distribution                                                        | 40
|C.         Markets                                                                     | 40
|D.         Selling shareholders                                                        | 40
|E.         Dilution                                                                    | 40
|F.         Expenses of the issue                                                       | 41
|Item 10.                                                                               | 41
|A.         Share Capital                                                               | 41
|B.         Memorandum and articles of association                                      | 41
|C.         Material contracts                                                          | 44
|D.         Exchange controls                                                           | 44
|E.         Taxation                                                                    | 46
|F.         Dividends and paying agents                                                 | 52
|G.         Statement by experts                                                        | 52
|H.         Documents on display                                                        | 52
|I.         Subsidiary information                                                      | 52
|Item 11.  Quantitative and Qualitative Disclosures About Market Risk                   | 52
|Item 12.  Description of Securitites Other than Equity Securities                      | 53
|A.         Debt securities                                                             | 53
|B.         Warrants and rights                                                         | 53
|C.         Other securities                                                            | 53
|D.         American depositary shares                                                  | 53
|PART II                                                                                | 54
|Item 13.  Defaults, Dividend Arrearages and Delinquencies                              | 54
|Item 14.  Material Modifications to the Rights of Security Holders and Use of Proceeds | 54
|Item 15.  Controls and Procedures                                                      | 54
|Item 16.  [Reserved]                                                                   | 54
|PART III                                                                               | 55
|Item 17.  Financial Statements                                                         | 55
|Item 18.  Financial Statements                                                         | 55
|Item 19.  Exhibits                                                                     | 55

iv

---

# PART I

# Item 1.   Identity of
Directors, Senior Management and Advisers

| | A.        Directors
and senior management.
| | ------------------------------------------

Not applicable.

| | B.        Advisers.
| | -------------------

Not applicable.

| | C.        Auditor.
| | ------------------

Not applicable.

# Item 2.   Offer Statistics
and Expected Timetable

| | D.        Offer
statistics.
| | ---------------------------

Not applicable.

| | E.        Method
and expected timetable.
| | ----------------------------------------

Not applicable.

---

# Item 3.   Key Information

| | A.        Selected
financial data.
| | ----------------------------------

The following table sets forth
selected financial data regarding our consolidated operating results and financial
position. The data has been derived from our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in Canada
(Canadian GAAP). For reconciliation to accounting principles generally
accepted in the United States (U.S. GAAP), see note 11 to the Consolidated
Financial Statements for the three fiscal years ended October 31, 2003, 2002, and
2001 (audited). The following selected financial data is qualified in its entirety by, and
should be read in conjunction with, the consolidated financial statements and notes
thereto included elsewhere this Annual Report. The selected financial data is expressed in
Canadian dollars (in accordance with Canadian GAAP and some in U.S. GAAP where indicated).

|                                    | 
|----------------------------------- | 
|
|
|                                    | 
|Operating Revenue                   | 
|Software Set-up                     | 
|Software Licensing                  | 
|Interest and other                  | 
|                                    | 
|Total Operating Revenue             | 
|                                    | 
|Total Expenses                      | 
|                                    | 
|Income (Loss) from                  | 
|Continuing Operations before income | 
|taxes                               | 
|                                    | 
|Income (Loss) from Discontinued Oil | 
|& Gas Operations(1)                 | 
|                                    | 
|Income taxes:                       | 
|Future income tax recovery          | 
|                                    | 
|Net Income (Loss)                   | 
|Canadian GAAP                       | 
|US GAAP                             | 
|                                    | 
|Net Income (Loss) per Share from    | 
|Continuing Operations               | 
|Canadian GAAP                       | 
|US GAAP                             | 
|                                   

2

---

|                          | 
|------------------------- | 
|
|
|                          | 
|Cash and cash equivalents | 
|Total Assets              | 
|                          | 
|Canadian GAAP             | 
|US GAAP                   | 
|                          | 
|Total Liabilities         | 
|                          | 
|Net Assets                | 
|                          | 
|Shares Outstanding        | 
|                         

|(1) | On
February 1, 1999,  the Company sold its petroleum and natural gas  properties  business
 segment for proceeds of $127,750  cash. The Company  recognized a loss of $113,397 on
the sale.  The  operating  results of this business  segment for all years  presented are
reflected as "discontinued operations".  See Note 5 of the Consolidated Financial
Statements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company paid no dividends during
the past five fiscal years.

Our financial statements are stated
in Canadian Dollars (Cdn$) and are prepared in accordance with Canadian generally accepted
accounting principles (GAAP), which, in the case of the Company, conforms in all material
respects for the periods presented with United States GAAP, except as disclosed in the
footnotes to the financial statements.

# CURRENCY AND EXCHANGE
RATES

Our financial statements are stated
in Canadian Dollars and are prepared in accordance with Canadian Generally Accepted
Accounting Principles (GAAP), the application of which, in our case, conforms in all
material respects for the periods presented with the US GAAP as noted in the footnotes to
financial statements. In this Annual Report, unless otherwise specified, all dollar
amounts are expressed in Canadian Dollars. References in this document to $
and Cdn$ refer to Canadian dollars, unless otherwise specified; references to
US$ refer to US dollars.

The following table shows the rates
derived from the noon buying rates in New York City for cable transfers payable in
Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New
York. The high and low exchange rates for each month during the previous six months are as
follows (Canadian dollars per United States $1.00):

|              
|--------------
|
|              
|March 2004    
|              
|February 2004 
|              
|January 2004  
|              
|December 2003 
|              
|November 2003 
|              
|October 2003  
|              
|September 2003
|              

3

---

The high, low, average and closing
exchange rates for each of the Companys five previous fiscal years are as follows:

|          
|----------
|
|          
|
|          
|High      
|          
|Low       
|          
|Average   
|          
|Period End
|          

On April 27, 2004, the exchange
rate of Canadian dollars into United States dollars, based upon the noon buying rate in
New York City for cable transfers payable in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York, was U.S. $1.00 equals Cdn$1.3517
Capitalization and indebtedness.

Not applicable.

| | B.        Reasons
for the offer and use of proceeds.
| | ----------------------------------------------------

Not applicable.

| | C.        Risk
factors.
| | -----------------------

The securities of the Registrant are
highly speculative. In evaluating the Registrant, it is important to consider that the
Registrant is in the preliminary stage of its operations as a developer of emerging gaming
entertainment software. A prospective investor or other person reviewing the Registrant
should not consider an investment unless the investor is capable of sustaining an economic
loss of the entire investment. All costs have been funded through equity and related party
advances. Certain risks are associated with the Registrants business including the
following:

| |  |  | We
may incur future losses and negative cash flow, which may affect the value of our shares.
| | - |  | --------------------------------------------------------------------------------------------

| |  |  | If
we are unable to obtain additional financing, our ability to implement our business plan
may be adversely affected.
| | - |  | ----------------------------------------------------------------------------------------------------------------------

| |  |  | Our
operating results are difficult to predict, which may affect our business.
| | - |  | ------------------------------------------------------------------------------

| |  |  | Because
we currently do not intend to have long-term licensing relationships, we could lose
licensees and opportunities.
| | - |  | ------------------------------------------------------------------------------------------------------------------------

| |  |  | We
may never fully develop our technologies to achieve commercial success.
| | - |  | --------------------------------------------------------------------------

| |  |  | Lack
of acceptance of our products will affect our business.
| | - |  | ------------------------------------------------------------

| |  |  | Our
products will become obsolete if we do not upgrade and improve our products and develop
new technologies.
| | - |  | -------------------------------------------------------------------------------------------------------------

| |  |  | We
may not be able to compete successfully against current and future competitors.
| | - |  | ----------------------------------------------------------------------------------

| |  |  | We
expand our game offerings and enter new business categories that may not achieve market
acceptance.
| | - |  | ------------------------------------------------------------------------------------------------------

| |  |  | Our
success is dependent on certain technologies developed by third-party vendors and the
Internet, which may fail and havea material adverse affect on our business.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Our
success depends on our ability to prevent others from infringing on our technologies.
| | - |  | -----------------------------------------------------------------------------------------

| |  |  | Our
ability to license our technology will be adversely affected if our technologys
security measures fail.
| | - |  | ------------------------------------------------------------------------------------------------------------

4

---

| |  |  | We
may need to change the manner in which we intend to conduct our business if government
regulation increases.
| | - |  | ---------------------------------------------------------------------------------------------------------------

| |  |  | We
are engaged in a business that is relatively new and it is difficult to predict the
likelihood of our success.
| | - |  | -----------------------------------------------------------------------------------------------------------------

| |  |  | Our
target customers are concentrated and may base their buying decision on the availability
of services that we do notoffer, which may affect our ability to market and sell
our products.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Growth
in volume on the Internet may adversely affect licensees ability to operate their
businesses, which may adverselyaffect our ability to license our products.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The
loss of our key management personnel may adversely affect our business.
| | - |  | ---------------------------------------------------------------------------

| |  |  | Rapid
growth may strain our resources and the ability for our personnel to effectively support
our business.
| | - |  | ------------------------------------------------------------------------------------------------------------

| |  |  | Our
inability to grow and to successfully manage our growth may harm our business.
| | - |  | ----------------------------------------------------------------------------------

| |  |  | Our
operations could be affected by currency fluctuations.
| | - |  | ----------------------------------------------------------

| |  |  | Broker-dealers
may be discouraged from effecting transactions in our shares because they are considered
penny stocks and aresubject to the penny stock rules.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

A more detailed discussion of Risk
Factors may be found within Item 4. Information on the Company in this Annual
Report.

# Item 4.   Information on
the Company

| | A.        History
and development of the company.
| | -------------------------------------------------

# Introduction

Chartwell Technology Inc.
(we, us, our, Chartwell, the
Company or the Registrant as the context requires) and our wholly
owned subsidiaries, Gateway Technology Inc. (GTI), a Delaware corporation, and
Chartwell Games Corp (CGC), formerly Gaming Tech Corporation (GT),
a Belize corporation, are engaged in the business of developing, marketing and licensing
computer software applications for gaming and entertainment on the Internet and internal
intranet systems. Our principal office is located at Chartwell House, 750 
11th Street SW, Suite 400, Calgary, Alberta, Canada, T2P 3N7.Our common stock
trades on the TSX Venture Exchange under the symbol CWH.

# General Development of
Business

We were incorporated as Napier
Explorations Inc. in British Columbia on December 16, 1987 to engage in business as
a mineral exploration company. We changed our name to Brockton Resources Inc.
on May 1, 1989. From our inception to April 1992, we conducted a program of mineral
lease acquisition and exploration activities. We abandoned our mineral properties in April
1992. On November 19, 1992, we changed our name to Chartwell Ventures
Ltd.

We remained inactive until May 1994,
when we acquired a 1.967% working interest in a petroleum and natural gas property, the
Harmattan East Viking Unit No. 1 located in Township 32, Ranges 2 and 3, W5M, known as the
Harmattan Property, for $740,000. Mobil Oil (Canada) was the operator of the
Harmattan Property and we received revenues from production on the Harmattan Property
through our working interest. On December 18, 1995, we continued our incorporation into
Alberta, Canada under the Business Corporations Act of Alberta. From June 1994
through November 1998, our only asset and business was our working interest in the
Harmattan Property.

Effective November 1, 1998, we
acquired GTI, which was engaged in the business of developing software and integrating
computer hardware and software for Internet and Intranet based computer applications.
After acquiring GTI, we shifted our business strategy from the oil and gas industry to the
software technology development and licensing industry. On December 8, 1998, we changed
our name to Chartwell Technology Inc. At this time, we changed our business to
the development of computer software.

5

---

In February 1999, we sold our entire
interest in the Harmattan Property to an arms-length third party. Our sale of the
Harmattan Property was effected to divest our oil and gas operation and to focus our
resources on the development of our computer hardware and software integration business.
We received approval of the Alberta Stock Exchange related to our change in business in
accordance with its policies. During our fiscal year ended October 31, 1999, we raised
$500,000 through a private placement of convertible debentures and share purchase warrants
(1999 Warrants) and $1,000,000 through a private placement of special warrants
(1999 Special Warrants) completed on May 26, 1999. All of the 1999 Special
Warrants and 1999 Warrants were exercised resulting in the issuance of 1,100,000 Common
Shares in aggregate and resulting in a further cash infusion of $1,375,000. Effective June
7, 1999, all of our convertible debentures were converted into 500,000 Common Shares.

During the year ended October 31,
2000, we raised $10,075,000 through a private placement of Special Warrants completed on
March 10, 2000.

During the year ended October 31,
2002, the Company continued development and licensing of software products. Our marketing
and sales efforts were focused mainly on Europe and Asia due to the perceived demand from
this region.

During the year ended October 31,
2003, the Company continued its product development initiatives. Sales and marketing
efforts remained focused on Europe.

# OUR BUSINESS

Our business plan and strategy is to
focus primarily on the development, marketing and market development of our Internet
entertainment software.

# Development of Our
Business

We acquired GTI to affect a shift of
our business strategy from the oil and gas industry to the software technology industry.
GTI was a computer hardware and software integrator that specialized in developing and
licensing Internet and Intranet based computing solutions, with a focus in the area of
Internet based commerce and Internet/Intranet gaming.

Under an agreement dated October 8,
1998, GTI acquired from Corel Corporation all proprietary rights to certain software code,
which formed the basis of our Internet gaming product. Since our acquisition of GTI, we
have completed a total redevelopment of our Internet gaming software product.

On November 1, 1999, we sold certain
parts of our interest in our gaming software and assigned all our software sublicensing
agreements related to our gaming software to our wholly owned subsidiary Chartwell Games
Corp. (CGC). We organized CGC as an independent operating subsidiary to
license and manage the wagering version of our Online Games software application. Our
business plan and strategy is to focus primarily on the development, marketing and market
development of our entertainment software.

# OUR PRODUCTS

Entertainment Software

Our entertainment software products
consist of Online Casino, multiplayer Bingo and multiplayer Poker games. The Online Casino
comprises a large selection of card games, table games, slots and video poker. The online
Casino suite is available in in-browser or download versions and a selection of these
games can also be played using Java enabled mobile devices. All games can be operated in a
wagering mode for real money applications or a free mode for fun or entertainment
applications. The software can be deployed in either a standalone configuration or
integrated into an existing gaming site.

6

---

|                 
|-----------------
|
|                 
|Casino stud poker
|                 
|Pai Gow poker    
|                 
|                 
|                 
|Three card poker 
|                 
|                 
|                 
|                 
|Blackjack        
|                 
|                 
|Roulette         
|                 
|                 
|                 
|                 
|                 
|Baccarat         
|                 
|                 
|Craps            
|                 
|                 
|                 
|Sic Bo           
|                 
|                 
|                 
|Bingo            
|                 
|                 

Online Games also offers different
types of video poker and slot machine type games.

7

---

|                 
|-----------------
|
|                 
|Slots:           
|                 
|                 
|                 
|                 
|                 
|Video Poker:     
|                 
|                 
|                 
|                 
|                 
|                 
|"Jacks or Better"
|                 
|"Joker's Poker"  
|                 
|"Deuces Wild"    
|                 
|"All American"   
|                 

We continually upgrade our support software
and technologies to increase their functionality and capabilities. The ability of our
licensees to maintain a high-quality gaming environment is critical to the success of our
Online Games product and to our licensing revenue. The Online Games software is subject to
technological obsolescence and as technology advances, we will attempt to stay ahead of
the competition by upgrading the quality of our software with respect to new gaming
products, graphics, sound and other features to meet rising user expectations.

Our Online Games software has been
designed to be as easy to use as possible and to include extensive help features to assist
players. Help features have been designed to assist users to operate the gaming software
and to explain the following:

| |  |  | objective
of each game;
| | - |  | -----------------------

| |  |  | rules
for each game; and
| | - |  | ------------------------

| |  |  | odds
given and pay-out information.
| | - |  | -----------------------------------

All games and player platforms are
supported through a common set of back office servers and utilities. Java is the primary
development environment used for all server side development. We use Java, Flash and
Shockwave for our player side interfaces, which are supported on virtually all PC based
browsers and operating systems. Java provides a portable, scalable and robust
multi-platform capability for server side code and provides a very productive development
environment.

We believe that maintaining a gaming
environment, which includes security measures to protect player information,
confidentiality of player information, responsible gaming features, variety of games,
state of the art graphics, sounds and processing speeds, will contribute to our ability to
generate licensing revenues. We have designed our Online Games software to feature the
look and feel of wagering games that are played in a physical environment by using our
proprietary technology.

8

---

Our Online Games software provides
the following built-in security features that are designed to prevent hackers or licensees
of our software from manipulating games and systems, including:

| |  |  | a
high-level security system that requires passwords to access the server systems;
| | - |  | ----------------------------------------------------------------------------------

| |  |  | hard
 coding  our game  logic  software  so that it can only be  reprogrammed  by us, to
 prevent  manipulation  of the gaming          programs;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | isolated
 source  code  security so that the source code is not  located on the  application
 server and to prevent  access or          manipulation; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | the
use of password encryption software for data transmissions.
| | - |  | ---------------------------------------------------------------

Although we have implemented security
measures to prevent tampering or manipulating of our games, we cannot guarantee that such
security measures will not be breached or that future technologies will not render our
systems obsolete. If our Online Games security measures are breached, our business and
results of operations will be adversely affected.

We have also developed related
applications, CyberBoss and CyberBanx, which provide the back-end tools required for a
completely integrated Internet gaming system.

CyberBoss is a comprehensive
administrative utility that provides licensees with a suite of administrative, marketing,
customer relations management and promotional tools. By using CyberBoss licensees
are able to securely access and classify server and transaction data from virtually
anywhere via a web browser. The CyberBoss system features password encryption features for
data transmissions and access by the licensee. We do not administer the CyberBoss system
or store licensee operations data.

CyberBanx is a proprietary e-commerce
engine that facilitates secure, automated player access to their account deposits and
withdrawals through a number of third party credit card and payment processors. The
software features a high-level security system that uses multiple level password
encryption software for data transmissions and can be programmed to require a variety of
player information including name, address, credit card number, maximum player information
that may be required by third party credit card and wire transfer processing systems.
CyberBanx also features technology that permits a licensee to authenticate and verify the
identity of the parties sending and receiving data. As a security measure our licensees do
not store credit card information in the gaming system database.

Although we have implemented security
measures to prevent tampering or manipulating of our games, we cannot guarantee that such
security measures will not be breached or that future technologies will not render our
systems obsolete. If our Online Games security measures are breached, our business and
results of operations will be adversely affected.

We have also developed related
applications that integrate with our Online Games software into an integrated Internet
gaming package. These related applications include the following:

9

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|         
|---------
|
|         
|CyberBoss
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|CyberBanx
|         
|         
|         
|         

We have also designed and developed a
Site Development Kit (SDK), a Game Development Kit (GDK) and an External Game Interface
(EGI). These applications are not licensed separately.

The SDK is a comprehensive
integration interface that allows for seamless integration of a customers
administration system to the Gaming System. The SDK is comprised of a set of Java servlets
that allow an interface to facilitate player registration, login, fund transfers and
deposits. The SDK is modular based which provides for flexibility in using only the parts
of the system that are needed.

The GDK and EGI are interfaces that
enable rapid development and deployment of online games. The GDK is a standard interface
to the back end of the system and supports rapid internal game development as well
as providing a method for independent third party game developers to add to the gaming
suite. The EGI allows for the addition of existing third party applications such as sports
books to be integrated into the Gaming System.

# Online Games Licensing

CGC licenses Online Games play for
real applications only to operators of Internet gaming Web Sites who have been granted
Internet gaming licenses by jurisdictions that permit Internet gaming. We also license our
Online Games applications to a variety of entertainment Web Sites for entertainment and
promotional purposes. We modify our Online Games applications to meet our licensees
specifications and marketing theme. We do not offer electronic funds transfer services,
provide credit card processing or banking services, conduct any gaming operations on our
Web Site or server, provide gaming marketing or administrative services or provide
services related to obtaining gaming licenses or governmental approval for gaming
activities. Our business is developing and licensing entertainment software and software
that is designed to assist operators with the administration and management of a variety
of game playing Web Sites. Our licensees must, therefore, manage, support and administer
their own Web Site servers and the games offered on their sites and market their Web Site
operations without our assistance.

The material terms of CGCs
standard licensing agreement are as follows:

10

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| |  |  | The
initial term is generally for a period of three years, renewable for an additional two
year period unless the licensee provides written notice of termination at least 90 days
prior to the expiration of a term;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The
licenses are non-exclusive and non-transferable;
| | - |  | ----------------------------------------------------

| |  |  | CGC
may terminate the license agreement if the licensee breaches any material term of the
license;
| | - |  | --------------------------------------------------------------------------------------------------

| |  |  | We
will maintain and upgrade our software and retain all right, title and interest in our
technologies;
| | - |  | -------------------------------------------------------------------------------------------------------

| |  |  | The
licensee pays a set-up fee and a monthly licensing fee, which may be a fixed fee or a
royalty fee, based on use of the software or revenues of the licensees business;
and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The
licensee must be licensed in a jurisdiction that permits Internet gaming and must remain
in full compliance with the gaming laws and regulatory requirements in the licensing
jurisdiction.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CGC has reserved the right to cancel
any license if certain standards are not met, including:

| |  |  | The
licensee must maintain in good standing proper licensing and authority to use the Online
Games application;
| | - |  | ---------------------------------------------------------------------------------------------------------------

| |  |  | The
licensee must use the Online Games application in a fair and legal manner under
applicable law;
| | - |  | ---------------------------------------------------------------------------------------------------

| |  |  | The
licensee must use the Online Games application in accordance with the terms of the
license; and
| | - |  | ---------------------------------------------------------------------------------------------------

| |  |  | The
licensee must pay licensing fees in accordance with the terms of the license.
| | - |  | ---------------------------------------------------------------------------------

As of March 31, 2004, CGC has
licensing agreements with twenty-four (24) licensees. Thirteen (13) of these licensees
have launched licensed Internet gaming Web Sites. The Company cannot confirm if or when
the remaining licensees will launch their Web Sites.

None of the Company, GTI or CGC
intend to own or operate any Internet gaming operations.

# Other Revenue
Opportunities

Play for Fun Applications

We define our market for the play for
fun application of our software as an international group of Internet content providers,
retail companies with business-to-consumer e-commerce Web Sites, portal and community Web
Site operators, land-based casinos, and corporations using Internet/Intranet for internal
communication. The broader market of browser based entertainment software is of
significant interest to Chartwell. We believe there is a demand for entertainment software
of all kinds and we have identified niche markets where we can compete effectively.

Land-Based Casinos 
Internet/Intranet: Land-based Casinos (LBCs) provide a potential
sales channel for Chartwells play for fun software designed to satisfy their need
for relevant content on their Web Sites for:

| |  |  | obtaining
data from prospective visitors
| | - |  | ----------------------------------------

| |  |  | use
as an educational tool on various games
| | - |  | -------------------------------------------

| |  |  | use
as a promotional tool
| | - |  | -------------------------

Portal Sites and Virtual
Communities  Internet: Virtual communities and portal sites are growing at a
rapid rate. With games content having been identified as a leading attraction and
retention tool, this market provides further sales potential.

11

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Online Retail Sites 
Internet: A marketing campaign targeting online retail sites is currently in
development. Specific product items such as slot machines have been identified as having
the greatest potential. Games will also enable retail sites to offer promotional discounts
and giveaways in exchange for customer information (data mining) that can be used for
direct and specific marketing.

Hotel/Cruise Ships Industry
Incentive Programs  Intranet: Chartwell plans to develop customized play for fun
casinos for this industry where guests could play for entertainment or possibly earn
prizes and credits for hotel services.

Chartwells position in the
industry is directed by a fundamental corporate policy that prohibits participating in the
ownership or operation of Internet gambling sites. This allows the Company to focus on
software development and niche markets in the play for fun, entertainment, and incentives
industries.

Internet Games and Gaming
Software Market

The market for Internet gaming
software applications is relatively new and the size of the market is difficult to
estimate. Internet gaming is a global industry with the ability to transcend traditional
geographic barriers. Developing and licensing our Online Games software is our primary
business activity. CGC licenses Online Games software to operators of Internet gaming web
sites.

We have an ongoing marketing campaign
to position our entertainment mode software as a leader in play for fun content
applications for virtual community web sites. We believe that entertainment applications
are one of the fastest growing segments of the Internet industry. We have developed our
with multi-language capabilities to access other potential market areas in the
entertainment content segment of the Internet software business.

We cannot assure you that we will
benefit from the increase size of the Internet gaming market or the growth trend in the
market in recent years. We also cannot assure you that we will be able to successfully
compete against established companies that are in the business of licensing Internet
gaming software.

Intranet Games and Gaming
Software Market

Intranet games are designed to be
played over local area networks as well as wide area networks or Intranets such as those
operated by hotel chains and international sales organizations. These applications are
intended to provide pure entertainment or incentives for guests, clients and personnel of
the Intranet operators or can be integrated into a licensed or approved gaming operation.
The market for Intranet gaming software applications is relatively new and accordingly, it
is very difficult to estimate the size of the market. The Intranet market can include both
real money wagering and play for fun applications. We anticipate that land based hotel
Casino operators for in room gaming applications and Indian tribe casinos will be
potential target markets for this technology.

We have begun marketing efforts
targeted at this potential market segment, however we have made no sales to date and
accordingly we cannot assure you that we will successfully license our technology for
these applications.

Competition

There are currently several
competitors for the licensing of play for real Internet gaming software, including, among
others, Access Gaming Systems, Global Entertainment, iCrystal Inc., iGlobeMedia, Random
Logic, Realtime Gaming, World Net Gaming, Net Entertainment, Unified Gaming, Dot Com
Entertainment, Playtech Inc., Wagerworks Inc. Microgaming, Cryptologic Inc. and Boss Media
AB. We believe that each of these competitors offers Internet gaming technologies that
compete directly with our Online Games application. Many of these competitors have greater
financial resources than us and have established relationships with licensees or are
operating Internet gaming Web Sites.

Many of our competitors currently
offer a full range of products and services, including Internet gaming software,
assistance in procuring licenses, electronic funds transfer services, data management
services, administrative

12

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services, hosting of server software,
credit card processing and other banking services, marketing consulting services and
turn-key Internet gaming systems.

There are also a number of
competitors in the play for fun software market, ranging from large game developers such
as Nintendo and Sega to individual game developers, any of whom may develop products which
directly compete with ours.

We believe that our competitors may
develop software and technologies that compete with our technologies. These potential
competitors include large software development companies that develop a broad range of
products as well as Internet gaming companies that have developed technologies for their
own businesses.

Barriers to Entry

Barriers to entry into the
Internet/Intranet gaming and entertainment software industry include significant capital
costs relating to software development, lead time relating to software development and
scarcity of qualified software programmers.

Set forth below are the market
barriers we believe we face and our strategy for addressing these issues:

|                                                         
|---------------------------------------------------------
|
|                                                         
|Developing technology that is compatible with the        
|Internet and that transforms commonly played tangible    
|games of chance into virtual games that are easy for     
|players to play and understand                           
|                                                         
|Developing a web-site infrastructure that is secure and  
|that can  process transactions on a timely and accurate  
|basis                                                    
|                                                         
|Obtaining an experienced management and technical team to
|develop an effective marketing, gaming and Internet      
|strategy                                                 
|                                                         
|Developing a solid reputation among licensees            
|                                                         
|                                                         
|                                                         
|                                                         

We believe that each of these market
barriers must be overcome to establish and maintain a successful position in the Internet
gaming software development market. We cannot assure you that we will be able to overcome
these barriers to entry or that new competitors will not overcome them more quickly than
us. If we fail to overcome these barriers, we may be unable to compete or generate
sufficient revenues to earn profits, which will have a material affect on our business and
results of operations.

Technology

Although software development varies
significantly in terms of the programming languages used and operating systems on which
such software runs, we view the Internet games and gaming software markets as being
divided between applications which are developed in popular programming languages such as
C++ which require the user to install software prior to playing and those applications
developed in Java which require no installation. A significant part of our Online Games
software was developed in Java. The cross-platform nature of Java makes it possible to
play Online Games on all major operating systems without having to install any part of the
software prior to playing. We believe the browser based capability of our software
provides a competitive advantage over our competition whose software requires
installation.

We believe that our no install, Java
and Flash based Online Games software will provide licensees with the ability to present
our players with the most current version of our Online Games every time a user logs onto
a system with no need to install upgrades.

13

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Our Online Games software is designed
to run on all popular web browsers. The server software was designed to operate in the
Windows NT and 2000 operating system and has been modified to operate on Linux and Unix
systems.

Strategic Relationships

We intend to develop strategic
relationships with licensees, which are anticipated to use our Online Games technologies
to develop virtual casinos on the Internet. We anticipate we will receive ongoing license
fees from these licensing arrangements. We also anticipate our licensees will provide
useful feedback, such as the popularity of games, requested features, operational
suggestions to improve web site administration, customer comments, which are expected to
assist us in upgrading our technologies and developing the next generation of products and
gaming solutions.

We also anticipate we will enter into
strategic relationships with potential vendors and licensees of our Intranet gaming and
entertaining solutions. These vendors and licensees may allow us to offer our Intranet
solutions for applications in land based gaming establishments. We also believe that our
Intranet solutions may be successfully marketed as an entertainment product in non-gaming
environments. We anticipate that vendors and licensees of our Intranet software solutions
may provide useful feedback, which may assist us in developing new technologies and in
marketing our products.

We intend to establish strategic
relationships with virtual community web sites for the development of our gaming software
applications as entertainment content, with operators of other Internet gaming operations
who provide licensed sports betting facilities, bingo operators, Internet service
providers and telecommunications companies. None of these strategic relationships have
been established to date, and there can be no assurance that we will successfully enter
into any such relationships.

Regulatory Environment
 Internet Gaming Regulation

Historically, the gaming industry is
subject to intense government regulation. Many countries are currently struggling with
issues surrounding wagering and gambling over the Internet. More specifically, they are
considering the merits, limitations and enforceability of prohibition, regulation or
taxation of wagering and gambling transactions that are transacted over the Internet.
There are significant differences of opinion and law between countries such as the United
Kingdom, United States, Canada, Australia, Liechtenstein and Antigua. Nevertheless,
several countries accept Internet gambling as legal and some countries offer licenses for
the operation of online casinos.

To the best of our knowledge, all of
our licensees operate their interactive Casinos from jurisdictions where Internet gaming
is regulated or tolerated. All licensees provide a representation in their license
agreements to the effect that such licensee will assume responsibility for determining the
legality of using our software, including, without limitation, accepting wagers in
whichever jurisdictions they choose to market to and receive wagers from.

As has been the case for several
years, a significant debate exists whether the laws of any country other than the country
where the computer gaming servers are physically located have jurisdiction over the
operations of a licensee. We license our software only to licensees that maintain an
internet gaming license issued by a jurisdiction in which internet gaming is legal.

In the United States, the Federal
Interstate Wire Act contains provisions which make it a crime for anyone in the business
of gaming to use an interstate or international telephone line to transmit information
assisting in the placing of wagers, unless the wagering is legal in the jurisdictions from
which and into which the transmission is made. There are other federal laws impacting
gaming activities including the Interstate Wagering Paraphernalia Act, the Travel Act and
the Organized Crime Control Act. However, it remains unresolved whether these other laws
apply to gaming conducted over the Internet.

14

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Various U.S. regulatory and
legislative agencies are conducting studies of interstate and interactive wagering and
one, the National Gambling Impact Study Commission, has recommended the prohibition of
Internet gambling within the United States and the development of enforcement strategies
by the Department of Justice.

There has been an effort in the
United States Congress to prohibit certain types of interactive gaming:

| |  |  | In
1999, Senator Jon Kyl of the United States Senate introduced a revised proposal intended
to prohibit and criminalize Internet gambling. This Bill (S. 692) passed the Senate on
November 11, 1999, but did not become law .
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | In
1999, Representative Goodlatte introduced the Goodlatte Bill in the House of
Representatives (H.R. 3125) with similar language to the Kyl bill. The Goodlatte Bill was
voted on by the House of Representatives on July 17, 2000 under suspension of the rules,
which limited debate and required a two-thirds vote for passage. The vote failed to
achieve the necessary two-thirds vote required for passage, but was supported by over
sixty percent (60%) of those voting.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | In
2000,the Internet Gambling Funding Prohibition Act (H.R. 4419) was introduced in the
House of Representatives in May 2000 in the House of Representatives, is titled the
Internet Gambling Funding Prohibition Act (H.R. 4419). This bill would have prohibited
any gambling business from accepting any financial instrument (defined as any check,
wire, credit card charge or any other transaction facilitated by a financial institution)
for the purpose of Internet gaming.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | In
2002, Congressman John Conyers introduced a bill to consider regulation of Internet
gaming in the United States.
| | - |  | -------------------------------------------------------------------------------------------------------------------

| |  |  | State
legislators in New Jersey, Nevada and California have also enacted or proposed
legislation to legalize online gaming within their jurisdictions.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

We believe that any change in either
the substance or the enforcement of the applicable or proposed rules and regulations in
these areas could have an adverse effect on our business and prospects.

In the United States, all 50 states
currently have statutes or regulations regarding gaming activities, and three states have
no gaming at all. In most states it is illegal to place or accept a wager, with specific
state-by-state statutory exceptions. Certain of internet gaming companies have been the
subject of criminal complaints at the state level, including Minnesota, Missouri and New
York. For example, of several indictments issued at the request of the United States
Attorney for the Southern District of New York, one case that went to trial involved Jay
Cohen, an owner of World Sports Exchange, a licensed gaming operator in Antigua. On
February 28, 2000, the jury in the Federal District Court case found Jay Cohen guilty of
violating United States federal law (18 U.S.C. Section 1084), a federal statute that
purports to make it illegal for a betting or wagering business to use a wire communication
facility to transmit bets or wagers in interstate or foreign commerce. Several of the
counts for which Mr. Cohen was found guilty solely involved his Internet operations. The
decision is on appeal.

The U.S. 5th District Court in
Louisiana upheld a decision that online casino gaming does not violate the Federal Wire
Act, and therefore is not illegal under that act.

In other areas of the world, there
are countries and states that are legalizing Internet gaming and moving toward regulation
and licensing of operators. For example:

| |  |  | Queensland,
Australia, has chosen to protect gaming consumers who play games offered over the
Internet through regulation embodied in the Interactive Gambling (Player Protection) Act
1998. The primary aim of the Act is to regulate Internet gaming, and to provide players
with protection mechanisms in a secure regulatory environment. The Act requires all
players to be registered, subject to providing satisfactory proof of identity, residence
and age. The Queensland Office of Gaming Regulation is enforcing the Act and regulating
licensees to ensure that interactive gambling is conducted in accordance with the Act.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15

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| |  |  | In
the United Kingdom a draft Gambling Bill is scheduled to be tabled in Parliament in June,
2004. The Gambling Bill will provide a legal framework for a variety of remote gambling
activities, including Internet gambling. The draft Gambling Bill has widespread support
and is expected to be passed into law in 2005.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The
United Kingdom has launched its national lottery online.
| | - |  | ------------------------------------------------------------

| |  |  | One
of the biggest Internet lotteries One Billion Through Millions 2000 is
sponsored by the principality of Liechtenstein under contract with the International Red
Cross.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Dominica
sponsors its own Internet gambling web-site.
| | - |  | -----------------------------------------------------

| |  |  | A
number of Caribbean countries accept Internet gambling as legal.
| | - |  | ------------------------------------------------------------------

In addition, as electronic commerce
further develops, it may generally be the subject of government regulation. As well,
current laws, which pre-date or are incompatible with Internet electronic commerce, may be
enforced in a manner that restricts the electronic commerce market. Any such developments
could have a material adverse effect on the Companys business, revenues, operating
results and financial condition.

We are unaware of any regulations or
laws that prohibit the development and the licensing of Internet gaming software, which
may potentially be used in violation of applicable statutes. It is possible that our
planned activities may be alleged to violate an applicable statute based on an
interpretation of the statute or based on a future change of law or interpretation or
enforcement policy. Such allegations could result in either civil or criminal proceedings
brought by governmental or private litigants. As a result of such proceedings, we could
incur substantial litigation expense, fines, diversion of the attention of key employees,
and injunctions or other prohibitions preventing us from engaging in various anticipated
business activities. Such an outcome would have a material adverse effect on our business
and our results of operations.

CGCs strategy is to sublicense
Online Games software to operators that are licensed to operate Internet gaming web sites.
As such, we believe CGCs activities will conform to current gaming laws and
regulations. However, there is little case law authority related to the interpretation of
gaming statutes as they relate to they relate to the Internet and the wording of many of
the applicable statutes is ambiguous. Consequently, it is possible that sublicensees of
Online Games applications may be alleged to violate an applicable statute based on an
interpretation of the statute or based on a future change of law or interpretation or
enforcement policy.

Marketing Strategies

The following summarizes our
strategic focus and operating strategy:

PENETRATE THE INTERNET ENTERTAINMENT
SOFTWARE MARKET. We intend to continue to market our Online Games technologies as
entertainment software solutions for both Internet-based and land-based casino operators
that desire to launch Intranet games for entertainment or wagering. We intend to penetrate
the market by identifying market leaders and licensing our Online Games technologies on
mutually beneficial terms to establish the Online Games brand name in the market.

PROVIDE HIGH QUALITY, INNOVATIVE AND
SUPERIOR PRODUCTS AND SERVICES. We will continue to position our product in the market
based on the quality of our graphics, sounds, administrative tools and security features
and the speed of our software and systems. We intend to continue to remain focused on
designing technology that achieves efficiency for licensees and that is innovative, easy
to use and appealing to players.

PROVIDE AN INNOVATIVE SOLUTION FOR
LICENSEE SUCCESS. A key to our success will be the success of our licensees. We intend to
continue to obtain input from our licensees on game content and features and to continue
to design and develop a wider variety of gaming products that will meet their needs and
the expectations of their customers. We intend to assist licensees by providing customized
software solutions featuring unique graphics, themes and features that will allow
licensees to differentiate their web sites and games in the marketplace

16

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PROVIDE OUR CUSTOMERS WITH A VARIETY
OF GAMING PLATFORMS. We anticipate that the market for electronic gaming will expand to
new platforms like mobile, iTV (interactive television) and networked kiosks. We intend to
deploy our gaming products to new platforms and integrate these into our existing
licensees.

We cannot assure you that we will
successfully differentiate our technologies from our competitors or will develop a
competitive advantage in the marketplace.

# Product Development
Strategy

We believe that the most significant
factor influencing the licensing of Internet gaming software is player appeal followed by
a mix of elements including price, service, reliability, technical capability, interface
capability, upgradability, ability to customize and differentiate from other web sites,
management and administrative support tools and the financial condition and reputation of
the developer. We believe the factors affecting player appeal is a combination of play
features, game variety, ease of use, appealing graphics, sound and special effects.

To increase the player appeal of
Online Games games, we have designed them to be easy to use and to play and to feature
appealing graphics, sound and special effects. Version 6.2 is our next product release.
We intend to continue to make significant investments in research and development in
designing our next generation of Online Games. We intend to develop new technologies and
to license the latest available technologies to improve the look, feel and speed of our
games. Our goal is to incorporate new games, graphics, sounds and features into our games
to differentiate our Online Games games from those of our competitors. To appeal to
licensees, we intend to develop technologies that allow operators to market and
differentiate their Internet casinos by featuring unique themes and customized visual
elements. We also intend to enhance our technologies to provide data support and
information systems that allow operators to develop and manage marketing programs
targeted at their customers and to manage the administrative and financial aspects of
their business efficiently through data retention and analysis and accounting
capabilities.

# ACQUISITION OF GATEWAY
TECHNOLOGY INC.

GTI Share Purchase
Agreement

We acquired all of the issued and
outstanding shares of GTI pursuant to a share purchase agreement dated November 1, 1998,
by and among us, GTI and shareholders of GTI, including David Bailey, Steven Latham and
Richard Latham (collectively, the GTI Shareholders). Under the terms of the
Share Purchase Agreement:

| | (i) |  | we
issued 1,000,000 of our common shares as consideration for 100,000 shares of
               GTI, constituting all of the GTI issued and outstanding shares, to the GTI
               Shareholders (600,000 shares to David Bailey, 250,000 shares to Steven
Latham                and 150,000 shares to Richard Latham);
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) |  | the
shares we issued to the GTI Shareholders were issued subject to the terms
               and conditions of an Escrow Agreement (See 1998 Escrow Agreement);
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii) |  | we
agreed to enter into employment agreements with each of the GTI Shareholders
               (See Compensation of Officers and Directors  Employment
               Agreements); and
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv) |  | we
agreed to include certain terms in the GTI Shareholders employment
               agreements including, among other terms, that:
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------

| |  | (a) |  | each
GTI Shareholder would be appointed as a director of GTI,
| |  | --- |  | -------------------------------------------------------------

| |  | (b) |  | each
GTI Shareholder would be employed full-time by us,
| |  | --- |  | -------------------------------------------------------

| |  | (c) |  | each
GTI Shareholder would receive a salary of $60,000 per year for the first           year,
and
| |  | --- |  | -------------------------------------------------------------------------------------------------

| |  | (d) |  | each
GTI Shareholder would be granted options immediately exercisable to           acquire
shares of the common stock of Chartwell at $1.00 per share (166,667           shares to
David Bailey expired unexercised on October 31, 1999, 166,666 shares
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

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| | to
Steven Latham expiring October 31, 2003 and 166,666 shares to Richard Latham expiring
October 31, 2003).
| | -----------------------------------------------------------------------------------------------------------

The shares we issued to the GTI
Shareholders were valued at $1.00 per share for a cumulative value of $1,000,000. We based
the value of such shares on average trading price of our shares 10 days prior to entering
into the agreement to issue such shares to the GTI Shareholders. The number shares issued
to the GTI Shareholders was determined through arms length negotiations between our
management and the GTI Shareholders, unrelated parties at the time.

Software Purchase
Agreement

On February 1, 1999, we and GTI
entered into a Contractual Rights and Software Purchase and Sale Agreement (the
Software Purchase Agreement) pursuant to which we acquired all of GTIs
rights, title and interests to the technologies GTI owned pursuant to a Software Transfer
Agreement (the CCC Transfer Agreement) and a Value Added Distributor Agreement
(the Value Added Distributor Agreement) by and between GTI and Corel Computer
Corp. Under the terms of the Software Purchase Agreement, we and GTI agreed as follows:

| | (i) |  | we
agreed to pay a purchase price of US$100,000 for the transfer of the
               technology by acknowledging the satisfaction of a debt in the amount of
               US$100,000 owed by GTI to us for advances we made to GTI subsequent to the
               closing of our acquisition of GTI;
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) |  | we
assumed all GTIs obligations under the CCC Transfer Agreement including
               the obligation to pay a 5% net receipts (amounts received directly or
indirectly                in connection with the commercial use of the technologies),
offset by US$75,000                in advance royalties paid by GTI;
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii) |  | we
acquired all rights, title and interests to certain software technologies
               developed by Corel Computer Corp. and transferred to GTI under the CCC
Transfer                Agreement; and
| | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv) |  | we
assumed the Value Added Distributor Agreement.
| | ---- |  | -------------------------------------------------

CCC Transfer Agreement

On October 8, 1998, GTI entered into
a software transfer agreement with Corel Computer Corp. (the CCC Transfer
Agreement), pursuant to which GTI acquired from Corel all proprietary rights to
certain software code, which formed the basis of our first client side Casino
software. Under the terms and conditions set forth in the agreement, GTI agreed to pay
Corel the following amounts:

| | (i) |  | $75,000
on October 30, 1998;
| | --- |  | ----------------------------

| | (ii) |  | $25,000
on November 30, 1998, as a nonrefundable advance on royalties due under
               the agreement;
| | ---- |  | -------------------------------------------------------------------------------------------------------------

| | (iii) |  | royalties
calculated on the basis of 5% of net receipts (amounts received                directly
or indirectly in connection with the commercial use of the                technologies).
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

GTI also agreed to pay all federal,
provincial and state use, sales or value-added taxes, or any other taxes, duties or
governmental charges related to the operation of GTIs business activities, the net
receipts or the royalties and payments paid to Corel (not including Corels income
tax), and granted to Corel a first priority fixed security interest in the software and
the proceeds thereof. GTI also agreed to indemnify and hold Corel harmless from and
against any and all claims, demands, costs and liabilities arising directly or indirectly
out of claims brought by end users or third parties related to the use of the software.

The CCC Transfer Agreement was
assumed by CGC, pursuant to the GT Transfer Agreement. See Item 10.C Material Contracts
GT Transfer. This Agreement has no further effect since we have replaced the
subject Casino software with a product developed in-house by the Company.

18

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Master Licensing Agreement

We entered into a Master Licensing
Agreement with GTI dated February 1, 1999, pursuant to which we licensed our Internet
gaming technologies to GTI. Under the Master License Agreement, we and GTI agreed to the
following terms and conditions:

| | (i) |  | GTI
would pay to us a royalty fee in the amount of one half of all payments,
               fees or royalties, in cash or non-cash form, received by GTI in connection
with                the sublicensing of the technologies;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) |  | GTI
would also pay to us a royalty fee in the amount equal to the amounts
               payable by us to Corel Computer Corp. pursuant to the CCC Transfer
Agreement;
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii) |  | we
granted to GTI the non-exclusive, non-transferable world-wide license related
               to the gaming technologies for sublicensing;
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------

| | (iv) |  | we
also agreed to license to GTI any enhancements and improvements related to
               the gaming technologies during the term of the license;
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | (v) |  | the
term of the license is five years, and renewable for an additional term upon
               written agreement of the parties; and
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------

| | (vi) |  | we
would retain all rights, title and interests to the gaming technologies upon
               termination of the agreement.
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------

The Master Licensing Agreement was
terminated on November 1, 1999, under the terms of the GT Transfer Agreement. See GT
Transfer.

1998 Escrow Agreement

We entered into an escrow agreement
dated December 1, 1998 by and among us, Montreal Trust Company of Canada and the GTI
Shareholders. Under the terms of the escrow agreement, the parties agreed as follows:

| | (i) |  | The
GTI Shareholders would deposit into escrow with Montreal Trust Company of
               Canada, the escrow agent, one million of our common shares;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) |  | The
escrowed shares would be released pro rata by the escrow agent to the GTI
               Shareholders on the basis of one share for each dollar of net income
derived by                the GTIs business, subject to approval of an application
for such release                by the Alberta Stock Exchange and a maximum of 333,333 of
the escrowed shares                during any calendar year;
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii) |  | Any
of the escrowed shares not released with in five years from the date of the
               escrow agreement would be cancelled.
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------

This Escrow Agreement expired on
November 1, 2003. On October 31, 2003, the Company made application to the TSX Venture
Exchange (as required under the terms of the Escrow Agreement) for the release of one
third of the escrowed shares to Steven Latham, as to 183,333 shares, and to the estate of
Richard Latham, as to 150,000 shares, and for the cancellation of the remaining 666,667
escrowed shares. On April 27, 2004, the TSX Venture Exchange approved the immediate
release on a pro rata basis of 333,333 shares subject to the agreement at a deemed
price to be determined.  The remaining 666,667 shares are to be canceled.  All
of the 1,000,000 escrowed shares were included in the Companys total issued capital
reported at October 31, 2003.  The total issued capital will be adjusted to reflect
the cancellation of the remaining escrowed shares.

19

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2000 Special Warrant
Offering

Under an agency agreement (the
Agency Agreement) dated March 10, 2000, we appointed Canaccord Capital
Corporation (Canaccord), to act as our exclusive agent to offer the special
warrants for sale to prospective investors.

On March 10, 2000, we completed the
sale of 3,100,000 Special Warrants at a price of $3.25 per Special Warrant, pursuant to
prospectus exemptions under applicable securities legislation in Canada. Each Special
Warrant entitled the holder thereof to acquire, at no additional cost, one (1) Common
Share, and one-half (1/2) Warrant, subject to adjustment in certain events, at any time
until the Expiry Time. Each whole Warrant entitled the holder thereof to acquire one
Common Share at a price of $3.80, subject to adjustment in certain events, until March 10,
2001. No warrants were exercised prior to their expiry on March 10, 2001.

We paid Canaccord, as agent, a fee of
6% of the subscription proceeds and in addition to this fee, we issued to Canaccord an
option (the Agents Option) to purchase 310,000 Common Shares at a price
of $3.25 per share, exercisable until March 10, 2001. We also engaged Maxwell Mercantile
Inc. (Maxwell) as a financial consultant and agreed to issue to Maxwell a
warrant (the Maxwell Warrant) to purchase 500,000 Common Shares at a price of
$3.25 per share, exercisable until March 10, 2001. None of the Agents Option or
Maxwell Warrant was exercised prior to expiry on March 10, 2001.

The net proceeds to us from the sale
of the Special Warrants was $9,258,584 after deducting sales commissions and offering
expenses.

Under the terms of the Agency
Agreement, we were required to use our best efforts to file and obtain receipts for a
prospectus filing in Canada. On July 7, 2000, we filed and received a receipt for a final
prospectus in Canada to qualify for distribution upon exercise of the Special Warrants (i)
3,100,000 of our common shares and (ii) 1,550,000 common share purchase warrants
(Warrants). On July 14, 2000, all Special Warrants were converted to Common
Shares and Warrants of the Company. We did not receive any additional proceeds from the
issuance of Common Shares and the Warrants on exercise of the Special Warrants.

In addition, pursuant to the Agency
Agreement, Chartwell granted the Agent a right of first refusal with respect to any future
financings undertaken by the Company to and including February 28, 2001, subject to
certain terms and conditions.

# PLAN OF OPERATION

We are continuing to develop our
business, expand our suite of games, deploy our games across new platforms and sign new
licensees. Fiscal year 2003 was our first year of profitability and substantial revenue
growth. During the fiscal years ended October 31, 2003, and October 31, 2002, we had
revenues from continuing operations of $7,353,141 and $3,737,994, respectively. During
these same periods, we had operating income of $1,610,852 and an operating loss of
$1,431,282, respectively. As of October 31, 2003, our accumulated deficit was reduced to
$6,480,170. At October 31, 2003, our cash and cash equivalent position was $3,465,120, and
we had working capital of $6,752,155. We believe we have sufficient working capital to
fund our operations through our fiscal year ending October 31, 2004. See Item
5.B  Liquidity and Capital Resources.

Our business plan through our fiscal
year ending October 31, 2004 is to increase our European market focus with a significant
presence in the United Kingdom and to continue our product development initiatives. Under
our plan, we will develop, maintain and upgrade the Online Games technologies and CGC will
sublicense and market the wagering version of Online Games to licensed Internet gaming
companies.

20

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# ONLINE GAMES SOFTWARE

Software Maintenance and
Upgrades

During the year ended October 31,
2003, we released Version 5.3 of our Online Games software. Through our fiscal year ending
October 31, 2004, we plan to maintain and upgrade software that is being used by our
present licensees and to integrate new and unique gaming applications into our customer
base. We have targeted to release new games including Multi-player Poker, Multi-player
Bingo, and soft games including Scratch Cards, Pull Tabs and lottery style games. We will
also continue the deployment of our expanding suite of games to alternate platforms like
Java enabled phones, networked kiosks and interactive televisions, In addition, we are
developing localization of the software, which means developing the screens in various
languages to accommodate non-English-speaking players.

We will continue to offer
customization to the current version of our Online Games software, which allows licensees
to differentiate its web site using interfaces with unique graphic and sound effects and
themes. The gaming engines that run the Online Games are essentially be the same for each
sublicensee who customize their individual web sites with graphic and sound interfaces
that provide the appearance of a unique web site. We also customize or upgrade the
back-end systems, which allow licensees to structure the layout of their Internet casino
web sites and operations, and accounting applications, which permit licensees to
administer and structure their accounting systems, to provide different types and
structures of reports upon the request of licensees.

Graphic Development and
Creation

We have in-house graphics designers
that design and create the HTML graphics that are required to customize and distinguish
licensees gaming sites. Our in-house graphic services work with licensees to develop
web site interfaces that feature unique themes designed to appeal to the licensees
target markets.

Present and Future Sales
of Online Games Software

Our strategy for marketing and
licensing our technology is to continue sales efforts to present leads as well as
exhibiting at trade shows, limited trade publication advertising, online advertising and
implementing a marketing campaign targeted at existing Internet gaming companies. We are
also establishing a sales and marketing office in London, England that will be staffed by
sales and marketing professionals with extensive industry experience. We expect that the
establishment of the London office will increase our visibility in Europe and will generate
more revenue opportunities for the Company. CGC is negotiating with several potential
licensees who have expressed an interest in using the Online Games software.

We intend to use our working capital
to fund further enhancements to our Java-based Internet gaming and entertainment software,
to develop new products based on its existing product suite and to formally launch the
marketing of its Internet gaming and entertainment software.

Staffing

At March 31, 2004, we had sixty (67)
employees including subsidiaries. CGC had five (5) full employees. None of the employees
of the Company or CGC are covered by a collective bargaining agreement.

# RISK FACTORS

Our securities are highly
speculative. In evaluating us, it is important to consider that we are in the preliminary
stage of our operations as a developer of emerging gaming entertainment software. A
prospective investor or other person reviewing our business should not consider an
investment unless the investor is capable of sustaining an economic loss of our entire
investment. A significant majority of costs have been funded through equity issuances.
Certain risks are associated with our business including the following:

21

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Our lack of an operating
history makes our future success uncertain

We acquired GTI in November 1998 to
engage in the business of developing, commercializing and marketing software and
technologies related to gaming and entertainment offered over the Internet. Over the last
five years we continued to develop our business, enhance and extend our gaming suite, and
build our organization. We have a limited operating history, and limited experience in
developing, commercializing and marketing software applications, which makes our continued
success uncertain. As a result of our brief operating history, it is difficult to
accurately forecast our revenues and we have limited meaningful historical financial data
upon which to base planned operating expenses and new business revenue.

We may incur future
losses and negative cash flow, which may affect the value of our shares.

We have one year of profitability and
a history of losses. During the year ended October 31, 2003, we had revenues from our
software operations of $7,353,141. During this same period, we had operating income of
$1,610,852. As of the year ended October 31, 2003, we had an accumulated deficit of
$6,480.170, and as of October 31, 2002, we had an accumulated deficit of $8,091,022. We
expect to incur costs and expenses related to:

| |  |  | continued
brand development, marketing and other promotional activities;
| | - |  | ------------------------------------------------------------------------

| |  |  | continued
development, upgrading and maintenance of our software technologies;
| | - |  | ------------------------------------------------------------------------------

| |  |  | increased
administrative costs related to infrastructure and business support systems,
| | - |  | --------------------------------------------------------------------------------------

| |  |  | the
expansion of our product offerings and the continued enhancements to our e-commerce
technologies; and
| | - |  | ---------------------------------------------------------------------------------------------------------

| |  |  | development
of strategic business relationships with decision makers in the industry.
| | - |  | -------------------------------------------------------------------------------------

Our ability to remain profitable
depends on our ability to generate and sustain substantial revenues while maintaining
reasonable expense levels. See Managements Discussion and Analysis of
Operating Results.

Our operating results are
difficult to predict, which may affect our business.

Our operating results may fluctuate
significantly due to a variety of factors, many of which are outside of our control.
Factors that may harm our business or cause our operating results to fluctuate include the
following:

|- |  | the
ability of sublicensees of our Online Games  technologies to obtain new players and to
encourage  existing players to play Online
Games;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------

|- |  | the
mix of games and other products developed by us;
|- |  | ----------------------------------------------------

|- |  | CGC's
inability to obtain additional licensees of our Online Games technologies;
|- |  | --------------------------------------------------------------------------------

|- |  | our
inability to adequately maintain, upgrade and develop our Online Games technologies;
|- |  | ----------------------------------------------------------------------------------------

|- |  | the
ability of our competitors to offer new or enhanced gaming technologies, services or
products;
|- |  | --------------------------------------------------------------------------------------------------

|- |  | price
competition;
|- |  | ------------------

|- |  | fluctuations
in the demand for Internet wagering;
|- |  | -------------------------------------------------

|- |  | an
increase in the number of Internet wagering web sites;
|- |  | ---------------------------------------------------------

|- |  | our
failure to develop strategic marketing relationships;
|- |  | ---------------------------------------------------------

|- |  | the
amount and timing of operating costs and capital expenditures relating to commercializing
our Online Games technologies;
|- |  | ----------------------------------------------------------------------------------------------------------------------------

|- |  | changes
in the regulatory and political  environment  that adversely  affect the Internet gaming
 industry,  licensees and our      business; and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

|- |  | economic
conditions specific to the Internet, online commerce and the Internet gaming and
entertainment industry.
|- |  | -----------------------------------------------------------------------------------------------------------------

A number of these factors are
expected to affect our ability to generate revenues and to become commercially profitable.
We cannot assure you that we will ever achieve commercial profitability.

22

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Because we currently do
not intend to have long-term sublicensing relationships, we could lose licensees and
opportunities.

Our success depends on our ability to
sublicense our products to operators of Internet gaming and other entertainment related
web sites. We currently do not intend to enter into long-term sublicensing agreement
related to our Online Games technologies. We believe that this will allow us to monitor
the use of our technology. As a result, sublicensees of our technology may elect to use
the technologies of our competitors, which may adversely affect our ability to market our
Online Games technologies.

We may never fully
develop our technologies to achieve commercial success.

We may not be able to achieve the
necessary technological developments required to fully develop and commercialize our
products, services or business as intended. Technology developed for Internet gaming and
entertainment is rapidly changing and evolving to meet the needs and expectations of
Internet users and sublicensees of Internet related software. We intend to develop
technologies that are designed to be functional and feature superior graphics, sound,
video and speed. Some of the technology we are developing is relatively new and untested
and there is no assurance that all of the technical hurdles that might arise will be
overcome. Our inability to overcome technical challenges to developing our technologies
may have a material adverse affect on our business and results of operations.

We may have underestimated the
expenditures and time necessary to complete further development and commercialization of
our software products and the market for these and other products. Greater expenditures
may be required than we have anticipated, and the amount of time required to complete
development and commence operations may be underestimated. If such expenditure are more
than we anticipate, we may be required to reduce allocation of our resources to other
areas or to delay our development or marketing efforts, which may have a material adverse
affect on our business and results of operations.

Lack of continued
acceptance of our products will affect our business.

Poor market acceptance of our
products or other unanticipated events may result in lower revenues than anticipated,
making anticipated expenditures on development, advertising and promotion not feasible.
Initially, our success may be limited by our lack of experience marketing Internet gaming
technologies, our limited international marketing experience and our lack of brand
recognition. We cannot assure you that our technologies will be accepted in the
marketplace or that we will earn sufficient revenues from sublicensing our products to
earn any profits.

Our products will become
obsolete if we do not upgrade and improve our products and develop new technologies.

The success of our products and our
ability to sublicense our technologies and to develop a competitive advantage in the
market will depend on our ability to improve our products and develop new and innovative
technologies. Our operations will be at risk if our products are not continually upgraded
and improved. The high technology industry is characterized by a consistent flow of new
product and service offerings, which may render existing products and services obsolete.
Without continued development, our products could be rendered obsolete in 18 to 24 months.

23

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We may not be able to
compete successfully against current and future competitors.

The online commerce market is new,
rapidly evolving and intensely competitive. The competition among developers of Internet
related software is also increasing especially in the online gaming industry. Currently,
we compete with a number of competitors including Playtech Inc.,Wagerworks Inc.,
Microgaming,. Cryptologic, Inc., Boss Media AB and a number of other software companies,
many of which have similar product offerings or offer products with more features and
capabilities than our Online Games technologies. Many of our competitors have
substantially greater financial, marketing and other resources than us and offer a broader
range services than us. Some of these competitors have diversified businesses, such as
World Gaming, Boss Media, Microgaming and Cryptologic, Inc., which offer turnkey Internet
casinos, in which the licensor assist the licensee by consulting in the application for an
Internet gaming license, establishing an Internet gaming web site, developing and
implementing a marketing strategy, providing and maintaining web site servers, providing
management and web site operating services and providing clearing and credit card
services. Some of our competitors have longer operating histories and have penetrated the
market by licensing their software and technologies to web site operators, which have
established Internet wagering businesses. To remain competitive, we may have to reduce the
cost of our products and services, which may negatively affect profitability.

Our competitors may be able to
develop technologies more effectively or may be able to license their technologies on more
favorable terms based on the number of sublicensees that license their products.
Competitors may also adopt more aggressive pricing or licensing policies than us, which
may hinder our ability to penetrate the market and license our technologies.

In addition, increased competition is
likely to result in price reductions, reduced gross margins and an increased number of
competitors competing for market share, any of which could seriously harm our ability to
generate revenues and our results of operations. We expect competition to intensify in the
future because current and new competitors can enter our market with little difficulty,
and our competitors may sell their software at reduced prices. In addition, should we
decide to expand our product lines or develop alternative uses for our technologies, we
will be required to develop marketing strategies to target those markets.

We expand our game
offerings and enter new business categories that may not achieve market acceptance.

Any new game, product or service that
is developed by us, which is not favorably received by sublicensees or end-users could
damage our brand or reputation. This damage could impair our ability to attract new
customers, which could cause our revenues to fall below expectations. An expansion of our
business into other new business categories or use applications will require significant
additional expenses, and strain our management, financial and operational resources. This
type of expansion would also subject us to increased business risks and could aversely
affect our levels of customer service. We may choose to expand our operations by
developing new games, services, products or applications for our technologies, promoting
new or complementary games, expanding the breadth and depth of products and services
offered or expanding our market presence through relationships with third parties. If we
allocate our resources to an expansion strategy that fails to provide acceptable returns,
our results of operation may be materially adversely affected.

Our success is dependent
on certain technologies developed by third-party vendors and the Internet, which may fail
and have a material adverse affect on our business.

We incorporate into our products
certain software licensed to us by other software developers, which are not licensed
exclusively to us. Our business may be materially adversely affected if the third party
software developers in which we rely upon are acquired by a competitor or terminate our
ability to use their software.

Our success is also dependent
licensees who depend on the Internet. Internet service providers who do not guarantee
access to the Internet or the reliability of Internet service. Accordingly, we could face
materially adverse consequences if Internet service providers chose not to permit Internet
access to licensees.

Because our products incorporate
software developed and maintained by third parties, we are also dependent to a certain
extent upon such third parties abilities to enhance their current products, to
develop new products on a

24

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timely and cost-effective basis and
to respond to emerging industry standards and other technological changes. There can be no
assurance that we would be able to replace the functionality provided by the third-party
software currently offered in conjunction with our products in the event that such
software becomes obsolete or incompatible with future versions of our products, or is
otherwise not adequately maintained or updated. The absence of, or any significant delay
in, the replacement of that functionality could have a material adverse effect on our
sales.

Our success depends on
our ability to prevent others from infringing on our technologies.

Our success is heavily dependent upon
proprietary technology. To protect our proprietary technology, we rely principally upon
copyright and trade secret protection. All proprietary information which is capable of
copyright is marked as such. All employees and consultants are required to execute
confidentiality agreements with us. There can be no assurance that the steps taken by us
in this regard will be adequate to prevent misappropriation or independent third-party
development of our technology. Further, the laws of certain countries in which we intend
to license our technologies or products do not protect software and intellectual property
rights to the same extent as the laws of Canada or the United States. We do not include in
our software any mechanism to prevent or inhibit unauthorized use, but we generally
require the execution of an agreement that restricts unauthorized copying and use of our
products. If unauthorized copying or misuse of our products were to occur, our business
and results of operations could be materially adversely affected.

While the disclosure and use of our
proprietary technology, know-how and trade secrets are generally controlled under
agreements with the parties involved, there can be no assurance that all confidentiality
agreements will be honored, that others will not independently develop similar or superior
technology, that disputes will not arise concerning the ownership of intellectual
property, or that dissemination of our proprietary technology, know-how and trade secrets
will not occur.

Intellectual property
claims against us can be costly and could impair our business.

We believe that our products and
technology do not infringe patents or other proprietary rights of third parties, however,
there can be no assurance that third parties will not claim that our current or future
products infringe such rights of third parties. We expect that software developers will
increasingly be subject to such claims as the number of products and competitors providing
Internet related software and services grows and overlaps occur. Any such claim, with or
without merit, could result in costly litigation or require us to enter into royalty or
licensing agreements in order to obtain a license to continue to develop and market the
affected products. There can be no assurance that we would prevail in any such action or
that any license (including licenses proposed by third parties) would be made available on
commercially acceptable terms, if at all. If we become involved in litigation over
proprietary rights, it could consume a substantial portion of our managerial and financial
resources, which could have a material adverse effect on our business, financial condition
and operations.

Our ability to license
our technology will be adversely affected if our technologys security measures fail.

Our technologies incorporate security
and authentication protections designed to allow licensees to protect certain personal
information of players, such as credit card numbers, player information and player account
balances. We cannot predict that whether events or developments will result in a
compromise or breach of the technology we use to protect a players personal
information. If the security measures in our software fail, licensees may lose many
customers and our ability to license our technologies will be adversely affected.

Furthermore, the servers and computer
systems of licensees may be vulnerable to computer viruses, physical or electronic
break-ins and similar disruptions, which could disrupt their operations and their ability
to pay us licensing fees. Any material failure of such systems may have a material affect
on our business. We may need to expend significant additional capital and other resources
to protect against a security breach or to alleviate problems caused by any breaches. We
cannot assure you that we can prevent all security breaches.

25

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We may need to change the
manner in which we intend to conduct our business if government regulation increases

The adoption or modification of laws
or regulations relating to the Internet gaming or Internet commerce could adversely affect
the manner in which we currently conduct our business. Many countries are currently
struggling with issues surrounding Internet gaming. More specifically, they are
considering the merits, limitations and enforceability of prohibition, regulation or
taxation of wagering and gaming transactions that are transacted over the Internet. There
are significant differences of opinion and law between countries such as the United
States, Canada, Australia, South Africa and Belize. In addition, the growth and
development of the market for online commerce may lead to more stringent consumer
protection laws, both in the United States and abroad, that may impose additional burdens
on us. Laws and regulations directly applicable to gaming, communications or commerce over
the Internet are becoming more prevalent. The United States Congress recently enacted
Internet laws regarding childrens privacy, copyrights, taxation and the transmission
of sexually explicit material. We believe that any change in either the substance or the
enforcement of the applicable or proposed rules and regulations in these areas could have
an adverse effect on our business and prospects.

The European Union recently enacted
its own privacy regulations. The law of the Internet, however, remains largely unsettled,
even in areas where there has been some legislative action. It may take years to determine
whether and how existing laws such as those governing intellectual property, privacy,
libel and taxation apply to the Internet. In order to comply with new or existing laws
regulating online commerce, we may need to modify the manner in which we do business,
which may result in additional expenses. We may need to hire additional personnel to
monitor our compliance with applicable laws.

We are not aware of any regulations
or laws that prohibit the development and the licensing of Internet gaming software, which
may potentially be used in violation of applicable statutes. It is possible that our
planned activities may be alleged to violate an applicable statute based on an
interpretation of the statute or based on a future change of law or interpretation or
enforcement policy. Such allegations could result in either civil or criminal proceedings
brought by governmental or private litigants. As a result of such proceedings, we could
incur substantial litigation expense, fines, diversion of the attention of key employees,
and injunctions or other prohibitions preventing us from engaging in various anticipated
business activities. Such an outcome would have a material adverse effect on our business
and our results of operations.

We are engaged in a
business that is relatively new and it is difficult to predict the likelihood of our
success.

The Internet gaming communication and
entertainment industries are relatively new and will likely undergo rapid and constant
change. We will need to be able to adapt to such changes and to develop technologies that
appeal to licensees and users of the Internet to compete effectively. Several competitors
have developed products that have been commercialized and we believe these competitors are
developing new technologies that are designed to create competitive advantages for their
products. We cannot assure you that the industry will continue to grow or that we will
successfully develop products that will be appealing to licensees or their customers.

Our target customers are
concentrated and may base their buying decision on the availability of services that we
do not offer, which may affect our ability to market and sell our products.

We believe that the customers for our
Online Games Internet gaming software are primarily individual entrepreneurs. These
potential customers may make purchase decisions on the availability of services that we do
not offer, such as management services, transaction clearing services, Internet gaming
licensing services and Internet casino marketing services. Several of our competitors may
offer these services in packages that may be more attractive to this target market. This
may affect our ability to successfully market and sell our services.

The customers for our Internet
entertainment and Intranet gaming software may be primarily large corporations, Indian
tribes and other entities that license our technologies for their licensed casino
operations or for entertainment purposes. In order to effectively target and market to
this target market, we will need to develop specialized marketing programs and
modifications to our software to meet their specific business needs. We cannot assure you
that we will successfully be able to market and sell our technology to this target market
or that such efforts will be profitable.

26

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If we cannot build and sustain a
large customer base for our products and services, our ability to upgrade, improve and
develop new technologies will be adversely affected and our ability to generate revenues
and earn a profit will be adversely affected.

The loss of our key
management personnel may adversely affect our business.

We will depend on a relatively small
number of key employees including Darold H. Parken, the President, Dave Acorn, the VP of
Software Development, and Andrew Smith, our Technical Director, the loss of whom could
have an adverse affect on the financial performance of our business. We do not have
employment agreements with these individuals, and accordingly cannot assure you that they
will continue their service with the Company. We currently do not maintain key man life
insurance on any of our managers.

We rely on our management and if you
are not prepared to do so should not invest in our securities. All of the directors and
officers of the Company may not devote all of their time to the affairs of the company,
but will be devoting such time as is required to manage the company. The directors and
officers are engaged and will continue to be engaged in the search for business prospects
on behalf of themselves and others. See Conflicts of Interest.

Rapid growth may strain
our resources and the ability for our personnel to effectively support our business.

We expect to grow rapidly, which may
strain our resources. Limitations on our personnel and resources may affect our ability to
provide the quality of service, technical support and marketing support needed to achieve
and maintain a competitive market position. There is a high demand for software
development and sales personnel, which may affect our ability to hire qualified personnel.
The loss of qualified personnel, growth in the demand for qualified personnel or our
inability to recruit and train qualified personnel on a timely may adversely affect the
timeliness of the services we provide or the delivery of our software.

Rapid growth may strain our resources
and increase our cost of doing business by reducing our efficiency. We cannot assure you
that we will have the resources necessary to develop and maintain a competitive market
position.

Our inability to grow and
to successfully manage our growth may harm our business.

To achieve our projected revenues and
other targeted operating results, we will be required to rapidly expand our systems,
procedures, controls, employee base and facilities. The success of the expansion plans
will depend in part upon our ability to continue to attract, retain and motivate key
personnel. Failure to make the required expansions and upgrades could have a material
adverse effect on our business, financial condition, results of operations and corporate
relationships. Our results of operations will also be adversely affected if revenues do
not increase sufficiently to compensate for the increase in operating expenses resulting
from any expansion and there can be no assurance that any expansion will be profitable or
will not adversely affect our results of operations.

Our operations could be
affected by currency fluctuations.

Our profitability may also be
adversely affected by fluctuations in currency exchange rates. Our sublicensing agreements
are denominated in United States dollars. CGCs obligation and our obligations related
to our license arrangements are generally denominated in United States dollars. We hold
our funds in Canadian dollars. Fluctuating currency rates between the United States dollar
and the Canadian dollar may affect our results of operations. We do not engage in hedging
transactions to protect against such fluctuations.

Broker-dealers may be
discouraged from effecting transactions in our shares because they are considered penny
stocks and are subject to the penny stock rules.

Rules 15g-1 through 15g-9 promulgated
under the Exchange Act impose sales practice and disclosure requirements on NASD
brokers-dealers who make a market in a penny stock. A penny stock generally
includes any non-NASDAQ equity security that has a market price of less than US$5.00 per
share. Our shares are quoted on the TSX

27

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Venture Exchange and the closing
price of our shares during the fiscal year ended October 31, 2003 ranged from $0.71 to
$1.80 per share. As such, our shares will be deemed penny stock for the purposes of the
Exchange Act. The additional sales practice and disclosure requirements imposed upon
brokers-dealers may discourage broker-dealers from effecting transactions in our shares,
which could severely limit the market liquidity of the shares and impede the sale of our
shares in the secondary market.

Under the penny stock regulations, a
broker-dealer selling penny stock to anyone other than an established customer or
accredited investor, generally, an individual with net worth in excess of
US$1,000,000 or an annual income exceeding US$200,000, or US$300,000 together with his or
her spouse, must make a special suitability determination for the purchaser and must
receive the purchasers written consent to the transaction prior to sale, unless the
broker-dealer or the transaction is otherwise exempt. In addition, the penny stock
regulations require the broker-dealer to deliver, prior to any transaction involving a
penny stock, a disclosure schedule prepared by the Commission relating to the penny stock
market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer
is also required to disclose commissions payable to the broker-dealer and the registered
representative and current quotations for the securities. Finally, a broker-dealer is
required to send monthly statements disclosing recent price information with respect to
the penny stock held in a customers account and information with respect to the
limited market in penny stocks.

| | B.        Organizational
structure.
| | -----------------------------------

We have two wholly-owned
subsidiaries: GTI and CGC.

GTI, our wholly owned subsidiary, was
formed on June 27, 1997, as a Delaware corporation. GTI was primarily responsible for the
Companys marketing and sales functions until May 31, 2000, from and after which time
GTI has been inactive and will be dissolved.

On November 5, 1999, we
organized CGC (formerly GT) as an international business corporation under the laws of
Belize. CGC was organized as an independent operating subsidiary to license our real money
wagering software applications. We own all the issued and outstanding shares of CGC.

We are headquartered in Calgary,
Canada, and are primarily responsible for technology and software development, software
upgrade and maintenance, corporate finance, strategic planning and other corporate
functions related to the development of our business.

We, GTI and CGC have never been
subject to any bankruptcy, receivership or similar proceedings.

| | C.        Property,
plants and equipment.
| | -----------------------------------------

Our executive offices are located in
leased premises of approximately 11,072 square feet at Suite 400, 750 
11th Street SW, Calgary, Alberta, Canada. The lease is for a term of six years
commencing December 1, 2003 at a base annual rental rate of approximately $166,080 with
operating costs of approximately $130,405 annually. We consider these premises suitable
for our current needs. We have an office of approximately 838 square feet at 1166 Alberni
Street, Suite 1400, Vancouver, British Columbia, Canada. The lease is for a term of five
years commencing January 1, 2004 at a base annual rental rate of approximately $9,380 with
operating costs of approximately $9,965 annually.

CGCs principal offices are
located in London, England.

# Item 5.   Operating and
Financial Review and Prospects

| | A.        Operating
results.
| | ----------------------------

The following discussion and analysis
of the results of operations and financial condition of the Company for the two fiscal
years ending October 31, 2003 and 2002 should be read in conjunction with the
Companys audited financial statements and the related notes. The financial
statements have been prepared in accordance with

28

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accounting principles generally
accepted in Canada, which conform to accounting principles in the United States, except as
described in the notes to financial statements. Unless expressly stated otherwise, all
references to dollar amounts in this section are in Canadian dollars (in accordance with
Canadian GAAP).

# Overview

Chartwell specializes in the
development of leading edge gaming applications and entertainment content for the Internet
and wireless platforms. Chartwells Java and Flash based software products and games
are designed for deployment in gaming, entertainment, advertising and promotional
applications. Chartwell does not participate in the online gaming business of its clients.
Chartwells team of highly trained professionals is committed to delivering the
highest quality software and maintaining its leading edge through continuous development
and unparalleled customer support.

# Results Of Operations

The financial results for the year
ended October 31, 2003 and 2002 include the operations of our wholly owned subsidiary
Chartwell Games Corp.

# Revenues

Operating revenues increased by
$3,615,000 or 97% to $7,353,000 for the year ended October 31, 2003 compared to $3,738,000
in 2002.

We realized revenue growth occurred
in both set up fees and license fees. The addition of six new clients in 2003 resulted in
an increase of 20% in set up fees over the prior year. License fees increased by 138% to
$6,300,000 from $2,647,000 in 2002. This increase was attributable to the strong
quarter-over-quarter revenue growth within our installed base of clients. License fees
remain the biggest revenue contributor and represented 86% of operating revenue in 2003,
up from 71% in 2002.

All of our revenue is billed in U.S.
dollars. As a result of the continued strengthening of the Canadian dollar compared to its
U.S. counterpart, we estimate that the amount of operating revenue reported in fiscal 2003
was approximately $600,000 lower than it would have been reported if the average exchange
rate would have remained at historical levels.

At October 31, 2003, we had 24
licensing agreements in place.

Interest and other revenues for the
fiscal year ended October 31, 2003 were $109,000, compared to $302,000 in 2002, a decrease
of 64%. The decrease was due to a reduction in earned interest resulting from a decrease
in short term investments of $1,469,000.

We anticipate that operating revenues
will continue to increase during our fiscal year 2004, as we enter into new software
licensing agreements and as we continue to earn increasing revenues from our installed
base of customers.

# Consolidated Expenses.

Our expenses are classified into four
categories: software development, general and administrative, depreciation and
amortization and foreign currency losses.

In fiscal 2003, our consolidated
expenses increased by 21% from fiscal 2002. Our consolidated expenses increased to
$6,262,000 in fiscal 2003 from $5,169,000 in fiscal 2002. This increase is due solely to
an increase in software development expenses and foreign currency losses of $795,000.

# Software Development
Expenses

Software development and support
represents the Companys largest expenditure area and increased by 23% in fiscal
2003, compared to fiscal 2002. In fiscal 2003, expenses increased by $621,000 to
$3,272,000 from

29

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$2,651,000 in 2002. Costs relating to
the development of software are expensed as incurred unless such costs meet the criteria
for deferral and amortization under Canadian generally accepted accounting principles. In
2003, we deferred $531,000 of costs relating to the development of our Community Poker
product. These costs will be amortized over a three year period commencing in the second
quarter of 2004 when commercial sales of the product commence. There was no deferral of
costs in 2002.

Our development focus is reflected in
our employee demographics as 75% of our were dedicated to product design, development and
support. Salaries and benefits accounted for 93% of software development costs in 2003
compared to 81% in 2002. Due to the increasing demands for new gaming products and our
product development and support initiatives, we anticipate adding technical resources in
fiscal 2004 which will result in a corresponding increase in software development
expenses.

As a percentage of operating revenue,
software development expenses decreased to 45% from 71% in 2002.

# General and
Administrative Expenses

General and administrative expenses,
which include salaries, benefits and expenses of Corporate personnel in addition to all
sales, marketing, and business development expenses, decreased by 18% in fiscal 2003
compared to fiscal 2002.

In fiscal 2003, general and
administrative expenses decreased by $438,000 to $1,947,000 from $2,386,000 in fiscal
2002. The decrease was due primarily to a reduction in contract termination expenses of
$220,000 and lower consulting fees. In fiscal 2004, we will be expanding our business
development and marketing capabilities and establishing a corporate business development
presence in Europe. This is expected to result in an increase in sales marketing expenses
over 2003.

As a percentage of operating revenue,
general and administrative expenses decreased to 26% in fiscal 2003 compared to 64% in
fiscal 2002.

# Depreciation &
Amortization

Amortization of deferred software
development costs remained constant at $110,000 in 2003. Costs related to the acquisition
of Gateway Technology Inc. have been fully amortized. In fiscal 2003, depreciation and
amortization expenses increased by 27% to $137,000 from $108,000 in 2002. The increase is
due to the Companys purchase of $208,000 of computer systems.

# Income Taxes

In fiscal 2003, the Company recorded
a tax asset of $520,000 relating to the tax benefit of tax losses and unclaimed deductions
expected to be realized in future years. No assets were recorded in previous years. The
impact of this recognition was to increase net income from $1,091,000 to $1,611,000. At
October 31, 2003, $1,046,000 of realizable future assets remain to be applied against
future income tax expense.

# Net Income

In fiscal 2003, net income increased
to $1,611,000 from a net loss of $1,431,000 in fiscal 2002. This was due to the
combination of a significantly larger growth in revenues (97%) than in expenses (21%) and
the positive effect of the future income tax recovery on current income.

Earnings per share for the fiscal
year ended October 31, 2003 were $0.11 compared to a loss per share of $(0.11) for the
preceding fiscal year.

30

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| | B.           Liquidity
and capital resources.
| | ---------------------------------------------

# Operating Activities

The Companys principal sources
of capital are its cash on hand and cash flow from operations.

In 2003, the Company generated cash
flow from operations of $1,436,000 compared to a utilization of $1,219,000 in 2002. The
improved cash flow was due to net income resulting primarily from a 97% increase in
operating revenues.

At October 31, 2003, the Company had
cash, cash equivalents and short term investments of $5.178 million compared to $4,886,000
at the end of 2002. Accounts receivable increased to $1,992,000 from $1,129,000 in 2002. A
significant portion of the receivables were collected in the first quarter of 2004. There
was no significant change in accounts payable and accrued liabilities in 2003 compared to
2002.

Deferred revenue at October 31, 2003
was $343,000. This amount is associated with two contracts where payments were received
but revenue was not yet recognized. In accordance with the Companys revenue
recognition policy we expect the revenue to be recognized in the first quarter of 2004.
The Company had no deferred revenue in 2002.

The Company does not carry any debt
and we believe that our working capital is sufficient for our present requirements. Our
cash flow from operations, supplemented by existing working capital, provide sufficient
resources to finance our operations and planned capital needs for the next 12 months at
least.

# Financing Activities

In 2003, the Company generated
proceeds of $153,000 from the exercise of 145,000 stock options compared to proceeds of
$121,000 in 2002. There were no other significant financing activities.

# Investing Activities

In 2003, the Companys net
proceeds from investing activities were $730,000 compared to $71,000 in 2002. The positive
cash position was attributable to proceeds of $1,469,000 from the sale of short term
investments. Investment in new capital assets totaled $208,000, compared to $97,000 in
2002 and deferred development costs totaled $531,000. There was no deferral in 2002.

We do not know of any trends,
demands, commitments, events or uncertainty that will result in, or that are reasonably
likely to result in, our liquidity either materially increasing or decreasing at present
or in the foreseeable future. Material increases or decreases in our liquidity are
determined by the success or failure of our software operations.

# Critical Accounting
Policies & Estimates

# Revenue Recognition

The most significant judgment
involved in the preparation of the financial statements is the application of the
method of accounting for contract revenue. As explained in note 1(e) to the financial
statements, software set-up fees, which require software customization, modification and
integration are recognized following the completed contract method which is consistent
with the guidance contained in AICPA Statements of Position 97-2 and 81-1.  The
Company makes estimates of costs to complete each contract at each financial reporting
date and those estimates comprise a significant amount of judgment as to the resources and
related costs which are required in the future to reach contract completion.  To the
extent that estimated costs exceed expected revenues on contracts, the estimated loss is
recognized in the financial statements when identified. Licensing revenue, including
revenue related to software maintenance and software upgrades, is recognized on an accrual
basis as earned over the life of the licensing agreement.

31

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# Future Income Taxes

Income tax assets relate to the
Companys future tax benefits which arise from loss carry forwards and research and
development costs. The valuation of tax assets is based on the amount of tax benefits
available combined with the determination as to when the tax benefits will be realized and
the tax rate in effect at that time. At October 31, 2003 the Company had $1,046,000 of
available Canadian tax benefits to be utilized in future years should the Company remain
profitable. The tax assets are based on Managements best estimates of the timing of
the recovery of these assets.

# Currency Translation
& Inflation

The Company operates internationally,
with 100% of its revenue derived from non-Canadian sources. Under our licensing
agreements, the majority of our revenues will be received in U.S. dollars. Consequently,
the Company will be faced with currency fluctuations. We do not currently engage in
currency hedging. Product development, sales, marketing and administration is carried out
through our Canadian operations in Canadian dollars, our functional currency.

We do not anticipate that inflation
will have a material adverse affect on our future operations. Our material obligations are
fixed based on capital leases and real property leases.

# Research and
Development, Patents and Licenses

The Companys policy is to
continuously perform research and development on new products or versions of products. We
also research new technologies that relate to our products and use them to improve our
products where appropriate. The Company utilizes a licensing model with its customers,
which provides protection from unauthorized use. Our source code is not made available to
licensees and we utilize various security measures to prevent any unauthorized copying or
viewing of our source code. Research and development expenditures are included as
Software Development in our financial statements and are fully expensed in the
periods they are incurred unless such costs meet the criteria for deferral and
amortization under Canadian generally accepted accounting principles.

# OUTLOOK

Fiscal 2003 was a year of significant
growth and profitability for Chartwell. The Company concluded the year with a 97% growth
in revenue, achieved profitability in four successive quarters and generated $0.11 in
earnings per share and cash flow of $1.8 million. Profitability was achieved without
sacrificing or minimizing our product and business development initiatives.

During 2003, the Company continued to
invest in product development, compliance, infrastructure and security to strengthen the
regulatory framework. These initiatives continue to drive significant revenue
opportunities within the installed base and in new vertical markets. The introduction of
the Companys poker product, planned for the second quarter of 2004, lottery and
mobile games will provide additional sources of revenue that did not exist in 2003. In
addition, the Companys strategy to establish a significant corporate business
development presence in Europe will drive more sales opportunities and extend our
marketing capabilities.

In fiscal 2004 the Company will
continue to expand its international customer base of brand name licensees by providing
products that are market driven and provide incremental revenue for our clients and
accordingly for Chartwell.

| | C.        Research
and development, patents and licenses, etc.
| | --------------------------------------------------------------

The Companys policy is to
continuously perform research and development to develop new products or versions of
products. We also research new technologies that relate to our products and use them to
improve our products where appropriate. The Company does not patent its products or
technologies but utilizes a licensing model with its customers, which provides protection
from unauthorized use. Our source code is not made available to licensees and we utilize
various security measures to prevent any unauthorized copying or viewing of our source
code. Research

32

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and development expenditures are
included as Software Development in our financial statements and are fully
expensed in the periods they are incurred. For fiscal 2003 these expenditures amounted to
$3,272,353, for fiscal 2002 these expenditures amounted to $2,651,335 and for fiscal 2001
expenditures were $2,013,601.

| | D.        Trend
information.
| | ----------------------------

Since the end of the last fiscal year
the company released a new version of casino software. Our recurring license fee revenue
generated 86% of total software revenue and should continue to increase as a percentage of
the total. The Company has added several new clients since the end of the last fiscal year
and existing clients are being upgraded to the new version.

| | E.        Off
balance sheet arrangements
| | ----------------------------------------

The Company has no off balance sheet
arrangements.

| | F.        Tabular
disclosure of contractual obligations
| | -------------------------------------------------------

The following table lists as of
October 31, 2003 information with respect to our material contractual obligations.

|                                              | Payments due by period
|--------------------------------------------- | ----------------------
|
|Long-Term Debt Obligations                    |                       
|Capital (Finance) Lease Obligations           |                       
|Operating Lease Obligations                   |                       
|Purchase Obligations                          |                       
|Other Long-Term Liabilities Reflected on the  |                       
|Company's Balance Sheet under the GAAP of the |                       
|primary financial statements                  |                       
|                                              |                       
|Total                                         |                       

1.    
          Capital leases were incurred to purchase office equipment. There were two leases
          outstanding at October 31, 2003 with monthly principal and interest payments of
          $413.54 and $319.47 and termination dates of May, 2004 and August, 2005
          respectively.

2.    
          Operating lease obligations were incurred to lease facilities in Vancouver and
          Calgary, Canada.

|                                 
|---------------------------------
|
|                                 
|Canada Place                     
|407 - 2nd Street SW, Suite 700   
|Calgary, Alberta, Canada, T2P 2Y3
|                                 
|1166 Albirni Street, Suite 1400  
|Vancouver, BC, Canada, V6E 3Z3   
|                                 
|Chartwell House                  
|750 - 11th Street SW, Suite 400  
|Calgary, Alberta, Canada, T2P 3N7
|                                 

| | G.        Safe
harbour
| | ----------------------

Certain statements contained in the
foregoing Results of Operations and elsewhere in this Form 20-F constitute forward-looking
statements. Such forward-looking statements involve a number of known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements,
which

33

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speak only as of the date the
statements were made and readers are advised to consider such forward-looking statements
in light of the risks set forth in the section entitled Risk Factors above.

# Item 6.   Directors,
Senior Management and Employees

| | A.        Directors
and senior management.
| | ------------------------------------------

All of our directors are elected
annually by the shareholders and hold office until the next annual general meeting of
shareholders or until their successors are duly elected and qualified, unless they sooner
resign or cease to be directors in accordance with our Articles. The Registrants
last annual regular general meeting was held on July 10, 2003. Our executive officers are
appointed by and serve at the pleasure of the Board of Directors.

As at March 31, 2004, the following
are the names and municipalities of residence of our directors and officers, their
positions and offices and their principal occupations during the last five years.

|                     
|---------------------
|
|                     
|Darold H. Parken **  
|Calgary, AB          
|                     
|                     
|                     
|Rene G. Carrier*     
|Vancouver, BC        
|                     
|                     
|                     
|Darcy E. Krogh**     
|Vancouver, BC        
|                     
|                     
|                     
|Donald Gleason       
|Calgary, AB          
|                     
|                     
|                     
|                     
|David V. Acorn       
|Calgary, AB          
|                     
|                     
|                     
|Roderick A. Ferguson*
|Calgary, AB          
|                     
|                     
|                     
|Andrew Smith         
|Calgary, AB          
|                     
|                     
|                     

34

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|                
|----------------
|
|                
|                
|Peter H. Kinash*
|Calgary, AB     
|                
|                
|                
|                
|                
|                

Notes:* Audit Committee Member 
** Compensation Committee Member

The following provides a brief
biographical description of the senior management of the Company:

Darold H. Parken, B.A., LL.B.
President and Chief Executive Officer
Mr. Parken received his Bachelor of Arts Degree in Economics from the University of
Calgary in 1977 and his Bachelor of Laws Degree from the University of Calgary
in 1980. From 1980 to 1990, Mr. Parken practiced corporate securities law with a
major Canadian law firm of which he was a partner. He has public company
management experience and a wide range of experience in the areas of corporate
finance, mergers and acquisitions.

Donald Gleason, CGA 
Vice President, Operations and Chief Financial Officer
Mr. Gleason has held senior level positions in the areas of operations and finance
with multinational software development and technology related companies for the
past 19 years. His most recent work experience in the technology sector was in
developing and implementing the financial plan for a growth oriented,
internationally focused provider of automated trading, clearing and settlement
software for the international capital markets. In addition Mr. Gleason had
direct management responsibilities for leading the finance and operations teams
in the areas of human resources, customer support, due diligence related to
mergers and acquisitions and strategic investments.

Darcy E. Krogh, B.A.
Vice President, Business Development
Mr.
Krogh joined Chartwells board and management team in June, 1999. His
responsibilities include strategic planning, corporate finance, expanding
operations, mergers and acquisitions. Mr. Krogh has experience as an investment
advisor and stock broker. Prior to joining Chartwell, Mr. Krogh was a stock
broker for 18 years with several Canadian investment dealers.

David V. Acorn 
Vice President, Client and Product Management
Mr. Acorn received his Honours diploma in Internet Object Oriented Software
Engineering from the Southern Alberta Institute of Technology. He has an
extensive background in Internet and e-commerce development and design. Mr.
Acorn has management experience in the Information Technology industry,
specializing in Web development and owning and operating his own Web development
company from 1995 to 1999. His responsibilities in the Company include the
management of software, graphics and Web strategies. He leads a team of
programmers, designers and artists responsible for the development of the
Companys products and services.

35

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Andrew Smith 
Vice President, Software Development and Chief Technical Officer
Mr. Smith responsibilities include systems design, technical architecture and
technical direction. He has comprehensive and extensive software development
experience as well as over ten years in project management. Prior to joining
Chartwell, Mr. Smith was Senior Software Architect and Project Manager for Burnt
Sand Solutions, a public e-business solutions integration firm. Mr. Smith
received his Bachelor of Science (Computer Science) degree from the University
of Calgary in 1986.

| | B.        Compensation.
| | -----------------------

Independent directors of the
Corporation are compensated for their services as directors, each receive $2,500 per
quarter and $500 for each meeting attended. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with attendance
at meetings of the Board of Directors. The Board of Directors makes separate remuneration
to any director undertaking services on behalf of us other than services ordinarily
required of a director.

We grant stock options to directors,
executive officers and employees. See Item 6.E  Share Ownership  Stock
Option Plan.

Executive Officers

The following table sets forth
certain information regarding the compensation paid to Chartwells Chief Executive
Officer and the other executive officers of Chartwell who had total annual salary and
bonus exceeding $100,000 for the fiscal year ended October 31, 2003 (collectively,
the Named Executive Officers).

|Compensation Summary Table
|--------------------------
|
|
|
|
|Darold H. Parken(1)       
|President and Chief       
|Executive Officer         
|
|Darcy E. Krogh, Vice      
|President, Business       
|Development               
|
|David Acorn, Vice         
|President Software        
|Development               
|
|Andrew Smith, Technical   
|Director                  
|                          
|
|Don Harold, Vice          
|President, Operations     
|                          
|

Notes:

| | (1) |  | A
law firm in which Mr. Parken is principal received fees and disbursements
          for legal services of $60,000 during the last completed fiscal year, $60,000 in
          fiscal 2002 and $60,000 in fiscal 2001.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) |  | Effective
January 15, 2004, Donald Harold ceased to be an officer and employee           of the
Company.
| | --- |  | --------------------------------------------------------------------------------------------------------

36

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Options Exercised and
Granted During the Fiscal Year Ended October 31, 2003

No options were exercised by or
granted to any of the Named Executive Officers during the last completed fiscal year.

# Termination of
Employment, Changes in Responsibility and Employment Contracts

During the last fiscal year,
Chartwell entered into an employment contract with Mr. Donald Gleason, Chief Financial
Officer. Chartwell has no compensatory plan or arrangement in respect of compensation
received or that may be received by any Named Executive Officer in Chartwells most
recently completed or current fiscal year to compensate such executive officer in the
event of the termination of employment (resignation, retirement, change of control) or in
the event of a change in responsibilities following a change in control.

Aggregate cash compensation paid to
directors and senior management for fiscal 2003 was $804,083.

No amounts have been set aside or
accrued by us during fiscal 2003 to provide pension retirements or similar benefits for
our directors or executive officers pursuant to any plan provided for or contributed to by
us.

We have no plans or arrangements in
respect of remuneration received or that may be received by our executive officers in the
current year to compensate such officers in the event of termination of employment (as a
result of resignation, retirement, change of control) or a change of responsibilities
following a change of control, where the value of such compensation exceeds $60,000 U.S.
per executive officer.

None of our directors or executive
officers received other compensation in excess of the lesser of US$25,000 or 10% of such
officers cash compensation, and all directors and executive officers, as a group,
did not receive other compensation which exceeded US$25,000 times the number of persons in
the group or 10% of group compensation.

Except as set out above, we have no
material bonus or profit sharing plans pursuant to which cash or non-cash compensation is
or may be paid to our directors or executive officers.

| | C.        Board
practices.
| | --------------------------

Members of the Board of Directors are
elected by the holders of our Shares to represent the interests of all shareholders. The
Board of Directors meets periodically to review significant developments affecting the
Registrant and to act on matters requiring Board approval. Although the Board of Directors
delegates many matters to others, it reserves certain powers and functions to itself.

The only standing committees of our
Board of Directors are the Audit Committee, the Disclosure Committee and the Compensation
Committee.

Audit Committee

The Audit Committee of the
Registrants Board of Directors currently consists of the following directors:

| |  |  | Rene
Carrier,
| | - |  | -------------

| |  |  | Rod
Ferguson and
| | - |  | ----------------

| |  |  | Peter
Kinash.
| | - |  | -------------

This committee is directed to review
the scope, cost and results of the independent audit of our books and records, the results
of the annual audit with management and the adequacy of our accounting, financial and
operating controls; to recommend annually to the Board of Directors the selection of the
independent auditors; to consider proposals made by our independent auditors for
consulting work; and to report to the Board of Directors, when so requested, on any
accounting or financial matters.

37

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Compensation Committee

The Compensation Committee of the
Board of Directors currently consists of the following directors:

| |  |  | Darold
H. Parken and
| | - |  | --------------------

| |  |  | Darcy
Krogh.
| | - |  | ------------

This committee is directed to review
all elements of employee compensation including salaries, bonuses and stock options. This
committee has the authority to fix such elements of compensation. None of our directors or
executive officers are parties to any arrangement or understanding with any other person
pursuant to which said individual was elected as a director or officer of the Registrant.

Disclosure Committee

The Disclosure Committee of the Board
of Directors currently consists of the following directors:

| |  |  | Darold
H. Parken,
| | - |  | -----------------

| |  |  | Darcy
Krogh and
| | - |  | ---------------

| |  |  | Roderick
A. Ferguson.
| | - |  | ---------------------

The mandate of the Disclosure
Committee is as set out below.

| |  |  | Determination
of material information
| | - |  | -------------------------------------

| |  |  | Establishing
primary principles of disclosure policy
| | - |  | ----------------------------------------------------

| |  |  | Designation
of Company spokespersons
| | - |  | ------------------------------------

| |  |  | Establishing
and monitoring timing and procedures for disclosure
| | - |  | ----------------------------------------------------------------

| |  |  | Review
of Chartwell website content
| | - |  | -----------------------------------

| |  |  | Establishing
and monitoring rules of communications with financial analysts and investors
| | - |  | -----------------------------------------------------------------------------------------

| |  |  | Approving
forward looking information release
| | - |  | ---------------------------------------------

| |  |  | Approving
earnings guidance information
| | - |  | ---------------------------------------

| |  |  | Reviewing
analysts reports or models
| | - |  | -------------------------------------

| |  |  | Responding
to market rumors
| | - |  | ---------------------------

| |  |  | Maintaining
confidentiality and restrictions on trading
| | - |  | -------------------------------------------------------

None of our directors and/or
executive officers has been the subject of any order, judgment, or decree of any
governmental agency or administrator or of any court of competent jurisdiction, revoking
or suspending for cause any license, permit or other authority of such person or of any
corporation of which he is a director and/or executive officer, to engage in the
securities business or in the sale of a particular security or temporarily or permanently
restraining or enjoining any such person or any corporation of which he is an officer or
director from engaging in or continuing any conduct, practice, or employment in connection
with the purchase or sale of securities, or convicting such person of any felony or
misdemeanor involving a security or any aspect of the securities business or of theft or
of any felony.

There are no arrangements or
understandings among any of the directors regarding their election as director.

None of our directors or executive
officers has any family relationship with any other officer or director of the Company.

| | D.        Employees.
| | --------------------

We had 67 employees as at March 31,
2004 in the following departments:

| |  |  | Software
Development and Support: 53
| | - |  | ------------------------------------

| |  |  | Sales:
3
| | - |  | --------

| |  |  | General
Administration: 6
| | - |  | -------------------------

38

---

| |  |  | Management:
5
| | - |  | -------------

Our employees are not members of any
labor union or organization.

| | E.        Share
ownership.
| | --------------------------

Beneficial Ownership of
Directors and Senior Management

The following table lists, as of
March 31, 2004, Directors and Senior Management of the Company who beneficially owned our
voting securities and any amount of our voting securities owned by the Directors and
Senior Management as a group, based on 16,354,901 common shares outstanding.

|Title of Class | Name of Beneficial Owner | Amount of BeneficialOwnership | Percent ofClass
|-------------- | ------------------------ | ----------------------------- | ---------------
|Common         |                          | Darold H. Parken (1)          |                
|Common         |                          | Darcy E. Krogh (2)            |                
|Common         |                          | Rene G. Carrier (3)           |                
|Common         |                          | David V. Acorn (4)            |                
|Common         |                          | Roderick A. Ferguson (5)      |                
|Common         |                          | Andrew Smith (6)              |                
|Common         |                          | Total Directors/Officers      |                

|1) |  | Includes
options (exercisable within 60 days of March 31, 2004) to purchase           75,000
common shares exercisable at a price of $1.06 per share, expiring January           4,
2005; 250,000 common shares at a price of $1.06 per share, expiring September
          17, 2005; and 300,000 common shares at a price of $1.06 per share, expiring
          April 22, 2006.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2) |  | Includes
options (exercisable within 60 days of March 31, 2004) to purchase           100,000
common shares at a price of $1.06 per  share, expiring September 17, 2005.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3) |  | Includes
options (exercisable within 60 days of March 31, 2004) to purchase           50,000
common shares exercisable at a price of $1.06 per share, expiring October           31,
2004.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4) |  | Includes
options (exercisable within 60 days of March 31, 2004) to purchase           6,267 common
shares exercisable at a price of $1.17 per share, expiring October           31, 2004 and
27,067 common shares at a price of $1.06 per share, expiring June           6, 2005.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5) |  | Includes
options (exercisable within 60 days of March 31, 2004) to purchase           50,000
common shares exercisable at a price of $1.63 per share, expiring April           18,
2007.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6) |  | Includes
options (exercisable within 60 days of March 31, 2004) to purchase           66,667
common shares exercisable at a price of $1.06 per share, expiring July           10,
2005; and 16,667 common shares at a price of $2.00 per share, expiring
          September 5, 2006.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

39

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Stock Option Plan

Stock Options to purchase securities
from the Registrant are granted to Directors, Officers, employees and consultants of the
Registrant on terms and conditions acceptable to the regulatory authorities in Canada,
notably the TSX Exchange (the TSX). We have a formal written Stock Option Plan
which was approved by our shareholders at an Annual general meeting held on July 31, 2000.
Options under the Stock Option Plan are granted by the Compensation Committee of the Board
of Directors.

Under the Stock Option Plan, stock
options for up to 3,110,000 common shares may be granted from time to time, provided that
stock options in favor of any one individual may not exceed 10% of the total issued and
outstanding common shares. No stock option granted under the stock option program is
transferable by the optionee other than by will or the laws of descent and distribution,
and each stock option is exercisable during the lifetime of the optionee only by such
optionee.

The exercise price of all stock
options granted under the stock option program must be at least equal to the fair market
value of such common shares on the date of grants, less the permitted discount under the
TSX policies and the maximum term of each stock option may not exceed five years. The
exercise prices for stock options are determined in accordance with TSX guidelines.

On June 5, 2001, we repriced
certain employee stock options with an original exercise price ranging from $1.77 to
$4.20, to a new exercise price ranging from $1.06 to $1.17 per share.

Refer to the Notes to the
Consolidated Financial Statements for further information regarding stock options.

# Item 7.   Major
Shareholders and Related Party Transactions

| | A.        Major
shareholders.
| | -----------------------------

We are currently a publicly-held
corporation, with our common shares held by residents of Canada, the United States and
other countries. To the best of our knowledge, we are not controlled, directly or
indirectly, by another corporation or any government, as at March 31, 2004. Except as
otherwise set forth below, no person or corporation or other entity owns, directly or
indirectly, or controls more than 5% of our common shares, the only class of securities
with voting rights.

|                   
|-------------------
|
|Darold H. Parken   
|Oak Bay Investments
|Tim Gamble         
|                   

|(1) | Includes
625,000 options to purchase common shares.
|--- | ---------------------------------------------------

The major shareholders do not have
different voting rights than other holders of our common shares, and there are no
arrangements, known to us which may at a subsequent date result in a change in control of
the corporation.

| | B.        Related
party transactions.
| | -------------------------------------

Except for the ownership of our
securities and the compensation described herein, none of our directors, executive
officers, holders of ten percent of our outstanding Shares, or any associate or affiliate
of such person, have, to our knowledge, had a material interest, direct or indirect,
during the three fiscal years ended October 31, 2001, 2002 and 2003, or in any proposed
transaction which may materially affect us except for our acquisition of GTI described in
Item 4  Information on the Company Description of Business  Acquisition
of Gateway Technology Inc..

40

---

Steven Latham, a former director of
Chartwell, owes the company $49,907 without interest on a demand note. This loan is
payable upon demand. This arrangement is not on similar terms as arrangements we would
otherwise negotiate with unrelated third parties.

Darold Parken, a director and the
President of Chartwell, owes the company $140,605 as of March 31, 2004. Interest on the
promissory note issued with respect to Company stock options that he exercised is set at
6% annually. This loan is payable upon demand. This arrangement is not on similar terms as
arrangements we would otherwise negotiate with unrelated third parties.

| | C.        Interests
of experts and counsel.
| | -------------------------------------------

Mr. Parken, our President and CEO, is a principal of Parken & Company, corporate
          counsel to the Company. During the fiscal years ended October 31, 2001,
          2002 and 2003, we paid Parken & Company legal fees in the amount of $60,000.
          We believe that the terms of our arrangements with Parken & Company are no
          less fair to us than terms of similar relationships with unrelated third parties
          at arms length.

# Item 8.   Financial
Information

| | A.        Consolidated
statements and other financial information.
| | ------------------------------------------------------------------

See Item 17 for a list of the
financial statements filed as part of this Annual Report.

We are aware of no pending or threatened
legal proceedings to which the Corporation is a party, or of which any of its properties
is the subject.

We have never declared or paid any
cash dividends on our common shares. We currently expect to retain future earnings, if
any, for use in the operation and expansion of our business and do not anticipate paying
any cash dividends in the foreseeable future.

| | B.        Significant
changes.
| | ------------------------------

There have been no significant
subsequent events since October 31, 2003 to the date of this Annual Report.

# Item 9.   The Offer and
Listing

| | A.        Offer
and listing details.
| | ------------------------------------

Our Common Shares are listed for
trading on the TSX Venture Exchange (TSX) under the symbol CWH.V
The following tables set forth the reported high and low closing bid prices of the
Corporations Common Shares on the designated exchangesfor (a) the five most
recent fiscal years; (b) each quarterly period for the past two fiscal years and (c) for
the last six months ending March 31, 2004.

|TSX 
|----
|
|1999
|2000
|2001
|2002
|2003

41

---

|Quarter Ended    | High | Low 
|---------------- | ---- | ----
|
|October 31, 2003 |      | 1.80
|July 31, 2003    |      | 1.25
|April 30, 2003   |      | 1.40
|January 31, 2003 |      | 1.15
|October 31, 2002 |      | 1.15
|July 31, 2002    |      | 1.65
|April 30, 2002   |      | 1.78
|January 31, 2002 |      | 2.09

|Month         | High | Low 
|------------- | ---- | ----
|
|March 2004    |      | 3.41
|February 2004 |      | 2.60
|January 2004  |      | 2.49
|December 2003 |      | 1.85
|November 2003 |      | 1.90
|October 2003  |      | 1.80

The closing price of our Common
Shares on March 31, 2004 was $3.24 on the TSX.

In January 2004, the Company
received conditional approval to list its common shares on the Toronto Stock Exchange.
 The Company's common shares are expected to be listed on the Toronto Stock Exchange
beginning in early May 2004.

| | B.        Plan
of distribution.
| | -------------------------------

Not applicable.

| | C.        Markets.
| | ------------------

Not applicable.

| | D.        Selling
shareholders.
| | -------------------------------

Not applicable.

| | E.        Dilution.
| | -------------------

Not applicable.

| | F.        Expenses
of the issue.
| | --------------------------------

Not applicable.

# Item 10.   Additional
Information

| | A.        Share
Capital.
| | ------------------------

Not applicable.

42

---

| | B.           Memorandum
and articles of association.
| | ----------------------------------------------------

Purposes

We are a corporation continued from
British Columbia to Alberta under the Business Corporations Act (Alberta) on December 18,
1995. There are no restrictions on the business which we may carry on. The
Corporations objectives and purposes are not described in its Articles of
Continuance or constating documents. The Corporation is governed by the Business
Corporations Act (Alberta), (the Act). Under the Act the Corporation is not
required to define or state its objectives and purposes, rather, it is granted an
unrestricted right to carry on business.

Conflicts

Pursuant to the Corporations
Articles, a director or officer who is a party to a material contract or proposed material
contract, or who has a material interest in any person who is a party to a material
contract or proposed material contract with the Corporation or a subsidiary must disclose
such interest. Subject to the provisions of the Act, a director will not by reason only of
his office be accountable to the Corporation or to the Corporations shareholders for
any profit or gain realized from such a contract or transaction, and such contract or
transaction will not be void or voidable by reason only of the directors interest
therein, of the Corporation provided that the required declaration and disclosure of
interest is properly made, the contract or transaction is approved by the directors or
shareholders, if necessary, and it was fair and reasonable to the Corporation at the time
it was approved and, if required by the Act, the director refrains from voting as a
director on the contract or transaction. Under the Act, such a director must not vote on
any resolution to approve the contract unless the contract is:

an arrangement by way of security for
money lent to or obligations undertaken by him, or by a body corporate in which he has an
interest, for the benefit of the Corporation or an affiliate of the Corporation;

| | (a) |  | a
contract relating primarily to his remuneration as a director, officer,
               employee or agent of the Corporation or an affiliate of the Corporation;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | a
contract for indemnity or insurance under the Act; or
| | --- |  | -------------------------------------------------------

| | (c) |  | a
contract with an affiliate of the Corporation.
| | --- |  | ------------------------------------------------

These rules would allow the full
board to vote on compensation of directors generally, but would require a director to
abstain on a vote relating to compensation unique to him.

Quorum

The quorum for the transaction of
business at any meeting of its board of directors must consist of a majority of the
directors holding office or such greater number of directors as the Corporations
board determines.

Borrowing Powers

Pursuant to the Corporations
Articles of Continuance dated December 18, 1995, its directors may without the
authorization of its shareholders, (a) borrow money on in such manner and amount, on such
security, from such sources and upon such terms and conditions as they see fit; (b) issue
bonds, debentures, and other debt obligations either outright or as security for any
liability or obligation of the Corporation or any other person; (c) mortgage, charge,
whether by way of specific or floating charge, or give other security on the undertaking
or on the whole or any part of the property and assets of the Corporation, both present
and future; and (d) give financial assistance to any person, directly or indirectly, by
way of loan, guarantee, the provision of security, or otherwise. The Corporations
directors may also, by resolution, delegate the borrowing powers referred to above to one
of its directors, a committee of directors or one of its officers.

43

---

Directors
Qualifications

Pursuant to the Act, the
Corporations directors must be at least 18 years of age and are not required to hold
shares issued by the Corporation.

The Corporations Articles of
Continuance provide that the Board of Directors shall consist of a minimum of three and a
maximum of six Directors. The Board of Directors may, between annual meetings, appoint one
or more additional directors to serve until the next annual meeting, but the number of
additional directors shall not at any time exceed 1/3 of the number of directors who held
office at the expiration of the last annual meeting of the corporation.

Common Shares

The authorized share capital of the
Company consists of 100,000,000 Common Shares, without par value. The holders of Common
Shares are entitled to dividends, if as and when declared by the directors, to one vote
per Common Share at meetings of the holders of Common Shares of the Company and, upon
liquidation, to receive such assets of the Company as are distributable to the holders of
the Common Shares.

The common shares have no preemptive
or conversion rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to the common shares. All outstanding common shares are fully paid
and non-assessable.

According to the Act, the Corporation
may not declare or pay a dividend if there are reasonable grounds for believing that:

| | (a) |  | before
or after the payment of the dividend it would be unable to pay its
               liabilities as they become due; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------

| | (b) |  | the
realizable value of its assets would be less than its liabilities plus its
               stated capital. The Corporation cannot predict what the realizable value
of its                assets or the amount of its liabilities will be in the future.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Amendment of Articles

Under the Act, the Corporations
directors, or shareholders who are entitled to vote at its annual meeting of shareholders,
may make a proposal to amend its Articles of Incorporation. A resolution to amend its
Articles of Incorporation must be passed by a majority of not less than two-thirds of the
votes cast by the Corporations shareholders who vote in respect of the resolution.
In certain cases, where they are affected differently from other shareholders, a class or
series of shares will be entitled to a separate vote on a proposal to amend the
Corporations Articles.

Annual Meeting

The Corporations directors must
call an annual meeting of shareholders no later than 15 months after its last preceding
annual meeting of shareholders, and may at any time call a special meeting of
shareholders. A notice of the time and place of a meeting of shareholders must be sent not
less than 21 days and not more than 50 days before the meeting and must be sent to each
shareholder who is entitled to vote, to each director and to its auditor.

The Corporations directors may
fix a date, that is not less than 21 days and not more than 50 days before the meeting, as
a record date for the determination of the shareholders entitled to notice of the meeting.
If a record date is not fixed, the record date must be the close of business on the date
immediately preceding the date on which notice is given, or if notice is not given, the
date on which the meeting is held.

All business transacted at a special
meeting of shareholders and all business transacted at an annual meeting of shareholders,
except consideration of the financial statements and auditors report, fixing the number of
directors for

44

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the following year, election of
directors and re-appointment of the incumbent auditor is deemed to be special business. A
notice of a meeting of shareholders at which special business is to be transacted must
state the nature of that business in sufficient detail to allow the Corporations
shareholders to form a reasonable judgment on that business and the text of any special
resolution to be submitted to the meeting.

The only persons entitled to be
present at a meeting of its shareholders are those persons who are entitled to vote
thereat, the directors and auditors of the Corporation and others who, although not
entitled to vote, are entitled or required under any provision of the Act or the articles
to be present at the meeting. Any other person will be admitted only on the invitation of
the chairman of the meeting or with the consent of the meeting.

Limitations on Ownership
of Securities

There are no limitations on the right
to own securities imposed by foreign law or by the Articles of Continuance or other
constituent documents.

Change of Control

Except for the restrictions set out
above that attach to the Corporations shares, there are no provisions in the
Corporations Articles of Continuance or other constituent documents that would
delay, defer or prevent a change of control and that would operate only with respect to a
merger, acquisition or corporate restructuring involving the Corporation.

Shareholder Ownership
Disclosure

The Corporations constituent
documents do not contain provisions that govern an ownership threshold above which its
shareholder ownership must be disclosed. However, we are governed by the Securities
Act (Alberta) and under that Act, a person or company that becomes an
insider (as that term is defined in such Act), must file a report with the
applicable securities commission disclosing any direct or indirect beneficial ownership or
control or direction over the Corporations securities. An insider
includes all of the Corporations directors and senior officers, every director or
senior officer of a company that is itself an insider of the Corporation, all its
subsidiaries, any person or corporation that, beneficially owns, directly or indirectly,
voting securities of the Corporation, exercises control or direction over its voting
securities, or beneficially owns, directly or indirectly, certain voting securities of the
Corporation and exercises control or direction over certain voting securities of the
Corporation that carry more than 10% of the voting rights attached to all of its voting
securities, excluding voting securities held by a person or company as underwriter in the
course of a distribution.

Capital Changes

The Corporations Articles of
Incorporation and other constituent documents do not contain provisions that govern
changes in its capital that are more stringent than those required by Canadian securities
laws.

| | C.        Material
Contracts.
| | -----------------------------

There are no contracts other than
normal course of business agreements except as follows:

# GT Transfer

Under the terms of an agreement dated
as of November 1, 1999, we sold to CGC, our wholly owned subsidiary, all of our and
GTIs right, title and interest in and to proprietary Internet gaming software and
assigned to CGC all our interests in all existing license agreements of the software (the
CGC Transfer Agreement).

The aggregate sale price of the
software and the contractual rights under the CGC Transfer Agreement was $2,000,000, which
was paid by CGCs issuance of demand promissory notes which bears interest at the
rate of 5% per annum. The sale proceeds were allotted $1,775,000 to Chartwell and $225,000
to GTI.

45

---

Under the terms of the CGC Transfer
Agreement, CGC acquired certain source code and the exclusive right to utilize the
software in all real money betting or wagering applications. We retain the right to
utilize all or any part of the source code in all other applications, including
entertainment, tournament play, prize awards and incentives applications. Our right to
utilize the source code or any part thereof is conditional upon such use being permitted
under Canadian law. In the event of any dispute between us and CGC as to the authorized
nature of a particular use of the source code, we are obligated to provide CGC with a
legal opinion confirming that the particular use is permitted under Canadian law.

CGC is incorporated under the laws of
Belize and has its registered office at 35 Barrack Road, Belize City, Belize and its
corporate offices at 8 The Square,, Stockely Park, Heathrow, Uxbridge, UX11 1FW, England,
UK . Mr. Lee Richardson is the Chief Executive Officer and currently the sole
director of CGC. The business activities of CGC and those of Chartwell will be independent
of one another. CGC and Chartwell will have no common officers, directors or employees.
CGCs business will focus on wagering game development, sales and customer service
related to our Online Games technologies.

Our business will focus on the
development and marketing of play for fun applications of the Online Games
software and the development of new games as pure entertainment content for Internet Web
sites, for advertising, prize awards and incentives applications and in tournament play
applications. GTIs business is the marketing of Chartwells play for
real software applications.

| | D.        Exchange
controls.
| | ----------------------------

# Exchange Controls and
Investment Canada Act

Canada has no system of exchange
controls. There are no exchange restrictions on borrowing from foreign countries nor on
the remittance of dividends, interest, royalties and similar payments, management fees,
loan repayments, settlement of trade debts, or the repatriation of capital. Any such
remittances to United States residents, however, may be subject to a withholding tax
pursuant to the Canadian Income Tax Act as modified by the reciprocal tax treaty between
Canada and the United States. See Item 10E., Taxation.

The Investment Canada Act (the
Act), enacted on June 20, 1985, requires prior notification to the Government
of Canada on the acquisition of control of Canadian businesses by
non-Canadians, as defined in the Act. Certain acquisitions of control, discussed below,
are reviewed by the Government of Canada. The term acquisition of control is
defined as any one or more non-Canadian persons acquiring all or substantially all of the
assets used in the Canadian business, or the acquisition of the voting shares of a
Canadian corporation carrying on the Canadian business or the acquisition of the voting
interests of an entity controlling or carrying on the Canadian business. The acquisition
of the majority of the outstanding shares is deemed to be an acquisition of
control of a corporation. The acquisition of less than a majority, but one-third or
more, of the voting shares of a corporation is presumed to be an acquisition of
control of a corporation unless it can be established that the purchaser will not
control the corporation.

Investments requiring notification
and review are all direct acquisitions of Canadian businesses with assets of CDN$5,000,000
or more (subject to the comments below on WTO investors), and all indirect acquisitions of
Canadian businesses (subject to the comments below on WTO investors) with assets of more
than CDN$50,000,000 or with assets of between CDN$5,000,000 and CDN$50,000,000 which
represent more than 50% of the value of the total international transaction. In addition,
specific acquisitions or new businesses in designated types of business activities related
to Canadas cultural heritage or national identity could be reviewed if the
Government of Canada considers that it is in the public interest to do so.

The Act was amended with the
implementation of the Agreement establishing the World Trade Organization
(WTO) to provide for special review thresholds for WTO investors,
as defined in the Act. WTO investor generally means (i) an individual, other
than a Canadian, who is a national of a WTO member (such as, for example, the United
States), or who has the right of permanent residence in relation to that WTO member, (ii)
governments of WTO members, and (iii) entities that are not Canadian controlled, but which
are WTO investor controlled, as determined by rules specified in the Act. The special
review thresholds for WTO investors do not apply, and the general rules described above do
apply, to the acquisition of control of certain types of businesses specified in the Act,
including a business that is a cultural business. If the WTO investor rules
apply, an investment in the shares

46

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of the Company by or from a WTO
investor will be reviewable only if it is an investment to acquire control of the Company
and the value of the assets of the Company is equal to or greater than a specified amount
(the WTO Review Threshold). The WTO Review Threshold is adjusted annually by a
formula relating to increases in the nominal gross domestic product of Canada. The 2002
WTO Review Threshold is CDN$218,000,000.

If any non-Canadian, whether or not a
WTO investor, acquires control of the Company by the acquisition of shares, but the
transaction is not reviewable as described above, the non-Canadian is required to notify
the Canadian government and to provide certain basic information relating to the
investment. A non-Canadian, whether or not a WTO investor, is also required to provide a
notice to the government on the establishment of a new Canadian business. If the business
of the Company is then a prescribed type of business activity related to Canadas
cultural heritage or national identity, and if the Canadian government considers it to be
in the public interest to do so, then the Canadian government may give notice in writing
within 21 days requiring the investment to be reviewed.

For non-Canadians (other than WTO
investors), an indirect acquisition of control, by the acquisition of voting interests of
an entity that directly or indirectly controls the Company, is reviewable if the value of
the assets of the Company is then CDN$50,000,000 or more. If the WTO investor rules apply,
then this requirement does not apply to a WTO investor, or to a person acquiring the
entity from a WTO investor. Special rules specified in the Act apply if the value of the
assets of the Company is more than 50% of the value of the entity so acquired. By these
special rules, if the non-Canadian (whether or not a WTO investor) is acquiring control of
an entity that directly or indirectly controls the company, and the value of the assets of
the Company and all other entities carrying on business in Canada, calculated in the
manner provided in the Act and the regulations under the Act, is more than 50% of the
value, calculated in the manner provided in the Act and the regulations under the Act, of
the assets of all entities, the control of which is acquired, directly or indirectly, in
the transition of which the acquisition of control of the Company forms a part, then the
thresholds for a direct acquisition of control as discussed above will apply, that is, a
WTO Review Threshold of CDN$218,000,000 (in 2002) for a WTO investor or a threshold of
CDN$5,000,000 for a non-Canadian other than a WTO investor. If the value exceeds that
level, then the transaction must be reviewed in the same manner as a direct acquisition of
control by the purchase of shares of the Company.

If an investment is reviewable, an
application for review in the form prescribed by the regulations is normally required to
be filed with the Director appointed under the Act (the Director) prior to the
investment taking place and the investment may not be consummated until the review has
been completed. There are, however, certain exceptions. Applications concerning indirect
acquisitions may be filed up to 30 days after the investment is consummated and
applications concerning reviewable investments in culture-sensitive sectors are required
upon receipt of a notice for review. In addition, the Minister (a person designated as
such under the Act) may permit an investment to be consummated prior to completion of the
review, if he is satisfied that delay would cause undue hardship to the acquiror or
jeopardize the operations of the Canadian business that is being acquired. The Director
will submit the application to the Minister, together with any other information or
written undertakings given by the acquiror and any representation submitted to the
Director by a province that is likely to be significantly affected by the investment.

The Minister will then determine
whether the investment is likely to be of net benefit to Canada, taking into account the
information provided and having regard to certain factors of assessment where they are
relevant. Some of the factors to be considered are (i) the effect of the investment on the
level and nature of economic activity in Canada, including the effect on employment, on
resource processing, and on the utilization of parts, components and services produced in
Canada; (ii) the effect of the investment on exports from Canada; (iii) the degree and
significance of participation by Canadians in the Canadian business and in any industry in
Canada of which it forms a part; (iv) the effect of the investment on productivity,
industrial efficiency, technological development, product innovation and product variety
in Canada; (v) the effect of the investment on competition within any industry or
industries in Canada; (vi) the compatibility of the investment with national industrial,
economic and cultural policies taking into consideration industrial, economic and cultural
objectives enunciated by the government or legislature of any province likely to be
significantly affected by the investment; and (vii) the contribution of the investment to
Canadas ability to compete in world markets.

The Act sets certain time limits for
the Director and the Minister. Within 45 days after a completed application has been
received, the Minister must notify the acquiror that (a) he is satisfied that the
investment is likely to be of net benefit to Canada, or (b) he is unable to complete his
review, in which case he shall have 30 additional days to complete his review (unless the
acquiror agrees to a longer period), or (c) he is not satisfied that the investment is
likely to be of net benefit to Canada.

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Where the Minister has advised the
acquiror that he is not satisfied that the investment is likely to be of net benefit to
Canada, the acquiror has the right to make representations and submit undertakings within
30 days of the date of the notice (or any further period that is agreed upon between the
acquiror and the Minister). On the expiration of the 30 day period (or the agreed
extension), the Minister must quickly notify the acquiror (i) that he is now satisfied
that the investment is likely to be of net benefit to Canada or (ii) that he is not
satisfied that the investment is likely to be of net benefit to Canada. In the latter
case, the acquiror may not proceed with the investment or, if the investment has already
been consummated, must divest itself of control of the Canadian business.

The Act provides civil remedies
for non-compliance with any provision. There are also criminal penalties for breach of
confidentiality or providing false information.

| | E.        Taxation.
| | -------------------

# U.S. Federal Income Tax
Consequences

The following is a summary of the
anticipated material U.S. federal income tax consequences to a U.S. Holder (as defined
below) arising from and relating to the acquisition, ownership, and disposition of common
shares of the Company (Common Shares).

This summary is for general
information purposes only and does not purport to be a complete analysis or listing of all
potential U.S. federal income tax consequences that may apply to a U.S. Holder as a result
of the acquisition, ownership, and disposition of Common Shares. In addition, this summary
does not take into account the individual facts and circumstances of any particular U.S.
Holder that may affect the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Common Shares. Accordingly, this summary is not intended to
be, and should not be construed as, legal or U.S. federal income tax advice with respect
to any U.S. Holder. Each U.S. Holder should consult its own financial advisor, legal
counsel, or accountant regarding the U.S. federal, U.S. state and local, and foreign tax
consequences of the acquisition, ownership, and disposition of Common Shares.

# Scope of this Disclosure

Authorities

This summary is based on the Internal
Revenue Code of 1986, as amended (the Code), Treasury Regulations, published
Internal Revenue Service (IRS) rulings, published administrative positions of
the IRS, the Convention Between Canada and the United States of America with Respect to
Taxes on Income and on Capital, signed September 26, 1980, as amended (the
Canada-U.S. Tax Convention), and U.S. court decisions that are applicable as
of the date of this Annual Report. Any of the authorities on which this summary is based
could be changed in a material and adverse manner at any time, and any such change could
be applied on a retroactive basis. This summary does not discuss the potential effects,
whether adverse or beneficial, of any proposed legislation that, if enacted, could be
applied on a retroactive basis.

U.S. Holders

For purposes of this summary, a
U.S. Holder is a beneficial owner of Common Shares that, for U.S. federal
income tax purposes, is (a) an individual who is a citizen or resident of the U.S.,
(b) a corporation, or other entity classified as a corporation for U.S. federal
income tax purposes, that is created or organized in or under the laws of the U.S. or any
state in the U.S., including the District of Columbia, (c) an estate if the income of
such estate is subject to U.S. federal income tax regardless of the source of such income,
or (d) a trust if (i) such trust has validly elected to be treated as a U.S.
person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise
primary supervision over the administration of such trust and one or more U.S. persons
have the authority to control all substantial decisions of such trust.

Non-U.S. Holders

A "non-U.S.  Holder" is a beneficial
 owner of Common Shares other than a U.S.  Holder.  This summary does not address the
U.S. federal income tax consequences of the acquisition, ownership, and disposition of
Common Shares

48

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to non-U.S. Holders. Accordingly, a
non-U.S. Holder should consult its own financial advisor, legal counsel, or accountant
regarding the U.S. federal, U.S. state and local, and foreign tax consequences (including
the potential application of and operation of any tax treaties) of the acquisition,
ownership, and disposition of Common Shares.

U.S. Holders Subject to
Special U.S. Federal Income Tax Rules Not Addressed

This summary does not address the
U.S. federal income tax consequences of the acquisition, ownership, and disposition of
Common Shares to U.S. Holders that are subject to special provisions under the Code,
including the following U.S. Holders: (a) U.S. Holders that are tax-exempt
organizations, qualified retirement plans, individual retirement accounts, or other
tax-deferred accounts; (b) U.S. Holders that are financial institutions, insurance
companies, real estate investment trusts, or regulated investment companies or that are
broker-dealers or dealers in securities; (c) U.S. Holders that have a
functional currency other than the U.S. dollar; (d) U.S. Holders that are
subject to the alternative minimum tax provisions of the Code; (e) U.S. Holders that
own Common Shares as part of a straddle, hedging transaction, conversion transaction,
constructive sale, or other arrangement involving more than one position; (f) U.S.
Holders that acquired Common Shares through the exercise of employee stock options or
otherwise as compensation for services; (g) U.S. Holders that are partners of
partnerships or that are owners of other entities classified as partnerships or
pass-through entities for U.S. federal income tax purposes; and (h) U.S.
Holders that hold Common Shares other than as a capital asset within the meaning of
Section 1221 of the Code. U.S. Holders that are subject to special provisions under
the Code, including U.S. Holders described immediately above, should consult their own
financial advisor, legal counsel or accountant regarding the U.S. federal, U.S. state and
local, and foreign tax consequences of the acquisition, ownership, and disposition of
Common Shares.

Tax Consequences Other
than U.S. Federal Income Tax Consequences Not Addressed

This summary does not address the
U.S. state and local or foreign tax consequences to U.S. Holders of the acquisition,
ownership, and disposition of Common Shares. Each U.S. Holder should consult its own
financial advisor, legal counsel, or accountant regarding the U.S. state and local and
foreign tax consequences of the acquisition, ownership, and disposition of Common Shares.
(See TaxationCanadian Federal Income Tax Considerations below).

Treaty Application to
Certain Individual U.S. Holders

An individual U.S. Holder who does
not maintain a substantial presence, permanent home, or habitual abode in the U.S., or
whose personal and economic relations are not closer to the U.S. than to any other country
(other than Canada), may be unable to benefit from the provisions of the Canada-U.S. Tax
Convention. An individual U.S. Holder described immediately above should consult its own
financial advisor, legal counsel, or accountant regarding the availability of benefits
under the Canada-U.S. Tax Convention.

U.S. Federal
Income Tax Consequences of the Acquisition, Ownership, and Disposition           of
Common Shares

Distributions on Common
Shares

| | General
Taxation of Distributions
| | ---------------------------------

A U.S. Holder that receives a
distribution, including a constructive distribution, with respect to the Common Shares
will be required to include the amount of such distribution in gross income as a dividend
(without reduction for any Canadian income tax withheld from such distribution) to the
extent of the current or accumulated earnings and profits of the Company. To
the extent that a distribution exceeds the current and accumulated earnings and
profits of the Company, such distribution will be treated (a) first, as a
tax-free return of capital to the extent of a U.S. Holders tax basis in the Common
Shares and, (b) thereafter, as gain from the sale or exchange of such Common Shares.
(See more detailed discussion at Disposition of Common Shares below).

| | Reduced
Tax Rates for Certain Dividends
| | ---------------------------------------

For taxable years beginning after
December 31, 2002 and before January 1, 2009, a dividend paid by the Company generally
will be taxed at the preferential tax rates applicable to long-term capital gains if
(a) the Company is a

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qualified foreign
corporation (as defined below), (b) the U.S. Holder receiving such dividend is
an individual, estate, or trust, and (c) such dividend is paid on Common Shares that
have been held by such U.S. Holder for at least 61 days during the 121-day period
beginning 60 days before the ex-dividend date (i.e., the first date that a
purchaser of such Common Shares will not be entitled to receive such dividend).

The Company generally will be a
qualified foreign corporation under Section 1(h)(11) of the Code (a
QFC) if (a) the Company is incorporated in a possession of the U.S.,
(b) the Company is eligible for the benefits of the Canada-U.S. Tax Convention, or
(c) the Common Shares are readily tradable on an established securities market in the
U.S. However, even if the Company satisfies one or more of such requirements, the Company
will not be treated as a QFC if the Company is a foreign personal holding
company, a foreign investment company, or a passive foreign
investment company (each as defined below) for the taxable year during which the
Company pays a dividend or for the preceding taxable year.

As discussed below, the Company
believes that it is not a foreign personal holding company, a foreign
investment company, or a passive foreign investment company (See more
detailed discussion at Additional Rules that May Apply to U.S. Holders below).
Accordingly, the Company believes that it should be a QFC. There can be no assurance,
however, that the IRS will not challenge the determination made by the Company concerning
its QFC status or that the Company will be a QFC for the current or any future taxable
year. If the Company is not a QFC, a dividend paid by the Company to a U.S. Holder,
including a U.S. Holder that is an individual, estate, or trust, generally will be taxed
at ordinary income tax rates (and not at the preferential tax rates applicable to
long-term capital gains). The dividend rules are complex and each U.S. Holder should
consult its own financial advisor, legal counsel, or accountant regarding the dividend
rules.

| | Distributions
Paid in Foreign Currency
| | --------------------------------------

The amount of a distribution paid in
foreign currency generally will be equal to the U.S. dollar value, based on the exchange
rate, of such distribution on the date of receipt. A U.S. Holder that does not convert
foreign currency received as a distribution into U.S. dollars on the date of receipt
generally will have a tax basis in such foreign currency equal to the U.S. dollar value of
such foreign currency on the date of receipt. Such a U.S. Holder generally will recognize
ordinary income or loss on the subsequent sale or other taxable disposition of such
foreign currency (including an exchange for U.S. dollars). However, an individual U.S.
Holder whose realized gain does not exceed $200 will not recognize such gain to the extent
that there are no expenses associated with the transaction that meet the requirements for
deductibility as a trade or business expense or as an expense for the production of
income.

| | Dividends
Received Deduction
| | ----------------------------

Dividends paid on the Common Shares
generally will not be eligible for the dividends received deduction. The
availability of the dividends received deduction is subject to complex limitations that
are beyond the scope of this discussion, and a U.S. Holder that is a corporation should
consult its own financial advisor, legal counsel, or accountant regarding the dividends
received deduction.

Disposition of Common
Shares

A U.S. Holder will recognize gain or
loss on the sale or other taxable disposition of Common Shares in an amount equal to the
difference, if any, between (a) the amount of cash plus the fair market value of any
property received and (b) such U.S. Holders tax basis in the Common Shares sold
or otherwise disposed of. Any such gain or loss generally will be capital gain or loss,
which will be long-term capital gain or loss if the Common Shares are held for more than
one year.

Preferential tax rates apply to
long-term capital gains of a U.S. Holder that is an individual, estate, or trust. There
are currently no preferential tax rates for long-term capital gains of a U.S. Holder that
is a corporation. Deductions for capital losses and net capital losses are subject to
complex limitations. For a U.S. Holder that is an individual, estate, or trust, capital
losses may be used to offset capital gains and up to $3,000 of ordinary income. An unused
capital loss of a U.S. Holder that is an individual, estate, or trust generally may be
carried forward to subsequent taxable years, until such net capital loss is exhausted. For
a U.S. Holder that is a corporation, capital losses may be

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used to offset capital gains, and an
unused capital loss generally may be carried back three years and carried forward five
years from the year in which such net capital loss is recognized.

Foreign Tax Credit

A U.S. Holder who pays (whether
directly or through withholding) Canadian or other foreign income tax with respect to the
Common Shares generally will be entitled, at the election of such U.S. Holder, to receive
either a deduction or a credit for such Canadian or other foreign tax paid. Generally, a
credit will reduce a U.S. Holders U.S. federal income tax liability on a
dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holders income
subject to U.S. federal income tax. This election is made on a year-by-year basis and
applies to all foreign taxes paid (whether directly or through withholding) by a U.S.
Holder during a year.

Complex limitations apply to the
foreign tax credit, including the general limitation that the credit cannot exceed the
proportionate share of a U.S. Holders U.S. federal income tax liability that such
U.S. Holders foreign source taxable income bears to such U.S.
Holders worldwide taxable income. In applying this limitation, a U.S. Holders
various items of income and deduction must be classified, under complex rules, as either
foreign source or U.S. source. In addition, this limitation is
calculated separately with respect to specific categories of income (including
passive income, high withholding tax interest, financial
services income, shipping income, and certain other categories of
income). Dividends paid by the Company generally will constitute foreign
source income and generally will be classified as passive income or, in
the case of certain U.S. Holders, financial services income. In addition, a
U.S. Holder that is a corporation and that owns 10% or more of the voting stock of the
Company may, subject to complex limitations, be entitled to an indirect
foreign tax credit under Section 902 of the Code with respect to dividends paid by
the Company. The foreign tax credit rules are complex, and each U.S. Holder should consult
its own financial advisor, legal counsel, or accountant regarding the foreign tax credit
rules.

Information Reporting;
Backup Withholding Tax

Payments made within the U.S. of
dividends on, and proceeds arising from the sale or other taxable disposition of, Common
Shares generally will be subject to information reporting and backup withholding tax, at
the rate of 28%, if a U.S. Holder (a) fails to furnish such U.S. Holders
correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an
incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such
U.S. Holder has previously failed to properly report items subject to backup withholding
tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has
furnished its correct U.S. taxpayer identification number and that the IRS has not
notified such U.S. Holder that it is subject to backup withholding tax. However, U.S.
Holders that are corporations generally are excluded from these information reporting and
backup withholding tax rules. Any amounts withheld under the U.S. backup withholding tax
rules will be allowed as a credit against a U.S. Holders U.S. federal income tax
liability, if any, or will be refunded, if such U.S. Holder furnishes required information
to the IRS. Each U.S. Holder should consult its own financial advisor, legal counsel, or
accountant regarding the information reporting and backup withholding tax rules.

# Additional Rules that
May Apply to U.S. Holders

If the Company is a foreign
personal holding company, a foreign investment company, a
controlled foreign corporation, or a passive foreign investment
company (each as defined below), the preceding sections of this summary may not
describe the U.S. federal income tax consequences to U.S. Holders of the acquisition,
ownership, and disposition of Common Shares.

Foreign Personal Holding
Company

The Company generally will be a
foreign personal holding company under Section 552 of the Code (a
FPHC) if (a) at any time during a taxable year, more than 50% of the
total voting power or the total value of the outstanding shares of the Company is owned,
directly or indirectly, by five or fewer individuals who are citizens or residents of the
U.S. and (b) 60% (or 50% in certain cases) or more of the gross income of the Company
for such taxable year is foreign personal holding company income. Foreign personal
holding company income includes, for example, dividends, interest, certain rents and
royalties, certain gains from the sale of stock and securities, and certain gains from
commodities transactions.

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If the Company is a FPHC, a U.S.
Holder generally will be required to include in gross income such U.S. Holders
allocable portion of the undistributed foreign personal holding company income
(as defined in Section 556 of the Code) of the Company. The Company does not believe
that it has previously been, or currently is, a FPHC. However, there can be no assurance
that the Company will not be a FPHC for the current or any future taxable year.

Foreign Investment Company

The Company generally will be a
foreign investment company under Section 1246 of the Code (a
FIC) if (a) 50% or more of the total voting power or the total value of
the outstanding shares of the Company is owned, directly or indirectly, by citizens or
residents of the U.S., domestic partnerships, domestic corporations, domestic estates, or
domestic trusts (each as defined in Section 7701(a)(30) of the Code) and (b) the
Company is (i) registered under the U.S. Investment Company Act of 1940, as amended,
as a management company or a unit investment trust or
(ii) engaged primarily in the business of investing, reinvesting, or trading in
securities, commodities, or any interest in securities or commodities.

If the Company is a FIC, all or part
of any gain recognized by a U.S. Holder on the sale or other taxable disposition of Common
Shares will be treated as ordinary income (rather than as capital gain). The Company does
not believe that it has previously been, or currently is, a FIC. However, there can be no
assurance that the Company will not be a FIC for the current or any future taxable year.

Controlled Foreign
Corporation

The Company generally will be a
controlled foreign corporation under Section 957 of the Code (a
CFC) if more than 50% of the total voting power or the total value of the
outstanding shares of the Company is owned, directly or indirectly, by citizens or
residents of the U.S., domestic partnerships, domestic corporations, domestic estates, or
domestic trusts (each as defined in Section 7701(a)(30) of the Code), each of which
own, directly or indirectly, 10% or more of the total voting power of the outstanding
shares of the Company (a 10% Shareholder).

If the Company is a CFC, a
10% Shareholder generally will be subject to current U.S. federal income tax with
respect to (a) such 10% Shareholders pro rata share of the subpart F
income (as defined in Section 952 of the Code) of the Company and (b) such
10% Shareholders pro rata share of the earnings of the Company invested in
United States property (as defined in Section 956 of the Code). In
addition, under Section 1248 of the Code, any gain recognized on the sale or other
taxable disposition of Common Shares by a U.S. Holder that was a 10% Shareholder at
any time during the five-year period ending with such sale or other taxable disposition
generally will be treated as a dividend to the extent of the earnings and
profits of the Company that are attributable to such Common Shares. If the Company
is both a CFC and a passive foreign investment company (as defined below), the
Company generally will be treated as a CFC (and not as a passive foreign investment
company) with respect to any 10% Shareholder.

The Company does not believe that it
has previously been, or currently is, a CFC. However, there can be no assurance that the
Company will not be a CFC for the current or any future taxable year.

Passive Foreign
Investment Company

The Company generally will be a
passive foreign investment company under Section 1297 of the Code (a
PFIC) if, for a taxable year, (a) 75% or more of the gross income of the
Company for such taxable year is passive income or (b) 50% or more of the assets held
by the Company either produce passive income or are held for the production of passive
income, based on the fair market value of such assets (or on the adjusted tax basis of
such assets, if the Company is not publicly traded and either is a controlled
foreign corporation or makes an election). Passive income includes, for
example, dividends, interest, certain rents and royalties, certain gains from the sale of
stock and securities, and certain gains from commodities transactions. However, gains
arising from the sale of commodities generally are excluded from passive income if
(a) a foreign corporation holds the commodities directly (and not through an agent or
independent contractor) as inventory or similar property or as dealer property,
(b) such foreign corporation incurs substantial expenses related to the production,
processing, transportation, handling, or storage of the commodities, and (c) gross
receipts from sales of commodities that satisfy the requirements of clauses (a) and (b)
constitute at least 85% of the total gross receipts of such foreign corporation.

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For purposes of the PFIC income test
and assets test described above, if the Company owns, directly or indirectly, 25% or more
of the total value of the outstanding shares of another foreign corporation, the Company
will be treated as if it (a) held a proportionate share of the assets of such other
foreign corporation and (b) received directly a proportionate share of the income of
such other foreign corporation. In addition, for purposes of the PFIC income test and
asset test described above, passive income does not include any interest,
dividends, rents, or royalties that are received or accrued by the Company from a
related person (as defined in Section 954(d)(3) of the Code), to the
extent such items are properly allocable to the income of such related person that is not
passive income.

If the Company is a PFIC, the U.S.
federal income tax consequences to a U.S. Holder of the acquisition, ownership, and
disposition of Common Shares will depend on whether such U.S. Holder makes an election to
treat the Company as a qualified electing fund or QEF under
Section 1295 of the Code (a QEF Election) or a mark-to-market election
under Section 1296 of the Code (a Mark-to-Market Election). A U.S. Holder
that does not make either a QEF Election or a Mark-to-Market Election will be referred to
in this summary as a Non-Electing U.S. Holder.

Under Section 1291 of the Code,
any gain recognized on the sale or other taxable disposition of Common Shares, and any
excess distribution (as defined in Section 1291(b) of the Code) paid on
the Common Shares, must be ratably allocated to each day in a Non-Electing U.S.
Holders holding period for the Common Shares. The amount of any such gain or excess
distribution allocated to prior years of such Non-Electing U.S. Holders holding
period for the Common Shares generally will be subject to U.S. federal income tax at the
highest tax applicable to ordinary income in each such prior year. A Non-Electing U.S.
Holder will be required to pay interest on the resulting tax liability for each such prior
year, calculated as if such tax liability had been due in each such prior year.

A U.S. Holder that makes a QEF
Election generally will not be subject to the rules of Section 1291 of the Code
discussed above. However, a U.S. Holder that makes a QEF Election generally will be
subject to U.S. federal income tax on such U.S. Holders pro rata share of
(a) the net capital gain of the Company, which will be taxed as long-term
capital gain to such U.S. Holder, and (b) and the ordinary earnings of
the Company, which will be taxed as ordinary income to such U.S. Holder. A U.S. Holder
that makes a QEF Election will be subject to U.S. federal income tax on such amounts for
each taxable year in which the Company is a PFIC, regardless of whether such amounts are
actually distributed to such U.S. Holder by the Company.

A U.S. Holder that makes a
Mark-to-Market Election generally will not be subject to the rules of Section 1291 of
the Code discussed above. A U.S. Holder may make a Mark-to-Market Election only if the
Common Shares are marketable stock (as defined in Section 1296(e) of the
Code). A U.S. Holder that makes a Mark-to-Market Election will include in gross income,
for each taxable year in which the Company is a PFIC, an amount equal to the excess, if
any, of (a) the fair market value of the Common Shares as of the close of such
taxable year over (b) such U.S. Holders tax basis in such Common Shares. A U.S.
Holder that makes a Mark-to-Market Election will, subject to certain limitations, be
allowed a deduction in an amount equal to the excess, if any, of (a) such U.S.
Holders adjusted tax basis in the Common Shares over (b) the fair market value
of such Common Shares as of the close of such taxable year.

The Company does not believe that it
was a PFIC for the taxable year ended October 31, 2003, and does not expect that it will
be a PFIC for the taxable year ending October 31, 2004. There can be no assurance,
however, that the IRS will not challenge the determination made by the Company concerning
its PFIC status or that the Company will not be a PFIC for the current or any future
taxable year.

The PFIC rules are complex, and each
U.S. Holder should consult its own financial advisor, legal counsel, or accountant
regarding the PFIC rules and how the PFIC rules may affect the U.S. federal income tax
consequences of the acquisition, ownership, and disposition of Common Shares.Canadian
Federal Income Tax Considerations

The summary below is restricted to
the case of a holder (a Holder) of one or more common shares who for the
purposes of the Income Tax Act (Canada) (the Act) is a non-resident of Canada,
holds his common shares as capital property and deals at arms length with the
Company.

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| | Dividends
| | ---------

A Holder will be subject to Canadian
withholding tax (Part XIII Tax) equal to 25%, or such lower rate as may be
available under an applicable tax treaty, of the gross amount of any dividend paid or
deemed to be paid on these common shares. Under the 1995 Protocol amending the Canada-U.S.
Income Tax Convention (1980) (the Treaty) the rate of Part XIII Tax applicable
to a dividend on common shares paid to a Holder who is a resident of the United States is
limited to 15% reduced to 5% if the shareholder is a corporation owning at least 10% of
the outstanding common shares of the Company. These treaty limits do not apply to
dividends paid on common shares held by a holder resident in the U.S. where the holding is
effectively connected to a permanent establishment in Canada through which a business is
carried on. The Company will be required to withhold the applicable amount of Part XIII
Tax from each dividend so paid and remit the withheld amount directly to the Receiver
General for Canada for the account of the Holder.

| | Disposition
of Common Shares
| | ----------------------------

A Holder who disposes of a common
share, including by deemed disposition on death, will not be subject to Canadian tax on
any capital gain (or capital loss) thereby realized unless the common share constituted
taxable Canadian property as defined by the Act. A capital gain occurs when
proceeds from the disposition of a share or other capital property exceeds the original
cost. A capital loss occurs when the proceeds from the disposition of a share are less
than the original cost. Under the Act, a capital gain is effectively taxed at a lower rate
as only 50% of the gain is effectively included in the Holders taxable income.

Generally, a common share will not
constitute taxable Canadian property of a Holder unless he held the common shares as
property used or held by him in a business (other than an insurance business) carried on
in Canada, or he or persons with whom he did not deal at arms length alone or
together held or held options to acquire, at any time within the five year period
immediately preceding the disposition, 25% or more of the shares of any class of the
capital stock of the Company. The disposition of a common share that constitutes
taxable Canadian property of a Holder could also result in a capital loss
which can be used to reduce taxable income to the extent that such Holder can offset it
against a capital gain. A capital loss cannot be used to reduce all taxable income (only
that portion of taxable income derived from a capital gain).

A Holder who is a resident of the
United States and realizes a capital gain on disposition of a common share that was
taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt
from Canadian tax thereon unless (a) more than 50% of the value of the common share
is derived from, or forms an interest in, Canadian real estate, including rights to
exploit Canadian minerals and resources, (b) the common share formed part of the
business property of a permanent establishment that the Holder has or had in Canada within
the 12 months preceding disposition, or (c) the Holder (i) was a resident of
Canada at any time within the ten years immediately preceding the disposition and for a
total of 120 months during any consecutive 20 year period ending before the disposition,
and (ii) owned the common share (or property for which it was substituted in a
rollover transaction) when he ceased to be resident in Canada.

A Holder who is subject to Canadian
tax in respect of a capital gain realized on disposition of a common share must include
50% of the capital gain (taxable capital gain) in computing his taxable income earned in
Canada. The Holder may, subject to certain limitations, deduct 50% of any capital loss
(allowable capital loss) arising on disposition of taxable Canadian property from taxable
capital gains realized in the year of disposition in respect to taxable Canadian property
and, to the extent not so deductible, from such taxable capital gains of any of the three
preceding years or of any subsequent year. For losses carried back to years prior to 2000,
the amount is adjusted to reflect the former 75% inclusion rate. For losses applied to
capital gains in 2000, the amount is adjusted to reflect the average inclusion rate for
the year.

| | F.        Dividends
and paying agents.
| | --------------------------------------

Not applicable.

54

---

| | G.           Statement
by experts.
| | ----------------------------------

Not applicable.

| | H.        Documents
on display.
| | -------------------------------

Documents referred to in this annual
report may be viewed at the head office of the Company.

| | I.        Subsidiary
information.
| | ---------------------------------

Not applicable.

# Item 11.   Quantitative
and Qualitative Disclosures About Market Risk

Our financial results are quantified
in Canadian dollars and a majority of our obligations and expenditures with respect to our
operations are incurred in Canadian dollars, while revenues are generally received in U.S.
dollars. In the past, we have raised equity funding through the sale of securities
denominated in Canadian dollars, and we may in the future raise additional equity funding
or financing denominated in Canadian dollars. We currently do not believe we currently
have any materially significant market risks relating to our operations resulting from
foreign exchange rates. However, if we enter into financing or other business arrangements
denominated in currency other than the Canadian dollar, variations in the exchange rate
may give rise to foreign exchange gains or losses that may be significant.

We currently have no long-term debt
obligations. We do not use financial instruments for trading purposes and we are not a
party to any leverage derivatives. In the event we experience substantial growth in the
future, our business and results of operations may be materially affected by changes in
interest rates and certain other credit risk associated with our operations.

# Item 12.   Description of
Securities Other than Equity Securities

| | A.    Debt
securities.
| | ----------------------

None.

| | B.    Warrants
and rights.
| | --------------------------

None.

| | C.    Other
securities.
| | -----------------------

None.

| | D.    American
depositary shares.
| | ---------------------------------

None.

55

---

# PART II

# Item 13.   Defaults,
Dividend Arrearages and Delinquencies

None.

Item 14.   Material Modifications to
the Rights of Security Holders and Use of Proceeds

None.

# Item 15.   Controls and
Procedures

Disclosure Controls and
Procedures

The Company maintains disclosure
controls and procedures that are designed to ensure that the information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms, and that such
information is accumulated and communicated to management, including the Companys
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. After evaluating the effectiveness of the
Companys disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c)) as of the end of the period covered by this report,
the Chief Executive Officer and Chief Financial Officer have concluded that as of such
date, the Companys disclosure controls and procedure were adequate and effective to
ensure that material information relating to the Company and its consolidated subsidiaries
would be made known to them by others within those entities.

Report on Internal
Control Over Financial Reporting

There were no significant changes in
the Companys internal controls or in other factors that could significantly affect
these disclosure controls and procedures during the fiscal year, including any significant
deficiencies or material weaknesses of internal controls that would require corrective
action.

# Item 16A.   Audit
Committee Financial Expert

All of the members of the Audit
Committee are financially literate and the Board has determined that Peter Kinash of the Audit
Committee meets the requirements of an audit committee financial expert as
defined in Item 16A of Form 20-F.

# Item 16B.   Code of Ethics

The Company developed a code of
ethics to reflect SEC rules and other proposed regulations, which code of ethics was
adopted by the board of directors. The Code of ethics governs the actions of and is
applicable to all of the directors and officers of the Company and its subsidiaries, and
their affiliates. The code of ethics deals with the following issues:

| |  |  | compliance
with all the laws and regulations identified in the code of ethics;
| | - |  | ------------------------------------------------------------------------------

| |  |  | corporate
opportunities and conflicts of interest;
| | - |  | --------------------------------------------------

| |  |  | the
quality of the public disclosures;
| | - |  | --------------------------------------

| |  |  | the
protection and appropriate use of the Company's properties;
| | - |  | ---------------------------------------------------------------

| |  |  | the
protection of confidential information and property; and
| | - |  | ------------------------------------------------------------

| |  |  | fair
behavior; and
| | - |  | ------------------

56

---

All interested investors may acquire
a copy of our code of ethics free of charge by written request.

There have been no waivers to the
code of ethics since its adoption in April 2004.

# Item 16C.   Principal
Accountant Fees and Services

KPMG
acted as the Companys independent auditor for the fiscal years ended
October 31, 2003 and 2002. The chart below sets forth the total amount billed the
Company by KPMG for services performed in the years 2003 and 2002, and breaks down these
amounts by category of service in Cdn$:

|               | Years ended October 31
|-------------- | ----------------------
|
|              
|Audit:         |                       
|              
|Audit Related: |                       
|              
|Tax            |                       
|              
|All Other Fees |                       
|              
|Total          |                       
|              

Audit Fees are the
aggregate fees billed by KPMG for the audit of the Companys consolidated annual
financial statements, reviews of interim financial statements and attestation services
that are provided in connection with statutory and regulatory filings or engagements.

Audit-Related Fees are
fees charged by KPMG for assurance and related services that are reasonably related to the
performance of the audit or review of the Companys financial statements and are not
reported under Audit Fees. This category comprises fees billed for independent
accountant review of the interim financial statements and Management Discussion and
Analysis, as well as advisory services associated with the Companys financial
reporting.

Tax Fees are fees for
professional services rendered by KPMG for tax compliance, tax advice on actual or
contemplated transactions.

# Audit Committees
pre-approval policies and procedures

The Audit Committee nominates and
engages the independent auditors to audit the financial statements, and approves all
audit, audit-related services, tax services and other services provided by KPMG. Any
services provided by KPMG that are not specifically included within the scope of the audit
must be pre-approved by the audit committee prior to any engagement. The audit committee
is permitted to approve certain fees for audit-related

57

---

services, tax services and other
services pursuant to a de minimusexception before the completion of the
engagement.

# Item 16D.   Exemptions
from the Listing Standards for Audit Committees.

Not
Applicable

Item 16E.   Purchases of
Equity Securities by the Issuer and Affiliated Purchasers.

None

58

---

# PART III

# Item 17.   Financial
Statements

Our financial statements are stated
in Canadian Dollars (Cdn$) and are prepared in accordance with Canadian Generally Accepted
Accounting Principles (GAAP), which, in our case, conforms in all material respects for
the periods presented with United States GAAP, except as disclosed in the footnotes to the
financial statements.

The financial statements as required
under Item No. 17 are attached hereto and found immediately following the text of this
Annual Report.

| | Audited
Consolidated Financial Statements of Chartwell Technology Inc. for the fiscal years ended
October 31, 2001, 2002 and 2003.
| | ----------------------------------------------------------------------------------------------------------------------------------

59

---

# Item 18.   Financial
Statements

Not applicable.

# Item 19.   Exhibits

|Exhibit
Number | Description
|-------------- | -----------
|               |            
|1.1(1)         |            
|               |            
|1.2(1)         |            
|               |            
|               |            
|1.3(1)         |            
|               |            
|1.4(1)         |            
|               |            
|1.5(1)         |            
|               |            
|               |            
|1.6(1)         |            
|               |            
|               |            
|1.7(1)         |            
|               |            
|               |            
|1.8(1)         |            
|               |            
|               |            
|1.9(1)         |            
|               |            
|1.10(1)        |            
|               |            
|4.1(1)         |            
|               |            
|               |            
|4.2(1)         |            
|               |            
|               |            
|               |            
|4.3(1)         |            
|               |            
|               |            
|               |            
|4.4(1)         |            
|               |            
|               |            
|4.5(1)         |            
|               |            
|               |            
|4.6(1)         |            
|               |            
|               |            
|               |            
|4.7(1)         |            
|               |            
|               |            

60

---

|Exhibit
Number | Description
|-------------- | -----------
|               |            
|4.8(1)         |            
|               |            
|4.9(1)         |            
|               |            
|               |            
|4.10(1)        |            
|               |            
|               |            
|4.11(1)        |            
|               |            
|4.12(1)        |            
|               |            
|               |            
|4.13(1)        |            
|               |            
|4.14(1)        |            
|               |            
|               |            
|               |            
|4.15(2)        |            
|               |            
|               |            
|4.16(3)        |            
|               |            
|4.17           |            
|               |            
|11.1           |            
|               |            
|12.1           |            
|               |            
|12.2           |            
|               |            
|13.1           |            
|               |            
|               |            
|13.2           |            
|               |            

_________________

|(1) |  | Previously
filed on December 17, 1999
|--- |  | -------------------------------------

|(2) |  | Previously
filed on July 31, 2000.
|--- |  | ----------------------------------

|(3) |  | Previously
filed on April 19, 2001
|--- |  | ----------------------------------

61

---

# SIGNATURES

Pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant
certifies that it meets all of the requirements for filing on Form 20-F and has duly
caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|Date:  April 28, 2004 | By:  Signed "Don Gleason"
        Don Gleason, Chief Financial Officer
|--------------------- | ----------------------------------------------------------------------

62

---

kpmg

| | Consolidated
Financial Statements of
| | ------------------------------------

| | CHARTWELL
TECHNOLOGY INC.
| | -------------------------

| | As at October 31, 2003 and 2002 and for
each of the years in the three year period 
ended October 31, 2003
| | ----------------------------------------------------------------------------------------------------------

---

# AUDITORS REPORT TO
THE SHAREHOLDERS

We have audited the consolidated
balance sheets of Chartwell Technology Inc. as at October 31, 2003 and 2002 and the
consolidated statements of operations and deficit and cash flows for each of the years in
the three year period ended October 31, 2003. These financial statements are the
responsibility of the Corporations management. Our responsibility is to express an
opinion on these financial statements based on our audits.

With respect to the consolidated
financial statements for the years ended October 31, 2003 and 2002, we conducted our
audits in accordance with Canadian generally accepted auditing standards and auditing
standards generally accepted in the United States of America. With respect to the
consolidated financial statements for the year ended October 31, 2001, we conducted our
audit in accordance with Canadian generally accepted auditing standards. Those standards
require that we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated
financial statements present fairly, in all material respects, the financial position of
the Corporation as at October 31, 2003 and 2002 and the results of its operations and its
cash flows for each of the years in the three year period ended October 31, 2003 in
accordance with Canadian generally accepted accounting principles.

Canadian generally accepted
accounting principles vary in certain significant respects from accounting principles
generally accepted in the United States. Application of accounting principles generally
accepted in the United States would have affected results of operations for each of the
years in the three year period ended October 31, 2003 and assets and shareholders
equity as at October 31, 2003 and 2002 to the extent summarized in note 11 to the
consolidated financial statements.

(Signed)  
          KPMG LLP

Chartered Accountants

Calgary, Canada
December 5, 2003

---

CHARTWELL TECHNOLOGY INC. Consolidated Balance Sheets 

As at October 31 
(stated in Canadian dollars)

|                                                  
|--------------------------------------------------
|
|                                                  
|Assets                                            
|                                                  
|Current assets:                                   
|Cash                                              
|Short term investments (note 8)                   
|Accounts receivable                               
|Deferred set-up expense                           
|Prepaid expenses                                  
|                                                  
|                                                  
|                                                  
|Due from related parties (note 6)                 
|                                                  
|Capital assets (note 2)                           
|                                                  
|Deferred software development costs (note 3)      
|                                                  
|Future income tax asset (note 7)                  
|                                                  
|                                                  
|                                                  
|Liabilities and Shareholders' Equity              
|                                                  
|Current liabilities:                              
|Accounts payable and accrued liabilities          
|Current portion of obligations under capital lease
|Deferred revenue                                  
|                                                  
|                                                  
|                                                  
|Obligations under capital lease                   
|                                                  
|Shareholders' equity:                             
|Share capital (note 4)                            
|Deficit                                           
|                                                  
|                                                  
|                                                  
|Commitments (note 9)                              
|                                                  
|                                                  
|                                                  

See accompanying notes to
consolidated financial statements.

On behalf of the Board:

Signed "Darold H. Parken"
   Director

Signed
"Rod A. Ferguson"
   Director

---

CHARTWELL TECHNOLOGY INC. Consolidated Statements of Operations and Deficit

Years ended October 31 
(stated in Canadian dollars)

|                                               
|-----------------------------------------------
|
|                                               
|Revenue:                                       
|Software license fees                          
|Software set-up fees                           
|Interest and other                             
|                                               
|                                               
|Expenses:                                      
|Software development                           
|General and administrative                     
|Gain from extinguishment of debt (note 6)      
|Amortization of deferred software              
|development costs                              
|Depreciation and amortization                  
|Foreign currency loss (gain)                   
|                                               
|                                               
|                                               
|Net income (loss) before income taxes          
|                                               
|Income taxes:                                  
|Future income tax recovery (note 7)            
|                                               
|Net income (loss)                              
|                                               
|Deficit, beginning of year                     
|                                               
|Deficit, end of year                           
|                                               
|                                               
|Net income (loss) per share - basic and diluted
|                                               

See accompanying notes to
consolidated financial statements.

---

CHARTWELL TECHNOLOGY INC. Consolidated Statements of Cash Flows

Years ended October 31 
(stated in Canadian dollars)

|                                               
|-----------------------------------------------
|
|                                               
|Cash provided by (used in):                    
|                                               
|Operations:                                    
|Net income (loss)                              
|Depreciation and amortization                  
|Unrealized foreign exchange losses550,234      
|Amortization of deferred software              
|development costs                              
|Interest income capitalized                    
|Issue of shares as finders fee                 
|Future income tax recovery                     
|Write-down of long-term securities             
|Loss on disposal of capital assets-            
|                                               
|Change in non-cash working capital:            
|Accounts receivable                            
|Deferred set-up expense                        
|Prepaid expenses                               
|Accounts payable and accrued liabilities       
|Deferred revenue                               
|                                               
|                                               
|                                               
|                                               
|                                               
|Financing:                                     
|Issue of shares                                
|Repayment of lease obligations                 
|                                               
|                                               
|                                               
|Investing:                                     
|Sale (purchase) of short term investments      
|Purchase of capital assets                     
|Deferred software development costs            
|                                               
|                                               
|                                               
|Effect of foreign exchange rate changes on cash
|                                               
|Increase (decrease) in cash                    
|                                               
|Cash, beginning of year                        
|                                               
|Cash, end of year                              
|                                               
|                                               
|Supplemental cash flow information:            
|Cash interest received                         
|Cash interest paid                             
|                                               

See accompanying notes to
consolidated financial statements.

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

Chartwell Technology Inc. (the
Company) is incorporated under the Business Corporations Act (Alberta). The
Company specializes in the development of leading edge games and entertainment content for
Internet and Intranet deployment. The Companys software products and games are
designed for use in gaming, entertainment, advertising and promotional applications.

|1. |  | Significant
accounting policies:
|-- |  | --------------------------------

| | (a) |  | Basis of presentation:
| | --- |  | ----------------------

| | The
consolidated financial statements include the accounts of the Company and its wholly owned
subsidiaries, Gateway Technology Inc. (GTI), a United States company, and
Chartwell Games Corp. (CGC) (formerly Gaming Tech Corporation), a Belize
company. GTI is a US incorporated company, which was acquired on November 1, 1998, and CGC
was incorporated in Belize and commenced operations November 1, 1999. The accounting
policies of the Company are in accordance with generally accepted accounting principles in
Canada and Canadian dollars is the functional currency. Except for the information
disclosed in note 11 there are no material differences between Canadian and United States
generally accepted accounting principles in these consolidated financial statements.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | Capital
assets:
| | --- |  | ---------------

| | Capital
assets are recorded at cost and amortization is provided for on a declining balance basis
using the following rates:
| | ----------------------------------------------------------------------------------------------------------------------------

|                          
|--------------------------
|Capital assets under lease
|Computer equipment        
|Furniture and equipment   
|                          

| | (c) |  | Deferred
software development costs:
| | --- |  | ------------------------------------

| | Research
costs are expensed as incurred. Costs related to the development of software are expensed
as incurred unless such costs meet the criteria for deferral and amortization under
Canadian generally accepted accounting principles. The criteria include identifiable costs
attributable to a clearly defined product, the establishment of technical feasibility,
identification of a market for the software, the Companys intent to market the
software, and the existence of adequate resources to complete the project. In the year
ended October 31, 2003, the Company has deferred $530,948 of software development costs
which will be amortized over an estimated useful life of three years, commencing in the
year when commercial sales of the products commence. In addition, the deferred purchase
cost of previously acquired software has been fully amortized over its expected useful
life of five years. Capitalized software development is evaluated in each reporting period
to determine whether it continues to meet the criteria for continued deferral and
amortization.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 2

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|1. |  | Significant
accounting policies (continued):
|-- |  | --------------------------------------------

| | (d) |  | Foreign
currency translation:
| | --- |  | -----------------------------

| | Accounts
of foreign operations, all of which are considered financially and operationally
integrated, are translated to Canadian dollars using average exchange rates for the year
for revenue and expenses. Monetary assets and liabilities are translated at the year-end
current exchange rate and non-monetary assets and liabilities are translated using
historical rates of exchange. Gains or losses resulting from these translation adjustments
are included in net income.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Transactions
in foreign currencies are translated at rates in effect at the time of the transaction.
Monetary assets and liabilities are translated at current rates. Gains and losses are
included in income.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e) |  | Revenue
recognition:
| | --- |  | --------------------

| | Revenue
is recognized in accordance with the terms of the Companys various licensing
agreements. Software set-up fees, which require software customization, modification and
integration, are recognized following the completed contract method. Licensing revenue,
including revenue related to software maintenance and upgrades, is recognized on an
accrual basis as earned over the life of the licensing agreement.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) |  | Per
share amounts:
| | --- |  | ------------------

| | Basic
per share amounts are calculated using the weighted average number of shares outstanding
during the year. Diluted per share amounts are calculated based on the treasury stock
method, which assumes that any proceeds obtained on exercise of options would be used to
purchase common shares at the average market price during the period. The weighted average
number of shares outstanding is then adjusted by the net change.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g) |  | Income
taxes:
| | --- |  | -------------

| | The
Company follows the liability method of accounting for income taxes, whereby future tax
assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Future tax assets and liabilities are measured
using substantively enacted tax rates expected to apply when the asset is realized or the
liability settled. A valuation allowance is recorded against future income tax assets if
it is more likely than not that all or a portion of the assets will not be realized.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 3

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|1. |  | Significant
accounting policies (continued):
|-- |  | --------------------------------------------

| | (h) |  | Stock-based
compensation plan:
| | --- |  | ------------------------------

| | Effective
November 1, 2002, the Company adopted the Canadian standards for accounting for
stock-based compensation and other stock-based payments. The new recommendations require
equity instruments awarded to employees and the cost of the service received as
consideration to be measured and recognized based on the fair value of the equity
instruments issued. Compensation expense is recognized over the period of related employee
service, usually the vesting period of the equity instrument awarded. In addition, the new
standards require that equity instruments issued to non-employees be recorded at their
fair value at the date of issue. The new recommendations permit the measurement of
compensation expense for stock options granted to employees and directors that are not
direct awards of stock, stock appreciation rights or otherwise call for settlement in cash
or other assets by an alternative method and to provide pro forma disclosure of the
financial results using the fair value method.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has elected to follow an alternative method of accounting for stock options
awarded to employees and recognize no compensation expense when stock options are granted.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i) |  | Use
of estimates:
| | --- |  | -----------------

| | The
preparation of consolidated financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. Areas of significant estimate include the
recoverability of deferred software development costs, amortization periods for capital
assets and provision for doubtful accounts. Actual results could differ from
managements best estimates and underlying assumptions as additional information
becomes available in the future.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (j) |  | Comparative
figures:
| | --- |  | --------------------

| | Certain
comparative figures have been reclassified to conform with the current year financial
statement presentation.
| | ---------------------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 4

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|2. |  | Capital
assets:
|-- |  | ---------------

|                          
|--------------------------
|
|                          
|Capital assets under lease
|Computer equipment        
|Furniture and equipment   
|                          
|                          
|                          

|2002                       |  |           | 
|-------------------------- |  | --------- | 
|                          
|Capital assets under lease |  | $  47,005 | 
|Computer equipment         |  | 535,356   | 
|Furniture and equipment    |  | 77,070    | 
|                          
|                           |  | $659,431  | 
|                          

|3. |  | Deferred
software development costs:
|-- |  | ------------------------------------

|                              
|------------------------------
|
|                              
|Software development costs    
|Less: accumulated amortization
|                              
|Net book value                
|                              

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 5

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|4. |  | Share
capital:
|-- |  | --------------

| | (a) |  | Authorized:
| | --- |  | -----------

| | 100,000,000
common shares without par value
| | -------------------------------------------

| | (b) |  | Issued:
| | --- |  | -------

|                                            
|--------------------------------------------
|
|                                            
|Balance, October 31, 2000                   
|                                            
|Issued for cash on exercise of stock options
|Issued for cash on exercise of Warrants     
|                                            
|Balance, October 31, 2001                   
|                                            
|Issued for cash on exercise of stock options
|                                            
|Balance, October 31, 2002                   
|                                            
|Issued for cash on exercise of stock options
|Issued as finders fee                       
|                                            
|Balance, October 31, 2003                   
|                                            

| | 375,000
shares are held in escrow on behalf of the principals of the Company and are subject to
the direction and determination of the regulatory authorities in the Province of British
Columbia.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 955,400
shares are held in escrow on behalf of the principals of the Company and others, and
subject to the direction and determination of the regulatory authorities in the Province
of Alberta.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Pursuant
to the Companys acquisition of all of the issued shares of GTI, 1,000,000 shares
were held in escrow and were realizable from time to time as one escrowed share for each
$1.00 of cash flow generated by GTI subsequent to its acquisition by the Company. Shares
remaining in escrow at October 31, 2003 were to be returned to the Company and
cancelled.  At October 31, 2003 application was made to the TSX Venture Exchange for
release of 333,333 shares, in accordance with the terms of the escrow agreement.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 6

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|4. |  | Share
capital (continued):
|-- |  | --------------------------

| | (c) |  | Stock
options:
| | --- |  | --------------

| | The
Company has a stock option plan for its directors, officers, employees and key consultants
whereby an amount of options to a maximum of 3,110,100 shares may be granted subject to
certain terms and conditions. Stock option vesting privileges are at the discretion of the
Board. The exercise price for stock options granted is no less than the quoted market
price on grant date.Changes in the number of options, with their weighted average exercise
prices, are summarized below:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                      
|----------------------
|
|
|                      
|Outstanding, beginning
|of year               
|Granted               
|Exercised             
|Forfeited             
|                      
|Outstanding, end of   
|year                  
|                      

| | On
June 5, 2001 the Company re-priced certain employee stock options with original exercise
prices ranging from $1.77 to $4.20, to a new exercise prices ranging from $1.06 to $1.17.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table summarizes information about the stock options outstanding at October 31,
2003:
| | ---------------------------------------------------------------------------------------------------

|           
|-----------
|
|
|           
|$ 1.00-1.50
|1.51-2.00  
|2.01-2.09  
|           
|$ 1.00-2.09
|           

| | The
weighted average grant date fair value of stock options granted during the year was
$0.78.
| | ----------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 7

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|4. |  | Share
capital (continued):
|-- |  | --------------------------

| | (d) |  | Per
share amounts:
| | --- |  | ------------------

| | The
weighted average number of shares outstanding for the year was 14,504,036 (2002 
13,485,109; 2001  13,286,063). Diluted shares of 14,748,159 for 2003 reflect the
dilutive effect of the exercise of the options outstanding. Diluted loss per share was not
disclosed separately in 2002 and 2001 as the exercise of options outstanding would have
had an anti-dilutive effect on net loss per share. Contingently returnable and issuable
shares held in escrow have been excluded from the calculations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | Stock-based
compensation:
|-- |  | -------------------------

| | The
Company has calculated the fair value of stock options granted in 2003 to employees,
directors, and officers using the Black Scholes option pricing model, assuming a dividend
yield of 0%, a risk-free interest rate of 4%, volatility of 99%, and an expected option
life of 5 years. Had compensation expense been determined based on the fair value of the
2003 employee stock option awards at the grant dates, the Companys net income and
loss per share for 2003 would have been changed to the following pro forma amounts:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     
|---------------------
|
|                     
|Net income           
|                     
|Net income per share:
|Basic                
|Diluted              
|                     

|6. |  | Related
party transactions:
|-- |  | ---------------------------

| | For
the year ended October 31, 2003, the Company incurred legal fees of $60,000 (2002 
$60,000; 2001  $60,000) and consulting fees of $165,000 (2002  $165,000; 2001
 $162,000) to various directors of the Company in the normal course of business.
These transactions were measured at the exchange amount and recorded in general and
administrative expenses.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Amounts
due from related parties of $190,512 consist of amounts due from Company officers,
directors and employees. Of these amounts, $49,907 is non-interest bearing, unsecured and
with no set terms of repayment. The remaining $140,605 bears 6% interest, is secured by
189,200 common shares of the Company and has no set terms of repayment.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
2001, the Company determined that $242,512 of liabilities, which were recognized upon the
acquisition of the issued and outstanding shares of GTI, were no longer payable, and
therefore these amounts have been recognized as income in the 2001 year.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 8

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|7. |  | Income
taxes:
|-- |  | -------------

| | Income
tax recovery differs from the amount that would be computed by applying the basic combined
Canadian federal and provincial statutory income tax rate to the net loss for the year.
The reasons for the differences are as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                          
|------------------------------------------
|
|                                          
|Net income (loss) before income taxes     
|                                          
|Combined Canadian federal and provincial  
|statutory rate                            
|                                          
|Computed provision (recovery)             
|Non-tax-based amortization                
|Difference in foreign tax rates           
|Foreign accrual property income           
|(Realization) benefit of future tax assets
|not recognized                            
|Non deductible expenses                   
|Reduction of valuation allowance          
|                                          
|Actual recovery                           
|                                          

| | The
adjustment in respect of differences in foreign tax rates includes amounts arising from
the differences in taxable income in the various jurisdictions in which the Company
operates.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
components of the Companys net future income tax asset at October 31, 2003 and 2002
are as follows:
| | --------------------------------------------------------------------------------------------------------

|                                
|--------------------------------
|
|                                
|Non-capital/net operating losses
|Capital assets                  
|Share issue costs               
|Resource deductions             
|Deferred development costs      
|                                
|                                
|                                
|Less: valuation allowance       
|                                
|                                
|                                

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 9

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|7. |  | Income
taxes (continued):
|-- |  | -------------------------

|                                
|--------------------------------
|
|                                
|Non-capital/net operating losses
|Capital assets                  
|Share issue costs               
|Resource deductions             
|Deferred development costs      
|                                
|                                
|Less: valuation allowance       
|                                
|                                
|                                

| | At
October 31, 2003, the Company has non-capital loss carry-forwards for Canadian income tax
purposes of approximately $187,550 (2002  $1,377,491) available for deduction
against future years taxable income. These losses expire in 2008. The Company also
has $3,700,719 of unused deferred development costs which may be carried forward
indefinitely.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
addition, the Company has net operating losses carry-forward for United States income tax
purposes of approximately $61,750 (2002  $73,008) available for deduction against
future years taxable income. These losses expire between 2018 and 2019.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. |  | Financial
instruments:
|-- |  | ----------------------

| | The
Companys financial instruments consist of cash, short term investments, accounts
receivable, amounts due from related parties, accounts payable and accrued liabilities and
capital lease obligations. The fair value of these financial instruments approximate their
carrying values. It is managements opinion that the Company is not exposed to
significant interest and or credit risk. The Companys credit risk lies in its
accounts receivable where the balance is due from a small number of customers. The
Companys short term investments consist of investments in low risk, fixed interest,
corporate and government bonds. A substantial portion of the Companys revenue is
exposed to currency fluctuations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 10

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|9. |  | Commitments:
|-- |  | ------------

| | Operating
leases:
| | -----------------

| | Future
minimum annual payments under operating leases are as follows:
| | ---------------------------------------------------------------------

|          
|----------
|2004      
|2005      
|2006      
|2007      
|2008      
|Thereafter
|          

|10. |  | Segmented
information:
|--- |  | ----------------------

| | The
Company has aggregated its Canadian and Belize operating segments into one reporting
segment as management has determined that the nature of the operations in each segment
meets the aggregation criteria specified by the CICA. The Companys software set-up
and license fees are from domestic and foreign entities and originate from the following
countries of operation:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     
|---------------------
|
|                     
|Software set-up fees 
|Software license fees
|Total assets         
|                     

|                     
|---------------------
|
|                     
|Software set-up fees 
|Software license fees
|Total assets         
|                     

|                     
|---------------------
|
|                     
|Software set-up fees 
|Software license fees
|                     

| | During
the year ended October 31, 2003, 4 licensees (2002  3; 2001  5), each of which
provided more than 10% of the Companys total sales revenue, accounted for 72.6%
(2002  68.5%; 2001  54.9%) of the Companys 2003 total set-up fee and
license revenue.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 11

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|11. |  | Differences
in generally accepted accounting principles between Canada and           the United
States:
|--- |  | -------------------------------------------------------------------------------------------------------

| | The
financial statements have been prepared in accordance with Canadian generally accepted
accounting principles (Canadian GAAP). Any differences in United States
generally accepted accounting principles (U.S. GAAP) as they pertain to the
Companys financial statements are not material except as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) |  | Reconciliation
of Canadian GAAP to U.S. GAAP net income (loss):
| | --- |  | ---------------------------------------------------------------

| | The
effect on the net income (loss) for each of the years in the three year period ended
October 31, 2003 of the differences between Canadian GAAP and U.S. GAAP is summarized as
follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               
|-----------------------------------------------
|
|
|                                               
|Net income (loss) from continuing operations   
|for the year as reported in                    
|accordance with Canadian GAAP                  
|Repricing of stock options                     
|Software development costs                     
|Stock based compensation expense:              
|APB 25                                         
|FAS 123                                        
|                                               
|Net income (loss) - U.S. GAAP                  
|Deficit, beginning of year - U.S. GAAP         
|                                               
|Deficit, end of year - U.S. GAAP               
|                                               
|Net income (loss) per share - basic and diluted
|                                               

| | For
U.S. GAAP purposes, the amounts of interest income would not be included in the subtotal
of revenue.
| | --------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 12

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

11.    
          Differences in generally accepted accounting principles between Canada and
          the United States (continued):

(a)       
          Reconciliation of Canadian GAAP to U.S. GAAP net income (loss) (continued):

The
components of comprehensive income are as follows:

|                                  
|----------------------------------
|
|                                  
|Net income (loss) - U.S. GAAP     
|Other comprehensive (loss) income:
|Change in fair value of available 
|for sale long-term securities     
|                                  
|Comprehensive income (loss)       
|                                  

| | Balance
sheet items which vary in conformity with U.S. GAAP and SEC requirements:
| | ---------------------------------------------------------------------------------

|                                       
|---------------------------------------
|
|                                       
|Assets:                                
|Available for sale long-term securities
|Deferred software development costs    
|                                       
|                                       
|                                       
|Shareholders' equity:                  
|Accumulated other comprehensive income 
|Deficit                                
|                                       
|                                       
|                                       

| | There
are no variations between the amounts of liabilities and those amounts measured using
U.S. GAAP.
| | ------------------------------------------------------------------------------------------------------

| | Accumulated
other comprehensive income at October 31, 2002 has been restated to correct an error of
$27,625.
| | ------------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 13

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|11. |  | Differences in generally accepted accounting principles between Canada and           the United
States (continued):
|--- |  | -------------------------------------------------------------------------------------------------------------------

| | (b) |  | Stock based compensation:
| | --- |  | -------------------------

| | The
Company applies the intrinsic value-based method of accounting prescribed by Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations, in accounting for its stock options issued
to employees, directors and officers of the Company for purposes of reconciliation to U.S.
GAAP. As such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. SFAS No. 123,
Accounting for Stock-Based Compensation, established accounting and disclosure
requirements using a fair value-based method of accounting for stock-based employee
compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to
apply the intrinsic value-based method of accounting described above and has adopted the
disclosure requirements of SFAS No. 123. Stock options issued to consultants and other
third parties are accounted for at their fair values in accordance with SFAS No. 123.
During 2003, there were no options granted to consultants or other third parties.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | With
the exception of 100,000 options granted to a consultant in the year ended October 31,
2002 and 50,000 options granted to a consultant in the year ended October 31, 2001, all
options granted to date have been fixed and granted to employees, directors and officers
of the Company. There was $nil (2002  $105,119; 2001  $94,870) charged to
income for those options in 2003.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has calculated the fair value of stock options granted to employees, directors and
officers under the minimum valued method using the Black Scholes option pricing model with
the following weighted-average assumptions:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               
|-------------------------------
|
|                               
|Risk free interest rate        
|Volatility                     
|Expected option life (in years)
|Dividend yield                 
|                               

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 14

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|11. |  | Differences
in generally accepted accounting principles between Canada and           the United
States (continued):
|--- |  | -------------------------------------------------------------------------------------------------------------------

| | (b) |  | Stock
based compensation (continued):
| | --- |  | -------------------------------------

| | Had
the Company determined compensation costs based on the fair value at the date of grant for
its stock options under SFAS 123, net earnings in accordance with US GAAP would have been
as reported in the following table. The Company has not recognized in income any amount
under SFAS 123 for stock-based employee compensation expense. These pro forma earnings
reflect compensation cost amortized over the vesting periods of the options.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              
|------------------------------
|
|
|                              
|Net income (loss) - U.S. GAAP:
|As reported                   
|Pro forma (revised)           
|                              
|Net income (loss) per share - 
|basic and diluted:            
|As reported                   
|Pro forma (revised)           
|                              

| | Previously
reported pro forma amounts of $(1,683,131) for 2002 and $(1,889,073) for 2001, and pro
forma net loss per share of $ (.12) and $ (.14) for those years respectively, have been
revised to correct calculation errors in the prior years.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) |  | Additional
disclosures under U.S. GAAP:
| | --- |  | ---------------------------------------

| |  | (i) |  | The
Company follows SFAS 130 regarding comprehensive income for purposes of
                    reconciliation to U.S. GAAP. Under U.S. GAAP, items defined as other
                    comprehensive income are separately classified in the financial
statements and                     the accumulated balance of other comprehensive income
(loss) is reported                     separately in shareholders equity on the
balance sheet. For the three                     years ended October 31, 2003 there are
no items classified as other                     comprehensive income, with the exception
of a change in the fair value of                     available for sale securities of
$(1,365)for the year ended October 31,                     2003 (2002  $(85,426);
2001  $27,625).
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (ii) |  | The
1,663,733 common shares held in escrow for the year ended October 31, 2003
                    (2002  2,330,400 and 2001  2,330,400) have not been
included in the                     calculation of basic or diluted earnings per share as
doing so would be                     anti-dilutive.
| |  | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

CHARTWELL TECHNOLOGY INC. Notes to Consolidated Financial Statements, Page 14

Years ended October 31, 2003, 2002 and 2001 
(stated in Canadian dollars)

---

|11. |  | Differences
in generally accepted accounting principles between Canada and           the United
States (continued):
|--- |  | -------------------------------------------------------------------------------------------------------------------

| | (c) |  | Additional
disclosures under U.S. GAAP (continued):
| | --- |  | ---------------------------------------------------

| |  | (iii) |  | As
disclosed in note 4(c) to the consolidated financial statements, in 2001
                    certain stock options were repriced. In accordance with the intrinsic
value                     method of accounting for stock options, an expense of $702,660
was recognized in                     the year of repricing. In fiscal 2003 and 2002
these stock options have been                     accounted for using variable price
accounting, resulting in an expense of                     $228,900 in 2003 and an
expense reduction of $95,820 in 2002.
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (iv) |  | Under
U.S. GAAP, deferred software development costs are accounted for under
                    SFAS 86, Accounting for Costs of Computer Software to be Sold, Leased
or                     Otherwise Marketed, which requires the expensing of all amounts
incurred to the                     date of technical feasibility. Under Canadian GAAP,
these amounts have been                     capitalized as they meet all of the required
criteria.
| |  | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---